Player Avatar mrindependent (36.30) Submitted: 2/23/2010 9:27:23 AM : Outperform Start Price: $17.50 ATPAQ Score: -181.99

Following Portefeuille’s pitch for the AllStarPortolio. ATP Oil & Gas Corporation is engaged in the acquisition, development and production of oil and natural gas properties in the Gulf of Mexico and the United Kingdom and Dutch Sectors of the North Sea (the North Sea). Portefeuille’s pitch references the February 2 press release and two of the company's presentations. Some highlights of the February 2 press release include the company’s prediction that production will DOUBLE in 2010 and the company’s statement that the reserve replacement ratio for 2009 was 376%. Wow! Analysts think the company’s future prospects are extremely good. The average eps estimate for 2010 is $1.41 per share (based on 8 analysts) and the average eps estimate for 2011 is an astounding $6.34 per share (based on 5 analysts). This means ATPG is selling for less than 3 times its estimated 2011 eps. Although the stock price is up approximately 40% since the announcement, this appears to be an under reaction. The company’s presentations explain how the company is different from other oil and gas producers in two significant ways: (1) the company only acquires properties with proven reserves, which leads to a 98% drilling success rate and (2) the company organizes its drilling process in “hubs”. By using hubs, the company is able to achieve better economics and growth. Historically, the company’s strategy has yielded excellent results. Five year average roe is 45% and 5 yr average sales growth is 43%. Although longterm debt is high at $1.2 billion, there is no solvency concern because the company has wonderful profitability expectations and $317 million of cash on hand. Current p/bv is 1.83. During the past five years, p/bv has varied wildly from 0.66 to 33.27- but it usually hovers around 5. The current price/sales ratio is 2.8. During the past 5 years, p/sales has varied from 0.34 to 7.34. My last comment on this stock is to note that oil and gas should prosper during the coming decade for two reasons: (1) most industrial nations are inflating their money supplies and (2) the emerging nations continue to grow. These factors will be partially offset by a renewed worldwide focus on conservation.

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