Atlas Resources Series 28-2010 L.P. - FORM 10-Q - XML - IDEA: XBRL DOCUMENT - November 9, 2012

NOTE 6 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

The Partnership has entered into the following significant transactions with its MGP and its affiliates as provided under its Partnership Agreement:

 

·                     Administrative costs which are included in general and administrative expenses in the Partnership's statement of operations are payable at $75 per well per month. Administrative costs incurred were $21,200 and $60,200 for the three and nine months ended September 30, 2012, respectively. Administrative costs incurred were $19,400 and $50,500 for the three and nine months ended September 30, 2011.

 

·                     Monthly well supervision fees which are included in production expenses in the Partnership's statements of operations are payable at $975 per well, per month for Marcellus wells, $1,500 per well, per month for New Albany wells, $600 per well, per month for Horizontal Antrim wells and for Colorado wells, a fee of $400 is charged per well, per month for operating and maintaining the wells. Well supervision fees incurred for the three and nine months ended September 30, 2012 were $259,400 and $719,500, respectively. Well supervision fees incurred for the three and nine months ended September 30, 2011 were $243,600 and $678,000, respectively.

 

·                     Transportation fees, which are included in production expenses in the Partnership's statement of operations, incurred were $1,030,800 and $2,584,400 for the three and nine months ended September 30, 2012, respectively. Transportation fees incurred for the three and nine months ended September 30, 2011, were $301,900 and $579,300, respectively.

 

·                     Assets contributed, net of syndication costs, from the MGP which are disclosed on the Partnership's statement of cash flows as a non-cash activity for the nine months ended September 30, 2012 and 2011 were $12,836,500 and $5,524,200, respectively.

 

·                     The MGP received a credit to its capital account of $1,400 and $177,600, respectively, for the nine months ended September 30, 2012 and 2011, respectively, for fees, commissions and reimbursement costs to organize the partnership.

 

·                     The MGP and its affiliates perform all administrative and management functions for the Partnership including billing revenues and paying expenses. Accounts receivable trade-affiliate on the Partnership's balance sheets includes the net production revenues due from the MGP.

 

Subordination by Managing General Partner

 

Under the terms of the Partnership Agreement, the MGP may be required to subordinate up to 50% of its share of net production revenues of the Partnership to the benefit of the limited partners for an amount equal to at least 12% of their net subscriptions in the first 12-month subordination period, 10% of their net subscriptions in each of the next three 12-month subordination periods, and 8% of their net subscriptions in the fifth 12-month subordination period determined on a cumulative basis, in each of the first five years of Partnership operations, commencing when the MGP determines natural gas or oil is being sold from at least 75% of the Partnership's wells, excluding any wells drilled that were non-productive and expiring 60 months from that date. Therefore, MGP capital was decreased and the limited partners' capital was increased by $1,434,900, net of a previous working interest adjustment, as shown on the statement of changes in partners' capital for the nine months ended September 30, 2012. The Partnership's first distribution to the limited partners was March 2011.