ATP Reports 376% Reserve Replacement, Earnings
ATP Oil & Gas Corporation issued its annual 2009 results, a 376% reserve replacement ratio, and announced that its major deepwater Gulf of Mexico development, the Telemark Hub, is on schedule for first production later this month. At ATP's other deepwater development, the Canyon Express Hub, the MC 217 #3 well was placed on initial production March 11, 2010 at 30 MMcf/d gross.
Telemark Hub Update
ATP's major deepwater Gulf of Mexico development, the Telemark Hub, is on schedule to commence production during March 2010 from the Atwater Valley 63 # 4 well. This well was tested in February at a gross rate in excess of 10,700 Boe/d from two zones. The ATP Titan, the Telemark Hub's state-of-the-art floating production and processing facility, is in the final stages of commissioning following the installation of all major production and processing components. The sales pipelines have been hydro-tested and dewatered.
The initial sections of the Nabor's platform rig 202 began arriving this week. Following erection of the drilling rig on the ATP Titan over the next several weeks, ATP will begin the process of re-entering and completing the Mississippi Canyon ("MC") 941 #3 well. The MC 941 #3 well, which has been drilled and cased, is expected to commence production in the second quarter 2010. In September 2009, this well encountered 266' of net pay, triple the amount of net pay found in the original control well.
ATP operates the Telemark Hub with a 100% working interest and owns 100% of the ATP Titan and associated pipelines and infrastructure.
Canyon Express Hub Update
At King's Peak, the MC 217 #3 well began production through the Canyon Express pipeline on March 11, 2010 at a gross rate of 30 MMcf/d. At Aconcagua, MC 305, two additional wells, the #3 and #4, are scheduled to resume production at a rate of 30 MMcf/d gross, bringing the entire Canyon Express Hub production rate up to 60 MMcf/d gross.
ATP operates the Canyon Express Hub with a greater than 50% working interest in the wells and associated pipelines, which have a throughput capacity of approximately 500 MMcf/d.
Results of Operations
Oil revenues rose to 75% of total oil and gas revenues in 2009 compared with 56% in 2008. Oil and gas production for 2009 was 5.9 MMBoe compared to 9.6 MMBoe for 2008. In the fourth quarter 2009, ATP produced 1.3 MMBoe compared to 0.9 MMBoe in the fourth quarter 2008. With the startup of production at the Telemark Hub, ATP anticipates a further increase in its oil revenues as a percent of total revenues as well as its oil to gas production ratio during 2010.
Lease operating expense was $85.0 million for 2009 and $24.5 million for the fourth quarter 2009, compared to $91.2 million for 2008 and $18.1 million for the fourth quarter 2008. Lease operating expense for 2009 decreased compared to 2008 primarily due to the sale of 80% of the two North Sea properties mentioned above and from reduced fuel and chemical costs in the Gulf of Mexico. These cost decreases were partially offset by increases related to insurance premiums and nonrecurring workover activities at various Gulf of Mexico and North Sea properties.
General and administrative expense was $44.2 million for 2009 and $19.1 million for the fourth quarter of 2009, compared to $41.7 million for 2008 and $14.4 million for the fourth quarter of 2008. The general and administrative expense increased in 2009 compared to 2008 due primarily to the payment of third party fees related to ATP's debt modification in the fourth quarter 2009.
Interest expense decreased to $40.9 million in 2009 compared to $100.7 million in 2008 primarily due to 2009 capitalized interest of $110.1 million compared to capitalized interest of $44.6 million in 2008. Capitalized interest in 2009 increased due to higher average construction work-in-progress balances.
ATP recorded a net loss attributable to common shareholders of $51.8 million or $1.24 per basic and diluted share for 2009, compared to net income of $121.7 million or $3.43 per basic and $3.39 per diluted share for 2008. For the fourth quarter, ATP recorded a net loss of $40.0 million or $0.80 per basic and diluted share, compared to net income of $50.2 million or $1.41 per basic and diluted share for the fourth quarter 2008. Fourth quarter results were impacted by delays related to a well recompletion at ATP's Gomez Hub. The recompletion of the MC 711 #4 well was successful in January 2010 and, as a result, the comingled well tested at a net rate in excess of 4,600 Boe/d.
The net loss for the fourth quarter 2009 was impacted by several nonrecurring items research analysts typically exclude from their published estimates including an after-tax impairment at several Gulf of Mexico shelf properties of $24.1 million, an after-tax gain on the sale of properties of $8.5 million, an after-tax expense of $4.0 million relating to debt modification and an unrealized after-tax loss on derivatives of $10.1 million. Accordingly, net loss before these nonrecurring items, a non-GAAP measure, in the fourth quarter 2009 was $10.3 million or $0.20 per basic and diluted share. For the same metric in 2008, ATP recorded net income of $78.4 million or $2.21 per basic and $2.20 per diluted share.
- Lessons from ATP Bankruptcy There for Those Who Listen (Jun 30)
- Cosco Discontinues Octabuoy Hull and Topside Module Project (Jan 12)
- Cosco Reveals Buying Interest for Octabuoy Hull and Topside Module (Jul 23)