ATP Underscores Second Quarter 2009 Results
ATP Oil & Gas has announced second quarter 2009 results and provided a hedging update.
- Achieved initial production from two wells, one at South Marsh Island 190 in the Gulf of Mexico and one at Wenlock in the North Sea;
- Completed a $68.2 million common stock issuance, net of fees and expenses;
- Reduced long-term debt by $24.9 million in the second quarter and $58.7 million in the first six months of 2009;
- Hedged 2.2 million Bbls of crude oil at an average price of $68.36 per Bbl and 4.7 Bcf of natural gas at an average price of $6.08 per MMBtu.
ATP recorded net loss attributable to common shareholders of $4.4 million, or $(0.12) per basic and diluted share for the second quarter 2009, compared to a net loss of $11.8 million or $0.33 per basic and diluted share for the second quarter 2008. Oil and gas production for the second quarter 2009 was 1.6 MMBoe (58% oil) versus 3.1 MMBoe (46% oil) for the second quarter 2008. The partial sale of producing properties in the Gulf of Mexico and North Sea and natural declines contributed to lower production. Revenues from oil and gas production were $80.9 million for the second quarter 2009, compared to $191.8 million for the second quarter 2008. The decrease in revenues was primarily due to lower commodity prices and production.
As of June 30, 2009, ATP estimated its proved and probable reserves to be 193 MMBoe (57% oil) with a PV-10 value of $5.3 billion based on strip pricing in effect at June 30, 2009. Cash and cash equivalents as of June 30, 2009 were $100.2 million. Working capital, as defined in ATP's senior secured credit facility, was $34.3 million as of June 30, 2009. For the quarter ended June 30, 2009, ATP was in compliance with all the terms of its credit agreement. Moreover, based on the Company's current projections of production, asset monetizations, and existing liquidity, ATP believes that it will remain in compliance with all of its financial covenants throughout 2009.
During the first half of 2009, ATP incurred $240.0 million of capital expenditures toward its budgeted property developments. Additionally, during that period we capitalized interest of approximately $44.0 million. These costs were incurred primarily at the Telemark and Gomez Hubs in the Gulf of Mexico and at the Wenlock development in the North Sea. We are revising our 2009 estimated capital expenditure budget, which excludes capitalized interest, to a range of $350 million to $400 million from the previously announced range of $300 million to $400 million.
In June 2009, we conveyed limited-term net profits interests ("NPIs") to three vendors in exchange for the value of their services and equipment that they will contribute to complete the development of our 100% owned Telemark Hub properties. At June 30, 2009, in addition to the capital expenditures noted above, we recorded the aggregate value of the services and equipment contributions of $43.3 million, and it is expected that additional contributions of about $80 million will be made in the second half of 2009 at the Telemark Hub. The total expected value of the NPIs is approximately $200 million. The NPIs provide for payments to the vendors out of the net profits from specified properties, for a limited time until the amounts of the NPIs are satisfied, at which time the interests will revert to ATP. Payments begin upon commencement of production from the specified properties and are due solely from the proceeds from the sale of production from the properties.
During the second quarter 2009, ATP issued 8.75 million shares of common stock and received net proceeds of $68.2 million ($8.25 per share before underwriters’ discounts and commissions and offering expenses.) In accordance with ATP’s term loans, ATP used $17.0 million of net proceeds from the issuance to reduce the Asset Sale Facility. During the first six months of 2009, ATP has reduced outstanding debt by $58.7 million, including $36.4 million from proceeds of asset sales, $17.0 million from the equity issuance, and $5.3 million from scheduled principal payments.
Since ATP announced first quarter earnings on May 7, 2009, ATP has been active in the derivatives market, hedging 2.2 million Bbls of crude oil at an average price of $68.36 per Bbl, 3.6 Bcf of natural gas in the U.S. at an average price of $5.73 per MMBtu and 1.1 Bcf of natural gas in the U.K. at an average price of $7.26 per MMBtu. ATP also unwound some natural gas derivatives in the second quarter, receiving cash proceeds of $14.1 million on U.S. fixed forward contracts and $0.8 million on U.K. natural gas swap contracts.
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