1279228--2/29/2008--ATLAS_AMERICA

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{gas, price, oil}

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{cost, regulation, environmental}

{operation, natural, condition}

{acquisition, growth, future}

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We are required to pay gathering fees to Atlas Pipeline pursuant to our contribution agreement with Atlas Energy equal to the difference between the gathering fee payable and the amount Atlas Energy receives from its investment partnerships for gathering services out of our own resources. We may be required to indemnify Atlas Energy for claims relating to activities before our contribution of assets to it. We could be liable for taxes in connection with our spin-off from Resource America. Atlas Energy may not have sufficient cash flow from operations to pay the initial quarterly distribution, or IQD, to us following the establishment of cash reserves and payment of fees and expenses. If commodity prices decline significantly, Atlas Energy s cash flow from operations will decline and it may have to lower its distributions or may not be able to pay distributions at all. Unless Atlas Energy replaces its reserves, its reserves and production will decline, which would reduce its cash flow from operations and impair its ability to make distributions to us. Atlas Energy s estimated reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of its reserves. Atlas Energy s operations require substantial capital expenditures, which will reduce its cash available for distribution. In addition, each quarter it is required to deduct estimated maintenance capital expenditures from operating surplus, which may result in less cash available to us than if actual maintenance capital expenditures were deducted. The scope and costs of the risks involved in making acquisitions may prove greater than estimated at the time of the acquisition. Atlas Energy may be unsuccessful in integrating the operations from its recent acquisition or any future acquisitions with its operations and in realizing all of the anticipated benefits of these acquisitions. The DTE Gas Oil acquisition has substantially changed Atlas Energy s business, making it difficult to evaluate our business based upon our historical financial information Atlas Energy has limited experience in drilling wells to the Marcellus Shale, less information regarding reserves and decline rates in the Marcellus Shale than in other areas of its Appalachian operations and wells drilled to the Marcellus Shale will be deeper, more expensive and more susceptible to mechanical problems in drilling and completing than wells in the other areas. Changes in tax laws may impair Atlas Energy s ability to obtain capital funds through investment partnerships. Atlas Energy has a substantial amount of indebtedness which could adversely affect its Covenants in Atlas Energy s debt agreements restrict its business in many ways. Atlas Energy may not be able to continue to raise funds through its investment partnerships at the levels it has recently experienced, which may in turn restrict its ability to maintain its drilling activity at the levels recently experienced. Atlas Energy s fee-based revenues may decline if it is unsuccessful in continuing to sponsor investment partnerships, and its fee-based revenue may not increase at the same rate as recently experienced if it is unable to raise funds at the same or higher levels as it has recently experienced. Atlas Energy s revenues may decrease if investors in its investment partnerships do not receive a minimum return. Competition in the natural gas and oil industry is intense, which may hinder Atlas Energy s ability to acquire gas and oil properties and companies and to obtain capital, contract for drilling equipment and secure trained personnel. Atlas Energy depends on certain key customers for sales of its natural gas. To the extent these customers reduce the volumes of natural gas they purchase from Atlas Energy, its revenues and cash available for distribution could decline. Atlas Energy s Appalachia business depends on the gathering and transportation facilities of Atlas Pipeline. Any limitation in the availability of those facilities would interfere with its ability to market the natural gas it produces and could reduce its revenues and cash available for distribution. Shortages of drilling rigs, equipment and crews could delay Atlas Energy s operations. Because Atlas Energy handles natural gas and oil, it may incur significant costs and liabilities in the future resulting from a failure to comply with new or existing environmental regulations or an accidental release of hazardous substances into the environment. Many of Atlas Energy s leases are in areas that have been partially depleted or drained by offset wells. Atlas Energy s identified drilling location inventories are susceptible to uncertainties that could materially alter the occurrence or timing of its drilling activities, which may result in lower cash from operations .Its management has specifically identified and scheduled drilling locations as an estimation of our future multi-year drilling activities on its existing acreage. Some of Atlas Energy s undeveloped leasehold acreage is subject to leases that may expire in the near future. Drilling for and producing natural gas are high-risk activities with many uncertainties. Properties that Atlas Energy buys may not produce as projected and it may be unable to determine reserve potential, identify liabilities associated with the properties or obtain protection from sellers against such liabilities. Hedging transactions may limit Atlas Energy s potential gains or cause it to lose money. Atlas Energy may be exposed to financial and other liabilities as the managing general partner in investment partnerships. Atlas Energy is subject to comprehensive federal, state, local and other laws and regulations that could increase the cost and alter the manner or feasibility of it doing business. Atlas Energy s tax treatment depends on its status as a partnership for federal income tax purposes, as well as Atlas Energy not being subject to entity-level taxation by individual states. If the IRS were to treat Atlas Energy as a corporation for federal income tax purposes or Atlas Energy were to become subject to entity-level taxation for state tax purposes, taxes paid, if any, would reduce the amount of cash available for distribution. Atlas Energy will be considered to have terminated for tax purposes due to a sale or exchange of 50% or more of its interests within a twelve-month period. AHD s only cash generating assets are its interests in APL, and its cash flow is therefore completely dependent upon the ability of APL to make distributions to its partners. AHD s and APL s debt levels and restrictions in AHD s and APL s credit facilities could limit their ability to make distributions to its unitholders. If AHD does not pay distributions on its common units with respect to any fiscal quarter, AHD s unitholders are not entitled to receive such payments in the future. In the future, AHD may not have sufficient cash to pay distributions at its current quarterly distribution level or to increase distributions. AHD, as the parent of APL s general partner, may limit or modify the incentive distributions it is entitled to receive from APL in order to facilitate the growth strategy of APL. The board of directors of AHD s general partner, our subsidiary, can give this consent without a vote of our or AHD s unitholders. A reduction in APL s distributions will disproportionately affect the amount of cash distributions to which AHD is currently entitled. AHD s ability to meet its financial needs may be adversely affected by its cash distribution policy and AHD s lack of operational assets. There is no guarantee that AHD s unitholders will receive quarterly distributions from AHD. AHD s cash distribution policy limits its ability to grow. AHD is largely dependent on APL for its growth. As a result of the fiduciary obligations of APL s general partner, which is AHD s wholly-owned subsidiary, to the common unitholders of APL, AHD s ability to pursue business opportunities independently will be limited. AHD s ability to sell its general partner interest and incentive distribution rights in APL is limited. APL s common unitholders have the right to remove APL s general partner with the approval of the holders of 66 2/3% of all units, which would cause AHD to lose its general partner interest and incentive distribution rights in APL and the ability to manage APL. APL may issue additional limited partner units, which may increase the risk of it not having sufficient available cash to maintain or increase its per common unit distribution level. AHD may issue an unlimited number of limited partner interests without the consent of its unitholders, which will dilute existing limited partners ownership interest in AHD and may increase the risk that AHD will not have sufficient available cash to maintain or increase its per unit distribution level. If in the future AHD ceases to manage and control APL through AHD s ownership of APL s general partner interests, AHD may be deemed to be an investment company under the Investment Company Act of 1940. Because AHD s cash flow currently consists exclusively of distributions from APL, risks to APL s business are also risks to AHD. Set forth below are the material risks to APL s business or results of operations, the occurrence of which could negatively impact APL s financial performance and decrease the amount of cash it is able to distribute to AHD, thereby decreasing the amount of cash AHD has available for distribution to its unitholders. APL s profitability is affected by the volatility of prices for natural gas and NGL products. The amount of natural gas APL transports will decline over time unless it is able to attract new wells to connect to its gathering systems. The amount of natural gas APL transports, treats or processes may be reduced if the natural gas liquids pipelines to which it delivers NGLs cannot or will not accept the gas. The success of APL s Mid-Continent operations depends upon its ability to continually find and contract for new sources of natural gas supply from unrelated third parties. APL s Mid-Continent operations currently depend on certain key producers for their supply of natural gas; the loss of any of these key producers could reduce its revenues. The curtailment of operations at, or closure of, any of APL s processing plants could harm its business. APL may face increased competition in the future in its Mid-Continent service areas. The amount of natural gas APL transports, treats or processes may be reduced if the public utility and interstate pipelines to which APL delivers gas cannot or will not accept the gas. The scope and costs of the risks involved in making acquisitions may prove greater than estimated at the time of the acquisition. APL may be unsuccessful in integrating the operations from its recent acquisitions or any future acquisitions with its operations and in realizing all of the anticipated benefits of these acquisitions. The acquisitions of APL s Chaney Dell and Midkiff/Benedum systems have substantially changed APL s business, making it difficult to evaluate its business based upon its historical financial information. Due to APL s lack of asset diversification, negative developments in its operations would reduce its ability to make distributions to its common unitholders. APL s construction of new assets may not result in revenue increases and is subject to regulatory, environmental, political, legal and economic risks, which could impair its results of operations and financial condition. If APL is unable to obtain new rights-of-way or the cost of renewing existing rights-of-way increases, then it may be unable to fully execute its growth strategy and its cash flows could be reduced. Regulation of APL s gathering operations could increase its operating costs, decrease its revenues, or both. Ozark Gas Transmission is subject to FERC rate-making policies that could have an adverse impact on APL s ability to establish rates that would allow it to recover the full cost of operating the pipeline. Ozark Gas Transmission is subject to regulation by FERC in addition to FERC rules and regulations related to the rates it can charge for its services. Compliance with pipeline integrity regulations issued by the DOT and state agencies could result in substantial expenditures for testing, repairs and replacement. APL s midstream natural gas operations may incur significant costs and liabilities resulting from a failure to comply with new or existing environmental regulations or a release of hazardous substances into the environment. APL may not be able to execute its growth strategy successfully. Limitations on APL s access to capital or the market for its common units will impair APL s ability to execute its growth strategy. APL s hedging strategies may fail to protect it and could reduce its gross margin and cash flow. Litigation or governmental regulation relating to environmental protection and operational safety may result in substantial costs and liabilities. APL is subject to operating and litigation risks that may not be covered by insurance.

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1279228--2/29/2008--ATLAS_AMERICA_INC