Susan Giles - Vice President Investor Relations Bob Best - Chairman and CEO Fred Meisenheimer - Senior Vice President and CFO Kim Cocklin – President & COO

James Lykins - Hilliard Lyons Ted Durbin – Goldman Sachs Barry Klein – Citigroup Vedula Murti - CDP US

This call is open to the general public and media, but designed for analysts. It is being webcast live over the internet.

We have placed slides on the website that summarize our financial results. We will not review them in detail but we will take some questions on them at the end of our remarks.

If you would like to access the webcast or slides, please visit our website at www.AtmosEnergy.com and click on the conference call link. Our speakers today are Bob Best, Chairman and CEO and Fred Meisenheimer, Senior Vice President and CFO.

There are also other members of our leadership team here to assist with questions as needed. As we review these financial results and discuss future expectations, please keep in mind that some of our discussion might contain forward looking statements within the meaning of the Securities Act and the Securities Exchange Act.

Any forward looking statements are intended to fall within the Safe Harbor rules of the Private Securities Litigation Reform Act of 1995. Now I’ll the call over to Mr.

Bob Best.

Yesterday we reported earnings of $2.08 per diluted share an increase of 4% from last year again meeting our commitment to deliver average annual earnings per share growth in the 4% to 6% range. However, if you exclude the impact of the mark to market accounting and the impact of our one time items our base line earnings per share were $2.12 for fiscal 2009.

Our regulated operations contributed 83% of total net income while the non-regulated operations contributed the remaining 17%. Our debt capitalization ratio improved to 54.7% at the end of fiscal 2009 compared with 54.6% one year ago.

This metric remains a top priority as we strive to preserve our debt capitalization range of 50% to 55% while maintaining solid investment grade credit ratings. Yesterday our Board of Directors declared our 104th consecutive cash dividend and raised the dividend $0.02 bringing our indicated annual dividend for fiscal 2010 to $1.34 per share.

Now I’m going to ask Fred to review the financial drivers for fiscal 2009 and then I’ll return for closing comments and then we will take your questions.

Since the quarter is really a shoulder period for us, my remarks will focus on the fiscal year and then I’ll review earnings guidance for fiscal 2010. As Bob mentioned, fiscal 2009 included some positive one time items that we’ve discussed with you throughout the year.

These items totaled $17 million of net income or $0.19 per diluted share, as detailed on your slide 51 in your conference call slide deck. Our consolidated results were negatively impacted by the mark to market accounting treatment required by GAAP.

Fiscal 2009 had an unrealized net loss of $21.6 million or -$0.23 per share shown on slide 52 but as you know, unrealized margins are temporary and should reverse in future periods. The elimination of both the one time items which totaled $0.19 per diluted share and the mark to market accounting treatment which totals $0.23 per share will result in fiscal 2009 earnings of $2.12 per diluted share as Bob said.

Like many of the companies in our sector, our business was impacted by the economic conditions experienced in fiscal 2009 which contributed to the general decline in sales and transportation through put. The real story for the year is incremental improvement from rate increases and rate design enhancements in the distribution business which increased margin by about $30 million.

We also had the ability to earn higher per unit margins on our regulated Texas intra-state pipeline and in our non-regulated gas marketing business. Due to prior planning and the diversified contract portfolio enjoyed by Atmos Pipeline Texas the revenue stream was insulated on about 56% of fiscal 2009 through system transportation revenues.

We expect to be insulated on about 67% of our 2010 budgeted through system transportation revenues. We successfully executed multi-year demand based contracts for producers and marketers at a time when basis differentials were more robust.

Lease agreements run through 2011. The non-regulated gas marketing business experienced delivered gas margins of $0.17 per Mcf which offset the 5% decline in sales volumes which were primarily associated with the industrial margins.

Margins benefited from robust year over year basis gains and continued practice of closely monitoring the credit worthiness of our customer base. Although the marketing business records some sizeable unrealized losses, over $37 million of realized margins were generated in storage and trading business.

This was the result of the unrealized gains captured in fiscal 2008 that were realized primarily in the first quarter 2009. As natural gas prices have continued to trend downward throughout fiscal fourth quarter we have been a net storage injector and have reset our financial hedges to enhance the economic value of our storage book in fiscal 2010.

At September 30, we had $28.6 million of economic value which is expected to be realized in March, its primarily in the fiscal and second quarters of 2010. At the macro level, lower natural gas demand translated to lower natural gas prices.

Our average cost of gas at the utility was 23% lower then the previous year. These lower prices reduced our bad debt expense from $16 million last year to just $8 million this year and helped to drive the $548 million increase in our operating cash flow.

On the expense side our focus on conserving cash kept O&M excluding bad debt expense flat year over year. Interest charges increased $15 million or 11% from a year ago.

About $7 million of that increase can be directly tied to replacing of the $400 million 4% notes with $450 million of 8.5% notes in March/April timeframe. The remaining increase is due to the tightening of the credit markets beginning last fall which made it more expensive to access the capital markets.

As a result we experienced higher commercial paper rates and higher commitment fees on our lines of credit. We also experienced higher average short term debt balances particularly during the first fiscal quarter 2009.

At September 30 last year we had about $350 million in short term debt at a weighted average cost of just over 3.5% with only $20 million of commercial paper placed, while the remainder was drawn directly from our five year revolver. Fast forward to September 30 of this year where we had just $73 million of short term debt all placed in the CP market at a rate of just a quarter of 1%.

Of course, since we received upgrades by both Moody’s and S&P we’re in certainly better position to access the capital markets to satisfy our liquidity requirements on more economical terms. It is also important to mention that all our financing costs are placed into rates as quickly as possible.

After we did the refinancing in March we went to several of our jurisdictions and updated our outstanding filings to adjust for the incremental debt costs we would be incurring this year. Capital expenditures for fiscal 2009 rose about $37 million to about $510 million mainly due to $33 million in capital spend on line BP extension project at Atmos Pipeline Texas.

As you recall this was placed into service in June of this year and we expect the capital expenditure to be eligible for grip recovery in fiscal 2010. Moving now to earnings guidance for fiscal 2010.

We’ve announced our fiscal 2010 earnings per share guidance of $2.15 to $2.25 per diluted share. The guidance range assumes no material mark to market impact at September 30, 2010.

As you can understand we have no way of determining what the mark will be until the end of our fiscal year. Let me draw your attention to slides 41 and 42 where we have outlined our budget assumptions and net income by segment for fiscal 2010.

Some of the assumptions of the underlying budget include continued successful execution of our rate strategy and collection efforts. Over the next three year horizon we project operating income increases of about $50 to $60 million annually from our rate outcomes.

Marketing margins of between $95 and $105 million again with no material impact from mark to market of our fiscal storage and offsetting financial hedges. We’re projecting asset optimization margins of $23 to $25 million assuming gas price time spreads spot to forward spreads of about $2.00 per Mcf.

Storage demand fees of about $10 million and index minus deals of between $4 and $6 million on about 18 to 20 Bcf of storage. Average gas costs ranging from $6.00 to $8.00 per Mcf for the winter purchases and summer gas prices of about $5.00 per Mcf for refilling storage.

We’re assuming short term interest rates at the level of about 1.5% as the result of stronger credit ratings the return of more stable credit market. No material acquisitions and limiting our bad debt expense to no more then $9 million.

Let me make you aware that our historical presentation of CapEx on slide 47 has changed and is split between maintenance capital and growth capital has been revised. In the past our definition of regulated growth capital was limited to capital that generated incremental margin through metered growth and metered growth only.

We found we were applying to narrow when compared to our peers so going forward we’ve broadened our definition of regulated growth capital to include all capital expenditures that add to rate base which ultimately drives regulated margin growth. In a regulated business, growth capital equals capital spent in excess of depreciation.

Because we have rate mechanisms in place if we project will allow us to recover about 86% of our capital on accelerated basis and when you factor in our timely filings we expect to have all of about 4% of our budgeted 2010 regulated capital in rate base and earning on that 12 months of capital outlook. Regulated maintenance capital equals depreciation expense.

We’re projecting between $520 and $535 million of capital expenditures in fiscal 2010. Of that, regulated CapEx is projected to be between $507 and $520 million and non-regulated CapEx is projected to fall between $13 to $15 million.

No capital is budgeted for Fort Necessity in fiscal 2010. We continue negotiations for a potential buyer, however, market conditions are not favorable.

Overall, low gas prices of summer/winter spreads are influencing the value of storage which impact the potential returns a buyer would require. We are actively pursuing a reasonable outcome and we’ll update you with any material developments when appropriate.

That concludes my remarks. Once gain here’s Bob.

I’ll make a few final comments and then we’ll be glad to take your questions. In fiscal 2009 we were able to overcome challenging economic times both financially and operationally to deliver our earnings results.

Not only did we increase our earnings, we improved our debt to capitalization ratio, reached positive outcomes in the regulatory arena, and completed the line BP extension project on the Atmos Pipeline Texas System. We will continue to emphasize blocking and tackling fundamentals to reach our financial goals as we move into the future.

We continue to access the commercial paper markets on very reasonable terms. Our credit and liquidity positions are strong, aided in part by the two upgrades we received in fiscal 2009 by S&P and Moody’s.

We have witnessed a financial situation we remain poised to take advantage of acquisition opportunities which could provide us earnings growth. We recognize that growth along with consistency and predictability are important as we move into fiscal 2010.

This covers our highlights for the year. I want to mention before we open it up for questions that yesterday our Board elected Kim Cocklin our President to the Atmos Board of Directors.

With that we’ll now turn it back the operator and questions.

A couple of questions about Fort Necessity if you could give us any idea about the timing of the negotiations or is there any chance of this moving forward or are you just looking to sell at this point?

We’ve said publicly before that as we’ve looked at our capital needs for the longer term and as Fred outlined this morning we felt like it wouldn’t be with all the other capital requirements we have on our system that it would probably be better for someone else to develop that story. Secondly we’re not in the storage development business so again thought that it would be better for us to not go forward with the expenditures that we would have to make to develop the storage.

We’re continuing to negotiate, we don’t have anything to announce today. We remain hopeful that we would be able to reach agreement and sell the Fort Necessity property.

I know you can’t comment specifically but if you do go forward with the sale of Fort Necessity are there some other storage projects that you might be looking at or do you think you might focus on pipeline. If you could give us any kind of feel for what type of projects to maybe expect over the next year or so or what the next catalyst might be.

We would not intend to be in the storage development project business. Our focus is going to be mainly on our pipeline, we’d still feel longer term because of where we’re positioned in Texas in the shale area that there’s going to be some good opportunities for project development there.

As well as focusing on our other utility business where I think we still feel particularly in the Metroplex in Dallas that as housing industry comes back that we’ll have some good growth in our residential market. Right now its fairly stagnant but we feel confident long term that that will be growth engine for us too.

Is there anything else out there that you’re looking at now for what could be next with rate design?

Our concentration really for a very long time now has been on insulating our sales from weather and also getting bad debt and our rates to the extent that we’re allowed to and I think we’ve done that to over 60% of our customer base. Also, working on de-coupling and frankly working on mechanisms that allow us.

In our three largest states the mechanisms that Fred described to you allow us to make our recoveries on a very timely basis. That’s really been a focus for us so that as we spend this capital we don’t have huge lags.

Those are the things that we’ll continue to work on but in Louisiana, Texas, and Mississippi we have very good rate design mechanisms. Frankly in weather normalization the only large state of our 12 states that we don’t have weather normalization would be Colorado and we really don’t need it there.

We’re better off without it.

We feel like we’ve done a very good job in the rate arena over the last three years and obviously our focus has been on trying to reduce lag and improve margin recovery and we’ve done it, as Bob said, through WNA and bad debt through gas costs trackers and increasing the recovery of fixed costs or customer demand charges. That all is going to continue to move forward and we follow the rule that we’re going to partner up with our regulators, particularly in difficult economic times and we feel like that they’ve understood where we’re going , why we’re trying to go where we’re going.

We’re going to continue to do that and obviously the biggest issue we have is the level of the return that we’re awarded and have the opportunity to pursue and earn. That’s what we’re working on right now.

Where the economy is there’s you get some support for that but we’ve got, as we’ve indicated, somewhere between $15 and $20 million of what we’re earning and what we could earn if we reached the realized returns that we’ve been provided in the rate levels. Lag is a huge issue but at the end of the day we’re regulated with utility, we’re comfortable with this business and our focus is on reducing all the lag that we can, we’ve done a good job in improving the returns and getting a regulated return that is competitive in the marketplace to attract the necessary capital we need to grow the business.

I had a question on your guidance for 2010 for the distribution segment. I’m realizing that you had a few one time items in 2009 that probably won’t repeat.

Maybe a little bit more color on why you see the numbers coming down on a year over year basis?

Are you referring to a specific page?

Page 42 the $117 million of net income in 2009 now your new guidance is $109 to $113 million. I’m trying to get a sense of the different drivers that are moving things.

We had a tax benefit that we had this year that was a one time item. We had a total of $17 million of one time items, $11 million of which was due to the tax on the deferred tax a 1% change there.

That is really a big item that will go away next year, we can’t count on that tax item for next year. That’s really the difference.

There are higher costs, you have all the rate mechanism where you’ll get the automatic trackers and what not. I’m trying to figure out what else is in that number.

We’re basically have flat O&M, costs are not going up, some benefit type costs pension related type things always go up somewhat. We tend to manage and try to offset those through managing our O&M costs.

Really the difference in the business is the $17 million of one time items.

Those are mostly attributable to utility?

Yes they are.

You mentioned the interest dates business and how you had I think it was 60% with volume protected in 2010. How does that look in 2011 as you get out there with those contracts, how much rolls off in ’11?

Contracts that we have will be expiring in the year 2011. They were three year deals that we negotiated and so they do go into 2011 but the current contracts expire at that point.

The utility CapEx it looks like its bumping up next year on a year over year basis. What’s behind that, are you expecting a lot more customer growth or is there some AMI in there what in the numbers?

This year we had the $33 million at Atmos Pipeline in Texas on the line BP, the Austin lateral, that’s been completed and so that will be an item going away. We spent a good bit of money this year also in our Mid-Tex division on pre-net risers that will be money going away.

We have about $40 million of three significant size projects in the pipeline business replacing some compression and dehydration units, there’s three projects there that total about $40 million that will be new for next year. We also are putting in a new data center here in the Dallas area for our system, that’s in the neighborhood of $9 or $10 million type expenditure next year.

Then we are also building a new service center training facility here in the Dallas area that’s in next year’s budget that also will be in the $9 to $10 million range. That basically is what gives rise to the increase in capital for next year.

The dividend you took 1.5% EPS was up more then that. How are you thinking about your payout ratio and the dividend has only gone up 1% to 2% a year for the last couple year.

Where are you thinking you want to do with that over the next few years?

Its been higher then what we wanted or we saw in our peer group. If you look back year over year you’ll see it going down about 2% per year.

This year ’09 our payout ratio is like 63%. If we hit the middle of our budget next year we would come in with about a 61% payout ratio.

We are on the lower end of our desired range we want to be in the low 60% range. We believe we now have that dividend down where we want it.

Going back to a question on Fort Necessity you mentioned that you didn’t want to develop any more storage. Whatever you do with the Fort Necessity project would that be something that you might be able to lease some capacity for the marketing division to take advantage of that on the marketing side?

Yes, they’re going to be looking for a home for that capacity obviously. There was an open season conducted prior to the application that we filed at the FDRC that issued the certificate.

Our marketing group did submit a nomination. Yes, its an opportunity.

As Bob indicated while we won’t be into storage development business we continue to grow our market and we continue to have the need to manage supply for a number of our deregulated customers and our non-regulated customers. We always are looking for market priced storage that we can contract for.

With big declines in industrial margins in 2009 what do you expecting in your guidance for these volumes in 2010? Do you expect flat, up, down?

They’re basically flat. We’re seeing some gradual improvement but we’re still thinking its going to be closer to being flat.

With regard to the utility CapEx the last caller was talking about, will that be concentrated in any service areas? Will it basically, you were mentioning some things about Texas, do you think most of the growth will be concentrated in the Mid-Tex service area?

Yes it will be in the Texas area. We concentrate in those area where we get quicker rate relief on our capital expenditures and try to manage that as best we can.

On the earnings next year, incremental pension in 2010 should we expect any significant incremental pension expense and any significant pension contributions?

As far as expense goes, no, no big incremental expense. For the funding requirements as you know we’ll have to look at on January 1st.

This past January when we looked at it we elected to fund it to 94% rate and put $21 million in the pension plans. They have improved considerably this year and improved at an accelerating rate in the third calendar quarter, the quarter just ended September 30 we saw a dramatic improvements in the market and so the market values have improved dramatically.

Interest rates have come down so discount rates have come down but the markets have more then offset that from what we’re seeing at this point in time. We will have to look at it January 1st and do an evaluation to see what, if any, funding requirements would be.

With regard to the operating cash flow guidance of about $350 million but if you add the net income and D&A it looks like its over $400 million and expected cash flow. Is this a consequence of negative impacts on working capital from the higher gas prices or is this something else that brings me from the over $400 million down to the $350 million?

Its the low gas prices that we’ve had have contributed to our improved cash flow and of our increase $500 plus million in our operating cash flow, $360 to $370 million of that we attribute to the decrease in the gas prices and improvements in receivables, payables and inventories.

You mentioned the regulatory maintenance CapEx level. What is the true maintenance CapEx level assuming that you have no growth projects?

We don’t look at it that way. We look at all capital basically is growth capital because we do get it into rates immediately, within 12 months all but about 4% goes into rates within 12 months that’s because of where we spend it, the rate mechanisms that we have and then the time on this with which we file rate cases where we don’t have the annual mechanisms.

We get virtually all of our capital into rates within 12 months period and so we consider it all growth capital.

Its investment, its capital investment. That’s what we continue to drive.

I talk and educate folks on it. Whatever we do from a capital investment standpoint goes to increase the rate base which is really the earnings engine upon which we generate margins.

We increased the rate base we could increase our margins and that’s why we have the $50 to $60 million of assumed rate margin coming in over the next three years on an average annual basis. That’s going put us in the capital appetite range for the regulated businesses about $500 million a year.

You think that over at least the medium term you think that we could expect capital expenditures in that $500 million.

Yes.

To follow up a little bit in terms of the ongoing capital expenditures given to your modest payout ratio and balance sheet is there any reason to consider over the next two years that any equity will be required?

No, we don’t foresee any need for any equity in the next couple of years. Under our capital spending that we have and the cash generation that we do we don’t have other needs for cash, we don’t have any debt coming due until 2011 and then we don’t have any more after that until 2013.

We believe that we will be able to fund everything that we need here internally.

Obviously the target cap structure is about $45 or $55 and that’s driven a lot by the regulations with the states. If they don’t recognize or don’t want to reward a real thick equity structure.

Just a reminder that a recording of this call is available for replay on our website through February 2nd. Also we will be hosting a live webcast next Thursday, November 19th beginning at 12:15 Eastern to provide a more in depth review of our financial performance in 2009 and our key strategies for maximizing value in fiscal 2010.

You will be able to access the webcast on our website at www.AtmosEnergy.com We appreciate your interest and thank you for joining us.