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ATPG: Raising capital

ATP Oil & Gas has been on a tear recently. Management executed beautifully on the Telemark project. And now we have this:

ATP Oil & Gas Corporation today announced that it intends to offer, subject to market conditions, $1,500 million aggregate principal amount of senior second lien notes due 2015 in a private offering. ATP intends to use the net proceeds of this offering to repay its existing senior secured term loans in full, to pay associated fees and expenses and for general corporate purposes. Concurrently with the consummation of this offering, ATP intends to replace its existing senior secured credit facility with a new senior secured credit facility. The consummation of this offering is conditioned upon the concurrent termination of its existing credit facility and entering into the new senior secured credit facility.

With oil selling at recent highs of mid-80s, the asset valuation of ATP is looking very strong. Also with the debt market looking like it is starting to function, it will be easier for ATP to raise capital. The company raising new capital bodes exceptionally well for shareholders. 2010 will be a strong year for ATP on operational side, which should reflect in the company’s share price.

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Categories: Updates
  1. ron
    May 27, 2010 at 11:17 pm

    any comments on atpg now with the new regards to the drilling ban?

    • parasd
      May 28, 2010 at 12:32 pm

      i think a complete drilling ban is unlikely. if the government’s agenda is to get US independent from foreign oil, then the offshore oil has to be a play. It can’t happen without it. what we currently have is uncertainty as to how the government will act and media is making it sound like the government has already banned all offshore drilling. we currently have uncertainty as to what happens with offshore drilling, i don’t think we have a situation where we have 0 offshore drilling.

      from my talk with some investors in ATP, management has mentioned that ATP hasn’t been asked to stop drilling/producing from their wells. management is still on plan with their production numbers. what has happened is some of the 3rd party resources they would have access to have been limited, as most of them are diverted to the disaster. also, management has already received approval for their wells so any ban on new approvals will not have a short-term impact. remember ATP can’t really come out and say anything. if their drilling isn’t impacted it would be stupid for management to mention anything publicly, that would just be an invitation for the EPA to come and shut them down. the company’s silence will hurt the share prices but it should be a great opportunity for investors.

      i think ATP is a very interesting play at current prices. i think the shares still have more downward movement. i would sit back and watch the situation closely. i think the LEAPs might be a more interesting play here than the share prices. if ATP’s drilling is not substantially impacted by whatever the government does then the options could have huge upside. if government bans all offshore drilling then you lose all on the options, but it will be a small amount that you had at risk. although i’m not buying yet. still waiting and watching what happens.

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