Company Overview

Background Areas of Operation How We Drill Environmental and Safety Policies Company Management Board of Directors Offices

Areas of Operation

Appalachia

The Appalachian Basin includes the states of Kentucky, Maryland, New York, Ohio, Pennsylvania, Virginia, West Virginia and Tennessee. Our affiliated drilling partnerships drill and develop their wells primarily in Ohio, Pennsylvania, New York and Tennessee. As one of the largest operators within this drilling area, we have the bargaining power to obtain priority access to what we believe are the best regional drilling and well-services contractors in the area. These services range from drilling rigs to logging crews to completion specialists.

The Appalachian Basin is the most mature oil and gas producing region in the United States, having established the first oil production in 1860. Because it is located near the high energy-consuming regions of the mid-Atlantic and northeastern United States, Appalachian producers have historically sold their natural gas at a premium to the benchmark price for natural gas on the NYMEX. In addition, most of our natural gas production has a high Btu content, resulting in an additional premium to NYMEX natural gas prices. We further believe that natural gas is becoming America’s fuel of choice due to the Federal Clean Air Act Amendments of 1990 and subsequent environmental legislation, which have spurred the increased use of efficient, clean-burning natural gas.

During the first several years of production, Appalachian Basin wells generally experience higher initial production rates and decline rates which are followed by an extended period of significantly lower production rates and decline rates.

Shallow reserves in the Appalachian Basin are typically in blanket formations and have a high degree of step-out development success. This means that as development progresses, reserves from newly completed wells are reclassified from the "proved undeveloped" to the "proved developed" category and additional adjacent locations are added to "proved undeveloped"reserves. As a result, the cumulative amount of total proved reserves tends to increase as development progresses. Wells in the Appalachian Basin generally produce little or no water, contributing to a low cost of operation. In addition, most wells produce dry natural gas, which does not require processing.

Atlas Energy is also well positioned in the Marcellus Shale play, which is a black, organic rich blanket shale formation found throughout much of western Pennsylvania. To take advantage of this play, we employ a number of fracturing (fracing) techniques. We have drilled approximately 80 vertical wells and 1 horizontal well to date. We also control approximately 552,000 Marcellus acres, of which 269,000 are in our core drilling areas.

Atlas Pipeline Partners, LP, an affiliate of Atlas Energy and a subsidiary of our indirect parent company, Atlas America, owns and operates more than 1,600 miles of pipeline in the Appalachian Basin, which is one of the largest active gas-gathering systems in the northeast United States. We transport our natural gas in Appalachia through gathering lines operated by Atlas Pipeline, which are situated throughout the areas in which we drill. They are readily accessible by us and are connected to major regional and interstate utility pipelines. Our relationship with Atlas Pipeline allows us to have reliable access to the natural gas markets we serve and significantly reduces the capital we would otherwise expend to connect our wells to an outside pipeline system.

Indiana

In 2008, Atlas Energy entered into several transactions resulting in the opportunity to drill on 284,000 gross acres in Indiana. This acreage provides Atlas Energy with approximately 800 horizontal drilling locations in the New Albany shale.

Atlas Energy Indiana, a subsidiary of Atlas Energy, intends to drill and complete over 100 horizontal New Albany shale wells by the end of 2009. This total acreage position is largely contiguous and is located in Sullivan, Knox, Greene, Owen, Clay and Lawrence counties of southwestern Indiana. Further, the acreage is within the northern "biogenic" part of the New Albany shale play where several operators have drilled over 40 successful horizontal wells.

A biogenic shale is unique in that methane is created as a bi-product of bacterial consumption of organic material contained in the shale. The Devonian aged New Albany Shale is a blanket formation found at depths of 500 to 3,000 feet, with thicknesses ranging from 100 to 200 feet. The natural fracture patterns in the New Albany Shale are vertically oriented which makes the play well suited to horizontal wells. Atlas has reviewed over thirty successful horizontal completions within and in close proximity to the acreage where it has acquiring rights. Horizontal wells in the New Albany Shale having 4,000 to 5,000 foot laterals can be drilled for approximately $1.3 million. The Company expects proven reserves of approximately 1.3 bcf per well.

Michigan

In June 2007, Atlas Energy completed the acquisition of DTE Gas & Oil Company (DGO), a wholly-owned subsidiary of DTE Energy Company for $1.225 billion in cash. DGO, now part of Atlas Energy Michigan, owns interests in approximately 2,400 natural gas wells producing from the Antrim Shale, located in northern Michigan. The Antrim Shale is a mature play characterized by long-lived reserves and predictable production rates and as of June 2008 has 613 Bcfe (billion cubic feet of natural gas equivalents) of proved reserves on DGO’s approximately 273,900 net developed acres and 39,300 net undeveloped acres. Daily production in the Antrim Shale on the date of the transaction was approximately 60 Mmcfe/d (million cubic feet equivalent per day).

Atlas Energy Michigan is the largest operator in Michigan’s Antrim Shale, a biogenic shale found between 500 and 1,500 feet in northern Michigan. Our reserves in this basin are long-lived and have historically stable production rates. One of the first shale plays to evolve and mature, Antrim has been producing since the 1940’s. Although mature, the field continues to expand through development of technology and successful testing of new areas. The natural gas in Antrim exists as adsorbed gas on the surface of the shale and within its natural fractures. The use of horizontal wells has opened up new areas of development resulting in approximately 2,400 producing wells, with more than 750 future drilling locations identified. Our technical team in Michigan has a long operating track record in the Antrim Shale which we believe has resulted in our strong operating discipline and our position as one of the lowest-cost producers in the region. We also believe that we have the most experienced management, technical and operating teams with biogenic shale formations in the country.

Tennessee

Since the beginning of 2007, Atlas Energy has accumulated 111,000 net acres located in eastern Tennessee. We believe this acreage contains up to 500 potential horizontal drilling locations in the Chattanooga Shale. Today, Atlas Energy operates more than 375 vertical wells producing from conventional zones, as well as the Chattanooga Shale, and is the largest producer of oil and gas in Tennessee.

Atlas Energy Tennessee, a subsidiary of Atlas Energy, intends to drill and complete approximately 150 conventional wells by the first quarter of 2009 and 50 horizontal Chattanooga Shale wells by the fourth quarter of 2009. Previous results indicated that horizontal Chattanooga Shale wells, with a 3,000 foot lateral, are capable of stabilized production into a pipeline of between 300 and 500 Mcfe per day.

The Devonian Chattanooga Shale is an organic, hydrocarbon rich shale found throughout eastern Tennessee. This productive horizon is located beneath the Mississippian Fort Payne Limestone at a depth of between 3,000 and 4,000 feet. The shale thickness ranges from 80 to more than 200 feet and is thought to be the source rock for the hydrocarbons produced from many of the conventional reservoirs in Tennessee.

Atlas Energy’s affiliate, Atlas Pipeline Partners, is installing two natural gas processing plants that will be capable of serving a broad area of eastern Tennessee. Atlas Pipeline’s ownership of these facilities, along with the recently acquired intrastate pipeline system, offers Atlas Energy an advantage in acquiring additional leasehold acreage.