Basis of Presentation and Summary of Significant Accounting Policies | NOTE 2—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and the applicable rules and regulations of the Securities Exchange Commission regarding interim financial reporting and include all adjustments that are necessary for a fair presentation of our consolidated results of operations, financial condition and cash flows for the periods shown, including normal, recurring accruals and other items. The consolidated results of operations for the interim periods presented are not necessarily indicative of results for the full year. The year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. For a more complete discussion of our accounting policies and certain other information, refer to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31 2016. We determined that ARP (through the Plan Effective Date, as discussed further below) and AGP are variable interest entities (“VIE’s”) based on their respective partnership agreements, our power, as the general partner, to direct the activities that most significantly impact each of their respective economic performance, and our ownership of each of their respective incentive distribution rights. Accordingly, we consolidated the financial statements of ARP (until the date of ARP’s Chapter 11 Filings, as discussed further below) and AGP into our condensed consolidated financial statements. Our consolidated VIE’s operating results and asset balances are presented separately in Note 10 – Operating Segment Information. As the general partner for both ARP (through the Plan Effective Date) and AGP, we have unlimited liability for the obligations of ARP (through the Plan Effective Date) and AGP except for those contractual obligations that are expressly made without recourse to the general partner. The non-controlling interests in ARP (through the date of ARP’s Chapter 11 Filings, as discussed further below) and AGP are reflected as (income) loss attributable to non-controlling interests in the condensed consolidated statements of operations and as a component of unitholders’ equity on the condensed consolidated balance sheets. All material intercompany transactions have been eliminated. In connection with ARP’s Chapter 11 Filings on July 27, 2016, we deconsolidated ARP’s financial statements from our condensed consolidated financial statements, as we no longer had the power to direct the activities that most significantly impacted ARP’s economic performance; however, we retained the ability to exercise significant influence over the operating and financial decisions of ARP and therefore applied the equity method of accounting for our investment in ARP up to the Plan Effective Date. As a result of these changes, our condensed consolidated financial statements subsequent to ARP’s Chapter 11 Filings will not be comparable to our condensed consolidated financial statements prior to ARP’s Chapter 11 Filings. Our financial results for future periods following the application of equity method accounting will be different from historical trends and the differences may be material. Certain reclassifications have been made to our condensed consolidated financial statements for the prior year periods to conform to classifications used in the current year, specifically related to ARP’s Drilling Partnerships management, which includes all of ARP’s managing and operating activities specific to ARP’s Drilling Partnerships including well construction and completion, administration and oversight, well services and gathering and processing. We previously presented these revenue and expense items separately; however, due to the deconsolidation of ARP on the date of the Chapter 11 Filings, we have aggregated these items to be presented as one combined revenue item and one combined expense item. As a result of this change, we have restated our prior year condensed consolidated statements of operations to conform to our current presentation. In accordance with established practice in the oil and gas industry, our condensed consolidated financial statements include our pro-rata share of assets, liabilities, income and lease operating and general and administrative costs and expenses of the Drilling Partnerships in which ARP has an interest through the date of ARP’s Chapter 11 Filings. Such interests generally approximated 30%. Our condensed consolidated financial statements do not include proportional consolidation of the depletion or impairment expenses of the Drilling Partnerships through the date of ARP’s Chapter 11 Filings. Rather, ARP calculated these items specific to its own economics through the date of ARP’s Chapter 11 Filings. On the Plan Effective Date, we determined that Titan is a VIE based on its limited liability company agreement and the delegation of management and omnibus agreements between Titan and Titan Management, which provide us the power to direct activities that most significantly impact Titan’s economic performance, but we do not have a controlling financial interest. As a result, we do not consolidate Titan but rather apply the equity method of accounting as we have the ability to exercise significant influence over Titan’s operating and financial decisions. Liquidity, Capital Resources, and Ability to Continue as a Going Concern Our primary sources of liquidity are cash distributions received with respect to our ownership interests in AGP, Lightfoot, and Titan and AGP’s annual management fee. However, neither Titan nor AGP are currently paying distributions. Our primary cash requirements, in addition to normal operating expenses, are for debt service and capital expenditures, which we expect to fund through operating cash flow, and cash distributions received. Accordingly, our sources of liquidity are currently not sufficient to satisfy our obligations under our credit agreements. The significant risks and uncertainties related to our primary sources of liquidity raise substantial doubt about our ability to continue as a going concern. If we are unable to remain in compliance with the covenants under our credit agreements (as described in Note 4), absent relief from our lenders, we maybe be forced to repay or refinance such indebtedness. Upon the occurrence of an event of default, the lenders under our credit agreements could elect to declare all amounts outstanding immediately due and payable and could terminate all commitments to extend further credit. If an event of default occurs, we will not have sufficient liquidity to repay all of our outstanding indebtedness, and as a result, there would be substantial doubt regarding our ability to continue as a going concern. In addition to the $40.1 million of indebtedness due on September 30, 2017, we classified the remaining $51.4 million of outstanding indebtedness under our credit agreements as a current liability, based on the uncertainty regarding future covenant compliance. In total, we have $90.3 million of outstanding indebtedness under our credit agreements, which is net of $1.1 million of debt discounts and $0.1 million of deferred financing costs, as current portion of long term debt, net on our condensed consolidated balance sheet as of June 30, 2017. We continually monitor our capital markets and capital structures and may make changes from time to time, with the goal of maintaining financial flexibility, preserving or improving liquidity, strengthening the balance sheet, meeting debt service obligations and/or achieving cost efficiency. For example, we could pursue options such as refinancing or reorganizing our indebtedness or capital structure or seek to raise additional capital through debt or equity financing to address our liquidity concerns and high debt levels. There is no certainty that we will be able to implement any such options, and we cannot provide any assurances that any refinancing or changes to our 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 our stakeholders, including cancellation of debt income (“CODI”) which would be directly allocated to our unitholders and reported on such unitholders’ separate returns. It is possible additional adjustments to our strategic plan and outlook may occur based on market conditions and our needs at that time, which could include selling assets or seeking additional partners to develop our assets. Our condensed consolidated 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. Our condensed consolidated financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty. If we cannot continue as a going concern, adjustments to the carrying values and classification of our assets and liabilities and the reported amounts of income and expenses could be required and could be material. Atlas Growth Partners – Liquidity, Capital Resources, and Ability to Continue as a Going Concern AGP has historically funded its operations, acquisitions and cash distributions primarily through cash generated from operations and financing activities, including its private placement offering completed in 2015. AGP’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 continue to remain low in 2017. These lower commodity prices have negatively impacted AGP’s revenues, earnings and cash flows. Sustained low commodity prices will have a material and adverse effect on AGP’s liquidity position. On November 2, 2016, AGP decided to temporarily suspend its current primary offering efforts in light of new regulations and the challenging fund raising environment until such time as market participants have had an opportunity to ascertain the impact of such issues. In addition, AGP’s board of directors suspended its quarterly common unit distributions, beginning with the three months ended September 30, 2016, in order to retain its cash flow and reinvest in its business and assets. Accordingly, these decisions raise substantial doubt about AGP’s ability to continue as a going concern. Management determined that substantial doubt is alleviated through management’s plans to reduce AGP’s general and administrative expenses, the majority of which represent allocations from us. Use of Estimates The preparation of our condensed consolidated 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 disclosure of contingent assets and liabilities that exist at the date of our condensed consolidated financial statements, as well as the reported amounts of revenue and costs and expenses during the reporting periods. Our condensed consolidated financial statements are based on a number of significant estimates, including revenue and expense accruals, depletion of gas and oil properties, and fair value of derivative instruments. The oil and 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. Equity Method Investments Investment in Titan . At June 30, 2017, we had a 2% Series A Preferred interest in Titan. We account for our investment under the equity method of accounting due to our ability to exercise significant influence. As of June 30, 2017 and December 31, 2016, the net carrying amount of our investment in Titan was $0.4 million and zero, respectively. During the three and six months ended June 30, 2017, we recognized equity loss of $0.1 million and equity income of $0.4 million, respectively, within other, net on our condensed consolidated statements of operations. Investment in Lightfoot. At June 30, 2017, we had an approximate 12.0% interest in Lightfoot L.P. and an approximate 15.9% interest in Lightfoot G.P., the general partner of Lightfoot L.P. We account for our investment in Lightfoot under the equity method of accounting due to our ability to exercise significant influence. As of June 30, 2017 and December 31, 2016, the net carrying amount of our investment in Lightfoot was $18.5 million and $18.7 million, respectively. During the three months ended June 30, 2017 and 2016, we recognized equity income of $0.3 million and $0.5 million, respectively, within other, net on our condensed consolidated statements of operations. For the six months ended June 30, 2017 and 2016, we recognized equity income of $0.5 million and $0.7 million, respectively, within other, net on our condensed consolidated statement of operations. During the three months ended June 30, 2017 and 2016, we received net cash distributions of approximately $0.4 million and $0.4 million, respectively. For the six months ended June 30, 2017 and 2016, we received net cash distributions of approximately $0.8 million and $0.9 million, respectively. Rabbi Trust In 2011, we established an excess 401(k) plan relating to certain executives. In connection with the plan, we established a “rabbi” trust for the contributed amounts. At June 30, 2017 and December 31, 2016, we reflected $2.2 million and $4.2 million, respectively, related to the value of the rabbi trust within other assets, net on our condensed consolidated balance sheets, and recorded corresponding liabilities of $2.2 million and $4.2 million, respectively, as of those same dates, within asset retirement obligations and other on our condensed consolidated balance sheets. During the six months ended June 30, 2017 and 2016, we distributed $2.1 million and $2.3 million, respectively, to certain executives related to the rabbi trust. Accrued Liabilities We had $8.1 million and $10.6 million of accrued payroll and benefit items at June 30, 2017 and December 31, 2016, respectively, which were included within accrued liabilities on our condensed consolidated balance sheets. Shard Based Compensation Plans For the six months ended June 30, 2017, 739,350 phantom units under the 2015 Long-Term Incentive Plan (“2015 LTIP”) were forfeited, primarily due to Titan’s completion of the majority of the sale of its Appalachian assets and reductions in force, which resulted in a $2.3 million reversal of previously recognized stock compensation expense recognized in general and administrative expenses on our condensed consolidated statements of operations for the six months ended June 30, 2017. Conversion of Series A Preferred Units On May 5, 2017, the holders of all 1.9 million of our outstanding Series A Preferred Units elected to convert their units into 5.9 million common units. Net Income (Loss) Per Common Unit Basic net income (loss) attributable to common unitholders per unit is computed by dividing net income (loss) attributable to common unitholders, which is determined after the deduction of net income attributable to participating securities and the preferred unitholders’ interests, if applicable, by the weighted average number of common units outstanding during the period. The following is a reconciliation of net income (loss) allocated to the common unitholders for purposes of calculating net income (loss) attributable to common unitholders per unit (in thousands): Three Months Ended June 30 Six Months Ended June 30 2017 2016 2017 2016 Net loss $ (3,425 ) $ (150,717 ) $ (8,328 ) $ (151,989 ) Preferred unitholders’ dividends — — — (339 ) Loss attributable to non-controlling interests 343 114,637 624 109,297 Net loss attributable to common unitholders (3,082 ) (36,080 ) (7,704 ) (43,031 ) Less: Net income attributable to participating securities – phantom units (1) — — — — Net loss utilized in the calculation of net loss attributable to common unitholders per unit – diluted (1) $ (3,082 ) $ (36,080 ) $ (7,704 ) $ (43,031 ) (1) For the three months ended June 30, 2017 and 2016, net loss attributable to common unitholder’s ownership interest was not allocated to approximately 34,000 and 352,000 phantom units, respectively, because the contractual terms of the phantom units as participating securities do not require the holders to share in the losses of the entity. For the six months ended June 30, 2017 and 2016, net loss attributable common unitholder’s ownership interest was not allocated to approximately 106,000 and 307,000 phantom units, respectively, because the contractual terms of the phantom units as participating securities do not require the holders to share in the losses of the entity. Diluted net income (loss) attributable to common unitholders per unit is calculated by dividing net income (loss) attributable to common unitholders, less income allocable to participating securities, by the sum of the weighted average number of common unitholder units outstanding and the dilutive effect of unit option awards and convertible preferred units, as calculated by the treasury stock or if converted methods, as applicable. Unit options consist of common units issuable upon payment of an exercise price by the participant under the terms of our long-term incentive plan. The following table sets forth the reconciliation of our weighted average number of common units used to compute basic net loss attributable to common unitholders per unit with those used to compute diluted net loss attributable to common unitholders per unit (in thousands): Three Months Ended June 30 Six Months Ended June 30 2017 2016 2017 2016 Weighted average number of common units—basic 29,765 26,031 27,923 26,029 Add effect of dilutive incentive awards (1) — — — — Add effect of dilutive convertible preferred units and warrants (2) — — — — Weighted average number of common units—diluted 29,765 26,031 27,923 26,029 (1) For the three months ended June 30, 2017 and 2016, approximately 3,143,000 and 2,692,000 phantom units, respectively, were excluded from the computation of diluted net income (loss) attributable to common unitholders per unit, because the inclusion of such units would have been anti-dilutive. For the six months ended June 30, 2017, and 2016, approximately 3,331,000 and 2,691,000 phantom units, respectively, were excluded from the computation of diluted net income (loss) attributable to common unitholders per unit, because the inclusion of such units would have been anti-dilutive. (2) For the periods presented, our warrants issued in connection with the Second Lien Credit Agreement in 2016 were excluded from the computation of diluted earnings attributable to common unitholders per unit, because the inclusion of such warrants and units would have been anti-dilutive. For the three and six months ended June 30, 2016, our convertible Series A Preferred Units were excluded from the computation of diluted earnings attributable to common unitholders per unit, because the inclusion of such warrants and units would have been anti-dilutive Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) updated the accounting guidance related to leases. The updated accounting guidance requires lessees to recognize a lease asset and liability at the commencement date of all leases (with the exception of short-term leases), initially measured at the present value of the lease payments. The updated guidance is effective for us as of January 1, 2019 and requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest period presented. We are currently in the process of determining the impact that the updated accounting guidance will have on our condensed consolidated financial statements. 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. We intend to adopt the new standard using the modified retrospective method, which is expected to have an immaterial impact to our financial statements. The 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. |