Atlas Energy LP will benefit from a buyer’s market for conventional assets when it launches its new master limited partnership (MLP), Atlas Resource Partners LP, CEO Edward Cohen told financial analysts Tuesday.
Atlas last month announced plans to form the MLP, “which is a vehicle, of course, for acquiring conventional cash-flowing properties, which as we discussed in our call three weeks ago, have been left relatively undervalued and profusely available because of the industry’s fixation on raising money to develop unconventional gas plays,” Cohen said.
“The spectacular purchases announced by others in the past few weeks have confirmed our thesis of great opportunity for Atlas in this area. The fruits of our continuing efforts in finding and negotiating for conventional properties should become clear in the near future…[O]nce we have obtained SEC [Securities and Exchange Commission] clearance for our Form 10, we hope to be off and running within the next 90 days.”
The MLP will hold substantially all of Atlas’s current natural gas and oil development and production assets and the partnership management business. Atlas said it intends to take Atlas Resource Partners public by distributing to its unitholders common units representing a 19.6% limited partner interest in Atlas Resource Partners.
Atlas management said the MLP formation will enhance unitholder value by separating the company’s current exploration and production (E&P) assets and partnership management business from Atlas’s general partner interests and incentive distribution rights in Atlas Pipeline Partners LP.
“By creating this new entity, we are positioning ourselves to capitalize more fully on the many opportunities currently available to us in the U.S. E&P industry,” Cohen said last month. “We expect that the transaction will enable us to achieve substantial growth in cash flows to our Atlas unitholders from increased distributions in the future both from Atlas Resource Partners and Atlas Pipeline Partners.”
During the third quarter Atlas total net production was about 34.8 MMcfe/d. Average net daily production for the Appalachia segment was 31.3 MMcfe/d. The partnership said it expects to connect 16 Marcellus Shale horizontal wells during the first quarter of 2012. Eleven of these wells were drilled in 2011, and five of the wells were previously drilled and completed and are awaiting pipeline connection.
Average net daily production for the New Albany/Antrim segment for the third quarter was 3.1 MMcfe/d. Average net daily production for the Niobrara segment was 461 Mcfe/d.
During the third quarter Atlas Pipeline Partners LP operated at or above nameplate capacity on all of its gathering and processing systems in the Midcontinent, processing about 567 MMcf/d of natural gas, a 21% increase over the year-ago quarter, the partnership said. Record volumes of about 53,000 b/d of gross natural gas liquids were generated from the partnership’s three processing systems.
Consolidated income from continuing operations of $50.9 million for the third quarter compared with a loss of $3.2 million for the prior-year.
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