Source: ATP Oil & Gas
ATP Oil & Gas Corporation (NASDAQ:ATPG) announced the formation of ATP Titan LLC to monetize its investment in the ATP Titan.
The ATP Titan is a new U.S.-built floating production facility that began production operations at ATP's deepwater Telemark Hub in March 2010. This is the second monetization of ATP's floating production infrastructure; ATP monetized the ATP Innovator located at ATP's deepwater Gomez Hub in March 2009.
ATP Oil & Gas Corporation contributed its ownership in the ATP Titan platform and related assets to ATP Titan LLC, a wholly owned and unrestricted subsidiary. Simultaneously with the transfer, the Corporation entered into an exclusive platform use agreement with LLC and LLC secured a $350 million term loan facility with CLG Energy Finance, LLC, an affiliate of Beal Bank Nevada.
The facility was funded $150 million at closing with an additional draw request of $100 million when ATP begins production from the second well at the Telemark Hub, the Mississippi Canyon 941 #3 well. An additional $100 million in equal draws may be requested as ATP brings to production the third and fourth wells at the Telemark Hub. The terms of the loan between LLC and CLG Energy call for principal reductions of 8% in the first year, 9% during the second year and then 10% thereafter until maturity in September 2017. All payments are made quarterly and bear an annual interest rate of LIBOR (floor of 0.75%) + 8%. ATP does not guarantee the debt of LLC. The net cash proceeds from the initial term loan were distributed from LLC to the Corporation where the funds will be used for continued development of its properties in the Gulf of Mexico, the North Sea and for other corporate purposes. ATP holds a 100% ownership in LLC, remains operator and continues to hold a 100% working interest in the Telemark Hub and its oil and gas reserves.
T. Paul Bulmahn, ATP's Chairman and CEO stated, "The formation of ATP Titan LLC demonstrates our continued commitment to monetizing our reusable fleet of floating production platforms. The ATP Titan has a designed capacity of 25 MBbls/d of oil and 50 MMscf/d of gas, ample space for additional growth, and a 40-year life. The ATP Titan will be reused and redeployed multiple times during its life span in water depths of 1,500 to 9,500 feet. We are extremely pleased to have CLG Energy and Beal Bank Nevada as our lender in the ATP Titan LLC venture."