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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR


[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number: 1-4998

ATLAS PIPELINE PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware
(State of other jurisdiction of
incorporation or organization)		     23-3011077
(I.R.S. Employer
Identification No.)
       
311 Rouser Road
Moon Township, Pennsylvania
(Address of principal executive office)		     15108
(Zip code)
       

Registrant’s telephone number, including area code: (412) 262-2830

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [X]     No [ ]

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [X]    No [ ]

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT
ON FORM 10-Q


PAGE
PART I FINANCIAL INFORMATION  
     
      Item 1.       Financial Statements  
     
         Consolidated Balance Sheets as of September 30, 2004 (Unaudited) and
               December 31, 2003 3
     
         Consolidated Statements of Income for the Three and Nine Months Ended
                September 30, 2004 and 2003 (Unaudited) 4
     
         Consolidated Statement of Partners' Capital for the Nine Months Ended
               September 30, 2004 (Unaudited) 5
     
         Consolidated Statements of Cash Flows for the Nine Months Ended
               September 30, 2004 and 2003 (Unaudited) 6
     
         Notes to Consolidated Financial Statements - September 30, 2004 (Unaudited) 7 - 22
     
      Item 2.        Management's Discussion and Analysis of Financial Condition and Results
               of Operations 23 - 33
     
      Item 3.       Quantitative and Qualitative Disclosures About Market Risk 34 - 36
     
      Item 4.       Controls and Procedures 37
     
PART II OTHER INFORMATION
     
      Item 6.       Exhibits and Reports on Form 8-K 38
     
SIGNATURES   39

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)


September 30,
2004
 December 31,
2003
(Unaudited)
                                     ASSETS      
Current assets:  
    Cash and cash equivalents  $      29,020   $      15,078  
    Accounts receivable  11,341   12  
    Prepaid expenses  808   67  
      Total current assets  41,169   15,157  
 
Property, plant and equipment, net  172,312   29,628  
 
Goodwill (net of accumulated amortization of $285)  2,305   2,305  
 
Other long-term assets  4,472   2,422  
   $    220,258   $      49,512  
                               LIABILITIES AND PARTNERS' CAPITAL      
 
Current liabilities: 
    Current portion of long-term debt  $        3,062   $              --  
    Accounts payable and accrued liabilities  16,313   521  
    Accounts payable - affiliates  6,189   1,673  
    Distribution payable  6,030   3,073  
      Total current liabilities  31,594   5,267  
 
Other long-term liabilities  2,060   --  
 
Long-term debt, less current portion  57,158   --  
 
Partners' capital (deficit): 
    Common unitholders, 5,563,659 and 2,713,659 units outstanding  132,224   43,551  
    Subordinated unitholder, 1,641,026 units outstanding  (1,040 ) 354  
    General partner  2,190   340  
    Accumulated other comprehensive loss  (3,928 ) --  
      Total partners' capital  129,446   44,245  
   $      220,258   $        49,512  

See accompanying notes to consolidated financial statements

3

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per unit data)

Three Months Ended
September 30,
 Nine Months Ended
September 30,
2004
 2003
 2004
 2003
Revenues:          
    Natural gas and liquids  $30,048   $     --   $30,048   $       --  
    Transportation and compression  4,665   4,163   13,344   11,816  
    Interest income and other  166   36   282   61  
      Total revenues  34,879   4,199   43,674   11,877  
 
Costs and expenses: 
    Natural gas and liquids  24,588   --   24,588   --  
    Plant operating  931   --   931   --  
    Transportation and compression  564   607   1,709   1,831  
    General and administrative  1,737   435   2,901   1,301  
    Depreciation and amortization  1,022   438   2,132   1,266  
    Interest expense  1,075   50   1,202   212  
    Terminated acquisition  2,987   --   2,987   --  
      Total costs and expenses  32,904   1,530   36,450   4,610  
 
Net income  $  1,975   $2,669   $  7,224   $  7,267  
 
Net income - limited partners  $  1,016   $2,352   $  5,497   $  6,611  
 
Net income - general partner  $     959   $   317   $  1,727   $     656  
 
Basic net income per limited partner unit  $     .15   $   .54   $    1.01   $    1.72  
 
Weighted average limited partner 
    units outstanding - basic  6,839   4,355   5,416   3,854  
 
Diluted net income per limited partner unit   $     .15   $   .54   $    1.01   $    1.72  
Weighted average limited partner 
    units - diluted  6,898   4,355   5,441   3,854  

See accompanying notes to consolidated financial statements

4

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(Unaudited)
(in thousands, except unit data)

Number of Limited
Partner Units
   General Accumulatd
Other
Comprehensive		 Total
Partners'
Capital
Common
 Subordinated
 Common
 Subordinated
 Partner
 Loss
 (Deficit)
Balance at
 January 1, 2004		        2,713,659        1,641,026   $     43,551   $    354   $    340   $      --   $   44,245    
 
Issuance of
 common units,
  net of offering
   costs		   2,850,000   --   92,714   --   --   --   92,714
Capital
 contribution		   --   --   --   --   1,994   --   1,994
Distribution to
 partners		   --   --   (3,893)   (2,068)   (812)   --   (6,773)
Distribution
 payable		   --   --   (3,839)   (1,132)   (1,059)   --   (6,030)
Other
 comprehensive
 loss		   --   --   --   --   --   (3,928)   (3,928)
Net income   --   --   3,692   1,806   1,727   --   7,224
Balance at
 September 30, 2004		   5,563,659   1,641,026 $ 132,224 $ (1,040) $ 2,190 $ (3,928) $ 129,446



See accompanying notes to consolidated financial statements

5

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)


September 30,
2004
 September 30,
2003
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income  $     7,224   $   7,267  
Adjustments to reconcile net income to net cash 
  provided by operating activities: 
    Depreciation and amortization  2,132   1,266  
    Non-cash loss on derivative value  585   --  
    Non-cash compensation on long-term incentive plan  342   --  
    Alaska Pipeline Company acquisition costs  2,987   --  
    Loss on disposal of fixed assets  7   --  
    Amortization of deferred finance costs  219   86  
Changes in operating assets and liabilities: 
    Changes in operating assets and liabilities  499   2,846  
    Increase in accounts payable - affiliates  3,741   --  
      Net cash provided by operating activities  17,736   11,465  
 
CASH FLOWS FROM INVESTING ACTIVITIES: 
Business acquisition, net of cash acquired  (141,564 ) --  
Capital expenditures  (4,419 ) (4,143 )
(Increase) decrease in other assets  67   (868 )
Proceeds from disposal of fixed assets  188   --  
      Net cash used in investing activities  (145,728 ) (5,011 )
 
CASH FLOWS FROM FINANCING ACTIVITIES: 
Borrowings on credit facilities  100,000   2,000  
Repayments of credit facilities  (40,000 ) (8,500 )
Repayments on other long-term debt  (13 ) --  
Capital contributions  1,994   539  
Issuance of common units, net of offering costs  92,714   25,182  
Distributions paid to partners  (9,846 ) (6,572 )
Increase in other assets  (2,915 ) (864 )
      Net cash provided by financing activities  141,934   11,785  
Increase in cash and cash equivalents  13,942   18,239  
Cash and cash equivalents, beginning of period  15,078   1,859  
Cash and cash equivalents, end of period  $   29,020   $ 20,098  




See accompanying notes to consolidated financial statements

6

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2004
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

        The consolidated financial statements of Atlas Pipeline Partners, L.P. (“the Partnership”) and its wholly-owned subsidiaries as of September 30, 2004 and for the three and nine month periods ended September 30, 2004 and 2003 are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2003. The results of operations for the nine month period ended September 30, 2004 may not necessarily be indicative of the results of operations for the full year ending December 31, 2004.

        Certain reclassifications have been made to the consolidated financial statements for the three and nine month periods ended September 30, 2003 to conform to the presentation for the three and nine month periods ended September 30, 2004.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        In addition to matters discussed further in this note, the Partnership’s significant accounting policies are detailed in its audited consolidated financial statements and notes thereto in the Partnership’s annual report on Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission.

Net Income Per Unit

        Net income per limited partner unit is based on the weighted average number of common and subordinated units outstanding during the period. Basic net income per limited partner unit is computed by dividing net income, after deducting the general partner’s 2% and incentive distributions, by the weighted average number of outstanding common units and subordinated units. Diluted net income per limited partner unit is computed by dividing net income attributable to limited partners by the sum of the weighted average number of common and subordinated units outstanding and the weighted average number of phantom units during the period. Phantom units consist of common units issuable under the terms of the Partnership’s Long-Term Incentive Plan (see Note 7).

7

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
SEPTEMBER 30, 2004
(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Net Income Per Unit — (Continued)

        The following table presents a reconciliation of the components used in the computation of net income per limited partner unit-basic and net income per limited partner unit-diluted for the periods indicated:


Three Months Ended
September 30,
 Nine Months Ended
September 30,
2004
 2003
 2004
 2003
(in thousands) (in thousands)
 
Net income - limited partners   $    1,016   $    2,352   $    5,497   $    6,611  
Weighted average limited partner units outstanding - basic  6,839   4,355   5,416   3,854  
Dilutive effect of phantom units  59   --   25   --  
Weighted average limited partner units - diluted   6,898   4,355   5,441   3,854  

Comprehensive Income (Loss)

        Comprehensive income (loss) includes net income and all other changes in the equity of a business during a period from transactions and other events and circumstances from non-owner sources. These changes, other than net income, are referred to as “other comprehensive income (loss)” and for the Partnership include only changes in the fair value of unrealized hedging gains and losses.


Three Months Ended
September 30,
 Nine Months Ended
September 30,
2004
 2003
 2004
 2003
(in thousands) (in thousands)
 
Net income   $    1,975   $    2,669   $    7,224   $    7,267  
Other comprehensive loss:
    Unrealized loss on hedging contracts  (3,955)   --   (3,955)   --  
Less: reclassification adjustment for losses
    realized in net income  27   --   27   --  
    (3,928)   --   (3,928)   --  
Comprehensive (loss) income  $   (1,953)   $    2,669   $    3,296   $    7,267  




8

ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
SEPTEMBER 30, 2004
(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued)

Cash Flow Statements

        The Partnership considers temporary investments with a maturity at the date of acquisition of 90 days or less to be cash equivalents. Supplemental disclosure of cash flow information:


Nine Months Ended
September 30,
2004
 2003
(in thousands)
Cash paid during the period for:      
    Interest  $             757   $             127  
Non-cash activities include the following: 
    Fair value of assets acquired  $      161,603