Atlas Pipeline Holdings to acquire upstream assets from parent

By Jennifer Lanning Drey

Savannah, Ga., Nov. 9 - Atlas Pipeline Holdings LP has agreed to acquire upstream assets from its parent, Atlas Energy Inc., in a transaction expected to be significantly accretive to 2011 distributable cash flow per unit upon closing, Edward Cohen, Atlas Pipeline's chairman, said during a Tuesday conference call held to discuss the transaction.

Atlas Pipeline's distributable cash flow per unit is expected to increase in 2011 by approximately 250%, he said.

Moreover, the transaction will provide Atlas Pipeline with an exploration and production platform at a time when a number of E&P companies are looking to sell producing properties with assured cash flows, Cohen said.

"This phenomenon will offer the new [Atlas Pipeline] an opportunity to acquire secured revenues without undue risk in plays and areas that we know well," he said.

Under the agreement, Atlas Pipeline will acquire all of Atlas Energy's interest in the investment management business, including all of the ongoing fees related to managing the partnerships.

Atlas Pipeline will also acquire some of the parent's producing oil and cash assets, 100% interest in Atlas Pipeline Holdings, GP LLC and Atlas Energy's GP and LP interest in Lightfoot Capital Partners, GP LLC.

Total consideration for the transaction is $250 million, consisting of $220 million of newly issued Atlas Pipeline common units and $30 million in cash.

Upon closing of the transaction, Atlas Pipeline will have in place debt financing of $70 million. Approximately $64 million will be initially borrowed to fund the cash portion of the transaction, as well as to repay a note payable of $34 million to Atlas Energy, according to a company news release.

Related transactions

The completion of the Atlas Pipeline transaction is subject to the subsequent completion of Chevron Corp.'s acquisition of Atlas Energy and to the completion of Atlas Energy's acquisition of a 49% interest in Laurel Mountain Midstream, LLC from Atlas Pipeline Partners, LP, according to the news release.

Atlas Energy announced on Monday it had reached a definitive agreement to be acquired by Chevron for $4.3 billion.

Atlas Energy also announced it had reached a definitive agreement with Atlas Pipeline Partners to acquire a 49% interest in Laurel Mountain Midstream, LLC for $403 million in cash.

The transaction between Atlas Pipeline Holdings and Atlas Energy Inc. is expected to close immediately preceding Chevron's acquisition of Atlas Energy and concurrently with Atlas Energy's acquisition of the interest in Laurel Mountain Midstream, according to the release.

Based in Moon Township, Pa., Atlas Pipeline Partners is a natural gas pipeline operating company.

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