SOURCE: Atlas Energy Resources, LLC

March 01, 2007 09:16 ET

Atlas Energy Resources, LLC Reports Information for the Quarter and Year Ended December 31, 2006

PITTSBURGH, PA -- (MARKET WIRE) -- March 1, 2007 -- Atlas Energy Resources, LLC (NYSE: ATN) ("Atlas Energy") today reported earnings and production results for the quarter and year ended December 31, 2006. Total revenues reached $321.0 million for the year ended December 31, 2006, an approximate 32% increase from the prior year comparable period. For the fourth quarter 2006, revenues were $94.1 million, or approximately 29% higher than the prior year comparable quarter. Average natural gas and oil production volume was 27.0 million cubic feet equivalents ("mmcfe") per day for the year ended December 31, 2006, representing an increase of approximately 14% from the prior year comparable period. For the fourth quarter 2006, production volumes reached 28.3 mmcfe, an increase of approximately 18% from the prior year comparable quarter.

Atlas Energy, a leading sponsor of natural gas drilling investment programs in the Appalachian Basin, issued approximately 7.3 million common units (approximately 20%) in an initial public offering at a price of $21.00 per common unit on December 18, 2006. The financial results presented consist primarily of the results of Atlas Energy's predecessor, Atlas America, Inc. (NASDAQ: ATLS) and also include the results of Atlas Energy for the 14-day period from December 18 to December 31, 2006..

On January 24, 2007, Atlas Energy declared its initial quarterly cash distribution for the fourth quarter 2006 of $0.06 per common unit, which was paid on February 14, 2007 to common unitholders of record as of February 7, 2007. This distribution represents a pro-rated distribution of $0.42 per common unit for the period from December 18, 2006, the date of its initial public offering, through December 31, 2006.

On February 23, 2007, Atlas Energy filed an amendment to its registration statement with the Securities and Exchange Commission for the Public 16 drilling program. Atlas Energy expects to raise approximately $200 million in this program, the initial offering of the year, and expects to recognize drilling and management fees from this program through most of 2007.

"I am very pleased with the excellent year that we've enjoyed," said Edward E. Cohen, Chairman and Chief Executive Officer of Atlas Energy. "Total revenues for the year grew by 32% to a record $321.0 million, reflecting strong growth in both our investment program business and the production of natural gas. During the year, $218.5 was raised million from syndicated drilling programs, a 39% increase over the full year 2005, and production of natural gas and oil increased by 14% over 2005. With over 3,100 identified drilling locations on our existing acreage position, which does not include our emerging play in the Marcellus Shale, we have a growing inventory of locations to support our drilling programs. We continue to see strong demand for our drilling programs and we plan to raise at least $270 million through these programs in 2007."

In January 2007, Atlas Energy entered into additional hedging contracts covering future production through the end of 2011. A summary of Atlas Energy's hedge positions are as follows:

Fixed Price Swaps
-----------------
                             Average
Production Period         Hedge Price (3)     Percentage
Ended December 31,          (per mcf)        Hedged (2)(4)
-----------------         -------------      ------------
     2007                    $   9.88             77%(5)
     2008                    $  10.10             74%(6)
     2009                    $   9.72             68%
     2010                    $   8.79             28%
     2011                    $   8.02             10%


(1) In thousand cubic feet ("mcf")
(2) Based upon Atlas Energy's estimated net interest of the natural gas
     production
(3) Includes an estimated positive basis differential and Btu adjustment
(4) Based upon projected natural gas production volumes for the
    full year 2007
(5) Includes costless collar positions with an average floor of $8.31
    per mcf and an average cap of $9.45 per mcf
(6) Includes costless collar positions with an average floor of $8.31
    per mcf and an average cap of $10.29 per mcf

Reserves
--  Proved reserves net to Atlas Energy's interest grew to 180.9 billion
    cubic feet of natural gas equivalents ("bcfe") at December 31, 2006, up
    approximately 5% from 171.5 bcfe at December 31, 2005.

--  Atlas Energy managed an additional 229.3 bcfe of reserves for its
    drilling programs as of December 31, 2006, a decrease of 1% from 232.0
    bcfe of reserves at December 31, 2005.

--  The PV-10 value of these reserves was $280.2 million on December 31,
    2006, compared with $597.1 million on December 31, 2005. This valuation
    is based on using the weighted average price for Atlas Energy's natural
    gas at December 31, 2006 of $6.33 per mcf, versus a weighted average
    price of $10.84 per mcf for the prior year comparable period.

Drilling & Fundraising
--  The number of wells drilled, net to both Atlas Energy's interest and
    that of its sponsored drilling programs, was 205 for the three months
    ended December 31, 2006, an increase of 18 wells or approximately 10%
    from the prior year comparable quarter. Overall, 715 wells were drilled
    for the full year 2006, an increase of approximately 8% from the prior year
    comparable period.

--  Fund raising from Atlas Energy's investment drilling partnerships,
    which is utilized to finance well drilling, reached $218.5 million in
    2006, an increase of approximately 39% from the prior year comparable
    period. Atlas Energy expects to raise approximately $270 million from
    investment drilling partnerships in calendar year 2007.

--  Atlas Energy connected 865 wells in 2006, compared to 451 wells
    connected in calendar year 2005.

Well Construction and Completion
--  Revenues generated by Atlas Energy's well drilling segment increased
    by approximately 25% in the current quarter compared to the similar
    quarter in the prior year.

Acreage

--  Atlas Energy had approximately 547,000 net acres at December 31, 2006,
    an increase of approximately 17% from the net acreage position at
    December 31, 2005 and an approximate 6% increase from September 30,
    2006. Additionally, Atlas Energy has a joint venture with Knox
    Energy, which provides an opportunity to drill wells on approximately
    200,000 acres in the state of Tennessee. In December 2006, the parties
    extended the underlying agreement through December 2007 and expanded
    the original drilling area to include an additional approximately
    3,800 acres that will have a term of five years.

--  Undeveloped acreage at December 31, 2006 was approximately 323,000 net
    acres, up approximately 25% from the net acreage position at December
    31, 2005, exclusive of the joint venture with Knox Energy.

--  During the fourth quarter of 2006 and the first quarter of 2007, Atlas
    Energy and its investment partnerships drilled three vertical wells to
    the Marcellus Shale in Western Pennsylvania. Two of these wells have
    been completed and management is pleased with the results. The Marcellus
    Shale is a black, organic rich shale formation located at depths
    between 7,000 and 8,500 feet and ranges in thickness from 100 to 150      
    feet on Atlas Energy's acreage. Leases are currently held on 157,500   
    acres, up from 105,000 acres in December 2006, which management 
    believes is prospective for the Marcellus Shale. Management expects to 
    drill several more vertical wells within the Marcellus Shale over the next 
    two quarters and is planning a full development program beginning in the   
    fourth quarter of 2007.

--  Atlas Energy has currently identified over 3,100 geologically
    favorable sites for additional well drilling, not including any
    locations within the Marcellus Shale.

Wells & Production
--  Atlas Energy had interests in over 7,200 gross wells at December 31,
    2006, an increase of approximately 11% from December 31, 2005, and
    operates approximately 85% of these wells.

--  Natural gas and oil production was 28.2 mmcfe per day for the three
    months ended December 31, 2006, an increase of 4.2 mmcfe per day, or
    approximately 18%, from the prior year comparable period.

Atlas Energy Resources, LLC is an energy concern focused on the development and production of natural gas and, to a lesser extent, oil principally in the Appalachian Basin. Atlas Energy sponsors and manages tax advantaged investment partnerships, in which it co-invests, to finance the exploration and development of its acreage. For more information, visit Atlas Energy's website at www.atlasenergyresources.com or contact investor relations at bbegley@atlasamerica.com.

Atlas America, Inc. owns an 80% common unit interest and all of the Class A and management incentive interests in Atlas Energy Resources, LLC. For more information, please visit its website at www.atlasamerica.com, or contact Investor Relations at bbegley@atlasamerica.com.


Certain matters discussed within this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 10Q, reports on Form 8-K and annual reports on Form 10-K.

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

                                 Three Months Ended   Twelve Months Ended
                                    December 31,          December 31,
                                --------------------- ---------------------
                                  2006       2005       2006       2005
                                ---------- ---------- ---------- ---------
REVENUES
Well construction and
 completion                     $   63,238 $   42,145 $  198,567 $ 145,925
Gas and oil production              21,753     24,086     88,449    72,926
Gathering fees(1)                    2,349      1,407      9,251     4,607
Administration and oversight         3,275      2,964     11,762    10,400
Well services                        3,455      2,561     12,953     9,865
                                ---------- ---------- ---------- ---------
                                    94,070     73,163    320,982   243,723
                                ---------- ---------- ---------- ---------
COSTS AND EXPENSES
Well construction and
 completion                         54,989     36,648    172,666   126,891
Gas and oil production               3,331      2,440     13,881     8,856
Gathering fees(1)                    6,667      7,968     29,545    24,648
Well services                        1,797      1,487      7,337     5,463
General and administrative           6,024      5,819     23,367    16,822
Net expense reimbursement -
 affiliate                             196        163      1,237       552
Depreciation, depletion and
 amortization                        6,180      4,916     22,491    15,811
                                ---------- ---------- ---------- ---------
                                    79,184     59,441    270,524   199,043
                                ---------- ---------- ---------- ---------
OPERATING INCOME                    14,886     13,722     50,458    44,680

OTHER INCOME (EXPENSE)
Interest income                        313         32        966       348
Other, net                              94         25        403      (214)
                                ---------- ---------- ---------- ---------
                                       407         57      1,369       134
                                ---------- ---------- ---------- ---------
Income before cumulative impact
 of accounting change               15,293     13,779     51,827    44,814
Cumulative effect of change in
 accounting principle                6,355          -      6,355         -
                                ---------- ---------- ---------- ---------
Net income                      $   21,648 $   13,779 $   58,182 $  44,814
                                ========== ========== ========== =========

Allocation of net income
 attributable to members’
 interests/owners:
 Portion applicable to owners’
  interest (period prior to the
  initial public offering on
  December 18, 2006)            $   18,841 $   13,779 $   55,375 $  44,814
 Portion applicable to members’
  interests (period subsequent
  to the initial public
  offering on December 18,
  2006)                              2,807          -      2,807         -
                                ---------- ---------- ---------- ---------
          Net income            $   21,648 $   13,779 $   58,182 $  44,814
                                ========== ========== ========== =========

Allocation of net income
 attributable to members’
 interests:
  Common units                  $    2,751            $    2,751
  Class A units                         56                    56
                                ----------            ----------
    Net income attributable to
     members’ interests         $    2,807            $    2,807
                                ==========            ==========

Net income attributable to
 members’ interests per common

   unit - basic and diluted     $     0.08            $     0.08
                                ==========            ==========

Weighted average common units
 outstanding:
  Basic                             36,627                36,627
                                ==========            ==========
  Diluted                           36,638                36,638
                                ==========            ==========


(1)  Historically, the gathering fees due to Atlas Pipeline
     Partners, L.P. were insufficient to cover the gathering expenses
     paid to Atlas Pipeline Partners, L.P. Upon the completion of Atlas
     Energy’s initial public offering on December 18, 2006, Atlas
     America, Inc. agreed to retain 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 ENERGY RESOURCES, LLC
                          FINANCIAL INFORMATION
                            (in thousands)


                                                       December 31,
                                                 --------------------------
                                                     2006          2005
                                                 ------------  ------------
BALANCE SHEET DATA:
  Cash and cash equivalents                      $      8,833  $     20,918
  Property and equipment, net                         277,814       214,701
  Total assets                                        415,463       315,052
  Total debt                                               68           156
  Total members’ interests/owners’ equity             212,682       154,519




                                             
Reconciliation of net             Three Months Ended   Twelve Months Ended
 income to non-GAAP                  December 31,          December 31,
   measures(1):                      2006      2005      2006       2005
                                  --------- ---------  --------- ---------
Net income                        $  21,648 $  13,779  $  58,182  $ 44,814
  Depreciation, depletion and
   amortization                       6,180     4,916     22,491    15,811
  Cumulative impact of change
   in accounting policy(2)           (6,355)        -    (6,355)         -
                                  --------- ---------  --------- ---------
EBITDA                               21,473    18,695    74,318     60,625
  Non-recurring item - 
   transportation charges(3)          4,318     6,561    20,294     20,041
Adjusted EBITDA                   $  25,791 $  25,256  $ 94,612  $  80,666
                                  ========= ========= ========= ==========

(1) EBITDA is a non-GAAP financial measure under the rules of the 
    Securities and Exchange Commission. Management of Atlas Energy believes
    that EBITDA provides additional information with respect to Atlas
    Energy's ability to meet its debt service, capital expense and working 
    capital requirements. EBITDA is a commonly used measure by commercial
    banks, investment bankers, rating agencies and investors in evaluating
    an entity's performance relative to its peers. It is also a financial
    measurement that, with certain negotiated adjustments, is utilized 
    within Atlas Energy's financial covenants under its credit facility.
    EBITDA is not a measure of financial performance under GAAP and,
    accordingly, should not be considered as a substitute for net income
    or cash flows from operating activities prepared in accordance
    with GAAP.
(2) The change in accounting principle relates to the adoption by Atlas 
    Energy of Financial Accounting Standards Board Interpretation No. 47,
    "Accounting for Conditional Asset Retirement Obligations" ("FIN 47").
    FIN 47 required Atlas Energy to disregard any probability factor that
    is applied to either the timing and/or method of settlement of its 
    asset retirement obligations related to the plugging and abandonment
    liabilities of its oil and gas properties.
(3) 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
                           OPERATING HIGHLIGHTS

 
                                    Three Months Ended  Twelve Months Ended
                                       December 31,        December 31,
                                    ------------------- ------------------- 
                                      2006      2005      2006      2005
                                    --------- --------- --------- ---------

Production revenues (in thousands):
   Gas (1)                          $  19,684 $  21,852 $  79,016 $  64,531
   Oil                              $   2,060 $   2,227 $   9,384 $   8,324

Production volume per day (3):
   Gas (mcf/day) (1) (2)               25,835    21,468    24,511    21,190
   Oil (bbls/day)                         405       431       413       429
                                    --------- --------- --------- ---------
   Total (mcfe/day)                    28,264    24,056    26,989    23,761

Aggregate production volume(3):
   Gas (mcf) (1) (2)                2,376,779 1,975,099 8,946,376 7,734,445
   Oil (bbls)                          37,253    39,678   150,628   156,415
                                    --------- --------- --------- ---------
   Total (mcfe)                     2,600,298 2,213,168 9,850,146 8,672,932

Average sales prices (3):
   Gas (per mcf) (4)                $    8.28 $   11.06 $    8.83 $    8.34
   Oil (per bbl)                    $   55.31 $   56.13 $   62.30 $   53.22

Production costs per mcfe (3)(5)    $    0.79 $    0.78 $    0.86 $    0.76

Depletion per mcfe (3)              $    2.18 $    2.01 $    2.08 $    1.61


(1) Excludes sales to landowners.
(2) Production quantities consist of the sum of (i) Atlas Energy's
    proportionate share of production from wells in which it had a 
    direct interest, based on its proportionate net revenue interest in
    such wells, and (ii) Atlas Energy's proportionate share of production
    from wells owned by the investment partnerships in which it has an 
    interest, based on Atlas Energy's equity interest in each such 
    partnership and based on each partnership's proportionate net revenue
    interest in these wells.
(3) "Mcf" and "mmcf" means thousand cubic feet and million cubic feet,
    respectively, "mcfe" and "mmcfe" means thousand cubic feet equivalent
    and million cubic feet equivalent, respectively, and "bbls" means
    barrels.  Barrels are converted to mcfe using the ratio of six mcfs
    to one barrel.
(4) Average natural gas sales price before the effects of financial 
    hedging was $7.35 and $7.90 for the three and twelve months ended
    December 31, 2006.  There were no natural gas financial hedges for the
    three and twelve months ended December 31, 2005.
(5) Production costs include labor to operate the wells and related
    equipment, repairs and maintenance, materials and supplies, property
    taxes, severance taxes, insurance, production overhead.

Contact Information

  • CONTACT:
    Brian J. Begley
    Investor Relations
    Atlas Energy Resources, LLC
    1845 Walnut Street - Suite 1000
    Philadelphia, PA 19103
    215/546-5005
    215/561-5692 (facsimile)