ATP Oil & Gas Files for Bankruptcy: When the Oil Business Doesn't Work Out

ATP Oil & Gas Corp. (NASDAQ: ATPG) is joining the bankruptcy crowd. The oil company in the Gulf of Mexico filed a voluntary Chapter 11 bankruptcy petition in order to undertake a comprehensive financial restructuring.

ATP said that it expects its oil and gas operations to continue in the ordinary course throughout the reorganization process. It is worth noting that ATP has obtained a debtor-in-possession (DIP) financing commitment for $617.6 million from members of its existing senior lender group. The group will provide $250 million of additional funds and refinance into the DIP facility the amounts owed to those existing first lien lenders that participate in providing additional funds.

The blame for the bankruptcy is effectively being tied to BP PLC (NYSE: BP) and the current administration as its troubles “began with the Macondo well blowout in April 2010 and the imposition beginning in May 2010 of the moratoria on drilling and related activities in the Gulf of Mexico.” ATP noted that this drilling ban prevented it from bringing wells to production.

Chapter 11 bankruptcy processes rarely end up well for common shareholders. To prove the point, ATP shares are down 55% at $0.205 in premarket trading against a prior 52-week range of $0.31 to $14.48.

JON C. OGG