Atlas Resource Partners Enters Second Barnett Deal In Two Months

To buy 16,000 net acres primarily in Denton, Tarrant, Johnson & Hood cos. in N TX Barnett shale featuring 43 producing wells, gaining 24 MMcfe/d, 250 Bcfe proved.

Atlas Resource Partners LP, Philadelphia, (NYSE: ARP) will acquire assets in the North Texas Barnett shale from privately held, Fort Worth, Texas-based Titan Operating LLC for approximately $184 million in ARP units.

Atlas Resource will issue approximately 3.8 million common units and 3.8 million newly issued convertible preferred units to the private owners of Titan.

The assets include approximately 16,000 net acres primarily in Denton, Tarrant, Johnson and Hood counties in close proximity to previously acquired Barnett assets. The properties are 90% held by production and feature 43 producing wells.

Net production is approximately 24 million cubic feet of gas equivalent per day, including approximately 370 barrels per day of gas liquids. Proved reserves are 250 billion cubic feet equivalent (84% gas, 34% proved developed).

Upside includes approximately 335 potential undeveloped drilling locations. Lease operating expenses and production taxes is approximately $0.65 per thousand cubic feet equivalent.

This transaction represents Atlas Resource’s second acquisition in the Barnett in two months, establishing a position of approximately 530 billion cubic feet equivalent of total net proved reserves in the region. ARP’s total net proved reserves pro forma for the acquisition are approximately 700 billion cubic feet equivalent, almost four times greater than its original net reserves upon first trading publicly on March 14.

The preferred units in the offering are voluntarily convertible to common units on a one-for-one basis within three years at a strike price of $26.03 per unit and will be mandatorily converted to common units on the third anniversary of the issuance.

Atlas Resource chief executive Edward E. Cohen says, “This transaction continues to solidify our position in the Barnett shale through opportunistic purchases of ongoing production and associated assets. We continue to evaluate additional opportunities to expand”

J.P. Morgan is financial advisor, and Jones Day (Houston) and Ledgewood (Philadelphia) are legal advisors to Atlas Resource.