On August 17, Houston-based ATP Oil & Gas filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.
T. Paul Bulmahn, the 68-year-old CEO and Chairman of Houston-based ATP, blames President Obama’s administration for destroying his company: “This administration has gone out of its way to create problems for my company, the company that I formed from scratch.” The circumstances were not quite that simple, however.
ATP Bond Issue Followed Deepwater Horizon Incident
The company that Bulmahn founded refinanced $1.5 billion in debt with a new bond issue and was within reach of full scale operations on its Titan floating production platform shortly after the Deepwater Horizon mobile rig exploded on April 20, 2010. ATP didn’t expect BP’s Horizon incident to have an impact on Titan; it’s underwriter, JPMorgan, agreed and the bond offering went through (with notes due May 2015.) This is after ATP’s Titan project was already over-budget and a year behind schedule.
Administration’s Six-Month Moratorium Announced
On May 27, 2010, U.S. Secretary of the Interior Ken Salazar’s six-month moratorium on new deepwater drilling permits stopped operations in the Gulf of Mexico, preventing Titan from producing even though the rig was 80 miles south of the Horizon’s spill area, in the opposite direction of the northerly drift. According to Bulmahn, the government “closed our spigot on revenues, but didn’t stop our expenses.” The moratorium was lifted in October, but no permits would be issued that year. ATP posted a 2010 loss of $349 million.
In February 2011, ATP received a federal permit to resume drilling. By 2012, several of Titan’s Telemark wells were finally in place, but the moratorium and delayed permitting had done their damage.
ATP and Ensco already filed suit against the federal government in U.S. District Court, a ruling in May 2011 was favorable with the judge finding that the federal government unreasonably delayed the issue of drilling permit applications.
In its Chapter 11 petition, ATP listed $3.6 billion in assets and $3.5 billion in debts. The debtor-in-possession has $617.6 million in financing available from lenders, an amount not expected to last long during the company’s restructuring.
ATP Oil & Gas filed Chapter 11 with the U.S. Bankruptcy Court for the Southern District of Texas – Case No. 12-36187.
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