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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: luckymouse who wrote (97737)	3/8/2008 4:30:50 PM
From: Ed Ajootian	Read Replies (2) of 206334

lucky, ATP Oil & Gas (ATPG) -- they are in my "penalty box" now. Their entrance into the North Sea has turned out to be a mistake IMO. Every quarter their DD&A rate over there keeps climbing, and I was thinking that it should start to turn around 4Q. Instead, they put out a DD&A rate there that is by far the worst DD&A rate I have ever seen by any E&P company ever (and I've seen some bad ones), $6.12/mcfe. Since 2/3rds of their UK proved reserves are for their Cheviot project, which is still in the design stage, this tells me that the projected costs of their current field development plan for that project must have skyrocketed. It makes no sense to do long-term offshore oil development projects when it is going to cost you $37/bbl. to do the project. That level of cost only makes economic sense if one or both of the following occurs: 1) oil prices stay over $90/bbl. once the project goes into production, and 2) a lot of the probable reserves that have been identified at Cheviot actually become proven up. To rely on either of these occuring in order to make your project a success is stupid, IMO. So I continue holding my currently small position in ATP, waiting to see if they do something to resolve the above. Maybe they can find some other sucker to farm into Cheviot on a promoted basis. Maybe they do an IPO of their UK sub (in effect getting the folks that buy that stock to be the suckers). Maybe Paul B. (ATP pres.) somehow is able to change his mind and admit he made a mistake, and they pull the plug on the Cheviot project before filing the field development plan with the DTI (UK version of MMS). Unless something happens to "fix" the UK situation I am unlikely to buy back much of my position. Its a goddam shame they are having all these problems in the UK because they have some great things going in the GOM deepwater, which are being overshadowed by the UK problems.

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