SOURCE: Atlas Energy Resources, LLC

February 22, 2008 01:48 ET

Atlas Energy Resources, LLC Reports Financial Results for the Fourth Quarter and Full Year 2007

PITTSBURGH, PA--(Marketwire - February 22, 2008) - Atlas Energy Resources, LLC (NYSE: ATN) ("Atlas Energy" or "the Company") today reported financial results for the fourth quarter and full year 2007.

The highlights of the results of the full year 2007 include:

--  Adjusted earnings before interest, income taxes, depreciation and
    amortization ("EBITDA"), a non-GAAP measure,  of $199.1 million for the
    full year 2007, as compared with $94.9 million for the full year 2006, an
    increase of $104.2 million, or approximately 110%. A reconciliation from
    net income to adjusted EBITDA is provided in the financial tables of this
    release;
    
--  Net income before cumulative effect of accounting change for the full
    year 2007 was $117.5 million, an increase of $65.7 million, or
    approximately 127%, over full year 2006;
    
--  Revenues were $577.9 million for the full year 2007, compared to
    $321.0 million for the full year 2006, an increase of $256.9 million, or
    approximately 80%, compared to the full year 2006.
    

The highlights of the results of the fourth quarter 2007 include:

--  Adjusted EBITDA of $71.7 million for the fourth quarter 2007, as
    compared with $26.1 million for the fourth quarter 2006, an increase of
    $45.6 million, of nearly 175%;
    
--  Net income before cumulative effect of accounting change for the
    fourth quarter 2007 was $24.3 million, an increase of $9.0 million, or
    approximately 59%, over the prior year comparable period;
    
--  Revenues were $164.4 million in the fourth quarter 2007, an increase
    of $70.3 million, or approximately 75%, compared to the fourth quarter
    2006;
    

Based on the financial results for the fourth quarter 2007, the Company paid a distribution of $0.57 per unit for the quarter. The fourth quarter 2007 distribution reflects an approximate 33% increase compared to the first quarter 2007, which was the Company's first full quarter of operations following its initial public offering in December 2006. In addition, the Company has increased its distribution coverage ratio from 1.1x to 1.3x over the course of the year.

Operating Highlights

Notable highlights from the fourth quarter 2007:

--  Record total natural gas and oil production of approximately 91.9
    million cubic feet of natural gas equivalents ("Mmcfe") per day;

    - average net daily production of 59.5 Mmcfe per day in Michigan;

    -  record average net daily production in Appalachia of 32.4 Mmcfe, up
       approximately 15% over the fourth quarter 2006

--  Significant progress continued in the Company's Marcellus Shale
    production, bringing the total number of vertical Marcellus wells
    drilled to date to 27; Atlas Energy expects to drill an additional
    150 vertical wells in the next eighteen months.

--  Net proved reserves grew to 897 billion cubic feet of natural gas
    equivalents ("bcfe") at December 31, 2007, a 396% increase from 181
    Bcfe at December 31, 2006;

--  The Company completed fundraising for Atlas Energy's Public #17-2007
    (A) drilling program,  bringing the total investor funds raised in 2007
    to approximately $363 million, representing a record for the Company
    and more than 67% above 2006's then-record $218 million;

On February 1, 2008, the Company's Post-Effective Amendment No. 1 to the Atlas Resources Public #17-2007 Drilling Program Registration Statement became effective with the Securities and Exchange Commission. The second partnership in the program (Atlas Resources Public #17-2008(B) L.P.) is offering units representing up to $236 million. The Company's subsidiary serves as managing general partner of the partnership. A written prospectus meeting the requirements of Section 10 of the Securities Act may be obtained from Anthem Securities, Inc. (a subsidiary of Atlas Energy), 1550 Coraopolis Heights Rd. - 2nd Floor, Moon Township, PA 15108.

On January 18, 2007, the Company announced the sale of $250 million of senior unsecured notes due in 2018 in a private placement at a coupon rate of 10.75%. By using the proceeds of the note offering to reduce the balance outstanding on its senior secured credit facility, Atlas Energy will benefit from a reduction of 75 basis points in the interest rate on the remaining balance outstanding on that credit facility, and increased the long term availability of funds on the facility by approximately $174 million as of the date of the pricing of the offering. Additionally, the Company has entered into an interest rate swap contract for $150 million. Atlas Energy will swap the floating rate incurred on a portion of its existing senior secured credit facility for a fixed rate of approximately 4.36%, which includes an initial margin of 1.25% over the three year fixed swap rate of 3.11%. The interest rate swap contract will mature in January 2011. Combining the 4.36% interest rate on the new swap and the 10.75% interest rate on the new senior notes, the Company will have fixed $400 million of its outstanding debt at a weighted average interest rate of approximately 8.35%.

Marcellus Shale Development

As previously reported, Atlas Energy has drilled 27 vertical wells to date and is currently producing 21 wells into a pipeline in its Marcellus Shale acreage position. The remaining 6 wells are scheduled to be completed and turned into line shortly.

Atlas Energy currently controls approximately 483,000 Marcellus acres in Pennsylvania, New York and West Virginia and continues to aggressively add to its position. The Company is currently focused on its approximately 224,000 existing Marcellus acres in southwestern Pennsylvania, where it has drilled all but one of its Marcellus wells and has now, through this drilling, largely delineated its acreage.

Since implementing the advanced drilling, completion and production techniques, Atlas Energy's initial daily rates (24 hours) into a pipeline have averaged 1.3 million cubic feet ("Mmcf") per day, and have been as high as 2.6 Mmcf per day, in southwestern Pennsylvania. Based on published reports, to Atlas Energy's knowledge, these are the best initial daily production rates of any vertical wells in the Marcellus play. In response to these results, the Company plans to drill and complete at least 150 vertical Marcellus Shale wells over the next eighteen months.

Atlas Energy has drilled one horizontal well in southwestern Pennsylvania with an industry partner and plans to drill at least four additional horizontal wells during the remainder of 2008.

Reserves

--  Proved reserves net to Atlas Energy's interest grew to 897 bcfe at
    December 31, 2007, compared to 181 bcfe at December 31, 2006, an increase
    of 396%. The increase in proved reserves is due primarily to the addition
    of the Michigan segment reserves acquired in June 2007 as well as continued
    growth from the Company's drilling programs in Appalachia.
    
--  Appalachia segment net proved reserves grew to 230 bcfe at December
    31, 2007, an increase of approximately 27% from 181 bcfe at December 31,
    2006. The increase in Appalachia proved reserves is related to additive
    reserves from the Company's Marcellus Shale development and the Company's
    record drilling program activity. Atlas Energy managed an additional 274
    bcfe of reserves for third parties as of December 31, 2007, an increase of
    approximately 20% from 229 bcfe of reserves at December 31, 2006.
    
--  Michigan segment net proved reserves were 667 bcfe at December 31,
    2007, an increase of approximately 9% from 611 bcfe at June 30, 2007.
    
--  Atlas Energy's proved reserves had a present value of estimated future
    net revenues, before income taxes, discounted by 10% (S.E.C. PV-10) of $1.5
    billion based on the NYMEX prices effective for December 31, 2007 for
    natural gas and oil of $6.79 and $95.95, respectively. In addition,
    the present value discounted by 10% of the Company's proved reserves
    increases to $2.1 billion after applying the natural gas and oil prices
    determined by Atlas Energy's hedge portfolio, and, for unhedged volumes,
    the February 14, 2008 12-month NYMEX strip. Approximately 99% of these
    reserves were natural gas; 68% of which were proved developed and 32% were
    proved undeveloped.
    

Appalachia Segment Results

--  Atlas Energy drilled 277 gross wells in Appalachia for the fourth
    quarter 2007, an increase of 75 wells or approximately 37%, from the prior
    year comparable quarter. For the full year 2007, Atlas Energy drilled a
    total of 1,117 gross wells, compared to 716 gross wells in 2006, an
    increase of more than 56%.  Atlas Energy connected 237 wells in the fourth
    quarter 2007.
    
--  Well drilling revenues increased by approximately $17.4 million, or
    approximately 28%, in the fourth quarter 2007 compared to the similar
    quarter in the prior year.
    
--  Natural gas and oil production in the Appalachian Basin was
    approximately 32.4 Mmcfe per day for fourth quarter 2007, an increase of
    4.1 Mmcfe per day, or approximately 15%, from the fourth quarter 2006.
    
--  As of December 31, 2007, Atlas Energy held approximately 752,000 net
    acres in the Appalachian Basin, of which approximately 501,000 were
    undeveloped, an increase of 37% from the net acreage position at December
    31, 2006 and a 6% increase from September 30, 2007.
    
--  As of December 31, 2007, Atlas Energy had identified approximately
    3,200 geologically favorable shallow drilling locations on its acreage in
    the Appalachian Basin, which does not include any locations prospective for
    the Marcellus Shale, and had an interest in approximately 8,350 gross
    producing wells in Appalachia, of which it operated approximately 85%.
    

Michigan Segment Results

--  Atlas Energy drilled 38 gross wells and connected 58 wells in Michigan
    during the fourth quarter 2007.
    
--  At December 31, 2007, Atlas Energy has approximately 232,000 net
    developed acres in the Antrim Shale in Michigan, and 53,000 net undeveloped
    acres.  On this acreage, the Company had identified 768 drilling locations
    to the Norwood and Lachine members of the Antrim Shale.
    
--  As of December 31, 2007, Atlas Energy had an interest in approximately
    2,370 gross wells in Michigan, of which it operated approximately 76%.
    
--  Natural gas and oil production in the Michigan segment was 59.5 Mmcfe
    per day for the fourth quarter 2007.
    

Hedging Summary

Atlas Energy entered into additional hedging contracts in the current period for its natural gas production. A summary of Atlas Energy's hedge positions as of December 31, 2007 are as follows:

Fixed Price Swaps
-----------------
                              Average
Production Period        Hedge Price (1)(3)     Percentage
Ended December 31,           (per mcf)          Hedged (2)
------------------       -----------------  ------------------
      2008               $            9.16         76%
      2009               $            8.83         67%
      2010               $            8.32         51%
      2011               $            7.99         43%
      2012               $            7.74         27%


Costless Collars
----------------
                             Average             Average
Production Period        Hedge Floor(1)(3)  Hedge Ceiling(1)(3) Percentage
Ended December 31,          (per mcf)           (per mcf)       Hedged (2)
------------------       -----------------  ------------------  ----------
      2008               $            8.39  $            10.41      2%
      2009                               -                   -      -
      2010               $            8.68  $             9.74      3%
      2011               $            8.41  $             9.41      8%
      2012               $            7.88  $             9.33      1%


(1) In thousand cubic feet ("mcf")
(2) Percentages hedged are based on: a) for Appalachia, actual fourth
    quarter 2007 production, and b) for Michigan, previously provided
    production guidance for full year 2008
(3) Includes an estimated positive basis differential and Btu adjustment

Interested parties are invited to access the live webcast of Atlas Energy's fourth quarter and full year 2007 results on Friday, February 22, 2008 at 9:00 am EST by going to the Investor Relations section of Atlas Energy's website at www.atlasenergyresources.com. An audio replay of the conference call will also be available beginning at 11:00 am EST on Friday, February 22, 2008. To access the replay, dial 1-888-286-8010 and enter conference code 72776757.

Atlas Energy Resources, LLC develops and produces domestic natural gas and to a lesser extent, oil. Atlas Energy is one of the largest independent energy producers in the Appalachian Basin and northern Michigan. The Company sponsors and manages tax-advantaged investment partnerships, in which it co-invests, to finance the exploration and development of the Company's acreage in the Appalachian Basin. Atlas Energy is active principally in Pennsylvania, Michigan and Tennessee. For more information, visit Atlas Energy's website at www.atlasenergyresources.com or contact investor relations at bbegley@atlasamerica.com.

Atlas America, Inc. (NASDAQ: ATLS) owns an approximate 64% limited partner interest in Atlas Pipeline Holdings, L.P. (NYSE: AHD), which holds the general partner interest and 5.5 million limited partner units of Atlas Pipeline Partners, L.P. (NYSE: APL), and an approximate 49% common unit interest and all of the Class A and management incentive interests in Atlas Energy Resources, LLC. For more information, please visit our website at www.atlasamerica.com, or contact Investor Relations at bbegley@atlasamerica.com.

Atlas Pipeline Partners, L.P. is active in the transmission, gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region of Oklahoma, Arkansas, northern and western Texas and the Texas panhandle, the Partnership owns and operates eight gas processing plants and a treating facility, as well as approximately 7,900 miles of active intrastate gas gathering pipeline and a 565-mile interstate natural gas pipeline. In Appalachia, it owns and operates approximately 1,600 miles of natural gas gathering pipelines in western Pennsylvania, western New York and eastern Ohio. For more information, visit our website at www.atlaspipelinepartners.com or contact bbegley@atlaspipelinepartners.com.

Atlas Pipeline Holdings, L.P. is a limited partnership which owns and operates the general partner of Atlas Pipeline Partners, L.P., through which it owns a 2% general partner interest, all the incentive distribution rights and approximately 5.5 million common units of Atlas Pipeline Partners, L.P.

Certain matters discussed within this press release are forward-looking statements. Although Atlas Energy Resources, LLC believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include financial performance, regulatory changes, changes in local or national economic conditions and other risks detailed from time to time in Atlas Energy's reports filed with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.


                        ATLAS ENERGY RESOURCES, LLC
              COMBINED AND CONSOLIDATED STATEMENTS OF INCOME
                   (in thousands, except per unit data)

                                 Three Months Ended        Year Ended
                                    December 31,          December 31,
                                --------------------- ---------------------
                                  2007        2006      2007        2006
                                ---------  ---------- ---------  ----------
REVENUES
   Well construction and
    completion                  $  80,630  $   63,238 $ 321,471  $  198,567
   Gas and oil production          70,285      21,753   180,125      88,449
   Administration and oversight     4,791       3,275    18,138      11,762
   Well services                    4,871       3,455    17,592      12,953
   Gathering                        3,805       2,349    14,314       9,251
   Gain on mark-to-market
    derivatives                         -           -    26,257           -
                                ---------  ---------- ---------  ----------
Total Revenues                    164,382      94,070   577,897     320,982

COSTS AND EXPENSES
   Well construction and
    completion                     70,113      54,989   279,540     172,666
   Gas and oil production          11,886       3,331    32,193      13,881
   Well services                    2,357       1,797     9,062       7,337
   Gathering fees-Atlas Pipeline    3,621       6,667    13,995      29,545
   General and administrative      12,095       6,220    39,414      24,604
   Depreciation, depletion and
    amortization                   25,254       6,180    56,942      22,491
                                ---------  ---------- ---------  ----------
Total operating expenses          125,326      79,184   431,146     270,524

OPERATING INCOME                   39,056      14,886   146,751      50,458

OTHER INCOME (EXPENSE):
  Interest expense                (15,124)          -   (30,096)          -
  Other - net                         354         407       849       1,369
                                ---------  ---------- ---------  ----------
Total other income (expense)      (14,770)        407   (29,247)      1,369
                                ---------  ---------- ---------  ----------

Net income before cumulative
 effect of accounting change       24,286      15,293   117,504      51,827
Cumulative effect of accounting
 change                                 -       6,355         -       6,355
                                ---------  ---------- ---------  ----------
Net income                      $  24,286  $   21,648 $ 117,504  $   58,182
                                =========  ========== =========  ==========

Allocation of net income
 attributable to members’
 interest/owners:
  Portion applicable to owner’s
   interest (period prior to
   the initial public offering
   on December 18, 2006)        $       -  $   18,841 $       -  $   55,375
  Portion applicable to
   members’ interests (period
   subsequent to the initial
   public offering on December
   18, 2006)                       24,286       2,807   117,504       2,807
                                ---------  ---------- ---------  ----------
                                $  24,286  $   21,648 $ 117,504  $   58,182
                                =========  ========== =========  ==========
Allocation of net income
 attributable to members’
 interests:
  Class A units                 $   1,451  $       56 $   4,099  $       56
  Class B common units and D
   units                           22,835       2,751   113,405       2,751
                                ---------  ---------- ---------  ----------
  Net income attributable to
   members’ interests           $  24,286  $    2,807 $ 117,504  $    2,807
                                =========  ========== =========  ==========

Net income per Class B common
 and Class D units:
  Basic                         $    0.38  $     0.08 $    2.32  $     0.08
                                =========  ========== =========  ==========
  Diluted                       $    0.37  $     0.08 $    2.29  $     0.08
                                =========  ========== =========  ==========

Weighted Average Class B common
 and Class D unit:
  Basic                            60,710      36,627    48,909      36,627
                                =========  ========== =========  ==========
  Diluted                          61,227      36,638    49,449      36,638
                                =========  ========== =========  ==========


                        ATLAS ENERGY RESOURCES, LLC
                          FINANCIAL INFORMATION
                              (in thousands)
                                (Unaudited)


                                                  December 31, December 31,
                                                      2007         2006
                                                  ------------ ------------
Balance Sheet Data (at period end):
  Cash and cash equivalents                       $     25,258 $      8,833
  Property and equipment, net                        1,693,467      277,814
  Total assets                                       1,891,234      415,463
  Total debt                                           740,030           68
  Total members’ capital                               836,115      212,682


                              Three Months Ended          Year Ended
                                 December 31,            December 31,
                            ----------------------- -----------------------
                                2007       2006         2007       2006
                            ----------- ----------  ----------- ----------
Capital Expenditure data:
  Maintenance capital
   expenditures             $    12,975 $    n/a(1) $    43,450 $    n/a(1)
  Expansion capital
   expenditures                  56,394      n/a(1)   1,421,186      n/a(1)
                            ----------- ----------  ----------- ----------
    Total                   $    69,369 $   21,559  $ 1,464,636 $   75,635
                            =========== ==========  =========== ==========


                              Three Months Ended          Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2007        2006        2007        2006
                            ----------  ----------  ----------  ----------
Reconciliation of net
 income to
 non-GAAP
 measures(2):
  Net income                $   24,286  $   21,648  $  117,504  $   58,182
  Depreciation and
   amortization                 25,254       6,180      56,942      22,491
  Interest expense              15,124           -      30,096           -
  Cumulative impact of change
   in accounting policy(3)           -      (6,355)          -      (6,355)
                            ----------  ----------  ----------  ----------
    EBITDA                      64,664      21,473     204,542      74,318
  Gain on mark-to-market
   derivatives(3)                5,754           -     (14,000)          -
  Non-recurring derivative
   fees                              -           -       3,873           -
  Non-recurring item -
   transportation charges(4)         -       4,318           -      20,294
  Non-cash compensation
   expense                       1,302         337       4,684         337
                            ----------  ----------  ----------  ----------
    Adjusted EBITDA             71,720  $   26,128     199,099  $   94,949
                                        ==========              ==========
  Interest expense             (15,124)                (30,096)
  Amortization of deferred
   financing costs
   (included within
   interest expense)             2,182                   3,040
  Maintenance capital
   expenditures                (12,975)                (43,450)
                            ----------              ----------
    Distributable
     cash flow              $   45,803              $  128,593
                            ==========              ==========


(1) Atlas Energy did not characterize capital expenditures as maintenance
    or growth and did not plan capital expenditures in a manner intended to
    maintain or expand its asset base or production before its initial
    public offering.
(2) EBITDA, Adjusted EBITDA and distributable cash flow are non-GAAP
    (generally accepted accounting principles) financial measures under the
    rules of the Securities and Exchange Commission. Management of Atlas
    Energy believes that EBITDA, Adjusted EBITDA and distributable cash
    flow provide additional information for evaluating the Company’s
    ability to make distributions to its unitholders, among other things.
    These measures are widely used by commercial banks, investment bankers,
    rating agencies and investors in evaluating performance relative to
    peers and pre-set performance standards. EBITDA is also a financial
    measurement that, with certain negotiated adjustments, is utilized
    within Atlas Energy financial covenants under its credit facility.
    EBITDA, Adjusted EBITDA and distributable cash flow are not measures of
    financial performance under GAAP and, accordingly, should not be
    considered as a substitute for net income, operating income, or cash
    flows from operating activities in accordance with GAAP.
(3) Represents the adjustments to reflect the cash impact of non-qualifying
    derivatives related to AGO production prior to its acquisition.
(4) Reflects the reduction to gathering fees resulting from the retention
    by Atlas America of the obligation to pay the difference between
    gathering fees paid to Atlas Energy by the drilling partnerships and
    gathering fees due to Atlas Pipeline Partners, L.P. under the gas
    gathering agreement.  Atlas America is obligated for this differential
    upon completion of Atlas Energy’s initial public offering on December
    18, 2006.


                        ATLAS ENERGY RESOURCES, LLC
                          FINANCIAL INFORMATION

                              Three Months Ended          Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2007        2006        2007        2006
                            ----------  ----------  ----------  ----------
Production revenues (in
 thousands):
    Gas (1) (6)             $   66,875  $   19,684  $  169,314  $   79,016
    Oil                     $    3,410  $    2,060  $   10,768  $    9,384

Production volume:(2) (7)
  Appalachia:
    Gas (Mcf/d) (1)             29,935      25,835      27,156      24,511
    Oil (Bbls/d)                   408         405         418         413
                            ----------  ----------  ----------  ----------
    Total (Mcfe/d)              32,386      28,264      29,666      26,989
  Michigan:(5)
    Gas (Mcf/d)                 59,508           -      59,737           -
    Oil (Bbls/d)                     5           -           4           -
                            ----------  ----------  ----------  ----------
    Total (Mcfe/d)              59,540           -      59,761           -
                            ----------  ----------  ----------  ----------
  Total (Mcfe/d) (3) (5)        91,926      28,264      89,425      26,989
                            ==========  ==========  ==========  ==========

Average sales prices: (7)
  Gas (per Mcf) (3) (8)     $     8.83  $     8.28  $     8.66  $     8.83
  Oil (per Bbl) (3)         $    89.60  $    55.31  $    70.16  $    62.30

Production costs:(4)
    As a percent of
     production revenues            12%          9%         12%         10%
    Per Mcfe (7)            $     1.01  $     0.79  $     0.97  $     0.86

Depletion per Mcfe (7)      $     2.88  $     2.18  $     2.49  $     2.08


(1) Excludes sales of residual gas and sales to landowners.
(2) Production quantities consist of the sum of (i) our proportionate share
    of production from wells in which we have a direct interest, based on
    our proportionate net revenue interest in such wells, and (ii) our
    proportionate share of production from wells owned by the investment
    partnerships in which we have an interest, based on our equity interest
    in each such partnership and based on each partnership’s proportionate
    net revenue interest in these wells.
(3) Our average sales price before the effects of financial hedging were
    $7.38 and $7.35 per Mcf for the three months ended December 31, 2007
    and 2006, and $7.22 and $7.90 per Mcf for the year ended December 31,
    2007 and 2006, respectively.
(4) Production costs include labor to operate the wells and related
    equipment, repairs and maintenance, materials and supplies, property
    taxes, severance taxes, insurance and production overhead.
(5) Amounts for the year ended December 31, 2007 represent production
    volumes related to AGO from the acquisition date (June 29, 2007) to
    December 31, 2007.
(6) Excludes non-qualifying hedge gains realized for the year ended
    December 31, 2007 of $26.3 million associated with the AGO acquisition.
(7) "Mcf" and "mmcf" represents thousand cubic feet and million cubic feet,
    respectively, "mcfe" and "Mmcfe" represents thousand cubic feet
    equivalent and million cubic feet equivalent, respectively, and "bbls"
    represents barrels.  Barrels are converted to mcfe using the ratio of
    six mcfs to one barrel.
(8) Includes $5.8 million and $12.3 million in derivative proceeds which
    were not included as revenue in the fourth quarter 2007 and the year
    ended December 31, 2007, respectively.

Contact Information

  • CONTACT:
    Brian J. Begley
    Investor Relations
    Atlas Energy Resources, LLC
    1845 Walnut Street
    Philadelphia, PA 19103
    215/546-5005
    215/553-8455 (fax)