ATP Survives Lingering Macondo Effects Through $133 Million Sale Of UK Subsidiary

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Acquired the UK-focused subisdiary ATP Oil & Gas (UK) Ltd. with reserves of more than 65 MMBOE.

Petroleum Equity LLP acquired ATP Oil & Gas (UK) Ltd. from Houston-based ATP Oil & Gas Corp. (OTC: ATPAQ) for US$133 million.

ATP Corp., an E&P company operating in the Gulf of Mexico and North Sea, began the sale process of its subsidiary ATP UK after filing for protection under Chapter 11 of the U.S. Bankruptcy Code in 2012 as a result of multi-billion dollar insolvency.

ATP UK’s assets include four producing gas fields, substantial 2P (proven plus probable) development reserves of more than 65 million barrels of oil equivalent (BOE), and a corporate entity with U.K. North Sea operator status on all of its producing and development fields. Certain legacy liabilities of ATP UK amounting to over US$1.2 billion have been compromised as part of the acquisition and the management team will stay in place.

Petroleum Equity, of London, is a private equity firm established in 2012 to focus on the upstream oil and gas market outside of North America. This acquisition is its first investment made through its investment vehicle Alpha Petroleum.

Daniel Reis, a founding partner at Petroleum Equity, said the acquisition was a complex transaction because of the nature of the assets, the cross-border restructuring process and the need to acquire ATP UK from its insolvent parent company.

"We have been extremely impressed with how ATP’s management team has held the business together over this period and continued being a first class operator in the U.K. Continental Shelf in face of the challenges," Reis said. "With our backing, ATP will have the financial and technical support required to execute its business plan, secure development authorization and bring new fields to production.”

In an August 2012 press release, ATP cited the main reason for the bankruptcy reorganization was due to the disruption of drilling operations in the Gulf of Mexico caused by the Macondo blowout in 2010, which prevented the company from increasing production. ATP UK was not a part of the Chapter 11 reorganization and refinancing filing. Its U.K. subsidiary continued to operate and manage its operations during the reorganization.

Graham Walters, managing director of ATP UK, is optimistic of the partnership with Petroleum Equity.

"We have worked very closely with them over the last months to deliver this very complex transaction and we have been impressed with their technical and commercial acumen. It has been an extremely challenging period for ATP UK since ATP Corporation filed under Chapter 11 and we look forward to driving the business forward with Petroleum Equity’s support,” Walters said.

The acquisition is expected to close in February.