ATP Oil & Gas Corp., which has been battered by production delays and missed output targets, sought bankruptcy protection, blaming the 2010 Deepwater Horizon disaster that led to a Gulf of Mexico drilling moratorium.
ATP said it has a commitment for $617.6 million in financing from existing lenders to support operations during its restructuring. The company listed $3.6 billion in assets and $3.5 billion in debt, in papers filed in U.S. Bankruptcy Court in Houston.
Houston-based ATP has been punished by investors as it drilled disappointing wells, missed production targets and stumbled to execute marquee offshore oil developments. Founder, Chairman and Chief Executive Officer Paul Bulmahn’s ambition to compete with international oil explorers many times larger than ATP by market value ran ahead of the company’s ability to generate the sums required to drill wells miles beneath the surface of the ocean and erect skyscraper-sized floating platforms.
During the past three years, ATP lost the equivalent of $1.1 million a day as equipment failures and unforeseen geological hurdles in the Gulf of Mexico frustrated efforts to lift crude output. The specter of lower production spooked investors because it meant a reduction in cash flow needed to make debt payments.
ATP said in a statement that the “primary reason” for the bankruptcy began with the explosion at BP Plc’s Deepwater Horizon and the government moratorium that halted drilling while safety rules were reviewed.
“These events prevented ATP from bringing to production in 2010 and in early 2011 six development wells that would have added significant production to ATP,” the company said. “As of the date of this filing, three of these wells are yet to be drilled.”
The bankruptcy filing came after Standard & Poor’s downgraded the company to CCC on Aug. 1, labeling it vulnerable to default.
ATP said the bankruptcy will provide the “time and flexibility it needs to fully address its financial challenges and position ATP for long-term viability.”
ATP rode the crest of the oil rally during the first half of the last decade, climbing from $14 at its initial share sale in February 2001 to a peak of $57.35 in October 2007. To mark the achievement of production and reserves-growth goals in 2006, every employee was awarded a new Volvo S60 automobile.
Two years later, Bulmahn announced the “Home Sweet Home” incentive program that sought to reduce debt, begin output from an offshore platform called Telemark and reach other technical milestones. In exchange, ATP promised to pay the home mortgages of each of its 66 employees for a year. After announcing the program in a March 2008 Business Wire statement, ATP mentioned it once more during an August 2008 conference call. It hasn’t been discussed since.
The company’s market value tumbled from a peak of $1.8 billion in late 2007 to about $24 million at the close of trading yesterday, according to data compiled by Bloomberg.
ATP’s stock closed at about 46 cents a share yesterday, down about 99 percent since its peak at the end of October 2007.
Bluewater Industries LP, Nabors Offshore Corp. and Schlumberger Technology Corp. were listed as the company’s three largest unsecured creditors, according to court papers.
ATP’s $1.5 billion of 11.875 percent notes due May 2015 dropped to 29.4 cents on the dollar at 4:21 p.m. in New York, the lowest on record, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Bondholders’ claims rank ahead of equity investors and behind secured lenders in a bankruptcy.
The bankruptcy case is In re ATP Oil & Gas Corp., 12-36187, U.S. Bankruptcy Court, Southern District of Texas (Houston).