We are a Delaware limited partnership and an independent developer and producer
of natural gas, crude oil and natural gas liquids (“NGL”) with operations
primarily focused in the Eagle Ford Shale in south Texas. Our general partner,
Atlas Growth Partners GP, LLC (“AGP GP”) owns 100% of our general
partner units (which are entitled to receive 2% of the cash distributed by us
without any obligation to make further capital contributions) and all of the
incentive distribution rights through which it manages and effectively controls
us.
Atlas Energy Group, LLC (“ATLS” or “Atlas Energy”),
a publicly traded Delaware limited liability company (OTC: ATLS) manages and
controls us through its 2.1% limited partner interest in us and 80.0% member
interest in AGP GP. Current and former members of ATLS management own the remaining
20% member interest in AGP GP.
Our primary business objective is to generate an attractive total return, consisting
of current distributions and capital appreciation, through the acquisition of
oil and gas assets in North America.
Eagle Ford. The Eagle Ford Shale is an Upper Cretaceous-age formation that
is prospective for horizontal drilling in approximately 26 counties across South
Texas. Target vertical depths range from 4,000 to some 11,000+ feet with thickness
from 40 to over 400 feet. The Eagle Ford formation is considered to be the primary
source rock for many conventional oil and gas fields including the prolific
East Texas Oil Field, one of the largest oil fields in the contiguous United
States. We own oil, natural gas and NGL interests in approximately 2,833 net
acres, of which 1,592 are undeveloped, non-producing net acres and 704 are developed
net acres, in the Eagle Ford Shale in Atascosa County, Texas. We acquired our
Eagle Ford position through a series of acquisitions in 2014 and 2015 for approximately
$100 million. During the year, we averaged 5.3 MMcfe/d net production volumes.
We estimate 23 Bcfe of total proved reserves for our Eagle Ford position, of
which 89% are oil.
Marble Falls. The Marble Falls play is Pennsylvanian-age formation located
above the Barnett Shale and beneath the Atoka at depths of approximately 5,500
feet and ranges in thickness from 50 and 500 feet. We own oil, natural gas and
natural gas liquids interests in approximately 2,208 net acres, of which 770
are undeveloped, non-producing net acres and 1,438 are developed net acres in
the Marble Falls formation and the Barnett Shale, in Jack County, Texas. During
the year, we averaged 0.32 MMcfe/d net production volumes. We estimate 0.5 Bcfe
of total proved reserves for our North Texas positions, of which 100% are proved
developed and producing (“PDP”).
Mississippi Lime. The Mississippi Lime formation is an expansive carbonate
hydrocarbon system and is located at depths between 4,000 and 7,000 feet between
the Pennsylvanian-aged Morrow formation and the Devonian-age world-class source
rock Woodford Shale formation. The Mississippi Lime formation can reach 600
feet in gross thickness, with a targeted porosity zone between 50 and 100 feet
thickness. We own a non-operated 21.25% working interest in two wells in the
Mississippi Lime formation in Garfield County, Oklahoma, operated by SandRidge
Energy, Inc. During the year, we averaged 0.043 MMcfe/d net production volumes.
We do not operate any of the rigs or related equipment used in our drilling
operations, relying instead on specialized subcontractors or joint venture partners
for all drilling and completion work. This enables us to streamline operations
and conserve capital for investments in new wells, infrastructure and property
acquisitions, while generally retaining control over all geological, drilling,
engineering and operating decisions. We perform regular inspection, testing
and monitoring functions on each of our operated wells.
Natural Gas and Oil Leases
The typical oil and gas lease agreement provides for the payment of a percentage
of the proceeds, known as a royalty, to the mineral owner(s) for all natural
gas, oil and other hydrocarbons produced from any well(s) drilled on the leased
premises. In Oklahoma (Mississippi Lime play) and Texas (Eagle Ford Shale and
Marble Falls play), both states where we have acquired acreage positions, royalties
are commonly in the 15-25% range, resulting in net revenue interests to us in
the 75-85% range.
In the Texas Eagle Ford Shale and Oklahoma Mississippi Lime play, where horizontal
wells are generally drilled on much larger drilling units (sometimes approaching
1,000 acres), the mineral and/or surface rights are generally acquired from
multiple parties.
Because the acquisition of hydrocarbon leases in highly desirable basins is
an extremely competitive process, and involves certain geological and business
risks to identify prospective areas, leases are frequently held by other oil
and gas operators. In order to access the rights to drill on those leases held
by others, we may elect to farm-in lease rights and/or purchase assignments
of leases from competitor operators. Typically, the assignor of such leases
will reserve an overriding royalty interest (over and above the existing mineral
owner royalty), that can range from 2-3% up to as high as 7% or 8%, and sometimes
contain options to convert the overriding royalty interests to working interests
at payout of a well. Areas where farm-ins are utilized can result in additional
reductions in our net revenue interests, depending upon their terms and how
much of a particular drilling unit the farm-in acreage encompasses.
There will be occasions where competitors owning leasehold interests in areas
where we want to drill will not farm-out or sell their leases, but will instead
join us as working interest partners, paying their proportionate share of all
drilling and operating costs in a well. However, it is generally our goal to
obtain 100% of the working interest in any and all new wells that we operate.
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