August 21, 2012 / 7:17 PM / 5 years ago

TEXT-S&P cuts ATP Oil & Gas ratings to 'D'

Overview
     -- U.S.-based ATP Oil & Gas Corp. has announced that it has filed
for Chapter 11 bankruptcy protection.
     -- We are lowering our long-term corporate credit rating on ATP to 'D' 
from 'CCC'. 
     -- We are also lowering our rating on the company's senior secured notes 
to 'D' from 'CCC'. The '4' recovery rating on the notes remains unchanged.

Rating Action
On Aug. 21, 2012, Standard & Poor's Ratings Services lowered its corporate 
credit rating on Houston, Texas-based ATP Oil & Gas Corp. to 'D' from 'CCC'. 
At the same time, Standard & Poor's lowered its issue rating on the company's 
senior secured notes to 'D' from 'CCC'. The recovery rating remains '4', 
indicating our expectation of average (30% to 50%) recovery on the notes.

Rationale
The downgrades follow ATP's announcement on Aug. 17 that it filed a voluntary 
petition for reorganization under Chapter 11 of the Bankruptcy Code with the 
U.S. Bankruptcy Court for the Southern District of Texas. The bankruptcy 
filing comes as the company faced an interest payment scheduled for November. 
ATP has obtained a commitment for $617.6 million of debtor-in-possession 
financing from members of its existing senior lender group. The lenders, led 
by Credit Suisse, will provide $250 million in additional funds and refinance 
into the DIP facility the amounts owed to existing first-lien lenders that 
participate in providing additional funds. As of the filing, ATP owed about 
$366 million on its first-lien term loan, $1.5 billion plus accrued and unpaid 
interest on its 11.875% senior second-lien notes, $35 million on its senior 
convertible note, and $318.5 million on its term loan facility secured by ATP 
Titan assets.

ATP is an oil and gas exploration and production company, with operations 
primarily in the Gulf of Mexico. The debt-laden company suffered from various 
operational delays in the second quarter of 2012. The company's Telemark hub 
(representing about half of the average 20,000 to 21,000 boe/day production of 
the company in April 2012) was shut down for four weeks versus an expected two 
weeks over the months of May and June to allow the tie-in of new pipelines. In 
addition, the workover at ATP's Mississippi Canyon A-2 well was completed only 
in July, while the well was initially expected to come online during the 
second quarter. In June, the CEO resigned only six days after the announcement 
of his hiring. These operational setbacks, the latest of a series of 
operational issues plaguing the company's development program, characterize 
the high execution risk in ATP's strategy. 

Recovery analysis
For the complete recovery analysis, see Standard & Poor's recovery report on 
ATP to be published on RatingsDirect immediately following the release of this 
report.

Related Criteria And Research
     -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011
     -- Criteria Guidelines For Recovery Ratings, Aug. 10, 2009.
     -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 
May 27, 2009
     -- Corporate Ratings Criteria 2008, published April 15, 2008.
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Ratings List
Downgraded 
                                        To                 From
ATP Oil & Gas Corp.
 Corporate Credit Rating                D/--               CCC/Negative/--
 Senior Secured                         D                  CCC
  Recovery Rating                       4                  4

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