Ryder Scott supports ATP fast-track operations

   Last year's Inc. 500 survey of the fastest-growing private companies in the United States had an unlikely rising star from the oil patch. ATP Oil & Gas Corp. was ranked No. 21 in the survey that was heavily populated with high-tech companies. Over a five-year period, the closely held Gulf of Mexico operator grew faster than the 38 other companies from Texas on the Inc. magazine list and was the fastest growing energy company in the United States.

Gas production from a well drilled in 1998 in the Big Hum Sand series flows to ATP’s Brazos Block 544 “A” platform, pictured here, for processing and sales. Ryder Scott evaluated Big Hum before the acquisition and development drilling.

   "ATP even outpaced dot-com companies in Austin and throughout the country," said Paul Bulmahn, president. "We are pleased to have sustained growth like that over five years."
   Sales increased 5,073 percent from 1994 to 1998. ATP's forecast of oil and gas revenues for 2000 is approximately $100 million, much of that stemming from development that should be on production during the second quarter.
   Behind these numbers is a business philosophy that accentuates a high rate of return on investments using the latest production technology on low-risk, marginal gas properties in the gulf. Last year, ATP installed the world's longest hydraulically controlled umbilical package (11.75 miles) that allowed the subsea development of the 520-ft-deep Garden Banks 134 field.
   In the February Oil and Gas Investor magazine, Bulmahn refers to minimal structures ATP uses in the gulf. "We use everything that technology has given to the industry, from tripods to caisson structures to four piles," he said. Only one of the 20 ATP platforms is manned, he remarked. ATP often has lower overhead than a major.
Ryder Scott: A partner from the beginning
   ATP's strategy for growth has been to buy marginal offshore properties from majors and larger independents. Then the operator quickly develops the proved undeveloped gas reserves as estimated by Ryder Scott. Both have worked together on acquisitions since ATP began in the early 1990s.
   "We have turned to Ryder Scott for an independent analysis of almost every project," said Bulmahn. "We internally screen the projects, but whether our management goes forward usually depends on the Ryder Scott estimates."
   ATP's reserves-based lending arrangements that facilitate the financing of property transactions are buttressed by Ryder Scott reports. On short notice, Bulmahn has asked Ryder Scott to act as a liaison with lenders to present its evaluation (U.S. SEC case) of the ATP property portfolio to financiers.
   The presentation and other documentation helped establish collateral values to support funding packages put together by ATP for acquisitions of interests in new fields. Ryder Scott personnel also evaluate potential acquisitions and present independent-report information to lenders.
   Ryder Scott personnel evaluate seismic, core and log data and integrate that and other information with decline-curve and material-balance analyses to predict performance. Then Ryder Scott analyzes cost structures under economic limits. The cash-flow information has been output to Aries software or converted to ASCII and output in Dwights Power Tools software, which is commonly used by lenders.
   "We go to the bank's offices, bring maps, log measurements, production profiles and other information to do the presentation," said Samantha Meador, an engineer with Ryder Scott. John Hodgin, executive vice president-geology at Ryder Scott, has also made presentations and has worked with ATP when it was an upstart almost a decade ago.
   "Even though Ryder Scott reserves estimates are considered conservative by some, those numbers are more bankable than estimates of most other consultants," said Bulmahn.
   A major resource for ATP is the Ryder Scott cross-reference system that electronically stores information from thousands of reports on properties in more than 1,600 GOM blocks. Ryder Scott has evaluated two-thirds of all offshore properties in the gulf.
   "It's a good bet that if a company is interested in computing screening economics for a particular property in the Gulf of Mexico, we very likely have already evaluated that property. We will certainly check our cross-reference system at no cost to the requesting party," said Ron Harrell, CEO of Ryder Scott.
   For instance, last year, ATP was interested in acquiring a working interest in a gulf property from another independent, also a client of Ryder Scott. In the fast-moving world of acquisitions and divestitures, ATP wanted to decide quickly, so Ryder Scott, after receiving permission from the seller, "turned a cash flow" in hours, said Meador.
   "We started with our reserves and projections for the property and incorporated ATP's product price profile and development costs and then electronically transferred an ATP-specific evaluation to the company to support what became a successful bidding effort," she remarked. "The quick-turnaround, low-cost, cash-flow report was crucial in helping ATP analyze the potential acquisition in an efficient, timely manner."
   Hodgin has also kept pace with ATP's accelerated schedules. "When we've needed a report in a pinch, John has worked nights to deliver it. If he had not been able to deliver, ATP would not have been able to secure some of the projects it has," said Bulmahn.
   More technically complex projects demand more reservoir-evaluation time, such as the Ryder Scott independent study of an ATP horizontal drilling project in West Delta. After acquiring the property, ATP drilled an offshore gas well that was sidetracked and a horizontal lateral was placed in the top of the pay sand last October. The well tested 9 MMcf/D of gas with no water production, said ATP, and the field is now onstream.
   "Because of the nature of the hydrocarbon accumulation, this project needed a special solution," said Meador. "We mapped the hydrocarbon accumulation and supported ATP in technical discussions with potential lenders and financial institutions regarding the expected commerciality of the drilling operation."
   With its latest acquisition of Eugene Island Block 30 early this year, ATP now owns interests in 38 offshore blocks. Almost all of those properties have the Ryder Scott stamp.
   "Many projects required funding one by one, so our relationship with Ryder Scott has been critical for ATP," said Bulmahn. "Our phenomenal success rate on the performance side has benefited greatly by the efforts of Ryder Scott."