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Atlas Energy Resources, LLC – IPO: ‘S-1/A’ on 10/4/06

On:  Wednesday, 10/4/06, at 12:52pm ET   ·   Accession #:  1193125-6-202521   ·   File #:  333-136094

Previous ‘S-1’:  ‘S-1’ on 7/28/06   ·   Next:  ‘S-1/A’ on 11/1/06   ·   Latest:  ‘S-1/A’ on 12/5/06   ·   1 Reference:  By:  SEC – ‘UPLOAD’ on 10/27/06

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/04/06  Atlas Energy Resources, LLC       S-1/A                  8:2.7M                                   RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Amendment No. 1 to Form S-1                         HTML   2.28M 
 2: EX-3.3      Limited Liability Company Agreement Dated June 23,  HTML     45K 
                          2006                                                   
 3: EX-5.1      Opinion of Ledgewood, P.C.                          HTML      9K 
 4: EX-8.1      Opinion of Ledgewood, P.C. Relating to Tax Matters  HTML     11K 
 5: EX-10.6     Limited Liability Company Agreement Dated June 29,  HTML     27K 
                          2006                                                   
 6: EX-10.7     Employment Agreement With Richard D. Weber          HTML     65K 
 7: EX-23.1     Consent of Grant Thornton LLP                       HTML      7K 
 8: EX-23.2     Consent of Wright & Company, Inc                    HTML      7K 

Table of Contents

As filed with the Securities and Exchange Commission on October 4, 2006

Registration No. 333-136094

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT

No. 1 to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ATLAS ENERGY RESOURCES, LLC

(Exact name of registrant as specified in its charter)

311 Rouser Road

Moon Township, Pennsylvania 15108

(412) 262-2830

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

Edward E. Cohen

Atlas Energy Resources, LLC

311 Rouser Road

Moon Township, Pennsylvania 15108

(412) 262-2830

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Please send copies of communications to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Calculation of Registration Fee

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

6,075,000 Common Units

[Logo]

ATLAS ENERGY RESOURCES, LLC

Representing Class B Limited Liability Company Interests

This is the initial public offering of our common units. No public market currently exists for our common units. We expect the initial public offering price to be between $            and $            per common unit.

We have applied to list our common units on the New York Stock Exchange under the symbol “ATN.”

Investing in our common units involves risks. Please read “ Risk factors” beginning on page 24.

These risks include:

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters may also purchase up to an additional 911,250 common units at the public offering price, less the underwriting discounts and commission payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $             and our total proceeds, before expenses will be $            .

The underwriters are offering the common units as set forth under “Underwriting.” Delivery of the common units will be made on or about                 , 2006.

UBS Investment Bank

The date of this prospectus is             , 2006

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You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, offering to sell our common units or seeking offers to buy our common units in any jurisdiction where offers and sales are not permitted. The information contained in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common units offered hereby.

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Prospectus summary

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical and pro forma financial statements and the notes to those financial statements. The information presented in this prospectus assumes (1) an initial public offering price of $20.00 per common unit, the mid-point of the price range set forth on the front cover of this prospectus, and (2) that the underwriters do not exercise their option to purchase additional common units.

You should read “Risk factors” beginning on page 24 for information about important factors that you should consider carefully before buying our common units. We include a glossary of some of the industry terms used in this prospectus in Appendix B. Wright and Company, Inc., an independent engineering firm, provided the estimates of our proved natural gas and oil reserves as of March 31, 2006 included in this prospectus. A summary prepared by Wright and Company of its reserve report is located at the back of this prospectus as Appendix C, and is referred to in this prospectus as the reserve report. References in this prospectus to “Atlas Energy Resources,” “we,” “our,” “us,” or like terms, when used in an historical context or in the present tense, refer to the subsidiaries that Atlas America will contribute to Atlas Energy Resources in connection with this offering and, when used prospectively, refer to Atlas Energy Resources, LLC and its subsidiaries. References to fiscal 2005 are to Atlas America E&P Operations’ most recent fiscal year end, which was September 30, 2005. Our first fiscal year will end on December 31, 2006. References to “our manager” or “Atlas Energy Management” are to Atlas Energy Management, Inc.

ATLAS ENERGY RESOURCES

We are a limited liability company focused on the development and production of natural gas and, to a lesser extent, oil principally in the Appalachian Basin. We sponsor and manage tax-advantaged investment partnerships, in which we coinvest, to finance the exploitation and development of our acreage. Our goal is to increase the distributions to our unitholders by continuing to grow the net production from our natural gas and oil production business as well as the fee-based revenues from our partnership management business.

We were formed in June 2006 to own and operate substantially all of the natural gas and oil assets and the investment partnership management business of Atlas America, Inc. (Nasdaq: ATLS). Atlas America has been involved in the energy industry since 1968, expanding its operations in 1998 when it acquired The Atlas Group, Inc. and in 1999 when it acquired Viking Resources Corporation, both engaged in the development and production of natural gas and oil and the sponsorship of investment partnerships.

We are managed by Atlas Energy Management, Inc., a wholly-owned subsidiary of Atlas America. Through our manager, the Atlas America personnel currently responsible for managing our assets and capital raising will continue to do so on our behalf upon completion of this offering.

As of June 30, 2006, our principal assets consisted of:

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In addition, at March 31, 2006, the date of our most recent reserve report, we had proved reserves of 170.9 Bcfe, including the reserves net to our equity interest in the investment partnerships and our direct interests in producing wells.

For the twelve month period ended June 30, 2006, we produced 25,110 Mcfe/d net to our interest in the production of our investment partnerships and including our direct interests in producing wells, which resulted in an average proved reserves to production ratio, or average reserve life, of approximately 18 years based on our proved reserves at March 31, 2006.

According to Rigdata.com, we were the 10^th most active operator in the United States based on well starts from January 2006 to August 2006. As of June 30, 2006, we had identified approximately 500 proved undeveloped drilling locations and over 2,400 additional potential drilling locations on our acreage and our Tennessee joint venture acreage.

We fund the drilling of natural gas and oil wells on our acreage by sponsoring and managing tax-advantaged investment partnerships. We generally structure our investment partnerships so that, upon formation of a partnership, we coinvest in and contribute leasehold acreage to it, enter into drilling and well operating agreements with it and become its managing general partner.

We derive substantially all of our revenues from our equity interest in the oil and gas produced by the investment partnerships as well as the fees paid by the partnerships to us for acting as the managing general partner as follows:

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The following table shows our revenues and segment margins and investment partnership and reserve data for the periods indicated.

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Gas and oil production

As of June 30, 2006, we owned interests in 6,884 gross wells, principally in the Appalachian Basin, of which we operated 5,833. On average during the quarter ended June 30, 2006, gross production from our wells was 81.2 MMcfe/d, or approximately 11.8 Mcfe/d per well. Over the past three fiscal years we have drilled 1,463 gross (565 net) wells, 98% of which were successful in producing natural gas in commercial quantities, including 662 gross wells in the fiscal year ended September 30, 2005, 97% of which were successful. In the nine months ended June 30, 2006, we drilled 513 gross (170 net) wells, over 99% of which were successful.

In September 2004, we expanded our operations into Tennessee through a joint venture with Knox Energy, LLC that gives us an exclusive right to drill up to 300 net wells before June 30, 2007 on approximately 209,000 acres owned by Knox Energy. As of June 30, 2006, we had drilled 103 net wells under this agreement. As of June 30, 2006, we had identified approximately 500 proved undeveloped drilling locations and over 2,400 additional potential drilling locations on our acreage and our Tennessee joint venture acreage.

Because the Appalachian Basin is located near the energy-consuming regions of the mid-Atlantic and northeastern United States, Appalachian producers have historically sold their natural gas at a premium to the benchmark price for natural gas on the NYMEX. For the fiscal year ended September 30, 2005, the average premium over NYMEX for natural gas delivered to our primary delivery points in the Appalachian Basin was $0.37 per MMBtu. In addition, most of our natural gas production has a high Btu content, resulting in an additional premium to NYMEX natural gas prices.

Partnership management

We generally fund our drilling activities through sponsorship of tax-advantaged investment partnerships. Accordingly, the amount of development activities we undertake depends in part upon our ability to obtain investor subscriptions to the partnerships. We raised $199.8 million in fiscal 2006 and $148.7 million in fiscal 2005. During fiscal 2005, our investment partnerships invested $157.0 million in drilling and completing wells, of which we contributed $57.3 million.

We generally structure our investment partnerships so that, upon formation of a partnership, we coinvest in and contribute leasehold acreage to it, enter into drilling and well operating agreements with it and become its managing general partner. In addition to providing capital for our drilling activities, our investment partnerships are a source of fee-based revenues which are not directly dependent on natural gas and oil prices.

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Our investment partnerships provide tax advantages to their investors because an investor’s share of the partnership’s intangible drilling cost deduction may be used to offset ordinary income. Intangible drilling costs include items that do not have salvage value, such as labor, fuel, repairs, supplies and hauling. Historically, under our partnership agreements, approximately 90% of the subscription proceeds received by each partnership have been used to pay 100% of the partnership’s intangible drilling costs. For example, an investment of $10,000 has generally permitted the investor to deduct approximately $9,000 in the year in which the investor invests.

Natural gas hedging

We seek to provide greater stability in our cash flows through our use of financial hedges and physical hedges. The financial hedges may include purchases of regulated NYMEX futures and options contracts and non-regulated over-the-counter futures contracts with qualified counterparties. The futures contracts are commitments to purchase or sell natural gas at future dates and generally cover one-month periods for up to 36 months in the future. To assure that the financial instruments will be used solely for hedging price risks and not for speculative purposes, we have a management committee to assure that all financial trading is done in compliance with our hedging policies and procedures. We do not intend to contract for positions that we cannot offset with actual production. As of June 30, 2006, we had financial hedges and physical hedges in place for approximately 65% of our expected production for the twelve months ending September 30, 2007.

Hess Corporation and other third-party marketers to which we sell gas, such as Colonial Energy, Inc. and UGI Energy Services, also use NYMEX-based financial instruments to hedge their pricing exposure and make price hedging opportunities available to us through physical hedge transactions. These transactions are not deemed hedges for accounting purposes because they require firm delivery of natural gas and are considered normal sales of natural gas. We generally limit these arrangements to much smaller quantities than those projected to be available at any delivery point. The price paid by these third-party marketers for volumes of natural gas sold under these sales agreements may be significantly different from the underlying monthly spot market value.

BUSINESS STRATEGY

Our goal is to increase the distributions to our unitholders by continuing to grow the net production from our natural gas and oil production business as well as the fee-based revenues from our partnership management business. The key elements of our business strategy are:

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COMPETITIVE STRENGTHS

We believe our competitive strengths favorably position us to execute our business strategy and to maintain and grow our distributions to unitholders. Our competitive strengths are:

RISK FACTORS

An investment in our common units involves risks associated with our business, regulatory and legal matters, our limited liability company structure and the tax characteristics of our common units. Please carefully read “Risk factors” immediately following this section beginning on page 24.

THE TRANSACTIONS AND OUR LLC STRUCTURE

General.    We were formed in June 2006 as a Delaware limited liability company to own and operate the natural gas and oil assets and the investment partnership management business of Atlas America. Atlas America is a separate entity from us, and its securities are not being offered in this offering. Our operations will be conducted through, and our operating assets will be owned by, our operating subsidiaries, including Atlas Energy Operating Company, LLC. We will have no significant assets other than our interest in our subsidiaries.

Contribution of Assets by Atlas America.    At the closing of this offering, Atlas America will contribute to us the stock of its natural gas and oil development and production subsidiaries. Before the closing, some of these subsidiaries will distribute to Atlas America, and thus we will not acquire their interests in a small gathering system. We anticipate paying the net proceeds of this offering, after payment of offering expenses and retention of $5.5 million for working capital, to Atlas America as reimbursement of capital expenditures incurred by it on our behalf and partial consideration for its contribution of assets to us.

Our Management.    We will enter into a management agreement with Atlas Energy Management pursuant to which it will be responsible for managing our day-to-day operations, subject to the supervision and direction of our board of directors. Our manager is a wholly-owned subsidiary of Atlas America. Neither we nor our manager will directly employ any of the persons responsible for our management or operations. Rather, personnel of Atlas America currently involved in managing our assets will manage and operate our business. Our manager will be entitled to distributions on our Class A units and management incentive interests. For more information about our management, please read “Management” and “Certain relationships and related transactions.”

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Units Outstanding after this Offering.    After giving effect to this offering and the related formation transactions:

We will use any net proceeds from the exercise of the underwriters’ over-allotment option to redeem from Atlas America the number of common units equal to the number of common units issued upon the exercise of the underwriters’ over-allotment option. If the underwriters’ over-allotment option is exercised in full, Atlas America’s ownership will be reduced to 28,238,750 common units, or approximately 78.5% of our membership interests, and the ownership interest of the public unitholders will increase to 6,986,250 common units, or approximately 19.4% of our membership interests.

Principal Executive Offices and Internet Address.    Our principal executive offices are located at 311 Rouser Road, Moon Township, Pennsylvania 15108 and our telephone number is (412) 262-2830. Our internet address is www.atlasenergyresources.com.

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Organizational Chart.    The following chart shows the organization and ownership of Atlas Energy Resources and its subsidiaries after giving effect to this offering and the related transactions.

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The offering

We will use the net proceeds from any exercise of the underwriters’ over-allotment option to purchase additional common units to redeem an equal number of common units from Atlas America.

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Our board of directors has adopted a policy that it will raise our quarterly cash distribution only when it believes that we have sufficient reserves and liquidity for the proper conduct of our business, including the maintenance of our asset base, and can maintain the increased distribution level for a sustained period. While this is our current policy, our board of directors may alter the policy in the future. Our limited liability company agreement requires that, within 45 days after the end of each calendar quarter beginning with the quarter ending December 31, 2006, we distribute all of our available cash to holders of record of our units on the applicable record date.

We will adjust IQD for the period from the closing of this offering through December 31, 2006, based on the actual length of the period.

The amount of available cash in any quarter may be greater or less than the aggregate amount associated with payment of the IQD on all our common units.

In general, we will pay any cash distributions we make in the following manner:

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The holder of our Class A units, initially our manager, will be entitled to 2% of our cash distributions without any obligation to make future capital contributions to us.

We will make management incentive payments to our manager if two tests are met.

The first test is the 12-Quarter Test, which requires that for the 12 full, consecutive, non-overlapping calendar quarters that begin with the first calendar quarter for which we pay per unit cash distributions from operating surplus to holders of Class A and common units in an amount equal to or greater than the First Target Distribution, which period we refer to as the Incentive Trigger Period:

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The second test is the 4-Quarter Test, which requires that for each of (i) the last four full, consecutive, non-overlapping calendar quarters in the Incentive Trigger Period, or (ii) in any four full, consecutive and non-overlapping quarters occurring after such last four quarters in the Incentive Trigger Period, provided that we have paid at least the IQD in each calendar quarter occurring between the end of the Incentive Trigger Period and the beginning of the four full, consecutive and non-overlapping quarters that satisfy the 4-Quarter Test, or (iii) in any four full, consecutive and non-overlapping quarters occurring partially within and partially after such last four quarters of the Incentive Trigger Period:

If both tests have been met, then:

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For a further discussion of the management incentive interests, please read the information set forth under the caption “How we make cash distributions—Management Incentive Interests.”

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Atlas America and its affiliates will own approximately 82.6% of our common units and all of our Class A units upon completion of this offering. This will give Atlas America the ability to determine virtually all matters submitted to a unitholder vote.

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The management agreement does not have a specified term, however, our manager may not terminate the management agreement before its tenth anniversary. We may terminate the management agreement upon the affirmative vote of the holders of at least two-thirds of our outstanding common units, including units held by Atlas America and its affiliates.

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following table sets forth summary historical combined financial and operating data for our predecessor, Atlas America E & P Operations, and pro forma financial data for Atlas Energy Resources, LLC, as of and for the periods indicated. Atlas America E & P Operations are the subsidiaries of Atlas America which hold its natural gas and oil development and production assets and liabilities, substantially all of which Atlas America will transfer to us upon the completion of this offering. We derived the historical financial data as of September 30, 2004 and 2005 and for the years ended September 30, 2003, 2004 and 2005 from Atlas America E & P Operations’ financial statements, which were audited by Grant Thornton LLP, independent registered public accounting firm, and are included in this prospectus. We derived the historical financial data for the nine months ended June 30, 2005 and 2006 and the balance sheet information as of June 30, 2006 from Atlas America E & P Operations’ unaudited financial statements included in this prospectus.

The summary pro forma financial data for the year ended September 30, 2005 and nine months ended June 30, 2006 are derived from the unaudited pro forma financial statements of Atlas Energy Resources, LLC included in this prospectus. The pro forma adjustments have been prepared as if the transactions listed below had taken place on June 30, 2006, in the case of the pro forma balance sheet, or as of October 1, 2004, in the case of the pro forma statements of income. These transactions include:

You should read the following summary financial data in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and our financial statements and related notes appearing elsewhere in this prospectus. You should also read the pro forma information together with the unaudited pro forma financial statements and related notes included elsewhere in this prospectus.

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The following table includes the non-GAAP financial measures of EBITDA and segment margin. For a definition of these measures and a reconciliation to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles, which we refer to as GAAP, please read “—Non-GAAP Financial Measures.”