Investors of ATP Oil & Gas (Nasdaq: ATPG) are generally focused on its operations in the Gulf of Mexico, which means that at times we tend to forget that this company also has operations elsewhere. ATP has started drilling operations in the Mediterranean Sea off the coast of Israel.

The next exciting discovery?
 ATP has initiated drilling operations at the Shimshon block in the Levant Basin with its partner Isramco Negev. This could be a challenge to Noble Energy (NYSE: NBL), which until now has been the sole foreign operator in Israel.

According to an investor presentation last month, the Shimshon block sits atop 2.5 trillion to 3.4 trillion cubic feet of natural gas reserves, of which 0.9 to 1.2 TCF are net to ATP. Additionally, ATP owns stakes in the Daniel East and Daniel West blocks. Now that's a huge find.

There are reasons to believe that these figures are genuine, namely the successes of Noble Energy in the adjacent fields. The Leviathan and Tamar fields are the biggest gas finds in the last decade. The Leviathan field, in particular, is estimated to hold a staggering 20 TCF in natural-gas reserves and around 600 million barrels of oil. Last December, Noble announced successful appraisal results here, encountering natural gas in multiple intervals.

The proverbial cash cow?
These numbers are incredible. Production from these fields in the Mediterranean will mean easy supply to the European and Asian markets. In the local market, natural gas currently trades around $6.50 per million cubic feet, which is phenomenal, considering the $2-per-MCF prices we are seeing in the U.S. If things go as planned, this should turn out to be a great move in the long run. Selling natural gas in its liquefied form in markets that have more demand is nothing new. While Cheniere Energy (AMEX: LNG) recently won approval to export natural gas to Asian markets, Chevron (NYSE: CVX) has been busy working on the Wheatstone and Gorgon LNG projects off the coast of Australia. The behemoth has been eyeing the Japanese and Chinese markets in particular.

Understandably, the only problem with ATP is its balance sheet, which is loaded with debt. With a debt-to-equity of more than 700%, investors might want to think twice before investing in its stock. However, keep in mind that the company has always had this unique business model, wherein it has managed to fund its operations primarily through debt -- and with successful results.

Foolish bottom line
Strategically, the Israel move looks good. With the kind of expertise ATP has in offshore drilling, this project could turn out to be a cash cow for the company. Investors should watch this company like a hawk. The Motley Fool will help you do just that; all you need to do is add ATP Oil & Gas to your free watchlist.

Natural gas is on everyone's mind these days. Some say now is the time to jump on board, while the market is at the bottom. However, others suggest that we have yet to reach the bottom and should sit this play out for now. If you are like the majority of people and are not sure whether a natural-gas play is in order, you will want to check out The Motley Fool's special free report. It will show you three great energy plays you will want to add to your portfolio right away. Download "3 Stocks for $100 Oil" today, absolutely free.