Atlas Energy, Inc. Reports Operating and Financial Results for the Fourth Quarter and Full Year 2009

PITTSBURGH--Atlas Energy, Inc. (“Atlas” or “the Company”) today reported operating and financial results for the fourth quarter and full year 2009.

Fourth Quarter Highlights

The five most recent horizontal Marcellus Shale wells turned into line before the end of the fourth quarter were assigned proved reserves that averaged 5.6 billion cubic feet (“Bcfe”) per well by the Company’s third-party reserve engineer. This compares to the Company’s recent reserve estimate of 4 Bcfe per Marcellus Shale horizontal well.
Due to production, reserve results and additional acreage evaluations, the Company has increased its estimate of net recoverable reserves from the Marcellus Shale to approximately 13 trillion cubic feet of natural gas equivalents (“Tcfe”) from the previous estimate of 9 Tcfe.
Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP measure, for the Company’s exploration and production operations (“E&P Operations”) of $72.1 million exceeded the high-end of the previously issued guidance range of $68 million to $72 million. A reconciliation from net income to adjusted EBITDA is provided in the financial tables of this release.
Total production guidance for 2010 was reaffirmed between 45 and 50 Bcfe, representing an increase of approximately 29% at the midpoint compared to full year 2009 production.
Total daily net production grew to an average of 102.8 million cubic feet equivalents (“Mmcfe”) per day, up 3% over the sequential quarter due to increasing production from the Company’s development of the Marcellus Shale.
Average Appalachia net production grew to a record of 45.2 Mmcfe per day, up 16% over the prior year quarter and 9% over the third quarter of 2009.
Gross Marcellus Shale production reached 60 MMcfe per day.
The 2010 capital budget is estimated to range between $250 million and $270 million, of which approximately 70% is allocated to Marcellus Shale activities.
Atlas Resources Public #18-2009 (C) drilling program raised $222.9 million of investor funds during the fourth quarter of 2009, bringing total funds raised for the year to $351.9 million.⁽²⁾
Adjusted diluted net income per share, a non-GAAP measure, was $0.20 for the fourth quarter 2009 compared with $0.16 per share for the fourth quarter 2008.

Marcellus Operational Update

During 2009, the Company successfully initiated its horizontal drilling program in the Marcellus Shale.

	-		17 horizontal wells were drilled to total depth in 2009.
	-		10 wells were fraced and producing into line as of December 31, 2009; each well was funded through either the Company’s retail drilling partnerships or industry consortia.
	-		3 wells were drilled for the Company’s account and will be fraced and turned into line in the first half of 2010.

As of December 31, 2009, the five most recent horizontal Marcellus wells turned into line were exhibiting shallower declines than the Company’s original estimated well profile. The most recent results for these wells are as follows

Results as of February 17, 2010


			Effective
			Lateral				30 Day	31-60 Day	61-90 Day	91-120 Day
		Dry/	Length @	Number	Peak	Cumulative	Average	Average	Average	Average
		Wet	90 degrees	Of Frac	24-hour	Production	Rate	Rate	Rate	Rate	Days
Well	County	Gas	(in feet)	Stages	Rate	(Mcfe)	(Mcfe/day)	(Mcfe/day)	(Mcfe/day)	(Mcfe/day)	In-Line

1	Fayette⁽¹⁾	Dry	2,617	11	3,459	420,765	3,191	3,181	2,896	2,617	147

2	Greene	Dry	2,081	8	3,407	279,576	2,982	2,465	2,036	1,836	120

3	Fayette⁽²⁾	Dry	2,570	13	1,845	169,096	1,121	1,200	1,623	1,696	120

4	Washington ⁽³⁾	Wet	2,916	10	3,707	197,508	2,183	1,911	2,180	N/A	96

5	Greene⁽¹⁾	Dry	2,921	11	7,493	389,390	6,318	5,306	N/A	N/A	69

	Average				3,982		3,159	2,813	2,184	2,050

(1)		Atlas has identified the lower Marcellus, which exhibits the highest total organic content readings, as the optimal zone for lateral placement (wells #1 and #5 were placed low in the section).

(2)		While fracing well #3, a contractor experienced significant equipment problems that resulted in reduced injection rates. This well continues to clean up and is still on steady production incline after 120 days.

(3)		Well #4 has been constrained by freeze-offs and limited plant capacity.

As of December 31, 2009, the Company controlled leasehold acreage of approximately 584,000 acres in Pennsylvania, West Virginia, and New York that are prospective for the Marcellus Shale, of which approximately 314,000 acres are in areas of active Marcellus Shale development (includes 270,000 acres located in the Company’s traditional focus area of southwestern Pennsylvania).

	-		The Company believes that over 3,150 horizontal net drilling locations exist on its 314,000 active Marcellus acres using 1,000 foot spacing between laterals and assuming between 15 and 25% of its acreage will not be developed, depending on the area.
	-		The Company estimates that these locations provide it with approximately 13 Tcfe of net incremental recoverable reserves.

For 2010, the Company has scheduled to frac and turn into line 43 horizontal Marcellus Shale wells.

	-		30 of these wells will be for the direct account of the Company; 13 wells are scheduled to be funded through the capital raised in its 2009 drilling programs.
	-		During the first quarter 2010, the Company has fraced or has scheduled to frac and turn into line 7 horizontal Marcellus Shale wells; 4 directly for its account and 3 for the benefit of its retail drilling partnerships.
	-		For the remaining three quarters of 2010, the Company intends to frac and turn into line approximately one well per week.
	-		To complete this horizontal drilling program, the Company has contracted two fit-for-purpose horizontal rigs and 4 smaller rigs designed to drill the vertical portion of the well.
	-		All but two of these wells will be drilled in the Company’s core dry gas area of southwest Pennsylvania.

Laurel Mountain Midstream Partners, LLC (‘LMM”), a joint venture between The Williams Companies and Atlas Pipeline Partners, L.P. , is in the process of constructing a new large diameter gathering system in southwestern Pennsylvania that will ultimately be capable of transporting over 500 million cubic feet (“Mmcf”) per day.

	-		The new system will be comprised of 232 miles of new pipeline having diameters up to 24 inches.
	-		Primary deliveries from the system will be made into Texas Eastern Pipeline Company.
	-		Targeted completion date for entire system is June 2011; initial deliveries into first stages of system are planned to take place in the third quarter 2010.
	-		In addition, three significant looping projects of the Company’s legacy system in southwestern Pennsylvania, also owned by LMM, are expected to be completed in the second and third quarters of 2010 and add approximately 30 Mmcf per day of incremental capacity.
	-		During the fourth quarter 2009, the Company estimates that its gross natural gas production was constrained by approximately 22 Mmcf per day (6 Mmcf per day net) due primarily to delayed well turn-ons, limited plant capacity, high gathering system pressures and compressor downtime. Most of these issues are expected to be alleviated by the expansion projects referenced above and LLM’s efforts to make the full capacity of its two Washington County natural gas processing plants available to the Company.

The Company recently contracted for firm capacity to deliver up to 100 Mmcf per day into the M3 market area of the Texas Eastern interstate pipeline at either a fixed basis to NYMEX or an M3 index price for ten years.

The Company is currently negotiating similar contracts that give it an additional 100 to 150 Mmcf per day on Texas Eastern at similar terms.

Atlas expects its per well costs to decline to $3.75 million this year primarily as a result of increased pad drilling, more targeted completion techniques and the Company’s commitment to reuse 100% of its flow back and production water.

	-		The Company’s current fully-loaded estimated well cost for its horizontal Marcellus Shale wells in the dry gas area of southwest Pennsylvania is approximately $4.2 million.
	-		The Company believes that it will be able to recycle all of its water production from the Marcellus Shale by the middle of 2010. Atlas’ water reuse strategy involves blending, treatment and the application of chloride tolerant additives.

The Company has added to its senior management, as Senior Vice President, the former Shale Development Manager of Marathon Oil Company. Greg D. Muse, 50, spent his entire 28-year career with Marathon Oil Company in engineering and operations and most recently was Shale Development Manager where he led integrated teams of technical experts in the exploration and development of unconventional shale plays worldwide including the Haynesville, Marcellus, Woodford, and Bakken Shale plays of North America, as well as Marathon’s recent entry into an emerging shale in Poland. He joins 22 other professionals who have joined Atlas in the last two years to work on the Company’s growing Marcellus Shale development.

Michigan/Indiana Operational Update

Natural gas production from the Michigan/Indiana Segment averaged 57.6 Mmcfe per day during the fourth quarter 2009.
Production of 58.1 Mmcfe per day during 2009 was down 3.3% year over year due to sharply reduced capital expenditures of $6 million in 2009 compared with $57 million in 2008. All but four of the 55 wells drilled in Michigan during the year were funded through the Company’s drilling partnership programs.

The Company plans to drill 31 wells in Michigan during 2010, almost all of which will likely be funded through its drilling partnerships.

At December 31, 2009, the Company had approximately 270,800 net acres in the Antrim Shale of Michigan, of which approximately 22,800 were undeveloped.

The Company maintains over 500 proved infill drilling locations in the Antrim Shale.

The Company spud 42 horizontal wells in Indiana’s biogenic New Albany Shale in 2009.

	-		As of December 31, 2009, 24 wells were online with the remainder waiting on tie-in to infrastructure.
	-		Average initial rate of production of 290 thousand cubic feet (“Mcf”) per day was consistent with initial assumptions.
	-		Drilling and completion costs of approximately $800,000 per well were 18% lower than original expectations.
	-		All wells were funded through the Company’s drilling partnership programs.

The Company had access to approximately 123,000 net acres in the biogenic New Albany Shale as of December 31, 2009, with over 450 potential locations.

The Company has plans to drill approximately 100 New Albany Shale wells through its drilling partnership programs in 2010.

Fourth Quarter 2009 Financial Results

Adjusted EBITDA, a non-GAAP measure, was $72.1 million for the Company’s E&P Operations for the fourth quarter 2009, as compared with $68.7 million for the prior year comparable quarter. The fourth quarter 2009 adjusted EBITDA exceeded the high-end of the Company’s previously issued guidance range of $68 million to $72 million. The increase from the prior year comparable quarter was primarily related to an increase in well drilling fees and other fees generated from the deployment of funds raised in our direct investment programs, and higher natural gas production volumes with price realizations significantly enhanced by the Company’s hedge portfolio. These items were partially offset by lower spot commodity prices compared with the prior year comparable period ($4.24/mcf during the fourth quarter 2009 compared with $6.95/mcf during the fourth quarter 2008). A reconciliation from net income to adjusted EBITDA is provided in the financial tables of this release.

Adjusted net income, a non-GAAP measure, was $15.8 million for the fourth quarter 2009 compared with $6.4 million for the prior year fourth quarter. Adjusted diluted net income per share was $0.20 for the fourth quarter 2009 compared with $0.16 per share for the fourth quarter 2008. Inclusive of a non-cash impairment charge associated with certain of the Company’s legacy Upper Devonian shallow wells, the consolidation of APL and Atlas Pipeline Holdings, L.P. (“AHD”) and other items, on a GAAP basis, the Company recognized a net loss of $85.3 million for the fourth quarter 2009 compared with a net loss of $28.9 million for the prior year fourth quarter. A reconciliation of net loss to adjusted net income is provided in the financial tables of this release.
Partnership management margin⁽¹⁾ was $26.3 million for the fourth quarter 2009, compared to $16.9 million for the prior year fourth quarter.

Full Year 2009 Financial Results

Adjusted EBITDA was $279.3 million for the Company’s E&P Operations for the full year 2009, as compared with $295.4 million for the prior year. The decrease from the prior year was primarily related to sharply lower spot commodity prices compared with the prior year comparable period ($4.07/mcf for the full year 2009 compared to $9.23/mcf for the prior year), partially offset by the Company’s hedging program which helped stabilize cash flows despite lower commodity prices and higher production volumes. A reconciliation of net loss to adjusted EBITDA is provided in the financial tables of this release.
Adjusted net income was $40.8 million for the full year 2009 compared with $37.1 million for the prior year. Adjusted diluted net income per share was $0.81 for the full year 2009 compared with $0.89 per share for the prior year. Inclusive of the non-cash impairment charge related to certain of the Company’s legacy Upper Devonian shallow wells, the consolidation APL and AHD and other items, on a GAAP basis, the Company recognized a net loss of $72.0 million for the full year 2009 compared with a net loss of $6.2 million for the prior year. A reconciliation of net loss to adjusted net income is provided in the financial tables of this release.
Full year 2009 partnership management margin⁽¹⁾ was $83.0 million compared with $84.6 million in the prior year.

Recent Events

The Company raised approximately $222.9 million for its Atlas Resources Public #18-2009 (C)⁽²⁾ drilling program during the fourth quarter 2009, bringing the total investor funds raised in 2009 to approximately $351.9 million. The $222.9 million of investor funds raised was the Company’s largest year end fundraising and 11% higher than its 2008 year end program.
In January 2010, the Company received approximately $20.1 million in proceeds from the early settlement of natural gas hedge positions related to periods from 2011 through 2013. Simultaneously, these hedge positions were effectively replaced with similar hedge contracts at current prevailing prices. The net proceeds from the hedge monetization were used to reduce indebtedness. An updated schedule of the Company’s hedge positions is provided in the financial tables of this press release.

Corporate and Other

General and administrative expense, excluding amounts attributable to APL and AHD, was $14.7 million for the fourth quarter 2009 compared with $12.1 million for the prior year comparable quarter. The increase in the fourth quarter 2009 compared to the prior year was principally related to $1.4 million of non-recurring expenses related to the merger between Atlas Energy Resources, LLC (“ATN”) and the Company (the “Merger”) and an increase in wages and other corporate activities due to the growth of its business. See consolidating statements of operations provided in the financial tables of this release.
Depreciation, depletion and amortization expense, excluding amounts attributable to APL and AHD, was $28.4 million for the fourth quarter 2009, compared to $27.1 million for the prior year comparable quarter. The increase was due primarily to the increase in production for the Company’s Appalachia segment, notably from Marcellus Shale production. See consolidating statements of operations provided in the financial tables of this release.
Interest expense, excluding amounts attributable to APL and AHD, was $17.7 million for the fourth quarter 2009 compared with $13.6 million for the prior year fourth quarter. The increase in interest expense was primarily due to ATN’s $200 million 12.5% senior note offering in July 2009, partially offset by lower average borrowings under its credit facility. See consolidating statements of operations provided in the financial tables of this release.

Hedging Summary

The Company entered into additional hedging contracts during the fourth quarter 2009 for its natural gas production. A summary of the Company’s current equity hedge positions as of February 25, 2010 is as follows:


Natural Gas

	Fixed Price Swaps
		Average
	Production Period	Fixed Price	Volumes
	Ended December 31,	(per mcf)^(a)(b)	(per mcf)^(a)
	2010	$ 7.63	27,978,899
	2011	$ 6.60	17,119,053
	2012	$ 6.69	13,926,941
	2013	$ 6.90	9,836,143


Costless Collars
	Average	Average
Production Period	Floor Price	Ceiling Price	Volumes
Ended December 31,	(per mcf)^(a)(b)	(per mcf)^(a)(b)	(per mcf)^(a)
2010	$ 8.04	$ 9.22	2,421,005
2011	$ 6.07	$ 7.15	8,679,659
2012	$ 6.28	$ 7.35	7,650,495
2013	$ 6.33	$ 7.50	8,772,324


Crude Oil

	Fixed Price Swaps
		Average
	Production Period	Fixed Price	Volumes
	Ended December 31,	(per bbl)^(a)	(bbls)^(a)
	2010	$ 97.30	36,977
	2011	$ 69.77	32,194
	2012	$ 71.55	26,139
	2013	$ 72.26	5,900


Costless Collars
	Average	Average
Production Period	Floor Price	Ceiling Price	Volumes
Ended December 31,	(per bbl)^(a)	(per bbl)^(a)	(bbls)^(a)
2010	$ 85.00	$ 112.72	23,442
2011	$ 60.00	$ 80.92	20,361
2012	$ 60.00	$ 86.50	16,777
2013	$ 60.00	$ 88.90	3,540

^{_______________________________________________________________}

			^(a)		“Mcf” represents thousand cubic feet; “bbl” represents barrel.
			^(b)		Includes an estimated positive basis differential and Btu (British thermal units) adjustment.

Interest in Atlas Pipeline and Atlas Pipeline Holdings

Through Atlas Energy’s controlling interest in AHD, which owns and operates the general partner of APL and owns 5.8 million limited partner units in APL, the Company recognizes approximately 11% of APL’s net income (loss) after eliminating minority interest from non-controlling parties. A consolidating statement of operations and balance sheet has been provided in the financial tables of the release, which segregates the Atlas Energy E&P Operations financial results from the Atlas Pipeline midstream financial results.

* * *

Interested parties are invited to access the live webcast of an investor call with management regarding Atlas Energy, Inc.’s fourth quarter 2009 results on Friday, February 26, 2010 at 9:00 am ET by going to the Investor Relations section of Atlas Energy’s website at www.atlasenergy.com. For those unavailable to listen to the live broadcast, the replay of the webcast will be available following the live call on the Atlas Energy website and telephonically beginning at 12:00 p.m. ET on February 26, 2010 by dialing 888-286-8010, passcode: 32659778.

⁽¹⁾ Partnership management margin is comprised of Well Construction & Completion margin, Well Services margin and Administration & Oversight Fee revenues.

⁽²⁾ Atlas Energy’s subsidiary serves as managing general partner of the partnership. A written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, may be obtained from Anthem Securities, Inc. (a subsidiary of Atlas Energy), 1550 Coraopolis Heights Rd. – 3rd Floor, Moon Township, PA 15108.

At December 31, 2009, the Company had a 100.0% ownership interest in ATN, an approximate 2.2% direct ownership interest in APL, a publicly-traded limited partnership, and an approximate 64.3% limited partner interest and 100% of the general partner interest in AHD. The Company’s financial results are presented on a consolidated basis with those of ATN, AHD, and APL. Non-controlling minority interests in ATN, AHD, and APL are reflected as income (expense) in the Company’s consolidated statements of operations and as a component of shareholders’ equity on its consolidated balance sheet. A consolidating statement of operations and balance sheet has also been provided in the financial tables to the release for the comparable periods presented.

Please see the respective AHD and APL earnings releases for more information with regard to their fourth quarter and full year 2009 financial results.

Atlas Energy, Inc. is one of the largest independent natural gas producers in the Appalachian and Michigan Basins and a leading producer in the Marcellus Shale in Pennsylvania. Atlas Energy, Inc. is also the country’s largest sponsor and manager of tax-advantaged energy investment partnerships. Atlas Energy, Inc. also owns 1.1 million common units in Atlas Pipeline Partners, L.P. and a 64% interest in Atlas Pipeline Holdings, L.P. , a limited partnership which owns the general partner interest, all the incentive distribution rights and approximately 5.8 million common units of Atlas Pipeline Partners, L.P. For more information, please visit our website at www.atlasenergy.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.

Atlas Pipeline Partners, L.P. is active in the gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region of Oklahoma, southern Kansas, northern and western Texas and the Texas panhandle, APL owns and operates eight active gas processing plants and a treating facility, as well as approximately 8,750 miles of active intrastate gas gathering pipeline. In Appalachia, APL is a 49% joint venture partner with Williams in Laurel Mountain Midstream, LLC, which manages the natural gas gathering system in that region, namely from the Marcellus Shale in southwestern Pennsylvania. For more information, visit the Partnership’s website at www.atlaspipelinepartners.com or contact investorrelations@atlaspipelinepartners.com.

Atlas Pipeline Holdings, L.P. is a limited partnership which owns and operates the general partner of Atlas Pipeline Partners, L.P., through which it owns a 2% general partner interest, all the incentive distribution rights and approximately 5.8 million common of Atlas Pipeline Partners, L.P.

Cautionary Note Regarding Forward-Looking Statements

This document contains forward-looking statements that involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Atlas Energy, Inc. cautions readers that any forward-looking information is not a guarantee of future performance. Such forward-looking statements include, but are not limited to, statements about future financial and operating results, resource potential, the Company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Risks, assumptions and uncertainties that could cause actual results to materially differ from the forward-looking statements include, but are not limited to, those associated with general economic and business conditions; changes in commodity price; changes in the costs and results of drilling operations; uncertainties about estimates of reserves and resource potential; inability to obtain capital needed for operations; the Company’s level of indebtedness; changes in government environmental policies and other environmental risks; the availability of drilling equipment and the timing of production; tax consequences of business transactions; and other risks, assumptions and uncertainties detailed from time to time in the Company’s reports filed with the U.S. Securities and Exchange Commission (the “SEC”). Forward-looking statements speak only as of the date hereof, and the Company assumes no obligation to update such statements, except as may be required by applicable law. The SEC requires natural gas and oil companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of natural gas and oil that by analysis of geoscience and engineering data can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. For filings reporting year-end 2009 reserves, the SEC permits the optional disclosure of probable and possible reserves. The Company has elected not to report probable and possible reserves in its filings with the SEC. In this press release the estimate of “incremental net recoverable reserves” describes the Company’s internal estimates of volumes of natural gas that are not classified as proved reserves but are potentially recoverable through exploratory drilling or additional drilling or recovery techniques. This may be a broader description of potentially recoverable volumes than probable and possible reserves, as defined by SEC regulations. Estimates of unproved resources are by their nature more speculative than estimates of proved resources and, accordingly, are subject to substantially greater risk of actually being realized by the Company. The Company believes that its estimates of unproved resources are reasonable, but such estimates have not been reviewed by independent engineers. Estimates of unproven resources may change significantly as development provides additional data and actual quantities that are ultimately recovered may differ substantially from prior estimates.


ATLAS ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited; in thousands, except per share data)

	Three Months Ended						Years Ended
	December 31,						December 31,
		2009			2008			2009			2008
Revenues:
Gas and oil production	$	70,276		$	75,433		$	278,184		$	311,850
Well construction and completion		114,814			71,570			372,045			415,036
Transmission, gathering and processing		260,382			165,853			815,755			1,384,212
Administration and oversight		5,969			3,992			15,613			19,362
Well services		5,280			5,119			20,191			20,482
Gain (loss) on asset sales		(741	)		(32	)		105,005			(32	)
Gain (loss) on mark-to-market derivatives⁽¹⁾		(19,760	)		193,864			(37,005	)		(63,480	)
Other, net		6,118			(427	)		17,814			11,415
Total revenues		442,338			515,372			1,587,602			2,098,845

Costs and expenses:
Gas and oil production		12,520			12,459			45,737			48,194
Well construction and completion		97,310			60,943			315,546			359,609
Transmission, gathering and processing		209,347			161,051			680,099			1,153,555
Well services		2,408			2,839			9,330			10,654
General and administrative		26,802			(805	)		108,421			57,787
Depreciation, depletion and amortization		53,298			48,730			200,725			178,269
Goodwill and other asset impairment		166,683			676,860			166,683			676,860
Total costs and expenses		568,368			962,077			1,526,541			2,484,928

Operating income (loss)		(126,030	)		(446,705	)		61,061			(386,083	)

Interest expense		(45,661	)		(37,527	)		(169,983	)		(144,065	)
Gain on early extinguishment of debt		−			19,867			−			19,867

Loss from continuing operations before income tax benefit		(171,691	)		(464,365	)		(108,922	)		(510,281	)
Income tax benefit		(54,624	)		(17,309	)		(49,069	)		(5,021	)
Net loss from continuing operations		(117,067	)		(447,056	)		(59,853	)		(505,260	)

Discontinued operations:
Gain on sale of discontinued operations (net of income tax provision of $2,228 for the year ended December 31, 2009)		−			−			48,851			−
Income (loss) from discontinued operations (net of income tax provision of $27 for the three months ended December 31, 2008 and $498 and $875 for the years ended December 31, 2009 and 2008, respectively)		−			(510	)		10,918			19,671
Net loss		(117,067	)		(447,566	)		(84	)		(485,589	)
(Income) loss attributable to non-controlling interests		31,784			418,654			(71,902	)		479,431
Net loss attributable to common shareholders	$	(85,283	)	$	(28,912	)	$	(71,986	)	$	(6,158	)

Net loss attributable to common shareholders per share – basic:
Loss from continuing operations attributable to common shareholders	$	(1.09	)	$	(0.74	)	$	(1.55	)	$	(0.19	)
Income from discontinued operations attributable to common shareholders		−			−			0.09			0.04
Net loss attributable to common shareholders	$	(1.09	)	$	(0.74	)	$	(1.46	)	$	(0.15	)

Net loss attributable to common shareholders per share – diluted:
Loss from continuing operations attributable to common shareholders	$	(1.09	)	$	(0.74	)	$	(1.55	)	$	(0.19	)
Income from discontinued operations attributable to common shareholders		−			−			0.09			0.04
Net loss attributable to common shareholders	$	(1.09	)	$	(0.74	)	$	(1.46	)	$	(0.15	)

Weighted average common shares outstanding:
Basic		78,134			39,249			49,208			39,999
Diluted		78,134			39,249			49,208			39,999

Loss attributable to common shareholders:
Loss from continuing operations (net of income tax benefit of $54,624 and $17,309 for the three months ended December 31, 2009 and 2008, respectively, and $49,069 and $5,021 for the years ended December 31, 2009 and 2008, respectively)	$	(85,283	)	$	(28,955	)	$	(76,239	)	$	(7,524	)
Discontinued operations (net of income tax provision of $27 for the three months ended December 31, 2008 and $2,726 and $875 for the years ended December 31, 2009 and 2008, respectively)		−			43			4,253			1,366
Net loss attributable to common shareholders	$	(85,283	)	$	(28,912	)	$	(71,986	)	$	(6,158	)

(1)

Consists principally of hydrocarbon derivative gains / (losses) that relate to the operating activities of the Company’s consolidated subsidiary, APL. The underlying hydrocarbon derivatives do not represent present or potential future obligations of the Company.


ATLAS ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited; in thousands, except per share data)


	December 31,
ASSETS		2009		2008
Current assets:
Cash and cash equivalents	$	20,627	$	104,496
Accounts receivable		172,848		172,427
Current portion of derivative asset		74,064		152,726
Subscription receivable from Partnerships		47,275		44,250
Prepaid expenses and other		31,010		25,464
Prepaid and deferred taxes		1,559		32,215
Current assets of discontinued operations		−		13,441
Total current assets		347,383		545,019

Property, plant and equipment, net		3,555,802		3,744,815
Goodwill and intangible assets, net		206,130		232,651
Long-term derivative asset		59,291		69,451
Investment in joint venture		132,990		−
Deferred tax asset		29,734		−
Other assets, net		74,833		56,030
Long-term assets of discontinued operations		−		242,165
	$	4,406,163	$	4,890,131

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Current portion of long-term debt	$	8,000	$	−
Accounts payable		99,748		140,725
Liabilities associated with drilling contracts		122,532		141,133
Accrued producer liabilities		66,211		66,846
Current portion of derivative liability		38,485		73,776
Current portion of derivative liability to Partnerships		22,382		34,933
Accrued interest		38,898		22,321
Accrued well drilling and completion costs		89,261		43,946
Current portion of deferred tax liability		26,415		−
Accrued and other current liabilities		46,142		37,224
Current liabilities of discontinued operations		−		10,572
Total current liabilities		558,074		571,476

Long-term debt, less current portion		2,040,572		2,413,082
Deferred tax liability		−		242,058
Long-term derivative liability		25,441		59,103
Long-term derivative liability to Partnerships		22,380		22,581
Other long-term liabilities		56,180		52,263

Shareholders’ equity:
Shareholders’ equity		1,065,290		390,372
Accumulated other comprehensive income		58,022		21,143
		1,123,312		411,515
Non-controlling interests		580,204		1,118,053
Total shareholders’ equity		1,703,516		1,529,568
	$	4,406,163	$	4,890,131


ATLAS ENERGY, INC.
Financial and Operating Highlights

	Three Months Ended							Years Ended
	December 31,							December 31,
		2009				2008			2009				2008

Net loss attributable to common shareholders per share - basic	$	(1.09	)		$	(0.74	)	$	(1.46	)		$	(0.15	)

Adjusted net income attributable to common shareholders per share – basic⁽¹⁾	$	0.20			$	0.16		$	0.83			$	0.93

Pro forma adjusted net income attributable to common shareholders per share – basic⁽¹⁾	$	0.20			$	0.22		$	0.85			$	1.15

E&P Operations Discretionary Cash Flow per share⁽²⁾	$	0.70			$	0.71		$	2.88			$	3.07

Production revenues (in thousands):
Natural gas	$	65,955			$	72,799		$	265,474			$	297,145
Oil		4,321				2,634			12,710				14,705

Production volume:^{(3) (4)}
Appalachia:
Natural gas (Mcfd)		40,401				36,281			39,912				33,023
Oil (Bpd)		800		⁽⁵⁾		459			532		⁽⁵⁾		423
Total (Mcfed) Oil (Bbls/day)		45,203				39,035			43,106				35,558
Michigan/Indiana:
Natural gas (Mcfd)		57,399				59,160			58,056				59,606
Oil (Bpd)		29		⁽⁵⁾		10			14		⁽⁵⁾		11
Total (Mcfed) Oil (Bbls/day)		57,575				59,220			58,140				59,672
Total:
Natural gas (Mcfd)		97,800				95,441			97,968				92,629
Oil (Bpd)		830		⁽⁵⁾		469			546		⁽⁵⁾		434
Total (Mcfed)		102,778				98,255			101,246				95,230

Average sales prices:⁽⁴⁾
Natural gas (per Mcf)⁽⁶⁾⁽⁷⁾	$	7.66			$	8.51		$	7.67			$	9.13
Oil (per Bbl)⁽⁸⁾		79.14				60.82			70.81				92.35

Production costs:⁽⁴⁾⁽⁹⁾
Lease operating expenses per Mcfe	$	0.92			$	0.94		$	0.86			$	0.85
Production taxes per Mcfe		0.15				0.24			0.16				0.35
Total production costs per Mcfe	$	1.07			$	1.18		$	1.02			$	1.20

Depletion per Mcfe⁽⁴⁾	$	2.90			$	2.89		$	2.81			$	2.64

⁽¹⁾		A reconciliation from net loss to adjusted net income attributable to common shareholders per share and pro forma adjusted net income attributable to common shareholders per share is provided in the financial tables of this release.
⁽²⁾		Calculation consists of discretionary cash flow divided by pro forma weighted average common shares outstanding for the respective period. A reconciliation from net loss to discretionary cash flow is provided in the financial tables of this release. Pro forma weighted average common shares outstanding for the respective period consists of the historical basic weighted average shares of the Company for the respective period, adjusted for the 38.8 million shares of the Company’s common stock issued in connection with the Merger.
⁽³⁾		Production quantities consist of the sum of (i) the Company’s proportionate share of production from wells in which it has a direct interest, based on the Company’s proportionate net revenue interest in such wells, and (ii) the Company’s proportionate share of production from wells owned by the investment partnerships in which the Company has an interest, based on its equity interest in each such partnership and based on each partnership’s proportionate net revenue interest in these wells.
⁽⁴⁾		“Mcf” and “Mcfd” represent thousand cubic feet and thousand cubic feet per day; “Mcfe” and “Mcfed” represent thousand cubic feet equivalents and thousand cubic feet equivalents per day, and “Bbl” and “Bpd” represent barrels and barrels per day. Barrels are converted to Mcfe using the ratio of six Mcf’s to one barrel.
⁽⁵⁾		Includes NGL production volume of 400 bpd and 101 bpd for the fourth quarter 2009 and year ended December 31, 2009, respectively.
⁽⁶⁾		The Company’s average sales price for gas before the effects of financial hedging was $4.24 and $6.95 per Mcf for the three months ended December 31, 2009 and 2008, respectively, and $4.07 and $9.23 per Mcf for the year ended December 31, 2009 and 2008, respectively. Including the effects of certain allocations of the Company’s production revenue to the investor partners within the Company’s investment partnerships, average gas sales prices for the three months and year ended December 31, 2009 was $7.37 per Mcf ($3.95 per Mcf before the effects of financial hedging) and $7.50 per Mcf ($3.91 per Mcf before the effects of financial hedging), respectively.
⁽⁷⁾		Includes cash proceeds of $0.4 million and $1.9 million for the three months ended December 31, 2009 and 2008, respectively, and $2.8 million and $12.4 million for the years ended December 31, 2009 and 2008, respectively, received from the settlement of ineffective derivative gains associated with the acquisition of the Company’s Michigan operations but not reflected in the consolidated statements of operations.
⁽⁸⁾		The Company’s average sales price for oil before the effects of financial hedging was $72.69 and $48.23 per barrel for the three months ended December 31, 2009 and 2008, respectively, and $57.26 and $91.79 per barrel for the years ended December 31, 2009 and 2008, respectively.
⁽⁹⁾		Production costs include labor to operate the wells and related equipment, repairs and maintenance, materials and supplies, property taxes, severance taxes, insurance and production overhead. Including the effects of the Company’s proportionate share of lease operating expenses associated with certain allocations of production revenue to investor partners within its investment partnerships, lease operating expenses per Mcfe for the three months and year ended December 31, 2009 was $0.83 per Mcfe (total production costs per Mcfe were $0.98) and $0.81 per Mcfe (total production costs per Mcfe were $0.97), respectively.


ATLAS ENERGY, INC.
CAPITALIZATION INFORMATION
(unaudited; in thousands)

	December 31, 2009									December 31, 2008
				Atlas									Atlas
				Pipeline									Pipeline
				and Atlas									and Atlas
	Atlas			Pipeline						Atlas			Pipeline
	Energy			Holdings			Consolidated			Energy			Holdings			Consolidated
Total debt	$	786,390		$	1,262,182		$	2,048,572		$	873,655		$	1,539,427		$	2,413,082
Less: Cash		(19,525	)		(1,102	)		(20,627	)		(97,211	)		(7,285	)		(104,496	)
Total net debt		766,865			1,261,080			2,027,945			776,444			1,532,142			2,308,586

Shareholders’ equity		1,123,481			690,726			1,703,516	⁽¹⁾		1,168,768			588,889			1,529,568	⁽¹⁾

Total capitalization	$	1,890,346		$	1,951,806		$	3,731,461		$	1,945,212		$	2,121,031		$	3,838,154

Ratio of net debt to capitalization	0.41x									0.40x

⁽¹⁾ Net of eliminated amounts.


	ATLAS ENERGY, INC.
	CAPITAL EXPENDITURE DATA
	(unaudited; in thousands)

		Three Months Ended				Years Ended
		December 31,				December 31,
			2009		2008⁽¹⁾		2009		2008⁽¹⁾
	Atlas Energy	$	37,275	$	122,686	$	168,060	$	347,656
	Atlas Pipeline Partners		17,306		76,955		154,916		300,723
	Consolidated capital expenditures	$	54,581	$	199,641	$	322,976	$	648,379

⁽¹⁾	Restated to reflect amounts reclassified to discontinued operations due to APL’s sale of its NOARK gas gathering and interstate pipeline system.


ATLAS ENERGY, INC.
Financial Information
(unaudited; in thousands)

	Three Months Ended						Years Ended
	December 31,						December 31,
		2009			2008			2009			2008
E&P Operations:
Gas and oil production margin⁽¹⁾	$	58,113		$	62,377		$	257,576		$	264,702
Well construction and completion margin		17,504			10,627			56,499			55,427
Administration and oversight margin		5,969			3,992			15,613			19,362
Well services margin		2,872			2,280			10,861			9,828
Gathering		(3,061	)		(3,062	)		(9,781	)		(12,204	)
E&P Operations Gross Margin		81,397			76,214			330,768			337,115
Cash general and administrative expenses⁽²⁾		(11,100	)		(9,294	)		(52,924	)		(45,089	)
Other, net		1,807			1,777			1,470			3,399
E&P Operations Adjusted EBITDA⁽³⁾		72,104			68,697			279,314			295,425
Cash interest expense⁽⁴⁾		(16,392	)		(12,970	)		(60,679	)		(53,368	)
Cash income tax refunds (payments)		(1,089	)		−			6,209			−
E&P Operations Discretionary Cash Flow⁽³⁾		54,623			55,727			224,844			242,057
Capital expenditures		(37,275	)		(117,984	)		(168,060	)		(342,954	)
E&P Operations Free Cash Flow⁽³⁾⁽⁵⁾	$	17,348		$	(62,257	)	$	56,784		$	(100,897	)


	Three Months Ended						Years Ended
	December 31,						December 31,
		2009			2008			2009			2008
Reconciliation of non-GAAP measures to net loss attributable to common shareholders⁽³⁾:
E&P Operations Discretionary Cash Flow	$	54,623		$	55,727		$	224,844		$	242,057
Atlas Pipeline and Atlas Pipeline Holdings net (income) loss attributable to common shareholders		(4,816	)		(53,751	)		1,417			(55,077	)
Cash income tax payments (refunds)		1,089			−			(6,209	)		−
Income tax benefit		54,624			17,309			49,069			5,021
Non-recurring Merger costs		(1,361	)		−			(8,113	)		−
Depreciation, depletion and amortization		(28,427	)		(27,088	)		(108,290	)		(95,427	)
Asset impairment		(156,359	)		−			(156,359	)		−
Amortization of deferred finance costs		(1,290	)		(641	)		(4,187	)		(2,823	)
Non-cash stock compensation expense		(2,249	)		(2,850	)		(8,304	)		(10,971	)
Non-cash net loss on sale of assets		(741	)		(32	)		(6,435	)		(32	)
Income attributable to ATN non-controlling interests⁽⁶⁾		(19	)		(15,664	)		(18,086	)		(76,475	)
Adjustments to reflect the cash impact of derivatives⁽¹⁾		(357	)		(1,922	)		(31,333	)		(12,431	)
Net loss attributable to common shareholders	$	(85,283	)	$	(28,912	)	$	(71,986	)	$	(6,158	)

⁽¹⁾		Includes adjustments to reflect the cash impact of derivatives, including (i) $28.5 million of cash proceeds received in May 2009 from the early settlement of natural gas and oil derivative positions and (ii) cash proceeds received from the settlement of ineffective derivative gains recognized in connection with the acquisition of the Company’s Michigan assets in June 2007 but not reflected in its consolidated statements of operations for the three months and year ended December 31, 2009 and 2008.
⁽²⁾		Excludes non-cash stock-compensation expense and non-recurring costs incurred in connection with the Merger.
⁽³⁾		Adjusted EBITDA, discretionary cash flow and free cash flow are non-GAAP (generally accepted accounting principles) financial measures under the rules of the Securities and Exchange Commission. Management of the Company believes that adjusted EBITDA, discretionary cash flow and free cash flow provide additional information for evaluating the Company’s performance, among other things. These measures are widely used by commercial banks, investment bankers, rating agencies and investors in evaluating performance relative to peers and pre-set performance standards. Adjusted EBITDA is also a financial measurement that, with certain negotiated adjustments, is utilized within Atlas Energy Resources’ financial covenants under its credit facility. Adjusted EBITDA, discretionary cash flow and free cash flow are not measures of financial performance under GAAP and, accordingly, should not be considered as a substitute for net income, operating income, or cash flows from operating activities in accordance with GAAP.
⁽⁴⁾		Excludes non-cash amortization of deferred financing costs.
⁽⁵⁾		Excludes the impact of cash distributions paid by Atlas Energy Resources, LLC to its non-controlling interests for periods prior to the Merger on September 29, 2009.
⁽⁶⁾		Represents the non-controlling interests in the net income (loss) of Atlas Energy Resources, LLC prior to the Merger on September 29, 2009.


ATLAS ENERGY, INC.
Financial Information
(unaudited; in thousands, except per share data)

	Three Months Ended						Years Ended
	December 31,						December 31,
		2009			2008			2009			2008
Reconciliation of net loss attributable to common shareholders to non-GAAP measure⁽¹⁾:
Net loss attributable to common shareholders	$	(85,283	)	$	(28,912	)	$	(71,986	)	$	(6,158	)
Atlas Pipeline and Atlas Pipeline Holdings loss (income) attributable to common shareholders		4,816			53,751			(1,417	)		55,077
Non-recurring Merger costs		1,361			−			8,113			−
Asset impairment		156,359			−			156,359			−
Adjustments to reflect the cash impact of derivatives		357			1,922			31,333			12,431
Non-cash net loss on sale of assets		741			32			6,435			32
Non-cash stock compensation expense		2,249			2,850			8,304			10,971
Adjustment to non-controlling interests for the above items		−			(1,750	)		(24,192	)		(9,192	)
Tax effect of the above items		(64,761	)		(21,512	)		(72,199	)		(26,041	)
Adjusted net income attributable to common shareholders	$	15,839		$	6,381		$	40,750		$	37,120
Adjusted net income attributable to common shareholders per share:
Basic	$	0.20		$	0.16		$	0.83		$	0.93
Diluted	$	0.20		$	0.16		$	0.81		$	0.89
Weighted average common shares outstanding:
Basic		78,134			39,249			49,208			39,999
Diluted		80,650			40,581			50,284			41,734

Pro forma adjusted net income attributable to common shareholders per share⁽²⁾:
Adjusted net income attributable to common shareholders	$	15,839		$	6,381		$	40,750		$	37,120
Adjustment to remove non- controlling interests for Atlas Energy Resources, LLC		−			17,398			42,215			85,603
Tax effect of the above item		−			(6,589	)		(16,481	)		(32,159	)
Pro forma adjusted net income attributable to common shareholders	$	15,839		$	17,190		$	66,484		$	90,564

Pro forma adjusted net income attributable to common shareholders per share:
Basic	$	0.20		$	0.22		$	0.85		$	1.15
Diluted	$	0.20		$	0.22		$	0.84		$	1.12
Pro forma weighted average common shares outstanding⁽³⁾:
Basic		78,134			78,025			77,963			78,775
Diluted		80,650			79,894			79,067			81,064

	⁽¹⁾		Adjusted net income attributable to common shareholders is a non-GAAP financial measure under the rules of the Securities and Exchange Commission. Management of the Company believes that the above financial measure provides additional information with respect to the Company's ability to meet its capital expense and working capital requirements. Adjusted net income is not a measure of financial performance under GAAP and, accordingly, should not be considered as a substitute for revenues, net income or cash flows from operating activities prepared in accordance with GAAP.
	⁽²⁾		Adjusted to reflect the Merger on September 29, 2009, through which the Company issued 38.8 million shares of its common stock in exchange for the 33.4 million Class B common units of ATN not previously held by the Company. The Merger effectively removes the non-controlling interests in the net income of Atlas Energy Resources, LLC upon the completion of the transaction.
	⁽³⁾		Consists of the historical basic and diluted weighted average shares of the Company for the respective period, adjusted for the 38.8 million shares of the Company’s common stock issued in connection with the Merger.


ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands)

Three Months Ended December 31, 2009

				Atlas Pipeline
				and Atlas
	Atlas			Pipeline
	Energy			Holdings			Eliminations			Consolidated
Revenues:
Gas and oil production	$	70,276		$	−		$	−		$	70,276
Well construction and completion		114,814			−			−			114,814
Transmission, gathering and processing		4,798			255,584			−			260,382
Administration and oversight		5,969			−			−			5,969
Well services		5,280			−			−			5,280
Loss on asset sales		(741	)		−			−			(741	)
Loss on mark-to-market derivatives		−			(19,760	)		−			(19,760	)
Other, net		1,807			4,909			(598	)		6,118
Total revenues		202,203			240,733			(598	)		442,338

Costs and expenses:
Gas and oil production		12,520			−			−			12,520
Well construction and completion		97,310			−			−			97,310
Transmission, gathering and processing		7,859			201,488			−			209,347
Well services		2,408			−			−			2,408
General and administrative		14,710			12,092			−			26,802
Depreciation, depletion and amortization		28,427			24,871			−			53,298
Asset impairment		156,359			10,324			−			166,683
Total costs and expenses		319,593			248,775			−			568,368

Operating loss		(117,390	)		(8,042	)		(598	)		(126,030	)

Interest expense		(17,682	)		(28,577	)		598			(45,661	)

Loss from continuing operations before income tax benefit		(135,072	)		(36,619	)		−			(171,691	)
Income tax benefit		(54,624	)		−			−			(54,624	)
Net loss from continuing operations		(80,448	)		(36,619	)		−			(117,067	)
Discontinued operations		−			−			−			−
Net loss		(80,448	)		(36,619	)		−			(117,067	)
Income attributable to non-controlling interests – E&P Operations		(19	)		−			−			(19	)
(Income) loss attributable to non-controlling interests – Atlas Pipeline and Atlas Pipeline Holdings		−			(1,102	)		32,905			31,803
Net income (loss) attributable to common shareholders	$	(80,467	)	$	(37,721	)	$	32,905		$	(85,283	)


ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands)

Three Months Ended December 31, 2008

				Atlas Pipeline
				and Atlas
	Atlas			Pipeline
	Energy			Holdings			Eliminations			Consolidated
Revenues:
Gas and oil production	$	75,433		$	−		$	−		$	75,433
Well construction and completion		71,570			−			−			71,570
Transmission, gathering and processing		5,519			171,292			(10,958	)		165,853
Administration and oversight		3,992			−			−			3,992
Well services		5,119			−			−			5,119
Gain on mark-to-market derivatives		−			193,864			−			193,864
Loss on sales of fixed assets		(32	)		−			−			(32	)
Other, net		1,799			(2,226	)		−			(427	)
Total revenues		163,400			362,930			(10,958	)		515,372

Costs and expenses:
Gas and oil production		14,978			−			(2,519	)		12,459
Well construction and completion		60,943			−			−			60,943
Transmission, gathering and processing		8,581			160,909			(8,439	)		161,051
Well services		2,839			−			−			2,839
General and administrative		12,144			(12,949	)		−			(805	)
Depreciation, depletion and amortization		27,088			21,642			−			48,730
Goodwill impairment		−			676,860			−			676,860
Total costs and expenses		126,573			846,462			(10,958	)		962,077

Operating income (loss)		36,827			(483,532	)		−			(446,705	)

Interest expense		(13,633	)		(23,894	)		−			(37,527	)
Gain on early extinguishment of debt		−			19,867			−			19,867

Income (loss) from continuing operations before income tax benefit		23,194			(487,559	)		−			(464,365	)
Income tax benefit		(17,309	)		−			−			(17,309	)
Net income (loss) from continuing operations		40,503			(487,559	)		−			(447,056	)
Discontinued operations		−			(510	)		−			(510	)
Net income (loss)		40,503			(488,069	)		−			(447,566	)
Income attributable to non-controlling interests – E&P Operations		(15,664	)		−			−			(15,664	)
Loss attributable to non-controlling interests – Atlas Pipeline and Atlas Pipeline Holdings		−			30,574			403,744			434,318
Net income (loss) attributable to common shareholders	$	24,839		$	(457,495	)	$	403,744		$	(28,912	)


ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands)

Year Ended December 31, 2009

				Atlas Pipeline
				and Atlas
	Atlas			Pipeline
	Energy			Holdings			Eliminations			Consolidated
Revenues:
Gas and oil production	$	278,184		$	−		$	−		$	278,184
Well construction and completion		372,045			−			−			372,045
Transmission, gathering and processing		21,008			811,513			(16,766	)		815,755
Administration and oversight		15,613			−			−			15,613
Well services		20,191			−			−			20,191
Gain (loss) on asset sales		(6,435	)		111,440			−			105,005
Loss on mark-to-market derivatives		−			(37,005	)		−			(37,005	)
Other, net		1,555			17,600			(1,341	)		17,814
Total revenues		702,161			903,548			(18,107	)		1,587,602

Costs and expenses:
Gas and oil production		51,941			−			(6,204	)		45,737
Well construction and completion		315,546			−			−			315,546
Transmission, gathering and processing		30,789			659,872			(10,562	)		680,099
Well services		9,330			−			−			9,330
General and administrative		69,341			39,080			−			108,421
Depreciation, depletion and amortization		108,290			92,435			−			200,725
Asset impairment		156,359			10,324			−			166,683
Total costs and expenses		741,596			801,711			(16,766	)		1,526,541

Operating income (loss)		(39,435	)		101,837			(1,341	)		61,061

Interest expense		(64,951	)		(106,373	)		1,341			(169,983	)

Loss from continuing operations before income tax benefit		(104,386	)		(4,536	)		−			(108,922	)
Income tax benefit		(49,069	)		−			−			(49,069	)
Net loss from continuing operations		(55,317	)		(4,536	)		−			(59,853	)
Discontinued operations		−			59,769			−			59,769
Net income (loss)		(55,317	)		55,233			−			(84	)
Income attributable to non-controlling interests – E&P Operations		(18,086	)		−			−			(18,086	)
Income attributable to non-controlling interests – Atlas Pipeline and Atlas Pipeline Holdings		−			(3,177	)		(50,639	)		(53,816	)
Net income (loss) attributable to common shareholders	$	(73,403	)	$	52,056		$	(50,639	)	$	(71,986	)


ATLAS ENERGY, INC.
CONSOLIDATING STATEMENTS OF OPERATIONS
(unaudited; in thousands)

Year Ended December 31, 2008

				Atlas Pipeline
				and Atlas
	Atlas			Pipeline
	Energy			Holdings			Eliminations			Consolidated
Revenues:
Gas and oil production	$	311,850		$	−		$	−		$	311,850
Well construction and completion		415,036			−			−			415,036
Transmission, gathering and processing		20,670			1,407,268			(43,726	)		1,384,212
Administration and oversight		19,362			−			−			19,362
Well services		20,482			−			−			20,482
Loss on asset sales		(32	)		−			−			(32	)
Loss on mark-to-market derivatives		−			(63,480	)		−			(63,480	)
Other, net		3,421			7,994			−			11,415
Total revenues		790,789			1,351,782			(43,726	)		2,098,845

Costs and expenses:
Gas and oil production		59,579			−			(11,385	)		48,194
Well construction and completion		359,609			−			−			359,609
Transmission, gathering and processing		32,874			1,153,022			(32,341	)		1,153,555
Well services		10,654			−			−			10,654
General and administrative		56,060			1,727			−			57,787
Depreciation, depletion and amortization		95,427			82,842			−			178,269
Goodwill impairment		−			676,860			−			676,860
Total costs and expenses		614,203			1,914,451			(43,726	)		2,484,928

Operating income (loss)		176,586			(562,669	)		−			(386,083	)

Interest expense		(56,213	)		(87,852	)		−			(144,065	)
Gain on early extinguishment of debt		−			19,867			−			19,867

Income (loss) from continuing operations before income tax benefit		120,373			(630,654	)		−			(510,281	)
Income tax benefit		(5,021	)		−			−			(5,021	)
Net income (loss) from continuing operations		125,394			(630,654	)		−			(505,260	)
Discontinued operations		−			19,671			−			19,671
Net income (loss)		125,394			(610,983	)		−			(485,589	)
Income attributable to non-controlling interests – E&P Operations		(76,475	)		−			−			(76,475	)
Loss attributable to non-controlling interests – Atlas Pipeline and Atlas Pipeline Holdings		−			22,781			533,125			555,906
Net income (loss) attributable to common shareholders	$	48,919		$	(588,202	)	$	533,125		$	(6,158	)


ATLAS ENERGY, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
(unaudited; in thousands)

December 31, 2009

			Atlas Pipeline
			and Atlas
	Atlas		Pipeline
ASSETS	Energy		Holdings			Eliminations			Consolidated
Current assets:
Cash and cash equivalents	$	19,525	$	1,102		$	−		$	20,627
Accounts receivable		98,687		98,416			(24,255	)		172,848
Current portion of derivative asset		73,066		998			−			74,064
Subscriptions receivable from Partnerships		47,275		−			−			47,275
Prepaid expenses and other		15,606		15,404			−			31,010
Prepaid and deferred taxes		1,559		−			−			1,559
Total current assets		255,718		115,920			(24,255	)		347,383

Property, plant and equipment, net		1,871,418		1,684,384			−			3,555,802
Goodwill and intangible assets, net		38,039		168,091			−			206,130
Long-term derivative asset		58,930		361			−			59,291
Investment in joint venture		−		132,990			−			132,990
Deferred tax asset		29,734		−			−			29,734
Investment in subsidiaries		110,691		−			(110,691	)		−
Other assets, net		40,719		34,114			−			74,833
	$	2,405,249	$	2,135,860		$	(134,946	)	$	4,406,163

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Current portion of long-term debt	$	−	$	32,255		$	(24,255	)	$	8,000
Accounts payable		76,820		22,928			−			99,748
Liabilities associated with drilling contracts		122,532		−			−			122,532
Accrued producer liabilities		−		66,211			−			66,211
Current portion of derivative liability		4,652		33,833			−			38,485
Current portion of derivative liability to Partnerships		22,382		−			−			22,382
Accrued interest		29,245		9,653			−			38,898
Accrued well drilling and completion costs		89,261		−			−			89,261
Current portion of deferred tax liability		26,415		−			−			26,415
Accrued and other current liabilities		31,594		14,548			−			46,142
Total current liabilities		402,901		179,428			(24,255	)		558,074

Long-term debt, less current portion		786,390		1,254,182			−			2,040,572
Long-term derivative liability		14,315		11,126			−			25,441
Long-term derivative liability to Partnerships		22,380		−			−			22,380
Other long-term liabilities		55,782		398			−			56,180

Shareholders’ equity:
Shareholders’ equity (deficit)		1,065,290		(7,755	)		7,755			1,065,290
Accumulated other comprehensive income (loss)		58,022		(6,550	)		6,550			58,022
		1,123,312		(14,305	)		14,305			1,123,312
Non-controlling interests		169		705,031			(124,996	)		580,204
Total shareholders’ equity		1,123,481		690,726			(110,691	)		1,703,516
	$	2,405,249	$	2,135,860		$	(134,946	)	$	4,406,163


ATLAS ENERGY, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
(unaudited; in thousands)

December 31, 2008

			Atlas Pipeline
			and Atlas
	Atlas		Pipeline
ASSETS	Energy		Holdings			Eliminations			Consolidated
Current assets:
Cash and cash equivalents	$	97,211	$	7,285		$	−		$	104,496
Accounts receivable		93,101		79,326			−			172,427
Current portion of derivative asset		107,765		44,961			−			152,726
Subscriptions receivable from Partnerships		44,250		−			−			44,250
Prepaid expenses and other		14,466		10,998			−			25,464
Prepaid and deferred taxes		32,215		−			−			32,215
Current assets of discontinued operations		−		13,441			−			13,441
Total current assets		389,008		156,011			−			545,019

Property, plant and equipment, net		1,963,804		1,781,011			−			3,744,815
Goodwill and intangible assets, net		39,004		193,647			−			232,651
Long-term derivative asset		69,451		−			−			69,451
Investment in joint venture		−		−			−			−
Investment in subsidiaries		228,089		−			(228,089	)		−
Other assets, net		30,845		25,185			−			56,030
Long-term assets of discontinued operations		−		242,165			−			242,165
	$	2,720,201	$	2,398,019		$	(228,089	)	$	4,890,131

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Current portion of long-term debt	$	−	$	−		$	−		$	−
Accounts payable		74,154		66,571			−			140,725
Liabilities associated with drilling contracts		141,133		−			−			141,133
Accrued producer liabilities		−		66,846			−			66,846
Current portion of derivative liability		12,829		60,947			−			73,776
Current portion of derivative liability to Partnerships		34,933		−			−			34,933
Accrued interest		19,878		2,443			−			22,321
Accrued well drilling and completion costs		43,946		−			−			43,946
Accrued and other current liabilities		23,806		13,418			−			37,224
Current liabilities of discontinued operations		−		10,572			−			10,572
Total current liabilities		350,679		220,797			−			571,476

Long-term debt, less current portion		873,655		1,539,427			−			2,413,082
Deferred tax liability		242,058		−			−			242,058
Long-term derivative liability		10,771		48,332			−			59,103
Long-term derivative liability to Partnerships		22,581		−			−			22,581
Other long-term liabilities		51,689		574			−			52,263

Shareholders’ equity:
Shareholders’ equity (deficit)		390,372		(5,463	)		5,463			390,372
Accumulated other comprehensive income (loss)		21,143		(15,788	)		15,788			21,143
		411,515		(21,251	)		21,251			411,515
Non-controlling interests		757,253		610,140			(249,340	)		1,118,053
Total shareholders’ equity		1,168,768		588,889			(228,089	)		1,529,568
	$	2,720,201	$	2,398,019		$	(228,089	)	$	4,890,131


ATLAS ENERGY RESOURCES, LLC
STAND-ALONE CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(unaudited; in thousands, except per unit data)

	Three Months Ended						Years Ended
	December 31,						December 31,
		2009			2008			2009			2008
Revenues:
Gas and oil production	$	70,276		$	75,433		$	278,184		$	311,850
Well construction and completion		114,814			71,570			372,045			415,036
Gathering		4,798			5,519			21,008			20,670
Administration and oversight		5,969			3,992			15,613			19,362
Well services		5,280			5,119			20,191			20,482
Other, net		312			411			592			1,255
Total revenues		201,449			162,044			707,633			788,655

Costs and expenses:
Gas and oil production		12,520			14,978			51,941			59,579
Well construction and completion		97,310			60,943			315,546			359,609
Gathering		7,859			5,181			26,810			19,539
Well services		2,408			2,839			9,330			10,654
General and administrative		11,180			8,628			58,570			44,658
Depreciation, depletion and amortization		28,427			27,090			108,293			95,434
Asset impairment		156,359			−			156,359			−
Loss on asset sales		741			32			6,435			32
Total costs and expenses		316,804			119,691			733,284			589,505

Operating income (loss)		(115,355	)		42,353			(25,651	)		199,150

Interest expense		(17,682	)		(13,640	)		(64,951	)		(56,306	)

Net income (loss)		(133,037	)		28,713			(90,602	)		142,844
Income attributable to non-controlling interests		(19	)		(16	)		(63	)		(64	)
Net income (loss) attributable to owner’s/members’ interests	$	(133,056	)	$	28,697		$	(90,665	)	$	142,780

Allocation of net income (loss) attributable to owner’s/members’ interests:
Portion allocable to members’ interests (period prior to Merger on September 29, 2009)	$	−		$	28,697		$	42,340		$	142,780
Portion allocable to owner’s interest (period subsequent to Merger on September 29, 2009)		(133,056	)		−			(133,005	)		−
Net income (loss) attributable to owner’s/members’ interests	$	(133,056	)	$	28,697		$	(90,665	)	$	142,780

Allocation of net income (loss) attributable to members’ interests:
Class A member’s units	$	−		$	2,227		$	(7,109	)	$	9,062
Class B members’ units		−			26,470			49,449			133,718
Net income attributable to members’ interests	$	−		$	28,697		$	42,340		$	142,780

Net income attributable to Class B members per unit:
Basic	$	−		$	0.45		$	0.77		$	2.12
Diluted	$	−		$	0.45		$	0.77		$	2.11
Weighted average Class B members’ units outstanding:
Basic		−			63,381			63,381			62,409
Diluted		−			63,513			63,405			62,767


ATLAS ENERGY RESOURCES, LLC
STAND-ALONE CONDENSED CONSOLIDATED BALANCE SHEET DATA
(unaudited; in thousands)

	December 31,
		2009		2008
ASSETS
Current assets:
Cash and cash equivalents	$	3,640	$	5,655
Accounts receivable		71,058		69,411
Current portion of derivative receivable from Partnerships		270		3,022
Current portion of derivative asset		73,066		107,766
Subscriptions receivable from Partnerships		47,275		44,250
Prepaid expenses and other		15,621		14,714
Total current assets		210,930		244,818

Property, plant and equipment, net		1,871,418		1,963,891
Other assets, net		23,747		18,403
Advances to affiliates		5,689		−
Long-term derivative asset		58,930		69,451
Intangible assets, net		2,873		3,838
Goodwill, net		35,166		35,166
	$	2,208,753	$	2,335,567
LIABILITIES AND OWNER’S/MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	76,993	$	74,262
Accrued interest		29,245		19,878
Accrued liabilities		14,308		5,872
Liabilities associated with drilling contracts		122,532		141,133
Accrued well drilling and completion costs		89,261		43,946
Current portion of derivative payable to Partnerships		22,382		34,932
Current portion of derivative liability		4,652		12,829
Total current liabilities		359,373		332,852

Long-term debt		786,390		873,655
Other long-term liabilities		−		6,337
Long-term derivative payable to Partnerships		22,380		22,581
Advances from affiliates		−		1,712
Long-term derivative liability		14,315		10,771
Asset retirement obligation		51,813		48,136

Commitments and contingencies

Owner’s/members’ equity:
Class B members’ interests		−		932,804
Class A member’s interest		−		6,257
Owner’s equity		873,170		−
Accumulated other comprehensive income		101,143		100,275
		974,313		1,039,336
Non-controlling interests		169		187
Total owner’s/members’ equity		974,482		1,039,523
	$	2,208,753	$	2,335,567


ATLAS ENERGY, INC.
Ownership Interests Summary

Atlas Energy Ownership Interests as of December 31, 2009:	Amount		Overall Ownership Interest Percentage

ATLAS PIPELINE HOLDINGS⁽¹⁾:
General partner interest	100	%	N/A
Common units	17,808,109		64.3	%
Total			64.3	%

ATLAS PIPELINE:
Atlas Energy directly-owned common units	1,112,000		2.2	%

LIGHTFOOT CAPITAL PARTNERS, GP LLC:
Approximate ownership interest			18.0	%

(1) Atlas Pipeline Holdings directly owns the following ownership interests in Atlas Pipeline Partners:
General partner interest	100	%	2.0	%
Common units	5,754,253		11.2	%
Incentive distribution rights	100	%	N/A
Total Atlas Pipeline Holdings direct ownership interests in Atlas Pipeline			13.2	%