Devon Shire

ATP Oil & Gas: Production Should Triple in Next 9 Months

Hi Mark,

1) They do have a fair bit of the Gomez production hedged, but hadn't hedged any Telemark production as of the last 10Q. As Telemark is going to be producing close to 200MMcfe/d when fully on production vs the entire company production of 100MMcfe/d in Q3 09 that means they have quite a bit unhedged. Interestingly the oil hedges ATP has have re-participation clauses whereby if oil gets over $97 the hedges come off. Clearly they think oil prices could spike up in the fairly near future.

2) Can you provide some examples of the $10 per barrel transactions. Were they really oil producers or were they weighted towards gas ? Were they sellers under real pressure to unload assets ?

3) It's really only a guess as ATP is willing to say that they expect an increase but won't give much color until the 3rd party engineers do the work. They did give a nice hint though in their most recent presentation and in an interview Al Reese did on Bloomberg. In both instances they suggested that Telemark may now be their largest property instead of Cheviot. That would mean about at 20 million BOE increase at Telemark at a minimum. I think the increase at year end could actually be a fair bit bigger than that as they have also indicated that there will be reserve increases at Wenlock, Ladybug and Gomez in addition to the new pay sands at Mirage.


On Dec 06 09:34 AM Offering wrote:

> Hey Devon,
>
> Hope your doing well. I had a great trade. Second best of the year
> with ATPG. Watching for now with a potential rally in the dollar
> could add more pressure to oil. I have a couple of questions about
> ATPG and it's value.
> 1-Do they have any of there production hedged? Reason for asking,
> is that if the dollar rally hard, Oil could have a nice pullback
> into first quarter.
>
> 2-Does anyone have a good feel how the reserves are priced. I'm looking
> for other Oil companies that have been sold recently and it's closer
> to $10 a barrell of oil. Making ATPG closer to a $40 target vs. your
> $80. Either way a premium from here.
>
> 3-Also How much of an increase in proven reserves could be coming?
> They mentioned a increase, a few months back. But nothing since then.
>
>
> Thanks again for you informative posts....
>
> Mark

ATP Oil & Gas: Production Should Triple in Next 9 Months

Mind Geek wrote:

"You'll be pleased to hear no doubt to know that you will no longer be "geeked". I will thank you 1 last time however for making me aware of this company...it trades like a schizophrenic biotech on steroids..what every trader hopes for! Onward and upward"

What happened ? This was like two days ago and I see you've posted twice more since then ! I thought I was free from any more "Geekings" ?


On Nov 09 01:06 AM mind_geek wrote:

> Devonshire wrote:
>
> What do you think ATP actually gains by anyone writing a positive
> opinion on a blog ? How can my writing help them find more oil and
> gas or develop it economically ?
> ______________________...
>
> I have to at least comment on these statements...
>
> - Most people dont write up elaborate articles about a company for
> the fun of it..they do it because thousands of people read it and
> yes, it helps prop up a stock (you claimed it yourself in a response
> to my post on how well the stock did after every article). Rumors
> and opinions always cause movement in a stock..this isnt exactly
> a small forum and this isnt exactly a large company. If you had wrote
> an article about Exxon, then no it probably wouldnt have mattered.
> Just stating the obvious.
>
> After this latest batch of bad news for the company...wait another
> week or 2 to send out a new, glowing ATPG post and we'll see what
> immediate effect it has on the stock.
>
> In case anyone cares...as predicted it fell to around $16.50 on Friday
> (read my last post) and I bought in again since its in an oversold
> pattern for now. Oil seems to bottom out at $77 and then proceeds
> to go into the low $80s over and over..SGY & ATPG are 2 of your
> best oil plays for this see-saw action.

ATP Oil & Gas: Production Should Triple in Next 9 Months

I'm not sure why you continue our conversation. I'm certainly not getting anything out of it and I doubt that you feel that you are either.

So I'll answer your questions and maybe we can wrap it up for a while.

" 1. Overall..have you actually made any money on this stock?"

At this point $18, yes I'm up quite a bit. I was certainly hurting at $3 and more importantly at that point I thought I may have lost all of my investment. I started in last fall at $16.80. I averaged down several times under $10 every time they executed as they said they would (received the Wenlock proceeds, sold the Innovator, arranged for the NPIS). But I haven't sold, so I haven't locked in any gains.

"2. Are all these countless hours and articles on a single company
> worth all the time you spend doing them?
> (Honestly its very bizarre for a supposed passive investor to investigate
> every doing and intricate detail of a single company, post it to
> the world and get extremely defensive EVERY time anything negative
> is posted..who actually does that??)"

I guess only I do that. I knew I'd be sitting on this investment for a long time and it was getting uncomfortable so I started writing about it. Therapy I think. I guess I get defensive about your comments because I think they are pretty much out to lunch. You think a stock is a piece of paper, I think it is an ownership in the business. You've done (as you have told me) 30 minutes of research and make comments about how terrible management is. I've looked at every move they have made over 10 years and have a different opinion. I think I'm quite open to different opinions about this thing. Hell, I even agree with Billy on some things and have said so. What I'm not real agreeable to are statements that are supported by no facts or reasoning. But you are making tons of money by doing the opposite of me, so who am I to say.

"3. Is this your only investment? Do you post this much info on every company you own stock in?"

It isn't. It is the only one that I felt had the chance to go up an enormous amount in a pretty short time frame (a couple of years) though. I do only own a couple of other stocks and they have been performing (the companies) very well so they really haven't been all that interesting to write about as they aren't all that undervalued any more.

"4. Is this your full time job and how much is ATPG paying you?"

It's not my full time job and they certainly aren't paying me. What do you think ATP actually gains by anyone writing a positive opinion on a blog ? How can my writing help them find more oil and gas or develop it economically ?

So I've answered your questions. I'll let you have a reply and last word. I see someone else wrote a bullish Seeking Alpha article on ATP today. Find out if they have him on payroll and let me know. I am willing to accept cash and I think my articles are quite a bit better than his so I should be on a higher pay grade.


On Nov 04 01:41 AM mind_geek wrote:

> Well I guess you got me there...I was thinking shorter term than
> "article date such and such" now 6 months later up X.XX%! Everything
> goes up eventually...and down eventually if you stretch that date
> out to to suit your point. There were MAJOR dips in between your
> article dates...enough to give the avg investor a bloody heart attack!
>
>
> My last article stated..."My guess is its patterning down again slightly
> for Monday (happened)...and then a total reversal of sentiment that
> things are once again rosy as the week goes on" (happening). Im not
> pulling this stuff out of my kiester....theres a logic to the madness.
>
>
> "buckets" of money for me are not in the billions as you so -cleverly-
> suggest. Im hardly rich and maybe only right about 60% of the time
> on stock picks in general...it only matters making money on the patterned
> and hedge fund friendly stocks (aka..manipulated) that follow what
> the charts and volumes are telling me. Always keep a tight stop loss
> to minimize the damage if wrong (and I wrong often)...nothing hard
> about investing if you are disciplined.
>
> Lets try a 3rd time to see if you can actually answer these simple
> questions that I keep asking over and over...
>
> 1. Overall..have you actually made any money on this stock?
>
> 2. Are all these countless hours and articles on a single company
> worth all the time you spend doing them?
> (Honestly its very bizarre for a supposed passive investor to investigate
> every doing and intricate detail of a single company, post it to
> the world and get extremely defensive EVERY time anything negative
> is posted..who actually does that??)
>
> 3. Is this your only investment? Do you post this much info on every
> company you own stock in?
>
> 4. Is this your full time job and how much is ATPG paying you?<br/>
>
>
> Unless you have significant amounts of money tied up in just this
> 1 stock...Q4 looks pretty obvious...

ATP Oil & Gas: Production Should Triple in Next 9 Months

I haven't ever really looked at EPS. More interested in cash flow.

I've plugged in the company numbers from their last presentation with respect to production from Telemark and assumed they complete the Gomez sleeve shift as expected. Using $75 oil and $6 gas I see revenue in 2010 of $931mil and cash flow from operations of $745mil.

If Cheviot comes on in 2012 I believe ATP will have over $1bil in revenue every year from 2011 - 2014. That assumes no major hurricane shut downs and oil averaging just over $80.


On Nov 02 07:51 PM Offering wrote:

> Hey Devon,
>
> Do you have any feel for EPS or estimates? I'm uncertain with the
> contractors sharing revenues from Telemark. Also I'm not sure of
> cost basis. I guess difficult to predict...Do you have any projections
> of EPS next year?
>
> Thanks,
>
> Mark

ATP Oil & Gas: Production Should Triple in Next 9 Months

I think what you are actually referring to is that production levels will double in 2010. Revenue levels is going to be much more than a double in 2010 over 2009 levels. There is first the benefit of the much higher production (see my article or the company's last presentation), then the fact that they are going be even more heavily weighted to oil (Telemark is 76% oil) and finally they are going to be selling oil at higher prices than 2009.

They will likely not hit a billion in revenue in 2010, but by June/July their annual run rate will be over a billion if production ramps up as expected. Telemark comes on in stages during the first half of the year.


On Oct 31 09:39 AM Offering wrote:

> Hey Devon,
>
> Always enjoy your posts. Not sure if you have read the last presentation
> by ATPG, but the CFO states that a double in revenues is possible
> (ref: Bloomberg interview). Now I'm not sure if he is reffering to
> this years revenues and it will double next year. I think he stated
> that 1 billion in revenues is not out of the questions...Maybe run
> the numbers on EPS at a billion and it may give you a better picture.
> But I'm not sure how much of that will got tot he contractors for
> their services.
>
> Enjoy the posts,
>
> Mark

ATP Oil & Gas: Production Should Triple in Next 9 Months

I have to say Mr. Geek. Your investing ability is impressive. Yes, it is embarrassing to watch you make money by doing exactly the opposite of what I suggest. But impressive nonetheless.

Look at how you have played me for a fool:

Article 1 published April 25 - Value after a stock and commodity collapse. Stock price at the time $6.36. Stock price now $17.50. 6 months have passed and the stock is up 275%. Certainly not up to your standards.

Article 2 published May 17 - ATP forgotten infrastructure value. Stock price at the time $7.00. Stock price now $17.50. 5 months have passed and the stock price is up 250%. Again, not up to your standards.

Article 3 published June 3 - 10 upcoming catalysts for ATP. Stock price at the time $9.01. Stock price now $17.50. 4 and a half months and stock price is up 194%. Just not what you are looking for.

Article 4 published Oct 5 - Production should triple in next 9 months. Stock price at the time $16.50. Almost a month ago and stock price is up 6%. That is awful. Only 6% in a month.

And to think. You are making buckets and buckets of money doing the opposite of what I suggest ! How much are you making ? The average annualized returns since my articles have been written must be over 400%. And you are somehow using me as a contrarian indicator to make gobs of money !

All I can say is congratulations. But I have to ask. If you are making that much money with all of 30 minutes of research how rich are you ? Do you have $500 million ? A billion ? More ?

I think Warren Buffett is pretty much the greatest stock investor of all time. His real glory years were the 1950s when his partnership averaged 29% per year. And here you are making multiples of this spending 30 minutes per investment. I'd suggest you write a book immediately, but why bother if you can play fools like me so easily without sharing your secret.

Here is what I think you should do. Next time when you get one of your ideas (other than simply doing the opposite of me which is like taking candy from a baby) how about you post here at the time you buy or short the stock. Your reports on the incredible amounts of money you make after the fact are great, but I'd really like to see it real time so I can put to rest any doubts that someone might have that you are full of it.

Now, with respect to me. I'm doing ok on this investment. I started buying in Oct 2008 as the panic was really getting going. I think I started in above $16 and averaged down most of the winter. I didn't ride it down from $55 as you suggest, but I'm not in at the bottom either. I feel damn lucky oil has turned around as fast as it has or this could have had a very bad outcome for me. I'm very optimistic that the stock price could be quite a bit higher by next June as this production comes on and oil prices keep rising. I'm hoping the Saudis do not loosen too early, as I believe they have the ability to control the price at this point.

I will write again in the future. Likely after we have a better idea of the upside in the reserves at Telemark. So get your considerable resources ready to short again after I "Pump" again.

Until then I will remain humbled by your ability to use me as your contrarian indicator to make vast amounts of money.


On Oct 30 02:55 PM mind_geek wrote:

> Bottom line is to make money on a stock... period. Im not sure what
> your avg cost is...if you rode this glorious company from 55 down
> to 6, if you bought at 6 and rode it up..etc, but with your blind
> faith and countless hours of research (Im betting youve invested
> a significant amount of time and effort offering rebuttals to every
> post) have you actually made any money on this stock? Is there any
> other reason to own a stock??
>
> I spent 30 mins researching telemark, reserve ratios, sector analysis
> and most importantly pricing trends and charts. I made a bucket of
> money from 10 to 19, shorted it at 22 when your last article came
> out (best time to short is when the blogsters are pumping there stocks)
> and with todays market blow-up..looking to cover that short.
>
> You have been a relative pariah for when to buy and when to sell
> this stock..I typically do the opposite of the timing of your posts
> which has been a great system in itself (props to you). You may easily
> blow me out of the water with your endless knowledge and devotion
> for ATPG, but at the end of the day...have you really made any money?
>
>
> Your posts would be better suited as research reports than as investment
> advice.

ATP Oil & Gas: Production Should Triple in Next 9 Months

“its all hype”

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.

ATP Oil & Gas: Production Should Triple in Next 9 Months

“its all hype”

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

ATP Oil & Gas: Production Should Triple in Next 9 Months

"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."

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.
>

ATP Oil & Gas: Production Should Triple in Next 9 Months

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 ?




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!

Gulf Island Fabrication: Value with Deepwater Exposure

"just read an article by Devon Shire on ATPG, very enthusiastic although not very careful in discussing the balance sheet and creative financing."

Hi Tom,

I've written a few times on ATP. You should also read the first three articles as I believe I took a very detailed look at ATP's debt.

I don't believe the creative financing is a problem. It is a positive. ATP just raised $300mil in cash. Is raising another $300mil with the sale of half of it's interest in the ATP Titan. And then will be selling the Telemark pipeline for $160mil.

That is $760mil in cash against $290mil of creative financing and doesn't consider the fact that cash flow from operations will approach $800mil per year once Telemark is fully on production.

Let me know what you think.


On Oct 08 07:26 PM Tom Armistead wrote:

> Harry, I was not trying to imply that GIFI contemplates litigation
> against ATPG, or indeed that they have any legal claims against them.
> My concern was about the quality of GIFI's assets, the point being
> that if they have any WIP on MinDOCII that is posted as an asset
> I am not aware of any reason to suspect they may have to take a write-down.
>
>
> As I recall in discussing a dry dock they had built specifically
> for the MinDOCII at a cost of 17 million GIFI said they could put
> it to other uses. In any event, I expect the management of any company
> where I own shares to asset any legal rights they may have to protect
> my interests.
>
> I just read an article by Devon Shire on ATPG, very enthusiastic
> although not very careful in discussing the balance sheet and creative
> financing. Also not very specific in defining the types of cash flow
> discussed or the claims various parties may have on the cash. Devon
> Shire has not written anything on any other company.
>
> I then went back over the financials and visited the website, noting
> as you do that Diamond Offshore is a strong player and has participated
> in the creative financing. I looked at a presentation ATPG gave recently,
> the main contention was that the NAV of their energy holdings is
> something like 114 per share, compared to where the share prices
> are.now.
>
> My experience with other asset rich but over indebted companies suggests
> that the assets do get monetized, but all too often the shareholders
> see very little benefit. On the other hand, some of these highly
> leveraged energy ploys like KWK will do very well at times, they
> can have some pretty impressive runs, but you have to bail before
> they crash.
>
> Personally I think there is still a lot of value in energy stocks
> but I would be very hesitant to take a position in a company with
> a history of backing themselves into a corner by excessive borrowing,
> solving the problem by diluting shareholders and engaging in creative
> financing, and very possibly making bad deals in monetizing assets
> that should have been retained unencumbered.
>
> Tom

ATP Oil & Gas: Production Should Triple in Next 9 Months

I really have no idea of the multiple to place on this. I prefer the PV10 less taxes (discounted cash flow) sort of approach.

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.

ATP Oil & Gas: Production Should Triple in Next 9 Months

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

ATP Oil & Gas: Production Should Triple in Next 9 Months

Thanks for the comment.

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?

ATP Oil and Gas – Production will Triple in the Next 9 Months

I will look at VQ. Thanks for the tip.

Here is a link to another "hyper". West Coast Asset Management a reasonably well respected value hedge fund. They were hyping the $75 to $88 value per share back in early October 2008 at Tilson's value investing conference.

seekingalpha.com/artic...

And here is a link to the value investing book that they wrote where I first discovered ATP. They liked CEO Paul's employee challenge

www.amazon.com/Entrepr...

I'm a little insulted that after reading so much of my writing (you mentioned you had read everything I'd written on the Motley Fool Board) that you think I'm posting under any name other than Swizzled. I would have thought you'd know my writing style by now.

You commented above that you think ATP shares could trade in the 30s and 40s. So you must buy a lot of the hype. That is a double from here and a 5 to 7 bagger from the $6 it was at when I started writing.

So a triple so far from when I started and you are still nailing me to the wall. I don't mind though. Some of your points are good ones.


On Oct 07 01:34 PM bfras921 wrote:

> >Not sure why I my writing annoys you so much
>
> i only responded to you once unless you are talking about all those
> yahoo names you created to pump this.
>
> Its so one sided , its ridiculous
>
> go look at VQ its pv10 is 200 a share and its 12
>
> you shouldnt put all your assets in one stock. I know you gave al
> reese your analysis. He quoted it, lol. One hyper quoting another
>
>
> Try some balance and you willearn more respect