Atlas Energy, L.P. (ATLS)

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Atlas Energy, Inc. (ATLS)

Q2 2010 Earnings Call Transcript

August 4, 2010 9:00 am ET

Executives

Brian Begley – Director, IR

Ed Cohen – Chairman and CEO

Rich Weber – President

Matt Jones – EVP and CFO

Freddie Kotek – EVP

Analysts

Scott Hanold – RBC

Michael Hall – Wells Fargo

Amir Arif – Stifel Nicolaus

Subash Chandra – Jefferies

Marshall Carver – CapitalOne

Greg Scheer [ph] – Trahi Brothers Investment Research [ph]

Presentation

Operator

Good day, ladies and gentlemen and welcome to the second quarter, 2010, Atlas Energy Incorporated earnings conference call. My name is Tikisha and I will be your operator for today. At this time, all lines are in listen-only mode (Operator Instructions) I would now like to turn the conference over to Mr. Brian Begley, Director of Investor Relations. Please proceed.

Brian Begley

Good morning everyone and thank you for joining us for today’s call. As we get started, I’d like to remind everyone that during this conference 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. It often contains words such as expects, anticipates and similar words or phrases.

Forward-looking statements by their nature address matters that are uncertain and subject to certain risks and uncertainties which could cause actual results to differ materially from those projected in the forward-looking statements. We discussed these risks in our second quarter form 10-Q which be filed tomorrow and in our annual report also on form 10-K, particularly in item one. And also I would like to 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 obligation to publicly update our forward-looking statement or to publicly release the results of any revisions to forward-looking statements and may be made to reflect events or circumstances after the date hereof or reflect the occurrence of unanticipated events.

Now, as we introduced several periods ago, we have provided several additional financial disclosures, incorporated in our earnings release, in order to segregate our E&P operations from our consolidated GAAP financial statements. In these, consolidated income statements and balance sheets provide for all applicable periods separate Atlas Energy's core E&P operations from the financial results of Atlas Pipeline, whose results are required to consolidated under GAAP in Atlas Energy's results due to our controlling interest in Atlas Pipeline.

And lastly, we also provide a reconciliation from net income to adjusted net income, adjusted EBITDA and discretionary flow for E&P operations as we believe that these non-GAAP measures offer the best means of evaluating results of our business. With that, I’d like to turn the call over to our Chairman and Chief Executive Officer, Ed Cohen for his remarks.

Ed Cohen

Thanks, Brian and hello everyone. First of all let me start with the focus, so I might say the obsession of our company, our horizontal Marcellus where our results continue to be excellent. Since our last detailed report, covering well completed through June 30, 2010, we have turned in the line two additional Greene County wells with peak 24-hour rates of approximately 5.5 million cubic feet equivalent per day and 4.1 respectively.

Both of these wells, I am glad to say are 100% owned by Atlas Energy. We’re now in the process of completing two additional Marcellus horizontal wells. The wells in 20h Westmoreland County and Laurel 2h in the Eastern Indiana County. Early indications from both are excellent. And that sharply expands our horizontal Marcellus geographical footprint of success.

The wells in 20h is only our third Westmoreland County well. And Laurel 2h is our first Marcellus Horizontal well in Indiana County. Four additional Marcellus horizontal wells will be fraced in the next four weeks or so and 15 additional wells had been spot of which seven have already reached total depth. On all of these wells and in all future Marcellus horizontal wells, we plan to continue providing periodic detailed reports – reports similar to the comprehensive information we provided in early July but reported with a specificity on all Atlas operated horizontal Marcellus Shale Wells through June 30th.

Now, we are appreciative that a number of you have commented that Atlas has comprehensive transparency on well results, is uniquely helpful for modeling and for analysis. And accordingly, we intend to continue to set the industry standard for complete disclosure of Marcellus horizontal reserves.

For an independent domestic natural-gas producer, we think that we’re also unique and now being able to actually to increase our Marcellus net production as you know from the 33.2 million cubic feet equivalent per day released at the end of June 2010 to be over 500 million cubic feet equivalent per day net two Atlas Energy projected by 2014.

And we're going to do all of this from financial resources already in place. Our existing two joint ventures will provide all of the capital resources that we will need. And they will do so on terms favorable to was and still attractive to our joint venture partners.

With the billions of dollars to be expended by Reliance on drilling and completion, Atlas will have no need for additional equity per debt financing. Atlas pipelines joint venture with Williams called Laurel Mountain Midstream ensures that infrastructure and take-away capacity will be available for that half billion cubic feet a day 2014 production.

In fact, Laurel Mountain Blue Header System [ph] is being designed to be capable of handling at least one and one-half billion cubic feet per day. And since virtually all of our Marcellus gas will be dry gas, we won’t have the distraction of worrying about the absence and the use in that space of a viable as a market or worrying about delays in crossover runs in completing processing plants for the NGLs contained wet gas.

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