Attached files
 Marcellus Joint Venture with Reliance Industries
April 2010
Atlas Energy, Inc.
Exhibit 99.3 |
 Disclaimer
1
Cautionary Note Regarding Forward-Looking Statements
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. Atlas Energy, Inc. 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, the Company’s 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, those
associated with general economic and business conditions; changes in commodity price; changes in
the costs and results of drilling operations; uncertainties about estimates; the Company’s
level of indebtedness; changes in government environmental policies and other environmental risks; the
availability of drilling equipment and the timing of production; tax consequences of business
transactions; and other risks, assumptions and uncertainties detailed from time to time in the
Company’s reports filed with the U.S. Securities and Exchange Commission (the
“SEC”). Forward-looking statements speak only as of the date hereof, and the Company assumes no obligation to
update such statements, except as may be required by applicable law.
The SEC requires natural gas and oil companies, in filings made with the SEC, to disclose proved
reserves, which are those quantities of natural gas and oil that by analysis of geo-science
and engineering data can be estimated with reasonable certainty to be economically producible
from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and
government regulations. For filings reporting year-end 2009 reserves, the SEC permits the
optional disclosure of probable and possible reserves. The Company has elected not to report
probable and possible reserves in its filings with the SEC. In this press release the
estimate of “incremental net recoverable reserves” describes the Company’s internal
estimates of volumes of natural gas that are not classified as proved reserves but are
potentially recoverable through exploratory drilling or additional drilling or recovery techniques.
This may be a broader description of potentially recoverable volumes than probable and possible
reserves, as defined by SEC regulations. Estimates of unproved resources are by their
nature more speculative than estimates of proved resources and, accordingly, are subject to
substantially greater risk of actually being realized by the Company. The Company believes that its
estimates of unproved resources are reasonable, but such estimates have of reserves and resource
potential; inability to obtain capital needed for operations; the not been reviewed by
independent engineers. Estimates of unproven resources may change significantly as
development provides additional data and actual quantities that are ultimately recovered may differ
substantially from prior estimates. |
 JV
Transaction Overview 2
•
Atlas to sell 40% undivided working interest in
approximately 300,000 net Marcellus Shale acres to an
affiliate of Reliance Industries Limited (“Reliance”) for
$1.7 billion
(1)
–
$340 million in cash upfront
–
$1.36 billion drilling carry; Reliance to fund 75% of Atlas'
share of well costs until drilling carry has been fully
utilized
–
Drilling carry period of 5.5 years; extending to 7.5 yr
under certain conditions
–
Transaction expected to close before end of April 2010
•
Creation of an Area of Mutual Interest (AMI) for future
acreage acquisitions
–
Atlas will be sole leasing agent
•
Atlas will be operator of joint interests in AMI
–
Reliance has right in the future to operate certain project
areas
outside
of
Atlas’s
core
area
of
Greene,
Washington, Fayette and Westmoreland counties.
•
Reliance has a Right of First Offer (“ROFO”) to acquire
acreage from Atlas in certain counties
–
ROFO price is $8,000 per net acre on a present value
basis (using a discount rate of 10%)
(1)
Subject to normal pre and post closing purchase price adjustments
|
 Overview of Marcellus Joint
Venture AMI
3
High quality existing acreage position in AMI
–
Approximately 300,000 net acres
–
Majority of acreage located in delineated, dry gas
window of southwestern Pennsylvania
Results suggest existing acreage in AMI has over
13 Tcfe
of potential reserves from Marcellus
Shale
–
Approx. 3,150 horizontal locations identified
–
Recent Atlas wells turned into line were assigned
EURs
averaging 5.6 Bcf
–
The Joint Venture expects to complete 45 horizontal
wells in 2010, over 100 wells in 2011 and ramping to
300 wells by 2013 and beyond
–
Atlas’
recent results indicate shallower than expected
decline rates
Laurel Mountain Midstream, LLC will provide
Joint Venture with mid-stream services
–
Ongoing build out of header system will ensure that
Joint Venture gas will get to market
(1)
Otsego
and
Delaware
County,
NY
are
not
displayed
on
this
map
but
included
in
the
ROFO
acreage.
(1) |
 Transaction Rationale
4
•
Enables
substantial
expansion
of
ATLS’
development
of
its
Marcellus
Shale
assets
–
Joint venture intends to drill over 1,000 horizontal Marcellus Shale wells in next
5 years •
Upfront portion of consideration will de-lever balance sheet and increase
liquidity –
Pro forma net debt to EBITDA of 1.6x
–
Zero pro forma revolver borrowings of with existing borrowing base of $575
million •
Drilling carry will significantly reduce Atlas’s capital expenditures
–
Finding
and
development
costs
could
fall
to
$0.20/mcfe
or
lower,
after
taking
into
account
the Drilling Carry.
•
Tax efficient structure
•
Aligns Atlas with global partner focused on expansion in the Marcellus Shale
–
Reliance
is
a
Fortune
Global
500
company
fully
integrated
across
the
energy
value chain
–
Reliance has demonstrated track record of excellence in large scale E&P
development –
Joint venture partners focused on additional acreage acquisitions and expanding
operations –
Reliance has right to operate certain project areas, which will create additional
development capability for the joint venture
–
Reliance Right of First Offer creates potential benchmark for value of > $2
billion for remaining Marcellus acreage not included in AMI
|
 5
A Global Enterprise Focused on
a Growing E&P Business
•
India’s Largest Private Sector Enterprise
–
3% of India’s GDP
–
Current market cap of $78.3 billion
–
LTM 12/31/2009 EBITDA of ~USD $5.8 billion
–
61% of FY2009 revenues generated outside of India
•
One of world’s leading natural gas producers
–
8.3 Tcfe of Proved Reserves (94% gas; 60% PDP)
–
Total daily production of approximately 3 Bcfe/d
–
Growth in E&P is focus of the company’s strategy
•
A world leader in crude refining and petrochemicals
–
Largest single refining complex in the world
–
Aggregate refining capacity of 1.24 million barrels per day
–
Largest polyester manufacturer in the world
–
Leading producer of polymers, chemicals and fiber intermediaries
|
 Atlas
poised to become a large scale producer in the Marcellus Shale
6
Premier Land Position
People
Gathering System to Move Large Volumes
Take-Away Capacity to Premium Markets
Water Treatment and Reuse Capacity
Access to Equipment and Services
Capital to Fund Growth
The Reliance joint venture provides Atlas the capital necessary to develop the
Marcellus Shale on a large scale |
 ATLS
Pro Forma Capitalization and Liquidity
7
12/31/2009
Actual
Pro Forma
Cash
20.6
$
150.6
$
Revolver
184.0
-
10.750% Senior Notes
400.0
400.0
12.125% Senior Notes
200.0
200.0
Total Debt
784.0
$
600.0
$
Equity
1,703.5
1,703.5
Total Capitalization
2,487.5
$
2,303.5
$
Equity / Total Capitalization
68.5%
74.0%
Revolver Borrowing Base
575.0
575.0
Less: Drawn Portion of Revolver
(184.0)
-
Plus: Cash
20.6
150.6
Total Liquidity
411.6
$
725.6
$
LTM E&P EBITDA
279.3
$
279.3
$
Net Debt
763.4
449.4
Proved Reserves (Bcfe)
1,020.0
PDP reserves (Bcfe)
535.0
Net Debt / LTM E&P EBITDA
2.7x
1.6x
Net Debt / Proved reserves
0.75
$
0.44
$
Net Debt / PDP reserves
1.43
$
0.84
$
|
 8
Reconciliation of Non-GAAP Measures
Full Year Ended
Full Year Ended
December 31,
December 31,
2009
2008
Reconciliation of net income to non-GAAP
measures
Net Income
(71,986)
(6,158)
Atlas Pipeline and Atlas Pipeline Holdings net
(income) loss
(1,417)
55,077
Depreciation, Depletion and Amortization
108,290
95,427
Asset Impairment
156,359
-
Interest Expense
64,866
56,191
Non-cash stock compensation expense
8,304
10,971
Income tax benefit
(49,069)
(5,021)
Income attributable to ATN non-controlling
interests
18,086
76,475
Non-recurring merger costs
8,113
-
Non-cash net loss on sale of assets
6,435
32
Adjustment to reflect cash impact of
derivatives
31,333
12,431
E&P Operations Adjusted EBITDA
279,314
295,425 |