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ATPG - Where Did All the Cash Go?

posted Apr 17, 2012, 9:57 PM by Jeff Davies   [ updated Apr 17, 2012, 10:04 PM ]
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?