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<SEC-DOCUMENT>0001144204-08-056681.txt : 20081128
<SEC-HEADER>0001144204-08-056681.hdr.sgml : 20081127
<ACCEPTANCE-DATETIME>20081008144708
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-08-056681
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20081008

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ATLAS AMERICA INC
		CENTRAL INDEX KEY:			0001279228
		STANDARD INDUSTRIAL CLASSIFICATION:	NATURAL GAS TRANSMISSION [4922]
		IRS NUMBER:				510404430
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		WESTPOINTE CORPORATE CENTER ONE
		STREET 2:		1550 CORAOPOLIS HEIGHTS RD. 2ND. FLOOR
		CITY:			MOONTOWNSHIP
		STATE:			PA
		ZIP:			15108
		BUSINESS PHONE:		412-262-2830

	MAIL ADDRESS:	
		STREET 1:		WESTPOINTE CORPORATE CENTER ONE
		STREET 2:		1550 CORAOPOLIS HEIGHTS RD. 2ND. FLOOR
		CITY:			MOONTOWNSHIP
		STATE:			PA
		ZIP:			15108
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<html>
  <head>
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  <body bgcolor="#ffffff">
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ATLAS
      AMERICA, INC.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 288pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">October
      8, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      H.
      Christopher Owings</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assistant
      Director</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Division
      of Corporation Finance</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mail
      Stop
      3561</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">United
      States Securities and </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exchange
      Commission</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">100
      F
      Street, N.E.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      D.C. 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">
            </td>
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Re:</strong></font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Atlas
                America, Inc. </strong></font></div>
              <div align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Form
                  10-K for Fiscal Year Ended December 31, 2007</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Filed
                  February 29, 2008</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Form
                  10-Q for Quarter Ended March 31, 2008</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Filed
                  May 9, 2008</strong></font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>File
                  No. 1-32169</strong></font></div>
              </div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dear
      Mr.
      Owings:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      copy of
      this letter has been furnished through EDGAR as correspondence. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      letter sets forth the Registrant&#8217;s response to the request that representation
      be given to the Staff of the Division of Corporation Finance (the &#8220;Staff&#8221;) of
      the Securities and Exchange Commission (the &#8220;Commission&#8221;) that the Registrant
      will include additional disclosures in the Summary of Significant Accounting
      Policies&#8212;Principles of Consolidation, &#8212;Oil and Gas Properties, and &#8212;Impairment
      of Long-Lived Assets beginning with its Form 10Q as of September 30, 2008 and
      in
      all future filings. The following disclosures are reproduced in their entirety
      and include the additional language requested as set forth below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Principles
      of Consolidation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      consolidated financial statements include the accounts of the Company and its
      subsidiaries, all of which are wholly-owned except for Atlas Pipeline Holdings
      and Atlas Energy Resources, which are majority-controlled by the Company. In
      accordance with established practice in the oil and gas industry, the Company
      includes in its consolidated financial statements its pro-rata share of assets,
      liabilities, income and lease operating and general and administrative costs
      and
      expenses of the energy partnerships in which it has an interest. The Company&#8217;s
      financial statements do not include proportional consolidation of the depletion
      or impairment expenses of the partnerships it invests in, but rather calculates
      these items to its own economics as further explained below. All material
      intercompany transactions have been eliminated.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      H. Christopher Owings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Page
      2</strong></font></div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Oil
      and Gas Properties </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company follows the successful efforts method of accounting for oil and gas
      producing activities. Acquisition costs of leases and development activities
      are
      capitalized. Exploratory drilling costs are capitalized pending determination
      of
      whether a well is successful. Exploratory wells subsequently determined to
      be
      dry holes are charged to expense. Costs resulting in exploratory discoveries
      and
      all development costs, whether successful or not, are capitalized. Geological
      and geophysical costs and delay rentals are expensed. Oil is converted to gas
      equivalent basis (&#8220;Mcfe&#8221;) at the rate one barrel equals 6&#160;Mcf.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Depletion
      depreciation and amortization expense is determined on a field-by-field basis
      using the units-of-production method, with depletion, depreciation and
      amortization rates for leasehold acquisition costs based on estimated proved
      reserves and depletion, depreciation and amortization rates for well and related
      equipment costs based on proved developed reserves associated with each
      field.&#160;&#160; Depletion rates are determined based on reserve quantity
      estimates and the capitalized costs of undeveloped and developed producing
      properties. Capitalized costs of developed producing properties in each field
      are aggregated to include the Company&#8217;s costs of property interests in
      uncontrolled but proportionately consolidated from investment partnerships,
      wells drilled solely by the Company, properties purchased and working interests
      with other outside operators.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      the
      sale or retirement of a complete field of a proved property, the cost is
      eliminated from the property accounts, and the resultant gain or loss is
      reclassified to income. Upon the sale of an individual well, the proceeds are
      credited to accumulated depreciation and depletion. Upon the sale of an entire
      interest in an unproved property where the property had been assessed for
      impairment individually, a gain or loss is recognized in the statements of
      income. If a partial interest in an unproved property is sold, any funds
      received are accounted for as a reduction of the cost in the interest
      retained.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Impairment
      of Long-Lived Assets</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s long-lived assets are reviewed for impairment annually or whenever
      events or changes in circumstances indicate that their carrying amounts may
      not
      be recoverable. Long-lived assets are reviewed for potential impairments at
      the
      lowest levels for which there are identifiable cash flows that are largely
      independent of other groups of assets. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      H. Christopher Owings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Page
      3</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      review of the Company&#8217;s oil and gas properties is done on a field-by-field basis
      by determining if the historical cost of proved properties less the applicable
      accumulated depletion, depreciation and amortization and abandonment is less
      than the estimated expected undiscounted future cash flows. The expected future
      cash flows are estimated based on the Company&#8217;s plans to continue to produce and
      develop proved reserves. Expected future cash flow from the sale of production
      of reserves is calculated based on estimated future prices. The Company
      estimates prices based upon current contracts in place at December 31, 2007
      adjusted for basis differentials and market related information including
      published futures prices. The estimated future level of production is based
      on
      assumptions surrounding future levels of prices and costs, field decline rates,
      market demand and supply, and the economic and regulatory climates. If the
      carrying value exceeds such cash flows, an impairment loss is recognized for
      the
      difference between the estimated fair market value, (as determined by discounted
      future cash flows) and the carrying value of the assets. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      determination of oil and natural gas reserve estimates is a subjective process,
      and the accuracy of any reserve estimate depends on the quality of available
      data and the application of engineering and geological interpretation and
      judgment. Estimates of economically recoverable reserves and future net cash
      flows depend on a number of variable factors and assumptions that are difficult
      to predict and may vary considerably from actual results.&#160;&#160;In
      particular, </font><a name="eolPage65"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      Company&#8217;s reserve estimates for its investment in its limited partnerships are
      based on its own assumptions rather than its proportionate share of the limited
      partnership&#8217;s reserves. These assumptions include the Company&#8217;s actual capital
      contributions, an additional carried interest (generally 7% to 10%), a
      disproportionate share of salvage value upon plugging of the wells and lower
      operating and administrative costs. The Company&#8217;s lower operating and
      administrative costs result from the limited partners paying to the Company
      their proportionate share of these expenses plus a profit margin. These
      assumptions could result in the Company&#8217;s calculation of depletion and
      impairment being different than its proportionate share of the limited
      partnership calculations for these items. In addition, reserve estimates for
      wells with limited or no production history are less reliable than those based
      on actual production. Estimated reserves are often subject to future revisions,
      which could be substantial, based on the availability of additional information
      which could cause the assumptions to be modified. The Company cannot predict
      what reserve revisions may be required in future periods. </font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s method of calculating its reserves may result in reserve quantities
      and values which are greater than those which would be calculated by the
      investment partnerships which the Company sponsors and owns an interest in
      but
      does not control. The Company&#8217;s reserve quantities include reserves in excess of
      its proportionate share of reserves in a partnership which the Company may
      be
      unable to recover due to the partnership legal structure. The Company may have
      to pay additional consideration in the future as a well or investment
      partnership becomes uneconomic under the terms of the partnership agreement
      in
      order for the Company to recover these excess reserves and to acquire any
      additional residual interests in the wells held by other partnership investors.
      The acquisition of any well interest from the partnership by the Company is
      governed under the partnership agreement and must be at fair market value
      supported by an appraisal of an independent expert selected by the
      Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify">&#160;</div>
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    <div>&#160;</div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
        H. Christopher Owings</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Page
        4</strong></font><br></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unproved
      properties are reviewed annually for impairment or whenever events or
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. Impairment charges are recorded if conditions indicate the Company
      will not explore the acreage prior to expiration of the applicable leases or
      if
      it is determined that the carrying value of the properties is above their fair
      value.</font></div>
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      McGurk, Chief Accounting Officer, at (330) 896-8510, ext. 201 or Lisa
      Washington, Chief Legal Officer, at (215) 717-3387.</font></div>
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