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ATP Oil & Gas Corp. Message Board

  • robertat40 robertat40 Feb 5, 2010 11:09 AM Flag

    Chevron/ATPG - Please expalin the disconnect?

    Hi Guys,

    I have been watching this stock and have been actively reading this message board for many months now. I want to start a position in ATPG, but i'm having a hard time understanding the enthusiasm here (The part where the stock will be trading north of $60 soon).

    When I compare ATPG's 2010 EPS estimates http://finance.yahoo.com/q/ae?s=ATPG with Chevrons http://finance.yahoo.com/q/ae?s=CVX

    2010
    ATPG - $1.46
    CVX - $7.82

    It would value ATPG at around $14.00 a share if targets are met.

    Oil & gas companies almost always trade around 10 times future earnings. Right now CVX is trading at $70.70

    Something that also doesn't seem clear to me is where are the partnership fees and distribution fee expenses listed for the ATP innovator?

    And if the Titan is monitized via convertible notes, there's a possible 40 or 50 % dillution coming, which would vale the stock in the $7.00 to $10.00 range.

    I'm looking to start a position but i'm having a hard time justify the risk/reward scenario. Why will ATPG shares be worth $40 plus in the near future, if the earnings per share as per the analysts estimates cannot justify it?

    Thanks in advance for your replies!

    Robert

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    • No I didn't see that post from Swizzle. I'll go find it now.
      Thanks and I agree.
      Sam

      Please do Sam, Your spreadsheet really tells the story well.

      John

    • Harleybarley,

      No I didn't see that post from Swizzle. I'll go find it now.

      Thanks and I agree.

      Best,
      Sam

    • I agree, Sam, this joker is probably not on the level. The same goes for his sidekick (Spartanhill), who popped up out of the blue to reinforce the negative comments and say how "substantial" his concerns were. Phoney baloney!

      By the way, Swizzled was asking for permission to include a link to your website in his new article. Did you see his post?

    • Robertat40,

      For a split second, I felt a little bad about giving you a hard time, but as expected you came back and made your self known.

      Your attempt to scare investors by stating that no one will monetize Titan is, at best, completely unethical. If GE monetized 49% of Innovator in March of last year when the market, including GE, was on the brink of total destruction, what basis do you have to support that noone would be willing to monetize Titan?

      Also, thanks for showing your concern, "[o]ne thing that I really hate seeing is when less experienced investors put their complete faith in the postings of what seems very knowledgeable posters, and they go "ALL IN" and end up losing big."

      Lastly, no one (that I know of) said go "ALL IN", everyone must maintain some level of diversification and do their own research, but this, in my opinion, is one of the top 5 buys I have ever seen. There is financial/liquidity risk, but when Titan starts operations and gets monetized ATPG is going to rapidly move up.

      sltibbs

    • Well I guess the analysts may well be clueless, after all! Just checked the analyst estimates on Yahoo, and the low analyst estimate for the full year ending December, 2010 has 9 cents per share for earnings! I'd like to make a small, $10,000 side bet with that analyst, if I could...

    • Grandpa,

      A perfect example of this was illustrated at the presentation held in Vail. One of the analysts asked Brian (VP Finance) if and when we were getting into the Marcellus shale play. Well, that's a real stretch since we are an off-shore development company and the shale play he talks of are in the hills around New York and Pennsylvania. Talk about clueless
      wafer

    • "Lets face it - Everyones "soon to be 100 dollar ATPG" stock is trading at 13 dollars. Why? Is it because all of the analysts and brokers that follow it are just plain dumb? Or maybe some of the more enthusiastic people on this board are missing something!"
      The analysts aren't dumb - they have, overall, buy recommendations on this stock. The stock is selling for $13 because the buyers and sellers that REALLY matter are funds and hedge funds, who don't really follow the stocks, and do quantitative investing based on screen information such as debt ratios, last quarter sales, eps, etc. By all of these measures, ATPG sucks - but therein lies the opportunity, because we on this board, thanks to the tireless work of swizzled and john, among others, KNOW BETTER! All in my humble opinion, of course. Why don't you go invest in Coca Cola or Procter and Gamble or something safe like that - clearly you are not suited to be an investor in ATPG.

    • What's so hard to see:

      "And if the Titan is monitized via convertible notes" = "No willing monetization partners to be found so ATPG decides to issue 30/40 million convertible notes instead"

      Well, call me a blind man, but I call that hard to see!

    • Dear Robert:

      Good question. But before I get to the answer, let me apologize for the rudeness of my fellow board members. It has been said that the proper attitude for a successful investor is one of unremitting suspicion. Instead, most here (and, to be fair, on most other boards, too) go into ballistic rudeness at the slightest suggestion that anything could be wrong with their favorite stock. Instead, one should really welcome negative comments (at least, ones with substance, like yours), as they are the ones from which you can learn.

      Anyway, off that podium, and on to what I think is the answer. I haven't got the numbers at hand, but ATPG, because of its huge, early capital investment, will have large non-cash expenses in the form of depreciation and amortization on those capital investments. CVX does, too, but they are relatively smaller. When "profit" is calculated, these non-cash expenses are subtracted, hence, in the case of ATPG, resulting in a rather small profit, much smaller than the underlying free cash flow. Because of this effect, you want to look at projected cash flow, as well as profit, and several posters here have done that. ATPG has a much better projected ratio of cash flow to stock price than does CVX, and that will eventually turn into a better price/earnings ratio (once the depreciation starts declining).

      There are other things to worry about with ATPG. Projected output is exactly that, projected. Lines someone at ATPG drew on a graph. One can worry about what the reality of production will be. Reality has to come pretty close to the projection, otherwise there will be a short term cash crunch, and maybe a financial disaster. But if (if if if) production can match the lines drawn on the graph, then the stock probably is a really good value at its present price, when you look at it from the point of view of cash flow rather than profits in 2011.

    • LArge firms might trade at 10 times earnings. Small growing firms trade very differently. You don't even know where to start. aTPG might sell for more or less than you state but your metric does not even apply in this case.

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