ATPG presented today at IPAA. Nothing particularly earth shattering with the same party lines from Al Reese, with the to-be-expected hint dropping of 'potential' deals related to Cheviot and Octabuoy. The interesting things to me were the following:
1Q production guidance was reduced from 1.8 - 2.1 MMBOE on March 15th, to now 1.8 - 1.9 MMBOE as of today. WTF happened in the last 15 days of March, or was the upside beyond 1.9 MMBOE all a mirage to begin with (it is appropriate one of the discoveries at Telemark was named Mirage)? To put those numbers in BOE/D context, ATPG went from 24,200 BOE/D in 3Q11 to 24,800 BOE/d in 4Q11, to guiding to 19,800 to 23,100 BOE/D, to now guiding to 19,800 to 20,900 BOE/D. Said a different way, production is likely to drop 18% quarter-over-quarter! Workovers at Telemark are to blame, but call me a skeptic as I think these continued misses are signs of underperformance of the reservoir there.
Now on the more interesting issue....where did all the cash go? Hopefully someone in the breakouts and one-on-ones asked the questions, but this is the math I have:
4Q11 Ending Cash 65MM
1Q12 Prepaid Swaps +19.4MM
1Q12 Clipper ORRI +100MM
1Q12 Gomex ORRIs +85MM
1Q12 1st Lien Expansion +142MM (net of assumed fees and discount to par)
Total Before 1Q12 FCF $411MM
Reported 1Q12 Cash $200MM (200+ is exactly what they say)
Implied Cash Burn Rate 211MM
Payment on Octabuoy -41MM
Implied Burn Rate 170MM
(ex Octabuoy pymt)
The implied cash capex per quarter using the midpoint of total capex and assumed capex paid via vendor deferrals is only about $100MM per quarter. Of course I should note I'd be double counting the Octabuoy payment in the calculation if I assumed that was the 1Q12 capex number to back into what appears to be a huge looming negative cash from operations number in 1Q12 (i.e. implies -70MM using 100MM cash capex in 1Q12, but if I add back the Octabuoy payment I've already taken out, the implied negative cash from operations number balloons to $110MM. Once again, where did all the cash go?