SOURCE: Atlas America, Inc.

April 30, 2007 20:39 ET

Atlas America, Inc. Reports Operating Results for the First Quarter 2007

PHILADELPHIA, PA -- (MARKET WIRE) -- April 30, 2007 -- Atlas America Inc. (NASDAQ: ATLS) ("the Company") reported earnings before interest, income taxes, depreciation and amortization ("EBITDA"), a non-GAAP measure, of $35.9 million for the three months ended March 31, 2007, compared with $34.9 million for the comparable prior year period, an increase of $1.0 million or 3%. Net income for the three months ended March 31, 2007 was $10.2 million, compared with $11.4 million for the comparable prior year period. Net income per diluted common share was $0.53 for the first quarter 2007, a decrease of $0.03 per share from the prior year comparable period, or approximately 5%. Total revenues reached $214.9 million for the first quarter 2007, or an approximate 12% increase from the prior year comparable period. A schedule is provided at the end of this release to reconcile net income to EBITDA.

In March 2007, the Company completed its "Dutch Auction" tender offer, repurchasing approximately 1.5 million shares, or approximately 8% of its then outstanding common stock for approximately $80.4 million at an average price of approximately $54 per share. There are approximately 17.9 million shares currently outstanding as of the date of this release.

On April 27, 2007, the Company announced that its Board of Directors approved a 3-for-2 stock split to be effected in the form of a stock dividend. Shareholders of record as of May 15, 2007 will receive one additional share of common stock for each two shares of common stock they own on that date. The shares will be distributed on or about May 25, 2007. After the split, there will be approximately 26.8 million shares of the Company's common stock outstanding. The Company expects the adjusted number of shares outstanding and adjusted per-share stock price to be reported by the NASDAQ Stock Market, effective May 28, 2007. The Company also announced that its Board of Directors has declared its first quarterly cash dividend of $0.05 per share of common stock, payable on May 15, 2007, to shareholders of record on May 8, 2007.

Cash Distributions from Affiliates

On April 26, 2007, Atlas Energy Resources, LLC (NYSE: ATN) ("Atlas Energy"), of which the Company owns an 80% common unit interest, declared its quarterly cash distribution for the first quarter 2007 of $0.43 per common unit, which will be paid on May 15, 2007 to common unitholders of record as of May 8, 2007. The Company will receive approximately $12.9 million in aggregate cash distributions from its ownership interests in Atlas Energy with regard to this quarterly distribution.

Atlas Pipeline Holdings, L.P. (NYSE: AHD) ("Atlas Holdings"), of which the Company owns an 83% limited partner interest, declared its quarterly cash distribution for the first quarter 2007 of $0.25 per common limited partner unit, which will be paid on May 18, 2007 to common unitholders of record as of May 8, 2007. The Company will receive approximately $4.4 million in cash distributions from its ownership interest in Atlas Pipeline Holdings with regard to this quarterly distribution. Atlas Holdings is the parent company of Atlas Pipeline Partners, L.P.'s (NYSE: APL) ("Atlas Pipeline") general partner, which owns the incentive distribution rights and 1,641,026 common units of limited partner interest in Atlas Pipeline. Atlas Pipeline is active in the transmission, gathering and processing segments of the midstream natural gas industry.

Please see Atlas Energy's and Atlas Holdings' earnings releases regarding their first quarter 2007 financial results for further information regarding their results.

"I am happy to announce results from yet another strong quarter for our Company," stated Edward E. Cohen, Chairman and Chief Executive Officer of the Company. "We continue to see solid results from Atlas Energy, as that company plans to conduct another record-breaking year with regards to wells drilled and partnership funds raised, which will reach at least $270 million in 2007. Atlas Pipeline continues to work on several important expansion projects in the Mid-Continent to grow its asset base. In March, the Company completed its first Dutch tender offering for almost 1.5 million common shares for $80 million. To further return value to our shareholders, we also recently announced a 3-for-2 stock split to be distributed as a stock dividend, and the Company also announced its first cash dividend of $0.05 per common share. We will continue to look for ways to provide shareholder value such as these in the future."

Atlas Energy

--  On April 2, 2007, the Company's registration statement with the
    Securities and Exchange Commission for the Public 16 Drilling Program
    became effective. Atlas Energy expects to raise approximately $200 million
    in this program, its initial offering of the year, and expects to recognize
    well construction and administration fees from this program through most of
    2007. Revenues generated by Atlas Energy's well construction and completion
    segment increased by approximately 42% compared to the prior year
    comparable period.
    
--  The number of gross wells drilled 303 for the three months ended
    March 31, 2007, an increase of 97 wells or approximately 47% from the prior
    year comparable period. Atlas Energy connected 197 wells in the quarter
    ended March 31, 2007.
    
--  Beginning in early December 2006, Atlas Energy and its investment
    partnerships drilled three vertical wells to the Marcellus Shale in Western
    Pennsylvania. All three of these wells have been completed and management
    is pleased with the results. The Marcellus Shale is a black, organic rich
    shale formation located at depths between 7,000 and 8,500 feet and ranges
    in thickness from 100 to 150 feet on Atlas Energy's acreage. Leases are
    currently held on over 180,000 acres, up from 105,000 acres in December
    2006, which management believes is prospective for the Marcellus Shale.
    Management plans to drill several more vertical wells within the Marcellus
    Shale over the next two quarters and is planning a full development program
    beginning in the fourth quarter of 2007.
    
--  Atlas Energy had approximately 645,000 gross acres, or 590,000 net
    acres, at March 31, 2007, an increase of approximately 24% from the net
    acreage position at March 31, 2006 and an approximate 8% increase from
    December 31, 2006. Additionally, Atlas Energy has a joint venture with Knox
    Energy through December 2007, which provides an opportunity to drill wells
    on approximately 200,000 acres in Tennessee. Undeveloped acreage at March
    31, 2007 was approximately 362,000 net acres, up approximately 39% from the
    net acreage position at March 31, 2006, exclusive of the joint venture with
    Knox Energy.
    
--  Atlas Energy has currently identified over 3,150 geologically
    favorable sites for additional well drilling. Atlas Energy had interests in
    over 7,500 gross wells at March 31, 2007, an increase of approximately 11%
    from March 31, 2006, and operates approximately 85% of these wells.
    
--  Natural gas and oil production was 25.8 mmcfe/d for the three months
    ended March 31, 2007, an increase of 2.4 mmcfe/d or approximately 10% from
    the prior year comparable period.
    
Atlas Pipeline
--  Atlas Pipeline's Mid-Continent segment recognized total revenue of
    $109.7 million for the quarter ended March 31, 2007, relatively consistent
    with the prior year comparable period. Total system volume in the Mid-
    Continent region averaged 635.8 million cubic feet ("mmcf") per day for the
    quarter ended March 31, 2007, an increase of approximately 15% from the
    prior year comparable period.
    
--  Total revenue for Atlas Pipeline's Appalachia system was $7.8 million
    for the quarter ended March 31, 2007, a 3% decrease from the prior year
    comparable period, principally due to a decrease in realized natural gas
    prices, partially offset by higher throughput volumes between periods.
    Throughput volume increased to 62.5 mmcf per day for the quarter ended
    March 31, 2007, compared with 57.3 mmcf per day for the prior comparable
    period due to new wells connected to the Appalachia gathering system. The
    average transportation rate per mcf was $1.38 for the quarter ended
    March 31, 2007, a 10% decrease from $1.53 per mcf for the prior year
    comparable period. Atlas Pipeline's Appalachia system's principal customer
    is Atlas Energy, of which the Company owns an 79% interest.
    
Corporate and Other
--  General and administrative expenses, including net expense
    reimbursements to affiliate, was $14.8 million for the first quarter 2007,
    an increase of $1.4 million from the prior year comparable period,
    primarily due to increases in non-cash compensation expenses associated the
    vesting of units and options for both Atlas Holdings, Atlas Energy and
    Atlas Pipeline and costs associated with Atlas Pipeline's expansion of its
    Mid-Continent operations.
    
--  Interest expense was $7.3 million for the first quarter 2007, an
    increase of $0.5 million from the prior year comparable period, primarily
    due to Atlas Pipeline's issuance of senior notes in May 2006 and borrowings
    under Atlas Pipeline's credit facility associated with its Mid-Continent
    acquisitions.
    
Interested parties are invited to access the live webcast of an investor call with management regarding Atlas America's first quarter results on Tuesday afternoon, May 1, 2007 at 3:00 pm ET by going to the Investor Relations section of Atlas America's website at www.atlasamerica.com. An audio replay of the conference call will also be available beginning at 5:00 pm EDT on Tuesday, May 1, 2007. To access the replay, dial 1-888-286-8010 and enter conference code 98614670.

Atlas America, Inc. owns an 80% common unit interest and all of the Class A and management incentive interests in Atlas Energy Resources, LLC. Also, Atlas America owns approximately 83% of the limited partner interest in Atlas Pipeline Holdings, L.P. For more information, please visit our website at www.atlasamerica.com, or contact Investor Relations at bbegley@atlasamerica.com.

Atlas Energy Resources, LLC is an energy concern focused on the development and production of natural gas and, to a lesser extent, oil principally in the Appalachian Basin. Atlas Energy sponsors and manages tax advantaged investment partnerships, in which it co-invests, to finance the exploitation and development of its acreage. For more information, visit its website at www.atlasenergyresources.com or contact investor relations at bbegley@atlasamerica.com.

Atlas Pipeline Partners, L.P. is active in the transmission, gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region of Oklahoma, Arkansas, northern Texas and the Texas panhandle, Atlas Pipeline owns and operates approximately 1,900 miles of active intrastate gas gathering pipeline and a 565-mile interstate natural gas pipeline. Atlas Pipeline also operates three gas processing plants and a treating facility in Velma, Elk City, Sweetwater and Prentiss, Oklahoma where natural gas liquids and impurities are removed. In Appalachia, it owns and operates approximately 1,600 miles of natural gas gathering pipelines in western Pennsylvania, western New York and eastern Ohio. For more information, visit its website at www.atlaspipelinepartners.com or contact bbegley@atlaspipelinepartners.com.

Atlas Pipeline Holdings, L.P. is the parent company of Atlas Pipeline Partners, L.P.'s general partner, which owns the incentive distribution rights and 1,641,026 common units of limited partner interest in Atlas Pipeline. For more information, visit its website at www.atlaspipelineholdings.com or contact investor relations at bbegley@atlasamerica.com.

Certain matters discussed within this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although Atlas America, Inc. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from expectations include financial performance, regulatory changes, changes in local or national economic conditions and other risks detailed from time to time in the Company's reports filed with the SEC, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.


                            ATLAS AMERICA, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
                  (in thousands, except per share data)
                                (Unaudited)



                                               Three Months Ended March 31,
                                                --------------------------
                                                    2007          2006
                                                ------------  ------------
REVENUES:
   Well construction and completion             $     72,378  $     50,883
   Gas and oil production                             21,260        22,866
   Transmission, gathering and processing            113,012       112,635
   Administration and oversight                        4,544         3,309
   Well services                                       3,721         2,766
                                                ------------  ------------
Total revenues                                       214,915       192,459
                                                ------------  ------------

COSTS AND EXPENSES:
   Well construction and completion                   62,932        44,246
   Gas and oil production                              2,034         1,905
   Transmission, gathering and processing             95,475        91,437
   Well services                                       2,043         1,766
   General and administrative                         14,457        12,908
   Net expense reimbursement - affiliate                 308           415
   Depreciation, depletion and amortization           12,401        10,102
                                                ------------  ------------
Total costs and expenses                             189,650       162,779
                                                ------------  ------------

Operating income                                      25,265        29,680

Other income (expense):
   Interest expense                                   (7,256)       (6,721)
   Minority interests                                 (3,186)       (6,255)
   Other, net                                          1,444         1,329
                                                ------------  ------------
Total other income (expense)                          (8,998)      (11,647)
                                                ------------  ------------

Income before income taxes                            16,267        18,033
Provision for income taxes                             6,019         6,672
                                                ------------  ------------
Net income                                      $     10,248  $     11,361
                                                ============  ============

Net income per common share - basic             $       0.54  $       0.57
                                                ============  ============
Weighted average common shares outstanding            18,924        20,001
                                                ============  ============

Net income per common share - diluted           $       0.53  $       0.56
                                                ============  ============
Weighted average common shares outstanding            19,478        20,453
                                                ============  ============



                                                  March 31,   December 31,
                                                    2007          2006
                                                ------------- -------------
BALANCE SHEET DATA:
   Cash and cash equivalents                    $      88,381 $     185,401
   Property and equipment, net                        913,014       884,812
   Total assets                                     1,257,146     1,379,926
   Total debt                                         395,579       324,151
   Total stockholders' equity                          52,461       132,246



                            ATLAS AMERICA, INC.
                          FINANCIAL INFORMATION
                                (Unaudited)


                                               Three Months Ended March 31,
                                                ---------------------------
Reconciliation of Net Income to EBITDA (2):         2007          2006
                                                ------------- -------------
Net income                                      $      10,248 $      11,361
   Interest expense                                     7,256         6,721
   Provision for income taxes                           6,019         6,672
   Depreciation, depletion and amortization            12,401        10,102
                                                ------------- -------------
EBITDA                                          $      35,924 $      34,856
                                                ============= =============


(1)  EBITDA is a non-GAAP financial measure under the rules of the
     Securities and Exchange Commission. Management of the Company believes
     that EBITDA provides additional information with respect to the
     Company's ability to meet its debt service, capital expense and
     working capital requirements. EBITDA is a commonly used measure by
     commercial banks, investment bankers, rating agencies and investors in
     evaluating an entity's performance relative to its peers. It is also a
     financial measurement that, with certain negotiated adjustments, is
     utilized within the Company's financial covenants under its credit
     facility. EBITDA is not a measure of financial performance under GAAP
     and, accordingly, should not be considered as a substitute for net
     income or cash flows from operating activities prepared in accordance
     with GAAP.



                            ATLAS AMERICA, INC.
                           OPERATING HIGHLIGHTS


                                               Three Months Ended March 31,
                                                --------------------------
Atlas Energy:                                       2007          2006
-------------                                   ------------  ------------
Production revenues (in thousands):
Gas (1)                                         $     19,427  $     20,492
Oil                                             $      1,826  $      2,365

Production volume:
Gas (mcf/day) (1) (2) (3)                             23,681        20,866
Oil (bbls/day)                                           359           423
                                                ------------  ------------
Total (mcfe/day) (3)                                  25,835        23,404
                                                ============  ============

Average sales prices:
Gas (per mcf) (3) (4)                           $       9.12  $      10.91
Oil (per bbl) (3)                               $      56.52  $      62.13

Production costs (5):
As a percent of production revenues                       10%            8%
Per mcfe (3)                                    $       0.87  $       0.90

Depletion per mcfe (3)                          $       2.31  $       1.98


Atlas Pipeline:
---------------
Appalachia system throughput volume (mcf/day) (3)     62,532        57,326

Velma system gathered gas volume (mcf/day) (3)        61,017        60,715

NOARK Ozark Gas Transmission throughput volume
 (mcf/day) (3)                                       286,891       239,151

Elk City/Sweetwater system gathered gas volume
 (mcf/day) (3)                                       287,892       252,190
                                                ------------  ------------

Combined throughput volume (mcf/day) (3)             698,332       609,382
                                                ============  ============


(1)  Excludes sales to landowners.

(2)  Production quantities consist of the sum of (i) ATN's proportionate
     share of production from wells in which it has a direct interest,
     based on its proportionate net revenue interest in such wells, and
     (ii) ATN's proportionate share of production from wells owned by the
     investment partnerships in which ATN has an interest, based on ATN's
     equity interest in each such partnership and based on each
     partnership's proportionate net revenue interest in these wells.

(3)  "Mcf" and "mmcf" means thousand cubic feet and million cubic feet;
     "mcfe" and "mmcfe" means thousand cubic feet equivalent and million
     cubic feet equivalent, and "bbls" means barrels. Bbls are converted to
     mcfe using the ratio of six mcfs to one bbl.

(4)  ATN's average sales price before the effects of financial hedging was
     $7.85 and $9.37 for the three months ended March 31, 2007 and 2006,
     respectively.

(5)  Production costs include labor to operate the wells and related
     equipment, repairs and maintenance, materials and supplies, property
     taxes, severance taxes, insurance and production overhead.

Contact Information

  • CONTACT:
    Brian J. Begley
    Investor Relations
    Atlas America, Inc.
    1845 Walnut Street - Suite 1000
    Philadelphia, PA 19103
    215/546-5005
    215/561-5692 (facsimile)