ATP Oil & Gas (ATPG) -- I re-added a significant amount of shares to my core position in this yesterday on the news of their financing. This financing was a watershed event for the company in several respects.
First, it now guarantees they will be able to fund full development of their Gomez project, without needing to farm any of it out. Gomez is out in the GOM deepwater, 3,000 ft. deep, and has the potential to have 100 BCFE of reserves in it (mostly oil). Just to put this in perspective, ATP's entire proved developed reserves at the end of last year were 56 BCFE.
Second, it marks the final stage of maturity of this company, being able to get an equity raise done without having the stock price take a huge whack. A few years ago, they had their backs up against the wall and when they went into the equity markets they promptly saw their stock price get cut in about half while they shopped a PIPE. Now, they do an equity raise at a few measly percentage points lower than market.
The first well in their Gomez project is being reentered as we speak and should be completed and tested by the end of the month. I believe that news of such test, with several thousand bbls. a day flow rate on the well, should power the stock to new highs. Soon after that point the investment banking firms that participated in the equity offering will likely initiate coverage with "Strong Buy" opinions, thereby powering the stock price even higher, creating the other side of the trade for their clients. |
