ATP files for bankruptcy protection
North Sea developer ATP has sought Chapter 11 bankruptcy protection in the US and is planning a major financial reorganisation of the company to continue operating.
ATP has filed a voluntary petition for Chapter 11 reorganisation and has received a commitment for US $617.6 million of new financing to continues its oil and gas operations which includes the Cheviot heavy oil field development with a floating platform in the UK sector of the North Sea.
The bankruptcy petition has been field with the US Bankruptcy Court for the Southern District of Texas.
“ATP expects its oil and gas operations to continue in the ordinary course throughout the reorganisation process and sees the reorganisation as a helpful step towards de-leveraging the company to position it for future development of its assets,” the Houston headquartered company declared.
Currently ATP’s Octobuoy concrete-based floating platform is continuing to be be built at China’s Cosco shipyard: In March this year, pictures released by ATP via a presentation showed the hull looking substantially complete.
The cause of the bankruptcy petition has been placed mainly on the Macondo oil well blowout in the US Gulf of Mexico two years ago: ATP says the primary reason for the reorganisation started with the Macondo blowout in April 2010 and the imposition in May that year of a moratorium on drilling in the US 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,” the company declares in a Chapter 11 statement.. “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 says the production increase would have provided more cash flow, allowing it to withstand the normal pressures on owners of oil and gas properties in the US Gulf of Mexico. Also the resulting cash flow would have prevented the need for additional financing arrangements which the company was forced to undertake: “… financings that require relatively high rates of return and monthly payments,” ATP points out in its Chapter 11 filing statement.
Currently has obtained agreement for a $617.6 million debtor in possession (DIP) financings agreement with its existing lenders, which will provide $250 m of additional funding and refinance. Once approved by the Bankruptcy Court, ATP says this money, along with cash from ongoing operations will be used to support the business and its efforts to negotiate a reorganisation plan acceptable to stakeholders.
Also the company has filed various motions with the court to ensure the bankruptcy filing does not affect its employees or suppliers, and will continue paying employees including health care benefits. And the DIP financing will allow it to pay its suppliers under normal terms for any good sand services provided after the filing date of 17 August.