ATP Oil & Gas Corporation (NASDAQ:ATPG) today released first
quarter 2012 financial results and an operations update.
Results of Operations
Production in first quarter 2012 was 2.0 MMBoe (million barrels
of oil equivalent) of which 63% was oil and condensate, compared to
2.3 MMBoe in the first quarter 2011 of which 68% was oil and
condensate. This falls within ATP’s previously-stated expectation
of 1.8 – 2.1 MMBoe for first quarter 2012. First quarter 2012
production includes approximately 0.1 MMBoe from a royalty relief
adjustment related to 2011 production. Revenues from oil and gas
production were $146.6 million in first quarter 2012 including a
$3.0 million benefit for royalty relief related to 2011, compared
to $166.5 million with no corresponding adjustment for royalty
relief in first quarter 2011.
Cash provided by operating activities in first quarter 2012 was
$100.9 million, compared to $86.2 million in first quarter 2011.
ATP ended first quarter 2012 with a cash balance of $224.7 million,
compared to $65.7 million in fourth quarter 2011. ATP’s working
capital deficit was $267.9 million at the end of first quarter 2012
compared to a $347.5 million deficit at the end of fourth quarter
2011.
Lease operating expense for first quarter 2012 was $26.9 million
compared to $32.4 million in first quarter 2011. Recurring lease
operating expense was $23.2 million in first quarter 2012 and $25.0
million in first quarter 2011. The improvement was primarily a
result of lower variable expense. Excluded from recurring lease
operating expense was workover expense of $3.7 million in first
quarter 2012 and $7.4 million in first quarter 2011. The workover
expenses in first quarter 2012 were primarily due to hull repair
and maintenance work at Gomez Hub, while the workover expenses in
first quarter 2011 were primarily due to work at ATP’s Atwater 63
and Mississippi Canyon 711 properties. General and administrative
expense was $18.0 million in first quarter 2012, which included
$3.8 million of organization and startup costs of operations in
Israel and other international prospect generation costs, and $3.7
million of bonuses awarded to executives by the Board. The
remaining general and administrative expense of $10.5 million is
comparable to the $9.7 million in first quarter 2011. For first
quarter 2012, ATP recorded a net loss attributable to common
shareholders of $145.1 million or $(2.83) per basic and diluted
share compared to $119.5 million or $(2.34) per basic and diluted
share in first quarter 2011. The net loss attributable to common
shareholders was impacted by items analysts sometimes exclude from
published estimates. For first quarter 2012, those items included a
gain on abandonment of $0.4 million, impairment of oil and gas
properties of $1.2 million, and unrealized losses on derivative
contracts of $42.8 million. For first quarter 2011, those items
included unrealized losses on derivative contracts of $42.9 million
and $18.5 million of drilling interruption costs associated with
the Gulf of Mexico moratorium.
Production and Operations
Update
In late February 2012, ATP completed the Mississippi Canyon (MC)
942 A-3 well, the fourth well at ATP’s Telemark Hub. Shortly
thereafter, ATP began a workover operation at the MC 941 A-2 well,
where ATP has been required to temporarily shut in production while
an additional sand, the B sand, is completed. The completion
operation, originally expected to conclude in first quarter 2012,
is now expected to conclude during second quarter 2012. Upon
completion of this operation, ATP also intends to conduct a sleeve
shift operation at the MC 941 A-1 well. Both of these operations
are expected to add production during the second quarter. ATP has
been notified by Shell Pipeline Company LP, the operator of the
Mars pipeline, that it intends to temporarily shut in the pipeline
to allow for the tie-in of a new offsetting platform. As a result,
ATP estimates production at its Telemark Hub could be shut-in for
up to two weeks during second quarter 2012.
ATP expects production of 1.6MMBoe – 2.3MMBoe during second
quarter 2012. ATP’s two wells at Clipper (Green Canyon 300) are on
schedule to begin production in late third quarter or early fourth
quarter 2012. Both wells were drilled and completed in 2011, and
ATP has begun preparatory work for the installation of the Clipper
pipeline during third quarter 2012. The two wells at Clipper tested
at a net 16 MBoe/day, 62% oil.
ATP commenced drilling its first well offshore Israel in late
April 2012, an exploratory well in the Shimshon license.
Preliminary results are expected in third quarter 2012. ATP
operates the well with a 40% working interest through its ATP East
Med B.V. subsidiary. ATP notes that Isramco Negev, its partner in
Shimshon, on March 6, 2011 reported that it received an
independent reservoir engineering evaluation from Lockwood
& Associates estimating gross potential natural gas resources
at Shimshon and that they calculated assessment of the total
geological and geophysical exploration probability of success of 20
percent to be reasonable. Lockwood said its high estimate of
reserves to the 100% interest was for 3.4 TCF, the low estimate was
1.5 TCF and its best estimate was 2.3 TCF.
Financing & Hedging
Update
During first quarter 2012, ATP successfully completed the $155
million expansion of its first lien facility, and the interest rate
was adjusted from a fixed 9.00% for existing holders to allow for a
floating 8.75% per annum.
ATP continues to pursue a long-term financing to fund the
construction of its Octabuoy floating production facility, which is
scheduled to be deployed at the Cheviot project in the North Sea
upon completion in 2014. The company is optimistic about the
potential for this transaction.
At the end of first quarter 2012, ATP’s net profits interests
(NPIs) and overriding royalty interests (ORRIs) totaled $513.3
million, up from $379.0 million in fourth quarter 2011. The
increase was primarily a result of four new ORRIs totaling $185
million, partially offset by payments of $69.2 million to NPI and
ORRI holders.
The following schedule summarizes ATP’s NPI and ORRI activity
during first quarter 2012:
Summary of First Quarter 2012 NPI and
Override Activity (In Thousands) (Unaudited)
NPI and Override balance as of December 31, 2011 $ 378,993
Additions for incremental overrides
183,775 Other additions 1,200 Interest accretion 18,573 Payments to
NPI and Override holders (69,210 ) NPI and Override balance
as of March 31, 2012 $ 513,331
During first quarter 2012, ATP continued to hedge using
traditional crude oil swaps and other instruments, including
prepaid swaps, basis swaps, and swaptions. A detailed derivatives
schedule is provided near the end of this press release.
ATP is targeting $400 million - $500 million in capital
expenditures in 2012, of which $50 million to $70 million is
expected to be contributed by vendors through existing NPI or
deferral programs.
ATP’s selected financial data schedule below contains additional
information on the company’s activities for first quarter 2012 and
the comparable 2011 period.
Selected Financial Data Three Months Ended
(Unaudited) March 31, 2012 2011
Production Natural gas (MMcf) 4,473 4,449 Gulf of
Mexico 4,087 3,813 North Sea 386 636 Oil and condensate (MBbls)
1,257 1,600 Gulf of Mexico 1,256 1,599 North Sea 1 1 Natural gas,
oil and condensate MMcfe 12,015 14,048 MBoe 2,002 2,341
Average Prices Natural gas (per Mcf) $ 3.50 $ 4.91 Gulf of
Mexico 3.00 4.30 North Sea 8.81 8.57 Oil and condensate (per Bbl)
104.17 90.40 Natural gas, oil and condensate Per Mcfe $
12.20 $ 11.85 Per Boe 73.23 71.10
Gain (Loss) on Oil and
Gas Derivatives ($000's) Natural gas contracts Realized or
settled during the period $ 2,794 $ 606 Unrealized (4,443 ) (3,636
) Oil and condensate contracts Realized or settled during the
period (19,007 ) (8,012 ) Unrealized (38,315 ) (39,220 ) Total
(58,971 ) (50,262 )
First Quarter 2012 Conference
Call
ATP Oil & Gas Corporation (NASDAQ: ATPG) will host a
conference call on Thursday, May 10th at 11:00 am CDT to discuss
the company’s first quarter 2012 results followed by a Q&A
session.
1st
Quarter Results Conference CallDate:
Thursday, May 10, 2012Time: 12:00 pm EDT; 11:00 am CDT; 10:00 am
MDT and 9:00 am PDT
ATP invites interested persons to listen to the live webcast on
the company’s website at www.atpog.com. Phone participants should
dial 888-259-8885. A digital replay of the call will be available
at 888-203-1112, ID# 2370475, for a period of 24 hours beginning at
3:00pm CDT.
CONSOLIDATED BALANCE SHEETS (In
Thousands) (Unaudited) March 31,
December 31, 2012 2011 Assets Current
assets: Cash and cash equivalents $ 224,743 $ 65,678 Restricted
cash 15,040 20,113 Accounts receivable (net of allowance of $0 and
$225, respectively) 85,430 70,628 Deferred tax asset 2,655 480
Derivative assets - 2,194 Other current assets 18,222
28,050 Total current assets 346,090 187,143
Oil and gas properties (using the successful efforts method of
accounting): Proved properties 5,049,543 4,875,232 Unproved
properties 24,691 22,945 5,074,234
4,898,177 Less accumulated depletion, depreciation, impairment and
amortization (1,853,185 ) (1,760,756 ) Oil and gas
properties, net 3,221,049 3,137,421 Restricted cash 10,000
10,000 Deferred financing costs, net 37,874 40,873 Other assets,
net 23,386 13,337 Total assets $
3,638,399 $ 3,388,774
Liabilities and
Equity Current liabilities: Accounts payable and accruals $
295,604 $ 265,620 Current maturities of long-term debt 36,630
33,848 Asset retirement obligation 53,047 52,536 Deferred tax
liability - 138 Derivative liability 117,483 68,816 Current
maturities of other long-term obligations 111,246
113,657 Total current liabilities 614,010 534,615
Long-term debt 2,115,483 1,976,157 Other long-term
obligations 594,427 451,797 Asset retirement obligation 119,059
115,981 Deferred tax liability 41,737 27,493 Derivative liability
1,122 522 Total liabilities 3,485,838
3,106,565 Temporary equity-redeemable noncontrolling
interest 115,819 115,820 Temporary equity-convertible preferred
stock, $0.001 par value 71,186 70,055 Shareholders' equity:
Convertible preferred stock, $0.001 par value 219,550 222,681
Common stock, $0.001 par value 52 52 Additional paid-in capital
527,103 529,669 Accumulated deficit (687,665 ) (548,765 )
Accumulated other comprehensive loss (92,573 ) (106,392 ) Treasury
stock, at cost (911 ) (911 ) Total shareholders'
equity (34,444 ) 96,334 Total liabilities and
equity $ 3,638,399 $ 3,388,774
CONSOLIDATED INCOME STATEMENTS (In Thousands, Except Per
Share Amounts)
(Unaudited)
Three Months Ended March 31, 2012
2011 Revenues: Oil and gas production $ 146,613 $
166,500 Costs, operating expenses and other: Lease
operating 26,905 32,407 Exploration 389 - General and
administrative 17,956 9,736 Depreciation, depletion and
amortization 84,906 79,320 Impairment of oil and gas properties
1,202 - Accretion of asset retirement obligation 3,804 3,664
Drilling interruption costs - 18,498
Loss (gain) on abandonment
(364 ) 1,269 134,798
144,894 Income from operations 11,815
21,606 Other income (expense): Interest income
40 57 Interest expense, net (73,854 ) (75,485 )
Derivative expense
(58,971 ) (50,262 ) (132,785 ) (125,690
) Loss before income taxes (120,970 ) (104,084 )
Deferred income tax expense (10,551 ) (9,142 ) Net
loss (131,521 ) (113,226 ) Less income attributable to the
redeemable noncontrolling interest (7,379 ) (3,563 ) Less
convertible preferred stock dividends (6,179 ) (2,758
) Net loss attributable to common shareholders $ (145,079 ) $
(119,547 ) Net loss per share attributable to common
shareholders: Basic $ (2.83 ) $ (2.34 ) Diluted $ (2.83 ) $ (2.34 )
Weighted average number of common shares: Basic 51,328
51,020 Diluted 51,328 51,020
CONSOLIDATED CASH
FLOW DATA (In Thousands)
(Unaudited)
Three Months Ended March 31, 2012
2011 Cash flows from operating activities: Net loss $
(131,521 ) $ (113,226 ) Adjustments to operating activities 153,634
153,903 Changes in assets and liabilities 78,790
45,498 Net cash provided by operating activities
100,903 86,175
Cash flows
from investing activities: Additions to oil and gas properties
(197,205 ) (95,648 ) Decrease (increase) in restricted cash
5,073 (3,504 ) Net cash used in investing activities
(192,132 ) (99,152 )
Cash flows from financing
activities:
Proceeds from first lien term loans 148,243 59,400 Proceeds from
term loan facility - ATP Titan assets - 45,000 Payments of term
loans (7,875 ) (5,000 ) Deferred financing costs (50 ) (2,781 )
Proceeds from other long-term obligations 183,775 - Payments of
other long-term obligations (59,218 ) (33,926 ) Distributions to
noncontrolling interest (9,253 ) (3,563 ) Preferred stock dividends
(6,313 ) (2,758 ) Derivative contracts, net 13,033 - Other
financings, net (12,157 ) (16,854 ) Exercise of stock
options/warrants 13 163 Net cash
provided by financing activities 250,198
39,681 Effect of exchange rate changes on cash and
cash equivalents 96 726 Increase
in cash and cash equivalents 159,065 27,430 Cash and cash
equivalents, beginning of year 65,678 154,695
Cash and cash equivalents, end of year $ 224,743 $
182,125
Derivatives Schedule (Unaudited)
2012
2013 2Q 3Q 4Q
FY 1Q 2Q
3Q 4Q
FY Gulf of Mexico
Natural Gas Calls Volumes (MMMBtu) 910 920 920
2,750
1,800 1,820 1,840 1,840
7,300 Price ($/MMBtu) $ 5.30 $ 5.30
$ 5.50
$ 5.37 $ 3.90 $ 3.90 $ 3.90 $ 3.90
$
3.90 Crude Oil Swaps Volumes (MBbls) 751 759
759
2,269 360 273 92 92
817 Price ($/Bbl) $ 97.36 $
97.36 $ 97.36
$ 97.36 $ 104.29 $ 108.92 $ 106.15 $
106.15
$ 106.25 Prepaid Crude Oil Swaps
(1) Volumes (MBbls) 268 202 104
575 - - - -
-
Price ($/Bbl) $ - $ - $ -
- - - - - -
Crude Oil
Basis Swaps Volumes (MBbls) 273 276 205
754 233 182 184
184
783 Basis Price ($/Bbl, LLS - WTI) $ 13.53 $ 10.90 $
10.39
$ 11.71 $ 5.06 $ 4.18 $ 4.18 $ 4.18
$
4.44 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) 455 460 460
1,375 180 - - -
180 Price ($/MMBtu)(3) $ 8.26 $ 8.26 $ 10.13
$
8.88 $ 11.28 - - -
$ 11.28 - - -
The above are ATP's financial and physical
commodity contracts outstanding as of May 9, 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 $104.42 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 were paid.
(2) Call swaptions sold to a third party
that allow 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 May 9, 2012
Cash Payments
Related to Other Long-term Obligations (In Thousands)
(Unaudited) Three Months Ended March
31, 2012 Net profits interests $ 53,454
Dollar-denominated overriding royalty interests 15,756 NPI
and ORRI payments 69,210 Gomez pipeline financing 4,347 Vendor
deferrals 4,472 Total payments $ 78,029
(1)
(1) Includes principal of $56,580 and
interest of $21,449. The weighted average effectiveinterest rate on
our other long-term obligations was 18.5% as of March 31, 2012.
Other Long-term Obligations (In
Thousands) (Unaudited) March 31,
December 31, 2012 2011 Net profits interests $
298,944 $ 336,669 Dollar-denominated overriding royalty interests
214,387 42,324 Total NPI and ORRI
obligations 513,331 378,993 Gomez pipeline obligation 71,110 71,676
Vendor deferrals – Gulf of Mexico 15,071 17,493 Vendor deferrals –
North Sea 103,579 94,710 Other 2,582 2,582
Total 705,673 565,454 Less current maturities
(111,246 ) (113,657 ) Other long-term obligations $ 594,427
$ 451,797
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.
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