Exhibit 99.1
ATP OIL & GAS CORPORATION REPORTS SECOND QUARTER 2005 RESULTS
HOUSTON, Aug. 4 /PRNewswire-FirstCall/ -- ATP Oil & Gas Corporation (Nasdaq:
ATPG) today announced second quarter 2005 results which include:
-- Acceleration of the first phase of the Tors development, including
Kilmar jacket and deck construction completion;
-- Increased ownership of the Tors property to 100%;
-- Additional liquidity of $287.3 million since the beginning of the second
quarter; $117.8 million net from the April 14, 2005 amendment of our
Term Loan and $169.5 million net from the August 3, 2005 issuance of
non-convertible perpetual preferred stock;
-- Production of 10.7 Bcfe for the first half of the year and 5.0 Bcfe for
the second quarter;
-- Revenues of $70.5 million for the first half of the year and $33.5
million for the second quarter, cash flows from operating activities of
$38.8 million for the first half of the year and $28.1 million for the
second quarter, and a net loss of $2.3 million for the first half of the
year and $3.3 million for the second quarter;
-- First production at High Island 74 and from a third well at Matagorda
Island 709, and
-- Acquisition of eight properties in the Gulf of Mexico, including seven
at the Central Gulf of Mexico Lease Sale.
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Review and Outlook
Since the latter part of 2004, ATP has focused a substantial portion of its
financial and personnel resources on oil and gas development projects that we
believe will result in a significant increase in production in late 2005.
Mississippi Canyon 711 (Gomez) in the Gulf of Mexico is currently scheduled to
begin production in the fourth quarter of 2005. L-06d in the Dutch Sector North
Sea is on track for first production in the fourth quarter of 2005. Tors in the
UK Sector North Sea was recently added to the 2005 development program and is
currently scheduled to begin production in late 2005 or early 2006. These three
projects are expected, together with the Company's present production volumes,
to propel ATP to a production rate in excess of 160 MMcfe per day by the end of
2005.
These are not the only projects on which ATP is focused on for 2005. ATP
placed four wells on production in the Gulf of Mexico in the first half of 2005
with another four wells in progress at the end of the second quarter. In the
second half of the year, eight additional wells are scheduled at six properties.
In a period when company-wide efforts are directed towards a step change in
production in the fourth quarter of 2005, ATP has been able to deliver solid
production of 54 - 65 MMcfe per day since the third quarter of 2004, despite
offshore decline rates and a seasonal shut-in at our Helvellyn property in the
UK Sector North Sea.
To fund its aggressive development plans, which comprise the largest annual
capital program in the Company's history, ATP has completed two financings,
adding a total of $287.3 million in new liquidity. The first transaction,
completed in April 2005, provided $117.8 million net by expanding our term loan,
reducing its interest rate, extending its maturity and providing more flexible
covenants. The second transaction, completed in August 2005, provided $169.5
million net of new equity in the form of a non-convertible, perpetual preferred
stock. Coupled with $102.7 million of cash and cash equivalents on hand at the
beginning of the year and cash flow from operating activities of $38.8 million
in the first half of 2005, ATP has over $400 million of available resources in
2005 to fund its capital program.
Mississippi Canyon 711 and Tors will each require in excess of $100.0
million in development capital during 2005. Other developments in the Gulf of
Mexico and the North Sea, including our first development in the Dutch Sector,
will total in excess of $100.0 million in 2005. In the first two quarters of
2005, ATP paid $147.0 million for acquisition and development of oil and gas
properties. Current estimates project that capital expenditures for the
remainder of 2005 will be between $200 and $250 million. Our 2005 capital
program is significant as it should result in the conversion of over 100 Bcfe
from undeveloped to developed reserves, the single largest conversion of
reserves in the Company's 14-year history. These proved developed reserves will
be the foundation for substantial production, revenue, cash flow, and earnings
growth in the fourth quarter of 2005, in 2006 and beyond.
Results of Operations
Oil and natural gas revenues were $33.5 million from production of 5.0 Bcfe
for the second quarter of 2005. Comparable amounts in the second quarter of 2004
for oil and natural gas revenues were $32.9 million from production of 6.6 Bcfe.
Improvements in the prices of hedged volumes and overall higher commodity prices
resulted in a 36% increase in average realized prices in the second quarter of
2005 to $6.73 per Mcfe, compared to $4.96 per Mcfe in the same period in 2004.
Natural gas price realizations increased 34% to $6.55 per Mcf and oil price
realizations increased 35% to $43.57 per barrel in the second quarter of 2005,
compared to the second quarter of 2004.
For the second quarter of 2005, lease operating expense was $6.0 million,
compared to $4.9 million in the same period in 2004. Included in the 2005 lease
operating expense was $1.3 million ($0.27 per Mcfe) related to various platform
repairs performed on our oil and gas properties in the Gulf of Mexico during the
period. General and administrative expenses increased to $5.2 million for the
second quarter of 2005, compared to $3.7 million for the same period of 2004,
primarily due to an increase in compensation-related costs, including accrued
costs related to the ATP Employee Volvo Challenge Plan.
DD&A was $15.2 million during the second quarter 2005, compared to $14.0
million in the second quarter of 2004. During the second quarter, ATP drilled
three wells, of which two wells are currently on production, while the third
well, an exploratory step-out well at our producing Eugene Island 30/71 complex,
found non-commercial quantities of hydrocarbons, resulting in exploration
expense of $2.1 million in the second quarter. For the second quarter 2005, we
had a net loss of $3.3 million or $0.11 per basic and diluted share, compared to
net income in the second quarter 2004 of $6.9 million or $0.28 per basic and
diluted share. For the first six months of 2005, we had a net loss of $2.3
million or $0.08 per basic and diluted share, compared to net income of $4.5
million or $0.18 per basic and diluted share for the same period of 2004.
Below are the Company's selected operating statistics and financial
information, which contain additional information on our activities for the
three and six months ended June 30, 2005 and 2004.
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Selected Operating Statistics
(unaudited)
Production
Natural gas (MMcf) 3,721 5,434 8,315 9,051
Oil and condensate (MBbls) 205 199 403 371
Natural gas equivalents (MMcfe) 4,951 6,630 10,730 11,276
Gulf of Mexico (MMcfe) 4,580 4,851 9,818 8,642
North Sea (MMcfe) 371 1,779 912 2,634
Average Prices (includes effect of
settled derivative activities)
Natural gas (per Mcf) $ 6.55 $ 4.87 $ 6.42 $ 4.96
Gulf of Mexico 6.74 5.44 6.36 5.55
North Sea 5.47 3.70 6.95 3.71
Oil and condensate (per Bbl) 43.57 32.27 41.87 31.74
Natural gas, oil and condensate
(per Mcfe) 6.73 4.96 6.55 5.03
Lease operating expense
(per Mcfe) 1.21 0.75 0.99 0.84
Other Expenses, per Mcfe
Depreciation, depletion and
amortization $ 3.07 $ 2.11 $ 3.33 $ 2.27
Selected Financial Data
(In Thousands, Except Per Share Data)
Oil and gas revenues, including
settled derivatives (1) $ 33,316 $ 32,875 $ 70,295 $ 56,704
Net income (loss) (3,322) 6,926 (2,321) 4,533
Per share, basic and diluted $ (0.11) $ 0.28 $ (0.08) $ 0.18
Weighted average shares outstanding
Basic 28,979 24,530 28,952 24,526
Diluted 29,794 24,715 29,788 24,706
(1) See oil and gas revenue reconciliation on the second to last table of this
press release.
Acquisitions
ATP increased its working interest ownership to 100% in the Tors fields in
the Southern Gas Basin of the UK Sector North Sea. ATP Oil & Gas (UK) Limited, a
wholly-owned subsidiary, acquired the remaining 25% ownership interest pursuant
to a Sale and Purchase Agreement with Gaz de France (GDF). ATP Oil & Gas (UK)
Limited is now the sole development and production operator.
ATP was awarded all seven blocks relating to its seven high bids at the
March 16, 2005 Central Gulf of Mexico Offshore Lease Sale. ATP owns a 100%
working interest in and is the operator of all seven blocks. Two of the blocks
are adjacent to the Company's wholly-owned Mississippi Canyon 711 development.
Two additional blocks are contiguous to an existing ATP operated development in
the West Cameron area and the remaining three blocks provide for new development
area opportunities.
During the second quarter, ATP acquired South Marsh Island 166. The property
has a temporarily abandoned well which has encountered hydrocarbons. ATP intends
to reenter, complete and tieback this well to nearby infrastructure during the
fourth quarter of 2005. ATP holds a 100% working interest in South Marsh Island
166.
Development Operations
During the second quarter, the Company placed on production its Matagorda
Island 709 A-4 ST-1 (MI 709 well) and High Island 74 No. 1 (HI 74 well). The MI
709 well, located in 145 feet of water, was completed in an upper Miocene Marg A
sand at 9,715 feet True Vertical Depth (TVD). The MI 709 well is the third well
to produce at the Company's Matagorda 704/709 complex. ATP operates MI 709 with
a 62.5% working interest. The HI 74 well, located in 41 feet of water, was
completed in Miocene Rob L sand at 8,760 feet TVD. ATP operates HI 74 with a 75%
working interest.
At Mississippi Canyon 711 (MC 711 or Gomez) in the Gulf of Mexico,
completion is being finalized on the first well in the southern section of the
block, the #4 ST1 well, which previously tested at a combined 134 MMcfe/d.
Following completion of the first well, down hole operations will commence on
the second well. The laying of the two 27-mile pipelines is approximately 50%
complete. Installation of facilities on the Rowan Midland, which will serve as
MC 711's production platform, is expected to begin in the third quarter. Initial
production is on schedule for the fourth quarter 2005.
The Department of Trade and Industry (DTI) in the United Kingdom has issued
approval for the field development plan of the Tors fields (Garrow and Kilmar)
in the Southern Gas Basin of the UK Sector North Sea. Coupled with other
recently obtained permits, ATP Oil & Gas (UK) Limited is now cleared for on-site
development at Tors. The Company completed construction of the jacket and deck
with installation in progress at Kilmar, the first phase of the Tors
development. The ENSCO 70 rig is under contract and is scheduled to arrive on
location before the end of the third quarter. In 2005, well operations will
consist of reentering and sidetracking two temporarily abandoned wells and
drilling a new well at Kilmar. In 2006, ATP plans to drill two new wells at
Garrow. First production at Kilmar is expected early in 2006 with the
possibility of production from the first well very late in 2005.
ATP reentered and sidetracked the #1 well at L-06d, the Company's first
Dutch Sector North Sea development. The well reached total depth of 8,859' and
logged 88' of net gas pay in a high quality Terschelling Sandstone, 26'
structurally high to the original well. The pipeline and umbilical lay is 60%
complete. The well will be completed and connected to a third-party host
platform with initial production expected in the fourth quarter of 2005.
Capital Resources and Liquidity
ATP has completed two capital transactions since the beginning of the second
quarter, raising a combined $287.3 million in additional liquidity. On April 14,
2005, ATP announced that it had amended and improved the terms of its Term Loan
by expanding the credit facility to $350.0 million and reducing the interest
rate. Significant terms of the amendment included:
-- a decrease in the overall interest rate of the credit facility from
LIBOR plus 6.847% to LIBOR plus 5.500%;
-- an addition of $117.8 million in additional liquidity;
-- the elimination of the second lien tranche of the credit facility which
carried an interest rate of LIBOR plus 10%;
-- the amendment of covenants within the credit facility to provide more
flexibility to ATP, and
-- an extension of the maturity by one year to April 2010.
On August 3, 2005, ATP issued $175.0 million of non-convertible perpetual
preferred stock. We received net proceeds of $169.5 million from the offering.
The security pays a non-cash quarterly dividend of 13.5%. Dividends become
payable in cash upon the earlier of full repayment of the existing Term Loan or
April 15, 2011. This security does not have a stated maturity. Additional
details of the preferred equity security can be found in the Company's Form 8-K
related to the security.
Cash flow from operating activities was $38.8 million for the six month
period ending June 30, 2005, compared to $5.6 million used in cash flow from
operating activities for the same period in 2004. Cash flow from operating
activities prior to changes in assets and liabilities, a non-GAAP measure
frequently used by research analysts, was $39.1 million for the six-month period
ended June 30, 2005, compared to $31.8 million for the same period in 2004. At
June 30, 2005, ATP had working capital of approximately $79.8 million, an
improvement over $68.3 million at December 31, 2004. The improvement in working
capital is primarily the result of the previously discussed financings and cash
flow from operating activities. ATP had $114.9 million in cash and cash
equivalents on hand at June 30, 2005, compared to $102.8 million at December 31,
2004. Giving effect to the recent preferred equity offering, pro forma cash and
cash equivalents was $284.4 million at June 30, 2005.
In the first two quarters of 2005, ATP paid $147.0 million for acquisition
and development of oil and gas properties. In addition to our Tors development,
we intend to accelerate three additional Gulf of Mexico projects, South Marsh
Island 166, Ship Shoal 351, and Brazos 578 into our 2005 development program.
The Company now estimates that capital expenditures are expected to be
approximately $350 to $400 million for the full year 2005.
Conference Call
ATP will host a conference call to discuss second quarter 2005 results on
August 5, 2005 at 8:00 a.m. CDT (9:00 a.m. EDT). To participate in the live
webcast, log on to www.atpog.com ten minutes prior to the start of the call and
click on Investor Info/Conference Calls. To listen to the conference call live
via telephone dial 1-800-500-0177. A rebroadcast of the call will be available
for 24 hours at 1-888-203-1112, id code 9478890. If you are unable to
participate during the live webcast, the call will be archived on our Web site,
http://www.atpog.com, for 30 days after the call.
About ATP Oil & Gas
ATP Oil & Gas is focused on development and production of natural gas and
oil in the Gulf of Mexico and the North Sea. The Company trades publicly as ATPG
on the NASDAQ National Market.
Forward-looking Statements
Certain statements included in this news release are "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995. ATP
cautions that assumptions, expectations, projections, intentions, or beliefs
about future events may, and often do, vary from actual results and the
differences can be material. Some of the key factors which could cause actual
results to vary from those ATP expects include changes in natural gas and oil
prices, the timing of planned capital expenditures, availability of
acquisitions, uncertainties in estimating proved reserves and forecasting
production results, operational factors affecting the commencement or
maintenance of producing wells, the condition of the capital markets generally,
as well as our ability to access them, and uncertainties regarding environmental
regulations or litigation and other legal or regulatory developments affecting
our business. More information about the risks and uncertainties relating to
ATP's forward-looking statements are found in our SEC filings.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30, December 31,
2005 2004
----------- -------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 114,882 $ 102,774
Accounts receivable (net of
allowance of $1,496 and $1,499) 32,233 36,991
Derivative asset 3 791
Other current assets 4,449 3,788
Total current assets 151,567 144,344
Oil and gas properties (using the
successful efforts method of accounting) 561,611 450,403
Less: Accumulated depletion,
impairment and amortization (247,364) (237,197)
Oil and gas properties, net 314,247 213,206
Furniture and fixtures (net of
accumulated depreciation) 753 741
Other assets, net 24,226 13,856
Total assets $ 490,793 $ 372,147
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accruals $ 62,337 $ 68,573
Current maturities of long-term debt 3,500 2,200
Asset retirement obligation 4,149 4,925
Derivative liability 1,823 316
Total current liabilities 71,809 76,014
Long-term debt 338,392 208,109
Asset retirement obligation 20,694 19,998
Deferred revenue 649 741
Other long-term liabilities and
deferred obligations 8,983 10,121
Total liabilities 440,527 314,983
Shareholders' equity
Preferred stock: $0.001 par value - -
Common stock: $0.001 par value 29 29
Additional paid in capital 141,598 140,628
Accumulated deficit (91,080) (88,759)
Accumulated other comprehensive income 630 6,177
Treasury stock, at cost (911) (911)
Total shareholders' equity 50,266 57,164
Total liabilities and
shareholders' equity $ 490,793 $ 372,147
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Oil and gas revenues $ 33,488 $ 32,879 $ 70,468 $ 56,890
Costs and operating expenses:
Lease operating 6,007 4,944 10,581 9,442
Exploration 2,173 195 2,507 280
General and administrative 5,163 3,694 9,354 7,778
Credit facility and related - - - 1,850
Depreciation, depletion and
amortization 15,201 13,961 35,704 25,544
Asset retirement accretion 600 483 1,179 974
(Gain) loss on abandonment 76 (17) 76 (273)
(Gain) on disposition of assets - (3,029) - (6,011)
Total costs and operating expenses 29,220 20,231 59,401 39,584
Income from operations 4,268 12,648 11,067 17,306
Other income (expense):
Interest income 998 108 1,488 132
Interest expense (8,595) (6,010) (14,884) (9,759)
Loss on extinguishment of debt - - - (3,326)
Other income 7 180 8 180
Total other expense (7,590) (5,722) (13,388) (12,773)
Income (loss) before income taxes (3,322) 6,926 (2,321) 4,533
Income tax expense - - - -
Net income (loss) $ (3,322) $ 6,926 $ (2,321) $ 4,533
Basic and diluted income (loss) per
common share $ (0.11) $ 0.28 $ (0.08) $ 0.18
Weighted average number of common shares:
Basic 28,979 24,530 28,952 24,526
Diluted 29,794 24,715 29,788 24,706
CONSOLIDATED CASH FLOW DATA
(In Thousands)
(Unaudited)
Six Months Ended June 30,
-------------------------
2005 2004
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (2,321) $ 4,533
Adjustments to operating activities 41,505 27,300
Changes in assets and liabilities (414) (37,409)
Net cash provided by (used in)
operating activities 38,770 (5,576)
Cash flows from investing activities:
Acquisition and development of oil
and gas properties (146,957) (32,746)
Proceeds from disposition of assets - 19,200
Additions to furniture and fixtures (182) (139)
Net cash used in investing activities (147,139) (13,685)
Cash flows from financing activities:
Proceeds from long-term debt 132,113 227,000
Payments of long-term debt (1,425) (165,130)
Deferred financing costs (10,416) (8,476)
Repurchase of warrants - (750)
Exercise of stock options 1,039 33
Other (68) -
Net cash provided by financing activities 121,243 52,677
Effect of exchange rate changes on cash (766) -
Net increase in cash and cash equivalents 12,108 33,416
Cash and cash equivalents, beginning
of period 102,774 4,564
Cash and cash equivalents, end of period $ 114,882 $ 37,980
Hedges, Derivatives and Fixed Price Contracts
(Unaudited)
2005
----------------------------------------------------------
1Q 2Q 3Q 4Q FY
--------- --------- --------- --------- ----------
Gulf of Mexico:
Fixed Forwards and Swaps
Natural Gas
Volumes (MMMBtu) 2,520 2,425 2,300 2,239 9,484
Price ($/MMbtu) $ 5.60 $ 6.23 $ 6.27 $ 6.54 $ 6.15
Crude Oil
Volumes (MBbls) 117.0 113.8 133.4 110.4 474.6
Price ($/bbl) $ 38.20 $ 42.10 $ 44.45 $ 45.00 42.48
Equivalents
Volumes (MMMBtue) 3,222 3,108 3,100 2,901 12,331
Price ($/MMbtue) $ 5.77 $ 6.40 $ 6.56 $ 6.76 $ 6.36
Puts
Natural Gas
Volumes (MMMBtu) 364 368 124 856
Floor Price ($/MMBtu) $ 5.01 $ 5.01 $ 5.01 $ 5.01
North Sea:
Swaps
Natural Gas(1)
Volumes (MMMBtu) 270 270
Price (pounds/MMBtu) 4.46 pounds 4.46 pounds
2006
----------------------------------------------------------
1Q 2Q 3Q 4Q FY
--------- --------- --------- --------- ----------
Gulf of Mexico:
Fixed Forwards and Swaps
Natural Gas
Volumes (MMMBtu) 1,710 455 460 155 2,780
Price ($/MMbtu) $ 7.38 $ 7.30 $ 7.30 $ 7.30 $ 7.35
Crude Oil
Volumes (MBbls) 108.0 63.7 64.4 64.4 300.5
Price ($/bbl) $ 47.14 $ 48.41 $ 48.41 $ 48.41 $ 47.96
Equivalents
Volumes (MMMBtue) 2,358 837 846 541 4,583
Price ($/MMbtue) $ 7.51 $ 7.65 $ 7.65 $ 7.85 $ 7.60
Puts
Natural Gas
Volumes (MMMBtu)
Floor Price ($/MMBtu)
North Sea:
Swaps
Natural Gas(1)
Volumes (MMMBtu) 540 540
Price (pounds/MMBtu) 6.41 pounds 6.41 pounds
The above are hedges, derivatives and fixed price contracts that are in
effect at August 5, 2005 or have settled prior to such date.
Additional hedges, derivatives and fixed price contracts, if any, will be
announced during the year.
(1) Swap for 1Q05 liquidated January 13, 2005 for approximately $710,000 in
favor of the Company.
Oil and Gas Revenue Reconciliation(1)
(In Thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
Oil and gas revenues, including the
effects of settled derivatives (1) $ 33,316 $ 32,875 $ 70,295 $ 56,704
Hedging ineffectiveness and other (2) 172 4 173 186
Oil and gas revenues per income
statements $ 33,488 $ 32,879 $ 70,468 $ 56,890
(1) Oil and gas revenues, including the effects of settled derivative
activities, represent net cash received from oil and gas sales and
related net derivative activities. This amount is presented because of
its acceptance as an indicator of the company's realized cash flow from
its oil and gas production during the period for which it is presented.
(2) Hedging ineffectiveness is the portion of gains (losses) on derivatives
that are based on imperfect correlations to benchmark oil and natural
gas prices.
Non-GAAP Reconciliation(1)
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
---------------------
2005 2004
--------- ---------
Net cash provided by (used in)
operating activities $ 38,770 $ (5,576)
Changes in assets and liabilities 414 37,409
Cash flow from operations prior to
changes in assets and liabilities $ 39,184 $ 31,833
(1) Cash flow from operations prior to changes in assets and liabilities is
a non-GAAP financial measure that is commonly used to assess an oil and
gas company's ability to internally fund capital expenditures. Cash flow
from operations prior to changes in assets and liabilities is not a
substitute for Cash flow from operating activities as defined by GAAP.
CONTACT: T. Paul Bulmahn, Chairman and President, or Albert L. Reese
Jr., Chief Financial Officer, +1-713-622-3311/
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