Atlas Energy Ltd. (TSX: AED) Announces 2006 Capital Program of $80 Million, Operations Update and Personnel Changes

January 22, 2006

Release Date: January 22, 2006
Atlas Energy Ltd. (TSX: AED) Announces 2006 Capital Program of $80 Million, Operations Update and Personnel Changes

00:08 EST Monday, January 23, 2006

CALGARY, Jan. 22 /CNW/ –

2006 Capital Program

The Atlas Energy Ltd. (“Atlas” or “the Company”) Board of Directors has approved an $80 million capital program for 2006, which includes approximately $50 million for the drilling and completion of 142 (137 net) wells targeting shallow natural gas and conventional heavy oil. Approximately 80% of the drilling program is expected to consist of development locations. Also included in the total program is approximately $25 million for the installation of production facilities in the Company’s main operating areas. The capital program is expected to be financed with cash flow and bank facilities. Approximately 35% of the capital expenditures are expected to be incurred in the first quarter of 2006.

Operations Update

In the Mooney area, Atlas is executing this winter’s program consisting of the drilling of 10 (7 net) horizontal development wells, 4 (3 net) stratigraphic test wells, and the installation of gathering and production facilities. Since November, 2005, 3 (2.1 net) horizontal development wells and 2 (1.5 net) stratigraphic test wells have been drilled and a fourth horizontal well is currently being drilled. The first two horizontal wells were drilled 200 meters on either side of the original horizontal well, which was drilled a year ago and has been on production since then. This spacing was chosen to allow for a water flood pilot project which is expected to start in the third quarter of 2006. Total production from the three wells on this original pad has stabilized at approximately 1,050 (693 net) barrels of oil per day, or an average of 350 (230 net) barrels of oil per day per well. The third and fourth horizontal wells in this winter’s program are being drilled from a new pad location. Both of these wells are expected to be completed by early February, 2006.
The first two stratigraphic test wells have encountered positive results on logs and management now believes that the potential pool size has increased from 14 sections to approximately 17 to 20 sections, all on lands operated by Atlas (74% average working interest). Two additional stratigraphic wells are expected to be drilled this winter to further delineate the pool. Atlas expects to complete the installation of gathering and production facilities at Mooney in early April, 2006. Wells in this pool will be tied in to a central battery and oil will be pipelined to an all weather road, from which it will be trucked to sales locations. Water handling and injection facilities and solution gas conservation facilities are also expected to be completed in early April. This capital investment is expected to increase operating netbacks due to a significant reduction in operating expenses and should allow year round production from this field.
Atlas plans to drill 4 (3 net) more horizontal wells in the third quarter of 2006 and currently expects that it will ultimately require, in total, from 120 (88.8 net) to 150 (111.0 net) horizontal wells to develop this pool under a full water flood project, with approximately one half of these wells expected to be converted to water injection wells after an initial production period.
In the Pikes Peak area, recently acquired in the Avalon Resources Ltd. corporate acquisition, Atlas drilled 7 (7 net) vertical wells, all resulting in successful oil wells. These wells are at various stages of completion and initial production and the Company expects production to range from 20 to 50 barrels of oil per day per well. Atlas expects to drill approximately 26 (26 net) wells later in 2006 for heavy oil and natural gas prospects in this area.
Production from the Southern Alberta shallow gas drilling program in late 2005 has recently stabilized at approximately 2.5 (2.5 net) mmcfd. Another 33 (33 net) wells are expected to be drilled later in 2006 to continue the development of this large resource play.
In Rainbow, Alberta one (1.0 net) natural gas well was recently tied in and, based on a long term production test, is expected to produce at 3.0 mmcfd of raw natural gas (estimated to be 2.4 mmcfd of sales gas) and 90 barrels per day of natural gas liquids when production commences within a few days. No further drilling has been budgeted in this area for 2006.
In the Unity area of Saskatchewan (100% working interest), the Company expects to drill 17 shallow gas wells in the first quarter of 2006 and construct gathering and processing facilities to allow initial production from 29 wells to begin by April 1, 2006. Atlas has recently acquired a 7 section block of acreage (100% working interest) in the heart of its land base in the Unity area which will add to its drilling inventory for shallow natural gas.

Personnel Changes

Mr. Robert Chaisson has resigned as Vice President, Operations effective February 1, 2006 and has accepted an invitation to join the Atlas Board of Directors also effective February 1, 2006. Atlas sincerely thanks Mr. Chaisson for his contributions and looks forward to his service on the Board where his technical expertise and knowledge of the Company’s properties will provide substantial benefits.
The Board of Directors has appointed Mr. Harold Hay as Vice President, Operations effective February 1, 2006. Mr. Hay is a professional engineer and has been with Atlas since 2004 focusing on production operations, completions and reservoir development. He has twenty years of oil and gas experience with companies such as Encana Energy Inc., Amber Energy Inc., and Amoco Canada Resources Ltd.
The Board of Directors also has appointed Mr. Dennis Jamieson as Vice President, Controller effective January 15, 2006. Mr. Jamieson is a Chartered Accountant with twelve years of oil and gas experience, most recently with Piper Energy Inc. and Amber Energy Inc.


The Company’s net debt position as at December 31, 2005 is estimated to be approximately $60 million with bank credit facilities of $80 million. Atlas expects to be producing approximately 6,500 boe per day (based on field estimates) when the Rainbow well is on stream. Additional field activity at Mooney, Pikes Peak and Unity in the first quarter of 2006 is expected to add to this production level by April, 2006. Through recent successful drilling and land acquisitions, Atlas has significantly increased its current development drilling inventory to approximately 450 net locations on Company lands. These assets are expected to drive the growth of the Company for several years.
Per barrel of oil equivalent (“boe”) amounts may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion of six thousand cubic feet of natural gas to one barrel and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Certain information regarding the Company contained herein may constitute
forward looking statements. Forward-looking statements may include
estimates, plans, expectations, opinions, forecasts, projections,
guidance or other statements that are not statements of fact. Although
the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. These statements are
subject to certain risks and uncertainties and may be based on
assumptions that could cause actual results to differ materially from
those anticipated or implied in the forward-looking statements. The
Company’s forward-looking statements are expressly qualified in their
entirety by this cautionary statement.

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adequacy or accuracy of this release.