U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number 333-09991
Atlas-Energy for the Nineties-Public #5 Ltd.
(Name of small business issuer in its charter)
Pennsylvania 25-1795703
(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)
311 Rouser Road, Moon Township, Pennsylvania 15108
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (412) 262-2830
Securities registered under Section 12(b) of the Exchange Act
Title of each class Name of each exchange on which registered
None None
Securities registered under Section 12(g) of the Exchange Act
None
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. [Yes] No _____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year. $1,526,439
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant. Not Applicable.
Transitional Small Business Disclosure Format (check one):
Yes [X] No _____
- ----------------------------------------------------------------------
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Atlas-Energy for the Nineties-Public #5 Ltd. (the "Partnership")
was formed under the Pennsylvania Revised Uniform Limited Partnership
Act on July 26, 1996, with Atlas Resources, Inc. ("Atlas") as Managing
General Partner. The Partnership had its initial and final closing on
December 31, 1996, and was funded with subscriptions of $7,992,240 to
drill natural gas development wells. Also, on the closing, the
Managing General Partner was credited with a total capital contribution
of $1,592,068 because of certain expenditures it made on behalf of the
Partnership and certain prospects it contributed to the Partnership.
The Partnership has not filed bankruptcy nor has the Partnership been
involved in any material reclassification, merger, consolidation,
receivership or similar proceeding or purchase or sale of a significant
amount of assets not in the ordinary course of business.
The Partnership was funded to drill natural gas development wells with
the objective being the discovery and production of natural gas in
commercially marketable quantities. Because the initial and final
closing date was December 31, 1996, the Partnership did not conduct any
drilling activities in 1996; however, the Partnership did prepay the
drilling costs pursuant to the drilling and operating agreement with
Atlas, on December 31, 1996, in an amount equal to $6,391,298. The
drilling and operating agreement provided that 35.91 development wells
would be drilled to the Clinton/Medina geological formation in Mercer,
Lawrence and Butler Counties, Pennsylvania. Atlas and its affiliates
had sufficient leasehold inventory to provide the prospects to be
developed by the Partnership. See "Description of Property".
For the next twelve months management believes that the Partnership has
adequate capital in order to conduct its operations. The Partnership
had sufficient capital resources from the closing to drill and develop
approximately 35.91 net wells. No other wells will be drilled and
therefore no additional funds will be required. The payment of
operation and maintenance costs did not begin until the Partnership
wells began to generate revenue. Although management does not
anticipate that the Partnership will have to do so, any additional
funds which may be required will be obtained from production revenues
from Partnership wells or from borrowings by the Partnership from Atlas
or its affiliates. Atlas, however, is not contractually committed to
make such a loan. The amount that may be borrowed by the Partnership
from Atlas and its affiliates, if any amounts are borrowed, may not at
any time exceed 5% of the Partnership subscription. No borrowings will
be obtained from third parties.
With respect to operating and maintenance costs, the Partnership's
commitments pursuant to the drilling and operating agreement are
expected to be fulfilled through revenues generated from the sale of
gas and oil. During producing operations Atlas, as operator, will
receive a monthly well supervision fee of $275 (proportionately reduced
to the extent less than 100% of the working interest was acquired) for
each producing well for which it has responsibility under the drilling
and operating agreement. The well supervision fee covers all normal
and regularly recurring operating expenses for the production, delivery
and sale of gas, such as well tending, routine maintenance and
adjustment, reading meters, recording production, pumping, maintaining
appropriate books and records, preparing reports to the Partnership and
to government agencies, and collecting and disbursing revenues. The
well supervision fees do not include costs and expenses related to the
production and sale of oil, purchase of equipment, materials or third
party services, brine disposal, and rebuilding of access roads, all of
which will be billed at the invoice cost of materials purchased or
third party services performed. As operator Atlas charges the
Partnership at cost for third party services and materials provided for
each well which has been placed in operation, and a reasonable charge
for services performed directly by Atlas or its affiliates. The
drilling and operating agreement also gives the operator the right at
any time after three years from the date a Partnership well has been
placed into production to retain $200 per month to cover future
plugging and abandonment of such well.
Natural gas produced by the wells developed by the Partnership
must be marketed in order for the Partnership to realize revenues from
such production. The Partnership did not purchase and does not
anticipate selling any producing wells. In recent years natural gas
and oil prices have been volatile.
The marketing of natural gas and oil production, is also affected by
numerous factors beyond the control of the Partnership and the effect
of which cannot be accurately predicted. These factors include the
availability and proximity of adequate pipeline or other transportation
facilities; the amount of domestic production and foreign imports of
oil and gas; competition from other energy sources such as coal and
nuclear energy; local, state and federal regulations regarding
production and the cost of complying with applicable environmental
regulations; and fluctuating seasonal supply and demand. For example,
the demand for natural gas is greater in the winter months than in the
summer months, which is reflected in a higher spot market price paid
for such gas. Also, increased imports of oil and natural gas have
occurred and are expected to continue. The free trade agreement between
Canada and the United States has eased restrictions on imports of
Canadian gas to the United States. Additionally, the passage in
November, 1993, of the North American Free Trade Agreement will have
some impact on the American gas industry by eliminating trade and
investment barriers in the United States, Canada and Mexico. In the
past the reduced demand for natural gas and/or an excess supply of gas
has resulted in a lower price paid for the gas. It has also resulted
in some purchasers curtailing or restricting their purchases of
natural gas; renegotiating existing contracts to reduce both take-or-
pay levels and the price paid for delivered gas; and other difficulties
in the marketing of production.
The Clean Air Act Amendments of 1990 contain incentives for the future
development of "clean alternative fuel," which includes natural gas and
liquefied petroleum gas for "clean-fuel vehicles". The Partnership
believes the amendments ultimately will have a beneficial effect on
natural gas markets and prices.
The Managing General Partner is responsible for selling the
Partnership's gas and oil production. Atlas' policy is to treat all
wells in a given geographic area equally. This reduces certain
potential conflicts of interest among the owners of the various wells,
including the Partnership, concerning to whom and at what price the gas
will be sold. Atlas calculates a weighted average selling price for
all the gas sold in the geographic area, such as the Mercer County
area. To arrive at the average weighted selling price the money
received from the sale of all the gas sold to its customers in a
geographic area is divided by the volume of all gas sold from the wells
in the area. On occasion, Atlas has reduced the amount of production
it normally sells on the spot market until the spot market price
increased. Atlas, however, has not voluntarily restricted its gas
production in the past two years. (See "Properties - Production.")
In the Mercer County area, a portion of the Partnership's gas is
transported through Atlas' own pipeline system and sold directly to
industrial end-users in the area where the wells were drilled. This
will generally result in the Partnership receiving higher prices for
the gas than if the gas were transported a farther distance through
interstate pipelines because of increased transportation charges. The
remainder of the Partnership's gas is transported through Atlas' and
its affiliates' pipelines to the interconnection points maintained with
Tennessee Gas Transmission Co., National Fuel Gas Supply Corporation,
National Fuel Gas Distribution Company, East Ohio Natural Gas Company
and Peoples Natural Gas Company. These delivery points are utilized by
Atlas Gas Marketing, Inc. to service its end-user markets in the
northeast United States which include in excess of 100 customers.
Atlas is currently delivering an average 27,000 MCF of natural gas per
day from the Mercer County area to all the aforementioned markets and
has the capacity of delivering 33,000 MCF per day from the Mercer
County area. Atlas anticipates that Wheatland Tube Company and Carbide
Graphite each will purchase approximately 10% to 15% of the
Partnership's gas production in 1998, pursuant to gas contracts between
them and an affiliate of Atlas, and it is possible that other
purchasers of the Partnership's gas production may account for 10% of
the Partnership's gas sales revenues in 1998. See "Financial
Statements".
In order to optimize the price it receives for the sale of natural gas,
Atlas markets portions of the gas through long term contracts, short
term contracts, and monthly spot sales. The marketing of natural gas
production has been influenced by the availability of certain financial
instruments, such as gas futures contracts, options and swaps which,
when properly utilized as hedge instruments, provide producers or
consumers of gas with the ability to lock in the price which will
ultimately be paid for the future deliveries of gas. Atlas is
utilizing financial instruments to hedge the price risk of a portion of
all of its programs' gas production which includes the Partnership. To
assure that the financial instruments will be used solely for hedging
price risks and not for speculative purposes, Atlas has established an
Energy Price Risk Committee composed of the President, General Counsel,
Chief Financial Officer (chairperson) and Director of Marketing, whose
responsibility will be to ascertain that all financial trading is done
in compliance with hedging policies and procedures. Atlas does not
intend to contract for positions that it cannot offset with actual
production.
There are many companies, partnerships and individuals engaged in
natural gas exploration, development and operations in the areas where
the Partnership is conducting its activities. The industry is highly
competitive in all phases, including the marketing of natural gas and
oil. With respect to the marketing of the Partnership's gas and oil
the Partnership should, through the use of Atlas' distribution system
and Atlas' experienced marketing staff, be able to sell the
Partnership's gas, although there can be no assurance of the price to
be received by the Partnership for the gas.
The Partnership has not and will not devote any funds to research
and development activities. There are no new products or services and
the Partnership does not have any patents, trademarks, licenses,
franchises, concessions, royalty agreements or labor contracts.
Oil and gas operations are regulated in Pennsylvania by the Department
of Environmental Resources, Division of Oil and Gas, which imposes a
comprehensive statutory and regulatory scheme with respect to oil and
gas operations. Among other things, the regulations involve: (i) new
well permit and well registration requirements, procedures and fees;
(ii) minimum well spacing requirements; (iii) restrictions on well
locations and underground gas storage; (iv) certain well site
restoration, groundwater protection and safety measures; (v) landowner
notification requirements; (vi) certain bonding or other security
measures; (vii) various reporting requirements; (viii) well plugging
standards and procedures; and (ix) broad enforcement powers.
Generally, the regulatory agency in the state where a producing natural
gas well is located supervises production activities and the
transportation of natural gas sold intrastate. Atlas does not expect
that these regulations will have a material adverse impact upon the
operations of the Partnership. The Partnership believes it has
complied in all material respects with applicable state regulations and
will continue to do so.
The Federal Energy Regulatory Commission ("FERC") regulates the
interstate transportation of natural gas and the pricing of natural gas
sold for resale interstate; and under the Natural Gas Policy Act of
1978 ("NGPA") the price of intrastate gas. Price controls for natural
gas production from new wells, however, were deregulated on December
31, 1992. Deregulated gas production may be sold at market prices
determined by supply, demand, BTU content, pressure, location of the
wells, and other factors. All gas produced by the Partnership wells
will be price decontrolled gas and sold at fair market value.
Although the transportation and sale of gas in interstate commerce
remains heavily regulated, FERC has sought to promote greater
competition in natural gas markets by encouraging open access
transportation by interstate pipelines, with the goal of expanding
opportunities for producers to contract directly with local
distribution companies and end-users. For example, FERC Order 500
requires interstate pipelines that transport gas for others to provide
transportation service to producers, distributors, and all other
shippers of natural gas on a non-discriminatory, "first-come, first-
served" basis so that producers and other shippers can sell natural gas
directly to end-users. FERC Order 636, which became effective May 18,
1992, requires gas pipeline companies to, among other things, separate
their sales services from their transportation services; and provide an
open access transportation service that is comparable in quality for
all gas suppliers. The premise behind FERC Order 636 was that the gas
pipeline companies had an unfair advantage over other gas suppliers
because they could bundle their sales and transportation services
together. FERC Order 636 is designed to create a regulatory
environment in which no gas seller has a competitive advantage over
another gas seller because it also provides transportation services.
It is difficult to assess the effect of the order on the Partnership.
The Partnership does not expects to sell any oil.
From time to time there are a number of proposals being considered
in Congress and in the legislatures and agencies of various states that
if enacted would significantly and adversely affect the oil and natural
gas industry. Such proposals involve, among other things, the
imposition of new taxes on natural gas and limiting the disposal of
waste water from wells. At the present time, it is impossible to
accurately predict what proposals, if any, will be enacted by Congress
or the legislatures and agencies of various states and what effect any
proposals which are enacted will have on the activities of the
Partnership.
Various federal, state and local laws covering the discharge of
materials into the environment, or otherwise relating to the protection
of the environment, may affect the Partnership's operations and costs.
The Partnership may generally be liable for cleanup costs to the United
States Government under the Federal Clean Water Act for oil or
hazardous substance pollution and under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA" or
Superfund) for hazardous substance contamination. The liability is
unlimited in cases of willful negligence or misconduct. There also is
no limit on liability for environmental cleanup costs or damages with
respect to claims by the state or private persons or entities. In
addition, the Environmental Protection Agency will require the
Partnership to prepare and implement spill prevention control and
countermeasure plans relating to the possible discharge of oil into
navigable waters and will further require permits to authorize the
discharge of pollutants into navigable waters. State and local permits
or approvals will also be needed with respect to wastewater discharges
and air pollutant emissions.
Violations of environment-related lease conditions or environmental
permits can result in substantial civil and criminal penalties as well
as potential court injunctions curtailing operations. Compliance with
these statutes and regulations may cause delays in producing natural
gas and oil from the wells and may increase substantially the cost of
producing such natural gas and oil. These laws and regulations,
however, are constantly being revised and changed. The Partnership is
unable to predict the ultimate costs of complying with present and
future environmental laws and regulations, although it does not believe
such costs will be substantial. The Partnership is unable to obtain
insurance to protect against many environmental claims.
ITEM 2: PROPERTIES
DRILLING ACTIVITY. The Partnership drilled 35.91 net wells, of which
35.91 net wells were productive. All the wells were drilled and
completed by the Partnership as of May 13, 1997. No further drilling
activities will be undertaken.
The following table summarizes the Partnership's drilling activity
since its formation. All the wells drilled were development wells
which means a well drilled within the proved area of an oil or gas
reservoir to the depth of a stratigraphic horizon known to be
productive. A "dry hole" is an exploratory or a development well found
to be incapable of producing either oil or gas in sufficient quantities
to justify completion as an oil or gas well. A "productive well" is an
exploratory or a development well that is not a dry well.
YEAR END ED DECEMBER 31,
1996 1997
GROSS NET GROSS NET
Development Wells:
Oil 0 0 0 0
Gas 0 0 36 35.91
Dry 0 0 0 0
Total 0 0 36 35.91
A "gross" well is a well in which the Partnership has a working
interest. A "net" well is deemed to exist when the sum of the
fractional ownership working interests owned by the Partnership in
gross wells equals one. The number of net wells is the sum of the
fractional working interests owned in gross wells expressed as whole
numbers and fractions thereof.
The Partnership has not participated, and will not participate, in
any exploratory wells which means a well drilled to find commercially
productive hydrocarbons in an unproved area, to find a new commercially
productive horizon in a field previously found to be productive of
hydrocarbons at another horizon, or to significantly extend a known
prospect.
PRODUCTION. The following table shows the Partnership's net
production in barrels ("Bbls") of crude oil and in thousands of cubic
feet ("Mcf") of natural gas and the costs and weighted average selling
prices thereof, for the periods indicated.
YEAR ENDED DECEMBER 31,
1996 1997
Production (1):
Oil (Bbls) 0 0
Natural Gas (Mcf) 0 569,305
Total (Equivalent Barrels) (2) 0 94,884Average Sales
Price:
Per Equivalent Barrel (2)(3) 0 $14.05Average Production
Cost (lifting cost):
Per Equivalent Barrel (2)(4) 0 $1.59
(1) The production shown in the table is determined by multiplying
the gross production of properties in which the Partnership has an
interest by the percentage of the leasehold interest owned by the
Partnership less the royalty interests of others. The properties owned
by the Partnership are subject to a 12.5% landowner's royalty and the
Partnership has an 87.5% net revenue interest.
(2) The ratio of energy content of oil and gas (six Mcf of gas
equals one barrel of oil) was used to convert natural gas production
into equivalent barrels of oil.
(3) The average sales price per Mcf of gas sold by the Partnership
was $2.38 in 1997, after deducting all expenses, including
transportation expenses.
(4) Production costs represent oil and gas operating expenses as
reflected in the financial statements of the Partnership plus
depreciation of support equipment and facilities.
SUMMARY OF PRODUCTIVE WELLS. The table below gives the number of the
Partnership's productive gross and net wells at December 31, 1997.
GAS WELLS OIL WELLS TOTAL
GROSS NET GROSS NET GROSS NET
LOCATION
Pennsylvania
Total 36 35.91 0 0 36 35.91
"Productive wells" are producing wells and wells capable of production.
OIL AND GAS RESERVES. All of the Partnership's oil and gas reserves
are located in the United States. Estimates of the Partnership's net
proved developed and undeveloped oil and gas reserves as of December
31, 1997, and the present value (discounted at 10%) of estimated future
net revenue before income tax from those reserves are set forth in the
following table. This information is derived from the engineering
report dated January 20, 1997.
AS OF DECEMBER 31, 1997 PRESENTVALUE OF
NET PROVEN RESERVES (in thousands)
OIL GAS TOTAL
Proved Developed 0 4,226,617 704,436 $3,611
Proved Undeveloped 0 0 0 0
Total 0 4,226,617 704,436 $3,611
Estimated future net revenues represent estimated future gross revenues
from the production of proved reserves, net of estimated production and
future development costs, using prices and costs in effect as of
December 31, 1997. These prices were held constant throughout the life
of the properties except where different prices were fixed and
determinable from applicable contracts. These price assumptions
resulted in weighted average price of $2.51 per Mcf for gas over the
life of the properties. . Prices used in calculating the estimated
future net revenues attributable to proved reserves do not necessarily
reflect market prices for oil and gas production subsequent to December
31, 1997 The amounts shown do not reflect non-property related costs,
such as general and administrative expenses, and future income tax
expense, or depreciation, depletion and amortization.
The present value of estimated future net revenues is calculated
by discounting estimated future net revenues by 10% annually. There
can be no assurance that all of the proved reserves will be produced
and sold within the periods assumed, that the assumed prices will
actually be realized for such production, or that existing contracts
will be honored. The values expressed are estimates only, and may not
reflect realizable values or fair market values of the oil and gas
ultimately extracted and recovered. The standardized measure of
discounted future net cash flows may not accurately reflect proceeds of
production to be received in the future from the sale of oil and gas
currently owned and does not necessarily reflect the actual costs that
would be incurred to acquire equivalent oil and gas reserves. For
additional information concerning oil and gas reserves and activities,
see Note 9 to the Financial Statements.
"Proved reserves" means the estimated quantities of crude oil,
natural gas, and natural gas liquids which geological and engineering
data demonstrate with reasonable certainty to be recoverable in future
years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made.
Prices include consideration of changes in existing prices provided
only by contractual arrangements, but not on escalations based upon
future conditions.
(i) Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation test.
The area of a reservoir considered proved includes (a) that portion
delineated by drilling and defined by gas-oil and/or oil-water
contacts, if any; and (b) the immediately adjoining portions not yet
drilled, but which can be reasonably judged as economically productive
on the basis of available geological and engineering data. In the
absence of information on fluid contacts, the lowest known structural
occurrence of hydrocarbons controls the lower proved limit of the
reservoir.
(ii) Reserves which can be produced economically through
application of improved recovery techniques (such as fluid injection)
are included in the "proved" classification when successful testing by
a pilot project, or the operation of an installed program in the
reservoir, provides support for the engineering analysis on which the
project or program was based.
(iii) Estimates of proved reserves do not include the following:
(a) oil that may become available from known reservoirs but is
classified separately as "indicated additional reserves"; (b) crude
oil, natural gas, and natural gas liquids, the recovery of which is
subject to reasonable doubt because of uncertainty as to geology,
reservoir characteristics, or economic factors; (c) crude oil, natural
gas, and natural gas liquids, that may occur in undrilled prospects;
and (d) crude oil, natural gas, and natural gas liquids, that may be
recovered from oil shales, coal, gilsonite and other such sources.
"Proved developed oil and gas reserves" means reserves that can be
expected to be recovered through existing wells with existing equipment
and operating methods. Additional oil and gas expected to be obtained
through the application of fluid injection or other improved recovery
techniques for supplementing the natural forces and mechanisms of
primary recovery should be included as "proved developed reserves" only
after testing by a pilot project or after the operation of an installed
program has confirmed through production response that increased
recovery will be achieved.
The Partnership does not have any proved undeveloped reserves. "Proved
undeveloped reserves" are reserves that are expected to be recovered
from new wells on undrilled acreage, or from existing wells where a
relatively major expenditure is required for recompletion. Reserves on
undrilled acreage are limited to those drilling units offsetting
productive units that are reasonably certain of production when
drilled. Proved reserves for other undrilled units can be claimed only
where it can be demonstrated with certainty that there is continuity of
production from the existing productive formation. Under no
circumstances should estimates for proved undeveloped reserves be
attributable to any acreage for which an application of fluid injection
or other improved recovery technique is contemplated, unless such
techniques have been proved effective by actual tests in the area and
in the same reservoir.
No major discovery or other favorable or adverse event which would
cause a significant change in estimated reserves is believed by the
Company to have occurred since December 31, 1997. Reserves cannot be
measured exactly as reserve estimates involve subjective judgment. The
estimates must be reviewed periodically and adjusted to reflect
additional information gained from reservoir performance, new
geological and geophysical data and economic changes. The Partnership
has not filed any estimates (on a consolidated basis) of its oil and
gas reserves with, nor were such estimates included in any reports to,
any Federal or foreign governmental agency other than the Securities
and Exchange Commission within the 12 months prior to the date of this
filing.
ACREAGE. The following table sets forth, as of December 31, 1997, the
acres of developed and undeveloped oil and gas acreage in which the
Partnership had an interest.
DEVELOPED ACREAGE UNDEVELOPED ACREAGE TOTAL
GROSS NET GROSS NET GROSS NET
LOCATION
Pennsylvania
Total 1,753 1,749 0 0 1,753 1,749
A "gross" acre is an acre in which the Partnership owns a working
interest. A "net" acre is deemed to exist when the sum of the
fractional ownership working interests owned by the Partnership in
gross acres equals one. The number of net acres is the sum of the
fractional working interests owned in gross acres expressed as whole
numbers and fractions thereof. "Undeveloped acreage" is those lease
acres on which wells have not been drilled or completed to a point
that would permit the production of commercial quantities of oil and
gas regardless of whether or not such acreage contains proved reserves.
DELIVERY COMMITMENTS. The Partnership is not obligated to provide any
determinable quantity of gas under any existing contracts or
agreements. The majority of the Partnership's gas production from the
wells was sold pursuant to short term contracts, which are term
contracts for a period of less than one year, with the remainder of the
Partnership gas production sold on the spot market and long term
contracts, which are term contracts for a period longer than one year.
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
RESPONSIBILITIES OF ATLAS. The Partnership has no employees and relies
on Atlas as Managing General Partner of the Partnership. Atlas also
serves as driller/operator of the wells. Atlas has complete and
exclusive discretion and control over the operations and activities of
the Partnership and will make all of the Partnership's decisions
affecting the wells developed by the Partnership. Atlas will provide
continuing review and analysis of all wells developed by the
Partnership and will monitor all expenditures and commitments made on
behalf of the Partnership. In addition, Atlas will perform
administrative services relating to the funding and operation of the
Partnership, Participant reporting, financial budgeting and
recordkeeping.
BUSINESS OF ATLAS. Atlas, a Pennsylvania corporation, was incorporated
in 1979 and Atlas Energy Group, Inc. ("Atlas Energy"), an Ohio
corporation, was incorporated in 1973. Atlas and Atlas Energy are
wholly owned subsidiaries of AIC, Inc., a corporation formed in July,
1995, which is a wholly owned subsidiary of The Atlas Group, Inc.,
("Atlas Group") that was formerly known as AEG Holdings, Inc., a
corporation which was also formed in July, 1995.
As of December 31, 1997, Atlas and its affiliates operated
approximately 1,240 natural gas wells located in Ohio and Pennsylvania.
Atlas and Atlas Energy have acted as operator with respect to the
drilling of a total of approximately 1,700 natural gas wells,
approximately 1,660 of which were capable of production in commercial
quantities. Atlas' primary offices are located at 311 Rouser Road,
Moon Township, Pennsylvania 15108.
Atlas and its affiliates employ a total of approximately ninety-nine
persons, consisting of three geologists (one of whom is an exploration
geologist), five landmen, five engineers, thirty-three operations
staff, eight accounting, one legal, eight gas marketing, and eighteen
administrative personnel. The balance of the personnel are
engineering, pipeline and field supervisors.
The other subsidiaries of AIC, Inc. are: (i) Atlas Gas Marketing,
Inc., a gas marketing company; (ii) Mercer Gas Gathering, Inc., a gas
gathering company which gathers gas from Atlas' and its affiliates'
wells in Mercer County, Pennsylvania, and delivers the gas directly to
industrial end-users or to interstate pipelines and local distribution
companies; (iii) Pennsylvania Industrial Energy, Inc., which sells
natural gas to industrial end-users in Pennsylvania; (iv) Transatco,
Inc., which owns a 50% interest in Topico which operates a pipeline in
Ohio; (v) Atlas Energy Corporation, which serves as managing general
partner of exploratory programs and driller and operator; and (vi)
Anthem Securities, Inc., which is a registered broker-dealer and a
member firm of the NASD and serves as dealer-manager of Atlas-sponsored
programs. In addition, Atlas is the sole owner of ARD Investments,
Inc., a corporation formed in July, 1995, and Atlas Energy is the sole
owner of AED Investments, Inc., a corporation formed in July, 1995.
Prior to July, 1995, all of the Atlas companies were wholly owned by
Atlas Energy. The purpose of forming Atlas Group, AIC, Inc., ARD
Investments, Inc. and AED Investments, Inc. was to achieve more
efficient concentration of funds of the Atlas group of companies,
thereby minimizing transaction costs and maximizing returns on
investment vehicles.
Atlas and its affiliates have constructed for their use over 600
miles of gas transmission lines and produce in excess of nine billion
cubic feet of natural gas annually from wells they operate which they
market directly to end-users or to interstate pipelines and local
distribution companies. In addition, Atlas Gas Marketing, Inc. (an
affiliate) purchases for resale an additional eight billion cubic feet
of natural gas annually from third party producers locally and in the
south/southwest United States which is marketed as described in
"Description of Business."
ORGANIZATIONAL DIAGRAM
The Atlas Group, Inc.
|
AIC, Inc.
|--------------------------------|
|
|-Atlas Resources, Inc. (Managing General Partner of Development Drilling
| Programs, Driller and Operator in Pennsylvania)
| |
| ARD Investments
|
|-Mercer Gas Gathering, Inc. (Gas Gathering Company)
|
|-Pennsylvania Industrial Energy, Inc. ("PIE") (Sells Gas to Pennsylvania
| Industry)
|
|-Atlas Energy Corporation (Managing General Partner of Exploratory Drilling
| Programs and Driller and Operator)
|
|-Transatco, Inc., which owns 50% of Topico (Operates Pipeline in Ohio)
|
|-Atlas Gas Marketing, Inc. (Markets Natural Gas)
|
|-Anthem Securities Inc. (Registered Broker/Dealer)
|
|-Atlas Energy Group, Inc. (Driller and Operator in Ohio)
|
AED Investments, Inc.
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES OF ATLAS.
The executive officers, directors and significant employees of Atlas
who are also officers, directors and significant employees of Atlas
Group and Atlas Energy are as follows:
Charles T. Koval 63 Chairman of the Board and a Director
James R. O'Mara 53 President, Chief Executive Officer and a Director
Bruce M. Wolf 48 General Counsel, Secretary and a Director
James J. Kritzo 62 Vice President of the Land Department
Donald P. Wagner 55 Vice President of Operations
Frank P. Carolas 37 Vice President of Geology
Tony C. Banks 42 Vice President of Finance and Chief Financial
Officer
Barbara J. Krasnicki 52 Vice President of Administration
Jacqueline B. Poloka 46 Controller
John A. Ranieri 37 Director of Gas Marketing
Eric D. Koval 32 President of Anthem Securities, Inc.
Joseph R. Sadowski 66 Director
CHARLES T. KOVAL. Chairman of the Board and a director. He co-founded
Atlas Energy. Mr. Koval is serving and has served as a director of
Imperial Harbors since 1980.
JAMES R. O'MARA. President, chief executive officer and a director.
Mr. O'Mara joined Atlas Energy in 1975. He is the President of Mercer
Gas Gathering, Inc.
BRUCE M. WOLF. General Counsel, Secretary and a director. Mr. Wolf
joined Atlas Energy in January, 1980. Mr. Wolf is the President of
Atlas Gas Marketing, Inc., AIC, Inc., ARD Investments, Inc. and AED
Investments, Inc.
JAMES J. KRITZO. Vice President of the Land Department. Mr. Kritzo
joined the Land Department of Atlas Energy in 1979.
DONALD P. WAGNER. Vice President of Operations. Mr. Wagner joined
Atlas Energy in 1979.
FRANK P. CAROLAS. Vice President of Geology. Mr. Carolas joined Atlas
Energy in 1981.
TONY C. BANKS. Vice President of Finance and Chief Financial Officer.
Mr. Banks joined Atlas Group in 1995. Prior to Mr. Banks joining Atlas
he had been with affiliates of Consolidated Natural Gas Company ("CNG")
since 1974. Mr. Banks started as an accounting clerk with CNG's parent
company in 1974 and progressed through various positions with CNG's
Appalachian producer, northeast gas marketer and southwest producer to
his last position as Treasurer of CNG's national energy marketing
subsidiary.
BARBARA J. KRASNICKI. Vice President of Administration, Ms. Krasnicki
has been with Atlas Energy since its inception in 1971.
JACQUELINE B. POLOKA. Controller. Ms. Poloka joined Atlas Energy in
1980.
JOHN A. RANIERI. Director of Gas Marketing for Atlas Gas Marketing,
Inc. Mr. Ranieri was promoted to Gas Procurement Manager of Columbia
Gas of Pennsylvania in 1984 and remained with that organization until
joining Atlas in July, 1990.
ERIC D. KOVAL. President of Anthem Securities, Inc. Mr. Koval joined
Atlas in 1993 as a production engineer specializing in acquisitions and
dispositions. He subsequently moved into the investor relations
department in 1994. Mr. Koval is a registered broker-dealer principal,
and is the son of Charles Koval.
JOSEPH R. SADOWSKI. A director. He co-founded Atlas Energy. Mr.
Sadowski has served as a director of Dixon Ticonderoga since 1987.
ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS
The Partnership, as previously stated, has no employees. The following
table, however, sets forth all cash compensation paid by Atlas (which
has complete and exclusive discretion and control over the operations
and activities of the Partnership) during Atlas' fiscal year ended July
31, 1997, to the three most highly compensated persons who are
executive officers or directors and to all executive officers and
directors of Atlas as a group, for services in all capacities while
acting as executive officers or directors of Atlas:
NAME OF Capacities in which Cash
INDIVIDUAL remuneration was received(4) Cpmpensation (1,2)
OR IDENTITY
OF GROUP
James R. O'Mara President, Chief Executive Officer $305,300
and a Director
Charles T. Koval Chairman of the Board $296,500
and a Director
Bruce M. Wolf General Counsel, Secretary $217,150
and a Director
Executive Officers $1,383,530
as a Group (8 persons)
(1) The amounts indicated were composed of salaries and all cash
bonuses for services rendered to Atlas and its affiliates during the
last fiscal year, including compensation that would have been paid in
cash but for the fact the payment of such compensation was deferred.
(2) Atlas has an "ESOP" retirement plan, described below, and has a
401(K) plan which allowed employees to contribute the lesser of 15% of
their compensation or $9,500 for the calendar year 1997 or $9,500 for
the calendar year 1996. Atlas contributed an amount equal to 50% and
50% of each employee's contribution for the calendar years July 31,
1997 and 1996, respectively.
(3) There were no stock options granted or exercised during the
fiscal year ended July 31, 1997, to the above individuals.
(4) During the fiscal year ended July 31, 1997, each director was paid
a director's fee of $12,000 for the year. There are no other arrangements
for remuneration of directors.
ITEM 5. SECURITY
OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
As of December 31, 1997, the Partnership had issued and outstanding 800
Units. No officer or director of Atlas owns any Units, and no partner
beneficially owns more than 10% of the outstanding Units of the
Partnership.
Atlas Group owns 100% of the common stock of AIC, Inc. which owns 100%
of the common stock of Atlas and Atlas Energy. The following table
sets forth, as of December 31, 1997, information as to the beneficial
ownership of common stock of Atlas Group by each person known to Atlas
Group to own beneficially 5% or more of the outstanding common stock of
Atlas Group, by directors and nominees, naming them individually, and
by all directors and officers of Atlas Group as a group:
Shares of Common Percent of Class
Charles T. Koval 109,391 26.445%
Joseph R. Sadowski. 109,142 26.384%
James R. O'Mara 95,164 (1) 23.005%
Bruce M. Wolf 44,710 (2) 10.808%
Directors and Officers as Group
(9 persons) 377,654 (1)(2) 91.344%
Includes 22,164 shares of Atlas Group issuable upon the exercise of
stock options held by Mr. O'Mara.
Includes 14,210 shares of Atlas Group issuable upon the exercise of
stock options held by Mr. Wolf.
Atlas Group has adopted Atlas Energy's existing Employee Stock
Ownership Plan ("ESOP") for the benefit of its employees, other than
Messrs. Koval and Sadowski, to which it will contribute annually
approximately 6% of annual compensation in the form of shares of Atlas
Group. Atlas Group anticipates that it will contribute approximately
3,000 shares of its stock to the ESOP each year.
Pursuant to agreements entered into between Atlas Group and its
shareholders to accommodate the desire of Messrs. Sadowski and Koval to
gradually liquidate a majority of their stock ownership in Atlas Group
in preparation for their respective retirement from Atlas Group it is
anticipated that by the year 2003 the stock ownership of Atlas Group by
Messrs. Koval and Sadowski will be reduced through a series of stock
redemptions to approximately 15% each. The stock ownership of certain
of the remaining officers will be increased to approximately 60%, in
the aggregate; and the stock ownership of the ESOP will be
approximately 10%.
The stock redemptions require Atlas Group to execute promissory
notes, from time to time, in favor of Messrs. Koval and Sadowski, the
first of which, in the original principal amount of $4,974,340 each,
plus interest at 13.5% were executed by Atlas Energy and were assumed
by Atlas Group. These promissory notes are totally subordinated to
Atlas Group's obligations to banks, the ESOP and any and all other
debts or obligations of Atlas Group, including its indemnification
obligations and Atlas' drilling obligation to the Partnership. If
Atlas Group defaults on a promissory note, Messrs. Koval and Sadowski
are entitled to purchase up to approximately an additional 1,500,000
shares of Atlas Group to regain management control.
In 1990, Messrs. Koval and Sadowski entered into five year employment
agreements with Atlas Energy which agreements have been transferred to
Atlas Group, renewable for an additional five year term and on an
annual basis after the first ten years. Mr. Sadowski, however, retired
other than as a director in 1996. The terms and provisions of the
employment agreements with Mr. Koval are subject to negotiation at the
time of each renewal and currently do not provide for any severance
payments. Also, during the terms of the promissory notes Messrs. Koval
and Sadowski have the right to serve as directors of Atlas Group and as
one of the two trustees of the ESOP.
On November 8, 1990, Atlas Energy entered into a Stock Option Agreement
which established a management employee stock option plan to provide
incentive compensation for certain of its key employees to acquire up
to 47,578 shares of common stock of Atlas Energy. Pursuant to the
plan, Messrs. O'Mara and Wolf were granted stock options for 22,164 and
14,210 shares, respectively. The options are 100% vested with an
option price of $1.00 per share and may be exercised when the
promissory notes to Messrs. Koval and Sadowski have been satisfied and
will terminate on August 15, 2012. The issuance of future options will
be determined at a later date. The shareholders are also subject to a
Shareholders Agreement which provides, among other things, that such
shareholders may not transfer their shares in Atlas Group unless the
shares have first been offered to Atlas Group and the other
shareholders.
ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
OIL AND GAS REVENUES. The Managing General Partner is allocated 25% of
the oil and gas revenues of the Partnership in return for paying
organization and offering costs equal to 15% of the Partnership
Subscription, 14% of tangible costs and contributing all leases to the
Partnership. During the calendar year ending December 31, 1997, the
Managing General Partner received $295,507 from the Partnership's oil
and gas revenues.
LEASES. The Managing General Partner initially contributed (at the
lower of fair market value or the Managing General Partner's cost of
such prospects) 36 undeveloped prospects to the Partnership to drill
approximately 35.91 net wells. With respect to the prospects
contributed for these wells Atlas received a credit in the amount of
$129,276. During 1997, the Managing General Partner did not enter into
any further lease transactions and none are anticipated.
ADMINISTRATIVE COSTS. The Managing General Partner and its affiliates
will receive an unaccountable, fixed payment reimbursement for their
administrative costs determined by the Managing General Partner to be
an amount equal to $75 per well per month, which will be
proportionately reduced if less than 100% of the working interest in a
well is acquired. With respect to the net wells during the calendar
year ending December 31, 1997, the Managing General Partner received
$37,469.
DIRECT COSTS. The Managing General Partner and its affiliates are
reimbursed for all direct costs expended on behalf of the Partnership.
With respect to the net wells during the calendar year ending December
31, 1997, the Managing General Partner received $61,660.
DRILLING CONTRACTS. On December 31, 1996, the Partnership entered into
a drilling contract with Atlas to drill and complete 35.91 net wells.
The Partnership paid Atlas for drilling and completing the Partnership
wells an amount equal to $37.39 per foot to the depth of the well at
its deepest penetration, proportionately reduced if less than 100% of
the working interest in a well is acquired. With respect to the net
wells the total amount received by Atlas was $8,256,466. During 1997,
the Partnership did not enter into any further drilling transactions
and none are anticipated.
PER WELL CHARGES. Atlas, as operator, is reimbursed at actual cost for
all direct expenses incurred on behalf of the Partnership and receives
well supervision fees for operating and maintaining the wells during
producing operations in the amount of $275 per well per month subject
to an annual adjustment for inflation. With respect to the net wells
during the calendar year ending December 31, 1997, the Managing General
Partner received $89,434. The well supervision fees are
proportionately reduced to the extent the Partnership acquires less
than 100% of the Working Interest in a well.
As operator Atlas charges the Partnership at cost for third party
services and materials provided for each well which has been placed in
operation.
TRANSPORTATION AND MARKETING FEES. The Partnership will pay a combined
transportation and marketing charge at a competitive rate, which is
currently 29 cents per MCF, to affiliates of Atlas, with respect to
natural gas produced by the Partnership.
OTHER COMPENSATION. Atlas or an affiliate will be reimbursed by the
Partnership for any loan Atlas or an affiliate may make to or on behalf
of the Partnership, and Atlas or the affiliate will have the right to
charge a competitive rate of interest on any such loan. If Atlas
provides equipment, supplies and other services to the Partnership it
may do so at competitive industry rates. For the calendar year ending
December 31, 1997, Atlas did not advance any funds nor did it provide
any equipment, supplies or other services.
The following discussion relates solely to certain relationships and
related transactions with respect to Atlas and does not relate to the
Partnership. The following discussion has been included because Atlas
has been granted by the Partnership Agreement and the drilling and
operating agreement the exclusive right, power and authority to control
the operations and activities of the Partnership.
Atlas, its officers, directors and affiliates have in the past
invested, and may in the future invest, as participants in oil and gas
programs sponsored by Atlas on the same terms as unrelated investors.
Atlas, its officers, directors and affiliates have also participated in
the past, and may in the future participate, as working interest owners
in wells in which Atlas or its oil and gas programs have an interest.
Frequently, such participation has been on more favorable terms than
the terms which were available to unrelated investors and Atlas Group
has loaned to its officers and directors amounts in excess of $60,000
from time to time as necessary for participation in such wells or
programs. Prior to 1996, such loans were either non-interest bearing
or accrued interest at variable rates, but since 1995 all new loans for
such purpose are required to bear interest. Currently no such loans
are outstanding.
PART II
ITEM 7. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION. There is no established public trading market
for the Investor General Partner interests or the Limited Partner
interests and it is not anticipated that such a market will develop.
The Partnership interests may be transferred only in accordance with
the provisions of Article 6 of the Partnership Agreement. The
principal restrictions on transferability are as follows: (i) the
consent of the Managing General Partner is required; and (ii) no
transfer may be made which would result in materially adverse tax
consequences to the Partnership or the violation of federal or state
securities laws.
An assignee may become a substituted Limited Partner or Investor
General Partner only upon meeting certain further conditions, which
include: (i) the assignor gives the assignee such right; (ii) the
Managing General Partner consents to such substitution, which consent
shall be in the Managing General Partner's absolute discretion; (iii)
the assignee pays to the Partnership all costs and expenses incurred in
connection with such substitution; and (iv) the assignee executes and
delivers such instruments, in form and substance satisfactory to the
Managing General Partner, necessary or desirable to effect such
substitution and to confirm the agreement of the assignee to be bound
by all terms and provisions of the Partnership Agreement. A substitute
Limited Partner or Investor General Partner is entitled to all rights
attributable to full ownership of the assigned Units, including the
right to vote.
HOLDERS. As of December 31, 1997, there were 378 investors.
DIVIDENDS. The Managing General Partner will review the accounts of the
Partnership at least quarterly to determine whether cash distributions
are appropriate and the amount to be distributed, if any.
The Partnership will distribute funds to the Managing General Partner and
the Participants allocated to their accounts which the Managing General
Partner deems unnecessary to be retained by the Partnership. In
no event, however, will funds be advanced or borrowed for purposes of
distributions, if the amount of such
distributions would exceed the Partnership's accrued and received revenues
for the previous four quarters,
less paid and accrued operating costs with respect to such revenues.
The determination of the revenues and
costs will be made in accordance with generally accepted accounting
principles, consistently applied. Cash
distributions from the Partnership to the Managing General Partner may
only be made in conjunction with
distributions to Participants and only out of funds properly allocated to
the Managing General Partner's
account. During the calendar year ending December 31, 1997, the
Partnership distributed $636,977 to the
Participants and $158,745 to the Managing General Partner.
ITEM 8. LEGAL PROCEEDINGS
None.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 11. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
There are no equity securities registered pursuant to
Section 12 of the Exchange Act.
ITEM 12. REPORTS ON FORM 8-K
The registrant filed no reports on Form 8-K during the
last quarter of the period covered by this report.
PART F/S
ITEM 13. FINANCIAL STATEMENTS
The Partnership's Financial Statements for the period January 1, 1997,
to December 31, 1997, together with the opinion of the accountants
thereon, are listed BELOW.
PART III
ITEM 14. EXHIBITS
(a) Exhibits
4(a)Certificate of Limited Partnership for Atlas-Energy for the
Nineties-Public #5 Ltd.Previously filed in the Form 10-KSB for
the period ending December 31, 1996 and received on March 31, 1997.
4(b)Amended and Restated Certificate and Agreementof Limited Partnership
for Atlas-Energy for the Nineties-Public #5 Ltd. dated December
31, 1996 Previously filed in the Form 10-KSB for the period ending
December 31, 1996 and received on March 31, 1997.
10(a)Drilling and Operating Agreement with exhibits
23(a)Consent of McLaughlin & Courson
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Atlas-Energy for the Nineties-Public #5 Ltd.
By: (Signature and Title): Atlas Resources, Inc., Managing
General Partner
By (Signature and Title):
/s/James R. O'Mara, President, Chief Executive Officer
and a Director
Date: March 31, 1998
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and
on the dates indicated.
By (Signature and Title):
/s/Charles T. Koval, Chairman of the Board and a Director
Date: March 31, 1998
By (Signature and Title):
/s/James R. O'Mara, President, Chief Executive Officer and a Director
Date: March 31, 1998
By (Signature and Title):
/s/Bruce M. Wolf, General Counsel, Secretary and a Director
Date: March 31, 1998
By (Signature and Title):
/s/Tony C. Banks, Vice President of Finance and Chief Financial Officer
Date: March 31, 1998
Supplemental information to be Furnished
With Reports Filed Pursuant to Section 15(d)
of the Exchange Act by Non-reporting Issuers
An annual report will be furnished to security holders subsequent to
the filing of this report.
====================================================================
PART F/S
ITEM 13
INDEPENDENT AUDITORS' REPORT
To the Partners
Atlas-Energy for the Nineties-Public #5 Ltd.
A Pennsylvania Limited Partnership
We have audited the accompanying balance sheets of Atlas-Energy
for the Nineties-Public #5 Ltd., A Pennsylvania Limited Partnership
as of December 31, 1997 and 1996 and the related statements of
income and changes in partners' capital accounts and cash flows for
the year then ended December 31, 1997 and for the period July 26,
1996 (date of formation) to December 31, 1996. These financial
statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Atlas-Energy for the Nineties-Public #5 Ltd., A Pennsylvania
Limited Partnership as of December 31, 1997 and 1996 and the
results of its operations, changes in partners' capital accounts
and cash flows for the year ended December 31, 1997 and for the
period July 26, 1996 (date of formation) to December 31, 1996 in
conformity with generally accepted accounting principles.
- ----------------------------------------------------------------------
Pittsburgh, Pennsylvania
February 10, 1998
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #5 LTD.
A PENNSYLVANIA LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
DECEMBER 31,
1997 1996
------- --------
Cash $ 7,979 $ 21,639
Accounts receivable 393,734 -0-
Oil and gas wells and leases 8,358,997 8,385,742
Less accumulated depletion and depreciation (946,005) -0-
---------- ----------
7,412,992 8,385,742
Organizational and syndication costs,
net of accumulated amortization of $135,675
in 1997 and $-0- in 1996, respectively $8,877,866 $9,606,217
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 12,099 $ -0-
Partners' capital 8,865,767 9,606,217
---------- -----------
$8,877,866 $9,606,217
========== ===========
STATEMENT OF INCOME AND CHANGES IN PARTNERS' CAPITAL ACCOUNTS
DECEMBER 31, 1997
MANAGING
GENERAL OTHER
PARTNER PARTNERS TOTAL
---------- ----------- -----------
Natural gas sales $ 381,610 $1,144,829 $1,526,439
Less direct operating costs:
Royalty interests 48,330 144,988 193,318
Other 37,773 113,321 151,094
---------- ---------- ----------
86,103 258,309 344,412
---------- ---------- ----------
Net production revenues 295,507 886,520 1,182,027
Interest income 950 2,850 3,800
Depletion and depreciation of oil
and gas wells and leases 43,213 902,792 946,005
Amortization of organizational and
syndication costs 135,675 -0- 135,675
General and administrative 9,367 28,102 37,469
----------- ---------- ---------
TOTAL EXPENSE 188,255 930,894 1,119,149
----------- ---------- ---------
NET INCOME (LOSS) 108,202 (41,524) 66,678
Capital accounts at beginning of year 1,592,338 8,013,879 9,606,217
Adjustments to assets contributed by
Managing General Partner (11,406) -0- (11,406)
Distributions (158,745) (636,977) (795,722)
------------ ----------- ----------
$1,530,389 $7,335,378 $8,865,767
============ ============ ===========
See notes to financial statements
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #5 LTD.
A PENNSYLVANIA LIMITED PARTNERSHIP
STATEMENT OF INCOME AND CHANGES IN PARTNERS' CAPITAL ACCOUNTS
JULY 26, 1996 (Date of Formation) TO DECEMBER 31, 1996
MANAGING
GENERAL OTHER
PARTNER PARTNERS TOTAL
-------- --------- -------
REVENUE
Interest income $ -0- $ 21,639 $ 21,639
PARTNERS' CAPITAL CONTRIBUTIONS
Cash -0- 7,992,240 7,992,240
Organizational and syndications costs 1,198,836 -0- 1,198,836
Tangible costs 264,226 -0- 264,226
Leasehold costs 129,276 -0- 129,276
----------- ----------- -----------
PARTNERS' CAPITAL AT END OF PERIOD $1,592,338 $8,013,879 $9,606,217
=========== =========== ===========
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997 AND
FROM JULY 26, 1996 (Date of Formation) TO DECEMBER 31, 1996
PERIOD ENDING
DECEMBER 31,
1997 1996
---- ----
Increase (Decrease) in Cash
---------------------------
Cash flows from operating activities:
Net income $ 66,678 $ 21,639
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion and depreciation of oil and
gas wells and leases 946,005 -0-
Amortization 135,675 -0-
Increase in accounts receivable (393,734) -0-
Increase in accounts payable 12,099 -0-
------------ -------------
Net cash provided by operating activities 766,723 21,639
Cash flows from investing activities:
Oil and gas well drilling contracts 15,339 (799,240)
Cash flows from financing activities:
Capital (distributions) contributions (795,722) 7,992,240
------------ -------------
Net (decrease) increase in cash (13,660) 21,639
Cash at beginning of period 21,639 -0-
------------ -------------
Cash at end of period $ 7,979 $ 21,639
============ =============
Supplemental cash flow information:
Adjustments to assets contributed by
Managing General Partner $ (11,406) $ -0-
Assets contributed by Managing General Partner:
Tangible costs -0- 264,226
Organizational and syndication costs -0- 1,198,836
Lease costs -0- 129,276
------------- -------------
$ (11,406) $1,592,338
============= =============
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
1.ORGANIZATION AND DESCRIPTION OF BUSINESS
Atlas-Energy for the Nineties-Public #5 Ltd. (the "Partnership"), is a
Pennsylvania limited partnership which includes Atlas Resources, Inc.
("Atlas"), of Pittsburgh, Pennsylvania, as Managing General Partner and
Operator, and 378 other investors as either Limited Partners or Investor
General Partners. The Partnership was funded to drill and operate gas wells
located primarily in Mercer County, Pennsylvania.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial statements are prepared in accordance with generally accepted
accounting principles.
The Partnership uses the successful efforts method of accounting for oil
and gas producing activities. Costs to acquire mineral interests in oil and
gas properties and to drill and equip wells are capitalized.
Capitalized costs are expenses at unit cost rates calculated annually based
on the estimated volume of recoverable gas and the related costs.
Oil and gas properties are periodically assessed for impairment of value,
and losses recognized at the time of impairment.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. FEDERAL INCOME TAXES
The Partnership is not treated as a taxable entity for federal income tax
purposes. Any item of income, gain, loss, deduction or credit flows through
to the partners as though each partner had incurred such item directly. As a
result, each partner must take into account his pro rata share of all items
of partnership income and deductions in computing his federal income tax
liability. Many provisions of the federal income tax laws are complex and
subject to various interpretations.
4. PARTICIPATION IN REVENUES AND COSTS
Atlas and the other partners generally participate in revenues and costs in
the following manner:
OTHER
ATLAS PARTNERS
Organization and offering costs 100 % 0 %
Lease costs 100 % 0 %
Revenues 25 % 75 %
Direct operating costs 25 % 75 %
Intangible drilling costs 0 % 100 %
Tangible costs 14 % 86 %
Tax deductions:
Intangible drilling and development costs 0 % 100 %
Depreciation 14 % 86 %
Depletion allowances 25 % 75 %
5.TRANSACTION WITH ATLAS AND ITS AFFILIATES
The Partnership has entered into the following significant transactions
with Atlas and its affiliates.
Drilling contracts to drill and complete Partnership wells at an
anticipated cost of $37.39 per foot on completed wells.
Administrative costs at $75 per well per month
Well supervision fees initially of $275 per well per month plus the cost
of third party materials and services
Reimbursement of gas transportation and marketing charges
6. PURCHASE COMMITMENT
Subject to certain conditions, investor partners may present their
interests beginning in 2000 for purchase by Atlas. Atlas is not obligated to
purchase more than 10% of the units in any calendar year.
7. SUBORDINATION OF MANAGING GENERAL PARTNER'S REVENUE SHARE
Atlas will subordinate a part of its partnership revenues in an amount up
to 10% of production revenues of the Partnership net of related operating
costs, administrative costs and well supervision fees to the receipt by
participants of cash distributions from the Partnership equal to at least 10%
of their agreed subscriptions of $8,000,000 determined on a cumulative basis,
in each of the first five years of Partnership operations, commencing with
the first distribution of revenues to the Participants (June 1997).
Cash distributions to participants in 1997 for the subordination year
ending in 1998 subject to the subordination agreement amounted to $600,000.
8. INDEMNIFICATION
In order to limit the potential liability of the investor general partners,
Atlas and The Atlas Group, Inc. formerly AEG Holdings, Inc. (parent company
of Atlas) have agreed to indemnify each investor general partner from any
liability incurred which exceeds such partner's share of Partnership assets.
9. NATURAL GAS AND OIL PRODUCING ACTIVITIES (UNAUDITED)
The supplementary information summarized below presents the results of
natural gas and oil activities in accordance with SFAS No. 69, "Disclosures
About Oil and Gas Producing Activities."
No consideration has been given in the following information to the income
tax effect of the activities as the Partnership is not treated as a taxable
entity for income tax purposes.
(1) Production costs
The following table presents the costs related to natural gas and oil
production activities:
Capitalized costs at December 31 1997:
Capitalized costs $ 8,358,997
Accumulated depreciation and depletion (946,005)
------------
Net capitalized costs $ 7,412,992
===========
Costs incurred during the year:
Property acquisition costs - proved undeveloped properties $ -0-
===========
Development costs $ 8,358,997
=============
Property acquisition costs include costs to purchase, lease or otherwise
acquire a property. Development costs include costs to gain access to and
prepare development well locations for drilling, to drill and equip
development wells and to provide facilities to extract, treat, gather and
store oil and gas.
(2) Results of Operations for Producing Activities
The following table presents the results of operations related to
natural gas and oil production for the year ended December 31, 1997.
Revenues $ 1,333,120
Production costs (151,094)
Depreciation and depletion (1,081,680)
------------
Results of operations from producing activities $ 100,346
============
Depreciation and depletion of natural gas and oil properties are
expensed at unit cost rates calculated annually based on the estimated
volume of recoverable gas and the related costs.
(3) Reserve Information
The information presented below represents estimates of proved natural
gas reserves. Proved developed
reserves represent only those reserves expected to be recovered from
existing wells and support equipment. All reserves are located in
Western Pennsylvania.
1997
NATURAL GAS (MCF)
Proved developed reserves:
Beginning of period -0-
Production (569,305)
Purchase of minerals in place 4,795,922
----------
End of period 4,226,617
==========
Proved developed reserves:
Beginning of period -0-
==========
End of period 4,226,617
==========
(4) Standard Measure of Discounted Future Cash Flows
Management cautions that the standard measure of discounted future
cash flows should not be viewed as an indication of the fair market
value of natural gas and oil producing properties, nor of the future
cash flows expected to be generated therefrom. The information
presented does not give recognition to future changes in estimated
reserves, selling prices or costs and has been discounted at an
arbitrary rate of 10%. Estimated future net cash flows from natural gas
and oil reserves based on selling prices and costs at December 31, 1997
price levels are as follows:
Future cash inflows $10,618,200
Future production costs (4,370,773)
Future development costs -0-
------------
Future net cash flow 6,247,427
10% annual discount for estimated timing of cash flows (2,636,329)
------------
Standardized measure of discounted future net cash flows $ 3,611,098
============
Summary of changes in the standardized measure of discounted future net cash
flows:
Sales of gas and oil produced - net $(1,156,114)
Discoveries and extensions 4,767,212
------------
Net increase 3,611,098
Beginning of period -0-
------------
End of period $ 3,611,098
============
======================================================================
Exhibit 10(a)
DRILLING AND OPERATING AGREEMENT
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #5 LTD.
INDEX
Section Page
1. Assignment of Well Locations; Representations; Designation of
Additional Well Locations;
Outside Activities 1
2. Drilling of Wells; Interest of Developer; Right of Substitution
2
3. Operator - Responsibilities in General; Term 3
4. Operator's Charges for Drilling and Completing Wells; Completion
Determination 3
5. Title Examination of Well Locations; Liability for Title Defects
4
6. Operations Subsequent to Completion of the Wells; Price
Determinations; Plugging and Abandonment 5
7. Billing and Payment Procedure with Respect to Operation of
Wells; Records, Reports and Information 6
8. Operator's Lien 7
9. Successors and Assigns; Transfers; Appointment of Agent 7
10. Insurance; Operator's Liability 7
11. Internal Revenue Code Election, Relationship of Parties; Right
to Take Production in Kind 8
12. Force Majeure 9
13. Term 9
14. Governing Law and Invalidity 9
15. Integration 9
16. Waiver of Default or Breach 9
17. Notices 9
18. Interpretation 10
19. Counterparts 10
Signature Page 10
Exhibit A Description of Leases and Initial Well Locations
Exhibits A-l through A36_ Maps of Initial Well Locations
Exhibit B Form of Assignment
Exhibit C Form of Addendum
DRILLING AND OPERATING AGREEMENT
THIS AGREEMENT made this 31 day of December, 1996, by and between
ATLAS RESOURCES, INC., a Pennsylvania corporation (hereinafter
referred to as "Atlas" or "Operator"),
and
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #5 LTD., a Pennsylvania
limited partnership, (hereinafter referred to as the
"Developer").
WITNESSETH THAT:
WHEREAS, Atlas, by virtue of the Oil and Gas Leases (the
"Leases") described on Exhibit A attached hereto and made a part
hereof, has certain rights to develop the Thirty six (36) initial
well locations identified on the maps attached hereto as Exhibits
A-l through A-36 (the "Initial Well Locations");
WHEREAS, the Developer, subject to the terms and conditions
hereof, desires to acquire certain of Atlas' rights to develop
the aforesaid thirty six (36) Initial Well Locations and to
provide for the development upon the terms and conditions herein
set forth of additional well locations ("Additional Well
Locations") which the parties may from time to time designate;
and
WHEREAS, Operator is in the oil and gas exploration and
development business, and the Developer desires that Operator, as
its independent contractor, perform certain services in
connection with its efforts to develop the aforesaid Initial and
Additional Well Locations (hereinafter collectively referred to
as the "Well Locations") and to operate the wells completed
thereon, on the terms and conditions herein set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and subject to the terms and conditions hereinafter set
forth, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Assignment of Well Locations; Representations; Designation
of Additional Well Locations; Outside Activities.
(a) Atlas shall execute an assignment of an undivided
percentage of Working Interest in the Well Location acreage for
each well to the Developer as shown on Exhibit A attached hereto,
which assignment shall be limited to a depth from the surface to
the top of the Queenston formation in Mercer County, Pennsylvania
and Ohio. The assignment shall be substantially in the form of
Exhibit B attached hereto and made a part hereof. The amount of
acreage included in each Initial Well Location and the
configuration thereof are indicated on the maps attached hereto
as Exhibits A-l through A-36. The amount of acreage included in
each Additional Well Location and the configuration thereof shall
be indicated on the maps to be attached as exhibits to the
applicable addendum as provided in sub-section (c) below.
(b) As of the date hereof, Atlas represents and warrants to
the Developer that Atlas is the lawful owner of said Lease and
rights and interest thereunder and of the personal property
thereon or used in connection therewith; that Atlas has good
right and authority to sell and convey the same, and that said
rights, interest and property are free and clear from all liens
and encumbrances, and that all rentals and royalties due and
payable thereunder have been duly paid. The foregoing
representations and warranties shall also be made by Atlas at the
time of each recorded assignment of the acreage included in each
Initial Well Location and at the time of each recorded assignment
of the acreage included in each Additional Well Location
designated pursuant to sub-section (c) below, such
representations and warranties to be included in each recorded
assignment substantially in the manner set forth in the form of
assignment attached hereto and made a part hereof as Exhibit B.
Atlas agrees to indemnify, protect and hold the Developer and its
successors and assigns harmless from and against all costs
(including but not limited to reasonable attorneys' fees),
liabilities, claims, penalties, losses, suits, actions, causes of
action, judgments or decrees resulting from the breach of any of
the aforesaid representations and warranties. It is understood
and agreed that, except as specifically set forth above, Atlas
makes no warranty or representation, express or implied, as to
its title or the title of the lessors in and to the lands or oil
and gas interests covered by said Leases.
(c) In the event that the parties hereto desire to designate
Additional Well Locations to be developed in accordance with the
terms and conditions of this Agreement, each of said parties
shall execute an addendum substantially in the form of Exhibit C
attached hereto and made a part hereof specifying the undivided
percentage of Working Interest and the Oil and Gas Leases to be
included as Leases hereunder, specifying the amount and
configuration of acreage included in each such Additional Well
Location on maps attached as exhibits to such addendum and
setting forth their agreement that such Additional Well Locations
shall be developed in accordance with the terms and conditions of
this Agreement.
(d) It is understood and agreed that the assignment of rights
under the Leases and the oil and gas development activities
contemplated by this Agreement relate only to the Initial Well
Locations described herein and to the Additional Well Locations
designated pursuant to sub-section (c) above. Nothing contained
in this Agreement shall be interpreted to restrict in any manner
the right of each of the parties hereto to conduct without the
participation of any other party hereto any additional activities
relating to exploration, development, drilling, production or
delivery of oil and gas on lands adjacent to or in the immediate
vicinity of the aforesaid Initial and Additional Well Locations
or elsewhere.
2. Drilling of Wells; Interest of Developer; Right of
Substitution.
(a) Operator, as Developer's independent contractor, agrees
to drill, complete (or plug) and operate 36natural gas wells on
the 36 Initial Well Locations in accordance with the terms and
conditions of this Agreement, and Developer, as a minimum
commitment, agrees to participate in and pay the Operator's
charges for drilling and completing the wells and any extra costs
pursuant to Section 4 hereof in proportion to the share of the
Working Interest owned by the Developer in the wells with respect
to all 36initial wells, it being expressly understood and agreed
that, subject to sub-section (e) below, Developer does not
reserve the right to decline participation in the drilling of any
of the 36 initial wells to be drilled hereunder.
(b) Operator will use its best efforts to commence drilling
the first well within thirty (30) days after the date of this
Agreement and to commence the drilling of each of said 36initial
wells for which payment is made pursuant to Section 4(b) of this
Agreement, on or before March 31, 1997. Subject to the foregoing
time limits, Operator shall determine the timing of and the order
of the drilling of said 36 Initial Well Locations.
(c) The 36 initial wells to be drilled on the Initial Well
Locations designated pursuant to this Agreement and any
additional wells drilled hereunder on any Additional Well
Locations designated pursuant to Section l(c) above shall be
drilled and completed (or plugged) in accordance with the
generally accepted and customary oil and gas field practices and
techniques then prevailing in the geographical area of the Well
Locations and shall be drilled to a depth sufficient to test
thoroughly the objective formation or the deepest assigned depth,
whichever is less.
(d) Except as otherwise provided herein, all costs, expenses
and liabilities incurred in connection with the drilling and
other operations and activities contemplated by this Agreement
shall be borne and paid, and all wells, gathering lines of up to
approximately 1,500 feet on the Prospect, equipment, materials,
and facilities acquired, constructed or installed hereunder shall
be owned, by the Developer in proportion to the share of the
Working Interest owned by the Developer in the wells. Subject to
the payment of lessor's royalties and other royalties and
overriding royalties, if any, production of oil and gas from the
wells to be drilled hereunder shall be owned by the Developer in
proportion to the share of the Working Interest owned by the
Developer in the wells.
(e) Notwithstanding the provisions of sub-section (a) above,
in the event the Operator or Developer determines in good faith,
with respect to any Well Location, before operations commence
hereunder with respect to such Well Location, based upon the
production (or failure of production) of any other wells which
may have been recently drilled in the immediate area of such Well
Location, or upon newly discovered title defects, or upon such
other evidence with respect to the Well Location as may be
obtained, that it would not be in the best interest of the
parties hereto to drill a well on such Well Location, then the
party making the determination shall notify the other party
hereto of such determination and the basis therefor and, unless
otherwise instructed by Developer, such well shall not be
drilled. If such well is not drilled, Operator shall promptly
propose a new well location (including such information with
respect thereto as Developer may reasonably request) within
Pennsylvania or Ohio to be substituted for such original Well
Location and Developer shall thereafter have the option for a
period of seven (7) business days to either reject or accept the
proposed new well location. If the new well location is rejected,
Operator shall promptly propose another substitute well location
pursuant to the provisions hereof. Once the Developer accepts a
substitute well location or does not reject it within said seven
(7) day period, this Agreement shall terminate as to the original
Well Location and the substitute well location shall become
subject to the terms and conditions hereof.
3. Operator - Responsibilities in General; Term.
(a) Atlas shall be the Operator of the wells and Well
Locations subject to this Agreement and, as the Developer's
independent contractor, shall, in addition to its other
obligations hereunder, (i) make the necessary arrangements for
the drilling and completion of wells and the installation of the
necessary gas gathering line systems and connection facilities;
(ii) make the technical decisions required in drilling, testing,
completing and operating such wells; (iii) manage and conduct all
field operations in connection with the drilling, testing,
completing, equipping, operating and producing of the wells; (iv)
maintain all wells, equipment, gathering lines and facilities in
good working order during the useful life thereof; and (v)
perform the necessary administrative and accounting functions. In
the performance of work contemplated by this Agreement, Operator
is an independent contractor with authority to control and direct
the performance of the details of the work.
(b) Operator covenants and agrees that (i) it shall perform
and carry on (or cause to be performed and carried on) its duties
and obligations hereunder in a good, prudent, diligent and
workmanlike manner using technically sound, acceptable oil and
gas field practices then prevailing in the geographical area of
the aforesaid Well Locations; (ii) all drilling and other
operations conducted by, for and under the control of Operator
hereunder shall conform in all respects to federal, state and
local laws, statutes, ordinances, regulations, and requirements;
(iii) unless otherwise agreed in writing by the Developer, all
work performed hereunder pursuant to a written estimate shall
conform to the technical specifications set forth in such written
estimate and all equipment and materials installed or
incorporated in the wells and facilities hereunder shall be new
or used and of good quality; (iv) in the course of conducting
operations hereunder, it shall comply with all terms and
conditions of the Leases (and any related assignments,
amendments, subleases, modifications and supplements) other than
any minimum drilling commitments contained therein; (v) it shall
keep the Well Locations subject to this Agreement and all wells,
equipment and facilities located thereon, free and clear of all
labor, materials and other liens or encumbrances arising out of
operations hereunder; (vi) it shall file all reports and obtain
all permits and bonds required to be filed with or obtained from
any governmental authority or agency in connection with the
drilling or other operations and activities which are the subject
of this Agreement; and (vii) it will provide competent and
experienced personnel to supervise the drilling, completing (or
plugging), and operating of the wells and use the services of
competent and experienced service companies to provide any third
party services necessary or appropriate in order to perform its
duties hereunder.
(c) Atlas shall serve as Operator hereunder until the
earliest of (i) the termination of this Agreement pursuant to
Section 13 hereof; (ii) the termination of Atlas as Operator by
the Developer which may be effected by the Developer at any time
in its discretion, with or without cause; upon sixty (60) days
advance written notice to the Operator; or (iii) the resignation
of Atlas as Operator hereunder which may occur upon ninety (90)
days' written notice to the Developer at any time after five (5)
years from the date hereof, it being expressly understood and
agreed that Atlas shall have no right to resign as Operator
hereunder prior to the expiration of the aforesaid five-year
period. Any successor Operator hereunder shall be selected by the
Developer. Nothing contained in this sub-section (c) shall
relieve or release Atlas or the Developer from any liability or
obligation hereunder which accrued or occurred prior to Atlas'
removal or resignation as Operator hereunder. Upon any change in
Operator pursuant to this provision, the then present Operator
shall deliver to the successor Operator possession of all
records, equipment, materials and appurtenances used or obtained
for use in connection with operations hereunder and owned by the
Developer.
4. Operator's Charges for Drilling and Completing Wells;
Completion Determination
(a) All natural gas wells which are drilled and completed
hereunder shall be drilled and completed on a footage basis for a
price of $37.39 per foot to the depth of the well at its deepest
penetration as recorded by Operator. The aforesaid footage price
for each of said natural gas wells shall be set forth in an AFE
which shall be attached to this Agreement as an Exhibit, and
shall cover all ordinary costs which may be incurred in drilling
and completing each such well for production of natural gas,
including without limitation, site preparation, permits and
bonds, roadways, surface damages, power at the site, water,
Operator's overhead and profit, rights-of-way, drilling rigs,
equipment and materials, costs of title examination, logging,
cementing, fracturing, casing, meters (other than utility
purchase meters), connection facilities, salt water collection
tanks, separators, siphon string, rabbit, tubing, an average of
1,500 feet of gathering line per well, geological and engineering
services and completing two (2) zones; provided, that such
footage price shall not include the cost of (i) completing more
than two (2) zones; (ii) completion procedures, equipment, or any
facilities necessary or appropriate for the production and sale
of oil and/or natural gas liquids; and (iii) equipment or
materials necessary or appropriate to collect, lift or dispose of
liquids for efficient gas production, except that the cost of
saltwater collection tanks, separators, siphon string and tubing
shall be included in the aforesaid footage price. Any such extra
costs shall be billed to Developer in proportion to the share of
the Working Interest owned by the Developer in the wells on a
direct cost basis equal to the sum of (i) Operator's invoice
costs of third party services performed and materials and
equipment purchased plus ten percent (10%) to cover supervisory
services and overhead; and (ii) Operator's standard charges for
services performed directly by it.
(b) In order to enable Operator to commence site preparation
for 36 initial wells, to obtain suitable subcontractors for the
drilling and completion of such wells at currently prevailing
prices, and to insure the availability of equipment and
materials, the Developer shall pay to Operator, in proportion to
the share of the Working Interest owned by the Developer in the
wells, one hundred percent (100%) of the estimated price for all
36 initial wells upon execution of this Agreement, such payment
to be nonrefundable in all events, except that Developer shall
not be required to pay completion costs prior to the time that a
decision is made that the well warrants a completion attempt and
Atlas' share of such payments as Managing General Partner of the
Developer shall be paid within five (5) business days of notice
from Operator that such costs have been incurred. With respect to
each additional well drilled on the Additional Well Locations, if
any, in order to enable Operator to commence site preparation, to
obtain suitable subcontractors for the drilling and completion of
such wells at currently prevailing prices, and to insure the
availability of equipment and materials, Developer shall pay
Operator, in proportion to the share of the Working Interest
owned by the Developer in the wells, one hundred percent (100%)
of the estimated price for such well upon execution of the
applicable addendum pursuant to Section l(c) above, except that
Developer shall not be required to pay completion costs prior to
the time that a decision is made that the well warrants a
completion attempt and Atlas' share of such payments as Managing
General Partner of the Developer shall be paid within five (5)
business days of notice from Operator that such costs have been
incurred. With respect to each well, Developer shall pay to
Operator, in proportion to the share of the Working Interest
owned by the Developer in the wells, all other costs for such
well within five (5) business days of receipt of notice from
Operator that such well has been drilled to the objective depth
and logged and is to be completed. Developer shall pay, in
proportion to the share of the Working Interest owned by the
Developer in the wells, any extra costs incurred with respect to
each well pursuant to sub-section (a) above within ten (10)
business days of its receipt of Operator's statement therefor.
(c) Operator shall determine whether or not to run the
production casing for an attempted completion or to plug and
abandon any well drilled hereunder; provided, however, that a
well shall be completed only if Operator has made a good faith
determination that there is a reasonable possibility of obtaining
commercial quantities of oil and/or gas.
(d) If Operator determines at any time during the drilling or
attempted completion of any well hereunder, in accordance with
the generally accepted and customary oil and gas field practices
and techniques then prevailing in the geographic area of the well
location, that such well should not be completed, it shall
promptly and properly plug and abandon the same. In such event,
such well shall be deemed a dry hole and the dry hole footage
price for each well drilled hereunder shall be $20.60 per foot
multiplied by the depth of the well, as specified in sub-section
(a) above, and shall be charged to the Developer in proportion to
the share of the Working Interest owned by the Developer in the
well. Any amounts paid by the Developer with respect to such dry
hole which exceed the aforesaid dry hole footage price shall be
retained by Operator and shall be applied to the costs for an
additional well or wells to be drilled on the Additional Well
Locations.
5. Title Examination of Well Locations; Liability for Title
Defects.
(a) The Developer hereby acknowledges that Operator has
furnished Developer with the title opinions identified on Exhibit
A, and other documents and information which Developer or its
counsel has requested in order to determine the adequacy of the
title to the Initial Well Locations and leased premises subject
to this Agreement. The Developer hereby accepts the title to said
Initial Well Locations and leased premises and acknowledges and
agrees that, except for any loss, expense, cost or liability
caused by the breach of any of the warranties and representations
made by Atlas in Section l(b) hereof, any loss, expense, cost or
liability whatsoever caused by or related to any defect or
failure of such title shall be the sole responsibility of and
shall be borne entirely by the Developer.
(b) Prior to commencing the drilling of any well on any
Additional Well Location designated pursuant to this Agreement,
Operator shall conduct, or cause to be conducted, a title
examination of such Additional Well Location, in order to obtain
appropriate abstracts, opinions and certificates and other
information necessary to determine the adequacy of title to both
the applicable Lease and the fee title of the lessor to the
premises covered by such Lease. The results of such title
examination and such other information as is necessary to
determine the adequacy of title for drilling purposes shall be
submitted to the Developer for its review and acceptance, and no
drilling shall be commenced until such title has been accepted in
writing by the Developer. After any title has been accepted by
the Developer, any loss, expense, cost or liability whatsoever,
caused by or related to any defect or failure of such title shall
be the sole responsibility of and shall be borne entirely by the
Developer, unless such loss, expense, cost or liability was
caused by the breach of any of the warranties and representations
made by Atlas in Section l(b) of this Agreement.
6. Operations Subsequent to Completion of the Wells; Price
Determinations; Plugging and Abandonment.
(a) Commencing with the month in which a well drilled
hereunder begins to produce, Operator shall be entitled to an
operating fee of $275 per month for each well being operated
under this Agreement, proportionately reduced to the extent the
Developer owns less than 100% of the Working Interest in the
wells, in lieu of any direct charges by Operator for its services
or the provision by Operator of its equipment for normal
superintendence and maintenance of such wells and related
pipelines and facilities. Such operating fees shall cover all
normal, regularly recurring operating expenses for the
production, delivery and sale of natural gas, including without
limitation well tending, routine maintenance and adjustment,
reading meters, recording production, pumping, maintaining
appropriate books and records, preparing reports to the Developer
and government agencies, and collecting and disbursing revenues,
but shall not cover costs and expenses related to the (i)
production and sale of oil, (ii) collection and disposal of salt
water or other liquids produced by the wells, (iii) rebuilding of
access roads, and (iv) purchase of equipment, materials or third
party services, which, subject to the provisions of sub-section
(c) of this Section 6, shall be paid by the Developer in
proportion to the share of the Working Interest owned by the
Developer in the wells. Any well which is temporarily abandoned
or shut-in continuously for the entire month shall not be
considered a producing well for purposes of determining the
number of wells in such month subject to the aforesaid operating
fee.
(b) The monthly operating fee set forth in sub-section (a)
above may in the following manner be adjusted annually as of the
first day of January (the "Adjustment Date") each year beginning
January l, 1998. Such adjustment, if any, shall not exceed the
percentage increase in the average weekly earnings of "Crude
Petroleum, Natural Gas, and Natural Gas Liquids" workers, as
published by the U.S. Department of Labor, Bureau of Labor
Statistics, and shown in Employment and Earnings Publication,
Monthly Establishment Data, Hours and Earning Statistical Table
C-2, Index Average Weekly Earnings of "Crude Petroleum, Natural
Gas, and Natural Gas Liquids" workers, SIC Code #131-2, or any
successor index thereto, since January l, 1996, in the case of
the first adjustment, and since the previous Adjustment Date, in
the case of each subsequent adjustment.
(c) Without the prior written consent of the Developer,
pursuant to a written estimate submitted by Operator, Operator
shall not undertake any single project or incur any extraordinary
cost with respect to any well being produced hereunder reasonably
estimated to result in an expenditure of more than $5,000, unless
such project or extraordinary cost is necessary to safeguard
persons or property or to protect the well or related facilities
in the event of a sudden emergency. In no event, however, shall
the Developer be required to pay for any project or extraordinary
cost arising from the negligence or misconduct of Operator, its
agents, servants, employees, contractors, licensees or invitees.
All extraordinary costs incurred and the cost of projects
undertaken with respect to a well being produced hereunder shall
be billed at the invoice cost of third party services performed
or materials purchased together with a reasonable charge by
Operator for services performed directly by it, in proportion to
the share of the Working Interest owned by the Developer in the
wells. Operator shall have the right to require the Developer to
pay in advance of undertaking any such project all or a portion
of the estimated costs thereof in proportion to the share of the
Working Interest owned by the Developer in the wells.
(d) Developer shall have no interest in the pipeline
gathering system, which gathering system shall remain the sole
property of Operator and shall be maintained at Operator's sole
cost and expense.
(e) Notwithstanding anything herein to the contrary, the
Developer shall have full responsibility for and bear all costs
in proportion to the share of the Working Interest owned by the
Developer in the wells with respect to obtaining price
determinations under and otherwise complying with the Natural Gas
Policy Act of 1978 and the implementing state regulations. Such
responsibility shall include, without limitation, preparing,
filing, and executing all applications, affidavits, interim
collection notices, reports and other documents necessary or
appropriate to obtain price certification, to effect sales of
natural gas, or otherwise to comply with said Act and the
implementing state regulations. Operator agrees to furnish such
information and render such assistance as the Developer may
reasonably request in order to comply with said Act and the
implementing state regulations without charge for services
performed by its employees.
(f) The Developer shall have the right to direct Operator to
plug and abandon any well which has been completed hereunder as a
producer, and Operator shall not plug and abandon any such well
prior to obtaining the written consent of the Developer;
provided, however, that if Operator in accordance with the
generally accepted and customary oil and gas field practices and
techniques then prevailing in the geographic area of the well
location, determines that any such well should be plugged and
abandoned and makes a written request to the Developer for
authority to plug and abandon any such well and the Developer
fails to respond in writing to such request within forty-five
(45) days following the date of such request, then the Developer
shall be deemed to have consented to the plugging and abandonment
of such well(s). All costs and expenses related to plugging and
abandoning the wells which have been drilled and completed as
producing wells hereunder shall be borne and paid by the
Developer in proportion to the share of the Working Interest
owned by the Developer in the wells. At any time after three (3)
years from the date each well drilled and completed hereunder is
placed into production, Operator shall have the right to deduct
each month from the proceeds of the sale of the production from
the well operated hereunder up to $200, in proportion to the
share of the Working Interest owned by the Developer in the
wells, for the purpose of establishing a fund to cover the
estimated costs of plugging and abandoning said well. All such
funds shall be deposited in a separate interest bearing escrow
account for the account of the Developer, and the total amount so
retained and deposited shall not exceed Operator's reasonable
estimate of such costs.
7. Billing and Payment Procedure with Respect to Operation of
Wells; Records, Reports and Information.
(a) Operator shall promptly and timely pay and discharge on
behalf of the Developer, in proportion to the share of the
Working Interest owned by the Developer in the wells, all
severance taxes, royalties, overriding royalties, operating fees,
pipeline gathering charges and other expenses and liabilities
payable and incurred by reason of its operation of the wells in
accordance with this Agreement and shall pay, in proportion to
the share of the Working Interest owned by the Developer in the
wells, on or before the due date any third party invoices
rendered to Operator with respect to such costs and expenses;
provided, however, that Operator shall not be required to pay and
discharge as aforesaid any such costs and expenses which are
being contested in good faith by Operator. Operator shall deduct
the foregoing costs and expenses from the Developer's share of
the proceeds of the oil and/or gas sold from the wells operated
hereunder and shall keep an accurate record of the Developer's
account hereunder, showing expenses incurred and charges and
credits made and received with respect to each well. In the event
that such proceeds are insufficient to pay said costs and
expenses, Operator shall promptly and timely pay and discharge
the same, in proportion to the share of the Working Interest
owned by the Developer in the wells, and prepare and submit an
invoice to the Developer each month for said costs and expenses,
such invoice to be accompanied by the form of statement specified
in sub-section (b) below. Any such invoice shall be paid by the
Developer within ten (10) business days of its receipt.
(b) Operator shall disburse to the Developer, on a monthly
basis, the Developer's share of the proceeds received from the
sale of oil and/or gas sold from the wells operated hereunder,
less (i) the amounts charged to the Developer under sub-section
(a) hereof, and (ii) such amount, if any, withheld by Operator
for future plugging costs pursuant to sub-section (f) of Section
6. Each such disbursement made and/or invoice submitted pursuant
to sub-section (a) above shall be accompanied by a statement
itemizing with respect to each well (i) the total production of
oil and/or gas since the date of the last disbursement or invoice
billing period, as the case may be, and the Developer's share
thereof, (ii) the total proceeds received from any sale thereof,
and the Developer's share thereof, (iii) the costs and expenses
deducted from said proceeds and/or being billed to the Developer
pursuant to sub-section (a) above, (iv) the amount withheld for
future plugging costs, and (v) such other information as
Developer may reasonably request, including without limitation
copies of all third party invoices listed thereon for such
period. Operator agrees to deposit all proceeds from the sale of
oil and/or gas sold from the wells operated hereunder in a
separate checking account maintained by Operator, which account
shall be used solely for the purpose of collecting and disbursing
funds constituting proceeds from the sale of production
hereunder.
(c) In addition to the statements required under sub-section
(b) above, Operator, within seventy-five (75) days after the
completion of each well drilled hereunder, shall furnish the
Developer with a detailed statement itemizing with respect to
such well the total costs and charges under Section 4(a) hereof
and the Developer's share thereof, and such information as is
necessary to enable the Developer (i) to allocate any extra costs
incurred with respect to such well between tangible and
intangible and (ii) to determine the amount of investment tax
credit, if applicable.
(d) Upon request, Operator shall promptly furnish the
Developer with such additional information as it may reasonably
request, including without limitation geological, technical and
financial information, in such form as may reasonably be
requested, pertaining to any phase of the operations and
activities governed by this Agreement. The Developer and its
authorized employees, agents and consultants, including
independent accountants shall, at Developer's sole cost and
expense, (i) upon at least ten (10) days' written notice have
access during normal business hours to all of Operator's records
pertaining to operations hereunder, including without limitation,
the right to audit the books of account of Operator relating to
all receipts, costs, charges and expenses under this Agreement,
and (ii) have access, at its sole risk, to any wells drilled by
Operator hereunder at all times to inspect and observe any
machinery, equipment and operations.
8. Operator's Lien.
(a) The Developer hereby grants Operator a first and
preferred lien on and security interest in the interest of the
Developer covered by this Agreement, and in the Developer's
interest in oil and gas produced and the proceeds thereof, and
upon the Developer's interest in materials and equipment, to
secure the payment of all sums due from Developer to Operator
under the provisions of this Agreement.
(b) In the event that the Developer fails to pay any amount
owing hereunder by it to the Operator within the time limit for
payment thereof, Operator, without prejudice to other existing
remedies, is authorized at its election to collect from any
purchaser or purchasers of oil or gas and retain the proceeds
from the sale of the Developer's share thereof until the amount
owed by the Developer, plus twelve percent (12%) interest on a
per annum basis and any additional costs (including without
limitation actual attorneys' fees and costs) resulting from such
delinquency, has been paid. Each purchaser of oil or gas shall be
entitled to rely upon Operator's written statement concerning the
amount of any default.
9. Successors and Assigns; Transfers; Appointment of Agent.
(a) This Agreement shall be binding upon and shall inure to
the benefit of the undersigned parties and their respective
successors and permitted assigns; provided, however, that
Operator may not assign, transfer, pledge, mortgage, hypothecate,
sell or otherwise dispose of any of its interest in this
Agreement, or any of the rights or obligations hereunder, without
the prior written consent of the Developer, except that such
consent shall not be required in connection with (i) the
assignment of work to be performed for Operator by
subcontractors, it being understood and agreed, however, that any
such assignment to Operator's subcontractors shall not in any
manner relieve or release Operator from any of its obligations
and responsibilities under this Agreement, or (ii) any lien,
assignment, security interest, pledge or mortgage arising under
or pursuant to Operator's present or future financing
arrangements, or (iii) the liquidation, merger, consolidation or
sale of substantially all of the assets of Operator or other
corporate reorganization; and provided, further, that in order to
maintain uniformity of ownership in the wells, production,
equipment, and leasehold interests covered by this Agreement, and
notwithstanding any other provisions to the contrary, the
Developer shall not, without the prior written consent of
Operator, sell, assign, transfer, encumber, mortgage or otherwise
dispose of any of its interest in the wells, production,
equipment or leasehold interests covered hereby unless such
disposition encompasses either (i) the entire interest of the
Developer in all wells, production, equipment and leasehold
interests subject hereto or (ii) an equal undivided interest in
all such wells, production, equipment, and leasehold interests.
(b) Subject to the provisions of sub-section (a) above, any
sale, encumbrance, transfer or other disposition made by the
Developer of its interests in the wells, production, equipment,
and/or leasehold interests covered hereby shall be made (i)
expressly subject to this Agreement, (ii) without prejudice to
the rights of the other party, and (iii) in accordance with and
subject to the provisions of the Lease.
(c) If at any time the interest of the Developer is divided
among or owned by co-owners, Operator may, at its discretion,
require such co-owners to appoint a single trustee or agent with
full authority to receive notices, reports and distributions of
the proceeds from production, to approve expenditures, to receive
billings for and approve and pay all costs, expenses and
liabilities incurred hereunder, to exercise any rights granted to
such co-owners under this Agreement, to grant any approvals or
authorizations required or contemplated by this Agreement, to
sign, execute, certify, acknowledge, file and/or record any
agreements, contracts, instruments, reports, or documents
whatsoever in connection with this Agreement or the activities
contemplated hereby, and to deal generally with, and with power
to bind, such co-owners with respect to all activities and
operations contemplated by this Agreement; provided, however,
that all such co-owners shall continue to have the right to enter
into and execute all contracts or agreements for their respective
shares of the oil and gas produced from the wells drilled
hereunder in accordance with sub-section (c) of Section 11
hereof.
10. Insurance; Operator's Liability.
(a) Operator shall obtain and maintain at its own expense so
long as it is Operator hereunder all required Workmen's
Compensation Insurance and comprehensive general public liability
insurance in amounts and coverage not less than $1,000,000 per
person per occurrence for personal injury or death and $1,000,000
for property damage per occurrence, which insurance shall include
coverage for blow-outs and total liability coverage of not less
than $10,000,000. Subject to the aforesaid limits, the Operator's
general public liability insurance shall be in all respects
comparable to that generally maintained in the industry with
respect to services of the type to be rendered and activities of
the type to be conducted under this Agreement; Operator's general
public liability insurance shall, if permitted by Operator's
insurance carrier, (i) name the Developer and all of Developer's
Investor General Partners as additional insured parties, and (ii)
provide that at least thirty (30) days' prior notice of
cancellation and any other adverse material change in the policy
shall be given to the Developer and its Investor General
Partners; provided, that the Developer shall reimburse Operator
for the additional cost, if any, of including it and its Investor
General Partners as additional insured parties under the
Operator's insurance. Current copies of all policies or
certificates thereof shall be delivered to the Developer upon
request. It is understood and agreed that Operator's insurance
coverage may not adequately protect the interests of the
Developer hereunder and that the Developer shall carry at its
expense such excess or additional general public liability,
property damage, and other insurance, if any, as the Developer
deems appropriate.
(b) Operator shall require all of its subcontractors to carry
all required Workmen's Compensation Insurance and to maintain
such other insurance, if any, as Operator in its discretion may
require.
(c) Operator's liability to the Developer as Operator
hereunder shall be limited to, and Operator shall indemnify the
Developer and hold it harmless from, claims, penalties,
liabilities, obligations, charges, losses, costs, damages or
expenses (including but not limited to reasonable attorneys'
fees) relating to, caused by or arising out of (i) the
noncompliance with or violation by Operator, its employees,
agents, or subcontractors of any local, state or federal law,
statute, regulation, or ordinance; (ii) the negligence or
misconduct of Operator, its employees, agents or subcontractors;
or (iii) the breach of or failure to comply with any provisions
of this Agreement.
11. Internal Revenue Code Election; Relationship of Parties;
Right to Take Production in Kind.
(a) With respect to this Agreement, each of the parties
hereto elects, under the authority of Section 761 (a) of the
Internal Revenue Code of 1986, as amended, to be excluded from
the application of all of the provisions of Subchapter K of
Chapter 1 of Sub Title A of the Internal Revenue Code of 1986, as
amended. If the income tax laws of the state or states in which
the property covered hereby is located contain, or may hereafter
contain, provisions similar to those contained in the Subchapter
of the Internal Revenue Code of 1986, as amended, referred to
under which a similar election is permitted, each of the parties
agrees that such election shall be exercised. Beginning with the
first taxable year of operations hereunder, each party agrees
that the deemed election provided by Section 1.761-2(b)(2)(ii) of
the Regulations under the Internal Revenue Code of 1986, as
amended, will apply; and no party will file an application under
Section 1.761-2 (b)(3)(i) and (ii) of said Regulations to revoke
such election. Each party hereby agrees to execute such documents
and make such filings with the appropriate governmental
authorities as may be necessary to effect such election.
(b) It is not the intention of the parties hereto to create,
nor shall this Agreement be construed as creating, a mining or
other partnership or association or to render the parties liable
as partners or joint venturers for any purpose. Operator shall be
deemed to be an independent contractor and shall perform its
obligations as set forth herein or as otherwise directed by the
Developer.
(c) Subject to the provisions of Section 8 hereof, the
Developer shall have the exclusive right to sell or dispose of
its proportionate share of all oil and gas produced from the
wells to be drilled hereunder, exclusive of production which may
be used in development and producing operations, production
unavoidably lost, and production used to fulfill any free gas
obligations under the terms of the applicable Lease or Leases;
and Operator shall not have any right to sell or otherwise
dispose of such oil and gas. The Developer shall have the
exclusive right to execute all contracts relating to the sale or
disposition of its proportionate share of the production from the
wells drilled hereunder. Developer shall have no interest in any
gas purchase agreements of Operator, except the right to receive
Developer's share of the proceeds received from the sale of any
gas or oil from wells developed hereunder. The Developer agrees
to designate Operator or Operator's designated bank agent as the
Developer's collection agent in any such contract. Upon request,
Operator shall render assistance in arranging such sale or
disposition and shall promptly provide the Developer with all
relevant information which comes to Operator's attention
regarding opportunities for sale of production. In the event
Developer shall fail to make the arrangements necessary to take
in kind or separately dispose of its proportionate share of the
oil and gas produced hereunder, Operator shall have the right,
subject to the revocation at will by the Developer, but not the
obligation, to purchase such oil and gas or sell it to others at
any time and from time to time, for the account of the Developer
at the best price obtainable in the area for such production,
however, Operator shall have no liability to Developer should
Operator fail to market such production. Any such purchase or
sale by Operator shall be subject always to the right of the
Developer to exercise at any time its right to take in kind, or
separately dispose of, its share of oil and gas not previously
delivered to a purchaser. Any purchase or sale by Operator of any
other party's share of oil and gas shall be only for such
reasonable periods of time as are consistent with the minimum
needs of the Industry under the particular circumstance, but in
no event for a period in excess of one (1) year.
12. Force Majeure.
(a) If Operator is rendered unable, wholly or in part, by
force majeure (as hereinafter defined) to carry out its
obligations under this Agreement, the Operator shall give to the
Developer prompt written notice of the force majeure with
reasonably full particulars concerning it; thereupon, the
obligations of the Operator, so far as it is affected by the
force majeure, shall be suspended during but no longer than, the
continuance of the force majeure. Operator shall use all
reasonable diligence to remove the force majeure as quickly as
possible to the extent the same is within reasonable control.
(b) The term "force majeure" shall mean an act of God,
strike, lockout, or other industrial disturbance, act of the
public enemy, war, blockade, public riot, lightning, fire, storm,
flood, explosion, governmental restraint, unavailability of
equipment or materials, plant shut-downs, curtailments by
purchasers and any other causes whether of the kind specifically
enumerated above or otherwise, which directly precludes
Operator's performance hereunder and is not reasonably within the
control of the Operator.
(c) The requirement that any force majeure shall be remedied
with all reasonable dispatch shall not require the settlement of
strikes, lockouts, or other labor difficulty affecting the
Operator, contrary to its wishes; the method of handling all such
difficulties shall be entirely within the discretion of the
Operator.
13. Term.
This Agreement shall become effective when executed by Operator
and the Developer and, except as provided in sub-section (c) of
Section 3, shall continue and remain in full force and effect for
the productive lives of the wells being operated hereunder.
14. Governing Law and Invalidity.
This Agreement shall be governed by, construed and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania. The
invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
15. Integration.
This Agreement, including the Exhibits hereto, constitutes and
represents the entire understanding and agreement of the parties
with respect to the subject matter hereof and supersedes all
prior negotiations, understandings, agreements, and
representations relating to the subject matter hereof. No change,
waiver, modification, or amendment of this Agreement shall be
binding or of any effect unless in writing duly signed by the
party against which such change, waiver, modification, or
amendment is sought to be enforced.
16. Waiver of Default or Breach.
No waiver by any party hereto to any default of or breach by any
other party under this Agreement shall operate as a waiver of any
future default or breach, whether of like or different character
or nature.
17. Notices.
Unless otherwise provided herein, all notices, statements,
requests, or demands which are required or contemplated by this
Agreement shall be in writing and shall be hand-delivered or sent
by registered or certified mail, postage prepaid, to the
following addresses until changed by certified or registered
letter so addressed to the other party:
(i) If to Atlas, to:
Atlas Resources, Inc.
311 Rouser Road
Moon Township, Pennsylvania 15108
Attention: President
(ii) If to Developer, to:
Atlas-Energy for the Nineties-Public #5 Ltd.
c/o Atlas Resources, Inc.
311 Rouser Road
Moon Township, Pennsylvania 15108
Notices which are served by registered or certified mail upon the
parties hereto in the manner provided in this Section shall be
deemed sufficiently served or given for all purposes under this
Agreement at the time such notice shall be mailed as provided
herein in any post office or branch post office regularly
maintained by the United States Postal Service or any successor
to the functions thereof. All payments hereunder shall be
hand-delivered or sent by United States mail, postage prepaid to
the addresses set forth above until changed by certified or
registered letter so addressed to the other party.
18. Interpretation.
Whenever this Agreement makes reference to "this Agreement" or to
any provision "hereof," or words to similar effect, such
reference shall be construed to refer to the within instrument
unless the context clearly requires otherwise. The titles of the
Sections herein have been inserted as a matter of convenience of
reference only and shall not control or affect the meaning or
construction of any of the terms and provisions hereof. As used
in this Agreement, the plural shall include the singular and the
singular shall include the plural whenever appropriate.
19. Counterparts.
The parties hereto may execute this Agreement in any number of
separate counterparts, each of which, when executed and delivered
by the parties hereto, shall have the force and effect of an
original; but all such counterparts shall be deemed to constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement under their respective seals as of the day and year
first above written.
Attest
/s/ Bruce M. Wolf
Secretary
[Corporate Seal]
[Corporate Seal]
ATLAS RESOURCES, INC.
By:/s/ J.R. O'Mara President
ATLAS-ENERGY FOR NINETIES-PUBLIC #5 LTD.
By its Managing General Partner:
ATLAS RESOURCES, INC.
By: /s/ J. R. O' Mara, President
=========== ----------- ==============
Exhibit "A" Drilling and Operating Agreement
ATLAS ENERGY FOR THE NINETIES -- PUBLIC #5 LTD.
MERCER COUNTY:
Babcock No. I (Coolspring Township)
Oil and Gas Lease from Edith L. Babcock, widow and not remarried,
to Atlas Resources, Inc., dated August 17, 1995 and recorded
September 13, 1995 in Volume 95 DR 11526 of the Mercer County
Records, ASSIGNING, HEREIN, HOWEVER, only that portion of said
lease containing 50.00 acres, more or less, as shown on the plat
attached hereto as Exhibit "A- V and made a part hereof. Title
opinion of Hunter & Hunter, 260 East Main Street, Suite 200,
Alliance, Ohio 44601, dated September 4, 1996. The Developer's
interest in the leasehold estate constituting this well location
is an undivided 100% Working Interest to those oil and gas rights
from the surface to the bottom of the Medina/Whirlpool Formation,
subject to the landowners' royalty interest.
Barber No. 2 (Coolspring Township)
Oil and Gas Lease from Edna M. Barber, widow and not remarried,
to Atlas Resources, Inc., dated July 18, 1995 and recorded August
23, 1995 in Volume 95 DR 09415 of the Mercer County Records,
ASSIGNING, HEREIN, HOWEVER, only that portion of said lease
containing 50.00 acres, more or less, as shown on the plat
attached hereto as Exhibit "A-2" and made a part hereof Title
opinion of Hunter & Hunter, 260 East Main Street, Suite 200,
Alliance, Ohio 44601, dated June 18, 1996. The Developer's
interest in the leasehold estate constituting this well location
is an undivided 100% Working Interest to those oil and gas rights
from the surface to the bottom of the Medina/Whirlpool
Fon-nation, subject to the landowners' royalty interest.
Black No. 2 (Coolspring Township)
Oil and Gas Lease from Robert W. Black and Betsy A. Black,
husband and wife, to Atlas Resources, Inc., dated May 18, 1995
and recorded June 16, 1995 in Volume 95 DR 07195 of the Mercer
County Records, ASSIGNING, HEREIN, HOWEVER, only that portion of
said lease containing 38.00 acres, more or less, as shown on the
plat attached hereto as Exhibit "A-3" and made a part hereof.
Title opinion of Hunter & Hunter, 260 East Main Street, Suite
200, Alliance, Ohio 44601, dated September 9, 1996. The
Developer's interest in the leasehold estate constituting this
well location is an undivided 100% Working Interest to those oil
and gas rights from the surface to the bottom of the
Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
Court No. I (Coolspring Township)
Oil and Gas Lease from John C. Court and Gale D. Court, husband and
wife, to Atlas Resources, Inc., dated March 3, 1995 and recorded March
28, 1995 in Volume 95 DR 03411 of the Mercer County Records, ASSIGNING,
HEREIN, HOWEVER, only that portion of said lease containing 50.00
acres, more or less, as shown on the plat attached hereto as Exhibit
"A-4" and made a part hereof. Title opinion of Hunter & Hunter, 260
East Main Street, Suite 200, Alliance, Ohio 44601, dated August 29,
1996. The Developer's interest in the leasehold estate constituting
this well location is an undivided 100% Working Interest to those oil
and gas rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Hissom No. 1 (Coolspring Township)
Oil and Gas Lease from James P. Hissom and Marietta S. Hissom, husband
and wife, to Atlas Resources, Inc., dated May 23, 1996 and recorded
June 17, 1996 in Volume 96 DR 08272 of the Mercer County Records,
ASSIGNING, HEREIN, HOWEVER, only that portion of said lease containing
50.00 acres, more or less, as shown on the plat attached hereto as
Exhibit "A-5" and made a part hereof. Title opinion of Hunter & Hunter,
260 East Main Street, Suite 200, Alliance, Ohio 44601, dated September
11, 1996. The Developer's interest in the leasehold estate constituting
this well location is an undivided 100% Working Interest to those oil
and gas rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Kelly No. 2 (Coolspring Township)
Oil and Gas Lease from Edward L. Kelly and Julie A. Kelly, husband and
wife, to Atlas Resources, Inc., dated February 11, 1996 and recorded
March 1, 1996 in Volume 96 DR 02485 of the Mercer County Records,
ASSIGNING, HEREIN, HOWEVER, only that portion of said lease containing
50.00 acres, more or less, as shown on the plat attached hereto as
Exhibit "A-6" and made a part hereof. Title opinion of Hunter & Hunter,
260 East Main Street, Suite 200, Alliance, Ohio 44601, dated September
9, 1996. The Developer's interest in the leasehold estate constituting
this well location is an undivided 100% Working Interest to those oil
and gas rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Kingerski No. 2 (Coolspring Township)
Oil and Gas Lease from John W. Kingerski and Irene K. Kingerski,
husband and wife, to Atlas Resources, Inc., dated May 26, 1995 and
recorded June 16, 1995 in Volume 95 DR 07199 of the Mercer County
Records, ASSIGNING, HEREIN, HOWEVER, only that portion of said lease
containing 50.00 acres, more or less, as shown on the plat attached
hereto as Exhibit "A-7" and made a part hereof. Title opinion of Hunter
& Hunter, 260 East Main Street, Suite 200, Alliance, Ohio 44601, dated
April 25, 1996. The Developer's interest in the leasehold estate
constituting this well location is an undivided 100% Working Interest
to those oil and gas rights from the surface to the bottom of the
Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
McCullough No. I I (Coolspring Township
Oil and Gas Lease from Thomas P. McCullough and Helen M. McCullough,
husband and wife, to Atlas Resources, Inc., dated April 21, 1994 and
recorded May 17, 1994 in Volume 94 DR 07363 of the Mercer County
Records, ASSIGNING, HEREIN, HOWEVER, only that portion of said lease
containing 50.00 acres, more or less, as shown on the plat attached
hereto as Exhibit "A-8" and made a part hereof. Title opinion of Hunter
& Hunter, 260 East Main Street, Suite 200, Alliance, Ohio 44601, dated
September 11, 1996. The Developer's interest in the leasehold estate
constituting this well location is an undivided 100% Working Interest
to those oil and gas rights from the surface to the bottom of the
Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
McEwen No. 1 (Coolspring Township)
Oil and Gas Lease from Margaret M. McEwen, widow and not remarried, to
Atlas Resources, Inc., dated April 20, 1995 and recorded April 26, 1995
in Volume 95 DR 04728 of the Mercer County Records, ASSIGNING, HEREIN,
HOWEVER, only that portion of said lease containing 50.00 acres, more
or less, as shown on the plat attached hereto as Exhibit "A-9" and made
a part hereof. Title opinion of Hunter & Hunter, 260 East Main Street,
Suite 200, Alliance, Ohio 44601, dated April 22, 1996. The Developer's
interest in the leasehold estate constituting this well location is an
undivided 100% Working Interest to those oil and gas rights from the
surface to the bottom of the Medina/Whirlpool Formation, subject to the
landowners' royalty interest.
Rains No. 1 (Coolspring Township)
Oil and Gas Lease from Austin C. Rains and Dorothy W. Rains, husband
and wife, to Atlas Resources, Inc., dated July 25, 1995 and recorded
August 29, 1995 in Volume 95 DR 09312 of the Mercer County Records,
ASSIGNING, HEREIN, HOWEVER, only that portion of said lease containing
35.00 acres, more or less, as shown on the plat attached hereto as
Exhibit "A-10" and made a part hereof. Title opinion of Hunter &
Hunter, 260 East Main Street, Suite 200, Alliance, Ohio 44601, dated
June 30, 1996. The Developer's interest in the leasehold estate
constituting this well location is an undivided 100% Working Interest
to those oil and gas rights from the surface to the bottom of the
Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
Sines No. 3 (Coolspring Township)
Oil and Gas Lease from Donald J. Sines and Mary E. Sines, husband and
wife, to Atlas Resources, Inc., dated May 6, 1996 and recorded June 7,
1996 in Volume 96 DR 07805 of the Mercer County Records, ASSIGNING,
HEREIN, HOWEVER, only that portion of said lease containing 3 8.16
acres, more or less, as shown on the plat attached hereto as Exhibit
"A- I I " and made a part hereof. Title opinion of Geiger, Teeple,
Smith & Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446, Alliance,
Ohio 44601, dated October 3, 1996. The Developer's interest in the
leasehold estate constituting this well location is an undivided 100%
Working Interest to those oil and gas rights from the surface to the
bottom of the Medina/Whirlpool Formation, subject to the landowners'
royalty interest.
Steele No. I (CooLspring Township)
Oil and Gas Lease ftom Samuel A. Steele and Martha E. Steele, husband
and wife, to Atlas Resources, Inc., dated August 17, 1995 and recorded
September 13, 1995 in Volume 95 DR 11525 of the Mercer County Records,
ASSIGNING, HEREIN, HOWEVER, only that portion of said lease containing
50.00 acres, more or less, as shown on the plat attached hereto as
Exhibit "A-12" and made a part hereof. Title opinion of Geiger, Teeple,
Smith & Hahn, P.L.L., 260 East Main Street, P. 0. box 2446, Alliance,
Ohio 44601, dated October 9, 1996. The Developer's interest in the
leasehold estate constituting this well location is an undivided 100%
Working Interest to those oil and gas rights from the surface to the
bottom of the Medina/Whirlpool Formation, subject to the landowners'
royalty interest.
Tait No. 3 (Coolspring Tow ship)
Oil and Gas Lease from Nancy E. Tait, divorced and not remarried, to
Atlas Resources, Inc., dated June 27, 1995 and recorded July 14, 1995
in Volume 95 DR 08847 of the Mercer County Records, ASSIGNING, HEREIN,
HOWEVER, only that portion of said lease containing 50.00 acres, more
or less, as shown on the plat attached hereto as Exhibit "A-13" and
made a part hereof. Title opinion of Hunter & Hunter, 260 East Main
Street, Suite 200, Alliance, Ohio 44601, dated June 19, 1995. The
Developer's interest in the leasehold estate constituting this well
location is an undivided 100% Working Interest to those oil and gas
rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Vogan No. 3 (Coolspring Township)
Oil and Gas Lease from Katherine A. Vogan, widow and not remarried, to
Atlas Resources, Inc., dated July 11, 1995 and recorded August 22, 1995
in Volume 95 DR 09399 of the Mercer County Records, ASSIGNING, HEREIN,
HOWEVER, only that portion of said lease containing 50.00 acres, more
or less, as shown on the plat attached hereto as Exhibit "A-14" and
made a part hereof. Title opinion of Geiger, Teeple, Smith & Hahn,
P.L.L., 260 East Main Street, P. 0. box 2446, Alliance, Ohio 44601,
dated October 24, 1995. The Developer's interest in the leasehold
estate constituting this well location is an undivided 100% Working
Interest to those oil and gas rights from the surface to the bottom of
the Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
Clark No. 5 (Fairview Township)
Oil and Gas Lease from Edgar L. Clark, Jr. and Patricia A. Clark,
husband and wife, to Atlas Resources, Inc., dated August 12, 1996 and
recorded August 21, 1996 in Volume 96 DR 1203
of the Mercer County Records, ASSIGNING, HEREIN, HOWEVER, only that
portion of said lease containing 50.00 acres, more or less, as shown on
the plat attached hereto as Exhibit "A-15" and made a part hereof.
Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East Main
Street, P. 0. box 2446, Alliance, Ohio 44601, dated March 14, 1997. The
Developer's interest in the leasehold estate constituting this well
location is an undivided 100% Working Interest to those oil and gas
rights from the surface to the bottom of the Medina/Whirlpool
Fon-nation, subject to the landowners' royalty interest.
Morley Unit #1 (Fairview Township
as more fully described in a certain Consolidation of Oil and Gas
Leases dated January 21, 1997
and recorded January 22, 1997 in Volume 97 DR 00779 of the Mercer
County Records,
ASSIGNING, HEREIN, HOWEVER, ALL that portion of said Leases containing
50.00 acres,
more or less, as shown on the plat attached hereto as Exhibit "A-16"
and made a part hereof.
Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East Main
Street, P. 0. Box 2446,
Alliance, Ohio 44601 dated March 13, 1997. The Developer's interest in
the leasehold estate
constituting this well location is an undivided 100% Working Interest
to those oil and gas rights
from the surface to the bottom of the Medina/Whirlpool Formation,
subject to the landowners'
royalty interest.
Kloos No. 4 (FindIff Township)
Oil and Gas Lease from Glenn C. Kloos and Imogene E. Kloos, husband and
wife, to Atlas Resources, Inc., dated November 28, 1990 and recorded
January 4, 1991 in Volume 91 DR 00148; Extension of Lease Agreement
dated July 11, 1995 and recorded August 22, 1995 in Volume 95 DR 09401
of the Mercer County Records, ASSIGNING, HEREIN, HOWEVER, only that
portion of said lease containing 50.00 acres, more or less, as shown on
the plat attached hereto as Exhibit "A-17" and made a part hereof.
Title opinion of Hunter & Hunter, 260 East Main Street, Suite 200,
Alliance, Ohio 44601, dated January 19, 1996. The Developer's interest
in the leasehold estate constituting this well location is an undivided
100% Working Interest to those oil and gas rights from the surface to
the bottom of the Medina/Whirlpool Formation, subject to the
landowners' royalty interest.
Dye Unit No. 1 (Jackson Township)
as more fully described in a certain Consolidation of Oil and Gas
Leases dated April 10, 1995 and recorded May 5, 1995 in Volume 95 DR
05285 of the Mercer County Records, ASSIGNING, HEREIN, HOWEVER, ALL
that portion of said Leases containing 50.00 acres, more or less, as
shown on the plat attached hereto as Exhibit "A-18" and made a part
hereof. Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East
Main Street, P. 0. Box 2446, Alliance, Ohio 44601 dated April 15, 1996.
The Developer's interest in the leasehold estate constituting this well
location is an undivided 100% Working Interest to those oil and gas
rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Hall No. I (Jackson Townshipl
Oil and Gas Lease from Rick L. Hall and Cynthia L. Hall, husband and
wife, to Atlas Resources, Inc., dated November 13, 1995 and recorded
November 27, 1995 in Volume 95 DR 15 23 1 of the Mercer County Records,
ASSIGNING, HEREIN, HOWEVER, only that portion of said lease containing
50.00 acres, more or less, as shown on the plat attached hereto as
Exhibit "A-19" and made a part hereof. Title opinion of Geiger, Teeple,
Smith & Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446, Alliance,
Ohio 44601 dated April 15, 1996. The Developer's interest in the
leasehold estate constituting this well location is an undivided 100%
Working Interest to those oil and gas rights from the surface to the
bottom of the Medina/Whirlpool Formation, subject to the landowners'
royalty interest.
Kurtek No. 1 (Jackson Townshfipj
Oil and Gas Lease from Louis Kurtek and Denise Kurtek, husband and
wife, to Atlas Resources, Inc., dated April 21, 1993 and recorded May
20, 1993 in Volume 93 DR 06599of the Mercer County Records, ASSIGNING,
HEREIN, HOWEVER, only that portion of said lease containing 50.00
acres, more or less, as shown on the plat attached hereto as Exhibit
"A-20" and made a part hereof. Title opinion of Geiger, Teeple, Smith &
Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446, Alliance, Ohio
44601 dated July 29, 1996. The Developer's interest in the leasehold
estate constituting this well location is an undivided 100% Working
Interest to those oil and gas rights from the surface to the bottom of
the Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
McDowell No. 11 (Jackson Township)
Oil and Gas Lease from Sandra E. McDowell, widow and not remarried,
(one half interest), to Atlas Resources, Inc., dated March 29, 1996 and
recorded April 29, 1996 in Volume 96 DR 05501 of the Mercer County
Records; and Oil and Gas Lease from John A. McDowell 11, single, (one
fourth interest), and Cheryl L. Cashdollar and Tyrone J. Cashdollar,
husband and wife, (one fourth interest), to Atlas Resources, Inc.,
dated March 14, 1996 and recorded April 29, 1996 in Volume 96 DR 05507
of the Mercer County Records, ASSIGNING, HEREIN, HOWEVER, only that
portion of said lease containing 50.00 acres, more or less, as shown on
the plat attached hereto as Exhibit "A-21" and made a part hereof.
Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East Main
Street, P. 0. Box 2446, Alliance, Ohio 44601 dated September 13, 1996.
The Developer's interest in the leasehold estate constituting this well
location is an undivided 100% Working Interest to those oil and gas
rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
McDowell No. 14 (Jackson Township)
Oil and Gas Lease from Leona M. McDowell, widow and not remarried, to
Atlas Resources, Inc., dated October 20, 1996 and recorded November 12,
1996 in Volume 96 DR 16618 of the Mercer County Records, ASSIGNING,
HEREIN, HOWEVER, only that portion of said lease containing 50.00
acres, more or less, as shown on the plat attached hereto as Exhibit
"A-22" and made a part hereof. Title opinion of Geiger, Teeple, Smith &
Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446, Alliance, Ohio
44601 dated March 18, 1997. The Developer's interest in the leasehold
estate constituting this well location is an undivided 100% Working
Interest to those oil and gas rights from the surface to the bottom of
the Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
Peterka No. 2 Ljackson Township)
Oil and Gas Lease from Frank Peterka, widower and not remarried, to
Atlas Resources, Inc., dated August 29, 1995 and recorded September 13,
1995 in Volume 95 DR 11534 of the Mercer County Records, ASSIGNING,
HEREIN, HOWEVER, only that portion of said lease containing 50.00
acres, more or less, as shown on the plat attached hereto as Exhibit
"A-23" and made a part hereof. Title opinion of Geiger, Teeple, Smith &
Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446, Alliance, Ohio
44601 dated April 22, 1996. The Developer's interest in the leasehold
estate constituting this well location is an undivided 100% Working
Interest to those oil and gas rights from the surface to the bottom of
the Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
Vernam Unit No. 1 (Jackson Township)
as more fully described in a certain Consolidation of Oil and Gas
Leases dated December 16, 1996 and recorded January 7, 1997 in Volume
97 DR 00153 of the Mercer County Records, ASSIGNING, HEREIN, HOWEVER,
ALL that portion of said Leases containing 50.00 acres, more or less,
as shown on the plat attached hereto as Exhibit "A-24" and made a part
hereof. Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East
Main Street, P. 0. Box 2446, Alliance, Ohio 44601 dated April 15, 1996.
The Developer's interest in the leasehold. estate constituting this
well location is an undivided 100% Working Interest to those oil and
gasrights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Carrier No. I (Jefferson Township)
Oil and Gas Lease from Ralph Carrier and Mary A. Carrier, husband and
wife, to Atlas Resources, Inc., dated June 19, 1996 and recorded July
18, 1996 in Volume 96 DR 10039 of the Mercer County Records, ASSIGNING,
HEREIN, HOWEVER, only that portion of said lease containing 50.00
acres, more or less, as shown on the plat attached hereto as Exhibit
"A-25" and made a part hereof. Title opinion of Hunter & Hunter, 260
East Main Street, Suite 200, Alliance, Ohio 44601, dated February 15,
1997. The Developer's interest in the leasehold estate constituting
this well location is an undivided 100% Working Interest to those oil
and gas rights from the surface to the bottom of the Medina/Wl-lirlpool
Formation, subject to the landowners' royalty interest.
Rueberger Unit No. I (Lackawannock Township)
as more fully described in a certain Consolidation of Oil and Gas
Leases dated January 21, 1997, and recorded January 22, 1997 in Volume
97 DR 00780 of the Mercer County Records, ASSIGNING, HEREIN, HOWEVER,
ALL that portion of said Leases containing 50.00 acres, more or less,
as shown on the plat attached hereto as Exhibit "A-26" and made a part
hereof. Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East
Main Street, P. 0. Box 2446, Alliance, Ohio 44601 dated November 20,
1996. The Developer's interest in the leasehold estate constituting
this well location is an undivided 100% Working Interest to those oil
and gas rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Andrews Unit #1 (Mill Creek Township)
Oil and Gas Lease from Glenn C. Andrews and Helen M. Andrews, a/k/a
Helen Andrews, husband and wife, to the Cabot Oil and Gas Corporation,
dated March 9, 1994; The primary term commenced May 17, 1994, and
recorded April 6, 1994, in Volume 94 DR 4971 of the Mercer County
Records. Assignment of Oil and Gas Lease from The Cabot Oil and Gas
Corporation, to Atlas Resources, Inc., dated December 16, 1996, and
recorded February 7, 1997 in Volume 97 DR 1557 of the Mercer County
Records ASSIGNING, HEREIN, HOWEVER, only that portion of said Lease
containing 18.55 acres, more or less, as shown on the plat attached
hereto as Exhibit "A-27" and made a part hereof. Title opinion of
Geiger, Teeple, Smith & Hahn, P.L.L., 260 East Main Street, P. 0. Box
2446, Alliance, Ohio 44601 dated August 27, 1996. The Developer's
interest in the leasehold estate constituting this well location is an
undivided 100% Working Interest to those oil and gas rights from the
surface to the bottom of the Medina/Whirlpool Formation, subject to the
landowners' royalty interest.
DonIgy No. 1 (Mill Creek Township)
Oil and Gas Lease from Paul A. Donley and Ada Donley, husband and wife,
to Atlas Resources, Inc., dated June 13, 1996 and recorded July 29,
1996 in Volume 96 DR 10625 of the Mercer County Records, ASSIGNING,
HEREIN, HOWEVER, only that portion of said lease containing 50.00
acres, more or less, as shown on the plat attached hereto as Exhibit
"A-28" and made a part hereof Title opinion of Geiger, Teeple, Smith &
Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446, Alliance, Ohio
44601 dated March 24, 1997. The Developer's interest in the leasehold
estate constituting this well location is an undivided 91% Working
Interest to those oil and gas rights from the surface to the bottom of
the Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
Winger No. 1 (Mill Creek Township)
Oil and Gas Lease from Jeanne I. Winger and Donald Winger (signs Donald
D. Winger), wife and husband, to Cabot Oil & Gas Corporation dated
March 10, 1993; The primary terms commenced September 20, 1993, and
recorded April 27, 1993 in Volume 93 DR 05295 of the Mercer County
Records. Assignment of Oil and Gas lease from Cabot Oil and Gas
Corporation, to Atlas Resources, Inc., dated December 16, 1996, and
recorded February 7, 1997 in Volume 97 DR 1557 of the Mercer County
Records, ASSIGNING, HEREIN, HOWEVER, only that portion of said lease
containing 45.80 acres, more or less, as shown on the plat attached
hereto as Exhibit "A-29" and made a part hereof. Title opinion of
Geiger, Teeple, Smith & Hahn, P.L.L., 260 East Main Street, P. 0. Box
2446, Alliance, Ohio 44601 dated March 18, 1997. The Developer's
interest in the leasehold estate constituting this well location is an
undivided 100% Working Interest to those oil and gas rights from the
surface to the bottom of the Medina/Whirlpool Formation, subject to the
landowners' royalty interest.
BUTLER COUNTY:
Coast No. 1 (Marion Townshio
Oil and Gas Lease from Sylvia M. Coast, widow and not remarried, to
Atlas Resources, Inc., dated November 2, 1994 and recorded June 10,
1996 in BK2636 PG0587 of the Butler County Records, ASSIGNING, HEREIN,
HOWEVER, only that portion of said lease containing 43.05 acres, more
or less, as shown on the plat attached hereto as Exhibit "A-30" and
made a part hereof. Title opinion of Geiger, Teeple, Smith & Hahn,
P.L.L., 260 East Main Street, P. 0. Box 2446, Alliance, Ohio 44601
dated October 4, 1996. The Developer's interest in the leasehold estate
constituting this well location is an undivided 100% Working Interest
to those oil and gas rights from the surface to the bottom of the
Medina/Whirlpool Formation, subject to the landowners' royalty
interest.
Myers Unit No. 2 (Marion Towns"I
as more fully described in a certain Consolidation of Oil and Gas
Leases dated December 9, 1996, and recorded February 5, 1997 in BK2708
PGO172 of the Butler County Records, ASSIGNING, HEREIN, HOWEVER, ALL
that portion of said lease containing 50.00 acres, more or less, as
shown on the plat attached hereto as Exhibit "A-3 V and made a part
hereof. Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East
Main Street, P. 0. Box 2446, Alliance, Ohio 44601 dated March 13, 1996.
The Developer's interest in the leasehold estate constituting this well
location is an undivided 100% Working Interest to those oil and gas
rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
LAWRENCE COUNTY:
Harris Unit No. 3 Mashington Township)
as more fully described in a certain Consolidation of Oil and Gas
Leases dated January 21, 1997, and recorded January 29, 1997 in BK1329
PG029 of the Lawrence County Records, ASSIGNING, HEREIN, HOWEVER, ALL
that portion of said Leases containing 50.00 acres, more or less, as
shown on the plat attached hereto as Exhibit "A-32" and made a part
hereof. Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East
Main Street, P. 0. Box 2446, Alliance, Ohio 44601 dated March 21, 1997.
The Developer's interest in the leasehold estate constituting this well
location is an undivided 100% Working Interest to those oil and gas
rights from the surface to the bottom of the Medina/Whirlpool
Formation, subject to the landowners' royalty interest.
Byler No. 11 (Wilmington Township)
Oil and Gas Lease from Levi U. Byler and Ella J. Byler, husband and
wife, to Atlas Resources, Inc., dated July 26, 1996; Effective October
16, 1996 and recorded August 22, 1996 in BK1299 P0415 of the Lawrence
County Records, ASSIGNING, HEREIN, HOWEVER, only that portion of said
lease containing 32.80 acres, more or less, as shown on the plat
attached hereto as Exhibit "A-33" and made a part hereof. Title opinion
of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East Main Street, P. 0.
Box 2446, Alliance, Ohio 44601 dated November 27, 1996. The Developer's
interest in the leasehold estate constituting this well location is an
undivided 100% Working Interest to those oil and gas rights from the
surface to the bottom of the Medina/Whirlpool Formation, subject to the
landowners' royalty interest.
Byler No. 14 (Wilmington Townshipj
Oil and Gas Lease from Jonathan J. Byler and Dena M. Byler,
husband and wife, to Atlas Resources, Inc., dated July 29, 1996;
Effective September 27, 1996 and recorded August 22, 1996 in
BK1299 PG406 of the Lawrence County Records, ASSIGNING, HEREIN,
HOWEVER, only that portion of said lease containing 50.00 acres,
more or less, as shown on the plat attached hereto as Exhibit
"A-34" and made a part hereof. Title opinion of Geiger, Teeple,
Smith & Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446,
Alliance, Ohio 44601 dated September 18, 1996. The Developer's
interest in the leasehold estate constituting this well location
is an undivided 100% Working Interest to those oil and gas rights
from the surface to the bottom of the Medina/Whirlpool Formation,
subject to the landowners' royalty interest.
Hostetler No. 3 (Wilmington Township)
Oil and Gas Lease from Andy Y. Hostetler and Christina K.
Hostetler, husband and wife, to
Atlas Resources, Inc., dated July 29, 1996; Effective October 16,
1996 and recorded August 22, 1996 in BK1299 PG403 of the Lawrence
County Records, ASSIGNING, HEREIN, HOWEVER, only that portion of
said lease containing 50.00 acres, more or less, as shown on the
plat attached hereto as Exhibit "A-35" and made a part hereof.
Title opinion of Geiger, Teeple, Smith & Hahn, P.L.L., 260 East
Main Street, P. 0. Box 2446, Alliance, Ohio 44601 dated November
27, 1996. The Developer's interest in the leasehold estate
constituting this well location is an undivided 100% Working
Interest to those oil and gas rights from the surface to the
bottom of the Medina/Whirlpool Formation, subject to the
landowners' royalty interest.
Kurtz No. 2 (Wilmington Township)
Oil and Gas Lease from Andrew E. Kurtz and Elsie D. Kurtz,
husband and wife, to Atlas Resources, Inc., dated July 26, 1996;
Effective September 27, 1996 and recorded August 22, 1996 in
BK1299 PG409 of the Lawrence County Records, ASSIGNING, HEREIN,
HOWEVER, only that portion of said lease containing 36.09 acres,
more or less, as shown on the plat attached hereto as Exhibit
"A-36" and made a part hereof. Title opinion of Geiger, Teeple,
Smith & Hahn, P.L.L., 260 East Main Street, P. 0. Box 2446,
Alliance, Ohio 44601 dated January 29, 1997. The Developer's
interest in the leasehold estate constituting this well location
is an undivided 100% Working Interest to those oil and gas rights
from the surface to the bottom of the Medina/Whirlpool Formation,
subject to the landowners' royalty interest.
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EXHIBT 23(a)
McLaughlin & Courson
Certified Public Accountants
2002 Law & Finance Building
Pittsburgh, PA 15219
Phone: 412-261-0630
CONSENT OF INDEPENDENT AUDITOR
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #5 LTD.
The firm, as Independent Certified Public Accountants, hereby consents
to the use of the audit report dated February 10, 1998, on the balance
sheet of Atlas-Energy for the Nineties-Public #5 Ltd., a Pennsylvania
Limited Partnership as of December 31, 1997, and the related statements
of income, changes in partners' capital accounts and cash flows for the
year then ended, in the U.S. Securities and Exchange Commission Form
10-KSB and any amendments thereto for Atlas-Energy for the Nineties-
Public #5 Ltd.
McLaughlin & Courson
Certified Public Accountants
/s/ McLaughlin & Courson
March 30, 1998
Pittsburgh, Pennsylvania
