Enogex Inc., a subsidiary of OGE Energy, has agreed to sell its 75% interest in the NOARK Pipeline System LP., and its Ozark Gas Transmission and Ozark Gas Gathering lines to Atlas Pipeline Partners LP., a company which started out in Appalachia, and is rapidly expanding into new Midcontinent operations.

The sale will be made by Enogex Arkansas Pipeline Corp. (EAPC), which holds the interest in the NOARK System. The company’s assets include the 565-mile Ozark Gas Transmission interstate, extending from southeastern Oklahoma through Arkansas to southeastern Missouri. It also includes the 365-mile unregulated Ozark Gas Gathering, located in eastern Oklahoma and western Arkansas. Southwestern Energy Co., primarily and E&P company, owns the other 25% of NOARK.

The consideration for the shares will be approximately $163 million of cash plus an adjustment for net working capital. A portion of the proceeds will be used to redeem $26 million of outstanding debt associated with the NOARK Pipeline System. The transaction is expected to provide an after-tax book gain of slightly more than $50 million. Standard & Poor’s Ratings Services said the sale does not affect the rating on Enogex. “Although the company has no definitive plans regarding the redeployment of sales proceeds, further investment in higher-risk nonregulated businesses, such as gas gathering and processing, could weaken the company’s consolidated business risk profile,” S&P advised. The ratings service said the sale is expected to generate about $90 million in after-tax cash proceeds. It will also reduce balance sheet debt by $67 million (or less than 5% of total OGE Energy debt).

The transaction is subject to customary closing conditions and regulatory review by the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Atlas Chairman Edward E. Cohen said in a conference call he expects the transaction to be closed in the fourth quarter and be immediately accretive to distributable cash flow. The acquisition will add significant fixed fee transportation business and presents an opportunity for growth.

Cohen pointed out the Ozark interstate has a 322 MMcf/d capacity and has compression in place, but runs at an average of 200 MMcf/d. The gathering system, running at 36,400 Mcf/d also is far below its capacity. “There’s a lot of opportunity to expand into the long haul pipeline business and the gathering business,” Cohen said. The new properties are adjacent to gathering and processing facilities Atlas holds in Oklahoma.

Bob Firth, president of the Atlas Midcontinent division based in Tulsa, said he would be working with producers and shippers to expand volumes. The new system has a number of pluses. There is potential in the Fayetteville shelf play and in the basis differential between Oklahoma and the eastern part of the Ozark system. Also, there is a bottleneck getting Barnett Shale gas out to the east. He also pointed out the Ozark system is relatively new — with the pipe 1982 or newer.

Enogex President Danny Harris said “the sale of EAPC and the subsequent reinvestment of proceeds are intended to strengthen our asset portfolio, which is part of our overall growth strategy. We will continue to look at the right growth opportunities to improve value to our parent company and shareholders.

“The assets included in this transaction are not part of our core business of providing intrastate gas services to numerous customers in Oklahoma, including Oklahoma Gas and Electric and Public Service Company of Oklahoma,” Harris added.

Atlas Pipeline Partners is a master limited partnership, which started out in Appalachia in 2000, moving into the Midcontinent in recent years. As of July 30, 2005, APL owned and operated approximately 2,200 miles of gas gathering pipeline in Oklahoma and northern Texas, transporting approximately 325 MMcf/d from more than 880 receipt points or wells to its gas processing and treating facilities in Velma, Elk City and Prentiss, OK. In Appalachia, the company owns and operates more than 1,440 miles of natural gas gathering pipelines in western Pennsylvania, western New York and eastern Ohio connected to more than 4,800 wells and gathering 54.7 MMcf/d.

Atlas America Inc., the parent company of Atlas Pipeline Partners, LP.’s general partner and owner of 1,641,026 units of limited partner interest of APL, is an energy company engaged primarily in the development and production of natural gas in the Appalachian Basin for its own account and for its investors through the offering of tax advantaged investment programs. Resource America, Inc., completed the spin-off of Atlas America in June. Atlas America drilled and connected 335 wells to its Appalachian Basin gathering systems in 2004, and 270 wells and 195 wells in 2003 and 2002 respectively.

On its current systems, Atlas America collects gathering fees equal to a percentage (generally 16%) of the gross or weighted average sales price of the gas transported.

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