Atlas Energy, L.P. (ATLS)

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Atlas Energy, L.P. (ATLS)

Q3 2012 Earnings Conference Call

November 1, 2012 09:00 ET

Executives

Brian Begley - Head of Investor Relations

Ed Cohen - Chief Executive Officer

Matt Jones - President, Atlas Resource Partners

Sean McGrath - Chief Financial Officer

Analysts

Craig Shere - Tuohy Brothers

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 Atlas Energy Limited Partners and Atlas Resource Partners Third Quarter Earnings Conference Call. My name is Juanita, and I will be your coordinator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Brian Begley, Head of Investor Relations. Please proceed.

Brian Begley - Head of Investor Relations

Good morning, everyone, and thank you for joining us for today's call to discuss our third quarter results. And as we get started, I'd 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'd also 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 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 a reconciliation from net income to adjusted EBITDA as well as distributable cash flow, as we believe these non-GAAP measures offer the best means for evaluating the results of our business.

And with that, I'd like to turn the call over to our Chief Executive Officer, Ed Cohen for his remarks. Ed?

Ed Cohen - Chief Executive Officer

Thank you and hello everyone. First of all, I'd like to thank all of our East Coast employees who have continued the function at a high level throughout these days of trauma from the Middle Atlantic states and New York. And I'd also like of course to thank all of our employees throughout the United States who have contributed individually to the surging success of our new company, which was of course reconstituted only last March with the launch of Atlas Resource Partners.

Simply put, ATLS and ARP continue successfully on a path that in eight months has already produced considerable accomplishment, and that puts the companies now in take off position for extraordinary increases in distributable cash flow in the coming months, and especially during 2013. Already as you know, ARP has increased its quarterly distribution per unit to $0.43, and our parent company, ATLS has declared a cash distribution of $0.27 per limited partner unit for the third quarter of 2012, and that represents a $0.02 per unit increase or 8% over the second quarter of 2012 and a 13% increase over the prior year quarter. In fact, the things are going so well in Atlas Resource Partners operations, but I am pleased to confirm our guidance for the second half of 2012 and to confirm expectations of distributions in 2013 of at least $2.30 per unit subject of course to no adverse surprises in future commodity prices, fundraising, or production results from new wells drilled.

Let me speak initially however, concerning Atlas Pipeline Partners. ATLS is gathering in processing, we'll call it, the midstream subsidiary, which itself has been enjoying considerable success and contributing substantially to ATLS' success and favorable prospects. APL's gathered volumes for the September 2012 quarter reached 860 million cubic feet a day and that’s up from 621 million cubic feet a day in the third quarter of last year, that’s an increase of about 40% in a single year. Processed gas volumes also grew by approximately 40%. APL’s adjusted EBITDA for the third quarter 2012 was $55.9 million, a 13% increase year-over-year powering a rise in APL’s distribution for the quarter to $0.57 per common limited partner unit and that’s APL’s eight increase in distribution in the past nine quarters.

Now, happy is we have been with the results today, for APL truly sharp increases in distributable income should be forthcoming only in the near future as a result of the completion and proliferation of projects now underway, but not yet productive of distributable income. APL during this quarter, the third quarter placed in the service a new West Oklahoma plant which immediately added 200 million cubic feet a day of processing capacity and APL is in the process of building yet another plant in West Texas and that plant on completion in the first quarter of 2013 will add yet a further 200 million cubic feet a day of processing capacity. By early 2013 processing capacity will reach 1.1 billion cubic feet per day, almost double APL’s processing capacity at the beginning of 2012 and that growth has been achieved entirely organically. Even in this greatly increased processing capacity will barely meet the burgeoning natural gas intake available to these plants.

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