Bloomberg News

ATP Says New Gulf of Mexico Oil Wells to Stave Off Default

September 29, 2011

Sept. 29 (Bloomberg) -- ATP Oil & Gas, one of the first oil explorers allowed to resume drilling in the U.S. Gulf of Mexico after the Deepwater Horizon disaster, expects to pump enough oil from new wells during the next three years to avoid defaulting on $1.5 billion in debt.

Moody’s Investors Service this week said ATP shows a “high likelihood” it may have to restructure its debt because its cash flow and asset base are insufficient to cover notes maturing in 2015. The company’s $1.79 billion in net debt exceeds that of 97 percent of Houston-based ATP’s U.S. peers, according to data compiled by Bloomberg.

ATP expects to begin production from new wells at its Telemark field this year, followed by additional output at the Clipper and Gomez projects in 2012, Entrada in 2013 and Cheviot a year later, said Albert L. Reese, ATP’s chief financial officer. All of those fields are in the Gulf of Mexico, except Cheviot, which is in the U.K.

“All of that is before the bonds come due in 2015, so I don’t know what Moody’s is talking about,” Reese said today in a telephone interview. “I can’t fight rumors or reports, all I can do is continue to deliver on the promises we’ve made. Our expectation is that everything is going to be fine.”

An exploration well off the coast of Israel that will be drilled next year has the potential to double the company’s reserves, Reese said. ATP will be operator of the project and owns a 40 percent stake, he said.

ATP shares fell 61 cents, or 6.7 percent, to $8.54 at 4 p.m. in New York Stock Exchange composite trading. The stock shed 15 percent of its value in the past two days.

ATP borrowed $2.1 billion in 2010, the biggest annual total in company history, at a time when the Gulf of Mexico was shut to exploratory drilling for most of the year and the company’s reserves fell 6.5 percent.

The company had $337.6 million in losses in 2010 and is expected to lose another $246.5 million this year, according to the average of four analysts’ estimates compiled by Bloomberg.

--With assistance from Sapna Maheshwari in New York. Editors: Charles Siler, Tina Davis

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.


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