ATPG - Buy this dip

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dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

ATPG - Buy this dip

Post by dan_s »

The current oil spill should have very little effect on ATPG operations. In fact, all the wells they need to get their Telemark Hub up to capacity have already been drilled, they just need to be tied into the platform.

ATPG was downgraded this morning by Wunderlich this morning as part of the "Great Oil Spill Sell-off". See article below by Toby Shute.

As I have posted to the E-P Group several times, ATPG will not have an impressive Q1 report since Telemark did not come on-line until very late in the quarter. I recommended to those not owning it to buy on the dip following the Q1 report because ATPG's production and revenues will be "off to the races" for the rest of this year.

Also, most on Wall Street still think the majority of ATPG's revenues come from the sale of natural gas. That is far from the the truth. Per my forecast model (which can be found under the Sweet-16 tab), 70% of ATPG's revenues in 2010 will come from the sale of oil and that percentage will go up in 2010.

As soon as ATPG releases Q1 results I will update their forecast model and make it available to all of our members.

The Great Oil Spill Sell-Off
By Toby Shute (Motley Fool)
April 30, 2010

Rate ATPG CAPS Rating 5/5 Stars

As each day passes, the headlines surrounding BP's (NYSE: BP) oil spill in the Gulf of Mexico keep getting worse.

Yesterday, we learned that the leak from the bottom of the Macondo exploration well is five times more severe than initially thought. Louisiana declared a state of emergency, and the Air Force and the Navy are now helping the Coast Guard try to contain a spill that could surpass Exxon Valdez to become the worst in U.S. history.

BP, along with contractors Halliburton (NYSE: HAL) and equipment maker Cameron (NYSE: CAM), has been served with at least one lawsuit already. Transocean (NYSE: RIG), whose Deepwater Horizon rig caught fire and sank to the ocean floor, could bring its share of litigation risk as well. All of these stocks have been battered since the accident was first announced, with Transocean hit particularly hard.

Some analysts are arguing that the sell-off in BP shares is overdone. Because it's one of the biggest oil companies in the world, a double-digit percentage decline obviously translates to a gigantic loss of market value. Bernstein Research estimates that BP could be on the hook for up to $8 billion in costs, but the company's equity has lost roughly three times that amount in market value.

That BP is oversold is probably a good bet. An even better bet, I think, is that companies that had nothing to do with the spill are also selling at a senseless discount. Here are three ideas:

Dril-Quip (NYSE: DRQ) is a manufacturer of offshore drilling and production equipment like wellheads and riser systems. The stock was down 9% at one point today. You'd think it had provided the blowout preventer that failed to engage, not Cameron.

ATP Oil & Gas (Nasdaq: ATPG) is an offshore exploration and production company that recently began production from a new deepwater field in the Gulf of Mexico. Two weeks ago, I said the shares were no longer in best buy territory -- but they're headed in that direction.

Finally, Cobalt International Energy (NYSE: CIE) is an offshore explorer that I've had my eye on since its unheralded IPO last fall. I've given a ballpark figure of the shares' value in the $19 to $23 range, so today's price has me quite interested. I should note that partner Anadarko Petroleum has had mechanical difficulties drilling out the Heidelberg structure, and that could justifiably knock a little off the share price. This isn't commensurate with the beating the stock has taken, though
Dan Steffens
Energy Prospectus Group
dlkerber

Re: ATPG - Buy this dip

Post by dlkerber »

Dan dont you think this might be a good time to buy or at least follow DPDW. I think there services will be in great demand.
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: ATPG - Buy this dip

Post by dan_s »

Deep Down (DPDW) is an interesting micro-cap. I've been trying to get them to host one of our luncheons. I've not taken a hard look at it so do your own due diligence. - Dan

Deep Down, Inc. provides oilfield services to the offshore exploration and production industry worldwide. The company offers various project engineering and management services, including the design, installation, and retrieval of subsea equipment and systems; connection and termination operations; well-commissioning services; and construction support and remote operated vehicles (ROV) operations support. It provides offshore project management, installation support and management, spooling services, pull-in operations, terminations, testing services, system integration testing, commissioning, and storage management services; and marine technical support services, including ROV tooling services and offshore construction equipment rental. In addition, the company offers installation support equipment, and component parts and assemblies for subsea distribution systems, including flying leads, umbilical hardware, bend limiters, compliant splices, installation aids, and buoyancy products; and SeaStax for offshore storage and space management on offshore installation vessels, drilling rigs, and production platforms. Further, it designs, manufactures, installs, and commissions integrated programmable logic controller, and supervisory control and data acquisition based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems. The company sells its products directly to oil and gas companies, subsea equipment manufacturers, and subsea equipment installation contractors involved in offshore exploration, development, and production; and offshore drilling contractors, engineering and construction companies, military, and other companies involved in maritime operations. Deep Down was founded in 1997 and is headquartered in Houston, Texas.
Dan Steffens
Energy Prospectus Group
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