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ATPG: Sending Mixed Messages



August 15, 2011 – Comments (0) | RELATED TICKERS: ATPAQ.DL

Every stock has its pros and cons. However, there are some stocks where the two sides are much more distinct. ATP Oil and Gas is one of those stocks. They have some negative aspects going on, but they also have some positives that create an encouraging view point for investors. Devon Shireexplains the two sides, and where he thinks ATPG will come out in the end. 


The Concerning

- This quarter included higher than expected operating costs because of a $17.3 million workover expense on the MC 711 #5 well at Gomez. The company explained this as being an one-time item and the normal operating expense run rate would be lower by roughly this amount. I have to be honest, I can’t recall an ATP quarter that didn’t have some sort of unexpected workover expense. Perhaps such workovers are simply just the nature of the business and should be factored into what is considered a normal run rate for operating expenses?

- The capital raising seemingly never ends and the reliability of capital expenditure estimates is potentially an issue. The ATP folks are very creative when it comes to funding their projects, which is great, but the balance sheet has become so complicated I can’t figure out how much of their future production belongs to them and how much belongs to their NPI and ORRI partners. Here are the details from the earnings release…"


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