Energy Prospectus

Two of our interns, Landon Hawke (SMU) and Jared Field (Rice) joined me for a meeting yesterday with ATPG CEO Al Reese and his financial team. We were impressed by the progress that ATPG has made at Telemark. We will issue a company profile on ATPG the week of September 12th (when I get back from Alaska).

This is from Global Hunter:

ATP Oil & Gas (NASDAQ: ATPG; $11.78; Accumulate; $20.00 PT) ATP Oil & Gas announces initial production at the third Telemark well.

· At the Telemark Hub, the MC941 #4 well was brought to production at approximately 7,000 Boepd, on the high end of our estimate (5-7 Mboepd); the well was completed at 17,600’ TVD in the C and D sands. This is the third well in the Mirage/Morgus development plan which was highly anticipated given the company's need to generate revenue to meet debt service requirements.

· The company indicated that the necessary permits to drill the MC942 #2 well, the fourth and final well at Telemark, have been approved. Provided there are no operational setbacks, the #2 well should be TD’d and brought to production within the 4Q which is in-line with our expectations.

· Takeaway: While the company remains heavily levered with $2.8 billion of debt, and $430MM of NPI/ORRI payments due to investors and vendors, the successful completion of the #4 well builds our confidence that ATP will be able to weather the liquidity storm. Assuming the final Telemark well is brought to production in the 4Q within expected results (5-7 Mboepd), we do not see a likelihood that ATP will default on its debts.

Philip McPherson pmcpherson@ghsecurities.com

ATP Oil & Gas (NASDAQ: ATPG; $10.29; Accumulate; $20.00 PT) ATPG reports 2Q results

ATP Oil & Gas continues to slug along as it deals with the inherent uncertainties of deepwater operations. 2Q11 results were mixed as production shortfalls continued, offset by higher commodity prices. While ATP's leverage has been well documented, the company is on the cusp of achieving a dramatic production increase at its Telemark property. The third and fourth wells of this project are now slated to come onto production at the end of 3Q11 and 4Q11, respectively. These wells are important for three reasons. First, it will allow the company to achieve positive gross margins. Second, it will allow the company to continue paying off the $400+MM of net profit interests (NPI) and overriding royalty interests (ORRI) at a faster pace. Lastly, as these other commitments are paid off, we should see real growth in NAV for the common shareholders. While the timing on these wells is always subject to typical GOM issues, i.e. hurricanes and permitting delays, we believe ATP has better than a 50% chance of exiting 2011 with production in excess of our expectations of 35,000 Boepd. We are therefore maintaining our Accumulate rating, while lowering our price target from $24.00 to $20.00 to reflect recently issued preferred stock dilution and lower estimates given delays in completing wells and permitting.

Philip McPherson

I added to my position in ATPG during the August swoon. September-October volatility might provide another TA-based opportunity. Option premiums are generous for this, reflecting the volatility, which make buy-writes and spreads lucrative strategies. They may exit 2011 producing around 40,000-42,000 boepd, which is approx. 1/3 more than current rates. This is a good spec play for 2012, in my opinion.

THE COMPANY IS HIGHLY LEVERED, WHICH HAS ATTRACTED THE SHORTS, BUT INSIDERS HAVE BOUGHT TO SIGNAL CONFIDENCE IN THE PRODUCTION GROWTH STORY.