ATP Oil & Gas Corporation (NASDAQ:ATPG) today released 2011
financial results and an operations update.
Results of Operations
Revenues from oil and gas production were $687.2 million in 2011
compared to $438.0 million in 2010, an increase of 57%. Increased
revenues were attributable to increased production volumes and
higher oil prices. Production in 2011 was 9.0 million barrels
(Bbls) of oil equivalent (MMBoe), 68% oil and condensate compared
to 7.7 MMBoe, 58% oil and condensate in 2010, an increase of
17%.
Revenues were $177.7 million in fourth quarter 2011 compared to
$141.7 million in fourth quarter 2010. Increased revenues were
attributable to higher oil prices and a $3.1 million benefit for
royalty relief related to 2010 production.
Production in fourth quarter 2011 was 2.3 MMBoe. Excluding 0.1
MMBoe related to royalty relief, fourth quarter 2011 production was
2.2 MMBoe, 70% oil and condensate compared to 2.3 MMBoe, 67% oil
and condensate, in fourth quarter 2010. The decrease was primarily
attributable to a natural decline in ATP’s producing wells over the
preceding 12 months.
Lease operating expense for fourth quarter 2011 was $20.4
million compared to $43.1 million in fourth quarter 2010. The
decrease was primarily related to nonrecurring workover expenses,
which were $0.3 million in fourth quarter 2011 compared to $20.1
million in fourth quarter 2010. General and administrative expense
was $9.8 million in fourth quarter 2011 compared to $15.7 million
in fourth quarter 2010. The decrease was primarily a result of
decreased compensation-related expense. Interest expense in fourth
quarter 2011 was $76.5 million compared to $76.0 million in fourth
quarter 2010.
For fourth quarter 2011, ATP recorded a net loss attributable to
common shareholders of $28.5 million or $(0.56) per basic and
diluted share compared to a net loss of $206.6 million or $(4.06)
per basic and diluted share in fourth quarter 2010. The net loss
attributable to common shareholders for fourth quarter 2011 and
2010 was impacted by items analysts sometimes exclude from
published estimates. For fourth quarter 2011, those items included
an impairment expense of $11.9 million, a gain on exchange/disposal
of properties of $26.0 million and unrealized losses of $41.6
million on derivatives contracts. For fourth quarter 2010, the
items included an impairment of $48.2 million, an expense of $14.9
million related to direct costs associated with the moratorium on
deepwater drilling in the Gulf of Mexico, an unrealized loss on
derivatives contracts of $34.1 million and the establishment of a
valuation reserve for ATP’s deferred tax assets of $94.8
million.
Cash provided from operating activities in fourth quarter 2011
was $68.5 million compared to a use of cash of $40.0 million in
fourth quarter 2010, a positive swing of $108.5 million.
At year-end 2011, ATP’s dollar-denominated limited-term net
profits interests (NPI’s) and dollar-denominated overriding royalty
interests (ORRI’s) amounted to $379.0 million, a decrease from
$388.0 million in third quarter 2011. ATP made payments to NPI and
ORRI holders of $52.4 million during the quarter. The decrease was
partly offset by the sale of a new $15 million ORRI with an
existing investor and by additions to the balance of certain ATP
suppliers for work on the Clipper wells (Green Canyon 300 #2 and
#4). The suppliers for these wells carried a significant portion of
drilling costs with the intent to recoup them through NPI’s in the
future. With the completion of the Clipper wells, ATP does not have
any future agreements to enter into NPI’s or ORRI’s with its
vendors. In the first quarter 2012, ATP expects NPI and ORRI
payments to increase from fourth quarter 2011 due to increased
production revenue and the effect of new NPI and ORRI transactions
with investors.
The following schedule summarizes ATP’s NPI and ORRI activity
during fourth quarter 2011.
Summary of Fourth Quarter 2011 NPI and ORRI
Activity (In Thousands) (Unaudited) NPI
and ORRI balance as of September 30, 2011 $ 388,017 Additions
related primarily to Clipper development 14,939 Addition for
incremental override 14,995 Interest accretion 13,395 Payments to
NPI and ORRI holders (52,353 ) NPI and ORRI balance as of
December 31, 2011 $ 378,993
Since year-end 2011, ATP has closed $85 million in NPI and ORRI
sales, including a $20 million sale that closed today. ATP expects
to raise an additional $100 million from an asset sale transaction
that is expected to close by the end of March 2012. In addition,
ATP has executed and allocated a $155 million expansion of its
first lien credit facility and anticipates drawing the funds after
the filing of ATP’s 2011 annual report on Form 10-K. Combined with
net cash advances from commodity hedging contracts, ATP expects to
have raised over $350 million in additional liquidity during first
quarter 2012 by quarter end.
Reserves
ATP reported year-end 2011 proved reserves of 118.9 MMBoe
compared to 126.4 MMBoe at year-end 2010. ATP reported proved and
probable reserves of 194.4 MMBoe at year-end 2011 compared to 211.3
MMBoe at year-end 2010. The changes were primarily a result of
production of 9.0 MMBoe in 2011 and revisions to oil and gas
reserves. On a Boe basis, ATP reported that oil and natural gas
liquids (NGLs) represent 66% of year-end 2011 proved reserves and
65% of proved and probable reserves compared to 59% and 58%,
respectively, at year-end 2010.
ATP reported a year-end 2011 SEC pre-tax PV-10 value of $4.2
billion for proved reserves and $7.3 billion for proved and
probable reserves compared to $2.6 billion and $4.8 billion,
respectively, at year-end 2010. This increase is primarily a result
of pricing, but other factors include timing and an increase in oil
and NGL reserves.
ATP will post to its web site the independent engineers’ letters
that accompany the reserve reports by March 16, 2012.
Production and Operations
Update
Production for first quarter 2012 is expected to fall within the
range of 1.8 – 2.1 MMBoe. The Mississippi Canyon (“MC”) 942 A-3
(#2) well, the fourth well at ATP’s Telemark Hub, began production
in late February 2012. ATP continues to see positive results from
this well. For part of the first quarter, ATP has been required to
temporarily shut in production at the Telemark Hub’s MC 941 A-1 and
A-2 wells due to rig moves, workovers and required safety
precautions. ATP is recompleting the MC 941 A-2 well, which
requires ATP to shut in the well while an additional oil sand, the
B sand, is completed. The completion operation is expected to lead
to a substantial increase in the well’s productivity beginning in
second quarter 2012. Upon completion of this operation, ATP also
intends to complete a sleeve shift operation at the MC 941 A-1
well, which is expected to add approximately 1.5 MBoe per day to
production beginning in second quarter 2012.
Capital spending for 2012 includes ongoing expenditures related
to ATP’s Telemark Hub described above and the completion of the
Clipper pipeline targeted for completion in late third quarter or
early fourth quarter 2012. Once installed, this pipeline will
connect the two Clipper wells to a host platform. The wells were
completed and tested at a combined rate of 16 MBoe per day, net to
ATP, in 2011. Other 2012 capital spending projects include
continued construction of the Octabuoy floating production platform
which will serve the Cheviot project, additional wells late in 2012
at the Gomez field and ATP’s first well in the deepwater offshore
Israel area.
ATP expects to fund these projects through cash flow and
additional sources of liquidity already announced or planned, such
as the expansion of its first lien and selection of partners to
join in property developments.
Hedging Update
A detailed hedging contracts schedule is provided near the end
of this press release. During fourth quarter 2011 and first quarter
2012, ATP continued to add crude oil swaps for 2012 and 2013
volumes. In addition to standard swaps, ATP entered into a crude
oil prepaid swap transaction during fourth quarter 2011 for 146,400
barrels at a price of $100.41. Subsequent to fourth quarter 2011,
ATP has added a net 306,000 Bbls of crude oil prepaid swaps at an
average price of $98.36. During future settlement months, ATP will
deliver cash to the counterparty based on prevailing market prices,
which may be higher or lower than those paid to ATP.
During first quarter 2012, ATP entered into basis swaps for
825,000 Bbls in 2012 at an average price spread of $12.34 and
820,000 Bbls in 2013 at an average price spread of $4.60. The basis
swaps pay out based on the price spread between LLS (Louisiana
Light Sweet), which is an approximate basis for most of ATP’s
production, and WTI (West Texas Intermediate), which is the basis
for certain ATP hedges.
ATP received $14.7 million in net cash advances from commodity
price derivative contracts in fourth quarter 2011 and has received
$19.4 million net so far in first quarter 2012.
During first quarter 2012, ATP entered into swaption agreements
amounting to a net 365,000 Bbls in 2013 at an average strike price
of $96.50 in January 2012. ATP receives cash up front and in
exchange the counterparty receives the option to enter into a swap
at a later date.
ATP's selected financial data schedule below contains additional
information on the company's activities for fourth quarter 2011 and
comparable 2010 period.
Selected Financial Data Three Months
Ended Year Ended (Unaudited) December 31,
December 31, 2011 2010 2011
2010 Production Natural gas (MMcf)
4,613 4,486 17,264 19,151 Gulf of Mexico 4,107 3,676 15,095 15,899
North Sea 506 810 2,169 3,252 Oil and condensate (MBbls) 1,510
1,538 6,111 4,471 Gulf of Mexico 1,509 1,537 6,107 4,464 North Sea
1 1 4 7 Natural gas, oil and condensate MMcfe 13,675 13,716 53,930
45,978 MBoe 2,279 2,286 8,988 7,663
Average Prices
Natural gas (per Mcf) $ 4.12 $ 4.84 4.77 $ 4.83 Gulf of Mexico 3.58
4.11 4.23 4.53 North Sea 8.47 8.13 8.55 6.32 Oil and condensate
(per Bbl) 105.07 78.04 98.98 72.94 Natural gas, oil and condensate
Per Mcfe $ 12.99 $ 10.33 $ 12.74 $ 9.11 Per Boe 77.96 61.98 76.45
54.66
Gain (Loss) on Oil and Gas Derivatives ($000's)
Natural gas contracts Realized or settled during the period $ 1,876
$ 2,807 $ 2,996 $ 9,238 Unrealized 3,668 (7,037 ) 6,495 (3,288 )
Oil and condensate contracts Realized or settled during the period
(7,433 ) (5,931 ) (15,613 ) (11,923 ) Unrealized (45,270 ) (27,056
) 31,313 (16,446 ) Total (47,159 ) (37,217 ) 25,191 (22,419 )
Year-End 2011 Conference
Call
ATP Oil & Gas Corporation (NASDAQ: ATPG) will host a
conference call on Friday, March 16th at 12:30 pm CDT to discuss
the company’s fourth quarter results followed by a Q&A
session.
Year-End Results Conference
Call
Date: Friday, March 16, 2012
Time: 1:30 pm EDT; 12:30 pm CDT; 11:30 pm MDT and 10:30 pm
PDT
ATP invites interested persons to listen to the live webcast on
the company’s website at www.atpog.com. Phone participants should
dial 888-554-1422. A digital replay of the conference call will be
available at 888-203-1112, ID# 4364330, for a period of 24 hours
beginning at 5:00 pm CDT.
About ATP Oil & Gas
Corporation
ATP Oil & Gas is an international offshore oil and gas
development and production company with operations in the Gulf of
Mexico, Mediterranean Sea and the North Sea. The company trades
publicly as ATPG on the NASDAQ Global Select Market. For more
information about ATP Oil & Gas Corporation, visit
www.atpog.com.
Forward-looking Statements
Certain statements included in this news release contain
"forward-looking statements" within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934. ATP cautions
that assumptions, expectations, projections, intentions, plans,
beliefs or similar expressions used to identify forward-looking
statements about future events may, and often do, vary from actual
results and the differences can be material from those expressed or
implied in such forward looking statements. Some of the key factors
which could cause actual results to vary from those ATP expects
include, without limitation, volatility in commodity prices for
crude oil and natural gas, the condition of the capital markets
generally, as well as ability to access them, the timing of planned
capital expenditures, uncertainties in estimating reserves and
forecasting production results, operational factors affecting the
commencement or maintenance of producing wells, and uncertainties
regarding environmental regulations or litigation and other legal
or regulatory developments affecting its business. ATP assumes no
obligation and expressly disclaims any duty to update the
information contained herein except as required by law. While ATP
does not file reports with the SEC containing probable and possible
reserve quantities, ATP occasionally will include them in news
releases, presentations and discuss such reserves publicly. ATP and
its independent third party reservoir engineers use the term
“probable” to describe volumes of reserves potentially recoverable
through additional drilling or recovery techniques that, by their
nature, are more speculative than estimates of proved reserves. Any
estimates of reserves in this news release have been prepared by
our independent third party engineers. More information about the
risks and uncertainties relating to ATP's forward-looking
statements is found in the company's SEC filings or website,
www.atpog.com.
CONSOLIDATED BALANCE SHEETS (In
Thousands) (Unaudited) December 31,
2011 2010 Assets Current assets: Cash and cash
equivalents $ 65,678 $ 154,695 Restricted cash 20,113 30,270
Accounts receivable (net of allowance of $225 and $225,
respectively) 70,628 92,737 Deferred tax asset 480 8,191 Derivative
assets 2,194 1,688 Other current assets 28,050
26,408 Total current assets 187,143 313,989 Oil and
gas properties (using the successful efforts method of accounting):
Proved properties 4,875,232 4,291,440 Unproved properties
22,945 20,402 4,898,177 4,311,842 Less
accumulated depletion, depreciation, impairment and amortization
(1,760,756 ) (1,407,206 ) Oil and gas properties, net
3,137,421 2,904,636 Restricted cash 10,000 10,000 Deferred
financing costs, net 40,873 48,353 Other assets, net 13,337
13,124 Total assets $ 3,388,774 $
3,290,102
Liabilities and Equity Current
liabilities: Accounts payable and accruals $ 265,620 $ 230,703
Current maturities of long-term debt 33,848 21,625 Asset retirement
obligation 52,536 43,386 Deferred tax liability 138 - Derivative
liability 68,816 37,893 Current maturities of other long-term
obligations 113,657 86,521 Total
current liabilities 534,615 420,128 Long-term debt 1,976,157
1,857,784 Other long-term obligations 451,797 472,500 Asset
retirement obligation 115,981 123,472 Deferred tax liability 27,493
16,956 Derivative liability 522 6,425
Total liabilities 3,106,565 2,897,265 Temporary
equity-redeemable noncontrolling interest 115,820 140,851 Temporary
equity-convertible preferred stock, $0.001 par value 70,055 -
Shareholders' equity: Convertible preferred stock, $0.001
par value 222,681 140,000 Common stock, $0.001 par value 52 51
Additional paid-in capital 529,669 570,739 Accumulated deficit
(548,765 ) (356,866 ) Accumulated other comprehensive loss (106,392
) (101,027 ) Treasury stock, at cost (911 ) (911 )
Total shareholders' equity 96,334 251,986
Total liabilities and equity $ 3,388,774 $ 3,290,102
CONSOLIDATED INCOME STATEMENTS (In
Thousands, Except Per Share Amounts) (Unaudited)
Three Months Ended Year Ended December 31,
December 31, 2011 2010 2011 2010
Revenues: Oil and gas production $ 177,690 $ 141,748 $ 687,208 $
437,997 Costs, operating expenses and other: Lease operating
20,448 43,121 122,202 132,544 Exploration 185 (90 ) 1,251 1,174
General and administrative 9,800 15,679 43,242 43,948 Depreciation,
depletion and amortization 67,221 62,036 298,574 220,657 Impairment
of oil and gas properties 11,935 48,189 57,639 63,267 Accretion of
asset retirement obligation 3,843 3,408 15,000 13,827 Drilling
interruption costs - 14,933 19,691 23,647 Loss on abandonment (158
) 4,596 3,916 4,829 Gain on exchange/disposal of properties
(26,000 ) 300 (27,000 ) (26,720 )
87,274 192,172 534,515
477,173 Income (loss) from operations 90,416
(50,424 ) 152,693 (39,176 )
Other income (expense): Interest income 39 105 223 696
Interest expense, net (76,528 ) (75,991 ) (326,411 ) (222,104 )
Derivative income (expense) (47,158 ) (37,218 ) 25,191 (22,419 )
Gain (loss) on debt extinguishment 4 2,855
1,095 (75,316 ) (123,643 )
(110,249 ) (299,902 ) (319,143 ) Loss
before income taxes (33,227 ) (160,673 )
(147,209 ) (358,319 ) Income tax (expense) benefit:
Current 1,327 789 1,327 859 Deferred 19,389
(40,782 ) (19,395 ) 35,414 20,716
(39,993 ) (18,068 ) 36,273
Net loss (12,511 ) (200,666 ) (165,277 ) (322,046 ) Less
income attributable to the redeemable noncontrolling interest
(9,668 ) (3,148 ) (26,622 ) (15,503 ) Less convertible preferred
stock dividends (6,312 ) (2,828 ) (18,583 )
(11,248 ) Net loss attributable to common shareholders $
(28,491 ) $ (206,642 ) $ (210,482 ) $ (348,797 ) Net loss
per share attributable to common shareholders: Basic $ (0.56 ) $
(4.06 ) $ (4.12 ) $ (6.88 ) Diluted $ (0.56 ) $ (4.06 ) $ (4.12 ) $
(6.88 ) Weighted average number of common shares: Basic
51,127 50,838 51,077 50,715 Diluted 51,127 50,838 51,077 50,715
CONSOLIDATED CASH FLOW DATA (In
Thousands) Twelve Months Ended December
31, 2011 2010 Cash flows from operating
activities: Net loss $ (165,277 ) $ (322,046 ) Adjustments to
operating activities 365,634 293,492 Changes in assets and
liabilities (3,266 ) (8,726 ) Net cash provided by
(used in) operating activities 197,091 (37,280
)
Cash flows from investing activities: Additions to
oil and gas properties (436,910 ) (598,108 ) Proceeds from
disposition of properties 27,000 17,053 Decrease (increase) in
restricted cash 10,157 (29,766 ) Net cash used
in investing activities (399,753 ) (610,821 )
Cash flows from financing activities: Proceeds from senior
second lien notes - 1,492,965 Proceeds from first lien term loans
59,400 147,000 Proceeds from term loan facility - ATP Titan assets
91,000 238,750 Proceeds from term loans - 46,000 Payments of term
loans (25,375 ) (1,263,727 ) Deferred financing costs (4,561 )
(62,937 ) Proceeds from preferred stock issuances, net of costs
149,866 - Purchase of capped-call options on ATP common stock
(26,500 ) - Proceeds from other long-term obligations 85,326
231,888 Payments of other long-term obligations (180,848 ) (102,818
) Distributions to noncontrolling interest (45,961 ) (14,250 )
Preferred stock dividends (15,098 ) (11,276 ) Derivative contracts,
net 67,129 - Other financings, net (42,534 ) (11,180 ) Exercise of
stock options/warrants 205 3,609 Net
cash provided by financing activities 112,049
694,024 Effect of exchange rate changes on cash and
cash equivalents 1,596 (189 ) Increase
(decrease) in cash and cash equivalents (89,017 ) 45,734 Cash and
cash equivalents, beginning of year 154,695
108,961 Cash and cash equivalents, end of year $ 65,678
$ 154,695
Derivatives
Schedule (Unaudited) 2012 2013 1Q
2Q 3Q 4Q
FY 1Q 2Q 3Q
4Q
FY Gulf of Mexico Natural
Gas Swaps Volumes (MMMBtu)
1,365 - - -
1,365 - - - -
- Price ($/MMBtu)
$ 4.64 - - -
$ 4.64 - - - - -
Natural Gas
Calls Volumes (MMMBtu) 910 910 920 920
3,660 - - - -
- Price ($/MMBtu) $ 5.30 $ 5.30 $ 5.30 $ 5.50
$
5.35 - - - - -
Crude Oil Swaps Volumes (MBbls)
834 751 759 759
3,102 315 228 230 230
1,003 Price
($/Bbl) $ 109.16 $ 97.36 $ 97.36 $ 97.36
$ 100.53 $
103.60 $ 108.88 $ 108.88 $ 108.88
$ 107.22
Prepaid Crude Oil Swaps (1) Volumes (MBbls) 208 268
202 104
783 - - - -
- Price ($/Bbl) $ - $ - $ - $ -
$ - - - - - -
Crude Oil Basis Swaps
Volumes (MBbls) - 273 276 276
825 270 182 184 184
820
Basis Price ($/Bbl, LLS - WTI) $ - $ 15.25 $ 10.90 $ 10.90
$
12.34 $ 5.47 $ 4.18 $ 4.18 $ 4.18
$ 4.60
Crude Oil Swaptions (Calls Sold)(2) Volumes
(MBbls) - - - -
- 90 91 92 92
365 Strike Price
($/Bbl) - - - - - $ 96.50 $ 96.50 $ 96.50 $ 96.50
$
96.50 North Sea Natural Gas Swaps
Volumes (MMMBtu) 455 455 460 460
1,830 180 - - -
180
Price ($/MMBtu)(3) $ 9.49 $ 8.26 $ 8.26 $ 10.13
$
9.03 $ 11.28 - - -
$ 11.28 - - -
The above are ATP's financial and physical
commodity contracts outstanding as of March 14, 2012 Additional
hedges, derivatives and fixed price contracts, if any, will be
announced during the year.
(1)
ATP received cash proceeds at closing
averaging approximately $105.03 per barrel. During the future
contract settlement months, ATP will pay cash based on the
prevailing market prices in effect at that time, which may be more
or less than ATP is paid.
(2)
Call swaptions sold to a third party that
allows the third party to exercise and enter into a swap with ATP
at the strike price.
(3)
Assumes currency translation rate of 1.60
USD per GBP which approximates the rate as of March 14, 2012
Cash Payments Related to Other Long-term Obligations
(In Thousands) (Unaudited) Three Months
Twelve Months Ended Ended December 31,
December 31, 2011 2011 Net profits interests $
38,669 $ 149,240 Dollar-denominated overriding royalty interests
13,684 108,332 NPI and ORRI payments 52,353 257,572
Gomez pipeline financing 5,428 21,847 Vendor deferrals 1,390
35,848 Total payments $ 59,171 $ 315,267
(1)
(1) Includes principal of $180,848 and
interest of $134,419. The weighted average effective interest rate
on our other long-term obligations was 18.9% as of December 31,
2011.
Other Long-term Obligations (In
Thousands) (Unaudited) December 31,
December 31, 2011 2010 Net profits interests $
336,669 $ 331,776 Dollar-denominated overriding royalty interests
42,324 52,825 Total NPI and ORRI
obligations 378,993 384,601 Gomez pipeline obligation 71,676 73,868
Vendor deferrals – Gulf of Mexico 17,493 7,096 Vendor deferrals –
North Sea 94,710 90,874 Other 2,582 2,582
Total 565,454 559,021 Less current maturities
(113,657 ) (86,521 ) Other long-term obligations $ 451,797
$ 472,500
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