ATP: Israel production to multiply gas reserves

American gas and oil drilling company's CFO quells concerns while responding to S&P and Moody's warnings of possible insolvency due to ban on new drillings in the Gulf of Mexico following disaster

Shay Salinas, Calcalist|Published: 10.05.11 , 09:49

Moody's and S&P 500 rating agencies posed some questions regarding the ability of American gas and oil drilling company ATP to repay its bondholders a $1.5 billion debt. The bond series was issued just a day before the big oil spill in the Gulf of Mexico approximately a year and a half ago.

In 2010, ATP reported a negative cash flow of $436 million and in the previous year - $476 million. Estimates are that the company will report a $206 million loss this year and gains in 2012.

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"Approximately 95% of the company’s revenues come from drilling in the Gulf of Mexico, and these days it's not easy to procure the required permits to initiate new drillings in the area," Moody's noted.

In a telephone interview with Bloomberg news agency, ATP's Financial Officer Albert L. Reese addressed the S&P and Moody's downgrade, saying that "we plan on beginning drilling off the coast of Israel next year, the move will double our gas reserves. In any event, once the drillings are under way the company will be able to meet its financial obligations."

ATP Oil and Gas is considered a world leader in deep water drilling and specializes in drilling in the Gulf of Mexico where it operates 29 rigs on the continental shelf. The company was poised for a quantum leap in production aiming at 50,000 barrels a day when BP's big oil spill occurred in the Gulf.

ATP partnered up with Isramco on three prospecting licenses: Samson and two Daniel licenses.