Atlas Pipeline Holdings Enters Agreement To Acquire Upstream Oil And Gas Assets From Atlas Energy

Atlas Pipeline Holdings announced that it has entered into an agreement to acquire from its parent, Atlas Energy, all of Atlas Energy's interests in the investment management business and certain producing oil and gas assets for total consideration of approximately $250M, consisting of approximately $220M of newly issued AHD common units and $30M in cash.

In a release dated Nov. 9, the Company said upon closing of the transaction, the Partnership will acquire the equity interest in its general partner currently owned by Atlas Energy and, therefore, cease to be controlled. Atlas Energy will also distribute to its stockholders all of the AHD common units held by Atlas Energy, or approximately 41 million AHD common units out of the approximately 51 million AHD common units expected to be outstanding after the transaction. Following the transaction, the Partnership will own the business and assets that it acquired from Atlas Energy as well as its existing general partnership interest in Atlas Pipeline Partners and the associated incentive distribution rights, as well as approximately 5.8 million of APL common units, or 10.8 percent of the outstanding units of APL.

Management believes that this transaction should be immediately accretive to the Partnership upon closing. Annualized distributable cash flow for the Partnership is expected to increase to a range of $0.70 to $0.80 per common unit following closing, as compared to third quarter 2010 annualized distributable cash flow of $0.20 per unit.

The completion of the transactions is subject to the subsequent completion of Chevron's acquisition of Atlas Energy, and to the completion of Atlas Energy's acquisition of a 49 percent interest in Laurel Mountain Midstream from APL.

Atlas Energy also announced that it reached a definitive agreement to be acquired by Chevron for total consideration of approximately $4.3B. Atlas Energy also announced that it reached a definitive agreement with APL to acquire from APL a 49 percent interest in Laurel Mountain Midstream for $403M in cash. The transaction between the Partnership and Atlas Energy, including the sale of the assets, the contribution by Atlas Energy of the equity interest in AHD's general partner to the Partnership, and the distribution of AHD common units to the Atlas Energy stockholders, is expected to close immediately preceding Chevron's acquisition of Atlas Energy and concurrently with Atlas Energy's acquisition of the interest in Laurel Mountain Midstream.

Gene Dubay, Chief Executive Officer of the Partnership, said, "This transaction is a tremendous event for Atlas Pipeline Holdings. We have created a solid platform for substantial future growth with a proven management team in order to expand our upstream assets. We look forward to creating increasingly strong returns."

The Partnership agreed to acquire the following assets from Atlas Energy:

• All of Atlas Energy's interest in the investment management business, including all of the ongoing fees related to managing the partnerships;
• Approximately 175 Bcfe of net proved reserves, and approximately 35 Mmcfe per day of long-lived, production in the Marcellus Shale, New Albany Shale, Antrim Shale, Chattanooga Shale, and Niobrara formation, as well as low-decline shallow production primarily in Pennsylvania, Ohio, and New York;
• 100 percent interest in Atlas Pipeline Holdings; and,
• Atlas Energy's interest in Lightfoot Capital Partners.

Additionally, upon closing of the transaction, the Partnership will have in place debt financing of $70M. Approximately $64M would be initially borrowed to fund the cash portion of the transaction, as well as to repay a note payable of $34M to Atlas Energy.

Citi acted as financial advisor to the special committee. Covington and Burling acted as legal advisor to the special committee, and Jones Day acted as special legal advisor to the Partnership in connection with the transaction. Jefferies acted as financial advisor to Atlas Energy in connection with the transaction, and Wachtell, Lipton, Rosen & Katz acted as legal advisor to Atlas Energy.

An investor presentation summarizing the transaction will be available in the Investor Relations section of the Atlas Pipeline Holdings website at atlaspipelineholdings.com.

Atlas Pipeline Holdings is a limited partnership which owns and operates the general partner of Atlas Pipeline Partners through which it owns a 1.9 percent general partner interest, all the incentive distribution rights and approximately 5.8 million common limited partner units of Atlas Pipeline Partners.

Atlas Pipeline Partners is active in the gathering and processing segments of the midstream natural gas industry. In the Mid-Continent region of Oklahoma, southern Kansas, and northern and western Texas, APL owns and operates five active gas processing plants as well as approximately 8,300 miles of active intrastate gas gathering pipeline. In Appalachia, APL is a 49 percent joint venture partner with Williams in Laurel Mountain Midstream which manages a natural gas gathering system focused on the Marcellus Shale in southwestern Pennsylvania.

Atlas Energy is an independent natural gas producer in the Appalachian and Michigan Basins and a producer in the Marcellus Shale in Pennsylvania.

Atlas Energy is also a sponsor and manager of tax-advantaged energy investment partnerships.

SOURCE: Atlas Pipeline Holdings