ATP Oil & Gas: Production Should Triple in Next 9 Months 39 comments
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I’ve written three previous times about ATP Oil & Gas (ATPG) this year (see here, here and here). I’m going to keep this one brief because I believe the case for very significant stock price appreciation over the next year is getting pretty obvious.
There are three parts to this story.
- A huge increase in production is beginning right now
- The balance sheet will continue to improve
- There will be more reserve growth (there always is with ATP)
Production Will Be Triple Current Levels Nine Months from Now
I’m going to talk about production in terms of millions of cubic feet of gas equivalent per day. But be aware that ATP is already almost 60% oil producing and is only going to move more towards oil.
Current daily production: About 100 million cubic feet a day. 59% oil, 41% natural gas.
By the end of June 2010, daily production is going to be somewhere around 300 million cubic feet a day. Here is how it gets there. There are six big wells coming on production
- Gomez sleeve shift – The company is currently working on a recompletion of a well at their largest producing property called Gomez in the Gulf of Mexico. Once finished, this is going to add the equivalent of 30 million cubic feet a day of production, about 75% oil. Source of the size of this increase is ATP President Leland Tate in the last earnings call
- Canyon Express – The company is currently drilling a well that will be completed in Q4 of this year at their Canyon Express property. These Canyon Express wells are big producers. It is 100% natural gas, but will be in the region of 50 million cubic feet a day, which ATP will have a 50% share of. Source of the size of the Canyon Express well is again Leland Tate at an early 2008 conference.
- Mirage well #1 – This will be the first producing well from the long awaited Telemark hub. ATP has been developing this property for 3 years. This has been drilled to total depth and will come on very early in 2010 or in a best case scenario at the end of 2009. This well is expected to produce at a rate of 30 million cubic feet a day and is almost 80% oil. The rate of production was disclosed by ATP president Leland Tate on their Q3 2008 conference call. Although I should mention that the company found pay area three times the size of what they expected when this was drilled (see recent press release) so I might be vastly understating the rate it will be produced at.
- Morgus well #1 – The second producing well at the Telemark hub. It has been drilled down to something like 13,000 feet and had casing set. The final completion will be drilled from the ATP Titan and expect it to start producing in the first quarter of 2010. It is also expected to produce at 30 million cubic feet a day and is again almost 80% oil. Again the source for this rate of production is Leland Tate on the Q3 2008 conference call.
- Mirage well #2 - The second producing well at the Telemark hub. It has also been drilled down to something like 13,000 feet and had casing set. The final completion will be drilled from the ATP Titan and expect it to start producing in the first quarter of 2010. It is also expected to produce at 30 million cubic feet a day and is again almost 80% oil. Again the source for this rate of production is Leland Tate on the Q3 2008 conference call.
- Atwater 63 well – this will be through a subsea connection to the ATP Titan. This will be drilled in December and first production is expected before the end of June 2010. This is a bigger well, with first production expected to be at a rate of 42 to 60 million cubic feet a day and is 75% plus oil. The source again is Leland Tate on the Q3 2008 conference call.
So total all of those up and you are looking at incremental production of about 200 million cubic feet a day, likely 75% of it oil. This is on top of the current 100 million cubic feet a day of company production. That means by the end of Q2 2010 ATP will have about 300 million cubic feet of production which is triple the current level.
That is a pretty noteworthy increase.
From a revenue perspective, assuming strip pricing which is pretty flat on the oil front right now, that is going to take them from an annual run rate of $300mil to more that $1.1bil as you get both the triple in production and an increase in percent of production that is oil from 59% to closer to 65%.
My estimate is that about 75% to 80% of this revenue gets through as cash flow from operations for ATP. So that is about $900mil of cash flow from operations, which is about $17 per share. The current share price for ATP is $16.45.
The really great part is that they have another project called Cheviot in the North Sea that is on schedule for 2012 production that is going to result in a similar increase in production.
The Balance Sheet Will Continue to Improve
ATP management found out this year that they had too much debt for $40 oil and $4 natural gas at their current rate of production. The price has been some dilution of shareholders as management worked to get the balance sheet back in shape and continued with progress on Telemark.
The recently raised $300mil of cash through the sale of a pipeline at Gomez for $80mil, and the issuance of $140mil of convertible pref and $90mil of common shares.
There is more improvement coming. According to CFO Al Reese, they will have a deal finalized later this year to bring in a partner on the ATP Titan (the brand new floating production unit with a 40 year useful life that is about to be deployed at Telemark). They did a similar deal on the ATP Innovator in March of this year with GE. If the Titan deal is structured the same we should expect proceeds of about $300mil and ATP will keep 50% and control of the floating unit (they don’t give up any of the ownership of the reserves at the location). I’ve been following this company very closely and Al has told shareholders several times about deals that he believed would be completed and they have subsequently delivered as advertised.
And there is more than that. We can expect that once Telemark is producing (early 2010) that the Telemark pipeline will also be monetized like the Gomez pipeline just was. Proceeds for the Telemark pipeline according to Al will be $160mil. He told us proceeds for the Gomez pipeline would be $75mil to $80mil and they were in the end $78mil.
So that is $750mil of cash that is being added to the balance sheet. $300mil of it already received. The company had net debt of $1.2bil at the end of June, so bringing in $750mil in cash puts them in very good shape.
I think down the road as some point we could very well see the infrastructure vehicle that these assets have been put into taken public. ATP will still have a 50% interest in these assets through the entity, the value of those assets will be $150mil of the Innovator and $300mil of the Titan. That will be another $450mil of value hiding within the company.
There Will Be Additions to Reserves in the Year End Reserve Report
ATP is a company that has always rapidly grown reserves. Up to 2005 this growth came through acquisition. Since then is has come through extensions at there large Deepwater properties. This year is going to be no exception.
Here is the detail from the drilling of the first well to total depth at the Telemark Hub:
As previously announced, ATP experienced outstanding results with the MC 941 #3 well that was drilled to total measured depth of 20,043 feet. The MC 941 #3 well encountered approximately 266 net feet of logged hydrocarbon pay as compared to the discovery well (the Vastar MC 941 #1 sidetrack 1) that encountered approximately 87 net feet of logged hydrocarbon pay. These additional pay sands will increase production and the proved and probable reserves at the Telemark Hub.
That was the Mirage block. I found this very exciting because it was the portion of the Telemark hub where I didn’t expect upside reserve revisions. There is real potential for more significant upside at both Morgus and Atwater (the other two blocks).
With respect to Morgus, the size of the reservoir is not fully delineated. The discovery well has a very nice pay sand that is filled to the base and the delineation well drilled too far down dip to find the oil water contact. Since the oil water contact is unknown, ATP can only book proven reserves to the base of the sand in the original well.
Also, they can only carry one sand thickness (about 150’) down structure as the probable reserves even though there is some seismic evidence that the oil water contact is much deeper. That means the reservoir at Morgus could be much larger than what is on the books.
Atwater 63 is the same as Morgus. The size of the field has not been fully delineated, so they know it is bigger, the just don’t know how much bigger. It could be significant and they have been pretty excited about it.
So there you have it. Production to triple, revenue and cash flow to almost quadruple, another $450mil of cash being added to the balance sheet and significant reserve additions coming.
But Does the Current Share Price Already Reflect All of This?
The short answer is no.
I showed earlier that the cash flow per share once Telemark is ramped up is going to be somewhere around $17 with the current share price being only $16.45. A more sensible multiple would be 5x which would imply a share price of $85. You could argue that the multiple should be even higher given the Cheviot development is going to mean another step change up in production in 2012.
You can also look at this on a reserve basis.
- PV10 of 2P reserves is $5.3bil
- Value of infrastructure is $1bil (and it is being unlocked)
- Net debt is ($1.2bil)
- Total is $5.1bil / 56mil shares (assuming pref is converted) = $91 per share
So a couple of ways to value it both suggest $80 plus. I’m more conservative, I think more like $65 but I also believe that is a number that is going to grow considerably as we learn more about Telemark and the reserve upside as well as have oil and natural gas prices work in our favour.
The balance sheet has been holding the stock price down. With $750mil of cash added to it and production increasing, I think the stock market will start valuing the assets this company controls more appropriately.
Disclosure: I am a shareholder of ATP Oil & Gas
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However, what is the cash costs of their production from the new fields?
Secondly, you state that “My estimate is that about 75% to 80% of this revenue gets through as cash flow from operations for ATP.”
Where is your estimate of cash flow based on?
Thanks.
Go to the ATP website and read their presentation in Aug 08 given at Enercom. Has detailed cost for each of their major fields. They are all very attractive as the developments were planned for very conservative estimates of reserves in place. Gomez for example has had 4 times what was originally indicated. Telemark is also looking very good as the first well taken to TD hit twice the amount of pay ATP had expected.
On Oct 05 09:41 AM Steven Ward wrote:
> The slightest hint of debt on a balance sheet spooks the market these
> days. So you are right that ATP is being punished unfairly.
>
> However, what is the cash costs of their production from the new
> fields?
The market is in the show me mode for good reason. ATP was running out of cash to develop Telemark after oil and natural gas prices collapsed.
Simply put, they had too much debt for their current production rate. We've suffered some dilution because of this, and management has done a good job of monetizing infrastructure to help get through.
The difference in the analyst estimate and my estimate is that I am looking at the run rate at mid 2010 while they are using all of 2010 (which includes the first half where Telemark is still ramping up).
On Oct 05 09:45 AM Gassy wrote:
> I was wondering why the market is in the show me mode? I have no
> background on this company but surprised out of 15 analysts only
> 6 are Buys (usually a good sign to make money). have you taken a
> decline on the existing production for 100mmcfe/d. Although EPS is
> not the right measure but still followed a lot, why is consensus
> EPS for 2010 $1.25/sh and cash eps $9/sh versus yours $17/sh. What
> is the market missing? Thanks
These fields do peak early at very high rates and decline quickly. You also have to factor in Cheviot in 2012 which is in the same sort of range as Telemark in terms of impact to ATP. So you need to consider that their growth is not done.
My cash flow estimate is based on analyst numbers I've seen for the new fields and also historical info. I'm comfortable with that range as a percentage of revenue.
I'm not too worried about getting it exact. If it is 3 or 4 times where it is now I think the stock market is going to pay attention in both cases.
This thing traded over $40 for most of 3 years prior to the collapse of the world last year. They have diluted since then, but they have also increased reserves by almost 50% since the start of that period. There was a real chance of bankruptcy here if oil had stayed at $30 and the capital markets stayed frozen. Neither of these have happened. It will take a while to get the fear of the debt replaced by the interest in ATP's ability to grow rapidly (albeit in stages) as the bring Telemark and then Cheviot on production.
On Oct 05 10:34 AM trying2notbestupid wrote:
> My question in line with 'Gassy' above, why do you think the Street
> set such a low price target when your analysis indicates multiples
> of that target? How fast will these reserves be depleted? Does ATP
> deserve a 5x multiple if the fields will decline rapidly? (not saying
> they will, but if they did)
>
> Secondly, you state that “My estimate is that about 75% to 80% of
> this revenue gets through as cash flow from operations for ATP.”
>
>
> Where is your estimate of cash flow based on?
>
> Thanks.
Still amazing that a "passive" investor has such intimate knowledge of a single company and can predict its future. I think theres less disclosure than meets the eye here by the author. (aka large shareholder or insider)
Using chartology methods, I bought this stock when it peeked over $10 and sold at $19...maybe a bit premature, but shortly before it issued more shares for the second time in 3 months. On the fence at the moment however until it breaks past $22.15 2 days in a row . The $65 price target is a bit far fetched unless oil goes above $100 and the market continues to ignore 10% unemployment, commercial real estate vacancies at a 20 year high..foreclosures..etc for now. Offcouse if oil goes above $100..that will just punish the economy that much more. The market seems to care not though right now!
I also own SGY for a play on Nat Gas...Mr Devonshire, PLEASE buy this as well and give it a price target 3 times higher than it is now. Your magic blogs and detailed analysis seem to add instant value!
So pleased to have you back. Last I recall you were wondering how many people had lost money based on what I had written. That was after you had the incredible patience to allow almost two weeks to pass after my article before deciding I'd made a giant error. Of course the stock price is up more than 300% since then.
And now you are back to let me have it again despite my having suggested buying a stock that has risen 300% plus in 3 months.
"Still amazing that a "passive" investor has such intimate knowledge of a single company and can predict its future. I think theres less disclosure than meets the eye here by the author. (aka large shareholder"
I'm flattered that you are amazed by me. I think I've gotten pretty lucky that oil didn't stay at $30 all year or ATP would have been in big trouble. But if you think I'm amazing, that's ok with me.
Everything I have written is based on publicly available info, because that is all I have available to me. It really isn't that hard to do some serious research on a publicly traded company. I suggest you give it a try, the results can be very satisfying.
If you'd like to know the source of any piece of my info let me know and I can direct you to the information which is on the internet. I'm simply a small (well, big position for me) outside shareholder.
"The $65 price target is a bit far fetched "
Can you explain why it is far fetched ? What piece of information in my valuation is unreasonable ? That is a serious question. You have an opinion, I'd like to know what it is based on. It is based on something right ?
On Oct 19 03:10 AM mind_geek wrote:
> Here we go again....
>
> Still amazing that a "passive" investor has such intimate knowledge
> of a single company and can predict its future. I think theres less
> disclosure than meets the eye here by the author. (aka large shareholder
> or insider)
>
> Using chartology methods, I bought this stock when it peeked over
> $10 and sold at $19...maybe a bit premature, but shortly before it
> issued more shares for the second time in 3 months. On the fence
> at the moment however until it breaks past $22.15 2 days in a row
> . The $65 price target is a bit far fetched unless oil goes above
> $100 and the market continues to ignore 10% unemployment, commercial
> real estate vacancies at a 20 year high..foreclosures..etc for now.
> Offcouse if oil goes above $100..that will just punish the economy
> that much more. The market seems to care not though right now!<br/>
>
> I also own SGY for a play on Nat Gas...Mr Devonshire, PLEASE buy
> this as well and give it a price target 3 times higher than it is
> now. Your magic blogs and detailed analysis seem to add instant value!
Maybe your taking a bit too much credit..your article came out when the stock was above $10 and it subsequently fell to under $6..a 40%+ loss. Most people who have jumped ship before the 300% rise Im afraid.
Im not "giving" it to you because the stock has risen...realistically you had nothing to do with it nor did I. If your a chartist, the stock price action and high volumes were telling you that a consistent close above $10 for 3 consecutive days meant a screaming buy which I DID mention...maybe Im the one everyone should thank! ha..
Theres company specific info on the internet? When did that happen?!... ;o) Lets be honest..the avg free financial website carries nothing of that detail. 10k's, annual reports and $200 brokerage house reports carry that much specific info, but the avg person doesnt have hours to pour over every detail of a company nor wants to. You are unique in that respect..but..sorry, hardly amazing.
Anyone who goes into this much depth, writes an incredibly articulate blog, answers everyones questions and then decides to be public about it....hmmm....passive?... me skeptical.
The reason I dont believe it will hit $65 anytime soon is simple: The company is highly dependent on the price of oil, its still highly indebted, sells valuable assets to reduce this debt and may continue its dilutive ways of issuing more shares (opinion). The price of oil would most likely need to rise above $110 to reach your target (based on reserves..minus debt) and you can just imagine what direction the stock market will head if that happens!
Nonetheless, 2 consecutive days at a close above $22.15 on high volume and put in your buy orders...but dont hold your breath for $65.
On Oct 19 10:47 AM Devon Shire wrote:
> Mr. Geek,
>
> So pleased to have you back. Last I recall you were wondering how
> many people had lost money based on what I had written. That was
> after you had the incredible patience to allow almost two weeks to
> pass after my article before deciding I'd made a giant error. Of
> course the stock price is up more than 300% since then.
>
> And now you are back to let me have it again despite my having suggested
> buying a stock that has risen 300% plus in 3 months.
>
> "Still amazing that a "passive" investor has such intimate knowledge
> of a single company and can predict its future. I think theres less
> disclosure than meets the eye here by the author. (aka large shareholder"
>
>
> I'm flattered that you are amazed by me. I think I've gotten pretty
> lucky that oil didn't stay at $30 all year or ATP would have been
> in big trouble. But if you think I'm amazing, that's ok with me.
>
>
> Everything I have written is based on publicly available info, because
> that is all I have available to me. It really isn't that hard to
> do some serious research on a publicly traded company. I suggest
> you give it a try, the results can be very satisfying.
>
> If you'd like to know the source of any piece of my info let me know
> and I can direct you to the information which is on the internet.
> I'm simply a small (well, big position for me) outside shareholder.
>
>
> "The $65 price target is a bit far fetched "
>
> Can you explain why it is far fetched ? What piece of information
> in my valuation is unreasonable ? That is a serious question.
> You have an opinion, I'd like to know what it is based on. It is
> based on something right ?
>
>
That is fair. I have written a few times. I think my first article was actually under $6, but the one you are referring to likely was close to $10.
I hope that most people wouldn't panic and sell after two weeks.
"You are unique in that respect..but..sorry, hardly amazing."
That is disappointing. I'd already told my Mom that you thought I was amazing. This will break her heart. The truth is, I feel like I'm very lucky. If oil had stayed down for another 6 months and the equity markets frozen, this would have been a big mistake for me.
"The price of oil would most likely need to rise above $110 to reach your target (based on reserves..minus debt)"
Is that a number off the top of your head or is there some reasoning behind it that you can provide that would help me understand why you think that ?
On Oct 21 02:18 AM mind_geek wrote:
> "Last I recall you were wondering how many people had lost money
> based on what I had written. That was after you had the incredible
> patience to allow almost two weeks to pass after my article before
> deciding I'd made a giant error. Of course the stock price is up
> more than 300% since then."
>
> Maybe your taking a bit too much credit..your article came out when
> the stock was above $10 and it subsequently fell to under $6..a 40%+
> loss. Most people who have jumped ship before the 300% rise Im afraid.
>
>
> Im not "giving" it to you because the stock has risen...realistically
> you had nothing to do with it nor did I. If your a chartist, the
> stock price action and high volumes were telling you that a consistent
> close above $10 for 3 consecutive days meant a screaming buy which
> I DID mention...maybe Im the one everyone should thank! ha..
>
> Theres company specific info on the internet? When did that happen?!...
> ;o) Lets be honest..the avg free financial website carries nothing
> of that detail. 10k's, annual reports and $200 brokerage house reports
> carry that much specific info, but the avg person doesnt have hours
> to pour over every detail of a company nor wants to. You are unique
> in that respect..but..sorry, hardly amazing.
>
> Anyone who goes into this much depth, writes an incredibly articulate
> blog, answers everyones questions and then decides to be public about
> it....hmmm....passive?... me skeptical.
>
> The reason I dont believe it will hit $65 anytime soon is simple:
> The company is highly dependent on the price of oil, its still highly
> indebted, sells valuable assets to reduce this debt and may continue
> its dilutive ways of issuing more shares (opinion). The price of
> oil would most likely need to rise above $110 to reach your target
> (based on reserves..minus debt) and you can just imagine what direction
> the stock market will head if that happens!
>
> Nonetheless, 2 consecutive days at a close above $22.15 on high volume
> and put in your buy orders...but dont hold your breath for $65.
>
If it wasnt for its latest share dilution, I believe the price would be above $25 right now. Management shoots the shareholder in the foot every time the stock gets momentum..regardless of the sunny picture you draw which I admit is much better than 3 months prior.
ATPG is a shareholder favorite now and will double the moves of crude up or down...I just think that continued exagerated crude prices will hamper the economy and keep a lid on $65 anytime soon as Ive mentioned.
If you wait long enough, anyone can pick the direction of a stock...but I normally dont keep a stock more than 2 weeks in this void of common sense market...too risky.
btw...I blow a lot of smoke your way and enjoy the banter back and forth.
you are missing nothing, ..the hyping hyena overstates everying by a factor of 2
On Oct 05 09:45 AM Gassy wrote:
> I was wondering why the market is in the show me mode? I have no
> background on this company but surprised out of 15 analysts only
> 6 are Buys (usually a good sign to make money). have you taken a
> decline on the existing production for 100mmcfe/d. Although EPS is
> not the right measure but still followed a lot, why is consensus
> EPS for 2010 $1.25/sh and cash eps $9/sh versus yours $17/sh. What
> is the market missing? Thanks
its all hype
Devon shire is a well know lunatic that also goes by Swizzle on yahoo. He posts incessanctly on Motley Fool and Yahoo under multiple niks and only post every good item he can scrounge up
he doesnt tell you that atpg is so debt laden that its interest cost is 1 m every 3 days or 40 dollars a barrel on current production
They are so broke that thy ask their drilling company for debt extensions, they ask they floating production maker for deferals and they did the same with octobuoy
they own so many people so much money, very little will flow to them
On Oct 05 10:34 AM trying2notbestupid wrote:
> My question in line with 'Gassy' above, why do you think the Street
> set such a low price target when your analysis indicates multiples
> of that target? How fast will these reserves be depleted? Does ATP
> deserve a 5x multiple if the fields will decline rapidly? (not saying
> they will, but if they did)
>
> Secondly, you state that “My estimate is that about 75% to 80% of
> this revenue gets through as cash flow from operations for ATP.”
>
>
> Where is your estimate of cash flow based on?
>
> Thanks.
to Devon shire, Swizzled, Azharm, et al
Try to balance your thesis with risk factors once in your life
Your NAV calculation is ludicous
Did you tell everyone that Barclays has a sell on it?
Did you tell everyone prof shorts arae shorting it?
Did you tell everyone that they have over ONE BILLION IN DEBT + off balance sheet expense commitments to ge for the Innovator?
Did you tell people they can even pay Diamond Offshore for drilling expenses?
Did you tell anyine that atpg cant pay for the titan and had to defer 89 m?
Did you tell anyone that they owe gifi for the 2nd min doc they cant afford?
No i dont think so
Until you do, you will afectionatly be called the hyping hyena!
Go look at exxi and do your same magic
This guy is so sensitive he will probably run to seeking alpha to have me banned
No really?? you should get paid by atpg. maybe you are on their payrolls a paid hyper
admit it to the world, you gave the cfo your nav calculations
admit it, im calling you out
On Oct 05 09:45 AM Gassy wrote:
> I was wondering why the market is in the show me mode? I have no
> background on this company but surprised out of 15 analysts only
> 6 are Buys (usually a good sign to make money). have you taken a
> decline on the existing production for 100mmcfe/d. Although EPS is
> not the right measure but still followed a lot, why is consensus
> EPS for 2010 $1.25/sh and cash eps $9/sh versus yours $17/sh. What
> is the market missing? Thanks
This company is a chartist dream because its has followed every price target to a "T" from 9 all the way to 22..as long as management doesnt do anything stupid, it should continue this trend.
This was a GREAT company from 52 all the way down to under $6 bucks if you ask the author (hence all my negative posts), however I can see it pushing up past $30 in the next 6 months as long as oil prices keep going higher and higher (bad for the consumer obviously).
On Oct 23 01:52 AM CNBC Kicker wrote:
> Chill out guys. I love ATPG and buying before earnings. Hope to get
> a $3-$4 pop.
billf921...I like a guy that looks past the fluff and brings up counter-points....nice work. You may want to hit the spell check a little harder though ;o)
On Oct 24 09:16 AM billf921 wrote:
>
> to Devon shire, Swizzled, Azharm, et al
>
> Try to balance your thesis with risk factors once in your life<br/>
>
> Your NAV calculation is ludicous
>
> Did you tell everyone that Barclays has a sell on it?
>
> Did you tell everyone prof shorts arae shorting it?
>
> Did you tell everyone that they have over ONE BILLION IN DEBT + off
> balance sheet expense commitments to ge for the Innovator?
>
> Did you tell people they can even pay Diamond Offshore for drilling
> expenses?
>
> Did you tell anyine that atpg cant pay for the titan and had to defer
> 89 m?
>
> Did you tell anyone that they owe gifi for the 2nd min doc they cant
> afford?
>
> No i dont think so
>
> Until you do, you will afectionatly be called the hyping hyena!<br/>
>
> Go look at exxi and do your same magic
>
> This guy is so sensitive he will probably run to seeking alpha to
> have me banned
You are one confusing fellow William. In a prior conversation you told me the following:
“I,also am long atpg, but i dont need to hype it non-stop . I think a double in production is doable as well as a double in price to the 30 and 40
You are one confusing fellow William. In a prior conversation you told me the following:
“I,also am long atpg, but i dont need to hype it non-stop . I think a double in production is doable as well as a double in price to the 30 and 40's. Beyond that, is a pipe dream.”
Here is the link to it:
seekingalpha.com/insta...
So you are also an ATP shareholder and think it could trade for $40. That’s a pretty bullish opinion. Why do you think it could trade for twice the current price ? You must like something about it. Considering how much time you spend making negative comments about the company it’s a bit of surprise that you are a shareholder.
“Devon shire is a well know lunatic that also goes by Swizzle on yahoo. He posts incessanctly on Motley Fool and Yahoo under multiple niks and only post every good item he can scrounge up”
I do post a lot on the Motley Fool Board and the Yahoo board. I follow the stock closely and I find it helps me to consistently put my thinking in writing. I’m a little surprised that you think I’m using more then Swizzled as a username. You have read everything I’ve written (you’ve told me so) and I would have thought you could spot the difference between me and someone who rants on about “frying the shorts” on an hourly basis.
I also am surprised that you would bring this up as I’ve been told by a few people that you post on the yahoo board as “Aliceoilexpert” and “Falcontix” and as Billy921. I read a few posts by all of those names and would have to say that they all certainly look like your writing. Same content, same comments about Swizzled as being a hyping hyena. Same $1mil of interest every 3 days comment. Same abbreviated writing style full of spelling errors. But honestly, I don’t care who provides the comment. I care about the content.
“he doesnt tell you that atpg is so debt laden that its interest cost is 1 m every 3 days or 40 dollars a barrel on current production”
C’mon Bill. You have read everything I’ve written. In each Seeking Alpha article I’ve written I’ve referred the reader back to my prior articles. The very first one covered the debt in very specific detail. In fact my mantra for months to anyone who would listen has been that ATP is either going to be a $70 stock or bankrupt. I felt that the asset value per share was multiples of the stock price, but that they had near term liquidity and covenant issues. You had to make the decision about whether or not they can handle their debt load prior to bringing Telemark on production. My analysis showed me that they could. Shareholders have suffered more dilution than I expected which has hurt value per share, but that dilution has taken away a huge amount of risk.
Here is my first article which covered the debt in detail.
seekingalpha.com/artic...
“They are so broke that thy ask their drilling company for debt extensions, they ask they floating production maker for deferals and they did the same with octobuoy”
It’s true they did get arrangements where payment for services would come out of production. I thought it was extremely positive for the company to have these arranged. Their vendors are willing to provide their services for very little cash now and take on full reservoir and production risk for their payment.
“they own so many people so much money, very little will flow to them”
These are the kinds of statements that you make that do annoy me. Why don’t you provide some support for this statement ? Why do you own shares if this is the case ?
The deferrals that they have arranged on the Telemark property total $200mil. With Telemark on full production next June ATP is going to have an annual cash flow from operations (assuming current oil prices) of over $800mil. So one quarter will cover the entire amount owed. The assumptions I used to arrive at those cash flow estimates are the current 100 million cubic feet a day of production, plus the incremental production from the 6 wells that are coming on line that I covered in detail in the article that these comments are attached to. The cash flow beyond this $200mil that they owe will go into Cheviot which is going to increase their production by an amount similar to what Telemark will.
Challenge my numbers. Do some work rather than make statements without evidence.
“Your NAV calculation is ludicrous”
Which part is ridiculous ? Again, no support. Just a statement. The independent 3rd party reserve engineers provide the PV10 number of $5.3bil that is the basis for the valuation. Tell me why it is ridiculous. Can you ?
And guess what. I think $5.3bil likely understates the PV10. So not only do I think that it is not ridiculous, but I think it is too conservative. And I’ll tell you why (I won’t make a statement without reasoning which is all you seem capable of). First, ATP found 3 times the expected reserves at the Mirage well. That means a pretty significant increase to the 3rd party reserve report. I think it could mean another 15 million BOE (Morgus/Mirage had 35 million BOE combined, so if you have triple what you expected at one of the two, a 15 million BOE increase is likely conservative) Second, they drilled an exploration well at Wenlock that hit pay and was put on at 50 million cubic feet a day (20% is ATP’s), these reserves were not in the 3rd party reserve report. Third, there is no oil/water contact known at either Morgus, or Atwater 63. There are additional reserves there, none of which are included in the $5.3bil PV10 figure. It could be significant. There is an excellent post on the Motley Fool Board by TMFDoodlebugger that covers the Telemark reserves. He thinks reserves at Telemark could easily double over time. Fourth, the $5.3bil PV10 figure was calculated with oil at $70 and gas under $4. Oil is now $80 and gas closer to $5.
So please tell me how the number is ridiculous. I’m willing to listen, just provide some reasoning to support your usual statement. I think my estimate is conservative.
“Did you tell everyone that Barclays has a sell on it?”
Are you kidding me ? You want me to tell everyone that Barclays has a sell on it but you don’t mention that there have been 6 recent upgrades ? Not one. Six. Do you even have proof that Barclays has a sell ? Here are the recent upgrades:
Sanders Morris
Canaccord Adams
Pritchard Capital
Wunderlich
Global Hunter
Howard Weil
“Did you tell everyone prof shorts arae shorting it?”
Yes. Read my articles. I’ve frequently questioned to wisdom of being short a stock that has a net asset value so many times it’s current share price.
“Did you tell everyone that they have over ONE BILLION IN DEBT + off balance sheet expense commitments to ge for the Innovator?”
Yes, again go to my earlier articles which mainly focused on the debt. Please name me a single E&P company that doesn’t have off balance sheet commitments that relates to the cost of lifting and transporting production. They also have future salary costs, and will have future toilet paper expense for the office as well.
“Did you tell people they can even pay Diamond Offshore for drilling expenses?”
You already mentioned the deferrals once. What you are doing is trying to make a very long list of things. I guess better that than make a short list of valid criticisms.
“Did you tell anyine that atpg cant pay for the titan and had to defer 89 m?”
Same point again on the deferrals. $200mil of deferred costs that will come out of Telemark production. Once Telemark is producing ATP will have over $800mil in cash flow and over $1bil in annual revenue. I believe these deferrals are a positive, not a negative.
“Did you tell anyone that they owe gifi for the 2nd min doc they cant afford?”
What do they owe them ? I’ve read all of GIFI’s disclosures, listened to their conference call and haven’t seen anywhere that ATP owes GIFI anything for delaying the MINDOC II. If you can provide some evidence (it is obvious that you can’t as you have raised this issue without evidence multiple times without providing evidence) please do.
“Until you do, you will afectionatly be called the hyping hyena!”
I like the nickname. Thanks.
“This guy is so sensitive he will probably run to seeking alpha to have me banned “
We would I do that ? When haven’t I ever replied to your lovely posts ?
“admit it to the world, you gave the cfo your nav calculations
admit it, im calling you out”
Do you think I somehow invented the idea of a NAV calculation ? Is ATP the first oil and gas company you have read something about ?
Here is a link to a 2004 presentation that ATP gave. In it is of all things…..a NAV calculation !
media.corporate-ir.net...
Here is another ATP NAV calculation presented by West Coast Asset Management at the 2008 fall Value Investing Congress. Before I even owned shares ! Someone else calculating a NAV per share for ATP ! That must mean that I am also a member of West Coast Asset Management ! Just like I am every other person on the internet ! Didn’t you even suggest that I am Al Reese once ?
seekingalpha.com/artic...
And here is a link to West Coast Asset Management’s investing book that they wrote. In it they discuss ATP Oil and Gas.
search.barnesandnoble....
Why do I keep replying to you ? I don’t know. You touch on some valid points. But you list 15 things when only 2 of them make sense, sometimes repeating the same thing 4 different ways. I suspect you are not a shareholder of ATP and have some motivation to try and discredit anything positive written about them. But as I have always said to you, some of your points are valid.
So keep on doing what you do, and the hyena will keep hyping. I think pretty much everything I write is pretty well supported with evidence or reasoning. I’m sure you will disagree.
The really important thing though is that this company still needs to execute and bring this production on line at the rates they have indicated. Until then, the outcome of my investment is not known in my opinion.