United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2015
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 000-51271
ATLAS AMERICA SERIES 25-2004 (B) L.P.
(Name of small business issuer in its charter)
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Delaware |
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34-1980376 |
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(State or other jurisdiction of |
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(I.R.S. Employer |
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Park Place Corporate Center One |
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15275 |
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(Address of principal executive offices) |
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(zip code) |
Issuer’s telephone number, including area code: (412)-489-0006
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer,” “non accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
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Large accelerated filer |
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Accelerated filer |
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¨ |
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Non-accelerated filer |
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¨ |
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Smaller reporting company |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
ATLAS AMERICA SERIES 25-2004 (B) L.P.
(A Delaware Limited Partnership)
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
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PAGE |
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PART I. |
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FINANCIAL INFORMATION (Unaudited) |
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Item 1: |
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Condensed Balance Sheets as of March 31, 2015 and December 31, 2014 |
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3 |
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Condensed Statements of Operations for the Three Months ended March 31, 2015 and 2014 |
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4 |
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Condensed Statements of Comprehensive Loss for the Three Months ended March 31, 2015 and 2014 |
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5 |
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Condensed Statement of Changes in Partners’ Capital for the Three Months ended March 31, 2015 |
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6 |
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Condensed Statements of Cash Flows for the Three Months ended March 31, 2015 and 2014 |
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7 |
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8 |
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Item 2: |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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16 |
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Item 4: |
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20 |
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PART II. |
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OTHER INFORMATION |
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Item 1: |
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20 |
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Item 6: |
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21 |
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22 |
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CERTIFICATIONS |
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2
ATLAS AMERICA SERIES 25-2004 (B) L.P.
(Unaudited)
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March 31, |
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December 31, |
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2015 |
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2014 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
- |
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$ |
- |
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Accounts receivable trade–affiliate |
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31,700 |
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78,100 |
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Asset retirement receivable-affiliate |
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16,300 |
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16,300 |
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Current portion of derivative assets |
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9,200 |
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8,000 |
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Total current assets |
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57,200 |
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102,400 |
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Gas and oil properties, net |
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2,134,600 |
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2,157,800 |
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Long-term derivative assets |
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6,500 |
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6,700 |
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$ |
2,198,300 |
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$ |
2,266,900 |
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LIABILITIES AND PARTNERS’ CAPITAL |
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Current liabilities: |
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Accrued liabilities |
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$ |
11,400 |
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$ |
9,100 |
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Current portion of put premiums payable-affiliate |
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5,300 |
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5,100 |
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Total current liabilities |
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16,700 |
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14,200 |
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Long-term put premiums payable-affiliate |
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4,400 |
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5,900 |
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Asset retirement obligations |
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3,649,000 |
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3,597,600 |
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Commitments and contingencies |
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Partners’ capital: |
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Managing general partner’s interest |
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23,500 |
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68,800 |
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Limited partners’ interest (1,265.38 units) |
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(1,498,200 |
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(1,423,300 |
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Accumulated other comprehensive income |
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2,900 |
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3,700 |
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Total partners’ capital |
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(1,471,800 |
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(1,350,800 |
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$ |
2,198,300 |
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$ |
2,266,900 |
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See accompanying notes to condensed financial statements.
3
ATLAS AMERICA SERIES 25-2004 (B) L.P.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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March 31, |
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2015 |
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2014 |
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REVENUES |
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Natural gas, oil and liquids |
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$ |
132,500 |
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$ |
299,100 |
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Gain on mark-to-market derivatives |
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2,300 |
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- |
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Total revenues |
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134,800 |
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299,100 |
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COSTS AND EXPENSES |
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Production |
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144,400 |
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183,300 |
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Depletion |
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23,200 |
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45,800 |
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Accretion of asset retirement obligation |
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51,400 |
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35,300 |
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General and administrative |
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36,000 |
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38,500 |
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Total costs and expenses |
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255,000 |
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302,900 |
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Net loss |
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$ |
(120,200 |
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$ |
(3,800 |
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Allocation of net loss: |
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Managing general partner |
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$ |
(45,300 |
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$ |
(100 |
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Limited partners |
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$ |
(74,900 |
) |
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$ |
(3,700 |
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Net loss per limited partnership unit |
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$ |
(59 |
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$ |
(3 |
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See accompanying notes to condensed financial statements.
4
ATLAS AMERICA SERIES 25-2004 (B) L.P.
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
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Three Months Ended |
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March 31, |
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2015 |
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2014 |
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Net loss |
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$ |
(120,200 |
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$ |
(3,800 |
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Other comprehensive loss: |
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Unrealized holding loss on cash flow hedging contracts |
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- |
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(9,400 |
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Difference in estimated hedge gains receivable |
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1,300 |
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17,000 |
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Reclassification adjustment for gains realized in net loss from cash flow hedges |
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(2,100 |
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(10,000 |
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Total other comprehensive loss |
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(800 |
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(2,400 |
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Comprehensive loss |
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$ |
(121,000 |
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$ |
(6,200 |
) |
See accompanying notes to condensed financial statements.
5
ATLAS AMERICA SERIES 25-2004 (B) L.P.
CONDENSED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL
FOR THE THREE MONTHS ENDED
March 31, 2015
(Unaudited)
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Managing |
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Accumulated Other |
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General |
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Limited |
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Comprehensive |
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Partner |
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Partners |
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Income (Loss) |
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Total |
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Balance at December 31, 2014 |
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$ |
68,800 |
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$ |
(1,423,300 |
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$ |
3,700 |
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$ |
(1,350,800 |
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Participation in revenues, costs and expenses: |
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Net production revenues |
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(4,700 |
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(7,200 |
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- |
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(11,900 |
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Gain on mark-to-market derivatives |
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- |
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2,300 |
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- |
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2,300 |
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Depletion |
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(10,000 |
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(13,200 |
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- |
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(23,200 |
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Accretion of asset retirement obligation |
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(18,000 |
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(33,400 |
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- |
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(51,400 |
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General and administrative |
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(12,600 |
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(23,400 |
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- |
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(36,000 |
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Net loss |
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(45,300 |
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(74,900 |
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- |
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(120,200 |
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Other comprehensive loss |
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- |
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- |
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(800 |
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(800 |
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Balance at March 31, 2015 |
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$ |
23,500 |
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$ |
(1,498,200 |
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$ |
2,900 |
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$ |
(1,471,800 |
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See accompanying notes to condensed financial statements.
6
ATLAS AMERICA SERIES 25-2004 (B) L.P.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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Three Months Ended |
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March 31, |
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2015 |
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2014 |
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Cash flows from operating activities: |
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Net loss |
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$ |
(120,200 |
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$ |
(3,800 |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depletion |
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23,200 |
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45,800 |
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Non cash (gain) loss on derivative value |
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(3,100 |
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1,300 |
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Accretion of asset retirement obligation |
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51,400 |
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35,300 |
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Changes in operating assets and liabilities: |
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Decrease (increase) in accounts receivable trade-affiliate |
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46,400 |
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(44,200 |
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Increase in accrued liabilities |
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2,300 |
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10,400 |
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Decrease in payable to limited partners |
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- |
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(9,600 |
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Net cash provided by operating activities |
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- |
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35,200 |
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Cash flows from financing activities: |
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Distributions to partners |
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- |
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(52,500 |
) |
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Net cash used in financing activities |
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- |
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(52,500 |
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Net change in cash and cash equivalents |
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- |
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(17,300 |
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Cash and cash equivalents at beginning of period |
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- |
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17,300 |
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Cash and cash equivalents at end of period |
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$ |
- |
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$ |
- |
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See accompanying notes to condensed financial statements.
7
ATLAS AMERICA SERIES 25-2004 (B) L.P.
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 2015
(Unaudited)
NOTE 1 - DESCRIPTION OF BUSINESS
Atlas America Series 25-2004 (B) L.P. (the “Partnership”) is a Delaware limited partnership, formed on January 21, 2004 with Atlas Resources, LLC serving as its Managing General Partner and Operator (“Atlas Resources” or the “MGP”). Atlas Resources is an indirect subsidiary of Atlas Resource Partners, L.P. (“ARP”) (NYSE: ARP).
On February 27, 2015, the MGP’s ultimate parent, Atlas Energy, L.P. (“Atlas Energy”), which was a publicly traded master-limited partnership, was acquired by Targa Resources Corp. and distributed to Atlas Energy’s unitholders 100% of the limited liability company interests in ARP’s general partner, Atlas Energy Group, LLC (“Atlas Energy Group”; NYSE: ATLS). Atlas Energy Group became a separate, publicly traded company and the ultimate parent of the MGP as a result of the distribution. Following the distribution, Atlas Energy Group continues to manage ARP’s operations and activities through its ownership of the ARP’s general partner interest.
The Partnership has drilled and currently operates wells located in Pennsylvania, Tennessee and West Virginia. The Partnership has no employees and relies on the MGP for management, which in turn, relies on its parent company, Atlas Energy (after February 27, 2015, Atlas Energy Group), for administrative services.
The Partnership’s operating cash flows are generated from its wells, which produce natural gas and oil. Produced natural gas and oil is then delivered to market through affiliated and/or third-party gas gathering systems. The Partnership intends to produce its wells until they are depleted or become uneconomical to produce, at which time they will be plugged and abandoned or sold. The Partnership does not expect to drill additional wells and expects no additional funds will be required for drilling.
The accompanying condensed financial statements, which are unaudited, except for the balance sheet at December 31, 2014, which is derived from audited financial statements, are presented in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. They do not include all disclosures normally made in financial statements contained in the Partnership’s Form 10-K. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto presented in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2014. The results of operations for the three months ended March 31, 2015 may not necessarily be indicative of the results of operations for the year ended December 31, 2015.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In management’s opinion, all adjustments necessary for a fair presentation of the Partnership’s financial position, results of operations and cash flows for the periods disclosed have been made. Management has considered for disclosure any material subsequent events through the date the financial statements were issued.
In addition to matters discussed further in this note, the Partnership’s significant accounting policies are detailed in its audited financial statements and notes thereto in the Partnership’s annual report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (“SEC”).
8
Use of Estimates
The preparation of the Partnership’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities that exist at the date of the Partnership’s financial statements, as well as the reported amounts of revenues and costs and expenses during the reporting periods. The Partnership’s financial statements are based on a number of significant estimates, including the revenue and expense accruals, depletion, impairments, fair value of derivative instruments and the probability of forecasted transactions. Actual results could differ from those estimates.
The natural gas industry principally conducts its business by processing actual transactions as many as 60 days after the month of delivery. Consequently, the most recent two months’ financial results were recorded using estimated volumes and contract market prices. Differences between estimated and actual amounts are recorded in the following months’ financial results. Management believes that the operating results presented for the three months ended March 31, 2015 and 2014 represent actual results in all material respects (See “Revenue Recognition”).
Accounts Receivable
Accounts receivable on the balance sheets consist solely of the trade accounts receivable associated with the Partnership’s operations. In evaluating the realizability of its accounts receivable, the MGP performs ongoing credit evaluations of the Partnership’s customers and adjusts credit limits based upon payment history and the customers’ current creditworthiness, as determined by review of such customers’ credit information. Credit is extended on an unsecured basis to many of the Partnership’s energy customers. At March 31, 2015 and December 31, 2014, the MGP’s credit evaluation indicated that the Partnership had no need for an allowance for uncollectible accounts receivable.
Gas and Oil Properties
Gas and oil properties are stated at cost. Maintenance and repairs which generally do not extend the useful life of an asset for two years or more through the replacement of critical components are expensed as incurred. Major renewals and improvements that generally extend the useful life of an asset for two years or more through the replacement of critical components are capitalized.
The Partnership follows the successful efforts method of accounting for gas and oil producing activities. Oil and natural gas liquids (NGLs) are converted to gas equivalent basis (“Mcfe”) at the rate of one barrel of oil to six Mcf of natural gas. Mcf is defined as one thousand cubic feet.
The Partnership’s depletion expense is determined on a field-by-field basis using the units-of-production method. Depletion rates for lease, well and related equipment costs are based on proved developed reserves associated with each field. Depletion rates are determined based on reserve quantity estimates and the capitalized cost of developed producing properties. The Partnership recorded depletion expense on natural gas and oil properties of $23,200 and $45,800 for the three months ended March 31, 2015 and 2014, respectively.
Upon the sale or retirement of a complete field of a proved property, the cost is eliminated from the property accounts and the resultant gain or loss is reclassified to the Partnership’s statements of operations. Upon the sale of an individual well, the Partnership credits the proceeds to accumulated depletion within its balance sheets.
The following is a summary of gas and oil properties at the dates indicated:
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March 31, |
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December 31, |
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2015 |
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2014 |
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Proved properties: |
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Leasehold interests |
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$ |
898,600 |
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$ |
898,600 |
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Wells and related equipment |
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41,682,000 |
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41,682,000 |
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Total natural gas and oil properties |
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42,580,600 |
|
|
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42,580,600 |
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Accumulated depletion and impairment |
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(40,446,000 |
) |
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(40,422,800 |
) |
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Gas and oil properties, net |
|
$ |
2,134,600 |
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$ |
2,157,800 |
|
9
Impairment of Long-Lived Assets
The Partnership reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an asset’s estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount of that asset to its estimated fair value if such carrying amount exceeds the fair value.
The review of the Partnership’s gas and oil properties is done on a field-by-field basis by determining if the historical cost of proved properties less the applicable accumulated depletion and impairment is less than the estimated expected undiscounted future cash flows including salvage. The expected future cash flows are estimated based on the Partnership’s plans to continue to produce and develop proved reserves. Expected future cash flow from the sale of the production of reserves is calculated based on estimated future prices. The Partnership estimates prices based upon current contracts in place, adjusted for basis differentials and market related information, including published futures prices. The estimated future level of production is based on assumptions surrounding future prices and costs, field decline rates, market demand and supply and the economic and regulatory climates. If the carrying value exceeds the expected future cash flows, an impairment loss is recognized for the difference between the estimated fair market value and the carrying value of the assets.
The determination of natural gas and oil reserve estimates is a subjective process and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results.
In addition, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Estimated reserves are often subject to future revisions, which could be substantial, based on the availability of additional information which could cause the assumptions to be modified. The Partnership cannot predict what reserve revisions may be required in future periods.
There was no gas and oil properties impairment recorded for the three months ended March 31, 2015 and 2014. During the year ended December 31, 2014, the Partnership recognized an impairment charge of $2,334,600. This impairment relates to the carrying amount of these gas and oil properties being in excess of the Partnership’s estimate of their fair value at December 31, 2014. The estimate of the fair value of these gas and oil properties was impacted by, among other factors, the deterioration of natural gas and oil prices at the date of measurement.
Working Interest
The Partnership Agreement establishes that revenues and expenses will be allocated to the MGP and limited partners based on their ratio of capital contributions to total contributions (“working interest”). The MGP is also provided an additional working interest of 7% as provided in the Partnership Agreement. Due to the time necessary to complete drilling operations and accumulate all drilling costs, estimated working interest percentage ownership rates are utilized to allocate revenues and expenses until the wells are completely drilled and turned on-line into production. Once the wells are completed, the final working interest ownership of the partners is determined and any previously allocated revenues and expenses based on the estimated working interest percentage ownership are adjusted to conform to the final working interest percentage ownership.
Revenue Recognition
The Partnership generally sells natural gas, crude oil and NGLs at prevailing market prices. Typically, the Partnership’s sales contracts are based on pricing provisions that are tied to a market index, with certain fixed adjustments based on proximity to gathering and transmission lines and the quality of its natural gas. Generally, the market index is fixed two business days prior to the commencement of the production month. Revenue and the related accounts receivable are recognized when produced quantities are delivered to a custody transfer point, persuasive evidence of a sales arrangement exists, the rights and responsibility of ownership pass to the purchaser upon delivery, collection of revenue from the sale is reasonably assured and the sales price is fixed or determinable. Revenues from the production of natural gas, crude oil and NGLs, in which the Partnership has an interest with other producers are recognized on the basis of its percentage ownership of the working interest and/or overriding royalty.
10
The MGP and its affiliates perform all administrative and management functions for the Partnership, including billing revenues and paying expenses. Accounts receivable trade-affiliate on the Partnership’s balance sheets includes the net production revenues due from the MGP. The Partnership accrues unbilled revenue due to timing differences between the delivery of natural gas, NGLs, crude oil and condensate and the receipt of a delivery statement. These revenues are recorded based upon volumetric data from the Partnership’s records and management estimates of the related commodity sales and transportation and compression fees, which are, in turn, based upon applicable product prices (See “Use of Estimates” for further description). The Partnership had unbilled revenues at March 31, 2015 and December 31, 2014 of $73,000 and $89,900, respectively, which have been offset by $41,300 and $11,800, respectively of amounts due to the MGP, with the net amount being presented as accounts receivable trade-affiliate within the Partnership’s balance sheets.
Comprehensive Loss
Comprehensive loss includes net loss and all other changes in the equity of a business during a period from transactions and other events and circumstances from non-owner sources that, under U.S. GAAP, have not been recognized in the calculation of net loss. These changes, other than net loss, are referred to as “other comprehensive loss” on the Partnership’s financial statements and, at March 31, 2015, only include changes in the fair value of unsettled derivative contracts which prior to January 1, 2015 were accounted for as cash flow hedges (See Note 4). The Partnership does not have any other type of transaction which would be included within other comprehensive loss.
Recently Issued Accounting Standards
In January 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-01, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“Update 2015-01”). The amendments in Update 2015-01 simplify the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration. The amendments in Update 2015-01 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity may also apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Partnership will adopt the requirements of Update 2015-01 upon its effective date of January 1, 2016, and it does not anticipate it having a material impact on its financial position, results of operations or related disclosures.
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40) (“Update 2014-15”). The amendments in Update 2014-15 provide GAAP guidance on the responsibility of an entity’s management in evaluating whether there is substantial doubt about the entity’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, an entity’s management will be required to evaluate whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year from the date the financial statements are issued. In doing so, the amendments in Update 2014-15 should reduce diversity in the timing and content of footnote disclosures. The amendments in Update 2014-15 are effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early adoption is permitted. The Partnership will adopt the requirements of Update 2014-15 upon its effective date in 2016, and it does not anticipate it having a material impact on its financial position, results of operations or related disclosures.
11
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“Update 2014-09”), which supersedes the revenue recognition requirements (and some cost guidance) in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the Accounting Standards Codification. In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, assets within the scope of Topic 360, Property, Plant and Equipment, and intangible assets within the scope of Topic 350, Intangibles – Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in Update 2014-09. Topic 606 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this, an entity should identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies the performance obligations. These requirements are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The Partnership will adopt the requirements of Update 2014-09 retrospectively upon its effective date of January 1, 2017, and is evaluating the impact of the adoption on its financial position, results of operations or related disclosures. On April 1, 2015, the FASB tentatively decided to defer the effective date of ASU 2014-09 by one year. As a result, public entities would apply the new revenue standard to annual reporting periods beginning after December 15, 2017, and to interim periods within that reporting period, with early adoption permitted.
NOTE 3 - ASSET RETIREMENT OBLIGATIONS
The Partnership recognizes an estimated liability for the plugging and abandonment of its gas and oil wells. It also recognizes a liability for future asset retirement obligations if a reasonable estimate of the fair value of that liability can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Partnership also considers the estimated salvage value in the calculation of depletion.
The estimated liability is based on the MGP’s historical experience in plugging and abandoning wells, estimated remaining lives of those wells based on reserve estimates, external estimates as to the cost to plug and abandon the wells in the future and federal and state regulatory requirements. The liability is discounted using an assumed credit-adjusted risk-free interest rate. Revisions to the liability could occur due to changes in cost estimates, remaining lives of the wells or if federal or state regulators enact new plugging and abandonment requirements. The Partnership has no assets legally restricted for purposes of settling asset retirement obligations. Except for the Partnership’s gas and oil properties, the Partnership determined that there were no other material retirement obligations associated with tangible long-lived assets.
The MGP’s historical practice and continued intention is to retain distributions from the limited partners as the wells within the Partnership near the end of their useful life. On a partnership-by-partnership basis, the MGP assesses its right to withhold amounts related to plugging and abandonment costs based on several factors including commodity price trends, the natural decline in the production of the wells and current and future costs. Generally, the MGP’s intention is to retain distributions from the limited partners as the fair value of the future cash flows of the limited partners’ interest approaches the fair value of the future plugging and abandonment cost. Upon the MGP’s decision to retain all future distributions to the limited partners of the Partnership, the MGP will assume the related asset retirement obligations of the limited partners. As of March 31, 2015, the MGP has withheld $16,300 of net production revenue for future plugging and abandonment costs.
A reconciliation of the Partnership’s liability for well plugging and abandonment costs for the periods indicated is as follows:
|
|
|
Three Months Ended |
|
|||||
|
|
|
March 31, |
|
|||||
|
|
|
2015 |
|
|
2014 |
|
||
|
Asset retirement obligations at beginning of period |
|
$ |
3,597,600 |
|
|
$ |
2,381,900 |
|
|
Accretion expense |
|
|
51,400 |
|
|
|
35,300 |
|
|
Asset retirement obligations at end of period |
|
$ |
3,649,000 |
|
|
$ |
2,417,200 |
|
12
NOTE 4 - DERIVATIVE INSTRUMENTS
The MGP, on behalf of the Partnership, uses a number of different derivative instruments, principally swaps, collars and options, in connection with the Partnership’s commodity price risk management activities. Management enters into financial instruments to hedge forecasted commodity sales against the variability in expected future cash flows attributable to changes in market prices. Swap instruments are contractual agreements between counterparties to exchange obligations of money as the underlying commodities are sold. Under commodity-based swap agreements, the Partnership receives or pays a fixed price and receives or remits a floating price based on certain indices for the relevant contract period. To manage the risk of regional commodity price differences, the Partnership occasionally enters into basis swaps. Basis swaps are contractual arrangements that guarantee a price differential for a commodity from a specified delivery point price and the comparable national exchange price. For natural gas basis swaps, which have negative differentials to New York Mercantile Exchange (“NYMEX”), the Partnership receives or pays a payment from the counterparty if the price differential to NYMEX is greater or less than the stated terms of the contract. Commodity-based put option instruments are contractual agreements that require the payment of a premium and grant the purchaser of the put option the right, but not the obligation, to receive the difference between a fixed, or strike, price and a floating price based on certain indices for the relevant contract period, if the floating price is lower than the fixed price. The put option instrument sets a floor price for commodity sales being hedged. Costless collars are a combination of a purchased put option and a sold call option, in which the premiums net to zero. The costless collar eliminates the initial cost of the purchased put, but places a ceiling price for commodity sales being hedged.
On January 1, 2015, the Partnership discontinued hedge accounting for its qualified commodity derivatives. As such, changes in fair value of these derivatives after December 31, 2014 are recognized immediately within gain (loss) on mark-to-market derivatives in the Partnership’s statements of operations. The fair values of these commodity derivative instruments at December 31, 2014, which were recognized in accumulated other comprehensive income within partners’ capital on the Partnership’s balance sheet, will be reclassified to the Partnership’s statements of operations in the future at the time the originally hedged physical transactions affect earnings.
The Partnership enters into derivative contracts with various financial institutions, utilizing master contracts based upon the standards set by the International Swaps and Derivatives Association, Inc. These contracts allow for rights of offset at the time of settlement of the derivatives. Due to the right of offset, derivatives are recorded on the Partnership’s balance sheets as assets or liabilities at fair value on the basis of the net exposure to each counterparty. Potential credit risk adjustments are also analyzed based upon the net exposure to each counterparty. Premiums paid for purchased options are recorded on the Partnership’s balance sheets as the initial value of the options. The Partnership reflected net derivative assets on its balance sheets of $15,700 and $14,700 at March 31, 2015 and December 31, 2014, respectively.
The following table summarizes the gains or losses recognized within the statements of operations for derivative instruments previously designated as cash flow hedges for the periods indicated:
|
|
|
Three Months Ended |
|
|||||
|
|
|
March 31, |
|
|||||
|
|
|
2015 |
|
|
2014 |
|
||
|
Gains reclassified from accumulated other comprehensive income into natural gas and oil and liquids revenues |
|
$ |
2,100 |
|
|
$ |
10,000 |
|
|
Gains subsequent to December 31, 2014 recognized in gain on mark-to-market derivatives |
|
$ |
2,300 |
|
|
$ |
- |
|
13
The Partnership enters into commodity future option and collar contracts to achieve more predictable cash flows by hedging its exposure to changes in commodity prices. At any point in time, such contracts may include regulated NYMEX futures and options contracts and non-regulated over-the-counter futures contracts with qualified counterparties. NYMEX contracts are generally settled with offsetting positions, but may be settled by the physical delivery of the commodity. Crude oil contracts are based on a West Texas Intermediate (“WTI”) index. NGL fixed price swaps are priced based on a WTI crude oil index. These contracts have been recorded at their fair values.
At March 31, 2015, the Partnership had the following commodity derivatives:
Natural Gas Put Options
|
Production Period Ending December 31, |
|
Volumes |
|
|
Average |
|
|
Fair Value |
|
|||
|
|
|
(MMBtu) (1) |
|
|
(per MMBtu) (1) |
|
|
|
|
|||
|
2015 |
|
|
5,700 |
|
|
$ |
4.00 |
|
|
$ |
7,000 |
|
|
2016 |
|
|
7,700 |
|
|
|
4.15 |
|
|
|
8,700 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
15,700 |
|
|
(1) |
“MMBtu” represents million British Thermal Units. |
|
(2) |
Fair value based on forward NYMEX natural gas prices, as applicable. |
As the underlying prices and terms in the Partnership’s derivative contracts were consistent with the indices used to sell its natural gas and oil, there were no gains or losses recognized during the three months ended March 31, 2015 and 2014 for hedge ineffectiveness.
Put Premiums Payable
During June 2012, a premium (“put premium”) was paid to purchase the contracts and will be allocated to natural gas production revenues generated over the contractual term of the purchased hedging instruments. At March 31, 2015 and December 31, 2014, the put premiums were recorded as short-term payables to affiliate, of $5,300 and $5,100, respectively, and long-term payables to affiliate of $4,400 and $5,900, respectively.
Accumulated Other Comprehensive Income
As a result of the put options, the Partnership recorded a net deferred gain on its balance sheet in accumulated other comprehensive income of $2,900 as of March 31, 2015. During the three months ended March 31, 2015, $1,500 of net gains were recorded by the Partnership and allocated only to the limited partners. Of the remaining $2,900 of net unrealized gain in accumulated other comprehensive income, the Partnership will reclassify $2,300 of net gains to the Partnership’s statements of operations over the next twelve month period and the remaining $600 of gains in later periods.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The Partnership has established a hierarchy to measure its financial instruments at fair value, which requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect the Partnership’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The hierarchy defines three levels of inputs that may be used to measure fair value:
Level 1 – Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 – Unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.
14
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The carrying values of cash, accounts receivable and accounts payable approximate their respective fair values due to the short-term maturities of such financial instruments. The Partnership uses a market approach fair value methodology to value the assets and liabilities for its outstanding derivative contracts (See Note 4). The Partnership manages and reports the derivative assets and liabilities on the basis of its net exposure to market risks and credit risks by counterparty. The Partnership’s commodity derivative contracts are valued based on observable market data related to the change in price of the underlying commodity and are therefore defined as Level 2 assets and liabilities within the same class of nature and risk. The fair values of these derivative instruments are calculated by utilizing commodity indices, quoted prices for futures and options contracts traded on open markets that coincide with the underlying commodity, expiration period, strike price (if applicable) and the pricing formula utilized in the derivative instrument.
Information for assets measured at fair value at March 31, 2015 and December 31, 2014 was as follows:
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
As of March 31, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets, gross |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity puts |
|
$ |
- |
|
|
$ |
15,700 |
|
|
$ |
- |
|
|
$ |
15,700 |
|
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
As of December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets, gross |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity puts |
|
$ |
- |
|
|
$ |
14,700 |
|
|
$ |
- |
|
|
$ |
14,700 |
|
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Partnership estimates the fair value of its asset retirement obligations based on discounted cash flow projections using numerous estimates, assumptions and judgments regarding factors at the date of establishment of an asset retirement obligation such as: amounts and timing of settlements, the credit-adjusted risk-free rate of the Partnership and estimated inflation rates (See Note 3). There were no additional assets or liabilities that were measured at fair value on a nonrecurring basis for the three months ended March 31, 2015 and 2014.
NOTE 6 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Partnership has entered into the following significant transactions with the MGP and its affiliates as provided under its Partnership Agreement. Administrative costs, which are included in general and administrative expenses in the Partnership’s statements of operations, are payable at $75 per well per month. Monthly well supervision fees, which are included in production expense in the Partnership’s statements of operations, are payable at $313 per well per month for operating and maintaining the wells. Well supervision fees are proportionately reduced to the extent the Partnership does not acquire 100% of the working interest in a well. Transportation fees are included in production expenses in the Partnership’s statements of operations and are generally payable at 13% of the natural gas sales price. Direct costs, which are included in production and general administrative expenses in the Partnership’s statements of operations, are payable to the MGP and its affiliates as reimbursement for all costs expended on the Partnership’s behalf.
The following table provides information with respect to these costs and the periods incurred:
|
|
|
Three Months Ended |
|
|||||
|
|
|
2015 |
|
|
2014 |
|
||
|
Administrative fees |
|
$ |
22,200 |
|
|
$ |
24,200 |
|
|
Supervision fees |
|
|
90,700 |
|
|
|
99,000 |
|
|
Transportation fees |
|
|
14,700 |
|
|
|
33,700 |
|
|
Direct costs |
|
|
52,800 |
|
|
|
64,900 |
|
|
Total |
|
$ |
180,400 |
|
|
$ |
221,800 |
|
The MGP and its affiliates perform all administrative and management functions for the Partnership, including billing revenues and paying expenses. Accounts receivable trade-affiliate on the Partnership’s balance sheets includes the net production revenues due from the MGP.
15
NOTE 7 - COMMITMENTS AND CONTINGENCIES
General Commitments
Subject to certain conditions, investor partners may present their interests for purchase by the MGP. The purchase price is calculated by the MGP in accordance with the terms of the partnership agreement. The MGP is not obligated to purchase more than 5% of the total outstanding units in any calendar year. In the event that the MGP is unable to obtain the necessary funds, it may suspend its purchase obligation.
Beginning one year after each of the Partnership’s wells has been placed into production, the MGP, as operator, may retain $200 per month per well to cover estimated future plugging and abandonment costs. As of March 31, 2015, the MGP has withheld $16,300 of net production revenue for future plugging and abandonment costs.
Legal Proceedings
The Partnership is a party to various routine legal proceedings arising out of the ordinary course of its business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the Partnership’s financial condition or results of operations.
Affiliates of the MGP and their subsidiaries are party to various routine legal proceedings arising in the ordinary course of their respective businesses. The MGP’s management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the MGP’s financial condition or results of operations.
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) |
Forward-Looking Statements
When used in this Form 10-Q, the words “believes”, “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from the results stated or implied in this document. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the results of any revisions to forward-looking statements which we may make to reflect events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
General
Atlas America Series 25-2004 (B) L.P. (“we”, “us” or the “Partnership”) is a Delaware limited partnership, formed on January 21, 2004 with Atlas Resources, LLC serving as its Managing General Partner and Operator (“Atlas Resources” or the “MGP”). Atlas Resources is an indirect subsidiary of Atlas Resource Partners, L.P. (“ARP”) (NYSE: ARP).
On February 27, 2015, the MGP’s ultimate parent, Atlas Energy, L.P. (“Atlas Energy”), which was a publicly traded master-limited partnership, was acquired by Targa Resources Corp. and distributed to Atlas Energy’s unitholders 100% of the limited liability company interests in ARP’s general partner, Atlas Energy Group, LLC (“Atlas Energy Group”; NYSE: ATLS). Atlas Energy Group became a separate, publicly traded company and the ultimate parent of the MGP as a result of the distribution. Following the distribution, Atlas Energy Group continues to manage ARP’s operations and activities through its ownership of the ARP’s general partner interest.
We have drilled and currently operate wells located in Pennsylvania, Tennessee and West Virginia. We have no employees and rely on our MGP for management, which in turn, relies on its parent company, Atlas Energy (after February 27, 2015, Atlas Energy Group), for administrative services.
We intend to continue to produce our wells until they are depleted or become uneconomical to produce, at which time they will be plugged and abandoned or sold. We expect that no other wells will be drilled and no additional funds will be required for drilling.
16
Overview
The following discussion provides information to assist in understanding our financial condition and results of operations. Our operating cash flows are generated from our wells, which produce primarily natural gas, but also some oil. Our produced natural gas and oil is then delivered to market through affiliated and/or third-party gas gathering systems. Our ongoing operating and maintenance costs have been and are expected to be fulfilled through revenues from the sale of our natural gas and oil production. We pay our MGP, as operator, a monthly well supervision fee, which covers all normal and regularly recurring operating expenses for the production and sale of natural gas and oil such as:
|
· |
well tending, routine maintenance and adjustment; |
|
· |
reading meters, recording production, pumping, maintaining appropriate books and records; and |
|
· |
preparation of reports for us and government agencies. |
The well supervision fees, however, do not include costs and expenses related to the purchase of certain equipment, materials and brine disposal. If these expenses are incurred, we pay cost for third-party services, materials and a competitive charge for services performed directly by our MGP or its affiliates. Also, beginning one year after each of our wells have been placed into production, our MGP, as operator, may retain $200 per month, per well, to cover the estimated future plugging and abandonment costs of the well. As of March 31, 2015, our MGP has withheld $16,300 of net production revenues for this purpose.
Markets and Competition
The availability of a ready market for natural gas and oil produced by us, and the price obtained, depends on numerous factors beyond our control, including the extent of domestic production, imports of foreign natural gas and oil, political instability or terrorist acts in gas and oil producing countries and regions, market demand, competition from other energy sources, the effect of federal regulation on the sale of natural gas and oil in interstate commerce, other governmental regulation of the production and transportation of natural gas and oil and the proximity, availability and capacity of pipelines and other required facilities. Our MGP is responsible for selling our production. During 2015 and 2014, we experienced no problems in selling our natural gas and oil. Product availability and price are the principal means of competing in selling natural gas and oil production. While it is impossible to accurately determine our comparative position in the industry, we do not consider our operations to be a significant factor in the industry.
17
Results of Operations
The following table sets forth information relating to our production revenues, volumes, sales prices, production costs and depletion during the periods indicated:
|
|
|
Three Months Ended |
|
|||||
|
|
|
March 31, |
|
|||||
|
|
|
2015 |
|
|
2014 |
|
||
|
Production revenues (in thousands): |
|
|
|
|
|
|
|
|
|
Gas |
|
$ |
114 |
|
|
$ |
262 |
|
|
Oil |
|
|
17 |
|
|
|
25 |
|
|
Liquids |
|
|
2 |
|
|
|
12 |
|
|
Total |
|
$ |
133 |
|
|
$ |
299 |
|
|
Production volumes: |
|
|
|
|
|
|
|
|
|
Gas (mcf/day) (1) |
|
|
513 |
|
|
|
564 |
|
|
Oil (bbl/day) (1) |
|
|
4 |
|
|
|
3 |
|
|
Liquids (bbl/day) (1) |
|
|
1 |
|
|
|
2 |
|
|
Total (mcfe/day) (1) |
|
|
543 |
|
|
|
594 |
|
|
Average sales prices (2) |
|
|
|
|
|
|
|
|
|
Gas (per mcf) (1) (3) |
|
$ |
2.47 |
|
|
$ |
5.20 |
|
|
Oil (per bbl) (1) |
|
$ |
51.57 |
|
|
$ |
91.67 |
|
|
Liquids (per bbl) (1) |
|
$ |
27.30 |
|
|
$ |
63.76 |
|
|
Production costs: |
|
|
|
|
|
|
|
|
|
As a percent of revenues |
|
|
109 |
% |
|
|
61 |
% |
|
Per mcfe (1) |
|
$ |
2.97 |
|
|
$ |
3.43 |
|
|
Depletion per mcfe |
|
$ |
0.48 |
|
|
$ |
0.85 |
|
|
(1) |
“Mcf” represents thousand cubic feet, “mcfe” represents thousand cubic feet equivalent, and “bbl” represents barrels. Bbl is converted to mcfe using the ratio of six mcfs to one bbl. |
|
(2) |
Average sales prices represent accrual basis pricing after adjusting for the effect of previously recognized gains resulting from prior period impairment charges. |
|
(3) |
Average gas prices are calculated by including in total revenue derivative gains previously recognized into income in connection with prior period impairment charges and dividing by the total volume for the period. Previously recognized derivative gains was $1,300 for the three months ended March 31, 2014. |
Natural Gas Revenues. Our natural gas revenues were $113,900 and $262,500 for the three months ended March 31, 2015 and 2014, respectively, a decrease of $148,600 (57%). The $148,600 decrease in natural gas revenues for the three months ended March 31, 2015 as compared to the prior year similar period was attributable to a $124,900 decrease in our natural gas sales prices after the effect of financial hedges, which was driven by market conditions, and by a $23,700 decrease in production volumes. Our production volumes decreased to 513 mcf per day for the three months ended March 31, 2015 from 564 mcf per day for the three months ended March 31, 2014, a decrease of 51 mcf per day (9%). The overall decrease in natural gas production volumes for the three months ended March 31, 2015 as compared to the prior year similar period resulted primarily from the normal decline inherent in the life of a well.
18
Oil Revenues. We drill wells primarily to produce natural gas, rather than oil, but some wells have limited oil production. Our oil revenues were $16,500 and $24,600 for the three months ended March 31, 2015 and 2014, respectively, a decrease of $8,100 (33%). The $8,100 decrease in oil revenues for the three months ended March 31, 2015 as compared to the prior year similar period was attributable to a $12,800 decrease in oil prices after the effect of financial hedges, partially offset by a $4,700 increase in production volumes. Our production volumes increased to 4 bbls per day for the three months ended March 31, 2015 from 3 bbls per day for the three months ended March 31, 2014, an increase of 1 bbl per day (33%).
Natural Gas Liquids Revenue. The majority of our wells produce “dry gas”, which is composed primarily of methane and requires no additional processing before being transported and sold to the purchaser. Some wells, however, produce “wet gas”, which contains larger amounts of ethane and other associated hydrocarbons (i.e. “natural gas liquids”) that must be removed prior to transporting the gas. Once removed, these natural gas liquids are sold to various purchasers. Our natural gas liquids revenues were $2,100 and $12,000 for the three months ended March 31, 2015 and 2014, respectively, a decrease of $9,900 (83%). The $9,900 decrease in natural gas liquids revenues for the three months ended March 31, 2015 as compared to the prior year similar period was attributable to a $7,000 decrease in production volumes and a $2,900 decrease in natural gas liquids prices. Our production volumes decreased to 1 bbl per day for the three months ended March 31, 2015 from 2 bbls per day for the three months ended March 31, 2014 a decrease of 1 bbls per day (50%).
Costs and Expenses. Production expenses were $144,400 and $183,300 for the three months ended March 31, 2015 and 2014, respectively, a decrease of $38,900 (21%). This decrease was attributable to a decrease in monthly well supervision fees, transportation fees, and water hauling disposal fees.
Depletion of gas and oil properties as a percentage of gas and oil revenues was 18% and 15% for the three months ended March 31, 2015 and 2014, respectively. This change was primarily attributable to changes in gas and oil reserve quantities and to a lesser extent revenues, product prices and production volumes and changes in the depletable cost basis of gas and oil properties.
General and administrative expenses for the three months ended March 31, 2015 and 2014 were $36,000 and $38,500, respectively, a decrease of $2,500 (6%). These expenses include third-party costs for services as well as the monthly administrative fees charged by our MGP and vary from period to period due to the costs charged to us and services provided to us.
Liquidity and Capital Resources
Cash provided by operating activities decreased $35,200 in the three months ended March 31, 2015 to $0 as compared to $35,200 for the three months ended March 31, 2014. This decrease was due to a decrease in net income before a net non-cash loss on derivative value, depletion and accretion of $127,300 and a decrease in the change in accrued liabilities of $8,100, partially offset by an increase in the change in accounts receivable trade-affiliate of $90,600 and the change in a payable to limited partners of $9,600, for the three months ended March 31, 2015 compared to the three months ended March 31, 2014.
Cash used in financing activities was $52,500 for the three months ended March 31, 2014, due to cash distributions to partners. There was no cash used in financing activities for the three months ended March 31, 2015.
Our MGP may withhold funds for future plugging and abandonment costs. Through March 31, 2015, our MGP has withheld $16,300 of funds for this purpose. Any additional funds, if required, will be obtained from production revenues or borrowings from our MGP or its affiliates, which are not contractually committed to make loans to us. The amount that we may borrow at any one time may not at any time exceed 5% of our total subscriptions, and we will not borrow from third-parties.
We are generally limited to the amount of funds generated by the cash flows from our operations, which we believe is adequate to fund future operations and distributions to our partners. Historically, there has been no need to borrow funds from our MGP to fund operations.
19
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with U.S. GAAP. On an on-going basis, we evaluate our estimates, including those related to our asset retirement obligations, depletion and certain accrued receivables and liabilities. We base our estimates on historical experience and on various other assumptions that we believe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. A discussion of significant accounting policies we have adopted and followed in the preparation of our financial statements is included within “Notes to Financial Statements” in Part I, Item 1, “Financial Statements” in this quarterly report and in our Annual Report on Form 10-K for the year ended December 31, 2014.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our general partner’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Under the supervision of our general partner’s Chief Executive Officer and Chief Financial Officer and with the participation of our disclosure committee appointed by such officers, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our general partner’s Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2015, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There have been no changes in the Partnership’s internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The Partnership is a party to various routine legal proceedings arising out of the ordinary course of its business. Management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the Partnership’s financial condition or results of operations.
Affiliates of the MGP and their subsidiaries are party to various routine legal proceedings arising in the ordinary course of their respective businesses. The MGP’s management believes that none of these actions, individually or in the aggregate, will have a material adverse effect on the MGP’s financial condition or results of operations.
20
EXHIBIT INDEX
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Exhibit No. |
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Description |
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4.2 |
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Amended and Restated Certificate and Agreement of Limited Partnership for Atlas America Series 25-2004 (B) L.P. (1) |
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31.1 |
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Certification Pursuant to Rule 13a-14/15(d)-14 |
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31.2 |
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Certification Pursuant to Rule 13a-14/15(d)-14 |
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32.1 |
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Section 1350 Certification |
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32.2 |
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Section 1350 Certification |
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101 |
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Interactive Data File |
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(1) |
Filed on April 29, 2005 in the Form S-1 Registration Statement dated April 29, 2005, File No. 000-51271 |
21
Pursuant to the requirements of the Securities of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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ATLAS AMERICA SERIES 25-2004 (B) L.P. |
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By: |
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Atlas Resources, LLC, its |
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Managing General Partner |
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Date: May 15, 2015 |
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By: |
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/s/ FREDDIE M. KOTEK |
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Freddie M. Kotek, Chief Executive Officer and President of the Managing General Partner
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Date: May 15, 2015 |
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By: |
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/s/ SEAN P. MCGRATH |
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Sean P. McGrath, Chief Financial Officer of the Managing General Partner |
22
EXHIBIT 31.1
CERTIFICATION
I, Freddie M. Kotek, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2015 of Atlas Resources Series 25-2004 (B) L.P.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have; |
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(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the entity, particularly during the period in which this report is being prepared; |
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(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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By: |
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/s/ FREDDIE M. KOTEK |
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Name: |
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Freddie M. Kotek |
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Title: |
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Chief Executive Officer and President of the Managing General Partner |
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Date: |
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May 15, 2015 |
EXHIBIT 31.2
CERTIFICATION
I, Sean P. McGrath, certify that:
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1. |
I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2015 of Atlas America Series 25-2004 (B) L.P.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have; |
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(a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the entity, particularly during the period in which this report is being prepared; |
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(b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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(c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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(d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
(a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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By: |
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/s/ SEAN P. MCGRATH |
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Name: |
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Sean P. McGrath |
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Title: |
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Chief Financial Officer of the Managing General Partner |
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Date: |
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May 15, 2015 |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atlas America Series 25-2004 (B) L.P. (the “Partnership”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Freddie M. Kotek, Chief Executive Officer of the Managing General Partner, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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(1) |
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
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(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. |
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By: |
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/s/ FREDDIE M. KOTEK |
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Name: |
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Freddie M. Kotek |
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Title: |
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Chief Executive Officer and President of the Managing General Partner |
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Date: |
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May 15, 2015 |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Atlas America Series 25-2004 (B) L.P. (the “Partnership”) on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sean P. McGrath, Chief Financial Officer of the Managing General Partner, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
(1) |
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. |
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By: |
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/s/ SEAN P. MCGRATH |
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Name: |
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Sean P. McGrath |
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Title: |
|
Chief Financial Officer of the Managing General Partner |
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|
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Date: |
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May 15, 2015 |
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