Tuesday, August 09, 2011
ATP O&G Corp.
ATP announced second quarter 2011 results.
Results of Operations
Revenues from oil and gas production were $172.9 million for the second quarter 2011, compared to $101.1 million for the second quarter 2010. Increased revenues from production were attributable to higher production volumes and higher oil prices. Oil and gas production for the second quarter 2011 was 2.1 MMBoe (23.6 MBoe/d) compared to 1.9 MMBoe (21.3 MBoe/d) for the second quarter 2010, an 11% increase. Average prices were up 68% over the same period a year ago. Oil represented 68% of total production for the second quarter 2011, compared to 48% of total production for the second quarter 2010.
ATP recorded a net loss attributable to common shareholders of $56.9 million or $(1.11) per basic and diluted share for the second quarter 2011, compared to $82.9 million or $(1.63) per basic and diluted share for the same 2010 period. The net loss attributable to common shareholders for the second quarter of 2011 was impacted by several items analysts often exclude from their published estimates. Those items include impairment expense of $45.7 million, workover expenses of $17.3 million and $1.2 million of drilling interruption costs associated with the Gulf of Mexico moratorium. Also, the items include $45.1 million related to the unrealized derivative income for the quarter. As a result of production increases and higher oil prices, ATP reduced its estimate of the time required to repay a dollar-denominated Override at Gomez. This change in estimate resulted in our recognizing $21.9 million in incremental interest expense related to this Override in the second quarter of 2011 compared to the first quarter of 2011.
The impairment expense of $45.7 million during the second quarter of 2011 related primarily to South Timbalier (“ST”) Block 77 (acquired in 2005), due to ATP's decision not to move forward with a capital expenditure on this property in the second half of 2011. The workover expense is related to the Gomez MC 711 #5 well, which was placed back on production late in the second quarter.
Capital Resources and Liquidity
In the second quarter 2011, ATP conveyed dollar-denominated Overrides and NPI's in the Gomez Hub and the Telemark Hub for net proceeds of $70.3 million. These Overrides and NPI's obligate ATP to deliver a percentage of the proceeds from the future sale of hydrocarbons in the specified proved properties until the purchasers achieve a specified return.
In June 2011 ATP closed a perpetual preferred equity offering that provided net proceeds of $123.3 million, net of discount, related option contract costs and issuance costs. Shares of the preferred are convertible into common shares at $22.20 per share.
During July 2011, ATP entered into a crude oil prepaid swap transaction for 274,500 barrels at a net price of $111.84 per barrel. ATP received $30.7 million at closing. A schedule summarizing ATP's outstanding oil and gas derivatives can be found near the end of this press release.
ATP incurred $220.5 million of capital expenditures ($209 million, excluding capitalized interest) on oil and gas properties during the first half of 2011, of which $34.8 million was funded through vendor deferral and net profit interest programs. These capital expenditures were predominantly related to the Gomez and Telemark Hubs, and the Octabuoy production platform. In the remainder of 2011, ATP anticipates incurring $250 million to $300 million in total capital expenditures, excluding capitalized interest, of which $150 million to $200 million will be contributed by vendors through existing NPI programs or deferral programs.
ATP had unrestricted cash of $185.9 million and restricted cash of $47.4 million at June 30, 2011.
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