<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                                   (Mark One)
                      [X] ANNUAL REPORT PURSUANT TO SECTION
               13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002

                                       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: 1-14998

                          ATLAS PIPELINE PARTNERS, L.P.
             (Exact name of registrant as specified in its charter)

DELAWARE                                                23-3011077
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                          Identification No.)

311 Rouser Road
Moon Township, Pennsylvania                                   15108
(Address of principal executive office)                     (Zip code)

Registrant's telephone number, including area code: (412) 262-2830
Securities registered pursuant to Section 12(b) of the Act:

                                                    Name of each exchange on
         Title of each class                            which registered

 Common Units of Limited Partnership Interest        American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

                                       N/A
                                 --------------
                                 Title of class

         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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

         The aggregate market value of the equity securities held by
non-affiliates of the registrant, based on the closing price on June 28, 2002
was approximately $37.4 million.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

<PAGE>

                      [THIS PAGE INTENTIONALLY LEFT BLANK]


<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                             INDEX TO ANNUAL REPORT
                                  ON FORM 10-K
<TABLE>
<CAPTION>
PART I                                                                                                         Page
                                                                                                               ----
<S>            <C>                                                                                            <C>
     Item 1:    Business..................................................................................   3 - 15
     Item 2:    Properties................................................................................       16
     Item 3:    Legal Proceedings.........................................................................       16
     Item 4:    Submission of Matters to a Vote of Security Holders.......................................       16

PART II
     Item 5:    Market for Registrant's Common Equity and Related Stockholder Matters.....................  17 - 18
     Item 6:    Selected Financial Data...................................................................  18 - 19
     Item 7:    Management's Discussion and Analysis of Financial Condition
                    and Results of Operations.............................................................  20 - 28
     Item 7A:   Quantitative and Qualitative Disclosures About Market Risk................................       28
     Item 8:    Financial Statements and Supplementary Data...............................................  29 - 42
     Item 9:    Changes in and Disagreements with Accountants
                    on Accounting and Financial Disclosure................................................       43

PART III
     Item 10:   Directors and Executive Officers of the Registrant........................................  44 - 46
     Item 11:   Executive Compensation....................................................................       47
     Item 12:   Security Ownership of Certain Beneficial Owners and Management............................       48
     Item 13:   Certain Relationships and Related Transactions............................................       48


PART IV
     Item 14:   Controls and Procedures...................................................................       49
     Item 15:   Exhibits, Financial Statement Schedules and
                Reports on Form 8-K.......................................................................       50

SIGNATURES          ......................................................................................       51

CERTIFICATIONS............................................................................................  52 - 53
</TABLE>

                                      -2-
<PAGE>


                                     PART I
ITEM 1. BUSINESS

         THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REGARDING
EVENTS AND FINANCIAL TRENDS WHICH MAY AFFECT OUR FUTURE OPERATING RESULTS AND
FINANCIAL POSITION. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT
COULD CAUSE OUR ACTUAL RESULTS AND FINANCIAL POSITION TO DIFFER MATERIALLY FROM
THOSE ANTICIPATED IN FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE
FLUCTUATIONS IN THE MARKET FOR NATURAL GAS FROM WHICH OUR REVENUES ARE DERIVED,
PRODUCTION DECLINES FROM WELLS SERVICED BY OUR GATHERING SYSTEMS, REDUCED
DRILLING FOR NEW WELLS IN OUR SERVICE AREAS AND OUR NEED FOR ADDITIONAL CAPITAL
TO EXPAND OUR GATHERING SYSTEMS.

General

         We are a Delaware limited partnership with common units traded on the
American Stock Exchange under the symbol "APL." We own and operate natural gas
pipeline gathering systems in eastern Ohio, western New York and western
Pennsylvania. As of December 31, 2002, our gathering systems, in the aggregate,
consisted of over 1,380 miles of intrastate pipelines, including approximately
80 miles of intrastate pipelines we constructed or acquired during the year then
ended. Our gathering systems served approximately 4,200 wells at December 31,
2002, with an average daily throughput for the year then ended of 50.4 million
cubic feet, or Mmcf, of natural gas. Our gathering systems provide a means
through which well owners and operators can transport the natural gas produced
by their wells to public utility pipelines for delivery to customers. To a
significantly lesser extent, our gathering systems transport natural gas
directly to customers. During the year ended December 31, 2002, our gathering
systems transported 18.4 billion cubic feet, or Bcf, of natural gas, an increase
of 7% and 27% from the years ended December 31, 2001 and 2000, respectively. We
connected 214 wells to our gathering systems in the year ended December 31, 2002
and 559 wells since our commencement of operations in January 2000. In addition,
we have added 433 wells through acquisitions of pipeline.

         Our gathering systems currently connect with public utility pipelines
operated by Peoples Natural Gas Company, National Fuel Gas Supply, Tennessee Gas
Pipeline Company, National Fuel Gas Distribution Company, East Ohio Gas Company,
Columbia of Ohio, Consolidated Natural Gas Co., Texas Eastern Pipeline, Columbia
Gas Transmission Corp. and Equitable Utilities. Public utility pipelines charge
transportation fees to the person having title to the natural gas being
transported, typically the well owner, an intermediate purchaser such as a
natural gas distribution company, or a final purchaser. We do not have title to
the natural gas gathered and delivered by us and, accordingly, do not pay
transportation fees charged by public utility pipelines. We do not engage in
storage or gas marketing programs, nor do we engage in the purchase and resale
for our own account of natural gas transported through our gathering systems. We
do not transport any oil produced by wells connected to our gathering systems.

         During the years ended December 31, 2002, 2001 and 2000, we had one
business segment, the transportation segment. We derive our revenues primarily
from the transportation of natural gas. In the year ended December 31, 2002,
substantially all of our revenues were generated by transporting natural gas
produced by Atlas America, Inc., a wholly-owned subsidiary of Resource America,
Inc., the indirect parent of our general partner, Atlas Pipeline Partners GP,
LLC. Under our transportation agreements with Atlas America, the gathering fees
we receive are generally equal to a percentage, generally 16%, of the gross or
weighted average sales price of the natural gas we transport subject, in certain
cases, to minimum prices of $.35 or $.40 per thousand cubic feet, or Mcf. Our
business therefore depends in large part upon the prices at which the natural
gas we transport is sold. Due to the volatility of natural gas prices, our gross
revenues can vary materially from period to period.


                                      -3-
<PAGE>

Objectives and Strategy

         Our objective is to increase cash flow, earnings and returns to our
unitholders by:

         o expanding our existing asset base through construction of extensions
           necessary to service additional wells drilled by Atlas America and
           others;

         o expanding our existing asset base through accretive acquisitions of
           gathering systems from other persons;

         o achieving economies of scale as a result of expanding our operations
           through extensions and acquisitions;

         o maintaining cost efficient operations and expansion of the system;
           and

         o continuing to strengthen our balance sheet by financing our growth
           with a combination of long-term debt and equity so as to provide the
           financial flexibility to fund future opportunities.

         Since commencing operations in January 2000, we have achieved these
objectives by:

         o adding 360 miles of pipeline to our original system;

         o connecting 559 new wells to our pipeline, 500 of which were drilled
           by Atlas America and 59 by other operators;

         o acquiring two gathering systems in Ohio and Pennsylvania, aggregating
           120 miles of pipeline with approximately 433 wells connected to those
           systems; and

         o upgrading our system and substantially expanding our capacity.

         We believe that our focus on the mid stream gas industry, specifically
gas gathering systems, the extensive prior experience of our general partner's
management in the operation of gathering systems, our position as one of the
largest operators of gathering systems in the Appalachian Basin and our
relationship with Atlas America provide us with a competitive advantage in
executing our growth strategy to achieve our business objectives.

Pipeline Characteristics

         We set forth in the following table the volumes of the natural gas we
transported, in Mcfs, in the years ended December 31, 2002, 2001 and 2000.

                                 For the years ended         Inception through
                                      December 31,               December 31,
                              ---------------------------
                                 2002              2001             2000
                              ----------       ----------        ----------
New York systems............     493,600          570,500           408,800
Ohio systems................   5,396,900        5,378,200         3,902,200
Pennsylvania systems........  12,492,100       11,176,300        10,175,800
                              ----------       ----------        ----------
                              18,382,600       17,125,000        14,486,800
                              ==========       ==========        ==========



                                      -4-
<PAGE>

         Of the approximately 4,200 wells currently connected to our gathering
systems, approximately 3,800 are owned by Atlas America or its affiliates or by
investment partnerships managed or operated by Atlas America or its affiliates
with the remainder being owned or managed by third parties. We have agreements
with Atlas America and its affiliates relating to the connection of future wells
owned or controlled by them to our gathering systems and the transportation fees
we will charge. We describe these agreements under "-Agreements with Atlas
America." These wells are the principal producers of gas transported by our
gathering systems and we anticipate that wells controlled by Atlas America will
continue in the future to be the principal producers into our gathering systems.
As of December 31, 2002, Atlas America and its affiliates controlled leases on
developed properties in the operational area of our gathering systems totaling
approximately 265,000 gross acres. In addition, Atlas America and its affiliates
control leases on approximately 223,000 undeveloped gross acres of land. During
the year ended December 31, 2002, Atlas America and its affiliates drilled and
connected 195 wells to our gathering systems as compared to 196 wells during the
year ended December 31, 2001.

         The gathering systems are generally constructed with 2, 4, 6, 8 and 12
inch cathodically protected and wrapped steel pipe and are generally buried 36
inches below the ground. Pipelines constructed in this manner typically are
expected to last at least 50 years from the date of construction. For the years
ended December 31, 2002, 2001 and 2000, the cost of operating the gathering
systems, excluding depreciation, was approximately $2.1 million, $1.9 million
and $1.2 million, respectively. We do not believe that there are any significant
geographic limitations upon our ability to expand in the areas serviced by our
gathering systems.

         Our revenues are determined primarily by the amount of natural gas
flowing through our gathering systems and the price received for this natural
gas. Our ability to increase the flow of natural gas through our gathering
systems and to offset the natural decline of the production already connected to
our gathering systems will be determined primarily by our ability to connect new
wells to our gathering systems and to acquire additional gathering assets.

Agreements with Atlas America

         At the completion of our initial public offering, we entered into an
omnibus agreement and a master natural gas gathering agreement with Atlas
America and two of its affiliates, Resource Energy, Inc. and Viking Resources
Corporation. The purpose of these agreements is to maximize the use and
expansion of our gathering systems and the volume of natural gas they transport.
Since then, we have entered into additional gas gathering agreements with
subsidiaries of Atlas America. None of these agreements resulted from arm's
length negotiations and, accordingly, we cannot assure you that we could not
have obtained more favorable terms from independent third parties similarly
situated. However, since these agreements principally involve the imposition of
obligations on Atlas America and its affiliates, we do not believe that we could
obtain similar agreements from independent third parties.

         Omnibus Agreement. Under the omnibus agreement, Atlas America and its
affiliates agreed to add wells to the gathering systems and provide consulting
services when we construct new gathering systems or extend existing systems. The
omnibus agreement also imposes conditions upon our general partner's disposition
of its general partner interest in us. The omnibus agreement is a continuing
obligation, having no specified term or provisions regarding termination except
for a provision terminating the agreement if our general partner is removed as
general partner without cause.

         Well Connections. Atlas America sponsors oil and gas drilling programs
in areas served by the gathering systems. Under the omnibus agreement, Atlas
America must construct up to 2,500 feet of small diameter (two inches or less)
sales or flow lines from the wellhead of any well it drills and operates to a
point of connection to our gathering systems. Where Atlas America has extended
sales and flow lines to within 1,000 feet of one of our gathering systems, we
must extend our system to connect to that well.


                                      -5-
<PAGE>

         With respect to wells drilled that are more than 3,500 feet from our
gathering systems, we have the right, at our cost, to extend our gathering
systems. If we do not elect to extend our gathering systems, Atlas America may
connect the wells to an interstate or intrastate pipeline owned by third
parties, a local natural gas distribution company or an end user; however, we
will have the right to assume the cost of construction of the necessary lines,
which then become part of our gathering systems. We must exercise our rights
within 30 days of notice to us from Atlas America that it intends to drill on a
particular site that is not within 3,500 feet of our gathering systems. If we
elect to have the well connected to our gathering systems, we must complete
construction of one of our gathering systems to within 2,500 feet of the well
within 60 days after Atlas America has notified us that the well will be
completed as a producing natural gas well. If we elect to assume the cost of
constructing lines, Atlas America will be responsible for the construction, and
we must pay the cost of that construction within 30 days of Atlas America's
invoice.

         Consulting Services. The omnibus agreement requires Atlas America to
assist us in identifying existing gathering systems for possible acquisition and
to provide consulting services to us in evaluating and making a bid for these
systems. Any gathering system that Atlas America or its affiliates identify as a
potential acquisition must first be offered to us. We will have 30 days to
determine whether we want to acquire the identified system and advise Atlas
America of our intent. If we intend to acquire the system, we have an additional
60 days to complete the acquisition. If we do not complete the acquisition, or
advise Atlas America that we do not intend to acquire the system, then Atlas
America may do so.

         Gathering System Construction. The omnibus agreement requires Atlas
America to provide us with construction management services if we determine to
expand one or more of our gathering systems. We must reimburse Atlas America for
its costs, including an allocable portion of employee salaries, in connection
with its construction management services.

         Construction Financing. The omnibus agreement requires Atlas America to
provide us with stand-by financing of up to $1.5 million per year for the cost
of constructing new gathering systems or gathering system expansions until
February 2005. If we choose to use the stand-by commitment, the financing will
be provided through the purchase by Atlas America of our common units in the
amount of the construction costs as they are incurred. The purchase price of the
common units will be the average daily closing price for the common units on the
American Stock Exchange for the 20 consecutive trading days before the purchase.
Construction costs do not include maintenance expenses or capital improvements
following construction or costs of acquiring gathering systems. We are not
obligated to use the stand-by commitment and may seek financing from other
sources. We have not used the stand-by commitment to date.



                                      -6-
<PAGE>

         Disposition of Interest in Our General Partner. Direct and indirect
wholly-owned subsidiaries of Atlas America act as the general partners,
operators or managers of the oil and gas investment partnerships sponsored by
Atlas America. Our general partner is a subsidiary of Atlas America. Under the
omnibus agreement, those subsidiaries, including our general partner, that
currently act as the general partners, operators or managers of partnerships
sponsored by Atlas America must also act as the general partners, operators or
managers for all new partnerships sponsored by Atlas America. Atlas America and
its affiliates may not divest their ownership of one entity without divesting
their ownership of the other entities to the same acquiror. For these purposes,
divestiture means a sale of all or substantially all of the assets of an entity,
the disposition of more than 50% of the capital stock or equity interest of an
entity, or a merger or consolidation that results in Atlas America and its
affiliates, on a combined basis, owning, directly or indirectly, less than 50%
of the entity's capital stock or equity interest. Atlas America and its
affiliates may transfer their interests to each other, or to their wholly or
majority-owned direct or indirect subsidiaries, or to a parent of any of them,
provided that their combined direct or indirect interest is not reduced to less
than 50%.

         Natural Gas Gathering Agreements. Under the master natural gas
gathering agreement, we receive a fee from Atlas America for gathering natural
gas, determined as follows:

         o for natural gas from well interests allocable to Atlas America, or
           its subsidiaries (excluding general or limited partnerships sponsored
           by them) that were connected to our gathering systems at February 2,
           2000, the greater of $.40 per mcf or 16% of the gross sales price of
           the natural gas transported;

         o for natural gas from well interests allocable to general and limited
           partnerships sponsored by Atlas America that are connected to our
           gathering systems at any time, and well interests allocable to
           independent third parties in wells connected to our gathering systems
           before February 2, 2000, the greater of $.35 per Mcf or 16% of the
           gross sales price of the natural gas transported;

         o for natural gas from well interests allocable to Atlas America that
           are connected to our gathering systems after February 2, 2000, the
           greater of $.35 per Mcf or 16% of the gross sales price of the
           natural gas transported; and

         o for natural gas from well interests operated by Atlas America and
           drilled after December 1, 1999 that are connected to a gathering
           system that is not owned by us and for which we assume the cost of
           constructing the connection to that gathering system, an amount equal
           to the greater of $.35 per Mcf or 16% of the gross sales price of the
           natural gas transported, less the gathering fee charged by the other
           gathering system.

         Atlas America receives gathering fees from contracts or other
arrangements with third party owners of well interests connected to our
gathering systems. However, Atlas America must pay gathering fees owed to us
from their own resources regardless of whether they receive payment under those
contracts or arrangements.

         The master natural gas gathering agreement is a continuing obligation
and, accordingly, has no specified term or provisions regarding termination.
However, if our general partner is removed as our general partner without cause,
then no gathering fees will be due under the agreement with respect to new wells
drilled by Atlas America. The agreement provides that Atlas America as the
shipper of natural gas, will indemnify us against claims relating to ownership
of the natural gas transported. For all other claims relating to natural gas we
transport, the party that has control and possession of the natural gas must
indemnify the other party with respect to losses arising in connection with or
related to the natural gas when it is in the first party's possession and
control.


                                      -7-
<PAGE>

         In addition to the master natural gas gathering agreement, we have
three other gas gathering agreements with subsidiaries of Atlas America. Under
two of these agreements, relating to wells located in southeastern Ohio which
Atlas America acquired from Kingston Oil Corporation and wells located in
Fayette County, Pennsylvania which Atlas America acquired from American Refining
and Exploration Company, we receive a fee of $.80 per Mcf. Under the third
agreement, which covers wells owned by third-parties unrelated to Atlas America
or the investment partnerships it sponsors, we receive fees that range from $.20
to $.29 per Mcf and 10% to 16% of the weighted average credit facility sales
price for the natural gas we transport.

Credit Facility

         In December 2002, we entered into a $7.5 million credit facility
administered by Wachovia Bank, National Association. In March 2003, Wachovia
Bank and KeyBank increased the facility by an additional $2.5 million until
June 2003. KeyBank, National Association increased this facility to $15.0
million. This facility replaced a similar facility administered by PNC Bank.
Borrowings under the facility are secured by a lien on and security interest in
all of our property and our subsidiaries. Up to $3.0 million of the facility may
be used for standby letters of credit. The revolving credit facility has a term
ending in December 2005 and bears interest at one of two rates, elected at our
option:

         o the base rate plus the applicable margin; or

         o the adjusted LIBOR plus the applicable margin.

         The base rate for any day equals the higher of the federal funds rate
plus 1/2 of 1% or the Wachovia Bank prime rate. Adjusted LIBOR is LIBOR divided
by 1.00 minus the percentage prescribed by the Federal Reserve Board for
determining the reserve requirement for euro currency funding. The applicable
margin is as follows:

         o where our leverage ratio, that is, the ratio of our debt to EBITDA,
           as defined in the credit facility agreement, is less than or equal to
           1.5, the applicable margin is 0.00% for base rate loans and 1.50% for
           LIBOR loans;


         o where our leverage ratio is greater than 1.5, but less than or equal
           to 2.5, the applicable margin is 0.25% for base rate loans and 1.75%
           for LIBOR loans; and

         o where our leverage ratio is greater than 2.5, the applicable margin
           is 0.50% for base rate loans and 2.00% for LIBOR loans.

         The credit facility requires us to maintain specified net worth and
specified ratios of current assets to current liabilities and debt to EBITDA,
and requires us to maintain a specified interest coverage ratio. We used this
credit facility to pay off our previous revolving credit facility with PNC Bank.

         Our principal purpose in obtaining the facility was to fund the
expansion of our existing gathering systems and the acquisitions of other gas
gathering systems. In the years ended December 31, 2002 and 2001, we used $4.4
million and $2.1 million of our credit facility to fund, in part, capital
expenditures for expansions of our existing gathering systems and the
acquisitions of two gas gathering systems. At December 31, 2002, $6.5 million
was outstanding under our facility.

Competition

         Our gathering systems do not encounter direct competition in their
respective service areas since Atlas America controls the majority of the
drillable acreage in each area. However, our gathering systems may be subject to
two forms of indirect competition:

         o competition to extend the gathering systems to wells owned or
           operated by persons other than Atlas America and its affiliates; and

         o competition to acquire gathering systems owned by third parties.


                                      -8-
<PAGE>

         We principally service wells drilled by Atlas America and are thus
affected by competitive factors affecting Atlas America's ability to obtain
properties and drill wells. Atlas America may encounter competition in obtaining
drilling sources from third-party providers. Any competition it encounters could
delay Atlas America in drilling wells for its sponsored partnerships, and thus
delay the connection of wells to our gathering systems. These delays would
reduce the volume of gas we otherwise would have transported, thus reducing our
potential transportation revenues.

         As our omnibus agreement with Atlas America generally requires it to
connect wells it operates to our system, we do not expect any direct competition
in connecting wells drilled and operated by Atlas America in the future. In
addition, we occasionally connect wells operating by third parties. During 2002,
we connected 19 such wells. We did not encounter, nor do we expect, significant
competition to connect such wells as they are generally in close proximity to
our gathering system and distant from others. In any case, revenue derived from
the gas transportation on behalf of third parties represents an insignificant
portion of our annual revenue.

         During 2002 we did encounter competition in acquiring gas gathering
systems owned by third parties. In several instances we submitted bids in
auction situations and in direct negotiations for the acquisition of existing
gas gathering systems. In each case we were either outbid by others or were
unwilling to meet the sellers' expectations and, as a result, were unsuccessful
in acquiring other systems. In the future, we expect to encounter equal if not
greater competition for such acquisitions as gas prices have recently increased
as has the economic attractiveness of owning such assets.

Regulation

         Federal Regulation. Under the Natural Gas Act, the Federal Energy
Regulatory Commission regulates various aspects of the operations of any
"natural gas company," including the transportation of natural gas, rates and
charges, construction of new facilities, extension or abandonment of services
and facilities, the acquisition and disposition of facilities, reporting
requirements, and similar matters. However, the Natural Gas Act definition of a
"natural gas company" requires that the company be engaged in the transportation
of natural gas in interstate commerce, or the sale in interstate commerce of
natural gas for resale. Since we believe that each of our individual gathering
systems performs primarily a gathering function, we believe that we are not
subject to regulation under the Natural Gas Act. If we were determined to be a
natural gas company, our operations would become regulated under the Natural Gas
Act. We believe the expenses associated with seeking certificates of authority
for construction, service and abandonment, establishing rates and a tariff for
our gas gathering activities, and meeting the detailed regulatory accounting and
reporting requirements would substantially increase our operating costs and
would adversely affect our profitability, thereby reducing our ability to make
distributions to unitholders.


                                      -9-
<PAGE>

         State Regulation. Our gas operations are subject to regulation at the
state level. The Public Utility Commission of Ohio, the New York Public Service
Commission and the Pennsylvania Public Utilities Commission regulate the
transportation of natural gas in their respective states. In Ohio, a producer or
gatherer of natural gas may file an application seeking exemption from
regulation as a public utility. We have been granted an exemption by the Public
Utility Commission of Ohio for our Ohio facilities. The New York Public Service
Commission imposes traditional public utility regulation on the transportation
of natural gas. This regulation includes rates, services and sitting authority
for the construction of certain facilities. Our gas gathering operations
currently are not regulated by the New York Public Service Commission. Our
operations in Pennsylvania currently are not subject to the Pennsylvania Public
Utility Commission's regulatory authority since they do not provide service to
the public generally and, accordingly, do not constitute the operation of a
public utility. In the event the New York and Pennsylvania authorities seek to
regulate our operations, we believe that our operating costs could increase and
our transportation fees could be adversely affected, thereby reducing our net
revenues and ability to make distributions to unitholders.

Environmental and Safety Regulation

         Under the Comprehensive Environmental Response, Compensation and
Liability Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act, the Clean Air Act, the Clean Water Act and other federal and state
laws relating to the environment, owners of natural gas pipelines can be liable
for fines, penalties and clean-up costs with respect to pollution caused by the
pipelines. Moreover, the owners' liability can extend to pollution costs from
situations that occurred prior to their acquisition of the pipeline. Natural gas
pipelines are also subject to safety regulation under the Natural Gas Pipeline
Safety Act of 1968 and the Pipeline Safety Act of 1992 which, among other
things, dictate the type of pipeline, quality of pipeline, depth, methods of
welding and other construction-related standards. The state public utility
regulators discussed above have either adopted the federal standards or
promulgated their own safety requirements consistent with federal regulations.
Although we believe that our gathering systems comply in all material respects
with applicable environmental and safety regulations, risks of substantial costs
and liabilities are inherent in pipeline operations, and we cannot assure you
that we will not incur these costs and liabilities. Moreover, it is possible
that other developments, such as increasingly rigorous environmental laws,
regulations and enforcement policies there-under, and claims for damages to
property or persons resulting from our operations, could result in substantial
costs and liabilities to us.

         We are also subject to the requirements of OSHA and comparable state
statutes. We believe that our operations comply in all material respects with
OSHA requirements, including general industry standards, record keeping, hazard
communication requirements and monitoring of occupational exposure and other
regulated substances.

         We have not expended and do not anticipate that we will be required in
the near future to expend, amounts that are material in relation to our revenues
by reason of environmental and safety laws. However, we cannot predict
legislative or regulatory developments or the costs of compliance with those
developments. In general, however, we anticipate that new laws, regulations or
policies will increase our operating costs and impose additional capital
expenditure requirements on us.



                                      -10-
<PAGE>

Tax Treatment of Publicly Traded Partnerships under the Internal Revenue Code

         The Internal Revenue Code of 1986, as amended, imposes certain
limitations on the current deductibility of losses attributable to investments
in publicly traded partnerships and treats certain publicly traded partnerships
as corporations for federal income tax purposes. The following discussion
briefly describes certain aspects of the Code that apply to individuals who are
citizens or residents of the United States without commenting on all of the
federal income tax matters affecting us or the holders of our units, and is
qualified in its entirety by reference to the Code. UNITHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISOR ABOUT THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES TO THEM OF AN INVESTMENT IN US.

         Characterization for Tax Purposes. The Code treats a publicly traded
partnership as a corporation for federal income tax purposes, unless, for each
taxable year 90% or more of its gross income consists of qualifying income.
Qualifying income includes interest, dividends, real property rents, gains from
the sale or disposition of real property, income and gains derived from the
exploration, development, mining or production, processing, refining,
transportation (including pipelines transporting gas, oil or products thereof),
or the marketing of any mineral or natural resource (including fertilizer,
geothermal energy and timber), and gain from the sale or disposition of capital
assets that produce such income. Because we are engaged primarily in the natural
gas pipeline transportation business, we believe that 90% or more of our gross
income has been qualifying income. If this continues to be true and no
subsequent legislation amends that provision, we will continue to be classified
as a partnership and not as a corporation for federal income tax purposes.

         Passive Activity Loss Rules. The Code provides that an individual,
estate, trust, or personal service corporation generally may not deduct losses
from passive activities, to the extent they exceed income from all such passive
activities, against other (active) income. Income that may not be offset by
passive activity losses includes not only salary and active business income, but
also portfolio income such as interest, dividends or royalties or gain from the
sale of property that produces portfolio income. Credits from passive activities
are also limited to the tax attributable to any income from passive activities.
The passive activity loss rules are applied after other applicable limitations
on deductions, such as the at-risk rules and basis limitations.

         Under the Code, net income from publicly traded partnerships is not
treated as passive income for purposes of the passive lose rule, but is treated
as non-passive income. Net losses and credits attributable to an interest in a
publicly traded partnership may not be used to offset a partner's other income.
Thus, a unitholder's proportionate share of our net losses may be used to offset
only partnership net income from our trade or business in succeeding taxable
years or, upon a complete disposition of a unitholder's interest in us to an
unrelated person in a fully taxable transaction, may be used to offset gain
recognized upon the disposition, and then against all other income of the
unitholder. In effect, net losses are suspended and carried forward indefinitely
until utilized to offset net income of the partnership from its trade or
business or allowed upon the complete disposition to an unrelated person in a
fully taxable transaction of the unitholder's interest in the partnership. A
unitholder's share of partnership net income may not be offset by passive
activity losses generated by other passive activities. In addition, a
unitholder's proportionate share of our portfolio income, including portfolio
income arising from the investment of our working capital, is not treated as
income from a passive activity and may not be offset by such unitholder's share
of net losses of the partnership.

                                      -11-
<PAGE>

         Deductibility of Interest Expense. The Code generally provides that
investment interest expense is deductible only to the extent of a non-corporate
taxpayer's net investment income. In general, net investment income for purposes
of this limitation includes gross income from property held for investment, gain
attributable to the disposition of the property held for investment (except for
net capital gains for which the taxpayer has elected to be taxed at special
capital gains rates) and portfolio income (determined pursuant to the passive
lose rules) reduced by certain expenses (other than interest) which are directly
connected with the production of such income. Property subject to the passive
loss rules is not treated as property held for investment. However, the IRS has
issued a Notice which provides that net income from a publicly traded
partnership (not otherwise treated as a corporation) may be included in net
investment income for purposes of the limitation on the deductibility of
investment interest. A unitholder's investment income attributable to its
interest in us will include both its allocable share of our portfolio income and
trade or business income. A unitholder's investment interest expense will
include its allocable share of our interest expense attributable to portfolio
investments.

         Unrelated Business Taxable Income. Certain entities otherwise exempt
from federal income taxes (such as individual retirement accounts, pension plans
and charitable organizations) are nevertheless subject to federal income tax on
net unrelated business taxable income and each such entity must file a tax
return for each year in which it has more than $1,000 of gross income from
unrelated business activities. We believe that substantially all of our gross
income will be treated as derived from an unrelated trade or business and
taxable to such entities. The tax-exempt entity's share of our deductions
directly connected with carrying on such unrelated trade or business are allowed
in computing the entity's taxable unrelated business income.

         State Tax Treatment. During 2002, we owned property or conducted
business in the states of Pennsylvania, New York and Ohio. A unitholder is
required to file state income tax returns and to pay applicable state income
taxes in the states and may be subject to penalties for failure to comply with
such requirements. None of these states have required that we withhold a
percentage of income attributable to our operations within the state for
unitholders who are non-residents of the state. In the event that one or more of
them do require withholding in the future, (which may be greater or less than a
particular unitholder's income tax liability to the state), such withholding
would generally not relieve the non-resident unitholder from the obligation to
file a state income tax return.

         Depreciation. Upon our formation in 2000, we elected fifteen-year 150%
declining-balance depreciation for tax purposes. Unitholders, however, will
continue to offset partnership income with individual unitholder depreciation
pursuant to our Section 754 election. Each unitholder's tax situation will
differ depending upon the price paid and when Units were purchased. Furthermore,
sale of units will result in a portion of gain (if any) being taxable as
ordinary income through recapture of previous deductions for depreciation.

Employees

         As is commonly the case with publicly traded limited partnerships, we
do not directly employ any of the persons responsible for our management or
operations. In general, Atlas America and Resource America personnel manage the
gathering systems and operate our business.

Risk Factors

         Limited partner interests are inherently different from the capital
stock of a corporation, although many of the business risks to which we are
subject are similar to those that would be faced by a corporation engaged in a
similar business. If any of the following risks actually occurs, our business,
financial condition or results of operations could be materially adversely
affected. In that case, the trading price of our common units could decline and
investors may lose some or all of their investment.



                                      -12-
<PAGE>

         Our cash distributions are not assured and may fluctuate with our
performance. The amounts of cash that we will generate may not be sufficient to
pay the minimum quarterly distributions established in our partnership agreement
or any other level of distributions. The actual amounts of cash we generate will
depend upon numerous factors relating to our business which may be beyond our
control, including:

         o the demand for and price of natural gas;

         o the volume of natural gas we transport;

         o profitability of operations;

         o required principal and interest payments on any debt we may incur;

         o the cost of acquisitions;

         o our issuance of equity securities;

         o fluctuations in working capital;

         o capital expenditures;

         o continued development of wells for connection to our gathering
           systems;

         o prevailing economic conditions;

         o fuel conservation measures;

         o alternate fuel requirements;

         o government regulations; and

         o technical advances in fuel economy and energy generation devices.

         Our ability to make cash distributions depends primarily on our cash
flow. Cash distributions do not depend directly on our profitability, which is
affected by non-cash items. Therefore, cash distributions may be made during
periods when we record losses and may not be made during periods when we record
profits.

         The failure of Atlas America to perform its obligations under the
natural gas gathering agreements may adversely affect our revenues. Our revenues
consist of the fees we receive under the master natural gas gathering agreement
and other transportation agreements we have with Atlas America and its
affiliates. While Atlas America receives gathering fees from the well owners, it
is contractually obligated to pay our fees even if those gathering fees are less
than the fees it pays us. Our cash flow could be materially adversely affected
if Atlas America failed to discharge its obligations to us.

         The amount of natural gas we transport will decline over time unless
new wells are connected to our gathering systems. Production of natural gas from
a well generally declines over time until the well can no longer economically
produce natural gas and is plugged and abandoned. Failure to connect new wells
to our gathering systems could, therefore, result in the amount of natural gas
we transport reducing substantially over time and could, upon exhaustion of the
current wells, cause us to abandon one or more of our gathering systems and,
possibly, cease operations. As a consequence, our revenues and, thus, our
ability to make distributions to unitholders would be materially adversely
affected.

         Although we entered into the omnibus agreement described in
"Business-Agreements with Atlas America-Omnibus Agreement" to, among other
things, increase the number of natural gas wells connected to our gathering
systems, well connections resulting from that agreement depend principally upon
the success of Atlas America in sponsoring drilling investment partnerships and
completing wells for these partnerships in areas where our gathering systems are
located. We cannot assure you that Atlas America will be able to continue to
organize these partnerships, the amount of money these partnerships will raise,
the number of wells that will actually be drilled or that wells drilled for
these partnerships will produce natural gas in economic quantities. Moreover, we
cannot assure you that production from any newly developed wells will be
sufficient to offset production declines from existing wells.

                                      -13-
<PAGE>

         The amount of gas we transport may be reduced if the public utility
pipelines to which we deliver gas cannot or will not accept the gas. Our
gathering systems principally serve as intermediate transportation facilities
between sales lines from wells connected to our systems and the public utility
pipelines to which we deliver natural gas. If one or more of these public
utility pipelines has service interruptions, capacity limitations or otherwise
does not accept the natural gas we transport, and we cannot arrange for delivery
to other public utility pipelines, local distribution companies or end users,
the amount of natural gas we transport may be reduced. Since our revenues depend
upon the volumes of natural gas we transport, this could result in a material
reduction in our revenues.

         Governmental regulation of our pipelines could increase our operating
costs. Currently our gathering of natural gas from wells is exempt from
regulation under the Natural Gas Act. We cannot assure you, however, that this
will remain the case. The implementation of new laws or policies that would
subject us to regulation by the Federal Energy Regulatory Commission under the
Natural Gas Act could increase our costs, decrease our revenues or both, as
discussed under "-Regulation."

         Gas gathering operations are subject to regulation at the state level.
Matters subject to regulation include rates, service and safety. We have been
granted an exemption from regulation as a public utility in Ohio. Presently, our
rates are not regulated in New York and Pennsylvania. Changes in state
regulations, or our status under these regulations that subject us to further
regulation, could increase our operating costs or require material capital
expenditures.

         Litigation or governmental regulation relating to environmental
protection and operational safety may result in substantial costs and
liabilities. Our operations are subject to federal and state environmental laws
under which owners of natural gas pipelines can be liable for clean-up costs and
fines in connection with any pollution caused by the pipelines. We may also be
held liable for clean-up costs resulting from pollution which occurred before
our acquisition of the gathering systems. In addition, we are subject to federal
and state safety laws that dictate the type of pipeline, quality of pipe
protection, depth, methods of welding and other construction-related standards.
While we believe that our gathering systems comply in all material respects with
applicable laws and will be indemnified for any violations arising from events
that occurred before our acquisition of the gathering systems, we cannot assure
you that future events will not occur for which we may be liable. Possible
future developments, including stricter laws or enforcement policies, or claims
for personal or property damages resulting from our operations could impose
substantial costs on us.

         We are also subject to the requirements of the Occupational Health and
Safety Act, or OSHA and comparable state statutes. We believe that our
operations comply in all material respects with OSHA requirements, including
general industry standards, record keeping, hazard communication requirements
and monitoring of occupational exposure to regulated substances. We cannot,
however, assure you that future events will not occur for which we may be
liable, imposing substantial costs on us.

         We cannot predict whether or in what form any new legislation or
regulatory requirements might be enacted or adopted or the costs of compliance.
In general, we expect that new regulations would increase our operating costs
and possibly require us to obtain additional capital to pay for improvements or
other compliance action necessitated by those regulations.

                                      -14-
<PAGE>

         We may not be able to fully execute our growth strategy. Our current
strategy contemplates substantial growth through both the acquisition of other
gathering systems and the development of our existing systems. Typically we have
paid for system development in cash and have made acquisitions either for cash
or a combination of cash and common units. As a result, limitations on our
access to capital or on the market for our common units will impair our ability
to execute our growth strategy. In addition, our strategy of growth through
acquisitions involves numerous additional risks, including:

         o we may not be able to identify suitable acquisition candidates;

         o we may not be able to make acquisitions on economically acceptable
           terms;

         o irrespective of estimates at the time we make an acquisition, the
           acquisition may prove to be dilutive to earnings and operating
           surplus; and

         o we may encounter difficulties in integrating operations and systems.

         If Atlas America and its affiliates default on their obligations to us,
we do not have contractual recourse to Resource America. The omnibus agreement
and natural gas agreements with Atlas America are material to our business,
financial condition and results of operations. Although Atlas America is a
subsidiary of Resource America, Resource America has not guaranteed or otherwise
assumed responsibility for any of these obligations.

         A decline in natural gas prices could adversely affect our revenues.
Our gathering fees are generally equal to a percentage of either the gross or
weighted average sales price of the natural gas we transport, although in some
cases we receive a flat fee per Mcf of gas transported. Our income therefore
depends upon the prices at which the natural gas we transport is sold.
Historically, the price of natural gas has been volatile, as a result, our
income may vary from period to period.

         Gathering system operations are subject to operational hazards and
unforeseen interruptions. The operations of our gathering systems are subject to
hazards and unforeseen interruptions, including natural disasters, adverse
weather, accidents or other events, beyond our control. A casualty occurrence
might result in injury and extensive property or environmental damage. Although
we maintain customary insurance coverage for gathering systems of similar
capacity, we can offer no assurance that this coverage will be sufficient for
any casualty loss we may incur.

         If we were to lose the management expertise of Atlas America, we would
not have sufficient stand-alone resources to operate. We do not directly employ
any of the persons responsible for our management. Rather, Atlas America
personnel manage and operate our business. Therefore, if we were to lose the
management expertise of Atlas America, we would not have sufficient stand-alone
resources to operate. Neither we or our general partner has or intends to obtain
keymen life insurance for the officers and employees of our general partner.



                                      -15-
<PAGE>

ITEM 2. PROPERTIES

         As of December 31, 2002, our principal facilities include approximately
1,380 miles of 2-inch to 12-inch diameter pipeline and 55 compressors, of which
eight are leased from third parties. Substantially all of our gathering systems
are constructed within rights-of-way granted by property owners named in the
appropriate land records. In a few cases, property for gathering system purposes
was purchased in fee. All of our compressor stations are located on property
owned in fee or on property under long-term leases. Our general partner believes
that we have satisfactory title to all of our properties.

         Our property or rights-of-way are subject to encumbrances, restrictions
and other imperfections, although these imperfections have not interfered, and
our general partner does not expect that they will materially interfere with the
conduct of our business. In many instances, lands over which rights-of-way have
been obtained are subject to prior liens which have not been subordinated to the
right-of-way grants. In a few instances, our rights-of-way are revocable at the
election of the land owners. In some cases, not all of the owners named in the
appropriate land records have joined in the right-of-way grants, but in
substantially all such cases signatures of the owners of majority interests have
been obtained. Substantially all permits have been obtained from public
authorities to cross over or under, or to lay facilities in or along, water
courses, county roads, municipal streets, and state highways, where necessary,
although in some instances these permits are revocable at the election of the
grantor. Substantially all permits have also been obtained from railroad
companies to cross over or under lands or rights-of-way, many of which are also
revocable at the grantor's election.

         Certain of our rights to lay and maintain pipelines are derived from
recorded gas well leases, which wells are currently in production; however, the
leases are subject to termination if the wells cease to produce. In some of
these cases, the rights to maintain existing pipelines continues in perpetuity,
even if the well associated with the lease ceases to be productive. In addition,
because many of these leases affect wells at the end of lines, these
rights-of-way will not be used for any other purpose once the related well
ceases to produce.

ITEM 3. LEGAL PROCEEDINGS

         We are not, nor are any of our gathering systems, subject to any
pending legal proceedings.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of the common unitholders during
the fourth quarter of the year ended December 31, 2002.



                                      -16-
<PAGE>


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED UNITHOLDER MATTERS

         Our common units are listed on the American Stock Exchange under the
symbol "APL." Approximately 3,300 record holders held our common units as of
December 31, 2002. In connection with our initial public offering, we also
issued 1,641,026 subordinated units, discussed below, all of which are held by
our general partner. There is no established public trading market for the
subordinated units.

         The following table sets forth the range of high and low sales prices
of our common units and distributions on our common and subordinated units for
the last two years.

                                                          Distributions
                              High             Low          Declared
                             -------         --------     -------------
Fiscal 2002
-----------
Fourth Quarter.............  $ 27.90         $  21.80        $  .54
Third Quarter..............  $ 26.95         $  20.40        $  .54
Second Quarter.............  $ 29.10         $  22.00        $  .54
First Quarter..............  $ 29.60         $  23.51        $  .52

Fiscal 2001
-----------
Fourth Quarter.............  $ 29.50         $  19.25        $  .58
Third Quarter..............  $ 31.95         $  25.01        $  .60
Second Quarter.............  $ 53.95         $  24.00        $  .67
First Quarter..............  $ 28.00         $  19.19        $  .65

         Our partnership agreement generally requires us to distribute available
cash 98% to the limited partners and 2% to our general partner except for our
general partner's incentive distribution rights. These rights require
distributions of increased percentages of available cash to the general partner
as distributions to limited partners exceed specified minimums, as follows:

                                                  Percent of Available
                                                     Cash in Excess
     Minimum Distributions                        of Minimum Allocated
     Per Unit Per Quarter                        to the General Partner
     --------------------                        ----------------------
           $ .42                                          15%
           $ .52                                          25%
           $ .60                                          50%

         Available cash generally means for any of our quarters, all cash on
hand at the end of the quarter less cash reserves that our general partner
determines are appropriate to provide for our operating costs, including
potential acquisitions, and to provide funds for distributions to the partners
for any one or more of the next four quarters.

         Our partnership agreement allocates distributions to limited partners
in accordance with their relative number of units except that, during the
subordination period, distributions to subordinated units are subordinated to
the receipt by the common units of a minimum quarterly distribution of $.42 per
common unit, plus any unpaid minimum quarterly distribution amounts from prior
periods. The subordination period extends until December 31, 2004 and thereafter
until our operations meet certain financial criteria established by our
partnership agreement.

                                      -17-
<PAGE>

         We make distributions of available cash to unitholders regardless of
whether the amount distributed is less than the minimum quarterly distribution.
If distributions from available cash on the common units for any quarter during
the subordination period are less than the minimum quarterly distribution of
$.42 per common unit, holders of common units will be entitled to arrearages.
Common unit arrearages will accrue and be payable in a future quarter after the
minimum quarterly distribution is paid for the quarter. Subordinated units will
not accrue any arrearages on distributions for any quarter. Upon expiration of
the subordination period, the subordinated units will convert into common units
on a one-for-one basis, and will then participate pro rata with the other common
units in distributions of our available cash.

ITEM 6. SELECTED FINANCIAL DATA

         The following selected financial data should be read together with our
consolidated financial statements, the notes to our consolidated financial
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Item 7 in this report. We have derived the selected
financial data set forth below for each of the years ended December 31, 2002 and
2001 and the income statement data for the year ended December 31, 2000 from our
consolidated financial statements appearing elsewhere in this report, which have
been audited by Grant Thornton LLP, independent accountants. We have derived the
selected balance sheet data at December 2000 from our consolidated financial
statements for that year audited by Grant Thornton LLP but not included in this
report. The financial data for the period ended December 31, 2000, is for the
period beginning with the inception of our operations on January 28, 2000
through December 31, 2000, and, accordingly, we deem January 28, 2000 to be the
commencement of our operations and we refer to the period from that date through
December 31, 2000 to as the year ended December 31, 2000.
<TABLE>
<CAPTION>

                                                                           For the years ended         Inception through
                                                                               December 31,               December 31,
                                                                        -------------------------
                                                                           2002           2001                2000
                                                                        ----------     ----------          -----------
                                                                              (in thousands, except per share data)
<S>                                                                    <C>            <C>                 <C>
Income statement data:
Revenues..........................................................      $   10,667     $   13,129          $     9,466
                                                                        ==========     ==========          ===========
Total transportation and compression, general and
   administrative expenses........................................      $    3,544     $    3,042          $     1,813
                                                                        ==========     ==========          ===========
Depreciation and amortization.....................................      $    1,476     $    1,356          $     1,020
                                                                        ==========     ==========          ===========
Net income........................................................      $    5,398     $    8,556          $     6,625
                                                                        ==========     ==========          ===========
Average transportation rate per Mcf...............................      $      .58     $      .76          $       .65
                                                                        ==========   ============          ===========
Net income per limited partner unit - basic and diluted...........      $     1.54     $     2.30          $      2.07
                                                                        ==========     ==========          ===========

                                                                                       At December 31,
                                                                        ----------------------------------------------
                                                                           2002           2001                2000
                                                                        ----------     ----------          -----------
                                                                              (in thousands, except per share data)
Balance sheet data:
Total assets.....................................................       $   28,515     $   26,002         $     22,092
                                                                        ==========     ==========         ============
Long-term debt...................................................       $    6,500     $    2,089         $          -
                                                                        ==========     ==========         ============

Common unitholders' capital......................................       $   19,164     $   20,129         $     18,122
Subordinated unitholder's capital................................              684          1,661                2,074
General partner's capital (deficit)..............................             (161)          (116)                 (89)
                                                                        ----------     ----------         ------------
Total partners' capital..........................................       $   19,687     $   21,674         $     20,107
                                                                        ==========     ==========         ============
Distributions declared per common unit...........................       $     2.14     $     2.50         $       1.85
                                                                        ==========     ==========         ============

</TABLE>


                                      -18-
<PAGE>
<TABLE>
<CAPTION>

                                                                           For the years ended         Inception through
                                                                               December 31,               December 31,
                                                                        -------------------------
                                                                           2002           2001                2000
                                                                        ----------     ----------          -----------
                                                                                       (in thousands)
<S>                                                                    <C>            <C>                 <C>
Other Financial data:

Net cash provided by operating activities..........................     $    8,138     $   10,268          $     5,968
                                                                        ==========     ==========          ===========
Net cash used in investing activities..............................     $   (5,231)    $   (3,128)         $   (17,965)
                                                                        ==========     ==========          ===========
Net cash provided by (used in) financing activities................     $   (3,211)    $   (7,022)         $    14,039
                                                                        ==========     ==========          ===========
EBITDA (1).........................................................     $    7,124     $   10,088          $     7,654
                                                                        ==========     ==========          ===========
</TABLE>
--------------
(1)   EBITDA means income before net interest expense, income taxes and
      depreciation and amortization. EBITDA is not intended to represent cash
      flow and does not represent the measure of cash available for
      distribution. Our method of computing EBITDA may not be the same method
      used to compute similar measures reported by other companies, or EBITDA
      may be computed differently by us in different contexts (i.e., public
      reporting versus computation under financing agreements). The table below
      shows how we calculated EBITDA.
<TABLE>
<CAPTION>

                                                                           For the years ended         Inception through
                                                                               December 31,               December 31,
                                                                        -------------------------
                                                                           2002           2001                2000
                                                                        ----------     ----------          -----------
                                                                                       (in thousands)
<S>                                                                    <C>            <C>                 <C>
Income statement data:

Net income..........................................................    $    5,398     $    8,556          $     6,625

Interest expense....................................................           250            176                    9

Depreciation and amortization.......................................         1,476          1,356                1,020
                                                                        ----------     ----------          -----------
EBITDA .............................................................    $    7,124     $   10,088          $     7,654
                                                                        ==========     ==========          ===========
</TABLE>

Certain items excluded from EBITDA are significant components in understanding
and assessing a company's financial performance, such as a company's cost of
capital and its historic costs of depreciable assets. We have included
information concerning EBITDA because EBITDA provides investors and management
with additional information as to our ability to pay our fixed charges and is
presented solely as a supplemental financial measure. EBITDA should not be
considered as an alternative to, or more meaningful than, net income or cash
flow as determined in accordance with generally accepted accounting principles
or as an indicator of our operating performance or liquidity.


                                      -19-
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Forward-Looking Statements

         When used in this Form 10-K 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 1 of this report, under the caption "Risk
Factors". These risks and uncertainties could cause actual results to differ
materially. 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-K or to reflect the occurrence of unanticipated
events.

         The following discussion provides information to assist in
understanding our financial condition and results of operation. This discussion
should be read in conjunction with our consolidated financial statements and
related notes appearing elsewhere in this report.

General

         Our principal business objective is to generate income for distribution
to our unitholders from the transportation of natural gas through our gathering
systems. We completed an initial public offering of our common units in January
2000 and used the proceeds of that offering to acquire the gathering systems
formerly owned by Atlas America. The gathering systems gather natural gas from
wells in eastern Ohio, western New York, and western Pennsylvania and transport
the natural gas primarily to public utility pipelines. To a lesser extent, the
gathering systems transport natural gas to end-users.

         In January 2001, we acquired the gas gathering system of Kingston Oil
Corporation, consisting of approximately 100 miles of pipeline located in
southeastern Ohio. The purchase price consisted of $1,250,000 of cash and 88,235
common units valued at $17.00 per unit. In March 2001, we acquired the gas
gathering system of American Refining and Exploration Company, consisting of
approximately 20 miles of pipeline located in Fayette County, Pennsylvania. The
purchase price consisted of $150,000 of cash and 32,924 common units valued at
$22.78 per unit. These acquisitions were accounted for under the purchase method
of accounting and, accordingly, we allocated the purchase prices to the assets
acquired based on their fair values at the dates of acquisition. In addition to
these acquisitions, we added approximately 80, 180 and 100 miles of pipeline
during fiscal years 2002, 2001 and 2000, respectively.

         On January 18, 2002, we entered into an agreement to acquire
substantially all of the equity interests in Triton Coal Company from New Vulcan
Coal Holdings, L.L.C. and Vulcan Intermediary, L.L.C. On July 31, 2002, we
terminated the agreement. We have incurred approximately $1,456,000 in costs in
connection with the terminated Triton transaction through December 31, 2002.
Pursuant to the terms of the acquisition agreement, we have requested
reimbursement from the Vulcan entities of $1,187,500 of the transaction costs.
We have expensed transaction costs of $268,500, the difference between costs
incurred and those reimbursable by the Vulcan entities. As of December 31, 2002,
Vulcan has reimbursed us $687,500 of these costs. Because Atlas America advanced
funds to us in order to pay our transaction costs, we have remitted amounts
reimbursed thus far to Atlas America. The advances, net of the reimbursements,
are included in "accounts payable-affiliates" at December 31, 2002. Our
remaining reimbursable costs of $500,000 are included on our consolidated
balance sheet as accounts receivable; we expect to collect this amount over the
first two quarters of 2003.


                                      -20-
<PAGE>

Results of Operations

         In the years ended December 31, 2002, 2001 and 2000, our principal
revenues came from the operation of our pipeline gathering systems which
transport and compress natural gas. Two variables which affect our
transportation revenues are:

         o the volumes of natural gas transported by us which, in turn, depend
           upon the number of wells connected to our gathering system, the
           amount of natural gas they produce, and the demand for that natural
           gas; and

         o the transportation fees paid to us which, in turn, depend upon the
           price of the natural gas we transport, which itself is a function of
           the relevant supply and demand in the Mid-Atlantic and North-Eastern
           areas of the United States.

         We set forth the average volumes we transported, our average
transportation rates per Mcf and revenues received by us for the periods
indicated in the following table:
<TABLE>
<CAPTION>

                                                                      For the years ended         Inception through
                                                                          December 31,               December 31,
                                                                   -------------------------
                                                                      2002           2001                2000
                                                                   ----------     ----------          -----------
<S>                                                              <C>            <C>                 <C>
Average daily throughput volumes, in Mcf......................         50,363            46,918           42,669
                                                                =============    ==============      ===========
Average transportation rate per Mcf...........................  $         .58    $          .76      $       .65
                                                                =============    ==============      ===========
Total transportation revenues.................................  $  10,660,300    $   13,094,700      $ 9,441,000
                                                                =============    ==============      ===========
</TABLE>


                                      -21-
<PAGE>

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

         Revenues. Our transportation revenue decreased to $10,660,300 in the
year ended December 31, 2002 from $13,094,700 in the year ended December 31,
2001. This decrease of $2,434,400 (19%) resulted from a decrease in the average
transportation rate paid to us ($3,163,700), partially offset by an increase in
the volumes of natural gas we transported ($729,300).

         Our average daily throughput volumes were 50,363 Mcfs in the year ended
December 31, 2002 as compared to 46,918 Mcfs in the year ended December 31,
2001, an increase of 3,445 Mcfs (7%). The increase in the average daily
throughput volume resulted principally from volumes associated with new wells
added to our pipeline system; we turned on-line 214 and 234 wells in the years
ended December 31, 2002 and 2001, respectively. These increases were partially
offset by the natural decline in production volumes inherent in the life of a
well.

         Our transportation rates are primarily at fixed percentages of the
sales price of the natural gas we transport. Our average transportation rate was
$.58 per Mcf in the year ended December 31, 2002 as compared to $.76 per Mcf in
the year ended December 31, 2001, a decrease of $.18 per Mcf (24%). The decrease
in our average transportation rate resulted from the decrease in the average
natural gas price received by producers for gas transported through our pipeline
system.

         Costs and Expenses. Our transportation and compression expenses
increased to $2,061,600 in the year ended December 31, 2002 as compared to
$1,929,200 in the year ended December 31, 2001, an increase of $132,400 (7%),
principally due to the increased volumes of natural gas we transported in 2002.
Our average cost per Mcf of transportation and compression was $.11 in both the
years ended December 31, 2002 and 2001. The majority of our compressors are
under short term leases which will be expiring over the next twelve months.

         Our general and administrative expenses increased to $1,481,900 in the
year ended December 31, 2002 as compared to $1,112,800 in the year ended
December 31, 2001, an increase of $369,100 (33%). This increase primarily
resulted from professional fees of $268,500 incurred in connection with the
terminated Triton transaction (see Note 8 to the Consolidated Financial
Statements) and our cost of insurance ($92,000) reflecting increased operating
activities and assets, as well as significant increases in insurance rates in
general.

         Our depreciation and amortization expense increased to $1,475,600 in
the year ended December 31, 2002 as compared to $1,356,100 in the year ended
December 31, 2001, an increase of $119,500 (9%). This increase resulted from the
increased asset base associated with pipeline extensions and acquisitions
partially offset by a reduction in goodwill amortization as compared to the
previous period due to the adoption of Statement of Financial Accounting
Standards No. 142, or SFAS 142, on January 1, 2002.

         Our interest expense increased to $249,800 in the year ended December
31, 2002 as compared to $175,600 in the year ended December 31, 2001. This
increase of $74,200 (42%) resulted primarily from the write-off of deferred
finance fees of $51,000 relating to our former credit facility with PNC Bank,
which we paid off upon obtaining our current credit facility with Wachovia Bank.
In addition, we had an increase in the amount of funds borrowed due to an
increase in pipeline extensions. These increases were partially offset by lower
borrowing rates.

                                      -22-
<PAGE>

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

         We commenced operations on January 28, 2000 when the pipeline
operations, formerly owned by Atlas America, began to be operated for our
account. Because our initial year of operations was not a full twelve months,
the year ended December 31, 2001 may not be entirely comparable to the period
ended December 31, 2000.

         Revenues. Our transportation revenue increased to $13,094,700 in the
year ended December 31, 2001 from $9,441,000 in the year ended December 31,
2000. The increase of $3,653,700 (39%) resulted from an increase in the volumes
of natural gas we transported ($2,017,300) and an increase in the average
transportation fees paid to us ($1,636,400).

         Our average daily throughput volumes were 46,918 Mcf in the year ended
December 31, 2001 as compared to 42,669 Mcf in the year ended December 31, 2000,
an increase of 4,249 Mcf (10%). The increase in the average daily throughput
volume resulted principally from volumes associated with pipelines acquired
during the first quarter of 2001 and new wells added to our pipeline system; 196
wells were turned on-line in the year ended December 31, 2001. These increases
were partially offset by the natural decline in production volumes inherent in
the life of a well.

         Our average transportation rate was $.76 per Mcf in the year ended
December 31, 2001 as compared to $.65 per mcf in the year ended December 31,
2000, an increase of $.11 per Mcf (17%). The increase in our average
transportation rate resulted from the increase in the average natural gas price
received by producers for gas transported through our pipeline system.
Transportation rates had increased significantly during the year, but had fallen
back to an average of $.50 per Mcf for the month ended December 31, 2001.

         Costs and Expenses. Our transportation and compression expenses
increased to $1,929,200 in the year ended December 31, 2001 as compared to
$1,223,800 in the year ended December 31, 2000, an increase of $705,400 (58%).
Our average cost per Mcf of transportation and compression was $.11 in the year
ended December 31, 2001 as compared to $.08 in the year ended December 3, 2000,
an increase of $.03 (38%). This increase primarily resulted from an increase in
compressor expenses, including lease payments, in the year ended December 31,
2001 as compared to the prior year, due to upgrades and additions, and increased
costs approximating $253,600 associated with operating pipelines acquired in the
first quarter of 2001.

         Our general and administrative expenses increased to $1,112,800 in the
year ended December 31, 2001 as compared to $589,400 in the year ended December
31, 2000, an increase of $523,400 (89%). This increase primarily resulted from
an increase in allocated compensation and benefits ($182,000), legal and
professional fees ($200,000) due to the increased level of activity associated
with acquisitions and an increase in our insurance ($88,600), reflecting an
increase in our operating activities and assets and in insurance rates.

         Our depreciation and amortization expense increased to $1,356,100 in
the year ended December 31, 2001 as compared to $1,019,600 in the year ended
December 31, 2000, an increase of $336,500 (33%). This increase resulted from
the increased depreciation associated with pipeline extensions and acquisitions.

         Our interest expense increased to $175,600 in the year ended December
31, 2001 as compared to $8,800 in the year ended December 31, 2000. This
increase of $166,800 resulted from borrowings on our credit facility in January
and March of 2001 to fund two acquisitions and an additional draw in June 2001
to fund capital expenditures associated with pipeline extensions.

                                      -23-
<PAGE>

Liquidity and Capital Resources

         Our primary cash requirements, in addition to normal operating
expenses, are for debt service, maintenance capital expenditures, expansion
capital expenditures and quarterly distributions to our unitholders and general
partner. In addition to cash generated from operations, we have the ability to
meet our cash requirements, (other than distributions to our unitholders and
general partner) through borrowings under our credit facility. In general, we
expect to fund:

         o cash distributions and sustaining capital expenditures through
           existing cash and cash flows from operating activities;

         o expansion capital expenditures and working capital deficits through
           the retention of cash and additional borrowings;

         o interest payments through cash flows from operating activities; and

         o debt principal payments through additional borrowings as they become
           due or by the issuance of additional common units.

         At December 31, 2002, we had $1.0 million of remaining borrowing
capacity under our credit facility. We recently received a commitment to
increase the borrowing capacity to $15.0 million.

         The following table summarizes our financial condition and liquidity at
the dates indicated:
<TABLE>
<CAPTION>
                                                                                At December 31,
                                                                  ---------------------------------------------
                                                                       2002           2001           2000
                                                                   ------------   ------------   ------------
<S>                                                                 <C>           <C>            <C>
Current ratio..................................................          1.0x         1.6x           1.9x
Working capital (in thousands).................................         $  57       $1,359         $1,845
Ratio of long-term debt to total partners' capital.............          .33x         .10x            N/A
</TABLE>

         Net cash provided by operations of $8,138,000 in 2002 was derived
principally from $6,963,600 of income from operations before depreciation and
amortization. This decrease of $2,130,200 in cash provided by operations from
2001 resulted primarily from a decrease of $2,434,400 in transportation fees
earned by us as a result of lower gas prices received by producers for gas
transported through our pipeline system. The change in the decrease in "accounts
receivable-affiliates" in the current year of $559,000 resulted primarily from
the advance by Atlas America for expenses we incurred in connection with the
terminated Triton acquisition.

         Net cash used in investing activities was $5,230,600 for the year ended
December 31, 2002, an increase of $2,102,600 from $3,128,000 in the year ended
December 31, 2001. Net cash used in investing activities during the year ended
December 31, 2001 consisted of the acquisition of two small pipelines from third
parties ($1,400,000) and capital expenditures associated with gathering system
extensions and compressor upgrades to our existing pipeline systems
($1,728,000). In the year ended December 31, 2002, we used $165,000 for the
acquisition of one small gathering system and incurred capital expenditures of
$5,065,600 for gathering system extensions and compressor upgrades to
accommodate new wells drilled by Atlas America and its affiliates.



                                      -24-
<PAGE>

         Net cash used in financing activities was $3,211,000 for the year ended
December 31, 2002, a decrease of $3,810,500 from cash used in financing
activities of $7,021,500 in the year ended December 31, 2001. Distributions paid
to partners in the year ended December 31, 2002 decreased $1,557,200 as compared
to the year ended December 31, 2001 as a result of a decrease in net income. Net
borrowings during the year increased $2,322,000 to $4,411,000 in the year ended
December 31, 2002 due to an increase in pipeline extensions and compressor
upgrades.

Partnership Distributions

         Our partnership agreement requires that we distribute 100% of available
cash to our partners within 45 days following the end of each calendar quarter
in accordance with their respective percentage interests. Available cash
consists generally of all of our cash receipts, less cash disbursements and net
additions to reserves, including any reserves required under debt instruments
for future principal and interest payments.

         Our general partner is granted discretion by our partnership agreement
to establish, maintain and adjust reserves for future operating expenses, debt
service, maintenance capital expenditures, rate refunds and distributions for
the next four quarters. These reserves are not restricted by magnitude, but only
by type of future cash requirements with which they can be associated. When our
general partner determines our quarterly distributions, it considers current and
expected reserve needs along with current and expected cash flows to identify
the appropriate sustainable distribution level.

         Available cash is initially distributed 98% to our limited partners and
2% to our general partner. These distribution percentages are modified to
provide for incentive distributions to be paid to our general partner if
quarterly distributions to unitholders exceed certain specified targets.

         Incentive distributions are generally defined as all cash distributions
paid to our general partner that are in excess of 2% of the aggregate amount of
cash being distributed. The general partner's incentive distribution for the
distributions that they received during the year ended December 31, 2002 was
$313,900.

Capital Expenditures

         Our property and equipment was approximately 83% and 77% of our total
consolidated assets at December 31, 2002 and 2001, respectively. Capital
expenditures, other than the acquisitions of gathering systems, were $5.1
million and $1.7 million for the years ended December 31, 2002 and 2001,
respectively. These capital expenditures principally consisted of costs relating
to expansion of our existing gathering systems to accommodate new wells drilled
in our service area and compressor upgrades. During 2002, we connected 214 wells
were connected to our gathering system. As of December 31, 2002, we were
committed to expend approximately $1.3 million for pipeline extensions. Our
capital expenditures could increase materially if the number of wells connected
to our gathering systems in fiscal 2003 increases significantly.

Inflation and Changes in Prices

         Inflation affects the operating expenses of our gathering systems.
Increases in those expenses are not necessarily offset by increases in
transportation fees that the gathering operations are able to charge. We have
not been materially affected by inflation because we were formed relatively
recently and have only a limited period of operations. While we anticipate that
inflation will affect our future operating costs, we cannot predict the timing
or amounts of any such effects. In addition, the value of the gathering systems
has been and will continue to be affected by changes in natural gas prices.
Natural gas prices are subject to fluctuations which we are unable to control or
accurately predict.

                                      -25-
<PAGE>

Environmental Regulation

         A continuing trend to greater environmental and safety awareness and
increasing environmental regulation has generally resulted in higher operating
costs for the oil and gas industry. We monitor environmental and safety laws and
believe we are in compliance with applicable environmental laws and regulations.
To date, compliance with environmental laws and regulations has not had a
material impact on our capital expenditures, earnings or competitive position.
We cannot assure you that compliance with environmental laws and regulations
will not, in the future, materially adversely affect our operations through
increased costs of doing business or restrictions on the manner in which we
conduct our operations.

Contractual Obligations and Commercial Commitments

         The following tables set forth our obligations and commitments as of
December 31, 2002:
<TABLE>
<CAPTION>
                                                                                  Payments Due By Period
                                                                                      (in thousands)
                                                             ------------------------------------------------------------------
Contractual cash obligations:                                  Less than           1 - 3             4 - 5          After 5
                                               Total            1 Year             Years             Years           Years
                                           --------------    --------------    ---------------    ------------    -------------
<S>                                         <C>               <C>               <C>                 <C>             <C>
Long-term debt...........................   $     6,500       $        -        $     6,500         $       -       $       -
Capital lease obligations................             -                -                  -                 -               -
Operating leases.........................           127              127                  -                 -               -
Unconditional purchase obligations.......             -                -                  -                 -               -
Other long-term obligations..............             -                -                  -                 -               -
                                           ------------      -----------        -----------         ---------       ---------
Total contractual cash obligations.......   $     6,627       $      127        $     6,500         $       -       $       -
                                            ===========       ==========         ==========         =========       =========


                                                                        Amount of Commitment Expiration Per Period
                                                                                      (in thousands)
                                                             ------------------------------------------------------------------
Other commercial commitments:                                  Less than           1 - 3             4 - 5          After 5
                                               Total            1 Year             Years             Years           Years
                                           --------------    --------------    ---------------    ------------    -------------
Lines of credit........................     $     1,000       $        -        $      1,000        $       -       $       -
Standby letter of credit...............               -                -                   -                -               -
Guarantees.............................               -                -                   -                -               -
Standby replacement commitments........               -                -                   -                -               -
Other commercial commitments...........               -                -                   -                -               -
                                            -----------       ----------        ------------        ---------       ---------
Total commercial commitments...........     $     1,000       $        -        $      1,000        $       -       $       -
                                             ==========       ==========         ===========        =========       =========
</TABLE>

Critical Accounting Policies and Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires us to
make 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 revenues and
expenses during the reporting period. Although we believe our estimates are
reasonable, actual results could differ from those estimates. We summarize our
significant accounting policies in Note 2 to our Consolidated Financial
Statements included in this report. The critical accounting policies that we
have identified are discussed below.



                                      -26-
<PAGE>

Revenue and Expenses

         We routinely make accruals for both revenues and expenses due to the
timing of receiving information from third parties and reconciling our records
with those of third parties. We have determined these estimates using available
market data and valuation methodologies. We believe our estimates for these
items are reasonable, but there is no assurance that actual amounts will not
vary from estimated amounts.

Depreciation and Amortization

         We calculate our depreciation based on the estimated useful lives and
salvage values of our assets. However, factors such as usage, equipment failure,
competition, regulation or environmental matters could cause us to change our
estimates, thus impacting the future calculation of depreciation and
amortization.

Impairment of Assets

         Effective January 1, 2002, we adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." In accordance with SFAS No. 144,
whenever events or changes in circumstances indicate that the carrying amount of
long-lived assets may not be recoverable, we review our long-lived assets for
impairment and recognize an impairment loss if estimated future cash flows
associated with an asset or group of assets are less than the asset carrying
amount.

         Our gathering systems are subject to numerous factors which could
affect future cash flows which we discuss in Item 1, "Business-Risk Factors". We
continuously monitor these factors and pursue alternative strategies to maintain
or enhance cash flows associated with these assets; however, we cannot assure
you that we can mitigate the effects, if any, on future cash flows related to
any changes in these factors.

Goodwill

         At December 31, 2002, we had $2.3 million of goodwill, all of which
relates to our acquisition of pipeline assets. We test our goodwill for
impairment each year. Our test during the current year resulted in no
impairment. We will continue to evaluate our goodwill at least annually and will
reflect the impairment of goodwill, if any, in operating income in the income
statement in the period in which the impairment is indicated.


                                      -27-
<PAGE>

Recently Issued Financial Accounting Standards

                  Recently the Financial Accounting Standards Boards issued SFAS
No. 143, "Accounting for Asset Retirement Obligations", and SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 143
establishes requirements for accounting for removal costs associated with asset
retirements and SFAS 144 addresses financial accounting and reporting for the
impairment or disposal of long-lived assets. SFAS 143 is effective for fiscal
years beginning after September 15, 2002, with earlier adoption encouraged, and
SFAS 144 is effective for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years. We are currently assessing the impact
of the adoption SFAS 143 on our results of operations and financial position.
The adoption of SFAS 144 had no impact on our operations or financial position.

         In May 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections" was
issued. SFAS 145 rescinds the automatic treatment of gains or losses from
extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in APB No. 30, "Reporting the Results of
Operations, Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions". SFAS
145 also requires sale-leaseback accounting for certain lease modifications that
have economic effects similar to a sale-leaseback transaction and makes various
technical corrections to existing pronouncements. SFAS 145 is effective for all
financial statements issued by us after January 1, 2003. We do not expect the
adoption of SFAS 145 to have a material effect on our consolidated financial
position or results of operations.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
 Associated with Exit or Disposal Activities". SFAS 146 addresses significant
 issues relating to the recognition, measurement, and reporting of costs
 associated with exit and disposal activities, including restructuring
 activities, and nullifies the guidance in Emerging Issues Task Force Issue No.
 94-3, "Liability Recognition for Certain Employee Termination Benefits and
 Other Costs to Exit an Activity (including Certain Costs Incurred in a
 Restructuring)". The provisions of this statement are effective for exit and
 disposal activities that are initiated after December 31, 2002. We do not
 expect SFAS 146 to have a material impact on our results of operations or
 financial position.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         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 do not engage in any interest rate, foreign currency exchange rate
or commodity price-hedging transactions, and as a result, we do not have
exposure to derivatives risk.

         Our major market risk exposure is in the pricing applicable to natural
gas sales. Realized pricing is primarily driven by spot market prices for
natural gas. Pricing for natural gas production has been volatile and
unpredictable for several years.

         Market risk inherent in our debt is the potential change arising from
increases or decreases in interest rates. Changes in interest rates usually do
not affect the fair value of variable rate debt, but may affect our future
earnings and cash flows. At December 31, 2002, we had a $7.5 million revolving
credit facility to fund the expansion of our existing gathering systems and the
acquisition of other gas gathering systems. We have a commitment to increase
this facility was increased to $15.0 million. The carrying value of our debt was
$6.5 million at December 31, 2002. At our option, the facility bears interest at
the lending institution's prime rate plus 0 to 50 basis points or the Euro rate,
which is the average of specified LIBORs plus 150 or 200 basis points, depending
upon our utilization of the line. At December 31, 2002, the interest rate was
2.92%. At December 31, 2002 and 2001, respectively, a hypothetical 10% change in
the average interest rate applicable to this debt would result in a change of
approximately $19,000 and $9,000 in our annual net income and would not affect
the market value of this debt.

                                      -28-
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Report of Independent Certified Public Accountants


Partners
Atlas Pipeline Partners, L.P.


         We have audited the accompanying consolidated balance sheets of Atlas
Pipeline Partners, L.P. and subsidiaries (the "Partnership") as of December 31,
2002 and 2001, and the related consolidated statements of income, partners'
capital (deficit) and cash flows for the years then ended and for the period
from commencement of operations on January 28, 2000 through December 31, 2000,
hereafter referred to as the year ended December 31, 2000. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Partnership at December 31, 2002 and 2001 and the consolidated results of
its operations and its consolidated cash flows for each of the three years in
the period ended December 31, 2002, 2001 and 2000 in conformity with accounting
principles generally accepted in the United States of America.

         As discussed in Note 2 to the consolidated financial statements,
effective January 1, 2002, the Partnership changed its method of accounting for
goodwill for the adoption of SFAS No. 142.


/s/ Grant Thornton LLP
---------------------
Cleveland, Ohio
January 27, 2003


                                      -29-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                     ------------------------------------
                                                                                          2002                  2001
                                                                                     --------------        --------------
<S>                                                                                  <C>                   <C>
                                    ASSETS
Current assets:
    Cash and cash equivalents.................................................       $    1,858,600        $    2,162,200
    Accounts receivable.......................................................              500,000                     -
    Accounts receivable - affiliates..........................................                    -             1,312,300
    Prepaid expenses..........................................................               26,800               123,500
                                                                                     --------------        --------------
      Total current assets....................................................            2,385,400             3,598,000

Property and equipment:
    Gas gathering and transmission facilities.................................           29,384,000            24,153,400
    Less - accumulated depreciation...........................................           (5,619,600)           (4,144,000)
                                                                                     --------------        --------------
      Net property and equipment..............................................           23,764,400            20,009,400

Goodwill (net of accumulated amortization of $285,300)........................            2,304,600             2,304,600

Other assets (net of accumulated amortization of $0 and $53,300)..............               60,900                89,800
                                                                                     --------------        --------------
                                                                                     $   28,515,300        $   26,001,800
                                                                                     ==============        ==============

                  LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Current liabilities:
    Accounts payable and accrued liabilities..................................       $      107,800        $      189,600
    Accounts payable - affiliates.............................................              347,200                     -
    Distribution payable......................................................            1,873,800             2,049,600
                                                                                     --------------        --------------
      Total current liabilities...............................................            2,328,800             2,239,200

Long-term debt................................................................            6,500,000             2,089,000

Partners' capital (deficit)
    Common unitholders, 1,621,159 units outstanding...........................           19,163,500            20,128,700
    Subordinated unitholder, 1,641,026 units outstanding......................              683,700             1,660,900
    General partner...........................................................             (160,700)             (116,000)
                                                                                     --------------        --------------
      Total partners' capital.................................................           19,686,500            21,673,600
                                                                                     --------------        --------------
                                                                                     $   28,515,300        $   26,001,800
                                                                                     ==============        ==============
</TABLE>
           See accompanying notes to consolidated financial statements


                                      -30-
<PAGE>
                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                   -------------------------------------------------------
                                                                         2002               2001                2000
                                                                   ---------------      --------------      --------------
<S>                                                                <C>                 <C>                 <C>
Revenues:
    Transportation and compression..............................   $    10,660,300      $   13,094,700      $    9,441,000
    Interest income.............................................             6,800              34,600              25,200
                                                                   ---------------      --------------      --------------
      Total revenues............................................        10,667,100          13,129,300           9,466,200

Costs and expenses:
    Transportation and compression..............................         2,061,600           1,929,200           1,223,800
    General and administrative..................................         1,481,900           1,112,800             589,400
    Depreciation and amortization...............................         1,475,600           1,356,100           1,019,600
    Interest....................................................           249,800             175,600               8,800
                                                                   ---------------      --------------      --------------
      Total costs and expenses..................................         5,268,900           4,573,700           2,841,600
                                                                   ---------------      --------------      --------------

Net income......................................................   $     5,398,200      $    8,555,600      $    6,624,600
                                                                   ===============      ==============      ==============

Net income - limited partners...................................   $     5,022,300      $    7,499,200      $    6,492,100
                                                                   ===============      ==============      ==============

Net income - general partner....................................   $       375,900      $    1,056,400      $      132,500
                                                                   ===============      ==============      ==============

Basic and diluted net income per limited partner unit...........   $          1.54      $         2.30      $         2.07
                                                                   ===============      ==============      ==============

Weighted average limited partner units outstanding..............         3,262,185           3,254,543           3,141,026
                                                                   ===============      ==============      ==============
</TABLE>
           See accompanying notes to consolidated financial statements

                                      -31-
<PAGE>
                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
<TABLE>
<CAPTION>

                                          Number of Limited                                                           Total
                                            Partner Units                                                             Partners'
                                      -----------------------                                        General          Capital
                                        Common  Subordinated        Common       Subordinated        Partner         (Deficit)
                                      ------------------------------------------------------------------------------------------
<S>                                   <C>       <C>             <C>             <C>              <C>               <C>
Balance at January 1, 2000...........         -           -     $           -    $          -     $      1,000     $       1,000
Issuance of common units............. 1,500,000           -        18,135,000               -                -        18,135,000
Issuance of subordinated units.......         -   1,641,026                 -       1,220,600                -         1,220,600
Payment of offering expenses.........         -           -          (352,500)       (382,400)         (16,100)         (751,000)
Capital contribution.................         -           -                 -               -          443,100           443,100
Distributions paid to partners.......         -           -        (1,920,600)     (1,237,200)        (525,100)       (3,682,900)
Distribution payable.................         -           -          (840,000)       (919,000)        (124,300)       (1,883,300)
Net income...........................         -           -         3,100,300       3,391,800          132,500         6,624,600
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000......... 1,500,000   1,641,026     $  18,122,200    $  2,073,800     $    (88,900)    $  20,107,100
Issuance of common units.............   121,159           -         2,250,000               -                -         2,250,000
Capital contributions................         -           -                 -               -           45,500            45,500
Distributions paid to partners.......         -           -        (3,112,800)     (3,150,700)        (971,500)       (7,235,000)
Distribution payable.................         -           -          (940,300)       (951,800)        (157,500)       (2,049,600)
Net income...........................         -           -         3,809,600       3,689,600        1,056,400         8,555,600
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001......... 1,621,159   1,641,026     $  20,128,700    $  1,660,900     $   (116,000)    $  21,673,600

Distributions paid to partners.......                              (2,585,700)     (2,617,400)        (308,400)       (5,511,500)
Distribution payable.................                                (875,400)       (886,200)        (112,200)       (1,873,800)
Net income...........................                               2,495,900       2,526,400          375,900         5,398,200
--------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002......... 1,621,159   1,641,026     $  19,163,500    $    683,700     $   (160,700)    $  19,686,500
                                      =========   =========     =============    ============     =============    =============
</TABLE>

           See accompanying notes to consolidated financial statements

                                      -32-
<PAGE>
                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                          For the years ended       Inception through
                                                                              December 31,             December 31,
                                                                      ----------------------------- -----------------
                                                                          2002             2001           2000
                                                                      ------------     ------------    ------------
<S>                                                                  <C>              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.........................................................   $  5,398,200     $  8,555,600    $  6,624,600
Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization..................................      1,475,600        1,356,100       1,019,600
    Amortization of deferred finance costs.........................         89,800           44,500           8,800
Change in operating assets and liabilities:
    Decrease (increase) in accounts receivable
      and prepaid expenses.........................................        909,000          350,000      (1,785,800)
    (Decrease) increase in accounts payable and
      accrued liabilities..........................................        (81,800)         (38,000)        101,100
    Increase in accounts payable - affiliates......................        347,200                -               -
                                                                      ------------     ------------    ------------
      Net cash provided by operating activities....................      8,138,000       10,268,200       5,968,300
                                                                      ------------     ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of gathering systems...................................       (165,000)      (1,400,000)    (16,635,100)
Capital expenditures...............................................     (5,065,600)      (1,728,000)     (1,329,500)
                                                                      ------------     ------------    ------------
      Net cash used in investing activities........................     (5,230,600)      (3,128,000)    (17,964,600)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on revolving credit facility............................     10,815,800        2,089,000               -
Repayments on revolving credit facility............................     (6,404,800)               -               -
Proceeds from initial public offering..............................              -                -      18,135,000
Capital contributions..............................................              -           45,500         443,100
Payment of formation costs.........................................              -                -        (751,000)
Distributions paid to partners.....................................     (7,561,100)      (9,118,300)     (3,682,900)
Increase in other assets...........................................        (60,900)         (37,700)       (105,400)
                                                                      ------------     ------------    ------------
      Net cash (used in) provided by financing activities..........     (3,211,000)      (7,021,500)     14,038,800
                                                                      ------------     ------------    ------------
(Decrease) increase in cash and cash equivalents...................       (303,600)         118,700       2,042,500
Cash and cash equivalents, beginning of year.......................      2,162,200        2,043,500           1,000
                                                                      ------------     ------------    ------------
Cash and cash equivalents, end of year.............................   $  1,858,600     $  2,162,200    $  2,043,500
                                                                      ============     ============    ============

Supplemental Cash Flow Information:
Cash paid during the year for interest.............................   $    165,200     $     94,800    $          -

Non-cash Activities:
Issuance of units in exchange for gas gathering and transmission
    facilities:
    Common.........................................................              -     $  2,250,000               -
    Subordinated...................................................              -                -    $  1,220,600
Liability assumed for gas system acquisition.......................              -     $    126,500               -
</TABLE>

           See accompanying notes to consolidated financial statements


                                      -33-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002

NOTE 1 - NATURE OF OPERATIONS

The Partnership

         Atlas Pipeline Partners, L.P. (the "Partnership") is a Delaware limited
partnership formed in May 1999 to acquire, own and operate natural gas gathering
systems theretofore owned by Atlas and its affiliates, Viking Resources
Corporation ("VRC") and Resource Energy, Inc. ("REI") (collectively referred to
as the "Predecessor"), all of which are wholly-owned subsidiaries of Resource
America, Inc. ("RAI" or "Parent"). RAI is a publicly traded company (trading
under the symbol REXI on NASDAQ) operating in energy, real estate and financial
services.

         The accompanying financial statements and related notes present the
Partnership's consolidated financial position as of December 31, 2002 and 2001
and its consolidated results of operations, cash flows and changes in partners'
capital (deficit) for the years ended December 31, 2002, 2001 and the period
from commencement of operations on January 28, 2000 through December 31, 2000,
hereafter referred to as the year ended December 31, 2000.

Initial Public Offering and Concurrent Transactions

         On January 28, 2000, the Partnership completed its initial public
offering (the "IPO") of 1,500,000 common units ("Common Units") representing
limited partner interests in the Partnership at a price of $13.00 per unit. The
Partnership retained for working capital purposes $750,000 of the $18.1 million
of net proceeds from the IPO and used the balance to pay certain offering costs
and, along with the issuance of 1,641,026 subordinated units valued at $21.3
million, to acquire the gathering systems from the Predecessor.

         Consistent with guidance provided by the Emerging Issues Task Force in
Issue No. 87-21 "Change of Accounting Basis in Master Limited Partnership
Transactions," the Partnership maintained the carrying value of the
Predecessor's historical gas gathering and transmission facilities and
associated goodwill of $17.8 million. The issuance of the subordinated units
were valued in the financial statements at $1.2 million, which represented the
excess of the Predecessor's carrying value in the transferred assets over the
cash amount paid for them.

Partnership Structure and Management

         The Partnership's operations are conducted through subsidiary entities
whose equity interests are owned by the Partnership's operating partnership
subsidiary, Atlas Pipeline Operating Partnership, L.P., (the "Operating
Partnership"). Atlas Pipeline Partners GP, LLC (the General Partner and a
wholly-owned subsidiary of Atlas), owns, through its general partner interests
in the Partnership and the Operating Partnership, a 2% general partner interest
in the consolidated pipeline operations. The remaining 98% consists of limited
partner interests of which 49.7% consists of Common Units and 50.3% consists of
Subordinated Units. The rights of holders of the Subordinated Units to
distributions are different from and are subordinated to the rights of the
holders of Common Units. Through the ownership of these Subordinated Units and
the General Partner interest, the General Partner effectively manages and
controls both the Partnership and the Operating Partnership.


                                      -34-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A summary of the significant accounting policies consistently applied
(except as otherwise noted) in the preparation of the accompanying consolidated
financial statements follows.

Principles of Consolidation

         The consolidated financial statements include the accounts of the
Partnership, the Operating Partnership and the Operating Partnership's
wholly-owned subsidiaries. The General Partner's interest in the Operating
Partnership is reported as part of its overall 2% general partner interest in
the Partnership, as opposed to a minority interest. All material intercompany
transactions have been eliminated.

Critical Accounting Policies and Estimates

         Certain amounts included in or affecting the Partnership's consolidated
financial statements and related disclosures must be estimated, requiring the
Partnership to make certain assumptions with respect to values or conditions
that cannot be known with certainty at the time the financial statements are
prepared.

         The preparation of its consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America
requires the Partnership to make estimates and assumptions that affect:

         o the amount the Partnership reports for assets and liabilities;

         o the Partnership's disclosure of contingent assets and liabilities at
           the date of the financial statements; and

         o the amounts the Partnership reports for revenues and expenses during
           the reporting period.

         Therefore, the reported amounts of the Partnership's assets and
liabilities, revenues and expenses and associated disclosures with respect to
contingent assets and obligations are necessarily affected by these estimates.
The Partnership evaluates these estimates on an ongoing basis, utilizing
historical experience, consultation with experts and other methods the
Partnership considers reasonable in the particular circumstances. Nevertheless,
actual results may differ significantly from the Partnership's estimates. Any
effects on the Partnership's business, financial position or results of
operations resulting from revisions to these estimates are recorded in the
period in which the facts that give rise to the revision become known.

         In preparing its consolidated financial statements and related
disclosures, the Partnership must use estimates in determining the economic
useful lives or impairment of its long-lived assets, provisions for
uncollectible accounts receivable, exposures under contractual indemnifications
and various other recorded or disclosed amounts. However, the Partnership
believes that certain accounting policies are of more significance in its
financial statement preparation process than others. With respect to
environmental exposure, the Partnership utilizes both internal and external
experts to assist it in identifying environmental issues.

Property and Equipment

         Depreciation is provided for in amounts sufficient to relate the cost
of depreciable assets to operations over the estimated useful lives of the
assets. Gas gathering and transmission facilities are depreciated over 15 or 20
years using the straight-line and double-declining balance methods. Other
equipment is depreciated over 5 to 10 years using the straight-line method.



                                      -35-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Impairment of Long-Lived Assets

         The Partnership reviews its long-lived assets for impairment whenever
events or 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 (see New Accounting Standards).

Goodwill

         Goodwill is evaluated for impairment in accordance with Statement of
Financial Accounting Standards (SFAS) No. 142. As of January 1, 2002, the date
of adoption, the Partnership had unamortized goodwill in the amount of $2.3
million. The Partnership completed the transitional impairment and annual tests
required by that standard, which involve the use of estimates related to the
fair market value of the business operations associated with the goodwill. These
tests did not indicate an impairment loss. The Partnership will continue to
evaluate its goodwill at least annually and will reflect the impairment of
goodwill, if any, in operating income in the income statement in the period in
which the impairment is indicated.

         Prior to the adoption of SFAS No. 142 on January 1, 2002, the
Partnership amortized goodwill on a straight-line basis over 30 years.
Amortization expense related to goodwill was $88,000 and $80,000 for the years
ended December 31, 2001 and 2000, respectively. Assuming that the Partnership
had applied SFAS No. 142 in 2001 and 2000, pro forma net income for those years
would have been $8,643,600 and $6,704,600, respectively, and pro forma net
income per limited partner unit for the years ended December 31, 2001 and 2000
would have been $2.33 and $2.09, respectively.

New Accounting Standards

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS 143 requires
entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred and a corresponding increase in
the carrying amount of the related long-lived asset. SFAS 143 will be effective
for fiscal years beginning after June 15, 2002. The Partnership is currently
assessing the impact of the adoption of SFAS 143 on its results of operations
and its financial position.

                                      -36-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

         In May 2002, SFAS 145, "Rescission of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections" was issued.
SFAS 145 rescinds the automatic treatment of gains and losses from
extinguishments of debt as extraordinary unless they meet the criteria for
extraordinary items as outlined in Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations, Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." SFAS 145 also requires sale-leaseback accounting for
certain lease modifications that have economic effects similar to a
sale-leaseback transaction and makes various corrections to existing
pronouncements. The provisions of this statement are effective for financial
statements issued by the Partnership in 2003. The Partnership does not expect
the adoption of SFAS 145 to have a material effect on our consolidated financial
position or results of operations.

         In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" (SFAS 146). SFAS 146 addresses
significant issues relating to the recognition, measurement, and reporting of
costs associated with exit and disposal activities, including restructuring
activities, and nullifies the guidance in Emerging Issues Task Force Issue
("EITF") No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring)". The provisions of this statement are effective for exit
and disposal activities that are initiated after December 31, 2002, with early
application encouraged. The Partnership does not expect SFAS 146 to have a
material impact on its results of operations or its financial position.

Distributions

         The Partnership is required to distribute, within 45 days of the end of
each quarter, all of its available cash for that quarter. For each quarter
during the subordination period (through at least December 31, 2004), to the
extent there is sufficient cash available, the original Common Unit holders have
the right to receive a minimum quarterly distribution ("MQD") of $.42 per unit
prior to any distribution to the subordinated units. The General Partner, in
connection with a distribution support agreement, was required to advance the
first distribution due to the normal lag time between transportation of gas
volumes and receipt of cash. Since that time, the Partnership has met all MQD
requirements. The General Partner was subsequently repaid from the second
quarterly distribution. If distributions in any quarter exceed specified target
levels, the General Partner will receive between 15% and 50% of such
distributions in excess of the specified target levels.

Federal Income Taxes

         The Partnership is a limited partnership. As a result, the
Partnership's income for federal income tax purposes is reportable on the tax
returns of the individual partners. Accordingly, no recognition has been given
to income taxes in the accompanying financial statements of the Partnership.

         Net income, for financial statement purposes, may differ significantly
from taxable income reportable to unitholders as a result of differences between
the tax bases and financial reporting bases of assets and liabilities and the
taxable income allocation requirements under the partnership agreement. These
different allocations can and usually will result in significantly different tax
capital account balances in comparison to the capital accounts per the
consolidated financial statements.



                                      -37-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Revenue Recognition

         Revenues are recognized at the time the natural gas is transported
through the gathering systems. Under the terms of its natural gas gathering
agreements with Atlas and its affiliates, the Partnership receives fees for
gathering natural gas from wells owned by Atlas, by limited partnerships
sponsored by Atlas or by independent third parties whose wells were connected to
the Partnership's gathering systems when operations commenced in 2000. The fees
received for the gathering services are the greater of 16% of the gross sales
price for gas produced from the wells, or $.35 or $.40 per thousand cubic feet
("Mcf"), depending on the ownership of the well. Substantially all gas gathering
revenues are derived under this agreement. Fees for transportation services
provided to independent third parties whose wells are connected to the
Partnership's gathering systems are at separately negotiated prices.

Segment Information

         The Partnership has one business segment, the transportation segment,
which derives its revenues primarily from the transportation of natural gas that
it receives from producers. Transportation revenues are, for the most part,
based on contractual arrangements with Atlas and its affiliates.

Fair Value of Financial Instruments

         For cash and cash equivalents, receivables and payables, the carrying
amounts approximate fair values because of the short maturity of these
instruments. The carrying value of long-term debt approximates fair market value
since interest rates approximate current market rates.

Net Income Per Unit

         There is no difference between basic and diluted net income per limited
partner unit since there are no potentially dilutive units outstanding. Net
income per limited partner unit is determined by dividing net income, after
deducting the General Partner's 2% interest and incentive distributions, by the
weighted average number of outstanding Common Units and Subordinated Units (a
total of 3,262,185, 3,254,543 and 3,141,026 units as of December 31, 2002, 2001
and 2000, respectively).

                                      -38-
<PAGE>
                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

Comprehensive Income

         Comprehensive income includes net income and all other changes in
equity of a business during a period from non-owner sources. These changes,
other than net income, are referred to as "other comprehensive income." The
Partnership has no material elements of comprehensive income, other than net
income, to report.

Cash Flow Statements

         For purposes of the statements of cash flows, all highly liquid debt
instruments purchased with a maturity of three months or less are considered to
be cash equivalents.

Concentration of Credit Risk

         Financial instruments, which potentially subject the Partnership to
concentrations of credit risk, consist principally of periodic temporary
investments of cash. The Partnership places its temporary cash investments in
high quality short-term money market instruments and deposits with high quality
financial institutions. At December 31, 2002, the Partnership and its
subsidiaries had $1.9 million in deposits at one bank, of which $1.7 million was
over the insurance limit of the Federal Deposit Insurance Corporation. No losses
have been experienced on such investments.

NOTE 3 - RELATED PARTY TRANSACTIONS

         The Partnership is affiliated with RAI and its subsidiaries, including
Atlas, VRC and REI ("Affiliates"). The Partnership is dependent upon the
resources and services provided by RAI and these Affiliates. Accounts
receivable/payable-affiliates represents the net balance due from or due to
these Affiliates for natural gas transported through the gathering systems, net
of reimbursements for Partnership costs and expenses paid by these Affiliates.
Substantially all Partnership revenue is from these Affiliates.

         The Partnership does not currently directly employ any persons to
manage or operate its business. These functions are provided by the General
Partner and employees of RAI and/or its Affiliates. The General Partner does not
receive a management fee or other compensation in connection with its management
of the Partnership apart from its interest as general partner and its right to
receive incentive distributions. The Partnership reimburses Atlas and/or its
Affiliates for all direct and indirect costs of services provided, including the
cost of employees, officer and managing board member compensation and benefits
properly allocable to the Partnership and all other expenses necessary or
appropriate to the conduct of the business of, and allocable to, the
Partnership.

         The partnership agreement provides that the General Partner will
determine the costs and expenses that are allocable to the Partnership in any
reasonable manner determined by the General Partner at its sole discretion. For
the years ended December 31, 2002, 2001 and 2000, such reimbursements were
approximately $4.4 million, $4.1 million and $3.0 million, respectively,
including costs capitalized by the Partnership.

                                      -39-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 3 - RELATED PARTY TRANSACTIONS - (Continued)

         Under an agreement with Atlas and its Affiliates, Atlas must construct
up to 2,500 feet of sales lines from its existing wells to a point of connection
to the Partnership's gathering systems. The Partnership must, at its own cost,
extend its system to connect to any such lines extended to within 1,000 feet of
its gathering systems. With respect to wells to be drilled by Atlas that will be
more than 3,500 feet from the Partnership's gathering systems, the Partnership
has various options to connect those wells to its gathering systems at its own
cost.

         Atlas has agreed to provide the Partnership with financing for the cost
of constructing new gathering system expansions through February 2, 2005, on a
stand-by basis. If the Partnership chooses to use this stand-by commitment, the
financing will be provided through the issuance of Common Units to Atlas. The
number of Common Units issued will be based upon the construction costs advanced
and the fair value of the Common Units at the time of such advances. The
commitment is for a maximum of $1.5 million in any contract year. As of December
31, 2002, the Partnership had not availed itself of the stand-by financing.

NOTE 4 - DISTRIBUTION DECLARED

         On December 23, 2002, the Partnership declared a cash distribution of
$.54 per unit on its outstanding Common Units and Subordinated Units. The
distribution represented the available cash flow for the three months ended
December 31, 2002. The $1,873,800 distribution, which includes a distribution of
$112,200 to the General Partner in respect to its general partner interest, is
scheduled to be paid on February 7, 2003 to unit holders of record on December
31, 2002.

NOTE 5 - CREDIT FACILITY

         In December 2002, the Partnership entered into a $7.5 million credit
facility administered by Wachovia Bank, National Association. In January 2003,
Wachovia Bank increased the facility by an additional $2.5 million through June
2003. Borrowings under the facility are secured by a lien on and security
interest in all the property of the Partnership and its subsidiaries, including
pledges by the Partnership of the issued and outstanding equity interests in its
subsidiaries. Up to $3.0 million of the facility may be used for standby letters
of credit. No such letters of credit have been issued under the facility. The
revolving credit facility has a term ending in December 2005 and bears interest
at one of two rates, elected at the Partnership's option:

         o the base rate plus the applicable margin; or

         o the adjusted LIBOR plus the applicable margin.

         The base rate for any day equals the higher of the federal funds rate
plus 1/2 of 1% or the Wachovia Bank prime rate. Adjusted LIBOR is LIBOR divided
by 1.00 minus the percentage prescribed by the Federal Reserve Board for
determining the reserve requirement for euro currency funding. The applicable
margin is as follows:

         o where the Partnership's leverage ratio, as defined in the credit
           facility agreement, is less than or equal to 1.5, the applicable
           margin is 0.00% for base rate loans and 1.50% for LIBOR loans;

         o where the Partnership's leverage ratio is greater than 1.5 but less
           than or equal to 2.5, the applicable margin is 0.25% for base rate
           loans and 1.75% for LIBOR loans; and

         o where the Partnership's leverage ratio is greater than 2.5, the
           applicable margin is 0.50% for base rate loans and 2.00% for LIBOR
           loans.

         At December 31, 2002, borrowings under the Wachovia credit facility
bore interest at 2.92%.

                                      -40-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 5 - CREDIT FACILITY - (Continued)

         The Wachovia credit facility requires the Partnership to maintain
specified net worth and specified ratios of current assets to current
liabilities and debt to EBITDA, and requires it to maintain a specified interest
coverage ratio. The Partnership used this credit facility to pay off our
previous revolving credit facility at PNC Bank. At December 31, 2002, $6.5
million was outstanding under this facility.

NOTE 6 - LEASES AND COMMITMENTS

         The Partnership leases certain compressors associated with its
gathering systems under lease agreements which expire in 2003. Rent expense for
the years ended December 31, 2002, 2001 and 2000 was $839,900, $783,700 and
$617,900, respectively. Minimum future lease payments for these leases in 2003
amount to $127,200.

NOTE 7 - ACQUISITIONS

         In January 2001, the Partnership acquired the gas gathering system of
Kingston Oil Corporation. The gas gathering system consists of approximately 100
miles of pipeline located in southeastern Ohio. The purchase price was
$2,750,000, consisting of $1.25 million of cash and 88,235 common units valued
at $17.00 per unit.

         In March 2001, the Partnership acquired the gas gathering system of
American Refining and Exploration Company. The gas gathering system consists of
approximately 20 miles of pipeline located in Fayette County, Pennsylvania. The
purchase price was $900,000, consisting of $150,000 of cash and 32,924 common
units valued at $22.78 per unit.

         These acquisitions were accounted for under the purchase method of
accounting and, accordingly, the purchase prices were allocated to the assets
acquired based on their fair values at the dates of acquisition. The pro forma
effect of these acquisitions on prior operations to the acquisition dates is not
material.


                                      -41-
<PAGE>

                 ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                DECEMBER 31, 2002

NOTE 8 - TERMINATION OF PROPOSED ACQUISITION

         On July 31, 2002, the Partnership terminated its agreement with New
Vulcan Coal Holdings, L.L.C. and Vulcan Intermediary, L.L.C. (collectively,
"Vulcan") to acquire Triton Coal Company ("Triton"). The related purchase
agreement for the sale of the interests held by Atlas in the Partnership's
General Partner also terminated. The Partnership has incurred approximately
$1,456,000 in costs in connection with the Triton transaction. Atlas had
advanced these costs to the Partnership. Such advances, net of reimbursements of
$687,500 from Vulcan referred to in the next paragraph, are included in
"accounts payable--affiliates" at December 31, 2002.

         The Partnership and its affiliates have requested reimbursement from
Vulcan under the terms of the acquisition agreement for $1,187,500 of the
transaction costs. The Partnership has expensed transaction costs of $268,500,
the difference between costs incurred and those reimbursable by Vulcan. As of
December 31, 2002, Vulcan has reimbursed the Partnership $687,500 of these
costs, which in turn were reimbursed to Atlas. The remaining costs of $500,000
that are reimbursable by Vulcan are included on the Partnership's consolidated
balance sheet as accounts receivable and are expected to be collected over the
next two quarters. The Partnership anticipates that it will further repay Atlas
from the Vulcan reimbursement.

NOTE 9 - QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
                                                                                For the Quarter Ended
                                                                -----------------------------------------------------------
                                                                March 31        June 30      September 30       December 31
                                                                --------       ---------     ------------       -----------
                                                                  (in thousands, except for unit and per unit data)
<S>                                                           <C>           <C>               <C>             <C>
Year ended December 31, 2002

Revenues....................................................  $      2,577   $       2,618    $      2,667    $       2,805

Costs and expenses..........................................         1,205           1,382           1,276            1,406

Net income..................................................         1,372           1,236           1,391            1,399

Net income - limited partners...............................         1,292           1,143           1,290            1,297

Net income - general partner................................            80              93             101              102

Basic and diluted net income per limited partner unit.......           .40             .35             .40              .39

Weighted average units outstanding..........................     3,262,185       3,262,185       3,262,185        3,262,185

Year ended December 31, 2001

Revenues....................................................  $      4,281   $       3,424    $      2,587    $       2,837

Costs and expenses..........................................           945           1,225           1,230            1,174

Net income..................................................         3,336           2,199           1,357            1,663

Net income - limited partners...............................         2,987           1,801           1,195            1,516

Net income - general partner................................           349             398             162              147

Basic and diluted net income per limited partner unit.......           .92             .55             .37              .46

Weighted average units outstanding..........................     3,231,193       3,262,185       3,262,185        3,262,185
</TABLE>

                                      -42-
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

              None




                                      -43-
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER

         As is commonly the case with publicly traded limited partnerships, we
are managed and operated by our general partner. The following table sets forth
information with respect to the executive officers and managing board members of
our general partner, Atlas Pipeline Partners GP, LLC. Executive officers and
managing board members serve one year terms.
<TABLE>
<CAPTION>
                                                                                                                 Year
                                                                                                               in which
Name                            Age                        Position with General Partner                    Service Began
----                            ---                        -----------------------------                    -------------
<S>                              <C>         <C>                                                            <C>
Edward E. Cohen                  64          Chairman of the Managing Board                                      1999
Jonathan Z. Cohen                32          Vice Chairman of the Managing Board                                 1999
Michael L. Staines               53          President, Chief Operating Officer, Secretary
                                             and Managing Board Member                                           1999
Steven J. Kessler                60          Chief Financial Officer                                             2002
Tony C. Banks                    48          Managing Board Member                                               1999
William R. Bagnell               40          Managing Board Member                                               1999
George C. Beyer, Jr.             64          Managing Board Member                                               1999
Murray S. Levin                  60          Managing Board Member                                               2001
</TABLE>

         Edward E. Cohen has been Chairman of the Board of Directors of Resource
America since 1990, Chief Executive Officer and a director of Resource America
since 1988 and President of Resource America since 2000. He has been Chairman of
the Board of Directors of Atlas America since 1998. He is Chairman of the Board
of Directors of Brandywine Construction & Management, Inc., a property
management company, and a director of TRM Corporation, a publicly traded
consumer services company. Mr. Cohen is the father of Jonathan Z. Cohen.

         Jonathan Z. Cohen has been Chief Operating Officer and a director of
Resource America since 2002 and Executive Vice President since 2001. Before
that, Mr. Cohen had been a Senior Vice President since 1999. Mr. Cohen has been
Vice Chairman of Atlas America since 1998. Mr. Cohen has also served as Trustee
and Secretary of RAIT Investment Trust, a real estate investment trust, since
1997 and Chairman of the Board of Directors of The Richardson Company, a sales
consulting company, since 1999. Mr. Cohen is the son of Edward E. Cohen.

         Michael L. Staines has been Senior Vice President of Resource America
since 1989 and served as a director and Secretary from 1989 through 2000 and
Secretary from 1989 through 1998. Since 1998, Mr. Staines has been Executive
Vice President, Secretary and a director of Atlas America. Mr. Staines is a
member of the Ohio Oil and Gas Association and the Independent Oil and Gas
Association of New York.

         Steven J. Kessler has been Senior Vice President and Chief Financial
Officer of Resource America since 1997. Before that he was Vice
President-Finance and Acquisitions at Kravco Company (a national shopping center
developer and operator) from 1994 to 1997.

                                      -44-
<PAGE>

         Tony C. Banks is a consultant providing energy marketing, technology,
price risk management and M&A advisory services to utilities, energy service
companies and energy technology firms. From 2000 through early 2002, Mr. Banks
was President of RAI Ventures, Inc. and chairman of the board of Optiron
Corporation, which until 2002 had been an energy technology subsidiary of Atlas
America. In addition, Mr. Banks served as President of our general partner
during 2000. He was Chief Executive Officer and President of Atlas America from
1998 through 2000. From 1995 to 1998, Mr. Banks was Vice President of various
subsidiaries of Atlas America.

         William R. Bagnell has been Vice President-Energy for Planalytics,
Inc., an energy industry software company, since March 2000. Before that, he was
from 1998 the Director of Sales for Fisher Tank Company, a national manufacturer
of carbon and stainless steel bulk storage tanks. From 1992 through 1998, Mr.
Bagnell was a Manager of Business Development for Buckeye Pipeline Partners,
L.P., a publicly traded master limited partnership which is a transporter of
refined petroleum products.

         George C. Beyer, Jr. has been Chief Executive Officer of Valley Forge
Financial Group, a financial planning company, since 1967, and is a co-founder
of Valley Forge Technologies Group, Inc. Mr. Beyer was also a co-founder of IBS,
Inc., an employee benefits consulting firm. Mr. Beyer serves as a director of
Commonwealth Bancorp and IBS, Valley Forge Financial Group, Inc., Valley Forge
Pension Management, Inc., Valley Forge Investment Consultants, Inc. and Valley
Forge Technologies Group, Inc.

         Murray S. Levin is a Senior Partner in the Litigation Department of
Pepper Hamilton LLP, a Philadelphia law firm. Mr. Levin served as the first
American president of the Association Internationale des Jeunes Avocats (Young
Lawyers International Association), headquartered in Western Europe. He is a
past president of the American Chapter and a member of the board of directors of
the Union Internationale des Avocats (International Association of Lawyers), a
Paris-based organization that is the world's oldest international lawyers
association.

Other Significant Employees

         Nancy J. McGurk, 47, has been the Chief Accounting Officer of our
general partner since 2000. In addition, she has been Vice President of Resource
America since 1992 and Treasurer and Chief Accounting Officer since 1989.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and managing board members of our general partner and persons who own
more than 10% of a registered class of our equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and to furnish us with copies of all such reports. Based solely upon our review
of reports received by us, or representations that no filings were required, we
believe that all of the officers and managing board members of our general
partner complied with all applicable filing requirements during 2002, except
that Steven J. Kessler did not file a Form 3 on a timely basis after his
appointment as Chief Financial Officer. We did not have any record holders of
10% or more of our common units in 2002.

Reimbursement of Expenses of Our General Partner and Its Affiliates

         Our general partner does not receive any management fee or other
compensation for its services apart from its general partnership and incentive
distribution interests. We reimburse our general partner and its affiliates,
including Atlas for all expenses incurred on our behalf. These expenses include
the costs of employee, officer and managing board member compensation and
benefits properly allocable to us, and all other expenses necessary or
appropriate to the conduct of our business. Our partnership agreement provides
that our general partner will determine the expenses that are allocable to us in
any reasonable manner determined by our general partner in its sole discretion.
Our general partner allocates the costs of employee and officer compensation and
benefits based upon the amount of business time spent by those employees and
officers on our business. We reimbursed our general partner $4.4 million for
expenses incurred during 2002.


                                      -45-
<PAGE>

Compensation Committee Interlocks and Insider Participation

         Neither we nor the managing board of our general partner has a
compensation committee. Compensation of the personnel of Atlas and its
affiliates who provide us with services is set by Atlas and such affiliates. The
independent members of the managing board of our general partner, however, does
review the allocation of the salaries of such personnel for purposes of
reimbursement, discussed in "Reimbursement of Expenses of our General Partner
and Its Affiliates and Item 11, "Executive Compensation.." None of the
independent managing board members is an employee or former employee of ours or
of our general partner. However, Mr. Bagnell was, until September 1992, an
employee of Resource America, the ultimate parent of our general partner and
served from December 1998 until February 2003 as a trustee of its employee stock
ownership plan and from September 1999 until February 2003 as a trustee of its
401(k) plan. No executive officer of our general partner is a director or
executive officer of any entity in which an independent managing board member is
a director or executive officer.



                                      -46-
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation

         We do not directly compensate the executive officers of our general
partner. Rather, Atlas and its affiliates allocate the compensation of the
executive officers between activities on behalf of our general partner and us
and activities on behalf of Atlas and its affiliates based upon an estimate of
the time spent by such persons on activities for us and for Atlas and its
affiliates, and we reimburse our general partner for the compensation allocated
to us. The compensation allocation was $344,700 and $397,500 for the years ended
December 31, 2002 and 2001, respectively. The following table sets forth the
compensation allocation since we commenced operations for our general partner's
President. No other executive officer of the general partner received aggregate
salary and bonus from us in excess of $100,000 during the periods indicated.

                           Summary Compensation Table
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                  All other
Name and Principal Position                                                           Year         Salary       compensation
---------------------------                                                           ----         ------       ------------
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>        <C>           <C>
-------------------------------------------------------------------------------------------------------------------------------
Michael L. Staines, President, Chief Operating Officer, Secretary and Managing
Board Member                                                                          2002      $  162,250     $   22,575
-------------------------------------------------------------------------------------------------------------------------------
                                                                                      2001         167,895         23,505
-------------------------------------------------------------------------------------------------------------------------------
                                                                                      2000          87,719         12,281
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Compensation of Managing Board Members

         Our general partner does not pay additional remuneration to officers or
employees of Resource America who also serve as managing board members. Each
independent managing board member receives an annual retainer of $6,000 together
with $1,000 for each board meeting attended, $1,000 for each committee meeting
attended where he is chairman of the committee and $500 for each committee
meeting attended where he is not chairman. In addition, our general partner
reimburses each independent board member for out-of-pocket expenses in
connection with attending meetings of the board or committees. We reimburse our
general partner for these expenses and indemnify our general partner's managing
board members for actions associated with being managing board members to the
extent permitted under Delaware law.



                                      -47-
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth the number and percentage of our common
units held by beneficial owners of 5% or more of either our common or
subordinated units, by executive officers and members of the managing board of
our general partner and by all of the executive officers and managing board
members of our general partner as a group as of March 3 2003. The subordinated
units listed opposite the name of each person represent subordinated units owned
by our general partner. By reason of their position as managing board members or
executive officers of our general partner, such persons may be deemed to have
shared voting and investment power over the subordinated units. The address of
our general partner, its executive officers and managing board members is 311
Rouser Road, Moon Township, Pennsylvania 15108.
<TABLE>
<CAPTION>
                                                                                       Subordinated
        Name of Beneficial Owner               Common Units       Percent of Class        Units           Percent of Class
        -------------------------              ------------       ----------------     -------------      ----------------
<S>                                            <C>                <C>                  <C>                <C>
Atlas Pipeline Partners GP............               -                   -               1,641,026              100%
Edward E. Cohen.......................               -                   -               1,641,026              100%
Steven J. Kessler.....................               -                   -               1,641,026              100%
Jonathan Z. Cohen.....................             2,397                 *               1,641,026              100%
Michael L. Staines....................               -                   -               1,641,026              100%
William R. Bagnell....................               -                   -               1,641,026              100%
George C. Beyer, Jr...................               -                   -               1,641,026              100%
Tony C. Banks.........................               -                   -               1,641,026              100%
Murray S. Levin.......................               -                   -               1,641,026              100%
Executive officers and managing board
  members as a group (8 persons)......             2,397                 *               1,641,026              100%
</TABLE>
-----------
*    Less than 1%.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         At December 31, 2002, our general partner owned 1,641,026 subordinated
units constituting a 50% limited partnership interest in us. Our general partner
also owned, through its 1.0101% general partnership interest in us and 1.0101%
general partnership interest in our operating subsidiary, Atlas Pipeline
Operating Partnership, a 2% general partner interest in our consolidated
pipeline operations. We paid our general partner distributions totaling
$4,035,100 during fiscal 2002 in respect of these interests.

         The omnibus agreement and the natural gas gathering agreements with
Atlas and its affiliates were not the result of arms-length negotiations and,
accordingly, we cannot assure you that we could have obtained more favorable
terms from independent third parties similarly situated. However, since these
agreements principally involve the imposition of obligations on Atlas and its
affiliates, we do not believe that we could obtain similar agreements from
independent third parties.

         We do not currently directly employ any persons to manage or operate
our business. These functions are provided by employees of Resource America
and/or its affiliates. As discussed in Items 10 and 11, we reimburse our general
partner, Atlas and its affiliates for expenses they incur in managing our
operations and for an allocation of the compensation paid to the executive
officers of our general partner.

         Mr. Levin is associated with a firm to which the Partnership paid
$60,000 for legal services during 2002.

         Mr. Beyer, Jr. is associated with a firm which sold Resource America a
life insurance policy on the life of Edward E. Cohen, Resource America's
Chairman. Mr. Beyer's firm received $23,700, $22,500 and $204,500 in commissions
in 2002, 2001 and 2000, respectively, in connection with the policy.

                                      -48-
<PAGE>

                                     PART IV

ITEM 14. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

         The Chairman of the Managing Board of Directors and Chief Financial
Officer of our general partner, our general partner's principal executive and
accounting officers, respectively, after evaluating the effectiveness of our
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 Rules 13a-14(c) and 15d-14(c)) as of a date within 90 days before the
filing date of this annual report, have concluded that as of the evaluation
date, our disclosure controls and procedures were adequate and designed to
ensure that material information relating to us would be made known to them by
our employees or persons employed by the general partner and its affiliates
working on our behalf.

Changes in Internal Controls

         There were no significant changes in our internal controls or in other
factors that could significantly affect these controls since the date of our
last evaluation of internal controls.


                                      -49-
<PAGE>

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


         (a)(1)   Financial Statements
                    The financial statements required by this Item 15(a)(1) are
                    set forth in Item 8.

         (a)(2)   Financial Statement Schedules
                    No schedules are required to be presented.

         (a)(3)   Exhibits
                   3.1   (1) Amended and Restated Agreement of Limited
                               Partnership of Atlas Pipeline Partners, L.P.
                   3.2   (1) Certificate of Limited Partnership of Atlas
                               Pipeline Partners, L.P.
                   4.1   (1) Common unit certificate
                  10.1   (1) Amended and Restated Agreement of Limited
                               Partnership of Atlas Pipeline Operating
                               Partnership, L.P. dated February 2, 2002.
                  10.2   (1) Omnibus Agreement among Atlas Pipeline Partners,
                               L.P., Atlas Pipeline Operating Partnership, L.P.,
                               Atlas America, Inc., Resource Energy Inc. and
                               Viking Resources Corporation dated February 2,
                               2000.
                  10.3   (1) Master Natural Gas Agreement among Atlas Pipeline
                               Partners, L.P., Atlas Operating Pipeline
                               Partnership, L.P., Atlas America, Inc., Resource
                               Energy, Inc. and Viking Resources Corporation
                               dated February 2, 2002.
                  10.4       Credit Agreement among Atlas Pipeline Partners,
                               L.P., Wachovia Bank, National Association and
                               certain subsidiaries of Atlas Pipeline Partners,
                               L.P. as guarantors dated December 27, 2002.
                  10.5       First Amendment to Credit Agreement, dated January
                               30, 2003.
                  10.6       Second Amendment to Credit Agreement, dated March
                               28, 2003.
                  10.7       Natural Gas Gathering Agreement among Atlas
                               Pipeline Partners, L.P., Atlas Pipeline Operating
                               Partnership, L.P., Atlas Resources, Inc., Atlas
                               Energy Group, Inc., Atlas Noble Corp., Resource
                               Energy, Inc. and Viking Resources Corporation
                               dated January 1, 2002.
                  21.1       Subsidiaries of Atlas Pipeline Partners, L.P.
                  99.1       Certification Pursuant to 18 U.S.C. Section 1350,
                               as Adopted Pursuant to Section 906 of The
                               Sarbanes-Oxley Act of 2002
                  99.2       Certification Pursuant to 18 U.S.C. Section 1350,
                               as Adopted Pursuant to Section 906 of The
                               Sarbanes-Oxley Act of 2002
----------------

(1) Filed previously as an exhibit to our Registration Statement on Form S-1
    (Registration No. 333-85193) and by this reference incorporated herein.

    (b) Reports on Form 8-K
        None

                                      -50-
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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 PIPELINE PARTNERS, L.P.
                            By:  Atlas Pipeline Partners GP, LLC, its General
                                 Partner
March 28, 2003         By:  /s/ Edward E. Cohen
                            ---------------------------------------
                                Chairman of the Managing Board

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated as of March 28, 2003.
<TABLE>
<CAPTION>
<S>                            <C>
/s/ Edward E. Cohen            Chairman of the Managing Board of the General Partner
-----------------------------  (Chief Executive Officer of the General Partner)
EDWARD E. COHEN

/s/ Jonathan Z. Cohen          Vice Chairman of the Managing Board of the General Partner
-----------------------------
JONATHAN Z. COHEN

/s/ Michael L. Staines         President, Chief Operating Officer, Secretary and
-----------------------------  Managing Board Member of the General Partner
MICHAEL L. STAINES

/s/ Steven J. Kessler          Chief Financial Officer of the General Partner
-----------------------------
STEVEN J. KESSLER

/s/ Nancy J. McGurk            Chief Accounting Officer of the General Partner
-----------------------------
NANCY J. McGURK

/s/ Tony C. Banks              Managing Board Member of the General Partner
-----------------------------
TONY C. BANKS

/s/ William R. Bagnell         Managing Board Member of the General Partner
-----------------------------
WILLIAM R. BAGNELL

/s/ George C. Beyer, Jr.       Managing Board Member of the General Partner
-----------------------------
GEORGE C. BEYER, JR.

/s/ Murray S. Levin            Managing Board Member of the General Partner
-----------------------------
MURRAY S. LEVIN
</TABLE>

                                      -51-
<PAGE>

                                 CERTIFICATIONS

I, Edward E. Cohen, certify that:

1.      I have reviewed this annual report on Form 10-K of Atlas Pipeline
        Partners, L.P.;

2.      Based on my knowledge, this annual report does not contain any untrue
        statement of a material fact or omit to state a material fact necessary
        to make the statements made, in light of the circumstances under which
        such statements were made, not misleading with respect to the period
        covered by this annual report;

3.      Based on my knowledge, the financial statements, and other financial
        information included in this annual report, fairly present in all
        material respects the financial condition, results of operations and
        cash flows of the registrant as of, and for, the periods presented in
        this annual report;

4.      The registrant's other certifying officer and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
        we have:

         a)   designed such disclosure controls and procedures to ensure that
              material information relating to the registrant, including its
              consolidated subsidiaries, is made known to us by others within
              those entities, particularly during the period in which this
              annual report is being prepared;

         b)   evaluated the effectiveness of the registrant's disclosure
              controls and procedures as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and

         c)   presented in this annual report our conclusions about the
              effectiveness of the disclosure controls and procedures based on
              our evaluation as of the Evaluation Date;

5.      The registrant's other certifying officer and I have disclosed, based on
        our most recent evaluation, to the registrant's auditors and the audit
        committee of registrant's board of directors (or persons performing the
        equivalent function):

         a)   all significant deficiencies in the design or operation of
              internal controls which could adversely affect the registrant's
              ability to record, process, summarize and report financial data
              and have identified for the registrant's auditors any material
              weaknesses in internal controls; and

         b)   any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal controls; and

6.      The registrant's other certifying officer and I have indicated in this
        annual report whether or not there were significant changes in internal
        controls or in other factors that could significantly affect internal
        controls subsequent to the date of our most recent evaluation, including
        any corrective actions with regard to significant deficiencies and
        material weaknesses.

                Date:  March 28, 2003
                /s/ Edward E. Cohen
                Edward E. Cohen
                Chairman of the Managing Board of the General Partner



                                      -52-
<PAGE>
                                 CERTIFICATIONS

I, Steven J. Kessler, certify that:

1.      I have reviewed this annual report on Form 10-K of Atlas Pipeline
        Partners, L.P.;

2.      Based on my knowledge, this annual report does not contain any untrue
        statement of a material fact or omit to state a material fact necessary
        to make the statements made, in light of the circumstances under which
        such statements were made, not misleading with respect to the period
        covered by this annual report;

3.      Based on my knowledge, the financial statements, and other financial
        information included in this annual report, fairly present in all
        material respects the financial condition, results of operations and
        cash flows of the registrant as of, and for, the periods presented in
        this annual report;

4.      The registrant's other certifying officer and I are responsible for
        establishing and maintaining disclosure controls and procedures (as
        defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
        we have:

         a)   designed such disclosure controls and procedures to ensure that
              material information relating to the registrant, including its
              consolidated subsidiaries, is made known to us by others within
              those entities, particularly during the period in which this
              annual report is being prepared;

         b)   evaluated the effectiveness of the registrant's disclosure
              controls and procedures as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and

         c)   presented in this annual report our conclusions about the
              effectiveness of the disclosure controls and procedures based on
              our evaluation as of the Evaluation Date;

5.      The registrant's other certifying officer and I have disclosed, based on
        our most recent evaluation, to the registrant's auditors and the audit
        committee of registrant's board of directors (or persons performing the
        equivalent function):

         a)   all significant deficiencies in the design or operation of
              internal controls which could adversely affect the registrant's
              ability to record, process, summarize and report financial data
              and have identified for the registrant's auditors any material
              weaknesses in internal controls; and

         b)   any fraud, whether or not material, that involves management or
              other employees who have a significant role in the registrant's
              internal controls; and

6.      The registrant's other certifying officer and I have indicated in this
        annual report whether or not there were significant changes in internal
        controls or in other factors that could significantly affect internal
        controls subsequent to the date of our most recent evaluation, including
        any corrective actions with regard to significant deficiencies and
        material weaknesses.

                Date:  March 28, 2003
                /s/ Steven J. Kessler
                Steven J. Kessler
                Chief Financial Officer of the General Partner

                                      -53-