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ATP Oil & Gas Corp.

Wed, 10 Dec 2008|

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Transcript

We we see it as a as a strong. Driver in economics -- projects and it it provides growth opportunities. I think a good example that would be it in whom is where we started out a block -- -- now. Owners just -- you know up to six walks in it development in -- -- all real production before before too long. It uses so very very good cost Berkshire in it reduces unit -- as we develop. And actually houses to do certain things it -- -- and Avery -- on being able to bring new opportunities uses extinction opportunities. And provide accurate cost. Develop plan. It also as a result processing for others helps us with with -- to offset their costs that their party and it. So -- we've been pursuing that strategy now for about three years and when you look at what it's done for us. There on on. Let it slide. Is Gomez project basically in 2006. We we install -- Him. Remove the drilling equipment turned into producing facility. We have five -- -- wells grounded right now. Where actually producing it's capable of about 20000 barrels -- -- well you know under me -- can't. It's been very successful project and I'll talk more about its reserves just -- minute. But these facilities are reusable ideas we're through using. Facilities and location will be able to move to new location which is one of the things we think the the infrastructures -- -- imports. In addition -- -- working on 23 other projects will -- the Telemar project. The idea. -- mean no one. And in -- just three make it far it basically has better stability. It is -- it has actually also provides the opportunity has served as well it did -- -- wells. In multiple risen wars to -- out it's a better content using. Senate seat please. The first when they were building is about 90% complete and will be towed out some time -- year next year. It's capable of that -- thousand girls were processing capacity Spain and it is defeat. -- and gas prices. Can go 200 million so it's quite personally -- -- can be. Removed. Moved to new location by removing the -- to polyester work twelve points system can be moved to new location use. The mean not to use a similar design. A bit higher -- and we'll have them wells associated with it in the first. Similar capacity but it's also expand. In the UK I'll talk about -- it and it say yeah property have to sixteen -- -- from a similar facility. It's a deep drifts in which it's not it's not quite spar but it's much deeper draft -- yeah. And it's in my -- he is capable of being award in the Dorsey infrastructure as well it's the Gulf of Mexico so it's very. Report. Offerings. So those things we think we're gonna help us in the long term but being able to leverage and acquire new opportunities. And also to help reduce costs as we -- -- a summary of of our two thousands in 2007 reserve report just to give you feel our top five properties are shown there. There about 80% of the the overall company day. On -- two. The I'll talk about three of those here just a minute seeing it go man is it Telemar garage and it. Champion. And -- so just to give you view where -- located. The -- the driver for us in in the deep water Gulf of Mexico is around reserve appreciation. The EC that third party reserves there again proved reserves of blue -- in probable. We we've done a lot of assessments over the last two years and looked it had to reserve base looked at how reserves of grown. At lady meaning Gomez and that it looked at characteristics of that ability to. Are other projects and we see something. Around 200 and that 58 million barrels of oil equivalent which is about 76 over the third party -- I'll just talk for a minute about where each of those awkward so you get a feel for where where the reserve base is growing. And go -- we started out with with reserves just over twenty million barrels from third parties. In fact we've actually have more proved reserves now and we head proved plus probable -- when the project actually started. We also see there an additional -- or around 27 million barrels of incremental hydrocarbons and we recovered through. Better recovery mechanisms and another couple wells. Water drugs much stronger than we -- In and the actual -- grown in size also so we're quite. Quite excited about bad as a model for how when we see some -- the project. It telemarketer hello mark of it's made up of a two different development and it brought more Augustin and won it Telemar. In a similar thing with is actually happening. We've we've really been able to grow the reserves to third parties have actually looked at me -- -- we think through. A larger area that will ultimately be developed and the incremental recovery factors that we'll actually see. An additional almost thirty million barrels of recoverable hydrocarbons in that area I would expect these to be book call one one year I think. From the third party's perspective these are gonna come with time and it being through performance. -- it's a little different in that it's -- much much more. Robust field hasn't seen him have 216 wells original projections were made with eleven. And through treaty -- me. Risen -- simulation. And just better analysis of the entire risk we believe that there's an increment in -- -- recoverable oil there. So we're seeing a similar pattern on these fields there -- -- Have quite a lot of upside potential not something you normally see an independent inning to acquisition development company. Normally see -- in an exploration company we think we have that opportunity also. But an -- I'll turn it over to keep god and and -- him is with you for a few minutes about some of our businesses. Thank you -- and again my name is -- -- when -- the chief accounting officer for ATP. -- -- start out by thanking all of you for -- -- -- a conference and listening to our presentation today both those view on the webcast and hearing room. And and also thank and well and don't want debt financing -- -- -- on this great conference. The first I wanna talk about today. Is wise ATP successful and you there's a lot of companies here today tomorrow and then and yesterday in this conference and why it's ATP different and -- -- we successful and and what we believe that we have compelling storytelling. And I think that the main difference Leyland talked about was our business model our business model is an exploration. Our business model is taking. Proved undeveloped properties -- them production. We try to do that and innovative ways we try to do it -- and a very a quick manner. Our dollars are spent not so much on acquisitions but on the development phase of the project. And we've had this same focus business -- since the very beginning of ATP when it was founded. Back in 1991. We we -- in that model. We we've tweaked it a bit we have made modifications. And enhanced it with things such as. Bringing in hub concept as we developed infrastructure and we recognize the value that we can bring. By leveraging off the existing infrastructure we have been bringing an additional blocks and other discoveries in the area and the existing infrastructure. We enhance that that business model but we have not we've never wavered from that. So the business model is the first thing. The second thing is is our personnel. -- -- present recognize some very very beginning. There it to be successful they PP we had to have the right people we had to have people -- entrepreneurial spirit spirit. And people who were motivated. To go out and work hard and come up with great ideas for ATP. We've. The people we have have great technical backgrounds. They're well respected. And and the other neat thing about ATP is that people we have. -- unlike a large NC where we go out and you -- one group who makes an acquisition and handed off another team. Are are people who are responsible for looking at -- acquisitions are actually the same people. We're the ones have to execute the plans that they've come up with an acquisition they've got to come up with -- The development plan and execute those plans to -- production so there's a lot on the line for everybody and everybody works really hard. Any and given that everybody in our company. Bottom to top -- equity in the company. ATP is owned. 22%. By insiders. Men -- really proud of that that's something that we believe. Aligns our staffs and and all of our management with the investors. We're rate of return focus it's very important to get right rate of return we're valuing projects we have a great focus on that. And analyze -- were very successful throughout the development cycle. This next slide. Shows that development cycle and where we create value at each stage of our developments. You the very first stage obvious acquisition I mentioned few weeks we typically don't spend or pay a lot of cash up front for -- acquisition. A lot of time will acquire an acquisition for an override. Small payment up front we've done things through net profits interest but we try to find innovative ways. The line the the value of the prospect 22 the future. We -- value through development plan we look our development. We step back will die -- -- how to previous owner of that -- of that property. Had envisioned developing -- the plan but we don't always go with that sometimes will use that plan. Sometimes we'll create into innovative plan something that we bring correction faster. Have a lower cost find a different way. One thing that we always strategists think outside the box and find ways to do things that that. Isn't necessarily the first answer comes to mind -- to a solution to a problem. Injuring or procurement. We go through him and that's a process that happens. Yeah we we show this this'll trying to going up bloody -- crossover some of that starts happening is we're -- the development plan. And then we develop the the the property. Sometimes will enhance that his words were moving along with the developments we have -- -- -- Gomez where we added additional blocks. As we develop that property and then we bring it to production. All of these stages during each of these stages of the process we're enhancing value for our shareholders. Back in march of this year we announced -- home sweet home challenge. That home sweet home talents. Maybe you might know the -- talent we had a few years back where we have some operational goals primarily. And we reward our employees once we reach those goals football -- Back in March we came up with via home sweet home challenge and the idea here was to one. Achieved some operational goals that are very important the company and shareholders but two we also recognize the need to to reduce -- leverage. And to monetize over assets and so we we set a goal back then in March through -- leverage. Nine to sell about 600 million dollars worth of assets and the goal was to do that -- July. July 1 of 09. Since that time in June we subsequently. Restructured. And amended our credit agreement such that we had the ability do so. Much more efficiently than the previous agreement also gave us two and a half years. To monetize assets and pay down 600 million dollar asset sale facility. Announced two and half -- from doing so we've got about two more years you know our internal goal was to get it done by July next year the the goal from the banks obviously it was two and half year. Goal to get that accomplished. We have made great progress in that and we opened up -- that we opened up data rooms. And we opened -- data rooms we we didn't know exactly where the most interest would be and so what we decide to do was offer virtually all of our assets. In a data room are major assets and what we did is in the Gulf of Mexico we offered up. Working interest and -- -- we offered. Working interest and -- mark and undeveloped property that we spent significant money on so far. And in the North Sea towards -- which -- both producing assets we have offered up to 50% working interest -- that property. And -- out -- fail all development in this in the North -- as well. The idea here was we would put. A lot of different assets in the data rooms let people take a look at what we had to offer and then see where the most interest was and leverage off of that interest. 22. Eventually. End up for sale agreements were. That's the -- million dollars with our goal. Earlier. In the last six weeks we've announced that we entered into a -- -- agreement. In do you -- to sell an 80% working interest. In our scorers and when -- are skewed towards a -- -- properties in the RC 8% working interest and we did that. -- into that for sale agreement. The amount for the -- of 265 million dollars -- -- five million pounds. And we expect that close by year and we're we're very excited about this the sale. We think the metrics here are outstanding. Especially given the market environment. We have no reason to believe that this will not close by year end and we're working aggressively to get that done. We have been in contact and communication with all the parties necessary to -- the closing. The -- the department. And you've Teddy. Did -- responsible for allowing us transfer license. -- we've been in discussions with them they've been notified and the purchaser EDS has been our offices and -- staff. And we're moving -- and aggressively to get this transaction close. We're also excited from the standpoint that. We. Despite what people believe in the market right now the transaction can't be done in addition this current transaction were also working with with multiple. Different potential purchasers in negotiating other transactions. They were also very hopeful on that can be completed in the very near future so. Stay tuned for that and we'll hopefully builder provide more clarity on that is that that may develop. The the sale itself. For the tours and -- -- with 63 BCF the proved reserves. Which were included. There. ATP will remain the -- -- as the operator again -- that we insist they close that December. Departure also has an option to purchase -- remaining 20%. In those two properties. The the nice thing about this transaction is that it allows us to pay down debt as we we've talked about. In addition our strong liquidity position ended September 30 we had a 178 million in cash we had 31 million available under the revolver. This transaction will take. Will allow us keep over a hundred million dollars. From the proceeds. Add to enhance our liquidity and they begin -- said the remaining portion 75% will be. Going to reduce our -- debt. We also have some other initiatives we announce back earlier in the year middle part of the year that we -- override freight two million dollars. The metrics on this were also outstanding this was. A limits that are -- override their reserve base. It's capped. For oil and gas -- our -- project property. Other -- nations we you've heard us talk about is that we have significant infrastructure that we would like to be able to but. You mob -- portion of we have the innovator we have the Nin dot which will develop that would will be used for -- development -- Telemar. We have pipelines all of which are any of which can be used in some sort pipeline transaction MOP transaction and we're we're continuing to act. Absolutely work on those type transactions. And then further we would we would also consider -- working interest or override -- as we've talked about. From its other transactions. The next flight I'd like to show it literally. It's not trying to tell you what's valuation should be -- to put perspective on our valuation. If you seen their stock price -- we don't we don't believe that our stock prices -- where it should be this is just a little metric for you take a look at. And what we've done is we've taken -- proved reserves 113 million barrels. And in the 63. Million barrels on the third party estimates to get to 176. Million barrels of third party. -- Scott's etc. engineered reserves at around 76. Million barrels that we -- talked about earlier come up to 252 million barrels. You take that number and -- you divided this surely Biden VS shares outstanding just under 36 million you come up to seven. Barrels. Per share. And if you compare that -- -- stock prices kind of staggering task -- had. But do we let's show that this kind of put things in perspective. For what we believe this as a significant disconnect right now. In summary -- TP. You be compelling part of the story here is is our outstanding track record. We have had outstanding production reserve growth. Three consecutive years that we've had production -- -- growth. Our reserve replacement ratios outstanding. 223%. To a three year average. -- future entry 3% -- three year average of 438%. And the edit the thing that that is remark about about ATP is is our. Inventory of prospects. We talked about Telemar we're actively developing -- project. We have developments opinions expressed. We have the Clifford discovery that we acquired earlier in year to develop we -- -- so we have multiple. In multiple if I am sorry -- -- -- develop and enhance and continue to grow ATP. -- talked about folks on earlier were committed to delivering the company. The 600 million dollar goals one that we set forth early in the year we've been working aggressively toward that. And I think we've made significant progress. Expect close the F transaction by year end and hopefully have other transactions announced to -- -- -- -- device management team we're all incentivized we we are we believing what we're doing we're lying to the shareholders and and we believe that. In -- remarkable times that we will build and deliver outstanding. Performance. Enhancement for sure. Thank you very much appreciate it.

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