"The Wall Street Journal": ATP, which is a partner in the Shimshon license, could file for bankruptcy protection within days.
"The Wall Street Journal" quotes sources that ATP Oil & Gas Corporation (Nasdaq: ATPG) could file for bankruptcy protection in the coming days, and that the company was in discussions with senior creditors on Friday on the terms of a $600 million loan to keep the company running during bankruptcy proceedings. ATP is a partner with Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) in the offshore Shimshon license, which was officially declared a natural gas discovery earlier this month.
The Shimshon license, located 90 kilometers northwest of Ashdod, has a best estimate of 2.3 trillion cubic feet (TCF) of natural gas with a 20% geological probability of success. The well's production tests produced 39.08 million cubic feet of gas and 9.3 million barrels of condensate, at an average rate of 22.7 million cubic feet of gas a day. The probability of success is lower than for the Tamar Sands formation, and the quantity of gas is just over a quarter of the 9 TCF Tamar discovery.
After Wall Street closed on Friday, the company notified the US Securities and Exchange Commission (SEC) that it would be late in filing its financial report for the second quarter as it was “unable to determine whether or not there will be any significant changes in its results of operations from the quarter ended June 30."
ATP chairman T. Paul Bulmahn founded the company in 1991. It produces oil and gas in the Gulf of Mexico, the Mediterranean Sea, and the North Sea. It often invests in properties that have been proven to hold oil and gas but have been cast off by larger explorers eyeing larger projects. That strategy is intended to take some of the chance out of offshore exploration, but the business of tapping the ocean floor for oil and gas is fraught with risk. In deep water, where ATP often operates, a single well can cost hundreds of millions of dollars.
"The Wall Street Journal" says that ATP was hurt by the Gulf of Mexico drilling ban enacted in response to 2010’s deadly Deepwater Horizon disaster. Analysts late last year began to predict that ATP would run out of money this year as it grappled with delays and increased costs at its deep-water Gulf projects. Too free up cash, ATP renegotiated payment to a key manufacturer in China, sold convertible preferred shares, delayed some projects and arranged to pay vendors using royalties from its wells rather than up-front cash, according to a securities filing.
This summer, however, ATP suffered new operational setbacks at a Gulf of Mexico platform and a deep-water well in the Mediterranean Sea. Then, in early June ATP hired a new CEO, former Dynamic Offshore Resources LLC chief Matt McCarroll, only to see him leave, and rescind a purchase of 1 million shares, a week later.
Published by Globes [online], Israel business news - www.globes-online.com - on August 12, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
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