ATP Oil & Gas Corp. on Friday said it has filed a voluntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of Texas "to undertake a comprehensive financial restructuring."

The Houston-based producer said it expects oil and natural gas operations would continue "in the ordinary course throughout the reorganization process and sees the reorganization as a helpful step toward deleveraging the company to position it for future development of its assets." It said the bankruptcy would give it "time and flexibility" to address its financial challenges and to position it for long-term viability.

"The primary reason for the reorganization began with the Macondo well blowout in April 2010 and the imposition beginning in May 2010 of the moratoria on drilling and related activities in the Gulf of Mexico," ATP stated. "These events prevented ATP from bringing to production in 2010 and in early 2011 six development wells that would have added significant production to ATP. As of the date of this filing, three of these wells are yet to be drilled.

"Had ATP been allowed to drill and complete these wells, ATP believes it would have provided a material production change in 2010 continuing to today.

"This projected increase in production should have substantially increased cash flows, shareholder value and allowed the company the ability to withstand normal operational issues experienced by owners of oil and gas properties in the Gulf of Mexico."

ATP said in addition, the incremental cash flows "would have mitigated or prevented the need to enter into many of the financings" that the company has completed since the moratorium was imposed, "financings that require relatively high rates of return and monthly payment."

ATP said it obtained a commitment for $617.6 million of debtor-in-possession (DIP) financing from members of its existing senior lender group, which would provide $250 million of additional funds and refinance into the DIP facility the amounts owed to those existing first lien lenders that participate in providing additional funds.

Once the bankruptcy court gives its approval, "the new financing and cash generated from ATP's ongoing operations will be used to support the business and ATP's efforts to negotiate and implement a reorganization plan acceptable to its stakeholders," the company stated.

The producer said it has filed various first-day motions with the court to obtain the relief needed to ensure that the Chapter 11 won't adversely affect day-to-day operations for its employees or suppliers, including requesting authorization to continue paying employee wages and providing health care and other benefits.

"As a result of their receipt of the DIP financing,ATP has the capacity and intends to pay its suppliers in full under normal terms for any goods and services provided after the filing date of August 17, 2012," it stated.

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