OREANDA-NEWS. Atlas Resource Partners, L.P.  reported operating and financial results for the first quarter 2016.

Daniel Herz, Chief Executive Officer of ARP, stated, “The energy environment remains extremely challenging, and ARP is not immune. We continue to work to reduce ARP’s outstanding debt. I am pleased with how our assets have performed over the last quarter, and appreciate all of our employee’s dedication to get as much out of our assets as possible, while at the same time minimizing our capital and operating expenses.”

  • First quarter 2016 Adjusted EBITDA, a non-GAAP measure, was $43.7 million, compared to $57.8 million for the fourth quarter 2015, and $70.9 million for the prior year first quarter. The decrease in Adjusted EBITDA compared to the prior quarter and to the prior year financial quarter was primarily due to declines in production volume and commodity prices during the respective periods, and the lower amount of funds raised within our 2015 Eagle Ford drilling partnership program.
  • On May 5, 2016, ARP announced that the Board of Directors elected to suspend monthly common unit distributions, beginning with the month of March 2016, as well as Preferred Class C distributions, due to the continued lower commodity price environment. For the first quarter 2016, ARP paid common unit cash distributions totaling approximately $0.025 per limited partner unit.
     
  • On a GAAP basis, net income was $12.8 million for the first quarter 2016 compared with net loss of $288.7 million for the fourth quarter 2015 and net income of $87.6 million for the prior year first quarter. As compared to the previous quarter which recorded a loss due to a non-cash impairment charge, net income for the first quarter 2016 was principally generated from operating cash flow and a gain on the early extinguishment of debt at a discount to par value.?

E&P Operating Results

  • Average net daily production for the first quarter 2016 was 237.0 million cubic feet equivalents per day ("Mmcfed"), compared to 270.8 Mmcfed in the first quarter 2015. The decrease in net production from the prior year quarter was due primarily to temporarily shutting in older, mature production across the Partnership’s footprint in response to the continued weaker commodity price environment.
     
  • ARP's net realized price for natural gas including the effect of hedge positions was $3.41 per thousand cubic feet ("mcf")" for the first quarter 2016, compared to $3.42 per mcf for the fourth quarter 2015. Net realized oil prices including the effect of hedge positions averaged $77.16 per barrel for the first quarter 2016, compared to $85.26 for the fourth quarter 2015.
     
  • Investment partnership margin contributed $3.0 million to Adjusted EBITDA for the first quarter 2016 compared with $5.0 million for the previous quarter. The $2.0 million decrease in investment partnership margin was due to lower amounts of capital deployed during the first quarter 2016 due to scheduled changes in well drilling activity.

Hedge Positions

  • A summary of ARP's derivative positions as of May 16, 2016 is provided in the financial tables of this release. During the first quarter 2016, ARP was approximately 76% hedged on its net natural gas production and approximately 99% hedged on its net oil production. During the quarter ended March 31, 2016, the Partnership received approximately $48.7 million of cash from realized natural gas and oil hedge positions.

Corporate Expenses & Capital Position

  • Cash general and administrative expense was $16.8 million for the first quarter 2016, $1.2 million higher than the fourth quarter 2015 and $5.2 million higher than the prior year first quarter. The increase compared with prior periods was due primarily to lower capitalized selling and administrative costs associated with lower funds raised in our 2015 drilling partnership program and the timing of certain seasonal costs.
     
  • Cash interest expense was $23.6 million for the first quarter 2016, $1.8 million higher than the fourth quarter 2015 and $5.6 million higher than the prior year first quarter. The increase compared with the prior year period was primarily due to the $250 million second lien financing entered into by ARP in February 2015 and a higher level of amounts outstanding on the revolving credit facility.
     
  • At March 31, 2016, ARP had $1.553 billion of total debt, including $672.0 million outstanding under its revolving credit facility. On May 10, 2016, ARP entered into a ninth amendment to its revolving credit facility due July 2018 to waive compliance with certain financial covenants as of March 31, 2016, which automatically waived compliance with similar covenants under its term loan facility due February 2020. Based on the terms of the amendment, ARP classified $906.2 million of outstanding amounts under these facilities, net of certain deferring financing costs and unamortized discounts, as current portion of long term debt within its consolidated balance sheet as of March 31, 2016.