ATLAS AMERICA PUBLIC #9 LTD. - FORM 10-Q - May 15, 2018

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EX-32.2 - EXHIBIT 32.2 - ATLAS AMERICA PUBLIC #9 LTD.a2018_1qxpub9xex322.htm
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EX-31.2 - EXHIBIT 31.2 - ATLAS AMERICA PUBLIC #9 LTD.a2018_1qxpub9xex312.htm
EX-31.1 - EXHIBIT 31.1 - ATLAS AMERICA PUBLIC #9 LTD.a2018_1qxpub9xex311.htm


United States
Securities and Exchange Commission
Washington, D.C. 20549 
_________________________________________________________ 
Form 10-Q
_________________________________________________________
(Mark One)
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                    

Commission file number 000-49776
_________________________________________________________
ATLAS AMERICA PUBLIC #9 LTD.
(Exact name of registrant as specified in its charter)
_________________________________________________________
Pennsylvania
 
25-1867510
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
c/o DGOC Partnership Holdings, LLC
1100 Corporate Drive
 
 
Birmingham, Alabama
 
35242
(Address of principal executive offices)
 
(zip code)
 

Registrant’s telephone number, including area code: (412)-489-0006
_________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  ☐
 
Accelerated filer  ☐
 
Non-accelerated filer  ☐
 
Smaller reporting company  ý
 
 
 
 
 
 
Emerging Growth Company ¨
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  þ

1


ATLAS AMERICA PUBLIC #9 LTD.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
 


2


PART I. FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
ATLAS AMERICA PUBLIC #9 LTD.
CONDENSED BALANCE SHEETS
(Unaudited)
 
 
March 31,
2018
 
December 31,
2017
ASSETS
 
 
 

Current assets:
 

 
 

Cash
$
—

 
$
—

Accounts receivable trade-affiliate
39,200

 
35,500

Total current assets
39,200

 
35,500

Gas and oil properties, net
65,500

 
65,500

Long-term asset retirement receivable-affiliate
621,800

 
576,900

Total assets
$
726,500

 
$
677,900

 
LIABILITIES AND PARTNERS’ DEFICIT
 

 
 

Current liabilities:
 

 
 

Accounts payable trade-affiliate
$
1,167,200

 
$
1,080,300

Accrued liabilities
6,100

 
9,900

Total current liabilities
1,173,300

 
1,090,200

 
 
 
 
Asset retirement obligations
1,918,200

 
1,900,900

 Commitments and contingencies (Note 4)


 


 
 
 
 
 Partners’ deficit:
 

 
 

Managing general partner’s deficit
(816,300
)
 
(798,100
)
Limited partners’ deficit (1,500 units)
(1,548,700
)
 
(1,515,100
)
Total partners’ deficit
(2,365,000
)
 
(2,313,200
)
Total liabilities and partners’ deficit
$
726,500

 
$
677,900

 
 
 
 
 
 
 
 
 
See accompanying notes to condensed financial statements.


3


ATLAS AMERICA PUBLIC #9 LTD.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
Three Months Ended
March 31,
 
 
 
2018
 
2017
 
REVENUES
 
 
 
 
Natural gas and oil
$
78,500

 
$
86,600

 
Total revenues
78,500

 
86,600

 
 
COSTS AND EXPENSES
 

 
 
 
Production
76,400

 
80,600

 
Accretion of asset retirement obligations
17,300

 
17,700

 
General and administrative
36,600

 
28,400

 
Total costs and expenses
130,300

 
126,700

 
Net loss
$
(51,800
)
 
$
(40,100
)
 
 
Allocation of net loss:
 

 
 

 
Managing general partner
$
(18,200
)
 
$
(14,300
)
 
Limited partners
$
(33,600
)
 
$
(25,800
)
 
Net loss per limited partnership unit
$
(22
)
 
$
(17
)
 
 
 
 
 
 
 
See accompanying notes to condensed financial statements.


4


ATLAS AMERICA PUBLIC #9 LTD.
CONDENSED STATEMENT OF CHANGES IN PARTNERS’ DEFICIT
FOR THE THREE MONTHS ENDED
MARCH 31, 2018
(Unaudited)
 
 
Managing
General
Partner
 
Limited
Partners
 
Total
 
 
 
 
 
 
Balance At December 31, 2017
$
(798,100
)
 
$
(1,515,100
)
 
$
(2,313,200
)
 
Participation in revenues, costs and expenses:
 
 
 
 
 
Net production expenses
800

 
1,300

 
2,100

Accretion of asset retirement obligations
(6,100
)
 
(11,200
)
 
(17,300
)
General and administrative
(12,900
)
 
(23,700
)
 
(36,600
)
Net loss
(18,200
)
 
(33,600
)
 
(51,800
)
 
 
 
 
 
 
Balance At March 31, 2018
$
(816,300
)
 
$
(1,548,700
)
 
$
(2,365,000
)
 
 
 
 
 
 
 
 
See accompanying notes to condensed financial statements.


5


ATLAS AMERICA PUBLIC #9 LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Three Months Ended
March 31,
 
2018
 
2017
Cash flows used in operating activities:
 

 
 

Net loss
$
(51,800
)
 
$
(40,100
)
Adjustments to reconcile net loss to net cash provided by operating activities:                                                                      
 

 
 

Accretion of asset retirement obligations
17,300

 
17,700

Changes in operating assets and liabilities:
 
 
 

Increase in accounts receivable trade-affiliate
(3,700
)
 
(2,200
)
Increase in asset retirement receivable-affiliate
(44,900
)
 
(48,700
)
Increase in accounts payable trade-affiliate
86,900

 
79,500

Decrease in accrued liabilities
(3,800
)
 
(6,200
)
Net cash provided by operating activities
—

 
—

 
 
 
 
Cash flows from investing activities:
 

 
 

Net cash provided by investing activities
—

 
—

 
 
 
 
Cash flows from financing activities:
 

 
 

Net cash used in financing activities
—

 
—

 
Net change in cash
—

 
—

Cash at beginning of period
—

 
—

Cash at end of period
$
—

 
$
—

 
 
 
 
 
See accompanying notes to condensed financial statements.


6


ATLAS AMERICA PUBLIC #9 LTD.
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2018
(Unaudited)
 
NOTE 1 - DESCRIPTION OF BUSINESS
 
Atlas America Public #9 LTD. (the “Partnership”) is a Pennsylvania limited partnership, formed on July 27, 2000. DGOC Partnership Holdings, LLC serves as its Managing General Partner (“DGOC Holdings” or the “MGP”) and certain affiliates of the MGP serve as our Operators ("Operators"). DGOC Holdings is an indirect subsidiary of Diversified Gas & Oil, PLC (“Diversified”; AIM: DGOC). Unless the context otherwise requires, references below to “the Partnership,” “we,” “us,” “our” and “our company”, refer to Atlas America Public #9 LTD.

  The Partnership has drilled and currently operates wells located in Pennsylvania and Ohio. We have no employees and rely on our MGP to staff and manage our operations, which in turn, relied on Atlas Energy Group, LLC, Titan’s parent company, for administrative services through a Transition Services Agreement effective through December 31, 2017. Since the expiration of the TSA, staffing is provided by an affiliate of Diversified.

The Partnership’s operating cash flows are generated from its wells, which produce natural gas and oil. Produced natural gas and oil is then delivered to market through third-party gas gathering systems. The Partnership intends to produce its wells until they are sold, depleted or become uneconomical to produce at which time they will be plugged and abandoned. The Partnership does not expect to drill additional wells and expects no additional funds will be required for drilling.

The economic viability of the Partnership’s production is based on a variety of factors including proved developed producing reserves that it expects to recover using existing equipment and operating methods or proved reserves recoverable where the cost of the necessary additional extraction equipment is relatively minor compared to the cost of a new well and through currently installed extraction equipment and related infrastructure which is operational at the time of the reserves estimate (if the extraction is by means not involving drilling, completing or reworking a well).

Numerous uncertainties are inherent in estimating quantities of proved reserves and in projecting future net revenues. The prices at which the Partnership’s natural gas and oil will be sold are uncertain and the Partnership is not guaranteed a specific price for the sale of its production. Changes in natural gas and oil prices have a significant impact on the Partnership’s cash flow and the value of its reserves. Lower natural gas and oil prices may, in addition to decreasing the Partnership’s revenues, also reduce the amount of natural gas that the Partnership can produce economically.

Liquidity, Capital Resources and Ability to Continue as a Going Concern

The Partnership is generally limited to the amount of funds generated by the cash flow from its operations to fund its obligations and make distributions, if any, to its partners. Prices for oil and natural gas began to decline significantly during the fourth quarter of 2014 and continue to remain low, on a relative basis, in 2018. Lower commodity prices negatively impact the Partnership’s revenues, earnings and cash flows, and having persisted on a sustained basis have materially adversely effect the Partnership’s liquidity position, resulting in net operating losses since 2015. Additionally, in 2015 the Partnership experienced significant downward revisions of its natural gas and oil reserves volumes and values due to the declines in commodity prices.

The MGP continues to implement various cost saving measures to reduce the Partnership’s operating and general and administrative costs, including renegotiating contracts with contractors, suppliers and service providers, reducing the number of staff and contractors and deferring and eliminating discretionary costs. The MGP will continue its strategic effort to manage the Partnership’s cost structure and, in turn, liquidity to meet its operating needs. To the extent commodity prices continue to remain low or decline further, or the Partnership experiences other disruptions in the industry, the Partnership’s ability to fund its operations and make distributions may be further impacted, and could result in the liquidation of the Partnership’s operations.

The recent significant declines in commodity prices have challenged the Partnership’s ability to fund its operations and may make it uneconomical for the Partnership to produce its wells until they are depleted as the Partnership originally intended. Accordingly, the MGP determined that there is substantial doubt about the Partnership’s ability to continue as a going concern. The MGP intends, as necessary, to continue the Partnership's operations and to fund the Partnership's obligations for at least twelve months from the date the financial statements are issued. The MGP has concluded that such undertaking is sufficient to alleviate the doubt as to the Partnership's ability to continue as a going concern.


7


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
These condensed financial statements are unaudited, but in the opinion of management, reflect all adjustments necessary for a fair presentation of results for the interim periods presented. All adjustments are of a normal recurring nature unless disclosed otherwise. Interim period results are not necessarily indicative of results to be expected for the full year. These condensed financial statements have been prepared in accordance with rules of the Securities and Exchange Commission (“SEC”) and do not include all the information and disclosures required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. They should be read in conjunction with the financial statements for the year ended December 31, 2017 and notes thereto included in our 2017 Annual Report on Form 10-K, which include a summary of the significant accounting policies.

Use of Estimates

The preparation of the Partnership’s condensed financial statements in conformity with U.S. GAAP requires the MGP to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities that exist at the date of the Partnership’s condensed financial statements, as well as the reported amounts of revenues and costs and expenses during the reporting periods. The Partnership’s condensed financial statements are based on a number of significant estimates, including the revenue and expense accruals, depletion, impairments and the probability of forecasted transactions. The natural gas industry principally conducts its business by processing actual transactions as many as 60 days after the month of delivery. Consequently, the most recent two months’ financial results were recorded using estimated volumes and contract market prices. Actual results could differ from those estimates.

Gas and Oil Properties

The following is a summary of natural gas and oil properties at the dates indicated:
 
March 31,
 
December 31,
 
Change
 
2018
 
2017
 
$
 
%
Proved properties:
 
 
 
 
 
 
 
Leasehold interests
$
254,600

 
$
254,600

 
$
—

 
—

Wells and related equipment
18,721,700

 
18,721,700

 
—

 
—

Total natural gas and oil properties
18,976,300

 
18,976,300

 
—

 
—

Accumulated depletion and impairment
(18,910,800
)
 
(18,910,800
)
 
—

 
—

Gas and oil properties, net
$
65,500

 
$
65,500

 
$
—

 
—


Sustained low commodity prices and the associated recorded impairment charges have driven the remaining net book value of gas and oil properties on our condensed balance sheets at March 31, 2018 and December 31, 2017 to be entirely related to the estimated salvage value of such properties.  The estimated salvage values are based on the MGP’s historical experience in determining such values.


Recently Adopted Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The standard requires an entity to identify all customer contracts and their corresponding performance obligations, determine the transaction price and its allocation, at the entity level, and to recognize revenue upon fulfillment of the performance obligation. ASU 2014-09 replaces most of the existing revenue recognition requirements in GAAP. The Partnership adopted the standard on January 1, 2018 using the modified retrospective method as of the adoption date. The new standard did not have a material impact on the Partnership's Financial Statements other than requiring new disclosures.

Revenue Recognition

The Partnership sells natural gas under multiple purchaser contracts. The Partnership’s performance obligation, to the customer, includes the production and sale of natural gas at multiple delivery points. The sales contracts are based on blended rate pricing provisions with fixed and variable components. The fixed component is well defined, under each purchaser contract, and is tied to base production levels. The variable component is generally tied to a regional market index and is received for anything in excess of the base production levels outlined under each customer contract. Under certain agreements, the Partnership’s natural gas sales are delivered to midstream processing entities and DGOC Partnership Holdings, LLC is in control of the gas asset at all

8


points of sale to the purchaser(s). The gathering fees charged, by the midstream processing agents, are paid at the gross rate, by the Partnership as production costs which is consistent with prior reporting periods. The Partnership recognizes revenue and related accounts receivable in the month the performance obligation has been met. However; the settlement statements may not be received from the purchaser for 30-90 days after the production is delivered. As a result, DGOC Partnership Holdings, LLC is required to estimate and accrue for the current month’s revenue using well defined processes that have historically demonstrated close proximities to actual payments. The current revenue accruals have existing internal controls and are evaluated, for accuracy, on a regular basis. Revenues from the production of natural gas, in which the Partnership has an interest with other producers, are recognized on the basis of its percentage ownership of working interest and/or overriding royalty. The MGP and its affiliates perform all administrative and management functions for the Partnership, including billing revenues and paying expenses.
       
NOTE 3 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 
The Partnership has entered into the following significant transactions with the MGP and its affiliates as provided under its Partnership Agreement. Administrative costs, which are included in general and administrative expenses in the Partnership’s condensed statements of operations, are payable at $75 per well per month. Monthly well supervision fees, which are included in production expense in the Partnership’s condensed statements of operations, are payable at $337 per well per month for operating and maintaining the wells. Well supervision fees are proportionately reduced to the extent the Partnership does not acquire 100% of the working interest in a well. Transportation fees are included in production expenses in the Partnership’s condensed statements of operations and are payable at either 16% of the natural gas sales price or $0.35 per Mcf, whichever is greater. Direct costs, which are included in production and general administrative expenses in the Partnership’s condensed statements of operations, are payable to the MGP and its affiliates as reimbursement for all costs expended on the Partnership’s behalf. Direct costs that are in excess of earnings are recorded as an increase to accounts payable trade-affiliate and reflected as changes in operating assets and liabilities in the operating section of the Condensed Statement of Cash Flows.

The following table provides information with respect to these costs and the periods incurred:
 
Three Months Ended
March 31,
 
Change
 
2018
 
2017*
 
$
 
%
Administrative fees
$
12,800

 
$
13,500

 
$
(700
)
 
(5
)%
Supervision fees
57,800

 
60,600

 
(2,800
)
 
(5
)%
Transportation fees
10,100

 
9,400

 
700

 
7
 %
Direct costs
32,300

 
25,500

 
6,800

 
27
 %
Total
$
113,000

 
$
109,000

 
$
4,000

 
4
 %
* Amounts paid to the Previous MGP.

The MGP and its affiliates perform all administrative and management functions for the Partnership, including billing revenues and paying expenses. Accounts payable trade-affiliate on the Partnership’s balance sheets includes the net production expenses due to the MGP.
 
NOTE 4 - COMMITMENTS AND CONTINGENCIES

General Commitments

Subject to certain conditions, investor partners may present their interests for purchase by the MGP. The purchase price is calculated by the MGP in accordance with the terms of the partnership agreement. The MGP is not obligated to purchase more than 5% of the total outstanding units in any calendar year. In the event that the MGP is unable to obtain the necessary funds, it may suspend its purchase obligation.

Beginning one year after each of the Partnership’s wells has been placed into production, our Operators may retain $200 per month per well to cover estimated future plugging and abandonment costs. As of March 31, 2018, the Operators have withheld $621,800 of net production revenue for future plugging and abandonment costs.

Environmental risk is inherent to oil and natural gas operations, and we and our affiliates may be, at times, subject to potential environmental remediation liability. We manage this environmental risk through appropriate environmental policies and practices to minimize any impact our operations may have on the environment. To the extent that we are unable to recover payment

9


for environmental liabilities from insurance or other potentially responsible parties, we will be responsible for payment of liabilities arising from environmental incidents associated with the operating activities of our oil and natural gas operations.

Legal Proceedings
 
The Partnership and affiliates of the MGP and their subsidiaries are party to various routine legal proceedings arising out of the ordinary course of its business. The MGP believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the Partnership’s or the MGP’s financial condition or results of operations.

10


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED)

Forward-Looking Statements

This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements in this Form 10-Q by words such as “anticipate,” “project,” “intend,” “estimate,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “plan,” “forecast,” “target” or similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to forward-looking statements which we may make to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

The Partnership cautions you that the forward-looking statements contained in this Form 10-Q are subject to all of the risks and uncertainties, many of which are beyond our control, incident to the production and sale of oil and natural gas. These risks include, but are not limited to, the risks described in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Annual Report on Form 10-K”),including under the heading entitled “Forward-Looking Statements,” and all quarterly reports on Form 10-Q filed subsequently thereto. Should one or more of the risks or uncertainties described herein or in our 2017 Annual Report on Form 10-K occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. We specifically disclaim all responsibility to publicly update any information contained in a forward-looking statement or any forward-looking statement in its entirety and therefore disclaim any resulting liability for potentially related damages.

General
 
See Note 1 to our condensed financial statements for a description of our business. Comparisons to financial results for periods prior to July 2017 reflect the results of the Predecessor Partnership.
 
Overview

The following discussion provides information to assist in understanding our financial condition and results of operations. Our operating cash flows are generated from our wells, which produce primarily natural gas, but also some oil. Our produced natural gas is then delivered to market through affiliated and/or third-party gas gathering systems.
Our ongoing operating and maintenance costs have been and are expected to be fulfilled through revenues from the sale of our natural gas production. Our results of operations are dependent upon the difference between prices received for our oil and gas production and the costs to find and produce such oil and gas. Oil and natural gas prices have been volatile and subject to fluctuations based on a number of factors beyond our control.
Beginning in the third quarter of 2014, the global prices for oil and natural gas began a dramatic decline, and while improved, prices remain low on a relative basis. Current prices remain significantly less than they were in the several years prior to mid-2014. A decline in oil and natural gas prices and a sustained period of oil and natural gas prices at depressed levels could have a material adverse effect on our financial condition. We currently do not have any derivative contracts to hedge against declines in commodity prices.
We pay our MGP, as an Operator, a monthly well supervision fee, which covers all normal and regularly recurring operating expenses for the production and sale of natural gas such as:

•
well tending, routine maintenance and adjustment;
•
reading meters, recording production, pumping, maintaining appropriate books and records; and
•
preparation of reports for us and government agencies.


11


The well supervision fees, however, do not include costs and expenses related to the production and sale of oil, the purchase of certain equipment, materials and brine disposal. If these expenses are incurred, we pay cost for third-party services, materials and a competitive charge for services performed directly by our MGP or its affiliates. Also, beginning one year after each of our wells has been placed into production, our Operators, may retain $200 per month, per well, to cover the estimated future plugging and abandonment costs of the well. As of March 31, 2018, our Operators have withheld $621,800 of net production revenues for this purpose.

Results of Operations

The following table sets forth information relating to our production revenues, production volumes, average sales prices, production costs and depletion during the periods indicated:
 
Three Months Ended March 31,
 
Change
 
2018
 
2017
 
$
 
%
Production revenues (in thousands):
 
 
 
 
 
 
 
Gas
$
65

 
$
72

 
$
(7
)
 
(10
)%
Oil
14

 
15

 
(1
)
 
(7
)%
Total
$
79

 
$
87

 
$
(8
)
 
(9
)%
 
 
 
 
 
 
 
 
Production volumes:
 
 
 
 
 
 
 
Gas (mcf/day) (1)
280

 
259

 
21

 
8
 %
Oil (bbl/day) (1)
3

 
4

 
(1
)
 
(25
)%
Total (mcfe/day) (1)
298

 
283

 
15

 
5
 %
 
 
 
 
 
 
 
 
 Average sales prices: (2)
 
 
 
 
 
 
 
Gas (per mcf) (1)
$
2.58

 
$
3.09

 
$
(0.51
)
 
(17
)%
Oil (per bbl) (1)
$
58.65

 
$
37.83

 
$
20.82

 
55
 %
 
 
 
 
 
 
 
 
 Production costs:
 
 
 
 
 
 
 
As a percent of revenues
97
%
 
93
%
 
4
%
 
4
 %
Per mcfe (1)
$
2.87

 
$
3.15

 
$
(0.28
)
 
(9
)%

(1)
“Mcf” represents thousand cubic feet, “mcfe” represents thousand cubic feet equivalent, and “bbl” represents barrels. Bbl is converted to mcfe using the ratio of six mcfs to one bbl.
(2)
Average sales prices represent accrual basis pricing.


12


Revenues
 
The following tables reconcile the changes in natural gas, oil and total revenue for the respective periods presented by reflecting the effect of changes in volume and in the underlying commodity prices. 
 
Three Months Ended March 31,
 
Natural gas
 
Oil
 
Total
Revenues for the three months ended March 31, 2017
$
72,100

 
$
14,500

 
$
86,600

Volume increase (decrease)
5,800

 
(5,800
)
 
—

Price (decrease) increase
(13,000
)
 
4,900

 
(8,100
)
Net decrease
(7,200
)
 
(900
)
 
(8,100
)
Revenues for the three months ended March 31, 2018
$
64,900

 
$
13,600

 
$
78,500

 
 The natural gas and oil volume variances reflected for the periods presented in the tables above relate to (1) wells being temporarily shut-in, (2) which may result in timing differences associated with the production from those wells depending upon when they are placed back into production, and (3) normal and expected declines inherent in the life of a well.

Costs and Expenses
 
Three Months Ended
March 31,
 
 
 
 
Change
 
2018
 
2017
 
$
 
%
Production
$
76,400

 
$
80,600

 
$
(4,200
)
 
(5
)%
Accretion of asset retirement obligations
17,300

 
17,700

 
(400
)
 
(2
)%
General and administrative
36,600

 
28,400

 
8,200

 
29
 %
Total costs and expenses
$
130,300

 
$
126,700

 
$
3,600

 
3
 %

Production expenses were $76,400 and $80,600 for the three months ended March 31, 2018 and 2017, respectively, a decrease of $4,200 (5)%. The decrease during the three months ended March 31, 2018 when compared to the prior year and correspond to an equal drop in produced volumes of oil and gas.

General and administrative expenses for the three months ended March 31, 2018 and 2017 were $36,600 and $28,400, respectively, an increase of $8,200. This increase was due to an increase in audit expenses.

Cash Flows Overview

There were no cash flows from operating activities for cash receipts and disbursements attributable to our normal monthly operating cycle for gas and oil production, lease operating expenses, gathering, processing and transportation expenses, severance taxes, general and administrative expenses.

No cash was provided by investing activities for the three months ended March 31, 2018 and 2017. 
 
No cash was used in financing activities for the three months ended March 31, 2018 and 2017.
 

13


Liquidity, Capital Resources and Ability to Continue as a Going Concern

See Note 1 to our condensed financial statements for additional information related to liquidity, capital resources and the ability to continue as a going concern.

As discussed in greater detail in Note 1 to our condensed financial statements, the significant risks and uncertainties related to the Partnership’s ability to fund its operations raise substantial doubt about the Partnership’s ability to continue as a going concern. The MGP currently intends to continue the Partnership’s operations and to fund the Partnership’s obligations; however, the MGP bears no obligation to absorb the Partnership’s operating losses. Should the MGP cease to absorb these losses, the Partnership would likely be further impacted and may make it uneconomical for the Partnership to produce its wells until they are depleted as originally intended. The financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty. If the Partnership cannot continue as a going concern, adjustments to the carrying values and classification of the Partnership’s assets and liability and the reported amounts of income and expenses could be required and could be material.

Critical Accounting Policies

See Note 2 to our condensed financial statements for additional information related to recently issued accounting standards.

For a more complete discussion of the accounting policies and estimates that we have identified as critical in the preparation of our condensed financial statements, please refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
 
ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

 The MGP maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the MGP's Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, the MGP recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
 
Under the supervision of the MGP's Chief Executive Officer and Principal Financial Officer, the MGP has carried out an evaluation of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the MGP's Chief Executive Officer and Principal Financial Officer concluded that, as of March 31, 2018, its disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in the Partnership’s internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 



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PART II OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS
 
The Partnership is a party to various routine legal proceedings arising out of the ordinary course of its business. The MGP believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the Partnership’s financial condition or results of operations.
 
The MGP's affiliates and their subsidiaries are party to various routine legal proceedings arising in the ordinary course of their respective businesses. The MGP believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the MGP’s financial condition or results of operations.


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ITEM 6. EXHIBITS

EXHIBIT INDEX
 
Exhibit No.
  
Description
3.1
 
Certificate of Limited Partnership for Atlas America Public #9 LTD. (filed as Exhibit 4(a) to the Partnership’s Form SB-2 Registration Statement dated September 8, 2000, as amended, File No. 333-44130, and incorporated herein by reference)
 
 
 
3.2
 
Amended and Restated Certificate and Agreement of Limited Partnership for Atlas America Public #9 LTD. (filed as Exhibit 4(b) to the Partnership’s Form SB-2 Registration Statement dated September 8, 2000, as amended, File No. 333-44130, and incorporated herein by reference)
 
 
 
3.3
 
Amendment to Amended and Restated Certificate and Agreement of Limited Partnership of Atlas America Public #9 LTD dated June 30, 2017 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K dated June 30, 2017 and incorporated herein by reference)
 
 
 
(a)
Certification Pursuant to Rule 13a-14/15(d)-14
 
 
 
(a)
Certification Pursuant to Rule 13a-14/15(d)-14
 
 
 
(b)
Section 1350 Certification
 
 
 
(b)
Section 1350 Certification
 
 
 
101
(c)
Interactive Data File
 
 
 
(a)
Filed herewith
(b)
Furnished herewith. Pursuant to SEC Release No. 33-8212, this certification will be treated as "accompanying" this report and not "filed" as part of such report for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of Section 18 of the Exchange Act, and this certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, except to the extent that the registrant specifically incorporates it by reference.
(c)
Pursuant to Rule 406T of Regulation S-T, these interactive data files are being furnished herewith and are not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability.

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SIGNATURES

Pursuant to the requirements of the Securities of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
ATLAS AMERICA PUBLIC #9 LTD.
 
 
 
 
By:
DGOC Partnership Holdings, LLC, its
 
 
Managing General Partner
 
 
 
Date: May 15, 2018
By:
/s/ Robert R. Hutson, Jr.
 
 
Robert R. Hutson, Jr.,
Chief Executive Officer (principal executive officer) of the Managing General Partner
 
 
Date: May 15, 2018
By:
/s/ Bradley G. Gray
 
 
Bradley G. Gray,
Chief Operating Officer (principal financial officer) of the Managing General Partner

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ATLAS AMERICA PUBLIC #9 LTD. Reports