2009-05-20-2009-04-28-2009-09-29

Acquired MLP subsidiary with 1.25 million net acres in the Marcellus, Antrim, New Albany and Chattanooga shales in OH, PA, NY, WV, KY, approximately 750,000 undeveloped, gaining 98 MMcfe/d, 1 Tcf proved.

Philadelphia-based Atlas America Inc. (Nasdaq: ATLS) plans to roll up the remaining 52% interest in MLP subsidiary Atlas Energy Resources LLC, Pittsburgh, Pa., (NYSE: ATN) in a stock-for-stock deal valued at approximately $550 million. Each class B common unit of Atlas Energy not currently held by Atlas America will be converted into 1.16 shares of Atlas America common stock, and Atlas America will be renamed Atlas Energy Inc. Current Atlas America shareholders will hold a 50.3% interest in the combined company. The deal values the combined company at $1.8 billion, according to Atlas America. Atlas Energy holds 1.25 million net acres in the Marcellus, Antrim, New Albany and Chattanooga shales, with approximately 750,000 undeveloped. Production is 98 million cubic feet per day from interests in 10,957 gross wells in Ohio, Pennsylvania, Tennessee, New York, West Virginia and Kentucky. Total net proved reserves are 1 trillion cubic feet. Approximately 550,000 net acres are in the Marcellus. Atlas America holds interest in Atlas Energy and through its subsidiary, Atlas Pipeline Partners LP (NYSE: APL), which operates transmission, gathering and processing of natural gas in the Midcontinent and the Appalachian regions. "As one of the leading producers in the Marcellus shale…it is imperative that we redirect our company's cash flow to fully realize the potential value of these assets for our existing unit holders," says Atlas Energy president Richard D. Weber. "We believe that, by merging with Atlas America, we will create a new entity that will have the financial resources to accelerate and expand the development of our Marcellus shale assets where we have already identified 4 to 6 trillion cubic feet of additional reserves." Edward E. Cohen, chairman and chief executive of Atlas America, says, "the merger will allow the combined companies to sharply accelerate expansion and development of its Marcellus shale position by reinvesting a far greater portion of its combined cash flow in America's greatest natural gas play. And the other benefits are enormous." Both companies' boards have approved the combination. The merger is expected to simplify the organizational structure of the Atlas companies and create a more attractive investment opportunity with a larger public float. In addition, the merger will enhance value to Atlas Energy by eliminating the effects on the public stockholders of the block represented by Atlas America's approximate 48% common unit ownership and management incentive interests in Atlas Energy. The transaction is also expected to create a stronger balance sheet and capital structure at the combined entity, along with a lower cost of capital. The net debt outstanding at Atlas Energy will be reduced by cash on hand at Atlas America. Furthermore, liquidity should be greatly improved from the larger combined company. The retention and investment of future cash flows will reduce the need to raise capital from outside sources under unfavorable market conditions. In addition, pending consummation of the merger, Atlas Energy will suspend distributions to its common unit holders. The combination of Atlas America and Atlas Energy will result in a single class of equity with one board of directors. The board of directors of the combined entity will consist of the 10 independent directors of Atlas America and Atlas Energy serving at the time the merger is consummated, as well as Edward E. Cohen and Jonathan Z. Cohen, CEO and vice Chairman, respectively, of both Atlas America and Atlas Energy. The transaction will be subject to approval by holders of a majority of the outstanding Atlas America common stock and a majority of the outstanding Atlas Energy Class B units, consent of a majority of the lenders under the Atlas Energy credit agreement and other customary closing conditions. JPMorgan Securities Inc. is financial advisor and Wachtell, Lipton, Rosen & Katz is legal counsel to Atlas America. UBS Investment Bank is financial advisor and K&L Gates is legal counsel to Atlas Energy. The deal is expected to close in second-half 2009. In May 2007, Atlas Energy acquired DTE Gas & Oil Co., a subsidiary of DTE Energy Co., Detroit, (NYSE: DTE) for $1.23 billion in cash, gaining 613 billion cubic feet equivalent (100% gas), and probable and possible reserves are approximately 76 billion cubic feet equivalent in the Antrim shale in Michigan's northern lower peninsula. Analysts at Tudor, Pickering, Holt & Co. Securities Inc. says the transaction is "more MLP fallout," as weak commodity prices, limited capital availability and high cost of capital forced the restructure. Stifel, Nicolaus & Company Inc. analyst Michael A. Hall says following repeated appeals to management from unit holders, many are "finally getting what they want" in the restructuring of Atlas Energy and Atlas America. "The proposed merged entities will be, in our view, a more proper and suitable vehicle by which to grow Atlas Energy's significant Marcellus shale holding," Hall says. "We believe Atlas Energy unit holders are treated fairly and see meaningful potential upside in the proposed remaining entity."