ATP went ahead and released their Q3 earnings numbers this afternoon (Sunday). As I have grown used to being disappointed by ATP actual production results I must admit I was not expecting to find anything particularly exciting.
This time I was wrong.
ATP had guided earlier in October that their most recent well completed at MC 941 “Mirage” had been brought on production in excess of 7,000 BOE per day. The Q3 earnings release indicated that the well had actually averaged 8,200 BOE per day in October and exited the month at 12,200 BOE per day 86% of which is oil production.
Consider how significant this is to ATP.
Q3 production was 21,000 BOE per day split about 60/40 between oil and gas. This one well that just came on production is now producing at 12,200 BOE per day 86% oil.
Adding 12,200 BOE per day to the existing 21,000 BOE per day of production is obviously a huge increase. The fact that is so heavily weighted to oil makes the impact on revenue and cash flow that much more significant.
Consider the numbers:
If you assume $80 oil and $4 gas prices revenue from production breaks out like this..
Existing production of 21,000 BOE split 60/40 would result in annual revenue of $440 million.
Production from the new well of 12,200 BOE split 86/14 would result in annual revenue of $320 million.
So while production increases by 12,200/21,000 = 58% which is huge, revenue increases by $320/$440 = 72%.
A 72% increase in revenue from one well.
For the quarter ATP rang up another loss which is not unexpected as they have been supporting the cost of developing a $1.5 billion Deepwater development at Telemark without enjoying any return on that investment. As we now see based on October production levels, the taps at Telemark have finally been turned on and oil is coming out.
The next step for ATP is to secure drilling permits for 2 additional wells at Telemark and Gomez. As they get these the production ramp which started at 14,000 BOE per day in Q4 2009 and which is now in excess of 30,000 BOE will continue.
As I’ve been saying for a few months, the big infrastructure spending is over for ATP in the Gulf of Mexico. Cash now spent will quickly result in the rewards of increased production. For the past 3 years all cash was directed into the Telemark infrastructure and production suffered in the short term as a result.
Here is the link to the earnings release:
http://finance.yahoo.com/news/ATP-Announces-Third-Quarter-bw-4210123281.html?x=0&.v=1
This time I was wrong.
ATP had guided earlier in October that their most recent well completed at MC 941 “Mirage” had been brought on production in excess of 7,000 BOE per day. The Q3 earnings release indicated that the well had actually averaged 8,200 BOE per day in October and exited the month at 12,200 BOE per day 86% of which is oil production.
Consider how significant this is to ATP.
Q3 production was 21,000 BOE per day split about 60/40 between oil and gas. This one well that just came on production is now producing at 12,200 BOE per day 86% oil.
Adding 12,200 BOE per day to the existing 21,000 BOE per day of production is obviously a huge increase. The fact that is so heavily weighted to oil makes the impact on revenue and cash flow that much more significant.
Consider the numbers:
If you assume $80 oil and $4 gas prices revenue from production breaks out like this..
Existing production of 21,000 BOE split 60/40 would result in annual revenue of $440 million.
Production from the new well of 12,200 BOE split 86/14 would result in annual revenue of $320 million.
So while production increases by 12,200/21,000 = 58% which is huge, revenue increases by $320/$440 = 72%.
A 72% increase in revenue from one well.
For the quarter ATP rang up another loss which is not unexpected as they have been supporting the cost of developing a $1.5 billion Deepwater development at Telemark without enjoying any return on that investment. As we now see based on October production levels, the taps at Telemark have finally been turned on and oil is coming out.
The next step for ATP is to secure drilling permits for 2 additional wells at Telemark and Gomez. As they get these the production ramp which started at 14,000 BOE per day in Q4 2009 and which is now in excess of 30,000 BOE will continue.
As I’ve been saying for a few months, the big infrastructure spending is over for ATP in the Gulf of Mexico. Cash now spent will quickly result in the rewards of increased production. For the past 3 years all cash was directed into the Telemark infrastructure and production suffered in the short term as a result.
Here is the link to the earnings release:
http://finance.yahoo.com/news/ATP-Announces-Third-Quarter-bw-4210123281.html?x=0&.v=1
