Atlas Energy 2012 EnerCom Oil & Gas Conference

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  • 1. Atlas Energy, L.P.EnerCom Oil & Gas ConferenceAugust 15, 2012
  • 2. Safe Harbor Statement This document contains forward-looking statements that involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. ATLS cautions readers that any forward-looking information is not a guarantee of future performance. Such forward-looking statements include, but are not limited to, statements about future financial and operating results, resource potential, ATLS’ plans, objectives, expectations and intentions and other statements that are not historical facts. Risks, assumptions and uncertainties that could cause actual results to materially differ from the forward-looking statements include, but are not limited to, uncertainties regarding the creation of Atlas Resource Partners, L.P. and the distribution of limited partner interests in Atlas Resource Partners, L.P.; the expected financial results of Atlas Resource Partners, L.P. after the planned distribution, which is dependent on future events or developments; assumptions and uncertainties associated with general economic and business conditions; changes in commodity prices; changes in the costs and results of drilling operations; uncertainties about estimates of reserves and resource potential; inability to obtain capital needed for operations; ATLS’ level of indebtedness; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; and tax consequences of business transactions. In addition, ATLS and Atlas Resource Partners, L.P. are subject to additional risks, assumptions and uncertainties detailed from time to time in the reports filed by ATLS and Atlas Resource Partners, L.P. with the U.S. Securities and Exchange Commission, including the risks, assumptions and uncertainties described in Atlas Resource Partners, L.P.’s registration statement on Form 10 and ATLS’s quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. Forward-looking statements speak only as of the date hereof, and neither ATLS nor Atlas Resource Partners, L.P. assumes any obligation to update such statements, except as may be required by applicable law. 2
  • 3. ATLS: Unique Business Model • General partner of public MLPs – IDRs • Substantial growth without requirement of capital invested • Atlas Resource Partners (NYSE: ARP): E&P MLP • Atlas Pipeline Partners (NYSE: APL): midstream MLP • Increasing cash flows from expansion at both subsidiaries 3
  • 4. Pro Forma Organizational Structure NYSE: ATLS2.0% GP & 100% IDRs 2.0% GP & 100% IDRs 11% LP 52% LP NYSE: APL NYSE: ARP 4
  • 5. Substantial Cash Flow Growth • Organic Growth • APL: substantial expansion in the Mid-Continent; increasing processing capacity by almost 100% to 1Bcf/d • ARP: new development in top tier basins • Mississippi Lime • Utica Shale • Marcellus Shale • Barnett Shale • Acquisition Growth • ARP: announced two Barnett Shale transactions and Miss. Lime JV in two months • APL: accretive acquisitions provide diversified cash flow 5
  • 6. ATLS: Growth in GP Cash Flow Streams APL LP & IDR Distributions to ATLS ARP LP & IDR Distributions to ATLS ATLS should benefit from strong cash flow growth in its general and limited partner interests in both ARP and APL, without any additional investment of its own capital 6
  • 7. ARP: Opportunity Overview Atlas Resource Partners (NYSE: ARP) Recently formed E&P MLP with significant base of stable cash flow and identified growth opportunities Stability Growth Experience • Long-lived reserve • Accretive acquisitions • Management team with base in strong basins with history of creating top • Low-leveraged balance deep value returns in Atlas sheet • Organic expansion in enterprises • Fee-based income high IRR basins • Highly skilled senior from investment • Ability to grow fees operating team with partnership business from increased vast knowledge of U.S. fundraising efforts basins 7
  • 8. ARP Profile Atlas Resource Partners (NYSE: ARP) Market Capitalization ~ $1.0 billion (39.8 MM common units outstanding)(1) Debt Outstanding ~ $144 million ($310 million borrowing base) Enterprise Value ~ $1.15 billion Proved Reserves ~ 700 Bcfe net reserves ~ 1.0 Tcfe total reserves under management Oil & Gas Production ~ 95 Mmcfe/d Production Areas Barnett Shale (TX); Appalachia (PA, OH, WV, TN); Colorado; Indiana Primary Targeted Plays Mississippi Lime; Utica Shale; Barnett Shale; Marcellus Shale(1) Based on ARP unit price as of 8/7/12 8
  • 9. “The First Four Months” ARP has already demonstrated its ability to provide strong value to its unitholders through accretive transactions 3/14/2012 The first day… ARP units are distributed to ATLS unitholders… Two weeks later… ARP enters into joint venture with Equal Energy, Ltd. 4/4/2012 in the core of the Mississippi Lime play in northwestern OK… Yet another two weeks later… ARP acquires 277 Bcfe of proved reserves 4/30/2012 and undeveloped locations in the Barnett Shale from Carrizo… Four months after becoming public… ARP acquires Titan Operating, LLC 7/26/2012 in the Barnett Shale, including 250 Bcfe of proved reserves and undeveloped locations 9
  • 10. ARP Production Growth •Production growth from both organic development and accretive acquisitions •Growth in production will substantially increase cash flow through 2013 and beyond 10
  • 11. Projected Distribution Growth Compared to it’s peers, ARP is projecting approximately 50% distribution growth from the current annualized distribution level of $1.60 per unit Source : Wells Fargo Securities Peer companies: BBEP, EVEP, LGCY, LINE, LRE, MCEP, MMEP, PSE, QRE, VNR 11
  • 12. ARP: Illustrative Growth in Distributions from AcquisitionsAtlas Resource Partners’ ability to find and execute transactions of similar size and scope will continue todrive distribution growth to common unitholders.Future Acquisitions: Common Unit Distribution Impacts ~49% Growth Note: Assumes acquisition assets are similar to Barnett assets acquired from Carrizo; Assumes 50/50 debt/equity financing. (1) Represents midpoint of ARP 2013E Common Unit Distribution guidance. (2) Forward year (FY1) distributions.4
  • 13. Balanced Approach to Risk Management& Strategic Growth Pro forma R/P Ratio of ~ 23x • Long-lived reserves Maintain Low Risk Profile • Strong hedging program Substantial hedges through 2017 • Fee-based income from partnerships > Fundraising = > Fee income > $1.5B raised in last 5 years • Leader in oil & gas Enhance Value through fundraising 30% WI for < ~5% net investment Unique Business Model • Enhanced IRRs through partnership business $250M ‘12 fundraising target • Accretive acquisitions > 525 Bcfe acquired in Barnett Shale • Organic leasehold Create Multiple Growth Mississippi Lime JV w/ EQU expansion Opportunities • Development through Initial Utica Shale development partnership business • Marcellus & Utica Shales Marcellus provides core development Operate in Attractive • Mississippi Lime Basins Utica/Miss Lime offer oil/NGLs • Barnett Shale Solid reserves/production in Barnett 13
  • 14. Carrizo Acquisition Atlas Asset Details Chesapeake Energy Devon Energy EOG Resources  Majority of the assets located in the EVEP Quicksilver Resources Core portion of the Barnett Shale Atlas Position  Most assets located in the Mansfield region of Southeast Tarrant County and Southern Denton County  277 Bcfe of proved reserves; 99% gas, 52% PDP  198 gross producing wells; ~ 60% operated  97 Gross PUD & PDNP locations  All acreage is held by production 14
  • 15. Titan Acquisition Asset Details Atlas Position • 250 Bcfe of proved reserves; 34% PDP • 84% natural gas, 16% NGLs • ~ 90% held by production • Lease operating expenses and taxes of approximately $0.65/mcfe • >300 potential future locations including liquids rich opportunities • Titan’s core operating team has joined ARP and will oversee the recently acquired Barnett assets from both transactions 15
  • 16. Mississippi Lime JV Position • ARP entered into a joint venture with Equal Energy (NYSE, TSX: EQU) to acquire a 50% interest in ~ 14,500 acres in the core of the Mississippi Lime play in northwestern OK • Acreage is located in Alfalfa, Grant and Garfield counties; oil & ARP/EQU liquids rich portion of the play JV Position • Position is primarily held by existing production in the Hunton formation • ARP/EQU will drill with one rig for the first 18 months; additional rigs can be subsequently added 16
  • 17. Ohio Operations in Utica Fairway Atlas Energy Has Over 2,900 Wells In Ohio ARP’s legacy Ohio operations: – Over 2,900 producing shallow wells – Long lived reserves with low decline (9 MMcf/d of gross production) Deerfield District Office ARP has existing land operations in eastern New Philadelphia Ohio to take advantage of development District opportunities in the region Office Cambridge District ARP will be drilling its first several Utica Shale Office wells later this year 17
  • 18. Strong Gas Hedge Position Natural Gas • ARP has significantly hedged its $4.78 – $5.88 future production, enhancing its $4.60 – overall risk management strategy: $5.54 $4.45 – $4.61 – • Barnett production is 90% $5.71 $5.55 hedged for the initial 12 $3.96 $4.32 $3.44 $4.55 months of production, 80% $4.68 for the following 24 months and 40% for the outer years Crude Oil • ARP continues to employ a consistent hedge strategy to ensure stability of its cash flow streams $84.17 – $83.85 – $110.65 $90 – $113.31 $116.40 $90 – $117.91 $97.69 $89.50Note: Hedge positions as of August 7, 2012 Hedge position prices shown are per thousand cubic feet (Mcf) for natural gas and per $103.80 $100.67 barrel (bbl) for oil Costless collar prices represent the floor and ceiling price established in the collar position. For natural gas hedges, price includes an estimated positive basis differential and Btu (British thermal unit) adjustment 18
  • 19. Pro Forma Reserve Summary The Barnett acquisitions more than doubles ARP’s proved reserves and enhances the long-lived nature of its asset base > 1,000 ~ 700 Total Managed Reserves includes net reserves to ARP + reserves managed on behalf of the drilling investment partners 19
  • 20. Comparable Peer Credit Profiles ARP intends to maintain financial flexibility to take advantage of new opportunities that present themselves in the marketplace 2012E Debt / EBITDA Ratios for E&P MLP Peer Group Source: Company Filings; FactSet. Comp group includes PSE, LINE, VNR, EVEP, BBEP, LGCY and QRE. Note: Assumes ARP finances 2012 capital program with borrowings on existing credit facility. 20
  • 21. Syndication Business Model Value to Value to Drilling Partners Atlas Resource • Substantial 1st year tax deduction • Upfront fees from fundraising; (~94% of investment) against 15% over costs paid by partners ordinary income • Carried interest of 5-7% in • Monthly royalties from production production; total working interest of wells of ~30% • Tax deductions beyond 1st year • Ongoing monthly fees for life of for depletion and depreciation the well • Credit received for cost paid for leasehold acreage 21
  • 22. APL Profile• Over 9,000 miles of gathering pipeline WestOK Gathering & Velma Gathering Processing System & Processing System• Diversified across 3 systems with an enviable exposure to liquids-rich gas areas as well as stable residue gas areas• 7 processing facilities including state-of-the-art cryogenic facilities  Woodford Shale Play  Located in Anadarko Basin  160 MMcfd processing capacity  258 MMcfd processing capacity  ~ 1,200 miles of active gathering• System wide average volumes per day of over:  ~ 4,300 miles of gathering pipeline pipeline  Approx 4,300 receipt points serviced  Approx. 600 receipt points serviced - 680 mmcfd of processed natural gas - 61,000 barrels of NGLs - 3,500 barrels of condensate WestTX Gathering West Texas LPG• Partnership owns 20% equity interest in West Texas & Processing System NGL Pipeline LPG Pipeline Limited Partnership• Recently purchased gathering system in Barnett to foster production from ARP• Current $600mm capital expansion program underway including all three processing systems;  Located in Spraberry Trend of  ~ 2,300 miles of NGL transportation Permian Basin pipeline approximately 75% of capital spent with meaningful  255 MMcfd processing capacity  Services Permian, Barnett, and Rockies cash flow benefit expected after new cryogenic  ~3,100 miles of gathering pipeline  243K bbl / day capacity is currently full Approx. 2,800 receipt points serviced  APL owns 20% interest (Chevron 80%) facilities are installed in mid-2012 and additional NGL   Delivers to enviable Mt. Belvieu NGL hub takeaway pipelines built in 1H 2013 22
  • 23. APL Organic Growth Projects System Current Expansion New Timing Comment Capacity Capacity Velma 100 mmcfd 60 mmcfd 160 mmcfd Online Now Expansion already 75% full WestOK 258 mmcfd 200 mmcfd 458 mmcfd August 2012 Significant amount of volume for new plant is currently on the system WestTX 255 mmcfd 200 mmcfd 455 mmcfd First 100 mmcfd in Second half of 1Q 2013, Second expansion could 100 mmcfd in 1Q come in earlier as 2014 volume growth dictates $600 Million in Capital Expansion in Progress to Add Significant Value to Stakeholders 23
  • 24. APL: Gross Margin is Substantially CoveredThrough Hedging and Fee-Based Contracts Unhedged 5% Keep-Whole Hedged 23% 18% 82% of run-rate Gross Margin is under Fixed Fee arrangement or Hedged to Limit Commodity Price Exposure Fixed Fee 19% • APL intends to maintain a Pro Forma diversified contract portfolio across its systems Run-Rate • Fee-Based component in Gross processing contracts will be used to offset costs of Margin connecting wells Percentage Hedged • APL continues to utilize a of 45% robust risk management Proceeds strategy utilizing swap and 58% options to prevent margin deterioration Unhedged Note: Hedges are at the corporate level and are not asset specific; Data as of 1Q 2012 13% 24
  • 25. APL Processing Capacity Growth •Positioned in several of the most prolific basins in the US •APL is expanding capacity to meet the increasing needs of operators in the regions •Given the recent pace of utilization at all APL systems further organic expansion is likely 25
  • 26. Summary • ATLS’ general partner ownership in APL and ARP creates growing cash flows and significant optionality • Both E&P business (ARP) and midstream operations (APL) have strong balance sheets and significant growth opportunities, providing stable and increasing cash flows • ATLS has no leverage and no capital requirements • Management team holds a solid record of creating value through the Atlas enterprises 26