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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 1-14998
 ATLAS PIPELINE PARTNERS, L.P.
  DELAWARE
    
    23-3011077(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)311 Rouser RoadMoon 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:
 Title of each class
    
    Name of each exchange on which registeredCommon Units representing Limited
    
    New York Stock ExchangePartnership Interests
 Securities registered pursuant to Section 12(g) of the Act:
  (Title of class)
 o þ
 o þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE: None




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##### 



ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO ANNUAL REPORT
ON FORM 10-K
 PagePART IItem 1:
    
    Business
    
    
    3Item 1A:
    
    Risk Factors
    
    
    21Item 2:
    
    Properties
    
    
    32Item 3:
    
    Legal Proceedings
    
    
    32Item 4:
    
    Submission of Matters to a Vote of Security Holders
    
    
    33PART IIItem 5:
    
    Market for Registrants Common Equity and Related Unitholder Matters
    
    
    33Item 6:
    
    Selected Financial Data
    
    
    34Item 7:
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    37Item 7A:
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    52Item 8:
    
    Financial Statements and Supplementary Data
    
    
    56Item 9:
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    86Item 9A:
    
    Controls and Procedures
    
    
    86PART IIIItem 10:
    
    Directors and Executive Officers of the Registrant
    
    
    90Item 11:
    
    Executive Compensation
    
    
    94Item 12:
    
    Security Ownership of Certain Beneficial Owners and Management
    
    
    97Item 13:
    
    Certain Relationships and Related Transactions
    
    
    98Item 14:
    
    Principal Accountant Fees and Services
    
    
    99PART IVItem 15:
    
    Exhibits and Financial Statement Schedules
    
    
    100SIGNATURES
    
    
    
    
    101Subsidiaries of RegistrantConsent of Grant Thornton LLPRule 13a-14(a)/15d-14(a) CertificationRule 13a-14(a)/15d-14(a) CertificationSection 1350 CertificationSection 1350 CertificationAudited Balance Sheet of Atlas Pipeline Partners GP, LLC
  2




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FORWARD-LOOKING STATEMENTS
 The matters discussed within this report include forward-looking statements. These statements
may be identified by the use of forward-looking terminology such as anticipate, believe,
continue, could, estimate, expect, intend, may, might, plan, potential,
predict, should, or will, or the negative thereof or other variations thereon or comparable
terminology. In particular, statements about our expectations, beliefs, plans, objectives,
assumptions or future events or performance contained in this report are forward-looking
statements. We have based these forward-looking statements on our current expectations,
assumptions, estimates and projections. While we believe these expectations, assumptions, estimates
and projections are reasonable, such forward-looking statements are only predictions and involve
known and unknown risks and uncertainties, many of which are beyond our control. These and other
important factors may cause our actual results, performance or achievements to differ materially
from any future results, performance or achievements expressed or implied by these forward-looking
statements. Some of the key factors that could cause actual results to differ from our expectations
include:
 
    
    the volatility of natural gas prices and demand for natural gas and natural gas liquids;
    
    our ability to connect new wells to our gathering systems;
    
    our ability to integrate newly acquired businesses with our operations;
    
    adverse effects of governmental and environmental regulation;
    
    limitations on our access to capital or on the market for our common units; and
    
    the strength and financial resources of our competitors.
 Other factors that could cause actual results to differ from those implied by the
forward-looking statements in this report are more fully described under Item 1A, Risk Factors in
this report. Given these risks and uncertainties, you are cautioned not to place undue reliance on
these forward-looking statements. The forward-looking statements included in this report are made
only as of the date hereof. We do not undertake and specifically decline any obligation to update
any such statements or to publicly announce the results of any revisions to any of these statements
to reflect future events or developments.
 
 PART I
 
 ITEM 1. BUSINESS
 General
  3




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
    
    a 75% interest in a Federal Energy Regulatory Commission (FERC)-regulated,
565-mile interstate pipeline system, that extends from southeastern Oklahoma through
Arkansas and into southeastern Missouri and has throughput capacity of approximately
322 MMcf/d;
    
    two natural gas processing plants with aggregate capacity of approximately 230
MMcf/d and one treating facility with a capacity of approximately 200 MMcf/d, all
located in Oklahoma; and
    
    1,765 miles of active natural gas gathering systems located in Oklahoma, Arkansas,
northern Texas and the Texas panhandle, which transport gas from wells and central
delivery points in the Mid-Continent region to our natural gas processing plants or
Ozark Gas Transmission.
    Recent Acquisition
  4




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
    
    The Ozark Gas Transmission system, a 565-mile FERC-regulated interstate pipeline
system which extends from southeastern Oklahoma through Arkansas and into southeastern
Missouri and has a throughput capacity of approximately 322 MMcf/d. The system includes
approximately 30 supply and delivery interconnections and two compressor stations.
    
    The Ozark Gas Gathering system, a 365-mile intrastate natural gas gathering system,
located in eastern Oklahoma and western Arkansas, and 11 associated compressor
stations.
     Contracts and Customer Relationships
  5




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The Midstream Natural Gas Gathering, Processing and Transmission Industry
     Our Mid-Continent Operations
  6




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Mid-Continent Overview
  FERC-Regulated Transmission System
  Gathering Systems
 Velma.
 Elk City.
 Ozark Gas Gathering.
 Processing Plants
 Velma
 7




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Elk City.
 Sweetwater.
 Enville.
 NOARK Partnership
     8




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Natural Gas Supply
   Natural Gas and NGL Marketing
 Inside FERC Inside FERC
   Natural Gas and NGL Hedging
  9




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
    
    Percentage-of-proceeds: require us to pay a percentage of revenue to the producer.
This results in our being net long physical natural gas and NGLs.
    
    Keep-whole: require us to deliver the same quantity of natural gas at the delivery
point as we received at the receipt point; any resulting NGLs produced belong to us.
This results in our being long physical NGLs and short physical natural gas.
    Our Appalachian Basin Operations
  10




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Appalachian Basin Overview
  Natural Gas Supply
  Natural Gas Revenues
   11




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Our Relationship with Atlas America
  Omnibus Agreement
  Well Connections
 Consulting Services.
 Gathering System Construction.
 12




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Disposition of Interest in Our General Partner.
  Natural Gas Gathering Agreements
  
    
    for natural gas from well interests allocable to Atlas America or its affiliates
(excluding general or limited partnerships sponsored by them) that were connected to
our gathering systems at February 2, 2000, the greater of $0.40 per Mcf or 16% of the
gross sales price of the natural gas transported;
    
    for (i) natural gas from well interests allocable to general and limited
partnerships sponsored by Atlas America that drill wells on or after December 1, 1999
that are connected to our gathering systems (ii) natural gas from well interests
allocable to Atlas America or its affiliates (excluding general or limited partnerships
sponsored by them) that are connected to our gathering systems after February 2, 2000,
and (iii) well interests allocable to third parties in wells connected to our gathering
systems at February 2, 2000, the greater of $0.35 per Mcf or 16% of the gross sales
price of the natural gas transported; and
    
    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 $0.35 per Mcf or 16% of the gross sales price of the
natural gas transported, less the gathering fee charged by the other gathering system.
   13




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Competition
 Acquisitions.
 Mid-Continent.
 
    
    the price received by an operator or producer for its production after deduction of
allocable charges, principally the use of the natural gas to operate compressors; and
    
    responsiveness to a well operators needs, particularly the speed at which a new
well is connected by the gatherer to its system.
   Appalachian Basin.
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Regulation
 Regulation by FERC of Interstate Natural Gas Pipelines.
 
    
    rate structures;
    
    rates of return on equity;
    
    recovery of costs;
    
    the services that our regulated assets are permitted to perform;
    
    the acquisition, construction and disposition of assets; and
    
    to an extent, the level of competition in that regulated industry.
   Gathering Pipeline Regulation.
 15




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Sales of Natural Gas.
 16




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Energy Policy Act of 2005.
 Environmental Matters
  
    
    restricting the way we can handle or dispose of our wastes;
    
    limiting or prohibiting construction and operating activities in sensitive areas
such as wetlands, coastal regions, or areas inhabited by endangered species;
    
    requiring remedial action to mitigate pollution conditions caused by our operations
or attributable to former operators; and
    
    enjoining some or all of the operations of facilities deemed in non-compliance with
permits issued pursuant to such environmental laws and regulations.
 17




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Hazardous Waste.
 Site Remediation.
  18




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Air Emissions.
 Water Discharges.
 Pipeline Safety.
  Employee Health and Safety.
 19




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Hydrogen Sulfide.
 Properties
    Employees
  20




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Available Information
 www.atlaspipelinepartners.com www.sec.gov
 
 ITEM 1A. RISK FACTORS
 Limited partner interests are inherently different from the capital stock of a corporation,
although many of the business risks we encounter are similar to those that would be faced by a
corporation engaged in a similar business. If any of these risks actually occurs, our business,
financial condition or results of operations could be materially adversely affected.
 Risks Relating to Our Business
 The amount of cash we generate depends in part on factors beyond our control.
  
    
    the demand for and price of natural gas and NGLs;
    
    the volume of natural gas we transport;
    
    expiration of significant contracts;
    
    continued development of wells for connection to our gathering systems;
    
    the availability of local, intrastate and interstate transportation systems;
    
    the expenses we incur in providing our gathering services;
    
    the cost of acquisitions and capital improvements;
    
    our issuance of equity securities;
    
    required principal and interest payments on our debt;
    
    fluctuations in working capital;
    
    prevailing economic conditions;
    
    fuel conservation measures;
    
    alternate fuel requirements;
 21




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
    
    government regulation and taxation; and
    
    technical advances in fuel economy and energy generation devices.
  Our profitability is affected by the volatility of prices for natural gas and NGL products.
  The amount of natural gas we transport will decline over time unless we are able to attract new
wells to connect to our gathering systems.
  22




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The success of our Appalachian operations depends upon Atlas Americas ability to drill and
complete commercial producing wells.
  The failure of Atlas America to perform its obligations under our natural gas gathering agreements
with it may adversely affect our business.
  The success of our Mid-Continent operations depends upon our ability to continually find and
contract for new sources of natural gas supply from unrelated third parties.
  Our Mid-Continent operations currently depend on certain key producers for their supply of natural
gas; the loss of any of these key producers could reduce our revenues.
  23




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The curtailment of operations at, or closure of, either of our processing plants could harm our
business.
  We may face increased competition in the future in our Mid-Continent service areas.
  The amount of natural gas we transport, treat or process may be reduced if the public utility and
interstate pipelines to which we deliver gas cannot or will not accept the gas.
  We may be unsuccessful in integrating the operations from our recent acquisitions or any future
acquisitions with our operations and in realizing all of the anticipated benefits of these
acquisitions.
  
    
    operating a significantly larger combined entity;
    
    the necessity of coordinating geographically disparate organizations, systems and facilities;
    
    integrating personnel with diverse business backgrounds and organizational cultures;
    
    consolidating operational and administrative functions;
    
    integrating internal controls, compliance under Sarbanes-Oxley Act of 2002 and other
corporate governance matters;
 24




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
    
    the diversion of managements attention from other business concerns;
    
    customer or key employee loss from the acquired businesses;
    
    a significant increase in our indebtedness; and
    
    potential environmental or regulatory liabilities and title problems.
  The acquisitions of our Velma, Elk City and NOARK operations have substantially changed our
business, making it difficult to evaluate our business based upon our historical financial
information.
  Before acquiring its Velma and Elk City operations, Atlas had no previous experience either in its
Mid-Continent service area or in operating natural gas processing plants.
  Due to our lack of asset diversification, negative developments in our operations would reduce our
ability to make distributions to our unitholders.
  Our construction of new assets may not result in revenue increases and is subject to regulatory,
environmental, political, legal and economic risks, which could impair our results of operations
and financial condition.
  25




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
    
    difficulties in obtaining equity or debt financing for construction and operating costs;
    
    difficulties in obtaining permits or other regulatory or third party consents;
    
    construction and operating costs exceeding budget estimates;
    
    revenue being less than expected due to lower commodity prices or lower demand;
    
    difficulties in obtaining consistent supplies of natural gas; and
    
    terms in operating agreements that are not favorable to us.
 If we are unable to obtain new rights-of-way or the cost of renewing existing rights-of-way
increases, then we may be unable to fully execute our growth strategy and our cash flows could be
reduced.
  Regulation of our gathering operations could increase our operating costs, decrease our revenues,
or both.
   26




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Ozark Gas Transmission is subject to FERC rate-making policies that could have an adverse impact on
our ability to establish rates that would allow us to recover the full cost of operating the
pipeline.
  Ozark Gas Transmission is subject to regulation by FERC in addition to FERC rules and regulations
related to the rates it can charge for its services.
  
    
    operating terms and conditions of service;
    
    the types of services Ozark Gas Transmissions may offer to its customers;
    
    construction of new facilities;
 27




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
    
    acquisition, extension or abandonment of services or facilities;
    
    accounts and records; and
    
    relationships with affiliated companies involved in all aspects of the natural
gas and energy businesses.
     Compliance with pipeline integrity regulations issued by the United States Department of
Transportation and state agencies could result in substantial expenditures for testing, repairs and
replacement.
  
    
    perform ongoing assessments of pipeline integrity;
    
    identify and characterize applicable threats to pipeline segments that could
impact a high consequence area;
    
    improve data collection, integration and analysis;
    
    repair and remediate the pipeline as necessary; and
    
    implement preventative and mitigating actions.
 28




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Our midstream natural gas operations may incur significant costs and liabilities resulting from a
failure to comply with new or existing environmental regulations or a release of hazardous
substances into the environment.
   We may not be able to execute our growth strategy successfully.
  
    
    we may not be able to identify suitable acquisition candidates;
    
    we may not be able to make acquisitions on economically acceptable terms;
    
    our costs in seeking to make acquisitions may be material, even if we cannot
complete any acquisition we have pursued;
    
    irrespective of estimates at the time we make an acquisition, the acquisition may
prove to be dilutive to earnings and operating surplus;
    
    we may encounter difficulties in integrating operations and systems; and
 29




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
    
    any additional debt we incur to finance an acquisition may impair our ability to
service our existing debt.
 Limitations on our access to capital or on the market for our common units will impair our ability
to execute our growth strategy.
  Our hedging strategies may fail to protect us and could reduce our gross margin and cash flow.
  
    
    hedging can be expensive, particularly during periods of volatile prices;
    
    available hedges may not correspond directly with the risks against which we seek
protection;
    
    the duration of the hedge may not match the duration of the risk against which we
seek protection; and
    
    the party owing money in the hedging transaction may default on its obligation to
pay.
 Litigation or governmental regulation relating to environmental protection and operational safety
may result in substantial costs and liabilities.
    30




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We are subject to operating and litigation risks that may not be covered by insurance.
  
    
    damage to pipelines, plants, related equipment and surrounding properties caused
by floods and other natural disasters;
    
    inadvertent damage from construction and farm equipment;
    
    leakage of natural gas, NGLs and other hydrocarbons;
    
    fires and explosions;
    
    other hazards, including those associated with high-sulfur content, or sour gas,
that could also result in personal injury and loss of life, pollution and suspension
of operations; and
    
    acts of terrorism directed at our pipeline infrastructure, production facilities,
transmission and distribution facilities and surrounding properties.
  The IRS could treat us as a corporation for tax purposes, which would substantially reduce the cash
available to us for payment of principal and, in some instances, interest on the notes.
  Risks Related to Our Ownership Structure
 Atlas America and its affiliates have conflicts of interest and limited fiduciary responsibilities,
which may permit them to favor their own interests to the detriment of our unitholders.
  31




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
    
    Employees of Atlas America who provide services to us also devote significant
time to the businesses of Atlas America in which we have no economic interest. If
these separate activities are significantly greater than our activities, there could
be material competition for the time and effort of the employees who provide
services to our general partner, which could result in insufficient attention to the
management and operation of our business.
    
    Neither our partnership agreement nor any other agreement requires Atlas America
to pursue a future business strategy that favors us or, apart from our agreements
with Atlas America relating to our Appalachian region operations, use our assets for
transportation or processing services we provide. Atlas America directors and
officers have a fiduciary duty to make these decisions in the best interests of the
stockholders of Atlas America.
    
    Our general partner is allowed to take into account the interests of parties
other than us, such as Atlas America, in resolving conflicts of interest, which has
the effect of limiting its fiduciary duty to us.
    
    Our general partner controls the enforcement of obligations owed to us by our
general partner and its affiliates, including our agreements with Atlas America.
  Cost reimbursements due our general partner may be substantial and will reduce the cash available
for distributions to our unitholders.
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED UNITHOLDER MATTERS
   DistributionsHigh
    
    Low
    
    Declared2005Fourth Quarter
    
    $
    49.21
    
    
    $
    39.45
    
    
    $
    0.83Third Quarter
    
    $
    49.72
    
    
    $
    43.75
    
    
    $
    0.81Second Quarter
    
    $
    46.39
    
    
    $
    41.25
    
    
    $
    0.77First Quarter
    
    $
    49.00
    
    
    $
    40.00
    
    
    $
    0.752004Fourth Quarter
    
    $
    42.90
    
    
    $
    37.67
    
    
    $
    0.72Third Quarter
    
    $
    38.32
    
    
    $
    33.46
    
    
    $
    0.69Second Quarter
    
    $
    40.03
    
    
    $
    32.60
    
    
    $
    0.63First Quarter
    
    $
    41.50
    
    
    $
    34.00
    
    
    $
    0.63
   33




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Percent of AvailableCash in ExcessMinimum Distributions
    
    
    
    of Minimum AllocatedPer Unit Per Quarter
    
    
    
    to the General Partner$ 0.42
    
    
    
    
    15
    %$ 0.52
    
    
    
    
    25
    %$ 0.60
    
    
    
    
    50
    %
   
 ITEM 6. SELECTED FINANCIAL DATA
  Years Ended December 31,2005(1)
    
    
    2004(2)
    
    
    2003
    
    
    2002
    
    
    2001(in thousands, except per unit and operating data)Statement of income data:Revenue:Natural gas and liquids
    
    $
    340,297
    
    
    $
    72,109
    
    
    $
    
    
    
    $
    
    
    
    $
    Transportation and compression
    
    
    30,309
    
    
    
    18,800
    
    
    
    15,651
    
    
    
    10,660
    
    
    
    13,095Interest income and other
    
    
    894
    
    
    
    382
    
    
    
    98
    
    
    
    7
    
    
    
    35Total revenue and other income
    
    
    371,500
    
    
    
    91,291
    
    
    
    15,749
    
    
    
    10,667
    
    
    
    13,130Costs and Expenses:Natural gas and liquids
    
    
    288,180
    
    
    
    58,707
    
    
    
    
    
    
    
    
    
    
    
    Plant operating
    
    
    10,557
    
    
    
    2,032
    
    
    
    
    
    
    
    
    
    
    
    Transportation and compression
    
    
    4,053
    
    
    
    2,260
    
    
    
    2,421
    
    
    
    2,062
    
    
    
    1,929General and administrative
    
    
    13,608
    
    
    
    4,643
    
    
    
    1,661
    
    
    
    1,482
    
    
    
    1,113Depreciation and amortization
    
    
    13,954
    
    
    
    4,471
    
    
    
    1,770
    
    
    
    1,475
    
    
    
    1,356Loss (gain) on arbitration settlement, net
    
    
    138
    
    
    
    (1,457
    )
    
    
    
    
    
    
    
    
    
    
    Interest
    
    
    14,175
    
    
    
    2,301
    
    
    
    258
    
    
    
    250
    
    
    
    176Minority interest in NOARK (3)
    
    
    1,083
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total costs and expenses
    
    
    345,748
    
    
    
    72,957
    
    
    
    6,110
    
    
    
    5,269
    
    
    
    4,574Net income
    
    
    25,752
    
    
    
    18,334
    
    
    
    9,639
    
    
    
    5,398
    
    
    
    8,556Premium on preferred unit redemption
    
    
    
    
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    Net income attributable to partners
    
    $
    25,752
    
    
    $
    17,934
    
    
    $
    9,639
    
    
    $
    5,398
    
    
    $
    8,556
 34




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Years Ended December 31,2005(1)
    
    
    2004(2)
    
    
    2003
    
    
    2002
    
    
    2001Net income attributable to partners per limited
partner unit:Basic
    
    $
    1.86
    
    
    $
    2.53
    
    
    $
    2.17
    
    
    $
    1.54
    
    
    $
    2.30Diluted
    
    $
    1.84
    
    
    $
    2.53
    
    
    $
    2.17
    
    
    $
    1.54
    
    
    $
    2.30Balance sheet data (at period end):Property, plant and equipment, net
    
    $
    445,066
    
    
    $
    175,259
    
    
    $
    29,628
    
    
    $
    23,764
    
    
    $
    20,009Total assets
    
    
    742,726
    
    
    
    216,785
    
    
    
    49,512
    
    
    
    28,515
    
    
    
    26,002Total debt, including current portion
    
    
    298,625
    
    
    
    54,452
    
    
    
    
    
    
    
    6,500
    
    
    
    2,089Total partners capital
    
    
    329,510
    
    
    
    136,704
    
    
    
    44,245
    
    
    
    19,686
    
    
    
    21,674Cash flow data:Net cash provided by operating activities
    
    $
    50,917
    
    
    $
    25,193
    
    
    $
    13,702
    
    
    $
    8,138
    
    
    $
    10,268Net cash used in investing activities
    
    
    (411,004
    )
    
    
    (151,797
    )
    
    
    (9,154
    )
    
    
    (5,230
    )
    
    
    (3,128
    )Net cash provided by (used in) financing
activities
    
    
    376,110
    
    
    
    129,740
    
    
    
    8,671
    
    
    
    (3,211
    )
    
    
    (7,021
    )Other financial data:Gross margin (4)
    
    $
    80,516
    
    
    $
    32,202
    
    
    $
    15,651
    
    
    $
    10,660
    
    
    $
    13,095EBITDA (5)
    
    
    53,146
    
    
    
    25,106
    
    
    
    11,667
    
    
    
    7,123
    
    
    
    10,088Adjusted EBITDA (5)
    
    
    57,956
    
    
    
    24,349
    
    
    
    11,667
    
    
    
    7,123
    
    
    
    10,088Maintenance capital expenditures
    
    $
    1,922
    
    
    $
    1,516
    
    
    $
    3,109
    
    
    $
    170
    
    
    $
    159Expansion capital expenditures
    
    
    50,576
    
    
    
    8,527
    
    
    
    4,526
    
    
    
    5,060
    
    
    
    1,569Total capital expenditures
    
    $
    52,498
    
    
    $
    10,043
    
    
    $
    7,635
    
    
    $
    5,230
    
    
    $
    1,728Operating data:Appalachia:Average throughput volumes (Mcf/d)
    
    
    55,204
    
    
    
    53,343
    
    
    
    52,472
    
    
    
    50,363
    
    
    
    46,918Average transportation rate per Mcf
    
    $
    1.21
    
    
    $
    0.96
    
    
    $
    0.82
    
    
    $
    0.58
    
    
    $
    0.76Mid-Continent:Velma system:Gathered gas volume (Mcf/d)
    
    
    67,075
    
    
    
    56,441
    
    
    
    
    
    
    
    
    
    
    
    Processed gas volume (Mcf/d)
    
    
    62,538
    
    
    
    55,202
    
    
    
    
    
    
    
    
    
    
    
    Residue gas volume (Mcf/d)
    
    
    50,880
    
    
    
    42,659
    
    
    
    
    
    
    
    
    
    
    
    NGL production (Bbl/d)
    
    
    6,643
    
    
    
    5,799
    
    
    
    
    
    
    
    
    
    
    
    Condensate volume (Bbl/d)
    
    
    256
    
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    Elk City system:Gathered gas volume (Mcf/d)
    
    
    250,717
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Processed gas volume (Mcf/d)
    
    
    119,324
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Residue gas volume (Mcf/d)
    
    
    109,553
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NGL production (Bbl/d)
    
    
    5,303
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Condensate volume (Bbld/d)
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NOARK system:Average throughput volume (Mcf/d)
    
    
    255,777
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Includes our acquisition of Elk City on April 14, 2005, representing eight and one-half
months operations for the year ended
December 31, 2005, and NOARK on October 31, 2005,
representing two months operations for the year ended
December 31, 2005.(2)
    
    Includes our acquisition of Spectrum on July 16, 2004, representing five and one-half months
operations for the year ended
December 31, 2004.(3)
    
    Represents Southwesterns 25% minority interest in the net income of NOARK.(4)
    
    We define gross margin as revenue less purchased product costs. Purchased product costs
include the cost of natural gas and NGLs that we purchase from third parties. Our management
views gross margin as an important performance measure of core profitability for our
operations and as a key component of our internal financial reporting. We believe that
investors benefit from having access 35




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##### Table of Contents



to the same financial measures that our management uses.
The following table reconciles our net income to gross margin (in thousands): Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in thousands)Net income
    
    $
    25,752
    
    
    $
    18,334
    
    
    $
    9,639
    
    
    $
    5,398
    
    
    $
    8,556Plus (minus):Interest income and other
    
    
    (894
    )
    
    
    (382
    )
    
    
    (98
    )
    
    
    (7
    )
    
    
    (35
    )Plant operating
    
    
    10,557
    
    
    
    2,032
    
    
    
    
    
    
    
    
    
    
    
    Transportation and compression
    
    
    4,053
    
    
    
    2,260
    
    
    
    2,421
    
    
    
    2,062
    
    
    
    1,929General and administrative
    
    
    13,608
    
    
    
    4,643
    
    
    
    1,661
    
    
    
    1,482
    
    
    
    1,113Depreciation and amortization
    
    
    13,954
    
    
    
    4,471
    
    
    
    1,770
    
    
    
    1,475
    
    
    
    1,356Loss (gain) on arbitration settlement, net
    
    
    138
    
    
    
    (1,457
    )
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    14,175
    
    
    
    2,301
    
    
    
    258
    
    
    
    250
    
    
    
    176Minority interest in NOARK net income
    
    
    1,083
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest share of gross margin for
NOARK
    
    
    (1,910
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross margin
    
    $
    80,516
    
    
    $
    32,202
    
    
    $
    15,651
    
    
    $
    10,660
    
    
    $
    13,095
 
 (5)
    
    EBITDA represents net income before net interest expense, income taxes, and depreciation
and amortization. Adjusted EBITDA is calculated by adding to EBITDA other non-cash items such
as compensation expenses associated with unit issuances to members of the managing board and
employees of our general partner. EBITDA and Adjusted EBITDA are not intended to represent
cash flow and do 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. The EBITDA calculation below is different from the EBITDA calculation under our
credit facility. Adjusted EBITDA excludes net gain or loss on arbitration settlement as a
non-recurring item.Certain items excluded from EBITDA are significant components in understanding and assessing an
entitys financial performance, such as their cost of capital and its tax structure, as well as
historic costs of depreciable assets. We have included information concerning EBITDA and
Adjusted EBITDA because they provide investors and management with additional information as to
our ability to pay fixed charges and are presented solely as a supplemental financial measure.
EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than,
net income or cash flow as determined in accordance with generally accepted accounting
principles or as indicators of our operating performance or liquidity. The following table
reconciles net income to EBITDA and EBITDA Adjusted EBITDA (in thousands): Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in thousands)Net income
    
    $
    25,752
    
    
    $
    18,334
    
    
    $
    9,639
    
    
    $
    5,398
    
    
    $
    8,556Plus:Interest expense
    
    
    14,175
    
    
    
    2,301
    
    
    
    258
    
    
    
    250
    
    
    
    176Depreciation and amortization
    
    
    13,954
    
    
    
    4,471
    
    
    
    1,770
    
    
    
    1,475
    
    
    
    1,356Minority interest share of depreciation and
amortization and interest expense for
NOARK
    
    
    (735
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EBITDA
    
    $
    53,146
    
    
    $
    25,106
    
    
    $
    11,667
    
    
    $
    7,123
    
    
    $
    10,088Adjustments:Non-cash compensation expense
    
    
    4,672
    
    
    
    700
    
    
    
    
    
    
    
    
    
    
    
    Loss (gain) on arbitration settlement, net
    
    
    138
    
    
    
    (1,457
    )
    
    
    
    
    
    
    
    
    
    
    Adjusted EBITDA
    
    $
    57,956
    
    
    $
    24,349
    
    
    $
    11,667
    
    
    $
    7,123
    
    
    $
    10,088
 36




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  General
   
    
    a 75% interest in a FERC-regulated, 565-mile interstate pipeline system, that
extends from southeastern Oklahoma through Arkansas and into southeastern Missouri and
which has throughput capacity of approximately 322 MMcf/d;
    
    two natural gas processing plants with aggregate capacity of approximately 230
MMcf/d and one treating facility with a capacity of approximately 200 MMcf/d, all
located in Oklahoma; and
    
    1,765 miles of active natural gas gathering systems located in Oklahoma, Arkansas,
northern Texas and the Texas panhandle, which transport gas from wells and central
delivery points in the Mid-Continent region to our natural gas processing plants or
transmission lines.
  Significant Acquisitions
  
    
    In October 2005, we acquired from Enogex, a wholly-owned subsidiary of OGE Energy
Corp., all of the outstanding equity of Atlas Arkansas, which owns a 75% interest in
NOARK, for $179.8 million, including $16.8 million for working capital adjustments and
other related transaction costs.
NOARKs principal assets include the Ozark Gas Transmission system, a 565-mile interstate
natural gas pipeline, and Ozark Gas Gathering, a 365-mile natural gas gathering system.
The remaining 25% interest in NOARK is owned by Southwestern.
 37




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##### Table of Contents




    
    In April 2005, we acquired all of the outstanding equity interests of Elk City for
$196.0 million, including related transaction costs. Elk Citys principal assets
include approximately 300 miles of natural gas pipelines located in the Anadarko Basin
in western Oklahoma and the Texas panhandle, a natural gas processing facility in Elk
City, Oklahoma, with a total capacity of approximately 200 MMcf/d and a gas treatment
facility in Prentiss, Oklahoma, with a total capacity of approximately 200 MMcf/d.
    
    In July 2004, we acquired Spectrum for $141.6 million, including transaction costs
and the payment of taxes due as a result of the transaction. Spectrums principal
assets consist of 1,100 miles of active and 800 miles of inactive natural gas gathering
pipelines in the Golden Trend area of southern Oklahoma and the Barnett Shale area of
North Texas and a natural gas processing facility in Stephens County, Oklahoma, with a
total capacity of approximately 100 MMcf/d.
 Contractual Revenue Arrangements
  
    
    the volumes of natural gas we gather, transport and process which, in turn, depend
upon the number of wells connected to our gathering systems, the amount of natural gas
they produce, and the demand for natural gas and NGLs; and
    
    the transportation and processing fees we receive which, in turn, depend upon the
price of the natural gas and NGLs we transport and process, which itself is a function
of the relevant supply and demand in the mid-continent, mid-Atlantic and northeastern
areas of the United States.
   Fee-Based Contracts
 POP Contracts
 38




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##### Table of Contents



Keep-Whole Contracts
   Results of Operations
  Years Ended December 31,2005
    
    2004
    
    2003Operating data:Appalachia:Average throughput volumes (Mcf/d)
    
    
    55,204
    
    
    
    53,343
    
    
    
    52,472Average transportation rate per Mcf
    
    $
    1.21
    
    
    $
    0.96
    
    
    $
    0.82Mid-Continent:Velma system:Gathered gas volume (Mcf/d)
    
    
    67,075
    
    
    
    56,441
    
    
    
    Processed gas volume (Mcf/d)
    
    
    62,538
    
    
    
    55,202
    
    
    
    Residue gas volume (Mcf/d)
    
    
    50,880
    
    
    
    42,659
    
    
    
    NGL production (Bbl/d)
    
    
    6,643
    
    
    
    5,799
    
    
    
    Condensate volume (Bbl/d)
    
    
    256
    
    
    
    185
    
    
    
    Elk City system:Gathered gas volume (Mcf/d)
    
    
    250,717
    
    
    
    
    
    
    
    Processed gas volume (Mcf/d)
    
    
    119,324
    
    
    
    
    
    
    
    Residue gas volume (Mcf/d)
    
    
    109,553
    
    
    
    
    
    
    
    NGL production (Bbl/d)
    
    
    5,303
    
    
    
    
    
    
    
    Condensate volume (Bbld/d)
    
    
    127
    
    
    
    
    
    
    
    NOARK system:Average throughput volume (Mcf/d)
    
    
    255,777
    
    
    
    
    
    
    
    
 39




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##### Table of Contents



Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Revenue.
  Costs and Expenses.
    40




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##### Table of Contents



Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Revenue.
 Costs and Expenses.
     41




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##### Table of Contents



Liquidity and Capital Resources
 General
  
    
    cash distributions and maintenance capital expenditures through existing cash and
cash flows from operating activities;
    
    expansion capital expenditures and working capital deficits through the retention of
cash and additional borrowings; and
    
    debt principal payments through additional borrowings as they become due or by the
issuance of additional common units.
  Cash Flows  Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
    42




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##### Table of Contents



Cash Flows  Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
    Capital Requirements
  
    
    maintenance capital expenditures to maintain equipment reliability and safety and to
address environmental regulations; and
    
    expansion capital expenditures to acquire complementary assets and to expand the
capacity of our existing operations.
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Maintenance capital expenditures
    
    $
    1,922
    
    
    $
    1,516
    
    
    $
    3,109Expansion capital expenditures
    
    
    50,576
    
    
    
    8,527
    
    
    
    4,526Total
    
    $
    52,498
    
    
    $
    10,043
    
    
    $
    7,635
  43




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##### Table of Contents



Partnership Distributions
    Contractual Obligations and Commercial Commitments
  Payments Due By PeriodLess than
    
    
    1  3
    
    
    4  5
    
    
    After 5Contractual cash obligations:
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsTotal debt (1)
    
    $
    298,625
    
    
    $
    1,263
    
    
    $
    2,462
    
    
    $
    11,900
    
    
    $
    283,000Operating leases
    
    
    3,828
    
    
    
    1,769
    
    
    
    1,679
    
    
    
    380
    
    
    
    Total contractual cash obligations
    
    $
    302,453
    
    
    $
    3,032
    
    
    $
    4,141
    
    
    $
    12,280
    
    
    $
    283,000
 
 (1)
    
    Not included in the table above are estimated interest payments calculated at the
rates in effect at December 31, 2005: Less than one year  $21.3 million; 1 to 3 years
 $42.6 million; 4 to 5 years  $42.1 million; and after 5 years  $95.6 million. 44




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##### Table of Contents



Amount of Commitment Expiration Per PeriodLess than
    
    
    1  3
    
    
    4  5
    
    
    After 5Other commercial commitments:
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsStandby letters of credit
    
    $
    11,050
    
    
    $
    11,025
    
    
    $
    25
    
    
    $
    
    
    
    $
    Other commercial commitments
    
    
    19,665
    
    
    
    19,665
    
    
    
    
    
    
    
    
    
    
    
    Total commercial commitments
    
    $
    30,715
    
    
    $
    30,690
    
    
    $
    25
    
    
    $
    
    
    
    $
    
  Equity Offerings
      Shelf Registration Statement
  45




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##### Table of Contents



Credit Facility
     Senior Notes
  46




---



##### Table of Contents



NOARK Notes
  Significant Announced Internal Growth Project
  47




---



##### Table of Contents



Environmental Regulation
   Inflation and Changes in Prices
  Critical Accounting Policies and Estimates
  Use of Estimates
  48




---



##### Table of Contents



Receivables
  Revenue Recognition
    49




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##### Table of Contents



Intangible Assets
  December 31, 2005
    
    
    EstimatedGross Carrying
    
    
    Accumulated
    
    
    Useful LivesAmount
    
    
    Amortization
    
    
    in YearsAmortized intangible assets:Customer contracts
    
    $
    23,990
    
    
    $
    (1,339
    )
    
    
    8Customer relationships
    
    
    32,960
    
    
    
    (742
    )
    
    
    20$
    56,950
    
    
    $
    (2,081
    )
  Goodwill
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Balance, beginning of year
    
    $
    2,305
    
    
    $
    2,305
    
    
    $
    2,305Goodwill acquired  Elk City acquisition
    
    
    61,136
    
    
    
    
    
    
    
    Goodwill acquired  NOARK acquisition
    
    
    49,088
    
    
    
    
    
    
    
    Reduction in
minority interest deficit acquired
    
    
    (1,083
    )
    
    
    
    
    
    
    Impairment losses
    
    
    
    
    
    
    
    
    
    
    Balance, end of year
    
    $
    111,446
    
    
    $
    2,305
    
    
    $
    2,305
  50




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##### Table of Contents



Depreciation and Amortization
  Impairment of Assets
  Fair Value of Derivative Commodity Contracts
    51




---



##### Table of Contents



Volume Measurement
  New Accounting Standards
   
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  52




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##### Table of Contents



General
   Interest Rate Risk.
 Commodity Price Risk
    53




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##### Table of Contents



Natural Gas Liquids Fixed  Price Swaps
 ProductionPeriod
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(1)(gallons)
    
    
    (per gallon)
    
    
    (in thousands)2006
    
    
    40,068,000
    
    
    $
    0.683
    
    
    $
    (12,119
    )2007
    
    
    36,036,000
    
    
    
    0.717
    
    
    
    (9,157
    )2008
    
    
    33,012,000
    
    
    
    0.697
    
    
    
    (7,365
    )$
    (28,641
    )
 Natural Gas Fixed  Price Swaps
 ProductionPeriod
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(3)(MMBTU)(2)
    
    
    (per MMBTU)
    
    
    (in thousands)2006
    
    
    3,192,500
    
    
    $
    7.186
    
    
    $
    (110
    )2007
    
    
    1,080,000
    
    
    
    7.255
    
    
    
    (3,242
    )2008
    
    
    240,000
    
    
    
    7.270
    
    
    
    (605
    )$
    (3,957
    )
 Natural Gas Basis Swaps
 ProductionPeriod
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)(MMBTU)(2)
    
    
    (per MMBTU)
    
    
    (in thousands)2006
    
    
    3,527,500
    
    
    $
    (0.521
    )
    
    $
    (473
    )2007
    
    
    1,080,000
    
    
    
    (0.535
    )
    
    
    3,5802008
    
    
    240,000
    
    
    
    (0.555
    )
    
    
    808$
    3,915
 54




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##### Table of Contents



Crude Oil Fixed  Price Swaps
 ProductionPeriod
    
    
    
    
    
    Average
    
    
    Fair ValueEnded December 31,
    
    Volumes
    
    
    Strike Price
    
    
    Liability(3)(barrels)
    
    
    (per barrel)
    
    
    (in thousands)2006
    
    
    77,600
    
    
    $
    51.545
    
    
    $
    (881
    )2007
    
    
    80,400
    
    
    
    56.069
    
    
    
    (643
    )2008
    
    
    62,400
    
    
    
    59.267
    
    
    
    (223
    )$
    (1,747
    )Total net liability
    
    $
    (30,430
    )
 
 (1)
    
    Fair value based upon management estimates, including forecasted
forward NGL prices as a function of forward NYMEX natural gas and
light crude prices.(2)
    
    MMBTU represents million British Thermal Units.(3)
    
    Fair value based on forward NYMEX natural gas and light crude prices, as
applicable. 55




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
     /s/ GRANT THORNTON LLP
 
 56




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    34,237
    
    
    $
    18,214Accounts receivable  affiliates
    
    
    4,649
    
    
    
    1,496Accounts receivable
    
    
    57,528
    
    
    
    13,729Current portion of hedge asset
    
    
    11,388
    
    
    
    40Prepaid expenses
    
    
    2,454
    
    
    
    1,056Total current assets
    
    
    110,256
    
    
    
    34,535Property, plant and equipment, net
    
    
    445,066
    
    
    
    175,259Long-term hedge asset
    
    
    4,388
    
    
    
    14Intangible assets, net
    
    
    54,869
    
    
    
    Goodwill
    
    
    111,446
    
    
    
    2,305Other assets, net
    
    
    16,701
    
    
    
    4,672$
    742,726
    
    
    $
    216,785LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Current portion of long-term debt
    
    $
    1,263
    
    
    $
    2,303Accounts payable
    
    
    15,609
    
    
    
    2,341Accrued liabilities
    
    
    16,064
    
    
    
    3,144Current portion of hedge liability
    
    
    23,796
    
    
    
    1,959Accrued producer liabilities
    
    
    36,712
    
    
    
    10,996Distribution payable
    
    
    
    
    
    
    6,467Total current liabilities
    
    
    93,444
    
    
    
    27,210Long-term hedge liability
    
    
    22,410
    
    
    
    722Long-term debt, less current portion
    
    
    297,362
    
    
    
    52,149Commitments and contingenciesPartners capital:Limited partners interests
    
    
    349,491
    
    
    
    135,769General partners interest
    
    
    10,094
    
    
    
    2,253Accumulated other comprehensive loss
    
    
    (30,075
    )
    
    
    (1,318
    )Total partners capital
    
    
    329,510
    
    
    
    136,704$
    742,726
    
    
    $
    216,785
  57




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Revenue:Natural gas and liquids
    
    $
    340,297
    
    
    $
    72,109
    
    
    $
    Transportation and compression  affiliates
    
    
    24,346
    
    
    
    18,724
    
    
    
    15,563Transportation and compression  third parties
    
    
    5,963
    
    
    
    76
    
    
    
    88Interest income and other
    
    
    894
    
    
    
    382
    
    
    
    98Total revenue and other income
    
    
    371,500
    
    
    
    91,291
    
    
    
    15,749Costs and expenses:Natural gas and liquids
    
    
    288,180
    
    
    
    58,707
    
    
    
    Plant operating
    
    
    10,557
    
    
    
    2,032
    
    
    
    Transportation and compression
    
    
    4,053
    
    
    
    2,260
    
    
    
    2,421General and administrative
    
    
    11,825
    
    
    
    3,562
    
    
    
    853Compensation reimbursement  affiliates
    
    
    1,783
    
    
    
    1,081
    
    
    
    808Depreciation and amortization
    
    
    13,954
    
    
    
    4,471
    
    
    
    1,770Interest
    
    
    14,175
    
    
    
    2,301
    
    
    
    258Minority interest in NOARK
    
    
    1,083
    
    
    
    
    
    
    
    Loss (gain) on arbitration settlement, net
    
    
    138
    
    
    
    (1,457
    )
    
    
    Total costs and expenses
    
    
    345,748
    
    
    
    72,957
    
    
    
    6,110Net income
    
    
    25,752
    
    
    
    18,334
    
    
    
    9,639Premium on preferred unit redemption
    
    
    
    
    
    
    (400
    )
    
    
    Net income attributable to partners
    
    $
    25,752
    
    
    $
    17,934
    
    
    $
    9,639Allocation of net income attributable to partners:Limited partners interest
    
    $
    16,355
    
    
    $
    14,864
    
    
    $
    8,651General partners interest
    
    
    9,397
    
    
    
    3,070
    
    
    
    988Net income attributable to partners
    
    $
    25,752
    
    
    $
    17,934
    
    
    $
    9,639Net income attributable to partners per limited
partner unit:Basic
    
    $
    1.86
    
    
    $
    2.53
    
    
    $
    2.17Diluted
    
    $
    1.84
    
    
    $
    2.53
    
    
    $
    2.17Weighted average limited partner units outstanding:Basic
    
    
    8,808
    
    
    
    5,866
    
    
    
    3,981Diluted
    
    
    8,872
    
    
    
    5,870
    
    
    
    3,981
  58




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Net income
    
    $
    25,752
    
    
    $
    18,334
    
    
    $
    9,639Premium on preferred unit redemption
    
    
    
    
    
    
    (400
    )
    
    
    Net income attributable to partners
    
    
    25,752
    
    
    
    17,934
    
    
    
    9,639Other comprehensive loss:Change in fair value of derivative instruments accounted for
as hedges
    
    
    (39,882
    )
    
    
    (1,320
    )
    
    
    Add: reclassification adjustment for losses in net income
    
    
    11,125
    
    
    
    2
    
    
    
    (28,757
    )
    
    
    (1,318
    )
    
    
    Comprehensive income (loss)
    
    $
    (3,005
    )
    
    $
    16,616
    
    
    $
    9,639
  59




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
(in thousands, except unit data)
 AccumulatedNumber of Limited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    TotalPartner Units
    
    
    
    
    
    
    
    
    
    
    General
    
    
    Comprehensive
    
    
    PartnersCommon
    
    
    Subordinated
    
    
    Common
    
    
    Subordinated
    
    
    Partner
    
    
    Loss
    
    
    CapitalBalance at January 1, 2003
    
    
    1,621,159
    
    
    
    1,641,026
    
    
    $
    19,163
    
    
    $
    684
    
    
    $
    (161
    )
    
    $
    
    
    
    $
    19,686Issuance of common units in public offering
    
    
    1,092,500
    
    
    
    
    
    
    
    25,182
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,182General partner capital contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    538
    
    
    
    
    
    
    
    538Distributions to partners
    
    
    
    
    
    
    
    
    
    
    (4,164
    )
    
    
    (2,888
    )
    
    
    (675
    )
    
    
    
    
    
    
    (7,727
    )Distribution payable
    
    
    
    
    
    
    
    
    
    
    (1,696
    )
    
    
    (1,026
    )
    
    
    (351
    )
    
    
    
    
    
    
    (3,073
    )Net income attributable to partners
    
    
    
    
    
    
    
    
    
    
    5,066
    
    
    
    3,584
    
    
    
    989
    
    
    
    
    
    
    
    9,639Balance at December 31, 2003
    
    
    2,713,659
    
    
    
    1,641,026
    
    
    $
    43,551
    
    
    $
    354
    
    
    $
    340
    
    
    $
    
    
    
    $
    44,245Issuance of common units in public offering
    
    
    2,850,000
    
    
    
    
    
    
    
    93,119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,119General partner capital contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,994
    
    
    
    
    
    
    
    1,994Distributions to partners
    
    
    
    
    
    
    
    
    
    
    (7,732
    )
    
    
    (3,200
    )
    
    
    (1,871
    )
    
    
    
    
    
    
    (12,803
    )Distribution payable
    
    
    
    
    
    
    
    
    
    
    (4,006
    )
    
    
    (1,181
    )
    
    
    (1,280
    )
    
    
    
    
    
    
    (6,467
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,318
    )
    
    
    (1,318
    )Net income attributable to partners
    
    
    
    
    
    
    
    
    
    
    10,941
    
    
    
    3,923
    
    
    
    3,070
    
    
    
    
    
    
    
    17,934Balance at December 31, 2004
    
    
    5,563,659
    
    
    
    1,641,026
    
    
    $
    135,873
    
    
    $
    (104
    )
    
    $
    2,253
    
    
    $
    (1,318
    )
    
    $
    136,704Conversion of subordinated units
    
    
    1,641,026
    
    
    
    (1,641,026
    )
    
    
    (104
    )
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common units in public offering
    
    
    5,330,000
    
    
    
    
    
    
    
    212,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212,700Issuance of common units under long-term
incentive plan
    
    
    14,581
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    General partner capital contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,684
    
    
    
    
    
    
    
    4,684Unissued common units under long-term
incentive plan
    
    
    
    
    
    
    
    
    
    
    5,381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,381Distributions to partners
    
    
    
    
    
    
    
    
    
    
    (20,433
    )
    
    
    
    
    
    
    (6,240
    )
    
    
    
    
    
    
    (26,673
    )Distribution equivalent rights paid on
unissued units under long-term incentive
plan
    
    
    
    
    
    
    
    
    
    
    (281
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (281
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,757
    )
    
    
    (28,757
    )Net income attributable to partners
    
    
    
    
    
    
    
    
    
    
    16,355
    
    
    
    
    
    
    
    9,397
    
    
    
    
    
    
    
    25,752Balance at December 31, 2005
    
    
    12,549,266
    
    
    
    
    
    
    $
    349,491
    
    
    $
    
    
    
    $
    10,094
    
    
    $
    (30,075
    )
    
    $
    329,510
  60




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Years Ended December 31,2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income attributable to partners
    
    $
    25,752
    
    
    $
    17,934
    
    
    $
    9,639Adjustments to reconcile net income attributable to partners
to net cash provided by operating activities:Depreciation and amortization
    
    
    13,954
    
    
    
    4,471
    
    
    
    1,770Non-cash gain on derivative value
    
    
    (954
    )
    
    
    (210
    )
    
    
    Non-cash compensation under long-term incentive plan
    
    
    4,672
    
    
    
    700
    
    
    
    Amortization of deferred finance costs
    
    
    2,140
    
    
    
    400
    
    
    
    106Minority interest in NOARK
    
    
    1,083
    
    
    
    
    
    
    
    Change in operating assets and liabilities, net of effects of
acquisitions:(Increase) decrease in accounts receivable and prepaid
expenses
    
    
    (27,823
    )
    
    
    4,361
    
    
    
    448Increase (decrease) in accounts payable and accrued
liabilities
    
    
    35,246
    
    
    
    (3,264
    )
    
    
    413(Increase) decrease in accounts receivable  affiliates
    
    
    (3,153
    )
    
    
    801
    
    
    
    1,326Net cash provided by operating activities
    
    
    50,917
    
    
    
    25,193
    
    
    
    13,702CASH FLOWS FROM INVESTING ACTIVITIES:Net cash paid for acquisitions
    
    
    (358,831
    )
    
    
    (141,626
    )
    
    
    Capital expenditures
    
    
    (52,498
    )
    
    
    (10,043
    )
    
    
    (7,635
    )Other
    
    
    325
    
    
    
    (128
    )
    
    
    (1,519
    )Net cash used in investing activities
    
    
    (411,004
    )
    
    
    (151,797
    )
    
    
    (9,154
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net proceeds from issuance of debt
    
    
    243,102
    
    
    
    
    
    
    
    Repayment of debt
    
    
    (677
    )
    
    
    
    
    
    
    Borrowings under credit facility
    
    
    463,500
    
    
    
    110,000
    
    
    
    2,000Repayments under credit facility
    
    
    (508,250
    )
    
    
    (55,750
    )
    
    
    (8,500
    )Distributions paid to partners
    
    
    (33,140
    )
    
    
    (15,876
    )
    
    
    (9,601
    )General partner capital contributions
    
    
    4,684
    
    
    
    1,994
    
    
    
    538Net proceeds from issuance of limited partner units
    
    
    212,700
    
    
    
    93,119
    
    
    
    25,182Net proceeds from sale of preferred units
    
    
    
    
    
    
    20,000
    
    
    
    Redemption of preferred units
    
    
    
    
    
    
    (20,000
    )
    
    
    Other
    
    
    (5,809
    )
    
    
    (3,747
    )
    
    
    (948
    )Net cash provided by financing activities
    
    
    376,110
    
    
    
    129,740
    
    
    
    8,671Net change in cash and cash equivalents
    
    
    16,023
    
    
    
    3,136
    
    
    
    13,219Cash and cash equivalents, beginning of year
    
    
    18,214
    
    
    
    15,078
    
    
    
    1,859Cash and cash equivalents, end of year
    
    $
    34,237
    
    
    $
    18,214
    
    
    $
    15,078
  61




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  NATURE OF OPERATIONS
  NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation and Minority Interest
   62




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ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Use of Estimates
  Cash Equivalents
  Receivables
  Property, Plant and Equipment
  Impairment of Long-Lived Assets
  Capitalized Interest
  Fair Value of Financial Instruments
  63




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ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Derivative Instruments
  Intangible Assets
  December 31, 2005
    
    
    EstimatedGross Carrying
    
    
    Accumulated
    
    
    Useful LivesAmount
    
    
    Amortization
    
    
    in YearsAmortized intangible assets:Customer contracts
    
    $
    23,990
    
    
    $
    (1,339
    )
    
    
    8Customer relationships
    
    
    32,960
    
    
    
    (742
    )
    
    
    20$
    56,950
    
    
    $
    (2,081
    )
  Goodwill
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Balance, beginning of year
    
    $
    2,305
    
    
    $
    2,305
    
    
    $
    2,305Goodwill acquired  Elk City acquisition (see Note 7)
    
    
    61,136
    
    
    
    
    
    
    
    Goodwill acquired  NOARK acquisition (see Note 7)
    
    
    49,088
    
    
    
    
    
    
    
    Reduction in
minority interest deficit acquired
    
    
    (1,083
    )
    
    
    
    
    
    
    Impairment losses
    
    
    
    
    
    
    
    
    
    
    Balance, end of year
    
    $
    111,446
    
    
    $
    2,305
    
    
    $
    2,305
 64




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Federal Income Taxes
   Stock-Based Compensation
   65




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Net Income Per Unit
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Weighted average number of limited partner units  basic
    
    
    8,808
    
    
    
    5,866
    
    
    
    3,981Add effect of dilutive unit incentive awards
    
    
    64
    
    
    
    4
    
    
    
    Weighted average number of limited partner units  diluted
    
    
    8,872
    
    
    
    5,870
    
    
    
    3,981
 Environmental Matters
  66




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Segment Information
  Revenue Recognition
    Comprehensive Income (Loss)
  67




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 New Accounting Standards
   Reclassifications
  NOTE 3  EQUITY OFFERINGS
   68




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    NOTE 4  CASH DISTRIBUTIONS
  Date Cash
    
    
    
    Cash Distribution per
    
    Total Cash DistributionsDistribution Paid
    
    For Quarter Ended
    
    Limited Partner Unit
    
    To Limited Partners(in thousands)May 9, 2003
    
    March 31, 2003
    
    $0.560
    
    $   908August 8, 2003
    
    June 30, 2003
    
    $0.580
    
    $1,574November 7, 2003
    
    September 30, 2003
    
    $0.620
    
    $1,682February 6, 2004
    
    December 31, 2003
    
    $0.625
    
    $1,696May 7, 2004
    
    March 31, 2004
    
    $0.630
    
    $1,710August 6, 2004
    
    June 30, 2004
    
    $0.630
    
    $2,182November 5, 2004
    
    September 30, 2004
    
    $0.690
    
    $3,839February 11, 2005
    
    December 31, 2004
    
    $0.720
    
    $4,006May 13, 2005
    
    March 31, 2005
    
    $0.750
    
    $4,173August 5, 2005
    
    June 30, 2005
    
    $0.770
    
    $6,055November 14, 2005
    
    September 30, 2005
    
    $0.810
    
    $6,382
  69




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 5  PROPERTY, PLANT AND EQUIPMENT
  EstimatedDecember 31,
    
    
    Useful Lives2005
    
    
    2004
    
    
    in YearsPipelines, processing and compression facilities
    
    $
    443,729
    
    
    $
    168,932
    
    
    
    15  40Rights of way
    
    
    19,252
    
    
    
    14,128
    
    
    
    20  40Buildings
    
    
    3,350
    
    
    
    3,215
    
    
    
    40Furniture and equipment
    
    
    1,525
    
    
    
    517
    
    
    
    3  7Other
    
    
    889
    
    
    
    307
    
    
    
    3  10468,745
    
    
    
    187,099Less  accumulated depreciation
    
    
    (23,679
    )
    
    
    (11,840
    )$
    445,066
    
    
    $
    175,259
  NOTE 6  OTHER ASSETS
  December 31,2005
    
    
    2004Deferred finance costs, net of
accumulated amortization of $1,636 and
$506 at December 31, 2005 and 2004,
respectively
    
    $
    15,034
    
    
    $
    3,316Security deposits
    
    
    1,599
    
    
    
    1,356Other
    
    
    68
    
    
    
    $
    16,701
    
    
    $
    4,672
  70




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 7  ACQUISITIONS
 NOARK
  Cash and cash equivalents
    
    $
    16,215Accounts receivable
    
    
    11,091Prepaid expenses
    
    
    497Property, plant and equipment
    
    
    126,238Other assets
    
    
    1,515Intangible assets  customer contracts
    
    
    11,600Intangible assets  customer relationships
    
    
    15,700Goodwill
    
    
    49,088Total assets acquired
    
    
    231,944Accounts payable and accrued liabilities
    
    
    (12,514
    )Total debt
    
    
    (39,600
    )Total liabilities assumed
    
    
    (52,114
    )Net assets acquired
    
    
    179,830Less: Cash and cash equivalents acquired
    
    
    (16,215
    )Net cash paid for acquisition
    
    $
    163,615
  Elk City
  71




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Accounts receivable
    
    $
    5,587Other assets
    
    
    497Property, plant and equipment
    
    
    104,106Intangible assets  customer contracts
    
    
    12,390Intangible assets  customer relationships
    
    
    17,260Goodwill
    
    
    61,136Total assets acquired
    
    
    200,976Accounts payable and accrued liabilities
    
    
    (4,970
    )Net assets acquired
    
    $
    196,006
  Spectrum
  Cash and cash equivalents
    
    $
    803Accounts receivable
    
    
    18,505Prepaid expenses
    
    
    649Property, plant and equipment
    
    
    139,464Other long-term assets
    
    
    1,054Total assets acquired
    
    
    160,475Accounts payable and accrued liabilities
    
    
    (17,153
    )Hedging liabilities
    
    
    (1,519
    )Long-term debt
    
    
    (164
    )Total liabilities assumed
    
    
    (18,836
    )Net assets acquired
    
    
    141,639Less: Cash and cash equivalents acquired
    
    
    (803
    )Net cash paid for acquisition
    
    $
    140,836
  72




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Years Ended December 31,2005
    
    2004Total revenue and other income
    
    $
    469,867
    
    
    $
    372,113Net income attributable to partners
    
    $
    19,029
    
    
    $
    11,656Net income attributable to limited partners per
limited partner unit:Basic
    
    $
    0.78
    
    
    $
    0.70Diluted
    
    $
    0.77
    
    
    $
    0.69
 NOTE 8  DERIVATIVE INSTRUMENTS
    73




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Natural Gas Liquids Fixed  Price Swaps
 Production
    
    
    
    
    
    Average
    
    
    Fair ValuePeriod
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(1)Ended December 31,
    
    (gallons)
    
    
    (per gallon)
    
    
    (in thousands)2006
    
    
    40,068,000
    
    
    $
    0.683
    
    
    $
    (12,119
    )2007
    
    
    36,036,000
    
    
    
    0.717
    
    
    
    (9,157
    )2008
    
    
    33,012,000
    
    
    
    0.697
    
    
    
    (7,365
    )$
    (28,641
    )
 Natural Gas Fixed  Price Swaps
 Production
    
    
    
    
    
    Average
    
    
    Fair ValuePeriod
    
    Volumes
    
    
    Fixed Price
    
    
    Liability(3)Ended December 31,
    
    (MMBTU)(2)
    
    
    (per MMBTU)
    
    
    (in thousands)2006
    
    
    3,192,500
    
    
    $
    7.186
    
    
    $
    (110
    )2007
    
    
    1,080,000
    
    
    
    7.255
    
    
    
    (3,242
    )2008
    
    
    240,000
    
    
    
    7.270
    
    
    
    (605
    )$
    (3,957
    )
 Natural Gas Basis Swaps
 Production
    
    
    
    
    
    Average
    
    
    Fair ValuePeriod
    
    Volumes
    
    
    Fixed Price
    
    
    Asset(3)Ended December 31,
    

(MMBTU)(2)
    
    
    (per MMBTU)
    
    
    (in thousands)2006
    
    
    3,527,500
    
    
    $
    (0.521
    )
    
    $
    (473
    )2007
    
    
    1,080,000
    
    
    
    (0.535
    )
    
    
    3,5802008
    
    
    240,000
    
    
    
    (0.555
    )
    
    
    808$
    3,915
 74




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Crude Oil Fixed  Price Swaps
 Production
    
    
    
    
    
    Average
    
    
    Fair ValuePeriod
    
    Volumes
    
    
    Strike Price
    
    
    Liability(3)Ended December 31,
    
    (barrels)
    
    
    (per barrel)
    
    
    (in thousands)2006
    
    
    77,600
    
    
    $
    51.545
    
    
    $
    (881
    )2007
    
    
    80,400
    
    
    
    56.069
    
    
    
    (643
    )2008
    
    
    62,400
    
    
    
    59.267
    
    
    
    (223
    )$
    (1,747
    )Total net liability
    
    
    $
    (30,430
    )
 
 (1)
    
    Fair value based upon management estimates, including forecasted
forward NGL prices as a function of forward NYMEX natural gas and
light crude prices.(2)
    
    MMBTU represents million British Thermal Units.(3)
    
    Fair value based on forward NYMEX natural gas and light crude prices, as
applicable. NOTE 9  DEBT
  December 31,2005
    
    
    2004Credit Facility:Revolving credit facility
    
    $
    9,500
    
    
    $
    10,000Term loan
    
    
    
    
    
    
    44,250Senior Notes
    
    
    250,000
    
    
    
    NOARK Notes
    
    
    39,000
    
    
    
    Other debt
    
    
    125
    
    
    
    202298,625
    
    
    
    54,452Less current maturities
    
    
    (1,263
    )
    
    
    (2,303
    )$
    297,362
    
    
    $
    52,149
 Credit Facility
  75




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Senior Notes
    76




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOARK Notes
   Years Ended December 31:2006
    
    $
    1,2632007
    
    
    1,2622008
    
    
    1,2002009
    
    
    1,2002010
    
    
    10,700Thereafter
    
    
    283,000$
    298,625
  NOTE 10  COMMITMENTS AND CONTINGENCIES
  Years Ended December 31:2006
    
    $
    1,7692007
    
    
    8532008
    
    
    8262009
    
    
    3732010
    
    
    7Thereafter
    
    
    $
    3,828
 77




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    NOTE 11  FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
     78




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE
12  STOCK COMPENSATION
 Long-Term
Incentive Plan
    79




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Outstanding, beginning of period
    
    
    58,329
    
    
    
    
    
    
    
    Granted(1)
    
    
    67,399
    
    
    
    59,175
    
    
    
    Matured
    
    
    (14,581
    )
    
    
    
    
    
    
    Forfeited
    
    
    (1,019
    )
    
    
    (846
    )
    
    
    Outstanding, end of period
    
    
    110,128
    
    
    
    58,329
    
    
    
    Non-cash compensation expense recognized
(in thousands)
    
    $
    2,201
    
    
    $
    700
    
    
    $
    
 
 (1)
    
    The weighted average price for phantom unit awards on the date of grant was $48.59 and $37.15 for
awards granted for the years ended December 31, 2005 and 2004, respectively. There were no units
awarded for the year ended December 31, 2003.  Incentive Compensation Agreements
   80




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 13  RELATED PARTY TRANSACTIONS
     NOTE 14  SETTLEMENT OF TERMINATED ALASKA PIPELINE ARBITRATION
  NOTE 15  OPERATING SEGMENT INFORMATION
  81




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Mid-Continent:RevenuesNatural gas and liquids
    
    $
    340,297
    
    
    $
    72,109
    
    
    $
    Transportation and compression
    
    
    5,880
    
    
    
    
    
    
    
    Interest income and other
    
    
    513
    
    
    
    60
    
    
    
    Total revenues and other income
    
    
    346,690
    
    
    
    72,169
    
    
    
    Costs and expensesNatural gas and liquids
    
    
    288,180
    
    
    
    58,707
    
    
    
    Plant operating
    
    
    10,557
    
    
    
    2,032
    
    
    
    Transportation and compression
    
    
    952
    
    
    
    
    
    
    
    General and administrative
    
    
    7,375
    
    
    
    1,088
    
    
    
    Minority interest in NOARK
    
    
    1,083
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    11,307
    
    
    
    2,408
    
    
    
    Total costs and expenses
    
    
    319,454
    
    
    
    64,235
    
    
    
    Segment profit
    
    $
    27,236
    
    
    $
    7,934
    
    
    $
    Appalachia:RevenuesTransportation and compression  affiliates
    
    $
    24,346
    
    
    $
    18,724
    
    
    $
    15,563Transportation and compression  third parties
    
    
    83
    
    
    
    76
    
    
    
    88Interest income and other
    
    
    381
    
    
    
    322
    
    
    
    98Total revenues and other income
    
    
    24,810
    
    
    
    19,122
    
    
    
    15,749Costs and expensesTransportation and compression
    
    
    3,101
    
    
    
    2,260
    
    
    
    2,421General and administrative
    
    
    3,117
    
    
    
    1,777
    
    
    
    831Depreciation and amortization
    
    
    2,647
    
    
    
    2,063
    
    
    
    1,770Total costs and expenses
    
    
    8,865
    
    
    
    6,100
    
    
    
    5,022Segment profit
    
    $
    15,945
    
    
    $
    13,022
    
    
    $
    10,727Reconciliation of segment profit to net income:Segment profitMid-Continent
    
    $
    27,236
    
    
    $
    7,934
    
    
    $
    Appalachia
    
    
    15,945
    
    
    
    13,022
    
    
    
    10,727Total segment profit
    
    
    43,181
    
    
    
    20,956
    
    
    
    10,727General and administrative expenses
    
    
    (3,116
    )
    
    
    (1,778
    )
    
    
    (830
    )Interest expense
    
    
    (14,175
    )
    
    
    (2,301
    )
    
    
    (258
    )Gain (loss) on arbitration settlement, net
    
    
    (138
    )
    
    
    1,457
    
    
    
    Net income
    
    $
    25,752
    
    
    $
    18,334
    
    
    $
    9,639Capital Expenditures:Mid-Continent
    
    $
    35,263
    
    
    $
    3,858
    
    
    $
    Appalachia
    
    
    17,235
    
    
    
    6,185
    
    
    
    7,635$
    52,498
    
    
    $
    10,043
    
    
    $
    7,635
 82




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31,2005
    
    
    2004Balance sheetTotal assets:Mid-Continent
    
    $
    668,782
    
    
    $
    157,675Appalachia
    
    
    43,428
    
    
    
    39,400Corporate other
    
    
    30,516
    
    
    
    19,710$
    742,726
    
    
    $
    216,785Goodwill:Mid-Continent
    
    $
    109,141
    
    
    $
    Appalachia
    
    
    2,305
    
    
    
    2,305$
    111,446
    
    
    $
    2,305
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Natural gas and liquids:Natural gas
    
    $
    200,597
    
    
    $
    38,908
    
    
    $
    NGLs
    
    
    126,498
    
    
    
    31,631
    
    
    
    Condensate
    
    
    5,417
    
    
    
    589
    
    
    
    Other (1)
    
    
    7,785
    
    
    
    981
    
    
    
    Total
    
    $
    340,297
    
    
    $
    72,109
    
    
    $
    Transportation and
Compression:Affiliates
    
    $
    24,346
    
    
    $
    18,724
    
    
    $
    15,563Third parties
    
    
    5,963
    
    
    
    76
    
    
    
    88Total
    
    $
    30,309
    
    
    $
    18,800
    
    
    $
    15,651
 
 (1)
    
    Includes treatment, processing, and other revenue associated with the products noted. NOTE 16  QUARTERLY FINANCIAL DATA (Unaudited)
 Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(in thousands, except per unit data)Year ended December 31, 2005:Revenue and
other income
    
    $
    136,379
    
    
    $
    102,645
    
    
    $
    85,199
    
    
    $
    47,277Costs and expenses
    
    
    125,520
    
    
    
    95,591
    
    
    
    81,610
    
    
    
    43,027Net income attributable to partners
    
    
    10,859
    
    
    
    7,054
    
    
    
    3,589
    
    
    
    4,250Basic net income per limited partner unit
    
    
    0.70
    
    
    
    0.48
    
    
    
    0.20
    
    
    
    0.39Diluted net income per limited partner unit
    
    
    0.69
    
    
    
    0.48
    
    
    
    0.20
    
    
    
    0.39
 83




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ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(in thousands, except per unit data)Year ended December 31, 2004:Revenue and
other income
    
    $
    47,617
    
    
    $
    34,879
    
    
    $
    4,549
    
    
    $
    4,246Costs and expenses
    
    
    36,507
    
    
    
    32,904
    
    
    
    1,777
    
    
    
    1,769Net income attributable to partners
    
    
    11,110
    
    
    
    1,575
    
    
    
    2,772
    
    
    
    2,477Basic net income per limited partner unit
    
    
    1.35
    
    
    
    0.09
    
    
    
    0.47
    
    
    
    0.49Diluted net income per limited partner unit
    
    
    1.35
    
    
    
    0.09
    
    
    
    0.47
    
    
    
    0.49
 NOTE 17  SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
  Balance Sheet
 December 31, 2005Non-Guarantor
    
    
    Guarantor
    
    
    ConsolidatingParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    1,306
    
    
    $
    16,726
    
    
    $
    16,205
    
    
    $
    
    
    
    $
    34,237Accounts receivable  affiliates
    
    
    157,923
    
    
    
    
    
    
    
    1,073
    
    
    
    (154,347
    )
    
    
    4,649Other current assets
    
    
    
    
    
    
    59,941
    
    
    
    11,429
    
    
    
    
    
    
    
    71,370Total current assets
    
    
    159,229
    
    
    
    76,667
    
    
    
    28,707
    
    
    
    (154,347
    )
    
    
    110,256Property, plant and equipment, net
    
    
    
    
    
    
    319,081
    
    
    
    125,985
    
    
    
    
    
    
    
    445,066Equity investments
    
    
    417,040
    
    
    
    685,748
    
    
    
    
    
    
    
    (1,102,788
    )
    
    
    Intangible assets, net
    
    
    
    
    
    
    27,942
    
    
    
    26,927
    
    
    
    
    
    
    
    54,869Goodwill
    
    
    
    
    
    
    63,441
    
    
    
    48,005
    
    
    
    
    
    
    
    111,446Other assets
    
    
    13,622
    
    
    
    5,986
    
    
    
    3,699
    
    
    
    (2,218
    )
    
    
    21,089$
    589,891
    
    
    $
    1,178,865
    
    
    $
    233,323
    
    
    $
    (1,259,353
    )
    
    $
    742,726Liabilities and Partners CapitalAccounts payable  affiliates
    
    $
    
    
    
    $
    154,347
    
    
    $
    
    
    
    $
    (154,347
    )
    
    $
    Other current liabilities
    
    
    881
    
    
    
    83,713
    
    
    
    8,850
    
    
    
    
    
    
    
    93,444Total current liabilities
    
    
    881
    
    
    
    238,060
    
    
    
    8,850
    
    
    
    (154,347
    )
    
    
    93,444Long-term hedge liability
    
    
    
    
    
    
    22,410
    
    
    
    
    
    
    
    
    
    
    
    22,410Long-term debt
    
    
    259,500
    
    
    
    62
    
    
    
    37,800
    
    
    
    
    
    
    
    297,362Partners capital
    
    
    329,510
    
    
    
    918,333
    
    
    
    186,673
    
    
    
    (1,105,006
    )
    
    
    329,510$
    589,891
    
    
    $
    1,178,865
    
    
    $
    233,323
    
    
    $
    (1,259,353
    )
    
    $
    742,726
 84




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Statement of Income
 Year Ended December 31, 2005Non-Guarantor
    
    
    Guarantor
    
    
    ConsolidatingParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedTotal revenue and other income
    
    $
    
    
    
    $
    350,957
    
    
    $
    20,543
    
    
    $
    
    
    
    $
    371,500Costs and expenses:Natural gas and liquids
    
    
    
    
    
    
    275,649
    
    
    
    12,531
    
    
    
    
    
    
    
    288,180Plant operating
    
    
    
    
    
    
    10,557
    
    
    
    
    
    
    
    
    
    
    
    10,557Transportation and compression
    
    
    
    
    
    
    3,101
    
    
    
    952
    
    
    
    
    
    
    
    4,053General and administrative
    
    
    19
    
    
    
    13,559
    
    
    
    30
    
    
    
    
    
    
    
    13,608Depreciation and amortization
    
    
    
    
    
    
    12,976
    
    
    
    978
    
    
    
    
    
    
    
    13,954Interest
    
    
    13,413
    
    
    
    35
    
    
    
    727
    
    
    
    
    
    
    
    14,175Equity income
    
    
    (39,154
    )
    
    
    (4,614
    )
    
    
    
    
    
    
    43,768
    
    
    
    Other
    
    
    (30
    )
    
    
    168
    
    
    
    1,083
    
    
    
    
    
    
    
    1,221Total costs and expenses
    
    
    (25,752
    )
    
    
    311,431
    
    
    
    16,301
    
    
    
    43,768
    
    
    
    345,748Net income
    
    $
    25,752
    
    
    $
    39,526
    
    
    $
    4,242
    
    
    $
    (43,768
    )
    
    $
    25,752
 Statement of Cash Flows
 Year Ended December 31, 2005Non-Guarantor
    
    
    Guarantor
    
    
    ConsolidatingParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCashflows from operating activities:Net income
attributable to partners
    
    $
    25,752
    
    
    $
    39,526
    
    
    $
    4,242
    
    
    $
    (43,768
    )
    
    $
    25,752Adjustments to reconcile net
income to net cash provided by
operating activities:Depreciation and amortization
    
    
    
    
    
    
    12,976
    
    
    
    978
    
    
    
    
    
    
    
    13,954Non-cash compensation
expense
    
    
    
    
    
    
    4,672
    
    
    
    
    
    
    
    
    
    
    
    4,672Amortization of deferred
financing costs
    
    
    2,121
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    2,140Other
    
    
    
    
    
    
    (954
    )
    
    
    1,083
    
    
    
    
    
    
    
    129Changes in assets and
liabilities
net of effects of acquisitions
    
    
    (157,374
    )
    
    
    (44,343
    )
    
    
    (5,778
    )
    
    
    211,765
    
    
    
    4,270Net cash provided by operating
activities
    
    
    (129,501
    )
    
    
    11,877
    
    
    
    544
    
    
    
    167,997
    
    
    
    50,917Cashflows from investing activities:Net cash paid for acquisitions
    
    
    
    
    
    
    (195,216
    )
    
    
    (163,615
    )
    
    
    
    
    
    
    (358,831
    )Capital expenditures
    
    
    
    
    
    
    (52,150
    )
    
    
    (348
    )
    
    
    
    
    
    
    (52,498
    )Equity investments
    
    
    (243,622
    )
    
    
    
    
    
    
    
    
    
    
    243,622
    
    
    
    Other
    
    
    
    
    
    
    314
    
    
    
    11
    
    
    
    
    
    
    
    325Net cash provided by investing
activities
    
    
    (243,622
    )
    
    
    (247,052
    )
    
    
    (163,952
    )
    
    
    243,622
    
    
    
    (411,004
    )
 85




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##### Table of Contents



ATLAS PIPELINE PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Statement of Cash Flows
 Year Ended December 31, 2005Guarantor
    
    
    Non-Guarantor
    
    
    ConsolidatingParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCashflows from financing
activities:Net proceeds from debt issuance
    
    
    243,102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    243,102Borrowings under credit facility
    
    
    463,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463,500Repayments under credit facility
    
    
    (508,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (508,250
    )Distributions paid to partners
    
    
    (33,140
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,140
    )General partner capital
contribution
    
    
    2,326
    
    
    
    2,358
    
    
    
    
    
    
    
    
    
    
    
    4,684Net proceeds from issuance of
limited partner units
    
    
    212,700
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212,700Capital contribution
contribution
    
    
    
    
    
    
    231,474
    
    
    
    180,213
    
    
    
    (411,687
    )
    
    
    Other
    
    
    (5,809
    )
    
    
    (77
    )
    
    
    (600
    )
    
    
    
    
    
    
    (6,486
    )Net cash provided by financing
activities
    
    
    374,429
    
    
    
    233,755
    
    
    
    179,613
    
    
    
    (411,687
    )
    
    
    376,110Net increase (decrease) in cash
and
cash equivalents
    
    
    1,306
    
    
    
    (1,488
    )
    
    
    16,205
    
    
    
    
    
    
    
    16,023Cash and cash equivalents,
beginning of year
    
    
    
    
    
    
    18,214
    
    
    
    
    
    
    
    
    
    
    
    18,214Cash and cash equivalents, end of
year
    
    $
    1,306
    
    
    $
    16,726
    
    
    $
    16,205
    
    
    $
    
    
    
    $
    34,237
 
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Managements Report on Internal Control over Financial Reporting
    86




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87




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     88




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89




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PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
      90




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Managing Board Members and Executive Officers of Our General Partner
  Yearin whichName
    
    Age
    
    Position with general partner
    
    service beganEdward E. Cohen
    
    
    67
    
    
    Chairman of the Managing Board
and Chief Executive Officer
    
    
    1999Jonathan Z. Cohen
    
    
    35
    
    
    Vice Chairman of the Managing Board
    
    
    1999Michael L. Staines
    
    
    56
    
    
    President, Chief Operating Officer
and Managing Board Member
    
    
    1999Matthew A. Jones
    
    
    44
    
    
    Chief Financial Officer
    
    
    2005Tony C. Banks
    
    
    51
    
    
    Managing Board Member
    
    
    1999Curtis D. Clifford
    
    
    63
    
    
    Managing Board Member
    
    
    2004Gayle P.W. Jackson
    
    
    59
    
    
    Managing Board Member
    
    
    2005Martin Rudolph
    
    
    59
    
    
    Managing Board Member
    
    
    2005
 Edward E. Cohen
 Jonathan Z. Cohen
 Michael L. Staines
 Matthew A. Jones
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Tony C. Banks
 Curtis D. Clifford
 Gayle P.W. Jackson
 Martin Rudolph
 Other Significant Employees
 Robert R. Firth
 David D. Hall
 Daniel C. Herz
 92




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Sean P. McGrath
 Lisa Washington
 Thomas B. Williams
 Section 16(a) Beneficial Ownership Reporting Compliance
  Reimbursement of Expenses of Our General Partner and Its Affiliates
  93




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Information Concerning the Audit Committee
  Compensation Committee Interlocks and Insider Participation
  Code of Business Conduct and Ethics, Partnership Governance Guidelines and Audit Committee Charter
 www.atlaspipelinepartners.com
 94




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION
  Summary Compensation Table
 All otherName and principal position
    
    Year
    
    Salary
    
    Bonus(1)
    
    Compensation(2)Edward E. Cohen, Chairman of the Managing
    
    
    2005
    
    
    $
    232,500
    
    
    $
    310,000
    
    
    $
    1,904,700Board and Chief Executive Officer
    
    
    2004
    
    
    
    133,950
    
    
    
    193,800
    
    
    
    1,047,5002003
    
    
    
    179,600
    
    
    
    119,700
    
    
    
    Michael L. Staines, President, Chief Operating
    
    
    2005
    
    
    $
    225,000
    
    
    $
    125,000
    
    
    $
    492,720Officer and Managing Board Member
    
    
    2004
    
    
    
    219,400
    
    
    
    45,600
    
    
    
    335,2002003
    
    
    
    133,300
    
    
    
    10,000
    
    
    
    
 
 (1)
    
    Bonuses in any fiscal year are generally based upon our performance in the prior
fiscal year and the individuals contribution to that performance. From time to time, our
general partners managing board may award bonuses in a fiscal year reflecting an individuals
performance during that fiscal year.(2)
    
    Reflects grants in 2005 and 2004 of phantom units under our Long-Term Incentive Plan
(the Plan), valued at the closing price of common units on the date of grant. The phantom
unit grants under the Plan entitle the recipient, upon vesting, to receive one common unit and include distribution equivalent rights. The number of
phantom units held and the value of those phantom units, valued at the closing market price of
our common units on December 31, 2005: Mr. Cohen38,750 units ($1,573,250); Mr.
Staines10,000 units ($406,000). Long-Term Incentive Plan
  
    
    A phantom unit entitles the grantee to receive a common unit upon the vesting of the
phantom unit or, at the discretion of the managing board, cash equivalent to the value
of a common unit. In addition, the managing board may grant a participant the right,
which we refer to as a DER, to receive cash per phantom unit in an amount equal to, and
at the same time as, the cash distributions we make on a common unit during the period
the phantom unit is outstanding.
    
    An option entitles the grantee to purchase our common units at an exercise price
determined by the managing board, which may be less than, equal to or more than the
fair market value of our common units on the date of grant. The managing board will
also have discretion to determine how the exercise price may be paid.
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
    
    Atlas Pipeline Partners GP (or an affiliate of Atlas America) ceasing to be our
general partner;
    
    a merger, consolidation, share exchange, division or other reorganization or
transaction of us, our general partner or a direct or indirect parent of our general
partner with any entity, other than a transaction which would result in the voting
securities of the us, our general partner or its parent, as appropriate, outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) at least 60% of the
combined voting power immediately after such transaction of the surviving entitys
outstanding securities or, in the case of a division, the outstanding securities of
each entity resulting from the division;
    
    the equity holders of us or a direct or indirect parent of our general partner
approve a plan of complete, liquidation or winding-up or an agreement for the sale or
disposition (in one transaction or a series of transactions) of all or substantially
all of our or such parents assets; or
    
    during any period of 24 consecutive months, individuals who at the beginning of such
period constituted the board of directors of Atlas Pipeline GP or a direct or indirect
parent of our general partner (including for this purpose any new director whose
election or nomination for election or appointment was approved by a vote of at least
2/3 of the directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the board or, in the
case of a spin off of the parent, if Edward E. Cohen and Jonathan Z. Cohen cease to be
directors of the parent.
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##### Table of Contents



Remaining UnvestedTotal
    
    Grants(1)Name
    
    Units
    
    Units
    
    ValueEdward E. Cohen
    
    
    20,000
    
    
    
    20,000
    
    
    $
    812,000Michael L. Staines
    
    
    4,000
    
    
    
    4,000
    
    
    $
    162,400
 
 (1)
    
    As if vested on December 31, 2005, at a market closing price of
$40.60 per unit. Compensation of Managing Board Members
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  97




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Name of Beneficial Owner
    
    Common Units
    
    
    Percent of ClassEdward E. Cohen
    
    
    15,350
    (1)
    
    
    *Jonathan Z. Cohen
    
    
    10,852
    (2)
    
    
    *Michael L. Staines
    
    
    2,000
    (3)
    
    
    *Matthew A. Jones
    
    
    3,750
    (4)
    
    
    *Tony C. Banks
    
    
    
    
    
    
    *Curtis D. Clifford
    
    
    113
    
    
    
    *Gayle P.W. Jackson
    
    
    77
    (5)
    
    
    *Martin Rudolph
    
    
    577
    (6)
    
    
    *Executive officers and managing board members as
a group
(8 persons)
    
    
    32,719
    
    
    
    *Other Owners of More than 5% of Outstanding UnitsAtlas Pipeline Partners GP, LLC
    
    
    1,641,026
    
    
    
    13.1
    %
 
 *
    
    Less than 1%.(1)
    
    This amount includes 5,000 phantom units which vest in 60 days and which, upon
vesting, convert into an equal number of our common units.(2)
    
    This amount includes 3,125 phantom units which vest in 60 days and which, upon
vesting, convert into an equal number of our common units.(3)
    
    This amount includes 1,000 phantom units which vest in 60 days and which, upon
vesting, convert into an equal number of our common units.(4)
    
    This amount represents 3,750 phantom units which vest in 60 days and which, upon
vesting, convert into an equal number of our common units.(5)
    
    This amount represents 77 phantom units which vest in 60 days and which, upon
vesting, may be converted into an equal number of our common units or into their then fair
market value in cash.(6)
    
    This amount includes 77 phantom units which vest in 60 days and which, upon vesting,
may be converted into an equal number of our common units or into their then fair market value
in cash. Equity Compensation Plan Information
  (a)
    
    (b)
    
    (c)Number of securities remainingNumber of securities
    
    Weighted-average
    
    available for future issuance underto be issued upon
    
    exercise price of
    
    equity compensation plansexercise of
    
    outstanding
    
    (excluding securities reflected inPlan category
    
    phantom units
    
    phantom units
    
    column (a))Equity compensation plans
approved by security holders
    
    
    110,128
    
    
    $
    0
    
    
    
    324,872
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  98




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##### Table of Contents



-
   
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2005
    
    
    2004Audit fees (1)
    
    $
    1,068,515
    
    
    $
    399,732Audit related fees (2)
    
    
    482,447
    
    
    
    152,363Tax fees (3)
    
    
    291,007
    
    
    
    362,309Total aggregate fees billed
    
    $
    1,841,969
    
    
    $
    914,404
 
 (1)
    
    Includes the aggregate fees recognized in each of the last two years for
professional services rendered by Grant Thornton LLP for the audit of our annual financial
statements and the review of financial statements included in Form 10-Q. The fees are for
services that are normally provided by Grant Thornton LLP in connection with statutory or
regulatory filings or engagements.(2)
    
    Includes the aggregate fees recognized in each of the last two years for
products and services provided by Grant Thornton LLP, other than those services described
above. Services in this category relate to acquisitions, filings on
Form S-3, and private placement offerings.(3)
    
    Includes the aggregate fees recognized in each of the last two years for
professional services rendered by Grant Thornton LLP for tax compliance, tax advice, and tax
planning. Audit Committee Pre-Approval Policies and Procedures
  99




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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    The following documents are filed as part of this report:
 (1)
    
    Financial StatementsThe financial statements required by this Item 15(a)(1) are set forth in Item 8.(2)
    
    Financial Statement SchedulesNo schedules are required to be presented.(3)
    
    Exhibits:
 ExhibitNo.
    
    Description2.1
    
    Purchase and Sale Agreement dated March 8, 2005 among Registrant, LG, PL,
LLC and LaGrange Acquisition, L.P.(1)2.2
    
    Stock Purchase Agreement dated September 21, 2005 between Enogex, Inc.
and Registrant(2)3.1
    
    Certificate of Limited Partnership(3)3.2
    
    Second Amended and Restated Agreement of Limited Partnership(4)4.1
    
    Common unit
certificate(3)10.1
    
    Revolving Credit and Term Loan Agreement dated as of April 14, 2005 among
Registrant, Wachovia Bank, National Association, and the other parties
named therein(1)10.1(a)
    
    First Amendment to Revolving Credit and Term Loan Agreement dated as of
October 31, 2005(5)10.2
    
    Amendment dated October 25, 2005 among Atlas America, Inc., Registrant,
Atlas Pipeline Operating partnership, L.P., Resource Energy, Inc., Viking
Resources Corporation, Atlas Noble Corp. and Atlas Resources,
Inc.(6)10.3
    
    Amended and Restated Agreement of Limited Partnership of NOARK Pipeline
System, Limited Partnership dated January 12,
1998.(5)10.3(a)
    
    First Amendment to Amended and Restated Agreement of Limited Partnership
of NOARK Pipeline System, Limited Partnership dated June 18,
1998.(5)10.4
    
    Indenture dated December 20, 2005(7)10.5
    
    Registration Rights Agreement dated December 20, 2005(7)21.1
    
    Subsidiaries of Registrant23.1
    
    Consent of Grant Thornton LLP31.1
    
    Rule 13a-14(a)/15d-14(a) Certification31.2
    
    Rule 13a-14(a)/15d-14(a) Certification32.1
    
    Section 1350 Certification32.2
    
    Section 1350 Certification99
    
    Audited Balance Sheet of Atlas Pipeline Partners GP, LLC
 
 (1)
    
    Previously filed as an exhibit to current report on Form 8-K on
April 18, 2005.(2)
    
    Previously filed as an exhibit to quarterly report on Form 10-Q for
the quarter ended September 30, 2005.(3)
    
    Previously filed as an exhibit to registration statement on Form S-1
on January 20, 2000.(4)
    
    Previously filed as an exhibit to registration statement on Form S-3
on April 2, 2004.(5)
    
    Previously filed as an exhibit to current report on Form 8-K on
November 4, 2005.(6)
    
    Previously filed as an exhibit to current report on Form 8-K on
October 31, 2005.(7)
    
    Previously filed as an exhibit to current report on Form 8-K on
December 21, 2005. 100




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SIGNATURES
  ATLAS PIPELINE PARTNERS, L.P.By: Atlas Pipeline Partners GP, LLC, its General PartnerMarch 10, 2006
    
    By:
    
    /s/ EDWARD E. COHENChairman of the Managing Board
  /s/ EDWARD E. COHEN
    
    Chairman of the Managing Board of the General PartnerEdward E. Cohen
    
    Chief Executive Officer of the General Partner/s/ JONATHAN Z. COHEN
    
    Vice Chairman of the Managing Board of the General PartnerJonathan Z. Cohen/s/ MICHAEL L. STAINES
    
    President, Chief Operating Officer,Michael L. Staines
    
    Managing Board Member of the General Partner/s/ MATTHEW A. JONES
    
    Chief Financial Officer of the General PartnerMatthew A. Jones/s/ SEAN P. MCGRATH
    
    Chief Accounting Officer of the General PartnerSean P. McGrath/s/ TONY C. BANKS
    
    Managing Board Member of the General PartnerTony C. Banks/s/ CURTIS D. CLIFFORD
    
    Managing Board Member of the General PartnerCurtis D. Clifford/s/ GAYLE P.W. JACKSON
    
    Managing Board Member of the General PartnerGayle P.W. Jackson/s/ MARTIN RUDOLPH
    
    Managing Board Member of the General PartnerMartin Rudolph
 101