NOTES TO CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—ORGANIZATION

We are a publicly traded (OTC: ATLS) Delaware limited liability company formed in October 2011. Unless the context otherwise requires, references to “Atlas Energy Group, LLC,” “the Company,” “we,” “us,” “our” and “our company,” refer to Atlas Energy Group, LLC, and our combined and consolidated subsidiaries.

On February 27, 2015, our former owner, Atlas Energy, L.P. (“Atlas Energy”), transferred its assets and liabilities, other than those related to its midstream assets, to us, and effected a pro rata distribution of our common units representing a 100% interest in us, to Atlas Energy’s unitholders (the “Separation”). Concurrently with the distribution of our units, Atlas Energy and its remaining midstream interests merged with Targa Resources Corp. (“Targa”; NYSE: TRGP) and ceased trading.

Our operations primarily consisted of our ownership interests in the following:

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At September 30, 2016, we had 26,037,992 common limited partner units issued and outstanding. The common units are a class of limited liability company interests in us. The holders of common units are entitled to participate in company distributions and exercise the rights or privileges available to holders of common units as outlined in the limited liability company agreement.

ARP Restructuring and Emergence from Chapter 11 Proceedings

On July 25, 2016, we, along with ARP and certain of its subsidiaries, solely with respect to certain sections thereof, entered into a Restructuring Support Agreement (the “Restructuring Support Agreement”) with (i) lenders holding 100% of ARP’s senior secured revolving credit facility (the “First Lien Lenders”), (ii) lenders holding 100% of ARP’s second lien term loan (the “Second Lien Lenders”) and (iii) holders (the “Consenting Noteholders” and, collectively with the First Lien Lenders and the Second Lien Lenders, and their respective successors or permitted assigns that become party to the Restructuring Support Agreement, the “Restructuring Support Parties”) of approximately 80% of the aggregate principal amount outstanding of the 7.75% Senior Notes due 2021 (the “7.75% Senior Notes”) and the 9.25% Senior Notes due 2021 (the “9.25% Senior Notes” and, together with the 7.75% Senior Notes, the “Notes”) of ARP’s subsidiaries, Atlas Resource Partners Holdings, LLC and Atlas Resource Finance Corporation (together, the “Issuers”). Under the Restructuring Support Agreement, the Restructuring Support Parties agreed, subject to certain terms and conditions, to support ARP’s restructuring (the “Restructuring”) pursuant to a pre-packaged plan of reorganization (the “Plan”).

On July 27, 2016, ARP and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court,” and the cases commenced thereby, the “Chapter 11 Filings”). The cases commenced thereby were jointly administered under the caption “In re: ATLAS RESOURCE PARTNERS, L.P., et al.”

ARP operated its businesses as “debtors in possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of Chapter 11 and the orders of the Bankruptcy Court. Under the Plan, all suppliers, vendors, employees, royalty owners, trade partners and landlords were unimpaired by the Plan and were satisfied in full in the ordinary course of business, and ARP’s existing trade contracts and terms were maintained. To assure ordinary course operations, ARP obtained interim approval from the Bankruptcy Court on a variety of “first day” motions, including motions seeking authority to use cash collateral on a consensual basis, pay wages and benefits for individuals who provide services to ARP, and pay vendors, oil and gas obligations and other creditor claims in the ordinary course of business.

On September 1, 2016, (the “Plan Effective Date”), pursuant to the Plan, the following occurred:

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We were not a party to ARP’s Restructuring. We remain controlled by the same ownership group and management team and thus, ARP’s Restructuring did not have a material impact on the ability of management to operate us or our other businesses.

NOTE 2—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying condensed combined consolidated financial statements, which are unaudited except that the balance sheet at December 31, 2015 was derived from audited financial statements, have been prepared pursuant to the rules and regulations of the SEC and are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim reporting. They do not include all disclosures normally made in financial statements contained in Form 10-K. It is suggested that these interim condensed combined consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in our latest Annual Report on Form 10-K though, as described further below, such prior financial statements may not be comparable to our interim financial statements due to the deconsolidation of ARP upon its Chapter 11 Filings and subsequent accounting for our investments in ARP and Titan under the equity method of accounting. In management’s opinion, all adjustments necessary for a fair presentation of our financial position, results of operations and cash flows for the periods disclosed have been made. Certain amounts in the prior year’s financial statements have been reclassified to conform to the current year presentation due to the adoption of certain accounting standards (see Note 4). The results of operations for the interim periods presented may not necessarily be indicative of the results of operations for the full year.

Principles of Consolidation and Combination

Our condensed combined consolidated financial statements for the three and nine months ended September 30, 2016 and 2015, subsequent to the transfer of assets on February 27, 2015, include our accounts and accounts of our subsidiaries. Our condensed combined consolidated financial statements for the portion of 2015 which is prior to the transfer of assets on February 27, 2015, were derived from the separate records maintained by Atlas Energy and may not necessarily be indicative of the conditions or results of operations that would have existed if we had been operated as an unaffiliated entity. Because a direct ownership relationship did not exist among all the various entities we comprise, Atlas Energy’s net investment in us is shown as equity in the condensed combined consolidated financial statements. U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed combined consolidated balance sheets and related condensed combined consolidated statements of operations. Such estimates included allocations made from the historical accounting records of Atlas Energy, based on management’s best estimates, in order to derive our financial statements. Actual balances and results could be different from those estimates. We have identified our transactions with other Atlas Energy operations in the condensed combined consolidated financial statements as transactions between affiliates.

In connection with Atlas Energy’s merger with Targa and the concurrent Separation, we were required to repay $150.0 million of Atlas Energy’s term loan credit facility, which was issued in July 2013 for $240.0 million. In accordance with U.S. GAAP, we included $150.0 million of Atlas Energy’s original term loan at the time of issuance, and the related interest expense, within our historical financial statements. Atlas Energy’s other historical borrowings were allocated to our historical financial statements in the same ratio. We used proceeds from the issuance of our Series A preferred units (see Note 9) and borrowings under our term loan credit facilities to fund the $150.0 million payment.

We determined that ARP (through the Plan Effective Date, as discussed further below) and AGP are variable interest entities (“VIE’s”) based on their respective partnership agreements, our power, as the general partner, to direct the activities that most significantly impact each of their respective economic performance, and our ownership of each of their respective incentive distribution rights. Accordingly, we consolidated the financial statements of ARP (until the date of ARP’s Chapter 11 Filings, as discussed further below) and AGP into our condensed combined consolidated financial statements. Our

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consolidated VIE’s operating results and asset balances are presented separately in Note 11 – Operating Segment Information. As the general partner for both ARP (through the Plan Effective Date) and AGP, we have unlimited liability for the obligations of ARP (through the Plan Effective Date) and AGP except for those contractual obligations that are expressly made without recourse to the general partner. The non-c ontrolling interests in ARP (through the date of ARP’s Chapter 11 Filings, as discussed further below) and AGP are reflected as (income) loss attributable to non-controlling interests in the condensed combined consolidated statements of operations and as a component of unitholders’ equity on the condensed combined consolidated balance sheets. All material intercompany transactions have been eliminated.

In connection with ARP’s Chapter 11 Filings on July 27, 2016, we deconsolidated ARP’s financial statements from our condensed combined consolidated financial statements, as we no longer had the power to direct the activities that most significantly impacted ARP’s economic performance; however, we retained the ability to exercise significant influence over the operating and financial decisions of ARP and therefore applied the equity method of accounting for our investment in ARP up to the Plan Effective Date. As a result of these changes, our condensed combined consolidated financial statements subsequent to ARP’s Chapter 11 Filings will not be comparable to our condensed combined financial statements prior to ARP’s Chapter 11 Filings.  Our financial results for future periods following the application of equity method accounting will be different from historical trends and the differences may be material.  

In accordance with established practice in the oil and gas industry, our condensed combined consolidated financial statements include our pro-rata share of assets, liabilities, income and lease operating and general and administrative costs and expenses of the Drilling Partnerships in which ARP has an interest through the date of ARP’s Chapter 11 Filings. Such interests generally approximate 30%. Our condensed combined consolidated financial statements do not include proportional consolidation of the depletion or impairment expenses of ARP’s Drilling Partnerships through the date of ARP’s Chapter 11 Filings. Rather, ARP calculated these items specific to its own economics through the date of ARP’s Chapter 11 Filings.

On the Plan Effective Date, we determined that Titan is a VIE based on its limited liability company agreement and the delegation of management and omnibus agreements between Titan and Titan Management, which provide us the power to direct activities that most significantly impact Titan’s economic performance, but we do not have a controlling financial interest. As a result, we do not consolidate Titan but rather apply the equity method of accounting as we have the ability to exercise significant influence over Titan’s operating and financial decisions.  

On June 5, 2015, ARP completed the acquisition of our coal-bed methane producing natural gas assets in the Arkoma Basin in eastern Oklahoma for $31.5 million, net of purchase price adjustments (the “Arkoma Acquisition”). ARP funded the purchase price using proceeds from the issuance of 6,500,000 common limited partner units. The Arkoma Acquisition had an effective date of January 1, 2015. ARP accounted for the Arkoma Acquisition as a transaction between entities under common control in its standalone consolidated financial statements.

Liquidity, Capital Resources, and Ability to Continue as a Going Concern

Our primary sources of liquidity are cash distributions received with respect to our ownership interests in AGP and Lightfoot.  Our primary cash requirements, in addition to normal operating expenses, are for debt service and capital expenditures, which we expect to fund through operating cash flow, and cash distributions received.

We rely on the cash flows from the distributions received on our ownership interests in AGP and Lightfoot. The amount of cash that AGP can distribute to its partners, including us, principally depends upon the amount of cash it generates from its operations. AGP’s future cash flows are subject to a number of variables, including oil and natural gas prices. Prices for oil and natural gas began to decline significantly during the fourth quarter of 2014 and have continued to decline and remain low in 2016. These lower commodity prices have negatively impacted AGP’s revenues, earnings and cash flows. Sustained low commodity prices will have a material and adverse effect on AGP’s liquidity position and ability to make distributions. Reductions of such distributions to us would adversely affect our ability to fund our cash requirements and obligations and meet our financial covenants under our credit agreements.

On November 2, 2016, AGP decided to temporarily suspend its current primary offering efforts in light of new regulations and the challenging fund raising environment until such time as market participants have had an opportunity to ascertain the impact of such issues. In addition, AGP’s Board of Directors suspended its quarterly common unit distributions, beginning with the three months ended September 30, 2016, in order to retain its cash flow and reinvest in its business and assets due to the suspension of its current primary offering.

We previously relied on cash distributions received with respect to our ownership interests in ARP; however, on May 5, 2016, ARP’s board of directors elected to suspend ARP’s common unit and Class C preferred distributions, beginning with the month of March of 2016, due to the continued lower commodity price environment.   

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The significant risks and uncertainties related to our primary sources of liquidity raise substantial doubt about our ability to continue as a going concern.  If we are unable to remain in compliance with the covenants under our term loan facilities (as described in Note 4), ab sent relief from our lenders, we maybe be forced to repay or refinance such indebtedness. Upon the occurrence of an event of default, the lenders under our term loan facilities could elect to declare all amounts outstanding immediately due and payable and could terminate all commitments to extend further credit. If an event of default occurs, we will not have sufficient liquidity to repay all of our outstanding indebtedness, and as a result, there would be substantial doubt regarding our ability to continue as a going concern. Based on the uncertainty regarding future covenant compliance, we classified $76.6 million of outstanding indebtedness under our term loan facilities, which is net of $1.6 million of debt discounts and $0.2 million of deferred financin g costs, as current portion of long term debt, net within our condensed combined consolidated balance sheet as of September 30, 2016.

We continually monitor our capital markets and capital structures and may make changes from time to time, with the goal of maintaining financial flexibility, preserving or improving liquidity, strengthening the balance sheet, meeting debt service obligations and/or achieving cost efficiency. For example, we could pursue options such as refinancing, restructuring or reorganizing our indebtedness or capital structure or seek to raise additional capital through debt or equity financing to address our liquidity concerns and high debt levels. There is no certainty that we will be able to implement any such options, and we cannot provide any assurances that any refinancing or changes to our  debt or equity capital structure would be possible or that additional equity or debt financing could be obtained on acceptable terms, if at all, and such options may result in a wide range of outcomes for our stakeholders, including cancellation of debt income (“CODI”) which would be directly allocated to our unitholders and reported on such unitholders’ separate returns. It is possible additional adjustments to our strategic plan and outlook may occur based on market conditions and our needs at that time, which could include selling assets or seeking additional partners to develop our assets.

Our condensed combined consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities and commitments in the normal course of business. Our condensed combined consolidated financial statements do not include any adjustments that might result from the outcome of the going concern uncertainty. If we cannot continue as a going concern, adjustments to the carrying values and classification of our assets and liabilities and the reported amounts of income and expenses could be required and could be material.

Atlas Growth Partners – Liquidity, Capital Resources, and Ability to Continue as a Going Concern

AGP has historically funded its operations, acquisitions and cash distributions primarily through cash generated from operations and financing activities, including its private placement offering completed in 2015. AGP’s future cash flows are subject to a number of variables, including oil and natural gas prices. Prices for oil and natural gas began to decline significantly during the fourth quarter of 2014 and have continued to decline and remain low in 2016. These lower commodity prices have negatively impacted AGP’s revenues, earnings and cash flows. Sustained low commodity prices will have a material and adverse effect on AGP’s liquidity position.

AGP was not a party to the Restructuring Support Agreement, and ARP’s Restructuring did not materially impact AGP.

On November 2, 2016, AGP decided to temporarily suspend its current primary offering efforts in light of new regulations and the challenging fund raising environment until such time as market participants have had an opportunity to ascertain the impact of such issues. In addition, AGP’s board of directors suspended its quarterly common unit distributions, beginning with the three months ended September 30, 2016, in order to retain its cash flow and reinvest in its business and assets due to the suspension of its current primary offering.  Accordingly, these decisions raise substantial doubt about AGP’s ability to continue as a going concern.  Management determined that substantial doubt is alleviated through management’s plans to reduce general and administrative expenses, the majority of which represent allocations from ATLS.

Use of Estimates

The preparation of our condensed combined consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities that exist at the date of our condensed combined consolidated financial statements, as well as the reported amounts of revenue and costs and expenses during the reporting periods. Our condensed combined consolidated financial statements are based on a number of significant estimates, including revenue and expense accruals, depletion, depreciation and amortization, fair value of derivative and other financial instruments, fair value of certain gas and oil properties and asset retirement obligations, and fair value of equity method investments. In addition, such estimates included estimated allocations made from the historical accounting records of Atlas Energy in order to derive our historical financial statements. The natural gas industry principally conducts its business by processing actual transactions as many as 60 days

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after the month of delivery. Consequently, the most recent two months’ financial results were recorded using estimated volumes and contract market prices. Actual results could differ from those estimates.

Net Income (Loss) Per Common Unit

Basic net income (loss) attributable to common unitholders per unit is computed by dividing net income (loss) attributable to common unitholders, which is determined after the deduction of net income attributable to participating securities and the preferred unitholders’ interests, if applicable, by the weighted average number of common unitholders units outstanding during the period.

Unvested unit-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities. A portion of our phantom unit awards, which consist of common units issuable under the terms of our long-term incentive plans and incentive compensation agreements, contain non-forfeitable rights to distribution equivalents. The participation rights result in a non-contingent transfer of value each time we declare a distribution or distribution equivalent right during the award’s vesting period. However, unless the contractual terms of the participating securities require the holders to share in the losses of the entity, net loss is not allocated to the participating securities. As such, the net income utilized in the calculation of net income (loss) per unit must be after the allocation of only net income to the phantom units on a pro-rata basis.

The following is a reconciliation of net income (loss) allocated to the common unitholders for purposes of calculating net income (loss) attributable to common unitholders per unit (in thousands, except unit data):

Diluted net income (loss) attributable to common limited partners per unit is calculated by dividing net income (loss) attributable to common limited partners, less income allocable to participating securities, by the sum of the weighted average number of common limited partner units outstanding and the dilutive effect of unit option awards and convertible preferred units, as calculated by the treasury stock or if converted methods, as applicable. Unit options consist of common units issuable upon payment of an exercise price by the participant under the terms of our long-term incentive plan.

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The following table sets forth the reconciliation of our weighted average number of common unitholder units used to compute basic net loss attributable to common unitholders per unit with those used to compute diluted net loss attribut able to common unitholders per unit (in thousands):

Equity Method Investments

As a result of deconsolidating ARP and recording our equity method investment in ARP a fair value of zero on the date of the Chapter 11 Filings, we recognized a $46.4 million non-cash gain, which is recorded in gain on deconsolidation of ARP on our condensed combined consolidated statements of operations for the three and nine months ended September 30, 2016, and includes a $61.7 million gain related to the remeasurement of our retained noncontrolling investment to fair value.  During the period after the Chapter 11 Filings through August 31, 2016, ARP generated a net loss and therefore we did not record any equity method income/(loss) based on our 25% proportionate share because such loss exceeded our investment.  Due to the cancellation of ARP’s preferred limited partnership units and common limited partnership units without the receipt of any consideration or recovery on the Plan Effective Date, we no longer hold an equity method investment in ARP.

On the Plan Effective Date, we recorded our equity method investment of Titan at fair value of $0.6 million, which was recorded in gain on deconsolidation of ARP on our condensed combined consolidated statements of operations for the three and nine months ended September 30, 2016 and in other assets, net on our condensed combined balance sheet as of September 30, 2016  For the period from the Plan Effective Date to September 30, 2016, we recorded equity method loss of $0.2 million based on our 2% proportionate share of Titan’s net loss, which is recorded in other, net revenues on our condensed combined consolidated statements of operations for the three and nine months ended September 30, 2016.

Rabbi Trust

In 2011, we established an excess 401(k) plan relating to certain executives. In connection with the plan, we established a “rabbi” trust for the contributed amounts. At September 30, 2016 and December 31, 2015, we reflected $4.1 million and $5.6 million, respectively, related to the value of the rabbi trust within other assets, net on our condensed combined consolidated balance sheets, and recorded corresponding liabilities of $4.1 million and $5.6 million as of those same dates, respectively, within asset retirement obligations and other on our condensed combined consolidated balance sheets. During the nine months ended September 30, 2016, a $2.3 million distribution was made to participants related to the rabbi trust. No distributions were made to participants related to the rabbi trust for the nine months ended September 30, 2015.

Recently Issued Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) updated the accounting guidance related to leases. The updated accounting guidance requires lessees to recognize a lease asset and liability at the commencement date of all leases (with the exception of short-term leases), initially measured at the present value of the lease payments. The updated

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guidance is effective for us as of January 1, 2019 and requires a modified retrospective transition approach for leases existing at, or entered into after , the beginning of the earliest period presented.  We are currently in the process of determining the impact that the updated accounting guidance will have on our condensed combined consolidated financial statements.

In August 2015, the FASB updated the accounting guidance related to the balance sheet presentation of debt issuance costs specific to line-of-credit arrangements. The updated accounting guidance allows the option of presenting deferred debt issuance costs related to line-of-credit arrangements as an asset, and subsequently amortizing over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings. We adopted the updated accounting guidance effective January 1, 2016 and it did not have a material impact on our condensed combined consolidated financial statements.

In February 2015, the FASB updated the accounting guidance related to consolidation under the variable interest entity and voting interest entity models. The updated accounting guidance modifies the consolidation guidance for variable interest entities, limited partnerships and similar legal entities. We adopted this accounting guidance upon its effective date of January 1, 2016, and it did not have a material impact on our condensed combined consolidated financial statements.

In August 2014, the FASB updated the accounting guidance related to the evaluation of whether there is substantial doubt about an entity’s ability to continue as a going concern. The updated accounting guidance requires an entity’s management to evaluate whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern within one year from the date the financial statements are issued and provide footnote disclosures, if necessary.  We adopted this accounting guidance on January 1, 2016, and provided enhanced disclosures, as applicable, within our condensed combined consolidated financial statements. 

In May 2014, the FASB updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which an entity has to refer. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The updated accounting guidance provides companies with alternative methods of adoption. We are currently in the process of determining the impact that the updated accounting guidance will have on our condensed combined consolidated financial statements and our method of adoption.

During the nine months ended September 30, 2016 and 2015, we recognized $20.6 million and $12.0 million, respectively, of non-cash property, plant and equipment additions, within the changes in accounts payable and accrued liabilities on our condensed combined consolidated statements of cash flows.

ARP capitalized interest on borrowed funds related to capital projects only for periods that activities were in progress to bring these projects to their intended use. The weighted average interest rates used to capitalize interest on combined borrowed funds by ARP was 6.3% and 6.5% for the three months ended September 30, 2016 and 2015.  The weighted average interest rates used to capitalize interest on combined borrowed funds by ARP were 6.6% and 6.4% for the nine months ended September 30, 2016 and 2015, respectively. The amounts of interest capitalized by ARP were $0.6 million and $4.0 million for the three months ended September 30, 2016 and 2015, respectively. The amounts of interest capitalized by ARP were $5.4 million and $12.0 million for the nine months ended September 30, 2016 and 2015, respectively.

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For the three months ended September 30, 2016 and 2015, we recorded $0.6 million and $1.6 million, respectively, of accretion expense related to ARP and AGP’s asset retirement obligations within deprec iation, depletion and amortization in our condensed combined consolidated statements of operations. For the nine months ended September 30, 2016 and 2015, we recorded $4.0 million and $4.8 million, respectively, of accretion expense related to ARP and AGP’ s asset retirement obligations within depreciation, depletion and amortization in our condensed combined consolidated statements of operations.  For the three and nine months ended September 30, 2015, ARP recorded liabilities of $0.1 million and $0.5 milli on, respectively, in asset retirement obligations in our condensed consolidated balance sheet due to the liquidation of some of ARP’s Drilling Partnerships.

In April 2015, the FASB updated the accounting guidance related to the balance sheet presentation of debt issuance costs. The updated accounting guidance requires that debt issuance costs be presented as a direct deduction from the associated debt obligation. We adopted this accounting guidance upon its effective date of January 1, 2016. The retrospective effect of the reclassification resulted in the following changes:

Cash Interest .  Cash payments for interest by us and our subsidiaries on our/their respective borrowings were $0.2 million and $42.0 million for the three months ended September 30, 2016 and 2015, respectively, and $55.6 million and $93.7 million for the nine months ended September 30, 2016 and 2015, respectively.

Term Loan Facilities

First Lien Credit Facility . On March 30, 2016, we, together with New Atlas Holdings, LLC (the “Borrower”) and Atlas Lightfoot, LLC, entered into a third amendment (the “Third Amendment”) to our credit agreement with Riverstone Credit Partners, L.P., as administrative agent (“Riverstone”), and the lenders (the “Lenders”) from time to time party thereto (the “First Lien Credit Agreement”).

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The outstanding loans under the First Lien Credit Agreement were bifurcated between the existing First Lien Credit Agreement and the new Second Lien Credi t Agreement (defined below), with $35.0 million and $35.8 million (including $2.4 million in deemed prepayment premium) in borrowings outstanding, respectively. In connection with the execution of the Third Amendment, the Borrower made a prepayment of appr oximately $4.25 million of the outstanding principal, which was classified as current portion of long-term debt on our condensed combined consolidated balance sheet at December 31, 2015, and $0.5 million of interest. The Third Amendment amended the First L ien Credit Agreement to, among other things:

On October 6, 2016, we entered into a fourth amendment to the First Lien Credit Agreement with Riverstone and the Lenders, effective as of September 1, 2016, that makes conforming changes to reflect the status of Titan as the successor to ARP following the consummation of the Chapter 11 Filings and also removes the financial covenants and related cross-defaults that had previously been incorporated from ARP’s credit agreement.

Second Lien Credit Agreement . Also on March 30, 2016, we and the Borrower entered into a new second lien credit agreement (the “Second Lien Credit Agreement”) with Riverstone and the Lenders. As described above, $35.8 million of the indebtedness previously outstanding under the First Lien Credit Agreement was moved under the Second Lien Credit Agreement. The First Lien Credit Agreement combined with Second Lien Credit Agreement is presented in the table above net of an unamortized discount of $1.6 million as of September 30, 2016, related to the 4,668,044 warrants issued in connection with the Second Lien Credit Agreement (see Note 9).

The Second Lien Credit Agreement matures on March 30, 2019, subject to an optional extension (the “Extension Option”) to March 30, 2020, assuming certain conditions are met, including a Total Leverage Ratio (as defined in the Second Lien Credit Agreement) of not more than 6:00 to 1:00 and a 5% extension fee. Borrowings under the Second Lien Credit Agreement are secured on a second priority basis by security interests in the same collateral that secures borrowings under the First Lien Credit Agreement.

Borrowings under the Second Lien Credit Agreement bear interest at a rate of 30%, payable in-kind through an increase in the outstanding principal. If the First Lien Credit Agreement is repaid in full prior to March 30, 2018, the rate will be reduced to 20%. If the Extension Option is exercised, the rate will again be increased to 30%. If our market capitalization is greater than $75 million, we can issue common units in lieu of increasing the principal to satisfy the interest obligation.

The Borrower may prepay the borrowings under the Second Lien Credit Agreement without premium at any time. The Second Lien Credit Agreement includes the same mandatory prepayment events as the First Lien Credit Agreement, subject to the Borrower’s discretion to prepay either the First Lien Credit Agreement or the Second Lien Credit Agreement.

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The Second Lien Credit Agreement co ntains the same negative and affirmative covenants and events of default as the First Lien Credit Agreement, including customary covenants that limit the Borrower’s ability to incur additional indebtedness, grant liens, make loans or investments, make dist ributions if a default exists or would result from the distribution, merge into or consolidate with other persons, enter into swap agreements that do not conform to specified terms or that exceed specified amounts, or engage in certain asset dispositions. In addition, the Second Lien Credit Agreement requires that we maintain an Asset Coverage Ratio (as defined in the Second Lien Credit Agreement) of not less than 2.00 to 1.00 as of September 30, 2017 and each fiscal quarter ending thereafter.

As a result of the cross-default, on July 11, 2016, we entered into waiver agreements (the “Waivers”) with Riverstone and the Lenders in connection with the First Lien Credit Agreement and the Second Lien Credit Agreement. Pursuant to the Waivers, Riverstone and the Lenders agreed to waive under the First Lien Credit Agreement and the Second Lien Credit Agreement:

On October 6, 2016, we entered into a first amendment to the Second Lien Credit Agreement with Riverstone and the Lenders, effective as of September 1, 2016, that makes conforming changes to reflect the status of Titan as the successor to ARP following the consummation of the Chapter 11 Filings and also removes the financial covenants and related cross-defaults that had previously been incorporated from ARP’s credit agreement.

In connection with the Term Loan Facilities, the lenders thereunder syndicated participations in loans underlying the facilities. As a result, certain of the Company’s current and former officers participated in approximately 12% of the loan syndication and warrants and a foundation affiliated with a 5% or more unitholder participated in approximately 12% of the loan syndication.

ARP First Lien Credit Facility

ARP was party to a Second Amended and Restated Credit Agreement, dated as of July 31, 2013 by and among ARP, the lenders from time to time party thereto, and Wells Fargo Bank (“Wells Fargo”), National Association, as administrative agent, as amended, supplemented or modified from time to time (the “ARP First Lien Credit Facility”), which provided for a senior secured revolving credit facility with a maximum borrowing base of $1.5 billion and was scheduled to mature in July 2018.

Pursuant to the ARP Restructuring Support Agreement, ARP completed the sale of substantially all of its commodity hedge positions on July 25, 2016 and July 26, 2016 and used the proceeds to repay $233.5 million of borrowings outstanding under the ARP First Lien Credit Facility. Accordingly, approximately $440 million remained outstanding under the ARP First Lien Credit Facility as of July 27, 2016, the date of ARP’s Chapter 11 Filings.

As of the date of the Chapter 11 Filings, we deconsolidated ARP for financial reporting purposes (see Note 2).

ARP Second Lien Term Loan

ARP was party to a Second Lien Credit Agreement, dated as of February 23, 2015 by and among ARP, the lenders from time to time party thereto, and Wilmington Trust, National Association, as administrative agent, as amended, supplemented or modified from time to time (the “ARP Second Lien Term Loan”), which provided for a second lien term loan in an original principal amount of $250.0 million. The ARP Second Lien Term Loan was scheduled to mature on February 23, 2020.

On the date of the Chapter 11 Filings, we deconsolidated ARP for financial reporting purposes (see Note 2).

ARP Senior Notes

In January and February 2016, ARP executed transactions to repurchase $20.3 million of its 7.75% Senior Notes and $12.1 million of its 9.25% Senior Notes for $5.5 million, which included $0.6 million of interest. As a result of these transactions, we recognized $26.5 million as gain on early extinguishment of debt, net of accelerated amortization of deferred

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financing costs of $0.9 million, in the condensed consolidated statement of operations for the nine months ended September 30 , 2016.

On the date of the Chapter 11 Filings, we deconsolidated ARP for financial reporting purposes (see Note 2).

NOTE 5—DERIVATIVE INSTRUMENTS

ARP and AGP use a number of different derivative instruments, principally swaps and options, in connection with their commodity price risk management activities.  ARP and AGP do not apply hedge accounting to any of their derivative instruments. As a result, gains and losses associated with derivative instruments are recognized in earnings.

ARP and AGP enter into commodity future option contracts to achieve more predictable cash flows by hedging their exposure to changes in commodity prices. At any point in time, such contracts may include regulated New York Mercantile Exchange (“NYMEX”) futures and options contracts and non-regulated over-the-counter futures contracts with qualified counterparties. NYMEX contracts are generally settled with offsetting positions, but may be settled by the physical delivery of the commodity. Crude oil contracts are based on a West Texas Intermediate (“WTI”) index. Natural gas liquids fixed price swaps are priced based on a WTI crude oil index, while ethane, propane, butane and iso butane contracts are based on the respective Mt. Belvieu price.  These contracts were recorded at their fair values.

We recorded net derivative liabilities on our condensed combined consolidated balance sheets of $0.2 million at September 30, 2016 and net derivative assets of $358.1 million at December 31, 2015.

Pursuant to the ARP Restructuring Support Agreement, ARP completed the sale of substantially all of its commodity hedge positions on July 25, 2016 and July 26, 2016 and used the proceeds to repay $233.5 million of borrowings outstanding under the ARP First Lien Credit Facility. On the date of the Chapter 11 Filings, we deconsolidated ARP for financial reporting purposes (see Note 2).

The following table summarizes the commodity derivative activity and presentation in our condensed combined consolidated statement of operations for the periods indicated (in thousands):

During the three and nine months ended September 30, 2015, we received approximately $4.9 million in net proceeds from the early termination of our remaining natural gas and oil derivative positions for production periods from 2015 through 2018. The net proceeds from the early termination of these derivatives were used to reduce indebtedness under our term loan facilities.

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Atlas Growth Partners

On May 1, 2015, AGP entered into a secured credit facility agreement with a syndicate of banks. As of September 30, 2016, the lenders under the credit facility have no commitment to lend to AGP under the credit facility and AGP has a zero dollar borrowing base, but AGP and its subsidiaries have the ability to enter into derivative contracts to manage their exposure to commodity price movements which will benefit from the collateral securing the credit facility. Obligations under the credit facility are secured by mortgages on AGP’s oil and gas properties and first priority security interests in substantially all of its assets. The credit facility may be amended in the future if AGP and the lenders agree to increase the borrowing base and the lenders’ commitments thereunder. The secured credit facility agreement contains covenants that limit AGP and its subsidiaries ability to incur indebtedness, grant liens, make loans or investments, make distributions, merge into or consolidate with other persons, enter into commodity or interest rate swap agreements that do not conform to specified terms or that exceed specified amounts, or engage in certain asset dispositions, including a sale of all or substantially all of its assets. AGP was in compliance with these covenants as of September 30, 2016. In addition, AGP’s credit facility includes customary events of default, including failure to timely pay, breach of covenants, bankruptcy, cross-default with other material indebtedness (including obligations under swap agreements in excess of any agreed upon threshold amount), and change of control provisions.

The following table summarizes the gross fair values of AGP’s derivative instruments, presenting the impact of offsetting the derivative assets and liabilities on our condensed combined consolidated balance sheets as of the dates indicated (in thousands):