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ATP Oil & Gas: Dramatic Share Price Decrease Seems Likely.

|Includes:BP p.l.c. (BP)
Atpg stunned the world when they released their quarterly earnings and admitted things are going very poorly.

Quoting from the release:
“The second quarter of 2010 and the early part of the third quarter has been one of the more challenging periods in the company’s history”

First the good news ……………….Revenue was    101 m

Expenses totaled    ………….                                  235 m

Resulting in a pre tax loss of 134!!

It could have been worse as they had 24 in gains from hedges.

So 260 m in expenses vs. 101 m in revenue means they are spending 2.6 dollars for every dollar of revenue

A company can not exist for very long out spending revenue.

As bad as the PL is, the balance sheet is worse. They have completely tapped all their credit lines and have 206 m in cash. They owe 263M in Accounts Payable and have 84 m in other current liabilities. An analyst on todays called picked up on that and asked you only have 200 m in cash and your ap is 263!!

They have long term obligations of 516 m and also 1,650 in debt.

All in all, the liabilities total 2.6 b.

Given that they only have 200 m in cash, and assuming a 50 m a month burn rate, they will be completely out of cash in 4 months. So, Atpg needs to raise more money perhaps equity. perhaps assets sales. The only hope is they sell a piece of the Titan as Al Reese said today , its 2 weeks away, but he acknowledged he been saying that for 4 months

There is no way the operations support at 14 dollar price.
It’s highly probable that dramatic Share Price Decrease Seems Likely.

Well its fell from 14 to 11. I still say sell as single digits are coming imho

Disclosure: no position in atpg, i try to invest in money making companies

Disclosure: no positions

Disclosure: no positions
Stocks: BP