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Atlas Pipeline Partners, L.P. (APL)

Q4 2008 Earnings Call Transcript

March 2, 2009 11:00 am ET


Brian Begley – VP, IR

Ed Cohen – Chairman

Eugene Dubay – President and CEO

Glenn Powell – COO

Matt Jones – CFO


Lee Cooperman – Omega Advisors

Bernice Katich [ph] – Wachovia

Eric Kalamaras – Wachovia Capital Markets

Yves Siegel – Aroya Capital

Gregg Brody – JP Morgan

Billy Aberman [ph] – Petro-Hunt

John Tysseland – Citigroup



Good day ladies and gentlemen, and welcome to the fourth quarter 2008 Atlas Pipeline Partners earnings conference call. My name is Tamale, and I will be your Operator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session toward the end of the today's conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's conference Mr. Brian Begley, Director of Investor Relations. Please proceed

Brian Begley

Thank you. Good morning everyone. Thank you for joining today's call. Before we go on and describe our results for our fourth quarter and full year 2008 results, I would like to remind everyone that when used in this conference call the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements. These statements are subject to certain risks and uncertainties which could 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 remind you and caution you 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 release the results of any revisions to forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Now I would like to turn the call over to our Chairman, Ed Cohen.

Ed Cohen

Hello, everyone. Our main speaker this morning will be Eugene Dubay, who has succeeded me as Chief Executive Officer of APL and AHD, its general partner. Landing Eugene is a real coup for APL. As for myself, now continuing non-Executive Chairman of APL, I anticipate basking in the glory of Eugene’s accomplishments. I don't mean to embarrass Eugene, but he really has it all. Good education, a graduate of the United States Naval Academy. He is also a Certified Public Accountant and holds an MBA in accounting from Texas A&M University. He knows our industry, over 20 years experience in midstream assets and utilities operations. He has been an executive with ONEOK and with Southern Union, and most recently, since 2003, he was Chief Operating Officer of Continental Energy Systems before joining us as CEO earlier this year. Even knows Tulsa, having lived there once before. And he's no stranger to our company having previously served as an outside director of APL.

Eugene, we are all ears.

Eugene Dubay

Thank you, Ed. Ladies and gentlemen, I am pleased to be here today with Atlas Pipeline Partners. Even in this extremely challenging economic environment, I am confident that with our solid asset base, our experienced field employee group and our strong management team, we will succeed in creating value on behalf of our equity and debt holders.

I would like to ask you to keep the larger picture in mind as you listen to our presentation. In a devastating economic environment, Atlas Pipeline Partners is creating an anticipated gross margin of over $300 million in the coming year even after the contemplated sale of assets that we will describe. 27% of this gross margin is fee income and 56% is in margin expected to be derived from percentage of the proceeds contracts, leaving only 17% of the margin related to keep-whole contracts.

Our margin and cash flow are sustainable and very likely to increase in the coming year. Our assets are concentrated in operating areas where we are still seeing drilling and well connects, and we expect in 2009 with volumes equal to or exceeding the volumes across our system in 2008. There are not many companies operating today that have the expectation that their product volumes will increase this year.

Atlas is a fundamentally strong company in excellent operating areas. We have a great deal of experience and talent in our field operations and a management team that is committed to improving the equity value for our unit holders and reducing leverage for our creditors. We will operate in 2009 with a discipline that you would expect in this environment. We will reduce O&M expenses, we will ensure capital spending goes only to essential projects and improve our contract term wherever possible, while continuing to provide, what we believe, is best in class service to our customers.

In our last investor call, the company committed itself to evaluating all strategic options. Today, we are in discussions that will likely lead to three transactions. The first transaction involves selling a 50% interest in our 9-Mile processing plant. The counterparty has received Board approval on the transaction and we have made significant progress in negotiating the agreements necessary to consummate the transaction.

Our second transaction entails the sale of potentially all of our Ozark assets. We have engaged UBS to manage a formal process with regard to these assets. The process has gotten to the point that we have been exchanging mark-up agreements with different interested parties. The timing of this transaction may be dictated by the Hart-Scott-Rodino requirements and final negotiations on the purchase and sale agreements.

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