PHILADELPHIA--(BUSINESS WIRE)--Atlas Resource Partners, L.P. (NYSE: ARP) has entered into a definitive purchase and sale agreement to acquire approximately 277 bcfe of proved reserves, including undeveloped drilling locations, in the Barnett Shale in Texas from Carrizo Oil & Gas (NASD: CRZO) for approximately $190 million, or $0.69 per mcfe. The transaction has been approved by ARP’s board of directors, and will be effective as of January 1, 2012, with an expected closing in late April, subject to customary closing conditions.
This transaction is expected to be immediately accretive to ARP’s adjusted EBITDA and distributable cash flow. Based on this transaction, ARP is increasing its distribution guidance for the second half of 2012 from $0.80 per limited partner common unit (implied from the previous full year 2012 distribution guidance of $1.60) to a range of $0.85 to $0.90. In addition, ARP is introducing full year 2013 distribution guidance in a range of $2.25 to $2.40 per unit, a 45% increase over the original full year 2012 guidance of $1.60. Both second half 2012 and full year 2013 distribution expectations assume a coverage ratio of approximately 1.2x.
Edward E. Cohen, Chief Executive Officer of ARP, commented, “This transaction is the first step in the execution of our growth strategy for ARP. These Barnett Shale assets are ideal – long-lived, producing assets which generate increased cash flow and distributions per unit. I offer congratulations to our unitholders, and appreciation to our team that worked hard to achieve this acquisition almost simultaneously with the birth of ARP.”
Matthew A. Jones, President and Chief Operating Officer of ARP, added, “These assets are well-positioned in the core of the Barnett Shale, and offer our enterprise an opportunity to establish a growing operation in this region.”
Transaction Details:
Approximately 277 Bcfe of proved reserves, including 198 gross producing wells on over 12,000 net acres
99% natural gas; 52% proved developed
Current net production of approximately 36 MMcfe per day
R/P ratio of over 20 years
Approximately 100 gross PUD and PDNP locations
Lease operating expenses of approximately $0.60 per mcfe
Pro Forma Financial Impact:
Distribution guidance:
Second half of 2012: $0.85 to $0.90 per limited partner unit
Full year 2013: $2.25 to $2.40 per limited partner unit
Adjusted EBITDA guidance:
Second half of 2012: $40 to $45 million
Full year 2013: $110 to $125 million
Distributable cash flow guidance:
Second half of 2012: $33 to $38 million
Full year 2013: $90 to $105 million
Targeted distribution coverage ratio of approximately 1.2x
Expected 2012 debt to adjusted EBITDA ratio of approximately 1.0x
Net proved reserves of approximately 435 bcfe, an increase of approximately 165% over existing net proved reserves of 167 bcfe
Transaction Financing
The Barnett Shale acquisition has been fully committed through:
A private placement of equity to institutional investors of $120 million, representing 6 million ARP common units at $20 per unit; and,
Approximately $70 million borrowed against ARP’s revolving credit facility
Concurrent with the closing of the transaction, ARP expects that its lending group will expand the capacity on its revolving credit line to a borrowing base of approximately $250 million.
Also, ARP intends to hedge 100% of its available acquired production for the following 12 months, using a combination of swap and put option contracts. Additionally, ARP intends to hedge 80-100% of its available production for the subsequent four years.
Citigroup acted as financial advisor and sole placement agent in connection with the private placement on the transaction, and Jones Day and Ledgewood acted as legal advisors on the transaction.
An investor presentation which provides details on the Barnett Shale transaction is available in the Investor Relations section of ARP’s website: www.atlasresourcepartners.com.
The securities offered in the private placement will not be and have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.
Management does not forecast certain items, including GAAP revenues, depreciation, amortization, and non-cash changes in derivatives, and therefore is unable to provide forecasted Net Income, a comparable GAAP measure, for the periods presented. The reconciling items between these non-GAAP measures and Net Income are expected to be similar to those for the current periods presented and are not expected to be significant to ARP’s cash flows.
Atlas Resource Partners, L.P. (NYSE: ARP) is a master limited partnership which owns an interest in over 8,500 producing natural gas and oil wells, representing over 167 Bcfe of net proved reserves, primarily in Appalachia and the Niobrara region in Colorado. ARP is also the largest sponsor of natural gas and oil investment partnerships in the U.S. For more information, please visit our website at www.atlasresourcepartners.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.
Atlas Energy, L.P. (NYSE: ATLS) is a master limited partnership which owns all of the general partner interest and approximately 78% of the limited partner interests in its upstream oil & gas subsidiary, Atlas Resource Partners, L.P. Additionally, Atlas Energy owns and operates the general partner of its midstream oil & gas subsidiary, Atlas Pipeline Partners, L.P., through which it owns a 2% general partner interest, all the incentive distribution rights and an approximate 11% limited partner interest. For more information, please visit our website at www.atlasenergy.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.
Atlas Pipeline Partners, L.P. (NYSE: APL) is active in the gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region of Oklahoma, southern Kansas, and northern and western Texas, APL owns and operates seven active gas processing plants as well as approximately 9,000 miles of active intrastate gas gathering pipeline. APL also has a 20% interest in the West Texas LPG Partnership, which is operated by Chevron Corporation. For more information, visit the Partnership's website at www.atlaspipeline.com or contact IR@atlaspipeline.com.
