SOURCE: Atlas Pipeline Partners, L.P.

April 26, 2007 19:23 ET

Atlas Pipeline Partners, L.P. Announces First Quarter 2007 Financial Results

PHILADELPHIA, PA -- (MARKET WIRE) -- April 26, 2007 -- Atlas Pipeline Partners, L.P. (NYSE: APL) (the "Partnership") today reported revenue for the first quarter 2007 was $117.5 million, relatively consistent with the prior year comparable quarter of $117.8 million. The Partnership recorded system wide volumes of approximately 698.3 million cubic feet per day ("MMcfd") for the first quarter 2007, compared with 609.4 MMcfd for the prior year comparable quarter, an increase of approximately 15%, due mostly to the increased throughput volume on the NOARK interstate pipeline system ("NOARK") and the addition of the Sweetwater processing facility. Earnings before interest, income taxes, depreciation and amortization ("EBITDA"), a non-GAAP measure, was $15.8 million and net income was $2.5 million for the first quarter 2007, compared with $20.2 million and $9.5 million, respectively, for the first quarter 2006. First quarter 2007 results were affected by unfavorable movements in commodity prices, including approximately $2.3 million of non-cash derivative expense and lower than expected processing volumes, partially offset by an increase in NOARK's Ozark Gas Transmission volume.

The Partnership has declared a quarterly cash distribution for the first quarter 2007 of $0.86 per common limited partner unit. The first quarter 2007 distribution will be paid on May 15, 2007 for all unitholders of record as of May 8, 2007. This brings distributions declared per common limited partner unit for the last twelve months to $3.42, an increase of $0.17, or 5%, from the prior twelve month period ended March 31, 2006.

"I'm very pleased with our substantial growth in transportation and gathering volumes, and with the fact that all divisions shared in this increase as against the comparable 2006 period," said Edward E. Cohen, Chairman and Chief Executive Officer of the Partnership. "In fact, our NOARK pipeline system is at or near full utilization. As a result, plans are in process for substantial increases in the capacity of this pipeline. Gathering volumes are so high at our Sweetwater plant that a substantial expansion is required, and design work for this addition is already underway. Volumes at our Velma facility also increased, and we anticipate further growth in utilization of our Appalachian system."

Segment Analysis

Mid-Continent

The Mid-Continent segment recognized total revenue of $109.7 million for the first quarter 2007, relatively consistent with the prior year comparable quarter. Revenues were affected by lower overall commodity prices compared to the prior year, offset by higher system volumes. For the Elk City/Sweetwater system, gross natural gas gathered volume for the first quarter 2007 averaged 287.9 MMcfd, a 14% increase from the first quarter 2006. The Elk City/Sweetwater system connected 11 new wells to its gathering system during the first quarter 2007. For the NOARK system, average Ozark Gas Transmission throughput volume was 286.9 MMcfd during the first quarter 2007, a 20% increase from the first quarter 2006. The Velma system's processed natural gas volume average of 58.5 MMcfd for the first quarter 2007 was consistent with the prior year comparable quarter. The Velma system connected 19 new wells to its gas gathering system during the first quarter 2007.

Appalachia

Total revenue for the Appalachia system was $7.8 million for the first quarter 2007, compared with $8.0 million for the first quarter 2006, a slight decrease of $0.2 million due principally to a decline in realized natural gas prices between periods, partially offset by higher throughput volume. Throughput volume increased to 62.5 MMcfd for the first quarter 2007 compared with 57.3 MMcfd for the first quarter 2006 due to new wells connected to the Appalachia gathering system. The Appalachia system's average transportation rate per thousand cubic feet ("mcf") was $1.38 for the first quarter 2007, a 10% decrease from $1.53 per mcf for the prior year first quarter. During the first quarter 2007, 121 new wells were connected to the Appalachia gathering system compared with 189 wells connected during the comparable prior year quarter.

Corporate and Other

General and administrative expense, including amounts reimbursed to affiliates, increased $1.4 million to $6.3 million for the first quarter 2007 from $4.9 million for the first quarter 2006. This increase was primarily related to an increase in non-cash compensation expense related to vesting of phantom and common unit awards and higher costs associated with managing the Partnership. Depreciation and amortization increased $1.3 million to $6.5 million for the first quarter 2007 due primarily to the depreciation related to the portion of the NOARK assets acquired during 2006 and the Partnership's 2006 expansion capital expenditures, particularly the Sweetwater processing facility.

Interest expense increased to $6.8 million for the first quarter 2007, an increase of $0.4 million from the prior year first quarter. This increase was primarily related to interest associated with the Partnership's May 2006 issuance of $35.0 million principal amount of 10-year senior unsecured notes and additional borrowings under the Partnership's credit facility, partially offset by the absence in the current quarter of interest associated with the NOARK notes in the prior year quarter, which were assumed by the seller in the Partnership's acquisition of the remaining 25% ownership interest in NOARK in May 2006. At March 31, 2007, the Partnership had $339.0 million of total debt, including the $285.0 million of senior unsecured notes and $53.0 million of outstanding borrowings under its $225.0 million credit facility.

Interested parties are invited to access the live webcast of an investor call with management regarding the Partnership's first quarter 2007 results on Friday morning, April 27, 2007 at 9:00 am EDT by going to the Investor Relations section of the Partnership's website at www.atlaspipelinepartners.com. An audio replay of the conference call will also be available beginning at 11:00 am ET on Friday, April 27, 2007. To access the replay, dial 1-888-286-8010 and enter conference code 58837914.

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 Texas and the Texas panhandle, the Partnership owns and operates approximately 1,900 miles of active intrastate gas gathering pipeline and a 565-mile interstate natural gas pipeline. The Partnership also operates three gas processing plants and a treating facility in Velma, Elk City, Sweetwater and Prentiss, Oklahoma where natural gas liquids and impurities are removed. 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. (NYSE: AHD) is the parent company of Atlas Pipeline Partners, L.P.'s general partner and owner of 1,641,026 limited partner units of Atlas Pipeline Partners, L.P. For more information, please contact investor relations at bbegley@atlasamerica.com.

Atlas America, Inc., (NASDAQ: ATLS) owns an 80% common unit interest and all of the Class A and management incentive interests in Atlas Energy Resources, LLC. Atlas America also owns an 83% interest in Atlas Pipeline Holdings, L.P.

Statements made in this release include forward-looking statements, which involve substantial risks and uncertainties. The Partnership's actual results, performance or achievements could differ materially from those expressed or implied in this release as a result of certain factors, including competition within the energy industry, climactic conditions and the price of gas in the Appalachian and Mid-Continent areas, actual versus projected volumetric production from wells connected to the Partnership's gas gathering pipeline system, and the cost of supplies and services in the energy industry.

            ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                      Financial Summary
            (in thousands, except per unit amounts)


                                                  Three Months Ended
                                                      March 31,
                                              ----------------------------
INCOME STATEMENT                                  2007           2006
                                              -------------  -------------

Revenue:
  Natural gas and liquids                     $     102,176  $     100,477
  Transportation and compression - affiliates         7,720          7,874
  Transportation and compression - third
   parties                                            9,838          8,777
  Other income (loss)                                (2,197)           682
                                              -------------  -------------
    Total revenue and other income (loss)           117,537        117,810
                                              -------------  -------------

Costs and expenses:
  Natural gas and liquids                            87,810         85,892
  Plant operating                                     4,530          3,227
  Transportation and compression                      3,112          2,076
  General and administrative                          5,703          4,215
  Compensation reimbursement - affiliates               630            720
  Depreciation and amortization                       6,534          5,275
  Interest                                            6,759          6,337
  Minority interest in NOARK                              -            569
                                              -------------  -------------
    Total costs and expenses                        115,078        108,311
                                              -------------  -------------

Net income                                            2,459          9,499
Preferred unit imputed dividend cost                   (499)           (95)
                                              -------------  -------------
Net income attributable to common limited
 partners and the general partner             $       1,960  $       9,404
                                              =============  =============

Allocation of net income attributable to
 common limited partners and the general
 partner:
  Common limited partners' interest           $      (1,884) $       5,806
  General partner's interest                          3,844          3,598
                                              -------------  -------------
    Net income attributable to common limited
     partners and the general partner         $       1,960  $       9,404
                                              =============  =============

Net income (loss) attributable to common
 limited partners per unit:
    Basic                                     $       (0.14) $        0.46
                                              =============  =============
    Diluted                                   $       (0.14) $        0.46
                                              =============  =============

Weighted average common limited partner units
 outstanding:
    Basic                                            13,080         12,549
                                              =============  =============
    Diluted                                          13,080         12,687
                                              =============  =============

Capital Expenditure data:
  Maintenance capital expenditures            $         772  $       1,161
  Expansion capital expenditures                     17,605         12,401
                                              -------------  -------------
    Total                                     $      18,377  $      13,562
                                              =============  =============

                                                March 31,   December 31,
Balance Sheet Data (at period end):               2007           2006
                                              -------------  -------------
  Cash and cash equivalents                   $       1,839  $       1,795
  Total assets                                      784,563        786,884
  Total debt                                        339,026        324,083
  Total partners' capital                           362,134        379,134




              ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                        Segment Information
                          (in thousands)

                                                  Three Months Ended
                                                      March 31,
                                              ----------------------------
                                                  2007           2006
                                              -------------  -------------
Mid-Continent
  Revenue:
    Natural gas and liquids                   $     102,176  $     100,477
    Transportation and compression                    9,819          8,750
    Other income (loss)                              (2,279)           541
                                              -------------  -------------
      Total revenue and other income (loss)         109,716        109,768
                                              -------------  -------------

  Costs and expenses:
    Natural gas and liquids                          87,810         85,892
    Plant operating                                   4,530          3,227
    Transportation and compression                    1,720          1,108
    General and administrative                        3,894          3,168
    Minority interest in NOARK                            -            569
    Depreciation and amortization                     5,460          4,459
                                              -------------  -------------
      Total costs and expenses                      103,414         98,423
                                              -------------  -------------
    Segment profit                            $       6,302  $      11,345
                                              =============  =============

Appalachia
  Revenue:
    Transportation and compression -
     affiliates                               $       7,720  $       7,874
    Transportation and compression - third
     parties                                             19             27
    Other income                                         82            141
                                              -------------  -------------
      Total revenue and other income                  7,821          8,042
                                              -------------  -------------

  Costs and expenses:
    Transportation and compression                    1,392            968
    General and administrative                        1,220            884
    Depreciation and amortization                     1,074            816
                                              -------------  -------------
      Total costs and expenses                        3,686          2,668
                                              -------------  -------------
Segment profit                                $       4,135  $       5,374
                                              =============  =============

Reconciliation of segment profit to net
 income
  Segment profit:
    Mid-Continent                             $       6,302  $      11,345
    Appalachia                                        4,135          5,374
                                              -------------  -------------
      Total segment profit                           10,437         16,719
  Corporate general and administrative
   expense                                           (1,219)          (883)
  Interest expense                                   (6,759)        (6,337)
                                              -------------  -------------
  Net income                                  $       2,459  $       9,499
                                              =============  =============





             ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARES
                           (in thousands)


                                                   Three Months Ended
                                                       March 31,
                                              ----------------------------
                                                   2007           2006
                                              -------------  -------------
Reconciliation of net income to adjusted
 net income:
  Net income                                  $       2,459 $       9,499
  Effect of prior period items (1)                        -          (137)
                                              ------------- -------------
    Adjusted net income                       $       2,459 $       9,362
                                              ============= =============

Reconciliation of net income to
 non-GAAP measures(2):
  Net income                                  $       2,459 $       9,499
  Depreciation and amortization                       6,534         5,275
  Minority interest share of depreciation
   and amortization and interest expense
   for NOARK                                              -          (873)
  Interest expense                                    6,759         6,337
                                              ------------- -------------
    EBITDA                                           15,752        20,238
  Effect of prior period items (1)                        -          (137)
                                              ------------- -------------
    Adjusted EBITDA                                  15,752        20,101
  Interest expense                                   (6,759)       (6,337)
  Minority interest share of interest
   expense for NOARK                                      -           708
  Non-cash derivative expense (income)                2,277          (540)
  Non-cash compensation expense                       1,795         1,319
  Amortization of deferred financing costs
   (included within interest expense)                   534           593
  Maintenance capital expenditures                     (772)       (1,161)
                                              ------------- -------------
    Distributable cash flow                   $      12,827 $      14,683
                                              ============= =============



(1) During June 2006, the Partnership identified measurement reporting
    inaccuracies on three newly installed pipeline meters. To adjust for
    such inaccuracies, which related to natural gas volume gathered during
    the third and fourth quarters of 2005 and first quarter of 2006, the
    Partnership recorded an adjustment of $1.2 million during the second
    quarter of 2006 to increase natural gas and liquids cost of goods
    sold. If the $1.2 million adjustment had been recorded when the
    inaccuracies arose, reported net income would have been reduced by
    approximately 2.7%, 8.3%, and 1.4% for the third quarter of 2005,
    fourth quarter of 2005, and first quarter of 2006, respectively.
    Management of the Partnership believes that the impact of these
    adjustments is immaterial to its current and prior financial
    statements.

(2) 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 the Partnership
    believes that EBITDA and distributable cash flow provide additional
    information for evaluating the Partnership's ability to make
    distributions to its common unitholders and the general partner, 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 the Partnership's financial covenants
    under its credit facility.  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.



               ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARES
                           Operating Highlights



                                                       Three Months Ended
                                                             March 31,
                                                      ---------------------
                                                        2007       2006
                                                      ---------- ----------
Mid-Continent - Velma System
  Natural Gas
    Gross natural gas gathered - mcfd                     61,017     60,715
    Gross natural gas processed - mcfd                    58,508     58,528
    Gross residue natural gas - mcfd                      45,689     45,754
  Natural Gas Liquids
    Gross NGL sales - bpd                                  6,247      6,334
  Condensate
    Gross condensate sales - bpd                             200        186

Mid-Continent - Elk City/Sweetwater System
  Natural Gas
    Gross natural gas gathered - mcfd                    287,892    252,190
    Gross natural gas processed - mcfd                   207,253    130,955
    Gross residue natural gas - mcfd                     190,940    119,016
  Natural Gas Liquids
    Gross NGL sales - bpd                                  8,515      5,758
  Condensate
    Gross condensate sales - bpd                             322        171

Mid-Continent - NOARK system
    Ozark Gas Transmission throughput - mcfd             286,891    239,151

Appalachia
    Throughput - mcfd                                     62,532     57,326
    Average transportation rate per mcf               $     1.38 $     1.53


Mcf - thousand cubic feet
Mcfd - thousand cubic feet per day
Bpd - barrels per day



                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                 Current Mid-Continent Segment Hedge Positions
                            (as of April 26, 2007)

Natural Gas Liquids Sales

Production Period                   Average
Ended December 31,     Volumes    Fixed Price
-----------------    ------------ ------------
                        (gallons) (per gallon)
2007                   71,631,000 $      0.901
2008                   33,012,000        0.697
2009                    8,568,000        0.746




Crude Oil Sales Options (associated with NGL volume)

Production Period      Crude     Associated   Average Crude
Ended December 31,     Volume    NGL Volume   Strike Price    Option Type
------------------    ---------- ------------ -------------- --------------
                      (barrels)   (gallons)    (per barrel)
2008                     693,600   38,744,000 $        60.00 Puts purchased
2008                     693,600   38,744,000          84.00     Calls sold
2009                     720,000   40,219,000          60.00 Puts purchased
2009                     720,000   40,219,000          81.00     Calls sold


Natural Gas Sales

Production Period                      Average
Ended December 31,      Volumes      Fixed Price
------------------   -------------  -------------
                         (mmbtu)(1) (per mmbtu)(1)
2007                       810,000  $       7.255
2008                       240,000          7.270
2009                       480,000          8.000




Natural Gas Basis Sales

Production Period                      Average
Ended December 31,      Volumes      Fixed Price
------------------   -------------  -------------
                         (mmbtu)(1) (per mmbtu)(1)
2007                       810,000  $      (0.535)
2008                       240,000         (0.555)
2009                       480,000         (0.540)


Natural Gas Purchases

Production Period                      Average
Ended December 31,      Volumes      Fixed Price
-----------------    -------------  -------------
                         (mmbtu)(1) (per mmbtu)(1)
2007                     5,220,000  $     8.854(2)
2008                     4,056,000        8.719(3)
2009                     2,880,000        8.343



Natural Gas Basis Purchases

Production Period                      Average
Ended December 31,      Volumes      Fixed Price
-----------------    -------------  -------------
                         (mmbtu)(1) (per mmbtu)(1)
2007                     5,220,000  $      (0.907)
2008                     4,056,000         (1.028)
2009                     2,880,000         (0.592)




                  ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                   Current Mid-Continent Segment Hedge Positions
                              (as of April 26, 2007)



Crude Oil Sales

Production Period                   Average
Ended December 31,     Volumes    Fixed Price
-----------------   ------------ ------------
                        (barrels) (per barrel)
2007                       57,800 $     56.192
2008                       65,400       59.424
2009                       33,000       62.700


Crude Oil Sales Options

Production Period                      Average
Ended December 31,      Volumes     Strike Price    Option Type
------------------   -------------- -------------- --------------
                          (barrels)   (per barrel)
2007                          9,900         60.000 Puts purchased
2007                          9,900         73.380     Calls sold
2008                         43,800         60.000 Puts purchased
2008                         43,800         79.544     Calls sold
2009                         30,000         60.000 Puts purchased
2009                         30,000         71.250     Calls sold


(1)  Mmbtu represents million British Thermal Units.
(2)  Includes the Partnership's premium received from its sale of an option
     for it to sell 3,600,000 mmbtu of natural gas at an average price of
     $14.33 per mmbtu for the year ended December 31, 2007.
(3)  Includes the Partnership's premium received from its sale of an option
     for it to sell 936,000 mmbtu of natural gas for the year ended
     December 31, 2008 at $15.50 per mmbtu.

Contact Information

  • Contact:

    Brian J. Begley
    Vice President, Investor Relations
    1845 Walnut Street
    Philadelphia, PA 19103
    (215) 546-5005
    (215) 546-4785 (facsimile)