ATP Oil & Gas Corp. (ATPG: Quote) announced that it has filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.
ATP said it has taken this action in order to undertake a comprehensive financial restructuring and it expects its oil and gas operations to continue in the ordinary course throughout the reorganization process and sees the reorganization as a helpful step towards deleveraging the company to position it for future development of its assets.
The company also said it believes that the rights and protections afforded it by a court-supervised reorganization process, including the ability to access new financing, will provide ATP with the time and flexibility it needs to fully address its financial challenges and position ATP for long-term viability.
ATP said the primary reason for the reorganization began with the Macondo well blowout in April 2010 and the imposition beginning in May 2010 of the moratoria on drilling and related activities in the Gulf of Mexico. 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. As of the date of this filing, three of these wells are yet to be drilled.
ATP noted that if it had been allowed to drill and complete these wells, it would have provided a material production change in 2010 continuing to today. This projected increase in production should have substantially increased cash flows, shareholder value and allowed the company the ability to withstand normal operational issues experienced by owners of oil and gas properties in the Gulf of Mexico. In addition, these incremental cash flows would have mitigated or prevented the need to enter into many of the financings ATP has closed since the imposition of the moratoria—financings that require relatively high rates of return and monthly payments.
ATP added it has obtained a commitment for $617.6 million of debtor-in-possession or DIP financing from members of its existing senior lender group, which will provide $250 million of additional funds and refinance into the DIP facility the amounts owed to those existing first lien lenders that participate in providing additional funds.
Upon approval by the Bankruptcy Court, the new financing and cash generated from ATP's ongoing operations will be used to support the business and ATP's efforts to negotiate and implement a reorganization plan acceptable to its stakeholders, the company said.
ATP Oil & Gas shares closed Friday's regular trading session at $0.46, up 4 cents or 8.71%.
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by RTT Staff Writer
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