ATP Oil & Gas Corporation announced first quarter 2009 net income, results and update.
Results of Operations
ATP recorded net income of $1.6 million or $0.05 per basic and diluted share for the first quarter of 2009, compared to net income of $46.8 million or $1.31 per basic and $1.29 per diluted share for the first quarter of 2008. Oil and gas production for the first quarter of 2009 was 1.7 MMBoe (10.0 Bcfe) compared to 3.6 MMBoe (21.6 Bcfe) for the first quarter of 2008. Oil production was 0.9 MMBbls (55% of total production) and natural gas production was 4.5 Bcf for the first quarter of 2009, compared to 1.6 MMBbls (45% of total production) and 11.8 Bcfe for the first quarter of 2008. In December of 2009, ATP sold 80% of Wenlock and Tors in the U.K. North Sea, which impacted production for the first quarter of 2009. Production was further impacted by curtailment of production at Gomez due to third party pipeline repairs in the Gulf of Mexico. Revenues from oil and gas production were $68.3 million for the first quarter of 2009, compared to $226.0 million for the first quarter of 2008 primarily due to the drop in oil and natural gas prices and the production details noted above. New wells at Gomez and Wenlock and properties placed back on production following hurricane related repairs in the Gulf of Mexico resulted in a 90% increase in production for the first quarter of 2009 compared to the fourth quarter of 2008.
Capital Resources and Liquidity
On March 6, 2009, ATP and GE Energy Financial Services ("GE") jointly announced the formation of ATP Infrastructure Partners, L.P. ("ATP-IP"). ATP contributed the ATP Innovator to ATP-IP for a 49% limited partner interest and a 2% general partner interest. GE contributed $150.0 million to ATP-IP for a 49% limited partner interest. The ATP Innovator is the floating production facility located on Mississippi Canyon Block 711, currently serving the Gomez Hub. The transaction was effective June 1, 2008 and allows ATP exclusive use of the ATP Innovator during the term of the Platform Use Agreement. ATP remains the operator and continues to hold a 100% working interest in the Gomez field and its oil and gas reserves. Under the partnership agreements, ATP will pay to ATP-IP a minimum fee or a per unit charge for all hydrocarbons processed by the ATP Innovator, and all partners will be entitled to future quarterly cash distributions in accordance with the provisions of the agreement. As a result of this transaction, ATP reduced its long term debt by $31.2 million in March of 2009 and will reduce debt by another $5.2 million in May of 2009.
Working capital, as defined in ATP's Senior Secured Credit Facility was $43.4 million as of March 31, 2009. ATP had unrestricted cash of $103.4 million and restricted cash of $13.5 million at March 31, 2009, as a result of the successful well at Gomez in the first quarter of 2009, the $13.5 million of restricted cash was released in April of 2009. During the first quarter of 2009, ATP incurred $33.5 million of interest expense. ATP capitalized $20.9 million of this interest, which was directly associated with the construction of the ATP Titan and the Octabuoy. For the quarter ended March 31, 2009, ATP was in compliance with all the terms of its credit agreement. Further, based on the Company's projections, ATP believes that it will remain in compliance with all of its financial covenants throughout 2009.
During the first quarter 2009 ATP incurred $167.0 million of capital expenditures on oil and gas properties. These expenditures were incurred predominately at ATP's three major 2009 developments, the Gomez Hub and the Telemark Hub in the Gulf of Mexico and Wenlock in the North Sea. In March 2009, ATP placed on production the Gomez #8 well and the Wenlock #2 well. ATP is currently drilling the #3 well at Wenlock and expects the well to be completed and on production during the second quarter of 2009. ATP is tightening its estimated capital expenditure for 2009 to $300 million to $400 million from the previously announced estimate of $300 million to $500 million. The focus of ATP's remaining program for 2009 will center on finalizing the drilling and completion of the Wenlock #3 well and achieving first production at ATP's Telemark Hub. ATP anticipates funding its capital program in 2009 from cash on hand and cash generated from operations. In addition, ATP is actively pursuing the sale of certain infrastructure assets and selected oil and gas properties to further reduce debt and improve liquidity.
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