ARKHAN 8-K Results of Operations and Financial Condition

FOR IMMEDIATE RELEASE

CONTACT:	MATTHEW A. JONES
	CHIEF FINANCIAL OFFICER
	ATLAS AMERICA, INC.
	1845 WALNUT STREET, SUITE 1000
	PHILADELPHIA, PA 19103
	215/546-5005
	215/546-5388 (facsimile)

ATLAS AMERICA, INC.

REPORTS OPERATING RESULTS

FOR SECOND FISCAL QUARTER AND SIX MONTHS ENDED MARCH 31, 2005

Philadelphia, PA - May 4, 2005 - Atlas America Inc. (NASDAQ: ATLS) (“Atlas” or the “Company”)reported net income of $8.5 million and $17.4 million for the second fiscal quarter and six months ended March 31, 2005 as compared to $5.2 million and $10.1 million for the second fiscal quarter and six months ended March 31, 2004, an increase of 65% and 73%, respectively. Net income per common share-basic and diluted was $.64 and $1.31 on 13.3 million weighted average shares outstanding for the second fiscal quarter and six months ended March 31, 2005 as compared to net income per common share-basic and diluted of $.48 and $.94 on 10.7 million weighted average shares outstanding for the second fiscal quarter and six months ended March 31, 2004, an increase of $.16 and $.37 per share, respectively.

Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) were $19.7 million and $41.2 million for the second fiscal quarter and six months ended March 31, 2005 as compared to $11.7 million and $23.0 million for the second fiscal quarter and six months ended March 31, 2004, an increase of 68% and 79%, respectively. The following table reconciles EBITDA to our net income for the three months and the six months ended March 31, 2005 and 2004, respectively (in thousands).

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2005		2004		2005		2004
Net income	$	8,516	$	5,166	$	17,408	$	10,059
Plus:
Interest expense		1,623		473		3,313		960
Provision for income taxes		4,791		2,547		9,793		5,182
Depreciation, depletion and amortization		4,781		3,534		10,653		6,779
EBITDA (see Note 1)	$	19,711	$	11,720	$	41,167	$	22,980

Note 1. Management of Atlas believes that EBITDA provides additional information with respect to Atlas’s ability to meet its debt service, capital expense and working capital requirements. EBITDA is a commonly used measure of a business’ ability to generate cash flow without consideration of its financing structure. This measure is widely used by commercial banks, investment bankers, rating agencies and investors in evaluating performance relative to peers and pre-set performance standards. It is also a financial measurement that, with certain negotiated adjustments, is reported to Atlas’s banks to establish conformance with its financial covenants under its current 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.

Highlights of the quarter:

Drilling & Fundraising

· The number of wells we drilled, net to both our interest and that of our sponsored drilling investment partnerships, increased to 207 and 343 wells in the three months and six months ended March 31, 2005 from 157 and 268 wells in the three months and six months ended March 31, 2004, up 32% and 28%, respectively.

· We expect to drill approximately 725 net wells in fiscal 2005.

· Through May 3, 2005, we raised $107.0 million for our sponsored drilling partnerships.

Acreage

· Atlas has an acreage position of approximately 446,946 net acres at March 31, 2005 up from 413,698 net acres at March 31, 2004, an increase of 8% in net acres.

· Undeveloped acreage at March 31, 2005 was 245,642 net acres, up from 219,994 net acres at March 31, 2004, an increase of 12% in net acres.

· We have identified 2,246 geologically favorable sites for drilling additional wells, of which 378 were set aside for the funds raised in the third and fourth quarter of fiscal 2005.

Wells & Production

· We had interests in 6,047 gross wells at March 31, 2005, of which we operate 5,148 wells or 85%.

· Natural gas production for our account was 19.3 and 19.8 million cubic feet per day in the three months and six months ended March 31, 2005, up from 18.3 and 18.9 million cubic feet per day in the three months and six months ended March 31, 2004, an increase of 6% and 5%, respectively.

· Oil production was 406 and 427 barrels per day in the three months and six months ended March 31, 2005.

Other Events

· On April 14, 2005, Atlas Pipeline Partners, L.P. (NYSE:APL) acquired all of the outstanding equity interests in ETC Oklahoma Pipeline, Ltd., a Texas limited partnership, for $192 million, excluding related transaction costs.

· Atlas Pipeline Partners entered into a new $270 million credit facility, proceeds from which were used to fund the ETC Oklahoma Pipeline Acquisition.

· On January 1, 2005, Atlas’s 1.6 million subordinated units of APL were converted to common units in accordance with the terms of the partnership agreement. Atlas’s general partner interest remains unchanged.

Atlas America, Inc. is an energy company engaged primarily in the development, production and transportation of natural gas in the Appalachian Basin, and operates primarily in eastern Ohio and western Pennsylvania. Atlas is the owner of 100% of the general partner of Atlas Pipeline Partners, L.P. (NYSE:APL) and owns 1,641,026common units of limited partner interest. APL owns and operates more than1,440miles of natural gas gathering pipelines in western Pennsylvania, western New York and eastern Ohio and approximately 2,200miles of gathering pipeline in southern Oklahoma and northern Texas, as well as gas processing and treating facilities in Velma, Elk City and Prentiss Oklahoma. For more information, please visit our website atwww.atlasamerica.com, or contact investor relations at pschreiber@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 10Q, reports on Form 8-K and annual reports on Form 10-K.

The remainder of this release contains the Company’s consolidated balance sheets, statements of income and other related information relating to the Company’s operations during the periods indicated.

ATLAS AMERICA, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	March31,			September 30,
	2005			2004
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	17,061		$	29,192
Accounts receivable		29,545			24,113
Prepaid expenses		4,883			2,433
Total current assets		51,489			55,738
Property and equipment, net		345,515			313,091
Intangible assets, net		6,777			7,243
Other assets, net		9,521			7,955
Advances to parent		662			-
Goodwill, net of accumulated amortization of $4,532		37,470			37,470
	$	451,434		$	421,497
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	2,361		$	3,401
Accounts payable		20,611			20,869
Liabilities associated with drilling contracts		23,060			29,375
Accrued producer liabilities		12,455			8,815
Accrued hedge liability		8,673			3,972
Accrued liabilities		13,397			10,795
Total current liabilities		80,557			77,227
Long-term debt		101,622			82,239
Advances from parent		-			10,413
Deferred tax liability		23,409			21,442
Other liabilities		9,867			6,949
Minority interest		126,488			132,224
Commitments and contingencies		-			-
Stockholders’ equity:
Preferred stock, $0.01 par value: 1,000,000 authorized shares		-			-
Common stock, $0.01 par value: 49,000,000 authorized shares		133			133
Additional paid-in capital		75,584			75,584
Accumulated other comprehensive loss		(1,473	)		(2,553	)
Retained earnings		35,247			17,839
Total stockholders’ equity		109,491			91,003
	$	451,434		$	421,497

ATLAS AMERICA, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2005			2004			2005			2004
	(in thousands, except per share data)
REVENUES
Well drilling	$	41,451		$	26,248		$	72,009		$	48,207
Gas and oil production		13,959			11,799			28,618			21,995
Gathering, transmission and processing		43,741			1,579			87,523			3,178
Well services		2,350			2,123			4,598			4,060
		101,501			41,749			192,748			77,440
COSTS AND EXPENSES
Well drilling		36,044			22,824			62,617			41,919
Gas and oil production and exploration		2,413			3,323			4,215			5,008
Gathering, transmission and processing		37,462			620			73,142			1,216
Well services		1,316			1,021			2,507			2,062
General and administrative		1,494			785			3,154			1,094
Compensation reimbursement - affiliate		244			463			457			1,065
Depreciation, depletion and amortization		4,781			3,534			10,653			6,779
		83,754			32,570			156,745			59,143
OPERATING INCOME		17,747			9,179			36,003			18,297
OTHER INCOME (EXPENSE)
Interest expense		(1,623	)		(473	)		(3,313	)		(960	)
Minority interest in Atlas Pipeline Partners, L.P		(2,500	)		(1,324	)		(9,720	)		(2,595	)
Arbitration settlement, net		(136	)		-			4,310			-
Other, net		(181	)		331			(79	)		499
		(4,440	)		(1,466	)		(8,802	)		(3,056	)
Income from continuing operations before income taxes		13,307			7,713			27,201			15,241
Provision for income taxes		4,791			2,547			9,793			5,182
Net income	$	8,516		$	5,166		$	17,408		$	10,059
Net income per common share- basic
Net income per common share - basic	$	.64		$	.48			1.31		$	.94
Weighted average common shares outstanding		13,333			10,688			13,333			10,688
Net income per common share- diluted
Net income per common shares - diluted	$	.64		$	.48			1.31		$	.94
Weighted average common shares outstanding		13,338			10,688			13,338			10,688

The following table sets forth information relating to our production revenues, production volumes, sales prices, production costs and depletion:

		Three Months Ended						Six Months Ended
		March 31,						March 31,
		2005			2004			2005			2004
Production revenues (in thousands):	��
Gas(1)		$	12,285		$	10,116		$	24,982		$	19,182
Oil		$	1,647		$	1,666		$	3,589		$	2,789
Production volume:
Gas (mcf/day)(1) (3)			19,315			18,265			19,806			18,875
Oil (bbls/day)			406			576			427			514
Total (mcfe/day) (3)			21,751			21,721			22,368			21,959
Average sales prices:
Gas (per mcf) (3)		$	7.07		$	6.09		$	6.93		$	5.55
Oil (per bbl) (3)		$	45.06		$	31.81		$	46.18		$	29.65
Production costs(`2):
As a percent of production revenues			16	%		15	%		14	%		16	%
Per mcfe(3)		$	1.11		$	.91		$	.96		$	.85
Depletion per mcfe(3)		$	1.36		$	1.24		$	1.29		$	1.15

(1)	Excludes sales of residual gas and sales to landowners.
(2)	Production costs include labor to operate the wells and related equipment, repairs and maintenance, materials and supplies, property taxes, severance taxes, insurance, gathering charges and production overhead.
(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.