I’ve written about ATP several times for Gurufocus and have followed the company extremely closely for several years. Here are my most recent articles:
Appomattox deal
http://www.gurufocus.com/news.php?id=108263
ATP Titan Deal
http://www.gurufocus.com/news.php?id=108122
Catalysts for a Short Squeeze
http://www.gurufocus.com/news.php?id=105495
After the market close today I came across an article that completely surprised me. Apparently GE is interested in investing in the Gulf of Mexico and has kicked the tires on ATP with respect to acquiring the entire company.
GE already is a partner with ATP on the ATP Innovator which is a production platform for ATP’s Gomez property so they are quite familiar with the company. What I can’t imagine though is ATP’s founder and CEO selling the company given his very large ownership interest and desire to see ATP’s development plans through to completion.
ATP has a huge short interest of almost 50% of the float. Much of this short interest likely relates to hedging by holders of ATP’s $1.5 billion high yield bonds. These folks are getting to crunch time as ATP recently secured another $350 million of financing and is on the verge of huge step change in production and cash flow from their first Mirage well. With the additional financing and the additional cash flow the bond holders will be feeling more comfortable with their bond holdings and will need to cover before the shares run higher and eat into their returns.
The fact that ATP is of interest to GE is another reason to be uncomfortable for someone short the stock.
Here is the article from the NY Times on GE and ATP:
http://dealbook.blogs.nytimes.com/2010/10/08/g-e-keeps-shopping-for-energy-assets/?partner=yahoofinance
“General Electric’s recent multibillion-dollar acquisition spree may just be getting started. The conglomerate’s GE Energy Financial Services unit has recently been taking a hard look at several energy companies that operate in the Gulf of Mexico, aiming to possibly acquire some or all of their assets, according to two people briefed on the matter.
But so far, G.E. has not made a move, passing on deals this summer to acquire the energy producer ATP Oil and Gas Corporation and Frontier Drilling, one person briefed on the matter said. G.E. also passed on a deal to acquire Plains Exploration’s offshore assets in the Gulf of Mexico, which were eventually sold to McMoRan Exploration for $818 million, according to this person, who like others was not authorized to speak publicly about any potential deals.
Nevertheless, G.E. is still looking to pick up assets in the gulf, according to another person briefed on the matter. G.E. is hoping to pick up distressed assets and has not ruled out acquiring an entire company, this person said.
Andrew Katell, a spokesman for GE Energy Financial Services, would not comment on the specific deals, but noted that the unit, which has $21 billion in energy assets, rarely buys companies outright.
“While we take ownership stakes in energy projects, assets and companies, it is not part of our strategy to buy public companies outright at GE Energy Financial Services,” Mr. Katell said.
But it is not unprecedented for the unit to take full ownership stakes in a company. In 2007, GE Energy Financial Services bought Regency Energy Partners, a publicly traded master limited partnership that owned natural gas gathering and processing systems, for $603 million. (G.E. divested part of its stake earlier this year).
G.E.’s latest acquisition, Dresser Industries, an energy infrastructure technology and service provider, was executed by GE Energy, another unit of General Electric. Unlike GE Energy Financial Services, GE Energy has a record of taking full ownership of energy companies.
But it would be unusual for any G.E. unit to fully acquire an exploration and production company like ATP. GE Energy Financial Services already had an equity stake in one of ATP’s offshore rigs and was contemplating doing a similar deal with another of the company’s rigs this year. But G.E. decided this summer to look into acquiring the entire company as its market value had collapsed because of fallout from the disastrous BP oil spill in the Gulf of Mexico, a person close to the situation told DealBook. Eventually, informal talks collapsed amid a disagreement surrounding due diligence, this person said.
Despite the setback, G.E. is still entertaining offers for pieces of exploration and production companies that have fallen on hard times because of weak natural gas prices and the government freeze on new drilling in the Gulf of Mexico. The company believes that any hard times in the gulf will be temporary, a person briefed on G.E.’s thinking told DealBook.
Some analysts think G.E. is likely to make another energy acquisition soon. “I would not be surprised to see G.E. with its balance sheet enter into the Gulf of Mexico and build an exploration and production company and I think now is a good time to do that,” Loretta Cross, a managing partner in Grant Thornton’s corporate advisory and restructuring group, told DealBook. “At another point in time, they were only able to buy assets, but now I think there are entire companies that would be for sale.”
Ms. Cross believes G.E. could still make another run at ATP or move to acquire another smaller production company like Energy XXI. She noted that if G.E. wanted to make a big splash, the company might choose to acquire the Gulf of Mexico assets of BP or a large independent oil and gas company like Apache.
Still, it is not completely clear if G.E. will ultimately acquire another company operating in the gulf as it did this week with Dresser. The company recently rejected one acquisition in the gulf because it was concerned that it could be “too big,” a person briefed on the talks told DealBook. Nevertheless, G.E. still is pushing its bankers to bring it more options, this person said. “
Appomattox deal
http://www.gurufocus.com/news.php?id=108263
ATP Titan Deal
http://www.gurufocus.com/news.php?id=108122
Catalysts for a Short Squeeze
http://www.gurufocus.com/news.php?id=105495
After the market close today I came across an article that completely surprised me. Apparently GE is interested in investing in the Gulf of Mexico and has kicked the tires on ATP with respect to acquiring the entire company.
GE already is a partner with ATP on the ATP Innovator which is a production platform for ATP’s Gomez property so they are quite familiar with the company. What I can’t imagine though is ATP’s founder and CEO selling the company given his very large ownership interest and desire to see ATP’s development plans through to completion.
ATP has a huge short interest of almost 50% of the float. Much of this short interest likely relates to hedging by holders of ATP’s $1.5 billion high yield bonds. These folks are getting to crunch time as ATP recently secured another $350 million of financing and is on the verge of huge step change in production and cash flow from their first Mirage well. With the additional financing and the additional cash flow the bond holders will be feeling more comfortable with their bond holdings and will need to cover before the shares run higher and eat into their returns.
The fact that ATP is of interest to GE is another reason to be uncomfortable for someone short the stock.
Here is the article from the NY Times on GE and ATP:
http://dealbook.blogs.nytimes.com/2010/10/08/g-e-keeps-shopping-for-energy-assets/?partner=yahoofinance
“General Electric’s recent multibillion-dollar acquisition spree may just be getting started. The conglomerate’s GE Energy Financial Services unit has recently been taking a hard look at several energy companies that operate in the Gulf of Mexico, aiming to possibly acquire some or all of their assets, according to two people briefed on the matter.
But so far, G.E. has not made a move, passing on deals this summer to acquire the energy producer ATP Oil and Gas Corporation and Frontier Drilling, one person briefed on the matter said. G.E. also passed on a deal to acquire Plains Exploration’s offshore assets in the Gulf of Mexico, which were eventually sold to McMoRan Exploration for $818 million, according to this person, who like others was not authorized to speak publicly about any potential deals.
Nevertheless, G.E. is still looking to pick up assets in the gulf, according to another person briefed on the matter. G.E. is hoping to pick up distressed assets and has not ruled out acquiring an entire company, this person said.
Andrew Katell, a spokesman for GE Energy Financial Services, would not comment on the specific deals, but noted that the unit, which has $21 billion in energy assets, rarely buys companies outright.
“While we take ownership stakes in energy projects, assets and companies, it is not part of our strategy to buy public companies outright at GE Energy Financial Services,” Mr. Katell said.
But it is not unprecedented for the unit to take full ownership stakes in a company. In 2007, GE Energy Financial Services bought Regency Energy Partners, a publicly traded master limited partnership that owned natural gas gathering and processing systems, for $603 million. (G.E. divested part of its stake earlier this year).
G.E.’s latest acquisition, Dresser Industries, an energy infrastructure technology and service provider, was executed by GE Energy, another unit of General Electric. Unlike GE Energy Financial Services, GE Energy has a record of taking full ownership of energy companies.
But it would be unusual for any G.E. unit to fully acquire an exploration and production company like ATP. GE Energy Financial Services already had an equity stake in one of ATP’s offshore rigs and was contemplating doing a similar deal with another of the company’s rigs this year. But G.E. decided this summer to look into acquiring the entire company as its market value had collapsed because of fallout from the disastrous BP oil spill in the Gulf of Mexico, a person close to the situation told DealBook. Eventually, informal talks collapsed amid a disagreement surrounding due diligence, this person said.
Despite the setback, G.E. is still entertaining offers for pieces of exploration and production companies that have fallen on hard times because of weak natural gas prices and the government freeze on new drilling in the Gulf of Mexico. The company believes that any hard times in the gulf will be temporary, a person briefed on G.E.’s thinking told DealBook.
Some analysts think G.E. is likely to make another energy acquisition soon. “I would not be surprised to see G.E. with its balance sheet enter into the Gulf of Mexico and build an exploration and production company and I think now is a good time to do that,” Loretta Cross, a managing partner in Grant Thornton’s corporate advisory and restructuring group, told DealBook. “At another point in time, they were only able to buy assets, but now I think there are entire companies that would be for sale.”
Ms. Cross believes G.E. could still make another run at ATP or move to acquire another smaller production company like Energy XXI. She noted that if G.E. wanted to make a big splash, the company might choose to acquire the Gulf of Mexico assets of BP or a large independent oil and gas company like Apache.
Still, it is not completely clear if G.E. will ultimately acquire another company operating in the gulf as it did this week with Dresser. The company recently rejected one acquisition in the gulf because it was concerned that it could be “too big,” a person briefed on the talks told DealBook. Nevertheless, G.E. still is pushing its bankers to bring it more options, this person said. “
