ATP Oil & Gas (ATPG) is currently involved in drilling an exploratory well 50 kilometers east of the Yam Tethys reserves offshore from Ashkelon, Israel. The company estimates that it will find no less than 2.3 trillion cubic feet of natural gas in the area, which should have remarkable implications for the company's success and the sustainability of its stock. Though, the estimated probability of success is 15%. ATP is serving as Shimshon's operator in the scenario and Shimshon is owned partially by Isramco (ISRL). Isramco recently sold 10% of the license rights to Modiin Energy. ATP Oil & Gas itself has a 40% stake in Shimshon, a company I expect will do very well in the upcoming months, due to this exploratory well currently being dug. This partial ownership, in turn, will have very good consequences for ATP stock.
However, this may be the only good news for ATP, at present. Very recently, ATP stock was crowded with stockholders who wanted to sell their stock in the company - leading, ultimately, to an oversold status. This could, however, be good news for any bullish investors out there who have an interest in ATP stock. If you consider that the heavy selling trend may be in the process of exhausting itself, it could be time to start looking at entry point opportunities on the buy side which could, in the long run, benefit you greatly.
Investors have flocked to sell ATP stock as the company continues to slip. With few signs of progress on the horizon, aside from the Israel drilling, the stock may drop lower. Risk-taking investors could take the opportunity to buy low, though I can't say for sure that any growth is due for the foreseeable future.
The eyes of the world are on ATP competitor BP (BP), as it continues to battle the fallout of the Gulf oil spill two years after it occurred. Recently, an ex-employee of the company was released on bail following an appearance in court. Kurt Mix was accused of covering up the severity of the spill and hiding information indicating that the recovery measures BP put in place were not expected to work. BP insists that it is doing everything in its power to cooperate with the investigation and to preserve evidence so that the truth is revealed.
This arrest is likely to delay the approval of a preliminary settlement of $7.8 billion, BP is trying to negotiate with plaintiffs. In addition, a group of shrimp processors in the area insist that the courts hold off before making a final decision about the settlement amount. They feel that the settlement unfairly excludes them from being sufficiently compensated for the damage caused to their industry by the spill.
The oil industry does not seem to have a lot of positive news lately. Even Chevron's (CVX) recent success in a lawsuit in Nigeria can be seen in a bad light. Although the company has been acquitted for all wrongdoing in the case where several Nigerians were killed, the ramifications of the lawsuit itself can be far reaching. Companies do not need to be in the press for negative reasons such as these, especially those that involve murder. Local Nigerians protested Chevron's activities in their area, claiming that the company was causing pollution. The protest, according to Chevron, turned violent and local Nigerian armed forces were contacted for help. The armed forces in question opened fire on the Nigerian protestors, killing two and wounding another. Again, however, Chevron was acquitted of all wrongdoing and looks to move forward. It will focus its attention, once more, on oil and gas production.
Anadarko Petroleum (APC) has recently made a discovery of a new gas source off the coast of Mozambique. This marks Anadarko as one of the few oil and gas companies in the press for positive manners, specifically in terms of gas production. With other competitors, including ATP struggling, look for this discovery to put Andarko ahead of the game, at least in the minds of oil and gas investors.
However, Anadarko is not the only company to have made a discovery in the area. Eni (E) has also made discoveries in the area and may therefore also benefit along with Anadarko. In addition, Mozambique authorities announced their intention to allow companies to bid for the right to drill in the areas where the gas was discovered. This may result in a bidding war, in which Andarko will have to release some of its cash. If it wins the bid, however, and the gas source turns to be plentiful, it will benefit Andarko considerably moving forward.
Cabot Oil & Gas (COG) may be ATP's most successful competitor at the moment. While other companies flounder in lawsuits, Cabot has made moves to ensure fiscal success. One of the bigger projects it's currently involved with is a pipeline that will run from Pennsylvania to Tennessee and will carry enormous amounts of gas. Although Cabot will not be the primary owner of the pipeline, its 25% share will certainly make a difference for its stock. The pipeline is expected to come online in 2015, meaning that now would be the best time to buy Cabot stock, in my opinion. Assuming work with the pipeline continues successful until its launch, Cabot should have minimal investment and great success.
In the light of Cabot's success with its pipeline running through America, ATP must hope that it can find internationals success. Its new discovery could be a game changer for the company, but only if its found to provide the enormous amount of gas predicted. Watch for movement in the offshore reserve and see if ATP can contract itself to handle the new gas production. That should go a long way in predicting its success.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.