August 12, 2013
The Honorable Judge Marvin Isgur
United States Bankruptcy Court
Southern District of Texas, Houston Division
515 Rusk Avenue
Houston Texas, 77002
RE: ATP Oil and Gas Corporation Case No. 12-36187.
Dear Honorable Judge Marvin Isgur:
This is an ATP reorganization plan that is fair to all parties and treats all classes the same.
Put all stakeholders into a "NEWCO.” The DIP loans, second lien holders, trade accounts, NPIs / ORRIs, the bank loan on Titan, all common and preferred - into a NEWCO.
All debts total $3.6 billion. This means issuing 360 million shares valued at $10.00/share each, which would total all credit claims of 3.6 billion. Outstanding NEWCO shares will be 370 million shares to cover Common and Preferred as follows:
Re-organizational plan:
Creditors: 360 million shares
Preferred: 5 million shares
Common: 5 million shares
The common equity takes a ten to one reverse split and the "Preferred" is exchanged for common on a 50/150 ratio or haircut of 3 to 1. Both Common and Preferred would get 5 million shares of NEWCO.
All creditors are treated equal. Dollar for dollar 360 million shares valued at $10.00 a share results in book value of NEWCO at $3.7 billion.
Creditor examples:
Second lien holders: $1.5 billion would get 150 million shares. The same for the NPIs / ORRIs - if they are owed $500 million, they would get 50 million NEWCO shares. Trade accounts pre-BK would be given common shares accordingly. Same with DIP lenders and Bank loan on Titan. Operating cash for production and payments to attorneys, etc. can be paid from current production cash. I would eliminate the need to pay NPIs / ORRIs, trade accounts pre-BK, and interest payments.
The NEW-CO would be debt free.
That's my solution. Oil reserves include:
1) 10 million barrels oil where the Titan sits now.
2) 10 million barrels oil at Clipper field.
3) 30 million barrels oil in the three Atwater blocks.
4) 50 million barrels oil at Cheviot for future development
Please note information about reserves valuation, SEC, and federal booking in addendum. Reserves haven't changed except for the produced and the reserves needing additional CapEx to produce. I have reduced them considerably in my plan:
From ATP management: 210 million BOE -> conservatively reduce to 100 million BOE.
100 million barrels at $30.00 a barrel = value of $3.0 billion for oil.
Titan platform = $500 million
Pipelines = $200 million
$0.7 billion plus the $3.0 billion for 100 million BOE equals valuation of $3.7 billion.
Does not include Innovator nor Innovator pipelines or Gomez oil in ground. No value for Octabuoy, Israel, and Entrada either.
NOTE: This plan leaves ATP management with about 5 million/370 million shares percent of company. It does not reward them like the DIP plan sale does.
The reason no ATP bidders other than DIP lenders is because of the NPI / ORRI issues and ATP assets don't fit other oil companies core areas as all exploration companies are trying to focus operation, not spread them out with a new acquisition.
NEWCO generating cash flow positive with no loans or debt interest to pay. Operating funds would take care of itself in a few months and the plan removes all debt and pays every creditor 100% of their principle back.
Regards,
Charles Nelson via Pal Luthra (owners of common / preferred shares)
Addendum:
Reserves - this knowledge will counter current DIP claims about reserves. Most market participants do not know these rules. And it is the rule that changes oil booking volumes so that the reserve volumes change in the ground.
Specific "5 year rule" is a new disclosure requirement in Regulation S-X 210.4-10 "Modernization of Oil and Gas Reporting Regulations: Final Rule (14 January 2009). Undeveloped projects should be developed within 5 years of the initial proved reserves booking, unless specific circumstances are met. Read more at this link:
ryderscott.com
Reference - herein lies another potential flaw: companies reporting proved undeveloped reserves, based on evidence of "reasonable certainty," must have a development plan that has reached a final investment decision, and that will move the reserves to the proved developed category within five years. The rule's logic is to prevent companies from piling reserves onto their books that they won't necessarily develop. Yet technically complex projects, deep-water ventures for example, may take longer than this to bring on stream. Read more at this link:
petroleum-economist.com\anges-now-for-the-fun-part.html#ixzz2VHRJmtLu |
