Atmos Energy and Energy Transfer Agree to Build Natural Gas Pipeline To Serve Northern D-FW Metroplex.

DALLAS -- Atmos Energy Corporation (NYSE:ATO) said today that it has entered into a letter of intent with Energy Transfer Partners, L.P., to jointly construct, own and operate a large-diameter natural gas pipeline in the northern portion of the Dallas-Fort Worth Metroplex.

Named the North Side Loop (NSL), the project will consist of approximately 45 miles of 30-inch pipeline from Atmos Energy's Line W near Justin, Texas, in Denton County to a point near Frisco, Texas, in Collin County. The NSL will interconnect with both Atmos Energy's and Energy Transfer's existing pipeline systems in Collin County.

"Adding this natural gas pipeline will help Atmos Energy deliver reliable and reasonably priced natural gas supplies to one of the fastest-growing consumer markets in the United States," said Robert W. Best, chairman, president and chief executive officer of Atmos Energy Corporation. "In addition, the NSL pipeline will add needed transmission capacity to serve natural gas producers and shippers in the Texas intrastate wholesale gas market."

Best said the project will address present and future operational needs to meet customer growth in the area. It also will benefit Texas by increasing access for customers to Texas gas supplies and contributing associated economic benefits to the state and local communities.

Energy Transfer will provide the initial capital to build the project, and Atmos Energy will contribute its share of capital within two years of signing a definitive agreement.

The NSL is planned to be in service by December 31, 2005, with an initial capacity of 200,000 million Btu (MMBtu) per day. With additional investments, the line can be expanded to 500,000 MMBtu per day. The two companies plan to have contractual commitments with shippers by the time the NSL is completed and plan to construct associated pipeline facilities to connect new natural gas production to the pipeline.

Forward-Looking Statements

The matters discussed in this news release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this news release 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 news release 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 news release, including the successful integration of 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, 2004. 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.

Atmos Energy Corporation, headquartered in Dallas, is the largest natural gas-only distributor in the United States, serving about 3.1 million utility customers. Atmos Energy's utility operations serve more than 1,500 communities in 12 states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy's nonutility operations, organized under Atmos Energy Holdings, Inc., operate in 18 states. They provide natural gas marketing and procurement services to industrial, commercial and municipal customers and manage company-owned natural gas storage and pipeline assets, including one of the largest intrastate natural gas pipelines in Texas. For more information, visit www.atmosenergy.com.

Energy Transfer Partners, L.P., is a publicly traded partnership owning and operating a diversified portfolio of energy assets. The partnership's natural gas operations include approximately 7,750 miles of natural gas gathering and transportation pipelines with an aggregate throughput capacity of 4.2 billion cubic feet of natural gas per day, with natural gas treating and processing assets located in Texas, Oklahoma, and Louisiana. The partnership is the fourth-largest retail marketer of propane in the United States, serving more that 650,000 customers from over 300 customer service locations in 31 states, extending from coast to coast, with concentration in the western, upper Midwestern, northeastern, and southeastern regions of the United States.