ATP Oil & Gas Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ATP Oil & Gas (Nasdaq: ATPG  ) dropped 10% for the third straight session as management's attempts to ease the market's fears are failing.

So what: Yesterday I highlighted rising bond yields on $2 billion of debt as driving shares lower and yesterday Global Hunter Securities downgraded the bonds due to "bankruptcy concerns." The company's CFO said in an interview that the company has "complete control of our destiny and we have no plans to miss any interest payments."

Now what: Momentum is definitely against shares lately, and I wouldn't look at this as a buying opportunity. Playing a game betting against bankruptcy is dangerous in the case of ATP considering the company has sold preferred shares and renegotiated payments to suppliers to save cash. It's possible that cash flow will be strong enough from the company's wells that ATP can survive, but it isn't a bet this Fool is willing to make.

Interested in more info on ATP Oil & Gas? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (2) | Recommend This Article (2)

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  • Report this Comment On November 11, 2011, at 5:24 PM, lovesstocks2 wrote:

    If you look at the last quarter's results, the company had more than $80MM in cash flow and even with the reduced flow of the one well, the cash flow should stay positive, plus they have another significant well coming on line. The bankruptcy crowd is just not doing their homework on this company.

  • Report this Comment On November 11, 2011, at 6:11 PM, EnergyKing wrote:

    I agree that analyst are wrong and do not understand how to properly evaluate this stock. Everything that I see and hear from ATP appears to be positive.

    Delay in bringing a well on by one month because they discovered that they can complete the well to produce from two zones sounds logical and positive to me.

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