Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2017shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Mar. 31, 2017 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q1 |
Entity Registrant Name | ATLAS RESOURCES SERIES 28-2010 L.P. |
Entity Central Index Key | 1,487,561 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 0 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 395,700 | $ 171,800 |
Accounts receivable trade-affiliate | 1,613,100 | 1,223,800 |
Total current assets | 2,008,800 | 1,395,600 |
Gas and oil properties, net | 24,064,500 | 24,494,800 |
Long-term asset retirement receivable-affiliate | 95,800 | 110,000 |
Total assets | 26,169,100 | 26,000,400 |
Current liabilities: | ||
Accrued liabilities | 213,700 | 206,300 |
Total current liabilities | 213,700 | 206,300 |
Asset retirement obligations | 3,975,600 | 3,956,700 |
Commitments and contingencies (Note 4) | ||
Partners’ capital: | ||
Managing general partner’s interest | 3,854,800 | 3,691,000 |
Limited partners’ interest (7,500 units) | 18,125,000 | 18,146,400 |
Total partners’ capital | 21,979,800 | 21,837,400 |
Total liabilities and partners’ capital | $ 26,169,100 | $ 26,000,400 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) | Mar. 31, 2017shares |
Statement Of Financial Position [Abstract] | |
Limited partners' units | 7,500 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
REVENUES | ||
Natural gas | $ 2,020,000 | $ 1,151,200 |
Gain on mark-to-market derivatives | 122,400 | |
Total revenues | 2,020,000 | 1,273,600 |
COSTS AND EXPENSES | ||
Production | 839,200 | 968,000 |
Depletion | 430,300 | 416,300 |
Accretion of asset retirement obligations | 44,500 | 42,400 |
General and administrative | 33,000 | 33,600 |
Total costs and expenses | 1,347,000 | 1,460,300 |
Net income (loss) | 673,000 | (186,700) |
Allocation of net income (loss): | ||
Managing general partner | 332,000 | (24,800) |
Limited partners | $ 341,000 | $ (161,900) |
Net income (loss) per limited partnership unit | $ 45 | $ (22) |
CONDENSED STATEMENTS OF COMPREH
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income (loss) | $ 673,000 | $ (186,700) |
Other comprehensive loss: | ||
Total other comprehensive loss | (900) | |
Less: reclassification adjustment to net income (loss) of mark-to-market gains on cash flow hedges | (900) | |
Comprehensive income (loss) | $ 673,000 | $ (187,600) |
CONDENSED STATEMENT OF CHANGES
CONDENSED STATEMENT OF CHANGES IN PARTNERS' CAPITAL - 3 months ended Mar. 31, 2017 - USD ($) | Total | Managing General Partner | Limited Partners |
Beginning balance at Dec. 31, 2016 | $ 21,837,400 | $ 3,691,000 | $ 18,146,400 |
Participation in revenues, costs and expenses: | |||
Net production revenues | 1,180,800 | 443,800 | 737,000 |
Depletion | (430,300) | (82,700) | (347,600) |
Accretion of asset retirement obligations | (44,500) | (16,700) | (27,800) |
General and administrative | (33,000) | (12,400) | (20,600) |
Net income (loss) | 673,000 | 332,000 | 341,000 |
Distributions to partners | (530,600) | (168,200) | (362,400) |
Ending balance at Mar. 31, 2017 | $ 21,979,800 | $ 3,854,800 | $ 18,125,000 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 673,000 | $ (186,700) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depletion | 430,300 | 416,300 |
Non-cash loss on derivative value | 78,300 | |
Accretion of asset retirement obligations | 44,500 | 42,400 |
Changes in operating assets and liabilities: | ||
(Increase) decrease in accounts receivable trade-affiliate | (389,300) | 500 |
Decrease (increase) in asset retirement receivable-affiliate | 14,200 | (17,400) |
Increase in accrued liabilities | 7,400 | 48,400 |
Asset retirement obligations settled | (25,600) | |
Net cash provided by operating activities | 754,500 | 381,800 |
Cash flows from financing activities: | ||
Distributions to partners | (530,600) | (563,000) |
Net cash used in financing activities | (530,600) | (563,000) |
Net change in cash | 223,900 | (181,200) |
Cash beginning of period | 171,800 | $ 181,200 |
Cash at end of period | $ 395,700 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 - DESCRIPTION OF BUSINESS Atlas Resources Series 28-2010 L.P. (the “Partnership”) is a Delaware limited partnership, formed on April 1, 2010 with Atlas Resources, LLC serving as its Managing General Partner and Operator (“Atlas Resources” or the “MGP”). Atlas Resources is an indirect subsidiary of Titan Energy, LLC (“Titan”). Titan is an independent developer and producer of natural gas, crude oil, and natural gas liquids, with operations in basins across the United States. Titan also sponsors and manages tax-advantaged investment partnerships, in which it co-invests to finance a portion of its natural gas and oil production activities. Titan is the successor to the business and operations of Atlas Resource Partners, L.P. (“ARP”), a Delaware limited partnership organized in 2012. Unless the context otherwise requires, references below to “the Partnership,” “we,” “us,” “our” and “our company”, refer to Atlas Resources Series 28-2010 L.P. Atlas Energy Group, LLC (“Atlas Energy Group”; OTCQX: ATLS) is a publicly traded company and manages Titan and the MGP through a 2% preferred member interest in Titan. The Partnership has drilled and currently operates wells located in Pennsylvania, Indiana and Colorado. We have no employees and rely on our MGP for management, which in turn, relies on Atlas Energy Group for administrative services. The Partnership’s operating cash flows are generated from its wells, which produce natural gas. Produced natural gas is then delivered to market through affiliated and/or third-party gas gathering systems. The Partnership intends to produce its wells until they are depleted or become uneconomical to produce at which time they will be plugged and abandoned or sold. 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 reserves that it can expect to recover through existing wells with existing equipment and operating methods or in which the cost of additional required 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). There are numerous uncertainties inherent in estimating quantities of proven reserves and in projecting future net revenues. The prices at which the Partnership’s natural gas will be sold are uncertain and the Partnership is not guaranteed a specific price for the sale of its production. Changes in natural gas prices have a significant impact on the Partnership’s cash flow and the value of its reserves. Lower natural gas prices may not only decrease the Partnership’s revenues, but also may 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. Historically, there has been no need to borrow funds from the MGP to fund operations as the cash flow from the Partnership’s operations had been adequate to fund its obligations and distributions to its partners. Prices for oil and natural gas began to decline significantly during the fourth quarter of 2014 and continued to remain low in 2017. These lower commodity prices have negatively impacted the Partnership’s revenues, earnings and cash flows. Sustained low commodity prices will have a material and adverse effect on the Partnership’s liquidity position and may make it uneconomical for the Partnership to produce its wells until they are depleted as the Partnership originally intended. In addition, the Partnership has 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 to be strategic in managing the Partnership’s cost structure and, in turn, liquidity to meet its operating needs. To the extent commodity prices 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 uncertainties of Titan’s and the MGP’s liquidity and capital resources (as further described below) raise substantial doubt about Titan’s and the MGP’s ability to continue as a going concern, which also raises substantial doubt about the Partnership’s ability to continue as a going concern. If Titan is unsuccessful in taking actions to resolve its liquidity issues (as further described below), the MGP’s ability to continue the Partnership’s operations may be further impacted and may make it uneconomical for the Partnership to produce its wells until they are depleted as originally intended. If the Partnership is not able to continue as a going concern, the Partnership will liquidate. If the Partnership’s operations are liquidated, a valuation of the Partnership’s assets and liabilities would be determined by an independent expert in accordance with the partnership agreement. It is possible that based on such determination, the Partnership would not be able to make any liquidation distributions to its limited partners. A liquidation could occur without any further contributions from or distributions to the limited partners. 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 liabilities and the reported amounts of income and expenses could be required and could be material. MGP’s Liquidity, Capital Resources, and Ability to Continue as a Going Concern The MGP’s primary sources of liquidity are cash generated from operations, capital raised through its drilling partnership program, and borrowings under Titan’s credit facilities. The MGP’s primary cash requirements are operating expenses, payments to Titan for debt service including interest, and capital expenditures. The MGP has historically funded its operations, acquisitions and cash distributions primarily through cash generated from operations, amounts available under Titan’s credit facilities and equity and debt offerings. The MGP’s future cash flows are subject to a number of variables, including oil and natural gas prices. Prices for oil and natural gas began to decline significantly during the fourth quarter of 2014 and continued to remain low in 2017. These lower commodity prices have negatively impacted the MGP’s revenues, earnings and cash flows. Sustained low commodity prices could have a material and adverse effect on the MGP’s liquidity position. In addition, challenges with the MGP’s ability to raise capital through its drilling partnership program, either as a result of downturn in commodity prices or other difficulties affecting the fundraising channel, have negatively impacted Titan’s and the MGP’s ability to remain in compliance with the covenants under its credit facilities. Titan was not in compliance with certain of the financial covenants under its credit facilities as of December 31, 2016, as well as the requirement to deliver audited financial statements without a going concern qualification. Titan and the MGP do not currently have sufficient liquidity to repay all of Titan’s outstanding indebtedness, and as a result, there is substantial doubt regarding Titan’s and the MGP’s ability to continue as a going concern. On April 19, 2017, Titan entered into a third amendment to its first lien credit facility in an attempt to ameliorate some of its liquidity concerns. The amendment provides for, among other things, waivers of non-compliance, increases in certain financial covenant ratios and scheduled decreases in Titan’s borrowing base. In addition, Titan expects that it will sell a significant amount of non-core assets in the near future to comply with the requirements of its first lien credit facility amendment and to attempt to enhance its liquidity. The lenders’ waivers are subject to revocation in certain circumstances, including the exercise of remedies by junior lenders (including pursuant to Titan’s second lien credit facility), the failure to extend the 180-day standstill period under the intercreditor agreement at least 15 business days prior to its expiration, and the occurrence of additional events of default under the first lien credit facility. On April 21, 2017, the lenders under the Titan’s second lien credit facility delivered a notice of events of default and reservation of rights, pursuant to which they noticed events of default related to financial covenants and the failure to deliver financial statements without a “going concern” qualification. The delivery of such notice began the 180-day standstill period under the intercreditor agreement, during which the lenders under the second lien credit facility are prevented from pursuing remedies against the collateral securing Titan’s obligations under the second lien credit facility. The lenders have not accelerated the payment of amounts outstanding under the second lien credit facility. Titan continually monitors the capital markets and the MGP’s capital structure and may make changes to its capital structure from time to time, with the goal of maintaining financial flexibility, preserving or improving liquidity, strengthening its balance sheet, meeting its debt service obligations and/or achieving cost efficiency. For example, Titan could pursue options such as refinancing, restructuring or reorganizing its indebtedness or capital structure or seek to raise additional capital through debt or equity financing to address its liquidity concerns and high debt levels. Titan is evaluating various options, but there is no certainty that Titan will be able to implement any such options, and cannot provide any assurances that any refinancing or changes in its debt or equity capital structure would be possible or that additional equity or debt financing could be obtained on acceptable terms, if at all, and such options may result in a wide range of outcomes for Titan’s stakeholders. In addition, Titan expects that it will sell a significant amount of non-core assets in the near future to comply with the requirements of its first lien credit facility amendment and to attempt to enhance its liquidity. However, there is no guarantee that the proceeds Titan receives for any asset sale will satisfy the repayment requirements under its first lien credit facility. Titan’s Appalachia Divestiture On May 4, 2017, Titan entered into a definitive agreement to sell its conventional Marcellus assets to Diversified Gas & Oil, PLC (“Diversified”), for $84.2 million. The transaction includes the sale of approximately 8,400 oil and gas wells across Pennsylvania, Ohio, Tennessee, New York and West Virginia, along with the associated infrastructure. Titan will retain its Utica Shale position, Indiana assets and West Virginia coalbed methane assets in the region. The transaction is subject to customary closing conditions, has an effective date of April 1, 2017 and is expected to close in June 2017. The net proceeds will be used to repay a portion of outstanding borrowings under Titan’s first lien credit facility. The transaction will significantly improve Titan’s first lien credit facility metrics and is expected to fulfill its borrowing base step down to $360 million, which is scheduled to occur on August 31, 2017. The assets Titan has agreed to sell to Diversified include its indirect interests in the Partnership’s Marcellus assets. Titan expects that the MGP will effectuate one or more transactions involving the Partnership in connection with the sale, pursuant to which the Partnership’s Marcellus assets will be segregated to allow Titan to transfer the MGP’s equity interests in the Partnership with respect to the Partnership’s Marcellus assets. Following Titan’s transfer, Diversified will be the managing general partner and operator with respect to the Marcellus assets. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the Partnership’s condensed financial statements in conformity with U.S. GAAP requires management 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, fair value of derivative instruments 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. Derivative Instruments The Partnership’s MGP entered into certain financial contracts to manage the Partnership’s exposure to movement in commodity prices. On January 1, 2015, the Partnership discontinued hedge accounting through de-designation for all of its existing commodity derivatives which were qualified as hedges. As such, subsequent changes in fair value after December 31, 2014 of these derivatives were recognized immediately within gain (loss) on mark-to-market derivatives in the Partnership’s statements of operations, while the fair values of the instruments recorded in accumulated other comprehensive income as of December 31, 2014 were reclassified to the statements of operations in the periods in which the respective derivative contracts settled. During the three months ended March 31, 2017, the Partnership did not have any derivative activity as all derivative contracts have matured. During the three months ended March 31, 2016, the Partnership recorded $900 as a gain reclassified from accumulated other comprehensive income into natural gas and oil revenues and $122,400 as a gain subsequent to hedge accounting recognized in gain on mark-to-market derivatives. Gas and The following is a summary of gas and oil properties at the dates indicated: March 31, 2017 December 31, Proved properties: Leasehold interests $ 5,301,300 $ 5,301,300 Wells and related equipment 159,420,100 159,420,100 Total natural gas and oil properties 164,721,400 164,721,400 Accumulated depletion and impairment (140,656,900 ) (140,226,600 ) Gas and oil properties, net $ 24,064,500 $ 24,494,800 Recently Issued Accounting Standards In May 2014, the FASB updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which an entity has to refer. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The updated accounting guidance provides companies with alternative methods of adoption. We are evaluating the impact of this updated accounting guidance on our financial statements. This accounting guidance will require that our revenue recognition policy disclosures include further detail regarding our performance obligations as to the nature, amount, timing, and estimates of revenue and cash flows generated from our contracts with customers. We are still in the process of determining whether or not we will use the retrospective method or the modified retrospective approach to implementation. |
Certain Relationships and Relat
Certain Relationships and Related Party Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 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 $975 per well per month for Marcellus wells, $1,500 per well per month for New Albany wells, and for Colorado wells a fee of $400 is charged per well per month for operating and maintaining the wells. The following table provides information with respect to these costs and the periods incurred. Three Months Ended 2017 2016 Administrative fees $ 16,000 $ 16,800 Supervision fees 165,200 182,300 Transportation fees 202,000 123,400 Direct costs 489,000 679,100 Total $ 872,200 $ 1,001,600 The MGP and its affiliates perform all administrative and management functions for the Partnership, including billing revenues and paying expenses. Accounts receivable trade-affiliate on the Partnership’s condensed balance sheets includes the net production revenues due from the MGP. Subordination by Managing General Partner Under the terms of the Partnership Agreement, the MGP may be required to subordinate up to 50% of its share of net production revenues of the Partnership to the benefit of the limited partners for an amount equal to at least 12% of their net subscriptions in the first 12-month subordination period, 10% of their net subscriptions in each of the next three 12-month subordination periods, and 8% of their net subscriptions in the fifth 12-month subordination period determined on a cumulative basis, in each of the first five years of Partnership operations, commencing with the first distribution to the limited partners (March 2011) and 60 months from that date. The subordination period expired September 2016. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 4 - COMMITMENTS AND CONTINGENCIES General Commitments Subject to certain conditions, investor partners may present their interests beginning in 2015 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, the MGP, as operator, may retain $200 per month per well to cover estimated future plugging and abandonment costs. As of March 31, 2017, the MGP has withheld $95,800 of net production revenue for future plugging and abandonment costs. 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’s management 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. |
Summary of Significant Accoun12
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies [Line Items] | |
Liquidity, Capital Resources and Ability to Continue as a Going Concern | 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. Historically, there has been no need to borrow funds from the MGP to fund operations as the cash flow from the Partnership’s operations had been adequate to fund its obligations and distributions to its partners. Prices for oil and natural gas began to decline significantly during the fourth quarter of 2014 and continued to remain low in 2017. These lower commodity prices have negatively impacted the Partnership’s revenues, earnings and cash flows. Sustained low commodity prices will have a material and adverse effect on the Partnership’s liquidity position and may make it uneconomical for the Partnership to produce its wells until they are depleted as the Partnership originally intended. In addition, the Partnership has 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 to be strategic in managing the Partnership’s cost structure and, in turn, liquidity to meet its operating needs. To the extent commodity prices 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 uncertainties of Titan’s and the MGP’s liquidity and capital resources (as further described below) raise substantial doubt about Titan’s and the MGP’s ability to continue as a going concern, which also raises substantial doubt about the Partnership’s ability to continue as a going concern. If Titan is unsuccessful in taking actions to resolve its liquidity issues (as further described below), the MGP’s ability to continue the Partnership’s operations may be further impacted and may make it uneconomical for the Partnership to produce its wells until they are depleted as originally intended. If the Partnership is not able to continue as a going concern, the Partnership will liquidate. If the Partnership’s operations are liquidated, a valuation of the Partnership’s assets and liabilities would be determined by an independent expert in accordance with the partnership agreement. It is possible that based on such determination, the Partnership would not be able to make any liquidation distributions to its limited partners. A liquidation could occur without any further contributions from or distributions to the limited partners. 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 liabilities and the reported amounts of income and expenses could be required and could be material. |
Titan’s Appalachia Divestiture | Titan’s Appalachia Divestiture On May 4, 2017, Titan entered into a definitive agreement to sell its conventional Marcellus assets to Diversified Gas & Oil, PLC (“Diversified”), for $84.2 million. The transaction includes the sale of approximately 8,400 oil and gas wells across Pennsylvania, Ohio, Tennessee, New York and West Virginia, along with the associated infrastructure. Titan will retain its Utica Shale position, Indiana assets and West Virginia coalbed methane assets in the region. The transaction is subject to customary closing conditions, has an effective date of April 1, 2017 and is expected to close in June 2017. The net proceeds will be used to repay a portion of outstanding borrowings under Titan’s first lien credit facility. The transaction will significantly improve Titan’s first lien credit facility metrics and is expected to fulfill its borrowing base step down to $360 million, which is scheduled to occur on August 31, 2017. The assets Titan has agreed to sell to Diversified include its indirect interests in the Partnership’s Marcellus assets. Titan expects that the MGP will effectuate one or more transactions involving the Partnership in connection with the sale, pursuant to which the Partnership’s Marcellus assets will be segregated to allow Titan to transfer the MGP’s equity interests in the Partnership with respect to the Partnership’s Marcellus assets. Following Titan’s transfer, Diversified will be the managing general partner and operator with respect to the Marcellus assets. |
Use of Estimates | Use of Estimates The preparation of the Partnership’s condensed financial statements in conformity with U.S. GAAP requires management 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, fair value of derivative instruments 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. |
Derivative Instruments | Derivative Instruments The Partnership’s MGP entered into certain financial contracts to manage the Partnership’s exposure to movement in commodity prices. On January 1, 2015, the Partnership discontinued hedge accounting through de-designation for all of its existing commodity derivatives which were qualified as hedges. As such, subsequent changes in fair value after December 31, 2014 of these derivatives were recognized immediately within gain (loss) on mark-to-market derivatives in the Partnership’s statements of operations, while the fair values of the instruments recorded in accumulated other comprehensive income as of December 31, 2014 were reclassified to the statements of operations in the periods in which the respective derivative contracts settled. During the three months ended March 31, 2017, the Partnership did not have any derivative activity as all derivative contracts have matured. During the three months ended March 31, 2016, the Partnership recorded $900 as a gain reclassified from accumulated other comprehensive income into natural gas and oil revenues and $122,400 as a gain subsequent to hedge accounting recognized in gain on mark-to-market derivatives. |
Gas and Oil Properties | Gas and The following is a summary of gas and oil properties at the dates indicated: March 31, 2017 December 31, Proved properties: Leasehold interests $ 5,301,300 $ 5,301,300 Wells and related equipment 159,420,100 159,420,100 Total natural gas and oil properties 164,721,400 164,721,400 Accumulated depletion and impairment (140,656,900 ) (140,226,600 ) Gas and oil properties, net $ 24,064,500 $ 24,494,800 |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In May 2014, the FASB updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which an entity has to refer. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The updated accounting guidance provides companies with alternative methods of adoption. We are evaluating the impact of this updated accounting guidance on our financial statements. This accounting guidance will require that our revenue recognition policy disclosures include further detail regarding our performance obligations as to the nature, amount, timing, and estimates of revenue and cash flows generated from our contracts with customers. We are still in the process of determining whether or not we will use the retrospective method or the modified retrospective approach to implementation. |
MGP | |
Summary Of Significant Accounting Policies [Line Items] | |
Liquidity, Capital Resources and Ability to Continue as a Going Concern | MGP’s Liquidity, Capital Resources, and Ability to Continue as a Going Concern The MGP’s primary sources of liquidity are cash generated from operations, capital raised through its drilling partnership program, and borrowings under Titan’s credit facilities. The MGP’s primary cash requirements are operating expenses, payments to Titan for debt service including interest, and capital expenditures. The MGP has historically funded its operations, acquisitions and cash distributions primarily through cash generated from operations, amounts available under Titan’s credit facilities and equity and debt offerings. The MGP’s future cash flows are subject to a number of variables, including oil and natural gas prices. Prices for oil and natural gas began to decline significantly during the fourth quarter of 2014 and continued to remain low in 2017. These lower commodity prices have negatively impacted the MGP’s revenues, earnings and cash flows. Sustained low commodity prices could have a material and adverse effect on the MGP’s liquidity position. In addition, challenges with the MGP’s ability to raise capital through its drilling partnership program, either as a result of downturn in commodity prices or other difficulties affecting the fundraising channel, have negatively impacted Titan’s and the MGP’s ability to remain in compliance with the covenants under its credit facilities. Titan was not in compliance with certain of the financial covenants under its credit facilities as of December 31, 2016, as well as the requirement to deliver audited financial statements without a going concern qualification. Titan and the MGP do not currently have sufficient liquidity to repay all of Titan’s outstanding indebtedness, and as a result, there is substantial doubt regarding Titan’s and the MGP’s ability to continue as a going concern. On April 19, 2017, Titan entered into a third amendment to its first lien credit facility in an attempt to ameliorate some of its liquidity concerns. The amendment provides for, among other things, waivers of non-compliance, increases in certain financial covenant ratios and scheduled decreases in Titan’s borrowing base. In addition, Titan expects that it will sell a significant amount of non-core assets in the near future to comply with the requirements of its first lien credit facility amendment and to attempt to enhance its liquidity. The lenders’ waivers are subject to revocation in certain circumstances, including the exercise of remedies by junior lenders (including pursuant to Titan’s second lien credit facility), the failure to extend the 180-day standstill period under the intercreditor agreement at least 15 business days prior to its expiration, and the occurrence of additional events of default under the first lien credit facility. On April 21, 2017, the lenders under the Titan’s second lien credit facility delivered a notice of events of default and reservation of rights, pursuant to which they noticed events of default related to financial covenants and the failure to deliver financial statements without a “going concern” qualification. The delivery of such notice began the 180-day standstill period under the intercreditor agreement, during which the lenders under the second lien credit facility are prevented from pursuing remedies against the collateral securing Titan’s obligations under the second lien credit facility. The lenders have not accelerated the payment of amounts outstanding under the second lien credit facility. Titan continually monitors the capital markets and the MGP’s capital structure and may make changes to its capital structure from time to time, with the goal of maintaining financial flexibility, preserving or improving liquidity, strengthening its balance sheet, meeting its debt service obligations and/or achieving cost efficiency. For example, Titan could pursue options such as refinancing, restructuring or reorganizing its indebtedness or capital structure or seek to raise additional capital through debt or equity financing to address its liquidity concerns and high debt levels. Titan is evaluating various options, but there is no certainty that Titan will be able to implement any such options, and cannot provide any assurances that any refinancing or changes in its debt or equity capital structure would be possible or that additional equity or debt financing could be obtained on acceptable terms, if at all, and such options may result in a wide range of outcomes for Titan’s stakeholders. In addition, Titan expects that it will sell a significant amount of non-core assets in the near future to comply with the requirements of its first lien credit facility amendment and to attempt to enhance its liquidity. However, there is no guarantee that the proceeds Titan receives for any asset sale will satisfy the repayment requirements under its first lien credit facility. |
Summary of Significant Accoun13
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Gas and Oil Properties | The following is a summary of gas and oil properties at the dates indicated: March 31, 2017 December 31, Proved properties: Leasehold interests $ 5,301,300 $ 5,301,300 Wells and related equipment 159,420,100 159,420,100 Total natural gas and oil properties 164,721,400 164,721,400 Accumulated depletion and impairment (140,656,900 ) (140,226,600 ) Gas and oil properties, net $ 24,064,500 $ 24,494,800 |
Certain Relationships and Rel14
Certain Relationships and Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Certain Relationships and Related Party Transactions | The following table provides information with respect to these costs and the periods incurred. Three Months Ended 2017 2016 Administrative fees $ 16,000 $ 16,800 Supervision fees 165,200 182,300 Transportation fees 202,000 123,400 Direct costs 489,000 679,100 Total $ 872,200 $ 1,001,600 |
Description of Business (Detail
Description of Business (Details) | May 04, 2017USD ($)Well | Mar. 31, 2017 |
Description Of Business [Line Items] | ||
Atlas Resources Series 28-2010 L.P. | Apr. 1, 2010 | |
Titan Energy, LLC | Appalachia and Marcellus | Subsequent Event | ||
Description Of Business [Line Items] | ||
Sale of assets | $ 84,200,000 | |
Number of oil and gas wells sold | Well | 8,400 | |
Titan Energy, LLC | First Lien Credit Facility | Appalachia and Marcellus | Subsequent Event | ||
Description Of Business [Line Items] | ||
Step down in borrowing base | $ 360,000,000 | |
Atlas Energy Group, LLC | Titan Energy, LLC | Preferred Member Interest | ||
Description Of Business [Line Items] | ||
Percentage of preferred interest | 2.00% |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Accounting Policies [Abstract] | |
Gain reclassified from accumulated other comprehensive income into natural gas and oil revenues | $ 900 |
Gain subsequent to hedge accounting recognized in gain on mark-to-market derivatives | $ 122,400 |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Summary of Gas and Oil Properties) (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Total natural gas and oil properties | $ 164,721,400 | $ 164,721,400 |
Accumulated depletion and impairment | (140,656,900) | (140,226,600) |
Gas and oil properties, net | 24,064,500 | 24,494,800 |
Leasehold interests | ||
Property Plant And Equipment [Line Items] | ||
Total natural gas and oil properties | 5,301,300 | 5,301,300 |
Wells and related equipment | ||
Property Plant And Equipment [Line Items] | ||
Total natural gas and oil properties | $ 159,420,100 | $ 159,420,100 |
Certain Relationships and Rel18
Certain Relationships and Related Party Transactions (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2017$ / mo | |
Related Party Transaction [Line Items] | |
Managing General Partner Maximum Subordination Percentage Of Share Of Net Production Revenues | 50.00% |
MGP | First 12 Month Subordination Period | |
Related Party Transaction [Line Items] | |
Subordination Target Return Rate For Limited Partner Subscriptions | 12.00% |
MGP | Next Three 12 Month Subordination Periods | |
Related Party Transaction [Line Items] | |
Subordination Target Return Rate For Limited Partner Subscriptions | 10.00% |
MGP | Fifth 12 Month Subordination Period | |
Related Party Transaction [Line Items] | |
Subordination Target Return Rate For Limited Partner Subscriptions | 8.00% |
MGP and Affiliates | General and administrative expenses | |
Related Party Transaction [Line Items] | |
Monthly Administrative Costs Per Well | 75 |
MGP and Affiliates | Production | |
Related Party Transaction [Line Items] | |
Transportation Fee Rate As Percentage Of Natural Gas Sales Price | 16.00% |
MGP and Affiliates | Production | Marcellus wells | |
Related Party Transaction [Line Items] | |
Monthly Supervision Fees Per Well | 975 |
MGP and Affiliates | Production | New Albany Wells | |
Related Party Transaction [Line Items] | |
Monthly Supervision Fees Per Well | 1,500 |
MGP and Affiliates | Production | Colorado Wells | |
Related Party Transaction [Line Items] | |
Monthly Supervision Fees Per Well | 400 |
Certain Relationships and Rel19
Certain Relationships and Related Party Transactions (Certain Relationships and Related Party Transactions) (Details) - MGP and Affiliates - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 872,200 | $ 1,001,600 |
Administrative fees | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Expenses from Transactions with Related Party | 16,000 | 16,800 |
Supervision fees | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Expenses from Transactions with Related Party | 165,200 | 182,300 |
Transportation fees | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Expenses from Transactions with Related Party | 202,000 | 123,400 |
Direct costs | ||
Related Party Transaction [Line Items] | ||
Related Party Transaction, Expenses from Transactions with Related Party | $ 489,000 | $ 679,100 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2017USD ($)$ / mo | |
Commitments And Contingencies Disclosure [Abstract] | |
Investor Partners Ownership Interest Presented For Purchase By The MGP, Maximum Percentage | 5.00% |
Operator Fee Per Well To Cover Estimated Future Plugging And Abandonment Costs, Monthly | $ / mo | 200 |
Net production revenue for future plugging and abandonment costs | $ | $ 95,800 |