ATP Oil & Gas Corporation : ATP Announces First Quarter 2012 Financial Results and Operations Update
05/09/2012| 09:25pm US/Eastern
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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 Call Date: Thursday, May
10, 2012 Time: 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
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 effective interest 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.
ATP Oil & Gas Corporation T. Paul Bulmahn, 713-622-3311 Chairman
and CEO or Albert L. Reese Jr., 713-622-3311 Chief
Financial Officer www.atpog.com
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