Atlas Resources Partners LP (ARP) has officially emerged from bankruptcy protection, marking a new chapter as Titan Energy LLC. This transition follows a comprehensive restructuring agreement with the vast majority of its lenders and bondholders, signaling a significant financial turnaround for the company.
Back in July, atlas resources partners finalized a deal designed to slash its debt burden by an impressive $900 million. In exchange for this debt reduction, lenders and bondholders received all of the common equity in the newly formed Titan Energy upon its emergence from Chapter 11. The specifics of the agreement saw $668 million of ARP’s outstanding senior notes converted into a substantial 90% stake of Titan’s common equity. The remaining 10% was allocated to ARP’s second lien lenders. Interestingly, Atlas Energy Group LLC (ATLS), the former general partner of atlas resources partners, now retains a 2% preferred member interest in the restructured entity.
The restructuring deal also incorporated a new senior secured credit facility amounting to $440 million. This financial injection includes a clause that suspends regular redetermination until May 2017, contingent upon Titan Energy meeting certain agreed-upon conditions. atlas resources partners clarified that the remaining debt on its balance sheet would be cleared using the proceeds generated from the sale of its natural gas and oil hedge positions.
“We are genuinely enthusiastic about what I believe is a remarkable opportunity to cultivate significant value for all of Titan Energy’s stakeholders,” stated CEO Daniel Herz. “I am confident that Titan is ideally positioned to capitalize on opportunities within the current energy landscape.”
atlas resources partners highlighted that Titan Energy’s asset portfolio encompasses over 14,000 gross wells spread across 17 states. These assets collectively produced an average of 223 million cubic feet of equivalent per day (MMcfe/d) during the second quarter of 2016. As of July 1st, Titan’s estimated proved reserves were reported to be 1,013 billion cubic feet of equivalent (Bcfe), with natural gas constituting 68% of this total. Furthermore, a significant 71% of these reserves are classified as proved developed producing. Titan’s reserve report, also dated July 1st, estimated the value of these reserves at $832 million.
Looking ahead, atlas resources partners indicated that “Titan will continue to operate, through its subsidiary, as the leading sponsor and manager of tax-advantaged investment partnerships. This structure enables the company to monetize a portion of its undeveloped natural gas, crude oil, and natural gas liquids production activities.” This strategy suggests a continued focus on leveraging investment partnerships to drive growth and value creation for Titan Energy in the evolving energy sector.
