Isramco Ltd's (Nasdaq: ISRL; TASE: ISRA.L) partner in the Shimshon license, ATP Oil & Gas Corporation (Nasdaq: ATPG), filed for Chapter 11 bankruptcy protection in Texas on Friday, and its chairman and CEO Paul Bulmahn is blaming President Barack Obama for the company's condition.
On Friday, ATP filed under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, in order to undertake a comprehensive financial restructuring. The company says that 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.
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. Had ATP been allowed to drill and complete these wells, ATP believes it would have provided a material production change in 2010 continuing to today."
ATP has obtained a commitment for $617.6 million of debtor-in-possession (DIP) financing from members of its existing senior lender group, which will provide $250 million of additional funds and refinance into the DIP.
In an interview with "Forbes", Bulmahn blames the Obama Administration, for what he calls its illegal ban on deep water drilling in the wake of the BP disaster, to blame for the implosion of his company, and that he is blameless for his company's problems.
"It is all directly attributable to what the government did to us,” he rails. “This Administration has gone out of its way to create problems for my company, the company that I formed from scratch.” Bulmahn has already brought suit against the US government seeking damages ($68 million to start with) for the 2010 moratorium that shut down deepwater operations in the Gulf of Mexico for the better part of a year. In an earlier case brought by ATP and rig company Ensco, Federal District Judge Martin Feldman ruled in May 2011 that the feds “acted unlawfully by unreasonably delaying action” on drilling permit applications. Still, ATP has a long, winding road to any hope of recovering damages from the government (which says it’s protected from claims by sovereign immunity).
"Forbes" says that this is proving disastrous for Bulmahn." While hundreds of companies with operations in the gulf were affected by the government’s decision, perhaps no other was as hard hit as ATP - or as vulnerable. In 2010 the company had completed work on its $800 million deepwater production platform Titan and floated it out to the deepwater Telemark field 160 miles south of New Orleans. Bulmahn planned for Titan to complete drilling the final feet of four wells, hook them up, and let the oil, and the cash, start rolling in."
The day before the Deepwater Horizon exploded on April 20, ATP refinanced and rolled up $1.5 billion in debt into a new bond issue. But the moratorium on deepwater drilling meant that the company could not complete it wells, or receive the planned income from them.
However, "Forbes" says, "ATP has been burning through cash on what appears to be an ill-advised exploratory drilling campaign off Israel."
The drilling of the offshore Shimshon 1 well began in April. The reservoir has an estimated 2.3 trillion cubic feet of gas with a 20% geologic probability of success.
Isramco and its affiliates own 60% of the Shimshon and Daniel East licenses, and ATP owns 40%.
"Forbes" quotes an oil executive as saying, "The moratorium had an effect on a lot of companies, but this is the only one blaming the moratorium two years later." It also quotes Global Hunter Securities analyst Ravi Kamath as saying that in 105 cases in the past decade, ATP has overpromised and under-delivered.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2012
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