FOR IMMEDIATE RELEASE
| |
|---|
| CONTACT: | | | FREDDIE M. KOTEK | | |
| | | | CHIEF FINANCIAL OFFICER | | |
| | | | ATLAS AMERICA, INC. | | |
| | | | 1845 WALNUT STREET, SUITE 1000 | | |
| | | | PHILADELPHIA, PA 19103 | | |
| | | | 215/546-5005 | | |
| | | | 215/546-5388 (facsimile) | | |
ATLAS AMERICA, INC.
REPORTS OPERATING RESULTS
FOR FIRST FISCAL QUARTER AND YEAR ENDED DECEMBER 31, 2004
Philadelphia, PA – February 3, 2005 — Atlas America Inc. (NASDAQ: ATLS) (“ATLS” or the “Company”)reported net income of $8.9 million for the first fiscal quarter ended December 31, 2004 as compared to $4.9 million for the first fiscal quarter ended December 31, 2003, an increase of 82%. Net income per common share-basic and diluted was $0.67 for the first fiscal quarter ended December 31, 2004 as compared to net income per common share-basic and diluted of $0.46 for the first fiscal quarter December 31, 2003, an increase of $0.21.
Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) was $21.5 million for the first fiscal quarter ended December 31, 2004 as compared to $11.3 million for the first fiscal quarter ended December 31, 2003, an increase of 91%. The following table reconciles EBITDA to our net income for the three months ended December 31, 2004 and 2003 (in thousands).
| Three Months Ended |
|---|
| December 31, |
|---|
|
| |
| 2004 | 2003 |
|---|
|
| |
| |
| Net income | | | $ | 8,892 | | $ | 4,893 | |
| |
| Plus: | | |
| Interest expense | | | | 1,690 | | | 487 | |
| Provision for income taxes | | | | 5,002 | | | 2,635 | |
| Depreciation, depletion and amortization | | | | 5,872 | | | 3,245 | |
|
| |
| |
| EBITDA | | | $ | 21,456 | | $ | 11,260 | |
|
| |
| |
Management of ATLS believes that EBITDA provides additional information with respect to ATLS’s ability to meet its debt service, capital expense and working capital requirements. EBITDA is a commonly used measure of a business’ ability to generate cash flow without consideration of its financing structure. This measure is widely used by commercial banks, investment bankers, rating agencies and investors in evaluating performance relative to peers and pre-set performance standards. It is also a financial measurement that, with certain negotiated adjustments, is reported to ATLS’s banks to establish conformance with its financial covenants under its current credit facility. EBITDA is not a measure of financial performance under GAAP and, accordingly, should not be considered as a substitute for net income or cash flows from operating activities prepared in accordance with GAAP.
Pro-forma net income, a non-GAAP measure, was $8.2 million for the three months ended December 31, 2004, or $0.61 per share-basic and diluted for the period. Pro-forma net income excludes ATLS's share of Atlas Pipeline Partners, L.P.'s (NYSE:APL) ("APL") "net arbitration settlement" related to the purported terminated acquisition of Alaska Pipeline Company ("APC"). The following table reconciles net income to pro-forma net income for the three months ended December 31, 2004 and 2003 (in thousands).
| Three Months Ended |
|---|
| December 31, |
|---|
|
| |
| 2004 | 2003 |
|---|
|
| |
| |
| Net income | | | $ | 8,892 | | $ | 4,893 | |
| Less: Company's share of net arbitration settlement | | |
| resulting from terminated acquisition, net of taxes | | |
| of $390 | | | | 692 | | | -- | |
|
| |
| |
| Pro-forma net income | | | $ | 8,200 | | $ | 4,893 | |
|
| |
| |
| Pro-forma net income per share basic and diluted | | | $ | 0.61 | | $ | 0.46 | |
|
| |
| |
On December 30, 2004, APL entered into an agreement with SEMCO settling all issues and matters related to SEMCO’s termination of the sale of APC to APL, and SEMCO paid APL $5.5 million. SEMCO Energy, Inc., the owner of APC, had sent APL a notice purporting to terminate the acquisition. APL pursued its remedies under the acquisition agreement. In connection with the termination and settlement, APL incurred approximately $1.1 million of costs during the three months ended December 31, 2004, which, have been netted against the $5.5 million settlement. In addition, APL incurred $3.0 million of costs which were expensed in our fiscal year ended September 30, 2004. The management of ATLS believes that the net income excluding our share of the “net arbitration settlement” is more fairly indicative of the continuing performance of the Company during the three months ended December 31, 2004. Further, the resulting pro-forma net income and pro-forma net income per share-basic and diluted have been presented for information purposes only.
Drilling & Fundraising
| • | The number of wells we drilled, net to both our interest and that of our sponsored drilling investment partnerships, increased to 136 wells in the three months ended December 31, 2004 from 111 wells in the three months ended December 31, 2003, up 23% |
| • | We expect to drill approximately 725 net wells in fiscal 2005. |
| • | We raised $52.2 million in the first quarter of fiscal 2005. |
| • | Atlas has an acreage position of approximately 438,900 net acres at December 31, 2004 up from 411,000 net acres at December 31, 2003, an increase of 7% in net acres. |
| • | Undeveloped acreage at December 31, 2004 was 239,500 net acres, up from 220,400 net acres at December 31, 2003, an increase of 9% in net acres. |
| • | We have identified 2,415 geologically favorable sites for drilling additional wells, of which 296 were set aside for the funds raised in the first quarter of fiscal 2005. |
| • | We had interests in 5,896 gross wells at December 31, 2004, an increase of 499 gross wells (9%) from interests in 5,397 gross wells at December 31, 2003. |
| • | We operate approximately 4,986 wells out of 5,896 wells or 84% of the wells in which we have an interest. |
| • | Natural gas and oil production for our own account was 23.0 million cubic feet equivalent per day in the three months ended December 31, 2004, up from 22.2 million cubic feet equivalent per day in the three months ended December 31, 2003, an increase of 3% (4). |
Atlas America, Inc. is an energy company engaged primarily in the development and production of natural gas in the Appalachian Basin for its own account and for its investors through the offering of tax advantaged investment programs. Atlas America also owns 100% of the general partner of Atlas Pipeline Partners, L.P. (NYSE:APL).APL owns and operates more than 3,300 miles of natural gas gathering pipelines in Oklahoma, Texas, Pennsylvania, New York and Ohio and a gas processing facility in Oklahoma. For more information, please visit our website atwww.atlasamerica.com, or contact investor relations atpschreiber@atlasamerica.com.
Certain matters discussed within this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Atlas America, Inc. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include financial performance, regulatory changes, changes in local or national economic conditions and other risks detailed from time to time in the Company’s reports filed with the SEC, including quarterly reports on Form 10Q, reports on Form 8-K and annual reports on Form 10-K.
The remainder of this release contains the Company’s consolidated balance sheets, statements of income and other related information relating to the Company’s operations during the periods indicated.
ATLAS AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| | December 31, | September 30, |
|---|
| | 2004 | 2003 |
|---|
|
| |
| |
| | (Unaudited) | |
|---|
| ASSETS | | | | | | | | |
| Current assets: | | |
| Cash and cash equivalents | | | $ | 29,159 | | $ | 29,192 | |
| Accounts receivable | | | | 28,561 | | | 24,113 | |
| Prepaid expenses | | | | 3,571 | | | 2,433 | |
|
| |
| |
| Total current assets | | | | 61,291 | | | 55,738 | |
| Property and equipment, net | | | | 325,033 | | | 313,091 | |
| Other assets, net | | | | 8,030 | | | 7,955 | |
| Intangible assets, net | | | | 7,010 | | | 7,243 | |
| Goodwill, net of accumulated amortization of $4,532 | | | | 37,470 | | | 37,470 | |
|
| |
| |
| | | | $ | 438,834 | | $ | 421,497 | |
|
| |
| |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | |
| Current liabilities: | | |
| Current portion of long-term debt | | | $ | 2,621 | | $ | 3,401 | |
| Accounts payable | | | | 28,138 | | | 20,869 | |
| Liabilities associated with drilling contracts | | | | 52,610 | | | 29,375 | |
| Accrued producer liabilities | | | | 10,881 | | | 8,815 | |
| Accrued liabilities | | | | 12,823 | | | 14,767 | |
|
| |
| |
| Total current liabilities | | | | 107,073 | | | 77,227 | |
| Long-term debt | | | | 59,966 | | | 82,239 | |
| Advance from parent | | | | 5,341 | | | 10,413 | |
| Deferred tax liability | | | | 23,067 | | | 21,442 | |
| Other liabilities | | | | 6,340 | | | 6,949 | |
| Minority interest | | | | 135,442 | | | 132,224 | |
| Commitments and contingencies | | | | - | | | - | |
| Stockholders' equity: | | |
| Preferred stock, $0.01 par value: 1,000,000 authorized shares | | | | - | | | - | |
| Common stock, $0.01 par value: 49,000,000 authorized shares | | | | 133 | | | 133 | |
| Additional paid-in capital | | | | 75,584 | | | 75,584 | |
| Accumulated other comprehensive loss | | | | (843 | ) | | (2,553 | ) |
| Retained earnings | | | | 26,731 | | | 17,839 | |
|
| |
| |
| Total stockholders' equity | | | | 101,605 | | | 91,003 | |
|
| |
| |
| | | | $ | 438,834 | | $ | 421,497 | |
|
| |
| |
ATLAS AMERICA, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
| Three Months Ended |
|---|
| December 31, |
|---|
|
| |
| 2004 | 2003 |
|---|
|
| |
| |
| REVENUES | | | | | | | | |
| Well drilling | | | $ | 30,558 | | $ | 21,959 | |
| Gas and oil production | | | | 14,659 | | | 10,196 | |
| Gathering, transmission and processing | | | | 43,782 | | | 1,599 | |
| Well services | | | | 2,248 | | | 1,937 | |
|
| |
| |
| | | | | 91,247 | | | 35,691 | |
| COSTS AND EXPENSES | | |
| Well drilling | | | | 26,573 | | | 19,095 | |
| Gas and oil production and exploration | | | | 1,802 | | | 1,685 | |
| Gathering, transmission and processing | | | | 35,680 | | | 596 | |
| Well services | | | | 1,191 | | | 1,041 | |
| General and administrative | | | | 1,873 | | | 911 | |
| Depreciation, depletion and amortization | | | | 5,872 | | | 3,245 | |
|
| |
| |
| | | | | 72,991 | | | 26,573 | |
| OPERATING INCOME | | | | 18,256 | | | 9,118 | |
| |
| OTHER INCOME (EXPENSE) | | |
| Interest expense | | | | (1,690 | ) | | (487 | ) |
| Minority interest in Atlas Pipeline Partners, L.P. | | | | (7,220 | ) | | (1,271 | ) |
| Arbitration settlement, net | | | | 4,446 | | | -- | |
| Other, net | | | | 102 | | | 168 | |
|
| |
| |
| | | | | (4,362 | ) | | (1,590 | ) |
| Income from continuing operations before income taxes | | | | 13,894 | | | 7,528 | |
| Provision for income taxes | | | | 5,002 | | | 2,635 | |
|
| |
| |
| Net income | | | $ | 8,892 | | $ | 4,893 | |
|
| |
| |
| Net income per common share - basic | | |
| Net income per common share - basic | | | $ | 0.67 | | $ | 0.46 | |
|
| |
| |
| Weighted average common shares outstanding | | | | 13,333 | | | 10,688 | |
|
| |
| |
| Net income per common share - diluted | | |
| Net income per common share - diluted | | | $ | 0.67 | | $ | 0.46 | |
|
| |
| |
| Weighted average common shares outstanding | | | | 13,338 | | | 10,688 | |
|
| |
| |
Results of Operations
The following table sets forth information relating to our production revenues, production volumes, sales prices, production costs and depletion:
| Three Months Ended |
|---|
| December 31, |
|---|
|
| |
| 2004 | 2003 |
|---|
|
| |
| |
| Production revenues (in thousands): | | | | | | | | |
| Gas (1) | | | $ | 12,697 | | $ | 9,066 | |
| Oil | | | $ | 1,942 | | $ | 1,123 | |
| |
| Production volume: | | |
| Gas (mcf/day) (1) (4) | | | | 20,286 | | | 19,479 | |
| Oil (bbls/day) (4) | | | | 447 | | | 453 | |
| Total (mcfe/day) (4) | | | | 22,968 | | | 22,197 | |
| |
| Average sales prices: | | |
| Gas (per mcf) (2) | | | $ | 6.80 | | $ | 5.06 | |
| | |
| Oil (per bbl) | | | $ | 47.17 | | $ | 26.94 | |
| |
| Production costs (3): | | |
| As a percent of production revenues | | | | 12 | % | | 16 | % |
| Per mcf equivalent unit | | | $ | 0.83 | | $ | 0.80 | |
| |
| Depletion per mcfe (4) | | | $ | 1.28 | | $ | 1.08 | |
_________________
| (1) | Excludes sales of residual gas and sales to landowners. |
| (2) | Our average sales price before the effects of hedging was $6.80 and $5.19 for the three months ended December 31, 2004 and 2003, respectively. |
| (3) | Production costs include labor to operate the wells and related equipment, repairs and maintenance, materials and supplies, property taxes, severance taxes, insurance, gathering charges and production overhead. |
| (4) | As used in this discussion, "mcf" and "mmcf" means thousand cubic feet and million cubic feet; "mcfe" and "mmcfe" means thousand cubic feet equivalent and million cubic feet equivalent, and "bbls" means barrels. Bbls are converted to mcfe using the ratio of six mcfs to one bbl. |
