Supplemental Oil and Gas Information (Unaudited) | NOTE 17—SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) Oil, Gas and NGL Reserve Information. The preparation of AGP’s and ARP’s natural gas, oil and NGL reserve estimates was completed in accordance with AGP’s and ARP’s prescribed internal control procedures by AGP’s and ARP’s reserve engineers. The accompanying reserve information included below was derived from the reserve reports prepared ARP’s annual reports on Form 10-K for the years ended December 31, 2015, 2014 and 2013. For the years ended 2015, 2014 and 2013, AGP’s information was derived from the reserve reports prepared for AGP’s registration statement on Form S-1 (Registration No. 333-207537). Other than for ARP’s Rangely assets, for the periods presented, Wright and Company, Inc., an independent third-party reserve engineer, was retained to prepare a report of proved reserves. The reserve information includes natural gas, oil and NGL reserves which are all located throughout the United States. The independent reserves engineer’s evaluation was based on more than 39 years of experience in the estimation of and evaluation of petroleum reserves, specified economic parameters, operating conditions, and government regulations. For ARP’s Rangely assets, Cawley, Gillespie, and Associates, Inc. was retained to prepare a report of proved reserves. The independent reserves engineer’s evaluation was based on more than 33 years of experience in the estimation of and evaluation of petroleum reserves, specified economic parameters, operating conditions and government regulations. AGP’s and ARP’s internal control procedures include verification of input data delivered to its third-party reserve specialist, as well as a multi-functional management review. The preparation of reserve estimates was overseen by AGP’s and ARP’s Senior Reserve Engineer, who is a member of the Society of Petroleum Engineers and has more than 17 years of natural gas and oil industry experience. The reserve estimates were reviewed and approved by the Company’s senior engineering staff and management, with final approval by the Senior Vice President. The reserve disclosures that follow reflect AGP’s and ARP’s estimates of proved reserves, proved developed reserves and proved undeveloped reserves, net of royalty interests, of natural gas, crude oil and NGLs owned at year end and changes in proved reserves during the last three years. Proved oil, gas and NGL reserves are those quantities of oil, gas and NGLs, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Proved developed reserves are those reserves of any category that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. Proved undeveloped reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Reserves on undrilled acreage are limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Estimates for undeveloped reserves cannot be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty. The proved reserves quantities and future net cash flows as of December 31, 2015, 2014 and 2013 were estimated using an unweighted 12-month average pricing based on the prices on the first day of each month during the years ended December 31, 2015, 2014 and 2013, including adjustments related to regional price differentials and energy content. There are numerous uncertainties inherent in estimating quantities of proven reserves and in projecting future net revenues and the timing of development expenditures. The reserve data presented represents estimates only and should not be construed as being exact. In addition, the standardized measures of discounted future net cash flows may not represent the fair market value of oil and gas reserves included within AGP and ARP or the present value of future cash flows of equivalent reserves, due to anticipated future changes in oil and gas prices and in production and development costs and other factors, for their effects have not been proved. Reserve quantity information and a reconciliation of changes in proved reserve quantities included within AGP and ARP are as follows (unaudited): Gas (Mcf) Oil (Bbls) NGLs (Bbls) Balance, January 1, 2013 573,774,257 8,868,836 16,061,897 Extensions, discoveries and other additions (1) 90,098,219 8,255,531 8,197,272 Sales of reserves in-place (2,755,155 ) — (4,625 ) Purchase of reserves in-place (2) 493,481,302 1,964 55,187 Transfers to limited partnerships (2,485,210 ) (239,910 ) (258,381 ) Revisions (3) (88,484,468 ) (1,412,371 ) (3,826,744 ) Production (59,849,442 ) (485,226 ) (1,267,590 ) Balance, December 31, 2013 1,003,779,503 14,988,824 18,957,016 Extensions, discoveries and other additions (1) 58,461,204 3,372,177 3,986,986 Sales of reserves in-place (169,035 ) (1,519 ) (11,326 ) Purchase of reserves in-place (2) 88,635,059 51,168,449 5,189,827 Transfers to limited partnerships (4,887,095 ) (684,613 ) (665,486 ) Revisions (3) 5,947,622 (4,639,546 ) (2,689,372 ) Production (86,889,803 ) (1,254,247 ) (1,387,865 ) Balance, December 31, 2014 1,064,877,455 62,949,525 23,379,780 Extensions, discoveries and other additions (1) 6,806,339 3,460,609 293,256 Sales of reserves in-place (4) (2,713,428 ) (2,393 ) — Purchase of reserves in-place — — — Transfers to limited partnerships (2,958,882 ) (481,771 ) (342,156 ) Revisions (3) (379,058,376 ) (11,223,648 ) (13,769,701 ) Production (79,266,969 ) (2,119,266 ) (1,084,848 ) Balance, December 31, 2015 607,686,139 52,583,056 8,476,331 Proved developed reserves at: January 1, 2013 338,655,324 3,400,447 7,884,778 December 31, 2013 766,872,394 3,459,260 7,676,389 December 31, 2014 889,073,136 31,150,298 12,209,825 December 31, 2015 568,793,757 27,129,766 6,488,931 Proved undeveloped reserves at: January 1, 2013 235,118,932 5,468,389 8,177,120 December 31, 2013 236,907,109 11,529,564 11,280,627 December 31, 2014 175,804,319 31,799,227 11,169,954 December 31, 2015 38,892,382 25,453,290 1,987,400 (1) For the year ended December 31, 2015, the increase represents PUD conversions related to development activity in the Eagle Ford Shale. For the year ended December 31, 2014, the increase was due to ARP’s Rangely, ARP’s and AGP’s Eagle Ford and ARP’s Geomet Acquisitions. For the year ended December 31, 2013, the increase was primarily due to the addition of Marble Falls wells. (2) Represents the purchase of proved reserves due to the Rangely, Eagle Ford and GeoMet Acquisitions for the year ended December 31, 2014 and mainly due to the EP Energy Acquisition for the year ended December 31, 2013. (3) The downward revisions for the year ended December 31, 2015 were primarily due to wells being shut-in as well as unfavorable economic conditions primarily related to gas and oil commodity prices. For the year ended December 31, 2014, the downward revisions on oil and NGL were primarily due to wells being shut-in. The upward revision for the year ended December 31, 2014 on gas was primarily due to production outperforming previous forecasts. The downward revisions for the year ended December 31, 2013 were primarily due to a reduction of ARP’s five year drilling plans in the Barnett Shale and pricing scenario revisions. (4) Decrease mainly due to ARP's sale of the County Line assets. Capitalized Costs Related to Oil and Gas Producing Activities. The components of capitalized costs related to oil and gas producing activities of AGP and ARP during the periods indicated were as follows (in thousands): Years Ended December 31, 2015 2014 Natural gas and oil properties: Proved properties $ 3,733,614 $ 3,639,833 Unproved properties 213,047 217,321 Support equipment 44,921 37,359 3,991,582 3,894,513 Accumulated depreciation, depletion and amortization (2,717,002 ) (1,518,686 ) Net capitalized costs $ 1,274,580 $ 2,375,827 Results of Operations from Oil and Gas Producing Activities. The results of operations related to AGP’s and ARP’s oil and gas producing activities during the periods indicated were as follows (in thousands): Years Ended December 31, 2015 2014 2013 Revenues $ 368,845 $ 475,758 $ 273,906 Production costs (171,882 ) (184,296 ) (100,178 ) Depreciation, depletion and amortization (153,938 ) (231,638 ) (132,860 ) Asset impairment (1) (973,981 ) (580,654 ) (38,014 ) $ (930,956 ) $ (520,830 ) $ 2,854 (1) During the year ended December 31, 2015, the Company recognized $974.0 million of asset impairment primarily related to ARP’s oil and gas properties in the Barnett, Coal-bed Methane, Rangely, Southern Appalachia, Marcellus and Mississippi Lime operating areas, and unproved acreage in the New Albany Shale, which were impaired due to lower forecasted commodity prices, net of $85.8 million of future hedge gains reclassified from accumulated other comprehensive income. During the year ended December 31, 2014, the Company recognized $580.7 million of asset impairment consisting of $562.6 million related to oil and gas properties within property, plant, and equipment, net on the Company’s combined consolidated balance sheet primarily for ARP’s Appalachian and mid-continent operations, which was net of $82.3 million of future hedge gains reclassified from accumulated other comprehensive income, and $18.1 million goodwill impairment resulting from the decline in overall commodity prices. During the year ended December 31, 2013, ARP recognized $38.0 million of impairment primarily related to its shallow natural gas wells in the New Albany Shale and unproved acreage in the Chattanooga and New Albany Shales. Costs Incurred in Oil and Gas Producing Activities. The costs incurred by AGP and ARP in their oil and gas activities during the periods indicated are as follows (in thousands): Years Ended December 31, 2015 2014 2013 Property acquisition costs: Proved properties $ 55,033 $ 754,197 $ 863,421 Unproved properties 43,820 10,978 895 Exploration costs (1) 1,601 722 1,053 Development costs 102,110 177,726 214,383 Total costs incurred in oil & gas producing activities $ 202,564 $ 943,623 $ 1,079,752 (1) There were no exploratory wells drilled during the years ended December 31, 2015, 2014 and 2013. Standardized Measure of Discounted Future Cash Flows. The following schedule presents the standardized measure of estimated discounted future net cash flows relating to AGP’s and ARP’s proved oil and gas reserves. The estimated future production was priced at a twelve-month average for the years ended December 31, 2015, 2014 and 2013, adjusted only for regional price differentials and energy content. The resulting estimated future cash inflows were reduced by estimated future costs to develop and produce the proved reserves based on year-end cost levels and include the effect on cash flows of settlement of asset retirement obligations on gas and oil properties. The future net cash flows were reduced to present value amounts by applying a 10% discount factor. The standardized measure of future cash flows was prepared using the prevailing economic conditions existing at the dates presented and such conditions continually change. Accordingly, such information should not serve as a basis in making any judgment on the potential value of recoverable reserves or in estimating future results of operations (in thousands): Years Ended December 31, 2015 2014 2013 Future cash inflows $ 3,910,339 $ 10,802,697 $ 5,268,148 Future production costs (1,954,564 ) (4,561,129 ) (2,397,997 ) Future development costs (1,289,841 ) (1,623,218 ) (752,369 ) Future net cash flows 665,934 4,618,350 2,117,782 Less 10% annual discount for estimated timing of (90,703 ) (2,381,586 ) (1,038,491 ) Standardized measure of discounted future net $ 575,231 $ 2,236,764 $ 1,079,291 Changes in Standardized Discounted Future Cash Flows. The following table summarizes the changes in the standardized measure of discounted future net cash flows from estimated production of proved oil, gas and NGL reserves (in thousands), including amounts related to asset retirement obligations. Since AGP and ARP allocate taxable income to their owner, no recognition has been given to income taxes: Years Ended December 31, 2015 2014 2013 Balance, beginning of year $ 2,236,764 $ 1,079,291 $ 623,676 Increase (decrease) in discounted future net cash flows: Sales and transfers of oil and gas, net of related costs (1) (137,942 ) (275,789 ) (171,409 ) Net changes in prices and production costs (2 ) (1,629,945 ) 339,776 85,191 Revisions of previous quantity estimates (41,147 ) (33,526 ) (1,881 ) Development costs incurred 88,261 52,077 27,245 Changes in future development costs (167,995 ) (90,887 ) (21,579 ) Transfers to limited partnerships (13,291 ) (2,966 ) (53,392 ) Extensions, discoveries, and improved recovery less related costs 20,408 69,436 143,338 Purchases of reserves in-place (3) — 1,018,345 516,985 Sales of reserves in-place (4) (2,162 ) (332 ) (2,053 ) Accretion of discount 223,676 107,929 62,368 Estimated settlement of asset retirement obligations (224 ) (16,824 ) (18,858 ) Estimated proceeds on disposals of well equipment (1,172 ) (21,896 ) 17,052 Changes in production rates (timing) and other — 12,130 (127,392 ) Outstanding, end of year $ 575,231 $ 2,236,764 $ 1,079,291 (1) Includes the amount of sales of oil and gas previously included in proved reserves and sold during the period ended. (2) Decrease due to commodity price declines for the year ended December 31, 2015. (3) Represents the change in discounted value of the proved reserves primarily due to the purchase of proved reserves due to ARP’s Rangely, ARP’s and AGP’s Eagle Ford and ARP’s Geomet Acquisitions for the period ended December 31, 2014 and primarily due to the purchase of proved reserves in Marble Falls for the period ended December 31, 2013. (4) |