SEC Company Response from ATLAS AMERICA SERIES 25-2004 B LP (CIK 0001294208) — Jun 17, 2005
ATLAS AMERICA SERIES 25-2004 B LP (CIK 0001294208)
Date: June 17, 2005 · CIK: 0001294208 · Accession: 0000950116-05-002199
AI Filing Summary & Sentiment
Referenced dates: June 6, 2005, May 10, 2005
Letter
June 17, 2005 ELECTRONIC FILING ----------------- Mr. H. Roger Schwall Securities and Exchange Commission Mail Stop 0405 450 Fifth Street N.W. Washington, DC 20549
RE: Atlas America Series 25-2004 (A) L.P. Atlas America Series 25-2004 (B) L.P. Registration Statements on Forms 10 Filed April 29, 2005 File Nos. 0-51271 and 0-51272, respectively -------------------------------------------
Dear Mr. Schwall:
This letter is in response to your comment letter dated June 6, 2005 for the above-referenced filings. For your convenience, we first restate your comment in italics and then provide our response. Also, comments in our responses relating to revisions in an amended registration statement are intended to apply to the respective amended registration statements for both Atlas America Series 25-2004(A) L.P. (which we sometimes refer to in our responses as "Series 25(A)") and Atlas America Series 25-2004(B) L.P. (which we sometimes refer to in our responses as "Series 25(B)"), unless otherwise noted. Also, we sometimes refer to Series 25(A) and/or Series 25(B) in our responses as a "partnership" or the "partnerships," as the context requires.
General -------
1. Please be advised that both Form 10 registration statements will automatically become effective 60 days from the date of the first filing. Upon effectiveness, you will become subject to the reporting requirements of the Securities Exchange Act of 1934. In the event that it appears that you will not be able to respond by the 60th day, you may wish to consider withdrawing your registration statement and refiling when you have prepared a response to our comments.
We acknowledge the comment concerning the effective dates of both Form 10 registration statements, however, under the Securities Exchange Act of 1934 there is no procedure for us to withdraw the registration statements.
2. Where comments in one section or documents also relate to disclosure in another section or document, please make parallel changes to all affected disclosure. This will eliminate the need for us to repeat similar comments.
We acknowledge your comment and we have made parallel changes to all affected disclosure which relate to your comments. <PAGE> KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall Securities and Exchange Commission June 17, 2005 Page 2
3. We acknowledge receipt of your letter dated May 10, 2005. We note that you have not filed this letter as correspondence on EDGAR. Please ensure that you file the May 10, 2005 letter and, unless the subject of a Rule 83 or confidential treatment request, all other future written communications, as correspondence on EDGAR.
Pursuant to your comment, our letter dated May 10, 2005 was filed on June 6, 2005 with the SEC as correspondence on EDGAR, in a separate filing for Series 25(A) and in a separate filing for Series 25(B). Also, subject to the exceptions set forth in your comment, all other future written communications from us concerning this matter will be filed as correspondence on EDGAR.
Item 1. Business ----------------
4. Please provide us with an organizational chart depicting the Atlas Resources, Inc. entities and affiliated entities with respective unit ownership delineated.
Each amended registration statement has been revised to include two organizational charts which depict Atlas Resources, Inc. and its affiliated entities, with the respective ownership delineated. We have included two organizational charts because Resource America, Inc., the indirect parent company of Atlas Resources, and certain other affiliated entities of Atlas Resources, are currently in the process of a corporate spin-off, two mergers and other corporate actions, as previously disclosed in Item 5. "Directors and Executive Officers - Managing General Partner," and as disclosed in a new subsection in Item 5, which has the subheading "Organizational Charts," in the amended registration statements. Upon the conclusion of these corporate transactions, there will be material changes in the organizational chart as illustrated in the charts included in the amended registration statements. The corporate transactions which are disclosed in the amended registration statements are described below.
In 2004 Resource America conducted a public offering of a portion of its common stock in Atlas America, Inc., which is another indirect parent company of Atlas Resources, Inc. After the conclusion of the offering, Resource America continued to own approximately 80.2% of Atlas America's common stock. Resource America has advised Atlas Resources that it intends to distribute all of its remaining shares of common stock in Atlas America to its common stockholders on or before June 30, 2005. In addition, Resource America has advised Atlas Resources that the following corporate transactions, among others, will occur before the distribution of the Atlas America stock is made by Resource America:
o Atlas Energy Group, Inc., the driller and operator in Ohio and a wholly-owned subsidiary of AIC, Inc., will be acquired by merger by Atlas America. Atlas Energy Group will then cease to exist and its subsidiary AED Investments, Inc. will become a direct wholly-owned subsidiary of Atlas America, and Atlas America will assume Atlas Energy Group's business as driller and operator in Ohio; and
<PAGE> KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall Securities and Exchange Commission June 17, 2005 Page 3
o Atlas Energy Holdings, Inc., a holding company which is wholly-owned by Resource America, will be merged into Resource America and Atlas Energy Holdings will cease to exist.
Thus, the first organizational chart included in the amended registration statements currently applies. The second organizational chart will apply after the spin-off, mergers and other corporate actions discussed above have occurred, which Resource America has advised Atlas Resources will be on or before June 30, 2005.
5. Please disclose the price at which each unit was originally sold.
The registration statements have been revised in the first paragraph under Item 1 "Business - General," to disclose the price at which each unit was originally sold. The units were offered at $25,000 per unit, however, the terms of the offering, which were disclosed to all potential investors in Series 25(A) and Series 25(B), permitted registered investment advisors and their clients, and selling agents and their registered representatives and principals, to pay a discounted price of $23,000 per unit, and the managing general partner, its officers, directors and affiliates, and investors who bought units through the officers and directors of the managing general partner to pay a discounted price of $21,625 per unit. The discounted unit prices for those groups of investors reflected certain offering fees and sales commissions which were not paid for the sale of those units.
6. Revise to describe in greater detail the investment objectives to which you refer. For example, what is the likelihood that investors will receive the $2,500 distribution? Likewise, is the $22,500 deduction to which you refer guaranteed for each investor?
We have revised the disclosure of investment objectives in Item 1 "Business," in both amended registration statements to describe them in greater detail. In particular, we addressed the likelihood that the investors will receive the aggregate annual distributions of $2,500 per unit, and disclosed that each participant is guaranteed a deduction for intangible drilling costs in an amount equal to not less than 90% of the subscription price he paid for his units, subject to certain conditions, as discussed below.
Also, we added a new risk factor to Item 1 "Business - Risk Factors - Risks Relating to Our Business," as the seventh risk factor, which has the subheading "Our Total Cash Distributions During Our First Five Years May be Less Than $2,500 Per Unit Per Year." This new risk factor discloses in greater detail that the minimum aggregate annual distributions of $2,500 per unit during the first five years described with respect to the managing general partner's subordination obligation is not a guarantee and could be less than that amount.
In Item 1 "Business - General," both registration statements set forth obtaining a 2004 tax deduction for intangible drilling costs of approximately $22,500 per unit, 90%, for each unit purchased for $25,000, as one of the investment objectives. In this regard, a deduction of $22,500 per unit for intangible drilling costs was not guaranteed to each investor, because the units were sold at different prices as discussed in our response to Comment 5. Instead, the allocation provisions of the partnership agreements, which
<PAGE> KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall Securities and Exchange Commission June 17, 2005 Page 4
were filed as Exhibits 4.2 to the respective registration statements, have the same effect, as a practical matter, of a guarantee that each investor's deduction for intangible drilling costs will not be less than 90% of the subscription price paid by each participant for his units. These allocation provisions are set forth in Section 5.01(a) and its subsections of the partnership agreements, and they generally provide that:
o not more than 10% of the amount paid by an investor for his units can be used by the partnership to pay the equipment costs of its wells; and
o all of the remaining amount paid by the investor for his units (i.e., 90%) must be used by the partnership to pay the intangible drilling costs of its wells.
Thus, the effect of these allocation provisions is that each investor is guaranteed a deduction for intangible drilling costs in an amount equal to not less than 90% of the amount the investor paid for his units. We have revised the investment objective accordingly in each amended registration statement. Theoretically, it is possible that the investors' share of a partnership's equipment costs could be less than 10% of the partnership's subscription proceeds. In that event, however, the investors' deduction would be more than 90%, but the deduction could never be less than 90%.
We also revised this investment objective to clarify that although the 90% deduction for intangible drilling costs is guaranteed, the IRS' treatment of the deduction is not guaranteed by either Series 25(A) or Series 25(B). We disclosed that if the IRS were to reduce the amount of the deduction for intangible drilling costs or defer part of the deduction to 2005 for wells that were prepaid in 2004, the investors would have no right to reimbursement from Series 25(A) or Series 25(B), as the case may be, for any increase in taxes, penalties or interest owed by the investors. Also, parallel disclosure was made concerning the additional aggregate 10% depreciation deductions.
7. You note in the registration statement for Atlas America Series 25-2004 (A) L.P. that UGI Energy Services, Inc. and Colonial Energy, Inc. accounted for 57% and 24% respectively, of the company's total revenues in 2004. Did any other customer account for in excess of 10% of your revenues? Please disclose.
We have revised the registration statement to disclose in Item 1 "Business - General - Major Customers," that no other customer accounted for more than 10% of Series 25(A)'s total revenues for the period ended December 31, 2004. This information has been confirmed to us by Atlas Resources, Inc., the managing general partner of Series 25(A).
8. Likewise, you note in the registration statement for Atlas America Series 25-2004 (B) L.P. that UGI Energy Services, Inc., First Energy Solutions Corporation, and American Energy Refining accounted for 35%, 18% and 17%, respectively, of the company's total revenues in 2004. Did any other customer account for in excess of 10% of your revenues? Please disclose.
We have revised the registration statement to disclose in Item 1 "Business - General - Major Customers," that no other customer accounted for more than 10% of Series 25(B)'s total revenues for the period ended December 31, 2004. This information has been confirmed to us by Atlas Resources, Inc., the managing general partner of Series 25(B). <PAGE> KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall Securities and Exchange Commission June 17, 2005 Page 5
Risk Factors ------------
9. Many of the subheadings merely state a fa
Show Raw Text
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
<PAGE>
KUNZMAN & BOLLINGER, INC.
ATTORNEYS-AT-LAW
5100 N. BROOKLINE, SUITE 600
OKLAHOMA CITY, OKLAHOMA 73112
Telephone (405) 942-3501
Fax (405) 942-3527
June 17, 2005
ELECTRONIC FILING
-----------------
Mr. H. Roger Schwall
Securities and Exchange Commission
Mail Stop 0405
450 Fifth Street N.W.
Washington, DC 20549
RE: Atlas America Series 25-2004 (A) L.P.
Atlas America Series 25-2004 (B) L.P.
Registration Statements on Forms 10
Filed April 29, 2005
File Nos. 0-51271 and 0-51272, respectively
-------------------------------------------
Dear Mr. Schwall:
This letter is in response to your comment letter dated June 6, 2005
for the above-referenced filings. For your convenience, we first restate your
comment in italics and then provide our response. Also, comments in our
responses relating to revisions in an amended registration statement are
intended to apply to the respective amended registration statements for both
Atlas America Series 25-2004(A) L.P. (which we sometimes refer to in our
responses as "Series 25(A)") and Atlas America Series 25-2004(B) L.P. (which we
sometimes refer to in our responses as "Series 25(B)"), unless otherwise noted.
Also, we sometimes refer to Series 25(A) and/or Series 25(B) in our responses as
a "partnership" or the "partnerships," as the context requires.
General
-------
1. Please be advised that both Form 10 registration statements will
automatically become effective 60 days from the date of the first
filing. Upon effectiveness, you will become subject to the reporting
requirements of the Securities Exchange Act of 1934. In the event that
it appears that you will not be able to respond by the 60th day, you
may wish to consider withdrawing your registration statement and
refiling when you have prepared a response to our comments.
We acknowledge the comment concerning the effective dates of
both Form 10 registration statements, however, under the
Securities Exchange Act of 1934 there is no procedure for us
to withdraw the registration statements.
2. Where comments in one section or documents also relate to disclosure in
another section or document, please make parallel changes to all
affected disclosure. This will eliminate the need for us to repeat
similar comments.
We acknowledge your comment and we have made parallel changes
to all affected disclosure which relate to your comments.
<PAGE>
KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall
Securities and Exchange Commission
June 17, 2005
Page 2
3. We acknowledge receipt of your letter dated May 10, 2005. We note that
you have not filed this letter as correspondence on EDGAR. Please
ensure that you file the May 10, 2005 letter and, unless the subject of
a Rule 83 or confidential treatment request, all other future written
communications, as correspondence on EDGAR.
Pursuant to your comment, our letter dated May 10, 2005 was
filed on June 6, 2005 with the SEC as correspondence on EDGAR,
in a separate filing for Series 25(A) and in a separate filing
for Series 25(B). Also, subject to the exceptions set forth in
your comment, all other future written communications from us
concerning this matter will be filed as correspondence on
EDGAR.
Item 1. Business
----------------
4. Please provide us with an organizational chart depicting the Atlas
Resources, Inc. entities and affiliated entities with respective unit
ownership delineated.
Each amended registration statement has been revised to
include two organizational charts which depict Atlas
Resources, Inc. and its affiliated entities, with the
respective ownership delineated. We have included two
organizational charts because Resource America, Inc., the
indirect parent company of Atlas Resources, and certain other
affiliated entities of Atlas Resources, are currently in the
process of a corporate spin-off, two mergers and other
corporate actions, as previously disclosed in Item 5.
"Directors and Executive Officers - Managing General Partner,"
and as disclosed in a new subsection in Item 5, which has the
subheading "Organizational Charts," in the amended
registration statements. Upon the conclusion of these
corporate transactions, there will be material changes in the
organizational chart as illustrated in the charts included in
the amended registration statements. The corporate
transactions which are disclosed in the amended registration
statements are described below.
In 2004 Resource America conducted a public offering of a
portion of its common stock in Atlas America, Inc., which is
another indirect parent company of Atlas Resources, Inc. After
the conclusion of the offering, Resource America continued to
own approximately 80.2% of Atlas America's common stock.
Resource America has advised Atlas Resources that it intends
to distribute all of its remaining shares of common stock in
Atlas America to its common stockholders on or before June 30,
2005. In addition, Resource America has advised Atlas
Resources that the following corporate transactions, among
others, will occur before the distribution of the Atlas
America stock is made by Resource America:
o Atlas Energy Group, Inc., the driller and operator in Ohio
and a wholly-owned subsidiary of AIC, Inc., will be
acquired by merger by Atlas America. Atlas Energy Group
will then cease to exist and its subsidiary AED
Investments, Inc. will become a direct wholly-owned
subsidiary of Atlas America, and Atlas America will assume
Atlas Energy Group's business as driller and operator in
Ohio; and
<PAGE>
KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall
Securities and Exchange Commission
June 17, 2005
Page 3
o Atlas Energy Holdings, Inc., a holding company which is
wholly-owned by Resource America, will be merged into
Resource America and Atlas Energy Holdings will cease to
exist.
Thus, the first organizational chart included in the amended
registration statements currently applies. The second
organizational chart will apply after the spin-off, mergers
and other corporate actions discussed above have occurred,
which Resource America has advised Atlas Resources will be on
or before June 30, 2005.
5. Please disclose the price at which each unit was originally sold.
The registration statements have been revised in the first
paragraph under Item 1 "Business - General," to disclose the
price at which each unit was originally sold. The units were
offered at $25,000 per unit, however, the terms of the
offering, which were disclosed to all potential investors in
Series 25(A) and Series 25(B), permitted registered investment
advisors and their clients, and selling agents and their
registered representatives and principals, to pay a discounted
price of $23,000 per unit, and the managing general partner,
its officers, directors and affiliates, and investors who
bought units through the officers and directors of the
managing general partner to pay a discounted price of $21,625
per unit. The discounted unit prices for those groups of
investors reflected certain offering fees and sales
commissions which were not paid for the sale of those units.
6. Revise to describe in greater detail the investment objectives to which
you refer. For example, what is the likelihood that investors will
receive the $2,500 distribution? Likewise, is the $22,500 deduction to
which you refer guaranteed for each investor?
We have revised the disclosure of investment objectives in
Item 1 "Business," in both amended registration statements to
describe them in greater detail. In particular, we addressed
the likelihood that the investors will receive the aggregate
annual distributions of $2,500 per unit, and disclosed that
each participant is guaranteed a deduction for intangible
drilling costs in an amount equal to not less than 90% of the
subscription price he paid for his units, subject to certain
conditions, as discussed below.
Also, we added a new risk factor to Item 1 "Business - Risk
Factors - Risks Relating to Our Business," as the seventh risk
factor, which has the subheading "Our Total Cash Distributions
During Our First Five Years May be Less Than $2,500 Per Unit
Per Year." This new risk factor discloses in greater detail
that the minimum aggregate annual distributions of $2,500 per
unit during the first five years described with respect to the
managing general partner's subordination obligation is not a
guarantee and could be less than that amount.
In Item 1 "Business - General," both registration statements
set forth obtaining a 2004 tax deduction for intangible
drilling costs of approximately $22,500 per unit, 90%, for
each unit purchased for $25,000, as one of the investment
objectives. In this regard, a deduction of $22,500 per unit
for intangible drilling costs was not guaranteed to each
investor, because the units were sold at different prices as
discussed in our response to Comment 5. Instead, the
allocation provisions of the partnership agreements, which
<PAGE>
KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall
Securities and Exchange Commission
June 17, 2005
Page 4
were filed as Exhibits 4.2 to the respective registration
statements, have the same effect, as a practical matter, of a
guarantee that each investor's deduction for intangible
drilling costs will not be less than 90% of the subscription
price paid by each participant for his units. These allocation
provisions are set forth in Section 5.01(a) and its
subsections of the partnership agreements, and they generally
provide that:
o not more than 10% of the amount paid by an investor for
his units can be used by the partnership to pay the
equipment costs of its wells; and
o all of the remaining amount paid by the investor for his
units (i.e., 90%) must be used by the partnership to pay
the intangible drilling costs of its wells.
Thus, the effect of these allocation provisions is that each
investor is guaranteed a deduction for intangible drilling
costs in an amount equal to not less than 90% of the amount
the investor paid for his units. We have revised the
investment objective accordingly in each amended registration
statement. Theoretically, it is possible that the investors'
share of a partnership's equipment costs could be less than
10% of the partnership's subscription proceeds. In that event,
however, the investors' deduction would be more than 90%, but
the deduction could never be less than 90%.
We also revised this investment objective to clarify that
although the 90% deduction for intangible drilling costs is
guaranteed, the IRS' treatment of the deduction is not
guaranteed by either Series 25(A) or Series 25(B). We
disclosed that if the IRS were to reduce the amount of the
deduction for intangible drilling costs or defer part of the
deduction to 2005 for wells that were prepaid in 2004, the
investors would have no right to reimbursement from Series
25(A) or Series 25(B), as the case may be, for any increase in
taxes, penalties or interest owed by the investors. Also,
parallel disclosure was made concerning the additional
aggregate 10% depreciation deductions.
7. You note in the registration statement for Atlas America Series 25-2004
(A) L.P. that UGI Energy Services, Inc. and Colonial Energy, Inc.
accounted for 57% and 24% respectively, of the company's total revenues
in 2004. Did any other customer account for in excess of 10% of your
revenues? Please disclose.
We have revised the registration statement to disclose in Item
1 "Business - General - Major Customers," that no other
customer accounted for more than 10% of Series 25(A)'s total
revenues for the period ended December 31, 2004. This
information has been confirmed to us by Atlas Resources, Inc.,
the managing general partner of Series 25(A).
8. Likewise, you note in the registration statement for Atlas America
Series 25-2004 (B) L.P. that UGI Energy Services, Inc., First Energy
Solutions Corporation, and American Energy Refining accounted for 35%,
18% and 17%, respectively, of the company's total revenues in 2004. Did
any other customer account for in excess of 10% of your revenues?
Please disclose.
We have revised the registration statement to disclose in Item
1 "Business - General - Major Customers," that no other
customer accounted for more than 10% of Series 25(B)'s total
revenues for the period ended December 31, 2004. This
information has been confirmed to us by Atlas Resources, Inc.,
the managing general partner of Series 25(B).
<PAGE>
KUNZMAN & BOLLINGER, INC.
Mr. H. Roger Schwall
Securities and Exchange Commission
June 17, 2005
Page 5
Risk Factors
------------
9. Many of the subheadings merely state a fa