0001175028
us-gaap:LimitedPartnerMember
2011-09-30
0001175028
us-gaap:GeneralPartnerMember
2011-09-30
0001175028
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2011-09-30
0001175028
us-gaap:LimitedPartnerMember
2010-12-31
0001175028
us-gaap:GeneralPartnerMember
2010-12-31
0001175028
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2010-12-31
0001175028
us-gaap:AccumulatedOtherComprehensiveIncomeMember
2011-01-01
2011-09-30
0001175028
2010-09-30
0001175028
2009-12-31
0001175028
2011-07-01
2011-09-30
0001175028
us-gaap:LimitedPartnerMember
2011-01-01
2011-09-30
0001175028
us-gaap:GeneralPartnerMember
2011-01-01
2011-09-30
0001175028
2010-07-01
2010-09-30
0001175028
2010-01-01
2010-09-30
0001175028
2011-09-30
0001175028
2011-01-01
2011-09-30
0001175028
2010-12-31
iso4217:USD
xbrli:shares
xbrli:shares
iso4217:USD
65600
370000
3800
378500
false
--12-31
Q3
2011
2011-09-30
10-Q
0001175028
3126.55
Smaller Reporting Company
ATLAS AMERICA PUBLIC 11-2002 LTD
12500
13700
433300
303700
2270300
2372500
81500
27100
102200
35800
66400
34100
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 3 — ASSET RETIREMENT OBLIGATION</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership recognizes an estimated liability for the plugging and abandonment of its oil and gas wells and related facilities. It also recognizes a liability for future asset retirement obligations if a reasonable estimate of the fair value of that liability can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Partnership also considers the estimated salvage value in the calculation of depletion. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The estimated liability is based on the MGP's historical experience in plugging and abandoning wells, estimated remaining lives of those wells based on reserve estimates, external estimates as to the cost to plug and abandon the wells in the future and federal and state regulatory requirements. The liability is discounted using an assumed credit-adjusted risk-free interest rate. Revisions to the liability could occur due to changes in estimates of plugging and abandonment costs or remaining lives of the wells or if federal or state regulators enact new plugging and abandonment requirements. The Partnership has no assets legally restricted for purposes of settling asset retirement obligations. Except for its oil and gas properties, the Partnership has determined that there are no other material retirement obligations associated with tangible long-lived assets. </div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">A reconciliation of the Partnership's liability for well plugging and abandonment costs for the periods indicated is as follows: </div>
<div align="center">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr valign="bottom"><td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"><b>Nine Months Ended</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Asset retirement obligation at beginning of period</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,338,400</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,866,500</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,270,300</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,812,100</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Accretion expense</div></td>
<td> </td>
<td> </td>
<td align="right">34,100</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">27,100</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">102,200</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">81,500</td>
<td> </td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Asset retirement obligation at end of period</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2,372,500</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,893,600</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2,372,500</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,893,600</td>
<td> </td></tr></table></div></div>
9591200
8587500
873700
639300
215500
128900
174400
114700
-86600
-59700
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 5 — COMPREHENSIVE (LOSS) INCOME</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Comprehensive (loss) income includes net loss and all other changes in the equity of a business during a period from transactions and other events and circumstances from non-owner sources that, under accounting principles generally accepted in the United States of America have not been recognized in the calculation of net loss. These changes, other than net (loss) income, are referred to as "other comprehensive (loss) income" and for the Partnership, include changes in the fair value of unsettled derivative contracts accounted for as cash flow hedges, and changes in the estimated amount of future monetized proceeds to be received (See Note 4). The monetized proceeds included in accounts receivable affiliate have been allocated to the Partnership based on estimated future production in relation to all other partnerships' future production eligible to receive monetized hedge proceeds. As actual production is realized, there may be a corresponding difference in the Partnership's actual share of monetized hedge proceeds received than what was previously estimated. This component is shown as "Difference in estimated monetized gains receivable." The following table sets forth the calculation of the Partnership's comprehensive (loss) income: </div>
<div align="center">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr valign="bottom"><td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td colspan="6" nowrap="nowrap" align="center"><b>Nine Months Ended</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Net loss</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(96,400</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(84,100</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(263,000</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(186,300</td>
<td nowrap="nowrap">)</td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Other comprehensive (loss) income:</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 30px;">Unrealized holding gain (loss) on hedging contracts</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">381,600</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,300</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">892,100</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 30px;">MGP portion of non-cash loss on hedge instruments</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">79,700</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 30px;">Difference in estimated monetized gains receivable</div></td>
<td> </td>
<td> </td>
<td align="right">3,200</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">14,500</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 30px;">Less: reclassification adjustment for gains realized in net loss</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(53,600</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(60,200</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(234,100</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(153,300</td>
<td nowrap="nowrap">)</td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Total other comprehensive (loss) income</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(50,400</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">321,400</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(129,600</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">738,800</td>
<td> </td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Comprehensive (loss) income</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(146,800</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">237,300</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(392,600</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">552,500</td>
<td> </td></tr></table></div></div>
596600
194200
569100
110200
458900
206500
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 4 — DERIVATIVE INSTRUMENTS</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The MGP, on behalf of the Partnership, historically used a number of different derivative instruments, principally swaps and collars, in connection with its commodity price risk management activities. The MGP entered into financial instruments to hedge the Partnership's forecasted natural gas and crude oil against the variability in expected future cash flows attributable to changes in market prices. Swap instruments are contractual agreements between counterparties to exchange obligations of money as the underlying natural gas and crude oil is sold. Under swap agreements, the Partnership received or paid a fixed price and received or remitted a floating price based on certain indices for the relevant contract period. Commodity-based option instruments are contractual agreements that grant the right, but not obligation, to purchase or sell natural gas and crude oil at a fixed price for the relevant contract period. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Historically, the MGP has entered into natural gas and crude oil future option contracts and collar contracts on behalf of the Partnership to achieve more predictable cash flows by hedging its exposure to changes in natural gas and oil prices. At any point in time, such contracts included regulated New York Mercantile Exchange ("NYMEX") futures and options contracts and non-regulated over-the-counter futures contracts with qualified counterparties. NYMEX contracts are generally settled with offsetting positions, but may be settled by the delivery of natural gas. Crude oil contracts are based on a West Texas Intermediate ("WTI") index. These contracts qualified and were designated as cash flow hedges and recorded at their fair values. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The MGP formally documented all relationships between hedging instruments and the items being hedged, including its risk management objective and strategy for undertaking the hedging transactions. This included matching the commodity derivative contracts to the forecasted transactions. The MGP assessed, both at the inception of the derivative and on an ongoing basis, whether the derivative was effective in offsetting changes in the forecasted cash flow of the hedged item. If it determined that a derivative was not effective as a hedge or that it had ceased to be an effective hedge due to the loss of adequate correlation between the hedging instrument and the underlying item being hedged, the MGP discontinued hedge accounting for the derivative and subsequent changes in the derivative fair value, which was determined by the MGP through the utilization of market data, were recognized immediately within gain (loss) on mark-to-market derivatives in the Partnership's statements of operations. For derivatives qualifying as hedges, the Partnership recognized the effective portion of changes in fair value in partners' capital as accumulated other comprehensive income and reclassified the portion relating to commodity derivatives to gas and oil production revenues for the Partnership's derivatives within the Partnership's statements of operations as the underlying transactions were settled. For non-qualifying derivatives and for the ineffective portion of qualifying derivatives, the Partnership recognized changes in fair value within gain (loss) on mark-to-market derivatives in its statements of operations as they occurred. </div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Prior to the sale on February 17, 2011 of the Transferred Business, Atlas Energy monetized its derivative instruments related to the Transferred Business. The monetized proceeds related to instruments that were originally put into place to hedge future natural gas and oil production of the Transferred Business, including production generated through its drilling partnerships. At September 30, 2011, the Partnership recorded a net receivable from the monetized derivative instruments of $223,200 in accounts receivable-affiliate and $169,800 in long-term receivable-affiliate with the corresponding net unrealized gains in accumulated other comprehensive income on the Partnership's balance sheets, which will be allocated to natural gas and oil production revenue generated over the period of the original instruments' term. As a result of the monetization and the early settlement of natural gas and oil derivative instruments and the unrealized gains recognized in income in prior periods due to natural gas and oil property impairments, the Partnership recorded a net deferred gain on its balance sheets in other comprehensive income of $303,700 as of September 30, 2011. Unrealized gains, net of the MGP's interest, previously recognized into income as a result of prior period impairments included in accumulated other comprehensive income are $89,300. The MGP's portion of the unrealized gains was written-off as part of the terms related to the acquisition of the Transferred Business. For the nine months ended September 30, 2011, the Partnership reclassified $79,700 of unrealized gains previously recognized into income from prior period impairments related to the MGP from a hedge receivable due from affiliate to a non-cash distribution to the MGP. As such, $79,700 was recorded as a distribution to partners on the statement of changes in partners' capital. During the nine months ended September 30, 2011, $163,700 of monetized proceeds were recorded by the Partnership and allocated only to the limited partners. Of the remaining $303,700 of net unrealized gain in accumulated other comprehensive income, the Partnership will reclassify $161,500 of net gains to the Partnership's statements of operations over the next twelve month period and the remaining $142,200 in later periods. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The following tables summarize the fair value of the Partnership's derivative instruments as of December 31, 2010, as well as the gain or loss recognized in the statements of operations for the three and nine months ended September 30, 2011 and 2010: </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Fair Value of Derivative Instruments:</b> </div>
<div align="center">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr valign="bottom"><td width="72%"> </td>
<td width="3%"> </td>
<td width="11%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">Fair Value</td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td nowrap="nowrap" align="center">Balance Sheet</td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center">December 31,</td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td style="border-bottom: #000000 1px solid;" nowrap="nowrap" align="left">Derivatives in Cash Flow Hedging Relationships</td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" nowrap="nowrap" align="center">Location</td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center">2010</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Commodity Contracts</div></td>
<td> </td>
<td valign="top" align="left">Current assets</td>
<td> </td>
<td align="left">$</td>
<td align="right">378,500</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left">Long-term assets</td>
<td> </td>
<td> </td>
<td align="right">370,000</td>
<td> </td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td> </td>
<td align="right">748,500</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left">Current liabilities</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,800</td>
<td nowrap="nowrap">)</td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" nowrap="nowrap" align="left">Long-term liabilities</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(65,600</td>
<td nowrap="nowrap">)</td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(69,400</td>
<td nowrap="nowrap">)</td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left">Total</td>
<td> </td>
<td align="left">$</td>
<td align="right">679,100</td>
<td> </td></tr></table></div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Effects of Derivative Instruments on Statements of Operations:</b> </div>
<div align="center">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr valign="bottom"><td width="25%"> </td>
<td width="3%"> </td>
<td width="24%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>Nine Months Ended</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Derivative in Cash Flow Hedging Relationships</div></td>
<td> </td>
<td valign="top" align="left">Gain Recognized in OCI on Derivatives</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left">Commodity Contracts</td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">381,600</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10,300</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">892,100</td>
<td> </td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 3px double;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr></table></div>
<div align="center">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr valign="bottom"><td width="25%"> </td>
<td width="3%"> </td>
<td width="24%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="6" nowrap="nowrap" align="center"><b>Nine Months Ended</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Location of Gain Reclassified from Accumulated OCI into Income</div></td>
<td> </td>
<td valign="top" align="left">Gain Reclassified from OCI into Net Loss</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td valign="top" align="left">Gas and Oil Revenue</td>
<td> </td>
<td align="left">$</td>
<td align="right">53,600</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">60,200</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">234,100</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">153,300</td>
<td> </td></tr></table></div></div>
864900
565400
320800
524600
169800
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 6 — FAIR VALUE OF FINANCIAL INSTRUMENTS</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership has established a hierarchy to measure its financial instruments at fair value which requires it to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The hierarchy defines three levels of inputs that may be used to measure fair value: </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify"><i>Level 1— </i>Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify"><i>Level 2— </i>Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify"><i>Level 3— </i>Unobservable inputs that reflect the entities own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Assets and Liabilities Measured at Fair Value on a Recurring Basis</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership used a fair value methodology to value the assets and liabilities for its outstanding derivative contracts (see Note 4). The Partnership's commodity derivative contracts were valued based on observable market data related to the change in price of the underlying commodity and are therefore defined as Level 2 fair value measurements. </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership estimates the fair value of asset retirement obligations using Level 3 inputs based on discounted cash flow projections using numerous estimates, assumptions and judgments regarding such factors at the date of establishment of an asset retirement obligation such as: amounts and timing of settlements; the credit-adjusted risk-free rate of the Partnership; and estimated inflation rates (see Note 3). </div></div>
129400
41000
129900
45400
84500
45500
79700
4477300
1925800
-24300
-19400
-9000
1200
300
100
100
100
9591200
8587500
16300
13700
2328400
3971800
3126.55
3126.55
538100
131000
407100
-864900
-565400
778300
505700
-186300
-84100
-263000
-60400
-202600
-96400
68800
14100
-60400
-32400
-255100
-98200
-202600
-64000
-82
-32
-65
-21
781800
268000
641100
225500
8347500
7778400
1402700
446100
1179200
415200
1589300
530300
1442300
511600
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 1 — DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Atlas America Public #11-2002 Ltd. (the "Partnership") is a Delaware limited partnership and formed on June 5, 2002 with Atlas Resources, LLC serving as its Managing General Partner and operator ("Atlas Resources" or "MGP"). Atlas Resources is an indirect subsidiary of Atlas Energy, L.P., formerly Atlas Pipeline Holdings, L.P. ("Atlas Energy") (NYSE: ATLS). On February 17, 2011, Atlas Energy, a then-majority owned subsidiary of Atlas Energy, Inc. and parent of the general partner of Atlas Pipeline Partners, L.P. ("APL") (NYSE: APL), completed an acquisition of assets from Atlas Energy, Inc., which included its investment partnership business; its oil and gas exploration, development and production activities conducted in Tennessee, Indiana, and Colorado, certain shallow wells and leases in New York and Ohio, and certain well interests in Pennsylvania and Michigan; and its ownership and management of investments in Lightfoot Capital Partners, L.P. and related entities (the "Transferred Business"). </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Atlas Energy recently announced that it intends to create a newly formed exploration and production master limited partnership named Atlas Resource Partners, L.P. ("Atlas Resource Partners"), which will hold substantially all of ATLS' current natural gas and oil development and production assets and the partnership management business. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Atlas Resources' focus is on the development and/or production of natural gas and oil in the Appalachian, Michigan, Indiana, and/or Colorado basin regions of the United States of America. Atlas Resources is also a leading sponsor of and manages tax-advantaged direct investment partnerships, in which it co-invests to finance the exploitation and development of its acreage. Atlas Energy Resource Services, Inc. provides Atlas Resources with the personnel necessary to manage its assets and raise capital. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The accompanying financial statements, which are unaudited except that the balance sheet at December 31, 2010 is derived from audited financial statements, are presented in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim reporting. They do not include all disclosures normally made in financial statements contained in the Form 10-K. These interim financial statements should be read in conjunction with the audited financial statements and notes thereto presented in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2010. The results of operations for the nine months ended September 30, 2011 may not necessarily be indicative of the results of operations for the year ended December 31, 2011. </div></div>
-129600
-129600
271200
76800
7239000
433300
4477300
2328400
6201300
303700
1925800
3971800
645100
261200
383900
-2229900
2229900
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; height: 221px; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 7 — TRANSACTIONS WITH ATLAS RESOURCES, LLC AND ITS AFFILIATES</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership has entered into the following significant transactions with the MGP and its affiliates as provided under its Partnership Agreement: </div>
<div style="margin-top: 10pt;">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="4%"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify;">Administrative costs which are included in general and administrative expenses in the Partnership's statements of operations are payable at $75 per well per month. Administrative costs incurred for the three and nine months ended September 30, 2011 were $30,400 and $89,100, respectively. Administrative costs incurred for the three and nine months ended September 30, 2010 were $31,500 and $94,200, respectively.</div></td></tr></table></div>
<div style="margin-top: 10pt;">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="4%"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify;">Monthly well supervision fees which are included in production expenses in the Partnership's statements of operations are payable at $320 per well per month in 2011 and 2010, respectively, for operating and maintaining the wells. Well supervision fees incurred for the three and nine months ended September 30, 2011 were $129,900 and $380,300, respectively. Well supervision fees incurred for the three and nine months ended September 30, 2010 were $134,700 and $402,400, respectively.</div></td></tr></table></div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt;">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr style="background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" valign="top"><td style="background: none transparent scroll repeat 0% 0%;" width="4%"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify;">Transportation fees which are included in production expenses in the Partnership's statements of operations are generally payable at 13% of the natural gas sales price. Transportation fees incurred for the three and nine months ended September 30, 2011 were $44,300 and $124,500, respectively. Transportation fees incurred for the three and nine months ended September 30, 2010 were $52,600 and $167,100, respectively.</div></td></tr></table></div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The MGP and its affiliates perform all administrative and management functions for the Partnership including billing revenues and paying expenses. Accounts receivable-affiliate on the Partnership's balance sheets represents the net production revenues due from the MGP. </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Subordination by Managing General Partner</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Under the terms of the Partnership Agreement, the MGP may be required to subordinate up to 50% of its share of net production revenues of the Partnership to provide a distribution to the limited partners equal to at least 10% of their agreed subscriptions. Subordination is determined on a cumulative basis, in each of the first five years of Partnership operations, commencing with the first distribution of net revenues to the limited partners (July 2003). Since inception of the Partnership, the MGP has not been required to subordinate any of its revenues to its limited partners. </div></div>
1403000
446200
1179300
415200
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In management's opinion, all adjustments necessary for a fair presentation of the Partnership's financial position, results of operations and cash flows for the periods disclosed have been made. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In addition to matters discussed further in this note, the Partnership's significant accounting policies are detailed in its audited financial statements and notes thereto in the Partnership's annual report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission ("SEC"). </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Use of Estimates</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities that exist at the date of the Partnership's financial statements, as well as the reported amounts of revenue and costs and expenses during the reporting periods. The Partnership's financial statements are based on a number of significant estimates, including the revenue and expense accruals, depletion, asset impairments, fair value of derivative instruments and the probability of forecasted transactions. Actual results could differ from those estimates. </div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The natural gas industry principally conducts its business by processing actual transactions as much as 60 days after the month of delivery. Consequently, the most recent two months' financial results were recorded using estimated volumes and contract market prices. Differences between estimated and actual amounts are recorded in the following months' financial results. Management believes that the operating results presented for the three and nine months ended September 30, 2011 and 2010 represent actual results in all material respects (see "Revenue Recognition" accounting policy for further description). </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Accounts Receivable and Allowance for Possible Losses</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In evaluating the need for an allowance for possible losses, the MGP performs ongoing credit evaluations of the Partnership's customers and adjusts credit limits based upon payment history and the customer's current creditworthiness, as determined by review of the Partnership's customers' credit information. Credit is extended on an unsecured basis to many of its energy customers. As of September 30, 2011 and December 31, 2010, the MGP's credit evaluation indicated that the Partnership had no need for an allowance for possible losses. </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Oil and Gas Properties</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Oil and gas properties are stated at cost. Maintenance and repairs are expensed as incurred. Major renewals and improvements that extend the useful lives of property are capitalized. The Partnership follows the successful efforts method of accounting for oil and gas producing activities. Oil is converted to gas equivalent basis ("Mcfe") at the rate of one barrel equals six Mcf. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership's depletion expense is determined on a field-by-field basis using the units-of-production method. Depletion rates for lease, well and related equipment costs are based on proved developed reserves associated with each field. Depletion rates are determined based on reserve quantity estimates and the capitalized costs of developed producing properties. Upon the sale or retirement of a complete field of a proved property, the Partnership eliminates the cost from the property accounts and the resultant gain or loss is reclassified to the Partnership's statements of operations. Upon the sale of an individual well, the Partnership credits the proceeds to accumulated depreciation and depletion within its balance sheets. </div>
<div align="center">
<table style="font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%">
<tr valign="bottom"><td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>September 30,</b></td>
<td> </td>
<td> </td>
<td colspan="2" nowrap="nowrap" align="center"><b>December 31,</b></td>
<td> </td></tr>
<tr style="font-size: 10pt;" valign="bottom"><td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2011</b></td>
<td> </td>
<td> </td>
<td style="border-bottom: #000000 1px solid;" colspan="2" nowrap="nowrap" align="center"><b>2010</b></td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Proved properties:</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Leasehold interests</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">695,700</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">695,700</td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Wells and related equipment</div></td>
<td> </td>
<td> </td>
<td align="right">40,827,100</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">40,827,100</td>
<td> </td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td> </td>
<td align="right">41,522,800</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">41,522,800</td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background: #cceeff;" valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Accumulated depletion</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(33,744,400</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(33,175,300</td>
<td nowrap="nowrap">)</td></tr>
<tr style="font-size: 1px;"><td>
<div style="text-indent: -15px; margin-left: 15px;"> </div></td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td>
<td> </td>
<td style="border-top: #000000 1px solid;" colspan="2" nowrap="nowrap" align="right"> </td>
<td> </td></tr>
<tr valign="bottom"><td>
<div style="text-indent: -15px; margin-left: 15px;">Oil and gas properties, net</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">7,778,400</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,347,500</td>
<td> </td></tr></table></div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Impairment of Long-Lived Assets</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an asset's estimated future cash flows will not be sufficient to recover its carrying amount, an impairment charge will be recorded to reduce the carrying amount for that asset to its estimated fair value if such carrying amount exceeds the fair value. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The review of the Partnership's oil and gas properties is done on a field-by-field basis by determining if the historical cost of proved properties, less the applicable accumulated depletion, and abandonment is less than the estimated expected undiscounted future cash flows. The expected future cash flows are estimated based on the Partnership's plans to continue to produce and develop proved reserves. Expected future cash flow from the sale of production of reserves is calculated based on estimated future prices. The Partnership estimates prices based upon current contracts in place, adjusted for basis differentials and market related information including published futures prices. The estimated future level of production is based on assumptions surrounding future prices and costs, field decline rates, market demand and supply and the economic and regulatory climates. If the carrying value exceeds the expected future cash flows, an impairment loss is recognized for the difference between the estimated fair market value (as determined by discounted future cash flows) and the carrying value of the assets. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The determination of oil and natural gas reserve estimates is a subjective process and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In addition, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Estimated reserves are often subject to future revisions, which could be substantial, based on the availability of additional information which could cause the assumptions to be modified. The Partnership cannot predict what reserve revisions may be required in future periods. There was no impairment charge recognized during the three and nine months ended September 30, 2011 and for the year ended December 31, 2010. </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Working Interest</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership Agreement establishes that revenues and expenses will be allocated to the MGP and limited partners based on their ratio of capital contributions to total contributions ("working interest"). The MGP is also provided an additional working interest of 7% as provided in the Partnership Agreement. Due to the time necessary to complete drilling operations and accumulate all drilling costs, estimated working interest percentage ownership rates are utilized to allocate revenues and expenses until the wells are completely drilled and turned on-line into production. Once the wells are completed, the final working interest ownership of the partners is determined and any previously allocated revenues and expenses based on the estimated working interest percentage ownership are adjusted to conform to the final working interest percentage ownership. In June 2011, an additional adjustment of $2,229,900 was made to decrease the Managing General Partner's equity account and a corresponding increase to the Limited Partners' equity account for previous depletion and impairment charges, to conform to the final working interest ownership percentages. </div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Revenue Recognition</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership generally sells natural gas and crude oil at prevailing market prices. Revenue is recognized when produced quantities are delivered to a custody transfer point, persuasive evidence of a sales arrangement exists, the rights and responsibility of ownership pass to the purchaser upon delivery, collection of revenue from the sale is reasonably assured and the sales price is fixed or determinable. Revenues from the production of natural gas and crude oil in which the Partnership has an interest with other producers are recognized on the basis of the Partnership's percentage ownership of working interest. Generally, the Partnership's sales contracts are based on pricing provisions that are tied to a market index with certain adjustments based on proximity to gathering and transmission lines and the quality of its natural gas. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">The Partnership accrues unbilled revenue due to timing differences between the delivery of natural gas and crude oil and the receipt of a delivery statement. These revenues are recorded based upon volumetric data from the Partnership's records and management estimates of the related commodity sales and transportation fees which are, in turn, based upon applicable product prices (see "Use of Estimates" accounting policy for further description). The Partnership had unbilled revenues at September 30, 2011 and December 31, 2010 of $220,200 and $231,300, respectively, which are included in accounts receivable — affiliate within the Partnership's balance sheets. </div>
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>Recently Issued Accounting Standards</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">In June 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. Update 2011-05 amends the FASB Accounting Standards Codification to provide an entity with the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with a total net income, each component of other comprehensive income, and a total amount for comprehensive income. Update 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in partners' capital. These changes apply to both annual and interim financial statements. Update 2011-05 will be effective for public entities' fiscal years, and interim periods within those years, beginning after December 15, 2011. The Partnership will apply the requirements of Update 2011-05 upon its effective date of January 1, 2012, and it does not anticipate it having a material impact on its financial position, results of operations or related disclosures. </div></div>
<div style="width: 7.5in; font-family: 'Times New Roman',Times,serif; margin-left: 0.25in;">
<div style="margin-top: 10pt; font-size: 10pt;" align="justify"><b>NOTE 8 — SUBSEQUENT EVENTS</b> </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify">Management has considered for disclosure any material subsequent events through the date the financial statements were issued. </div>
<div style="margin-top: 10pt; text-indent: 32px; font-size: 10pt;" align="justify"><i>Formation of Atlas Resource Partners, L.P</i>. On October 17, 2011, Atlas Energy announced that its board of directors has approved a plan to create a newly formed exploration and production master limited partnership named Atlas Resource Partners, L.P. ("Atlas Resource Partners"), which will hold substantially all of Atlas Energy's current natural gas and oil development, and production assets and the partnership management business, including the MGP. Upon consummation of the transaction, Atlas Energy will retain a 78.4% limited partner interest in Atlas Resource Partners and intends to distribute a 19.6% limited partner interest in Atlas Resource Partners to Atlas Energy unit holders. Atlas Energy will also own the newly created general partner of Atlas Resource Partners, which will own a 2% general partner interest and all of the incentive distribution rights in the newly formed partnership. Completion of the transaction is subject to a number of conditions, including final approval by the Atlas Energy's board of directors, as well as the effectiveness of a Form 10 registration statement that Atlas Resource Partners filed with the SEC on October 17, 2011. The transaction is expected to close in the first quarter of 2012. The MGP anticipates that this transaction will have no impact on the Partnership's operations. </div></div>