ATP Oil & Gas committee wants examination of reserve value discrepancy

By Caroline Salls

Pittsburgh, Dec. 4 - ATP Oil & Gas Corp.'s official committee of equity security holders asked the U.S. Bankruptcy Court for the Southern District of Texas to appoint an examiner for the company's Chapter 11 case, according to a Monday court filing.

"This case cries out for an examiner," the committee said in the motion.

"Barely three months after the debtor commenced this case claiming that the company suffered from a mere liquidity hiccup, we are now told that the debtor's reserves are valued drastically less than what the debtor has previously reported publicly and that, now, the only way forward is a fire-sale liquidation to satisfy the demands of the DIP lenders.

"It doesn't add up."

The committee said a DIP lenders' report either incorrectly undervalues ATP's reserves, "indicating perhaps poor execution or bad faith manipulation," or a company report incorrectly overvalued the reserves.

If the lenders' report is flawed, the shareholder group said there is no basis for forcing the liquidation of the ATP, according to the filing.

Meanwhile, if the company's estimates were significantly misleading, the committee said the estate may have substantial causes of action against ATP's management and officers.

The equity committee also said it is troubled by the company's "abrupt, complete and inexplicable capitulation" on the lenders' report.

After first standing by its own report, the committee said the company "has turned an about face."

According to the motion, ATP "cannot be counted on to investigate the DIP lenders it is trying to accommodate," nor can it be expected to investigate itself for exaggerating the value of its reserves.

ATP Oil & Gas is a Houston-based offshore oil and gas development and production company focused in the Gulf of Mexico, the Mediterranean Sea and the North Sea. The company filed for bankruptcy on Aug. 17 under Chapter 11 case number 12-36187.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.