With respect to ATP’s shallow water operations value!
Producing and non-producing Shelf Properties, which, based upon recent (i.e., October 1, 2012)
engineering reports, have proved reserves of 2.5MMBoe (Million Barrels of Oil Equivalent) additional probable and possible reserves are reported as much as 544MBoe (Thousand Barrels of Crude Oil Equivalent).
Round number $3 million times $93 a barrel, $279 million X .75 (ATP’s interest) is roughly $200 million less P&A Liabilities related to the Shelf Assets of approximately $34 million at 75% would be roughly $175 million of value.
Just me but I believe they (ATP) will be lucky to get $100 million for these shelf properties, which will scare lots of folks playing in this game. Of course those monies will go to the Dip lenders.
First reorganization step, dump the shelf properties. Get as much as you can which will go to the Dip lenders and reduces ATP liability to them. Again scaring lots of folks!
The real value is in the deep water ATP assets; including the UK, along with the floating production / drilling facilities and infrastructure to bring the oil and gas to market, which are owned by an ATP holding company, and thus far not part of the bankruptcy. Which I think scares a few more folks, maybe just a little.
And the twist, I have been reading the US federal government may not let smaller oil and gas companies like ATP participate, as the operator, in deep water drilling and production activities in the deep water GOM. Why because these smaller companies do not have the financial resources to pay for a large cleanup. Just look at the cost BP had to pay. Just me, but ATP will need to make a deal with a big player (operator) in the world market and the keys for ATP for a successful deal will be the floating production platforms and infrastructure which do incorporate the new GOM safety requirements. Also remember ATP UK is not part of the bankruptcy and these drilling and production platforms could be used in the North Sea which allows players the size of ATP. This may also scare a few folks, since the purpose of putting these assets in a holding company is to protect them from claims against the parent and or claims against the holding company to protect the parent!
But with the dogs at the door you need to throw them a bone to keep them at bay, selling off the shelf properties first does just that, but these monies will go to the dip lenders. So let’s make a deal, dip lender get paid their cash. Do you think the other secured creditors would take 50 cents on the dollar for their interest, do you think the bond holders would take 50 cents on the dollar for their interest?
That would reduce that debt in half. With all the bad news, my guess, they would take the money and run and then you would see all of their advisors patting each other on the back on the excellent job they did; since the first offer, just me, might be 20 cents on the dollar as the bonds are selling currently for less that 10 cents on the dollar. Getting 50 cents on the dollar might be considered a major win by their advisors, but ATP management might surprise the lot and they could settle with the secure creditor for 20 cents on the dollar. The original secure creditors are selling off their paper, how many of the original holders are still active. Now that will be an interesting presentation by the debtor when they explain to the court the “current secure holders financial positions” in the paper they now own. Which could scare a few more folks? (Yes your honor, 40% of the current bond holders purchased their bonds at 10% of the face value. And the debtor is willing to pay them 20% of face value. Who might win that one? ) Now with that debt possibly cut in half, finding a new source for funding might not be that difficult. Also remember ATP’s management still holds a 13% equity position in the company. Do you think management remembers those secure creditors that were shorting the stock?
One of the more interesting recent court filings is the 1/11/2013 filing #1200. Within that filing one will find exhibit C, ten pages of Sales Notice Parties. Just me, but within that document one would think we would find, maybe, the names of the future possible suitors. I think it would be hard to explain if a deal was made with a company that was not on this list. Don’t you love disclosure!
My favorite names on the list are CNOOC, China Development Bank Corporation, Evertrust International Insurance Brokers, IBBC Financial Leasing and Ping An Property Casualty Insurance of China. All of these companies are Chinese. Isn’t the Octabouy hull being built in China?
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