Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Titan Energy, LLC | d195871d8k.htm |
Exhibit 99.1
NEWS RELEASE
| CONTACT: | Matthew Skelly | |
| Vice President – Head of Investor Relations | ||
| Atlas Resource Partners, L.P. | ||
| (877) 280-2857 | ||
| (215) 405-2718 (fax) |
ATLAS RESOURCE PARTNERS, L.P. REPORTS OPERATING
AND FINANCIAL RESULTS FOR THE FIRST QUARTER 2016
| • | Adjusted EBITDA was $43.7 million(1) for the first quarter 2016 |
| • | Natural gas and oil production in the first quarter 2016 were hedged approximately 76% and 99%, respectively; current market value of ARP’s hedge portfolio is approximately $293 million |
| • | Management will discuss first quarter 2016 financial and operational results on a conference call at 9:00 AM ET on Tuesday, May 17, 2016 |
Fort Worth, TX – May 16, 2016 - Atlas Resource Partners, L.P. (NYSE: ARP) (“ARP” or the “Partnership”) reported operating and financial results for the first quarter 2016.
Daniel Herz, Chief Executive Officer of ARP, stated, “The energy environment remains extremely challenging, and ARP is not immune. We continue to work to reduce ARP’s outstanding debt. I am pleased with how our assets have performed over the last quarter, and appreciate all of our employee’s dedication to get as much out of our assets as possible, while at the same time minimizing our capital and operating expenses.”
| • | First quarter 2016 Adjusted EBITDA, a non-GAAP measure, was $43.7 million(1), compared to $57.8 million for the fourth quarter 2015, and $70.9 million for the prior year first quarter. The decrease in Adjusted EBITDA compared to the prior quarter and to the prior year financial quarter was primarily due to declines in production volume and commodity prices during the respective periods, and the lower amount of funds raised within our 2015 Eagle Ford drilling partnership program. |
| • | On May 5, 2016, ARP announced that the Board of Directors elected to suspend monthly common unit distributions, beginning with the month of March 2016, as well as Preferred Class C distributions, due to the continued lower commodity price environment. For the first quarter 2016, ARP paid common unit cash distributions totaling approximately $0.025 per limited partner unit. |
| • | On a GAAP basis, net income was $12.8 million for the first quarter 2016 compared with net loss of $288.7 million for the fourth quarter 2015 and net income of $87.6 million for the prior year first quarter. As compared to the previous quarter which recorded a loss due to a non-cash impairment charge, net income for the first quarter 2016 was principally generated from operating cash flow and a gain on the early extinguishment of debt at a discount to par value. |
E&P Operating Results
| • | Average net daily production for the first quarter 2016 was 237.0 million cubic feet equivalents per day (“Mmcfed”) compared to 270.8 Mmcfed in the first quarter 2015. The decrease in net production from the prior year quarter was due primarily to temporarily shutting in older, mature production across the Partnership’s footprint in response to the continued weaker commodity price environment. |
| (1) | A reconciliation of GAAP net income (loss) to Adjusted EBITDA and Net Free Cash Flow is provided in the financial tables of this release. Please see footnote 1 to the Financial Information table of this release. |
| • | ARP’s net realized price for natural gas including the effect of hedge positions was $3.41 per thousand cubic feet (“mcf”) for the first quarter 2016, compared to $3.42 per mcf for the fourth quarter 2015. Net realized oil prices including the effect of hedge positions averaged $77.16 per barrel for the first quarter 2016, compared to $85.26 for the fourth quarter 2015. |
| • | Investment partnership margin contributed $3.0 million to Adjusted EBITDA for the first quarter 2016 compared with $5.0 million for the previous quarter. The $2.0 million decrease in investment partnership margin was due to lower amounts of capital deployed during the first quarter 2016 due to scheduled changes in well drilling activity. |
Hedge Positions
| • | A summary of ARP’s derivative positions as of May 16, 2016 is provided in the financial tables of this release. During the first quarter 2016, ARP was approximately 76% hedged on its net natural gas production and approximately 99% hedged on its net oil production. During the quarter ended March 31, 2016, the Partnership received approximately $48.7 million of cash from realized natural gas and oil hedge positions. |
Corporate Expenses & Capital Position
| • | Cash general and administrative expense was $16.8 million for the first quarter 2016, $1.2 million higher than the fourth quarter 2015 and $5.2 million higher than the prior year first quarter. The increase compared with prior periods was due primarily to lower capitalized selling and administrative costs associated with lower funds raised in our 2015 drilling partnership program and the timing of certain seasonal costs. |
| • | Cash interest expense was $23.6 million for the first quarter 2016, $1.8 million higher than the fourth quarter 2015 and $5.6 million higher than the prior year first quarter. The increase compared with the prior year period was primarily due to the $250 million second lien financing entered into by ARP in February 2015 and a higher level of amounts outstanding on the revolving credit facility. |
| • | At March 31, 2016, ARP had $1.553 billion of total debt, including $672.0 million outstanding under its revolving credit facility. On May 10, 2016, ARP entered into a ninth amendment to its revolving credit facility due July 2018 to waive compliance with certain financial covenants as of March 31, 2016, which automatically waived compliance with similar covenants under its term loan facility due February 2020. Based on the terms of the amendment, ARP classified $906.2 million of outstanding amounts under these facilities, net of certain deferring financing costs and unamortized discounts, as current portion of long term debt within its consolidated balance sheet as of March 31, 2016. |
ARP will be discussing its first quarter 2016 results on an investor call with management on Tuesday, May 17, 2016 at 9:00 AM Eastern Time. Interested parties are invited to access the live webcast of the investor call by going to the Investor Relations section of the Partnership’s website at www.atlasresourcepartners.com. For those unavailable to listen to the live broadcast, the replay of the webcast will be available following the live call on the Atlas Resource website and telephonically beginning at approximately 12:30 p.m. ET on May 17, 2016 by dialing 855-859-2056, passcode: 10307133.
Additional details regarding ARP’s operations and financial results are available in its first quarter 2016 report on Form 10-Q, which has been filed with the Securities and Exchange Commission and is available at the Investor Relations section of the Partnership’s website or at www.SEC.gov.
Atlas Resource Partners, L.P. (NYSE: ARP) is an exploration & production master limited partnership which owns an interest in over 14,500 natural gas and oil wells, located primarily in Appalachia, the Eagle Ford Shale (TX), the Barnett Shale (TX), the Mississippi Lime (OK), the Raton Basin (NM), Black Warrior Basin (AL), Arkoma Basin (OK) and the Rangely Field in Colorado. ARP is also the largest sponsor of natural gas and oil investment partnerships in the U.S. For more information, please visit its website at www.atlasresourcepartners.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.
Atlas Energy Group, LLC (OTCQX: ATLS) is a limited liability company which owns the following interests: all of the general partner interest, incentive distribution rights and an approximate 23% limited partner interest in its upstream oil & gas subsidiary, Atlas Resource Partners, L.P.; the general partner interests, incentive distribution rights and limited partner interests in Atlas Growth Partners, L.P.; and a general partner interest in Lightfoot Capital Partners, an entity that invests directly in energy-related businesses and assets. For more information, please visit its website at www.atlasenergy.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.
* * *
Cautionary Note Regarding Forward-Looking Statements
Certain matters discussed within this press release are forward-looking statements. Although Atlas Resource Partners, L.P. (“ARP”) 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. ARP does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law. 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. ARP 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, and ARP’s plans, objectives, expectations, 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, those associated with general economic and business conditions; ARP’s level of indebtedness, potential changes to ARP’s capital structure, including refinancing, restructuring, or reorganizing its indebtedness; leverage and liquidity, including reductions in its borrowing base that may require repayment, and covenant compliance; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of potential balance sheet and other transactions; and other risks, assumptions and uncertainties detailed from time to time in ARP’s reports filed with the U.S. Securities and Exchange Commission, including quarterly reports on Form 10-Q, current reports on Form 8-K, and annual reports on Form 10-K. Forward-looking statements speak only as of the date hereof, and ARP assumes no obligation to update such statements, except as may be required by applicable law.
ATLAS RESOURCE PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per unit data)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Revenues: |
||||||||
| Gas and oil production |
$ | 48,492 | $ | 104,249 | ||||
| Well construction and completion |
2,100 | 23,655 | ||||||
| Gathering and processing |
1,495 | 2,184 | ||||||
| Administration and oversight |
455 | 1,259 | ||||||
| Well services |
4,432 | 6,624 | ||||||
| Gain on mark-to-market derivatives |
46,120 | 105,585 | ||||||
| Other, net |
114 | 33 | ||||||
|
|
|
|
|
|||||
| Total revenues |
103,208 | 243,589 | ||||||
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|
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|
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| Costs and expenses: |
||||||||
| Gas and oil production |
35,842 | 45,498 | ||||||
| Well construction and completion |
1,826 | 20,570 | ||||||
| Gathering and processing |
2,279 | 2,417 | ||||||
| Well services |
2,178 | 2,198 | ||||||
| General and administrative |
17,077 | 17,135 | ||||||
| Depreciation, depletion and amortization |
30,045 | 42,991 | ||||||
|
|
|
|
|
|||||
| Total costs and expenses |
89,247 | 130,809 | ||||||
|
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|
|
|
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| Operating income |
13,961 | 112,780 | ||||||
| Gain (loss) on asset sales and disposal |
9 | (11 | ) | |||||
| Gain on early extinguishment of debt, net |
26,498 | — | ||||||
| Interest expense |
(27,705 | ) | (25,197 | ) | ||||
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|
|
|
|
|||||
| Net income |
12,763 | 87,572 | ||||||
| Preferred limited partner dividends |
(3,648 | ) | (3,653 | ) | ||||
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|
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| Net income attributable to common limited partners and the general partner |
$ | 9,115 | $ | 83,919 | ||||
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| Allocation of net income attributable to common limited partners and the general partner: |
| |||||||
| General partner’s interest |
$ | 182 | $ | 3,575 | ||||
| Common limited partners’ interest |
8,933 | 80,344 | ||||||
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| Net income attributable to common limited partners and the general partner |
$ | 9,115 | $ | 83,919 | ||||
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| Net income attributable to common limited partners per unit: |
| |||||||
| Basic |
$ | 0.09 | $ | 0.93 | ||||
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| Diluted |
$ | 0.09 | $ | 0.91 | ||||
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| Weighted average common limited partner units outstanding: |
| |||||||
| Basic |
102,403 | 85,529 | ||||||
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| Diluted |
102,696 | 90,010 | ||||||
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ATLAS RESOURCE PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands)
| March 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 19,285 | $ | 1,353 | ||||
| Accounts receivable |
57,152 | 63,367 | ||||||
| Advances to affiliates |
10,997 | — | ||||||
| Current portion of derivative asset |
159,745 | 159,460 | ||||||
| Subscriptions receivable |
— | 19,877 | ||||||
| Prepaid expenses and other |
16,635 | 22,935 | ||||||
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| Total current assets |
263,814 | 266,992 | ||||||
| Property, plant and equipment, net |
1,175,045 | 1,191,611 | ||||||
| Goodwill and intangible assets, net |
14,062 | 14,095 | ||||||
| Long-term derivative asset |
195,074 | 198,262 | ||||||
| Other assets, net |
31,502 | 28,989 | ||||||
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| Total assets |
$ | 1,679,497 | $ | 1,699,949 | ||||
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| LIABILITIES AND PARTNERS’ CAPITAL (DEFICIT) | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 46,120 | $ | 49,249 | ||||
| Advances from affiliates |
— | 9,924 | ||||||
| Liabilities associated with drilling contracts |
— | 21,483 | ||||||
| Accrued well drilling and completion costs |
4,053 | 26,914 | ||||||
| Distribution payable |
4,337 | 4,334 | ||||||
| Accrued liabilities |
31,082 | 50,096 | ||||||
| Current portion of long-term debt |
906,156 | — | ||||||
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| Total current liabilities |
991,748 | 162,000 | ||||||
| Long-term debt, less current portion, net |
647,604 | 1,503,427 | ||||||
| Asset retirement obligations and other |
123,626 | 119,150 | ||||||
| Partners’ capital (deficit): |
||||||||
| General partner’s interest |
(30,989 | ) | (31,054 | ) | ||||
| Preferred limited partners’ interests |
188,097 | 188,739 | ||||||
| Common limited partners’ interests |
(257,625 | ) | (262,864 | ) | ||||
| Class C common limited partner warrants |
1,176 | 1,176 | ||||||
| Accumulated other comprehensive income |
15,860 | 19,375 | ||||||
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| Total partners’ deficit |
(83,481 | ) | (84,628 | ) | ||||
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| Total liabilities and partners’ deficit |
$ | 1,679,497 | $ | 1,699,949 | ||||
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ATLAS RESOURCE PARTNERS, L.P.
Financial and Operating Highlights
(unaudited)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Net income attributable to common limited partners per unit - basic |
$ | 0.09 | $ | 0.93 | ||||
| Cash distributions paid per unit(1) |
$ | 0.025 | $ | 0.325 | ||||
| Production revenues (in thousands): |
||||||||
| Natural gas |
$ | 31,284 | $ | 66,541 | ||||
| Oil |
15,312 | 32,385 | ||||||
| Natural gas liquids |
1,896 | 5,323 | ||||||
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| Total production revenues |
$ | 48,492 | $ | 104,249 | ||||
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| Production volume:(2)(3) |
||||||||
| Appalachia: (4) |
||||||||
| Natural gas (Mcfd) |
31,545 | 35,158 | ||||||
| Oil (Bpd) |
295 | 359 | ||||||
| Natural gas liquids (Bpd) |
290 | 240 | ||||||
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| Total (Mcfed) |
35,054 | 38,752 | ||||||
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| Coal-bed Methane: (4) |
||||||||
| Natural gas (Mcfd) |
120,549 | 134,133 | ||||||
| Oil (Bpd) |
— | — | ||||||
| Natural gas liquids (Bpd) |
— | — | ||||||
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|
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| Total (Mcfed) |
120,549 | 134,133 | ||||||
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| Barnett/Marble Falls: |
||||||||
| Natural gas (Mcfd) |
36,821 | 49,617 | ||||||
| Oil (Bpd) |
322 | 749 | ||||||
| Natural gas liquids (Bpd) |
1,457 | 2,274 | ||||||
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| Total (Mcfed) |
47,497 | 67,755 | ||||||
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| Rangely: |
||||||||
| Natural gas (Mcfd) |
— | — | ||||||
| Oil (Bpd) |
2,354 | 2,361 | ||||||
| Natural gas liquids (Bpd) |
256 | 253 | ||||||
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| Total (Mcfed) |
15,657 | 15,680 | ||||||
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| Eagle Ford: |
||||||||
| Natural gas (Mcfd) |
389 | 500 | ||||||
| Oil (Bpd) |
1,362 | 1,550 | ||||||
| Natural gas liquids (Bpd) |
81 | 106 | ||||||
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| Total (Mcfed) |
9,049 | 10,434 | ||||||
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| Mid-Continent: (4) |
||||||||
| Natural gas (Mcfd) |
5,246 | 7,931 | ||||||
| Oil (Bpd) |
231 | 514 | ||||||
| Natural gas liquids (Bpd) |
425 | 615 | ||||||
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| Total (Mcfed) |
9,178 | 14,709 | ||||||
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| Total Production: (3) |
||||||||
| Natural gas (Mcfd) |
194,550 | 227,340 | ||||||
| Oil (Bpd) |
4,563 | 5,533 | ||||||
| Natural gas liquids (Bpd) |
2,509 | 3,488 | ||||||
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| Total (Mcfed) |
236,983 | 281,463 | ||||||
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| Average sales prices: (3) |
||||||||
| Natural gas (per Mcf) (5) |
$ | 3.41 | $ | 3.58 | ||||
| Oil (per Bbl)(6) |
$ | 77.16 | $ | 80.81 | ||||
| Natural gas liquids (per Bbl) (7) |
$ | 8.31 | $ | 22.49 | ||||
| Production costs:(3)(8) |
||||||||
| Lease operating expenses per Mcfe |
$ | 1.25 | $ | 1.35 | ||||
| Production taxes per Mcfe |
0.18 | 0.24 | ||||||
| Transportation and compression expenses per Mcfe |
0.26 | 0.23 | ||||||
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| Total production costs per Mcfe |
$ | 1.69 | $ | 1.82 | ||||
| Depletion per Mcfe(3) |
$ | 1.23 | $ | 1.58 | ||||
| (1) | Represents the cash distributions declared for the respective period and paid by ARP within 45 days after the end of each month within each quarter, based upon the distributable cash flow generated during the respective period. |
| (2) | Production quantities consist of the sum of (i) ARP’s proportionate share of production from wells in which it has a direct interest, based on ARP’s proportionate net revenue interest in such wells, and (ii) ARP’s proportionate share of production from wells owned by the investment partnerships in which ARP has an interest, based on its equity interest in each such partnership and based on each partnership’s proportionate net revenue interest in these wells. |
| (3) | “Mcf” and “Mcfd” represent thousand cubic feet and thousand cubic feet per day; “Mcfe” and “Mcfed” represent thousand cubic feet equivalents and thousand cubic feet equivalents per day, and “Bbl” and “Bpd” represent barrels and barrels per day. Barrels are converted to Mcfe using the ratio of six Mcf’s to one barrel. |
| (4) | Appalachia includes ARP’s production located in Pennsylvania, Ohio, New York, West Virginia (excluding the Cedar Bluff area), and the Chattanooga (Tennessee) and New Albany (Indiana) Shales; Coal-bed methane includes ARP’s production located in the Raton Basin in northern New Mexico, the Black Warrior Basin in central Alabama, the Cedar Bluff area of West Virginia and Virginia and the Arkoma Basin in eastern Oklahoma; Mid-Continent includes ARP’s production located in the Mississippi Lime and Hunton plays and the Niobrara Shale (northeastern Colorado). |
| (5) | ARP’s average sales prices for natural gas before the effects of financial hedging were $1.78 per Mcf and $2.54 per Mcf for the three months ended March 31, 2016 and 2015, respectively. These amounts exclude the impact of subordination of production revenues to investor partners within the investor partnerships. Including the effects of subordination, average natural gas sales prices were $3.37 per Mcf ($1.74 per Mcf before the effects of financial hedging) and $3.53 per Mcf ($2.48 per Mcf before the effects of financial hedging) for the three months ended March 31, 2016 and 2015, respectively. |
| (6) | ARP’s average sales prices for oil before the effects of financial hedging were $29.51 per barrel and $43.46 per barrel for the three months ended March 31, 2016 and 2015, respectively. |
| (7) | There was no effect of financial hedging on ARP’s average sales price for natural gas liquids for the three months ended March 31, 2016. ARP’s average sales price for natural gas liquids before the effects of financial hedging was $14.10 per barrel for the three months ended March 31, 2015. |
| (8) | Production costs include labor to operate the wells and related equipment, repairs and maintenance, materials and supplies, property taxes, severance taxes, insurance, production overhead and transportation expenses. These amounts exclude the effects of ARP’s proportionate share of lease operating expenses associated with subordination of production revenue to investor partners within ARP’s investor partnerships. Including the effects of these costs, lease operating expenses per Mcfe were $1.23 per Mcfe ($1.66 per Mcfe for total production costs) and $1.33 per Mcfe ($1.80 per Mcfe for total production costs) for the three months ended March 31, 2016 and 2015, respectively. |
ATLAS RESOURCE PARTNERS, L.P.
CAPITALIZATION INFORMATION
(unaudited; in thousands)
| March 31, 2016 |
December 31, 2015 |
|||||||
| Total debt(1) |
$ | 1,553,760 | $ | 1,503,427 | ||||
| Less: Cash |
(19,285 | ) | (1,353 | ) | ||||
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| Total net debt/(cash) |
1,534,475 | 1,502,074 | ||||||
| Partners’ deficit |
(83,481 | ) | (84,628 | ) | ||||
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| Total capitalization |
$ | 1,450,994 | $ | 1,417,446 | ||||
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| Ratio of net debt to capitalization |
1.06x | 1.06x | ||||||
| (1) | Total debt is net of deferred financing costs and unamortized discounts totaling $35.9 million and $38.6 million at March 31, 2016 and December 31, 2015, respectively. |
ATLAS RESOURCE PARTNERS, L.P.
Financial Information
(unaudited; in thousands, except per unit amounts)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Reconciliation of net income to non-GAAP measures(1): |
||||||||
| Net income |
$ | 12,763 | $ | 87,572 | ||||
| Acquisition and related costs |
307 | 2,171 | ||||||
| Depreciation, depletion and amortization |
30,045 | 42,991 | ||||||
| Amortization of deferred finance costs |
4,100 | 7,199 | ||||||
| Non-cash stock compensation expense |
(47 | ) | 3,346 | |||||
| Capital expenditures |
(13,170 | ) | (42,498 | ) | ||||
| Preferred unit distributions |
(3,654 | ) | (4,085 | ) | ||||
| (Gain) loss on asset sales and disposal |
(9 | ) | 11 | |||||
| Gain on early extinguishment of debt |
(26,498 | ) | — | |||||
| Cash settlements on commodity derivative contracts(2) |
45,622 | 15,203 | ||||||
| Gain on mark-to-market derivatives |
(46,120 | ) | (105,585 | ) | ||||
| Distributions paid to common limited partners(3) |
(2,639 | ) | (28,483 | ) | ||||
| Other |
(93 | ) | (12 | ) | ||||
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| Net Free Cash Flow(1) |
$ | 607 | $ | (22,170 | ) | |||
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| Supplemental Adjusted EBITDA and Net Free Cash Flow Summary: |
| |||||||
| Gas and oil production margin |
$ | 58,272 | $ | 73,954 | ||||
| Well construction and completion margin |
274 | 3,085 | ||||||
| Administration and oversight margin |
455 | 1,259 | ||||||
| Well services margin |
2,254 | 4,426 | ||||||
| Gathering and processing margin |
(784 | ) | (233 | ) | ||||
| Cash general and administrative expenses(4) |
(16,817 | ) | (11,618 | ) | ||||
| Other, net |
21 | 21 | ||||||
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|
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| Adjusted EBITDA(1) |
43,675 | 70,894 | ||||||
| Cash interest expense(5) |
(23,605 | ) | (17,998 | ) | ||||
| Capital expenditures |
(13,170 | ) | (42,498 | ) | ||||
| Preferred unit distributions |
(3,654 | ) | (4,085 | ) | ||||
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| Free Cash Flow before distributions paid to common limited partners(1) |
$ | 3,246 | $ | 6,313 | ||||
| Distributions paid to common limited partners(3) |
(2,639 | ) | (28,483 | ) | ||||
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|
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| Net Free Cash Flow (1) |
$ | 607 | $ | (22,170 | ) | |||
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| Distribution per limited partner unit |
$ | 0.025 | $ | 0.325 | ||||
| (1) | Although not prescribed under generally accepted accounting principles (“GAAP”), ARP’s management believes the presentation of Adjusted EBITDA, Free Cash Flow before distributions paid to common limited partners (“FCF”), and Net Free Cash Flow is relevant and useful because it helps ARP’s investors understand its operating performance and is a critical component in the determination of quarterly cash distributions. As a MLP, ARP is required to distribute 100% of available cash, as defined in its limited partnership agreement (“Available Cash”) and subject to cash reserves established by its general partner, to investors on a quarterly basis. ARP refers to Available Cash prior to the establishment of cash reserves as FCF. Adjusted EBITDA and Net Free Cash Flow should not be considered in isolation of, or as a substitute for, net income as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. While ARP’s management believes that its methodology of calculating Adjusted EBITDA, FCF, and Net Free Cash Flow is generally consistent with the common practice of other MLPs, such metrics may not be consistent and, as such, may not be comparable to measures reported by other MLPs, who may use other adjustments related to their specific businesses. Adjusted EBITDA, FCF, and Net Free Cash Flow are supplemental financial measures used by the ARP’s management and by external users of ARP’s financial statements such as investors, lenders under ARP’s credit facility, research analysts, rating agencies and others to assess its: |
| • | Operating performance as compared to other publicly traded partnerships and other companies in the upstream energy sector, without regard to financing methods, historical cost basis or capital structure; |
| • | Ability to generate sufficient cash flows to support its distributions to unitholders; |
| • | Ability to incur and service debt and fund capital expansion; |
| • | The viability of potential acquisitions and other capital expenditure projects; and |
| • | Ability to comply with financial covenants in its Amended Credit Facility, which is calculated based upon Adjusted EBITDA. |
FCF is determined by calculating EBITDA, adjusting it for non-cash, non-recurring and other items to achieve Adjusted EBITDA, and then deducting cash interest expense and total capital expenditures. ARP defines EBITDA as net income (loss) plus the following adjustments:
| • | Interest expense; |
| • | Income tax expense; and |
| • | Depreciation, depletion and amortization. |
ARP defines Adjusted EBITDA as EBITDA plus the following adjustments:
| • | Asset impairments; |
| • | Acquisition and related costs; |
| • | Non-cash stock compensation; |
| • | (Gains) losses on asset sales and disposal; |
| • | Cash proceeds received from monetization of derivative transactions; |
| • | Premiums paid on swaption derivative contracts; |
| • | Non-cash valuation allowances; and |
| • | Other items. |
ARP adjusts FCF for non-cash, non-recurring and other items for the sole purpose of evaluating its cash distribution for the quarterly period, with EBITDA and Adjusted EBITDA adjusted in the same manner for consistency. ARP defines FCF as Adjusted EBITDA less the following adjustments:
| • | Cash interest expense; |
| • | Preferred unit cash distributions; and |
| • | Total capital expenditures. |
ARP defines Net Free Cash Flow as FCF less distributions paid to common unit holders.
| (2) | Includes cash settlements on commodity derivative contracts not previously recorded within accumulated other comprehensive income following the de-designation of hedges on January 1, 2015. |
| (3) | Represents the cash distributions declared for the respective period and paid by ARP within 45 days after the end of each month within each quarter, based upon the distributable cash flow generated during the respective period. |
| (4) | Excludes non-cash stock compensation expense and certain acquisition and related costs. |
| (5) | Excludes non-cash amortization of deferred financing costs. |
ATLAS RESOURCE PARTNERS, L.P.
Hedge Position Summary
(as of May 16, 2016)
Natural Gas
| Fixed Price Swaps |
||||||||
| Production Period Ended December 31, |
Average Fixed Price (per mmbtu)(a) |
Volumes (mmbtus)(a) |
||||||
| 2016(b) |
$ | 4.23 | 40,354,500 | |||||
| 2017 |
$ | 4.22 | 50,120,000 | |||||
| 2018 |
$ | 4.17 | 40,300,000 | |||||
| 2019 |
$ | 4.02 | 15,860,000 | |||||
| Put Options – Drilling Partnerships |
||||||||
| Production Period Ended December 31, |
Average Fixed Price (per mmbtu)(a) |
Average Volumes (mmbtus)(a) |
||||||
| 2016(b) |
$ | 4.15 | 1,080,000 | |||||
Crude Oil
| Fixed Price Swaps |
||||||||
| Production Period Ended December 31, |
Average Fixed Price (per bbl)(a) |
Volumes (bbls)(a) |
||||||
| 2016(b) |
$ | 81.68 | 1,230,800 | |||||
| 2017 |
$ | 77.61 | 1,200,000 | |||||
| 2018 |
$ | 76.28 | 1,080,000 | |||||
| 2019 |
$ | 68.37 | 540,000 | |||||
| (a) | “mmbtu” represents million metric British thermal units; “bbl” represents barrel. |
| (b) | Reflects hedges covering the remaining 9 months of unrealized production in 2016 (2Q – 4Q 2016). |