12-27-2011, 09:20 PM
Hi Friends,
Here is some I have written on ATPG in the past. It is on my rarely updated website, but the comments are still relevant.
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ATP Oil & Gas (ATPG) (Oct. 10 - 8.53/share) : This is a highly leveraged, deep value play with highly technically competent managment. Also, note that this firm is a developer of properties, not an exploration firm, something the market does not appreciate in my opinion. After being greatly harmed by the financial crisis and Macando well leak in the Gulf of Mexico ATPG is finally back up to full spead and with a PV 10 of $5.8 billion USD based on SEC Pricing (Market cap ~500 million USD), with $2.3 billion USD in net debt, $1 billion in infrastructure. Currently, drilling 4th well at Telemark after which the firm should be FCF even/ slightlypositive and after hooking up the pipeline for the Clipper find they will be securely ahead. The big came changer is their Cheviot asset in the North Sea. ATPG picked it up cheap, as they always do, after other producers were unable to handle the high water content. So they specifically designed and are building the Octabuoy to handle such. Cheviot has 39.0 mmboe proven and 17.0 mmboe probably (65% oil) and is expected to be online 2014. Due to convertible dilution above 27.5, which was raised by management's call option purchase, I say sell the Jan 2013 calls for around 0.90, nice yield for the current pricing. Also, insiders have been buying.
ATP Oil & Gas (Nov. 14 - 5.69) recently underperformed due to underperformance from one of their Telemark wells. Without too much detail, the well came in about half the rate initially anounced because the sand was much finer then what was expected requiring the well to be throttled to have the initial 7,000 boepd to avoid damaging the gravel pack. The reserves are expected to stay the same, but at a slower rate. They could drill a second well from Mods 202 rig on the Titan platform, which is much cheaper than a drilling ship, but still a negative due to time and costs. I expect they will get Titan maxed out (25k bopd) and if needed they could always sell/partner on Cheviot to cover costs. However, if oil prices drop dramatically and stay down then the firm would fold, but this is nothing new, this time the market was greatly disappointed. Based on the large recent decline, excellent assets and management, I believe it is a nice speculative play at the current price.
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Hope this helps.
Best,
Sam
Here is some I have written on ATPG in the past. It is on my rarely updated website, but the comments are still relevant.
----------------------------------
ATP Oil & Gas (ATPG) (Oct. 10 - 8.53/share) : This is a highly leveraged, deep value play with highly technically competent managment. Also, note that this firm is a developer of properties, not an exploration firm, something the market does not appreciate in my opinion. After being greatly harmed by the financial crisis and Macando well leak in the Gulf of Mexico ATPG is finally back up to full spead and with a PV 10 of $5.8 billion USD based on SEC Pricing (Market cap ~500 million USD), with $2.3 billion USD in net debt, $1 billion in infrastructure. Currently, drilling 4th well at Telemark after which the firm should be FCF even/ slightlypositive and after hooking up the pipeline for the Clipper find they will be securely ahead. The big came changer is their Cheviot asset in the North Sea. ATPG picked it up cheap, as they always do, after other producers were unable to handle the high water content. So they specifically designed and are building the Octabuoy to handle such. Cheviot has 39.0 mmboe proven and 17.0 mmboe probably (65% oil) and is expected to be online 2014. Due to convertible dilution above 27.5, which was raised by management's call option purchase, I say sell the Jan 2013 calls for around 0.90, nice yield for the current pricing. Also, insiders have been buying.
ATP Oil & Gas (Nov. 14 - 5.69) recently underperformed due to underperformance from one of their Telemark wells. Without too much detail, the well came in about half the rate initially anounced because the sand was much finer then what was expected requiring the well to be throttled to have the initial 7,000 boepd to avoid damaging the gravel pack. The reserves are expected to stay the same, but at a slower rate. They could drill a second well from Mods 202 rig on the Titan platform, which is much cheaper than a drilling ship, but still a negative due to time and costs. I expect they will get Titan maxed out (25k bopd) and if needed they could always sell/partner on Cheviot to cover costs. However, if oil prices drop dramatically and stay down then the firm would fold, but this is nothing new, this time the market was greatly disappointed. Based on the large recent decline, excellent assets and management, I believe it is a nice speculative play at the current price.
-------------------------------------------
Hope this helps.
Best,
Sam