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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-32169
 ATLAS AMERICA, INC.
  DELAWARE
    
    51-0404430(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)1550 Coraopolis Heights RoadMoon Township, Pennsylvania
    
    15108(Address of principal executive office)
    
    (Zip code)
 (412) 262-2830
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer  o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



ATLAS AMERICA, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
 PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2009 and
December 31, 2008 (Unaudited)
    
    
    3Consolidated Statements of Operations for the Three
Months Ended March 31, 2009 and 2008 (Unaudited)
    
    
    4Consolidated Statement of Stockholders Equity for the
Three Months Ended March 31, 2009 (Unaudited)
    
    
    5Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2009 and 2008 (Unaudited)
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    52Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    72Item 4. Controls and Procedures
    
    
    81PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    81Item 1A. Risk Factors
    
    
    82Item 6. Exhibits
    
    
    83SIGNATURES
    
    
    86Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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PART I. FINANCIAL INFORMATION
  
 ITEM 1. FINANCIAL STATEMENTS
 ATLAS AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share and per share data)
 (Unaudited)
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    87,401
    
    
    $
    104,571Accounts receivable
    
    
    147,158
    
    
    
    181,770Current portion of derivative receivable from Partnerships
    
    
    94
    
    
    
    3,022Current portion of derivative asset
    
    
    144,435
    
    
    
    152,726Prepaid expenses and other
    
    
    27,635
    
    
    
    27,337Prepaid and deferred income taxes
    
    
    20,038
    
    
    
    31,343Total current assets
    
    
    426,761
    
    
    
    500,769Property, plant and equipment, net
    
    
    4,071,816
    
    
    
    3,986,741Intangible assets, net
    
    
    190,799
    
    
    
    197,485Goodwill, net
    
    
    35,166
    
    
    
    35,166Long-term derivative receivable from Partnerships
    
    
    8
    
    
    
    2,719Long term derivative asset
    
    
    98,132
    
    
    
    69,451Other assets, net
    
    
    54,749
    
    
    
    53,550$
    4,877,431
    
    
    $
    4,845,881LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    154,274
    
    
    $
    144,845Liabilities associated with drilling contracts
    
    
    30,276
    
    
    
    96,883Accrued producer liabilities
    
    
    39,618
    
    
    
    67,406Current portion of derivative liability to Partnerships
    
    
    39,864
    
    
    
    34,933Current portion of derivative liability
    
    
    71,103
    
    
    
    73,776APL preferred unit redemption obligation
    
    
    15,000
    
    
    
    Accrued liabilities
    
    
    123,290
    
    
    
    109,275Advances from affiliate
    
    
    385
    
    
    
    108Total current liabilities
    
    
    473,810
    
    
    
    527,226Long-term debt
    
    
    2,515,875
    
    
    
    2,413,082Deferred tax liability
    
    
    247,355
    
    
    
    242,058Long-term derivative liability to Partnerships
    
    
    25,049
    
    
    
    22,581Long-term derivative liability
    
    
    25,542
    
    
    
    59,103Other long-term liabilities
    
    
    50,265
    
    
    
    52,263Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value: 1,000,000 authorized shares
    
    
    
    
    
    
    Common stock, $0.01 par value: 49,000,000 authorized shares
    
    
    426
    
    
    
    426Additional paid-in capital
    
    
    413,815
    
    
    
    412,869Treasury stock, at cost
    
    
    (143,403
    )
    
    
    (147,621
    )Accumulated other comprehensive income
    
    
    44,591
    
    
    
    21,143Retained earnings
    
    
    127,373
    
    
    
    124,698442,802
    
    
    
    411,515Non-controlling interests
    
    
    1,096,733
    
    
    
    1,118,053Total stockholders equity
    
    
    1,539,535
    
    
    
    1,529,568$
    4,877,431
    
    
    $
    4,845,881
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ATLAS AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share data)
 (Unaudited)
 Three Months EndedMarch 31,2009
    
    
    2008Revenue:Well construction and completion
    
    $
    112,368
    
    
    $
    104,138Gas and oil production
    
    
    71,943
    
    
    
    76,226Transmission, gathering and processing
    
    
    179,673
    
    
    
    385,326Administration and oversight
    
    
    3,853
    
    
    
    5,017Well services
    
    
    5,093
    
    
    
    4,798Gain (loss) on mark-to-market derivatives
    
    
    316
    
    
    
    (88,781
    )Total revenue
    
    
    373,246
    
    
    
    486,724Costs and expenses:Well construction and completion
    
    
    95,397
    
    
    
    90,555Gas and oil production
    
    
    11,286
    
    
    
    10,668Transmission, gathering and processing
    
    
    157,277
    
    
    
    295,532Well services
    
    
    2,424
    
    
    
    2,412General and administrative
    
    
    27,755
    
    
    
    21,008Net expense reimbursement  affiliate
    
    
    482
    
    
    
    250Depreciation, depletion and amortization
    
    
    52,707
    
    
    
    43,652Asset impairment
    
    
    
    
    
    
    3,981Total costs and expenses
    
    
    347,328
    
    
    
    468,058Operating income
    
    
    25,918
    
    
    
    18,666Other income (expense):Interest expense
    
    
    (34,646
    )
    
    
    (34,098
    )Other, net
    
    
    4,880
    
    
    
    2,030Total other expense
    
    
    (29,766
    )
    
    
    (32,068
    )Loss before income taxes
    
    
    (3,848
    )
    
    
    (13,402
    )Income tax expense
    
    
    (2,993
    )
    
    
    (3,841
    )Net loss
    
    
    (6,841
    )
    
    
    (17,243
    )Loss attributable to non-controlling interests
    
    
    11,484
    
    
    
    23,665Net income attributable to common shareholders
    
    $
    4,643
    
    
    $
    6,422Net income attributable to common shareholders
per share:Basic
    
    $
    0.12
    
    
    $
    0.16Diluted
    
    $
    0.11
    
    
    $
    0.15Weighted average common shares outstanding:Basic
    
    
    39,281
    
    
    
    40,324Diluted
    
    
    42,278
    
    
    
    42,067
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ATLAS AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 FOR THE THREE MONTHS ENDED MARCH 31, 2009
 (in thousands, except share data)
 (Unaudited)
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Non-
    
    
    TotalCommon Stock
    
    
    Paid-In
    
    
    Treasury Stock
    
    
    Comprehensive
    
    
    Retained
    
    
    controlling
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Earnings
    
    
    Interests
    
    
    EquityBalance at January 1, 2009
    
    
    42,503,119
    
    
    $
    426
    
    
    $
    412,869
    
    
    
    (3,252,861
    )
    
    $
    (147,621
    )
    
    $
    21,143
    
    
    $
    124,698
    
    
    $
    1,118,053
    
    
    $
    1,529,568Common stock issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,000
    
    
    
    4,218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,218Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,448
    
    
    
    
    
    
    
    50,670
    
    
    
    74,118Stock option compensation
expense
    
    
    
    
    
    
    
    
    
    
    946
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    946Dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,968
    )
    
    
    
    
    
    
    (1,968
    )Distributions to
non-controlling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,319
    )
    
    
    (36,319
    )Non-controlling
interests capital
contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,187
    )
    
    
    (24,187
    )Net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,643
    
    
    
    (11,484
    )
    
    
    (6,841
    )Balance at March 31, 2009
    
    
    42,503,119
    
    
    $
    426
    
    
    $
    413,815
    
    
    
    (3,157,861
    )
    
    $
    (143,403
    )
    
    $
    44,591
    
    
    $
    127,373
    
    
    $
    1,096,733
    
    
    $
    1,539,535
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ATLAS AMERICA, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 (Unaudited)
 Three Months EndedMarch 31,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (6,841
    )
    
    $
    (17,243
    )Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:Depreciation, depletion and amortization
    
    
    52,707
    
    
    
    43,652Asset impairment
    
    
    
    
    
    
    3,981Amortization of deferred finance costs
    
    
    1,713
    
    
    
    1,479Non-cash loss on derivative value, net
    
    
    45,490
    
    
    
    79,842Non-cash compensation expense
    
    
    2,270
    
    
    
    192Gain on asset sales and dispositions
    
    
    (7
    )
    
    
    (144
    )Distributions paid to non-controlling interests
    
    
    (36,319
    )
    
    
    (52,650
    )Deferred income taxes
    
    
    1,612
    
    
    
    4,317Changes in operating assets and liabilities, net of effects of
acquisitions:Accounts receivable and prepaid expenses and other
    
    
    38,636
    
    
    
    (24,693
    )Accounts payable and accrued liabilities
    
    
    (73,971
    )
    
    
    (71,683
    )Accounts payable and accounts receivable  affiliate
    
    
    277
    
    
    
    363Other operating assets/liabilities
    
    
    156
    
    
    
    1,126Net cash provided by (used in) operating activities
    
    
    25,723
    
    
    
    (31,461
    )CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (130,120
    )
    
    
    (139,686
    )Acquisition purchase price adjustment
    
    
    
    
    
    
    1,281Investment in Lightfoot Capital Partners, L.P.
    
    
    (2
    )
    
    
    (440
    )Proceeds from sale of assets
    
    
    114
    
    
    
    Other
    
    
    (38
    )
    
    
    (232
    )Net cash used in investing activities
    
    
    (130,046
    )
    
    
    (139,077
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under Atlas Energy Resources, LLC, Atlas Pipeline
Partners, L.P. and Atlas Pipeline Holdings, L.P. credit
facilities
    
    
    310,000
    
    
    
    173,000Repayments under Atlas Energy Resources, LLC, Atlas Pipeline
Partners, L.P. and Atlas Pipeline Holdings, L.P. credit
facilities
    
    
    (217,000
    )
    
    
    (274,008
    )Issuance of Atlas Energy Resources, LLC long-term debt
    
    
    
    
    
    
    250,000Dividends paid
    
    
    (1,968
    )
    
    
    (1,344
    )Deferred financing costs and other
    
    
    (3,879
    )
    
    
    (6,259
    )Net cash provided by financing activities
    
    
    87,153
    
    
    
    141,389Net change in cash and cash equivalents
    
    
    (17,170
    )
    
    
    (29,149
    )Cash and cash equivalents, beginning of period
    
    
    104,571
    
    
    
    145,535Cash and cash equivalents, end of period
    
    $
    87,401
    
    
    $
    116,386
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ATLAS AMERICA, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2009
 (Unaudited)
 NOTE 1  BASIS OF PRESENTATION
  
    
    Atlas Energy Resources, LLC (Atlas Energy or ATN), a publicly traded Delaware
limited liability company (NYSE: ATN) which focuses on natural gas development and
production in northern Michigans Antrim Shale, Indianas New Albany Shale and the
Appalachian Basin, which the Company manages through its subsidiary, Atlas Energy
Management, Inc., under the supervision of ATNs board of directors. At March 31, 2009,
the Company had a 48.3% ownership interest and owned all of the management incentive
interests of ATN;
    
    Atlas Pipeline Partners, L.P. (Atlas Pipeline Partners or APL), a publicly traded
Delaware limited partnership (NYSE: APL) and midstream energy service provider engaged in
the transmission, gathering and processing of natural gas in the Mid-Continent and
Appalachia regions (NYSE:APL). At March 31, 2009, the Company had a 2.3% direct
ownership interest in APL;
    
    Atlas Pipeline Holdings, L.P. (Atlas Pipeline Holdings or AHD), a publicly traded
Delaware limited partnership (NYSE: AHD) and owner of the general partner of APL.
Through the Companys ownership of AHDs general partner, it manages AHD. AHDs cash
generating assets currently consist solely of its interests in APL. At March 31, 2009,
the Company owned approximately 64.4% of the outstanding common units of AHD. AHD owned
a 2% general partner interest, all of the incentive distribution rights, an approximate
12.5% common limited partner interest, and 15,000 $1,000 par value 12.0% Class B
cumulative preferred limited partner units; and
    
    Lightfoot Capital Partners, LP (Lightfoot LP) and Lightfoot Capital Partners GP LLC,
(Lightfoot GP), the general partner of Lightfoot (collectively, Lightfoot), entities
which incubate new master limited partnerships (MLPs) and invest in existing MLPs. The
Company has an approximate direct and indirect 18% ownership interest in Lightfoot GP and
a commitment to invest a total of $20.0 million in Lightfoot LP. The Company also has
direct and indirect ownership interest in Lightfoot LP. As of March 31, 2009, the
Company has invested $10.7 million in Lightfoot LP.
  7




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NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Principles of Consolidation and Non-controlling Interest
     Use of Estimates
  8




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Impairment of Long-Lived Assets
      9




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Capitalized Interest
  Intangible Assets
 Customer contracts and relationships.
 Partnership management, operating contracts and non-compete agreement.
  EstimatedMarch 31,
    
    
    December 31,
    
    
    Useful Lives2009
    
    
    2008
    
    
    In YearsGross Carrying Amount:Customer contracts and relationships
    
    $
    235,382
    
    
    $
    235,382
    
    
    
    7 - 20Partnership management and
operating contracts
    
    
    14,343
    
    
    
    14,343
    
    
    
    2 - 13
 10




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EstimatedMarch 31,
    
    
    December 31,
    
    
    Useful Lives2009
    
    
    2008
    
    
    In YearsNon-compete agreement
    
    
    890
    
    
    
    890
    
    
    
    2$
    250,615
    
    
    $
    250,615Accumulated Amortization:Customer contracts and relationships
    
    $
    (48,124
    )
    
    $
    (41,735
    )Partnership management and
operating contracts
    
    
    (10,913
    )
    
    
    (10,728
    )Non-compete agreement
    
    
    (779
    )
    
    
    (667
    )$
    (59,816
    )
    
    $
    (53,130
    )Net Carrying Amount:Customer contracts and relationships
    
    $
    187,258
    
    
    $
    193,647Partnership management and
operating contracts
    
    
    3,430
    
    
    
    3,615Non-compete agreement
    
    
    111
    
    
    
    223$
    190,799
    
    
    $
    197,485
  Goodwill
  Three Months EndedMarch 31,2009
    
    
    2008Balance, beginning of period
    
    $
    35,166
    
    
    $
    744,449APL post-closing purchase price adjustment
with seller and purchase price allocation
adjustment  Chaney Dell and Midkiff/Benedum
systems acquisition
    
    
    
    
    
    
    (2,275
    )APL recovery of state sales tax initially
paid on transaction  Chaney Dell and
Midkiff/Benedum systems acquisition
    
    
    
    
    
    
    (30,206
    )Balance, end of period
    
    $
    35,166
    
    
    $
    711,968
  11




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Net Income Per Share
  Three Months EndedMarch 31,2009
    
    
    2008(1)Weighted average number of shares  basic
    
    
    39,281
    
    
    
    40,324Add: effect of dilutive incentive awards
    
    
    2,997
    
    
    
    1,743Weighted average number of common shares
 diluted
    
    
    42,278
    
    
    
    42,067
 
 (1)
    
    The shares for the three months ended March 31, 2008 have been restated to reflect
the three-for-two stock split on May 21, 2008. 12




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Revenue Recognition
 Atlas Energy.
  Atlas Pipeline.
 
    
    Fee-Based Contracts.These contracts provide for a set fee for gathering and
processing raw natural gas. APLs revenue is a function of the volume of natural gas that
it gathers and processes and is not directly dependent on the value of the natural gas.
    
    POP Contracts.These contracts provide for APL to retain a negotiated percentage of
the sale proceeds from residue natural gas and NGLs it gathers and processes, with the
remainder being remitted to the producer. In this situation, APL and the producer are
directly dependent on the volume of the commodity and its value; APL owns a percentage of
that commodity and is directly subject to its market value.
    
    Keep-Whole Contracts. These contracts require APL, as the processor, to purchase raw
natural gas from the producer at current market rates. Therefore, APL bears the economic
risk (the processing margin risk) that the aggregate proceeds from the sale of the
processed natural gas and NGLs could be less than the amount that it paid for the
unprocessed natural gas. However, because the natural gas purchases contracted under
keep-whole agreements are generally low in liquids content and meet downstream pipeline
specifications without being processed, the natural gas can be bypassed around the
processing plants and delivered directly into downstream pipelines during periods of
margin risk. Therefore, the processing margin risk associated with a portion of APLs
keep-whole contracts is minimized.
 13




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Comprehensive Income (Loss)
  Three Months EndedMarch 31,2009
    
    
    2008Net loss
    
    $
    (6,841
    )
    
    $
    (17,243
    )Other comprehensive income (loss):Changes in fair value of derivative instruments accounted for as
cash flow hedges, net of tax (provision) benefit of ($17,225) and
$17,814 for the three months ended March 31, 2009 and 2008,
respectively
    
    
    73,450
    
    
    
    (63,906
    )Less: reclassification adjustment for realized loss in net
income, net of tax provision of $2,247 and $565 for the three
months ended March 31, 2009 and 2008, respectively
    
    
    646
    
    
    
    11,681Plus: amortization of additional post-retirement liability
recorded upon adoption of SFAS No. 158, net of tax provision of $13
and $51 for the three months ended March 31, 2009 and 2008,
respectively
    
    
    22
    
    
    
    121Total other comprehensive income (loss), net of tax
    
    
    74,118
    
    
    
    (52,104
    )Comprehensive income (loss)
    
    
    67,277
    
    
    
    (69,347
    )Loss attributable to non-controlling interests
    
    
    11,484
    
    
    
    23,665Other comprehensive income attributable to non-controlling interests
    
    
    (50,670
    )
    
    
    21,449Comprehensive income (loss) attributable to shareholders
    
    $
    28,091
    
    
    $
    (24,233
    )
 Recently Adopted Financial Accounting Standards
  14




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15




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NOTE 3  APL ASSET SALE AGREEMENT
  NOTE 4  PROPERTY, PLANT AND EQUIPMENT
   16




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EstimatedMarch 31,
    
    
    December 31,
    
    
    Useful Lives2009
    
    
    2008
    
    
    in YearsNatural gas and oil properties:Proved properties:Leasehold interests
    
    $
    1,224,341
    
    
    $
    1,214,991Predevelopment costs
    
    
    15,838
    
    
    
    18,772Wells and related equipment
    
    
    918,973
    
    
    
    872,128Total proved properties
    
    
    2,159,152
    
    
    
    2,105,891Unproved properties
    
    
    44,291
    
    
    
    43,749Support equipment
    
    
    9,177
    
    
    
    9,527Total natural gas and oil properties
    
    
    2,212,620
    
    
    
    2,159,167Pipelines, processing and compression facilities
    
    
    2,054,900
    
    
    
    1,980,805
    
    
    
    15 - 40Rights of way
    
    
    180,373
    
    
    
    178,262
    
    
    
    20 - 40Land, buildings and improvements
    
    
    24,463
    
    
    
    24,434
    
    
    
    10 - 40Other
    
    
    22,308
    
    
    
    23,026
    
    
    
    3 - 104,494,664
    
    
    
    4,365,694Less  accumulated depreciation, depletion and
amortization
    
    
    (422,848
    )
    
    
    (378,953
    )$
    4,071,816
    
    
    $
    3,986,741
    NOTE 5  OTHER ASSETS
  March 31,
    
    
    December 31,2009
    
    
    2008Deferred finance costs, net of accumulated
amortization of $24,819 and $23,106 at March
31, 2009 and December 31, 2008, respectively
    
    $
    40,154
    
    
    $
    38,836Investments
    
    
    12,588
    
    
    
    12,702Security deposits
    
    
    1,877
    
    
    
    1,719Other
    
    
    130
    
    
    
    293$
    54,749
    
    
    $
    53,550
 17




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##### Table of Contents



NOTE 6  ASSET RETIREMENT OBLIGATIONS
    Three Months EndedMarch 31,2009
    
    
    2008Asset retirement obligations, beginning of period
    
    $
    48,136
    
    
    $
    42,358Liabilities incurred
    
    
    430
    
    
    
    782Liabilities settled
    
    
    (62
    )
    
    
    (2
    )Accretion expense
    
    
    758
    
    
    
    663Asset retirement obligations, end of period
    
    $
    49,262
    
    
    $
    43,801
 18




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##### Table of Contents



NOTE 7  DEBT
  March 31,
    
    
    December 31,2009
    
    
    2008ATN revolving credit facility
    
    $
    538,000
    
    
    $
    467,000ATN 10.75 % senior notes  due 2018
    
    
    406,472
    
    
    
    406,655AHD revolving credit facility
    
    
    46,000
    
    
    
    46,000APL revolving credit facility
    
    
    324,000
    
    
    
    302,000APL term loan
    
    
    707,180
    
    
    
    707,180APL 8.125 % senior notes  due 2015
    
    
    271,173
    
    
    
    261,197APL 8.75 % senior notes  due 2018
    
    
    223,050
    
    
    
    223,050Total long-term debt
    
    
    2,515,875
    
    
    
    2,413,082Less current maturities
    
    
    
    
    
    
    Total debt
    
    $
    2,515,875
    
    
    $
    2,413,082
 ATN Revolving Credit Facility
    19




---



##### Table of Contents



ATN Senior Notes
  AHD Credit Facility
   20




---



##### Table of Contents



APL Term Loan and Credit Facility
     21




---



##### Table of Contents



APL Senior Notes
     22




---



##### Table of Contents



NOTE 8  DERIVATIVE INSTRUMENTS
    Atlas Energy
 Commodity Risk Hedging Program
 23




---



##### Table of Contents



Fair Value of Derivative Instruments
 March 31, 2009Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    Balance SheetLocation
    
    Fair Value
    
    
    Location
    
    Fair ValueDerivatives in SFAS
No. 133 Cash Flow
Hedging Relationships:Commodity contracts
    
    Current portion of derivative asset
    
    $
    144,435
    
    
    Current portion of derivative liability
    
    $
    (344
    )Long-term asset
    
    
    98,132
    
    
    Long-term liability
    
    
    (31
    )242,567
    
    
    
    
    
    (375
    )Interest rate contracts
    
    Current portion of derivative asset
    
    
    
    
    
    Current portion of derivative liability
    
    
    (3,494
    )Long-term derivative asset
    
    
    
    
    
    Long-term derivative liability
    
    
    (2,219
    )
    
    
    
    
    
    (5,713
    )Total derivatives
under SFAS No. 133
    
    
    
    $
    242,567
    
    
    
    
    $
    (6,088
    )
 Effects of Derivative Instruments on Consolidated Statements of Operations:
 March 31, 2009Location ofGain/(Loss)Gain/(Loss)
    
    
    Reclassified from
    
    Gain/(Loss)Recognized in OCI
    
    
    Accumulated OCI
    
    Reclassified fromon Derivatives
    
    
    into Income
    
    OCI into Income(Effective Portion)
    
    
    (Effective Portion)
    
    (Effective Portion)Derivatives in SFAS No. 133 Cash Flow Hedging Relationships:Commodity contracts
    
    $
    86,814
    
    
    Gas and oil production
    
    $
    15,518Interest rate contracts
    
    
    (873
    )
    
    Interest expense
    
    
    (1,002
    )$
    85,941
    
    
    
    
    $
    (14,516
    )
 24




---



##### Table of Contents



Interest Fixed Rate Swap
 ContractNotional
    
    
    
    
    Period Ended
    
    Fair ValueTerm
    
    Amount
    
    
    Option Type
    
    December 31,
    
    Liability(in thousands)January 2008  January 2011
    
    $
    150,000,000
    
    
    Pay 3.11% - Receive LIBOR
    
    2009
    
    $
    (2,649
    )2010
    
    
    (2,877
    )2011
    
    
    (187
    )$
    (5,713
    )
 Natural Gas Fixed Price Swaps
 ProductionPeriod Ending
    
    
    
    
    
    
    Average
    
    
    Fair ValueDecember 31,
    
    
    Volumes
    
    
    Fixed Price
    
    
    Asset (1)(MMBtu)
    
    
    (per MMBtu)
    
    
    (in thousands)2009
    
    
    
    31,020,000
    
    
    $
    8.24
    
    
    $
    122,3382010
    
    
    
    26,360,000
    
    
    $
    8.11
    
    
    
    56,6792011
    
    
    
    18,680,000
    
    
    $
    7.84
    
    
    
    21,0312012
    
    
    
    13,800,000
    
    
    $
    8.06
    
    
    
    14,3492013
    
    
    
    1,500,000
    
    
    $
    8.73
    
    
    
    2,225$
    216,622
 Natural Gas Costless Collars
 ProductionPeriod Ending
    
    
    
    
    
    
    
    Average
    
    
    Fair ValueDecember 31,
    
    Option Type
    
    Volumes
    
    
    Floor and Cap
    
    
    Asset (1)(MMBtu)
    
    
    (per MMBtu)
    
    
    (in thousands)2009
    
    Puts purchased
    
    
    180,000
    
    
    $
    11.00
    
    
    $
    1,2012009
    
    Calls sold
    
    
    180,000
    
    
    $
    15.35
    
    
    
    2010
    
    Puts purchased
    
    
    3,360,000
    
    
    $
    7.84
    
    
    
    7,0342010
    
    Calls sold
    
    
    3,360,000
    
    
    $
    9.01
    
    
    
    2011
    
    Puts purchased
    
    
    7,500,000
    
    
    $
    7.48
    
    
    
    7,7502011
    
    Calls sold
    
    
    7,500,000
    
    
    $
    8.44
    
    
    
    2012
    
    Puts purchased
    
    
    1,020,000
    
    
    $
    7.00
    
    
    
    4072012
    
    Calls sold
    
    
    1,020,000
    
    
    $
    8.32
    
    
    
    2013
    
    Puts purchased
    
    
    300,000
    
    
    $
    7.00
    
    
    
    692013
    
    Calls sold
    
    
    300,000
    
    
    $
    8.25
    
    
    
    $
    16,461
 Crude Oil Fixed Price Swaps
 ProductionPeriod Ending
    
    
    
    
    
    
    Average
    
    
    Fair ValueDecember 31,
    
    
    Volumes
    
    
    Fixed Price
    
    
    Asset (2)(Bbl)
    
    
    (per Bbl)
    
    
    (in thousands)2009
    
    
    
    47,300
    
    
    $
    99.73
    
    
    $
    2,2062010
    
    
    
    48,900
    
    
    $
    97.40
    
    
    
    1,7252011
    
    
    
    42,600
    
    
    $
    96.44
    
    
    
    1,2262012
    
    
    
    33,500
    
    
    $
    96.00
    
    
    
    8332013
    
    
    
    10,000
    
    
    $
    96.06
    
    
    
    232$
    6,222
 25




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##### Table of Contents



Crude Oil Costless Collars
 ProductionPeriod Ending
    
    
    
    
    
    
    
    Average
    
    
    Fair ValueDecember 31,
    
    Option Type
    
    Volumes
    
    
    Floor and Cap
    
    
    Asset (2)(Bbl)
    
    
    (per Bbl)
    
    
    (in thousands)2009
    
    Puts purchased
    
    
    29,000
    
    
    $
    85.00
    
    
    $
    9442009
    
    Calls sold
    
    
    29,000
    
    
    $
    117.48
    
    
    
    2010
    
    Puts purchased
    
    
    31,000
    
    
    $
    85.00
    
    
    
    8172010
    
    Calls sold
    
    
    31,000
    
    
    $
    112.92
    
    
    
    2011
    
    Puts purchased
    
    
    27,000
    
    
    $
    85.00
    
    
    
    6032011
    
    Calls sold
    
    
    27,000
    
    
    $
    110.81
    
    
    
    2012
    
    Puts purchased
    
    
    21,500
    
    
    $
    85.00
    
    
    
    4162012
    
    Calls sold
    
    
    21,500
    
    
    $
    110.06
    
    
    
    2013
    
    Puts purchased
    
    
    6,000
    
    
    $
    85.00
    
    
    
    1072013
    
    Calls sold
    
    
    6,000
    
    
    $
    110.09
    
    
    
    $
    2,887Total ATN net asset
    
    $
    236,479
 
 (1)
    
    Fair value based on forward NYMEX natural gas prices, as applicable.(2)
    
    Fair value based on forward WTI crude oil prices, as applicable.  March 31,
    
    
    December 31,2009
    
    
    2008Unrealized derivative loss  short-term
    
    $
    94
    
    
    $
    3,022Other assets  long-term
    
    
    8
    
    
    
    2,719Accrued liabilities  short-term
    
    
    (39,864
    )
    
    
    (34,933
    )Unrealized derivative gain  long-term
    
    
    (25,049
    )
    
    
    (22,581
    )$
    (64,811
    )
    
    $
    (51,773
    )
 Interest Rate Risk Hedging Program
 26




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##### Table of Contents



Atlas Pipeline Holdings and Atlas Pipeline Partners
   Early Termination of DerivativeContracts for theThree Months Ended March 31,2009
    
    2008Net cash derivative
expense included within
gain (loss) on
mark-to-market
derivatives, net
    
    $
    (5,000
    )
    
    $
    Net non-cash derivative
income included within
gain (loss) on
mark-to-market
derivatives, net
    
    
    12,103
    
    
    
    Net non-cash derivative
expense included within
gathering, transmission
and processing revenue
    
    
    (21,944
    )
    
    
    
   27




---



##### Table of Contents



Three Months EndedMarch 31,2009
    
    2008Loss from cash and non-cash settlement of qualifying derivative
instruments(1)
    
    $
    (20,175
    )
    
    $
    (17,643
    )Loss from change in market value of non-qualifying derivatives(2)
    
    
    (44,990
    )
    
    
    (71,196
    )Gain (loss) from change in market value of ineffective portion of
qualifying derivatives(2)
    
    
    10,813
    
    
    
    (5,660
    )Gain (loss) from cash and non-cash settlement of non-qualifying
derivatives(2)
    
    
    34,495
    
    
    
    (11,925
    )Loss from cash settlement of interest rate derivatives(3)
    
    
    (3,055
    )
    
    
    
 
 (1)
    
    Included within transmission, gathering and processing revenue on the Companys consolidated
statements of operations.(2)
    
    Included within gain (loss) on mark-to-market derivatives on the Companys consolidated
statements of operations.(3)
    
    Included within interest expense on the Companys consolidated statements of operations.  March 31, 2009Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    Balance SheetLocation
    
    Fair Value
    
    
    Location
    
    Fair ValueDerivatives designated
as hedging instruments
under SFAS No. 133:Interest rate contracts
    
    Current portion of derivative asset
    
    $
    
    
    
    Current portion of derivative liability
    
    $
    (10,252
    )Interest rate contracts
    
    Long-term derivative asset
    
    
    
    
    
    Long-term derivative liability
    
    
    (523
    )Derivatives not
designated as hedging
instruments under SFAS
No. 133:Commodity contracts
    
    Current portion of derivative liability
    
    
    3,977
    
    
    Current portion of derivative liability
    
    
    (60,991
    )Commodity contracts
    
    Long-term derivative liability
    
    
    2,380
    
    
    Long-term derivative liability
    
    
    (25,147
    )$
    6,357
    
    
    
    
    $
    (96,913
    )
  28




---



##### Table of Contents



March 31, 2009Gain (Loss)
    
    Location of GainRecognized in
    
    (Loss) Recognized inIncome on
    
    Income onAmount of Gain
    
    
    
    Derivative
    
    Derivative(Loss) Reclassified
    
    Location of Gain
    
    (Ineffective
    
    (Ineffective Portionfrom
    
    (Loss) Reclassified
    
    Portion and
    
    and AmountAccumulated OCI
    
    from Accumulated
    
    Amount Excluded
    
    Excluded frominto Income
    
    OCI into Income
    
    from Effectiveness
    
    Effectiveness(Effective Portion)
    
    (Effective Portion)
    
    Testing)
    
    Testing)Derivatives in SFAS No. 133 Cash
Flow Hedging Relationships:Interest rate contracts
    
    $  (3,055)
    
    Interest expense
    
    $     
    
    N/ADerivatives not designated as
hedging instruments under SFAS
No. 133:Commodity contracts(1)
    
    (15,970)
    
    Transmission, gathering and processing revenue
    
    (9,527)
    
    Gain (loss) on mark-to-market derivativesCommodity contracts(2)
    
    
    
    
    
    39,820
    
    Gain (loss) on mark-to-market derivatives$(19,025)
    
    
    
    $30,293
 
 (1)
    
    Hedges previously designated as cash flow hedges(2)
    
    Dedesignated cash flow hedges and non-designated hedges  Interest Fixed-Rate Swap
 Notional
    
    
    
    
    Contract Period
    
    Fair ValueTerm
    
    Amount
    
    
    Type
    
    Ended December 31,
    
    Liability(1)(in thousands)May 2008-
May 2010
    
    $
    25,000,000
    
    
    Pay 3.01% Receive LIBOR
    
    2009
    
    $
    (444
    )2010
    
    
    (204
    )Total AHD net liability
    
    $
    (648
    )
 
 (1)
    
    Fair value based on independent, third-party
statements, supported by observable levels at which transactions are executed in the
marketplace.  Interest Fixed-Rate Swap
 Notional
    
    
    
    
    Contract Period
    
    Fair ValueTerm
    
    Amount
    
    
    Type
    
    Ended December 31,
    
    Liability(1)(in thousands)January 2008-
January 2010
    
    $
    200,000,000
    
    
    Pay 2.88% Receive LIBOR
    
    2009
    
    $
    (3,374
    )2010
    
    
    (304
    )$
    (3,678
    )April 2008-
April 2010
    
    $
    250,000,000
    
    
    Pay 3.14% Receive LIBOR
    
    2009
    
    $
    (4,715
    )2010
    
    
    (1,734
    )$
    (6,449
    )
 29




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##### Table of Contents



Natural Gas Liquids Sales  Fixed Price Swaps
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(2)(gallons)
    
    
    (per gallon)
    
    
    (in thousands)2009
    
    
    13,230,000
    
    
    $
    0.745
    
    
    $
    1,579
 Crude Oil Sales Options (associated with NGL volume)
 Production Period
    
    
    
    
    
    Associated
    
    
    AverageEnded
    
    Crude
    
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Volume
    
    
    Strike Price
    
    
    Asset/(Liability)(1)
    
    
    Option Type(barrels)
    
    
    (gallons)
    
    
    (per barrel)
    
    
    (in thousands)2009
    
    
    152,100
    
    
    
    13,542,984
    
    
    $
    111.53
    
    
    $
    (11,171
    )
    
    Puts sold(4)2009
    
    
    152,100
    
    
    
    13,542,984
    
    
    $
    157.82
    
    
    
    
    
    
    Calls purchased(4)2009
    
    
    1,588,500
    
    
    
    88,643,058
    
    
    $
    84.69
    
    
    
    (2,019
    )
    
    Calls sold2010
    
    
    3,127,500
    
    
    
    213,088,050
    
    
    $
    86.20
    
    
    
    (13,035
    )
    
    Calls sold2010
    
    
    714,000
    
    
    
    45,415,440
    
    
    $
    132.17
    
    
    
    638
    
    
    Calls purchased(4)2011
    
    
    606,000
    
    
    
    33,145,560
    
    
    $
    100.70
    
    
    
    (3,071
    )
    
    Calls sold2011
    
    
    252,000
    
    
    
    13,547,520
    
    
    $
    133.16
    
    
    
    665
    
    
    Calls purchased(4)2012
    
    
    450,000
    
    
    
    25,893,000
    
    
    $
    102.71
    
    
    
    (2,822
    )
    
    Calls sold2012
    
    
    180,000
    
    
    
    9,676,800
    
    
    $
    134.27
    
    
    
    657
    
    
    Calls purchased(4)$
    (30,158
    )
 Natural Gas Sales  Fixed Price Swaps
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    360,000
    
    
    $
    8.000
    
    
    $
    1,337
 Natural Gas Basis Sales
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    3,690,000
    
    
    $
    (0.558
    )
    
    $
    6732010
    
    
    2,220,000
    
    
    $
    (0.575
    )
    
    
    301$
    974
 Natural Gas Purchases  Fixed Price Swaps
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    7,740,000
    
    
    $
    8.687
    
    
    $
    (34,069
    )2010
    
    
    4,380,000
    
    
    $
    8.635
    
    
    
    (12,806
    )$
    (46,875
    )
 30




---



##### Table of Contents



Natural Gas Basis Purchases
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    11,070,000
    
    
    $
    (0.659
    )
    
    $
    (2,837
    )2010
    
    
    6,600,000
    
    
    $
    (0.560
    )
    
    
    (1,783
    )$
    (4,620
    )
 Ethane Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Asset(1)
    
    
    Option Type(gallons)
    
    (per gallon)
    
    (in thousands)2009
    
    
    630,000
    
    
    $
    0.340
    
    
    $
    12
    
    
    Puts purchased
 Isobutane Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Liablity(1)
    
    
    Option Type(gallons)
    
    (per gallon)
    
    (in thousands)2009
    
    
    126,000
    
    
    $
    0.589
    
    
    $
    (10
    )
    
    Puts purchased
 Normal Butane Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Liablity(1)
    
    
    Option Type(gallons)
    
    (per gallon)
    
    (in thousands)2009
    
    
    126,000
    
    
    $
    0.577
    
    
    $
    (10
    )
    
    Puts purchased
 Natural Gasoline Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Liablity(1)
    
    
    Option Type(gallons)
    
    (per gallon)
    
    (in thousands)2009
    
    
    126,000
    
    
    $
    0.762
    
    
    $
    (10
    )
    
    Puts purchased
 Crude Oil Sales
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)(barrels)
    
    
    (per barrel)
    
    

    (in thousands)2009
    
    
    24,000
    
    
    $
    62.700
    
    
    $
    205
 31




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##### Table of Contents



Crude Oil Sales Options
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Strike Price
    
    
    Liability(1)
    
    
    Option Type(barrels)
    
    
    (per barrel)
    
    
    (in thousands)2009
    
    
    229,500
    
    
    $
    84.802
    
    
    $
    (314
    )
    
    Calls sold2010
    
    
    234,000
    
    
    $
    88.088
    
    
    
    (912
    )
    
    Calls sold2011
    
    
    72,000
    
    
    $
    93.109
    
    
    
    (502
    )
    
    Calls sold2012
    
    
    48,000
    
    
    $
    90.314
    
    
    
    (478
    )
    
    Calls sold$
    (2,206
    )Total APL net liability
    
    
    $
    (89,909
    )
 
 (1)
    
    Fair value based on independent, third-party statements, supported by
observable levels at which transactions are executed in the marketplace.(2)
    
    Fair value based upon management estimates, including forecasted forward NGL
pricesas a function of forward NYMEX natural gas, light crude and propane prices.(3)
    
    Fair value based on forward NYMEX natural gas and light crude prices, as
applicable.(4)
    
    Puts sold and calls purchased for 2009 represent costless collars entered
into by APL as offsetting positions for the calls sold related to ethane and propane
production. In addition, calls were purchased by APL for 2010 through 2012 to offset
positions for calls sold. These offsetting positions were entered into to limit the
loss which could be incurred if crude oil prices continued to rise.(5)
    
    Mmbtu represents million British Thermal Units.  March 31,
    
    
    December 31,2009
    
    
    2008Current portion of derivative asset
    
    $
    144,435
    
    
    $
    152,726Long-term derivative asset
    
    
    98,132
    
    
    
    69,451Current portion of derivative liability
    
    
    (71,103
    )
    
    
    (73,776
    )Long-term derivative liability
    
    
    (25,542
    )
    
    
    (59,103
    )Total Company net asset
    
    $
    145,922
    
    
    $
    89,298
 NOTE 9  FAIR VALUE OF FINANCIAL INSTRUMENTS
  Level 1 
 Level 2 
 Level 3 
 32




---



##### Table of Contents



Assets and Liabilities Measured at Fair Value on a Recurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalSERP liability
    
    $
    
    
    
    $
    (126
    )
    
    $
    
    
    
    $
    (126
    )Interest rate derivatives
    
    
    
    
    
    
    (16,488
    )
    
    
    
    
    
    
    (16,488
    )APL commodity-based derivatives
    
    
    
    
    
    
    (48,978
    )
    
    
    (30,803
    )
    
    
    (79,781
    )ATN commodity-based derivatives
    
    
    
    
    
    $
    242,192
    
    
    
    
    
    
    $
    242,192Total
    
    $
    
    
    
    $
    176,600
    
    
    $
    (30,803
    )
    
    $
    145,797
  Crude OilSalesNGL
    
    
    OptionsFixed
    
    
    (associated
    
    
    Crude OilPrice
    
    
    with NGL
    
    
    Sales
    
    
    NGL SalesSwaps
    
    
    Volume)
    
    
    Options
    
    
    Options
    
    
    TotalBalance  December 31, 2008
    
    $
    1,509
    
    
    $
    (15,867
    )
    
    $
    (7,569
    )
    
    $
    12,316
    
    
    $
    (9,611
    )New options contracts
    
    
    459
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    459Cash settlements from unrealized gain
(loss)(1)
    
    
    (2,240
    )
    
    
    (30,189
    )
    
    
    (7,482
    )
    
    
    (11,410
    )
    
    
    (51,321
    )Cash settlements from other comprehensive
income(1)
    
    
    1,895
    
    
    
    7,952
    
    
    
    3,666
    
    
    
    
    
    
    
    13,513Net change in unrealized gain (loss)(2)
    
    
    (44
    )
    
    
    9,008
    
    
    
    5,878
    
    
    
    (982
    )
    
    
    13,860Deferred option premium recognition
    
    
    
    
    
    
    (1,062
    )
    
    
    3,301
    
    
    
    58
    
    
    
    2,297Net change in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance  March 31, 2009
    
    $
    1,579
    
    
    $
    (30,158
    )
    
    $
    (2,206
    )
    
    $
    (18
    )
    
    $
    (30,803
    )
 
 (1)
    
    Included within transmission, gathering and processing revenue on the Companys consolidated
statements of operations.(2)
    
    Included within gain (loss) on mark-to-market derivatives on the Companys consolidated
statements of operations. 33




---



##### Table of Contents



Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
   Three Months Ended
    
    
    Three Months EndedMarch 31, 2009
    
    
    March 31, 2008Level 3
    
    
    Total
    
    
    Level 3
    
    
    TotalAsset retirement obligations incurred in current period
    
    $
    430
    
    
    $
    430
    
    
    $
    782
    
    
    $
    782Total
    
    $
    430
    
    
    $
    430
    
    
    $
    782
    
    
    $
    782
 NOTE 10  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
  Relationship with ATN Sponsored Investment Partnerships.
 Relationship with Resource America, Inc.
 NOTE 11  COMMITMENTS AND CONTINGENCIES
 General Commitments
  34




---



##### Table of Contents



Legal Proceedings
 CNX Gas Company, LLC (CNX) v. Miller Petroleum, Inc. (Miller)
   NOTE 12  INCOME TAXES
  35




---



##### Table of Contents



, Accounting for Uncertainty in
Income Taxes (FIN 48) Accounting for Income Taxes,
  NOTE 13  COMMON STOCK
 Treasury Shares Contribution
  Stock Repurchase Plan
  Stock Splits
  36




---



##### Table of Contents



NOTE 14  ISSUANCE OF SUBSIDIARY UNITS
      NOTE 15  CASH DISTRIBUTIONS
 Atlas Energy Resources Cash Distributions.
 37




---



##### Table of Contents



CashDistribution
    
    Total CashDate Cash
    
    
    
    Per
    
    DistributionDistribution
    
    
    
    Common
    
    to thePaid or Payable
    
    For Quarter Ended
    
    Unit
    
    Company(in thousands)February 14, 2008
    
    December 31, 2007
    
    $0.57
    
    $17,437May 15, 2008
    
    March 31, 2008
    
    $0.59
    
    $18,410August 14, 2008
    
    June 30, 2008
    
    $0.61
    
    $19,060November 14, 2008
    
    September 30, 2008
    
    $0.61
    
    $19,060February 13, 2009
    
    December 31, 2008
    
    $0.61
    
    $19,060
 Atlas Pipeline Partners Cash Distributions.
 APL Cash
    
    Total APL Cash
    
    Total APL CashDistribution
    
    Distribution
    
    DistributionDate Cash
    
    
    
    per Common
    
    to Common
    
    to theDistribution
    
    For Quarter
    
    Limited
    
    Limited
    
    GeneralPaid
    
    Ended
    
    Partner Unit
    
    Partners
    
    PartnerFebruary 14, 2008
    
    December 31, 2007
    
    $0.93
    
    $36,051
    
    $5,092May 15, 2008
    
    March 31, 2008
    
    $0.94
    
    $36,450
    
    $7,891August 14, 2008
    
    June 30, 2008
    
    $0.96
    
    $44,096
    
    $9,308November 14, 2008
    
    September 30, 2008
    
    $0.96
    
    $44,105
    
    $9,312February 13, 2009
    
    December 31, 2008
    
    $0.38
    
    $17,463
    
    $2,545May 13, 2009(1)
    
    March 31, 2009
    
    $0.15
    
    $7,147
    
    $1,010
 
 (1)
    
    Declared subsequent to March 31, 2009 (see Note 18).  38




---



##### Table of Contents



Atlas Pipeline Holdings Cash Distributions.
 Cash Distribution
    
    Total CashDate Cash
    
    
    
    per
    
    Distribution to theDistribution Paid or
    
    For Quarter
    
    Common Limited
    
    Company (inPayable
    
    Ended
    
    Partner Unit
    
    thousands)February 19, 2008
    
    December 31, 2007
    
    $0.34
    
    $5,950May 20, 2008
    
    March 31, 2008
    
    $0.43
    
    $7,525August 19, 2008
    
    June 30, 2008
    
    $0.51
    
    $9,082November 19, 2008
    
    September 30, 2008
    
    $0.51
    
    $9,082February 19, 2009
    
    December 31, 2008
    
    $0.06
    
    $1,068
  NOTE 16  BENEFIT PLANS
 Incentive Bonus Plan
  Stock Incentive Plan
  Stock Options
 39




---



##### Table of Contents



Three Months EndedMarch 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Average
    
    
    Number
    
    
    Averageof Unit
    
    
    Exercise
    
    
    of Unit
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of period
    
    
    3,495,351
    
    
    $
    16.97
    
    
    
    2,715,381
    
    
    $
    12.10Granted
    
    
    100,000
    
    
    $
    13.35
    
    
    
    825,000
    
    
    $
    32.67Exercised(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    (15,187
    )
    
    $
    11.32
    
    
    
    
    
    
    
    Forfeited
    
    
    (21,938
    )
    
    $
    11.32
    
    
    
    
    
    
    
    Outstanding, end of period(2)(3)
    
    
    3,558,226
    
    
    $
    16.92
    
    
    
    3,540,381
    
    
    $
    16.89Options exercisable, end of
period(4)
    
    
    2,552,330
    
    
    $
    13.34
    
    
    
    2,116,525
    
    
    $
    11.51Non-cash compensation expense
recognized (in thousands)
    
    $
    920
    
    
    
    
    
    
    $
    974Available for grant at March 31, 2009
    
    
    760,095
 
 (1)
    
    There were no options exercised for the three months ended March 31, 2009 and 2008, respectively.(2)
    
    The weighted average remaining contractual term of options outstanding at March 31, 2009 is 7.2 years.(3)
    
    The aggregate intrinsic value for options outstanding at March 31, 2008 was $82.8 million. There was no
aggregate intrinsic value for options outstanding at March 31, 2009.(4)
    
    The weighted average remaining contractual term of options exercisable at March 31, 2009 is 6.5 years.  Three Months EndedMarch 31,2009
    
    2008Expected dividend yield
    
    
    0.6
    %
    
    
    0.4
    %Expected stock price volatility
    
    
    36
    %
    
    
    33
    %Risk-free interest rate
    
    
    2.2
    %
    
    
    2.6
    %Expected term (in years)
    
    
    6.25
    
    
    
    6.25Fair value of stock options granted
    
    $
    4.89
    
    
    $
    11.75
 Deferred Units and Restricted Shares
 40




---



##### Table of Contents



Three Months EndedMarch 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageNumber
    
    
    Grant Date
    
    
    Number
    
    
    Grant Dateof Units
    
    
    Fair Value
    
    
    of Units
    
    
    Fair ValueNon-vested shares
outstanding, beginning of
period
    
    
    12,512
    
    
    $
    24.05
    
    
    
    21,114
    
    
    $
    14.61Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Matured
    
    
    (842
    )
    
    $
    20.76
    
    
    
    (845
    )
    
    $
    20.76Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-vested shares
outstanding, end of
period
    
    
    11,670
    
    
    $
    24.29
    
    
    
    20,269
    
    
    $
    14.36
 
 (1)
    
    The intrinsic values for phantom unit awards vested during the three
months ended at March 31, 2009 and 2008 were $10,000 and $28,000,
respectively.(2)
    
    The aggregate intrinsic values for phantom unit awards outstanding at
March 31, 2009 and 2008 were $0.1 million and $0.8 million,
respectively.(3)
    
    The non-cash compensation expense recognized for phantom unit awards
was $26,000 and $24,000 for each of the three months ending March 31,
2009 and 2008.  Employee Stock Ownership Plan
  41




---



##### Table of Contents



Supplemental Employment Retirement Plan (SERP)
    March 31,
    
    
    December 31,2009
    
    
    2008Other liabilities
    
    $
    (126
    )
    
    $
    (3,209
    )Accumulated other comprehensive income
    
    
    232
    
    
    
    255Deferred income tax asset
    
    
    136
    
    
    
    150Net amount recognized
    
    $
    242
    
    
    $
    (2,804
    )
  AHD Long-Term Incentive Plan
  42




---



##### Table of Contents



AHD Phantom Units.
  Three Months EndedMarch 31,2009
    
    
    2008Outstanding, beginning of period
    
    
    226,300
    
    
    
    220,825Granted(1)
    
    
    
    
    
    
    4,650Matured(2)
    
    
    
    
    
    
    Forfeited
    
    
    (45,000
    )
    
    
    Outstanding, end of period(3)
    
    
    181,300
    
    
    
    225,475Non-cash compensation income
(expense) recognized (in thousands)
    
    $
    (308
    )
    
    $
    366
 
 (1)
    
    The weighted average price for phantom unit awards on the date of grant, which is utilized in the calculation of
compensation expense and does not represent an exercise price to be paid by the recipient, was $32.28 for awards granted for the
three months ended March 31, 2008. There were no awards granted during the three months ended March 31, 2009.(2)
    
    There were no phantom units exercised for the three months ended March 31, 2009 and 2008, respectively.(3)
    
    The aggregate intrinsic value for phantom unit awards outstanding at March 31, 2009 is $0.3 million.  AHD Unit Options.
 43




---



##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Average
    
    
    Number
    
    
    Averageof Unit
    
    
    Exercise
    
    
    of Unit
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of period
    
    
    1,215,000
    
    
    $
    22.56
    
    
    
    1,215,000
    
    
    $
    22.56Granted
    
    
    100,000
    
    
    $
    3.24
    
    
    
    
    
    
    
    Matured
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    (360,000
    )
    
    $
    22.56
    
    
    
    
    
    
    
    Outstanding, end of period(1)(2)(3)
    
    
    955,000
    
    
    $
    20.54
    
    
    
    1,215,000
    
    
    $
    22.56Options exercisable, end of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of unit
options per unit granted during
the quarter
    
    
    100,000
    
    
    $
    0.61
    
    
    
    
    
    
    
    Non-cash compensation income
(expense) recognized (in thousands)
    
    $
    (573
    )
    
    
    
    
    
    $
    309
 
 (1)
    
    The weighted average remaining contractual lives for outstanding options at March 31, 2009 and 2008
were 7.8 years and 8.6 years, respectively.(2)
    
    There was no aggregate intrinsic value of options outstanding at March 31, 2009. The aggregate
intrinsic value of options outstanding at March 31, 2008 was approximately $5.6 million.(3)
    
    There were no options exercised during the three months ended March 31, 2009 and 2008, respectively.   44




---



##### Table of Contents



Three Months EndedMarch 31, 2009Expected dividend yield
    
    
    7.0
    %Expected stock price volatility
    
    
    40
    %Risk-free interest rate
    
    
    2.3
    %Expected term (in years)
    
    
    6.9
 APL Long-Term Incentive Plan
    Three Months EndedMarch 31,2009
    
    
    2008Outstanding, beginning of year
    
    
    126,565
    
    
    
    129,746Granted(1)
    
    
    1,500
    
    
    
    53,951Matured(2)
    
    
    (9,886
    )
    
    
    (11,860
    )Forfeited
    
    
    (16,250
    )
    
    
    (750
    )Outstanding, end of period(3)
    
    
    101,929
    
    
    
    171,087Non-cash compensation income (expense)
recognized (in thousands)
    
    $
    (95
    )
    
    $
    486
 
 (1)
    
    The weighted average prices for phantom unit awards on
the date of grant, which is utilized in the calculation of compensation
expense and does not represent an exercise price to be paid 45




---



##### Table of Contents



by the
recipient, were $4.60 and $44.44 for awards granted for the three months
ended March 31, 2009 and 2008, respectively.(2)
    
    The intrinsic values for phantom unit awards exercised
during the three months ended March 31, 2009 and 2008 were $0.1 million
and $0.2 million, respectively.(3)
    
    The aggregate intrinsic value for phantom unit awards
outstanding at March 31, 2009 was $0.4 million.  APL Unit Options.
 Three Months Ended March 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Average
    
    
    Number
    
    
    Averageof Unit
    
    
    Exercise
    
    
    of Unit
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    100,000
    
    
    $
    6.24
    
    
    
    
    
    
    
    Matured
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of period(1)(2)
    
    
    100,000
    
    
    $
    6.24
    
    
    
    
    
    
    
    Options exercisable, end of period(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average fair value of unit
options per unit granted during
the period
    
    
    100,000
    
    
    $
    0.14
    
    
    
    
    
    
    
    Non-cash compensation expense
recognized (in thousands)
    
    $
    2
    
    
    
    
    
    
    $
    
 
 (1)
    
    The weighted average remaining contractual life for outstanding options at March
31, 2009 was 9.8 years.(2)
    
    There was no aggregate intrinsic value of options outstanding at March 31, 2009.(3)
    
    There were no options exercised during the three months ended March 31, 2009 and
2008, respectively. 46




---



##### Table of Contents



Three Months EndedMarch 31, 2009Expected dividend yield
    
    
    11.0
    %Expected stock price volatility
    
    
    20
    %Risk-free interest rate
    
    
    2.2
    %Expected term (in years)
    
    
    6.3
 APL Incentive Compensation Agreements
   Atlas Energy Resources, LLC Long-Term Incentive Plan
  47




---



##### Table of Contents



ATN Restricted Stock and Phantom Units.
  WeightedAverageGrant DateUnits
    
    
    Fair ValueNon-vested shares outstanding at December 31, 2008
    
    
    768,829
    
    
    $
    23.86Granted
    
    
    17,000
    
    
    
    14.18Vested
    
    
    (1,168
    )
    
    
    28.82Forfeited
    
    
    
    
    
    
    Non-vested shares outstanding at March 31, 2009
    
    
    784,661
    
    
    
    23.65
 Stock Options
  WeightedAverageWeighted
    
    
    Remaining
    
    
    AggregateAverage
    
    
    Contractual
    
    
    IntrinsicExercise
    
    
    Term
    
    
    ValueShares
    
    
    Price
    
    
    (in years)
    
    
    (in thousands)Outstanding at December 31, 2008
    
    
    1,902,902
    
    
    $
    24.17Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Forfeited or expired
    
    
    (900
    )
    
    
    23.06Outstanding at March 31, 2009
    
    
    1,902,002
    
    
    $
    24.17
    
    
    
    7.7
    
    
    $
    0Options exercisable at March 31, 2009
    
    
    186,876
    
    
    $
    21.00
    
    
    
    7.0Available for grant at March 31, 2009
    
    
    1,029,986
 48




---



##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    WeightedNumber of
    
    
    Remaining
    
    
    Average
    
    
    Number of
    
    
    WeightedRange of
    
    Shares
    
    
    Contractual
    
    
    Exercise
    
    
    Shares
    
    
    AverageExercise Prices
    
    Outstanding
    
    
    Life in Years
    
    
    Price
    
    
    Exercisable
    
    
    Exercise Price$21.00  23.06
    
    
    1,653,902
    
    
    
    7.6
    
    
    $
    22.59
    
    
    
    186,876
    
    
    $
    21.00$30.24  35.00
    
    
    240,600
    
    
    
    8.3
    
    
    $
    34.53
    
    
    
    
    
    
    
    $37.79 and above
    
    
    7,500
    
    
    
    8.8
    
    
    $
    39.79
    
    
    
    
    
    
    
    1,902,002
    
    
    
    7.7
    
    
    $
    24.17
    
    
    
    186,876
    
    
    $
    21.00
  NOTE 17  OPERATING SEGMENT INFORMATION
  Three Months EndedMarch 31,2009
    
    
    2008Gas and oil production:Revenues
    
    $
    71,943
    
    
    $
    76,226Costs and expenses
    
    
    (11,286
    )
    
    
    (10,668
    )Segment income
    
    $
    60,657
    
    
    $
    65,558Well construction and completion:Revenues
    
    $
    112,368
    
    
    $
    104,138Costs and expenses
    
    
    (95,397
    )
    
    
    (90,555
    )Segment income
    
    $
    16,971
    
    
    $
    13,583Atlas Pipeline:Revenues (a)
    
    $
    175,266
    
    
    $
    292,135Revenues  affiliates
    
    
    10,149
    
    
    
    9,224Costs and expenses
    
    
    (156,650
    )
    
    
    (299,392
    )Segment income
    
    $
    28,765
    
    
    $
    1,967Other(b):Revenues
    
    $
    3,520
    
    
    $
    5,001Costs and expenses
    
    
    (3,051
    )
    
    
    (2,533
    )Segment income
    
    $
    469
    
    
    $
    2,468
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Three Months EndedMarch 31,2009
    
    
    2008Reconciliation of segment income to net
income (loss) before income tax provision
(benefit):Segment income (loss)
Gas and oil production
    
    $
    60,657
    
    
    $
    65,558Well construction and completion
    
    
    16,971
    
    
    
    13,583Atlas Pipeline
    
    
    28,765
    
    
    
    1,967Other
    
    
    469
    
    
    
    2,468Total segment income (loss)
    
    
    106,862
    
    
    
    83,576General and administrative expenses
    
    
    (27,755
    )
    
    
    (21,008
    )Net expense reimbursement  affiliate
    
    
    (482
    )
    
    
    (250
    )Depreciation, depletion and amortization
    
    
    (52,707
    )
    
    
    (43,652
    )Interest expense
    
    
    (34,646
    )
    
    
    (34,098
    )Other income  net
    
    
    4,880
    
    
    
    2,030Net income (loss) before income
tax provision (benefit)
    
    $
    (3,848
    )
    
    $
    (13,402
    )Capital expenditures:Gas and oil production
    
    $
    49,618
    
    
    $
    54,474Well construction and completion
    
    
    
    
    
    
    Atlas Pipeline
    
    
    72,913
    
    
    
    84,069Corporate and other
    
    
    7,589
    
    
    
    1,143Total capital expenditures
    
    $
    130,120
    
    
    $
    139,686
 March 31,
    
    
    December 31,2009
    
    
    2008Balance sheet:Goodwill:Gas and oil production
    
    $
    21,527
    
    
    $
    21,527Well construction and completion
    
    
    13,639
    
    
    
    13,639Atlas Pipeline
    
    
    
    
    
    
    $
    35,166
    
    
    $
    35,166Total assets:Gas and oil production
    
    $
    2,294,264
    
    
    $
    2,210,563Well construction and completion
    
    
    13,826
    
    
    
    16,399Atlas Pipeline
    
    
    2,382,231
    
    
    
    2,413,196Corporate and other
    
    
    187,110
    
    
    
    205,723$
    4,877,431
    
    
    $
    4,845,881
 
 (a)
    
    Includes a gain of $0.3 million and a loss of $88.8 million on mark-to-market
derivatives for three months ended March 31, 2009 and 2008, respectively.(b)
    
    Includes revenues and expenses from well services, transportation and
administration and oversight that do not meet the quantitative threshold for reporting
segment information.  NOTE 18  SUBSEQUENT EVENTS
  50




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
 When used in this Form 10-Q , the words believes, anticipates, expects and similar
expressions are intended to identify forward-looking statements. Such statements are subject to
certain risks and uncertainties more particularly described in Item 1A, Risk Factors, in our annual
report on Form 10-K for the year ended December 31, 2008. These risks and uncertainties could cause
actual results to differ materially from the results stated or implied in this document. Readers
are cautioned not to place undue reliance on these forward-looking statements, which speak only as
of the date hereof. We undertake no obligation to publicly release the results of any revisions to
forward-looking statements which we may make to reflect events or circumstances after the date of
this Form 10-Q or to reflect the occurrence of unanticipated events.
 General
   
    
    Atlas Energy Resources, LLC (Atlas Energy or ATN), a publicly traded Delaware
limited liability company (NYSE: ATN) focused on natural gas development and production in
northern Michigans Antrim Shale, the Appalachian Basin and Indianas New Albany Shale,
which we manage through our subsidiary, Atlas Energy Management, Inc., under the
supervision of ATNs board of directors;
    
    Atlas Pipeline Partners, L.P. (Atlas Pipeline Partners or APL), a publicly traded
Delaware limited partnership (NYSE: APL) and midstream energy service provider engaged in
the transmission, gathering and processing of natural gas in the Mid-Continent and
Appalachia regions;
    
    Atlas Pipeline Holdings, L.P. (Atlas Pipeline Holdings or AHD), a publicly traded
Delaware limited partnership (NYSE: AHD) and owner of the general partner of APL. Through
our ownership of its general partner, we manage AHD; and
    
    Lightfoot Capital Partners LP (Lightfoot LP) and Lightfoot Capital Partners GP LLC
(Lightfoot GP), the general partner of Lightfoot (collectively, Lightfoot), entities
which incubate new master
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##### Table of Contents



limited partnerships (MLPs) and invest in existing MLPs. We
have an approximate direct and indirect 18% ownership interest in Lightfoot GP and a
commitment to invest a total of $20.0 million in Lightfoot LP. We also have a direct and
indirect ownership interests in Lightfoot LP.
  
    
    all of the outstanding Class A units, representing 1,293,486 units at March 31, 2009,
which entitles us to receive 2% of the cash distributed by ATN without any obligation to
make future capital contributions to ATN;
    
    all of the management incentive interests in ATN, which entitle us to receive increasing
percentages, up to a maximum of 25.0%, of any cash distributed by ATN as it reaches certain
target distribution levels in excess of $0.48 per ATN common unit in any quarter after ATN
has met the tests set forth within its limited liability company agreement; and
    
    29,952,996 common units, representing approximately 47.3% of the outstanding common
units at March 31, 2009, or a 46.3% ownership interest in ATN.
  
    
    for 12 full, consecutive, non-overlapping calendar quarters, (a) pay a quarterly cash
distribution to the outstanding Class A and common units in an amount that, on average
exceeds $0.48 per unit, (b) generate adjusted operating surplus, as defined, that on
average is equal to the amount of all cash distributions paid to the Class A and common
units plus the amount of management incentive distributions earned and (c) not reduce the
quarterly cash distribution per unit for any of such 12 quarters; and
    
    for the last four full, consecutive, non-overlapping quarters during the 12 quarter
period described previously (or any four full, consecutive and non-overlapping quarters
after the completion of the 12 quarter test is complete), (a) pay a quarterly cash
distribution to the outstanding Class A and common units in an amount that exceeds $0.48
per unit, (b) generate adjusted operating surplus, as defined, that on average is equal to
the amount of all cash distributions paid to the Class A and common units plus the amount
of management incentive distributions earned and (c) not reduce the quarterly cash
distribution per unit for any of such four quarters.
   
    
    a 2.0% general partner interest, which entitles it to receive 2% of the cash distributed
by APL;
 53




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
    
    all of the incentive distribution rights, which entitle it to receive increasing
percentages, up to a maximum of 48.0%, of any cash distributed by APL as it reaches certain
target distribution levels in excess of $0.42 per APL common unit in any quarter. AHD, the
holder of all of the incentive distribution rights in APL, had agreed to allocate up to
$5.0 million of its incentive distribution rights per quarter back to APL through the
quarter ended June 30, 2009, and up to $3.75 million per quarter thereafter (the IDR
Adjustment Agreement). AHD also agreed that the resulting allocation of incentive
distribution rights back to APL would be after AHD receives the initial $7.0 million per
quarter of incentive distribution rights;
    
    5,754,253 common units, representing approximately 12.5% of the outstanding common units
at March 31, 2009, or a 11.8% ownership interest in APL; and
    
    15,000 $1,000 par value 12.0% cumulative preferred limited partner units at March 31,
2009.
  
    
    13.0% of all cash distributed in a quarter after each APL common unit has received $0.42
for that quarter;
    
    23.0% of all cash distributed after each APL common unit has received $0.52 for that
quarter; and
    
    48.0% of all cash distributed after each APL common unit has received $0.60 for that
quarter.
 Financial Presentation
  Atlas Energy
   54




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Appalachia gas and oil operations
 
    
    direct and indirect working interests in approximately 8,602 gross producing gas
and oil wells;
    
    overriding royalty interests in approximately 628 gross producing gas and oil
wells;
    
    net daily production of 42.3 million cubic feet equivalents per day (MMcfed);
and
    
    approximately 952,000 gross (906,000 net) acres, of which approximately 640,000
gross (633,000 net) acres, are undeveloped. Included in the undeveloped acreage is
546,000 Marcellus Shale acres in Pennsylvania, New York and West Virginia, of which
approximately 274,000 acres are located in ATNs core Marcellus Shale position in
southwestern Pennsylvania.
 Michigan gas and oil operations
 
    
    direct and indirect working interests in approximately 2,479 gross producing gas
and oil wells;
    
    overriding royalty interest in approximately 93 gross producing natural gas and
oil wells;
    
    net daily production of 58.1 MMcfed; and
    
    approximately 345,400 gross (273,000 net) acres, of which approximately 39,400
gross (30,500 net) acres, are undeveloped.
 Indiana gas and oil operations
 
    
    direct and indirect working interests in approximately 5 gross producing gas and
oil wells;
    
    net daily production of 0.2 Mmcfed; and
    
    approximately 245,200 gross (118,900 net) acres, of which approximately 244,600
gross (118,400 net) acres, are undeveloped.
 Partnership management business
 
    
    ATN investment partnership business, which includes equity interests in 94
investment partnerships and a registered broker-dealer which acts as the
dealer-manager of ATNs investment partnership offerings.
 Atlas Pipeline Holdings and Atlas Pipeline Partners
  55




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
    
    a Federal Energy Regulatory Commission (FERC)-regulated, 565-mile interstate pipeline
system (Ozark Gas Transmission) that extends from southeastern Oklahoma through Arkansas
and into southeastern Missouri and which has throughput capacity of approximately 500
MMcfd;
    
    eight active natural gas processing plants with aggregate capacity of approximately 810
MMcfd and one treating facility with a capacity of approximately 200 MMcfd, located in
Oklahoma and Texas; and
    
    9,100 miles of active natural gas gathering systems located in Oklahoma, Arkansas,
Kansas and Texas, which transport gas from wells and central delivery points in the
Mid-Continent region to APLs natural gas processing and treating plants or Ozark Gas
Transmission, as well as third party pipelines.
  Subsequent Events
   56




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Recent Developments
    58




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Contractual Revenue Arrangements
 Atlas Energy
 Appalachia Natural Gas
 
    
    gas marketers;
    
    local distribution companies;
    
    industrial or other end-users; and/or
    
    companies generating electricity.
 Michigan Natural Gas
 Crude Oil.
 Investment Partnerships.
 
    
    Well construction and completion.For each well that is drilled by an investment
partnership, ATN receives an 18% mark-up on those costs incurred to drill and complete the
well.
    
    Administration and oversight.For each well drilled by an investment partnership, ATN
receives a fixed fee of approximately $15,000 ($62,000 for Marcellus wells). Additionally,
the partnership pays ATN a monthly per well administrative fee of $75 for the life of the
well. Because ATN coinvests in the partnerships, the net fee that it receives is reduced by
its proportionate interest in the well.
    
    Well services.Each partnership pays ATN a monthly per well operating fee, currently
$100 to $1,500, for the life of the well. Because ATN coinvests in the partnerships, the
net fee that ATN receives is reduced by its proportionate interest in the well.
 Atlas Pipeline Partners
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Fee-Based Contracts.
 POP Contracts.
 Keep-Whole Contracts
 Recent Trends and Uncertainties
  Atlas Energy
  60




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Atlas Pipeline Partners.
   Results of Operations
  Three MonthsEnded March 31,2009
    
    
    2008Atlas Energy:Production revenues (in thousands):Gas
    
    $
    69,874
    
    
    $
    72,874Oil(1)
    
    
    2,069
    
    
    
    3,351Production volume(2) (3):Gas (mcfd)
    
    
    98,158
    
    
    
    89,342
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Three MonthsEnded March 31,2009
    
    
    2008Oil (bpd)
    
    
    398
    
    
    
    405Total (mcfed) Oil(bpd)
    
    
    100,546
    
    
    
    91,772Average sales prices(3):Gas (per mcf)(4)(5)
    
    $
    8.09
    
    
    $
    9.58Oil (per bbl)(6) Gas(mcfd)
    
    $
    64.52
    
    
    $
    91.03Production costs (7):Lease operating expenses per mcfe
    
    $
    0.91
    
    
    $
    0.78Production taxes per mcfe
    
    
    0.19
    
    
    
    0.32Total production costs per mcfe
    
    $
    1.10
    
    
    $
    1.10Atlas Pipeline Partners:Appalachia system throughput volume (mcfd)(3)
    
    
    98,529
    
    
    
    75,632Velma system gathered gas volume (mcfd)(3)
    
    
    65,955
    
    
    
    62,400Elk City/Sweetwater system gathered gas volume (mcfd)(3)
    
    
    253,878
    
    
    
    305,377Chaney Dell system gathered gas volume (mcfd)(3)
    
    
    303,022
    
    
    
    251,487Midkiff/Benedum system gathered gas volume (mcfd)(3)
    
    
    153,978
    
    
    
    142,542NOARK Ozark Gas Transmission throughput volume (mcfd)(3)
    
    
    482,471
    
    
    
    390,293Combined throughput volume (mcfd)(3)
    
    
    1,357,833
    
    
    
    1,227,731
 
 (1)
    
    Excludes sales of natural gas liquids.(2)
    
    Production quantities consist of the sum of (i) Atlas Energys
proportionate share of production from wells in which it has a direct
interest, based on its proportionate net revenue interest in such wells, and (ii) Atlas Energys proportionate share of production from wells owned by
the investment partnerships in which Atlas Energy has an interest, based on
Atlas Energys equity interest in each such partnership and based on each
partnerships proportionate net revenue interest in these wells.(3)
    
    Mcf and mcfd represents thousand cubic feet and thousand cubic feet
per day; mcfe and mcfed represents thousand cubic feet equivalent and
thousand cubic feet equivalent per day and bbl and bpd represents
barrels and barrels per day. Barrels are converted to mcfe using the ratio
of six mcfs to one barrel.(4)
    
    Atlas Energys average sales price before the effects of financial
hedging was $5.21 and $8.32 for the three months ended March 31, 2009 and
2008, respectively.(5)
    
    Includes cash proceeds received from the settlement of derivative
contracts of $1.6 million and $5.0 million for the three months ended March
31, 2009 and 2008, respectively. The cash proceeds received from the
settlement of derivative contracts were not included as gas revenue for the
respective periods.(6)
    
    Atlas Energys average sales price for oil before the effects of
financial hedging were $37.54 per barrel for the three months ended March
31, 2009. ATN had no crude oil hedges in effect during the three months
ended March 31, 2008.(7)
    
    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. Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
 Natural Gas and Oil Production
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Well Construction and Completion
  Administration and Oversight and Well Services
 Transmission, Gathering and Processing
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Gain (Loss) on Mark-to-Market Derivatives
 Other Income, Costs and Expenses.
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Liquidity and Capital Resources
 General
  Atlas Energy
 
    
    cash distributions and maintenance capital expenditures through existing cash, cash
flows from operating activities, and the temporary use of funds raised in its investment
partnerships in the period before it invests these funds;
    
    expansion capital expenditures and working capital deficits through the retention of
cash, additional borrowings and capital raised through investment partnerships; and
    
    debt principal payments through additional borrowings as they become due or by the
issuance of additional common units.
  Atlas Pipeline Holdings
 Atlas Pipeline Partners.
 
    
    cash distributions and maintenance capital expenditures through existing cash and cash
flows from operating activities;
    
    expansion capital expenditures and working capital deficits through the retention of
cash and additional borrowings; and
    
    debt principal payments through additional borrowings as they become due or by the
issuance of
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additional limited partner units or APL asset sales.
    Cash Flows  Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008
    Capital Requirements
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Atlas Energy.
 
    
    maintenance capital expenditures  capital expenditures ATN makes on an ongoing basis to
maintain its capital asset base and its current production volumes at a steady level; and
    
    expansion capital expenditures  capital expenditures ATN makes to expand its capital
asset base for longer than the short-term and include new leasehold interests and the
development and exploitation of existing leasehold interests through acquisitions and
investments in its drilling partnerships.
 Atlas Pipeline Partners.
 
    
    maintenance capital expenditures to maintain equipment reliability and safety and to
address environmental regulations; and
    
    expansion capital expenditures to acquire complementary assets and to expand the
capacity of its existing operations.
  Three Months EndedMarch 31,2009
    
    
    2008Atlas EnergyMaintenance capital expenditures
    
    $
    12,975
    
    
    $
    12,975Expansion capital expenditures
    
    
    44,232
    
    
    
    42,642Total
    
    $
    57,207
    
    
    $
    55,617Atlas Pipeline PartnersMaintenance capital expenditures
    
    $
    695
    
    
    $
    1,619Expansion capital expenditures
    
    
    72,218
    
    
    
    82,450Total
    
    $
    72,913
    
    
    $
    84,069ConsolidatedMaintenance capital expenditures
    
    $
    13,670
    
    
    $
    14,594Expansion capital expenditures
    
    
    116,450
    
    
    
    125,092Total
    
    $
    130,120
    
    
    $
    139,686
 Atlas Energy
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Atlas Pipeline Partners
  Off Balance Sheet Arrangements
  Issuance of Subsidiary Common Units
  Atlas Energy
   Atlas Pipeline Partners and Atlas Pipeline Holdings
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Dividends
  Critical Accounting Policies and Estimates
  Fair Value of Financial Instruments
   69




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Level 1-
 Level 2 
 Level 3 
  Recently Adopted Accounting Standards
   70




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ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  General
    Interest Rate Risk.
 72




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Commodity Price Risk
  Atlas Energy.
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Fair Value of Derivative Instruments
 March 31, 2009Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    Balance SheetLocation
    
    Fair Value
    
    
    Location
    
    Fair ValueDerivatives in SFAS
No. 133 Cash Flow
Hedging Relationships:Commodity contracts
    
    Current portion of derivative asset
    
    $
    144,435
    
    
    Current portion of derivative liability
    
    $
    (344
    )Long-term asset
    
    
    98,132
    
    
    Long-term liability
    
    
    (31
    )242,567
    
    
    
    
    
    (375
    )Interest rate contracts
    
    Current portion of derivative asset
    
    
    
    
    
    Current portion of derivative liability
    
    
    (3,494
    )Long-term derivative 
asset
    
    
    
    
    
    Long-term derivative liability
    
    
    (2,219
    )
    
    
    
    
    
    (5,713
    )Total derivatives
under SFAS No. 133
    
    
    
    $
    242,567
    
    
    
    
    $
    (6,088
    )
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Effects of Derivative Instruments on Consolidated Statements of Operations:
 March 31, 2009Location ofGain/(Loss)Gain/(Loss)
    
    
    Reclassified from
    
    Gain/(Loss)Recognized in OCI on
    
    
    Accumulated OCI
    
    Reclassified fromDerivatives (Effective
    
    
    into Income
    
    OCI into IncomePortion)
    
    
    (Effective Portion)
    
    (Effective Portion)Derivatives in SFAS No. 133 Cash Flow Hedging Relationships:Commodity contracts
    
    $
    86,814
    
    
    Gas and oil production
    
    $
    15,518Interest rate contracts
    
    
    (873
    )
    
    Interest expense
    
    
    (1,002
    )$
    85,941
    
    
    
    
    $
    (14,516
    )
  Interest Fixed Rate Swap
 ContractNotional
    
    
    
    
    Period Ended
    
    Fair ValueTerm
    
    Amount
    
    
    Option Type
    
    December 31,
    
    Liability(in thousands)January 2008  January 2011
    
    $
    150,000,000
    
    
    Pay 3.11% - Receive LIBOR
    
    2009
    
    $
    (2,649
    )2010
    
    
    (2,877
    )2011
    
    
    (187
    )$
    (5,713
    )
 Natural Gas Fixed Price Swaps
 ProductionPeriod Ending
    
    
    
    
    
    Average
    
    
    Fair ValueDecember 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset (1)(MMBtu)
    
    
    (per MMBtu)
    
    
    (in thousands)2009
    
    
    31,020,000
    
    
    $
    8.24
    
    
    $
    122,3382010
    
    
    26,360,000
    
    
    $
    8.11
    
    
    
    56,6792011
    
    
    18,680,000
    
    
    $
    7.84
    
    
    
    21,0312012
    
    
    13,800,000
    
    
    $
    8.06
    
    
    
    14,3492013
    
    
    1,500,000
    
    
    $
    8.73
    
    
    
    2,225$
    216,622
 Natural Gas Costless Collars
 ProductionPeriod Ending
    
    
    
    
    
    
    
    
    Average
    
    
    Fair ValueDecember 31,
    
    
    Option Type
    
    Volumes
    
    
    Floor and Cap
    
    
    Asset (1)(MMBtu)
    
    
    (per MMBtu)
    
    
    (in thousands)2009
    
    
    Puts purchased
    
    
    180,000
    
    
    $
    11.00
    
    
    $
    1,2012009
    
    
    Calls sold
    
    
    180,000
    
    
    $
    15.35
    
    
    
    2010
    
    
    Puts purchased
    
    
    3,360,000
    
    
    $
    7.84
    
    
    
    7,0342010
    
    
    Calls sold
    
    
    3,360,000
    
    
    $
    9.01
    
    
    
    2011
    
    
    Puts purchased
    
    
    7,500,000
    
    
    $
    7.48
    
    
    
    7,7502011
    
    
    Calls sold
    
    
    7,500,000
    
    
    $
    8.44
    
    
    
    2012
    
    
    Puts purchased
    
    
    1,020,000
    
    
    $
    7.00
    
    
    
    4072012
    
    
    Calls sold
    
    
    1,020,000
    
    
    $
    8.32
    
    
    
    2013
    
    
    Puts purchased
    
    
    300,000
    
    
    $
    7.00
    
    
    
    692013
    
    
    Calls sold
    
    
    300,000
    
    
    $
    8.25
    
    
    
    $
    16,461
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Crude Oil Fixed Price Swaps
 ProductionPeriod Ending
    
    
    
    
    
    Average
    
    
    Fair ValueDecember 31,
    
    Volumes
    
    
    Fixed Price
    
    

Asset (2)(Bbl)
    
    
    (per Bbl)
    
    
    (in thousands)2009
    
    
    47,300
    
    
    $
    99.73
    
    
    $
    2,2062010
    
    
    48,900
    
    
    $
    97.40
    
    
    
    1,7252011
    
    
    42,600
    
    
    $
    96.44
    
    
    
    1,2262012
    
    
    33,500
    
    
    $
    96.00
    
    
    
    8332013
    
    
    10,000
    
    
    $
    96.06
    
    
    
    232$
    6,222
 Crude Oil Costless Collars
 ProductionPeriod Ending
    
    
    
    
    
    
    
    Average
    
    Fair ValueDecember 31,
    

Option Type
    
    Volumes
    
    
    Floor and Cap
    

Asset (2)(Bbl)
    
    
    (per Bbl)
    
    (in thousands)2009
    
    Puts purchased
    
    
    29,000
    
    
    $85.00
    
    $
    9442009
    
    Calls sold
    
    
    29,000
    
    
    $117.48
    
    
    2010
    
    Puts purchased
    
    
    31,000
    
    
    $85.00
    
    
    8172010
    
    Calls sold
    
    
    31,000
    
    
    $112.92
    
    
    2011
    
    Puts purchased
    
    
    27,000
    
    
    $85.00
    
    
    6032011
    
    Calls sold
    
    
    27,000
    
    
    $110.81
    
    
    2012
    
    Puts purchased
    
    
    21,500
    
    
    $85.00
    
    
    4162012
    
    Calls sold
    
    
    21,500
    
    
    $110.06
    
    
    2013
    
    Puts purchased
    
    
    6,000
    
    
    $85.00
    
    
    1072013
    
    Calls sold
    
    
    6,000
    
    
    $110.09
    
    
    $
    2,887Total ATN net asset
    
    $
    236,479
 
 (1)
    
    Fair value based on forward NYMEX natural gas prices, as applicable.(2)
    
    Fair value based on forward WTI crude oil prices, as applicable. Atlas Pipeline Partners.
 76




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##### Table of Contents



March 31, 2009Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    Balance SheetLocation
    
    Fair Value
    
    
    Location
    
    Fair ValueDerivatives designated
as hedging instruments
under SFAS No. 133:Interest rate contracts
    
    Current portion of derivative asset
    
    $
    
    
    
    Current portion of derivative liability
    
    $
    (10,252
    )Interest rate contracts
    
    Long-term derivative 
asset
    
    
    
    
    
    Long-term derivative liability
    
    
    (523
    )Derivatives not
designated as hedging
instruments under SFAS
No. 133:Commodity contracts
    
    Current portion of derivative liability
    
    
    3,977
    
    
    Current portion of derivative liability
    
    
    (60,991
    )Commodity contracts
    
    Long-term derivative liability
    
    
    2,380
    
    
    Long-term derivative liability
    
    
    (25,147
    )$
    6,357
    
    
    
    
    $
    (96,913
    )
  March 31, 2009Gain (Loss)
    
    
    Location of GainRecognized in
    
    
    (Loss) Recognized inIncome on
    
    
    Income onAmount of Gain
    
    
    
    
    Derivative
    
    
    Derivative(Loss) Reclassified
    
    
    Location of Gain
    
    (Ineffective
    
    
    (Ineffective Portionfrom
    
    
    (Loss) Reclassified
    
    Portion and
    
    
    and AmountAccumulated OCI
    
    
    from Accumulated
    
    Amount Excluded
    
    
    Excluded frominto Income
    
    
    OCI into Income
    
    from Effectiveness
    
    
    Effectiveness(Effective Portion)
    
    
    (Effective Portion)
    
    Testing)
    
    
    Testing)Derivatives in SFAS No. 133 Cash
Flow Hedging Relationships:Interest rate contracts
    
    $
    (3,055
    )
    
    Interest expense
    
    $
    
    
    
    N/ADerivatives not designated as
hedging instruments under SFAS
No. 133:Commodity contracts(1)
    
    $
    (15,970
    )
    
    Transmission, gathering and processing
    
    $
    (9,527
    )
    
    Gain (loss) on mark-to-market derivativesCommodity contracts(2)
    
    
    
    
    
    
    
    
    39,820
    
    
    Gain (loss) on mark-to-market derivatives$
    (19,025
    )
    
    
    
    $
    30,293
 
 (1)
    
    Hedges previously designated as cash flow hedges(2)
    
    Dedesignated cash flow hedges and non-designated hedges 77




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##### Table of Contents



Interest Fixed-Rate Swap
 Notional
    
    
    
    
    Contract Period
    
    Fair ValueTerm
    
    Amount
    
    
    Type
    
    Ended December 31,
    
    Liability(1)(in thousands)May 2008-May 2010
    
    $
    25,000,000
    
    
    Pay 3.01% Receive LIBOR
    
    2009
    
    $
    (444
    )2010
    
    
    (204
    )Total AHD net liability
    
    $
    (648
    )
 
 (1)
    
    Fair value based on independent, third-party
statements, supported by observable levels at which transactions are executed in the
marketplace.  Interest Fixed-Rate Swap
 Notional
    
    
    
    
    Contract Period
    
    Fair ValueTerm
    
    Amount
    
    
    Type
    
    Ended December 31,
    
    Liability(1)(in thousands)January 2008-January 2010
    
    $
    200,000,000
    
    
    Pay 2.88% Receive LIBOR
    
    2009
    
    $
    (3,374
    )2010
    
    
    (304
    )$
    (3,678
    )April 2008-April 2010
    
    $
    250,000,000
    
    
    Pay 3.14% Receive LIBOR
    
    2009
    
    $
    (4,715
    )2010
    
    
    (1,734
    )$
    (6,449
    )
 Natural Gas Liquids Sales  Fixed Price Swaps
 Production Period
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(2)(gallons)
    
    
    (per gallon)
    
    
    (in thousands)2009
    
    
    13,230,000
    
    
    $
    0.745
    
    
    $
    1,579
 Crude Oil Sales Options (associated with NGL volume)
 Production Period
    
    
    
    
    
    Associated
    
    
    AverageEnded
    
    Crude
    
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Volume
    
    
    Strike Price
    
    
    Asset/(Liability)(1)
    
    
    Option Type(barrels)
    
    
    (gallons)
    
    
    (per barrel)
    
    
    (in thousands)2009
    
    
    152,100
    
    
    
    13,542,984
    
    
    $
    111.53
    
    
    $
    (11,171
    )
    
    Puts sold(4)2009
    
    
    152,100
    
    
    
    13,542,984
    
    
    $
    157.82
    
    
    
    
    
    
    Calls purchased(4)
 78




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##### Table of Contents



Production Period
    
    
    
    
    
    Associated
    
    
    AverageEnded
    
    Crude
    
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Volume
    
    
    Strike Price
    
    
    Asset/(Liability)(1)
    
    
    Option Type(barrels)
    
    
    (gallons)
    
    
    (per barrel)
    
    
    (in thousands)2009
    
    
    1,588,500
    
    
    
    88,643,058
    
    
    $
    84.69
    
    
    
    (2,019
    )
    
    Calls sold2010
    
    
    3,127,500
    
    
    
    213,088,050
    
    
    $
    86.20
    
    
    
    (13,035
    )
    
    Calls sold2010
    
    
    714,000
    
    
    
    45,415,440
    
    
    $
    132.17
    
    
    
    638
    
    
    Calls purchased(4)2011
    
    
    606,000
    
    
    
    33,145,560
    
    
    $
    100.70
    
    
    
    (3,071
    )
    
    Calls sold2011
    
    
    252,000
    
    
    
    13,547,520
    
    
    $
    133.16
    
    
    
    665
    
    
    Calls purchased(4)2012
    
    
    450,000
    
    
    
    25,893,000
    
    
    $
    102.71
    
    
    
    (2,822
    )
    
    Calls sold2012
    
    
    180,000
    
    
    
    9,676,800
    
    
    $
    134.27
    
    
    
    657
    
    
    Calls purchased(4)$
    (30,158
    )
 Natural Gas Sales  Fixed Price Swaps
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    360,000
    
    
    $
    8.000
    
    
    $
    1,337
 Natural Gas Basis Sales
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    3,690,000
    
    
    $
    (0.558
    )
    
    $
    6732010
    
    
    2,220,000
    
    
    $
    (0.575
    )
    
    
    301$
    974
 Natural Gas Purchases  Fixed Price Swaps
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    7,740,000
    
    
    $
    8.687
    
    
    $
    (34,069
    )2010
    
    
    4,380,000
    
    
    $
    8.635
    
    
    
    (12,806
    )$
    (46,875
    )
 Natural Gas Basis Purchases
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(3)(mmbtu)(5)
    
    
    (per mmbtu)(5)
    
    
    (in thousands)2009
    
    
    11,070,000
    
    
    $
    (0.659
    )
    
    $
    (2,837
    )2010
    
    
    6,600,000
    
    
    $
    (0.560
    )
    
    
    (1,783
    )$
    (4,620
    )
 79




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##### Table of Contents



Ethane Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Asset(1)
    
    
    Option Type(gallons)
    
    
    (per gallon)
    
    
    (in thousands)2009
    
    
    630,000
    
    
    $
    0.340
    
    
    $
    12
    
    
    Puts purchased
 Isobutane Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Liability(1)
    
    
    Option Type(gallons)
    
    
    (per gallon)
    
    
    (in thousands)2009
    
    
    126,000
    
    
    $
    0.589
    
    
    $
    (10
    )
    
    Puts purchased
 Normal Butane Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Liability(1)
    
    
    Option Type(gallons)
    
    
    (per gallon)
    
    
    (in thousands)2009
    
    
    126,000
    
    
    $
    0.577
    
    
    $
    (10
    )
    
    Puts purchased
 Natural Gasoline Put Options
 Production Period
    
    Associated
    
    
    AverageEnded
    
    NGL
    
    
    Crude
    
    
    Fair ValueDecember 31,
    
    Volume
    
    
    Strike Price
    
    
    Liability(1)
    
    
    Option Type(gallons)
    
    
    (per gallon)
    
    
    (in thousands)2009
    
    
    126,000
    
    
    $
    0.762
    
    
    $
    (10
    )
    
    Puts purchased
 Crude Oil Sales
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)(barrels)
    
    
    (per barrel)
    
    
    (in thousands)2009
    
    
    24,000
    
    
    $
    62.700
    
    
    $
    205
 Crude Oil Sales Options
 Production Period
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Strike Price
    
    
    Liability(1)
    
    
    Option Type(barrels)
    
    
    (per barrel)
    
    
    (in thousands)2009
    
    
    229,500
    
    
    $
    84.802
    
    
    $
    (314
    )
    
    Calls sold2010
    
    
    234,000
    
    
    $
    88.088
    
    
    
    (912
    )
    
    Calls sold2011
    
    
    72,000
    
    
    $
    93.109
    
    
    
    (502
    )
    
    Calls sold2012
    
    
    48,000
    
    
    $
    90.314
    
    
    
    (478
    )
    
    Calls sold$
    (2,206
    )Total APL net liability
    
    $
    (89,909
    )
 
 (1)
    
    Fair value based on independent, third-party statements, supported by
observable levels at which transactions are executed in the marketplace.(2)
    
    Fair value based upon management estimates, including forecasted forward NGL
prices as a function of forward NYMEX natural gas, light crude and propane prices.(3)
    
    Fair value based on forward NYMEX natural gas and light crude prices, as
applicable. 80




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##### Table of Contents



(4)
    
    Puts sold and calls purchased for 2009 represent costless collars entered
into by APL as offsetting positions for the calls sold related to ethane and propane
production. In addition, calls were purchased by APL for 2010 through 2012 to offset
positions for calls sold. These offsetting positions were entered into to limit the
loss which could be incurred if crude oil prices continued to rise.(5)
    
    Mmbtu represents million British Thermal Units.  March 31,
    
    
    December 31,2009
    
    
    2008Current portion of derivative asset
    
    $
    144,435
    
    
    $
    152,726Long-term derivative asset
    
    
    98,132
    
    
    
    69,451Current portion of derivative liability
    
    
    (71,103
    )
    
    
    (73,776
    )Long-term derivative liability
    
    
    (25,542
    )
    
    
    (59,103
    )Total net derivative asset
    
    $
    145,922
    
    
    $
    89,298
 Atlas America.
 
 ITEM 4. CONTROLS AND PROCEDURES
    
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  81




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##### Table of Contents



ITEM 1A. RISK FACTORS
  A decrease in natural gas prices could subject ATNs oil and gas properties to a non-cash
impairment loss under generally accepted accounting principles.
 82




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##### Table of Contents



Due to the accounting treatment of ATNs and APLs derivative contracts, increases in prices
for natural gas and crude oil could result in non-cash balance sheet reductions
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Maximum NumberShares Purchased As
    
    
    of Shares that MayPart of Publicly
    
    
    Yet Be PurchasedTotal Number of
    
    
    Average Price
    
    
    Announced Plans
    
    
    Under the PlansShares Purchased
    
    
    paid Per Share
    
    
    or Programs
    
    
    or ProgramsAugust 1  31, 2008
    
    
    392,791
    
    
    $
    36.35
    
    
    
    392,791September
1  30, 2008
    
    
    610,086
    
    
    
    34.36
    
    
    
    610,086October 1
 31, 2008
    
    
    152,706
    
    
    
    33.83
    
    
    
    152,706Total
    
    
    1,155,583
    
    
    $
    34.76
    
    
    
    1,155,583
    
    
    See Note 1
  
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Description2.1
    
    Agreement and Plan of Merger, dated as of April 27, 2009, by
and among Atlas Energy Resources, LLC, Atlas America, Inc.,
Atlas Energy Management, Inc. and Merger Sub, as defined
therein. (11)3.1
    
    Amended and Restated Certificate of Incorporation(1)3.2
    
    Amended and Restated Bylaws(1)4.1
    
    Form of stock certificate(2)
 83




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##### Table of Contents



Exhibit No.

    
    Description10.1
    (a)
    
    Master Natural Gas Gathering Agreement, dated February 2,
2000, among Atlas Pipeline Partners, L.P., Atlas Pipeline
Operating Partnership, L.P., Atlas America, Inc., Resource
Energy, Inc. and Viking Resources Corporation(2)10.1
    (b)
    
    Natural Gas Gathering Agreement among Atlas Pipeline Partners,
L.P., Atlas Pipeline Operating Partnership, L.P., Atlas
Resources, Inc., Atlas Energy Group, Inc., Atlas Noble Corp.,
Resource Energy, Inc. and Viking Resources Corporation dated
January 1, 2002(2)10.1
    (c)
    
    Amendment to Master Natural Gas Gathering Agreement and
Natural Gas Gathering Agreement, dated October 25, 2005, among
Atlas Pipeline Partners, L.P., Atlas Pipeline Operating
Partnership, L.P., Atlas America, Inc., Resource Energy, Inc.,
Viking Resources Corporation, Atlas Noble Corp. and Atlas
Resources, Inc.(3)10.1
    (d)
    
    Amendment and Joinder to Gas Gathering Agreements, dated as of
December 18, 2006, among Atlas Pipeline Partners, L.P., Atlas
Pipeline Operating Partnership, L.P., Atlas America, Inc.,
Resource Energy, LLC, Viking Resources, LLC, Atlas Noble, LLC,
Atlas Resources, LLC, Atlas America, LLC, Atlas Energy
Resources, LLC and Atlas Energy Operating Company,
LLC(4)10.2
    (a)
    
    Omnibus Agreement, dated February 2, 2000, among Atlas
Pipeline Partners, L.P., Atlas Pipeline Operating Partnership,
L.P., Atlas America, Inc., Resource Energy, Inc. and Viking
Resources Corporation(2)10.2
    (b)
    
    Amendment and Joinder to Omnibus Agreement, dated as of
December 18, 2006 among Atlas Pipeline, Atlas America,
Resource Energy, LLC, Viking Resources, LLC, Atlas Energy
Resources, LLC and Atlas Energy Operating Company,
LLC(4)10.3
    
    
    Tax Matters Agreement between Atlas America, Inc. and Resource America, Inc. dated
May 14, 2004(5)10.4
    
    
    Transition Services Agreement between Atlas America, Inc. and Resource America, Inc.
dated May 14, 2004(5)10.5
    
    
    Employment Agreement for Edward E. Cohen dated May 14, 2004(5)10.5
    (a)
    
    Amendment to Employment Agreement dated as of December 31, 2008(12)10.6
    
    
    Agreement for Services among Atlas America, Inc. and Richard Weber, dated April 5,
2006(6)10.6
    (a)
    
    Amendment No. 1 to Agreement for Services dated as of April 26, 2007(7)10.6
    (b)
    
    Amendment No. 2 to Agreement for Services dated as of December 18, 2008(12)10.7
    
    
    Contribution, Conveyance and Assumption Agreement, dated as of December 18, 2006,
among Atlas America, Inc., Atlas Energy Resources, LLC and Atlas Energy Operating
Company, LLC(4)10.8
    
    
    Omnibus Agreement, dated as of December 18, 2006, between Atlas America, Inc. and
Atlas Energy Resources, LLC(4)10.9
    
    
    Management Agreement, dated as of December 18, 2006, among Atlas Energy Resources,
LLC, Atlas Energy Operating Company, LLC and Atlas Energy Management, Inc.(4)
 84




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##### Table of Contents



Exhibit No.
    
    Description10.10
    
    Stock Incentive Plan(12)10.11
    
    Atlas America Employee Stock Ownership Plan(8)10.12
    
    Atlas America, Inc. Investment Savings Plan(8)10.13
    
    Form of Stock Award Agreement(9)10.14
    
    Amended and Restated Annual Incentive Plan for Senior Executives(10)10.15
    
    Employment Agreement between Atlas America, Inc. and Jonathan Z. Cohen dated as of
January 30, 2009(12)31.1
    
    Rule 13(a)-14(a)/15d-14(a) Certification.31.2
    
    Rule 13(a)-14(a)/15d-14(a) Certification.32.1
    
    Section 1350 Certification.32.2
    
    Section 1350 Certification.
 
 (1)
    
    Previously filed as an exhibit to our Form 8-K filed June 14, 2005(2)
    
    Previously filed as an exhibit to our registration statement on Form S-1 (registration no.
333-112653)(3)
    
    Previously filed as an exhibit to our Form 8-K filed October 31, 2005(4)
    
    Previously filed as an exhibit to our Form 10-K for the year ended December 31, 2006(5)
    
    Previously filed as an exhibit to our Form 10-Q for the quarter ended June 30, 2004(6)
    
    Previously filed as an exhibit to our Form 10-Q for the quarter ended June 30, 2006(7)
    
    Previously filed as an exhibit to our Form 8-K filed May 1, 2007(8)
    
    Previously filed as an exhibit to our Form 10-K for the year ended September 30, 2005(9)
    
    Previously filed as an exhibit to our Form 10-Q for the quarter ended December 31, 2005(10)
    
    Previously filed as an exhibit to our definitive proxy statement filed May 8, 2008(11)
    
    Previously filed as an exhibit to our Form 8-K filed April 27, 2009(12)
    
    Previously filed as an exhibit to our Form 10-K for the year ended December 31, 2008 85




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##### Table of Contents



SIGNATURES
  ATLAS AMERICA, INC.Date:  May 11, 2009
    By:
    /s/ EDWARD E. COHENEdward E. CohenChairman of the Board and Chief Executive OfficerDate:  May 11, 2009
    By:
    /s/ MATTHEW A. JONESMatthew A. JonesChief Financial OfficerDate:  May 11, 2009
    By:
    /s/ SEAN P. MCGRATHSean P. McGrathChief Accounting Officer 86