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ATPG, part IV



June 02, 2010 – Comments (4) | RELATED TICKERS: ATPAQ.DL

Here is my 4th look at ATPG in the last several months. I have written about ATPG several times:

- Analysis Update: ATPG and AMX
- Analysis Update: ATPG and AMX (Feb 5)
- Natty: It's a Gas!, a Review of ATPG, and a look at SWN

I had been calling for a correction in ATPG down to the support level at ~$8.00. And I had a small short position in ATPG that I had recently covered partially yesterday and then again this morning. And for disclosure's sake, I just bought a speculative long position.

Here is the relevant chart from my last post that was showing the support levels: You can see my projection got extremely accelerated. I was bearish on ATPG due to it's extremely high debt levels, but it is being sold off aggressively along with nearly all producers due to BP's negligent actions.

But let me be clear, I am not long term bearish on ATPG. In fact I am long term very bullish. I think the management has made some smart long term strategic purchases. But their debt load is high and their stock ran up too far *way too fast* since this last correction. And now it has corrected back down way too fast. It is bouncing off very strong support.

Is this "the bottom" for ATGP? I have no idea. I just know that I like the risk/reward here for a bounce that should last awhile. And if it gets down to $6.00, I will like it even more.

Here is my new chart:


Disclosure: I have a small speculative long position in ATPG

4 Comments – Post Your Own

#1) On June 02, 2010 at 5:01 PM, AltData (31.93) wrote:

Cool Charts!

I'm gonna make a start limit of $7.00 CAPS pick. I think there is more pain to come, even though they have other NatGas properties besides the Gulf of Mexico.

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#2) On June 02, 2010 at 5:22 PM, binve (< 20) wrote:

blesto ,

Thanks man!

>> I think there is more pain to come

I tend to agree. I doubt this was the bottom, but I do think it was a bounce point. I really like the bounce risk/reward here. But eventually this will turn into an investment because I am a fan of the companies long term prospects.

>>even though they have other NatGas properties besides the Gulf of Mexico.

Exactly. They have a lot of other locations...

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#3) On June 03, 2010 at 12:24 PM, erosandras (< 20) wrote:

Thanks for sharing!

I'm following ATPG since this stock used to be my oil play. I sold a few weeks ago in a stop-loss. Unfortunately I have to consider to completely drop the idea of buying it back for long term hold.

The problem is that they are not profitable and their plan to change this is based on 2 main criteria:
1. Increasing oil prices.
2. Increasing production in the Gulf area.

I believe that point 1 is a valid argument on long term but point 2 is quite a weak one with the recent drilling ban. In their financial statement they state that several drilling activities have to be completed in the second half of 2010 in order to achieve the planned financial results. They will not be able to connect their new platform the ATP Titan as well.
This will also hurt their cash generating capabilities as well that will increase the risk of failing on their debt. So the risks about their business plan increasing sharply.

I believe that the short and mid-term fundemantals got quite weak for ATPG recently thanks to BP.

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#4) On June 03, 2010 at 12:53 PM, binve (< 20) wrote:

erosandras ,

No problem!

Those are some very good points. And I do agree with

>>. They will not be able to connect their new platform the ATP Titan as well.

However, the made the correction I was expecting over the next several months in the span of a few days and it is bouncing on some serious suppport.

This small long position is mainly speculative / technical in nature. But I want to see how all these issues start to shake out (BP fiasco, cleanup, drilling bans, regulations, etc.) before I consider putting in any serious investment money.

Thanks for the comment!..

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