What's happening today is a classic Short Squeeze.
Those shorting the stock, and there were a lot of them, were counting on disappointing results from the WC 941 #3 well.
ATPG Short Squeeze
ATPG Short Squeeze
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ATPG Short Squeeze
ATP Oil & Gas(ATPG_) is up more 8% on Tuesday, continuing a rally that began on Monday. It's an indication that the worst-case scenario for small oil and gas exploration and production companies in the Gulf of Mexico -- being forced out of business as a result of new federal drilling regulation with the liability cap being raised to levels small independents can't afford -- doesn't appear likely to investors.
It's not just optimism about the Gulf of Mexico on which ATP Oil & Gas is rallying, though. There was market chatter this week that General Electric(GE_) had been considering a bid for the company. The logical extension of the rumors was that if GE was willing to consider a play for ATP Oil & Gas it must have confidence that the situation in the Gulf of Mexico, and the liability cap issue, won't drive small independents out of business. ATP is the smallest pure deepwater play, and investors had been staying away from the story.
Not surprisingly, ATP Oil & Gas has also been one of the most heavily shorted names in the exploration and production sector. The short squeeze is on this week with shares of ATP Oil & Gas. The action over the past two days is a big unwind in the ATP short trade, and it's painful for those betting short on the independent oil and gas company.
At the same time, some long investors are becoming more constructive on ATP Oil & Gas. The company released more encouraging well results on Monday, and coupled with the GE rumors, it began the rally.
It's not just optimism about the Gulf of Mexico on which ATP Oil & Gas is rallying, though. There was market chatter this week that General Electric(GE_) had been considering a bid for the company. The logical extension of the rumors was that if GE was willing to consider a play for ATP Oil & Gas it must have confidence that the situation in the Gulf of Mexico, and the liability cap issue, won't drive small independents out of business. ATP is the smallest pure deepwater play, and investors had been staying away from the story.
Not surprisingly, ATP Oil & Gas has also been one of the most heavily shorted names in the exploration and production sector. The short squeeze is on this week with shares of ATP Oil & Gas. The action over the past two days is a big unwind in the ATP short trade, and it's painful for those betting short on the independent oil and gas company.
At the same time, some long investors are becoming more constructive on ATP Oil & Gas. The company released more encouraging well results on Monday, and coupled with the GE rumors, it began the rally.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ATPG Short Squeeze
HOUSTON--(BUSINESS WIRE)-- ATP Oil & Gas Corporation (NASDAQ:ATPG - News) is scheduled to present on Wednesday, October 13th at IPAA’s OGIS San Francisco. The live webcast by Chief Financial Officer Al Reese, Jr. begins at 4:10 pm PT at www.atpog.com and http://www.investorcalendar.com/CEPage.asp?ID=161726. The slides accompanying the presentation will be posted prior to the market open on Wednesday at the company’s website at www.atpog.com.
The focus of the investor presentation includes the recent increase in production at ATP’s 100% owned Telemark Hub, ATP’s consistent growth in reserves not only at individual deepwater projects but across the company’s history, an analysis of ATP’s liquidity as a result of the recent ATP Titan monetization and the significance of the Gulf of Mexico deepwater to the energy supply of America. Independents hold a majority interest in 81% of producing leases, 66% of all Gulf of Mexico leases and 52% of deepwater leases.
In addition to the presentation, ATP is scheduled to meet individually in one-on-one sessions with interested investors, shareholders and bondholders. Contact Mr. Reese at the conference or email sthornton@atpog.com for individual meeting requests.
The focus of the investor presentation includes the recent increase in production at ATP’s 100% owned Telemark Hub, ATP’s consistent growth in reserves not only at individual deepwater projects but across the company’s history, an analysis of ATP’s liquidity as a result of the recent ATP Titan monetization and the significance of the Gulf of Mexico deepwater to the energy supply of America. Independents hold a majority interest in 81% of producing leases, 66% of all Gulf of Mexico leases and 52% of deepwater leases.
In addition to the presentation, ATP is scheduled to meet individually in one-on-one sessions with interested investors, shareholders and bondholders. Contact Mr. Reese at the conference or email sthornton@atpog.com for individual meeting requests.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ATPG Short Squeeze
ATPG closed today with a very bearish candlestick. short squeeze over? a similar sign happened on aug 7 and next day atpg dropped over $2. a repeat? i could not find any news.
it must have been bad news in the presentation released today on their website--i haven't looked at it yet--only thing to explain.
i sold my calls.
jim
it must have been bad news in the presentation released today on their website--i haven't looked at it yet--only thing to explain.
i sold my calls.
jim
Re: ATPG Short Squeeze
i don't see anything negative in the presentation--of course i don't have real skilled eyes in this arena.
anybody else have an opinion?
anybody else have an opinion?
Re: ATPG Short Squeeze
Just like all bull runs on a stock, short squeezes have corrections.
Those in ATPG need to keep in mind that the Company is going to report a significant 3rd quarter loss. See my forecast under the Sweet-16 tab. WC 941 #3 well did not come on until very late in the quarter. It will give Q4 a nice boost.
Those in ATPG need to keep in mind that the Company is going to report a significant 3rd quarter loss. See my forecast under the Sweet-16 tab. WC 941 #3 well did not come on until very late in the quarter. It will give Q4 a nice boost.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: ATPG Short Squeeze
From Seeking Alpha (October 12)
There are events that are positive for companies and then there are events that transform companies. Monday ATP Oil and Gas (ATPG) had an event that has completely changed the company.
The company announced first production at its second Telemark well. The first zone is already producing at 7,000 BOE per day (this is an oil well) and they will be commingling this with a second zone which should push total production to 10,000 BOE or more.
Consider what this means for ATP’s revenue and cash flow:
The entire company production prior to adding this Mirage well was roughly 21,000 BOE per day, weighted 60% oil and 40% gas.
Rough estimate of the revenue from this production:
21,000 BOE x 60% = 12,600 BOE of oil per day
21,000 BOE x 40% = 8,400 BOE of natural gas per day
Revenue per year:
Oil – 12,600 x 365 x $70 = $321,930,000
Gas – 8,400 (50.4Mcfe) x $4 = $73,584,000
Total Revenue from existing production = $395,514,000
Rough estimate of revenue from Mirage well added Monday:
Oil – 10,000 x 365 x $70 = $255,500,000
So while production increases an enormous 10,000/21,000 = 48%, the increase in revenue and cash flows is even larger, $255mil/$395mil = 65%.
It pays to be an oil producer. And ATP has 5 more significant producing wells coming on soon.
And the pressure readings and flow test results don't just mean that production will be better than advertised, it also means the reservoir is likely larger than expected.
I wrote in late August about a short squeeze coming:
The stock price then was $11 and we are now at $15. I believe the good times for shareholders are just beginning. As I’ve said many times, the big spending for ATP in the Gulf of Mexico to put in the pipelines and $700 million floating production unit is done. Now every dollar spent goes towards drilling a well, and that money quickly turns into increased cash flow and production increases.
50% of the float is still short. ATP has more financing than it needs with the recent ATP Titan deal. And on the very near horizon (within one year) for ATP are the following wells (things could get very interesting quickly):
MC754 – Expected to add 4,000 BOE in Q4 (already drilled)
Second Mirage well – 7,000 BOE per day
First Morgus well – 7,000 BOE per day
Gomez well at MC711 – 5,000 BOE per day
Second Gomez well at MC711 – 5,000 BOE per day
The lifting of the drilling moratorium will also likely be a big catalyst for ATP. I suppose that is obvious given they have another 30,000 BOE per day of production coming from locations where 100% of the required infrastructure is already in place.
Before the BP spill, ATP was trading at $23 with production at less than 20,000 BOE per day and no clear plan for financing future projects.
Now production is over 30,000 and financing for the indefinite future is in place with the Titan monetization and this massive cash flow increase. The share price however is $15.
So there is a 50% upside just to get back to pre-BP spill levels, and those levels were not expensive.
The BP spill delayed the production ramp up, but it is here now. At over 30,000 BOE per day and the MC754 well being added this quarter, ATP will have tripled its 2010 exit production run rate.
With ATP's much improved and still rapidly growing production, more than enough financing and 50% of the float still short, there likely aren't many stocks poised for a more rapid move upwards.
Disclosure: Long ATPG
There are events that are positive for companies and then there are events that transform companies. Monday ATP Oil and Gas (ATPG) had an event that has completely changed the company.
The company announced first production at its second Telemark well. The first zone is already producing at 7,000 BOE per day (this is an oil well) and they will be commingling this with a second zone which should push total production to 10,000 BOE or more.
Consider what this means for ATP’s revenue and cash flow:
The entire company production prior to adding this Mirage well was roughly 21,000 BOE per day, weighted 60% oil and 40% gas.
Rough estimate of the revenue from this production:
21,000 BOE x 60% = 12,600 BOE of oil per day
21,000 BOE x 40% = 8,400 BOE of natural gas per day
Revenue per year:
Oil – 12,600 x 365 x $70 = $321,930,000
Gas – 8,400 (50.4Mcfe) x $4 = $73,584,000
Total Revenue from existing production = $395,514,000
Rough estimate of revenue from Mirage well added Monday:
Oil – 10,000 x 365 x $70 = $255,500,000
So while production increases an enormous 10,000/21,000 = 48%, the increase in revenue and cash flows is even larger, $255mil/$395mil = 65%.
It pays to be an oil producer. And ATP has 5 more significant producing wells coming on soon.
And the pressure readings and flow test results don't just mean that production will be better than advertised, it also means the reservoir is likely larger than expected.
I wrote in late August about a short squeeze coming:
The stock price then was $11 and we are now at $15. I believe the good times for shareholders are just beginning. As I’ve said many times, the big spending for ATP in the Gulf of Mexico to put in the pipelines and $700 million floating production unit is done. Now every dollar spent goes towards drilling a well, and that money quickly turns into increased cash flow and production increases.
50% of the float is still short. ATP has more financing than it needs with the recent ATP Titan deal. And on the very near horizon (within one year) for ATP are the following wells (things could get very interesting quickly):
MC754 – Expected to add 4,000 BOE in Q4 (already drilled)
Second Mirage well – 7,000 BOE per day
First Morgus well – 7,000 BOE per day
Gomez well at MC711 – 5,000 BOE per day
Second Gomez well at MC711 – 5,000 BOE per day
The lifting of the drilling moratorium will also likely be a big catalyst for ATP. I suppose that is obvious given they have another 30,000 BOE per day of production coming from locations where 100% of the required infrastructure is already in place.
Before the BP spill, ATP was trading at $23 with production at less than 20,000 BOE per day and no clear plan for financing future projects.
Now production is over 30,000 and financing for the indefinite future is in place with the Titan monetization and this massive cash flow increase. The share price however is $15.
So there is a 50% upside just to get back to pre-BP spill levels, and those levels were not expensive.
The BP spill delayed the production ramp up, but it is here now. At over 30,000 BOE per day and the MC754 well being added this quarter, ATP will have tripled its 2010 exit production run rate.
With ATP's much improved and still rapidly growing production, more than enough financing and 50% of the float still short, there likely aren't many stocks poised for a more rapid move upwards.
Disclosure: Long ATPG
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group