Atlas Energy Continues Successful HZ Marcellus Shale Well Devt

Atlas Energy has successfully drilled and completed two additional horizontal Marcellus Shale wells in southwestern Pennsylvania: one in western Fayette County and another in eastern Greene County. Both of these wells are in the high pressured, dry gas area of southwestern Pennsylvania, an area that makes up the core of the Company's 519,000 acres in the Marcellus Shale.

The Fayette County well, which is the first horizontal Marcellus Shale well drilled and completed in the county, has produced into a pipeline an average of 3.3 million cubic feet per day ("Mmcf/d") for its first 30 days. This well inclined for most of its first 30 days and is showing very little decline after 40 days. The Company’s second horizontal Marcellus Shale well drilled during 2009 in Greene County is exhibiting a similar flat production profile after an initial peak rate of 3.5 Mmcf/d. Both of these wells are producing at rates that exceed the Company's assumed 4 billion cubic feet ("Bcf") type curve. Atlas’s last four horizontal Marcellus Shale wells that were turned into line in southwestern Pennsylvania had an average peak 24-hour rate of 5.1 Mmcfe/d.

During the first nine months of 2009, Atlas successfully drilled 14 horizontal Marcellus Shale wells, all of which were drilled within industry partnerships or through its direct investment programs. Four of these wells are online, one is flowing but not yet online, three will be returned to production after upgrades to a gas processing plant are finished this week, and six are yet to be frac'd.

For the remainder of 2009, Atlas has scheduled to frac and complete 10 horizontal Marcellus Shale wells, including six within its direct investment programs, two within a 50/50 industry joint venture and two for its own account. The Company has scheduled seven horizontal well completions for the first quarter 2010, which will include six for its own account and one for its direct investment programs. The Company expects to drill and complete approximately 30 horizontal Marcellus Shale wells for its own account in 2010.

Through the combination of successfully drilling horizontal Marcellus Shale wells and the continued drilling through its syndicated direct investment programs of vertical Marcellus Shale, Antrim Shale, New Albany Shale and Chattanooga Shale wells, the Company is able to reaffirm its 2009 total production guidance of 37 to 37.5 Bcfe, up approximately 7% from 2008, and between 45 and 50 Bcfe for 2010, up 28% at the midpoint compared to estimated 2009 production. Due to increasing Marcellus Shale production, Atlas expects to exit 2009 with over 50 Mmcf/d of net production in Appalachia and expects this figure to more than double by the end of 2010. This production guidance assumes total funds raised through the Company's direct investment programs of $400 million in each of 2009 and 2010, and essentially a debt neutral capital budget of approximately $250 million in 2010. The Company's net production in the Appalachian Basin was approximately 41.3 Mmcfe/d in the third quarter, up 16% from the third quarter in 2008. Gross production from Marcellus Shale wells was approximately 44 Mmcfe/d in the third quarter 2009.

The Company is able to reaffirm its production guidance despite curtailments in Pennsylvania during the third quarter of approximately 13 Mmcfe/d (3 Mmcfe/d net). These curtailments were caused by a shutdown for upgrade of a natural gas processing plant in Washington County ("Stewart plant") and high pressures on the Company's legacy gathering system, all of which are now owned and operated by Laurel Mountain Midstream Partners, LLC ("Laurel Mountain"). In addition, and as a result of these infrastructure issues, Atlas delayed fracing and completing certain horizontal and vertical Marcellus Shale wells that the Company believes would have represented approximately 31.5 Mmcfe/d of gross initial production (7.3 Mmcfe/d net).

Laurel Mountain intends to return to service the Stewart plant in Washington County this week, which will have daily capacity of approximately 10.5 Mmcf/d. A second Washington County plant will be brought online by Laurel Mountain by the end of the year having incremental plant capacity of 15 Mmcfe/d. Atlas currently has three horizontal Marcellus Shale wells and six vertical Marcellus Shale wells shut in behind these plants. Furthermore, the Company has drilled and cased five additional horizontal Marcellus Shale wells that will deliver into these plants, but these wells are waiting to be frac'd.

To address pressure issues on the Company's legacy gathering system in southwestern Pennsylvania, Laurel Mountain has already initiated three significant looping projects in Greene and Fayette Counties, which are expected to add approximately 30 Mmcf/d of incremental capacity by the beginning of the second quarter of 2010. Moreover, Laurel Mountain is making plans to construct a new large diameter gathering system in Fayette, Greene, Washington and Westmoreland Counties that will ultimately be capable of transporting over 500 Mmcf/d. Laurel Mountain expects the first phase of the system to be completed in 12 to 18 months, but expects that Atlas will be able to make deliveries into the initial legs of this system during the second quarter of 2010.

Atlas began marketing the Company's $275 million Public #18-2009 (C) drilling program (1) in September of this year. When combined with the Company’s $125 million Public #18-2009 (B) drilling program completed earlier this year, Atlas expects to raise approximately $400 million in 2009 through its direct investment programs. The seasonal nature of fund raising typically results in greater drilling revenue and administrative fee generation from the programs in the first and fourth quarters of each year. Although third quarter 2009 revenues and fees from this segment exceeded those generated in the second quarter of 2009, the Company expects to achieve its highest level of revenue and fee generation from this segment in the fourth quarter. A detailed description of third quarter 2009 operating and financial results and fourth quarter 2009 guidance will be provided in the Company’s third quarter 2009 earnings call scheduled for Friday, November 6th at 9AM.

Over the past year, Atlas has added over 10 experienced senior managers and engineers to complement its existing operating team. Most of these individuals have experience in other shale plays, such as the Barnett, Fayetteville and Woodford Shale. Two recent hires in Operations include Greg Ryan, Senior Vice President of Land and Brett Loflin, Director of Permitting and Regulatory Compliance. Mr. Ryan joins Atlas after more than 25 years of professional land management experience working for EnCana, ExxonMobil and El Paso, and he spent most of his career focused on large scale development projects, including projects in the Barnett Shale and the Piceance Basin. Mr. Loflin held a similar position at Chesapeake and prior to that was Director of the West Virginia Oil and Gas Conservation Commission.


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