Atlas Energy Group, LLC Reports Operating And Financial Results For The Third Quarter 2015

CONTACT:

Brian J. Begley

Vice President - Investor Relations

Atlas Energy Group, LLC

(877) 280-2857

(215) 405-2718 (fax)

ATLAS ENERGY GROUP, LLC AND SUBSIDIARIES

COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS

 (unaudited; in thousands, except per unit data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

Revenues:

2015

2014

2015

2014

      Gas and oil production

$        94,612

$     130,937

$      300,249

$     342,456

      Well construction and completion

23,054

61,204

63,665

126,917

      Gathering and processing

1,685

3,061

6,046

11,287

      Administration and oversight

5,495

6,177

7,301

12,072

      Well services

5,842

6,597

18,568

18,441

      Gain on mark-to-market derivatives

131,777

—

210,466

—

Other, net

369

613

585

1,167

          Total revenues

262,834

208,589

606,880

512,340

Costs and expenses:

      Gas and oil production

42,300

52,004

131,908

134,590

      Well construction and completion

20,046

53,221

55,361

110,363

      Gathering and processing

2,473

3,214

7,406

11,900

      Well services

2,398

2,617

6,735

7,525

      General and administrative

21,704

17,299

82,037

63,487

Depreciation, depletion and amortization

43,311

65,068

131,043

177,513

Asset impairment

679,537

—

679,537

—

          Total costs and expenses

811,769

193,423

1,094,027

505,378

Operating income (loss)

(548,935)

15,166

(487,147)

6,962

Loss on asset sales and disposal

(362)

(92)

(276)

(1,683)

Loss on extinguishment of debt

(4,726)

—

(4,726)

—

Interest expense

(28,290)

(19,423)

(96,228)

(51,474)

Net loss

(582,313)

(4,349)

(588,377)

(46,195)

Preferred unitholders' dividends

(1,009)

—

(2,346)

—

Loss attributable to non-controlling interests

439,969

5,137

420,411

33,828

Net income (loss) attributable to unitholders'/owner's interests

$     (143,353)

$            788

$     (170,312)

$     (12,367)

Allocation of net income (loss) attributable to unitholders'/owner's interests:

Portion applicable to owner's interest (period prior to the transfer of assets on February 27, 2015)

$                —

$            788

$      (10,475)

$     (12,367)

Portion applicable to unitholders' interest (period subsequent to the transfer of assets on February 27, 2015)

(143,353)

—

(159,837)

—

Net income (loss) attributable to unitholders' /owner's interests

$     (143,353)

$            788

$     (170,312)

$     (12,367)

Net income (loss) attributable to unitholders per common unit:

Basic

$          (5.51)

$              —

$          (6.15)

$             —

Diluted

$          (5.51)

$              —

$          (6.15)

$             —

Weighted average common units outstanding:

Basic

26,011

—

26,011

—

Diluted

26,011

—

26,011

—

ATLAS ENERGY GROUP, LLC AND SUBSIDIARIES

COMBINED CONSOLIDATED BALANCE SHEETS

 (unaudited; in thousands)

September 30,

December 31,

ASSETS

2015

2014

Current assets:

      Cash and cash equivalents

$             54,950

$             58,358

      Accounts receivable

91,706

115,290

      Advances to affiliates

−

4,389

      Current portion of derivative asset

147,021

144,259

      Subscriptions receivable

23,054

32,398

      Prepaid expenses and other

26,022

26,789

          Total current assets

342,753

381,483

Property, plant and equipment, net

1,659,358

2,419,289

Intangible assets, net

515

691

Goodwill, net

13,639

13,639

Long-term derivative asset

206,142

130,602

Other assets, net

83,454

80,611

$        2,305,861

$        3,026,315

LIABILITIES AND UNITHOLDERS'/OWNER'S EQUITY

Current liabilities:

      Current portion of long-term debt

$                    —

$               1,500

      Accounts payable

85,792

123,670

      Liabilities associated with drilling contracts

—

40,611

      Accrued interest

11,428

26,479

      Accrued well drilling and completion costs

65,629

92,910

      Accrued liabilities

87,272

170,786

          Total current liabilities

250,121

455,956

Long-term debt, less current portion

1,587,747

1,541,085

Asset retirement obligations and other

122,982

114,059

Commitments and contingencies

Unitholders'/owner's equity:

      Common unitholders' equity

(34,624)

—

      Series A preferred equity

38,393

—

      Owner's equity

—

147,308

      Accumulated other comprehensive income

10,388

54,008

14,157

201,316

      Non-controlling interests

330,854

713,899

Total unitholders'/owner's equity

345,011

915,215

$         2,305,861

$         3,026,315

ATLAS ENERGY GROUP, LLC

Financial and Operating Highlights

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

Net income (loss) attributable to unitholders per common unit - basic

$           (5.51)

$             —

$       (6.15)

$             —

Production volume: ⁽¹⁾⁽²⁾

  ATLAS GROWTH:

Natural gas (Mcfd)

574

770

594

656

Oil (Bpd)

885

111

566

121

Natural gas liquids (Bpd)

91

104

84

85

Total (Mcfed)

6,426

2,058

4,497

1,887

  ATLAS RESOURCE:

Natural gas (Mcfd)

216,414

245,996

221,159

237,503

Oil (Bpd)

4,842

4,598

5,220

2,761

Natural gas liquids (Bpd)

3,121

4,048

3,266

3,722

Total (Mcfed)

264,196

297,876

272,077

276,403

  TOTAL:

Natural gas (Mcfd)

216,988

246,766

221,753

238,158

Oil (Bpd)

5,727

4,710

5,786

2,882

Natural gas liquids (Bpd)

3,212

4,152

3,350

3,807

Total (Mcfed)

270,623

299,934

276,574

278,290

Average realized sales prices:⁽²⁾

  ATLAS GROWTH:

Natural gas (per Mcf)

$          2.63

$          3.92

$          2.65

$       4.22

Oil (per Bbl) ⁽⁴⁾

$        47.14

$        92.96

$        48.39

$     93.52

Natural gas liquids (per Bbl)

$       11.88

$       32.44

$       12.63

$     31.45

  ATLAS RESOURCE:

Natural gas (per Mcf) ⁽³⁾

$          3.30

$          3.56

$          3.41

$       3.79

Oil (per Bbl)⁽⁴⁾

$        88.42

$        90.18

$        83.99

$     89.71

Natural gas liquids (per Bbl) ⁽⁵⁾

$       21.42

$        32.21

$       22.17

$     30.54

Production costs per Mcfe:⁽²⁾⁽⁶⁾

  ATLAS GROWTH:

Lease operating expenses per Mcfe

$          0.81

$          2.71

$          0.99

$          2.51

Production taxes per Mcfe

0.31

0.52

0.32

0.50

Transportation and compression expenses per Mcfe

0.07

—

0.06

—

Total production costs per Mcfe

$          1.20

$          3.24

$          1.37

$          3.01

  ATLAS RESOURCE:

Lease operating expenses per Mcfe

$          1.30

$          1.37

$          1.34

$          1.26

Production taxes per Mcfe

0.19

0.30

0.20

0.27

Transportation and compression expenses per Mcfe

0.24

0.23

0.24

0.26

Total production costs per Mcfe

$          1.74

$          1.89

$          1.78

$          1.79

  TOTAL:

Lease operating expenses per Mcfe

$          1.29

$          1.37

$          1.33

$          1.26

Production taxes per Mcfe

0.19

0.30

0.20

0.27

Transportation and compression expenses per Mcfe

0.24

0.23

0.23

0.26

Total production costs per Mcfe

$          1.72

$          1.90

$          1.77

$          1.80

⁽¹⁾   Production quantities consist of the sum of (i) the proportionate share of production from wells in which AGP and ARP have a direct interest, based on the proportionate net revenue interest in such wells, and (ii) ARP's proportionate share of production from wells owned by the investment partnerships in which ARP has an interest, based on its equity interest in each such partnership and based on each partnership's proportionate net revenue interest in these wells.

⁽²⁾   "Mcf" and "Mcfd" represent thousand cubic feet and thousand cubic feet per day; "Mcfe" and "Mcfed" represent thousand cubic feet equivalents and thousand cubic feet equivalents per day, and "Bbl" and "Bpd" represent barrels and barrels per day.  Barrels are converted to Mcfe using the ratio of six Mcf's to one barrel.

⁽³⁾   ARP's average sales prices for natural gas before the effects of financial hedging were $2.28 per Mcf and $3.48 per Mcf for the three months ended September 30, 2015 and 2014, respectively, and $2.32 per Mcf and $4.05 per Mcf for the nine months ended September 30, 2015 and 2014, respectively. ARP's amounts exclude the impact of subordination of ARP's production revenues to investor partners within its investor partnerships. Including the effects of this subordination, ARP's average natural gas sales prices were $3.25 per Mcf ($2.23 per Mcf before the effects of financial hedging) and $3.50 per Mcf ($3.43 per Mcf before the effects of financial hedging) for the three months ended September 30, 2015 and 2014, respectively, and $3.35 per Mcf ($2.27 per Mcf before the effects of financial hedging) and $3.69 per Mcf ($3.97 per Mcf before the effects of financial hedging) for the nine months ended September 30, 2015 and 2014, respectively.

⁽⁴⁾   AGP's average sales price for oil before the effects of financial hedging was $44.72 per barrel and $92.96 per barrel for the three months ended September 30, 2015 and 2014, respectively, and $47.09 per barrel and $93.52 per barrel for the nine months ended September 30, 2015 and 2014, respectively. ARP's average sales prices for oil before the effects of financial hedging were $43.25 per barrel and $91.08 per barrel for the three months ended September 30, 2015 and 2014, respectively, and $46.74 per barrel and $93.45 per barrel for the nine months ended September 30, 2015 and 2014, respectively.

⁽⁵⁾   ARP's average sales prices for natural gas liquids before the effects of financial hedging were $11.01 per barrel and $32.18 per barrel for the three months ended September 30, 2015 and 2014, respectively, and $13.00 per barrel and $32.16 per barrel for the nine months ended September 30, 2015 and 2014, respectively.

⁽⁶⁾   Production costs include labor to operate the wells and related equipment, repairs and maintenance, materials and supplies, property taxes, severance taxes, insurance, production overhead and transportation and compression expenses. These amounts exclude the effects of ARP's proportionate share of lease operating expenses associated with subordination of production revenue to investor partners within ARP's investor partnerships. Including the effects of these costs, ARP's lease operating expenses per Mcfe were $1.28 per Mcfe ($1.71 per Mcfe for total production costs) and $1.35 per Mcfe ($1.88 per Mcfe for total production costs) for the three months ended September 30, 2015 and 2014, respectively, and $1.32 per Mcfe ($1.75 per Mcfe for total production costs) and $1.23 per Mcfe ($1.76 per Mcfe for total production costs) for the nine months ended September 30, 2015 and 2014, respectively. Including the effects of these costs, total lease operating expenses per Mcfe were $1.27 per Mcfe ($1.70 per Mcfe for total production costs) and $1.36 per Mcfe ($1.88 per Mcfe for total production costs) for the three months ended September 30, 2015 and 2014, respectively, and $1.31 per Mcfe ($1.75 per Mcfe for total production costs) and $1.24 per Mcfe ($1.77 per Mcfe for total production costs) for the nine months ended September 30, 2015 and 2014, respectively.

ATLAS ENERGY GROUP, LLC

Financial Information

(unaudited; in thousands except per unit amounts)

Three Months Ended

Nine Months Ended

September 30,

September 30

Reconciliation of net loss to non-GAAP measures⁽¹⁾:

2015

2014

2015

2014

Net loss

$     (582,313)

$       (4,349)

$   (588,377)

$ (46,195)

Distributable cash flow not attributable to unitholders prior to February 27, 2015 (the asset transfer date)⁽²⁾

—

(15,794)

(4,291)

(42,915)

Atlas Resource net (income) loss attributable to unitholders

129,501

(4,371)

114,484

(1,326)

Atlas Resource cash distributions earned by ATLS⁽³⁾

9,407

18,720

28,114

54,564

Atlas Growth net (income) loss attributable to unitholders

217

147

231

485

Atlas Growth cash distributions earned by ATLS⁽³⁾

127

51

287

133

Non-recurring spinoff and acquisition costs

651

—

17,825

77

Amortization of deferred finance costs and predecessor

    Term Loan interest expense

1,308

323

16,024

941

Non-cash stock compensation expense

2,375

—

3,321

—

Gain on asset sales and disposal

—

—

—

(3)

Loss on extinguishment of debt

4,726

—

4,726

—

Preferred unit distributions

(1,009)

—

(2,346)

—

Other non-cash adjustments

1,052

136

1,736

411

Loss attributable to non-controlling interests

439,969

5,137

420,411

33,828

Distributable Cash Flow attributable to unitholders⁽¹⁾

$          6,011

$            —

$     12,145

$         —

Supplemental Adjusted EBITDA and Distributable Cash Flow Summary:

Atlas Resource Cash Distributions Earned⁽³⁾:

Limited Partner Units

$          8,723

$        14,580

$        26,172

$   43,325

Series A Preferred Units (2%)

684

1,074

1,942

3,003

Incentive Distribution Rights

—

3,066

—

8,236

Total Atlas Resource Cash Distributions Earned⁽³⁾

9,407

18,720

28,114

54,564

per limited partner unit

$            0.325

$            0.590

$            0.975

$     1.753

Atlas Growth Cash Distributions Earned⁽³⁾

127

51

287

133

Total Cash Distributions Earned

9,534

18,771

28,401

54,697

Cash general and administrative expenses⁽⁴⁾

(2,601)

(1,103)

(7,962)

(5,763)

Other, net

1,863

649

3,428

1,486

Adjusted EBITDA⁽¹⁾

8,796

18,317

23,867

50,420

Cash interest expense⁽⁵⁾

(1,776)

(2,523)

(5,085)

(7,505)

Preferred unit distributions

(1,009)

—

(2,346)

—

Distributable Cash Flow⁽¹⁾

$          6,011

$        15,794

$        16,436

$   42,915

Distributable cash flow not attributable to unitholders prior to February 27, 2015 (the asset transfer date)⁽²⁾

—

(15,794)

(4,291)

(42,915)

Distributable Cash Flow attributable to unitholders⁽¹⁾

$          6,011

$               —

$        12,145

$          —

⁽¹⁾

EBITDA and Distributable Cash Flow is relevant and useful, because they help ATLS' investors understand its operating performance, allows for easier comparison of its results with other master limited partnerships ("MLP"), and is a critical component in the determination of quarterly cash distributions. As a MLP, ATLS is required to distribute 100% of available cash, as defined in its limited partnership agreement ("Available Cash") and subject to cash reserves established by its general partner, to investors on a quarterly basis. ATLS refers to Available Cash prior to the establishment of cash reserves as DCF. EBITDA, Adjusted EBITDA and DCF should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. While ATLS' management believes that its methodology of calculating EBITDA, Adjusted EBITDA and DCF is generally consistent with the common practice of other MLPs, such metrics may not be consistent and, as such, may not be comparable to measures reported by other MLPs, who may use other adjustments related to their specific businesses. EBITDA, Adjusted EBITDA and DCF are supplemental financial measures used by ATLS' management and by external users of ATLS' financial statements such as investors, lenders under its credit facilities, research analysts, rating agencies and others to assess its:

·           Operating performance as compared to other publicly traded partnerships and other companies in the upstream and midstream energy sectors, without regard to financing methods, historical cost basis or capital structure;

·           Ability to generate sufficient cash flows to support its distributions to unitholders;

·           Ability to incur and service debt and fund capital expansion;

·           Viability of potential acquisitions and other capital expenditure projects; and

·           Ability to comply with financial covenants in its debt facility, which is calculated based upon Adjusted EBITDA.

DCF is determined by calculating EBITDA, adjusting it for non-cash, non-recurring and other items to achieve Adjusted EBITDA, and then deducting cash interest expense and maintenance capital expenditures. ATLS defines EBITDA as net income (loss) plus the following adjustments:

·           Interest expense;

·           Income tax expense;

·           Depreciation, depletion and amortization.

ATLS defines Adjusted EBITDA as EBITDA plus the following adjustments:

·           Cash distributions paid by ARP and AGP within 45 days after the end of the respective quarter, based upon their distributable cash flow generated during that quarter;

·           Asset impairments;

·           Acquisition and related costs;

·           Non-cash stock compensation;

·           (Gains) losses on asset disposal;

·           Cash proceeds received from monetization of derivative transactions;

·           Amortization of premiums paid on swaption derivative contracts; and

·           Other items.

ATLS adjusts DCF for non-cash, non-recurring and other items for the sole purpose of evaluating its cash distribution for the quarterly period, with EBITDA and Adjusted EBITDA adjusted in the same manner for consistency. ATLS defines DCF as Adjusted EBITDA less the following adjustments:

·           Cash interest expense; and

·           Maintenance capital expenditures.

⁽²⁾

In accordance with prevailing accounting literature, ATLS has adjusted its historical financial statements to present them combined with the historical financial results of the spin-off assets for all periods prior to its spin-off date of February 27, 2015.

⁽³⁾

Represents the cash distribution paid by ARP and AGP within 45 days after the end of each quarter, based upon the distributable cash flow generated during the respective quarter.

⁽⁴⁾

Excludes non-cash stock compensation expense and certain non-recurring spinoff costs and acquisition and related costs.

⁽⁵⁾

Excludes non-cash amortization of deferred financing costs.

ATLAS ENERGY GROUP, LLC

CAPITALIZATION INFORMATION

 (unaudited; in thousands)

September 30, 2015

Atlas

Atlas

Energy

Resource

Consolidated

Total debt

$        82,700

$  1,505,047

$     1,587,747

Less:  Cash

(52,532)

(2,418)

(54,950)

Total net debt

30,168

1,502,629

1,532,797

Unitholders' equity

164,689

244,877

      345,011⁽¹⁾

Total capitalization

$        194,857

$1,747,506

$    1,877,808

Ratio of net debt to capitalization

0.15x

⁽¹⁾        Net of eliminated amounts.             

December 31, 2014

Atlas

Atlas

Energy

Resource

Consolidated

Total debt

$        148,125

$1,394,460

$   1,542,585

Less:  Cash

(43,111)

(15,247)

(58,358)

Total net debt

105,014

1,379,213

1,484,227

Owner's equity   

267,637

947,537

      915,215⁽²⁾

Total capitalization

$        372,651

$2,326,750

$    2,399,442

Ratio of net debt to capitalization

0.28x

⁽²⁾        Net of eliminated amounts.             

ATLAS ENERGY GROUP, LLC

CONSOLIDATING STATEMENTS OF OPERATIONS

 (unaudited; in thousands)

Three Months Ended September 30, 2015

Atlas

Atlas

Energy

Resource

Eliminations

Consolidated

Revenues:

      Gas and oil production

$          3,878

$        90,734

$                 −

$        94,612

      Well construction and completion

−

23,054

−

23,054

      Gathering and processing

−

1,685

−

1,685

      Administration and oversight

−

5,495

−

5,495

      Well services

−

5,842

−

5,842

      Gain on mark-to-market derivatives

712

131,065

−

131,777

Other, net

349

20

−

369

          Total revenues

4,939

257,895

−

262,834

Costs and expenses:

      Gas and oil production

709

41,591

−

42,300

      Well construction and completion

−

20,046

−

20,046

      Gathering and processing

−

2,473

−

2,473

      Well services

−

2,398

−

2,398

      General and administrative

7,726

13,978

−

21,704

      Depreciation, depletion and amortization

2,848

40,463

−

43,311

7,291

672,246

−

679,537

          Total costs and expenses

18,574

793,195

−

811,769

Operating loss

(13,635)

(535,300)

−

(548,935)

Loss on asset sales and disposal

−

(362)

−

(362)

Loss on extinguishment of debt

(4,726)

−

−

(4,726)

Interest expense

(3,098)

(25,192)

−

(28,290)

Net loss

(21,459)

(560,854)

−

(582,313)

Preferred unitholders' dividends

(1,009)

−

−

(1,009)

  Loss attributable to non-controlling interests.

−

−

439,969

439,969

Net loss attributable to unitholders

$       (22,468)

$     (560,854)

$      439,969

$     (143,353)

ATLAS ENERGY GROUP, LLC

COMBINED CONSOLIDATING STATEMENTS OF OPERATIONS

 (unaudited; in thousands)

Three Months Ended September 30, 2014

Atlas

Atlas

Energy

Resource

Eliminations

Consolidated

Revenues:

      Gas and oil production

$          1,538

$      129,399

$                 −

$      130,937

      Well construction and completion

−

61,204

−

61,204

      Gathering and processing

−

3,061

−

3,061

      Administration and oversight

−

6,177

−

6,177

      Well services

−

6,597

−

6,597

Other, net

352

261

−

613

          Total revenues

1,890

206,699

−

208,589

Costs and expenses:

      Gas and oil production

613

51,391

−

52,004

      Well construction and completion

−

53,221

−

53,221

      Gathering and processing

−

3,214

−

3,214

      Well services

−

2,617

−

2,617

      General and administrative

4,175

13,124

−

17,299

Depreciation, depletion and amortization

490

64,578

−

65,068

          Total costs and expenses

5,278

188,145

−

193,423

Operating income (loss)

(3,388)

18,554

−

15,166

Loss on asset sales and disposal

−

(92)

−

(92)

Interest expense

(2,846)

(16,577)

−

(19,423)

Net income (loss)

(6,234)

1,885

−

(4,349)

  Loss attributable to non-controlling interests.

−

−

5,137

5,137

Net income (loss) attributable to owner

$         (6,234)

$          1,885

$          5,137

$             788

ATLAS ENERGY GROUP, LLC

COMBINED CONSOLIDATING STATEMENTS OF OPERATIONS

 (unaudited; in thousands)

Nine Months Ended September 30, 2015

Atlas

Atlas

Energy

Resource

Eliminations

Consolidated

Revenues:

      Gas and oil production

$          8,006

$      292,243

$                 −

$      300,249

      Well construction and completion

−

63,665

−

63,665

      Gathering and processing

−

6,046

−

6,046

      Administration and oversight

−

7,301

−

7,301

      Well services

−

18,568

−

18,568

      Gain on mark-to-market derivatives

760

209,706

−

210,466

Other, net

505

80

−

585

          Total revenues

9,271

597,609

−

606,880

Costs and expenses:

      Gas and oil production

1,684

130,224

−

131,908

      Well construction and completion

−

55,361

−

55,361

      Gathering and processing

−

7,406

−

7,406

      Well services

−

6,735

−

6,735

      General and administrative

37,637

44,400

−

82,037

      Depreciation, depletion and amortization

5,095

125,948

−

131,043

      Asset impairment

7,291

672,246

−

679,537

          Total costs and expenses

51,707

1,042,320

−

1,094,027

Operating loss

(42,436)

(444,711)

−

(487,147)

Loss on asset sales and disposal

−

(276)

−

(276)

Loss on extinguishment of debt

(4,726)

−

−

(4,726)

Interest expense

(21,123)

(75,105)

−

(96,228)

Net loss

(68,285)

(520,092)

−

(588,377)

Preferred unitholders' dividends

(2,346)

−

−

(2,346)

  Loss attributable to non-controlling interests.

−

−

420,411

420,411

Net loss attributable to unitholders/owner

$       (70,631)

$     (520,092)

$      420,411

$     (170,312)

ATLAS ENERGY GROUP, LLC

COMBINED CONSOLIDATING STATEMENTS OF OPERATIONS

 (unaudited; in thousands)

Nine Months Ended September 30, 2014

Atlas

Atlas

Energy

Resource

Eliminations

Consolidated

Revenues:

      Gas and oil production

$         4,563

$      337,893

$                 −

$      342,456

      Well construction and completion

−

126,917

−

126,917

      Gathering and processing

−

11,287

−

11,287

      Administration and oversight

−

12,072

−

12,072

      Well services

−

18,441

−

18,441

Other, net

824

343

−

1,167

          Total revenues

5,387

506,953

−

512,340

Costs and expenses:

      Gas and oil production

1,552

133,038

−

134,590

      Well construction and completion

−

110,363

−

110,363

      Gathering and processing

−

11,900

−

11,900

      Well services

−

7,525

−

7,525

      General and administrative

12,593

50,894