Attached files

file filename
10-Q - FORM 10-Q - Atlas Resources Series 28-2010 L.P.d431585d10q.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R9.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R25.htm
EX-31.1 - CERTIFICATION PURSUANT TO RULE 13A-14/15(D)-14 - Atlas Resources Series 28-2010 L.P.d431585dex311.htm
EX-32.2 - SECTION 1350 CERTIFICATION - Atlas Resources Series 28-2010 L.P.d431585dex322.htm
EX-32.1 - SECTION 1350 CERTIFICATION - Atlas Resources Series 28-2010 L.P.d431585dex321.htm
EXCEL - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R5.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R1.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R3.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R4.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R2.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R6.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R7.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R8.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R17.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R18.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R12.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R15.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R13.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R27.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R26.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R28.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R20.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R10.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R16.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R14.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R21.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R19.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R23.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R22.htm
XML - IDEA: XBRL DOCUMENT - Atlas Resources Series 28-2010 L.P.R24.htm
EX-31.2 - CERTIFICATION PURSUANT TO RULE 13A-14/15(D)-14 - Atlas Resources Series 28-2010 L.P.d431585dex312.htm
v2.4.0.6
Derivative Instruments
9 Months Ended
Sep. 30, 2012
Derivative Instruments [Abstract]  
DERIVATIVE INSTRUMENTS

NOTE 4 - DERIVATIVE INSTRUMENTS

 

The MGP, on behalf of the Partnership, uses a number of different derivative instruments, principally swaps, collars and options, in connection with its commodity price risk management activities. The MGP enters into financial instruments to hedge forecasted natural gas, NGL's, crude oil and condensate sales against the variability in expected future cash flows attributable to changes in market prices. Swap instruments are contractual agreements between counterparties to exchange obligations of money as the underlying natural gas, NGLs, crude oil and condensate are sold. Under commodity-based swap agreements, the MGP receives or pays a fixed price and receives or remits a floating price based on certain indices for the relevant contract period. Commodity-based option instruments are contractual agreements that grant the right, but not the obligation, to receive or pay a fixed price and receive or remit a floating price based on certain indices for the relevant contract period, if the floating price is lower than the fixed price. The put option instrument sets a floor price for commodity sales being hedged. Costless collars are a combination of a purchased put option and a sold call option, in which the premiums net to zero. The costless collar eliminates the initial cost of the purchased put, but places a ceiling price for commodity sales being hedged.

 

The MGP formally documents all relationships between hedging instruments and the items being hedged, including its risk management objective and strategy for undertaking the hedging transactions. This includes matching the commodity derivative contracts to the forecasted transactions. The MGP assesses, both at the inception of the derivative and on an ongoing basis, whether the derivative was effective in offsetting changes in the forecasted cash flow of the hedged item. If the MGP determines that a derivative is not effective as a hedge or that it has ceased to be an effective hedge due to the loss of adequate correlation between the hedging instrument and the underlying item being hedged, the MGP will discontinue hedge accounting for the derivative and subsequent changes in the derivative fair value, which are determined by management of the MGP through the utilization of market data, will be recognized immediately within gain (loss) on mark-to-market derivatives in the Partnership's statements of operations. For derivatives qualifying as hedges, the Partnership recognizes the effective portion of changes in fair value of derivative instruments as accumulated other comprehensive income and reclassifies the portion relating to the Partnership's commodity derivatives to gas and oil production revenues within the Partnership's statements of operations as the underlying transactions are settled. For non-qualifying derivatives and for the ineffective portion of qualifying derivatives, the Partnership recognized changes in fair value within gain (loss) on mark-to-market derivatives in its statements of operations as they occur.

 

At September 30, 2012, the Partnership had a secured hedge facility agreement with a syndicate of banks under which the Partnership will have the ability to enter into derivative contracts to manage its exposure to commodity price movements.  The Partnership's obligations under the facility are secured by mortgages on its oil and gas properties and first priority security interests in substantially all of its assets and by a guarantee of the general partner.  The MGP will administer the commodity price risk management activity for the Partnership under the secured hedge facility.  The secured hedge facility agreement contains covenants that limit the Partnership's ability to incur indebtedness, grant liens, make loans or investments, make distributions if a default under the secured hedge facility agreement exists or would result from the distribution, merge into or consolidate with other persons, enter into commodity or interest rate swap agreements that do not conform to specified terms or that exceed specified amounts, or engage in certain asset dispositions including a sale of all or substantially all of its assets.

 

At September 30, 2012, the Partnership had the following commodity derivatives:

 

Natural Gas Put Options

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

Period Ending

 

 

 

Average

 

Fair Value

December 31,

 

Volumes

 

Strike

 

Asset (2)

 

 

(mmbtu) (1)

 

(per mmbtu) (1)

 

 

 

 

 

 

 

 

 

2012

 

            117,100

 

$                        2.800

 

$                     1,200

2013

 

            351,200

 

              3.450

 

                     73,300

2014

 

            292,700

 

              3.800

 

                  101,000

2015

 

            234,100

 

              4.000

 

                  103,100

2016

 

            234,100

 

              4.150

 

                  126,100

 

 

 

 

 

 

$                404,700

 

 

Natural Gas Fixed Price Swaps

 

 

 

 

 

 

 

Production

 

 

 

 

 

 

Period Ending

 

 

 

Average

 

Fair Value

December 31,

 

Volumes

 

Fixed Price

 

Liability (2)

 

 

(mmbtu) (1)

 

(per mmbtu) (1)

 

 

 

 

 

 

 

 

 

2012

 

                     —

 

$                           —

 

$                              —

2013

 

          950,400

 

                3.659

 

               (175,300)

2014

 

          691,200

 

                4.035

 

                 (99,900)

2015

 

          576,000

 

                4.224

 

                 (82,800)

2016

 

          229,700

 

                4.460

 

                 (19,400)

 

 

 

 

 

 

$                                (377,400)

 

 

 

 

 

 

 

 

 

 

 

Total Net Asset

 

$                                27,300

____________

 

 

.

 

 

 

The following tables summarize the fair value of the Partnership's derivative instruments as of September 30, 2012, as well as the gain or loss recognized in the statements of operations for the three and nine months ended September 30, 2012 and 2011:

 

 

Fair Value of Derivative Instruments:

 

 

 

 

Fair Value

 

Derivatives in Cash Flow Hedging Relationships

 

Balance Sheet

Location

 

September 30,

2012

 

 

 

 

 

Derivative Commodity Contracts

 

Current Assets

 

$           53,800

 

 

Long-Term Assets

 

           350,900

 

 

 

 

           404,700

 

 

 

 

 

 

 

Current liabilities

 

            (92,300)

 

 

Long-term liabilities

 

          (285,100)

 

 

 

 

          (377,400)

 

 

 

 

 

 

 

Total

 

$           27,300

 

Effects of Derivative Instruments on Statements of Operations:

 

                 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2012

 

2011

 

2012

 

2011

Loss recognized in accumulated OCI

 

$      (621,500)

 

$              —

 

$    (679,400)

 

$    (113,900)

Gain reclassified from accumulated OCI into income

 

$    1,121,800

 

$   548,700

 

$  2,461,300

 

$  1,208,500

 

Historically, the MGP has entered into natural gas and crude oil future option contracts and collar contracts on behalf of the Partnership to achieve more predictable cash flows by hedging its exposure to changes in natural gas and oil prices. At any point in time, such contracts included regulated New York Mercantile Exchange ("NYMEX") futures and options contracts and non-regulated over-the-counter futures contracts with qualified counterparties. NYMEX contracts are generally settled with offsetting positions, but may be settled by the delivery of natural gas. Crude oil contracts are based on a West Texas Intermediate ("WTI") index. These contracts qualified and were designated as cash flow hedges and recorded at their fair values.

 

As the underlying prices and terms in the Partnership's derivative contracts were consistent with the indices used to sell its natural gas and oil, there were no gains or losses recognized during the nine months ended September 30, 2012 and 2011 for hedge ineffectiveness or as a result of the discontinuance of any cash flow hedges.

 

Monetized Gains

 

Prior to the sale on February 17, 2011 of the Transferred Business, Atlas Energy, Inc. monetized the derivative instruments related to the Transferred Business. The monetized proceeds related to instruments that were originally put into place to hedge future natural gas and oil production of the Transferred Business, including production generated through drilling partnerships. As of September 30, 2012 and December 31, 2011, the Partnership recorded a receivable from the monetized derivative instruments of $2,853,900 and $4,394,800 in accounts receivable monetized gains-affiliate, respectively, and $979,500 and $2,867,600 in long-term receivable monetized gains-affiliate, respectively, with the corresponding net unrealized gains in accumulated other comprehensive income on the Partnership's balance sheets, which will be allocated to natural gas and oil production revenue generated over the period of the original instruments' term. The monetized gains included on the Partnership's balance sheet are allocable to the limited partners only.

 

During June 2012, the MGP used the undistributed monetized funds to purchase natural gas put options on behalf of the limited partners of the Partnership only. A premium ("put premium") was paid to purchase the contracts and will be allocated to natural gas production revenues generated over the contractual term of the purchased hedging instruments. At September 30, 2012, the put premiums were recorded as short-term and long-term payables to affiliate of $159,300 and $547,400, respectively. Furthermore, the put premium liabilities were included in accounts receivable monetized gains-affiliate and long-term receivable monetized gains-affiliate, respectively, in the Partnership's balance sheet. The put premiums included on the Partnership's balance sheet are allocable to the limited partners only.

 

The following table summarizes the gross fair values of the Partnership's derivative and affiliate balances, presenting the impact of offsetting the related party assets and liabilities on the Partnership's balance sheets for the periods indicated:

 

 

 

Gross Amounts

 

Gross Amounts

 

Net Amount of Assets

 

 

of Recognized

 

Offset in the

 

Presented in the

 

 

Assets

 

Balance Sheets

 

Balance Sheets

 

 

 

 

 

 

 

Offsetting Derivative Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable monetized gains-affiliate

 

$         2,853,900

 

$          (159,300)

 

$                       2,694,600

Long-term accounts receivable monetized

gains-affiliate

 

 

              979,500

 

 

            (547,400)

 

 

                            432,100

Short-term hedge swaps

 

                  4,100

 

                (4,100)

 

                                     —

Long-term hedge swaps

 

                12,800

 

              (12,800)

 

                                     —

 

 

 

 

 

 

 

Total

 

$         3,850,300

 

$          (723,600)

 

$                       3,126,700

 

 

 

 

 

 

 

As of December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable monetized gains-affiliate

 

$         4,394,800

 

$                     —

 

$                       4,394,800

Long-term accounts receivable monetized

gains-affiliate

 

 

           2,867,600

 

 

                       —

 

 

                         2,867,600

 

 

 

 

 

 

 

Total

 

$         7,262,400

 

$                     —

 

$                       7,262,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Amounts

 

Gross Amounts

 

Net Amount of Liabilities

 

 

of Recognized

 

Offset in the

 

Presented in the

 

 

Liabilities

 

Balance Sheets

 

Balance Sheets

 

 

 

 

 

 

 

Offsetting Derivative Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

Put premiums payable-affiliate

 

$            (159,300)

 

$             159,300

 

$                                 —

Long-term put premiums payable-affiliate

 

              (547,400)

 

               547,400

 

                                   —

Short-term hedge swaps

 

                (96,400)

 

                   4,100

 

                           (92,300)

Long-term hedge swaps

 

              (297,900)

 

                 12,800

 

                         (285,100)

 

 

 

 

 

 

 

Total

 

$         (1,101,000)

 

$             723,600

 

$                       (377,400)

 

 

 

 

 

 

 

As of December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

Put premiums payable-affiliate

 

$                      —

 

$                      —

 

$                                 —

Long-term put premiums payable-affiliate

 

                        —

 

                        —

 

                                   —

 

 

 

 

 

 

 

Total

 

$                      —

 

$                      —

 

$                                 —

 

Accumulated Other Comprehensive Income

 

As a result of the monetization and the early settlement of natural gas and oil derivative instruments, the put options, and the unrealized gains recognized in income in prior periods due to natural gas and oil property impairments, the Partnership recorded a net deferred gain on its balance sheet in accumulated other comprehensive income of $2,470,100 as of September 30, 2012. Included in accumulated other comprehensive income are unrealized gains of $683,900 net of the MGP interest that were recognized into income as a result of oil and gas property impairments during the year ended December 31, 2011. During the current year, $2,305,700 of net gains were recorded by the Partnership and allocated only to the limited partners. Of the remaining $2,470,100 of net unrealized gain in accumulated other comprehensive income, the Partnership will reclassify $2,147,200 of net gains to the Partnership's statements of operations over the next twelve month period and the remaining $322,900 in later periods.