##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

OR



| ̈ | 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 ENERGY, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 51-0404430                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)



|                                                         |  |           
|-------------------------------------------------------- |  | ----------
|1550 Coraopolis Heights Road
Moon Township, Pennsylvania |  | 15108     
|(Address of principal executive office)                  |  | (Zip code)

Registrants telephone number, including area code: (412) 262-2830





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer and smaller reporting company in rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  | x                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The number of outstanding shares of the registrants common stock on May 4, 2010 was 78,325,295 shares.









---

##### Table of Contents

ATLAS ENERGY, INC. AND SUBSIDIARIES

INDEX TO QUARTERLY REPORT

ON FORM 10-Q



|                                         |  |                                                                                          |  |     
|---------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ----
|                                         |  |                                                                                          |  | PAGE
|PART I.            FINANCIAL INFORMATION |  |                                                                                         
|                                         |  |                                                                                         
|Item 1.                                  |  | Financial Statements (Unaudited)                                                         |  | 3   
|                                         |  |                                                                                         
|                                         |  | Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009                   |  | 3   
|                                         |  |                                                                                         
|                                         |  | Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009 |  | 4   
|                                         |  |                                                                                         
|                                         |  | Consolidated Statement of Shareholders Equity for the Three Months Ended March 31,
2010 |  | 5   
|                                         |  |                                                                                         
|                                         |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009 |  | 6   
|                                         |  |                                                                                         
|                                         |  | Notes to Consolidated Financial Statements                                               |  | 7   
|                                         |  |                                                                                         
|Item 2.                                  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations    |  | 45  
|                                         |  |                                                                                         
|Item 3.                                  |  | Quantitative and Qualitative Disclosures About Market Risk                               |  | 59  
|                                         |  |                                                                                         
|Item 4.                                  |  | Controls and Procedures                                                                  |  | 62  
|                                         | 
|PART II.            OTHER INFORMATION    |  |                                                                                         
|                                         |  |                                                                                         
|Item 1.                                  |  | Legal Proceedings                                                                        |  | 63  
|                                         |  |                                                                                         
|Item 1A.                                 |  | Risk Factors                                                                             |  | 63  
|                                         |  |                                                                                         
|Item 6.                                  |  | Exhibits                                                                                 |  | 64  
|                                         | 
|SIGNATURES                               |  | 67                                                                                      



---

##### Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ATLAS ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)



|                                                              |  |               |           |   |                  |   |           |  
|------------------------------------------------------------- |  | ------------- | --------- | - | ---------------- | - | --------- | -
|                                                              |  | March 31,2010 |           |   | December 31,2009 |  
|ASSETS                                                        |  |               |           |   |                  |  
|Current assets:                                               |  |               |           |   |                  |   |           |  
|Cash and cash equivalents                                     |  | $             | 13,548    |   |                  | $ | 20,627    |  
|Accounts receivable                                           |  |               | 137,335   |   |                  |   | 172,848   |  
|Current portion of derivative asset                           |  |               | 118,433   |   |                  |   | 74,064    |  
|Subscriptions receivable from Partnerships                    |  |               |          |   |                  |   | 47,275    |  
|Prepaid expenses and other                                    |  |               | 31,046    |   |                  |   | 31,010    |  
|Prepaid and deferred taxes                                    |  |               | 1,128     |   |                  |   | 1,559     |  
|                                                              |  |               |           |   |                  |   |           |  
|Total current assets                                          |  |               | 301,490   |   |                  |   | 347,383   |  
|                                                              |  |              
|Property, plant and equipment, net                            |  |               | 3,586,735 |   |                  |   | 3,555,802 |  
|Intangible assets, net                                        |  |               | 164,398   |   |                  |   | 170,964   |  
|Goodwill, net                                                 |  |               | 35,166    |   |                  |   | 35,166    |  
|Long-term derivative asset                                    |  |               | 106,383   |   |                  |   | 59,291    |  
|Investment in joint venture                                   |  |               | 130,461   |   |                  |   | 132,990   |  
|Other assets, net                                             |  |               | 82,684    |   |                  |   | 74,833    |  
|Deferred tax asset                                            |  |               | 11,445    |   |                  |   | 29,734    |  
|                                                              |  |               |           |   |                  |   |           |  
|                                                              |  | $             | 4,418,762 |   |                  | $ | 4,406,163 |  
|                                                              |  |               |           |   |                  |   |           |  
|                                                              |  |              
|LIABILITIES AND SHAREHOLDERS EQUITY                          |  |               |           |   |                  |   |           |  
|Current liabilities:                                          |  |               |           |   |                  |   |           |  
|Current portion of long-term debt                             |  | $             | 4,590     |   |                  | $ | 8,000     |  
|Accounts payable                                              |  |               | 82,451    |   |                  |   | 99,748    |  
|Liabilities associated with drilling contracts                |  |               | 49,508    |   |                  |   | 122,532   |  
|Accrued producer liabilities                                  |  |               | 65,621    |   |                  |   | 66,211    |  
|Current portion of derivative payable to Partnerships         |  |               | 37,605    |   |                  |   | 22,382    |  
|Current portion of derivative liability                       |  |               | 17,732    |   |                  |   | 38,485    |  
|Accrued interest                                              |  |               | 28,309    |   |                  |   | 38,898    |  
|Accrued well drilling and completion costs                    |  |               | 84,715    |   |                  |   | 89,261    |  
|Current portion of deferred tax liability                     |  |               | 33,052    |   |                  |   | 26,415    |  
|Accrued liabilities                                           |  |               | 36,316    |   |                  |   | 45,969    |  
|Advances from affiliate                                       |  |               | 143       |   |                  |   | 173       |  
|                                                              |  |               |           |   |                  |   |           |  
|Total current liabilities                                     |  |               | 440,042   |   |                  |   | 558,074   |  
|                                                              |  |              
|Long-term debt, less current portion                          |  |               | 2,070,133 |   |                  |   | 2,040,572 |  
|Long-term derivative payable to Partnerships                  |  |               | 39,187    |   |                  |   | 22,380    |  
|Long-term derivative liability                                |  |               | 38,629    |   |                  |   | 25,441    |  
|Other long-term liabilities                                   |  |               | 58,988    |   |                  |   | 56,180    |  
|Commitments and contingencies                                 |  |               |           |   |                  |   |           |  
|                                                              |  |              
|Shareholders equity:                                         |  |               |           |   |                  |   |           |  
|Preferred stock, $0.01 par value: 1,000,000 authorized shares |  |               |          |   |                  |   |          |  
|Common stock, $0.01 par value: 114,000,000 authorized shares  |  |               | 815       |   |                  |   | 814       |  
|Additional paid-in capital                                    |  |               | 1,159,560 |   |                  |   | 1,156,580 |  
|Treasury stock, at cost                                       |  |               | (142,021  | ) |                  |   | (142,848  | )
|Accumulated other comprehensive income                        |  |               | 99,740    |   |                  |   | 58,022    |  
|Retained earnings                                             |  |               | 48,643    |   |                  |   | 50,744    |  
|                                                              |  |               |           |   |                  |   |           |  
|                                                              |  |               | 1,166,737 |   |                  |   | 1,123,312 |  
|Non-controlling interests                                     |  |               | 605,046   |   |                  |   | 580,204   |  
|                                                              |  |               |           |   |                  |   |           |  
|Total shareholders equity                                    |  |               | 1,771,783 |   |                  |   | 1,703,516 |  
|                                                              |  |               |           |   |                  |   |           |  
|                                                              |  | $             | 4,418,762 |   |                  | $ | 4,406,163 |  
|                                                              |  |               |           |   |                  |   |           |  

See accompanying notes to consolidated financial statements



3



---

##### Table of Contents

ATLAS ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)



|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                         |  | Three Months Ended |        
|                                                                                                                                                                         |  | March 31,          |        
|                                                                                                                                                                         |  | 2010               |         |   | 2009 |  
|Revenues:                                                                                                                                                                |  |                    |         |   |      |   |         |  
|Gas and oil production                                                                                                                                                   |  | $                  | 63,909  |   |      | $ | 71,943  |  
|Well construction and completion                                                                                                                                         |  |                    | 72,642  |   |      |   | 112,368 |  
|Transmission, gathering and processing                                                                                                                                   |  |                    | 279,666 |   |      |   | 163,667 |  
|Administration and oversight                                                                                                                                             |  |                    | 2,047   |   |      |   | 3,853   |  
|Well services                                                                                                                                                            |  |                    | 5,312   |   |      |   | 5,093   |  
|Loss on asset sales                                                                                                                                                      |  |                    | (3,009  | ) |      |   |        |  
|Gain on mark-to-market derivatives                                                                                                                                       |  |                    | 4,133   |   |      |   | 316     |  
|Other, net                                                                                                                                                               |  |                    | 4,257   |   |      |   | 4,881   |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Total revenues                                                                                                                                                           |  |                    | 428,957 |   |      |   | 362,121 |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|                                                                                                                                                                         |  |                   
|Costs and expenses:                                                                                                                                                      |  |                    |         |   |      |   |         |  
|Gas and oil production                                                                                                                                                   |  |                    | 12,284  |   |      |   | 11,286  |  
|Well construction and completion                                                                                                                                         |  |                    | 61,561  |   |      |   | 95,397  |  
|Transmission, gathering and processing                                                                                                                                   |  |                    | 230,057 |   |      |   | 152,527 |  
|Well services                                                                                                                                                            |  |                    | 2,578   |   |      |   | 2,424   |  
|General and administrative                                                                                                                                               |  |                    | 30,555  |   |      |   | 27,607  |  
|Net expense reimbursement  affiliate                                                                                                                                    |  |                    | 256     |   |      |   | 289     |  
|Depreciation, depletion and amortization                                                                                                                                 |  |                    | 49,254  |   |      |   | 50,695  |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Total costs and expenses                                                                                                                                                 |  |                    | 386,545 |   |      |   | 340,225 |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|                                                                                                                                                                         |  |                   
|Operating income                                                                                                                                                         |  |                    | 42,412  |   |      |   | 21,896  |  
|                                                                                                                                                                         |  |                   
|Interest expense                                                                                                                                                         |  |                    | (44,599 | ) |      |   | (34,620 | )
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|                                                                                                                                                                         |  |                   
|Loss from continuing operations before income tax provision (benefit)                                                                                                    |  |                    | (2,187  | ) |      |   | (12,724 | )
|Income tax provision (benefit)                                                                                                                                           |  |                    | (1,408  | ) |      |   | 2,594   |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Net loss from continuing operations                                                                                                                                      |  |                    | (779    | ) |      |   | (15,318 | )
|                                                                                                                                                                         |  |                   
|Discontinued operations:                                                                                                                                                 |  |                    |         |   |      |   |         |  
|Income from discontinued operations (net of income tax provision of $399 for the three months ended March 31,
2009)                                                      |  |                    |        |   |      |   | 8,477   |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Net loss                                                                                                                                                                 |  |                    | (779    | ) |      |   | (6,841  | )
|(Income) loss attributable to non-controlling interests                                                                                                                  |  |                    | (1,322  | ) |      |   | 11,484  |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Net income (loss) attributable to common shareholders                                                                                                                    |  | $                  | (2,101  | ) |      | $ | 4,643   |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|                                                                                                                                                                         |  |                   
|Net income (loss) attributable to common shareholders per share  basic:                                                                                                 |  |                    |         |   |      |   |         |  
|Income (loss) from continuing operations attributable to common shareholders                                                                                             |  | $                  | (0.03   | ) |      | $ | 0.10    |  
|Income from discontinued operations attributable to common shareholders                                                                                                  |  |                    |        |   |      |   | 0.02    |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Net income (loss) attributable to common shareholders                                                                                                                    |  | $                  | (0.03   | ) |      | $ | 0.12    |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|                                                                                                                                                                         |  |                   
|Net income (loss) attributable to common shareholders per share  diluted:                                                                                               |  |                    |         |   |      |   |         |  
|Income (loss) from continuing operations attributable to common shareholders                                                                                             |  | $                  | (0.03   | ) |      | $ | 0.10    |  
|Income from discontinued operations attributable to common shareholders                                                                                                  |  |                    |        |   |      |   | 0.02    |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Net income (loss) attributable to common shareholders                                                                                                                    |  | $                  | (0.03   | ) |      | $ | 0.12    |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|                                                                                                                                                                         |  |                   
|Weighted average common shares outstanding:                                                                                                                              |  |                    |         |   |      |   |         |  
|Basic                                                                                                                                                                    |  |                    | 78,200  |   |      |   | 39,281  |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Diluted                                                                                                                                                                  |  |                    | 78,200  |   |      |   | 39,751  |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|                                                                                                                                                                         |  |                   
|Income (loss) attributable to common shareholders:                                                                                                                       |  |                    |         |   |      |   |         |  
|Income (loss) from continuing operations (net of income tax provision (benefit) of $(1,408) and $2,594 for the three months ended
March 31, 2010 and 2009, respectively) |  | $                  | (2,101  | ) |      | $ | 4,020   |  
|Income from discontinued operations (net of income taxes of $399 for the three months ended March 31, 2009)                                                              |  |                    |        |   |      |   | 623     |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  
|Net income (loss) attributable to common shareholders                                                                                                                    |  | $                  | (2,101  | ) |      | $ | 4,643   |  
|                                                                                                                                                                         |  |                    |         |   |      |   |         |  

See accompanying notes to consolidated financial statements



4



---

##### Table of Contents

ATLAS ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2010

(in thousands, except share data)

(Unaudited)



|                                                 |  |              |  |         |     |            |                |           |        |               |            |          |  |   |             |   |          |               |        |           |   |        |        |  |   |         |   |  |   |           |  
|------------------------------------------------ |  | ------------ |  | ------- | --- | ---------- | -------------- | --------- | ------ | ------------- | ---------- | -------- |  | - | ----------- | - | -------- | ------------- | ------ | --------- | - | ------ | ------ |  | - | ------- | - |  | - | --------- | -
|                                                 |  |              |  |         |     |            |                |           |        |               |            |          |  |   | Accumulated |   |          |               |        |           |   |        |        | 
|                                                 |  |              |  |         |     | Additional |                |           |        |               |            |          |  |   | Other       |   |          |               |        | Non-      |   |        | Total  | 
|                                                 |  | Common Stock |  | Paid-In |     |            | Treasury Stock |           |        | Comprehensive |            | Retained |  |   | Controlling |   |          | Shareholders |       
|                                                 |  | Shares       |  | Amount  |     | Capital    |                |           | Shares |               |            | Amount   |  |   | Income      |   | Earnings |               |        | Interests |   |        | Equity | 
|Balance, January 1, 2010                         |  | 81,290,492   |  | $       | 814 |            | $              | 1,156,580 |        |               | (3,144,681 | )        |  | $ | (142,848    | ) |          | $             | 58,022 |           | $ | 50,744 |        |  | $ | 580,204 |   |  | $ | 1,703,516 |  
|Issuance of common shares                        |  | 150,622      |  |         | 1   |            |                | (197      | )      |               | 19,632     |          |  |   | 827         |   |          |               |       |           |   |       |        |  |   |        |   |  |   | 631       |  
|Other comprehensive income                       |  |             |  |         |    |            |                |          |        |               |           |          |  |   |            |   |          |               | 41,718 |           |   |       |        |  |   | 9,418   |   |  |   | 51,136    |  
|Stock compensation expense                       |  |             |  |         |    |            |                | 3,177     |        |               |           |          |  |   |            |   |          |               |       |           |   |       |        |  |   |        |   |  |   | 3,177     |  
|Distributions to non-controlling interests       |  |             |  |         |    |            |                |          |        |               |           |          |  |   |            |   |          |               |       |           |   |       |        |  |   | (1,703  | ) |  |   | (1,703    | )
|Non-controlling interests capital contributions |  |             |  |         |    |            |                |          |        |               |           |          |  |   |            |   |          |               |       |           |   |       |        |  |   | 15,805  |   |  |   | 15,805    |  
|Net income (loss)                                |  |             |  |         |    |            |                |          |        |               |           |          |  |   |            |   |          |               |       |           |   | (2,101 | )      |  |   | 1,322   |   |  |   | (779      | )
|                                                 |  |              |  |         |     |            |                |           |        |               |            |          |  |   |             |   |          |               |        |           |   |        |        |  |   |         |   |  |   |           |  
|Balance, March 31, 2010                          |  | 81,441,114   |  | $       | 815 |            | $              | 1,159,560 |        |               | (3,125,049 | )        |  | $ | (142,021    | ) |          | $             | 99,740 |           | $ | 48,643 |        |  | $ | 605,046 |   |  | $ | 1,771,783 |  
|                                                 |  |              |  |         |     |            |                |           |        |               |            |          |  |   |             |   |          |               |        |           |   |        |        |  |   |         |   |  |   |           |  

See accompanying notes to consolidated financial statements



5



---

##### Table of Contents

ATLAS ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)



|                                                                                |  |                              |          |   |      |   |          |  
|------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                |  | Three Months Ended March 31, |         
|                                                                                |  | 2010                         |          |   | 2009 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                           |  |                              |          |   |      |   |          |  
|Net loss                                                                        |  | $                            | (779     | ) |      | $ | (6,841   | )
|Income from discontinued operations                                             |  |                              |         |   |      |   | 8,477    |  
|                                                                                |  |                              |          |   |      |   |          |  
|Loss from continuing operations                                                 |  |                              | (779     | ) |      |   | (15,318  | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |                              |          |   |      |   |          |  
|Depreciation, depletion and amortization                                        |  |                              | 49,254   |   |      |   | 50,695   |  
|Amortization of deferred finance costs                                          |  |                              | 2,752    |   |      |   | 1,713    |  
|Non-cash loss on derivative value, net                                          |  |                              | 8,303    |   |      |   | 45,490   |  
|Non-cash compensation expense                                                   |  |                              | 5,008    |   |      |   | 2,270    |  
|Loss on asset sales and dispositions                                            |  |                              | 3,009    |   |      |   |         |  
|Distributions paid to non-controlling interests                                 |  |                              | (1,703   | ) |      |   | (36,319  | )
|Equity (income) loss in unconsolidated companies                                |  |                              | (1,695   | ) |      |   | 188      |  
|Distributions received from unconsolidated companies                            |  |                              | 3,991    |   |      |   |         |  
|Deferred income taxes                                                           |  |                              | (9,980   | ) |      |   | 1,612    |  
|Changes in operating assets and liabilities:                                    |  |                              |          |   |      |   |          |  
|Accounts receivable and prepaid expenses and other                              |  |                              | 80,477   |   |      |   | 32,935   |  
|Accounts payable and accrued liabilities                                        |  |                              | (100,428 | ) |      |   | (69,555  | )
|                                                                                |  |                              |          |   |      |   |          |  
|Net cash provided by continuing operations operating activities                 |  |                              | 38,209   |   |      |   | 13,711   |  
|Net cash provided by discontinued operations operating activities               |  |                              |         |   |      |   | 12,012   |  
|                                                                                |  |                              |          |   |      |   |          |  
|Net cash provided by operating activities                                       |  |                              | 38,209   |   |      |   | 25,723   |  
|                                                                                |  |                              |          |   |      |   |          |  
|                                                                                |  |                             
|CASH FLOWS FROM INVESTING ACTIVITIES:                                           |  |                              |          |   |      |   |          |  
|Capital expenditures                                                            |  |                              | (80,913  | ) |      |   | (129,403 | )
|Investments in unconsolidated companies                                         |  |                              | (6,323   | ) |      |   | (2       | )
|Proceeds from asset sales                                                       |  |                              | 165      |   |      |   | 114      |  
|Other                                                                           |  |                              | (274     | ) |      |   | (104     | )
|                                                                                |  |                              |          |   |      |   |          |  
|Net cash used in continuing operations investing activities                     |  |                              | (87,345  | ) |      |   | (129,395 | )
|Net cash used in discontinued operations investing activities                   |  |                              |         |   |      |   | (651     | )
|                                                                                |  |                              |          |   |      |   |          |  
|Net cash used in investing activities                                           |  |                              | (87,345  | ) |      |   | (130,046 | )
|                                                                                |  |                              |          |   |      |   |          |  
|                                                                                |  |                             
|CASH FLOWS FROM FINANCING ACTIVITIES:                                           |  |                              |          |   |      |   |          |  
|Borrowings under subsidiary credit facilities                                   |  |                              | 252,000  |   |      |   | 310,000  |  
|Repayments under subsidiary credit facilities                                   |  |                              | (228,661 | ) |      |   | (217,000 | )
|Net proceeds from subsidiary equity offerings                                   |  |                              | 15,331   |   |      |   |         |  
|Dividends paid                                                                  |  |                              |         |   |      |   | (1,968   | )
|Proceeds from employee share purchases                                          |  |                              | 630      |   |      |   |         |  
|Deferred financing costs and other                                              |  |                              | 2,757    |   |      |   | (3,879   | )
|                                                                                |  |                              |          |   |      |   |          |  
|Net cash provided by financing activities                                       |  |                              | 42,057   |   |      |   | 87,153   |  
|                                                                                |  |                              |          |   |      |   |          |  
|                                                                                |  |                             
|Net change in cash and cash equivalents                                         |  |                              | (7,079   | ) |      |   | (17,170  | )
|Cash and cash equivalents, beginning of period                                  |  |                              | 20,627   |   |      |   | 104,496  |  
|                                                                                |  |                              |          |   |      |   |          |  
|Cash and cash equivalents, end of period                                        |  | $                            | 13,548   |   |      | $ | 87,326   |  
|                                                                                |  |                              |          |   |      |   |          |  

See accompanying notes to consolidated financial statements



6



---

##### Table of Contents

ATLAS ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(Unaudited)

NOTE 1
 BASIS OF PRESENTATION

Atlas Energy, Inc. (the Company) is a publicly traded Delaware corporation
(NASDAQ: ATLS) which is an independent developer and producer of natural gas and oil, with operations in the Appalachian, Michigan, and Illinois Basins. On September 29, 2009, the Company completed its merger with Atlas Energy Resources, LLC
(ATN), the Companys formerly publicly traded subsidiary and a Delaware limited liability company, pursuant to the definitive merger agreement previously executed, with ATN surviving as the Companys wholly-owned subsidiary
(the Merger) (see Note 3). Additionally, Atlas America, Inc. changed its name to Atlas Energy, Inc. upon completion of the Merger.

In addition to its natural gas development and production operations, the Company also maintains ownership interests in the following
entities:



| |  |  | 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. At March 31, 2010, the Company had a 2.1% 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, 2010, the Company owned
approximately 64.3% of the outstanding common units of AHD. At March 31, 2010, AHD owned a 1.9% general partner interest, all of the incentive distribution rights, an approximate 10.8% common limited partner interest, and 15,000 $1,000 par
value 12.0% Class B cumulative preferred limited partner units in APL; 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. At
March 31, 2010, the Company has satisfied its commitment to invest a total of $19.7 million in Lightfoot. The Company also has direct and indirect ownership interest in Lightfoot LP.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying consolidated financial statements, which are unaudited except that the balance sheet at December 31, 2009, is
derived from audited financial statements, are presented in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States for interim reporting. They do not include all disclosures normally made in
financial statements contained in Form 10-K. In managements opinion, all adjustments necessary for a fair presentation of the Companys financial position, results of operations and cash flows for the periods disclosed have been made.
These interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto presented in the Companys Annual Report on Form 10-K for the year ended December 31, 2009. Certain
amounts in the prior years consolidated financial statements have also been reclassified to conform to the current year presentation, including amounts related to APLs NOARK system, which have been reclassified to discontinued operations
following the sale of that system (see Note 5). The results of operations for the three month period ended March 31, 2010 may not necessarily be indicative of the results of operations for the full year ending December 31, 2010.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Non-Controlling Interest

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned at
March 31, 2010 except for AHD, which is controlled by the Company, and APL, which is controlled by AHD. The financial statements of AHD include its accounts and the accounts of its subsidiaries, all of which are wholly-owned except for APL.
Prior to ATNs merger with the Companys wholly-owned subsidiary on September 29, 2009, ATN was a controlled subsidiary of the Company but was not wholly-owned (see Note 3). The non-controlling ownership interests in the net income
(loss) of ATN prior to the Merger, AHD and APL are reflected within non-controlling interests on the Companys consolidated statements of operations. The non-controlling interests in the assets and liabilities of AHD and APL are reflected as a
component of shareholders equity on the Companys consolidated balance sheets. All material intercompany transactions have been eliminated.



7



---

##### Table of Contents

In accordance with established practice in the oil and gas industry, the Companys
financial statements include its pro-rata share of assets, liabilities, income and lease operating and general and administrative costs and expenses of the energy partnerships in which the Company has an interest (the Partnerships). Such
interests typically range from 15% to 35%. The Companys financial statements do not include proportional consolidation of the depletion or impairment expenses of the Partnerships. Rather, the Company calculates these items specific to its own
economics as further explained under the heading Property, Plant and Equipment below.

The Companys
consolidated financial statements also include APLs 95% ownership interest in joint ventures which individually own a 100% ownership interest in the Chaney Dell natural gas gathering system and processing plants and a 72.8% undivided interest
in the Midkiff/Benedum natural gas gathering system and processing plants. APL consolidates 100% of these joint ventures. The Company reflects the non-controlling 5% ownership interest in the joint ventures as non-controlling interests on its
statements of operations. The Company also reflects the 5% ownership interest in the net assets of the joint ventures as non-controlling interests as a component of shareholders equity on its consolidated balance sheets. The joint ventures
have a $1.9 billion note receivable from the holder of the 5% ownership interest in the joint ventures, which is reflected within non-controlling interests on the Companys consolidated balance sheets.

The Midkiff/Benedum joint venture has a 72.8% undivided joint venture interest in the Midkiff/Benedum system, of which the remaining
27.2% interest is owned by Pioneer Natural Resources Company (NYSE: PXD) (Pioneer). Due to the Midkiff/Benedum systems status as an undivided joint venture, the Midkiff/Benedum joint venture proportionally consolidates its 72.8%
ownership interest in the assets and liabilities and operating results of the Midkiff/Benedum system.

Use of Estimates

The preparation of the Companys consolidated financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities that exist at the date of the Companys consolidated financial
statements, as well as the reported amounts of revenue and costs and expenses during the reporting periods. The Companys consolidated financial statements are based on a number of significant estimates, including the revenue and expense
accruals, deferred tax assets and liabilities, depletion, depreciation and amortization, asset impairments, fair value of derivative instruments, the probability of forecasted transactions and the allocation of purchase price to the fair value of
assets acquired. Actual results could differ from those estimates.

The natural gas industry principally conducts its business
by processing actual transactions as much as 60 days after the month of delivery. Consequently, the most recent two months financial results were recorded using estimated volumes and contract market prices. Differences between estimated and
actual amounts are recorded in the following months financial results. Management believes that the operating results presented for the three months ended March 31, 2010 and 2009 represent actual results in all material respects (see
- Revenue Recognition accounting policy for further description).

Property, Plant and Equipment

Property, plant and equipment are stated at cost or, upon acquisition of a business, at the fair value of the assets acquired (see Note
6). Depreciation and amortization expense is based on cost less the estimated salvage value primarily using the straight-line method over the assets estimated useful life. Maintenance and repairs are expensed as incurred. Major renewals and
improvements that extend the useful lives of property are capitalized.

The Company follows the successful efforts method of
accounting for oil and gas producing activities. Exploratory drilling costs are capitalized pending determination of whether a well is successful. Exploratory wells subsequently determined to be dry holes are charged to expense. Costs resulting in
exploratory discoveries and all development costs, whether successful or not, are capitalized. Geological and geophysical costs, delay rentals and unsuccessful exploratory wells are expensed. Oil is converted to gas equivalent basis
(Mcfe) at the rate of one barrel equals 6 Mcf.



8



---

##### Table of Contents

The Companys depletion expense is determined on a field-by-field basis using the
units-of-production method. Depletion rates for leasehold acquisition costs are based on estimated proved reserves and depletion rates for well and related equipment costs are based on proved developed reserves associated with each
field. Depletion rates are determined based on reserve quantity estimates and the capitalized costs of undeveloped and developed producing properties. Capitalized costs of developed producing properties in each field are aggregated to include
the Companys costs of property interests in uncontrolled, but proportionately consolidated investment partnerships, wells drilled solely by the Company for its interests, properties purchased and working interests with other outside operators.

Upon the sale or retirement of a complete field of a proved property, the Company eliminates the cost from the property
accounts, and the resultant gain or loss is reclassified to the Companys consolidated statements of operations. Upon the sale of an individual well, the Company credits the proceeds to accumulated depreciation and depletion within its
consolidated balance sheets. Upon the Companys sale of an entire interest in an unproved property where the property had been assessed for impairment individually, a gain or loss is recognized in the Companys consolidated statements of
operations. If a partial interest in an unproved property is sold, any funds received are accounted for as a reduction of the cost in the interest retained.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. If it is determined that an assets estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its
estimated fair value if such carrying amount exceeds the fair value.

The review of the Companys oil and gas properties
is done on a field-by-field basis by determining if the historical cost of proved properties less the applicable accumulated depletion, depreciation and amortization and abandonment is less than the estimated expected undiscounted future cash flows.
The expected future cash flows are estimated based on the Companys plans to continue to produce and develop proved reserves. Expected future cash flow from the sale of production of reserves is calculated based on estimated future prices. The
Company estimates prices based upon current contracts in place, adjusted for basis differentials and market related information including published futures prices. The estimated future level of production is based on assumptions surrounding future
prices and costs, field decline rates, market demand and supply and the economic and regulatory climates. If the carrying value exceeds the expected future cash flows, an impairment loss is recognized for the difference between the estimated fair
market value (as determined by discounted future cash flows) and the carrying value of the assets.

The determination of oil
and natural gas reserve estimates is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically
recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, the Companys reserve estimates for its
investment in the Partnerships are based on its own assumptions rather than its proportionate share of the limited partnerships reserves. These assumptions include the Companys actual capital contributions, an additional carried interest
(generally 7% to 10%), a disproportionate share of salvage value upon plugging of the wells and lower operating and administrative costs.

The Companys lower operating and administrative costs result from the limited partners in the Partnerships paying to the Company
their proportionate share of these expenses plus a profit margin. These assumptions could result in the Companys calculation of depletion and impairment being different than its proportionate share of the Partnerships calculations for
these items. In addition, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Estimated reserves are often subject to future revisions, which could be substantial, based on
the availability of additional information which could cause the assumptions to be modified. The Company cannot predict what reserve revisions may be required in future periods.

The Companys method of calculating its reserves may result in reserve quantities and values which are greater than those which
would be calculated by the Partnerships, which the Company sponsors and owns an interest in but does not control. The Companys reserve quantities include reserves in excess of its proportionate share of reserves in a Partnership which the
Company may be unable to recover due to the Partnership legal structure. The Company may have to pay additional consideration in the future as a well or Partnership becomes uneconomic under the terms of the partnership agreement in order to recover
these excess reserves and to acquire any additional residual interests in the wells held by other partnership investors. The acquisition of any well interest from the Partnership by the Company is governed under the partnership agreement and must be
at fair market value supported by an appraisal of an independent expert selected by the Company. There were no impairments of proved oil and gas properties recorded by the Company for the three months ended March 31, 2010 and 2009.



9



---

##### Table of Contents

Unproved properties are reviewed annually for impairment or whenever events or circumstances
indicate that the carrying amount of an asset may not be recoverable. Impairment charges are recorded if conditions indicate the Company will not explore the acreage prior to expiration of the applicable leases or if it is determined that the
carrying value of the properties is above their fair value. There were no impairments of unproved oil and gas properties recorded by the Company for the three months ended March 31, 2010 and 2009.

During the three months ended December 31, 2009, the Company recognized a $156.4 million asset impairment related to oil and gas
properties within property, plant and equipment on its consolidated balance sheet for its shallow natural gas wells in the Upper Devonian shale. This impairment related to the carrying amount of these oil and gas properties being in excess of its
estimate of their fair value at December 31, 2009. The estimate of fair value of these oil and gas properties was impacted by, among other factors, the deterioration of natural gas prices. In addition, during the three months ended
December 31, 2009, APL evaluated its long-lived assets for impairment and recognized a $10.3 million impairment related to inactive pipelines and a reduction in estimated useful lives.

Capitalized Interest

The Company and its subsidiaries capitalize interest on borrowed funds related to capital projects only for periods that activities are in
progress to bring these projects to their intended use. The weighted average rate used to capitalize interest on combined borrowed funds by the Company in the aggregate was 9.6% and 5.9% for the three months ended March 31, 2010 and 2009,
respectively. The aggregate amount of interest capitalized by the Company was $3.0 million and $3.4 million for the three months ended March 31, 2010 and 2009, respectively.

Intangible Assets

Customer contracts and relationships.APL amortizes intangible assets with finite lives in connection with natural gas gathering
contracts and customer relationships assumed in certain consummated acquisitions, which APL amortizes over their estimated useful lives. If an intangible asset has a finite useful life, but the precise length of that life is not known, that
intangible asset must be amortized over the best estimate of its useful life. At a minimum, APL will assess the useful lives of all intangible assets on an annual basis to determine if adjustments are required. The estimated useful life for
APLs customer contract intangible assets is based upon the approximate average length of customer contracts in existence and expected renewals at the date of acquisition. The estimated useful life for APLs customer relationship
intangible assets is based upon the estimated average length of non-contracted customer relationships in existence at the date of acquisition, adjusted for APLs managements estimate of whether the individual relationships will continue
in excess or less than the average length.

Partnership management and operating contracts.The Company has recorded
intangible assets with finite lives in connection with partnership management and operating contracts acquired through consummated acquisitions. The Company amortizes contracts acquired on a declining balance and straight-line method over their
respective estimated useful lives.

The following table reflects the components of intangible assets being amortized at
March 31, 2010 and December 31, 2009 (in thousands):



|                                               |  |           |         |   |              |   |         |                        |  |       
|---------------------------------------------- |  | --------- | ------- | - | ------------ | - | ------- | ---------------------- |  | ------
|                                               |  | March 31, |         |   | December 31, |   |         | Estimated
Useful Lives
|                                               |  | 2010      |         |   | 2009         |   |         | In Years              
|Gross Carrying Amount:                         |  |           |         |   |              |   |         |                        |  |       
|Customer contracts and relationships           |  | $         | 235,382 |   |              | $ | 235,382 |                        |  | 3  15
|Partnership management and operating contracts |  |           | 14,343  |   |              |   | 14,343  |                        |  | 2  13
|                                               |  |           |         |   |              |   |         |                        |  |       
|                                               |  | $         | 249,725 |   |              | $ | 249,725 |                        |  |       
|                                               |  |           |         |   |              |   |         |                        |  |       
|Accumulated Amortization:                      |  |           |         |   |              |   |         |                        |  |       
|Customer contracts and relationships           |  | $         | (73,680 | ) |              | $ | (67,291 | )                      |  |       
|Partnership management and operating contracts |  |           | (11,647 | ) |              |   | (11,470 | )                      |  |       
|                                               |  |           |         |   |              |   |         |                        |  |       
|                                               |  | $         | (85,327 | ) |              | $ | (78,761 | )                      |  |       
|                                               |  |           |         |   |              |   |         |                        |  |       
|                                               |  |           |        
|Net Carrying Amount:                           |  |           |         |   |              |   |         |                        |  |       
|Customer contracts and relationships           |  | $         | 161,702 |   |              | $ | 168,091 |                        |  |       
|Partnership management and operating contracts |  |           | 2,696   |   |              |   | 2,873   |                        |  |       
|                                               |  |           |         |   |              |   |         |                        |  |       
|                                               |  | $         | 164,398 |   |              | $ | 170,964 |                        |  |       
|                                               |  |           |         |   |              |   |         |                        |  |       



10



---

##### Table of Contents

Amortization expense on intangible assets was $6.6 million and $6.7 million for the three
months ended March 31, 2010 and 2009, respectively. Aggregate estimated annual amortization expense for all of the contracts described above for the next five years ending December 31 is as follows: 2010-$26.3 million; 2011-$26.2 million;
2012-$25.7 million; 2013-$24.6 million; and 2014-$20.6 million.

Goodwill

At March 31, 2010 and December 31, 2009, the Company had $35.2 million of goodwill recorded in connection with consummated
acquisitions. There were no changes in the carrying amount of goodwill for the three months ended March 31, 2010 and 2009.

The Company and its subsidiaries test their goodwill for impairment at each year end by comparing their reporting unit estimated fair
values to carrying values. Because quoted market prices for the reporting units are not available, the Companys and subsidiaries management must apply judgment in determining the estimated fair value of these reporting units. The
Companys and subsidiaries management uses all available information to make these fair value determinations, including the present values of expected future cash flows using discount rates commensurate with the risks involved in the
assets. A key component of these fair value determinations is a reconciliation of the sum of the fair value calculations to the Companys and subsidiaries market capitalization. The observed market prices of individual trades of an
entitys equity securities (and thus its computed market capitalization) may not be representative of the fair value of the entity as a whole. Substantial value may arise from the ability to take advantage of synergies and other benefits that
flow from control over another entity. Consequently, measuring the fair value of a collection of assets and liabilities that operate together in a controlled entity is different from measuring the fair value of that entity on a stand-alone basis. In
most industries, including the Companys and its subsidiaries, an acquiring entity typically is willing to pay more for equity securities that give it a controlling interest than an investor would pay for a number of equity securities
representing less than a controlling interest. Therefore, once the above fair value calculations have been determined, the Companys and its subsidiaries management also consider the inclusion of a control premium within the calculations.
This control premium is judgmental and is based on, among other items, observed acquisitions in the Companys and its subsidiaries industry. The resultant fair values calculated for the reporting units are compared to observable metrics
on large mergers and acquisitions in the Companys and its subsidiaries industry to determine whether those valuations appear reasonable in managements judgment. The Company and its subsidiaries will continue to evaluate goodwill at
least annually or when impairment indicators arise. There were no goodwill impairments recognized by the Company and its subsidiaries during the three months ended March 31, 2010 and 2009.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding
during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) by the sum of the weighted average number of common shares outstanding and the dilutive effect of potential shares issuable during the period, as
calculated by the treasury stock method. Dilutive potential shares of common shares consist of the excess of shares issuable under the terms of the Companys stock incentive plan over the number of such shares that could have been reacquired
(at the weighted average market price of shares during the period) with the proceeds received from the exercise of the stock options (see Note 17). The following table sets forth the reconciliation of the Companys weighted average number of
common shares used to compute basic net income (loss) per share with those used to compute diluted net income (loss) per share (in thousands):



|                                                   |  |                             |  |       
|-------------------------------------------------- |  | --------------------------- |  | ------
|                                                   |  | Three Months EndedMarch 31,
|                                                   |  | 2010(1)                     |  | 2009  
|Weighted average number of shares  basic          |  | 78,200                      |  | 39,281
|Add: effect of dilutive incentive awards           |  |                            |  | 470   
|                                                   |  |                             |  |       
|Weighted average number of common shares  diluted |  | 78,200                      |  | 39,751
|                                                   |  |                             |  |       



| | (1) | During the three months ended March 31, 2010, approximately 2,900,000 shares were excluded from the calculation of diluted net income (loss) per share because the
inclusion of such shares would have been anti-dilutive.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



11



---

##### Table of Contents

Revenue Recognition

Certain energy activities are conducted by the Company through, and a portion of its revenues are attributable to, sponsored investment
partnerships. The Company contracts with the Partnerships to drill partnership wells. The contracts require that the Partnerships must pay the Company the full contract price upon execution. The income from a drilling contract is recognized as the
services are performed using the percentage of completion method. The contracts are typically completed between 60 and 180 days. On an uncompleted contract, the Company classifies the difference between the contract payments it has received and the
revenue earned as a current liability titled Liabilities Associated with Drilling Contracts on the Companys consolidated balance sheets. The Company recognizes well services revenues at the time the services are performed. The
Company is also entitled to receive management fees according to the respective partnership agreements and recognizes such fees as income when earned and includes them in administration and oversight revenues.

The Company generally sells natural gas and crude oil at prevailing market prices. Revenue is recognized when produced quantities are
delivered to a custody transfer point, persuasive evidence of a sales arrangement exists, the rights and responsibility of ownership pass to the purchaser upon delivery, collection of revenue from the sale is reasonably assured and the sales price
is fixed or determinable. Revenues from the production of natural gas and crude oil in which the Company has an interest with other producers are recognized on the basis of the Companys percentage ownership of working interest and/or
overriding royalty. Generally, the Companys sales contracts are based on pricing provisions that are tied to a market index, with certain adjustments based on proximity to gathering and transmission lines and the quality of its natural gas.

Atlas Pipeline.APLs revenue primarily consists of the fees earned from its transmission, gathering and
processing operations. Under certain agreements, APL purchases natural gas from producers and moves it into receipt points on its pipeline systems, and then sells the natural gas, or produced natural gas liquids (NGLs), if any, off of
delivery points on its systems. Under other agreements, APL transports natural gas across its systems, from receipt to delivery point, without taking title to the natural gas. Revenue associated with the physical sale of natural gas is recognized
upon physical delivery of the natural gas. In connection with its gathering and processing operations, APL enters into the following types of contractual relationships with its producers and shippers:



| |  |  | 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.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



12



---

##### Table of Contents

The Company accrues unbilled revenue due to timing differences between the delivery of
natural gas, NGLs, crude oil and condensate and the receipt of a delivery statement. These revenues are recorded based upon volumetric data from the Companys and APLs records and management estimates of the related commodity sales and
transportation and compression fees which are, in turn, based upon applicable product prices (see Use of Estimates accounting policy for further description). The Company had unbilled revenues at March 31, 2010 and
December 31, 2009 of $65.8 million and $94.9 million, respectively, which are included in accounts receivable within the Companys consolidated balance sheets.

Comprehensive Income

Comprehensive income includes net income and all other changes in the equity of a business during a period from transactions and other
events and circumstances from non-owner sources that, under accounting principles generally accepted in the United States, have not been recognized in the calculation of net income. These changes, other than net income, are referred to as
other comprehensive income and for the Company includes changes in the fair value of unsettled derivative contracts accounted for as cash flow hedges and post-retirement plan liabilities (which are presented net of income taxes). The
following table sets forth the calculation of the Companys comprehensive income (loss) (in thousands):



|                                                                                                                                                                                        |  |                             |        |   |      |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                                                                                                                        |  | Three Months EndedMarch 31, |       
|                                                                                                                                                                                        |  | 2010                        |        |   | 2009 |  
|Net loss                                                                                                                                                                                |  | $                           | (779   | ) |      | $ | (6,841  | )
|(Income) loss attributable to non-controlling interests                                                                                                                                 |  |                             | (1,322 | ) |      |   | 11,484  |  
|                                                                                                                                                                                        |  |                             |        |   |      |   |         |  
|Net income (loss) attributable to common shareholders                                                                                                                                   |  |                             | (2,101 | ) |      |   | 4,643   |  
|Other comprehensive income:                                                                                                                                                             |  |                             |        |   |      |   |         |  
|Changes in fair value of derivative instruments accounted for as cash flow hedges, net of taxes of $35,429 and $17,225 for the
three months ended March 31, 2010 and 2009, respectively |  |                             | 55,191 |   |      |   | 73,450  |  
|Less: reclassification adjustment for realized losses (gains) in net income (loss), net of taxes of $8,302 and 2,247 for the
three months ended March 31, 2010 and 2009, respectively   |  |                             | (3,342 | ) |      |   | 646     |  
|Changes in non-controlling interest related to items in other comprehensive income                                                                                                      |  |                             | (9,418 | ) |      |   | (50,670 | )
|Plus: amortization of additional post-retirement liability, net of tax provision (benefit) of ($392) and $13 for the three months
ended March 31, 2010 and 2009, respectively           |  |                             | (713   | ) |      |   | 22      |  
|                                                                                                                                                                                        |  |                             |        |   |      |   |         |  
|Total other comprehensive income                                                                                                                                                        |  |                             | 41,718 |   |      |   | 23,448  |  
|                                                                                                                                                                                        |  |                             |        |   |      |   |         |  
|Comprehensive income attributable to common shareholders                                                                                                                                |  | $                           | 39,617 |   |      | $ | 28,091  |  
|                                                                                                                                                                                        |  |                             |        |   |      |   |         |  

Recently Adopted Accounting Standards

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2010-02, Fair Value
Measurement and Disclosures (Topic (820)  Improving Disclosures about Fair Value Measurement (Update 2010-06). Update 2010-06 clarifies and requires new disclosures about the transfer of amounts between Level 1 and Level
2, as well as significant transfers in and out of Level 3. In addition, for Level 2 and Level 3 measurements, Update 2010-06 requires additional disclosure about the valuation technique used or any changes in technique. Update 2010-06 also clarifies
that entities must disclose fair value measurements by classes of assets and liabilities, based on the nature and risks of the assets and liabilities. The requirements of Update 2010-06 are effective at the start of a reporting entitys first
fiscal year beginning after December 15, 2009 (January 1, 2010 for the Company). The Company applied the requirements of Update 2010-06 upon its adoption on January 1, 2010, and it did not have a material impact on its financial position,
results of operations or related disclosures.

In January 2010, the FASB issued Accounting Standards Update 2010-02,
Consolidation (Topic (810)Accounting and Reporting for Decreases in Ownership of a Subsidiary  A Scope Clarification (Update 2010-02). Subtopic 810-10 previously applied to decrease-in-ownership provisions when an
entity either deconsolidates or realizes a decrease in ownership in which the entity retains control. When an entity deconsolidates a subsidiary, it is required to record any remaining interest at fair value and recognize a gain or loss. Update
2010-02 amends Subtopic 810-10 Consolidation  Overall and provides clarification on the entities and activities required to follow more specific guidance already included in the ASC. Update 2010-02 includes in the scope of
decrease-in-ownership provisions of ASC 810-10 a subsidiary or groups of assets that is a business or nonprofit activity, a subsidiary or group of assets transferred to an equity method investee or joint venture, or an exchange of a group of assets
that constitutes a business or nonprofit activity for a non-controlling interest in an entity. Excluded from the scope of Subtopic 810-10 are sales of in-substance real estate and conveyances of oil and gas mineral rights. The requirements of Update
2010-02 are effective at the start of a reporting entitys first fiscal year beginning after December 15, 2009 (January 1, 2010 for the Company). The Company applied the requirements of Update 2010-02 upon its adoption on January 1,
2010, and it did not have a material impact on its financial position, results of operations or related disclosures.



13



---

##### Table of Contents

In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for
Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing (Update 2009-15). Update 2009-15 includes amendments to Topic 470, Debt, and Topic 260, Earnings per Share, to
provide guidance on share-lending arrangements entered into on an entitys own shares in contemplation of a convertible debt offering or other financing. These requirements are effective for existing arrangements for fiscal years beginning on
or after December 15, 2009 (January 1, 2010 for the Company), and interim periods within those fiscal years for arrangements outstanding as of the beginning of those years, with retrospective application required for such arrangements that meet
the criteria. These requirements are also effective for arrangements entered into on (not outstanding) or after the beginning of the first reporting period that begins on or after June 15, 2009. The Company adopted the requirements of Update
2009-15 on January 1, 2010, and it did not have a material impact on its financial position, results of operations or related disclosures.

In June 2009, the FASB issued ASC 810-10-25-20 through 25-59, Consolidation of Variable Interest Entities (ASC
810-10-25-20), which changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. ASC 820-10-25-20 requires a reporting entity to
provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest
entity affects the reporting entitys financial statements. The requirements of ASC 820-10-25-20 are effective at the start of a reporting entitys first fiscal year beginning after November 15, 2009 (January 1, 2010 for the Company).
The Company adopted the requirements of ASC 810-10-25-20 on January 1, 2010, and it did not have a material impact on its financial position, results of operations or related disclosures.

NOTE 3  COMMON STOCK

Merger
with Atlas Energy Resources, LLC

On September 29, 2009, the Company completed its Merger, with ATN surviving as the
Companys wholly-owned subsidiary. In the Merger, the 33.4 million Class B common units of ATN not previously held by the Company were exchanged for 38.8 million shares of the Companys common stock (a ratio of 1.16 shares of the
Companys common stock for each Class B common unit of ATN). The Company also changed its name from Atlas America, Inc. to Atlas Energy, Inc. Concurrent with the Merger, the Compensation Committee of the Board of Directors approved the Atlas
Energy, Inc. 2009 Stock Incentive Plan, which created a new stock incentive plan for the combined entity. The Company also has assumed the legacy Atlas America stock incentive plan and the legacy ATN Long-Term Incentive Plan (see Note 17). Due to
the Merger, the Company recognized a reduction of $556.4 million in non-controlling interests, a decrease of $197.4 million in deferred tax liabilities, and a $741.8 million increase to additional paid-in-capital on the Companys consolidated
balance sheet. The Company accounted for the Merger transaction in accordance with prevailing accounting literature related to entities under common control and recognized the cost of the interests exchanged in the Merger, excluding transaction
costs incurred, of $741.8 million as a non-cash item in its consolidated statement of cash flows during the year ended December 31, 2009.



14



---

##### Table of Contents

The following data presents pro forma revenue, net income, net income per share and basic
and diluted weighted average shares outstanding for the Company for the three months ended March 31, 2009 as if the Merger discussed above had occurred on January 1, 2009. The Company has prepared these unaudited pro forma financial
results for comparative purposes only. The pro forma adjustments reflect an adjustment to income previously allocated to non-controlling interests offset by the related tax impact. These pro forma financial results may not be indicative of the
results that would have occurred if the Merger had been completed at the beginning of the period shown below or the results that will be attained in the future (in thousands, except per share data; unaudited):



|                                                                        |  |                                  |        
|----------------------------------------------------------------------- |  | -------------------------------- | -------
|                                                                        |  | Three Months EndedMarch 31, 2009
|Revenue                                                                 |  | $                                | 362,121
|Income attributable to common shareholders:                             |  |                                  |        
|Income from continuing operations                                       |  | $                                | 9,713  
|Income from discontinued operations                                     |  |                                  | 623    
|                                                                        |  |                                  |        
|Net income attributable to common shareholders                          |  | $                                | 10,336 
|                                                                        |  |                                  |        
|                                                                        | 
|Net income attributable to common shareholders per share  basic:       |  |                                  |        
|Income from continuing operations attributable to common shareholders   |  | $                                | 0.12   
|Income from discontinued operations attributable to common shareholders |  |                                  | 0.01   
|                                                                        |  |                                  |        
|Net income attributable to common shareholders                          |  | $                                | 0.13   
|                                                                        |  |                                  |        
|                                                                        | 
|Net income attributable to common shareholders per share  diluted:     |  |                                  |        
|Income from continuing operations attributable to common shareholders   |  | $                                | 0.12   
|Income from discontinued operations attributable to common shareholders |  |                                  | 0.01   
|                                                                        |  |                                  |        
|Net income attributable to common shareholders                          |  | $                                | 0.13   
|                                                                        |  |                                  |        
|                                                                        | 
|Weighted average common shares outstanding:                             |  |                                  |        
|Basic                                                                   |  |                                  | 78,057 
|                                                                        |  |                                  |        
|Diluted                                                                 |  |                                  | 78,527 
|                                                                        |  |                                  |        

NOTE 4  APL INVESTMENT IN JOINT VENTURE

On May 31, 2009, APL and a subsidiary of The Williams Companies, Inc. (NYSE: WMB) (Williams) completed the formation of
Laurel Mountain Midstream, LLC (Laurel Mountain), a joint venture which owns and operates APLs Appalachia Basin natural gas gathering system, excluding APLs Northern Tennessee operations. Williams contributed cash of $100.0
million to the joint venture (of which APL received approximately $87.8 million, net of working capital adjustments) and a note receivable of $25.5 million. APL contributed its Appalachia Basin natural gas gathering system and retained a 49%
ownership interest. APL is also entitled to preferred distribution rights relating to all payments on the note receivable. Williams retained the remaining 51% ownership interest in Laurel Mountain. Upon completion of the transaction, APL recognized
its 49% ownership interest in Laurel Mountain as an investment in joint venture on the Companys consolidated balance sheet at fair value and recognized a gain on sale of $108.9 million, including $54.2 million associated with the
re-measurement of APLs investment in Laurel Mountain to fair value as determined by the purchase price of the assets. APL used the net proceeds from the transaction to reduce borrowings under its senior secured credit facility (see Note 9). In
addition, the Company sold two natural gas processing plants and associated pipelines located in Southwestern Pennsylvania to Laurel Mountain for $10.0 million, resulting in a $6.5 million loss which is included in gain on asset sale on the
Companys consolidated statement of operations for the year ended December 31, 2009.

During the three months ended
March 31, 2010, APL utilized $6.8 million of the note receivable from Laurel Mountain to fund a portion of its capitalized expenditures, which is recorded as a non-cash investing activity in the Companys consolidated statement of cash
flows. As of March 31, 2010, 8.5 million of the 25.5 million note receivable has been utilized by APL.

Upon
the completion of the contribution of APLs Appalachia gathering systems to Laurel Mountain, Laurel Mountain entered into new gas gathering agreements with the Company which superseded the existing natural gas gathering agreements and omnibus
agreement between APL and the Company. Pursuant to these gas gathering agreements with Laurel Mountain, the Company generally pays a gathering fee equal to 16% of the realized natural gas sales price (adjusted for the settlement of natural gas
derivative instruments). However, in most of the Companys direct investment partnerships, it collects a gathering fee of 13% of the realized natural gas sales price per the respective partnership agreement. As a result, the Companys
Appalachian gathering expenses within its partnership management segment will generally exceed the revenues collected from the investment partnerships by approximately 3%. APL has accounted for its ownership interest in Laurel Mountain under the
equity method of accounting, with recognition of its ownership interest in the income of Laurel Mountain within other income (loss) on the Companys consolidated statements of operations.



15



---

##### Table of Contents

The following table provides summarized statement of operations on a 100% basis for Laurel
Mountain for the three months ended March 31, 2010 and 2009 and balance sheet data as of March 31, 2010 and December 31, 2009 (in thousands):



|                              |  |                             |         |                   |   |        
|----------------------------- |  | --------------------------- | ------- | ----------------- | - | -------
|                              |  | Three Months EndedMarch 31,
|                              |  | 2010                        |         | 2009             
|Statement of Operations data: |  |                             |         |                   |   |        
|Total revenue                 |  | $                           | 11,084  |                   | $ |       
|Net income                    |  |                             | 2,646   |                   |   |       
|                              |  |                            
|                              |  | March 31, 2010              |         | December 31, 2009
|Balance Sheet data:           |  |                             |         |                   |   |        
|Current assets                |  | $                           | 14,009  |                   | $ | 12,193 
|Long-term assets              |  |                             | 256,198 |                   |   | 248,730
|Current liabilities           |  |                             | 13,551  |                   |   | 19,724 
|Long-term liabilities         |  |                             | 9,437   |                   |   | 9,555  
|Net equity                    |  |                             | 247,219 |                   |   | 231,644

NOTE 5  DISCONTINUED
OPERATIONS

On May 4, 2009, APL completed the sale of its NOARK gas gathering and interstate pipeline system to
Spectra Energy Partners OLP, LP (NYSE:SEP) (Spectra) for net proceeds of $292.0 million in cash, net of working capital adjustments. APL received an additional $2.5 million in cash in July 2009 upon the delivery of audited financial
statements for the NOARK system assets to Spectra. APL used the net proceeds from the transaction to reduce borrowings under its senior secured term loan and revolving credit facility (see Note 9). The Company accounted for the sale of the NOARK
system assets as discontinued operations within its consolidated financial statements and recorded a gain of $48.9 million (net of income taxes of $2.2 million) on the sale of APLs NOARK assets within income from discontinued operations on its
consolidated statement of operations for the year ended December 31, 2009. The following table summarizes the components included within income from discontinued operations on the Companys consolidated statements of operations (amounts in
thousands):



|                                    |  |                             |   |      |   |        |  
|----------------------------------- |  | --------------------------- | - | ---- | - | ------ | -
|                                    |  | Three Months EndedMarch 31, |  
|                                    |  | 2010                        |   | 2009 |  
|Total revenues                      |  | $                           |  |      | $ | 16,005 |  
|Total costs and expenses            |  |                             |  |      |   | (7,129 | )
|                                    |  |                             |   |      |   |        |  
|Income before income tax expense    |  |                             |  |      |   | 8,876  |  
|Income tax expense                  |  |                             |  |      |   | (399   | )
|                                    |  |                             |   |      |   |        |  
|Income from discontinued operations |  | $                           |  |      | $ | 8,477  |  
|                                    |  |                             |   |      |   |        |  

NOTE 6  PROPERTY, PLANT AND EQUIPMENT

The following is a summary of property, plant and equipment (in thousands):



|                                                            |  |           |           |   |              |   |           |              |  |        
|----------------------------------------------------------- |  | --------- | --------- | - | ------------ | - | --------- | ------------ |  | -------
|                                                            |  |           |           |   |              |   |           | Estimated   
|                                                            |  | March 31, |           |   | December 31, |   |           | Useful Lives
|                                                            |  | 2010      |           |   | 2009         |   |           | in Years    
|Natural gas and oil properties:                             |  |           |           |   |              |   |           |              |  |        
|Proved properties:                                          |  |           |           |   |              |   |           |              |  |        
|Leasehold interests                                         |  | $         | 1,265,556 |   |              | $ | 1,243,932 |              |  |        
|Pre-development costs                                       |  |           | 6,797     |   |              |   | 6,270     |              |  |        
|Wells and related equipment                                 |  |           | 1,050,699 |   |              |   | 1,017,370 |              |  |        
|                                                            |  |           |           |   |              |   |           |              |  |        
|Total proved properties                                     |  |           | 2,323,052 |   |              |   | 2,267,572 |              |  |        
|Unproved properties                                         |  |           | 43,956    |   |              |   | 41,816    |              |  |        
|Support equipment                                           |  |           | 9,887     |   |              |   | 8,930     |              |  |        
|                                                            |  |           |           |   |              |   |           |              |  |        
|Total natural gas and oil properties                        |  |           | 2,376,895 |   |              |   | 2,318,318 |              |  |        
|Pipelines, processing and compression facilities            |  |           | 1,699,275 |   |              |   | 1,685,200 |              |  | 2  40 
|Rights of way                                               |  |           | 167,685   |   |              |   | 167,105   |              |  | 20  40
|Land, buildings and improvements                            |  |           | 26,757    |   |              |   | 26,697    |              |  | 3  40 
|Other                                                       |  |           | 23,103    |   |              |   | 21,931    |              |  | 3  10 
|                                                            |  |           |           |   |              |   |           |              |  |        
|                                                            |  |           | 4,293,715 |   |              |   | 4,219,251 |              |  |        
|Less  accumulated depreciation, depletion and amortization |  |           | (706,980  | ) |              |   | (663,449  | )            |  |        
|                                                            |  |           |           |   |              |   |           |              |  |        
|                                                            |  | $         | 3,586,735 |   |              | $ | 3,555,802 |              |  |        
|                                                            |  |           |           |   |              |   |           |              |  |        



16



---

##### Table of Contents

NOTE 7  OTHER ASSETS

The following is a summary of other assets at the dates indicated (in thousands):



|                                                                                                                                                      |  |           |        |              |   |       
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ------ | ------------ | - | ------
|                                                                                                                                                      |  | March 31, |        | December 31,
|                                                                                                                                                      |  | 2010      |        | 2009        
|Deferred finance and organization costs, net of accumulated amortization of $38,222 and $35,470 at March 31, 2010 and
December 31, 2009, respectively |  | $         | 44,341 |              | $ | 47,147
|Investment in Lightfoot                                                                                                                               |  |           | 17,786 |              |   | 11,528
|Other investments                                                                                                                                     |  |           | 6,794  |              |   | 6,340 
|Long-term pipeline lease prepayment                                                                                                                   |  |           | 3,731  |              |   | 3,168 
|Security deposits                                                                                                                                     |  |           | 3,424  |              |   | 3,809 
|Long-term derivative receivable from Partnerships                                                                                                     |  |           | 6,608  |              |   | 2,841 
|                                                                                                                                                      |  |           |        |              |   |       
|                                                                                                                                                      |  | $         | 82,684 |              | $ | 74,833
|                                                                                                                                                      |  |           |        |              |   |       

Deferred finance costs are recorded at cost and
amortized over the term of the respective debt agreements (see Note 9).

Investments at March 31, 2010 included a $17.8
million net investment balance in Lightfoot. The Company owns, directly and indirectly, approximately 13% of Lightfoot LP. In addition, the Company owns, directly and indirectly, approximately 18% of Lightfoot GP, the general partner of Lightfoot
LP, an entity of which Jonathan Cohen, Vice Chairman of the Companys Board of Directors, is the Chairman of the Board. The Company committed to invest a total of $19.7 million in Lightfoot. The Company has certain co-investment rights until
such point as Lightfoot LP raises additional capital through a private offering to institutional investors or a public offering. Lightfoot LP has initial equity funding commitments of approximately $160.0 million and focuses its investments
primarily on incubating new master limited partnerships and providing capital to existing MLPs in need of additional equity or structured debt. Lightfoot LP concentrates on assets that are MLP-qualified such as infrastructure, coal and other asset
categories. The Company accounts for its investment in Lightfoot under the equity method of accounting. For the three months ended March 31, 2010 and 2009, the Company recorded losses of $0.1 million for each period. During the three months
ended March 31, 2010, the Company contributed capital of $6.3 million to its interest in Lightfoot, in order to maintain its aggregate ownership interest. As of March 31, 2010, the Company has fulfilled its commitment to invest the total
of $19.7 million in Lightfoot LP.

Long-term derivative receivable from Partnerships represents a portion of the
Companys long-term unrealized derivative liability on contracts that have been allocated to the Partnerships based on their share of total production volumes sold.

NOTE 8  ASSET RETIREMENT OBLIGATIONS

The Company recognizes an estimated liability for the plugging and abandonment of its oil and gas wells and related facilities. It also
recognizes a liability for future asset retirement obligations if a reasonable estimate of the fair value of that liability can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset.
The Company also considers the estimated salvage value in the calculation of depreciation, depletion and amortization.



17



---

##### Table of Contents

The estimated liability is based on the Companys historical experience in plugging and
abandoning wells, estimated remaining lives of those wells based on reserve estimates, external estimates as to the cost to plug and abandon the wells in the future and federal and state regulatory requirements. The liability is discounted using an
assumed credit-adjusted risk-free interest rate. Revisions to the liability could occur due to changes in estimates of plugging and abandonment costs or remaining lives of the wells, or if federal or state regulators enact new plugging and
abandonment requirements. The Company has no assets legally restricted for purposes of settling asset retirement obligations. Except for its oil and gas properties, the Company has determined that there are no other material retirement obligations
associated with tangible long-lived assets.

A reconciliation of the Companys liability for well plugging and
abandonment costs for the periods indicated is as follows (in thousands):



|                                                  |  |                             |        |   |      |   |        |  
|------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                  |  | Three Months EndedMarch 31, |       
|                                                  |  | 2010                        |        |   | 2009 |  
|Asset retirement obligations, beginning of period |  | $                           | 51,813 |   |      | $ | 48,136 |  
|Liabilities incurred                              |  |                             | 43     |   |      |   | 430    |  
|Liabilities settled                               |  |                             | (7     | ) |      |   | (62    | )
|Accretion expense                                 |  |                             | 759    |   |      |   | 758    |  
|                                                  |  |                             |        |   |      |   |        |  
|Asset retirement obligations, end of period       |  | $                           | 52,608 |   |      | $ | 49,262 |  
|                                                  |  |                             |        |   |      |   |        |  

The above accretion expense was included in depreciation, depletion and amortization in the Companys
consolidated statements of operations and the asset retirement obligation liabilities were included in other long-term liabilities in the Companys consolidated balance sheets.

NOTE 9  DEBT

At
March 31, 2010, the Companys debt consists entirely of instruments entered into by ATN, AHD and APL. The Company has not guaranteed any of its subsidiaries debt obligations, with the exception of the AHD credit facility. Total debt
consists of the following at the dates indicated (in thousands):



|                                     |  |           |           |   |              |   |           |  
|------------------------------------ |  | --------- | --------- | - | ------------ | - | --------- | -
|                                     |  | March 31, |           |   | December 31, |  
|                                     |  | 2010      |           |   | 2009         |  
|ATN revolving credit facility        |  | $         | 265,000   |   |              | $ | 184,000   |  
|ATN 10.75 % senior notes  due 2018  |  |           | 405,739   |   |              |   | 405,922   |  
|ATN 12.125 % senior notes  due 2017 |  |           | 196,585   |   |              |   | 196,468   |  
|AHD credit facility                  |  |           | 4,000     |   |              |   | 8,000     |  
|APL revolving credit facility        |  |           | 280,000   |   |              |   | 326,000   |  
|APL term loan                        |  |           | 425,845   |   |              |   | 433,505   |  
|APL 8.125 % senior notes  due 2015  |  |           | 271,763   |   |              |   | 271,627   |  
|APL 8.75 % senior notes  due 2018   |  |           | 223,050   |   |              |   | 223,050   |  
|APL capital leases                   |  |           | 2,741     |   |              |   |          |  
|                                     |  |           |           |   |              |   |           |  
|Total debt                           |  |           | 2,074,723 |   |              |   | 2,048,572 |  
|Less current maturities              |  |           | (4,590    | ) |              |   | (8,000    | )
|                                     |  |           |           |   |              |   |           |  
|Total long-term debt                 |  | $         | 2,070,133 |   |              | $ | 2,040,572 |  
|                                     |  |           |           |   |              |   |           |  

ATN Revolving Credit Facility

At March 31, 2010, ATN had a credit facility with a syndicate of banks with a borrowing base of $575.0 million that matures in June
2012. The borrowing base is redetermined semiannually on April 1 and October 1 subject to changes in oil and gas reserves and is automatically reduced by 25% of the stated principal of any senior unsecured notes issued by ATN. In April
2010, in conjunction with a regularly scheduled borrowing base redetermination, the borrowing base under ATNs revolving credit facility of $550.0 million was approved (see Note 19). Up to $50.0 million of the credit facility may be in the form
of standby letters of credit, of which $1.6 million was outstanding at March 31, 2010, which was not reflected as borrowings on the Companys consolidated balance sheets. The facility is secured by substantially all of ATNs assets
and is guaranteed by each of its subsidiaries. At March 31, 2010 and December 31, 2009, the weighted average interest rate on outstanding borrowings was 3.4% and 2.9%, respectively. The base rate for any day equals the higher of the
federal funds rate plus 0.50%, the J.P. Morgan prime rate or the adjusted LIBOR for a month interest period plus 1.0%. Adjusted LIBOR is LIBOR divided by 1.00 minus the percentage prescribed by the Federal Reserve Board for determining the reserve
requirement for Eurocurrency liabilities. The facility also allows ATN to distribute to the Company (a) amounts equal to the Companys income tax liability attributable to ATNs net income at the highest marginal rate and (b) up
to $40.0 million per year and, to the extent that it distributes less than that amount in any year, it may carry over up to $20.0 million for use in the next year.



18



---

##### Table of Contents

The events which constitute an event of default for ATNs credit facility are customary
for loans of this size, including payment defaults, breaches of representations or covenants contained in the credit agreement, adverse judgments against ATN in excess of a specified amount and a change of control. In addition, the agreement
limits sales, leases or transfers of assets and the incurrence of additional indebtedness. ATN was in compliance with these covenants as of March 31, 2010. The credit facility also requires ATN to maintain a ratio of current assets (as
defined in the credit facility) to current liabilities (as defined in the credit facility) of not less than 1.0 to 1.0, and a ratio of total debt (as defined in the credit facility) to earnings before interest, taxes, depreciation, depletion and
amortization (EBITDA, as defined in the credit facility) of less than or equal to 3.5 to 1.0 effective January 1, 2010. Based on the definitions contained in ATNs credit facility, its ratio of current assets to current
liabilities was 1.8 to 1.0 and its ratio of total debt to EBITDA was 3.0 to 1.0 at March 31, 2010.

ATN Senior Notes

At March 31, 2010, ATN had $400.0 million principal amount outstanding of 10.75% senior unsecured notes (ATN 10.75% Senior
Notes) due on February 1, 2018 and $200.0 million principal amount outstanding of 12.125% senior unsecured notes due August 1, 2017 (ATN 12.125% Senior Notes; collectively, the ATN Senior Notes). Interest on
the ATN Senior Notes in the aggregate is payable semi-annually in arrears on February 1 and August 1 of each year. The ATN 10.75% Senior Notes, which are shown inclusive of unamortized premium of $5.7 million, are redeemable at any time on
or after February 1, 2013, and the ATN 12.125% Senior Notes, which are shown net of unamortized discount of $3.4 million, are redeemable at any time on or after August 1, 2013, at specified redemption prices, together with accrued and
unpaid interest to the date of redemption. In addition, before February 1, 2011 for the ATN 10.75% Notes and before August 1, 2012 for the ATN 12.125% Senior Notes, ATN may redeem up to 35% of the aggregate principal amount of the Senior
Notes with the proceeds of equity offerings at a stated redemption price. The ATN Senior Notes are also subject to repurchase by ATN at a price equal to 101% of the principal amount of the ATN 10.75% Senior Notes and ATN 12.125% Senior Notes, plus
accrued and unpaid interest, upon a change of control or upon certain asset sales if ATN does not reinvest the net proceeds within 360 days. The ATN Senior Notes are junior in right of payment to ATNs secured debt, including its obligations
under its credit facility. The indentures governing the ATN Senior Notes contain covenants, including limitations of ATNs ability to: incur certain liens; engage in sale/leaseback transactions; incur additional indebtedness; declare or pay
distributions if an event of default has occurred; redeem, repurchase or retire equity interests or subordinated indebtedness; make certain investments; or merge, consolidate or sell substantially all of its assets. ATN was in compliance with these
covenants as of March 31, 2010.

AHD Credit Facility

At March 31, 2010, AHD had $4.0 million outstanding under a credit facility with a syndicate of banks. In June 2009, AHD entered into
an amendment to its credit facility agreement which, among other changes, required AHD to immediately repay $30.0 million of a then-outstanding $46.0 million in borrowings under the credit facility and to repay the remaining $16.0 million in $4.0
million installments on each of July 13, 2009, October 13, 2009 and January 13, 2010, with the balance of the indebtedness being due on the original maturity date of the credit facility of April 13, 2010. On April 13,
2010, the remaining balance outstanding under the credit facility was repaid, and the credit facility was terminated.

AHDs $30.0 million repayment in June 2009 was funded from the proceeds of (i) a loan from the Company in the amount of $15.0
million (originated on June 1, 2009) and (ii) the purchase by APL of $15.0 million of preferred equity in a newly-formed subsidiary of AHD. Under the subordinate loan, interest accrues quarterly on the outstanding principal amount at the
rate of 12% per annum, but before the maturity date, interest is payable entirely by increasing the principal amount of the note, and the maturity date is generally the day following the day that AHD pays all indebtedness under the credit
facility (Termination Date). The material terms of the preferred units purchased by APL in a newly-formed subsidiary of AHD are as follows: distributions are payable quarterly at the rate of 12% per annum, but before the Termination
Date, distributions will be paid by increasing APLs investment in the preferred units; upon the Termination Date, all preferred distributions will be paid in cash to APL; and AHD has the option, after the Termination Date, of redeeming
all of the preferred units APL owns for an amount equal to the preferred unit capital.



19



---

##### Table of Contents

In June 2009, in connection with AHDs amendment of the credit facility, the Company
guaranteed the then remaining balance outstanding under the credit facility under a guarantee agreement with the administrative agent of the credit facility. In consideration for this guarantee, AHD issued to the Company a promissory note which
requires it to pay interest to the Company in an amount based upon the principal amount outstanding under the credit facility. The maturity date of the promissory note is the day following the date that AHD repays all outstanding borrowings under
its credit facility, after which it is payable on-demand. Interest on the promissory note, which is calculated on the outstanding balance under the credit facility plus a $1.0 million guaranty fee, accrues quarterly at the rate of 3.75% per
annum. However, prior to the maturity date of the promissory note, interest under the promissory note will not be payable in cash, but instead the principal amount upon which interest is calculated will be increased by the interest amount payable.
AHD funded all of the repayments of the outstanding balance under the credit facility through the Companys guaranty of AHDs obligations.

APL Term Loan and Credit Facility

At March 31, 2010, APL had a senior secured credit facility with a syndicate of banks which consisted of a term loan which matures in
July 2014 and a $380.0 million revolving credit facility which matures in July 2013. Borrowings under APLs credit facility bear interest, at APLs option, at either (i) adjusted LIBOR, subject to a floor of 2.0% per annum, plus
the applicable margin, as defined, or (ii) the higher of the federal funds rate plus 0.5% or the Wachovia Bank prime rate (each plus the applicable margin). The weighted average interest rate on both the outstanding APL revolving credit
facility and term loan borrowings at March 31, 2010 were both 6.8%. Up to $50.0 million of the credit facility may be utilized for letters of credit, of which $9.8 million was outstanding at March 31, 2010. These outstanding letter of
credit amounts were not reflected as borrowings on the Companys consolidated balance sheet at March 31, 2010. At March 31, 2010, APL had $90.2 million of remaining committed capacity under its credit facility, subject to covenant
limitations.

Borrowings under APLs credit facility are secured by a lien on and security interest in all of APLs
property and that of its subsidiaries, except for the assets owned by Chaney Dell and Midkiff/Benedum joint ventures and the Laurel Mountain joint venture, and by the guaranty of each of APLs consolidated subsidiaries other than the joint
venture companies. The credit facility contains customary covenants, including restrictions on APLs ability to incur additional indebtedness; make certain acquisitions, loans or investments; make distribution payments to its unitholders if an
event of default exists; or enter into a merger or sale of assets, including the sale or transfer of interests in its subsidiaries. In addition, the credit facility (a) allows APL to pay cash distributions commencing with the three months ended
March 31, 2010 if its senior secured leverage ratio is less than 2.75x and it has minimum liquidity (as defined in the credit agreement) of at least $50.0 million, (b) limits APLs annual capital expenditures to $70.0 million
commencing January 1, 2010, (c) permits APL to retain up to $50.0 million of net cash proceeds from dispositions completed in any fiscal year subject to certain limitations (as defined within the credit agreement), and (d) has a
mandatory repayment requirement of the outstanding senior secured term loan from excess cash flow (as defined in the credit agreement) based upon APLs leverage ratio. APL is also unable to borrow under its credit facility to pay distributions
of available cash to unitholders because such borrowings would not constitute working capital borrowings pursuant to its partnership agreement. APL is in compliance with these covenants as of March 31, 2010.

The events which constitute an event of default for the credit facility are also customary for loans of this size, including payment
defaults, breaches of representations or covenants contained in the credit agreement, adverse judgments against APL in excess of a specified amount and a change of control of APLs general partner. The credit facility requires APL to maintain
the following ratios:



|                       |  |          |  |                |  |         
|---------------------- |  | -------- |  | -------------- |  | --------
|                       |  |          |  | Maximum        |  | Minimum 
|                       |  | Maximum  |  | Senior Secured |  | Interest
|                       |  | Leverage |  | Leverage       |  | Coverage
|Fiscal quarter ending: |  | Ratio    |  | Ratio          |  | Ratio   
|March 31, 2010         |  | 9.25x    |  | 5.75x          |  | 1.40x   
|June 30, 2010          |  | 8.00x    |  | 5.00x          |  | 1.65x   
|September 30, 2010     |  | 7.00x    |  | 4.25x          |  | 1.90x   
|December 31, 2010      |  | 6.00x    |  | 3.75x          |  | 2.20x   
|Thereafter             |  | 5.00x    |  | 3.00x          |  | 2.75x   



20



---

##### Table of Contents

At March 31, 2010, APLs leverage ratio was 5.5 to 1.0, its senior secured
leverage ratio was 3.3 to 1.0 and its interest coverage ratio was 2.2 to 1.0.

APL Senior Notes

At March 31, 2010, APL had $223.1 million principal amount outstanding of 8.75% senior unsecured notes due on June 15, 2018
(APL 8.75% Senior Notes) and $275.5 million principal amount outstanding of 8.125% senior unsecured notes due on December 15, 2015 (APL 8.125% Senior Notes; collectively, the APL Senior Notes). The APL 8.125%
Senior Notes are presented combined with a net $3.7 million of unamortized discount as of March 31, 2010. Interest on the APL Senior Notes in the aggregate is payable semi-annually in arrears on June 15 and December 15. The APL 8.75%
Senior Notes are redeemable at any time after June 15, 2013, and the APL 8.125% Senior Notes are redeemable at any time after December 15, 2010 at certain redemption prices, together with accrued and unpaid interest to the date of
redemption. Prior to June 15, 2011, APL may redeem up to 35% of the aggregate principal amount of the APL 8.75% Senior Notes with the proceeds of certain equity offerings at a stated redemption price. The APL Senior Notes in the aggregate are
also subject to repurchase by APL at a price equal to 101% of their principal amount, plus accrued and unpaid interest, upon a change of control or upon certain asset sales if APL does not reinvest the net proceeds within 360 days. The APL Senior
Notes are junior in right of payment to APLs secured debt, including APLs obligations under its credit facility.

Indentures governing the APL Senior Notes in the aggregate contain covenants, including limitations of APLs ability to: incur
certain liens; engage in sale/leaseback transactions; incur additional indebtedness; declare or pay distributions if an event of default has occurred; redeem, repurchase or retire equity interests or subordinated indebtedness; make certain
investments; or merge, consolidate or sell substantially all of its assets. APL is in compliance with these covenants as of March 31, 2010.

Cash payments for interest related to debt made by the Company and its subsidiaries were $54.8 million and $37.1 million for the three
months ended March 31, 2010 and 2009, respectively.

NOTE 10  DERIVATIVE INSTRUMENTS

The Company and its subsidiaries use a number of different derivative instruments, principally swaps, collars and options, in connection
with its commodity price and interest rate risk management activities. The Company and its subsidiaries enter into financial instruments to hedge its forecasted natural gas, NGL, crude oil and condensate sales against the variability in expected
future cash flows attributable to changes in market prices. Its subsidiaries also enter into financial swap instruments to hedge certain portions of its floating interest rate debt against the variability in market interest rates. Swap instruments
are contractual agreements between counterparties to exchange obligations of money as the underlying natural gas, NGLs, crude oil and condensate is sold or interest payments on the underlying debt instrument are due. Under swap agreements, the
Company and its subsidiaries receive or pay a fixed price and receive or remit a floating price based on certain indices for the relevant contract period. Commodity-based option instruments are contractual agreements that grant the right, but not
obligation, to purchase or sell natural gas, NGLs, crude oil and condensate at a fixed price for the relevant contract period.

The Company and its subsidiaries formally document all relationships between hedging instruments and the items being hedged, including
its risk management objective and strategy for undertaking the hedging transactions. This includes matching the commodity and interest derivative contracts to the forecasted transactions. The Company and its subsidiaries assess, both at the
inception of the derivative and on an ongoing basis, whether the derivative is effective in offsetting changes in the forecasted cash flow of the hedged item. If it is determined that a derivative is not effective as a hedge or that it has ceased to
be an effective hedge due to the loss of adequate correlation between the hedging instrument and the underlying item being hedged, the Company and its subsidiaries will discontinue hedge accounting for the derivative and subsequent changes in the
derivative fair value, which is determined by the Company and its subsidiaries through the utilization of market data, will be recognized immediately within gain (loss) on mark-to-market derivatives in the Companys consolidated statements of
operations. For derivatives qualifying as hedges, the Company and its subsidiaries recognize the effective portion of changes in fair value in shareholders equity as accumulated other comprehensive income and reclassify the portion relating to
commodity derivatives to gas and oil production revenues for the Companys derivatives and gathering, transmission and processing revenues for APL derivatives, and the portion relating to interest rate derivatives to interest expense within the
Companys consolidated statements of operations as the underlying transactions are settled. For non-qualifying derivatives and for the ineffective portion of qualifying derivatives, the Company and its subsidiaries recognize changes in fair
value within gain (loss) on mark-to-market derivatives in its consolidated statements of operations as they occur.



21



---

##### Table of Contents

Derivatives are recorded on the Companys consolidated balance sheet as assets or
liabilities at fair value. The Company reflected net derivative assets on its consolidated balance sheets of $168.5 million and $69.4 million at March 31, 2010 and December 31, 2009, respectively. Of the $100.9 million of net gain in
accumulated other comprehensive income within shareholders equity on the Companys consolidated balance sheet related to commodity and interest rate derivatives at March 31, 2010, if the fair values of the instruments remain at
current market values, the Company will reclassify $48.4 million of gains to the Companys consolidated statements of operations over the next twelve month period as these contracts expire, consisting of $50.7 million of gains to gas and oil
production revenues, $1.3 million of losses to transmission, gathering and processing revenues and $1.0 million of losses to interest expense. Aggregate gains of $52.5 million will be reclassified to the Companys consolidated statements of
operations in later periods as these remaining contracts expire, consisting of $54.7 million of gains to gas and oil production revenues, $1.1 million of losses to gathering, transmission and processing revenues and $1.1 million of losses to
interest expense. Actual amounts that will be reclassified will vary as a result of future price changes.

The following table
summarizes the fair value of the Companys derivative instruments as of March 31, 2010 and December 31, 2009, as well as the gain or loss recognized in the consolidated statements of operations for effective derivative instruments for
the three months ended March 31, 2010 and 2009:

Fair Value of Derivative Instruments:



|                                              |                        |                   |               |                       |                  |         |                        |                |               |                       |         |                  |         |   |         |   |         |  
|--------------------------------------------- | ---------------------- | ----------------- | ------------- | --------------------- | ---------------- | ------- | ---------------------- | -------------- | ------------- | --------------------- | ------- | ---------------- | ------- | - | ------- | - | ------- | -
|                                              |                        | Asset Derivatives |               | Liability Derivatives |                 
|Derivatives in Cash Flow HedgingRelationships |                        |                   |               | Fair Value            |                  |         |                        | Fair Value     |              
|                                              | Balance Sheet
Location |                   | March 31,2010 |                       | December 31,2009 |         | Balance Sheet
Location |                | March 31,2010 |                       |         | December 31,2009 |        
|                                              |                        |                   |               | (in thousands)        |                  |         |                        | (in thousands) |              
|                                              |                        |                   |               |                       |                  |        
|Commodity contracts:                          |                        | Current assets    |               | $                     | 117,798          |         | $                      | 73,066         |               | Current liabilities   |         | $                | (956    | ) |         | $ | (901    | )
|                                              |                        | Long-term assets  |               |                       | 106,383          |         |                        | 58,930         |               | Long-term liabilities |         |                  | (30,736 | ) |         |   | (14,091 | )
|                                              |                        |                   |               |                       |                  |         |                        |                |               |                       |         |                  |         |   |         |   |         |  
|                                              |                        |                   |               |                       | 224,181          |         |                        | 131,996        |               |                       |         |                  | (31,692 | ) |         |   | (14,992 | )
|                                              |                        |                   |               |                       |                  |        
|Interest rate contracts:                      |                        | Current assets    |               |                       |                 |         |                        |               |               | Current liabilities   |         |                  | (3,350  | ) |         |   | (3,751  | )
|                                              |                        | Long-term assets  |               |                       |                 |         |                        |               |               | Long-term liabilities |         |                  |        |   |         |   | (224    | )
|                                              |                        |                   |               |                       |                  |         |                        |                |               |                       |         |                  |         |   |         |   |         |  
|                                              |                        |                   |               |                       |                 |         |                        |               |               |                       |         |                  | (3,350  | ) |         |   | (3,975  | )
|                                              |                        |                   |               |                       |                  |         |                        |                |               |                       |         |                  |         |   |         |   |         |  
|                                              |                        |                   |               |                       |                 
|Total derivatives                             |                        | $                 | 224,181       |                       | $                | 131,996 |                        |                |               | $                     | (35,042 | )                |         | $ | (18,967 | )
|                                              |                        |                   |               |                       |                  |         |                        |                |               |                       |         |                  |         |   |         |   |         |  

Effects of Derivative Instruments on Consolidated Statements of Operations:



|                                               |      |                                                                                                   |                     |      |                                                       |  |                                                                                                      |   |        |   |  |                        |  |   |        |   |  |  |  |   |        |  
|---------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------- | ------------------- | ---- | ----------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- | - | ------ | - |  | ---------------------- |  | - | ------ | - |  |  |  | - | ------ | -
|Derivatives in Cash Flow Hedging Relationships |      | Gain/(Loss)Recognized in OCI on Derivative(Effective Portion) for
theThree Months Ended March 31, |                     |      | Location of
Gain/(Loss)
Reclassified from
Accumulated |  | Gain/(Loss)Reclassified from 
OCI into Income(Effective Portion) for theThree Months Ended March 31, |  
|                                               | 2010 |                                                                                                   |                     | 2009 |                                                       |  | OCI into Income                                                                                      |   | 2010   |   |  | 2009                   | 
|                                               |      |                                                                                                   | (Effective Portion) |      |                                                      
|                                               |      | (in thousands)                                                                                    |                     |      |                                                       |  | (in thousands)                                                                                       |  
|                                               |      |                                                                                                   |                     |      |                                                       |  |                                                                                                     
|Commodity contracts                            |      | $                                                                                                 | 91,056              |      |                                                       |  |                                                                                                      | $ | 86,814 |   |  | Gas and oil production |  | $ | 23,479 |   |  |  |  | $ | 15,518 |  
|Interest rate contracts                        |      |                                                                                                   | (457                | )    |                                                       |  |                                                                                                      |   | (873   | ) |  | Interest expense       |  |   | (1,081 | ) |  |  |  |   | (1,002 | )
|                                               |      |                                                                                                   |                     |      |                                                       |  |                                                                                                      |   |        |   |  |                        |  |   |        |   |  |  |  |   |        |  
|                                               |      | $                                                                                                 | 90,599              |      |                                                       |  |                                                                                                      | $ | 85,941 |   |  |                        |  | $ | 22,398 |   |  |  |  | $ | 14,516 |  
|                                               |      |                                                                                                   |                     |      |                                                       |  |                                                                                                      |   |        |   |  |                        |  |   |        |   |  |  |  |   |        |  

The Company enters into natural gas and crude oil future option contracts and collar contracts to achieve
more predictable cash flows by hedging its exposure to changes in natural gas prices and oil prices. At any point in time, such contracts may include regulated New York Mercantile Exchange (NYMEX) futures and options contracts and
non-regulated over-the-counter futures contracts with qualified counterparties. NYMEX contracts are generally settled with offsetting positions, but may be settled by the delivery of natural gas. Crude oil contracts are based on a West Texas
Intermediate (WTI) index. These contracts have qualified and been designated as cash flow hedges and recorded at their fair values.

In January 2010, the Company received approximately $20.1 million in proceeds from the early settlement of natural gas and oil derivative
positions for production periods from 2011 through 2013. In conjunction with the early termination of these derivatives, the Company entered into new derivative positions at prevailing prices at the time of the transaction. The net proceeds from the
early termination of these derivatives were used to reduce indebtedness under ATNs revolving credit facility (see Note 9). In May 2009, the Company received approximately $28.5 million in proceeds from the early termination of natural gas and
oil derivative positions for production periods from 2011 through 2013. In conjunction with the early termination of these derivatives, the Company entered into new derivative positions at prevailing prices at the time of the transaction. The net
proceeds from the early termination of these derivatives were used to reduce indebtedness under ATNs credit facility (see Note 9). The gain recognized upon the early termination of these derivative positions will continue to be reported in
accumulated other comprehensive income and will be reclassified into the Companys consolidated statements of operations in the same periods in which the hedged production revenues would have been recognized in earnings.



22



---

##### Table of Contents

The Company recognized gains of $23.5 million and $15.5 million for three months ended
March 31, 2010 and 2009, respectively, on settled contracts covering natural gas and oil production. These gains and losses are included within gas and oil production revenue in the Companys consolidated statements of operations. As the
underlying prices and terms in the Companys derivative contracts were consistent with the indices used to sell its natural gas and oil, there were no gains or losses recognized during the three months ended March 31, 2010 and 2009 for
hedge ineffectiveness or as a result of the discontinuance of any cash flow hedges.

At March 31, 2010, ATN had $265.0
million of borrowings under its senior secured revolving credit facility (see Note 9). At March 31, 2010, the Company had interest rate derivative contracts having an aggregate notional principal amount of $150.0 million through January 2011,
which were designated as cash flow hedges. These hedging arrangements reduce the impact of volatility of changes in the London interbank offered rate (LIBOR). Under the terms of the contract, the Company will pay a three-year fixed swap
interest rate of 3.1%, plus the applicable margin as defined under the terms of its revolving credit facility, and will receive LIBOR, plus the applicable margin, on the notional principal amounts. This derivative effectively converts $150.0 million
of ATNs floating rate debt under the revolving credit facility to fixed-rate debt. The Company has accounted for the interest rate derivative contracts as effective hedge instruments under prevailing accounting standards.

At March 31, 2010, the Company had the following interest rate and commodity derivatives:

Interest Fixed Rate Swap



|                            |  |          |             |             |                          |              |      |                |   |        |  
|--------------------------- |  | -------- | ----------- | ----------- | ------------------------ | ------------ | ---- | -------------- | - | ------ | -
|                            |  |          |             |             |                          | Contract     |      |                |  
|                            |  | Notional |             |             |                          | Period Ended |      | Fair Value     |  
|Term                        |  | Amount   |             | Option Type |                          | December 31, |      | Liability      |  
|                            |  |          |             |             |                          |              |      | (in thousands) |  
|January 2008  January 2011 |  | $        | 150,000,000 |             | Pay 3.1% - Receive LIBOR |              | 2010 |                | $ | (3,045 | )
|                            |  |          |             |             |                          |              | 2011 |                |   | (305   | )
|                            |  |          |             |             |                          |              |      |                |   |        |  
|                            |  |          |             |             |                          |              |      |                | $ | (3,350 | )
|                            |  |          |             |             |                          |              |      |                |   |        |  

Natural Gas Fixed Price Swaps



|                                      |  |            |  |                    |       |                   |   |        
|------------------------------------- |  | ---------- |  | ------------------ | ----- | ----------------- | - | -------
|Production Period Ending December 31, |  | Volumes    |  | AverageFixed Price |       | Fair ValueAsset  
|                                      |  | (mmbtu)(1) |  | (per mmbtu)(1)     |       | (in thousands)(2)
|2010                                  |  | 30,750,003 |  | $                  | 7.354 |                   | $ | 95,033 
|2011                                  |  | 24,140,004 |  | $                  | 6.689 |                   |   | 32,449 
|2012                                  |  | 19,652,260 |  | $                  | 6.850 |                   |   | 20,280 
|2013                                  |  | 13,211,510 |  | $                  | 6.822 |                   |   | 9,344  
|                                      |  |            |  |                    |       |                   |   |        
|                                      |  |            |  |                    |       |                   | $ | 157,106
|                                      |  |            |  |                    |       |                   |   |        



23



---

##### Table of Contents

Natural Gas Costless Collars



|                                      |  |                |  |            |  |                      |       |                             |   |         |  
|------------------------------------- |  | -------------- |  | ---------- |  | -------------------- | ----- | --------------------------- | - | ------- | -
|Production Period Ending December 31, |  | Option Type    |  | Volumes    |  | AverageFloor and Cap |       | Fair ValueAsset/(Liability) |  
|                                      |  |                |  | (mmbtu)(1) |  | (per mmbtu)(1)       |       | (in thousands)(2)           |  
|2010                                  |  | Puts purchased |  | 2,520,000  |  | $                    | 7.839 |                             | $ | 9,039   |  
|2010                                  |  | Calls sold     |  | 2,520,000  |  | $                    | 9.007 |                             |   | (22     | )
|2011                                  |  | Puts purchased |  | 12,840,000 |  | $                    | 6.197 |                             |   | 19,167  |  
|2011                                  |  | Calls sold     |  | 12,840,000 |  | $                    | 7.283 |                             |   | (4,929  | )
|2012                                  |  | Puts purchased |  | 9,780,000  |  | $                    | 6.220 |                             |   | 16,311  |  
|2012                                  |  | Calls sold     |  | 9,780,000  |  | $                    | 7.309 |                             |   | (9,240  | )
|2013                                  |  | Puts purchased |  | 11,820,000 |  | $                    | 6.228 |                             |   | 21,487  |  
|2013                                  |  | Calls sold     |  | 11,820,000 |  | $                    | 7.389 |                             |   | (15,904 | )
|                                      |  |                |  |            |  |                      |       |                             |   |         |  
|                                      |  |                |  |            |  |                      |       |                             | $ | 35,909  |  
|                                      |  |                |  |            |  |                      |       |                             |   |         |  

Crude Oil Fixed Price Swaps



|                                      |  |          |  |                    |        |                             |   |      |  
|------------------------------------- |  | -------- |  | ------------------ | ------ | --------------------------- | - | ---- | -
|Production Period Ending December 31, |  | Volumes  |  | AverageFixed Price |        | Fair ValueAsset/(Liability) |  
|                                      |  | (Bbl)(1) |  | (per Bbl)(1)       |        | (in thousands) (3)          |  
|2010                                  |  | 39,300   |  | $                  | 97.219 |                             | $ | 497  |  
|2011                                  |  | 42,600   |  | $                  | 77.460 |                             |   | (365 | )
|2012                                  |  | 33,500   |  | $                  | 76.855 |                             |   | (324 | )
|2013                                  |  | 10,000   |  | $                  | 77.360 |                             |   | (93  | )
|                                      |  |          |  |                    |        |                             |   |      |  
|                                      |  |          |  |                    |        |                             | $ | (285 | )
|                                      |  |          |  |                    |        |                             |   |      |  

Crude Oil Costless Collars



|                                      |  |                |         |          |  |                      |         |                             |   |      |  
|------------------------------------- |  | -------------- | ------- | -------- |  | -------------------- | ------- | --------------------------- | - | ---- | -
|Production Period Ending December 31, |  | Option Type    |         | Volumes  |  | AverageFloor and Cap |         | FairValue Asset/(Liability) |  
|                                      |  |                |         | (Bbl)(1) |  | (per Bbl)(1)         |         | (in thousands) (3)          |  
|2010                                  |  | Puts purchased |         | 25,000   |  | $                    | 85.000  |                             | $ | 130  |  
|2010                                  |  | Calls sold     |         | 25,000   |  | $                    | 112.546 |                             |   | (10  | )
|2011                                  |  | Puts purchased |         | 27,000   |  | $                    | 67.223  |                             |   | 100  |  
|2011                                  |  | Calls sold     |         | 27,000   |  | $                    | 89.436  |                             |   | (276 | )
|2012                                  |  | Puts purchased |         | 21,500   |  | $                    | 65.506  |                             |   | 99   |  
|2012                                  |  | Calls sold     |         | 21,500   |  | $                    | 91.448  |                             |   | (247 | )
|2013                                  |  | Puts purchased |         | 6,000    |  | $                    | 65.358  |                             |   | 32   |  
|2013                                  |  | Calls sold     |         | 6,000    |  | $                    | 93.442  |                             |   | (69  | )
|                                      |  |                |         |          |  |                      |         |                             |   |      |  
|                                      |  |                |         |          |  |                      |         |                             | $ | (241 | )
|                                      |  |                |         |          |  |                      |         |                             |   |      |  
|Total Company net asset               |  | $              | 189,139 |         
|                                      |  |                |         |          |  |                      |         |                             |   |      |  



| | (1) | Mmbtu represents million British Thermal Units; Bbl represents barrels.
| | --- | ---------------------------------------------------------------------------

| | (2) | Fair value based on forward NYMEX natural gas prices, as applicable.
| | --- | --------------------------------------------------------------------

| | (3) | Fair value based on forward WTI crude oil prices, as applicable.
| | --- | ----------------------------------------------------------------

The Companys commodity price risk management includes estimated future natural gas and crude oil production of the Partnerships.
Therefore, a portion of any unrealized derivative gain or loss is allocable to the limited partners of the Partnerships based on their share of estimated gas and oil production related to the derivatives not yet settled. At March 31, 2010 and
December 31, 2009, net unrealized derivative assets of $70.0 million and $41.7 million, respectively, are payable to the limited partners in the Partnerships and are included in the consolidated balance sheets as follows (in thousands).



|                               |  |           |         |   |              |   |         |  
|------------------------------ |  | --------- | ------- | - | ------------ | - | ------- | -
|                               |  | March 31, |         |   | December 31, |  
|                               |  | 2010      |         |   | 2009         |  
|Prepaid expenses and other     |  | $         | 181     |   |              | $ | 270     |  
|Other assets, net              |  |           | 6,608   |   |              |   | 2,841   |  
|Accrued liabilities            |  |           | (37,605 | ) |              |   | (22,382 | )
|Long-term derivative liability |  |           | (39,187 | ) |              |   | (22,380 | )
|                               |  |           |         |   |              |   |         |  
|                               |  | $         | (70,003 | ) |              | $ | (41,651 | )
|                               |  |           |         |   |              |   |         |  



24



---

##### Table of Contents

Atlas Pipeline Holdings and Atlas Pipeline Partners

In July 2008, APL discontinued hedge accounting for its existing commodity derivatives which were qualified as hedges under prevailing
accounting literature. As such, subsequent changes in fair value of these derivatives are recognized immediately within gain (loss) on mark-to-market derivatives in the Companys consolidated statements of operations. The fair value of these
commodity derivative instruments at June 30, 2008, which was recognized in accumulated other comprehensive loss within shareholders equity on the Companys consolidated balance sheet, will be reclassified to the Companys
consolidated statements of operations in the future at the time the originally hedged physical transactions affect earnings.

At March 31, 2010, AHD had an interest rate derivative contract having an aggregate notional principal amount of $25.0 million.
Under the terms of agreement, AHD will pay an interest rate of 3.0%, plus the applicable margin as defined under the terms of its credit facility (see Note 9), and will receive LIBOR, plus the applicable margin, on the notional principal amounts.
The interest rate swap agreement was effective at March 31, 2010 and expires on May 28, 2010. In June 2009, AHD repaid a portion of its borrowings under its credit facility with additional payments made in July and October 2009 and January
2010 with a resulting balance of $4.0 million outstanding under its credit facility at March 31, 2010. In addition, in accordance with the June 2009 amendment to its credit facility, AHD is prohibited from borrowing additional amounts under its
credit facility once the amounts have been repaid. In accordance with prevailing accounting literature, the portion of any gain or loss in other comprehensive income (loss) related to forecasted hedge transactions that are no longer expected to
occur are to be removed from other comprehensive income (loss) and recognized within the statements of operations.

At
March 31, 2010, APL had interest rate derivative contracts having aggregate notional principal amounts of $250.0 million. Under the terms of these agreements, APL will pay weighted average interest rates of 3.1%, plus the applicable margin as
defined under the terms of its revolving credit facility (see Note 9), and will receive LIBOR, plus the applicable margin, on the notional principal amounts. The APL interest rate swap agreements were effective as of March 31, 2010 and expire
on April 30, 2010.

Beginning May 29, 2009, AHD and APL discontinued hedge accounting for their interest rate
derivatives which were qualified as hedges under prevailing accounting literature. As such, subsequent changes in the fair value of these derivatives will be recognized immediately within loss on mark-to-market derivatives in the Companys
consolidated statements of operations. The fair value of these derivative instruments at May 29, 2009, which was recognized in accumulated other comprehensive loss within shareholders equity on the Companys consolidated
balance sheet, will be reclassified to the Companys consolidated statements of operations in the future at the time the originally hedged physical transactions affect earnings.

The following table summarizes AHDs and APLs gross fair values of derivative instruments for the period indicated (in
thousands):



|                        |  |                                         |  |                       |       |                  |   |                        |  |                                         |  |   |                  |   |  |   |         |  
|----------------------- |  | --------------------------------------- |  | --------------------- | ----- | ---------------- | - | ---------------------- |  | --------------------------------------- |  | - | ---------------- | - |  | - | ------- | -
|                        |  | Asset Derivatives                       |  | Liability Derivatives |      
|                        |  | Balance Sheet
Location                  |  | March 31,2010         |       | December 31,2009 |   | Balance Sheet
Location |  | March 31,2010                           |  |   | December 31,2009 |  
|Interest rate contracts |  | N/A                                     |  | $                     |      |                  | $ |                       |  | Current portion of derivative liability |  | $ | (600             | ) |  | $ | (2,533  | )
|Interest rate contracts |  | N/A                                     |  |                       |      |                  |   |                       |  | Current portion of derivative asset     |  |   | (118             | ) |  |   | (593    | )
|Commodity contracts     |  | Current portion of derivative asset     |  |                       | 753   |                  |   | 1,591                  |  | N/A                                     |  |   |                 |   |  |   |        |  
|Commodity contracts     |  | Long-term derivative asset              |  |                       |      |                  |   | 361                    |  | N/A                                     |  |   |                 |   |  |   |        |  
|Commodity contracts     |  | Current portion of derivative liability |  |                       | 3,718 |                  |   | 6,562                  |  | Current portion of derivative liability |  |   | (16,544          | ) |  |   | (37,862 | )
|Commodity contracts     |  | Long-term derivative liability          |  |                       | 2,385 |                  |   | 3,435                  |  | Long-term derivative liability          |  |   | (10,278          | ) |  |   | (14,561 | )
|                        |  |                                         |  |                       |       |                  |   |                        |  |                                         |  |   |                  |   |  |   |         |  
|                        |  |                                         |  | $                     | 6,856 |                  | $ | 11,949                 |  |                                         |  | $ | (27,540          | ) |  | $ | (55,549 | )
|                        |  |                                         |  |                       |       |                  |   |                        |  |                                         |  |   |                  |   |  |   |         |  



25



---

##### Table of Contents

As of March 31, 2010, AHD had the following interest rate derivatives, which do not
qualify for hedge accounting:

Interest Fixed-Rate Swaps



|                  |  |                |            |      |                         |                                   |                     |                                      |   |      |  
|----------------- |  | -------------- | ---------- | ---- | ----------------------- | --------------------------------- | ------------------- | ------------------------------------ | - | ---- | -
|Term              |  | NotionalAmount |            | Type |                         | Contract PeriodEnded December 31, |                     | Fair
ValueLiability(1)(in thousands) |  
|May 2008-May 2010 |  | $              | 25,000,000 |      | Pay 3.0% Receive LIBOR |                                   | 2010                |                                      | $ | (115 | )
|                  |  |                |            |      |                         |                                   |                     |                                      |   |      |  
|                  |  |                |            |      |                         |                                   | Total AHD liability |                                      | $ | (115 | )
|                  |  |                |            |      |                         |                                   |                     |                                      |   |      |  



| | (1) | Fair value based on independent, third-party statements, supported by observable levels at which transactions are executed in the marketplace.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------

As of March 31, 2010, APL had the following interest rate and commodity derivatives, which do not
qualify for hedge accounting:

Interest Fixed-Rate Swaps



|                      |  |        |             |      |                         |                                               |   |      |  
|--------------------- |  | ------ | ----------- | ---- | ----------------------- | --------------------------------------------- | - | ---- | -
|Term                  |  | Amount |             | Type |                         | Fair 
Value(1)Asset/(Liability)(in thousands) |  
|April 2008-April 2010 |  | $      | 250,000,000 |      | Pay 3.1% Receive LIBOR |                                               | $ | (603 | )

Fixed Price Swaps



|                        |  |                 |  |                   |  |            |  |                   |   |  |                                               |        |  
|----------------------- |  | --------------- |  | ----------------- |  | ---------- |  | ----------------- | - |  | --------------------------------------------- | ------ | -
|Production Period       |  | Purchased/ Sold |  | Commodity         |  | Volumes(2) |  | AverageFixedPrice |   |  | Fair 
Value(1)Asset/(Liability)(in thousands) |       
|                        |  |                 |  |                   | 
|Natural Gas             |  |                 |  |                   |  |            |  |                   |   |  |                                               |        |  
|2010                    |  | Sold            |  | Natural Gas Basis |  | 3,390,000  |  | (0.659            | ) |  | $                                             | (1,775 | )
|2010                    |  | Purchased       |  | Natural Gas Basis |  | 5,580,000  |  | (0.619            | ) |  |                                               | 2,523  |  
|2011                    |  | Sold            |  | Natural Gas Basis |  | 1,920,000  |  | (0.728            | ) |  |                                               | (988   | )
|2011                    |  | Purchased       |  | Natural Gas Basis |  | 1,920,000  |  | (0.758            | ) |  |                                               | 1,045  |  
|2012                    |  | Sold            |  | Natural Gas Basis |  | 720,000    |  | (0.685            | ) |  |                                               | (321   | )
|2012                    |  | Purchased       |  | Natural Gas Basis |  | 720,000    |  | (0.685            | ) |  |                                               | 321    |  
|                        |  |                 |  |                   | 
|Natural Gas Liquids     |  |                 |  |                   |  |            |  |                   |   |  |                                               |        |  
|                        |  |                 |  |                   | 
|2010                    |  | Sold            |  | Propane           |  | 17,640,000 |  | 1.108             |   |  |                                               | (423   | )
|                        |  |                 |  |                   |  |            |  |                   |   |  |                                               |        |  
|Total Fixed Price Swaps |  |                 |  |                   |  |            |  |                   |   |  | $                                             | 382    |  
|                        |  |                 |  |                   |  |            |  |                   |   |  |                                               |        |  



26



---

##### Table of Contents

Options



|                    |  |                |  |                     |  |               |         |            |   |                    |        |                                               |   |         |  
|------------------- |  | -------------- |  | ------------------- |  | ------------- | ------- | ---------- | - | ------------------ | ------ | --------------------------------------------- | - | ------- | -
|Production Period   |  | Purchased/Sold |  | Type                |  | Commodity     |         | Volumes(2) |   | AverageStrikePrice |        | Fair 
Value(1)Asset/(Liability)(in thousands) |  
|                    |  |                |  |                     |  |              
|Natural Gas         |  |                |  |                     |  |               |         |            |   |                    |        |                                               |   |         |  
|                    |  |                |  |                     |  |              
|2010                |  | Purchased      |  | Call                |  | Natural Gas   |         | 6,390,000  |   | $                  | 5.829  |                                               | $ | (672    | )
|                    |  |                |  |                     |  |              
|Natural Gas Liquids |  |                |  |                     |  |               |         |            |   |                    |        |                                               |   |         |  
|                    |  |                |  |                     |  |              
|2010                |  | Purchased      |  | Put                 |  | Propane       |         | 23,688,000 |   | $                  | 1.073  |                                               |   | 84      |  
|2010                |  | Purchased      |  | Put                 |  | Normal Butane |         | 2,772,000  |   |                    | 1.440  |                                               |   | (187    | )
|                   
|Crude Oil           | 
|2010                |  | Purchased      |  | Put                 |  | Crude Oil     |         | 627,000    |   |                    | 74.31  |                                               |   | 1,045   |  
|2010                |  | Sold           |  | Call                |  | Crude Oil     |         | 1,961,250  |   |                    | 83.83  |                                               |   | (12,184 | )
|2010                |  | Purchased(3)   |  | Call                |  | Crude Oil     |         | 444,000    |   |                    | 120.00 |                                               |   | 107     |  
|2011                |  | Sold           |  | Call                |  | Crude Oil     |         | 678,000    |   |                    | 94.68  |                                               |   | (4,996  | )
|2011                |  | Purchased(3)   |  | Call                |  | Crude Oil     |         | 252,000    |   |                    | 120.00 |                                               |   | 548     |  
|2012                |  | Sold           |  | Call                |  | Crude Oil     |         | 498,000    |   |                    | 95.83  |                                               |   | (4,871  | )
|2012                |  | Purchased(3)   |  | Call                |  | Crude Oil     |         | 180,000    |   |                    | 120.00 |                                               |   | 778     |  
|                    |  |                |  |                     |  |               |         |            |   |                    |        |                                               |   |         |  
|Total Options       |  |                |  |                     |  |               |         |            | $ | (20,348            | )     
|                    |  |                |  |                     |  |               |         |            |   |                    |        |                                               |   |         |  
|                    |  |                |  | Total APL liability |  | $             | (20,569 | )         
|                    |  |                |  |                     |  |               |         |            |   |                    |        |                                               |   |         |  



|(1) | See Note 11 for discussion on fair value methodology.
|--- | -----------------------------------------------------

|(2) | Volumes for Natural Gas are stated in MMBTUs. Volumes for NGLs are stated in gallons. Volumes for Crude Oil are stated in barrels.
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(3) | Calls purchased for 2010 through 2012 represent offsetting 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the three months ended March 31,
2010 and 2009, APL made net payments of $13.4 million and $5.0 million, respectively, related to the early termination of derivative contracts. Terminated derivative contracts are due to expire through December 31, 2012. During the three months
ended March 31, 2010 and 2009, the Company recognized the following derivative activity related to APLs early termination of these derivative instruments within its consolidated statements of operations (in thousands):



|                                                                                                                     |  |                                     |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------- | - | ---- | - | ------- | -
|Early termination of derivative contracts:                                                                           |  | For the Three MonthsEnded
March 31, |        
|                                                                                                                     |  | 2010                                |         |   | 2009 |  
|Cash paid for early termination                                                                                      |  | $                                   | (13,370 | ) |      | $ | (5,000  | )
|Less: Deferred recognition of loss on early
termination(1)                                                           |  |                                     | (5,615  | ) |      |   |        |  
|                                                                                                                     |  |                                     |         |   |      |   |         |  
|                                                                                                                     |  |                                     | (18,985 | ) |      |   | (5,000  | )
|                                                                                                                     |  |                                     |         |   |      |   |         |  
|                                                                                                                     |  |                                    
|Net cash derivative expense included within transmission, gathering and processing revenue                           |  |                                     | 5,197   |   |      |   |        |  
|Net cash derivative expense included within gain on mark-to-market derivatives                                       |  |                                     | (24,182 | ) |      |   | (5,000  | )
|Recognition of deferred hedge loss from prior periods included within transmission, gathering and processing
revenue |  |                                     | (15,532 | ) |      |   | (21,944 | )
|Recognition of deferred hedge gain from prior periods included within gain on mark-to-market derivative              |  |                                     | 22,084  |   |      |   | 12,103  |  
|                                                                                                                     |  |                                     |         |   |      |   |         |  
|Total recognized loss from early termination                                                                         |  | $                                   | (12,433 | ) |      | $ | (14,841 | )
|                                                                                                                     |  |                                     |         |   |      |   |         |  



| | (1) | Deferred recognition based upon effective portion of hedges deferred to accumulated other comprehensive income, plus theoretical premium related to
unwound options which had previously been purchased or sold as part of costless collars
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, APL
will recognize $13.7 million in the period beginning April 1, 2010 and ending on December 31, 2010 and $2.3 million and $2.0 million of income in years 2011 and 2012, respectively, the remaining period for which the hedged physical
transactions are scheduled to be settled, in the Companys consolidated statements of operations. This $18.0 million includes $16.1 million of income related to the theoretical premiums for unwound options which had previously been purchased or
sold as part of costless collars, plus $1.9 million which will be reclassified from accumulated other comprehensive loss within shareholders equity on the Companys consolidated balance sheet.



27



---

##### Table of Contents

The following tables summarize the gross effect of AHDs and APLs derivative
instruments on the Companys consolidated statement of operations for the period indicated (amounts in thousands):



|                           |  |                                          |   |      |                                                                              |        |                             |  |                                                |  |   |         |   |  |   |         |  
|-------------------------- |  | ---------------------------------------- | - | ---- | ---------------------------------------------------------------------------- | ------ | --------------------------- |  | ---------------------------------------------- |  | - | ------- | - |  | - | ------- | -
|                           |  | Gain (Loss) Recognizedin Accumulated OCI |   |      | Gain (Loss) Reclassified from Accumulated OCI
into Income (EffectivePortion) |       
|                           |  | Three MonthsEnded March 31,              |   |      |                                                                              |        | Three Months EndedMarch 31, | 
|                           |  | 2010                                     |   | 2009 |                                                                              |        | Location                    |  | 2010                                           |  |   | 2009    |  
|Interest rate
contracts(1) |  | $                                        |  |      | $                                                                            | (1,377 | )                           |  | Interest expense                               |  | $ | (1,823  | ) |  | $ | (3,054  | )
|Interest rate
contracts(1) |  |                                          |  |      |                                                                              |       |                             |  | Gain on mark-to market derivatives             |  |   | (20     | ) |  |   |        |  
|Commodity
contracts(1)     |  |                                          |  |      |                                                                              |       |                             |  | Transmission, gathering and processing revenue |  |   | (8,933  | ) |  |   | (15,970 | )
|                           |  |                                          |   |      |                                                                              |        |                             |  |                                                |  |   |         |   |  |   |         |  
|                           |  | $                                        |  |      | $                                                                            | (1,377 | )                           |  |                                                |  | $ | (10,776 | ) |  | $ | (19,024 | )
|                           |  |                                          |   |      |                                                                              |        |                             |  |                                                |  |   |         |   |  |   |         |  



|                           |  |                                                                                                       |  |                              |       |   |      |   |        |  
|-------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | ---------------------------- | ----- | - | ---- | - | ------ | -
|                           |  | Gain (Loss) Recognized in Income
(Ineffective Portion and Amount Excluded from Effectiveness Testing) | 
|                           |  |                                                                                                       |  | Three Months Ended March 31, |      
|                           |  | Location                                                                                              |  | 2010                         |       |   | 2009 |  
|Interest rate
contracts(1) |  | Gain on mark-to market derivatives                                                                    |  | $                            | (10   | ) |      | $ |       |  
|Commodity
contracts(1)     |  | Transmission, gathering and processing revenue                                                        |  |                              |      |   |      |   | (4,203 | )
|Commodity
contracts(2)     |  | Gain on mark-to market derivatives                                                                    |  |                              | 4,139 |   |      |   | 316    |  
|                           |  |                                                                                                       |  |                              |       |   |      |   |        |  
|                           |  |                                                                                                       |  | $                            | 4,129 |   |      | $ | (3,887 | )
|                           |  |                                                                                                       |  |                              |       |   |      |   |        |  



| | (1) | Hedges previously designated as cash flow hedges
| | --- | ------------------------------------------------

| | (2) | Dedesignated cash flow hedges and non-designated hedges
| | --- | -------------------------------------------------------

The fair value of the derivatives included in the Companys consolidated balance sheets is as follows (in thousands):



|                                        |  |           |         |   |              |   |         |  
|--------------------------------------- |  | --------- | ------- | - | ------------ | - | ------- | -
|                                        |  | March 31, |         |   | December 31, |  
|                                        |  | 2010      |         |   | 2009         |  
|Current portion of derivative asset     |  | $         | 118,433 |   |              | $ | 74,064  |  
|Long-term derivative asset              |  |           | 106,383 |   |              |   | 59,291  |  
|Current portion of derivative liability |  |           | (17,732 | ) |              |   | (38,485 | )
|Long-term derivative liability          |  |           | (38,629 | ) |              |   | (25,441 | )
|                                        |  |           |         |   |              |   |         |  
|Total Company net asset                 |  | $         | 168,455 |   |              | $ | 69,429  |  
|                                        |  |           |         |   |              |   |         |  

NOTE 11  FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has established a hierarchy to measure its financial instruments at fair value which requires it to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy defines three levels of inputs that may be used to measure fair value:

Level 1Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting
entity has the ability to access at the measurement date.

Level 2 Inputs other than quoted prices included
within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3  Unobservable inputs that reflect the entitys own assumptions about the assumption market participants would
use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.



28



---

##### Table of Contents

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company uses a fair value methodology to value the assets and liabilities for its, AHDs and APLs outstanding derivative
contracts (see Note 10) and the Companys Supplemental Employment Retirement Plans (SERPssee Note 17). The Companys and APLs commodity derivative contracts, with the exception of APLs NGL fixed price swaps
and NGL options, are valued based on observable market data related to the change in price of the underlying commodity and are therefore defined as Level 2 fair value measurements. The Companys, AHDs and APLs interest rate
derivative contracts are valued using a LIBOR rate-based forward price curve model and are therefore defined as Level 2 fair value measurements. The Companys SERPs are calculated based on observable actuarial inputs developed by a third-party
actuary and therefore is defined as a Level 2 fair value measurement, while the asset related to the funding of the SERPs are based on publicly traded equity and debt securities and is therefore defined as a Level 1 fair value measurement.
Valuations for APLs NGL fixed price swaps are based on a forward price curve modeled on a regression analysis of quoted price curves for NGLs for similar locations, and therefore are defined as Level 3 fair value measurements. Valuations
for APLs NGL options are based on forward price curves developed by the related financial institution, and therefore are defined as Level 3 fair value measurements.

In June 2009, APL changed the basis for its valuation of crude oil options. Previously, APL utilized forward price curves developed by
its derivative counterparties. Effective June 2009, APL utilized crude oil option prices quoted from a public commodity exchange. With this change in valuation basis, APL reclassified the inputs for the valuation of its crude oil options from a
Level 3 input to a Level 2 input. The change in valuation basis did not materially impact the fair value of its derivative instruments on its consolidated statements of operations.

Assets and liabilities measured at fair value at March 31, 2010 and December 31, 2009 were as follows (in thousands):



|                                    |  |         |       |         |   |         |         |  |   |       |   |  |   |         |  
|----------------------------------- |  | ------- | ----- | ------- | - | ------- | ------- |  | - | ----- | - |  | - | ------- | -
|                                    |  | Level 1 |       | Level 2 |   |         | Level 3 |  |   | Total |  
|March 31, 2010                      |  |         |       |         |   |         |         |  |   |       |   |  |   |         |  
|SERP liability                      |  | $       |      |         | $ | (6,025  | )       |  | $ |      |   |  | $ | (6,025  | )
|SERP asset funded in rabbi trust    |  |         | 3,940 |         |   |        |         |  |   |      |   |  |   | 3,940   |  
|Company commodity-based derivatives |  |         |      |         |   | 192,489 |         |  |   |      |   |  |   | 192,489 |  
|APL commodity-based derivatives     |  |         |      |         |   | (19,440 | )       |  |   | (526  | ) |  |   | (19,966 | )
|Interest rate derivatives           |  |         |      |         |   | (4,068  | )       |  |   |      |   |  |   | (4,068  | )
|                                    |  |         |       |         |   |         |         |  |   |       |   |  |   |         |  
|Total                               |  | $       | 3,940 |         | $ | 162,956 |         |  | $ | (526  | ) |  | $ | 166,370 |  
|                                    |  |         |       |         |   |         |         |  |   |       |   |  |   |         |  
|December 31, 2009                   |  |         |       |         |   |         |         |  |   |       |   |  |   |         |  
|SERP liability                      |  | $       |      |         | $ | (3,968  | )       |  | $ |      |   |  | $ | (3,968  | )
|SERP asset funded in rabbi trust    |  |         | 3,778 |         |   |        |         |  |   |      |   |  |   | 3,778   |  
|Company commodity-based derivatives |  |         |      |         |   | 117,003 |         |  |   |      |   |  |   | 117,003 |  
|APL commodity-based derivatives     |  |         |      |         |   | (41,742 | )       |  |   | 1,268 |   |  |   | (40,474 | )
|Interest rate derivatives           |  |         |      |         |   | (7,100  | )       |  |   |      |   |  |   | (7,100  | )
|                                    |  |         |       |         |   |         |         |  |   |       |   |  |   |         |  
|Total                               |  | $       | 3,778 |         | $ | 64,193  |         |  | $ | 1,268 |   |  | $ | 69,239  |  
|                                    |  |         |       |         |   |         |         |  |   |       |   |  |   |         |  

APLs Level 3 fair value amount relates to its derivative contracts on NGL fixed price swaps and crude
oil options. The following table provides a summary of changes in fair value of APLs Level 3 derivative instruments as of March 31, 2010 (in thousands):



|                                              |  |                      |      |   |                |   |        |       |  |   |        |  
|--------------------------------------------- |  | -------------------- | ---- | - | -------------- | - | ------ | ----- |  | - | ------ | -
|                                              |  | NGL FixedPrice Swaps |      |   | NGL PutOptions |   |        | Total | 
|Balance  December 31, 2009                   |  | $                    |     |   |                | $ | 1,268  |       |  | $ | 1,268  |  
|New contracts                                 |  |                      |     |   |                |   |       |       |  |   |       |  
|Cash settlements from unrealized
loss(1)
 (2) |  |                      |     |   |                |   | 3,951  |       |  |   | 3,951  |  
|Net change in unrealized
loss(1)              |  |                      | (423 | ) |                |   | (1,371 | )     |  |   | (1,794 | )
|Deferred option premium recognition           |  |                      |     |   |                |   | (3,951 | )     |  |   | (3,951 | )
|                                              |  |                      |      |   |                |   |        |       |  |   |        |  
|Balance  March 31, 2010                      |  | $                    | (423 | ) |                | $ | (103   | )     |  | $ | (526   | )
|                                              |  |                      |      |   |                |   |        |       |  |   |        |  



| | (1) | Included within gain on mark-to-market derivatives on the Companys consolidated statements of operations.
| | --- | ----------------------------------------------------------------------------------------------------------

| | (2) | Includes option premium cost reclassified from unrealized gain (loss) to realized gain (loss) at the time of option expiration.
| | --- | -------------------------------------------------------------------------------------------------------------------------------

Other Financial Instruments

The estimated fair value of the Companys other financial instruments has been determined based upon its assessment of available
market information and valuation methodologies. However, these estimates may not necessarily be indicative of the amounts that the Company could realize upon the sale or refinancing of such financial instruments.

The Companys other current assets and liabilities on its consolidated balance sheets are financial instruments. The estimated fair
values of these instruments approximate their carrying amounts due to their short-term nature. The estimated fair values of the Companys debt at March 31, 2010 and December 31, 2009, which consists principally of APLs term
loan, ATN and APLs Senior Notes and borrowings under the ATNs, AHDs and APLs credit facilities, were $2,124.7 million and $1,911.4 million, respectively, compared with the carrying amounts of $2,074.7 million and $2,048.6
million, respectively. The Senior Notes were valued based upon recent trading activity. The carrying value of outstanding borrowings under the credit facilities, which bear interest at a variable interest rate, approximates their estimated fair
value.



29



---

##### Table of Contents

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company estimates the fair value of asset retirement obligations based on discounted cash flow projections using numerous estimates,
assumptions and judgments regarding such factors at the date of establishment of an asset retirement obligation such as: amounts and timing of settlements; the credit-adjusted risk-free rate of the Company; and estimated inflation rates (see Note
8). Information for assets that are measured at fair value on a nonrecurring basis for the three months ended March 31, 2010 was as follows (in thousands):



|                             |  |                    |    |                |   |         |  |       |     |  |   |    
|---------------------------- |  | ------------------ | -- | -------------- | - | ------- |  | ----- | --- |  | - | ---
|                             |  | Three Months Ended
|                             |  | March 31, 2010     |    | March 31, 2009
|                             |  | Level 3            |    | Total          |   | Level 3 |  | Total
|Asset retirement obligations |  | $                  | 43 |                | $ | 43      |  | $     | 430 |  | $ | 430
|                             |  |                    |    |                |   |         |  |       |     |  |   |    
|Total                        |  | $                  | 43 |                | $ | 43      |  | $     | 430 |  | $ | 430
|                             |  |                    |    |                |   |         |  |       |     |  |   |    

NOTE 12  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of its business operations, the Company has ongoing relationships with several related entities:

Relationship with the Companys Sponsored Investment Partnerships.The Company conducts certain activities
through, and a substantial portion of its revenues are attributable to, the Partnerships. The Company serves as general partner and operator of the Partnerships and assumes customary rights and obligations for the Partnerships. As the general
partner, the Company is liable for the Partnerships liabilities and can be liable to limited partners if it breaches its responsibilities with respect to the operations of the Partnerships. The Company is entitled to receive management fees,
reimbursement for administrative costs incurred, and to share in the Partnerships revenue, and costs and expenses according to the respective partnership agreements.

Relationship with Resource America, Inc.The Company has a transition services agreement with Resource America, Inc.
(RAI), its former parent that is still in effect at March 31, 2010. The transition services agreement governs the provision of support services by the Company to RAI and by RAI to the Company, such general and administrative
functions. The Company reimburses RAI for various costs and expenses it incurs for these services on behalf of the Company, primarily payroll and rent. For both the three months ended March 31, 2010 and 2009, the Companys reimbursements
to RAI totaled $0.3 million. At March 31, 2010 and December 31, 2009, reimbursements to RAI totaling $0.1 million and $0.2 million, respectively, which remain to be settled between the parties, were reflected in the Companys
consolidated balance sheets as advances to/from affiliate.

Relationship with Laurel Mountain. Upon completion of the
transaction with Laurel Mountain, the Company entered into new gas gathering agreements with Laurel Mountain which superseded the existing master natural gas gathering agreement and omnibus agreement between the Company and APL. Under the new gas
gathering agreements, the Company is obligated to pay Laurel Mountain all of the gathering fees it collects from the Partnerships, which generally ranges from $0.35 per Mcf to the amount of the competitive gathering fee (which is currently defined
as 13% of the gross sales price received for the Partnerships gas) plus any excess amount of the gathering fees collected up to an amount equal to approximately 16% of the natural gas sales price. The new gathering agreements contain additional
provisions which define certain obligations and options of each party to build and connect newly drilled wells to any Laurel Mountain gathering system.

Relationship with Crown Drilling of Pennsylvania, LLC.Since 2007, the Company has had an equity interest in Crown Drilling of
Pennsylvania, LLC (Crown), a company that performs the drilling activities for certain of the Companys investment partnerships. In addition to its equity ownership, the Company guarantees 50% of the outstanding balances of
Crowns credit agreement. As of March 31, 2010, the Companys guarantee was limited to $10.7 million.



30



---

##### Table of Contents

NOTE 13  COMMITMENTS AND CONTINGENCIES

General Commitments

The
Company is the managing general partner of the Partnerships, and has agreed to indemnify each investor partner from any liability that exceeds such partners share of Partnership assets. Subject to certain conditions, investor partners in
certain Partnerships have the right to present their interests for purchase by the Company, as managing general partner. The Company is not obligated to purchase more than 5% to 10% of the units in any calendar year. Based on past experience, the
management of the Company believes that any liability incurred would not be material. The Company may be required to subordinate a part of its net partnership revenues from the Partnerships to the benefit of the investor partners for an amount equal
to at least 10% of their subscriptions, determined on a cumulative basis, in accordance with the terms of the partnership agreements. For the three months ended March 31, 2010, $3.3 million of the Companys revenues, net of corresponding
production costs, were subordinated, which reduced its cash distributions received from the investment partnerships. No subordination of the Companys net revenues was required for the three months ended March 31, 2009.

The Company is party to employment agreements with certain executives that provide compensation and certain other benefits. The
agreements also provide for severance payments under certain circumstances.

As of March 31, 2010, the Company and its
subsidiaries are committed to expend approximately $47.1 million on pipeline extensions, compressor station upgrades and processing facility upgrades.

Legal Proceedings

Following announcement of the Merger on April 27, 2009, five purported class actions were filed in Delaware Chancery Court and were
later consolidated into a single complaint, In re Atlas Energy Resources, LLC Unitholder Litigation, C.A. No. 4589-VCN (the Consolidated Action) filed on July 1, 2009 (the Consolidated Complaint). The
Consolidated Complaint named the Company and ATNs various officers and directors as defendants (the Defendants), alleged violations of fiduciary duties in connection with the Merger, and requested injunctive relief and damages.

On August 7, 2009, plaintiffs advised the Delaware Chancery Court by letter that they would not pursue their motion for
a preliminary injunction, which had been scheduled for a hearing on September 4, 2009, and requested that the September 4 hearing date be removed from the Courts calendar. On October 16, 2009, the Company filed a motion to
dismiss the Consolidated Complaint. On December 15, 2009, plaintiffs filed an Amended Complaint (the Amended Complaint). On January 6, 2010, the Delaware Chancery Court granted the parties Scheduling Stipulation
and Order, providing that Defendants would have until February 18, 2010, to file a motion to dismiss the Amended Complaint; that plaintiffs answering brief in opposition would be due on or before May 3, 2010; and that
Defendants reply papers would be due on or before June 4, 2010. Defendants filed their opening brief in support of their motion to dismiss on February 18, 2010 and plantiffs filed their brief in opposition on May 3, 2010.

The Amended Complaint alleges that Defendants breached their purported fiduciary duties to ATNs public unitholders in
connection with their negotiation of the Merger. In particular, plaintiffs allege that the Merger was not entirely fair to ATNs public unitholders, and that Defendants conducted the Merger process in bad faith.

Predicting the outcome of this lawsuit is difficult. An adverse judgment for monetary damages could have a material adverse effect on the
operations of the Company. Based on the facts known to date, Defendants believe that the claims asserted against them in this lawsuit are without merit, and will continue to defend themselves vigorously against the claims.

In June 2008, the Companys wholly-owned subsidiary, Atlas America, LLC, was named as a co-defendant in the matter captioned CNX
Gas Company, LLC (CNX) v. Miller Petroleum, Inc. (Miller), et al. (Chancery Court, Campbell County, Tennessee). In its complaint, CNX alleged that Miller breached a contract to assign to CNX certain leasehold rights
(Leases) representing approximately 30,000 acres in Campbell County, Tennessee and that Atlas America, LLC and another defendant, Wind City Oil & Gas, LLC, interfered with the closing of this assignment on June 6, 2008. ATN
purchased the Leases from Miller for approximately $19.1 million. On December 15, 2008, the Chancery Court dismissed the matter in its entirety, holding that there had been no breach of the contract by Miller and, therefore, that Atlas America,
LLC could not have tortuously interfered with the contract. The Chancery Court dismissed all claims against Atlas America, LLC; however, CNX has appealed this decision.

The Company is a party to various routine legal proceedings arising out of the ordinary course of its business. Management believes that
none of these actions, individually or in the aggregate, will have a material adverse effect on the Companys financial condition or results of operations.



31



---

##### Table of Contents

NOTE 14  INCOME TAXES

The Company accounts for income taxes under the asset and liability method pursuant to prevailing accounting literature. Under such
literature, deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operating loss
and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of any tax
rate change on deferred taxes is recognized in the period that includes the enactment date of the tax rate change. Realization of deferred tax assets is assessed and, if not more likely than not, a valuation allowance is recorded to write down the
deferred tax assets to their net realizable value. As of March 31, 2010 and December 31, 2009, the Company determined that no valuation allowance was necessary.

The Company recognizes the financial statement benefit of a tax position after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions meeting a more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood
of being realized upon ultimate settlement with the relevant tax authority. The Company had applied this methodology to all tax positions for which the statute of limitation remains open, and there were no additions, reductions or settlements in
unrecognized tax benefits during the three months ended March 31, 2010 and 2009. The Company has no material uncertain tax positions at March 31, 2010. During the three months ended March 31, 2009, the Company made cash tax payments
of $0.3 million.

The Company is subject to income taxes in the U.S. federal jurisdiction and various states. Tax regulations
within each jurisdiction are subject to the interpretations of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state, and local, or non-U.S.
income tax examinations by tax authorities for the years before 2006. The Companys policy is to reflect interest and penalties related to uncertain tax positions as part of the income tax expense, when and if they become applicable.

NOTE 15  ISSUANCES OF SUBSIDIARY UNITS

The Company recognizes gains on its subsidiaries equity transactions as a credit to equity rather than as income pursuant to
prevailing accounting literature. These gains represent the Companys portion of the excess net offering price per unit of each of its subsidiarys units to the book carrying amount per unit.

In January 2010, APL executed amendments to warrants to purchase 2,689,765 of its common units. The warrants were originally issued along
with its common units in connection with a private placement to institutional investors that closed on August 20, 2009. The amendments to the warrants provided that, for the period January 8 through January 12, 2010, the warrant
exercise price was lowered to $6.00 from $6.35 per unit. In connection with the amendments, the holders of the warrants agreed to exercise all of the warrants for cash, which resulted in net cash proceeds of approximately $15.3 million. APL utilized
the net proceeds from the common unit offering to repay a portion of its indebtedness under its senior secured term loan and credit facility (see Note 9), and to fund the early termination of certain derivative agreements.

In August 2009, APL sold 2,689,765 common units in a private placement at an offering price of $6.35 per unit, yielding net proceeds of
approximately $16.1 million. APL also received a capital contribution from AHD of $0.4 million for AHD to maintain its-then 2.0% general partner interest in the APL. In addition, APL issued warrants granting investors in its private placement the
right to purchase an additional 2,689,765 common units at a price of $6.35 per unit for a period of two years following the issuance of the original common units. APL utilized the net proceeds from the common unit offering to repay a portion of its
indebtedness under its senior secured term loan (see Note 9).

NOTE 16  SUBSIDIARY CASH DISTRIBUTIONS

Atlas Pipeline Partners Cash Distributions. APL is required to distribute, within 45 days after the end of each quarter, all of its
available cash (as defined in its partnership agreement) for that quarter to its common unitholders and AHD, as general partner. If APLs common unit distributions in any quarter exceed specified target levels, AHD will receive between 15% and
50% of such distributions in excess of the specified target levels. Common unit and general partner distributions declared by APL for the period from January 1, 2009 through March 31, 2010 were as follows (in thousands, except per unit
amounts):



|                            |  |                   |  |                                                   |      |                                                     |   |                                                 |  |   |      
|--------------------------- |  | ----------------- |  | ------------------------------------------------- | ---- | --------------------------------------------------- | - | ----------------------------------------------- |  | - | -----
|Date Cash Distribution Paid |  | For Quarter Ended |  | APL
CashDistributionper CommonLimitedPartner Unit |      | Total APL 
CashDistributionto CommonLimitedPartners |   | Total APL 
CashDistributionto theGeneralPartner
|February 13, 2009           |  | December 31, 2008 |  | $                                                 | 0.38 |                                                     | $ | 17,463                                          |  | $ | 2,545
|May 13, 2009                |  | March 31, 2009    |  | $                                                 | 0.15 |                                                     | $ | 7,147                                           |  | $ | 1,010



32



---

##### Table of Contents

On May 29, 2009, APL entered into an amendment to its senior secured credit facility
(see Note 9), which, among other things, required that it pay no cash distributions during the remainder of the year ended December 31, 2009 and allows it to pay cash distributions commencing with the quarter ended March 31, 2010 if its
senior secured leverage ratio is below certain thresholds and it has minimum liquidity (both as defined in the credit agreement) of at least $50.0 million.

Atlas Pipeline Holdings Cash Distributions.AHD has a cash distribution policy under which it distributes, within 50 days after
the end of each quarter, all of its available cash (as defined in its partnership agreement) for that quarter to its common unitholders. Distributions declared by AHD for the period from January 1, 2009 through March 31, 2010 were as
follows (in thousands, except per unit amounts):



|                                       |  |                   |  |                                                 |      |                                                    |   |      
|-------------------------------------- |  | ----------------- |  | ----------------------------------------------- | ---- | -------------------------------------------------- | - | -----
|Date Cash Distribution Paid or Payable |  | For QuarterEnded  |  | Cash Distribution perCommon
LimitedPartner Unit |      | Total CashDistribution to theCompany (inthousands)
|February 19, 2009                      |  | December 31, 2008 |  | $                                               | 0.06 |                                                    | $ | 1,068

On June 1, 2009,
AHD entered into an amendment to its credit facility agreement, which, among other changes, prohibited it from paying any cash distributions on its equity while the credit facility was in effect (see Note 9).

NOTE 17  BENEFIT PLANS

Stock
Incentive Plan

The Company has a Stock Incentive Plan (the 2004 Plan) which authorizes the granting of up to
4,499,999 shares of the Companys common stock to employees, affiliates, consultants and directors of the Company in the form of incentive stock options (ISOs), non-qualified stock options, stock appreciation rights
(SARs), restricted stock and deferred units. The Company also has a 2009 Stock Incentive Plan (the 2009 Plan and together with the 2004 Plan, the Plans) which authorizes the granting of up to 4,800,000 shares of
the Companys common stock to employees, affiliates, consultants and directors of the Company in the form of ISOs, non-qualified stock options, SARs, restricted stock, restricted stock units and deferred units. Generally, all share-based
payments to employees, including grants of employee stock options, are required to be recognized in the financial statements based on their fair values.

2009 Plan Stock Options. Generally, options granted under the 2009 Plan as of March 31, 2009 vest 25% per year upon the
anniversary of the grant and expire not later than ten years after the date of grant. Compensation cost is recorded on a straight-line basis. The Company issues shares when stock options are exercised or units are converted to shares. The following
tables set forth the 2009 Plan activity for the three months ended March 31, 2010 (there was no plan activity for the three months ended March 31, 2009):



|                                                       |  |        |           |                               |   |                                                    |  |                                        |  |   |      
|------------------------------------------------------ |  | ------ | --------- | ----------------------------- | - | -------------------------------------------------- |  | -------------------------------------- |  | - | -----
|                                                       |  | Shares |           | WeightedAverageExercise Price |   | WeightedAverageRemainingContractualTerm (in years) |  | AggregateIntrinsicValue(in 
thousands)
|Outstanding at January 1, 2010                         |  |        | 2,500     |                               | $ | 29.10                                              |  |                                        |  |   |      
|Granted                                                |  |        | 1,185,500 |                               |   | 29.09                                              |  |                                        |  |   |      
|Exercised                                              |  |        |          |                               |   |                                                   |  |                                        |  |   |      
|Cancelled                                              |  |        |          |                               |   |                                                   |  |                                        |  |   |      
|Forfeited or expired                                   |  |        |          |                               |   |                                                   |  |                                        |  |   |      
|                                                       |  |        |           |                               |   |                                                    |  |                                        |  |   |      
|Outstanding at March 31, 2010                          |  |        | 1,188,000 |                               | $ | 29.09                                              |  | 9.9                                    |  | $ | 2,434
|                                                       |  |        |           |                               |   |                                                    |  |                                        |  |   |      
|Options exercisable at March 31, 2010                  |  |        |          |                               |   |                                                   |  |                                        |  |   |      
|                                                       |  |        |           |                              
|Non-cash compensation expenserecognized (in thousands) |  | $      | 709       |                               |   |                                                    |  |                                        |  |   |      
|                                                       |  |        |           |                               |   |                                                    |  |                                        |  |   |      
|                                                       |  |        |           |                              
|Available for grant at March 31, 2010                  |  |        | 3,353,459 |                               |   |                                                    |  |                                        |  |   |      
|                                                       |  |        |           |                               |   |                                                    |  |                                        |  |   |      



33



---

##### Table of Contents

The Company used the Black-Scholes option pricing model to estimate the weighted average
fair value of options granted. The following weighted average assumptions were used for the period indicated:



|                                    |  |                                 |       |  
|----------------------------------- |  | ------------------------------- | ----- | -
|                                    |  | Three MonthsEnded March 31,2010 |      
|Expected dividend yield             |  |                                 |      |  
|Expected stock price volatility     |  |                                 | 48    | %
|Risk-free interest rate             |  |                                 | 2.6   | %
|Expected term (in years)            |  |                                 | 6.25  |  
|Fair value of stock options granted |  | $                               | 14.43 |  

2009 Plan
Restricted Share Units and Restricted Shares.Under the 2009 Plan, restricted share units are granted from time to time to employees of the Company. Each unit represents the right to receive one share of the Companys common stock upon
vesting. The vesting schedule is determined by the Compensation Committee of the Companys Board of Directors. Units will vest sooner upon a change in control of the Company or death or disability of a grantee, provided that a grantee has
completed at least six months service. The fair value of the grants is based on the closing share price on the grant date, and is being charged to operations over the requisite service periods using a straight-line attribution method. Upon
termination of service by a grantee, all unvested units are forfeited.

Restricted shares are granted from time to time to
employees of the Company. The shares are issued to the participant, held in escrow, and distributed to the participant upon vesting. The vesting schedule is determined by the Compensation Committee of the Companys Board of Directors. The fair
value of the grant is based on the closing price on the grant date, and is expensed over the requisite service period using a straight-line attribution method.

The following table summarizes the activity of deferred and restricted units for the three months ended March 31, 2010 (there was no
activity for deferred and restricted units for the three months ended March 31, 2009):



|                                                        |  |       |         |                                     |   |      
|------------------------------------------------------- |  | ----- | ------- | ----------------------------------- | - | -----
|                                                        |  | Units |         | WeightedAverageGrant DateFair Value
|Non-vested shares outstanding at January 1, 2010        |  |       | 12,633  |                                     | $ | 29.50
|Granted                                                 |  |       | 245,908 |                                     |   | 29.07
|Vested                                                  |  |       |        |                                     |   |     
|Forfeited                                               |  |       |        |                                     |   |     
|                                                        |  |       |         |                                     |   |      
|Non-vested shares outstanding at March 31,
2010(1)      |  |       | 258,541 |                                     | $ | 29.09
|                                                        |  |       |         |                                     |   |      
|                                                        |  |      
|Non-cash compensation expense recognized (in thousands) |  | $     | 305     |                                     |   |      
|                                                        |  |       |         |                                     |   |      



| | (1) | The aggregate intrinsic value for restricted stock unit awards outstanding at March 31, 2010 was $8.0 million.
| | --- | --------------------------------------------------------------------------------------------------------------

For the three months ended March 31, 2010, the Company recorded non-cash compensation of $1.0 million for the Companys options
and units under the 2009 Plan. At March 31, 2010, the Company had unamortized compensation expense related to its unvested portion of the 2009 Plan options and units of $23.6 million that the Company expects to recognize over the next four
years.



34



---

##### Table of Contents

2004 Plan Stock Options. For options granted under the 2004 Plan, 25% of the granted
amount becomes exercisable each year upon the grant date anniversary, except options totaling 1,687,500 shares awarded in fiscal 2005 to Messrs. Edward Cohen and Jonathan Cohen, which are immediately exercisable, and expire not later than ten years
after the date of grant. Compensation cost is recorded on a straight-line basis. The Company received $2,000 during the three months ended March 31, 2010 from the exercise of options. The Company issues new shares when stock options are
exercised or units are converted to shares. The following tables set forth the Plan activity for the three months ended March 31, 2010 and 2009:



|                                                        |  |                              |           |      |          |   |         |  |   |           |   |  |   |      
|------------------------------------------------------- |  | ---------------------------- | --------- | ---- | -------- | - | ------- |  | - | --------- | - |  | - | -----
|                                                        |  | Three Months Ended March 31,
|                                                        |  | 2010                         |           | 2009
|                                                        |  |                              |           |      | Weighted |   |         |  |   | Weighted 
|                                                        |  | Number                       |           |      | Average  |   | Number  |  |   | Average  
|                                                        |  | of Unit                      |           |      | Exercise |   | of Unit |  |   | Exercise 
|                                                        |  | Options                      |           |      | Price    |   | Options |  |   | Price    
|Outstanding, beginning of period                        |  |                              | 3,507,054 |      |          | $ | 16.81   |  |   | 3,495,351 |   |  | $ | 16.96
|Granted                                                 |  |                              |          |      |          |   |        |  |   | 100,000   |   |  | $ | 13.35
|Exercised(1)                                            |  |                              | (183      | )    |          | $ | 11.32   |  |   |          |   |  |   |     
|Cancelled                                               |  |                              |          |      |          |   |        |  |   | (15,187   | ) |  | $ | 11.32
|Forfeited                                               |  |                              |          |      |          |   |        |  |   | (21,938   | ) |  | $ | 11.32
|                                                        |  |                              |           |      |          |   |         |  |   |           |   |  |   |      
|Outstanding, end of
period(2)(3)                        |  |                              | 3,506,871 |      |          | $ | 16.81   |  |   | 3,558,226 |   |  | $ | 16.92
|                                                        |  |                              |           |      |          |   |         |  |   |           |   |  |   |      
|                                                        |  |                              |           |     
|Options exercisable, end of
period(4)                   |  |                              | 2,983,746 |      |          | $ | 14.66   |  |   |           |   |  |   |      
|                                                        |  |                              |           |      |          |   |         |  |   |           |   |  |   |      
|                                                        |  |                              |           |     
|Non-cash compensation expense recognized (in thousands) |  | $                            | 703       |      |          |   |         |  | $ | 920       |   |  |   |      
|                                                        |  |                              |           |      |          |   |         |  |   |           |   |  |   |      
|                                                        |  |                              |           |     
|Available for grant at March 31, 2010                   |  |                              | 759,270   |      |          |   |         |  |   |           |   |  |   |      
|                                                        |  |                              |           |      |          |   |         |  |   |           |   |  |   |      



| | (1) | The aggregate
intrinsic value for the options that were exercised during the three months ended March 31, 2010 was $4,000.
| | --- | --------------------------------------------------------------------------------------------------------------------------

| | (2) | The weighted
average remaining contractual life for outstanding options at March 31, 2010 was 6.2 years.
| | --- | --------------------------------------------------------------------------------------------------------

| | (3) | The aggregate
intrinsic value of options outstanding at March 31, 2010 was approximately $51.5 million.
| | --- | -------------------------------------------------------------------------------------------------------

| | (4) | The weighted
average outstanding contractual life of exercisable options at March 31, 2010 is 5.7 years.
| | --- | --------------------------------------------------------------------------------------------------------

The
Company used the Black-Scholes option pricing model to estimate the weighted average fair value of options granted. The following weighted average assumptions were used for the periods indicated:



|                                    |  |                              |   |      |   |      |  
|----------------------------------- |  | ---------------------------- | - | ---- | - | ---- | -
|                                    |  | Three Months Ended March 31, |  
|                                    |  | 2010                         |   | 2009 |  
|Expected dividend yield             |  |                              |  |      |   | 0.6  | %
|Expected stock price volatility     |  |                              |  |      |   | 36   | %
|Risk-free interest rate             |  |                              |  |      |   | 2.2  | %
|Expected term (in years)            |  |                              |  |      |   | 6.25 |  
|Fair value of stock options granted |  | $                            |  |      | $ | 4.89 |  

2004 Plan Deferred
Units and Restricted Shares. Under the 2004 Plan, on an annual basis, non-employee directors of the Company are awarded deferred units that vest over a four-year period. Each unit represents the right to receive one share of the Companys
common stock upon vesting. Units will vest sooner upon a change in control of the Company or death or disability of a grantee, provided that a grantee has completed at least six months service. The fair value of the grants is based on the
closing stock price on the grant date, and is being charged to operations over the requisite service periods using a straight-line attribution method. Upon termination of service by a grantee, all unvested units are forfeited.

Restricted shares are granted from time to time to employees of the Company. The shares are issued to the participant, held in escrow,
and distributed to the participant upon vesting. The units vest one-fourth at each anniversary date over a four-year service period. The fair value of the grant is based on the closing price on the grant date, and is being expensed over the
requisite service period using a straight-line attribution method.



35



---

##### Table of Contents

The following table summarizes the activity of deferred and restricted units for the three
months ended March 31, 2010 and 2009:



|                                                                                                                                                                                                                                                                              |  |                              |        |      |                                      |   |                |  |   |                                      |   |  |   |       |  | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ---- | ------------------------------------ | - | -------------- |  | - | ------------------------------------ | - |  | - | ----- |  | 
|                                                                                                                                                                                                                                                                              |  | Three Months Ended March 31,
|                                                                                                                                                                                                                                                                              |  | 2010                         |        | 2009
|                                                                                                                                                                                                                                                                              |  | Numberof Units               |        |      | WeightedAverageGrant 
DateFair Value |   | Numberof Units |  |   | WeightedAverageGrant 
DateFair Value
|Non-vested shares outstanding, beginning of period                                                                                                                                                                                                                            |  |                              | 34,366 |      |                                      | $ | 22.94          |  |   | 12,512                               |   |  | $ | 24.05
|Granted                                                                                                                                                                                                                                                                       |  |                              |       |      |                                      |   |               |  |   |                                     |   |  |   |     
|Matured(1)                                                                                                                                                                                                                                                                    |  |                              | (1,425 | )    |                                      | $ | 22.93          |  |   | (842                                 | ) |  | $ | 20.76
|Forfeited                                                                                                                                                                                                                                                                     |  |                              |       |      |                                      |   |               |  |   |                                     |   |  |   |     
|                                                                                                                                                                                                                                                                              |  |                              |        |      |                                      |   |                |  |   |                                      |   |  |   |       |  | 
|Non-vested shares outstanding, end of
period(2)                                                                                                                                                                                                                               |  |                              | 32,941 |      |                                      | $ | 22.94          |  |   | 11,670                               |   |  | $ | 24.29
|                                                                                                                                                                                                                                                                              |  |                              |        |      |                                      |   |                |  |   |                                      |   |  |   |       |  | 
|                                                                                                                                                                                                                                                                              |  |                              |        |     
|Non-cash compensation expense recognized (in thousands)                                                                                                                                                                                                                       |  | $                            | 54     |      |                                      |   |                |  | $ | 26                                   |   |  |   |      
|                                                                                                                                                                                                                                                                              |  |                              |        |      |                                      |   |                |  |   |                                      |   |  |   |       |  | 
|(1)The aggregate intrinsic values for phantom unit awards that matured during the three months ended March 31, 2010 and 2009 were $45,000 and
$10,000, respectively.
(2)The aggregate intrinsic value for phantom unit awards outstanding at March 31, 2010 was $1.0 million.

For the three months ended March 31, 2010 and 2009, the Company recorded non cash compensation expense of $0.8 million and $0.9
million, respectively, for the Companys options and units under the 2004 Plan. At March 31, 2010, the Company had unamortized compensation expense related to its unvested portion of the options and units of $5.3 million that the Company
expects to recognize over the next four years.

Amended and Restated Atlas Energy, Inc. Assumed Long-Term Incentive Plan

Prior to the Merger on September 29, 2009, ATN had a Long-Term Incentive Plan (LTIP), which provided equity incentive
awards to officers, employees and directors and employees of its affiliates, consultants and joint-venture partners. Subsequent to the Merger, the Company assumed ATNs LTIP and renamed the LTIP as the Atlas Energy, Inc. Assumed Long-Term
Incentive Plan (Assumed LTIP) and each outstanding unit option, phantom unit and restricted unit granted under the LTIP was converted to an equivalent stock option, phantom share or restricted share of the Companys at a ratio
of 1.0 ATN unit to 1.16 Company common shares. No new grant awards will be issued under the Assumed LTIP.

Other than the
conversion of the LTIP awards to the Companys options, restricted shares or phantom shares, the terms of the grants that had been awarded under the LTIP remain unchanged under the Assumed LTIP. Awards granted to all participants other than
non-employee directors vest 25% upon the third anniversary of the grant date and 75% upon the fourth anniversary of the grant date. Awards to non-employee directors vest 25% per year over four years. Generally, upon termination of service by a
grantee, all unvested awards will be forfeited. Upon vesting of a phantom stock award, a grantee is entitled to receive an equivalent number of common shares of the Company. Non-employee directors have the right, upon the vesting of their phantom
stock awards to receive an equivalent number of common shares or, the cash equivalent to the then fair market value of the Companys common shares.

Assumed Plan Restricted and Phantom Units. The fair value of the grants under the Assumed LTIP was based on the closing stock
price on the grant date, and was charged to operations over the requisite service periods using the straight-line method. The following table summarizes the pre-Merger unconverted restricted unit and phantom unit activity for the period from
January 1, 2009 to March 31, 2009 and the post-Merger converted restricted stock and phantom unit activity from January 1, 2010 through March 31, 2010:



|                                                        |  |                              |          |      |                                         |   |                    |  |   |                                          |   |  |   |      
|------------------------------------------------------- |  | ---------------------------- | -------- | ---- | --------------------------------------- | - | ------------------ |  | - | ---------------------------------------- | - |  | - | -----
|                                                        |  | Three Months Ended March 31,
|                                                        |  | 2010                         |          | 2009
|                                                        |  | Numberof
Units(1)            |          |      | WeightedAverageGrant 
DateFair Value(1) |   | Numberof 
Units(2) |  |   | WeightedAverageGrant 
DateFair 
Value(2)
|Non-vested shares outstanding, beginning of period      |  |                              | 856,172  |      |                                         | $ | 19.97              |  |   | 768,829                                  |   |  | $ | 23.86
|Granted                                                 |  |                              |         |      |                                         |   |                   |  |   | 17,000                                   |   |  | $ | 14.18
|Matured(3
)                                             |  |                              | (147,393 | )    |                                         | $ | 19.83              |  |   | (1,168                                   | ) |  | $ | 28.82
|Forfeited                                               |  |                              | (580     | )    |                                         | $ | 22.45              |  |   |                                         |   |  |   |     
|                                                        |  |                              |          |      |                                         |   |                    |  |   |                                          |   |  |   |      
|Non-vested shares outstanding, end of
period(4)         |  |                              | 708,199  |      |                                         | $ | 20.00              |  |   | 784,661                                  |   |  | $ | 23.65
|                                                        |  |                              |          |      |                                         |   |                    |  |   |                                          |   |  |   |      
|                                                        |  |                              |          |     
|Non-cash compensation expense recognized (in thousands) |  | $                            | 1,110    |      |                                         |   |                    |  | $ | 1,183                                    |   |  |   |      
|                                                        |  |                              |          |      |                                         |   |                    |  |   |                                          |   |  |   |      



36



---

##### Table of Contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|(1)The shares and fair values for the three months ended March 31, 2010 (post-Merger shares) have been adjusted to reflect the post-Merger
conversion ratio of 1.0 ATN common unit to 1.16 common shares of the Company.
(2)The shares and fair values for the three months ended March 31, 2009 (pre-Merger shares) have not been adjusted to reflect the post-Merger
conversion of 1.0 ATN common unit to 1.16 common shares of the Company.
(3)The intrinsic values for phantom unit awards vested during the three months ended at March 31, 2010 and 2009 were $4.4 million and $14,000,
respectively.
(4)The aggregate intrinsic value for phantom unit awards outstanding at March 31, 2010 was $22.0 million.

Assumed Plan Stock Options. Option awards under the Assumed LTIP expire 10 years from the date of grant and were generally granted
with an exercise price equal to the market price of ATNs stock at the date of grant. For the period from January 1, 2009 to March 31, 2009, the following table summarizes the unconverted number of the ATN Class B units prior to the
Merger on September 29, 2009. The converted number of the Companys common shares subsequent to the Merger and the weighted average exercise price underlying the converted stock options are listed from January 1, 2010 through
March 31, 2010. For the three months ended March 31, 2010, the Company received $0.1 million from the exercise of options. The following table sets forth the Assumed Plan option activity for the periods indicated:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |      |                                 |   |                         |  |   |                                 |   |  |   |      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | --------- | ---- | ------------------------------- | - | ----------------------- |  | - | ------------------------------- | - |  | - | -----
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Three Months Ended March 31,
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | 2010                         |           | 2009
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Numberof
UnitOptions(1)      |           |      | WeightedAverageExercisePrice(1) |   | Numberof
UnitOptions(2) |  |   | WeightedAverageExercisePrice(2)
|Outstanding, beginning of period                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              | 2,068,514 |      |                                 | $ | 20.38                   |  |   | 1,902,902                       |   |  | $ | 24.17
|Granted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                              |          |      |                                 |   |                        |  |   |                                |   |  |   |     
|Exercised(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |                              | (7,279    | )    |                                 | $ | 19.88                   |  |   |                                |   |  |   |     
|Cancelled                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                              | (174      | )    |                                 | $ | 19.88                   |  |   |                                |   |  |   |     
|Forfeited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |                              | (2,784    | )    |                                 | $ | 19.88                   |  |   | (900                            | ) |  | $ | 23.06
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |      |                                 |   |                         |  |   |                                 |   |  |   |      
|Outstanding, end of
period(4)(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              | 2,058,277 |      |                                 | $ | 20.38                   |  |   | 1,902,002                       |   |  | $ | 24.17
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |      |                                 |   |                         |  |   |                                 |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |     
|Options exercisable, end of
period(6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                              | 681,647   |      |                                 | $ | 19.03                   |  |   |                                 |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |      |                                 |   |                         |  |   |                                 |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |     
|Non-cash compensation expense recognized (in thousands)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | $                            | 296       |      |                                 |   |                         |  | $ | 334                             |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |      |                                 |   |                         |  |   |                                 |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |     
|Available for grant at March 31, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                              |          |      |                                 |   |                         |  |   |                                 |   |  |   |      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |                              |           |      |                                 |   |                         |  |   |                                 |   |  |   |      
|(1)The shares and exercise prices for the three months ended March 31, 2010 (post-Merger shares) have been adjusted to reflect the post-Merger conversion ratio of
1.0 ATN common unit to 1.16 common shares of the Company.
(2)The shares and exercise prices for the three months ended March 31, 2009 (pre-Merger shares) have not been adjusted to reflect the post-Merger conversion ratio of
1.0 ATN common unit to 1.16 common shares of the Company.
(3)The aggregate intrinsic value of options exercised was approximately $0.1 million for the three months ended March 31, 2010.
(4)The weighted average remaining contractual life for outstanding options at March 31, 2010 was 6.8 years.
(5)The aggregate intrinsic value of options outstanding at March 31, 2010 was approximately $22.1 million.
(6)The weighted average outstanding contractual life of exercisable options at March 31, 2010 is 6.8 years.



37



---

##### Table of Contents

The following tables summarize information about stock options outstanding and exercisable
under the Assumed LTIP at March 31, 2010 subsequent to the Merger and the weighted average exercise price underlying the converted stock options:



|                         |  |                            |  |                                                  |  |                              |       |                            |         |                               |   |      
|------------------------ |  | -------------------------- |  | ------------------------------------------------ |  | ---------------------------- | ----- | -------------------------- | ------- | ----------------------------- | - | -----
|                         |  | Options Outstanding        |  | Options Exercisable                             
|Range of Exercise Prices |  | Number ofSharesOutstanding |  | WeightedAverageRemainingContractualLife in Years |  | WeightedAverageExercisePrice |       | Number ofSharesExercisable |         | WeightedAverageExercise Price
|$18.10  22.22           |  | 1,885,669                  |  | 6.8                                              |  | $                            | 19.48 |                            | 681,647 |                               | $ | 19.03
|$26.07  30.17           |  | 163,908                    |  | 7.3                                              |  | $                            | 29.98 |                            |        |                               |   |     
|$34.30 and above         |  | 8,700                      |  | 8.2                                              |  | $                            | 34.30 |                            |        |                               |   |     
|                         |  |                            |  |                                                  |  |                              |       |                            |         |                               |   |      
|                         |  | 2,058,277                  |  | 6.8                                              |  | $                            | 20.38 |                            | 681,647 |                               | $ | 19.03
|                         |  |                            |  |                                                  |  |                              |       |                            |         |                               |   |      

The Company recognized $1.4 million and $1.5
million in compensation expense related to the Assumed LTIP restricted stock units, phantom units and unit options for the three months ended March 31, 2010 and 2009, respectively. ATN paid $0.4 million with respect to distribution equivalent
rights (DER) for three months ended March 31, 2009. These amounts were recorded as a reduction of non-controlling interests on the Companys consolidated balance sheet during the respective period. ATN made no payments related
to DERs during the three months ended March 31, 2010. At March 31, 2010, the Company had approximately $5.9 million of unrecognized compensation expense related to the unvested portion of the restricted shares, phantom shares and stock
options.

Employee Stock Ownership Plan

The Company has an Employee Stock Ownership Plan (ESOP), which is a qualified non-contributory retirement plan, that was
established to acquire shares of the Companys common stock for the benefit of all employees who are 21 years of age or older and have completed 1,000 hours of service. Contributions to the ESOP were made at the discretion of the Companys
Board of Directors. Any dividends which may be paid on allocated shares will reduce retained earnings.

The common stock
purchased by the ESOP is held by the ESOP trustee in a suspense account. On an annual basis, a portion of the common stock will be released from the suspense account and allocated to participating employees. As of December 31, 2009, all shares
were allocated to participants. Participants will receive shares upon vesting, which occurs over a five year period, beginning after the participants second year of service.

Supplemental Employment Retirement Plans (SERPs)

The Company has employment agreements with certain executive officers, pursuant to which the Company has agreed to provide them with SERPs
and with certain financial benefits upon termination of their employment. Under the SERPs, the executive officers entitled to SERP benefits will be paid an annual benefit upon retirement, death or other termination of employment based upon their
salary at the time of the termination of their employment, number of years of service to the Company and other factors. During the three months ended March 31, 2010 and 2009, expense recognized with respect to these commitments was $0.7 million
and $0.2 million, respectively.

During the year ended December 31, 2009, the Company funded $3.2 million of the
outstanding liability with a financial institution in a rabbi trust for the SERP Plans, which is included in other assets on the Companys consolidated balance sheet. As of March 31, 2010 and December 31, 2009, the actuarial present
value of the expected postretirement obligation due under its SERPs were $6.0 million and $4.0 million, respectively, which were included in other long-term liabilities on the Companys consolidated balance sheets. The following table provides
information about amounts recognized in the Companys consolidated balance sheets at the dates indicated (in thousands):



|                                       |  |               |        |   |                  |   |        |  
|-------------------------------------- |  | ------------- | ------ | - | ---------------- | - | ------ | -
|                                       |  | March 31,2010 |        |   | December 31,2009 |  
|Other liabilities                      |  | $             | (6,025 | ) |                  | $ | (3,968 | )
|Accumulated other comprehensive income |  |               | 1,172  |   |                  |   | 340    |  
|Deferred income tax asset              |  |               | 749    |   |                  |   | 218    |  
|                                       |  |               |        |   |                  |   |        |  
|Net amount recognized                  |  | $             | (4,104 | ) |                  | $ | (3,410 | )
|                                       |  |               |        |   |                  |   |        |  

The estimated amount that will be amortized from accumulated other comprehensive income into expense for the
year ended December 31, 2010 is $0.2 million.



38



---

##### Table of Contents

AHD Long-Term Incentive Plan

The Board of Directors of AHD approved and adopted AHDs Long-Term Incentive Plan (AHD LTIP), which provides equity
incentive awards to officers, employees and board members and employees of its affiliates, consultants and joint-venture partners (collectively, the Participants) who perform services for AHD. The AHD LTIP is administered by a committee
(the AHD LTIP Committee), appointed by AHDs board, which is the Compensation Committee of the Companys Board of Directors. Under the AHD LTIP, phantom units and/or unit options may be granted, at the discretion of the AHD
LTIP Committee, to all or designated Participants, at the discretion of the AHD LTIP Committee. The AHD LTIP Committee may grant such awards of either phantom units or unit options for an aggregate of 2,100,000 common limited partner units. At
March 31, 2010, AHD had 1,093,375 phantom units and unit options outstanding under the AHD LTIP, with 961,150 phantom units and unit options available for grant.

AHD Phantom Units.A phantom unit entitles a Participant to receive a common unit of AHD upon vesting of the phantom unit.
Non-employee directors receive an annual grant of a maximum of 500 phantom units which, upon vesting, entitles the grantee to receive the equivalent number of common units of AHD or the cash equivalent to the then fair market value of the common
limited partner units of AHD. In tandem with phantom unit grants, the AHD LTIP Committee may grant a Participant a distribution equivalent right (DER), which is the right to receive cash per phantom unit in an amount equal to, and at the
same time as, the cash distributions AHD makes on a common unit during the period such phantom unit is outstanding. The AHD LTIP Committee determines the vesting period for phantom units. Through March 31, 2010, phantom units granted under the
AHD LTIP generally will vest 25% of the original granted amount three years from the date of grant and the remaining 75% of the original granted amount four years from the date of grant. Awards will automatically vest upon a change of control of
AHD, as defined in the AHD LTIP. Of the phantom units outstanding under the AHD LTIP at March 31, 2010, 132,713 units will vest within the following twelve months. All phantom units outstanding under the AHD LTIP at March 31, 2010 include
DERs granted to the Participants by the AHD LTIP Committee. There were no amounts paid with respect to AHDs LTIP DERs for the three months ended March 31, 2010 and 2009. These amounts were recorded as an adjustment of non-controlling
interests on the Companys consolidated balance sheet. The following table sets forth the AHD LTIP phantom unit activity for the periods indicated:



|                                                                                                        |  |                              |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                        |  | Three Months Ended March 31, |        
|                                                                                                        |  | 2010                         |         |   | 2009 |  
|Outstanding, beginning of period                                                                        |  |                              | 138,875 |   |      |   | 226,300 |  
|Granted                                                                                                 |  |                              |        |   |      |   |        |  
|Matured                                                                                                 |  |                              |        |   |      |   |        |  
|Forfeited                                                                                               |  |                              | (500    | ) |      |   | (45,000 | )
|                                                                                                        |  |                              |         |   |      |   |         |  
|Outstanding, end of
period(1)                                                                           |  |                              | 138,375 |   |      |   | 181,300 |  
|                                                                                                        |  |                              |         |   |      |   |         |  
|                                                                                                        |  |                             
|Non-cash compensation expense recognized (in thousands)                                                 |  | $                            | 196     |   |      | $ | (308    | )
|                                                                                                        |  |                              |         |   |      |   |         |  
|                                                                                                       
|(1)The aggregate
intrinsic value for phantom unit awards outstanding at March 31, 2010 is $0.9 million. | 

At March 31, 2010, AHD had approximately $0.5 million of unrecognized compensation expense
related to unvested phantom units outstanding under AHDs LTIP based upon the fair value of the awards.

AHD Unit
Options.A unit option entitles a Participant to receive a common unit of AHD upon payment of the exercise price for the option after completion of vesting of the unit option. The exercise price of the unit option is equal to the fair market
value of AHDs common unit on the date of grant of the option. The AHD LTIP Committee also shall determine how the exercise price may be paid by the Participant. The AHD LTIP Committee will determine the vesting and exercise period for unit
options. Unit option awards expire 10 years from the date of grant. Through March 31, 2010, unit options granted under the AHD LTIP generally will vest 25% of the original granted amount three years from the date of grant and the remaining 75%
of the original granted amount four years from the date of grant. Awards will automatically vest upon a change of control of AHD, as defined in the AHD LTIP. There are 641,250 unit options outstanding under the AHD LTIP at March 31, 2010 that
will vest within the following twelve months. The following table sets forth the AHD LTIP unit option activity for the periods indicated:



|                                                                               |  |                              |         |                              |   |                      |  |   |                              |   |  |   |      
|------------------------------------------------------------------------------ |  | ---------------------------- | ------- | ---------------------------- | - | -------------------- |  | - | ---------------------------- | - |  | - | -----
|                                                                               |  | Three Months Ended March 31,
|                                                                               |  | 2010                         |         | 2009                        
|                                                                               |  | Numberof
UnitOptions         |         | WeightedAverageExercisePrice |   | Numberof
UnitOptions |  |   | WeightedAverageExercisePrice
|Outstanding, beginning of period                                               |  |                              | 955,000 |                              | $ | 20.54                |  |   | 1,215,000                    |   |  | $ | 22.56
|Granted                                                                        |  |                              |        |                              |   |                     |  |   | 100,000                      |   |  | $ | 3.24 
|Forfeited                                                                      |  |                              |        |                              |   |                     |  |   | (360,000                     | ) |  | $ | 22.56
|                                                                               |  |                              |         |                              |   |                      |  |   |                              |   |  |   |      
|Outstanding, end of
period(1)(2)                                               |  |                              | 955,000 |                              | $ | 20.54                |  |   | 955,000                      |   |  | $ | 20.54
|                                                                               |  |                              |         |                              |   |                      |  |   |                              |   |  |   |      
|                                                                               |  |                              |         |                             
|Options exercisable, end of
period(3)                                          |  |                              | 213,750 |                              | $ | 22.56                |  |   |                             |   |  |   |     
|                                                                               |  |                              |         |                              |   |                      |  |   |                              |   |  |   |      
|                                                                               |  |                              |         |                             
|Weighted average fair value of unit options per unit granted during the period |  |                              |         |                              |   |                      |  |   |                              |   |  | $ | 0.61 
|                                                                               |  |                              |         |                              |   |                      |  |   |                              |   |  |   |      
|                                                                               |  |                              |         |                             
|Non-cash compensation expense recognized (in thousands)                        |  | $                            | 155     |                              |   |                      |  | $ | (573                         | ) |  |   |      
|                                                                               |  |                              |         |                              |   |                      |  |   |                              |   |  |   |      



39



---

##### Table of Contents

|                                                                                                            |  |  |  |  |  |  |  | 
|----------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|(1)The weighted average remaining contractual life for outstanding options at March 31, 2010 was 6.8 years.
|(2)The aggregate intrinsic value of options outstanding at March 31, 2010 was approximately $0.3 million.  
|(3)The weighted average remaining contractual life for options exercisable at March 31, 2010 was 6.6 years.

AHD used the Black-Scholes option pricing model to estimate the weighted average fair value of each unit option granted. The following
weighted average assumptions were used for the period indicated:



|                                |  |                                  |  
|------------------------------- |  | -------------------------------- | -
|                                |  | Three Months EndedMarch 31, 2009 |  
|Expected dividend yield         |  | 7.0                              | %
|Expected stock price volatility |  | 40                               | %
|Risk-free interest rate         |  | 2.3                              | %
|Expected term (in years)        |  | 6.9                              |  

At
March 31, 2010, AHD had approximately $0.4 million of unrecognized compensation expense related to unvested unit options outstanding under AHDs LTIP based upon the fair value of the awards.

APL Long-Term Incentive Plan

APL has a Long-Term Incentive Plan (APL LTIP), in which officers, employees and non-employee managing board members of the
General Partner and employees of the General Partners affiliates and consultants are eligible to participate. The APL LTIP is administered by a committee (the APL LTIP Committee) appointed by AHDs managing board. The APL LTIP
Committee may make awards of either phantom units or unit options for an aggregate of 435,000 common units.

APL Phantom
Units.A phantom unit entitles a grantee to receive a common unit, without payment of an exercise price, upon vesting of the phantom unit. Non-employee directors receive an annual grant of a maximum of 500 phantom units which, upon vesting,
entitles the grantee to receive the equivalent number of common units or the cash equivalent to the then fair market value of the common limited partner units of APL. In addition, the APL LTIP Committee may grant a participant a DER, which is the
right to receive cash per phantom unit in an amount equal to, and at the same time as, the cash distributions APL makes on a common unit during the period the phantom unit is outstanding. Except for phantom units awarded to non-employee managing
board members of AHD, the APL LTIP Committee will determine the vesting period for phantom units and the exercise period for options. Through March 31, 2010, phantom units granted under the APL LTIP generally had vesting periods of four years.
Phantom units awarded to non-employee managing board members will vest over a four year period. Awards will automatically vest upon a change of control, as defined in the APL LTIP. Of the units outstanding under the APL LTIP at March 31, 2010,
28,153 units will vest within the following twelve months. All phantom units outstanding under the APL LTIP at March 31, 2010 include DERs granted to the participants by the APL LTIP Committee. The amount paid with respect to APL LTIP DERs was
$0.1 million for the three months ended March 31, 2009. This amount was recorded as reductions of non-controlling interest on the Companys consolidated balance sheet. No APL LTIP DERs were paid for the three months ended March 31,
2010. The following table sets forth the APL LTIP phantom unit activity for the periods indicated:



|                                                        |  |                             |        |   |      |   |         |  
|------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                        |  | Three Months EndedMarch 31, |       
|                                                        |  | 2010                        |        |   | 2009 |  
|Outstanding, beginning of period                        |  |                             | 52,233 |   |      |   | 126,565 |  
|Granted(1)                                              |  |                             | 1,000  |   |      |   | 1,500   |  
|Matured(2)                                              |  |                             | (2,695 | ) |      |   | (9,886  | )
|Forfeited                                               |  |                             | (1,375 | ) |      |   | (16,250 | )
|                                                        |  |                             |        |   |      |   |         |  
|Outstanding, end of
period(3)                           |  |                             | 49,163 |   |      |   | 101,929 |  
|                                                        |  |                             |        |   |      |   |         |  
|                                                        |  |                            
|Non-cash compensation expense recognized (in thousands) |  | $                           | 122    |   |      | $ | (95     | )
|                                                        |  |                             |        |   |      |   |         |  



40



---

##### Table of Contents

|                                                                                                                                                                                                                                                                                                                        |  |  |  | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|(1)The weighted average prices for phantom unit awards on the date of grant, which are utilized in the calculation of compensation expense and do
not represent exercise prices to be paid by the recipients, were $5.58 and $4.60 for awards granted for the three months ended March 31, 2010 and 2009, respectively.
|(2)The
 intrinsic values for phantom unit awards exercised during the three months ended at March 31, 2010 and 2009 were $0.4 million and $0.1 million, respectively.                                                                                                                                                  
|(3)The
 aggregate intrinsic value for phantom unit awards outstanding at March 31, 2010 is $0.7 million.                                                                                                                                                                                                               

At
March 31, 2010, APL had approximately $0.5 million of unrecognized compensation expense related to unvested phantom units outstanding under the APL LTIP based upon the fair value of the awards.

APL Unit Options.A unit option entitles a Participant to receive a common unit of APL upon payment of the exercise price for the
option after completion of vesting of the unit option. The exercise price of the unit option is equal to the fair market value of APLs common unit on the date of grant of the option. The APL LTIP Committee also shall determine how the exercise
price may be paid by the Participant. The APL LTIP Committee will determine the vesting and exercise period for unit options. Unit option awards expire 10 years from the date of grant. Through March 31, 2010, unit options granted under
APLs LTIP generally will vest 25% on each of the next four anniversaries of the date of grant. Awards will automatically vest upon a change of control of APL, as defined in the APLs LTIP. There were 25,000 unit options outstanding under
APLs LTIP at March 31, 2010 that will vest within the following twelve months.

The following table sets forth the
LTIP unit option activity for the periods indicated:



|                                                                                                                   |  |                              |         |                              |   |                      |  |                              |         |  |   |     
|------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- | ------- | ---------------------------- | - | -------------------- |  | ---------------------------- | ------- |  | - | ----
|                                                                                                                   |  | Three Months Ended March 31,
|                                                                                                                   |  | 2010                         |         | 2009                        
|                                                                                                                   |  | Numberof
UnitOptions         |         | WeightedAverageExercisePrice |   | Numberof
UnitOptions |  | WeightedAverageExercisePrice
|Outstanding, beginning of period                                                                                   |  |                              | 100,000 |                              | $ | 6.24                 |  |                              |        |  | $ |    
|Granted                                                                                                            |  |                              |        |                              |   |                     |  |                              | 100,000 |  |   | 6.24
|Matured                                                                                                            |  |                              |        |                              |   |                     |  |                              |        |  |   |    
|Forfeited                                                                                                          |  |                              |        |                              |   |                     |  |                              |        |  |   |    
|                                                                                                                   |  |                              |         |                              |   |                      |  |                              |         |  |   |     
|Outstanding, end of
period(1)(2)                                                                                   |  |                              | 100,000 |                              | $ | 6.24                 |  |                              | 100,000 |  | $ | 6.24
|                                                                                                                   |  |                              |         |                              |   |                      |  |                              |         |  |   |     
|                                                                                                                   |  |                              |         |                             
|Options exercisable, end of
period(3)                                                                              |  |                              | 25,000  |                              | $ | 6.24                 |  |                              |        |  |   |    
|                                                                                                                   |  |                              |         |                              |   |                      |  |                              |         |  |   |     
|                                                                                                                   |  |                              |         |                             
|Weighted average fair value of unit options per unit granted during the period Weighted average fair value of
unit |  |                              |         |                              |   |                      |  |                              |         |  | $ | 0.14
|                                                                                                                   |  |                              |         |                              |   |                      |  |                              |         |  |   |     
|                                                                                                                   |  |                              |         |                             
|Non-cash compensation expense recognized (in thousands)                                                            |  | $                            | 1       |                              |   |                      |  | $                            | 2       |  |   |     
|                                                                                                                   |  |                              |         |                              |   |                      |  |                              |         |  |   |     
|(1)The weighted average remaining contractual life for outstanding options at March 31, 2010 was 8.8 years.       
|(2)The
 aggregate intrinsic value of options outstanding at March 31, 2010 was $0.8 million.                      
|(3)The
 weighted average remaining contractual life for exercisable options at March 31, 2010 was 8.8 years.      



41



---

##### Table of Contents

APL used the Black-Scholes option pricing model to estimate the weighted average fair value
of options granted. The following weighted average assumptions were used for the period indicated:



|                                |  |                                  |  
|------------------------------- |  | -------------------------------- | -
|                                |  | Three Months EndedMarch 31, 2009 |  
|Expected dividend yield         |  | 11.0                             | %
|Expected stock price volatility |  | 20                               | %
|Risk-free interest rate         |  | 2.2                              | %
|Expected term (in years)        |  | 6.3                              |  

APL Employee Incentive
Compensation Plan and Agreement

In June 2009, a wholly-owned subsidiary of APL adopted an incentive plan (the APL
Plan) which allows for equity-indexed cash incentive awards to employees of APL (the Participants), but expressly excludes as an eligible Participant any person that, at the time of the grant, is a Named Executive
Officer of APL (as such term is defined under the rules of the Securities and Exchange Commission). The APL Plan is administered by a committee appointed by the chief executive officer of APL. Under the APL Plan, cash bonus units may be
awarded to Participants at the discretion of the committee and bonus units totaling 325,000 were awarded under the APL Plan in June 2009. In September 2009, the APL subsidiary entered into an agreement with an APL executive officer that granted an
award of 50,000 bonus units on substantially the same terms as the bonus units available under the APL Plan (the bonus units issued under the APL Plan and under the separate agreement are, for purposes hereof, referred to as APL Bonus
Units). An APL Bonus Unit entitles the employee to receive the cash equivalent of the then-fair market value of an APL common limited partner unit, without payment of an exercise price, upon vesting of the APL Bonus Unit. APL Bonus Units vest
ratably over a three year period from the date of grant and will automatically vest upon a change of control, death, or termination without cause, each as defined in the governing document. Vesting will terminate upon termination of employment with
cause. Of the 375,000 APL Bonus Units outstanding at March 31, 2010, 123,750 APL Bonus Units will vest within the following twelve months. APL recognized $1.3 million of compensation expense related to these awards based upon the fair value of
the awards within general and administrative expense on the Companys consolidated statements of operations with respect to the vesting of these awards for the three months ended March 31, 2010. At March 31, 2010 and December 31,
2009, the Company has recognized $2.5 million and $1.2 million, respectively, within accrued liabilities on its consolidated balance sheets with regard to the awards, which represents their fair value at the respective dates.

NOTE 18  OPERATING SEGMENT INFORMATION

The Companys operations include four reportable operating segments. These operating segments reflect the way the Company manages its
operations and makes business decisions. Operating segment data for the periods indicated are as follows (in thousands):



|                                                 |  |                              |          |   |         |   |          |  
|------------------------------------------------ |  | ---------------------------- | -------- | - | ------- | - | -------- | -
|                                                 |  | Three Months Ended March 31, |         
|                                                 |  | 2010                         |          |   | 2009(1) |  
|Gas and oil production                           |  |                              |          |   |         |   |          |  
|Revenues                                         |  | $                            | 63,909   |   |         | $ | 71,943   |  
|Costs and expenses                               |  |                              | (12,284  | ) |         |   | (11,286  | )
|Depreciation, depletion and amortization expense |  |                              | (25,257  | ) |         |   | (27,010  | )
|                                                 |  |                              |          |   |         |   |          |  
|Segment income                                   |  | $                            | 26,368   |   |         | $ | 33,647   |  
|                                                 |  |                              |          |   |         |   |          |  
|                                                 |  |                             
|Well construction and completion                 |  |                              |          |   |         |   |          |  
|Revenues                                         |  | $                            | 72,642   |   |         | $ | 112,368  |  
|Costs and expenses                               |  |                              | (61,561  | ) |         |   | (95,397  | )
|                                                 |  |                              |          |   |         |   |          |  
|Segment income                                   |  | $                            | 11,081   |   |         | $ | 16,971   |  
|                                                 |  |                              |          |   |         |   |          |  
|                                                 |  |                             
|Other partnership
management(2)                  |  |                              |          |   |         |   |          |  
|Revenues                                         |  | $                            | 12,137   |   |         | $ | 3,567    |  
|Loss on asset sales                              |  |                              | (2,942   | ) |         |   |         |  
|Costs and expenses                               |  |                              | (10,249  | ) |         |   | (3,051   | )
|Depreciation, depletion and amortization expense |  |                              | (1,251   | ) |         |   | (1,017   | )
|                                                 |  |                              |          |   |         |   |          |  
|Segment loss                                     |  | $                            | (2,305   | ) |         | $ | (501     | )
|                                                 |  |                              |          |   |         |   |          |  
|                                                 |  |                             
|Atlas
Pipeline(1)                                |  |                              |          |   |         |   |          |  
|Revenues(3)                                      |  | $                            | 283,211  |   |         | $ | 164,094  |  
|Revenues  affiliates                            |  |                              |         |   |         |   | 10,149   |  
|Costs and expenses                               |  |                              | (222,386 | ) |         |   | (151,900 | )
|Depreciation and amortization expense            |  |                              | (22,746  | ) |         |   | (22,668  | )
|                                                 |  |                              |          |   |         |   |          |  
|Segment income (loss)                            |  | $                            | 38,079   |   |         | $ | (325     | )
|                                                 |  |                              |          |   |         |   |          |  



42



---

##### Table of Contents

|                                                                                          |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------- |  | - | ------- | - |  | - | ------- | -
|Reconciliation of segment income (loss) to net loss before income tax provision (benefit) |  |   |         |   |  |   |         |  
|Segment income (loss)                                                                     |  |   |         |   |  |   |         |  
|Gas and oil production                                                                    |  | $ | 26,368  |   |  | $ | 33,647  |  
|Well construction and completion                                                          |  |   | 11,081  |   |  |   | 16,971  |  
|Other partnership management                                                              |  |   | (2,305  | ) |  |   | (501    | )
|Atlas Pipeline                                                                            |  |   | 38,079  |   |  |   | (325    | )
|                                                                                          |  |   |         |   |  |   |         |  
|Total segment income                                                                      |  |   | 73,223  |   |  |   | 49,792  |  
|General and administrative
expenses(4)                                                    |  |   | (30,811 | ) |  |   | (27,896 | )
|Interest
expense(4)                                                                       |  |   | (44,599 | ) |  |   | (34,620 | )
|                                                                                          |  |   |         |   |  |   |         |  
|Net loss from continuing operations before income tax provision (benefit)                 |  | $ | (2,187  | ) |  | $ | (12,724 | )
|                                                                                          |  |   |         |   |  |   |         |  
|                                                                                          |  |  
|Capital expenditures                                                                      |  |   |         |   |  |   |         |  
|Gas and oil production                                                                    |  | $ | 65,212  |   |  | $ | 49,618  |  
|Well construction and completion                                                          |  |   |        |   |  |   |        |  
|Other partnership management                                                              |  |   | 4,632   |   |  |   | 7,427   |  
|Atlas Pipeline                                                                            |  |   | 10,914  |   |  |   | 72,196  |  
|Corporate and other                                                                       |  |   | 155     |   |  |   | 162     |  
|                                                                                          |  |   |         |   |  |   |         |  
|Total capital expenditures                                                                |  | $ | 80,913  |   |  | $ | 129,403 |  
|                                                                                          |  |   |         |   |  |   |         |  



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |               |           |                  |   |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | --------- | ---------------- | - | ---------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | March 31,2010 |           | December 31,2009
|Balance sheet                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |               |           |                  |   |          
|Goodwill:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |               |           |                  |   |          
|Gas and oil production                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | $             | 21,527    |                  | $ | 21,527   
|Well construction and completion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |               | 6,389     |                  |   | 6,389    
|Other partnership management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |               | 7,250     |                  |   | 7,250    
|Atlas Pipeline                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |               |          |                  |   |         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |               |           |                  |   |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | $             | 35,166    |                  | $ | 35,166   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |               |           |                  |   |          
|Total assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |               |           |                  |   |          
|Gas and oil production                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | $             | 2,190,947 |                  | $ | 2,115,867
|Well construction and completion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |               | 12,118    |                  |   | 12,054   
|Other partnership management                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |               | 48,035    |                  |   | 44,311   
|Atlas Pipeline                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |               | 2,085,093 |                  |   | 2,135,860
|Corporate and other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |               | 82,569    |                  |   | 98,071   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |               |           |                  |   |          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | $             | 4,418,762 |                  | $ | 4,406,163
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |               |           |                  |   |          
|(1)     Restated to reflect amounts reclassified to discontinued operations due to
APLs sale of its NOARK gas gathering and interstate pipeline system (see Note 5).
(2)     Includes revenues and expenses from well services, transportation and
administration and oversight that do not meet the quantitative threshold for reporting segment information.
(3)     Includes gains on mark-to-market derivatives of $4.1 million and $0.3 million
for the three months ended March 31, 2010 and 2009, respectively.
(4)     The Company notes that income taxes, interest expense and general and
administrative expenses have not been allocated to its reportable segments as it would be impracticable to reasonably do so for the periods presented.

NOTE 19  SUBSEQUENT EVENTS

Marcellus Shale Joint Venture. Effective April 20, 2010, the Company consummated a transaction whereby it entered into an
undivided joint venture with Reliance Industries Limited (Reliance). Pursuant to the agreement, the Company sold Reliance a 40% undivided joint venture interest in approximately 300,000 net acres (approximately 120,000 to Reliance) of
undeveloped core Marcellus Shale acreage held by the Company in exchange for $340.0 million of cash and $1,360.0 million in the form of a drilling carry. In addition to funding its own 40% interest of the drilling and completion costs, Reliance is
required to fund 75% of the Companys respective portion of drilling and completion costs until the $1,360.0 million drilling carry is fully utilized. The Company has five and a half years to utilize the drilling carry, subject to a two-year
extension under certain conditions.



43



---

##### Table of Contents

Acquisition of additional Marcellus Shale Acreage. In April 2010, the Company and
Reliance agreed, through a series of transactions subsequent to the completion of the undivided joint venture agreement, to purchase an additional 42,344 undeveloped core Marcellus Shale acreage for an average purchase price of $4,532 per acre. The
acreage is contained within the joint ventures area of mutual interest. Pursuant to the joint venture agreement with Reliance, the Company will contribute 60% of the cost associated with this acreage, while Reliance will contribute the
remaining 40%. As a result of the transactions, the joint venture between the Company and Reliance will control approximately 343,000 Marcellus Shale acres.

Borrowing Base Redetermination. In April 2010, in conjunction with a regularly scheduled borrowing base redetermination, the
borrowing base under ATNs revolving credit facility of $550.0 million was approved.



44



---

##### Table of Contents

|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, 2009. 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.

BUSINESS OVERVIEW

We are a publicly traded Delaware corporation whose common units are listed on the NASDAQ Stock Market under the symbol ATLS.
On September 29, 2009, we completed our merger with Atlas Energy Resources, LLC (ATN), our formerly publicly traded subsidiary and a Delaware limited liability company, pursuant to the definitive merger agreement previously executed
between us and ATN, with ATN surviving as our wholly-owned subsidiary (the Merger).

We are an independent
developer and producer of natural gas and oil, with operations in the Appalachian Basin, the Michigan Basin, and the Illinois Basin. Within these Basins, we believe we are one of the leading natural gas producers in four established shale plays: the
Marcellus Shale of western Pennsylvania, the Antrim Shale of northern Michigan, the Chattanooga Shale of northeastern Tennessee and the New Albany Shale of west central Indiana. We specialize in development of these natural gas basins, because they
provide repeatable, low-risk drilling opportunities. We are also a leading sponsor and manager of tax-advantaged direct investment natural gas and oil partnerships in the United States. Through March 31, 2010, we have funded the majority of our
drilling of natural gas and oil wells on our acreage by sponsoring and managing tax advantaged investment partnerships (see Subsequent Events). We generally structure our investment partnerships so that, upon formation of a partnership,
we co-invest in and contribute leasehold acreage to it, enter into drilling and well operating agreements with it and become its managing general partner.

The following is a summary of our key operating measures as of and for the three months ended March 31, 2010:



|                                                  |  |            |  |                  |  |          
|------------------------------------------------- |  | ---------- |  | ---------------- |  | ---------
|                                                  |  | Appalachia |  | Michigan/Indiana |  | Total    
|                                                  |  |            | 
|Acreage:                                          |  |            |  |                  |  |          
|Gross developed acreage  Marcellus Shale         |  | 146,333    |  |                 |  | 146,333  
|Gross developed acreage  Other                   |  | 154,359    |  | 331,671          |  | 486,030  
|Gross undeveloped acreage  Marcellus Shale       |  | 446,856    |  |                 |  | 446,856  
|Gross undeveloped acreage  Other                 |  | 166,230    |  | 259,788          |  | 426,018  
|                                                  |  |            |  |                  |  |          
|Total gross acreage                               |  | 913,778    |  | 591,459          |  | 1,505,237
|                                                  |  |            |  |                  |  |          
|                                                  |  |            | 
|Net developed acreage  Marcellus Shale           |  | 137,275    |  |                 |  | 137,275  
|Net developed acreage  Other                     |  | 128,653    |  | 259,088          |  | 387,741  
|Net undeveloped acreage  Marcellus Shale         |  | 436,953    |  |                 |  | 436,953  
|Net undeveloped acreage  Other                   |  | 173,765    |  | 145,276          |  | 319,041  
|                                                  |  |            |  |                  |  |          
|Total net acreage                                 |  | 876,646    |  | 404,364          |  | 1,281,010
|                                                  |  |            |  |                  |  |          
|                                                  |  |            | 
|Net core Marcellus Shale acreage (included above) |  |            |  |                  |  | 269,479  
|                                                  |  |            | 
|Production per day (Mcfed)                        |  | 45,239     |  | 54,719           |  | 99,958   
|                                                  |  |            | 
|Direct and indirect gross well working interests  |  | 9,329      |  | 2,561            |  | 11,890   



45



---

##### Table of Contents

OTHER OWNERSHIP INTERESTS

In addition to our production operations, we also maintain ownership interests in the following entities at March 31, 2010:



| |  |  | Atlas Pipeline Holdings, L.P. (Atlas Pipeline Holdings or AHD), our publicly-traded subsidiary (NYSE: AHD). At March 31,
2010, we had a 64.3% ownership interest in AHD and a 100% ownership interest in its general partner, through which we control AHD;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Atlas Pipeline Partners, L.P. (Atlas Pipeline Partners or APL), our publicly-traded subsidiary which AHD controls through its
100% ownership of APLs general partner. At March 31, 2010, we had a 2.1% direct ownership interest in APL and AHD had a 12.5% ownership interest in APL; 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. We have an approximate direct and indirect 18% ownership interest in Lightfoot GP. At
March 31, 2010, we have satisfied our commitment to invest a total of $19.7 million in Lightfoot. We also have direct and indirect ownership interests in Lightfoot LP.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

FINANCIAL PRESENTATION

Our consolidated financial statements contain our accounts and those of our subsidiaries, including ATN, AHD and APL. Due to the structure
of our ownership interests in ATN, AHD and APL, in accordance with generally accepted accounting principles, we consolidate the financial statements of these subsidiaries into our financial statements rather than present our ownership interests as
equity investments. As such, the non-controlling interests in ATN prior to the Merger, AHD and APL are reflected as income (loss) attributable to non-controlling interests in our consolidated statements of operations and as a component of
shareholders equity on our consolidated balance sheets. Throughout this section, when we refer to our consolidated financial statements, we are referring to the consolidated results for us and our wholly-owned subsidiaries and the
consolidated results of AHD, including APLs financial results, adjusted for non-controlling interests in ATNs net income (loss) prior to the Merger on September 29, 2009 and AHDs and APLs net income (loss).

On May 4, 2009, APL completed the sale of its NOARK gas gathering and interstate pipeline system (NOARK). As such, we
have adjusted the prior year consolidated financial information presented to reflect the amounts related to the operations of the NOARK as discontinued operations.

SUBSEQUENT EVENTS

Marcellus Shale Joint Venture. Effective April 20, 2010, we consummated a transaction whereby we entered into an undivided
joint venture with Reliance Industries Limited (Reliance). Pursuant to the agreement, we sold Reliance a 40% undivided joint venture interest in approximately 300,000 net acres (approximately 120,000 to Reliance) of undeveloped core
Marcellus Shale acreage held by us in exchange for $340.0 million of cash and $1,360.0 million in the form of a drilling carry. In addition to funding its own 40% interest of the drilling and completion costs, Reliance is required to fund 75% of our
respective portion of drilling and completion costs until the $1,360.0 million drilling carry is fully utilized. We have five and a half years to utilize the drilling carry, subject to a two-year extension under certain conditions.

Acquisition of additional Marcellus Shale Acreage. In April 2010, we and Reliance agreed, through a series of transactions
subsequent to the completion of the undivided joint venture agreement, to purchase an additional 42,344 undeveloped core Marcellus Shale acreage for an average purchase price of $4,532 per acre. The acreage is contained within the joint
ventures area of mutual interest. Pursuant to the joint venture agreement with Reliance, we will contribute 60% of the cost associated with this acreage, while Reliance will contribute the remaining 40%. As a result of the transactions, the
joint venture between us and Reliance will control approximately 343,000 core Marcellus Shale acres.

Borrowing Base
Redetermination. In April 2010, in conjunction with a regularly scheduled borrowing base redetermination, the borrowing base under ATNs revolving credit facility of $550.0 million was approved.



46



---

##### Table of Contents

RECENT DEVELOPMENTS

Monetization of Certain Derivative Positions. In January 2010, we received approximately $20.1 million in proceeds from the
early settlement of natural gas and oil derivative positions for production periods from 2011 through 2013. In conjunction with the early termination of these derivatives, we entered into new derivative positions at prevailing prices at the time of
the transaction. The net proceeds from the early termination of these derivatives were used to reduce indebtedness under ATNs revolving credit facility.

CONTRACTUAL REVENUE ARRANGEMENTS

Appalachia Natural Gas. We market the majority of our natural gas production in the Appalachian Basin to Hess Corporation, Colonial
Energy, Inc., Atmos Energy, UGI Energy Services, Equitable Gas Co., EQT Energy, Sequent Energy and South Jersey Resources Group. The remainder of our natural gas production in the Appalachian Basin has been primarily supplied to gas marketers, local
distribution companies, industrial or other end-users, and companies generating electricity. The sales price of natural gas produced in the Appalachian Basin has been primarily based upon the NYMEX spot market price.

Michigan/Indiana Natural Gas. In Michigan, we have natural gas sales agreements with DTE Energy Company (DTE) through
December 31, 2012. DTE has the obligation to purchase all of the natural gas produced and delivered by us and our affiliates from specific projects at certain delivery points. The remainder of our natural gas production in Michigan and Indiana
has been primarily supplied to gas marketers, local distribution companies, industrial or other end-users, and companies generating electricity. The sales price of natural gas produced in Michigan has been primarily based upon the NYMEX spot market
price and Indiana has been primarily based upon the Texas Gas Zone SL and Chicago spot market prices.

Crude Oil. Crude
oil produced from our wells flow directly into storage tanks where it is picked up by an oil company, a common carrier or pipeline companies acting for an oil company, which is purchasing the crude oil. We sell any oil produced by our Appalachian
wells to regional oil refining companies at the prevailing spot market price for Appalachian crude oil. In Michigan, the property operator typically markets the oil produced.

Investment Partnerships. Through March 31, 2010, we generally have funded the majority of our drilling activities through
sponsorship of tax-advantaged investment partnerships (see Subsequent Events). In addition to providing capital for our drilling activities, our investment partnerships are a source of fee-based revenues, which are not directly dependent
on natural gas and oil prices. As managing general partner of the investment partnerships, we receive the following fees:



| |  |  | Well construction and completion.For each well that is drilled by an investment partnership, we receive an 18% mark-up on those costs incurred
to drill and complete the well. For our investment partnerships that were formed prior to November 2008, the mark-up was 15%;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Administration and oversight.For each well drilled by an investment partnership, we receive a fixed fee of approximately $249,000 for
horizontal Marcellus Shale wells and a range of $15,700 to $62,200 for all other well types. For our investment partnerships that were formed prior to April 2009, the fixed fee for wells ranged from $15,700 to $62,000, including horizontal Marcellus
Shale wells. Additionally, the partnership pays us a monthly per well administrative fee of $75 for the life of the well. Because we coinvest in the partnerships, the net fee that we receive is reduced by our proportionate interest in the well; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Well services.Each partnership pays us a monthly per well operating fee, currently $100 to $1,500, for the life of the well. Because we
coinvest in the partnerships, the net fee that we receive is reduced by our proportionate interest in the well.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

GENERAL
TRENDS AND OUTLOOK

We expect our business to be affected by the following key trends. Our expectations are based on
assumptions made by us and information currently available to us. To the extent our underlying assumptions about or interpretations of available information prove to be incorrect, our actual results may vary materially from our expected results.



47



---

##### Table of Contents

Natural Gas Supply and Outlook.While commodity prices for natural gas were at lower
levels during the three months ended March 31, 2010 when compared with the prior year, we believe that the current development of the Marcellus Shale and new horizontal drilling techniques will likely cause relatively high levels of natural
gas-related drilling in these geological areas as producers seek to increase their level of natural gas production. The areas in which we operate are experiencing a decline in the development of shallow wells, but a significant increase in drilling
activity related to new and increased drilling for deeper natural gas formations and the implementation of new exploration and production techniques, including horizontal and multiple fracturing techniques. While we anticipate continued high levels
of exploration and production activities over the long-term in the areas in which we operate, fluctuations in energy prices can greatly affect production rates and investments by third parties in the development of new natural gas reserves.

Reserve Outlook. Our future oil and gas reserves, production, cash flow and our ability to make payments on ATNs
debt depend on our success in producing our current reserves efficiently, developing our existing acreage and acquiring additional proved reserves economically. We face the challenge of natural production declines and volatile natural gas and oil
prices. As initial reservoir pressures are depleted, natural gas production from particular wells decrease. We attempt to overcome this natural decline by drilling to find additional reserves and acquiring more reserves than we produce.

RESULTS OF OPERATIONS

GAS AND OIL
PRODUCTION

Production Profile. Currently, we have focused our natural gas production operations in
various shale plays in the northeastern and Midwestern United States. Notably, we are one of the leading producers in the Marcellus Shale, a rich, organic shale located in the Appalachia basin. The portion of the Marcellus Shale in southwestern
Pennsylvania in which we focus our drilling is high-pressured and generally contains dry, pipeline-quality natural gas. In addition, we also are a leading natural gas producer in Michigan through our activity in the Antrim Shale, a biogenic shale
play with a long-lived and shallow decline profile. We have also established a position in the New Albany Shale in southwestern Indiana, where we produce out of the biogenic region of the shale similar to the Antrim Shale. We also produce from the
Chattanooga Shale in northeastern Tennessee, which enables us to access other formations in that region such as the Monteagle and Ft. Payne Limestone.

Production Volumes. The following table presents our total net gas and oil production volumes and production per day during
the three months ended March 31, 2010 and 2009:



|                          |  |                              |     |  |        
|------------------------- |  | ---------------------------- | --- |  | -------
|                          |  | Three Months Ended March 31,
|                          |  | 2010                         |     |  | 2009   
|Production:
(1)(2)        |  |                              |     |  |        
|Appalachia:(3)            |  |                              |     |  |        
|Natural gas (MMcf)        |  | 3,603                        |     |  | 3,592  
|Oil (000s Bbls)          |  | 78                           | (4) |  | 35     
|                          |  |                              |     |  |        
|Total (MMcfe)             |  | 4,072                        |     |  | 3,804  
|                          |  |                              |     |  |        
|Michigan/Indiana:         |  |                              |     |  |        
|Natural gas (MMcf)        |  | 4,906                        |     |  | 5,242  
|Oil (000s Bbls)          |  | 3                            | (4) |  | 1      
|                          |  |                              |     |  |        
|Total (MMcfe)             |  | 4,925                        |     |  | 5,246  
|                          |  |                              |     |  |        
|Total:                    |  |                              |     |  |        
|Natural gas (MMcf)        |  | 8,509                        |     |  | 8,834  
|Oil (000s Bbls)          |  | 81                           | (4) |  | 36     
|                          |  |                              |     |  |        
|Total (MMcfe)             |  | 8,996                        |     |  | 9,050  
|                          |  |                              |     |  |        
|                          |  |                             
|Production per
day:(1)(2) |  |                              |     |  |        
|Appalachia:(3)            |  |                              |     |  |        
|Natural gas (Mcfd)        |  | 40,029                       |     |  | 39,908 
|Oil (Bpd)                 |  | 868                          | (4) |  | 393    
|                          |  |                              |     |  |        
|Total (Mcfed)             |  | 45,239                       |     |  | 42,267 
|                          |  |                              |     |  |        
|Michigan/Indiana:         |  |                              |     |  |        
|Natural gas (Mcfd)        |  | 54,516                       |     |  | 58,250 
|Oil (Bpd)                 |  | 34                           | (4) |  | 6      
|                          |  |                              |     |  |        
|Total (Mcfed)             |  | 54,719                       |     |  | 58,289 
|                          |  |                              |     |  |        
|Total:                    |  |                              |     |  |        
|Natural gas (Mcfd)        |  | 94,545                       |     |  | 98,158 
|Oil (bpd)                 |  | 902                          | (4) |  | 400    
|                          |  |                              |     |  |        
|Total (Mcfed)             |  | 99,958                       |     |  | 100,556
|                          |  |                              |     |  |        



48



---

##### Table of Contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|(1)Production quantities consist of the sum of (i) our proportionate share of production from wells in which we have a direct interest, based
on our proportionate net revenue interest in such wells, and (ii) our proportionate share of production from wells owned by the investment partnerships in which we have an interest, based on our equity interest in each such partnership and
based on each partnerships proportionate net revenue interest in these wells.
(2)MMcf represents million cubic feet; MMcfe represent million cubic feet equivalents; Mcfd represents
thousand cubic feet per day; Mcfed represents thousand cubic feet equivalents per day; and Bbls and Bpd represent barrels and barrels per day.
(3)Appalachia includes our production located in Pennsylvania, Ohio, New York, West Virginia and Tennessee.
(4)Includes NGL production volume for the three months ended March 31, 2010.

Production Revenues, Prices and Costs. Our production revenues and estimated gas and oil reserves are substantially
dependent on prevailing market prices for natural gas, which comprised 99% of our proved reserves on an energy equivalent basis at December 31, 2009. The following table presents our production revenues and average sales prices for our natural
gas and oil production for the three months ended March 31, 2010 and 2009, along with our average production costs, taxes, and transmission and compression costs in each of the reported periods:



|                                           |  |                              |        |     |      |   |       
|------------------------------------------ |  | ---------------------------- | ------ | --- | ---- | - | ------
|                                           |  | Three Months Ended March 31,
|                                           |  | 2010                         |        |     | 2009
|Production revenues (in thousands):        |  |                              |        |     |      |   |       
|Appalachia:(1)                             |  |                              |        |     |      |   |       
|Natural gas revenue                        |  | $                            | 22,423 |     |      | $ | 27,544
|Oil revenue                                |  |                              | 4,270  | (6) |      |   | 2,050 
|                                           |  |                              |        |     |      |   |       
|Total revenues                             |  | $                            | 26,693 |     |      | $ | 29,594
|                                           |  |                              |        |     |      |   |       
|Michigan/Indiana:                          |  |                              |        |     |      |   |       
|Natural gas revenue                        |  | $                            | 37,119 |     |      | $ | 42,330
|Oil revenue                                |  |                              | 97     | (6) |      |   | 19    
|                                           |  |                              |        |     |      |   |       
|Total revenues                             |  | $                            | 37,216 |     |      | $ | 42,349
|                                           |  |                              |        |     |      |   |       
|Total:                                     |  |                              |        |     |      |   |       
|Natural gas revenue                        |  | $                            | 59,542 |     |      | $ | 69,874
|Oil revenue                                |  |                              | 4,367  | (6) |      |   | 2,069 
|                                           |  |                              |        |     |      |   |       
|Total revenues                             |  | $                            | 63,909 |     |      | $ | 71,943
|                                           |  |                              |        |     |      |   |       
|                                           |  |                             
|Average sales
price:(2)                    |  |                              |        |     |      |   |       
|Natural gas (per Mcf):                     |  |                              |        |     |      |   |       
|Total realized price, after
hedge(3)
 (4)  |  | $                            | 7.61   |     |      | $ | 8.09  
|Total realized price, before
hedge(3)
 (4) |  | $                            | 5.68   |     |      | $ | 5.21  
|Oil (per Bbl):                             |  |                              |        |     |      |   |       
|Total realized price, after hedge          |  | $                            | 71.99  |     |      | $ | 57.56 
|Total realized price, before hedge         |  | $                            | 67.58  |     |      | $ | 30.01 
|                                           |  |                             
|Production costs (per
Mcfe):(2)            |  |                              |        |     |      |   |       
|Appalachia:(1)                             |  |                              |        |     |      |   |       
|Lease operating
expenses(5)                |  | $                            | 0.99   |     |      | $ | 1.04  
|Production taxes                           |  |                              | 0.04   |     |      |   | 0.04  
|Transportation and compression             |  |                              | 0.76   |     |      |   | 0.87  
|                                           |  |                              |        |     |      |   |       
|                                           |  | $                            | 1.80   |     |      | $ | 1.95  
|                                           |  |                              |        |     |      |   |       
|Michigan/Indiana:                          |  |                              |        |     |      |   |       
|Lease operating expenses                   |  | $                            | 0.77   |     |      | $ | 0.81  
|Production taxes                           |  |                              | 0.33   |     |      |   | 0.30  
|Transportation and compression             |  |                              | 0.24   |     |      |   | 0.26  
|                                           |  |                              |        |     |      |   |       
|                                           |  | $                            | 1.34   |     |      | $ | 1.37  
|                                           |  |                              |        |     |      |   |       
|Total:                                     |  |                              |        |     |      |   |       
|Lease operating
expenses(5)                |  | $                            | 0.87   |     |      | $ | 0.91  
|Production taxes                           |  |                              | 0.20   |     |      |   | 0.19  
|Transportation and compression             |  |                              | 0.48   |     |      |   | 0.51  
|                                           |  |                              |        |     |      |   |       
|                                           |  | $                            | 1.55   |     |      | $ | 1.61  
|                                           |  |                              |        |     |      |   |       



49



---

##### Table of Contents

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|(1)Appalachia includes our operations located in Pennsylvania, Ohio, New York, West Virginia and Tennessee.
(2)Mcf
 represents thousand cubic feet; Mcfe represents thousand cubic feet equivalents; and Bbl represents barrels.
(3)Excludes
 the impact of certain allocations of production revenue to investor partners within our investment partnerships for the three months ended March 31, 2010. Including the effect of these allocations, the average realized gas sales price for the
three months ended March 31, 2010 was $7.03 per Mcf ($5.10 per Mcf before the effects of financial hedging). There were no such allocations of production revenue for the three months ended March 31, 2009.
(4)Includes cash proceeds of $0.3 million and $1.6 million for the three months ended March 31, 2010 and 2009, respectively, received from
the settlement of ineffective derivative gains but were not reflected in the consolidated statement of operations for the respective periods.
(5)Excludes the effects of our proportionate share of lease operating expenses associated with certain allocations of production revenue to
investor partners within our investment partnerships for the three months ended March 31, 2010. Including the effects of these costs, lease operating expenses per Mcfe for the three months ended March 31, 2010 for Appalachia were $0.59 per
Mcfe (total production costs per Mcfe were $1.40) and in total they were $0.69 per Mcfe (total production costs per Mcfe were $1.37). There were no such allocations of production revenue and therefore no affect on lease operating expenses for the
three months ended March 31, 2009.
(6)Includes NGL production revenue for the three months ended March 31, 2010.

Total natural gas revenues were $59.5 million for the three months ended March 31, 2010, a decrease of $10.4 million from $69.9
million for the three months ended March 31, 2009. This decrease consisted of a $2.5 million decrease attributable to lower natural gas production volumes, a $3.0 million decrease attributable to lower realized natural gas prices and $4.9
million of gas revenues subordinated to the investor partners within our investment partnerships during the three months ended March 31, 2010. Total oil revenues were $4.4 million for the three months ended March 31, 2010, an increase of
$2.3 million from $2.1 million for the comparable prior year period. This increase resulted primarily from a $1.6 million increase in revenue from the sale of natural gas liquids, a $0.2 million increase associated with higher average realized oil
prices and a $0.5 million increase associated with higher production volumes.

Appalachia production costs were $5.7 million
for the three months ended March 31, 2010, an increase of $1.6 million from $4.1 million for the three months ended March 31, 2009. This increase was principally due to a $3.3 million decrease in the elimination of intercompany
transportation costs subsequent to the formation of the Laurel Mountain joint venture. Prior to the formation of Laurel Mountain, the transportation costs included within Appalachia production costs were eliminated within our consolidated financial
statements against APLs corresponding transportation revenue for performing such transportation services. Subsequent to the formation of Laurel Mountain, APL no longer recognizes transportation revenue for these transportation services, but
rather recognizes its equity in the net income of Laurel Mountain. This amount was partially offset by a $1.6 million decrease associated with our proportionate share of lease operating expenses associated with our revenue that was subordinated to
the investor partners within our investment partnerships. Michigan/Indiana production costs were $6.6 million for the three months ended March 31, 2010, a decrease of $0.6 million from $7.2 million for the comparable prior year period. This
decrease was primarily attributable to a $0.3 million decrease in compression station expenses and a $0.2 million decrease in transportation costs attributable to production.

PARTNERSHIP MANAGEMENT

Well
Construction and Completion

Drilling Program Results. The number of wells we drill will vary depending on
the amount of money we raise through our investment partnerships, the cost of each well, the depth or type of each well, the estimated recoverable reserves attributable to each well and accessibility to the well site. The following table presents
the number of gross and net development wells we drilled for us and our investment partnerships during the three months ended March 31, 2010 and 2009. We did not drill any exploratory wells during the three months ended March 31, 2010 and
2009:



|                                                                                                                                                                                                             |  |                              |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- |  | ----
|                                                                                                                                                                                                             |  | Three Months Ended March 31,
|                                                                                                                                                                                                             |  | 2010                         |  | 2009
|Gross wells drilled:                                                                                                                                                                                         |  |                              |  |     
|Appalachia                                                                                                                                                                                                   |  | 15                           |  | 79  
|Michigan/Indiana                                                                                                                                                                                             |  |                             |  | 26  
|                                                                                                                                                                                                             |  |                              |  |     
|Total                                                                                                                                                                                                        |  | 15                           |  | 105 
|                                                                                                                                                                                                             |  |                              |  |     
|                                                                                                                                                                                                             |  |                             
|Net wells drilled:                                                                                                                                                                                           |  |                              |  |     
|Appalachia                                                                                                                                                                                                   |  | 12                           |  | 67  
|Michigan/Indiana                                                                                                                                                                                             |  |                             |  | 23  
|                                                                                                                                                                                                             |  |                              |  |     
|Total                                                                                                                                                                                                        |  | 12                           |  | 90  
|                                                                                                                                                                                                             |  |                              |  |     
|                                                                                                                                                                                                             |  |                             
|Our share of net wells
drilled(1):                                                                                                                                                                           |  |                              |  |     
|Appalachia                                                                                                                                                                                                   |  | 5                            |  | 24  
|Michigan/Indiana                                                                                                                                                                                             |  |                             |  | 6   
|                                                                                                                                                                                                             |  |                              |  |     
|Total                                                                                                                                                                                                        |  | 5                            |  | 30  
|                                                                                                                                                                                                             |  |                              |  |     
|(1)Includes (i) our percentage interest in wells in which we have a direct ownership interest and (ii) our percentage interest in the wells based
on our percentage interest in our investment partnerships.



50



---

##### Table of Contents

Well construction and completion revenues and costs and expenses incurred represent the
billings and costs associated with the completion of wells for investment partnerships we sponsor. The following table sets forth information relating to these revenues and the related costs and number of net wells drilled during the periods
indicated (dollars in thousands):



|                                                                                               |  |                              |        |   |      |   |        |  
|---------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                               |  | Three Months Ended March 31, |       
|                                                                                               |  | 2010                         |        |   | 2009 |  
|Average construction and completion per well:                                                  |  |                              |        |   |      |   |        |  
|Revenue                                                                                        |  | $                            | 2,137  |   |      | $ | 1,050  |  
|Costs                                                                                          |  |                              | (1,811 | ) |      |   | (892   | )
|                                                                                               |  |                              |        |   |      |   |        |  
|Gross profit                                                                                   |  | $                            | 326    |   |      | $ | 158    |  
|                                                                                               |  |                              |        |   |      |   |        |  
|                                                                                               |  |                             
|Gross profit margin                                                                            |  | $                            | 11,081 |   |      | $ | 16,971 |  
|                                                                                               |  |                              |        |   |      |   |        |  
|                                                                                               |  |                             
|Net wells drilled within investment
partnerships:(1)                                           |  |                              |        |   |      |   |        |  
|Marcellus Shale                                                                                |  |                              | 20     |   |      |   | 24     |  
|Chattanooga Shale                                                                              |  |                              | 6      |   |      |   | 5      |  
|Michigan/Indiana                                                                               |  |                              | 8      |   |      |   | 24     |  
|Other - shallow                                                                                |  |                              |       |   |      |   | 54     |  
|                                                                                               |  |                              |        |   |      |   |        |  
|                                                                                               |  |                              | 34     |   |      |   | 107    |  
|                                                                                               |  |                              |        |   |      |   |        |  
|(1)Includes wells drilled for which revenue is recognized on a percentage of completion basis. | 

Well construction and completion segment margin was $11.1 million for the three months ended March 31, 2010, a decrease of $5.9
million from $17.0 million for the three months ended March 31, 2009. This decrease was due primarily to a $23.8 million decrease associated with a decline in the number of wells drilled within the investment partnerships, partially offset by
an $17.9 million increase due to increased gross profit per well. Since our drilling contracts with the investment partnerships are on a cost-plus basis (typically cost-plus 18%), an increase in our average cost per well also results in
a proportionate increase in our average revenue per well, which directly affects the number of wells we drill. Average cost and revenue per well have increased due to a shift from drilling less expensive shallow wells to more expensive deep or
horizontal shale wells in both Appalachia and Michigan/Indiana during the three months ended March 31, 2010 in comparison to the comparable prior year period.

Our consolidated balance sheet at March 31, 2010 includes $49.5 million of liabilities associated with drilling
contracts for funds raised by our investment partnerships that have not been applied to the completion of wells due to the timing of drilling operations, and thus had not been recognized as well construction and completion revenue on our
consolidated statements of operations. We expect to recognize this amount as revenue during the second quarter of 2010.

Administration and
Oversight

Administration and oversight fee revenues represents supervision and administrative fees earned for the drilling
and subsequent ongoing management of wells for our investment partnerships. Administration and oversight fee revenues were $2.0 million for the three months ended March 31, 2010, a decrease of $1.9 million from $3.9 million for the three months
ended March 31, 2009. This decrease was primarily due to fewer wells drilled during the current year period in comparison to the prior year comparable period, partially offset by an increase in the number of Marcellus Shale horizontal wells
drilled, for which we earn higher fees for our partnership management activities in comparison to conventional wells.



51



---

##### Table of Contents

Well Services

Well service revenue and expenses represent the monthly operating fees we charge and the work our service company performs for our
investment partnership wells during the drilling and completing phase as well as ongoing maintenance of these wells and other wells in which we serve as operator.

Well services revenues were $5.3 million for the three months ended March 31, 2010, an increase of $0.2 million from $5.1 million
for the three months ended March 31, 2009. Well services expenses were $2.6 million for three months ended March 31, 2010, an increase of $0.2 million from $2.4 million for the three months ended March 31, 2009. These increases were
primarily attributable to an increase in the number of producing wells.

Transmission, Gathering and Processing

Transmission, gathering and processing revenue includes gathering fees we charge to our investment partnership wells that are connected to
Laurel Mountains Appalachian gathering systems and the operating revenues and expenses of APL. On May 31, 2009, APL contributed its Appalachian gathering systems to Laurel Mountain, a joint venture in which APL retained a 49% ownership
interest. Under new gas gathering agreements with Laurel Mountain entered into upon formation of the joint venture, we are obligated to pay to Laurel Mountain all of the gathering fees we collect from the investment partnerships. During the period
from January 1, 2009 to June 1, 2009, we were required to remit these gathering fees to APL, which were eliminated when we consolidated APLs financial statements.

The gathering fees charged to our investment partnership wells generally range from $0.35 per Mcf to the amount of the competitive
gathering fee, currently defined as 13% of the gross sales price of the natural gas. Pursuant to our new agreements with Laurel Mountain, we must also pay an additional amount equal to the excess of the gathering fees collected from the investment
partnerships up to an amount equal to approximately 16% of the natural gas sales price. As a result of our agreements with Laurel Mountain, our Appalachian gathering expenses within our partnership management segment will generally exceed the
revenues collected from the investment partnerships by approximately 3%. We recognize a proportionate share of gathering fees paid to Laurel Mountain based on our percentage interest in the investment partnership wells, which is included in gas and
oil production expense. The net effect of the elimination amounts is eliminated against our pro-rata portion of production costs from our investment partnerships in our consolidated statements of operations.

The following table presents our gathering revenues and expenses and those attributable to APL for each of the respective periods:



|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ------- | - | -------- | -
|                                                                                                                                                         |  | Three Months Ended March 31, |         
|Transmission, Gathering and Processing:                                                                                                                  |  | 2010                         |          |   | 2009(1) |  
|Atlas Energy:                                                                                                                                            |  |                              |          |   |         |   |          |  
|Revenue                                                                                                                                                  |  | $                            | 4,461    |   |         | $ | 4,723    |  
|Expense                                                                                                                                                  |  |                              | (7,671   | ) |         |   | (7,480   | )
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|Gross Margin                                                                                                                                             |  | $                            | (3,210   | ) |         | $ | (2,757   | )
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|                                                                                                                                                         |  |                             
|Atlas Pipeline:                                                                                                                                          |  |                              |          |   |         |   |          |  
|Revenue                                                                                                                                                  |  | $                            | 275,205  |   |         | $ | 169,093  |  
|Expense                                                                                                                                                  |  |                              | (222,386 | ) |         |   | (151,900 | )
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|Gross Margin                                                                                                                                             |  | $                            | 52,819   |   |         | $ | 17,193   |  
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|Eliminations:                                                                                                                                            |  |                              |          |   |         |   |          |  
|Revenue                                                                                                                                                  |  | $                            |         |   |         | $ | (10,149  | )
|Expense                                                                                                                                                  |  |                              |         |   |         |   | 6,853    |  
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|Gross Margin                                                                                                                                             |  | $                            |         |   |         | $ | (3,296   | )
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|Total:                                                                                                                                                   |  |                              |          |   |         |   |          |  
|Revenue                                                                                                                                                  |  | $                            | 279,666  |   |         | $ | 163,667  |  
|Expense                                                                                                                                                  |  |                              | (230,057 | ) |         |   | (152,527 | )
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|Gross Margin                                                                                                                                             |  | $                            | 49,609   |   |         | $ | 11,140   |  
|                                                                                                                                                         |  |                              |          |   |         |   |          |  
|(1)     Restated to reflect amounts reclassified to discontinued operations due to
APLs sale of its NOARK gas gathering and interstate pipeline system. | 



52



---

##### Table of Contents

Our net gathering fee expense for the three months ended March 31, 2010 was $3.2
million compared with $2.8 million for the three months ended March 31, 2009. This increase was principally due a decrease in fees received from the investment partnership due to lower investment partnership volumes, a decrease in natural gas
prices and an increase in our equity natural gas volumes due to an increase in the number of wells drilled for our own account.

Transmission, gathering and processing margin for APL was $52.8 million for the three months ended March 31, 2010 compared with
$17.2 million for the three months ended March 31, 2009. This increase was due principally to higher average natural gas liquids and crude oil commodity prices between periods.

Loss on Asset Sales

Loss on asset sales of $3.0 million for the three months ended March 31, 2010 principally represents the loss recognized on our sale
of a processing plant outside of our core operating area.

Gain on Mark-to-Market Derivatives

Gain on mark-to-market derivatives was $4.1 million for the three months ended March 31, 2010 compared with $0.3 million for the
three months ended March 31, 2009. This favorable movement was due primarily to a $53.4 million favorable movement in APLs non-cash mark-to market adjustments on derivatives and a $10.0 million favorable movement in non-cash derivative
gains related to the early termination of a portion of its derivative contracts, partially offset by an unfavorable movement of $40.3 million related to cash settlements on APLs non-qualified derivatives and a $19.2 million unfavorable
variance due to early cash settlements.

OTHER COSTS AND EXPENSES

General and Administrative

The following table presents our general and administrative expenses and those attributable to APL and AHD for each of the respective
periods:



|                                                                                                                                                         |  |                              |        |         |   |       
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ------- | - | ------
|                                                                                                                                                         |  | Three Months Ended March 31,
|                                                                                                                                                         |  | 2010                         |        | 2009(1)
|General and Administrative expenses:                                                                                                                     |  |                              |        |         |   |       
|Atlas Energy                                                                                                                                             |  | $                            | 20,227 |         | $ | 17,754
|Atlas Pipeline and Atlas Pipeline Holdings                                                                                                               |  |                              | 10,584 |         |   | 10,142
|                                                                                                                                                         |  |                              |        |         |   |       
|Total                                                                                                                                                    |  | $                            | 30,811 |         | $ | 27,896
|                                                                                                                                                         |  |                              |        |         |   |       
|(1)     Restated to reflect amounts reclassified to discontinued operations due to
APLs sale of its NOARK gas gathering and interstate pipeline system.

Total general and administrative
expenses, including amounts reimbursed to affiliates, increased to $30.8 million for the three months ended March 31, 2010 compared with $27.9 million for the three months ended March 31, 2009. This $2.9 million increase was due to our
$2.5 million increase and a $0.4 million increase related to APL and AHD. The $2.5 million increase was principally attributable to a $1.9 million increase in expenses related to wages and other corporate activities due to the growth of our business
and a $0.6 million increase in non-cash stock compensation expense. The $0.4 million increase for APL and AHD was due principally to a $1.1 million increase in expenses related to its respective long-term incentive plans, partially offset by a $0.7
million decrease in other expenses, principally professional fees and other outside services.

Depreciation, Depletion and Amortization

The following table presents our depreciation, depletion and amortization expense and that which is attributable to APL
and AHD for each of the respective periods:



|                                                                                                                                                         |  |                              |        |         |   |       
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ------- | - | ------
|                                                                                                                                                         |  | Three Months Ended March 31,
|                                                                                                                                                         |  | 2010                         |        | 2009(1)
|Depreciation, depletion and amortization:                                                                                                                |  |                              |        |         |   |       
|Atlas Energy                                                                                                                                             |  | $                            | 26,508 |         | $ | 28,027
|Atlas Pipeline and Atlas Pipeline Holdings                                                                                                               |  |                              | 22,746 |         |   | 22,668
|                                                                                                                                                         |  |                              |        |         |   |       
|Total                                                                                                                                                    |  | $                            | 49,254 |         | $ | 50,695
|                                                                                                                                                         |  |                              |        |         |   |       
|(1)     Restated to reflect amounts reclassified to discontinued operations due to
APLs sale of its NOARK gas gathering and interstate pipeline system.



53



---

##### Table of Contents

Total depreciation, depletion and amortization decreased to $49.3 million for the three
months ended March 31, 2010 compared with $50.7 million for the comparable prior year period, due primarily to a $1.8 million decrease in our depletion expense, partially offset by additional depreciation recorded as a result of APLs
expansion capital expenditures incurred subsequent to March 31, 2009.

The following table presents our depletion
expense, excluding amounts attributable to APL and AHD, per Mcfe for our Appalachia and Michigan/Indiana regions for of the respective periods:



|                                                                    |  |                              |        |   |      |   |        |  
|------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ---- | - | ------ | -
|                                                                    |  | Three Months Ended March 31, |       
|                                                                    |  | 2010                         |        |   | 2009 |  
|Depletion expense (in thousands):                                   |  |                              |        |   |      |   |        |  
|Appalachia                                                          |  | $                            | 10,509 |   |      | $ | 13,102 |  
|Michigan/Indiana                                                    |  |                              | 14,748 |   |      |   | 13,908 |  
|                                                                    |  |                              |        |   |      |   |        |  
|Total                                                               |  | $                            | 25,257 |   |      | $ | 27,010 |  
|                                                                    |  |                              |        |   |      |   |        |  
|Depletion expense as a percentage of gas and oil production revenue |  |                              | 40     | % |      |   | 38     | %
|                                                                    |  |                             
|Depletion per Mcfe:                                                 |  |                              |        |   |      |   |        |  
|Appalachia                                                          |  | $                            | 2.58   |   |      | $ | 3.44   |  
|Michigan/Indiana                                                    |  | $                            | 2.99   |   |      | $ | 2.65   |  
|Total                                                               |  | $                            | 2.81   |   |      | $ | 2.98   |  

Depletion expense
varies from period to period and is directly affected by changes in our oil and gas reserve quantities, production levels, product prices and changes in the depletable cost basis of our oil and gas properties. Decreases in our depletable basis,
primarily due to the $156.4 million write-down of our Upper Devonian field during the three months ended December 31, 2009, and fluctuations in our production volumes by region caused depletion expense to decrease $1.7 million to $25.3 million
for the three months ended March 31, 2010 compared with $27.0 million for the three months ended March 31, 2009. Our depletion expense of oil and gas properties as a percentage of oil and gas revenues was 40% for the three months ended
March 31, 2010, compared with 38% for the three months ended March 31, 2009. Depletion expense per Mcfe was $2.81 for the three months ended March 31, 2010, a decrease of $0.17 per Mcfe from $2.98 for the three months ended
March 31, 2009.

Interest Expense

The following table presents our interest expense and that which is attributable to APL and AHD for each of the respective periods:



|                                                                                                                                                         |  |                              |        |   |         |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | - | ------- | - | ------ | -
|                                                                                                                                                         |  | Three Months Ended March 31, |       
|                                                                                                                                                         |  | 2010                         |        |   | 2009(1) |  
|Interest Expense:                                                                                                                                        |  |                              |        |   |         |   |        |  
|Atlas Energy                                                                                                                                             |  | $                            | 18,032 |   |         | $ | 12,984 |  
|Atlas Pipeline and Atlas Pipeline Holdings                                                                                                               |  |                              | 27,049 |   |         |   | 21,665 |  
|Eliminations                                                                                                                                             |  |                              | (482   | ) |         |   | (29    | )
|                                                                                                                                                         |  |                              |        |   |         |   |        |  
|Total                                                                                                                                                    |  | $                            | 44,599 |   |         | $ | 34,620 |  
|                                                                                                                                                         |  |                              |        |   |         |   |        |  
|(1)     Restated to reflect amounts reclassified to discontinued operations due to
APLs sale of its NOARK gas gathering and interstate pipeline system. | 



54



---

##### Table of Contents

Total interest expense increased to $44.6 million for the three months ended March 31,
2010 as compared with $34.6 million for the three months ended March 31, 2009. This $10.0 million increase was primarily due to our $5.1 million increase and a $5.4 million increase related to APL and AHD, partially offset by a $0.5 million
elimination of intercompany interest related to AHDs promissory note. Our $5.1 million increase was principally attributable to a $6.2 million increase associated with ATNs issuance of $200.0 million of 12.125% senior unsecured notes in
July 2009, partially offset by a $1.0 million decrease associated with borrowings under ATNs credit facility. The $1.0 million decrease associated with ATNs credit facility was primarily due to the repayment of amounts the net proceeds
from the issuance of the senior notes and lower average interest rates. The $5.4 million increase in interest expense for APL and AHD was due principally to a $2.9 million increase associated with higher borrowings under APLs credit
facility, an $1.5 million increase associated with APLs term loan, and a $1.2 million decrease in capitalized interest associated with a reduction in APLs capital expenditures.

Income Taxes

Income tax
benefit related to net income (loss) from continuing operations attributable to common shareholders for the three months ended March 31, 2010 was $1.4 million as compared with income tax expense of $2.6 million for the three months ended
March 31, 2009. Our effective income tax rate related to net income (loss) from continuing operations attributable to common shareholders was 40% and 39% for the three months ended March 31, 2010 and 2009, respectively. Our effective tax
rate fluctuates as a result of the impact of state income taxes and permanent differences between our accounting for certain revenue or expense items and their corresponding treatment for income tax purposes. We expect our effective income tax rate
to be 40% for the year ended December 31, 2010.

Income from Discontinued Operations

Income from discontinued operations, net of income taxes, which consists of amounts associated with APLs NOARK gas gathering and
interstate pipeline system that was sold in May 2009, was $8.5 million for the three months ended March 31, 2009, net of related taxes of $0.4 million.

Income (Loss) Attributable to Non-Controlling Interests

Income (loss) attributable to non-controlling interests was a loss of $1.3 million for the three months ended March 31, 2010 compared
with a benefit of $11.5 million for the comparable prior year period. Income (loss) attributable to non-controlling interests includes an allocation of APLs and AHDs net income (loss) to non-controlling interest holders, as well as an
allocation of ATNs net income prior to the Merger on September 29, 2009 to its non-controlling interest holders. This change was primarily due to an increase in ATNs and APLs net earnings between periods.

LIQUIDITY AND CAPITAL RESOURCES

General

Our primary
sources of liquidity are cash generated from operations, capital raised through investment partnerships and borrowings under ATNs credit facility. Our primary cash requirements, in addition to normal operating expenses, are for debt service
and capital expenditures. In general, we expect to fund:



| |  |  | 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 shares.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

Recent instability in the financial markets, as a result of recession or otherwise, has increased the cost of capital while the
availability of funds has diminished significantly. This may affect our ability to raise capital and reduce the amount of cash available to fund our operations. We rely on cash flow from operations and ATNs credit facility to execute our
growth strategy and to meet our financial commitments and other short-term liquidity needs. We cannot be certain that additional capital will be available to us to the extent required and on acceptable terms. We believe that we will have sufficient
liquid assets, cash from operations and borrowing capacity to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures for at least the next twelve month period. However, we are subject to
business, operational and other risks that could adversely affect our cash flow. We may supplement our cash generation with proceeds from financing activities, including borrowings under ATNs credit facility and other borrowings, the issuance
of additional common shares, the sale of assets and other transactions.



55



---

##### Table of Contents

ATN Revolving Credit Facility

At March 31, 2010, ATN had a credit facility with a syndicate of banks that matures in June 2012. The borrowing base is redetermined
semiannually on April 1 and October 1 subject to changes in oil and gas reserves and is automatically reduced by 25% of the stated principal of any senior unsecured notes issued by ATN. In April 2010, in conjunction with a regularly
scheduled borrowing base redetermination, the borrowing base under ATNs revolving credit facility of $550.0 million was approved. Up to $50.0 million of the credit facility may be in the form of standby letters of credit, of which $1.6 million
was outstanding at March 31, 2010. The facility is secured by substantially all of ATNs assets and is guaranteed by each of its subsidiaries. The facility allows ATN to distribute to us (a) amounts equal to our income tax liability
attributable to ATNs net income at the highest marginal rate and (b) up to $40.0 million per year and, to the extent that it distributes less than that amount in any year, it may carry over up to $20.0 million for use in the next year.

The events which constitute an event of default for ATNs credit facility are customary for loans of this size,
including payment defaults, breaches of representations or covenants contained in the credit agreement, adverse judgments against ATN in excess of a specified amount and a change of control. In addition, the agreement limits sales, leases or
transfers of assets and the incurrence of additional indebtedness. ATN is in compliance with these covenants as of March 31, 2010. The credit facility also requires ATN to maintain a ratio of current assets (as defined in the credit
facility) to current liabilities (as defined in the credit facility) of not less than 1.0 to 1.0, and a ratio of total debt (as defined in the credit facility) to earnings before interest, taxes, depreciation, depletion and amortization
(EBITDA, as defined in the credit facility) of less than or equal to 3.5 to 1.0 effective January 1, 2010. Based on the definitions contained in ATNs credit facility, its ratio of current assets to current liabilities was
1.8 to 1.0 and its ratio of total debt to EBITDA was 3.0 to 1.0 at March 31, 2010.

Cash Flows  Three Months Ended
March 31, 2010 Compared to the Three Months Ended March 31, 2009

Net cash provided by operating activities of
$38.2 million for the three months ended March 31, 2010 represented a favorable movement of $12.5 million from net cash provided by operating activities of $25.7 million for the comparable prior year period. The increase was derived principally
from a $34.6 million favorable movement in distributions paid to non-controlling interest holders and a $16.7 million favorable movement in working capital changes, partially offset by a $15.2 million decrease in net income excluding non-cash
items, an $11.6 million unfavorable movement in deferred taxes and a $12.0 million unfavorable movement in cash provided by discontinued operations. The non-cash charges which impacted net income include an unfavorable movement in non-cash loss on
derivatives of $37.2 million, partially offset by a $3.0 million loss an asset sales and a $2.7 million increase in non-cash compensation expense. The movement in non-cash derivative losses resulted from decreases in commodity prices during the
three months ended March 31, 2010 and their favorable impact on the fair value of derivative contracts we and APL have for future periods. The movement in cash distributions to non-controlling interest holders is due mainly to decreases in the
cash distributions of our consolidated subsidiaries, including ATN prior to the Merger. The movement in working capital was principally due to a $46.5 million favorable movement in accounts receivable and other current assets, partially offset by a
$31.3 million unfavorable movement in accounts payable.

Net cash used in investing activities of $87.3 million for the three
months ended March 31, 2010 represented a favorable movement of $42.7 million from $130.0 million of net cash used in investing activities for the comparable prior year period. This favorable movement was principally due to a $48.5 million
decrease in our and APLs capital expenditures, partially offset by a $6.3 million unfavorable movement in investments in unconsolidated subsidiaries, including our investment in Lightfoot.

Net cash provided by financing activities of $42.1 million for the three months ended March 31, 2010 represented an unfavorable
movement of $45.1 million from $87.2 million for the comparable prior year period. This unfavorable movement was principally due to a $58.0 million reduction in subsidiary borrowings under their respective credit facilities, partially offset by a
$15.3 million favorable movement resulting from the issuance of additional common units by APL.



56



---

##### Table of Contents

Capital Requirements

Our capital requirements consist primarily of capital expenditures we make to expand our capital asset base for longer than the
short-term, which includes new leasehold interests and the development and exploitation of existing leasehold interests through acquisitions and investments in our drilling partnerships. The following table presents our capital expenditures and
those attributable to APL for the periods presented (in thousands):



|                                                                                                                                                    |  |                              |        |         |   |        
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | ------ | ------- | - | -------
|                                                                                                                                                    |  | Three Months Ended March 31,
|                                                                                                                                                    |  | 2010                         |        | 2009(1)
|Atlas Energy                                                                                                                                        |  | $                            | 69,999 |         | $ | 57,207 
|Atlas Pipeline                                                                                                                                      |  |                              | 10,914 |         |   | 72,196 
|                                                                                                                                                    |  |                              |        |         |   |        
|Total                                                                                                                                               |  | $                            | 80,913 |         | $ | 129,403
|                                                                                                                                                    |  |                              |        |         |   |        
|(1)Restated to reflect amounts reclassified to discontinued operations due to APLs sale of its NOARK gas gathering and interstate pipeline
system.

During the three months ended March 31, 2010, our capital expenditures related primarily to
$20.3 million for wells drilled exclusively for our own account, an increase of $8.6 million when compared with the comparable prior year period, $22.6 million incurred for leasehold acquisition costs, an increase of $12.5 million when compared with
the comparable prior year period, and $17.7 million of investments in our investment partnerships, a decrease of $10.1 million when compared with the comparable prior year period.

Through March 31, 2010, the level of capital expenditures we have devoted to our exploration and production operations depended upon
any acquisitions made and the level of funds raised through our investment partnerships (see Subsequent Events). We believe cash flows from operations and amounts available under ATNs credit facility will be adequate to fund our
capital expenditures. However, the amount of funds we raise and the level of our capital expenditures will vary in the future depending on market conditions for natural gas and other factors. We expect to fund our capital expenditures with cash flow
from our operations, borrowings under ATNs credit facility, and with the temporary use of funds raised in our investment partnerships in the period before we invest the funds. We may also consider other transactions, which may supplement our
cash generation activities and provide liquidity to fund capital expenditures.

We continuously evaluate acquisitions of gas
and oil assets. In order to make any acquisition, we believe we will be required to access outside capital either through debt or equity placements or through joint venture operations with other energy companies. There can be no assurance that we
will be successful in our efforts to obtain outside capital.

Atlas Pipeline Partners. APLs capital expenditures
decreased to $10.9 million for the three months ended March 31, 2010, compared with $72.2 million for the comparable prior year period. The decrease was due principally to costs incurred in the prior year related to APLs construction of
the Madill to Velma pipeline and its Nine Mile gas plant and compressor upgrades.

As of March 31, 2010, APL is committed
to expend approximately $47.1 million on pipeline extensions, compressor station upgrades and processing facility upgrades.

OFF BALANCE
SHEET ARRANGEMENTS

As of March 31, 2010, our off balance sheet arrangements are limited to our guarantee of Crown
Drilling of Pennsylvania, LLCs $10.7 million credit agreement, ATNs and APLs letters of credit outstanding of $1.6 million and $9.8 million, respectively, our estimated capital contribution for drilling and completion expenditures
related to Atlas Resources Public #18-2008 Program of approximately $10.8 million, and APLs commitments to expend approximately $47.1 million on capital projects.

DIVIDENDS

We paid cash
dividends of $2.0 million for the three months ended March 31, 2009. No dividends were paid for the three months ended March 31, 2010. The determination of the amount of future cash dividends, if any, is at the sole discretion of our board
of directors and will depend on the various factors affecting our financial condition and other matters the board of directors deems relevant.



57



---

##### Table of Contents

ISSUANCE OF SUBSIDIARY COMMON UNITS

Pursuant to prevailing accounting literature, we recognize gains on our subsidiaries equity transactions as a credit to equity
rather than as income. These gains represent our portion of the excess net offering price per unit of each of our subsidiaries units to the book carrying amount per unit.

Atlas Pipeline Partners and Atlas Pipeline Holdings

On January 7, 2010, APL executed amendments to warrants to purchase 2,689,765 of its common units. The warrants were originally
issued along with its common units in connection with a private placement to institutional investors that closed on August 20, 2009. The amendments to the warrants provided that, for the period January 8 through January 12, 2010, the
warrant exercise price was lowered to $6.00 from $6.35 per unit. In connection with the amendments, the holders of the warrants agreed to exercise all of the warrants for cash, which resulted in net cash proceeds of approximately $15.3 million. APL
utilized the net proceeds from the common unit offering to repay a portion of its indebtedness under its senior secured term loan and credit facility.

In August 2009, APL sold 2,689,765 common units in a private placement at an offering price of $6.35 per unit, yielding net proceeds of
approximately $16.1 million. APL also received a capital contribution from AHD of $0.4 million for AHD to maintain its-then 2.0% general partner interest in APL. In addition, APL issued warrants granting investors in our private placement the right
to purchase an additional 2,689,765 common units at a price of $6.35 per unit for a period of two years following the issuance of the original common units. APL utilized the net proceeds from the common unit offering to repay a portion of its
indebtedness under its senior secured term loan. The common units and warrants sold by APL were registered with the Securities and Exchange Commission and the registration statement was declared effective on October 14, 2009.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires making
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of actual revenue and expenses during the
reporting period. Although we base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances, actual results may differ from the estimates on which our financial statements are
prepared at any given point of time. Changes in these estimates could materially affect our financial position, results of operations or cash flows. Significant items that are subject to such estimates and assumptions include revenue and expense
accruals, deferred tax assets and liabilities, depletion, depreciation and amortization, asset impairment, fair value of derivative instruments, the probability of forecasted transactions and the allocation of purchase price to the fair value of
assets acquired. A discussion of our significant accounting policies we have adopted and followed in the preparation of our consolidated financial statements is included within our Audit Report on Form 10-K for the year ended December 31, 2009
and in Note 2 under Item 1, Financial Statements included in this report, and there have been no material changes to these policies through March 31, 2010.

Fair Value of Financial Instruments

We have established a hierarchy to measure our financial instruments at fair value which requires us to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy defines three levels of inputs that may be used to measure fair value:

Level 1 Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting
entity has the ability to access at the measurement date.

Level 2 Inputs other than quoted prices included
within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3  Unobservable inputs that reflect the entitys own assumptions about the assumption market participants would use in
the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.



58



---

##### Table of Contents

We use a fair value methodology to value the assets and liabilities for our, AHDs and
APLs outstanding derivative contracts and our Supplemental Employment Retirement Plan (SERP). Our and APLs commodity hedges, with the exception of APLs NGL fixed price swaps and NGL options, are calculated based on
observable market data related to the change in price of the underlying commodity and are therefore defined as Level 2 fair value measurements. Our, AHDs and APLs interest rate derivative contracts are valued using a LIBOR rate-based
forward price curve model and are therefore defined as Level 2 fair value measurements. Our SERP is calculated based on observable actuarial inputs developed by a third-party actuary and therefore is defined as a Level 2 fair value measurement,
while the asset related to the funding of the SERP in a rabbi trust is based on publicly traded equity and debt securities and is therefore defined as a Level 1 fair value measurement. Valuations for APLs NGL fixed price swaps are based on a
forward price curve modeled on a regression analysis of natural gas, crude oil and propane prices and therefore are defined as Level 3 fair value measurements. Valuations for APLs NGL options are based on forward price curves developed by the
related financial institution and therefore are defined as Level 3 fair value measurements.

Liabilities that are required to
be measured at fair value on a nonrecurring basis include our asset retirement obligations (AROs) that are defined as Level 3. Estimates of the fair value of AROs are based on discounted cash flows using numerous estimates,
assumptions, and judgments regarding the cost, timing of settlement, our credit-adjusted risk-free rate and inflation rates.



|ITEM 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our
potential exposure to market risks. As our assets currently consist principally of our ownership interests in our subsidiaries, the following information principally encompasses their exposure to market risks unless otherwise noted. The term
market risk refers to the risk of loss arising from adverse changes in interest rates and oil and natural gas prices. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonable
possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of the market risk sensitive instruments were entered into for purposes other than trading.

General

All of our
assets and liabilities are denominated in U.S. dollars, and as a result, we do not have exposure to currency exchange risks.

We and our subsidiaries are exposed to various market risks, principally fluctuating interest rates and changes in commodity prices.
These risks can impact our results of operations, cash flows and financial position. We and our subsidiaries manage these risks through regular operating and financing activities and periodical use of derivative financial instruments such as forward
contracts and interest rate cap and swap agreements. The following analysis presents the effect on our results of operations, cash flows and financial position as if the hypothetical changes in market risk factors occurred on March 31, 2010.
Only the potential impact of hypothetical assumptions was analyzed. The analysis does not consider other possible effects that could impact our and our subsidiaries business.

Current market conditions elevate our and our subsidiaries concern over counterparty risks and may adversely affect the ability of
these counterparties to fulfill their obligations to us, if any. The counterparties related to our commodity and interest-rate derivative contracts are banking institutions, who also participate in their revolving credit facilities. The
creditworthiness of our counterparties is constantly monitored, and we currently believe them to be financially viable. We are not aware of any inability on the part of our counterparties to perform under their contracts and believe our exposure to
non-performance is remote.

Interest Rate Risk.At March 31, 2010, ATN had an outstanding balance of $265.0
million on its senior secured revolving credit facility with a borrowing base of $575.0 million. At March 31, 2010, we had interest rate derivative contracts having aggregate notional principal amounts of $150.0 million. Under the terms of this
agreement, we will pay weighted average interest rates of 3.1% plus the applicable margin as defined under the terms of ATNs revolving credit facility, and will receive LIBOR plus the applicable margin on the notional principal amounts. These
derivatives effectively convert $150.0 million of ATNs floating rate debt under its revolving credit facility to fixed rate debt. The interest rate swap agreement is effective as of March 31, 2010 and expires on January 31, 2011.

At March 31, 2010, AHD had a credit facility with $4.0 million outstanding. AHD also had an interest rate derivative
contract having an aggregate notional principal amount of $25.0 million, which expires on May 28, 2010. Under the terms of agreement, AHD pays an interest rate of 3.0%, plus the applicable margin as defined under the terms of its credit
facility, and receives LIBOR, plus the applicable margin, on the notional principal amounts.



59



---

##### Table of Contents

At March 31, 2010, APL had $280.0 million of outstanding borrowings under its $380.0
million senior secured revolving credit facility and $425.8 million outstanding under its senior secured term loan. Borrowings under APLs credit facility bear interest, at its option, at either (i) adjusted LIBOR plus the applicable
margin, as defined, or (ii) the higher of the federal funds rate plus 0.5% or the Wachovia Bank prime rate (each plus the applicable margin). On May 29, 2009, APL entered into an amendment to its senior secured credit facility agreement,
which, among other changes, set a floor for the LIBOR interest rate of 2.0% per annum. At March 31, 2010, APL had contracts having an aggregate notional principal amount of $250.0 million. Under the terms of these agreements, APL pays
weighted average interest rates of 3.1%, plus the applicable margin as defined under the terms of its revolving credit facility, and receives LIBOR, plus the applicable margin, on the notional principal amount. These derivatives effectively convert
$250.0 million of APLs floating rate debt under its term loan and revolving credit facility to fixed-rate debt. These derivatives are in effect as of March 31, 2010 and expired on April 30, 2010.

Holding all other variables constant, including the effect of interest rate derivatives, a hypothetical 100 basis-point or 1% change in
variable interest rates would change our consolidated interest expense by $0.9 million.

Commodity Price Risk. Our
market risk exposure to commodities is due to the fluctuations in the price of natural gas, NGLs, condensate and oil and the impact those price movements have on the financial results of our subsidiaries. To limit our exposure to changing natural
gas and oil prices, we use financial derivative instruments for a portion of our future natural gas and oil production. APL is exposed to commodity prices as a result of being paid for certain services in the form of natural gas, NGLs and condensate
rather than cash. APL enters into financial swap and option instruments to hedge forecasted sales against the variability in expected future cash flows attributable to changes in market prices. The swap instruments are contractual agreements between
counterparties to exchange obligations of money as the underlying natural gas, NGLs and condensate are sold. Under these swap agreements, APL receives or pays a fixed price and receives or remits a floating price based on certain indices for the
relevant contract period. Option instruments are contractual agreements that grant the right, but not obligation, to purchase or sell natural gas, NGLs and condensate at a fixed price for the relevant period.

Holding all other variables constant, including the effect of commodity derivatives, a 10% change in the average price of natural gas,
NGLs, condensate and oil would result in a change to our consolidated operating income from continuing operations, excluding income tax effects, for the twelve-month period ending March 31, 2011 of approximately $30.0 million.

Realized pricing of our oil and natural gas production is primarily driven by the prevailing worldwide prices for crude oil and spot
market prices applicable to United States natural gas production. Pricing for natural gas and oil production has been volatile and unpredictable for many years. To limit our exposure to changing natural gas prices, we enter into natural
gas and oil swap and costless collar option contracts. At any point in time, such contracts may include regulated NYMEX futures and options contracts and non-regulated over-the-counter futures contracts with qualified counterparties. NYMEX contracts
are generally settled with offsetting positions, but may be settled by the delivery of natural gas. Crude oil contracts are based on a West Texas Intermediate (WTI) index. These contracts have qualified and been designated as cash flow
hedges and been recorded at their fair values.

At March 31, 2010, we had the following interest rate and commodity
derivatives:

Interest Fixed Rate Swap



|                            |  |                |             |             |                          |                                  |     
|--------------------------- |  | -------------- | ----------- | ----------- | ------------------------ | -------------------------------- | ----
|Term                        |  | NotionalAmount |             | Option Type |                          | ContractPeriod EndedDecember 31,
|                            |  |                |            
|January 2008  January 2011 |  | $              | 150,000,000 |             | Pay 3.1%  Receive LIBOR |                                  | 2010
|                            |  |                |             |             |                          |                                  | 2011



60



---

##### Table of Contents

Natural Gas Fixed Price Swaps



|                                      |  |            |  |                    |      
|------------------------------------- |  | ---------- |  | ------------------ | -----
|Production Period Ending December 31, |  | Volumes    |  | AverageFixed Price
|                                      |  | (mmbtu)(1) |  | (per mmbtu)(1)    
|2010                                  |  | 30,750,003 |  | $                  | 7.354
|2011                                  |  | 24,140,004 |  | $                  | 6.689
|2012                                  |  | 19,652,260 |  | $                  | 6.850
|2013                                  |  | 13,211,510 |  | $                  | 6.822

Natural Gas Costless Collars



|                                      |  |                |  |            |  |                       |      
|------------------------------------- |  | -------------- |  | ---------- |  | --------------------- | -----
|Production Period Ending December 31, |  | Option Type    |  | Volumes    |  | AverageFloor and 
Cap
|                                      |  |                |  | (mmbtu)(1) |  | (per mmbtu)(1)       
|2010                                  |  | Puts purchased |  | 2,520,000  |  | $                     | 7.839
|2010                                  |  | Calls sold     |  | 2,520,000  |  | $                     | 9.007
|2011                                  |  | Puts purchased |  | 12,840,000 |  | $                     | 6.197
|2011                                  |  | Calls sold     |  | 12,840,000 |  | $                     | 7.283
|2012                                  |  | Puts purchased |  | 9,780,000  |  | $                     | 6.220
|2012                                  |  | Calls sold     |  | 9,780,000  |  | $                     | 7.309
|2013                                  |  | Puts purchased |  | 11,820,000 |  | $                     | 6.228
|2013                                  |  | Calls sold     |  | 11,820,000 |  | $                     | 7.389

Crude Oil Fixed Price Swaps



|                                      |  |          |  |                    |       
|------------------------------------- |  | -------- |  | ------------------ | ------
|Production Period Ending December 31, |  | Volumes  |  | AverageFixed Price
|                                      |  | (Bbl)(1) |  | (per Bbl)(1)      
|2010                                  |  | 39,300   |  | $                  | 97.219
|2011                                  |  | 42,600   |  | $                  | 77.460
|2012                                  |  | 33,500   |  | $                  | 76.855
|2013                                  |  | 10,000   |  | $                  | 77.360

Crude Oil Costless Collars



|                                                                               |  |                |  |          |  |                       |        
|------------------------------------------------------------------------------ |  | -------------- |  | -------- |  | --------------------- | -------
|Production Period Ending December 31,                                          |  | Option Type    |  | Volumes  |  | AverageFloor and 
Cap
|                                                                               |  |                |  | (Bbl)(1) |  | (per Bbl)(1)         
|2010                                                                           |  | Puts purchased |  | 25,000   |  | $                     | 85.000 
|2010                                                                           |  | Calls sold     |  | 25,000   |  | $                     | 112.546
|2011                                                                           |  | Puts purchased |  | 27,000   |  | $                     | 67.223 
|2011                                                                           |  | Calls sold     |  | 27,000   |  | $                     | 89.436 
|2012                                                                           |  | Puts purchased |  | 21,500   |  | $                     | 65.506 
|2012                                                                           |  | Calls sold     |  | 21,500   |  | $                     | 91.448 
|2013                                                                           |  | Puts purchased |  | 6,000    |  | $                     | 65.358 
|2013                                                                           |  | Calls sold     |  | 6,000    |  | $                     | 93.442 
|(1)Mmbtu represents million British Thermal Units; Bbl represents barrels.



61



---

##### Table of Contents

As of March 31, 2010, AHD had the following interest rate derivatives:

Interest Fixed-Rate Swap



|                    |  |                |            |      |                          |                                   |     
|------------------- |  | -------------- | ---------- | ---- | ------------------------ | --------------------------------- | ----
|Term                |  | NotionalAmount |            | Type |                          | Contract PeriodEnded December 31,
|May 2008 - May 2010 |  | $              | 25,000,000 |      | Pay 3.0%  Receive LIBOR |                                   | 2010

As of March 31,
2010, APL had the following interest rate and commodity derivatives, including derivatives that do not qualify for hedge accounting:

Interest Fixed-Rate Swap



|                      |  |        |             |      |                         
|--------------------- |  | ------ | ----------- | ---- | ------------------------
|Term                  |  | Amount |             | Type
|April 2008-April 2010 |  | $      | 250,000,000 |      | Pay 3.1%  Receive LIBOR

Fixed Price Swaps



|                  |  |                |  |                   |  |            |  |                   |        |  
|----------------- |  | -------------- |  | ----------------- |  | ---------- |  | ----------------- | ------ | -
|Production Period |  | Purchased/Sold |  | Commodity         |  | Volumes(1) |  | AverageFixedPrice |       
|2010              |  | Sold           |  | Propane           |  | 17,640,000 |  | $                 | 1.108  |  
|2010              |  | Sold           |  | Natural Gas Basis |  | 3,390,000  |  |                   | (0.659 | )
|2010              |  | Purchased      |  | Natural Gas Basis |  | 5,580,000  |  |                   | (0.619 | )
|2011              |  | Sold           |  | Natural Gas Basis |  | 1,920,000  |  |                   | (0.728 | )
|2011              |  | Purchased      |  | Natural Gas Basis |  | 1,920,000  |  |                   | (0.758 | )
|2012              |  | Sold           |  | Natural Gas Basis |  | 720,000    |  |                   | (0.685 | )
|2012              |  | Purchased      |  | Natural Gas Basis |  | 720,000    |  |                   | (0.685 | )

NGL Options



|                  |  |                |  |      |  |               |  |            |  |                    |      
|----------------- |  | -------------- |  | ---- |  | ------------- |  | ---------- |  | ------------------ | -----
|Production Period |  | Purchased/Sold |  | Type |  | Commodity     |  | Volumes(1) |  | AverageStrikePrice
|2010              |  | Purchased      |  | Put  |  | Propane       |  | 23,688,000 |  | $                  | 1.073
|2010              |  | Purchased      |  | Put  |  | Normal Butane |  | 2,772,000  |  |                    | 1.440
|2010              |  | Purchased      |  | Call |  | Natural Gas   |  | 6,390,000  |  |                    | 5.829

Crude Oil Options



|                  |  |                |  |      |  |           |  |            |  |                   
|----------------- |  | -------------- |  | ---- |  | --------- |  | ---------- |  | ------------------
|Production Period |  | Purchased/Sold |  | Type |  | Commodity |  | Volumes(1) |  | AverageStrikePrice
|2010              |  | Purchased      |  | Put  |  | Crude Oil |  | 627,000    |  | 74.31             
|2010              |  | Sold           |  | Call |  | Crude Oil |  | 1,961,250  |  | 83.83             
|2010              |  | Purchased(2)   |  | Call |  | Crude Oil |  | 444,000    |  | 120.00            
|2011              |  | Sold           |  | Call |  | Crude Oil |  | 678,000    |  | 94.68             
|2011              |  | Purchased(2)   |  | Call |  | Crude Oil |  | 252,000    |  | 120.00            
|2012              |  | Sold           |  | Call |  | Crude Oil |  | 498,000    |  | 95.83             
|2012              |  | Purchased(2)   |  | Call |  | Crude Oil |  | 180,000    |  | 120.00            



|(1) | Volumes for Natural Gas are stated in MMBTUs. Volumes for NGLs are stated in gallons. Volumes for crude are stated in barrels.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(2) | Calls purchased for 2010 through 2012 represent offsetting 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities
Exchange Act of 1934 reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.



62



---

##### Table of Contents

Under the supervision of our Chief Executive Officer and Chief Financial Officer and with
the participation of our disclosure committee appointed by such officers, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2010, our disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER
INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

Following announcement of the Merger on April 27, 2009, five purported class actions were filed in Delaware Chancery Court and were
later consolidated into a single complaint, In re Atlas Energy Resources, LLC Unitholder Litigation, C.A. No. 4589-VCN (the Consolidated Action) filed on July 1, 2009 (the Consolidated Complaint). The
Consolidated Complaint named us and ATNs various officers and directors as defendants (the Defendants), alleged violations of fiduciary duties in connection with the Merger, and requested injunctive relief and damages.

On August 7, 2009, plaintiffs advised the Delaware Chancery Court by letter that they would not pursue their motion for a
preliminary injunction, which had been scheduled for a hearing on September 4, 2009, and requested that the September 4 hearing date be removed from the Courts calendar. On October 16, 2009, Defendants filed a motion to
dismiss the Consolidated Complaint. On December 15, 2009, plaintiffs filed an Amended Complaint (the Amended Complaint). On January 6, 2010, the Delaware Chancery Court granted the parties Scheduling Stipulation
and Order, providing that Defendants would have until February 18, 2010, to file a motion to dismiss the Amended Complaint; that plaintiffs answering brief in opposition would be due on or before May 3, 2010; and that
Defendants reply papers would be due on or before June 4, 2010. Defendants filed their opening brief in support of their motion to dismiss on February 18, 2010 and plaintiffs filed their brief in opposition on May 3, 2010.

The Amended Complaint alleges that Defendants breached their purported fiduciary duties to ATNs public unitholders in
connection with the negotiation of the Merger. In particular, plaintiffs allege that the Merger was not entirely fair to ATNs public unitholders, and that Defendants conducted the Merger process in bad faith.

Predicting the outcome of this lawsuit is difficult. An adverse judgment for monetary damages could have a material adverse effect on our
operations. Based on the facts known to date, Defendants believe that the claims asserted against them in this lawsuit are without merit, and will continue to defend themselves vigorously against the claims.

In June 2008, our wholly-owned subsidiary, Atlas America, LLC, was named as a co-defendant in the matter captioned CNX Gas Company,
LLC (CNX) v. Miller Petroleum, Inc. (Miller), et al. (Chancery Court, Campbell County, Tennessee). In its complaint, CNX alleges that Miller breached a contract to assign to CNX certain leasehold rights
(Leases) representing approximately 30,000 acres in Campbell County, Tennessee and that Atlas America, LLC and another defendant, Wind City Oil & Gas, LLC, interfered with the closing of this assignment on June 6, 2008. ATN
purchased the Leases from Miller for approximately $19.1 million. On December 15, 2008, the Chancery Court dismissed the matter in its entirety, holding that there had been no breach of the contract by Miller and, therefore, that Atlas America,
LLC could not have tortuously interfered with the contract. The Chancery Court dismissed all claims against Atlas America, LLC; however, CNX has appealed this decision.

We are also party to various routine legal proceedings arising in the ordinary course of our business. Management believes that none of
these actions, individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

Our
business operations and financial position are subject to various risks. These are described elsewhere in this report and in our most recent Form 10-K for the year ended December 31, 2009. The risk factors identified therein have not changed in
any material respect.



63



---

##### Table of Contents

|ITEM 6. | EXHIBITS
|------- | --------



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|2.1         |  | Purchase and Sale Agreement, dated April 9, 2010, by and between Atlas Energy Resources, LLC and Reliance Marcellus,
LLC.(26)Schedules and exhibits to the Agreement have been
omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request                                                                              
|            | 
|2.2         |  | Participation and Development Agreement, dated April 20, 2010, by and between Atlas Energy Resources, LLC, Atlas America, LLC, Viking Resources, LLC, Atlas Resources, LLC and
Reliance Marcellus, LLC.(27)Schedules and exhibits to the Agreement have been
omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request
|            | 
|2.3         |  | Standstill, AMI and Transfer Restriction Agreement, dated April 20, 2010, by and among Atlas Energy, Inc., Atlas Energy Resources, LLC, Reliance Industries Limited and Reliance
Marcellus,
LLC(27)                                                                                                                                                                                                                          
|            | 
|2.4         |  | 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.(13)Schedules and exhibits to the
Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request             
|            | 
|3.1         |  | Amended and Restated Certificate of
Incorporation(1)                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|3.2         |  | Amended and Restated
Bylaws(1)                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|4.1         |  | Form of stock
certificate(2)                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.1        |  | Indenture dated as of January 23, 2008 among Atlas Energy Operating Company, LLC, Atlas Energy Finance Corp., as Issuers, the subsidiaries named therein, as Guarantors, and U.S.
Bank National Association, as
Trustee(14)                                                                                                                                                                                                  
|            | 
|10.2        |  | Form of 10.75% Senior Note due 2018 (included as an exhibit to the Indenture filed as Exhibit 10.1 hereto)                                                                                                                                                                                                                                                                                                                   
|            | 
|10.3        |  | Senior Indenture dated July 16, 2009 among Atlas Energy Operating Company, LLC, Atlas Energy Finance Corp., as Issuers, the subsidiaries named therein, as Guarantors, and U.S. Bank
National Association, as Trustee(15)                                                                                                                                                                                                    
|            | 
|10.4        |  | First Supplemental Indenture date July 16,
2009(15)                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.5        |  | Form of Note 12.125% Senior Notes due 2017 (contained in Annex A to the First Supplemental Indenture filed as Exhibit 10.4 hereto)                                                                                                                                                                                                                                                                                           
|            | 
|10.6        |  | Tax Matters Agreement between Atlas America, Inc. and Resource America, Inc. dated May 14,
2004(5)                                                                                                                                                                                                                                                                                                                           
|            | 
|10.7        |  | Transition Services Agreement between Atlas America, Inc. and Resource America, Inc. dated May 14,
2004(5)                                                                                                                                                                                                                                                                                                                   
|            | 
|10.8(a)     |  | Employment Agreement for Edward E. Cohen dated May 14,
2004(5)                                                                                                                                                                                                                                                                                                                                                               
|            | 
|10.8(b)     |  | Amendment to Employment Agreement dated as of December 31,
2008(12)                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.9(a)     |  | Agreement for Services among Atlas America, Inc. and Richard Weber, dated April 5,
2006(6)                                                                                                                                                                                                                                                                                                                                   
|            | 
|10.9(b)     |  | Amendment No. 1 to Agreement for Services dated as of April 26,
2007(7)                                                                                                                                                                                                                                                                                                                                                      
|            | 
|10.9(c)     |  | Amendment No. 2 to Agreement for Services dated as of December 18,
2008(12)                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.10       |  | Management Agreement, dated as of December 18, 2006, among Atlas Energy Resources, LLC, Atlas Energy Operating Company, LLC and Atlas Energy Management,
Inc.(4)                                                                                                                                                                                                                                                             



64



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|10.11       |  | Stock Incentive
Plan(12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|10.12       |  | 2009 Stock Incentive
Plan(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            | 
|10.13       |  | Assumed Long-Term Incentive
Plan(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.14       |  | Atlas America Employee Stock Ownership Plan(8)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.15       |  | Atlas America, Inc. Investment Savings Plan(8)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            | 
|10.16       |  | Form of Stock Award
Agreement(9)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.17       |  | Amended and Restated Annual Incentive Plan for Senior
Executives(10)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.18       |  | Employment Agreement between Atlas America, Inc. and Jonathan Z. Cohen dated as of January 30,
2009(12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.19(a)    |  | Revolving Credit Agreement, dated as of June 29, 2007, among Atlas Energy Operating Company, LLC its subsidiaries, J.P. Morgan Chase Bank, N.A., as Administrative Agent and the
other lenders signatory thereto(19)                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.19(b)    |  | First Amendment to Credit Agreement, dated as of October 25,
2007(20)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            | 
|10.19(c)    |  | Second Amendment to Credit Agreement, dated as of April 9,
2009(21)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|10.19(d)    |  | Third Amendment to Credit Agreement, dated as of July 10,
2009(22)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            | 
|10.20       |  | ATN Option Agreement dated as of June 1, 2009, by and among APL Laurel Mountain, LLC, Atlas Pipeline Operating Partnership, L.P. and Atlas Energy Resources,
LLC(23)                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|            | 
|10.21       |  | Amended and Restated Limited Liability Company Agreement of Laurel Mountain Midstream, LLC dated as of June 1,
2009(23)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|10.22       |  | Employment Agreement for Matthew A. Jones dated July 1,
2009(17)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|            | 
|10.23       |  | Gas Gathering Agreement for Natural Gas on the Legacy Appalachian System dated as of June 1, 2009 between Laurel Mountain Midstream, LLC and Atlas America, LLC, Atlas Energy
Resources, LLC, Atlas Energy Operating Company, LLC, Atlas Noble, LLC, Resource Energy, LLC, Viking Resources, LLC, Atlas Pipeline Partners, L.P. and Atlas Pipeline Operating Partnership,
L.P.(24)Specific terms in this exhibit have been
redacted, as marked three asterisks (***), because confidential treatment for those terms has been requested. The redacted material has been separately filed with the Securities and Exchange Commission.   
|            | 
|10.24       |  | Gas Gathering Agreement for Natural Gas on the Expansion Appalachian System dated as of June 1, 2009 between Laurel Mountain Midstream, LLC and Atlas America, LLC, Atlas Energy
Resources, LLC, Atlas Energy Operating Company, LLC, Atlas Noble, LLC, Resource Energy, LLC, Viking Resources, LLC, Atlas Pipeline Partners, L.P. and Atlas Pipeline Operating Partnership,
L.P.(24)Specific terms in this exhibit have been
redacted, as marked three asterisks (***), because confidential treatment for those terms has been requested. The redacted material has been separately filed with the Securities and Exchange Commission.
|            | 
|10.25       |  | From of Non-Qualified Stock Option Grant
Agreement(25)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|10.26       |  | From of Incentive Stock Option Grant
Agreement(25)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|            | 
|10.27       |  | From of Restricted Stock Unit
Agreement(25)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|10.28       |  | Securities Purchase Agreement dated April 7, 2009 by and between Atlas Pipeline Mid-Continent, LLC and Spectra Energy Partners OLP,
LP(17)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|            | 
|32.1        |  | Section 1350 Certification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|            | 
|32.2        |  | Section 1350 Certification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             



65



---

##### Table of Contents



|(1) | Previously filed as an exhibit to our Form 8-K filed September 30, 2009
|--- | -----------------------------------------------------------------------

|(2) | Previously filed as an exhibit to our registration statement on Form S-1 (registration no. 333-112653)
|--- | ------------------------------------------------------------------------------------------------------

|(3) | [Intentionally omitted]
|--- | -----------------------

|(4) | [Intentionally omitted]
|--- | -----------------------

|(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) | [Intentionally omitted]
|---- | -----------------------

|(12) | Previously filed as an exhibit to our Form 10-K for the year ended December 31, 2008
|---- | ------------------------------------------------------------------------------------

|(13) | Previously filed as an exhibit to our Form 8-K filed April 27, 2009.
|---- | --------------------------------------------------------------------

|(14) | Previously filed as an exhibit to Atlas Energy Resources, LLCs Form 8-K filed January 24, 2008
|---- | -----------------------------------------------------------------------------------------------

|(15) | Previously filed as an exhibit to Atlas Energy Resources, LLCs Form 8-K filed July 17, 2009
|---- | --------------------------------------------------------------------------------------------

|(16) | Previously filed as an exhibit to our Form S-8 filed September 30, 2009
|---- | -----------------------------------------------------------------------

|(17) | Previously filed as an exhibit to our Form 10-Q for the quarter ended June 30, 2009
|---- | -----------------------------------------------------------------------------------

|(18) | [Intentionally omitted]
|---- | -----------------------

|(19) | Previously filed as an exhibit to Atlas Energy Resources, LLCs Form 8-K filed June 29, 2007
|---- | --------------------------------------------------------------------------------------------

|(20) | Previously filed as an exhibit to Atlas Energy Resources, LLCs Form 8-K filed October 26, 2007
|---- | -----------------------------------------------------------------------------------------------

|(21) | Previously filed as an exhibit to Atlas Energy Resources, LLCs Form 8-K filed April 17, 2009
|---- | ---------------------------------------------------------------------------------------------

|(22) | Previously filed as an exhibit to Atlas Energy Resources, LLCs Form 8-K filed July 24, 2009
|---- | --------------------------------------------------------------------------------------------

|(23) | Previously filed as an exhibit to our Form 8-K filed June 5, 2009
|---- | -----------------------------------------------------------------

|(24) | Previously filed as an exhibit to Atlas Energy Resources, LLCs Form 10-Q for the quarter ended June 30, 2009
|---- | -------------------------------------------------------------------------------------------------------------

|(25) | Previously filed as an exhibit to our Form 10-K for the year ended December 31, 2009
|---- | ------------------------------------------------------------------------------------

|(26) | Previously filed as an exhibit to our Form 8-K filed April 13, 2010
|---- | -------------------------------------------------------------------

|(27) | Previously filed as an exhibit to our Form 8-K filed April 21, 2010
|---- | -------------------------------------------------------------------



66



---

##### Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



|                   |  |  |  |                    |  |                                     
|------------------ |  |  |  | ------------------ |  | ------------------------------------
|                   |  |  |  | ATLAS ENERGY, INC.
|                   |  |  | 
|Date:  May 7, 2010 |  |  |  | By:                |  | /s/ EDWARD E. COHEN                 
|                   |  |  |  |                    |  | Edward E. Cohen                     
|                   |  |  |  |                    |  | Chairman and Chief Executive Officer
|                   |  |  | 
|Date:  May 7, 2010 |  |  |  | By:                |  | /s/ MATTHEW A. JONES                
|                   |  |  |  |                    |  | Matthew A. Jones                    
|                   |  |  |  |                    |  | Chief Financial Officer             
|                   |  |  | 
|Date:  May 7, 2010 |  |  |  | By:                |  | /s/ SEAN P. MCGRATH                 
|                   |  |  |  |                    |  | Sean P. McGrath                     
|                   |  |  |  |                    |  | Chief Accounting Officer            



67