Atlas Pipeline Partners loss widens in 2nd quarter on termination of oil derivative contracts

Saturday, August 2nd 2008

Natural gas company Atlas Pipeline Partners LP has recently told the press that it posted a dramatically wider loss in the second quarter, after it terminated about 85 percent of its crude oil derivative contracts that it used as hedges.

Atlas Pipeline said Thursday that it recognized a loss after paying preferred dividends of $279.3 million, or $7.16 per unit, for the quarter ended June 30 compared with a loss of $25.3 million, or $2.20 per unit, in the year ago quarter. With the charges, revenue totaled $149 million, compared with $95.4 million in the 2007 period.

Discounting the charge, Atlas said it made $30.4 million for the quarter, or 52 cents per unit, up from $10.2 million, or 13 cents per unit, a year ago and that revenue for the quarter totaled $463 million.

Analysts surveyed by Thomson Financial expected profit of 50 cents per unit on revenue of $408.9 million. Those estimates typically exclude charge.

Atlas said the hedges had become less effective because of significant increases in oil and less significant increases in ethane and propane. The partnership terminated the contracts at a cost of $264 million with a portion of the amount reflect in its third quarter report.

Systemwide volumes totaled 1.3 billion cubic feet per day in the quarter, up from 800,000 cubic feet per day in the second quarter a year ago.

Year to date, Atlas reported a loss of $335.8 million, or $8.56 per unit, compared with a loss of $23.3 million, or $2.34 per unit, a year ago. Revenue totaled $452.5 million, up from $213 million a year ago.

Atlas units fell 14 cents to $37.21 in afternoon trading. The shares have traded between $34.96 and $52.75 the past year.