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Ozark to Transport More of Southwestern's Fayetteville Shale Production

Atlas Pipeline Partners LP said Southwestern Energy signed a new three-year firm transportation contract for 175,000 Dth/d of capacity on Atlas' FERC-regulated Ozark Gas Transmission system to support growing Fayetteville Shale production in north central Arkansas.

Atlas said the pipeline now has 75% of its 322,000 Dth/d of firm capacity under contract. Atlas CEO Edward E. Cohen said the contract "is a further indication of the success that we are experiencing in this region."

Southwestern has had significant success developing the Fayetteville shale gas play in the Arkoma Basin. The shale in the unconventional gas reservoir is a Mississippian-age shale that is the geologic equivalent of the Barnett Shale found in North Texas. Southwest said it currently has 101 Bcf of reserves in the play, which makes up about 12% of its total proved reserves. The company holds about 875,000 net acres in the play area.

As of February, the company had spud a total of 117 wells, 60 of which were producing and 17 of which were in some stage of completion. Another 34 wells are being drilled. In 2006, Southwestern expects to continue the evaluation of its acreage position by investing $338.3 million in the Fayetteville Shale play, which would include drilling between 175 to 200 wells and testing an additional 24 to 30 pilot areas by year-end 2006.

Atlas acquired 75% of the interest in NOARK Pipeline System from a subsidiary of OGE Energy Corp. on Oct. 31, 2005. NOARK includes the 565-mile Ozark pipeline system, extending from southeastern Oklahoma through Arkansas and into southeastern Missouri. NOARK also operates 365 miles of gas gathering pipeline in Oklahoma and Arkansas. Another subsidiary of Southwestern Energy holds the 25% minority interest in NOARK.

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