U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
Commission file number 333-31681
Atlas-Energy for the Nineties-Public #6 Ltd.
(Name of small business issuer in its charter)
Pennsylvania 23-2888337
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
311 Rouser Road, Moon Township, Pennsylvania 15108
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (412) 262-2830
Securities registered under Section 12(b) of the Exchange Act
Title of each class Name of each exchange on
which registered
None None
Securities registered under Section 12(g) of the Exchange Act
None
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 X No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year. $1,721,899
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant. Not Applicable.
Transitional Small Business Disclosure Format (check one):
Yes X No
================================================================
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Atlas-Energy for the Nineties-Public #6 Ltd. (the "Partnership")
was formed under the Pennsylvania Revised Uniform Limited Partnership
Act on July 1, 1997, with Atlas Resources, Inc. ("Atlas") as Managing
General Partner. The Partnership had its final closing on December 31,
1997, and was funded with total subscriptions of $9,901,025 to drill
natural gas development wells. Also, the Managing General Partner was
credited with a total capital contribution of $1,968,637 because of
certain expenditures it made on behalf of the Partnership and certain
prospects it contributed to the Partnership.
The Partnership has not filed bankruptcy nor has the Partnership been
involved in any material reclassification, merger, consolidation,
receivership or similar proceeding or purchase or sale of a significant
amount of assets not in the ordinary course of business.
The Partnership was funded to drill natural gas development wells
with the objective being the discovery and production of natural gas in
commercially marketable quantities. The initial closing date was
December 1, 1997, and the Partnership began its drilling activities
pursuant to the drilling and operating agreement. Additionally, the
Partnership prepaid drilling costs pursuant to the drilling and
operating agreement on December 31, 1997, in an amount equal to
$7,918,110, in order to claim a 1997 deduction for intangible drilling
and development costs of wells to be drilled in 1998. The drilling and
operating agreement provided that a total of 44.45 development wells
would be drilled to the Clinton/Medina geological formation in Mercer
and Lawrence Counties, Pennsylvania. Atlas and its affiliates had
sufficient leasehold inventory to provide the prospects to be developed
by the Partnership. See "Description of Property."
For the next 12 months management believes that the Partnership
has adequate capital in order to conduct its operations. The
Partnership had sufficient capital resources from the closings to drill
and develop approximately 44.45 net wells. No other wells will be
drilled and therefore no additional funds will be required. The
payment of operation and maintenance costs did not begin until the
Partnership wells began to generate revenue. Although management does
not anticipate that the Partnership will have to do so, any additional
funds which may be required will be obtained from production revenues
from Partnership wells or from borrowings by the Partnership from Atlas
or its affiliates. Atlas, however, is not contractually committed to
make such a loan. The amount that may be borrowed by the Partnership
from Atlas and its affiliates, if any amounts are borrowed, may not at
any time exceed 5% of the Partnership subscription. No borrowings will
be obtained from third parties.
With respect to operating and maintenance costs, the Partnership's
commitments pursuant to the drilling and operating agreement are
expected to be fulfilled through revenues generated from the sale of
gas and oil. During producing operations Atlas, as operator, will
receive a monthly well supervision fee of $275 (proportionately reduced
to the extent less than 100% of the working interest was acquired) for
each producing well for which it has responsibility under the drilling
and operating agreement. The well supervision fee covers all normal
and regularly recurring operating expenses for the production, delivery
and sale of gas, such as well tending, routine maintenance and
adjustment, reading meters, recording production, pumping, maintaining
appropriate books and records, preparing reports to the Partnership and
to government agencies, and collecting and disbursing revenues. The
well supervision fees do not include costs and expenses related to the
production and sale of oil, purchase of equipment, materials or third
party services, brine disposal, and rebuilding of access roads, all of
which will be billed at the invoice cost of materials purchased or
third party services performed. As operator Atlas will charge the
Partnership at cost for third party services and materials provided for
each well which has been placed in operation, and a reasonable charge
for services performed directly by Atlas or its affiliates. The
drilling and operating agreement also gives the operator the right at
any time after three years from the date a Partnership well has been
placed into production to retain $200 per month to cover future
plugging and abandonment of such well.
Natural gas and any oil produced by the wells developed by the
Partnership must be marketed in order for the Partnership to realize
revenues from such production. The Partnership did not purchase and
does not anticipate selling any producing wells. In recent years
natural gas and oil prices have been volatile.
The marketing of natural gas and oil production, if any, will be
affected by numerous factors beyond the control of the Partnership and
the effect of which cannot be accurately predicted. These factors
include the availability and proximity of adequate pipeline or other
transportation facilities; the amount of domestic production and
foreign imports of oil and gas; competition from other energy sources
such as coal and nuclear energy; local, state and federal regulations
regarding production and the cost of complying with applicable
environmental regulations; and fluctuating seasonal supply and demand.
For example, the demand for natural gas is greater in the winter months
than in the summer months, which is reflected in a higher spot market
price paid for such gas. Also, increased imports of oil and natural
gas have occurred and are expected to continue. The free trade
agreement between Canada and the United States has eased restrictions
on imports of Canadian gas to the United States. Additionally, the
passage in November, 1993, of the North American Free Trade Agreement
will have some impact on the American gas industry by eliminating trade
and investment barriers in the United States, Canada and Mexico. In
the past the reduced demand for natural gas and/or an excess supply of
gas has resulted in a lower price paid for the gas. It has also
resulted in some purchasers curtailing or restricting their purchases
of natural gas; renegotiating existing contracts to reduce both take-
or-pay levels and the price paid for delivered gas; and other
difficulties in the marketing of production.
The Clean Air Act Amendments of 1990 contain incentives for the
future development of "clean alternative fuel," which includes natural
gas and liquefied petroleum gas for "clean-fuel vehicles." The
Partnership believes the amendments ultimately will have a beneficial
effect on natural gas markets and prices.
The Managing General Partner is responsible for selling the
Partnership's gas and oil production. Atlas' policy is to treat all
wells in a given geographic area equally. This reduces certain
potential conflicts of interest among the owners of the various wells,
including the Partnership, concerning to whom and at what price the gas
will be sold. Atlas calculates a weighted average selling price for
all the gas sold in the geographic area, such as the Mercer County
area. To arrive at the average weighted selling price the money
received from the sale of all the gas sold to its customers in a
geographic area is divided by the volume of all gas sold from the wells
in the area. On occasion, Atlas has reduced the amount of production
it normally sells on the spot market until the spot market price
increased. Atlas, however, has not voluntarily restricted its gas
production in the past two years. (See "Properties - Production.")
In the Mercer County area, a portion of the Partnership's gas is
transported through Atlas' own pipeline system and sold directly to
industrial end-users in the area where the wells were drilled. This
will generally result in the Partnership receiving higher prices for
the gas than if the gas were transported a farther distance through
interstate pipelines because of increased transportation charges. The
remainder of the Partnership's gas from the Mercer County area will be
transported through Atlas' and its affiliates' pipelines to the
interconnection points maintained with Tennessee Gas Transmission Co.,
National Fuel Gas Supply Corporation, National Fuel Gas Distribution
Company, East Ohio Natural Gas Company and Peoples Natural Gas Company.
These delivery points are utilized by Atlas Gas Marketing, Inc. to
service its end-user markets in the northeast United States which
include in excess of 300 customers. Atlas is currently delivering an
average 27,000 MCF of natural gas per day from the Mercer County area
to all the aforementioned markets and has the capacity of delivering
33,000 MCF per day from the Mercer County area. Atlas anticipates that
Wheatland Tube Company and Carbide Graphite each will purchase
approximately 10% to 15% of the Partnership's gas production in 1999
pursuant to gas contracts between them and an affiliate of Atlas, and
it is possible that other purchasers of the Partnership's gas
production may account for 10% of the Partnership's gas sales revenues
in 1999. (See "Financial Statements.")
In order to optimize the price it receives for the sale of natural
gas, Atlas markets portions of the gas through long term contracts,
short term contracts, and monthly spot sales. The marketing of natural
gas production has been influenced by the availability of certain
financial instruments, such as gas futures contracts, options and swaps
which, when properly utilized as hedge instruments, provide producers
or consumers of gas with the ability to lock in the price which will
ultimately be paid for the future deliveries of gas. Atlas is
utilizing financial instruments to hedge the price risk of a portion of
all of its programs' gas production which would include the
Partnership. To assure that the financial instruments will be used
solely for hedging price risks and not for speculative purposes, Atlas
has established an Energy Price Risk Committee, whose responsibility
will be to ascertain that all financial trading is done in compliance
with hedging policies and procedures. Atlas does not intend to
contract for positions that it cannot offset with actual production.
There are many companies, partnerships and individuals engaged in
natural gas exploration, development and operations in the areas where
the Partnership is conducting its activities. The industry is highly
competitive in all phases, including the marketing of natural gas and
oil. With respect to the marketing of the Partnership's gas and oil
the Partnership should, through the use of Atlas' distribution system
and Atlas' experienced marketing staff, be able to sell the
Partnership's gas, although there can be no assurance of the price to
be received by the Partnership for the gas.
The Partnership has not and will not devote any funds to research
and development activities. There are no new products or services and
the Partnership does not have any patents, trademarks, licenses,
franchises, concessions, royalty agreements or labor contracts.
Oil and gas operations are regulated in Pennsylvania by the
Department of Environmental Resources, Division of Oil and Gas which
imposes a comprehensive statutory and regulatory scheme with respect to
oil and gas operations. Among other things, the regulations involve:
(i) new well permit and well registration requirements, procedures and
fees; (ii) minimum well spacing requirements; (iii) restrictions on
well locations and underground gas storage; (iv) certain well site
restoration, groundwater protection and safety measures; (v) landowner
notification requirements; (vi) certain bonding or other security
measures; (vii) various reporting requirements; (viii) well plugging
standards and procedures; and (ix) broad enforcement powers.
Generally, the regulatory agency in the state where a producing natural
gas well is located supervises production activities and the
transportation of natural gas sold intrastate. Atlas does not expect
that these regulations will have a material adverse impact upon the
operations of the Partnership. The Partnership believes it has
complied in all material respects with applicable state regulations and
will continue to do so.
The Federal Energy Regulatory Commission ("FERC") regulates the
interstate transportation of natural gas and the pricing of natural gas
sold for resale interstate; and under the Natural Gas Policy Act of
1978 ("NGPA") the price of intrastate gas. Price controls for natural
gas production from new wells, however, were deregulated on December
31, 1992. Deregulated gas production may be sold at market prices
determined by supply, demand, BTU content, pressure, location of the
wells, and other factors. The Managing General Partner anticipates
that all gas produced by the Partnership wells will be price
decontrolled gas and sold at fair market value.
Although the transportation and sale of gas in interstate commerce
remains heavily regulated, FERC has sought to promote greater
competition in natural gas markets by encouraging open access
transportation by interstate pipelines, with the goal of expanding
opportunities for producers to contract directly with local
distribution companies and end-users. For example, FERC Order 500
requires interstate pipelines that transport gas for others to provide
transportation service to producers, distributors, and all other
shippers of natural gas on a non-discriminatory, "first-come, first-
served" basis so that producers and other shippers can sell natural gas
directly to end-users. FERC Order 636, which became effective in 1992,
requires gas pipeline companies to, among other things, separate their
sales services from their transportation services; and provide an open
access transportation service that is comparable in quality for all gas
suppliers. The premise behind FERC Order 636 was that the gas pipeline
companies had an unfair advantage over other gas suppliers because they
could bundle their sales and transportation services together. FERC
Order 636 is designed to create a regulatory environment in which no
gas seller has a competitive advantage over another gas seller because
it also provides transportation services. It is difficult to assess
the effect of the order on the Partnership.
From time to time there are a number of proposals being considered
in Congress and in the legislatures and agencies of various states that
if enacted would significantly and adversely affect the oil and natural
gas industry. Such proposals involve, among other things, limiting the
disposal of waste water from wells. At the present time, it is
impossible to accurately predict what proposals, if any, will be
enacted by Congress or the legislatures and agencies of various states
and what effect any proposals which are enacted will have on the
activities of the Partnership.
Various federal, state and local laws covering the discharge of
materials into the environment, or otherwise relating to the protection
of the environment, may affect the Partnership's operations and costs.
The Partnership may generally be liable for cleanup costs to the United
States Government under the Federal Clean Water Act for oil or
hazardous substance pollution and under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA" or
Superfund) for hazardous substance contamination. The liability is
unlimited in cases of willful negligence or misconduct. There is also
no limit on liability for environmental cleanup costs or damages with
respect to claims by the state or private persons or entities. In
addition, the Environmental Protection Agency will require the
Partnership to prepare and implement spill prevention control and
countermeasure plans relating to the possible discharge of oil into
navigable waters and will further require permits to authorize the
discharge of pollutants into navigable waters. State and local permits
or approvals will also be needed with respect to wastewater discharges
and air pollutant emissions.
Violations of environment-related lease conditions or
environmental permits can result in substantial civil and criminal
penalties as well as potential court injunctions curtailing operations.
Compliance with these statutes and regulations may cause delays in
producing natural gas and oil from the wells and may increase
substantially the cost of producing such natural gas and oil. These
laws and regulations, however, are constantly being revised and
changed. The Partnership is unable to predict the ultimate costs of
complying with present and future environmental laws and regulations,
although it does not believe such costs will be substantial. The
Partnership is unable to obtain insurance to protect against many
environmental claims.
The "year 2000 issue" is the result of computer programs being
written using two digits, rather than four digits, to identify the year
in a date field. Any computer programs using such a system which have
date sensitive software will not be able to distinguish between the
year 2000 and 1900. This could result in miscalculations or an
inability to process transactions, send invoices or engage in similar
normal business activities. As is the case with most other businesses,
Atlas is in the process of evaluating and addressing Year 2000
compliance of both its information technology and non-information
technology systems (collectively, the "Systems").
Based on a recent assessment by Atlas, Atlas believes that the
Systems for its energy operations have completed approximately 85% of
the necessary remediation processes and that remediation (including
testing) will be completed by May 1999. Atlas believes that its
embedded systems (such as natural gas monitoring systems and
telephones) are Year 2000 compliant or, if not, are either not date
dependent or would not materially affect operations.
To date, Atlas' costs in remediation of its Systems has not been
material. Atlas anticipates that its remaining remediation costs will
not exceed $100,000.
Atlas has initiated communications with all of its significant
business partners through a Vendor Readiness Survey to determine their
Year 2000 compliance. Responses are evaluated as they are received to
determine if additional action is required to ensure compliance of the
business partner. As of December 31, 1998, all of Atlas; principal
business partners have advised Atlas that they are Year 2000 compliant
or have initiated programs that will render them Year 2000 compliant in
a timely fashion.
As a result of its internal assessment and survey of its business
partners, Atlas currently does not believe that Year 2000 matters will
have a material impact on its business, financial condition or results
of operations. To the extent that any of its business partners are
materially affected by year 2000 problems, Atlas intends to seek
alternative firms providing the same services that are Year 2000
compliant. In view of the responses from its current business
partners, Atlas will identify alternative firms on an as-needed basis.
There can be no assurance, however, that Atlas would be able to make
appropriate arrangements should the need arise and, accordingly, it is
uncertain whether or to what extent Atlas may be affected if problems
with its business partners arise.
Atlas is aware of the potential for claims against it and other
companies for damages for products and services that were not Year 2000
compliant. Since Atlas is neither a hardware manufacturer nor a
software developer, Atlas believes that it does not have significant
exposure to liability for such claims.
ITEM 2. PROPERTIES
Drilling Activity. The Partnership drilled 44.45 net wells, of
which 44.45 net wells were productive. All the wells were drilled and
completed by the Partnership as of June 29, 1998. No further drilling
activities will be undertaken.
The following table summarizes the Partnership's drilling activity
since its formation. All the wells drilled were development wells
which means a well drilled within the proved area of an oil or gas
reservoir to the depth of a stratigraphic horizon known to be
productive. A "dry hole" is an exploratory or a development well found
to be incapable of producing either oil or gas in sufficient quantities
to justify completion as an oil or gas well. A "productive well" is an
exploratory or a development well that is not a dry well.
Year Ended December 31, 1997 1998
Gross Net
Development Wells: Oil 0 0
Gas 55 44.45
Dry 0 0
Total 55 44.45
A "gross" well is a well in which the Partnership has a working
interest. A "net" well is deemed to exist when the sum of the
fractional ownership working interests owned by the Partnership in
gross wells equals one. The number of net wells is the sum of the
fractional working interests owned in gross wells expressed as whole
numbers and fractions thereof.
The Partnership has not participated, and will not participate, in
any exploratory wells which means a well drilled to find commercially
productive hydrocarbons in an unproved area, to find a new commercially
productive horizon in a field previously found to be productive of
hydrocarbons at another horizon, or to significantly extend a known
prospect.
Production. The following table shows the Partnership's net
production in barrels ("Bbls") of crude oil and in thousands of cubic
feet ("Mcf") of natural gas and the costs and weighted average selling
prices thereof, for the periods indicated.
Year Ended December 31,
1997 1998
Production (1):
Oil (Bbls) 0
Natural Gas (Mcf) 0 816,375
Total (Equivalent Barrels) (2) 0 136,063
Average Sales Price:
Per Equivalent Barrel (2)(3) 0 $12.66
Average Production Cost (lifting cost):
Per Equivalent Barrel (2)(4) 0 $1.60
(1) The production shown in the table is determined by multiplying
the gross production of properties in which the Partnership has an
interest by the percentage of the leasehold interest owned by the
Partnership less the royalty interests of others. The properties owned
by the Partnership are subject to a 12.5% landowner's royalty and the
Partnership has an 87.5% net revenue interest.
(2) The ratio of energy content of oil and gas (six Mcf of gas
equals one barrel of oil) was used to convert natural gas production
into equivalent barrels of oil.
(3) The average sales price per Mcf of gas sold by the Partnership
was $2.22 in 1998, after deducting all expenses, including
transportation expenses.
Production costs represent oil and gas operating expenses as reflected
in the financial statements of the Partnership plus depreciation of
support equipment and facilities.
Summary of Productive Wells. The table below gives the number of the
Partnership's productive gross and net wells at December 31, 1998.
Gross Net
55 44.45 All Wells Located in Pennsylvania
"Productive wells" are producing wells and wells capable of production.
Oil and Gas Reserves. All of the Partnership's oil and gas reserves
are located in the United States. Estimates of the Partnership's net
proved developed and undeveloped oil and gas reserves as of December
31, 1998, and the present value (discounted at 10%) of estimated future
net revenue before income tax from those reserves are set forth in the
following table. This information is derived from the engineering
report dated January 1, 1999.
As of December 31, 1998 Present Value of
Net Proved Reserves Future Net Revenues
Oil Gas Total
(Bbls) (McF) (BOE) (in thousands)
Proved Developed 0 $5,631 5,631 939
Proved Undeveloped 0 0 0
Total 0 $5,631 5,631 $939
Estimated future net revenues represent estimated future gross
revenues from the production of proved reserves, net of estimated
production and future development costs, using prices and costs in
effect as of December 31, 1998. These prices were held constant
throughout the life of the properties except where different prices
were fixed and determinable from applicable contracts. These price
assumptions resulted in a weighted average price of $2.33 per Mcf for
gas over the life of the properties. The amounts shown do not reflect
non-property related costs, such as general and administrative
expenses, and future income tax expense, or depreciation, depletion and
amortization. The present value of estimated future net revenues is
calculated by discounting estimated future net revenues by 10%
annually. Prices used in calculating the estimated future net revenues
attributable to proved reserves do not necessarily reflect market
prices for oil and gas production subsequent to December 31, 1998.
There can be no assurance that all of the proved reserves will be
produced and sold within the periods assumed, that the assumed prices
will actually be realized for such production, or that existing
contracts will be honored. The values expressed are estimates only,
and may not reflect realizable values or fair market values of the oil
and gas ultimately extracted and recovered. The standardized measure
of discounted future net cash flows may not accurately reflect proceeds
of production to be received in the future from the sale of oil and gas
currently owned and does not necessarily reflect the actual costs that
would be incurred to acquire equivalent oil and gas reserves. For
additional information concerning oil and gas reserves and activities,
see Note 9 to the Financial Statements.
"Proved reserves" means the estimated quantities of crude oil,
natural gas, and natural gas liquids which geological and engineering
data demonstrate with reasonable certainty to be recoverable in future
years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made.
Prices include consideration of changes in existing prices provided
only by contractual arrangements, but not on escalations based upon
future conditions.
(i) Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation test.
The area of a reservoir considered proved includes (a) that portion
delineated by drilling and defined by gas-oil and/or oil-water
contacts, if any; and (b) the immediately adjoining portions not yet
drilled, but which can be reasonably judged as economically productive
on the basis of available geological and engineering data. In the
absence of information on fluid contacts, the lowest known structural
occurrence of hydrocarbons controls the lower proved limit of the
reservoir.
(ii) Reserves which can be produced economically through
application of improved recovery techniques (such as fluid injection)
are included in the "proved" classification when successful testing by
a pilot project, or the operation of an installed program in the
reservoir, provides support for the engineering analysis on which the
project or program was based.
(iii) Estimates of proved reserves do not include the following:
(a) oil that may become available from known reservoirs but is
classified separately as "indicated additional reserves"; (b) crude
oil, natural gas, and natural gas liquids, the recovery of which is
subject to reasonable doubt because of uncertainty as to geology,
reservoir characteristics, or economic factors; (c) crude oil, natural
gas, and natural gas liquids, that may occur in undrilled prospects;
and (d) crude oil, natural gas, and natural gas liquids, that may be
recovered from oil shales, coal, gilsonite and other such sources.
"Proved developed oil and gas reserves" means reserves that can be
expected to be recovered through existing wells with existing equipment
and operating methods. Additional oil and gas expected to be obtained
through the application of fluid injection or other improved recovery
techniques for supplementing the natural forces and mechanisms of
primary recovery should be included as "proved developed reserves" only
after testing by a pilot project or after the operation of an installed
program has confirmed through production response that increased
recovery will be achieved.
The Partnership does not have any proved undeveloped reserves.
"Proved undeveloped reserves" are reserves that are expected to be
recovered from new wells on undrilled acreage, or from existing wells
where a relatively major expenditure is required for recompletion.
Reserves on undrilled acreage are limited to those drilling units
offsetting productive units that are reasonably certain of production
when drilled. Proved reserves for other undrilled units can be claimed
only where it can be demonstrated with certainty that there is
continuity of production from the existing productive formation. Under
no circumstances should estimates for proved undeveloped reserves be
attributable to any acreage for which an application of fluid injection
or other improved recovery technique is contemplated, unless such
techniques have been proved effective by actual tests in the area and
in the same reservoir.
No major discovery or other favorable or adverse event which would
cause a significant change in estimated reserves is believed by the
Company to have occurred since December 31, 1998. Reserves cannot be
measured exactly as reserve estimates involve subjective judgment. The
estimates must be reviewed periodically and adjusted to reflect
additional information gained from reservoir performance, new
geological and geophysical data and economic changes. The Partnership
has not filed any estimates (on a consolidated basis) of its oil and
gas reserves with, nor were such estimates included in any reports to,
any Federal or foreign governmental agency other than the Securities
and Exchange Commission within the 12 months prior to the date of this
filing.
Acreage. The following table sets forth, as of December 31, 1998,
the acres of developed and undeveloped oil and gas acreage in which the
Partnership had an interest.
Developed Acreage Undeveloped Acreage Total
Location Gross Net Gross Net Gross Net
Pennsylvania 2,512 2,025 0 0 2,512 2,025
Total 2,512 2,025 0 0 2,512 2,025
A "gross" acre is an acre in which the Partnership owns a working
interest. A "net" acre is deemed to exist when the sum of the
fractional ownership working interests owned by the Partnership in
gross acres equals one. The number of net acres is the sum of the
fractional working interests owned in gross acres expressed as whole
numbers and fractions thereof. "Undeveloped acreage" is those lease
acres on which wells have not been drilled or completed to a point
that would permit the production of commercial quantities of oil and
gas regardless of whether or not such acreage contains proved reserves.
Delivery Commitments. The Partnership is not obligated to
provide any determinable quantity of gas under any existing contracts
or agreements. The majority of the Partnership's gas production from
the wells was sold pursuant to short term contracts, which are term
contracts for a period of less than one year, with the remainder of the
Partnership gas production sold on the spot market and long term
contracts, which are term contracts for a period longer than one year.
===============================================================
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Responsibilities of Atlas. The Partnership has no employees and
relies on Atlas as Managing General Partner of the Partnership. Atlas
also serves as driller/operator of the wells. Atlas has complete and
exclusive discretion and control over the operations and activities of
the Partnership and will make all of the Partnership's decisions
affecting the wells developed by the Partnership. Atlas will provide
continuing review and analysis of all wells developed by the
Partnership and will monitor all expenditures and commitments made on
behalf of the Partnership. In addition, Atlas will perform
administrative services relating to the funding and operation of the
Partnership, Participant reporting, financial budgeting and
recordkeeping.
Business of Atlas. Atlas, a Pennsylvania corporation, was
incorporated in 1979 and Atlas Energy Group, Inc. ("Atlas Energy"), an
Ohio corporation, was incorporated in 1973. As of December 31, 1998,
Atlas and its affiliates operated approximately 1,399 natural gas wells
located in Ohio and Pennsylvania. Atlas and Atlas Energy have acted as
operator with respect to the drilling of a total of approximately 1,842
natural gas wells, approximately 1,781 of which were capable of
production in commercial quantities. Atlas' primary offices are
located at 311 Rouser Road, Moon Township, Pennsylvania 15108.
On September 29, 1998, Atlas Group, the former parent company of
Atlas, merged into Atlas America, Inc. ("AAI"), a newly formed wholly-
owned subsidiary of Resource America, Inc. ("RAI"). The merger was
consummated pursuant to an Agreement and Plan of Merger dated July 13,
1998, as amended by Amendment No. 1 thereto dated September 29, 1998 by
and among RAI, AAI, Atlas Group and certain shareholders of Atlas
Group, (collectively, the "Agreement"). RAI is a publicly-traded
company principally engaged in real estate finance, equipment leasing
and energy and energy finance.
AAI will continue the existing business of Atlas Group. AAI will
be headquartered in Atlas Group's existing suburban Pittsburgh offices.
There may be changes in the future in the directors and executive
officers of Atlas. However, Mr. James R. O'Mara will continue to serve
Atlas, as well as AAI, as President and Chief Executive Officer
pursuant to an employment agreement which can be renewed upon the
expiration of its term. Additionally, it is anticipated that current
RAI, AAI and/or Resource Energy, Inc. ("Resource Energy") staff and
directors of RAI will assume a variety of new operating
responsibilities in AAI. Although Resource Energy will maintain its
separate corporate existence, AAI will manage the employees and assets
of Resource Energy including sharing common employees.
Atlas and its affiliates under AIC, Inc. employ a total of
approximately ninety-nine persons, consisting of three geologists (one
of whom is an exploration geologist), five landmen, five engineers,
thirty-three operations staff, eight accounting, one legal, eight gas
marketing, and eighteen administrative personnel. The balance of the
personnel are engineering, pipeline and field supervisors.
ORGANIZATIONAL DIAGRAM (1)
Resource America, Inc.Atlas America, Inc.AIC, Inc.Atlas Resources,
Inc. (Managing General Partner, Driller and Operator in
Pennsylvania)Mercer Gas Gathering, Inc. (Gas Gathering
Company)Pennsylvania Industrial Energy, Inc. ("PIE") (Sells Gas to
Pennsylvania Industry)Atlas Energy Corporation (Managing General
Partner of Exploratory Drilling Programs and Driller and
Operator)Transatco, Inc., which owns 50% of Topico (Operates Pipeline
in Ohio)Anthem Securities Inc. (Registered Broker-Dealer and Dealer-
Manager)Atlas Energy Group, Inc. (Driller and Operator in Ohio)Atlas
Information Management, L.L.C. (Markets Information and Technology
Services)ARD Investments, Inc.AED Investments, Inc.
Resource Energy, Inc., a subsidiary of Resource America, Inc., is
also engaged in the oil and gas business. As a result of the merger
there may, in the future, be a consolidation of the existing entities.
In addition, AAI has agreed to seel its gas marketing subsidiary, Atlas
Gas Marketing, Inc. to an Affiliate of First Energy (a company listed
on the New York Stock Exchange). The Managing General Partner
anticipates the Partnership's gas would be marketed by First Energy's
Affiliate, Northeast Ohio Gas Marketing
Directors, Executive Officers and Significant Employees of Atlas.
The executive officers, directors and significant employees of Atlas
are as follows:
NAME AGE POSITION OR OFFICE
Charles T. Koval 65 Chairman of the Board and a Director
James R. O'Mara 55 President, Chief Executive Officer and a
Director
Bruce M. Wolf 50 General Counsel, Secretary and a Director
Donald P. Wagner 56 Vice President-Drilling and Completion
Frank P. Carolas 38 Vice President of Geology
Tony C. Banks 43 Senior Vice President of Finance and Chief
Financial Officer
Michael L. Staines 49 Senior Vice President and Chief Operating
Officer
Jacqueline B. Poloka47 Controller
John A. Ranieri 38 Director of Gas Marketing
Eric D. Koval 33 President of Anthem Securities, Inc.
Jeffrey C. Simmons 39 Vice President of Production
Charles T. Koval. Chairman of the Board and a director. He co-founded
Atlas Energy. Mr. Koval is serving and has served as a director of
Imperial Harbors since 1980.
James R. O'Mara. President, chief executive officer and a director.
Mr. O'Mara joined Atlas Energy in 1975. He is the President of Mercer
Gas Gathering, Inc. and AAI.
Bruce M. Wolf. General Counsel, Secretary and a director. Mr. Wolf
joined Atlas Energy in January, 1980. Mr. Wolf is the President of
Atlas Gas Marketing, Inc., AIC, Inc., ARD Investments, Inc. and AED
Investments, Inc.
Donald P. Wagner. Vice President-Drilling and Completion Mr. Wagner
joined Atlas Energy in 1979.
Frank P. Carolas. Vice President of Geology. Mr. Carolas joined Atlas
Energy in 1981.
Tony C. Banks. Senior Vice President of Finance and Chief Financial
Officer. Mr. Banks joined Atlas Group in 1995. Prior to Mr. Banks
joining Atlas he had been with affiliates of Consolidated Natural Gas
Company ("CNG") since 1974. Mr. Banks started as an accounting clerk
with CNG's parent company in 1974 and progressed through various
positions with CNG's Appalachian producer, northeast gas marketer and
southwest producer to his last position as Treasurer of CNG's national
energy marketing subsidiary.
Michael L. Staines. Chief Operating Officer. Senior Vice President
and Secretary of RAI since 1989 and President, Chief Executive Officer
and director of Resource Energy, Inc. ("Resource Energy") (a wholly
owned subsidiary of RAI) since 1997.
Jacqueline B. Poloka. Controller. Ms. Poloka joined Atlas Energy in
1980.
Eric D. Koval. President of Anthem Securities, Inc. Mr. Koval joined
Atlas in 1993 as a production engineer specializing in acquisitions and
dispositions. He subsequently moved into the investor relations
department in 1994. Mr. Koval is a registered broker-dealer principal,
and is the son of Charles Koval.
Jeffrey C. Simmons. Vice President of Production. Executive Vice
President, Chief Operating Officer and director of Resource Energy
since 1997. From 1994 to 1997, he was Vice President - Exploration of
RAI and, from 1988 to 1994, he was Director of Well Services of RAI.
ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS
The Partnership, as previously stated, has no employees. The
following table, however, sets forth all cash compensation paid by
Atlas (which has complete and exclusive discretion and control over the
operations and activities of the Partnership) during the calendar
years ended December 31, 1998 and 1997, to the three most highly
compensated persons who are executive officers or directors and to all
executive officers and directors of Atlas as a group, for services in
all capacities while acting as executive officers or directors of
Atlas:
(A) (B) (C) (D) (E)
Name of Individual or
number of persons in
group(3)
Capacities in
which served (4)
Cash
Compensation (1)
Compensation
pursuant to
Plans (2)
Aggregate of
contingent forms
of remuneration
James R. O'Mara
President, Chief Executive Officer and a Director
$307,450 $21,457 -------
$305,300 $12,066 -------
Charles T. Koval
Chairman of the Board and a Director
$298,000 $5,000 -------
$296,500 $5,281 -------
Bruce M. Wolf
General Counsel, Secretary and a Director
$147,560 $14,059 -------
$217,150 $11,735 -------
Donald P. Wagner
Vice President-Drilling and Completion
$147,560 $14,059 -------
$125,604 $5,281 -------
Tony C. Banks
Senior Vice President and Chief Financial Officer
$143,034 $12,269 -------
$124,000 $3,926 -------
Executive Officers as a Group (8 persons)
$1,534,085 $179,189 -------
$1,383,530 $70,703 -------
(1)The amounts indicated were composed of salaries and all cash bonuses
for services rendered to the Managing General Partner and its
Affiliates during the last fiscal year, including compensation that
would have been paid in cash but for the fact the payment of the
compensation was deferred.
(2)Atlas Group and its Affiliates had an Employee Stock Ownership Plan
("ESOP") for the benefit of its employees, other than Messrs. Koval and
Joseph R. Sadowski (a retired founder), to which it contributed
annually approximately 6% of annual compensation in the form of shares
of Atlas Group, and a 401(K) plan which allowed employees to contribute
the lesser of 15% of their compensation or $10,000 for the calendar
year 1998 and 1997. Atlas Energy contributed an amount equal to 50% of
each employee's contribution for the calendar years 1998 and 1997.
(3)During the Managing General Partner's fiscal year ended July 31,
1998, each director was paid a director's fee of $12,000 for the year.
There were no other arrangements for remuneration of directors.
ITEM 5. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY
HOLDERS
As of December 31, 1998, the Partnership had issued and
outstanding 991.615 Units. No officer or director of Atlas owns any
Units, and no partner beneficially owns more than 10% of the
outstanding Units of the Partnership.
RAI owns 100% of the common stock of AAI, which owns 100% of the
common stock of AIC, Inc., which owns 100% of the common stock of the
Managing General Partner. See above regarding the stock options in RAI
to the executive officers.
ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Oil and Gas Revenues. The Managing General Partner is allocated
25% of the oil and gas revenues of the Partnership in return for paying
organization and offering costs equal to 15% of the Partnership
Subscription, 14% of tangible costs and contributing all leases to the
Partnership. During the calendar year ending December 31, 1998, the
Managing General Partner received $ 376,170 from the Partnership's oil
and gas net revenues.
Leases. The Managing General Partner initially contributed (at
the lower of fair market value or the Managing General Partner's cost
of such prospects) 55 undeveloped prospects to the Partnership to
drill approximately 44.45 net wells. With respect to the prospects
contributed for these wells Atlas received a credit in the amount of
$156,420. During 1998, the Managing General Partner did not enter into
any further lease transactions and none are anticipated.
Administrative Costs. The Managing General Partner and its
affiliates will receive an unaccountable, fixed payment reimbursement
for their administrative costs determined by the Managing General
Partner to be an amount equal to $75 per well per month, which will be
proportionately reduced if less than 100% of the working interest in a
well is acquired. With respect to the net wells during the calendar
year ending December 31, 1998, the Managing General Partner received
$31,691.
Direct Costs. The Managing General Partner and its affiliates are
reimbursed for all direct costs expended on behalf of the Partnership.
With respect to the net wells during the calendar year ending December
31, 1998, the Managing General Partner received $109,396.
Drilling Contracts. On December 31, 1997, the Partnership entered
into a drilling contract with Atlas to drill and complete 44.45 net
wells. The Partnership paid Atlas for drilling and completing the
Partnership wells an amount equal to $37.39 per foot to the depth of
the well at its deepest penetration, proportionately reduced if less
than 100% of the working interest in a well is acquired. With respect
to the net wells the total amount received by Atlas was $10,228,088.
During 1998, the Partnership did not enter into any further drilling
transactions and none are anticipated.
Per Well Charges. Atlas, as operator, is reimbursed at actual
cost for all direct expenses incurred on behalf of the Partnership and
receives well supervision fees for operating and maintaining the wells
during producing operations in the amount of $275 per well per month
subject to an annual adjustment for inflation. With respect to the net
wells during the calendar year ending December 31, 1998, the Managing
General Partner received $107,823. The well supervision fees are
proportionately reduced to the extent the Partnership acquires less
than 100% of the Working Interest in a well.
As operator Atlas charges the Partnership at cost for third party
services and materials provided for each well which has been placed in
operation.
Transportation and Marketing Fees. The Partnership pays a
combined transportation and marketing charge at a competitive rate,
which is currently 29 cents per MCF, to affiliates of Atlas, with
respect to natural gas produced by the Partnership.
Other Compensation. Atlas or an affiliate will be reimbursed by
the Partnership for any loan Atlas or an affiliate may make to or on
behalf of the Partnership, and Atlas or the affiliate will have the
right to charge a competitive rate of interest on any such loan. If
Atlas provides equipment, supplies and other services to the
Partnership it may do so at competitive industry rates. For the
calendar year ending December 31, 1998, Atlas did not advance any funds
nor did it provide any equipment, supplies or other services.
================================================================
PART II
ITEM 7. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market Information. There is no established public trading
market for the Investor General Partner interests or the Limited
Partner interests and it is not anticipated that such a market will
develop. The Partnership interests may be transferred only in
accordance with the provisions of Article 6 of the Partnership
Agreement. The principal restrictions on transferability are as
follows: (i) the consent of the Managing General Partner is required;
and (ii) no transfer may be made which would result in materially
adverse tax consequences to the Partnership or the violation of federal
or state securities laws.
An assignee may become a substituted Limited Partner or Investor
General Partner only upon meeting certain further conditions, which
include: (i) the assignor gives the assignee such right; (ii) the
Managing General Partner consents to such substitution, which consent
shall be in the Managing General Partner's absolute discretion; (iii)
the assignee pays to the Partnership all costs and expenses incurred in
connection with such substitution; and (iv) the assignee executes and
delivers such instruments, in form and substance satisfactory to the
Managing General Partner, necessary or desirable to effect such
substitution and to confirm the agreement of the assignee to be bound
by all terms and provisions of the Partnership Agreement. A substitute
Limited Partner or Investor General Partner is entitled to all rights
attributable to full ownership of the assigned Units, including the
right to vote.
Holders. As of December 31, 1998, there were 393 investors.
Dividends. The Managing General Partner will review the accounts
of the Partnership at least quarterly to determine whether cash
distributions are appropriate and the amount to be distributed, if any.
The Partnership will distribute funds to the Managing General Partner
and the Participants allocated to their accounts which the Managing
General Partner deems unnecessary to be retained by the Partnership.
In no event, however, will funds be advanced or borrowed for purposes
of distributions, if the amount of such distributions would exceed the
Partnership's accrued and received revenues for the previous four
quarters, less paid and accrued operating costs with respect to such
revenues. The determination of the revenues and costs will be made in
accordance with generally accepted accounting principles, consistently
applied. Cash distributions from the Partnership to the Managing
General Partner may only be made in conjunction with distributions to
Participants and only out of funds properly allocated to the Managing
General Partner's account. During the calendar year ending December
31, 1998, the Partnership distributed $806,289 to the Participants and
$257,732 to the Managing General Partner.
==================================
ITEM 8. LEGAL PROCEEDINGS
None.
==================================
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
==================================
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None, however, see Item 12 below.
==================================
ITEM 11. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
There are no equity securities registered pursuant to Section 12 of the
Exchange Act.
==================================
ITEM 12. REPORTS ON FORM 8-K
==================================
The registrant filed one report on Form 8-K during the last
quarter of the period covered by this report. In December 1998, the
Partnership engaged Grant Thornton, L.L.P., as the independent
certified public accountants to audit the Partnership's financial
statements for the calendar year ended December 31, 1998. At that
time, the Partnership chose not to renew the engagement of McLaughlin &
Courson, who previously served as the Partnership's independent
certified public accountants. The decision to change accountants was
approved by the Board of Directors of the Managing General Partner,
Atlas.
During the period since the formation of the Partnership on July
1, 1997, and each subsequent interim period, there were no
disagreements with the former accountants on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the
satisfaction of the former accountants would have caused them to make
reference in connection with their report to the subject matter of the
disagreements.
The reports of the former principal accountants on the financial
statements of the Partnership since its formation on July 1, 1997,
contained no adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope, or accounting
principles.
==================================
PART F/S
ITEM 13. FINANCIAL STATEMENTS
Atlas-Energy for the Nineties - Public #6 Ltd.
(A Pennsylvania Limited Partnership)
BALANCE SHEETS
December 31
ASSETS
1998 1997
Cash 7,960 19,459
Accounts receivable 444,226 18,076
Oil and gas wells and leases
(Successful Efforts) 10,355,660 10,384,508
Less accumulated depletion
and depreciation (1,113,233) -
------------ ----------
9,242,427 10,384,508
Organizational and syndication
costs, net of accumulated
amortization o f$159,653
and $-0-, respectively 1,325,501 1,485,154
$11,020,114 $11,907,197
LIABILITIES AND PARTNERS' CAPITAL
Advance from Managing General Partner - 15,000
Accounts payable and accrued liabilities 17,725 -
Partners' capital 11,002,389 11,892,197
$11,020,114 $11,907,197
Atlas-Energy for the Nineties - Public #6 Ltd.
(A Pennsylvania Limited Partnership)
STATEMENTS OF EARNINGS
For the periods ended December 31
JULY 1, 1997
(DATE OF FORMATION)
TO DECEMBER 31,
1998 1997
Revenues
Natural gas sales $ 1,721,899 -
Interest income 4,530 22,535
1,726,429 22,535
Expenses
Well operating expense 217,219 -
Depletion and depreciation of oil and gas
wells and leases 1,113,233 -
Amortization of organizational
and syndication costs 159,653 -
General and administrative fees 43,819 -
Total expenses 1,533,924 -
NET EARNINGS 192,505 22,535
Atlas-Energy for the
Nineties - Public #6 Ltd.
(A Pennsylvania Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the periods ended December 31, 1998 and 1997
MANAGING
GENERAL OTHER
PARTNER PARTNERS TOTAL
BALANCE AT JULY 1, 1997 $- $- $-
Participation in revenue and expenses:
Interest income - 22,535 22,535
Net earnings - 22,535 22,535
Contributions 1,968,637 9,901,025 11,869,662
BALANCE AT
DECEMBER 31, 1997 1,968,637 9,923,560 11,892,197
Participation in revenue
and expenses
Net production revenues 376,170 1,128,510 1,504,680
Interest income 1,132 3,398 4,530
Depletion and depreciation:
Oil and gas wells (35,513) (1,077,720) (1,113,233)
Amortization (159,653) - (159,653)
General and
administrative fees (10,955) (32,864) (43,819)
Net earnings 171,181 21,324 192,505
Adjustments to
assets contributed
by partners (14,940) (3,352) (18,292)
Distributions (257,732) (806,289) (1,064,021)
BALANCE AT
DECEMBER 31, 1998 $ 1,867,146 $9,135,243 $ 11,002,389
Atlas-Energy for the Nineties - Public #6 Ltd.
(A Pennsylvania Limited Partnership)
STATEMENTS OF CASH FLOWS
For the periods ended December 31
JULY 1, 1997
(DATE OF FORMATION)
TO DECEMBER 31,
1998 1997
Cash flows from operating activities:
Net earnings 192,505 22,535
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depletion and depreciation 1,113,233 -
Amortization 159,653 -
Adjustment to oil and
gas wells and leases 10,556 -
Increase in accounts receivable (426,150) (18,076)
(Decrease) increase in
advance from Managing General Partner (15,000) 15,000
Increase in accounts
payable and accrued liabilities 17,725 -
Net cash provided
by operating activities 1,052,522 19,459
Cash flows used in investing activities:
Payments for oil and
gas well drilling contracts - (9,901,025)
Cash flows from financing activities:
Partners' contributions - 9,901,025
Capital distributions (1,064,021) -
Net cash (used in) provided
by financing activities (1,064,021) 9,901,025
NET (DECREASE) INCREASE IN CASH (11,499) 19,459
Cash at beginning of year 19,459 -
Cash at end of year 7,960 19,459
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Assets contributed
by Managing General Partner - 1,968,637
Adjustments to assets
contributed by partners (18,292) -
The accompanying notes are an integral part of these financial
statements.
ATLAS-ENERGY FOR THE NINETIES - PUBLIC #6 LTD.
(A Pennsylvania Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
A summary of significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows:
1. NATURE OF OPERATIONS
Atlas-Energy for the Nineties - Public #6 Ltd. (the "Partnership")
is a Pennsylvania Limited Partnership which includes Atlas
Resources, Inc. ("Atlas") of Pittsburgh, Pennsylvania, as Managing
General Partner and Operator, and 393 other investors as either
Investor General Partners or Limited Partners. The Partnership
was formed on July 1, 1997 to drill and operate gas wells located
primarily in Mercer County, Pennsylvania. At December 31, 1998,
the Partnership has various working interests in 55 wells.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are prepared in accordance with generally
accepted accounting principles.
The Partnership uses the successful efforts method of accounting
for oil and gas producing activities. Costs to acquire mineral
interests in oil and gas properties and to drill and equip wells
are capitalized. Depreciation and depletion is computed on a
field-by-field basis by the unit-of-production method based on
periodic estimates of oil and gas reserves.
Undeveloped leaseholds and proved properties are assessed
periodically or whenever events or circumstances indicate that the
carrying amount of these assets may not be recoverable. Proved
properties are assessed based on estimates of future cash flows.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
In 1998, the AICPA issued Statement of Position 98-5 ("SOP 98-5"),
Reporting on the Costs of Start-Up Activities. This statement requires costs of
start-up activities and organization costs, as defined, to be
expensed as incurred. The Partnership is required to adopt the
provisions of SOP 98-5 effective January 1, 1999 and as a result
will write-off the unamortized organization and syndication costs
as a charge against Partners' Capital.
3. FEDERAL INCOME TAXES
The Partnership is not treated as a taxable entity for federal
income tax purposes. Any item of income, gain, loss, deduction or
credit flows through to the partners as though each partner had
incurred such item directly. As a result, each partner must take
into account his pro rata share of all items of partnership income
and deductions in computing his federal income tax liability.
ATLAS-ENERGY FOR THE NINETIES - PUBLIC #6 LTD.
(A Pennsylvania Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
4. PARTICIPATION IN REVENUES AND COSTS
Atlas and the other partners generally participate in revenues and
costs in the following manner:
ATLAS SUBSCRIBING
PARTNERS
Organization and offering costs 100% 0%
Lease costs 100% 0%
Revenues 25% 75%
Direct operating costs 25% 75%
Tangible costs 14% 86%
Tax deductions:
Intangible drilling and development costs 0% 100%
Depreciation 14% 86%
Depletion allowances 25% 75%
5. TRANSACTIONS WITH ATLAS AND ITS AFFILIATES
The Partnership has entered into the following significant
transactions with Atlas and its affiliates as provided under the
Partnership agreement:
Drilling contracts to drill and complete Partnership wells at
a
cost of $37.39 per foot on completed wells. The total amount
paid to Atlas for well drilling contracts was $9,901,025, all
in 1997.
Administrative costs at $75 per well per month.
Administrative
costs totaled $31,691 in 1998.
Well supervision fees initially of $275 per well per month
plus the
cost of third party materials and services. Well supervision
fees
totaled $107,823 in 1998.
Reimbursement of gas transportation and marketing charges.
6. PURCHASE COMMITMENT
Subject to certain conditions, investor partners may present their
interests beginning in 2001 for purchase by Atlas. Atlas is not
obligated to purchase more than 5% of the units in any calendar
year.
ATLAS-ENERGY FOR THE NINETIES - PUBLIC #6 LTD.
(A Pennsylvania Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
7. SUBORDINATION OF MANAGING GENERAL PARTNER'S
REVENUE SHARE
Atlas will subordinate a part of its partnership revenues in an
amount up to 10% of production revenues of the Partnership, net of
related operating costs, administrative costs and well supervision
fees to the receipt by participants of cash distributions from the
Partnership equal to at least 10% of their agreed subscriptions of
$9,901,025, determined on a cumulative basis, in each of the first
five years of Partnership operations, commencing with the first
distribution of revenues to the participants.
8. INDEMNIFICATION
In order to limit the potential liability of the investor general
partners, Atlas and Atlas America, Inc., formerly The Atlas Group,
Inc. (parent company of Atlas) have agreed to indemnify each
investor general partner from any liability incurred which exceeds
such partner's share of Partnership assets.
9. NATURAL GAS AND OIL PRODUCING ACTIVITIES (UNAUDITED)
The supplementary information summarized below presents the
results of natural gas and oil activities in accordance with SFAS
No. 69, "Disclosures About Oil and Gas Producing Activities".
No consideration has been given in the following information to
the income tax effect of the activities as the Partnership is not
treated as a taxable entity for income tax purposes.
(1) CAPITALIZED COSTS
The following table presents the capitalized costs related to
natural gas and oil product activities:
1998 1997
Capitalized costs at December 31:
Proved properties $10,355,660 $10,384,508
Accumulated depreciation
and depletion (1,113,233) -
NET CAPITALIZED COSTS $9,242,427 $10,384,508
Costs incurred during the year:
Development costs - $ 9,901,025
ATLAS-ENERGY FOR THE NINETIES - PUBLIC #6 LTD.
(A Pennsylvania Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
9. NATURAL GAS AND OIL PRODUCING ACTIVITIES (UNAUDITED)
(CONTINUED)
(1) CAPITALIZED COSTS - CONTINUED
Development costs include costs to gain access to and prepare
development well locations for drilling, to drill and equip
development wells and to provide facilities to extract, treat,
gather and store oil and gas.
(2) RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
The following table presents the results of operations related to
natural gas and oil production for the year ended December 31,
1998 and the period July 1, 1997 (date of formation) to December
31, 1997:
1998
Natural gas sales $1,721,899
Production costs (217,219)
Depreciation, depletion and amortization (1,113,233)
Results of operations from
producing activities 391,447
Depreciation and depletion of natural gas and oil properties are
expensed at unit cost rates calculated annually based on the
estimated volume of recoverable gas and the related costs.
(3) RESERVE INFORMATION
The information presented below represents estimates of proved
natural gas and oil reserves. Proved developed reserves represent
only those reserves expected to be recovered from existing wells
and support equipment. All reserves are proved developed reserves
and are located in Western Pennsylvania.
There are numerous uncertainties inherent in estimating quantities
of proved reserves and in projecting future net revenues and the
timing of development expenditures. The reserve data presented
represents estimates only and should not be construed as being
exact. In addition, the standarized measures of discounted future
net cash flows may not represent the fair market value of the
Company's oil and gas reserves or the present value of future cash
flows of equivalent reserves, due to anticipated future changes in
oil and gas prices and in production and development costs and
other factors for which effects have not been provided.
ATLAS-ENERGY FOR THE NINETIES - PUBLIC #6 LTD.
(A Pennsylvania Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
9. NATURAL GAS AND OIL PRODUCING ACTIVITIES (UNAUDITED)
(CONTINUED)
(3) RESERVE INFORMATION - CONTINUED
1998
NATURAL GAS
MCF
Proved developed reserves:
Beginning of period -
Production (816,375)
Current additions 6,447,443
End of period 5,631,068
(4) STANDARD MEASURE OF DISCOUNTED FUTURE CASH FLOWS
The standardized measure of discounted future net cash flows is
information provided for the financial statement user as a common
base for comparing oil and gas reserves of enterprises in the
industry. The following schedule presents the standardized
measure of estimated discounted future net cash flows from the
Company's proved reserves. Estimated future cash flows are
determined by using the weighted average price received for the
month of December 1998 adjusted only for fixed and determinable
increases in natural gas prices provided by contractual
agreements. The standardized measure of future net cash flows was
prepared using the prevailing economic conditions existing at
December 31, 1998 and such conditions continually change.
Accordingly, such information should not serve as a basis in
making any judgement on the potential value of recoverable
reserves or in estimating future results of operations.
1998
Future cash inflows $13,137,280
Future production costs (5,485,285)
Future net cash flow 7,651,995
10% annual discount for
estimated timing of cash flows (3,166,039)
STANDARDIZED MEASURE OF
DISCOUNTED FUTURE NET CASH FLOWS $ 4,485,956
ATLAS-ENERGY FOR THE NINETIES - PUBLIC #6 LTD.
(A Pennsylvania Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
9. NATURAL GAS AND OIL PRODUCING ACTIVITIES (UNAUDITED)
(CONTINUED)
(4) STANDARD MEASURE OF DISCOUNTED FUTURE CASH FLOWS - CONTINUED
Summary of changes in the standardized measure of discounted
future net cash flows:
1998
Sales of gas and oil produced
- - net of related costs $(1,504,680)
Net changes in prices,production and
development costs -
Discoveries and extensions 5,990,636
Accretion of discount -
Net increase 4,485,956
Beginning of period -
END OF PERIOD $ 4,485,956
- --------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE PARTNERS
ATLAS-ENERGY FOR THE NINETIES - PUBLIC #6 LTD.
A PENNSYLVANIA LIMITED PARTNERSHIP
We have audited the accompanying balance sheet of Atlas-Energy for The
Nineties - Public #6 Ltd., A Pennsylvania Limited Partnership, as of
December 31, 1998, and the related statements of earnings, changes in
partners' capital accounts and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Atlas-
Energy for The Nineties - Public #6 Ltd. as of December 31, 1998 and
the results of its operations and cash flows for the year then ended,
in conformity with generally accepted accounting principles.
Cleveland, Ohio
March 1, 1999
- ----------------------------------------------------------------
PART III
ITEM 14. EXHIBITS
- --------------------------------------------------------------
Description Location
4(a)Certificate of Limited Partnership for
Atlas-Energy for the Nineties-Public #6 Ltd.
Previously filed in the Form 10-KSB for the period ending December 31,
1997.
- ---------------------------------------------------------------
4(b)Amended and Restated Certificate and Agreement
of Limited Partnership for Atlas-Energy for the
Nineties-Public #6 Ltd. dated December 31, 1997
Previously filed in the Form 10-KSB for the period ending December 31,
1997.
- ---------------------------------------------------------------
10(a)Drilling and Operating Agreement updated exhibits
March 31, 1999
1998 Fiscal Year Annual Report to Participants
in Atlas-Energy for the Nineties-Public #6 Ltd.
Pursuant to Section 4.03(b)(1) of the Partnership Agreement
(a) Audited financial statements of the Partnership for the fiscal
year ending December 31, 1998, are included in this report.
(b) The Partnership total fees and compensation including any
unaccountable, fixed payment reimbursements for Administrative
Costs and Operating Costs, paid by the Partnership, or indirectly
on behalf of the Partnership, to the Managing General Partner, the
Operator and their Affiliates. $261,039.
Percentage that the annual unaccountable fixed fee reimbursement
for Administrative Costs bears to annual Partnership revenues.
2.23%
(c) The following table describes the Partnership's 55 gross wells
(44.45 net wells) drilled in 1998.
The following wells were removed from the partnership and wells were
substituted.
George #2
Kaltenbaugh #2
Kingery #2
McCartney #1
Plants #1
Rick #1
Roman #1
Shardy #1
Sines #4
Tinney Unit #1
Wiese #1
Whyte #4
Williams #4
(d) Quarterly distributions are made in March, June, September and
December. There were three quarterly distributions in 1998 for
nine months of natural gas production from the partnership's fifty
five wells located in Lawrence and Mercer, Pennsylvania.
Checks were sent on February 27, 1998 to those partners who earned
interest while their subscriptions were in the escrow account.
Checks were sent on September 8, 1998 to each partner for the
refund of unused drilling funds, prorated according to their
percentage interest in the partnership. The total of unused
drilling funds amounted to $10,556.
(e) There were no farmins and joint ventures in 1998.
(---------------------------------------------------------------
===============================================================
CONSENT OF INDEPENDENT AUDITOR
McLAUGHLIN & COURSON
CERTIFIED PUBLIC ACCOUNTANTS
2002 LAW & FINANCE BUILDING
PITTSBURGH, PA 15219
412/261-0630
FAX 412/261-3582
CONSENT OF INDEPENDENT AUDITOR
ATLAS-ENERGY FOR THE NINETIES-PUBLIC 6 LTD.
The firm, as Independent Certified Public Accountants, hereby consents
to the use of the audit report dated February 10, 1998, on the balance
sheet of Atlas-Energy for the Nineties-Public #6 Ltd., a Pennsylvania
Limited Partnership as of December 31, 1997, and the related statements
of income, changes in partners, capital accounts and cash flows for the
year then ended, in the U.S. Securities and Exchange Commission Form
10-KSB for the year ended December 31, 1998 and any amendments thereto
for Atlas-Energy for the Nineties-Public #6 Ltd.
/s/McLaughlin & Courson
Certified Public Accountants
April 9, 1999
Pittsburgh, Pennsylvania
================================================================
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Atlas-Energy for the Nineties-Public #6 Ltd.
By: (Signature and Title): Atlas Resources, Inc., Managing
General Partner
By (Signature and Title): /s/ James R. O'Mara
James R. O'Mara, President, Chief Executive Officer
and a Director
Date: April 15,1999
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and
on the dates indicated.
By (Signature and Title): /s/ Charles T. Koval
Charles T. Koval, Chairman of the Board and a Director
Date: April 15,1999
By (Signature and Title): /s/ James R. O'Mara
James R. O'Mara, President, Chief Executive Officer and
a Director
Date: April 15,1999
By (Signature and Title): /s/ Bruce M. Wolf
Bruce M. Wolf, General Counsel, Secretary and a Director
Date: April 15,1999
By (Signature and Title): /s/ Tony C. Banks
Tony C. Banks, Vice President of Finance and Chief Financial Officer
Date: April 15,1999
Supplemental information to be Furnished
With Reports Filed Pursuant to Section 15(d)
of the Exchange Act by Non-reporting Issuers
An annual report will be furnished to security holders subsequent to
the filing of this report.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 7,960
<SECURITIES> 0
<RECEIVABLES> 444,226
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 452,186
<PP&E> 11,840,814
<DEPRECIATION> (1,272,886)
<TOTAL-ASSETS> 11,020,114
<CURRENT-LIABILITIES> 17,725
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,020,114
<SALES> 1,721,899
<TOTAL-REVENUES> 1,726,429
<CGS> 1,272,886
<TOTAL-COSTS> 1,272,886
<OTHER-EXPENSES> 261,038
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 192,505
<INCOME-TAX> 0
<INCOME-CONTINUING> 192,505
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 192,505
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
