ATP files for bankruptcy

Bankrupt: ATP files for Chapter 11

Houston-based ATP Oil & Gas filed for Chapter 11 bankruptcy protection after market close on Friday afternoon after a long period of struggles the Gulf of Mexico player traces back to the Macondo disaster.

ATP said it had obtained $617.6 million of debtor-in-possession financing from its current senior lenders, including Credit Suisse.

The lenders will provide $250 million of additional funds, and will refinance the amounts owed to existing first lien lenders that participate in providing additional funds, ATP said in a statement.

The company said it expects its oil and gas operations to continue "in the ordinary course throughout the reorganisation process", which is sees "as a helpful step towards de-leveraging the company to position it for future development of its assets".

ATP has been floundering for months as its stock price has plummeted. The stock has lost some 98% of its value since its $57 peak in 2007. It closed the week trading at about 45 cents a share.

The company's newly appointed chief executive quit after a week on the job in June. Operational setbacks in the Gulf of Mexico and the Mediterranean Sea further weighed on the company.

The company also faces an $89 million interest payment in November, according to reports.

On 1 August, Standard & Poor’s downgraded ATP's credit rating to CCC, meaning the company was considered vulnerable to default.

ATP said the 2010 moratorium on drilling in the Gulf of Mexico was the "primary reason" it went bankrupt.

"These events prevented ATP from bringing to production in 2010 and in early 2011 six development wells that would have added significant production to ATP," the company said, adding that three of the wells remain undrilled.

"Had ATP been allowed to drill and complete these wells, ATP believes it would have provided a material production change in 2010 continuing to today," the company said.

"This projected increase in production should have substantially increased cash flows, shareholder value and allowed the company the ability to withstand normal operational issues experienced by owners of oil and gas properties in the Gulf of Mexico."

In June of this year, shortly after the new chief executive resigned, ATP sued the US government for $68 million to recoup money it claims it lost as a result of the drilling ban. That case is still pending.

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