atmos enerrgy 120705pres

Forward Looking Statements
The matters discussed or incorporated by reference in this presentation may
contain “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements other than statements of historical fact included in this presentation
are forward-looking statements made in good faith by the Company and are
intended to qualify for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. When used in this presentation or in any
of the Company’s other documents or oral presentations, the words “anticipate,”
“believes,” “estimate,” “expect,” “forecast,” “goal,” “intends,” “objective,” “plans”
“projection,” “seek,” “strategy” or similar words are intended to identify forward-
looking statements. Such forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
discussed in this presentation, including the Company’s acquisition of the
operations of TXU Gas, the Company’s ability to continue to access the capital
markets and the other factors discussed in the Company’s SEC filings. These
factors include the risks and uncertainties discussed in the Company’s Form 10-K
for the fiscal year ended September 30, 2005. Although the Company believes
these forward-looking statements to be reasonable, there can be no assurance
that they will approximate actual experience or that the expectations derived from
them will be realized. The Company undertakes no obligation to update or revise
forward-looking statements, whether as a result of new information, future events
or otherwise. 1

Management Participants

Robert W. Best - Chairman, President & CEO

J. Patrick Reddy - Senior VP & CFO

R. Earl Fischer - Senior VP, Utility Operations

JD Woodward - Senior VP, Nonutility Operations

Mark H. Johnson – VP, Nonutility Operations

Laurie M. Sherwood - VP, Corporate Development,
and Treasurer

Susan C. Kappes - VP, Investor Relations

2

Atmos Energy Today

Robert W. Best
Chairman, President & CEO

3

Overview
Company Profile

The nation’s largest pure-gas distribution company
Solid financial foundation
Track record of creating shareholder value
• Consistent earnings growth
• 22 consecutive years of increasing dividends
Focused strategy over time
• Maximize core natural gas utility earnings capability
• Complement core utility business through select
nonutility operations
• Grow through prudent acquisitions

4

Overview
Scope of Operations
• Utility operates in 12 states (yellow)
• Nonutility operates in 22 states (grey)

5

Overview
Largest Pure-Play LDC Based on Customers

(customers in millions)

3.5 3.16

3.0

2.30
2.5
2.00
2.0 1.68

1.5
0.99
0.96
1.0
0.63 0.60
0.46
0.31
0.5

0.0
ATO ATG OKE SWX WGL PNY LG NWN NJR SJI

6

Overview
Return on Invested Capital (ROIC*) Remains Strong

18.0% 17.4%
16.4%
15.9%
15.8%
15.5%
16.0%
14.5%

14.0%

12.0%

10.0%
2001 2002 2003 2004 2005 5 Yr Avg

*ROIC - Return on invested capital is calculated using the following GAAP financial measures: Income before interest expense and income taxes plus common
stock dividends paid, divided by the average of the year’s beginning and ending long-term debt plus common equity. This measure is used to more precisely
7
evaluate operational performance and management effectiveness.

Overview
Times Interest Earned Ratios*

3.5

3.05
3.0 2.83 2.76
2.75
2.59
2.55
2.5

2.0

1.5
2001 2002 2003 2004 2005 2006E
*The times interest earned ratio measures the ability to satisfy annual interest costs
8

Overview
Weighted Average Cost of Debt Remains Low

8.0 7.4
6.9
7.0 6.4
6.0
5.7
6.0 5.6
Percent

5.0
4.0
3.0
2.0
1.0
2001 2002 2003 2004 2005 2006E
9

Overview
Total Return to Shareholders is Competitive

Five year total return
One year total return
9/30/00 – 9/30/05
9/30/04 – 9/30/05

107.9%
60%
110%
51.6%

50%
75.5%
85%
38.7%
40%
29.4%
60%
30%
31.5%
17.2%
35%
20% 12.3%

10% 10%
(1.9%)
(7.2%)
0%
-15%
00 tils
rgy ti l s ils
Ut
P5 0 ti l s ti l s
rgy
tils
ne 0U
sU 50
s
S& ne
0U sU
sE sU
Ga 50 ne &P E Ga
50
mo Jo ne
&P
00 S os
At Jo
P6 &P
S w 00
tm
Do P6
S w
S& A
Do S&
10
Source: Bloomberg

Overview
Earnings Per Share Compared to Company Guidance
Reflects Management’s Commitment to Shareholders

$2.00

1.72 $1.80-$1.90
$1.75
1.58
1.54
$ per share

$1.65-$1.75
1.45
$1.50 $1.55-$1.60
$1.52-$1.58
$1.43-$1.60
$1.25

$1.00

$0.75

$0.50
2002 2003 2004 2005 2006E
11

Overview
Annual Dividend for the Years 1984 – 2006E
$1.26

$1.20

$1.00

$0.80

$0.60

$0.40

$0.20

$0.00
'8
'8
'8
'8
'8
'8
'9
'9
'9
'9
'9
'9
'9
'9
'9
'9
'0
'0
'0
'0
'0
'0
'0
4
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
6E
Note: Amounts are adjusted for mergers and acquisitions. For fiscal 2006, $1.26 is the indicated annual dividend.

12

Overview
Dividend Payout Continues to Improve

Payout Dividend / Share

85% $1.50
81%
79%
80% $1.40
78%
77%

75% $1.30
1.26E
72%

1.24
70% $1.20
1.22 68% E
1.20
1.18
1.16
65% $1.10

60% $1.00
2001 2002 2003 2004 2005 2006E
Current Indicated Dividend Yield Approximately 4.7%
13
Average LDC Payout Ratio = 65%

Overview
Diversified Operating Base – Geographically and Operationally

Fiscal 2005
Utility Throughput by
Fiscal 2005
Customer Type: 411 Bcf
Operating Income: $349 MM
Transportation
27.9%
Mississippi:
Mid-States:
5.5%
10.3% West Texas:
8.0%
Louisiana: 7.1% Commercial
22.5%

Kentucky: 5.4%
Marketing:
11.8%
Colorado-
Kansas: 7.2%

Industrial 7.2%

Public Authority
& Other 2.2%
Pipeline & Irrigation 0.8%
Residential 39.4%
Storage: 20.2%
Mid-Tex: 24.5%

14

Overview

Regulatory Strategy Remains Key Focus

Rate Design Issues

Seek weather normalization in key jurisdictions
•
• Shift more revenue from the commodity charge to base rates
• Seek mechanism to mitigate declining use per customer
• Recover the gas cost portion of bad debt expense

Regulatory Lag Issues

Shift capital spending to jurisdictions with more timely recovery
•
(short-term)
• Seek mechanisms in remaining jurisdictions to reduce regulatory
lag on recovering capital expenditures (long-term)
• File rate cases to maintain actual returns close to allowed returns

15

Overview

Average Annual Rate Increases in the Utility Segment
($ in Millions)

$25.0
15.0-
25.0
$20.0
18.6
$15.0
16.2

$10.0

6.3
$5.0

$0.0
2003 2004 2005 2006-2010E
16

Overview
Atmos Utility Gross Profit per Meter

$320
305-310
$310
299
$300 293
287
$ per meter

$290
$280
271
$270
$260
$250
$240
2002 2003 2004 2005 2006E
11%
6% 4%
1% Assumes
warmer warmer Normal Weather
warmer colder
17

Overview
Impressive Utility Efficiency Metrics vs. Peers

Customers Served
per Utility Employee
2005 Utility O&M Expense Per Customer

800
$250

730
$200 600
$209
$150 511
400
$100
$110
200
$50

0
$0
Atmos Energy Peer Group Avg.
Atmos Energy Peer Group Avg.

Note: Results are based on fiscal 2005 performance for Atmos and most recent information available for the peer group.
Companies in the peer group include AGL Resources, KeySpan, Laclede, New Jersey Resources, Nisource, Northwest Natural Gas, Oneok,
Piedmont Natural Gas, Southwest Gas and WGL Holdings. 18

Overview
Nonutility Business Segments Complement Atmos Energy
Gas Marketing
Utilizes storage and transportation assets that are leased or managed to:

• provide bundled city gate services (including base load sales, peaking sales, risk
management and demand based storage services), to municipal, industrial, power generator,
LDC and affiliate utility customers and

• capture time and location price differentials (arbitrage) through various trading strategies

Pipeline & Storage
Owns or leases storage and pipeline assets in Texas, Kentucky and Louisiana that are
utilized to provide storage and transportation services to municipal, industrial, power
generator and affiliate utility customers

Includes recently acquired pipeline and storage assets from TXU Gas (6,162 miles of
intrastate pipelines and 5 storage facilities). Effective 10/1/04, these pipeline operations
are functionally reporting under the nonutility businesses

Other Nonutility
Provides gas supply services to Atmos utility divisions and peaking power construction
services
19

Overview
Historical and Estimated Net Income Contribution by Segment

3%
9%
95%
21%
23%
6% 19%
5%
75% 86% 14%
17%
Percent

73% Pipeline & Storage
65%
55% Natural Gas Marketing
60%
Other Nonutility
35% Utility

15%
(1)%
-5%
2003 2004 2005 2006E
20

Overview
Successful Acquisition History

1986 - Trans Louisiana Gas Company
1987 - Western Kentucky Gas Company
1993 - Greeley Gas Company
1997 - United Cities Gas Company
2000 - Associated Natural Gas Company (Missouri Assets)
2000 - Acquired interest in Heritage Propane Partners
(sold in Fiscal 2004)

2001 - Acquisition of remaining interest in Woodward Marketing

2001 - Louisiana Gas Service and LGSN

2002 - Mississippi Valley Gas Company

2004 – TXU Gas Company 21

Overview
Acquisition of TXU Gas Provided Scale and Scope in Texas
Cash price of $1.9 billion
• 26 million common shares
issued @ $24.75
• $1.4 billion senior unsecured
notes – initial weighted average
interest rate of 4.76%
LDC Operations
• Mid-Tex Division serves about
1.5 million customers, 92%
residential
• Annual customer growth of 2%
• Over 550 municipalities served
Pipeline Operations
• Atmos Pipeline-Texas Division
• 1,800 miles of backbone
intrastate pipeline
West Texas Division
• Integrated with LDC
Mid-Tex Division
• Working storage capacity of
Atmos Pipeline-Texas
39 Bcf
Atmos Energy Headquarters
22

Growth Through Acquisitions
Increasing Regulated Operations – Operating Income Mix

2004 - $194 MM

17%
83% 2006E - $373 - $387 MM

15% 16%

69%
2005 - $349 MM

13% 19%

68%

Regulated LDC
Regulated Pipeline
Non-Regulated
23

Overview
2005 Scorecard

Meeting Our Objectives -
Yes
Could We:
1. Close the TXU Gas acquisition in three months?

2. Fund the acquisition without pressuring the stock price or losing our
investment grade credit ratings?
3. Integrate the new business within one year?

4. Operate the new business more efficiently than the prior owner?

5. Take advantage of the pipeline opportunities?

6. Achieve better rate design on these assets? In progress

7. Reduce debt as a percent of capital in 3-5 years? In progress

8. Continue to grow earnings in the 4-6% range? In progress

24

Overview
Fiscal 2005 Net Income and EPS Experienced Substantial Increases

Net Income ($ millions) Diluted Earnings Per Share
9%
1.72
$1.80
135.8
57%
$150.0
1.58
$1.60

86.2 $1.40
$100.0

$1.20

$50.0 $1.00
2004 2005
2004 2005

Net income reached a record level in 2005
24.6 million increase in weighted average outstanding shares year over year – primarily
to help fund the TXU Gas transaction 25

Financial Outlook

J. Patrick Reddy
Senior VP and Chief Financial Officer

26

Maximizing Core Utility Earnings

Atmos Energy Corporation
(Natural Gas Utility Divisions) Atmos Energy Holdings, Inc.
(Nonutility Businesses)
Colorado-Kansas
Colorado-Kansas
Atmos Energy Marketing
Kentucky
Kentucky • • Storage (Trading)
Storage (Trading)
• • Transportation (Marketing)
Transportation (Marketing)
Louisiana
Louisiana
Atmos Pipeline & Storage
Mid-States
Mid-States • • Atmos Pipeline-Texas
• Non-Texas Assets

Mid-Tex **
Mid-Tex
Other Nonutility
Other Nonutility
Mississippi
Mississippi • • Atmos Energy Services
Atmos Energy Services
• • Atmos Power Systems
Atmos Power Systems
West Texas
West Texas * Effective 10/1/04, includes LDC and pipeline operations of
former TXU Gas. Pipeline operations have functionally reported
under the nonutility businesses beginning in Fiscal 2005.
27

2005 Regulatory Activity Drives Top Line Revenue Stream for Fiscal 2006

Favorable rate stabilization results in Mississippi effective 10/1/05
• Establishes an earnings sharing mechanism
• Provides calculated ROE plus performance adjuster, currently 9.8%
• Shifts $10 million in annual margins from volumetric to customer charge
• Adds about 4% more heating degree days to the WNA period
• Reduces regulatory lag
Increased rates requested in Georgia
• Filed for revenue increase of $4 million and rate design enhancements
• Order was disappointing; currently reviewing options for “next steps”

Productive GRIP filings in the state of Texas
• 2003 expenditure filings concluded; total of $8.5 million implemented in
Mid-Tex and Atmos Pipeline-Texas rates, with $6.7 million rate increase
effective October 2005
• 2004 expenditure filings ongoing; expect approximately $12.5 million to be
implemented in rates in first quarter of calendar 2006
Results from Grip filings made on behalf of Mid-Tex and Atmos Pipeline-Texas
o
Divisions, and West Texas and Lubbock jurisdictions 28

Earnings Grow Despite Warmer Weather

Degree Days*
EPS
4,124
4,000
$1.90
$1.72
$1.75 3,473
3,368
3,500
$1.58
$1.60 $1.54
$1.47 3,271
$1.45 3,000
$1.45

$1.30
2,500
2,587
$1.15

$1.00 2,000
2001 2002 2003 2004 2005
* Adjusted for WNA
29

Warmer Than Normal Weather is the Biggest Regulatory Challenge
d
ate
es a
ky as id
t at an x
S ol
tuc ex is i - Te
/K S ns
- T
n u
d d
W.
MS Mi Mi
CO Ke Co
Lo
0

Fiscal 2005 Impact:
% Warmer than Normal

(5)
11 percent warmer
than normal on a
consolidated basis
(10) Cost 29 cents per
diluted share in
11%
fiscal 2005
(15) Largest exposure is
14%
in Mid-Tex Division

(20)
20%
22%
(25)
Actual / Normal Adjusted for WNA
30

Utility Margin Sensitivity Increased with TXU Gas Acquisition

2004–2006E
2003–2004
Heating Seasons
Heating Season

35%
36%
48%
51%

13% 17%

Weather Weather- Nonweather-
Normalized Sensitive Margin Sensitive Margin

31

Mid-Tex Division Earnings Impact of Warmer Than Normal Weather

Percent Warmer than Normal
5% 10% 15% 20%
$0.00

($0.02)

($0.04)
EPS Impact

($.05)
($0.06)

($0.08)
($.09)
($0.10)

($0.12)
($.12)
($0.14)

($0.16)
($.16)
32

Hurricane Katrina Rate Relief
Ongoing discussions with the Louisiana Commission and staff for recovery
of incremental O&M, lost gas and lost margins
Total property damage and expenses estimated between $13 million and
$15 million
• Property Related:
o $10.6 million damage to distribution systems
o $ 0.5 million damage to 3 buildings and equipment
• $ 1.8 million of lost gas (144,000 Mcf)
• $ 1.5 million of incremental O&M related costs, included in fiscal 2005 results
Property Insurance Coverage
• Self-insured for $1 million, included in fiscal 2005 results
• Damage from $1.0 to $5.0 million - coverage with third-party provider
• Damage greater than $5.0 million – coverage through OIL
Fiscal 2006 Guidance assumes lost margin between $10 million and $12
million
• Approximately 230,000 Louisiana customers affected by Hurricane Katrina
• Estimate 40,000 customers semi-permanently lost (> 9 mos. to restore service,
if at all)
We fully expect recovery for these losses. However, we are unsure of the
timing and therefore, have conservatively assumed no recovery in our fiscal
2006 guidance.
33

Gas Supply Hedging for Winter 2005-2006

Hedging gas supply
reduces effect of
Storage high gas prices
22% Customers pay a
blended rate for gas
47.6 Bcf
Market
Provides some
54% protection to Atmos’
customer
116.8 Bcf
receivables and
working capital
Hedged
requirements
24%
53.7 Bcf

34

Gas Supply Hedging for Winter 2005-2006

35.0
Billion Cubic Feet (Bcf)

30.0
25.0
Storage
20.0
Futures
15.0
Fixed Forwards
10.0
5.0
0.0
6
5 5 6 6
n-0
v -0 c -0 b- 0 r-0
Ma
Ja
No De Fe
$10.74 Weighted Average Cost of Futures and Fixed Forwards
$ 7.17 Weighted Average Cost of Storage
$ 9.11 Weighted Average Blended Cost of Gas
Hedges Plus Storage = Approximately 46% of Winter Requirements 35


Utility Bad Debt Expense as a % of Revenues Well Below Industry Average

2.0 1.86

2006 estimated bad
1.5 debt expense is $20
Percent

million
Reserve of $10
million was
1.0 0.83 established as of
September 30, 2005,
0.64
0.58
with accruals
0.5 throughout fiscal
0.29 2006

0.0
0.0
2001 2002 2003 2004 2005 2006E
36

Managing Pension, Post-Retirement & Other Benefits Expense

(in millions)

$54.4 Other
$60.0
Medical & Dental
$44.3
$50.0 8.9 Post-retirement
Pension
$40.0 10.0
22.2
$30.0
16.8
$20.0 2006 Assumptions
13.8 8.50% return on plan assets
12.8 5.00% discount rate
$10.0 4.00% wage increase
9.5
4.7
$0.0
2005 2006E
37


Managing Capital Expenditures at the Utility
($ in millions)
$250 $250

$200 $200
$183-189

Depreciation Expense
$52
Capital Expenditures

$174

$150 $150

$90-94
$100 $100

$50 $50

$0 $0
2001 2002 2003 2004 2005 2006E

Non-Growth Growth Depreciation 38

Nonutility Operations

Colorado-Kansas
Colorado-Kansas
Kentucky
Storage (Trading)
Louisiana
Louisiana
Mid-States

Mid-Tex **
Mid-Tex
Other Nonutility
Other Nonutility
Mississippi
Atmos Power Systems
West Texas
39

Business Model
The portfolio of assets that AEM manages is either acquired, leased or results from various asset management
transactions with 3rd parties. Also, transportation and storage assets are contracted for (proprietary). These assets are
utilized to capture value and create commercial opportunities.

Storage Assets Transportation Assets
• Support Customer Marketing
• Optimize Value
(trading to capture (optimize value of capacity)
time and location price differentials)

Proprietary Proprietary
Asset Management Asset Management
• No customer obligation • No customer obligation
• Customer obligation • Customer obligation
• 100% optionality • 100% optionality
• Partial optionality • Partial optionality

Customer Sales Customer Sales
• Full Requirements • Base-load
• Billable Plan • Peaking
• Other • Balancing
40


Trading Arbitrage Opportunities (Storage and Transportation)

Example:
Cash Market to prompt (arbitrage opportunity)

Storage Cash Market = $8.00 / dth
Prompt futures = $8.40 / dth
Capture arbitrage spreads with storage
AEM buys physical at $8.00 and injects in storage
Cash market vs. prompt futures
AEM sells prompt futures at $8.40 / dth
Prompt futures vs. forward futures
Spread captured $ 0.40 / dth
Balance of month cash vs. prompt month
Less: Injection & Storage fees (0.20) / dt
futures
Unit Margin $ 0.20 / dth

Trading Parameters
Transportation
Transportation
Run flat book
Capture arbitrage spreads on pipeline grid
Capture arbitrage spreads on pipeline grid
No speculative trading
Excess transport capacity
Excess transport capacity
Pipeline segmentation
Pipeline segmentation

41

Margin Composition
2006E
Impacted by customer volume demand
Marketing Sales prices are:
Marketing
• Cost plus profit margin $40- $42 Million
(Bundled gas deliveries & • Cost plus demand charges
(Bundled gas deliveries &
peaking sales)
peaking sales)
Margins: More predictable

Impacted by gas price spread values
in the market (arbitrage opportunity)
Trading
Trading $12 - $26 Million
Physical storage capabilities
Available storage and transport
(Storage & transportation
(Storage & transportation capacity
management)
management)
Margins: More variable
=
Total margins reflect:
Stability from marketing margins
$52 - $68 Million
Upside from trading around storage
Total AEM
Total AEM and transportation assets to capture
Margins
Margins arbitrage value

Margins: Stable with potential upside 42

Nonutility Operations

Colorado-Kansas
Colorado-Kansas
Kentucky
Storage (Trading)
Louisiana
Louisiana
Mid-States

Mid-Tex **
Mid-Tex
Other Nonutility
Other Nonutility
Mississippi
Atmos Power Systems
West Texas
43

Ownership of Strategic Asset Base Provides Revenue Growth & Stability

Atmos Pipeline
& Storage

Storage Assets
Pipeline Assets East Diamond Reservoir
2.2 bcf of storage in KY
Atmos Pipeline –Texas
6,162 miles of intrastate pipe
Barnsley Reservoir
in Texas
1.3 Bcf of storage in KY
Trans LA Gas Pipeline
25 % interest in Napoleonville
21 miles of 24” pipe in Louisiana
0.4 Bcf of Salt storage in LA

5 Storage Fields in Texas
39 Bcf of storage

Upstream pipeline services and storage-type services provided to Atmos Energy’s Mid-Tex Division,
affiliates & third parties 44

Atmos Pipeline - Texas
Asset Description
Pipeline transports and stores gas, as well as provides other pipeline
services for distribution, industrial, electric generation, cross haul and
other shippers
Approximately 6,162 miles of intrastate pipeline
•

Total projected transportation volume is approximately 591 Bcf
o

Current average volume of approximately 1.6 Bcf/d.
o

Demonstrated peak day deliveries of 3.5 Bcf/d
o

The Dallas / Fort Worth Metroplex comprises approximately 75%
•
of on-system distribution demand
Five Storage facilities (One salt cavern; four depleted reservoirs)
Working Gas Capacity: 39 Bcf
•
Maximum withdrawal: 1.2 Bcf/d
•
Maximum Injection: 270 MMcf/d
•
45

Project Update

CAPEX GRIP Filings *
Actual Estimated
Project 2005 2006 2005 2006
Northside Loop
JV with Energy $1.6 million $43.4 million $13.0 million $32.0 million
Transfer

Enbridge
---
Line/Corridor $4.0 million $16.0 million $20.0 million
Compression

Devon Line/
Corridor ---- ---- ---- ----
Compression

Katy Capacity ----
Expansion/ $1.3 million $13.7 million $15.0 million
Compression

Total: $6.9 million $73.1 million $13.0 million $67.0 million

Estimated total annual revenues are $15.0 million; of which $6.7 million are expected to occur in fiscal 2006.
* Capital expenditures on a calendar year basis are Included in GRIP filings when the asset is operational 46

Financial Outlook - Nonutility Operations
Net Income by Nonutility Segment

2005 2006E
$55 million $51 - $58 million

$31-$32
$31
$1-$2
$23

$19-$24

$1
AEM AP&S Other AEM AP&S Other

47

Financial Outlook – Consolidated

Earnings Guidance – 2006 Fiscal Year

Atmos Energy expects earnings to be in the range of $1.80 - $1.90
per fully diluted share for the 2006 fiscal year

Base assumptions include:
• Normal weather conditions in non-WNA jurisdictions
• Continued execution of rate strategy and collections efforts
• Irrigation volumes of 4.0 Bcf
• Not less than $11.7 million of storage margin contribution
• No material acquisitions
• Average short-term interest rate @ 4.5 %
• Bad debt expense of no more than $20 million
• Adverse impact of Hurricane Katrina on margin between $10
million and $12 million

48

Financial Outlook - Consolidated
Selected Income Statement Components
($ in millions)
1200

2006E Consolidated
1000 ($ millions)
443-450
O&M $443 - $450
800 D&A $192 - $198
428
Interest $137 - $138
Income Tax $90 - $95
600
Net Income $148 - $156
192-198
178
215
400 205
158 137-138
133
140 97
87
200 82 90-95
82
68 65
64
59
47 52
42 148-156
35
33 136
86
72
60
56
0
01 02 03 04 05 6E
00
20 20 20 20 20 49
2

Net Income by Segment
($ millions, except EPS)

2006E
2004
2003 2005
$ 63
$ 62 $ 81 $ 97 - 98
Utility
17
(1) 23 19 - 24
Natural Gas Marketing
3
7 31 31 - 32
Pipeline & Storage
3
4 1 1-2
Other
86
72 136 148 - 156
Total
54.4
46.5 79.0 82.0
Avg. Diluted Shares
$ 1.58
$ 1.54 $ 1.72 $1.80 - $1.90
Earnings Per Share

50

Capital Expenditures – 2006 Fiscal Year

Utility CAPEX Pipeline & Storage CAPEX
(in millions) (in millions)

$301 $127-$132
$273-$283
$350
$140
$300
$120
37-39
$250
$100
211 183-189
$200
$80
$150 $32
$60
90-93
$100 $40
$50 90 90-94 25
$20
7
$0 $0
2005 2006E 2005 2006E
Maintenance
Growth

Consolidated fiscal 2006 CAPEX projection is $400-$415 million
51

Cash Flow
($ millions)

2003 2004 2005 2006E

$ 49 $ 271 $ 387 $ 393 - 403
Cash flows from operations
(110) (126) (243) (220 - 228)
Maintenance/Non-growth capital
(55) (67) (99) (103)
Dividend

$ 45 $ 70 - 72
$ (116)
Cash available for debt reduction $ 78
and growth projects

Note: The company issued approximately $2.0 billion in debt and equity in 2004. Net
cash proceeds exceeded the TXU Gas purchase price by approximately $56 million (after
$43 million related to Treasury lock obligations) in anticipation of funding significant and
attractive growth projects.
52

Net Liquidity Position Is Solid With Existing Credit Lines*

$1,200 1,034

$1,000 786
661
$800 505
$ millions

214
$600 416 156
529
$400 149 505
574
267
$200

$0
2003 2004 2005 2006E

Atm os Energy Corp. Atm os Energy Holdings

* Subject to internal borrowing strategy and collateral limitations primarily at AEH 53

Financing Activities
Investment Grade Credit Ratings

Moody’s Rating
Senior Unsecured Debt: Baa3
Commercial Paper: P-3
Outlook: stable
Standard & Poor’s
Senior Unsecured Debt: BBB
Commercial Paper: A-2
Outlook: stable
Fitch
Senior Unsecured Debt: BBB+
Commercial Paper: F-2
Outlook: negative

54

Summary
Compelling Valuation

Forward P/E Estimates 5 Year Growth Estimates
12.4
20.0 12.0
18.1

14.9
16.0 9.0
13.8
5.9
6.0
12.0 4.7

3.0
8.0
Peer Group Atmos S&P 500
S&P 500 Peer Group Atmos
Avg. Energy
Avg. Energy

Source: Bloomberg
Companies in the peer group include AGL Resources, KeySpan, Laclede, New Jersey Resources, Nisource, Northwest Natural Gas, Oneok,
Piedmont Natural Gas, Southwest Gas and WGL Holdings.

55

Summary
Company Profile

The nation’s largest pure-gas distribution company
Solid financial foundation
Track record of creating shareholder value
• Consistent earnings growth
• 22 consecutive years of increasing dividends
Focused strategy over time
• Maximize core natural gas utility earnings capability
• Complement core utility business through select
nonutility operations
• Grow through prudent acquisitions

56

Authorized Regulatory Returns

Authorized Regulatory Return on Equity (ROE) by Division *

13.0
12.2 12.0
12.0 11.6
11.3
11.3 11.0
11.0 10.5
10.5-
10.1 10.0
11.5 9.8
10.0
9.5-
Percent

10.5
9.0

8.0

7.0

6.0

5.0
L ck
lo X
LA GA IL IA VA X/P MS aril
CO MO .T
bo
T W
d- b
Am Lu
Mi

Consolidated GAAP Average ROE at 9/30/05 was 9.0%

58
* ROE not stated in state commission’s decision in Kansas, Kentucky and Tennessee

Atmos Energy Marketing - Storage
Storage Trading Margin - Economic Value vs. GAAP Reported Results

Economic Value*
Reported GAAP
Reported GAAP
(Commercial Value)
Value
Value (Embedded Value)
- -Physical and Financial
Physical and Financial
- Physical and Financial
Positions
Positions Positions
($14.8 MM)
($14.8 MM) $13.1 MM
Storage
Trading Margin
Embedded margin
difference
* Realizing Economic Value
$27.9 MM is dependent on ability to
execute – deliver physical
gas & close financial hedges
At September 30, 2005
59

Trading Margin Description
We commercially manage our storage assets by capturing arbitrage value through
optimization strategies that create embedded (forward) value in the portfolio. We
financially report the transactions for external reporting purposes in accordance
with GAAP.

GAAP Reported Value is the period to period net change in fair value of the
portfolio reported in the income statement that results from the process of marking
to market the physical storage volumes and corresponding financial instruments in
an interim period.

Economic Value is the period to period forward margin of our storage portfolio
that results from the process of calculating our weighted average cost of inventory
(WACOG), and our weighted average sales price of our forward financials
(WASP), then multiplying the difference times inventory volumes. This margin will
be realized in cash when the hedged transaction is executed or when financials
are settled and then reset to stay hedged against physical volumes.
Economic Value represents the “forward” economic margin of the transactions, while GAAP
reported results reflect that portion of our “forward” margin that has been recorded in the income
statement.
Volatility in earnings includes the impact of the accounting treatment of our storage portfolio and is
reflective of relatively high price volatility of the prompt month, and the relatively low volatility of the
offsetting forward months.
60

Storage Margin Volatility
(Potential Impact of Change in GAAP Reported Spread Values)
$16.0

$14.0

$12.0

$10.0
($ in Millions)

$8.0

$6.0

$4.0

$2.0

$0.0
5
4 4 5
5
n-0
p-0 c-0 p-0
r-0
Ma
De Ju
Se Se
$.25 Price Move $.50 Price Move $1 Price Move

Sep-04 Dec-04 Mar-05 Jun-05 Sep-05
Storage Volumes:
BCF 5.5 6.4 12.5 14.7 6.9 61

Year Ended September 30
Natural Gas Marketing Segment 2005 2004 Change
(In thousands, except storage balances)

Storage Activities
Realized margin $28,008 ($1,900) $29,908
Unrealized margin (14,007) 357 (14,364)
Total Storage Activities 14,001 (1,543) 15,544

Marketing Activities
Realized margin 59,971 51,347 8,624
Unrealized margin (11,999) (3,173) (8,826)
Total Marketing Activities 47,972 48,174 (202)

GROSS PROFIT $61,973 $46,631 $15,342

Ending storage balance (Bcf) 6.9 5.5 1.4
62


63

Project Update
Northside Loop Agreement – Energy Transfer
Joint Venture with Energy Transfer Fuel to construct and operate approximately 45 miles of 30quot;
pipeline extending from Justin to Frisco, in the northern part of the DFW Metroplex, creating
incremental capacity of 225 MMcf/d.
Initial investment approximately $45 million, contributed over a two-year period with final Atmos
contribution made in April 2006
Justin to Line F segment expected in-service by end of December 2005, remaining segment by
February 2006
Compression is ordered and anticipated to be in-service by March 2006
CAPEX: approximately $1.6 million in fiscal 2005; $43.4 million in fiscal 2006

Enbridge - Line (Corridor Compression Project)
Executed agreement in May 2005 to install compression to enhance re-injection capabilities at Bethel
and to transport up to 100 MMcf/d into Enbridge’s new 36” Carthage pipeline at Bethel.
Start date anticipated early-2006
CAPEX: approximately $4 million in fiscal 2005; $16 million in fiscal 2006.
GRIP eligible in calendar 2006 filing when the line becomes operational

Devon – Line (Corridor Compression Project)
Executed agreement in July 2005 to transport up to 50 MMcf/d into Enbridge.
Start date anticipated early-2006

Katy Capacity Expansion (Compression Project)
Signed agreements in July 2005 with 3 shippers to transport an additional 50 MMcf/d of capacity to
the Katy area.
Project is expected to come online in June 2006
64
CAPEX: approximately $1.3 million in fiscal 2005 and $13.7 million fiscal 2006.

Atmos Pipeline-Texas Project Map

North Side
Loop

Enbridge
Compression

65

Trans Louisiana Gas Pipeline

h
ris

rish
Pa
s
Storage is held on upstream pipelines

Orleans Pa
rl e
ha

h
.C

ris
St

Jefferson Pa
• Bridgeline
• Acadian
• Gulf South Entergy Louisiana
Entergy Louisiana
(TLGP Sales)
(TLGP Sales)
S5,T13S,R20E
Gulf South Pipeline S5,T13S,R20E
Gulf South Pipeline
S48,T13S,R21E
S48,T13S,R21E Atmos Energy Louisiana
Atmos Energy Louisiana
S5,T13S,R23E
S5,T13S,R23E

Acadian Gas Pipeline
Acadian Gas Pipeline
S48,T13S,R21E
S48,T13S,R21E

AEL 18”

TLGP 24”

Bridgeline Gas
Bridgeline Gas
(Paradis)
(Paradis) TLGP 16”
S39,T14S,R20E
S39,T14S,R20E Future Interconnect
Future Interconnect
Columbia Gulf
Columbia Gulf
S24,T13S,R23E

TLGP Pipeline
TLGP Pipeline
B’line 14”

October 26, 2001

N

Metropolitan New Orleans Area
Metropolitan New Orleans Area 21 Miles of 24” TLGP Pipe W E
.95 Miles of 12” TLGP Pipe
TLGP Transmission // TLGP Sales Points
TLGP Transmission TLGP Sales Points
66
S

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