A judge has cleared ATP Oil & Gas Corp. to tap a $617.6 million bankruptcy loan to fund its operations, including the construction of a key oil pipeline in the Gulf of Mexico, as it restructures its more than $2 billion in debt in Chapter 11.
Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston on Tuesday said the company can borrow up to $80 million on the $250 million "new money" portion of the loan and refinance $367.6 million in first-lien debt pending a Sept. 20 final hearing on its bid to use the full balance of the loan.
ATP, which sought Chapter 11 protection last week, said the bankruptcy loan from a group of lenders led by Credit Suisse AG will allow it to install a pipeline for two completed deep-water wells in the Gulf of Mexico.
In court papers, the company said the "very promising" project would put it on a path to "considerable, short-term improvement."
"This low-risk project remains a source of immediate cash flow and considerable potential value to the estate and its constituencies," ATP said.
ATP has blamed its financial woes in part on the drilling ban put in place in the Gulf of Mexico, where 90% of its wells are located, after the disastrous 2010 Deepwater Horizon oil spill. It resumed drilling in the Gulf last spring.
"While the moratorium adversely affected all companies involved in deep-water drilling in the Gulf of Mexico, the impact was especially profound on ATP, which is a smaller company than its principal competitors with a heavier concentration in the deep-water Gulf of Mexico," ATP said in court papers.
The Houston company was founded in 1991 by T. Paul Bulmahn, its former chief executive and current chairman. It drills for oil and gas in the Gulf of Mexico, Mediterranean Sea and North Sea. Its deep-water drilling operations are costly and often plagued with complications.
Earlier this year, the company faced operational problems at its platform in the Gulf of Mexico and a deep-water well in the Mediterranean. In early June, its newly hired CEO, Matt McCarroll, left after just a week and rescinded his purchase of 1 million of ATP's shares.
Copyright (c) 2012 Dow Jones & Company, Inc.
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