Q2 2007 Atlas Energy Resources Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good day, ladies and gentlemen, and welcome to the Second Quarter 2007 Atlas Energy Resources Earnings Conference Call. My name is [Tawanda], and I will be your coordinator for today.

(OPERATOR INSTRUCTIONS)

I would now like to turn the presentation over to Mr. Ed Cohen, Chairman and Chief Executive Officer. Please proceed sir.

ED COHEN, CHAIRMAN, CEO, ATLAS ENERGY RESOURCES, LLC: Thank you, Tawanda, and greetings to all of you.

I would like to start, of course, with the Safe Harbor statement and remind you all that when used in this conference call, the words "believes," "anticipates," "expects," and similar expressions are intended to identify forward-looking statements.

These statements are, of course, subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected in the forward-looking statements. You can analyze these risks in our quarterly report on Form 10-Q and our annual report also on Form 10-K, particularly Item One.

I would also like to caution everyone not to place undue reliance on these forward-looking statements. They reflect management's analysis only as of the date hereof.

The Company undertakes no obligations to publicly release the results of any revisions to forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Now, I am, of course, pleased to report that the second quarter of 2007 was another outstanding period for Atlas Energy Resources. But the best, we expect, is yet to come.

As previously announced, we anticipate increasing our second-quarter cash distribution of $0.43 per common unit. We anticipate increasing that to approximately $0.50 per common unit for both the third and fourth quarters of 2007. Then we anticipate achieving further increases totaling an annual distribution of $2.20 to $2.40 per common unit for 2008.

For the second quarter, of course, we have already raised our distribution coverage ratio to 1.2 times and we anticipate continuing this enhanced coverage throughout 2008.

Much of this sparkling tone of our Company reflects our recent DTE acquisition. To remind you, two days before the end of the quarter, we completed the purchase for $1.268 billion, the purchase of DTE Gas & Oil Company, now Atlas Energy of Michigan.

Atlas Michigan's energy assets are located in Northern Lower Peninsula of Michigan, and encompass approximately 294,000 acres, of which 66,000 are still undeveloped. This acreage targets the Antrim Shale and mature play characterized by long-lived reserves and predictable production rates.

The purchase included interests in approximately 2150 natural gas wells. With this addition, we now have interests in a total of 9950 wells, providing what the bankers would call an amazing granularity. We now operate well over 8,000 wells. We operate well over 8,000 wells, as I said, another astonishing figure.

The DTE acquisition immediately tripled our prior Company-owned energy production volume to approximately 88 million cubic feet equivalent of gas per day. It added 613 billion cubic feet equivalent of proved reserves, virtually quadrupling our proved reserves.

We have now established our Company's presence in a new region that joins Pennsylvania and Tennessee as a third focus of Atlas Energy's activity.

There, in Michigan, we will be drilling for our own account. The dewaterization process required in the Michigan Antrim makes the acreage inappropriate at present, I think, for our investment programs.

Drilling in Michigan, however, will not adversely affect our efforts in Pennsylvania and Tennessee. We are employing an established team that has worked together in Michigan successfully for years. It's headed by our old friend, Dick Redmond, Jr., the former President of the DTE unit, who has joined Atlas Energy as President of Atlas Michigan.

But even without Michigan, Atlas has been booming. Net income for the second quarter 2007 was $41.7 million, an increase of $29.1 million or considerably more than double the comparable 2006 period. Revenues rose to $101.8 million, an increase of $38.2 million or 60%, compared to the second quarter of 2006.

Let me mention EBITDA. EBITDA reached $28.7 million for the second quarter 2007, as compared with only $18.2 million in 2006, an increase of $10.5 million or approximately 58%.

During the quarter, we drilled 237 new wells, an increase of 109, or approximately 85%, from the prior year quarter.

We did even better with connections. 241 wells turned on this quarter, ensuring a healthy increase in actual production. In fact, volumes were 28.4 million cubic feet equivalent per day for the second quarter of 2007. This represents an increase of approximately 10% from the -- from the quarter ended March 31, 2007, and an increase of about 7% for the first six months of 2007 versus prior year first half.

Oil production. to be sure, it is a minor portion of our energy generation, but nonetheless it too increased. It increased 13.5% as against the 2006 period.

Rich Weber, our President, will now provide further information on these favorable trends, and he will speak to our continuing successful efforts in the Marcellus Shale, which is increasingly establishing itself as the most exciting play to hit our Company and the Appalachian Basin in decades.

Rich?

RICH WEBER, PRESIDENT, COO, ATLAS ENERGY RESOURCES, LLC: Thank you, Ed. I am pleased to report that Atlas Energy had an excellent quarter, as you well laid out in your presentation. We met all of our operating objectives in Appalachia and we have already successfully completed the integration of our new Michigan subsidiary, Atlas Energy Michigan.

We are a balanced company today that is capable of providing predictable and growing distributions to our unit holders. We have approximately 800 billion cubic feet equivalent of proved reserves in the long-lived basins of Michigan and Appalachia, and are currently hedged on average 67% through 2011. We expect to continue our very active drilling program and grow our current net daily production of 88 million cubic feet of natural gas equivalents.

Our investment program business is humming, and we expect to close out a $200 million summer program this month, our largest program ever. We have identified approximately 3900 shallow drilling and recompletion opportunities on our substantial position of undeveloped acreage, including 426,000 net undeveloped acres in …