Atlas Energy's 'Sweet Spot'

At the Master Limited Partnership Investor Conference in NY yesterday morning, Atlas (ATN) President & COO, Richard Weber, discussed the "Sweet Spot" position his company has in the Marcellus shale in southwestern Pennsylvania. The fundamental reason is that the shale in the area is characterized by a very desirable .6 pressure gradient which is providing the verticals that they've completed with the strongest recovery numbers in the entire play. He also noted that coincident with that "overpressure" is a greater degree of natural fracturing.

Atlas, a long time area producer with 242,000 acres in the four county area, is also very much in the sweet spot by having acquired those leases well before anyone had even heard the name Marcellus (and even a few print jocks in the area still can't spell it). With 60 verticals under their belt, Weber said their experience gives them a very good understanding of the acreage and clearly delineates their position. Add it all up and you get 4-6 Tcfe of proven, recoverable reserves.

Tactically speaking, Weber reiterated from the last conference call that the 1600 miles of 8" & 12" gathering systems they have built over the last several years are exactly the type one would build for a Marcellus program. They are scalable and tied in to a 6.5 Bcfd Texas Eastern [SE] line which runs through the heart of the region.

Is Weber alone in his thinking? I hadn't heard this before but he also said that over the last few weeks, they've met with El Paso's Tennessee Gas Pipeline, National Fuel, Dominion, and Equitable; all of whom want to build more high pressure transmission capacity in the area.

Full audio here.

Disclosure: none

Comments

[CRYSBALL:]

IMHO, ATN will be he ultimate 'King of Marcellus shale'. They have several advantages in addition to legacy location & in-place gathering system (duscussed in the article above)... [built-in capital raising sytem via their long established drilling partnership program which is non-dilutive, REDUCTION IN MARCELLUS VERTICAL WELL DRILL TIME BY 30%,distance premium and BTU premium]. The only negative is thier hedge position, but they may work out from under this as more Marcellus revenue comes on line.

They have the ulitmate advantage of SPPED......they are outdistancing the Range's, & CHK's by putting revenue stream on line very rapidly.

crysball

2008 May 23 08:39 AM

[footballtaxman:]

Why not by the parent ATLS? They have the gp interest of ATN with an IDR. ATN is good for income seekers but ATLS should provide greater upside for the true believer.

2008 May 24 10:47 PM