Cons to consider: the debt dilemma
Perhaps nothing needs more watching than ATP's rising debt levels, which threaten to hurl this company into bankruptcy court by 2015 (or sooner) if it can't figure out a way to boost production and cash flow quickly.
ATP boasts a balance sheet with over $2 billion in debt, of which $1.5 billion comes due in May 2015. At its current rate of production, there is precisely zero chance of paying that debt off without a massive secondary offering, which would dilute shareholder value to smithereens. Based on ATP's first-quarter interest payment of $76.5 million, the company will be divvying out more than $300 million in just interest expenses each year; not a very pretty picture if you ask me.
Even worse, ATP has failed to consistently produce positive cash flow over the past couple of years. It's therefore imperative for ATP to quickly and successfully build out its properties so that it can begin generating enough cash flow to cover its rapidly approaching debt window.
"My well came in big, so big, Bick and there's more down there and there's bigger wells. I'm rich, Bick. I'm a rich 'un. I'm a rich boy." - Jett Rink
