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Energy NewsLine is published by Atlas Resources, LLC Editorial Staff: Marci F. Bleichmar, Executive Vice President, Marketing Jack L. Hollander, Executive Vice President, Direct Participation Programs Tracy Billings, Regional Marketing Director - Internal Bruce Bundy, Regional Marketing Director, Great Plains Vicki Burbridge, Regional Marketing Director, Pacific West Barry Dow, Regional Marketing Director, Mid-Atlantic Jon Eastman, Regional Marketing Director Andrew Eisen, Regional Marketing Director, Northeast Karen George, Regional Marketing Director - Internal Robert Gourlay, Regional Marketing Director, Southeast Kevin Harris, Regional Marketing Director Neil Nakagawa, Regional Marketing Director, West Davina Pennington, Regional Marketing Director - Internal Matt Podolsky, Regional Marketing Director Jeff Smith, Regional Marketing Director, East Paul Tencer, Regional Marketing Director, Midwest Nancy Hiler, Managing Editor Karen Morstad & Associates, Designer We welcome your comments/questions. Contact investorservices@atlasenergy.com or 800-251-0171 option 3

page 3

Safe and Sound, Back from Afghanistan page 2

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More Companies Switching to Natural Gas Fleets

Steelmakers Move to Natural Gas in Manufacturing page 1

EIA Launches Monthly “Drilling Productivity Report”

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Year-End Tax Planning

IN THIS ISSUE:

Year-End Tax Planning It's that time again, when year-end tax planning becomes an important discussion with clients. The benefits of an oil and natural gas drilling program should be part of that discussion. An oil and natural gas drilling program can potentially provide a 2013 ordinary income tax deduction for accredited investor general partners.

The Drilling Productivity Report initially covers six regions, which account for 90% of domestic oil production growth and virtually all natural gas production growth nationwide. It provides a page summarizing results for all six regions, a more detailed page for each region, and a detailed description of the indicators developed and presented for each of the regions.

First Report’s Main Findings Some of the main findings of the first report published include: • The main drivers of recent growth in domestic oil and natural gas production have been increases in drilling efficiency and new well productivity, rather than an increase in the number of active rigs.

T H E Q U A R T E R LY N E W S L E T T E R F O R T H E AT L A S I N V E S T M E N T C O M M U N I T Y

ENERGY NEWSLINE Volume 16 – Issue 4 • Winter 2013

Wishing you a joyful holiday season and a happy new year!

.....

A spike in client’s income is usually the result of different triggering events, such as a Roth IRA conversion, the exercise of stock options, or the sale of a business or real estate, for example. An oil and natural gas drilling program may be an appropriate tax reduction strategy for clients such as these. Issues often overlooked include the tax savings for those in the alternative minimum tax, the self employed, the closely held corporation, and state income tax savings.

• Although natural gas production increased in four of the six regions over the past year, the Marcellus alone accounted for about 75% of natural gas production growth in the six regions.

The top federal income tax rate is now 39.6%, and many states allow the pass-through of intangible drilling costs (IDC) to offset state income as well. Take California as an example where the top state rate is over 12%. It’s possible for a California resident to recoup around 50% of his/her investment from the 2013 federal and state income tax savings resulting from the IDC deduction. A discussion of oil and natural gas drilling programs may be suitable in your clients’ year-end planning. The reinvestment of cash distributions from oil and gas properties, which are not guaranteed, may further benefit your clients’ portfolios. ▲

EIA Launches Monthly “Drilling Productivity Report” The U.S. Energy Information Administration (EIA) introduced a new monthly “Drilling Productivity Report,” which takes a fresh look at oil and natural gas production. The report, whose first edition was published in late October, provides region-specific insights into oil and natural gas drilling rig efficiency, new well productivity, existing well decline rates, and overall oil and natural gas production trends. "The metrics presented in the Drilling Productivity Report are intended to be more informative than traditional indicators of future oil and gas production," EIA Administrator Adam Sieminski explained. "The report provides a new approach that takes into account changes in the application of technologies that have led to rapid increases in U.S. oil and gas production."

Park Place Corporate Center One 1000 Commerce Drive, Suite 410 Pittsburgh, PA 15275

“Given the importance of drilling productivity trends as a driver for future domestic oil and natural gas production, EIA has been developing new approaches to assess the productivity of drilling operations,” the EIA stated in announcing the new report. “New technology used in drilling for and producing natural gas and oil, mostly since 2007, made obsolete traditional indicators of future production, such as simple counts of oil-directed and gas-directed drilling rigs in use,” the EIA stated.

Separate information for each region is offered, as shown in the Marcellus region chart example above.

The EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment, including a wide range of information covering energy production, stocks, demand, imports, exports, and prices, and prepares analyses and special reports on topics of current interest. ▲ SOURCE: Energy Information Administration.

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11/26/13

10:01 AM

Page 1

Energy NewsLine is published by Atlas Resources, LLC Editorial Staff: Marci F. Bleichmar, Executive Vice President, Marketing Jack L. Hollander, Executive Vice President, Direct Participation Programs Tracy Billings, Regional Marketing Director - Internal Bruce Bundy, Regional Marketing Director, Great Plains Vicki Burbridge, Regional Marketing Director, Pacific West Barry Dow, Regional Marketing Director, Mid-Atlantic Jon Eastman, Regional Marketing Director Andrew Eisen, Regional Marketing Director, Northeast Karen George, Regional Marketing Director - Internal Robert Gourlay, Regional Marketing Director, Southeast Kevin Harris, Regional Marketing Director Neil Nakagawa, Regional Marketing Director, West Davina Pennington, Regional Marketing Director - Internal Matt Podolsky, Regional Marketing Director Jeff Smith, Regional Marketing Director, East Paul Tencer, Regional Marketing Director, Midwest Nancy Hiler, Managing Editor Karen Morstad & Associates, Designer We welcome your comments/questions. Contact investorservices@atlasenergy.com or 800-251-0171 option 3

Atlas_2013_Winter_Newsletter_Mech.qxd:Layout 1

Year-End Tax Planning The Drilling Productivity Report initially covers six regions, which account for 90% of domestic oil production growth and virtually all natural gas production growth nationwide. It provides a page summarizing results for all six regions, a more detailed page for each region, and a detailed description of the indicators developed and presented for each of the regions.

It's that time again, when year-end tax planning becomes an important discussion with clients. The benefits of an oil and natural gas drilling program should be part of that discussion. An oil and natural gas drilling program can potentially provide a 2013 ordinary income tax deduction for accredited investor general partners.

First Report’s Main Findings Some of the main findings of the first report published include: • The main drivers of recent growth in domestic oil and natural gas production have been increases in drilling efficiency and new well productivity, rather than an increase in the number of active rigs.

page 3

Safe and Sound, Back from Afghanistan page 2

More Companies Switching to Natural Gas Fleets

page 2

Steelmakers Move to Natural Gas in Manufacturing page 1

page 1

Year-End Tax Planning

EIA Launches Monthly “Drilling Productivity Report”

IN THIS ISSUE:

T H E Q U A R T E R LY N E W S L E T T E R F O R T H E AT L A S I N V E S T M E N T C O M M U N I T Y

• Although natural gas production increased in four of the six regions over the past year, the Marcellus alone accounted for about 75% of natural gas production growth in the six regions.

.....

A spike in client’s income is usually the result of different triggering events, such as a Roth IRA conversion, the exercise of stock options, or the sale of a business or real estate, for example. An oil and natural gas drilling program may be an appropriate tax reduction strategy for clients such as these. Issues often overlooked include the tax savings for those in the alternative minimum tax, the self employed, the closely held corporation, and state income tax savings. The top federal income tax rate is now 39.6%, and many states allow the pass-through of intangible drilling costs (IDC) to offset state income as well. Take California as an example where the top state rate is over 12%. It’s possible for a California resident to recoup around 50% of his/her investment from the 2013 federal and state income tax savings resulting from the IDC deduction.

ENERGY NEWSLINE Volume 16 – Issue 4 • Winter 2013

Wishing you a joyful holiday season and a happy new year!

A discussion of oil and natural gas drilling programs may be suitable in your clients’ year-end planning. The reinvestment of cash distributions from oil and gas properties, which are not guaranteed, may further benefit your clients’ portfolios. ▲

EIA Launches Monthly “Drilling Productivity Report” The U.S. Energy Information Administration (EIA) introduced a new monthly “Drilling Productivity Report,” which takes a fresh look at oil and natural gas production. The report, whose first edition was published in late October, provides region-specific insights into oil and natural gas drilling rig efficiency, new well productivity, existing well decline rates, and overall oil and natural gas production trends.

Separate information for each region is offered, as shown in the Marcellus region chart example above.

The EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment, including a wide range of information covering energy production, stocks, demand, imports, exports, and prices, and prepares analyses and special reports on topics of current interest. ▲

"The metrics presented in the Drilling Productivity Report are intended to be more informative than traditional indicators of future oil and gas production," EIA Administrator Adam Sieminski explained. "The report provides a new approach that takes into account changes in the application of technologies that have led to rapid increases in U.S. oil and gas production."

SOURCE: Energy Information Administration.

“Given the importance of drilling productivity trends as a driver for future domestic oil and natural gas production, EIA has been developing new approaches to assess the productivity of drilling operations,” the EIA stated in announcing the new report. “New technology used in drilling for and producing natural gas and oil, mostly since 2007, made obsolete traditional indicators of future production, such as simple counts of oil-directed and gas-directed drilling rigs in use,” the EIA stated.

1

Park Place Corporate Center One 1000 Commerce Drive, Suite 410 Pittsburgh, PA 15275


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More Companies Switching to Natural Gas Fleets A growing number of companies are shifting away from gasoline and diesel to the use of natural gas for fleets of vehicles, an option with both environmental and economic benefits. Natural gas can be used in gaseous form — compressed natural gas (CNG) — or liquid form — liquefied natural gas (LNG).

Many other companies are making substantial investments in natural gas fleets, including the United Parcel Service, FedEx, Proctor & Gamble, General Mills, Frito-Lay, AT&T, Lowes, Giant Eagle’s Talon Logistics, Enviro Express, Kwik Trip, Saddle Creek Corp., Royal Disposal & Recycling, Home City Ice Company, Range Resources, CenterPoint Energy, and Waste Management. UPS, which has been using CNG vehicles since 1989 and LNG vehicles since 2000, plans to purchase 700 trucks this year, for example, and is projected to have the largest LNG fleet in the U.S. by the end of next year. At the same time, P&G’s goal is to have 20% of its shipments provided by compressed natural gas (CNG) equipment by June of 2013, and General Mills is running a pilot program of similar nature this year, with the goal of using 35% less diesel in five years. Home improvement retailer Lowes is looking to replace all of its diesel-powered fleet trucks with natural gas trucks by 2018. One of its fleets in Texas already runs entirely on natural gas, making it the first major retail distribution center in North America solely run on natural gas. Still another example, telecommunications giant AT&T has converted more than 5,000 of its service trucks to alternative fuels and plans to convert 15,000 by 2018.

Dave Hurst, natural gas vehicles principal research analyst at Navigant Research, a transportation market research company estimates that 2.89 million heavy-duty natural gas vehicles will be sold in the U.S. in 2013. The heavy-duty natural gas market will continue to expand because fleet managers understand they can recover the additional costs of purchasing a natural gas vehicle quickly, Hurst said.

Also, Waste Management, a provider of comprehensive waste management services across North America, operates 2,500 refuse collection trucks powered by CNG, representing 15% of its current fleet, and 90% of its new truck purchases are natural gas vehicles. “Compared to diesel, every natural gas truck we put in service saves us $30,000 every year in fuel costs,” John Lemmon, Waste Management’s director of fleet and logistics told Green Fleet magazine recently. ▲

As reported in this newsletter, global transportation leader Ryder System, Inc. initiated a groundbreaking natural gas truck rental and leasing project in Southern California in 2009, deploying 200 natural gas trucks, the first commercial truck rental and leasing operation in the U.S. to do so. Currently, Ryder operates approximately 380 natural gas fleet vehicles, and expects to exceed 1,000 by year-end 2014.

SOURCES: GreenFleet, Forbes, TruckInfo.com, the Motley Fool, the CBS affiliate channel WLTX, Lowes, AT&T, and Ryder.

Safe and Sound, Back from Afghanistan “He’s home safe and sound,” Atlas Chief Geologist and Senior Vice President of Exploration Jerry Dominey said with a sigh of relief. By home he meant America. Jerry referred to his 25-year-old son, Corporal Jered Dominey, who recently returned to the United States from the second of two back-to-back tours in Eastern Afghanistan. A military intelligence analyst, Jered was first deployed with the 75th Ranger Regiment, U.S. Army in October 2012, followed by a second deployment with the 10th Mountain Division. He just returned on October 1st, stationed at Ft. Drum in Jefferson County, New York where his unit is headquartered and where he will finish out his three-and-a-half-years of service in April 2014.

Enlisted After College Graduation Fresh out of college, Jered decided to enlist, Jerry said. “He just believes somebody has to do it, why not him?” Prior to joining Atlas, Jerry had traveled around the world working for Shell Oil company, so Jered grew up understanding and interested in seeing the world. “We lived in China, in Oman near Saudi Arabia, the Netherlands,” Jerry recounted, “and Jered spent two semesters studying abroad in Austria and Morocco.” In front of a memorial to the victims of the 9/11 World Trade Center attacks at Bagram Airfield, Afghanistan Sept 2013, a senior officer awards the Bronze Star Medal for Valor to U.S. Army Corporal Jered Dominey (at right), son of the very proud and now very relieved Jerry Dominey, Atlas Senior Vice President of Exploration.

The “always very analytical” Jered was involved in analyzing military information to locate high-value Taliban targets and to protect our soldiers from attacks, Jerry explained, working a minimum of 12 hours a day, 7 days a week, probably having three months worth of sleep for the year. “In his field of endeavor, you can’t just take off and pick it up later and hope nothing happens while you’re gone,” he said.

Steelmakers Move to Natural Gas in Manufacturing The steel industry is increasingly reducing the use of coke, made from crushed coal, in favor of natural gas in its manufacturing process. According to reports, America's steel industry is making the switch to natural gas technologies to become more competitive against foreign producers.

“He endured a lot of hardships. When he got back, he looked like he aged five years just in life experience,” Jerry continued. “It’s something we don’t think about enough, the sacrifice [those who are on active duty] make. That’s why they become so valuable. They’re not types to complain.”

Awarded Bronze Star Medal

“A process called direct reduced iron uses natural gas to concentrate iron ore into pellets within a furnace that requires less, or in some cases, no coke,” steel expert Peter Warrian of the University of Toronto told the Hamilton Spectator recently. Since this DRI process is less expensive, steelmakers are investing more heavily in developing the technology, he said, adding, "In the next 10 years, it will replace blast furnaces."

U.S. Steel’s former CEO John Surma said in an interview last year that using natural gas in some stages of production can cut the use of more expensive coking coal by some 10%, according to Reuters. Recently, U.S. Steel decided to end steel and iron making in Hamilton, Ontario, which is seen as a major move away from the blast furnaces that use coke. The plant shutdown of its blast furnaces represent four of just 30 that were still operating in North America.

“Many integrated steel and iron companies are turning to natural gas over coal because it's both cheaper and more abundant than coal,” Bruce Steiner, president of the American Coke and Coal Chemicals Institute, said in the same article.

Additionally, Nucor is constructing a new, all natural gas-fired plant to produce DRI, a key ingredient in its steel-making process, as reported in Energy & Capital. ▲

U.S. Steel Corp. and Nucor Inc., the two largest U.S. steel producers, are among those changing their traditional manufacturing processes.

During a direct and decisive engagement with an insider threat on a forward operating base (or FOB, a secured forward military position used to support tactical operations) in Eastern Afghanistan, Jered was awarded the Bronze Star Medal with “V” device (for Valor) for saving the lives of multiple coalition force soldiers.

Between the job he loves and the family he loves (his wife of 30 years, Rebecca, plus twins Chris and Sarah, three years younger than Jered), Jerry said, “I’m very lucky, and always have been, but the fact that my son is back reinforces that.” Will Jered re-enlist? “He’s leaning toward not,” said Jerry hopefully. “I want him to just relax, and not think about anything going on in the world right now.” ▲

The Bronze Star Medal is the fourth-highest individual military award and may be awarded for meritorious service in a combat zone, acts of merit or acts of heroism. When awarded for acts of heroism, the medal is awarded with the "V" device.

SOURCES: The Hamilton Spectator, Ontario’s Mayor’s Office, Energy & Capital newsletter, and Reuters.

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More Companies Switching to Natural Gas Fleets A growing number of companies are shifting away from gasoline and diesel to the use of natural gas for fleets of vehicles, an option with both environmental and economic benefits. Natural gas can be used in gaseous form — compressed natural gas (CNG) — or liquid form — liquefied natural gas (LNG).

Many other companies are making substantial investments in natural gas fleets, including the United Parcel Service, FedEx, Proctor & Gamble, General Mills, Frito-Lay, AT&T, Lowes, Giant Eagle’s Talon Logistics, Enviro Express, Kwik Trip, Saddle Creek Corp., Royal Disposal & Recycling, Home City Ice Company, Range Resources, CenterPoint Energy, and Waste Management. UPS, which has been using CNG vehicles since 1989 and LNG vehicles since 2000, plans to purchase 700 trucks this year, for example, and is projected to have the largest LNG fleet in the U.S. by the end of next year. At the same time, P&G’s goal is to have 20% of its shipments provided by compressed natural gas (CNG) equipment by June of 2013, and General Mills is running a pilot program of similar nature this year, with the goal of using 35% less diesel in five years. Home improvement retailer Lowes is looking to replace all of its diesel-powered fleet trucks with natural gas trucks by 2018. One of its fleets in Texas already runs entirely on natural gas, making it the first major retail distribution center in North America solely run on natural gas. Still another example, telecommunications giant AT&T has converted more than 5,000 of its service trucks to alternative fuels and plans to convert 15,000 by 2018.

Dave Hurst, natural gas vehicles principal research analyst at Navigant Research, a transportation market research company estimates that 2.89 million heavy-duty natural gas vehicles will be sold in the U.S. in 2013. The heavy-duty natural gas market will continue to expand because fleet managers understand they can recover the additional costs of purchasing a natural gas vehicle quickly, Hurst said.

Also, Waste Management, a provider of comprehensive waste management services across North America, operates 2,500 refuse collection trucks powered by CNG, representing 15% of its current fleet, and 90% of its new truck purchases are natural gas vehicles. “Compared to diesel, every natural gas truck we put in service saves us $30,000 every year in fuel costs,” John Lemmon, Waste Management’s director of fleet and logistics told Green Fleet magazine recently. ▲

As reported in this newsletter, global transportation leader Ryder System, Inc. initiated a groundbreaking natural gas truck rental and leasing project in Southern California in 2009, deploying 200 natural gas trucks, the first commercial truck rental and leasing operation in the U.S. to do so. Currently, Ryder operates approximately 380 natural gas fleet vehicles, and expects to exceed 1,000 by year-end 2014.

SOURCES: GreenFleet, Forbes, TruckInfo.com, the Motley Fool, the CBS affiliate channel WLTX, Lowes, AT&T, and Ryder.

Safe and Sound, Back from Afghanistan “He’s home safe and sound,” Atlas Chief Geologist and Senior Vice President of Exploration Jerry Dominey said with a sigh of relief. By home he meant America. Jerry referred to his 25-year-old son, Corporal Jered Dominey, who recently returned to the United States from the second of two back-to-back tours in Eastern Afghanistan. A military intelligence analyst, Jered was first deployed with the 75th Ranger Regiment, U.S. Army in October 2012, followed by a second deployment with the 10th Mountain Division. He just returned on October 1st, stationed at Ft. Drum in Jefferson County, New York where his unit is headquartered and where he will finish out his three-and-a-half-years of service in April 2014.

Enlisted After College Graduation Fresh out of college, Jered decided to enlist, Jerry said. “He just believes somebody has to do it, why not him?” Prior to joining Atlas, Jerry had traveled around the world working for Shell Oil company, so Jered grew up understanding and interested in seeing the world. “We lived in China, in Oman near Saudi Arabia, the Netherlands,” Jerry recounted, “and Jered spent two semesters studying abroad in Austria and Morocco.” In front of a memorial to the victims of the 9/11 World Trade Center attacks at Bagram Airfield, Afghanistan Sept 2013, a senior officer awards the Bronze Star Medal for Valor to U.S. Army Corporal Jered Dominey (at right), son of the very proud and now very relieved Jerry Dominey, Atlas Senior Vice President of Exploration.

The “always very analytical” Jered was involved in analyzing military information to locate high-value Taliban targets and to protect our soldiers from attacks, Jerry explained, working a minimum of 12 hours a day, 7 days a week, probably having three months worth of sleep for the year. “In his field of endeavor, you can’t just take off and pick it up later and hope nothing happens while you’re gone,” he said.

Steelmakers Move to Natural Gas in Manufacturing The steel industry is increasingly reducing the use of coke, made from crushed coal, in favor of natural gas in its manufacturing process. According to reports, America's steel industry is making the switch to natural gas technologies to become more competitive against foreign producers.

“He endured a lot of hardships. When he got back, he looked like he aged five years just in life experience,” Jerry continued. “It’s something we don’t think about enough, the sacrifice [those who are on active duty] make. That’s why they become so valuable. They’re not types to complain.”

Awarded Bronze Star Medal

“A process called direct reduced iron uses natural gas to concentrate iron ore into pellets within a furnace that requires less, or in some cases, no coke,” steel expert Peter Warrian of the University of Toronto told the Hamilton Spectator recently. Since this DRI process is less expensive, steelmakers are investing more heavily in developing the technology, he said, adding, "In the next 10 years, it will replace blast furnaces."

U.S. Steel’s former CEO John Surma said in an interview last year that using natural gas in some stages of production can cut the use of more expensive coking coal by some 10%, according to Reuters. Recently, U.S. Steel decided to end steel and iron making in Hamilton, Ontario, which is seen as a major move away from the blast furnaces that use coke. The plant shutdown of its blast furnaces represent four of just 30 that were still operating in North America.

“Many integrated steel and iron companies are turning to natural gas over coal because it's both cheaper and more abundant than coal,” Bruce Steiner, president of the American Coke and Coal Chemicals Institute, said in the same article.

Additionally, Nucor is constructing a new, all natural gas-fired plant to produce DRI, a key ingredient in its steel-making process, as reported in Energy & Capital. ▲

U.S. Steel Corp. and Nucor Inc., the two largest U.S. steel producers, are among those changing their traditional manufacturing processes.

During a direct and decisive engagement with an insider threat on a forward operating base (or FOB, a secured forward military position used to support tactical operations) in Eastern Afghanistan, Jered was awarded the Bronze Star Medal with “V” device (for Valor) for saving the lives of multiple coalition force soldiers.

Between the job he loves and the family he loves (his wife of 30 years, Rebecca, plus twins Chris and Sarah, three years younger than Jered), Jerry said, “I’m very lucky, and always have been, but the fact that my son is back reinforces that.” Will Jered re-enlist? “He’s leaning toward not,” said Jerry hopefully. “I want him to just relax, and not think about anything going on in the world right now.” ▲

The Bronze Star Medal is the fourth-highest individual military award and may be awarded for meritorious service in a combat zone, acts of merit or acts of heroism. When awarded for acts of heroism, the medal is awarded with the "V" device.

SOURCES: The Hamilton Spectator, Ontario’s Mayor’s Office, Energy & Capital newsletter, and Reuters.

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Atlas Resources, LLC - Energy Newsline - Q4 2013  

Atlas Resources, LLC - Energy Newsline - Q4 2013

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