Atlas Energy, L.P. (ATLS)

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Atlas Energy (ATLS)

Q4 2012 Earnings Call

February 22, 2013, 09:00 am ET


Brian Begley - VP, Investor Relations

Ed Cohen - President & CEO

Matt Jones - SVP & President & COO, E&P

Sean McGrath - CFO


Michael Peterson - MLV & Company

Craig Shere - Tuohy Brothers

Praneeth Satish - Wells Fargo

John Ragozzino - RBC Capital Markets

Wayne Cooperman - Cobalt Capital



Good day, ladies and gentlemen, and welcome to the Atlas Energy and Atlas Resource Partners Fourth Quarter and Year-End Earnings Conference Call. My name is Anne, and I will be your coordinator for today’s call. As a reminder, this conference is being recorded for replay purposes. At this time, all participants are in listen-only mode. (Operator Instructions) We will be facilitating a question-and-answer session following the presentation.

I would now like to turn the presentation over to your host for today's call, Mr. Brian Begley, Head of Investor Relations. Please proceed sir.

Brian Begley

Good morning, everyone, and thank you for joining us for today's call to discuss our fourth quarter and full-year 2012 results. So as we get started, I would like to remind everyone that during this call we'll make certain forward-looking statements, and in this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as expects, anticipates, and similar words or phrases.

Forward-looking statements, by their nature, address matters that are uncertain and are subject to certain risks and uncertainties, which can cause actual results to differ materially from those projected in the forward-looking statements. We discuss these risks in our quarterly report on Form 10-Q and our annual report, also on Form 10-K, particularly in Item 1.

I would also like to caution not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The company undertakes no obligations to publicly update our forward-looking statements or to publicly release the results of any revisions to forward-looking statements and maybe made to reflect the events or circumstances after the date hereof or reflect the occurrence of unanticipated events.

In both our Atlas Energy and Atlas Resource earnings releases, we provide reconciliation from net income to adjusted EBITDA and distributable cash flow, as we believe that these non-GAAP measures offer the best means for evaluating the results of our business.

And lastly, we will be participating in several upcoming investor conferences among other events including the Morgan Stanley Corporate Access Day in New York on Tuesday March 5th and the IPAA OGIS East Oil & Gas Conference also in New York on April 15th to the 17th.

With that, I would like to turn the call over to our Chief Executive Officer, Ed Cohen for his remarks. Ed?

Ed Cohen

Thanks and hello everyone. Let me just put it simply; 2012 was an incredibly successful year for Atlas Energy LP, ATLS, for Atlas Pipeline Partners and for Atlas Resource Partners, which are referred to as ARP, and this year, 2013, should see an acceleration and enhancement in my opinion of our accomplishments.

Over the entire range of criteria applicable to Energy Partnerships, and that’s return to unit holders, levels of distributable cash flow, growth in reserves, growth in level of production and processing, acquisitions and corporate development, handling of safety and environmental concerns, over this entire range, ATLS and ARP achieved outstanding results in 2012 and I believe set the stage for further triumphs in 2013.

Specifically, we're now reiterating ARP guidance for 2013 of distributions of at least $2.35 per unit. ATLS will distribute in 2013, $1.70 to $2 per unit. These projections of course are based on the assets we currently own and the projects that we already built or have set in motion, but you know we're certainly not a status quo enterprise and I think that you would expect us now to undertake and achieve additional favorable initiatives in 2013.

Now look at what we did in 2012. First, unit holder return; in contrast to the loss of approximately 8% for the overall E&P index, the [EXP] during 2012 and that was a horrendous year generally for E&P stocks; Atlas Resource Partners, ARP stock increased in price about 12% during its abbreviated 2012 year; remember it started in March. That was from the $20 punitive price at which it was spun-off in March to its closing price of $22.47 at year-end. ATLS’ total unit holder return for 2012 was 61%; I repeat that 61%. Median peer-group total return for the year was 3%. This strong increase in shareholder value for the year 2012 is especially impressive, because ATLS’ stock price total unit holder return had already increased 67% during the prior 2011 year. This stock market success happily reflected in my opinion true underlying operational achievements.

And now let me touch on some of these highlights. First of all, distributable cash flow. In 2012, ARP generated distributed cash flow of $72 million, a 50% increase over the proforma of $47.86 million for the prior year. Atlas Energy’s fourth quarter 2012 cash distribution of $0.30 per unit represented 25% increase over the corresponding prior year period.

Now let's turn to growth in reserves; ARP’s proved gas and oil reserves for its own account more than quintupled during the year from 167 billion cubic feet equivalent to 910 billion cubic feet equivalent, an increase of over 445% calculated on the basis of NYMEX forward strip prices. Reserves now achieved levels that had been attained prior to the 2011 sale of the old Atlas Energy to Chevron for $4.3 billion.

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