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Case 12-36187 Document 28 Filed in TXSB on 08/17/12Docket #0028 38 Filed: 8/17/2012 Page 1 of Date

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re: ATP Oil & Gas Corporation, Debtor. Chapter 11 Case No.: 12-____________

DECLARATION OF ALBERT L. REESE, JR. IN SUPPORT OF FIRST DAY PLEADINGS I, Albert L. Reese, Jr., pursuant to 28 U.S.C. 1746, declare as follows: 1. I am over the age of 18 and am otherwise fully competent to make this

declaration. I am the Chief Financial Officer of ATP Oil & Gas Corporation (ATP, the Debtor or the Company), a publicly owned corporation organized under the laws of the State of Texas and a debtor and debtor in possession in the above-captioned Chapter 11 case (the Chapter 11 Case). In such capacity, I am generally familiar with ATPs business, its day-today operations and financial affairs. 2. I submit this Declaration in support of the voluntary petition for relief filed by

ATP under Chapter 11 of title 11 of the United States Code (the Bankruptcy Code) and the motions and applications for related relief filed as of August 17, 2012 (the Petition Date) or concurrently herewith (collectively, the First Day Pleadings). 3. I have reviewed the First Day Pleadings and, to the best of my knowledge, insofar

as I have been able to ascertain after reasonable inquiry, I believe that approval of the relief requested therein is necessary to minimize disruption to ATPs business operations so as to permit an effective transition into Chapter 11, preserve and maximize the value of ATPs estate and, ultimately, achieve a successful reorganization. I also believe that, absent immediate access to additional financing and authority to make certain essential preplan payments and otherwise
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continue conducting ordinary course business operations as set forth herein, and described in greater detail in the First Day Pleadings, ATP would suffer immediate and irreparable harm to the detriment of its estate. 4. Except as otherwise indicated, the facts set forth in this Declaration are based

upon my review of relevant documents, information provided to me or verified by other executives or employees, and my experience, knowledge and information concerning ATPs operations, financials and the oil and gas industry generally. Unless otherwise indicated, the financial information contained in this Declaration is unaudited and subject to change. This financial information is presented on a consolidated basis for ATP and its non-debtor affiliates, except where noted. If called to testify, I would testify competently to the facts set forth herein based upon my personal knowledge, my review of relevant documents, and/or my opinion. I am authorized to submit this declaration on behalf of ATP. 5. Part I of this Declaration provides an overview of ATPs business operations, its

capital structure and financial standing, and the circumstances surrounding ATPs commencement of the Chapter 11 Case. Part II of this Declaration sets forth the facts relevant to the various First Day Pleadings in these cases and ATPs business judgment in seeking such relief. I. OVERVIEW OF ATPS BUSINESS A. CAPITAL STRUCTURE AND FINANCIAL STANDING i. 6. Organizational Structure

ATP was incorporated in Texas in 1991 and is headquartered in Houston, Texas.

Together with its direct and indirect subsidiaries, ATP is engaged in the acquisition, development and production of oil and natural gas properties, primarily in the Gulf of Mexico,

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and internationally in the U.K. sector of the North Sea and in the Eastern Mediterranean Sea. A corporate organizational chart of ATP is attached hereto as Exhibit A. 7. As of the Petition Date, ATPs stock is publicly traded on the NASDAQ

Exchange under the ticker symbol, ATPG. Based on information provided by the Companys transfer agent, American Stock Transfer & Trust Company (AST), and after adjustments for restricted shares, 53,467,487 shares of ATPs common stock were outstanding as of July 31, 2012 (including shares converted from preferred stock, as discussed below). Per the most applicable SEC filings dated June 30, 2012, which are the most current as of the Petition Date, the five largest institutional holders of ATP common stock were The Vanguard Group, Inc., D.E. Shaw & Co., Inc., BlackRock Fund Advisors, Credit Suisse Securities (USA) and State Street Global Advisors, and management holds approximately 14% of the Companys outstanding common stock (including restricted shares). 8. As of the Petition Date, ATP also has two outstanding series of preferred stock.

In September 2009, ATP issued 1.4 million shares of convertible preferred stock (Series A Preferred Stock) and received net proceeds of $135.5 million. In June 2011, ATP issued 1.7 million shares of convertible preferred stock (Series B Preferred Stock) and received net proceeds of $123.3 million. The Series B Preferred Stock has terms which are substantially identical to the Series A Preferred Stock. According to AST, as of July 31, 2012, 265,801 shares of Series A Preferred Stock have been converted into 1,197,286 common shares and 34,051 shares of Series B Preferred Stock have been converted into 153,370 common shares, which are included in the common shares above. ii. 9. ATPs Assets and Operations

ATP seeks to acquire and develop properties with proved undeveloped reserves

that are economically attractive but are not strategic to major independent exploration-oriented 3
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oil and gas companies. ATP is a recognized operator for offshore operations on the Outer Continental Shelf in the Gulf of Mexico, both in shallow water and deep water. As of December 31, 2011, ATP directly held leasehold and other interests in the Gulf of Mexico in 38 offshore blocks and 49 wells, including 23 subsea wells. ATP operates approximately 90% of its total wells in the Gulf of Mexico, and serves as operator on all of its deepwater wells. Approximately two-thirds of ATPs wells are located in the Gulf of Mexico, reporting, as of December 31, 2011, Gulf of Mexico proved reserves of 75.9 MMboe (Million Barrels of Crude Oil Equivalent). As of June 30, 2012, proved reserves based on ATPs internal reserve report are estimated at 76.6 MMboe. 10. ATPs remaining proved reserves are owned by its wholly owned non-debtor

affiliates in the UK and the North Sea. ATPs UK subsidiary, ATP Oil & Gas (UK) Limited, owns producing oil and gas properties and undeveloped properties in the North Sea. ATPs indirect subsidiary ATP East Med B.V. is the operator and holds a working interest in the recently drilled Shimshon natural gas well, in the Eastern Mediterranean offshore Israel. As of December 31, 2011, the estimated proved reserves in the North Sea owned by ATPs United Kingdom affiliate were approximately 42.9 MMboe. No proved reserves have yet been assigned to the Shimshon well. 11. ATP also owns, through wholly or majority owned non-debtor affiliates, two

floating production facilities in the deepwater of the Gulf of Mexico, the ATP Titan, which operates at its Telemark Hub and the ATP Innovator, which operates at its Gomez Hub. Through its United Kingdom affiliate, ATP has under construction an additional floating production facility called an Octabuoy, which is being built in shipyards in China and is scheduled for deployment in 2014/2015 at ATPs Cheviot Hub in the North Sea.

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iii.

The Companys Liabilities (a) First Lien Credit Facility

12.

In June 2010, ATP entered into a first-lien term credit facility (the First Lien

Credit Facility) pursuant to that certain Credit Agreement, dated as of June 18, 2010, among ATP, as borrower, the lenders party thereto and Credit Suisse AG as administrative agent and collateral agent. Following amendments to the First Lien Credit Facility documents in February 2011 and March 2012, the principal amount available to ATP under the First Lien Credit Facility was increased to $365 million and the interest rate reduced to a floating rate of 8.75%, calculated based on three-month LIBOR (with a floor of 1.5%) plus 7.25%. As of the Petition Date, the obligations outstanding under the First Lien Credit Facility totalled approximately $365 million with a scheduled maturity of January 2015.

13.

ATPs obligations under the First Lien Credit Facility are secured principally by a

first lien on not less than 80% of ATPs proved oil and gas reserves in the Gulf of Mexico, as well as 100% of the capital stock of ATPs subsidiaries ATP Holdco, LLC and ATP Titan Holdco, LLC and 65% of the capital stock of its direct non-U.S. subsidiaries ATP Oil & Gas (UK) Limited and ATP Oil & Gas (Netherlands) B.V. (b) Senior Second Lien Notes 14. In April 2010, ATP issued senior second lien notes (the Second Lien Notes) in

an aggregate face amount of $1.5 billion, due May 1, 2015. The Second Lien Notes bear interest at an annual rate of 11.875%, payable each May 1 and November 1. As of the Petition Date, the outstanding obligations under the Second Lien Notes were approximately $1.5 billion. 15. ATPs obligations under the Second Lien Notes are secured by a subordinate lien

on substantially the same assets that secure ATPs obligations under the First Lien Credit Facility. 5
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(c) Private Placement Of Unsecured Convertible Note And Warrant 16. In June 2012, the Company obtained gross proceeds of $35 million from a private

placement of a convertible note and a warrant to purchase 3,923,767 shares of ATPs common stock, which remain outstanding as of the Petition Date. (d) Third Party Revenue Obligations 17. As with any oil and gas production company, ATP is obligated to various third

parties for gas and hydrocarbons produced, consisting of obligations to pay royalties, working interests, and other similar third party revenue obligations. Working and overriding royalty interests. In certain cases, third parties hold working interests and overriding royalty interests (ORRIs) in properties that are owned and operated by ATP. In some cases, these working interests and ORRIs relate to the terms of ATPs initial acquisition of the properties. The working interests and ORRIs obligate ATP to deliver proceeds from the future sale of hydrocarbons for the remaining life of the property. (NPIs) in certain of its proved oil and gas properties in and around the Telemark Hub, the Gomez Hub and the Clipper Wells to certain of its vendors in exchange for oil and gas property development services and to certain investors in exchange for cash proceeds. The interests granted are paid solely from the net profits, as defined, of the subject properties and are paid until the holder receives a specified return. Dollar-denominated Overriding Royalty Interests. Beginning in 2010, ATP sold limited-term dollar-denominated overriding royalty interests in its Telemark Hub, Gomez Hub and Clipper Wells. These dollardenominated overriding royalty interests obligate ATP to deliver proceeds from the future sale of hydrocarbons in the specified proved properties until the purchasers achieve a specified return.

Net Profits Interests. Beginning in 2009, ATP granted net profits interests

As of June 30, 2012, the Debtor had financings in the form of the NPIs and dollardenominated overriding royalty interests, which were carried on its balance sheet in an amount equal to $489 million, and as of the Petition Date, the arrearages under the foregoing third party revenue obligations totalled, in the aggregate, approximately $23.4 million.

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(e) Trade Creditors 18. ATP also utilizes an assortment of vendors in the ordinary course of business,

including drilling contractors, labor and repair contractors, parts and equipment suppliers, pipeline companies, heavy machinery and equipment rentals, hydrocarbon transporters, chemical and surfactant suppliers, contractor laborers and professionals, and employee benefits providers. 19. As of the Petition Date, unsecured claims (other than those claims represented by

the third party revenue claimants, and any deficiency claims, if any, held by the holders of the Second Lien Notes) were approximately $147 million. B. 20. EVENTS PRECIPITATING THE CHAPTER 11 FILINGS As detailed further below, due to adverse operational exigencies stemming from

the 2010 Gulf drilling moratoria as well as subsequent events, ATP finds itself with over $2 billion of indebtedness and less than $10 million in cash as of the Petition Date. However, the path to considerable, short-term improvement is clear, as the Debtor has a very promising, already-drilled project the Clipper Wells project to which it simply has to complete a pipeline. At the time of completion of such pipeline, originally scheduled for October 2012, the Debtors cash position should measurably improve, and much of the relief sought in the First Day Pleadings is targeted toward meeting this paramount goal as soon as possible. i. 21. The Impact of the Moratoria

In early 2010, ATP looked to the bond market to raise funds necessary to develop

infrastructure and conduct offshore drilling under a program designed to capture known proved reserves and significant revenues. On April 19, 2010, ATP priced the $1.5 billion offering of the Second Lien Notes. These bonds priced the day before the April 20th explosion and blow-out of the Macondo well facility that led to the shutdown of operations in the Gulf of Mexico. Less

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than two weeks later, the U.S. government issued the first of three moratoria on further drilling in the Gulf of Mexico. 22. The delay on operations and the increasingly uncertain regulatory environment

adversely affected ATPs operations and planned development that was necessary to service its additional debt. Despite statements that the moratoria had been lifted at various points in time, the government did not issue new deepwater drilling permits until February 28, 2011, thus effectively extending the moratorium. As a result, ATP was unable, despite access to funds, to drill and bring on-line six new wells during 2010 and 2011. In addition to the high costs of interrupted and discontinued drilling operations in deepwater, ATP continued to incur construction costs on the Octabuoy, its newest deepwater production platform, as a discontinuation of work of the platform would have led to significant escalation in cost-tocompletion once work resumed. Moreover, as access to deepwater rigs became limited, ATP also experienced higher than expected costs in preserving its access to equipment during the moratoria. 23. During 2010 and 2011, ATP had commenced and was in the process of drilling

and completing six wells in its program, all of which were disrupted by the moratoria: (i) the Mississippi Canyon 941 A-1 well, which was drilled to 20,000 feet total depth but had completion halted during the early stages of the moratorium, (ii) the Mississippi Canyon 941 A-2 well, which was previously drilled to 12,000 feet, but could not be drilled to its targeted total depth of 20,000 feet until March 2011 when the drilling permit was issued, (iii) the Mississippi Canyon 942 A-3 well, which was drilled to approximately 12,000 feet and suffered the same fate as the 941 A-2 well, and did not receive its drilling permit until October 2011, (iv) the Mississippi Canyon 305 (Canyon Express) side track well, which initially received permits in

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early May 2010 (after the first 30 day moratorium), only to have its permit pulled less than three weeks later, when the first six-month moratorium was issued on May 30, 2010; (v) the Gomez #9 well, which was delayed indefinitely; and (vi) the Gomez #10 well, which was also delayed indefinitely. Each of these wells were targeted because they are located in close proximity to either the ATP Innovator, the ATP Titan or the Canyon Express pipeline system, and their development was part of the economic model justifying ATPs investment in this infrastructure. 24. When the moratorium was effectively lifted in March 2011, ATP received permits

and attempted to generate production from these projects as quickly as possible. By February 2012, ATP was able to complete the Mississippi Canyon 941 A-1, A-2, and Mississippi Canyon 942 A-3 wells in its Telemark field and connect them to the ATP Titan. To date, because of liquidity constraints, ATP has not been able to return to drill the Mississippi Canyon 305 well, which is on a very large dry gas reservoir producing through the Canyon Express pipeline system, or either of the Gomez #9 and #10 wells, both of which would have tied in to the ATP Innovator.1

ATP has been proactive in protecting its interests from the effects of the moratoria. More than two months after the moratorium was lifted by the government, ATP still had not received the permits it needed even though the permit applications were completed. On December 22, 2010, ATP joined a lawsuit with Ensco, in Case No. 2:10-cv-01941 in the United States District Court for the Eastern District of Louisiana (the District Court), in an effort to secure two permits, one for the MC-941#4 well (Telemark) and one for the GC-300 well (Clipper). In March 2011, the District Court ordered the government to make a decision on ATPs two permits within thirty days; during that time, the government did grant both permits. On its own, ATP commenced a second lawsuit in the District Court in Case No. 2-11-cv-01488, seeking three additional drilling permits and a comingling permit. By August 29, 2011, the additional permits were issued or proceeding properly, and the case was voluntarily dismissed without prejudice. On June 14, 2012, ATP filed a case against the United States government in the United States Court of Federal Claims, currently pending as case no. 1:12-cv-00379 (FMA), in which ATP is seeking recovery of monetary damages for the governments actions in connection with the moratoria. 9
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25.

As the scope of the moratoria on deepwater exploration was clarified, ATP

determined that it was able to use its contracted rig (for which it already had contracted for a fullyear term) to complete one of the Green Canyon 300 wells, which already had been drilled to its total depth, and sidetrack a second well (the Clipper Wells). This reallocation of resources to drill the Clipper Wells was highly successful, as ATPs reserve report dated of December 31, 2011 reflects a projected proved PV-10 estimated value for the Clipper Wells of $388 million. In order to realize the value of the Clipper Wells, however, ATP has been required to commence construction of a $120 million subsurface pipeline that will connect these wells to an existing third-party floating production platform. 26. Overall, ATPs inability to complete various wells or commence pipeline

construction when planned due to the shutdown in the Gulf created significant liquidity problems, which were exacerbated by less than expected production rates at ATPs Telemark Hub and cost overruns on the Octabuoy. ATPs management, with the assistance of various outside professionals, closely monitored these challenging conditions and evaluated potential alternatives to improve ATPs liquidity position. ATP diligently sought to solicit potential partners, joint operators, or investors with respect to its foreign operations to share in the development costs of its North Sea and Eastern Mediterranean oil and gas properties. Although it is generally recognized that the reserves and operations of ATPs foreign affiliates have significant value, ATP has not yet been able to complete a transaction with any parties that will bring in enough financing to complete the construction of the necessary infrastructure to start generating new production from these foreign deepwater operations.
27.

To exacerbate the situation, during the first four months of 2012, in an effort to

improve cash flows, ATP engaged in a recompletion operation at the Mississippi Canyon 941 A-

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2 well and experienced a tubing failure. The project, estimated to take 20 days, was significantly delayed for nearly 4 months. ATP experienced lost revenues for this well during that entire period. 28. During this period, ATP attempted to raise funds for its ongoing projects and

operations through sales to third parties of overriding royalty and net profits interests against future production from certain wells. While these transactions provided some degree of relief for ATPs cash needs, they also reduced available revenue from existing and future production and added further pressure on the Company to bring the already-drilled Clipper Wells on-line, which were originally scheduled for completion in October 2012. ii. 29. The Current Liquidity Crunch.

Despite ATPs best efforts, it was unable to overcome the impact of the moratoria

when ongoing project construction costs, declining oil prices and less than anticipated production put it in the untenable position of running out of cash before it could complete the Clipper Wells project and generate the revenues necessary to begin remedying its situation. In the period leading up to the Petition Date, ATP found itself facing a severe liquidity crisis, with a cash position of less than $10 million and a substantial backlog of trade payables and amounts due under overriding royalties and net profit interests totaling, in the aggregate, over $70 million, along with substantial payments due on the Second Lien Notes later this fall. ATPs inability to make current payments on many of its obligations have resulted in a number of notices of default and lawsuits from its creditors, with some seeking prejudgment relief (such as temporary restraining orders or writs of sequestration) that could further restrict the Companys short-term cash flow and liquidity. 30. Faced with this extremely challenging situation, ATP turned to potential DIP

providers to fund the connection of Clipper Wells to complete the pipeline, which is a low-risk 11
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project that is a source of considerable potential value to the estate and its constituencies. ATP already has invested $73 million in specialized steel pipe and related materials that are en route to the Clipper site in the Gulf of Mexico, and without immediate additional liquidity, ATP will not be able to pay the vendors needed to complete the project. Without the prospect of DIP financing and the interim relief sought by the Debtor, there would undoubtedly be a complete stoppage in the project resulting in a significant delay in the project, a prospect that the Debtor and its estate simply cannot withstand. 31. ATP believes the proposed DIP financing and other relief sought today will

enable ATP and its stakeholders and implement an orderly restructuring of ATPs capital structure. The proposed financing also will allow ATP to meet some of its immediate cash needs for operations generally as well as provide funding to keep the Clipper Wells project alive. Following entry of the Final Order, and assuming completion of reserve reports and other conditions to the DIP Lenders satisfaction, ATP anticipates that it will be able to bring the Clipper Wells and Gomez #9 well online, which should create substantial value for ATP and its stakeholders. 32. In sum, ATP has sought Chapter 11 protection in order to protect and preserve its

assets and ongoing operations, and to allow it to bring in additional cash through postpetition financing in order to complete various projects and effect an orderly restructuring. ATP has determined in the prudent exercise of its business judgment that the commencement of the Chapter 11 case is the best alternative to ensure that maximum value can be preserved and realized for the benefit of its estate constituents. II. REQUEST FOR EMERGENCY HEARINGS ON FIRST DAY MOTIONS 33. As set forth above, ATP is operating in an extremely cash-intensive industry, and

is struggling to meet its day-to-day liquidity needs in order to derive the maximum revenue from 12
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existing and future production and to ensure that profitable wells will be brought online on a timely basis. Absent the Court granting the relief requested on an emergency basis, the Debtor will suffer immediate and irreparable harm. Without additional funding, the Debtor anticipates that it will soon run out of cash to operate its business. It is imperative for ATP to obtain access to postpetition financing, so that it can pursue a restructuring that will maximize value and provide the greatest possible recovery for all stakeholders. C. Administrative Motions i. Debtors Emergency Motion for an Order Extending Time to File Schedules, Statement of Financial Affairs, and List of Equity Interest Holders (the Schedules and Statements Motion)

34.

ATP seeks entry of an order (a) granting it an extension of the time to file its

schedule of assets and liabilities, schedule of current income and expenditures, schedule of executory contracts and unexpired leases and statement of financial affairs (collectively, the Schedules and Statements) and (b) waiving the requirements to (i) file a list of all equity security holders (the Equity Holders List) within 14 days after the Petition Date and (ii) give notice of the commencement of this Chapter 11 case to all of ATPs equity security holders. 35. ATP has thousands of potential creditors and, together with its non-debtor

affiliates, operates an integrated global business. Given the scope and complexity of ATPs business, coupled with the limited time and resources available to ATP to compile the required information, I submit that requiring ATP to complete the Schedules and Statements during the period of time immediately following the Petition Date would be unnecessarily burdensome to ATP. Therefore, I believe that an extension of the deadline to file the Schedules and Statements is warranted.

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36.

Additionally, I believe that preparing the Equity Holders List and sending the

notice of commencement of this Chapter 11 case to all parties on the Equity Holders List will be burdensome, time-consuming, expensive and serve little or no beneficial purpose. Instead, ATP intends to provide the parties on the Equity Holders List with notice of the bar date and an opportunity to assert their interests, in the event that they are required to file proofs of interest. Thus, I believe that the relief requested by ATP will not prejudice any equity security holders. 37. I believe that the relief requested in the Schedules and Statements Motion is in the

best interests of ATPs estate, its creditors and all other parties in interest, and will enable ATP to continue to operate its businesses in Chapter 11 without disruption. Accordingly, I

respectfully submit that the Schedules and Statements Motion should be approved. ii. Debtors Emergency Motion Pursuant to Section 105(a) of the Bankruptcy Code and Bankruptcy Rules 1005(c) and 9007 Seeking Authority to Implement Certain Notice Procedures (the Notice Procedures Motion)

38.

ATP seeks entry of an order authorizing the establishment of certain notice, case

management and administrative procedures (the Notice Procedures). I understand that these Notice Procedures will promote the efficient and orderly administration of this Chapter 11 case by, among other things: (a) limiting service of documents filed in these cases to those parties that have an interest in the subject matter thereof; (b) authorizing electronic service; and (c) fixing monthly omnibus hearings. At the same time, the Notice Procedures ensure that

appropriate notice is provided, and do not seek to waive the substantive rights of any party in interest in this Chapter 11 case. 39. I believe that the relief requested in the Notice Procedures Motion is in the best

interests of ATPs estate, its creditors and all parties in interest and will enable ATP to continue

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to operate its business in Chapter 11 without disruption. Accordingly, I respectfully submit that the Notice Procedures Motion should be approved. D. Operational Motions Requesting Immediate Relief i. Debtor's Emergency Motion for Entry of Interim and Final Orders Pursuant to Bankruptcy Code Sections 105, 107(b), 361, 362, 363, 364 and 507 (I) Approving Postpetition Financing, (II) Authorizing Use of Cash Collateral, (III) Granting Liens and Providing Superpriority Administrative Expense Status, (IV) Granting Adequate Protection, (V) Modifying Automatic Stay, (VI) Authorizing the Debtor to File Fee Letter Under Seal and (VII) Scheduling a Final Hearing (the DIP Financing Motion).

40.

Pursuant to a motion filed under sections 105, 107(b), 361, 362, 363, 364, and 507

of the Bankruptcy Code, ATP is requesting entry of interim and final orders (a) authorizing it to obtain post-petition financing in the aggregate amount of up to $617,600,000 and enter into that certain Debtor-In-Possession Credit Agreement with Credit Suisse AG (the DIP Agent) and/or its affiliates or designees (the DIP Lenders), including on an interim basis pursuant to the term sheet and promissory note attached thereto (the DIP Term Sheet) and the proposed interim order, (b) granting senior liens on unencumbered assets, and superpriority claims and priority liens, to the DIP Lenders, (c) authorizing the Debtor to file the fee letter under seal, and (d) prescribing the form and manner of notice and setting the time and date for the final hearing on the DIP Financing Motion. 41. To finance the Chapter 11 case and continue to fund its operations, ATP has

sought approval to enter into postpetition financing on the terms set forth in the DIP Financing Motion. Approval of the motion will provide ATP with immediate and ongoing access to borrowing availability to pay its current and ongoing operating expenses, including wages and salaries, necessary budgeted capital expenditures and utility and vendor costs. I believe that, unless these expenditures are made, ATP may be forced to cease certain of its operations, which 15
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will (i) result in irreparable harm to its business, (ii) deplete going concern value and (iii) jeopardize ATPs ability to reorganize and maximize value for its creditors and estate. Because ATPs available and projected cash collateral is insufficient to fund the required expenditures, I believe that the credit provided under the proposed DIP facility is necessary to preserve and enhance the value of the estate for the benefit of all parties in interest. Additionally, I believe that the availability of credit under the DIP Facility will provide confidence to our creditors and counterparties, while the implementation of the DIP Agreement will be viewed favorably by the ATPs employees and suppliers, thereby promoting a successful reorganization. Accordingly, I believe that the timely approval of the relief requested in the DIP Motion is imperative. 42. Prior to the Petition Date, ATP and its advisors canvassed the market and solicited

various proposals with respect to debtor-in-possession financing. ATP and its advisors engaged in robust negotiations with potential DIP providers to attempt to obtain the best financing terms possible. During the weeks of July 30th, August 5th and August 12th, ATP engaged in extensive negotiations with potential providers, which resulted in multiple proposals and counterproposals from the DIP providers and ATP. Many material changes were made to ATPs benefit during the arms-length and vigorous negotiation process. 43. After ATP and its advisors narrowed the field to the two best proposals, ATPs

board of directors met on August 14th and 15th to consider the merits and drawbacks of the two proposals. Following such meeting, ATP, in its business judgment and in consultation with its advisors, decided that the postpetition financing set forth in the DIP Motion was the best financing available. 44. In sum, the proposed DIP facility was extensively negotiated, at arms-length and

in good faith, following a comprehensive search by ATPs advisors for alternative financing, and

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will allow ATP to immediately access needed liquidity at this critical, early stage of its reorganization efforts. I believe that ATP could not have obtained better terms elsewhere under the circumstances. 45. In paragraph E.x of the Interim DIP Order, the Debtor stipulates that as of the

Petition Date, the value of the collateral securing the First Lien Credit Facility exceeded the aggregate amount of the obligations thereunder. The Debtor believes that the obligations owed to the lenders and the swap counterparties under the First Lien Credit Facility are fully secured based on at least three indications of value. First, immediately before the Petition Date, the Company's equity was trading at a positive value. Second, it is my understanding that the Debtor's Second Lien Notes are currently trading on the secondary market in the range of 30 to 40 cents on the dollar. Third, the Debtor's proved PV-10 on the Telemark and Gomez wells is $2,419,771, which after deducting the burden of the net profit interests and overriding royalty interests and, even if heavily discounted, reflects a value for the mortgaged property well in excess of the obligations. 46. On an interim basis, the DIP financing is intended to enable ATP to complete the

Clipper Wells pipeline and generate substantial additional revenues. If the Debtor is unable to obtain funds in the very near term to pay for the completion of the pipeline, a delay of more than 12 months could result. Consequently, the Debtor has negotiated, subject to the restrictions set forth in the DIP Financing Motion and the interim and final orders sought in connection therewith, the authority to pay the budgeted amounts associated with the completion of the Clipper Wells project. It is my understanding that amounts payable to such contractors may in certain instances relate to work performed or services or materials provided prior to the Petition Date, but I also believe that failure to pay such amounts could result in the subcontractors

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refusal to deliver the critical materials or services and/or their postpetition assertion of liens against the Debtors property. Any such action could cause substantial delay in the Clipper project and resulting irreparable harm to ATP and its reorganization efforts. As a result, and as described in the DIP Motion and recognized by the DIP Budget, ATP seeks authority to pay any such amounts in its discretion, subject to the reasonable approval of the lenders under the Debtors proposed DIP loan facility. 47. Under the terms of the DIP Facility, the availability of a significant portion of the

interim funding is contingent upon the DIP Lenders receipt of a satisfactory reserve report by Approved Petroleum Engineers (the Satisfactory APE Report). For this purpose, Netherland, Sewell & Associates, Inc. (NSAI), a well-known petroleum engineering firm, was retained by counsel for the DIP Agent. NSAI requires, as a condition to providing the Satisfactory APE Report necessary for funding, that ATP is authorized by the Court to pay the professional fees and expenses of NSAI and to undertake and incur the obligations, including confidentiality, and any liability under the indemnity that may arise from any breach thereof, imposed upon ATP by the terms of NSAIs engagement. Confidential treatment of the Fee Letter was an important part of the DIP Agents willingness to consent to provide the New Money Facility and is an express term of the Commitment Letter executed in connection therewith. As such, ATP seeks such authority in the DIP Financing Motion. 48. In connection with the DIP Facility, ATP has executed a fee letter (the Fee

Letter) with the DIP Agent that I understand the DIP Agent believes contains commercial information with respect to the amount, structure and allocation of fees under the DIP Facility, which information is viewed by the financial industry and its clients as highly sensitive and confidential. They have indicated that publicly disclosing this information would provide an

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unfair advantage to competitors of the DIP Lenders and DIP Agent, potentially adversely affecting the DIP Facility and thereby harming ATP and its estate, and feel that disclosure of the commercial terms in the Fee Letter beyond those described in the DIP Financing Motion may also set a negative precedent for other financial lending institutions, who might not come forward to assist ATP for fear of disclosure of their commercial fee structures and related information. As such, ATP has agreed to seek authority, and seeks such authority in the DIP Financing Motion, to file the Fee Letter under Seal. 49. As a result, ATP requests approval of the DIP Financing motion. I believe that

the relief requested in the motion is in the best interests of ATP, its estates and its creditors, and absent such relief, ATP will experience immediate and irreparable harm and its reorganization efforts will be jeopardized. ii. Debtors Motion for an Order Authorizing Continued Use of (1) Bank Accounts and Business Forms; and (2) Cash Management System Pursuant to Sections 105(a), and 363(c) of the Bankruptcy Code (the Cash Management Motion).

50.

ATP seeks an order pursuant to sections 105(a), 345(b), and 363(c) of the

Bankruptcy Code, authorizing it (i) to maintain existing bank accounts, and (ii) to continue to operate its centralized cash management system in the ordinary course of business consistent with its pre-petition practices. 51. Prior to the Petition Date, ATP and its subsidiaries managed their cash,

receivables and payables (including payroll and tax obligations) through a centralized cash management system (the Cash Management System), pursuant to which ATP maintained four accounts at J.P. Morgan Chase Bank, N.A. (Chase) and one account at BBVA Compass (Compass), as detailed on Exhibit A to the Cash Management Motion (collectively the Accounts). ATP also participated in Chases End-of-Day Commercial Paper Investment 19
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Sweep, pursuant to which, on a nightly basis, excess funds in its master operating account are swept and invested in overnight, interest-bearing investment grade commercial paper for ATPs benefit. 52. I understand that one of the US Trustee Guidelines in this jurisdiction requires a

Chapter 11 debtor-in-possession to open new bank accounts and close all existing accounts. ATP seeks a waiver of, among other things, the United States Trustees requirement that the Accounts be closed and new post-petition accounts be opened. This requirement would cause significant disruption in ATPs business and would impair its efforts to reorganize. 53. ATPs continued use of the Cash Management System and the Accounts during

the pendency of this Chapter 11 case is essential to ATPs business operations. In particular, requiring ATP to open new bank accounts and devise a new centralized cash management system at this early and critical stage would disrupt the Companys operations and impose needless expense and administrative burden. Any such disruption would adversely affect ATPs ability to reorganize and/or maximize the value of the estate, at little to no benefit, as ATP already maintains accounting controls with respect to each of the Accounts to ensure it can accurately record and trace any movements of funds throughout its Cash Management System. 54. ATP also seeks a waiver of the US Trustee Guidelines to the extent necessary to

allow it to keep its payroll account at Compass. Although Compass is not on the list of approved depositories that is kept by the United States Trustee for this district, the Compass payroll account is an FDIC insured account. Moreover, funds are not regularly maintained in the Payroll Account for any extended period, but instead deposited when and to the extent necessary to meet ATPs periodic payroll obligations, all of which are paid through ACH transfers. For all these reasons, ATP believes that any funds deposited at Compass will be secure.

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55.

In sum, I submit that requiring ATP to adopt new cash management systems and

open new bank accounts at this early and critical stage of the Chapter 11 case would be expensive, impose administrative burdens, and cause needless disruption. As a result, ATP requests authority to continue the use of the existing Cash Management System. iii. Debtors Emergency Motion for Entry of Orders: (1) Authorizing the Debtors to Pay Prepetition Employee Salaries, Reimbursable Employee Expenses, Employee Benefits and Other Compensation; (2) Directing All Banks to Honor Certain Related Prepetition Transfers; and (3) Granting Related Relief (the Employee Wages and Benefits Motion)

56.

ATP requests the entry of an order authorizing, but not directing, ATP to pay,

continue, or otherwise honor prepetition obligations to or for the benefit of its current employees (collectively, the Employees) for salaries and other compensation and benefits under all plans, programs and policies implemented by ATP prior to the Petition Date. ATP also seeks

immediate authority to make payments to the Employees on account of Prepetition Employee Obligations up to the priority expense limit imposed on employee claims under Section 507(a)(4) of the Bankruptcy Code, and seeks further authority to pay the balance of such Prepetition Employee Obligations following a final hearing to be scheduled by this Court. 57. As of the Petition Date, ATPs workforce was comprised of approximately sixty

Employees. Currently, fifty-two Employees are based in Houston and eight Employees work on various Gulf of Mexico floating production platforms. All of ATPs Employees are salaried employees. In the ordinary course of ATPs business, each of ATPs Employees earns and is paid salaries and/or other compensation semi-monthly. The Employees perform a variety of critical functions, including the day-to-day operations of ATPs wells, platforms and production facilities, as well as a variety of administrative, legal, accounting, finance and managementrelated tasks. The skills and experience of the Employees, as well as their relationships with 21
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customers and vendors and their knowledge of ATPs infrastructure, are essential to ATPs ongoing operations and ability to effectively reorganize its business. ATPs employees have substantial industry expertise, including experience in the development and operation of offshore properties in the Gulf of Mexico. 58. In providing benefits to its Employees, ATP pays and incurs a number of

obligations (including employee contributions, claims and administrative fees to benefit providers) such as compensation, deductions and payroll taxes, cash incentive programs, equity plans, termination allowance programs, reimbursement expenses, relocation and expatriate expenses, health benefits, workers compensation benefits, vacation time, life insurance, accidental death and disability benefits, retirement and savings benefits and other benefits that ATP has historically provided in the ordinary course of business. Although ATP is nearly current on its Employee obligations as of the Petition Date, having paid payroll on August 15th, ATP seeks authority to pay approximately $42,798 in expense reimbursements, and $15,000 in other Employee benefits and related fees. 59. ATP further seeks authorization to make payments of up to $841,000 in the

aggregate to the forty-seven non-insider Employees who remain employed by the Debtors and who have earned but, as of the Petition Date, have yet to receive bonus compensation previously awarded to them under ATPs existing, prepetition bonus plan. These bonus amounts are an integral component of our Employees compensation and are calculated at a level that is at or below 50% of the industry average based on market survey data. 60. I believe the vast majority of our Employees rely exclusively on their

compensation to pay their daily living expenses, which includes their salaries as well as the outstanding unpaid bonuses. Such amounts are a critical component of the Employees total

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compensation package, and if ATP is not permitted to honor its outstanding obligations, I believe many Employees will be exposed to significant financial difficulties. Moreover, if ATP is unable to satisfy such obligations, Employee morale will be jeopardized at a time when Employee support is critical. In the absence of such payments, I believe that the Employees may seek alternative opportunities, perhaps with ATPs competitors. Since ATP already has rightsized its workforce, and in my view is as leanly and efficiently staffed as possible, any such loss could significant hinder ATPs efforts to successfully reorganize. 61. In addition to its Employees, ATP supplements its workforce through the use of

one temporary worker that provides key support for ATPs accounting and back-office management and of four independent contractors who provide crucial, highly-specialized geological and engineering skills. ATP further requests that it be authorized, but not directed, to pay the hourly fees of the temporary worker and independent contractors for any prepetition amounts owing and to continue such payments postpetition in the ordinary course of its business, as ATP depends on these services for the continued operation of its business. 62. ATP also has various Employee programs and obligations that are administered or

paid through a third-party administrator, agent, consultant or provider (the Administrators). ATP also seeks authority to pay any prepetition fees of the Administrators, and to continue such payments post-petition in the ordinary course of its business, in order to insure the uninterrupted delivery of payments or other benefits to the Employees. 63. I believe that the relief requested in the Employee Wages and Benefits Motion is

in the best interests of ATPs estate and will enable the Debtor to continue to operate its business during this Chapter 11 case without disruption so as to avoid immediate and irreparable harm to

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ATPs estate. Accordingly, I respectfully submit that the Employee Wages and Benefits Motion should be approved. iv. Debtors Emergency Motion for Authorization to: (1) Continue Prepetition Insurance Program; (2) Pay Any Prepetition Premium or Related Obligations; and (3) Honor Obligations under Prepetition Premium Financing Agreements

64.

ATP maintains more than three dozen insurance policies providing hundreds of

millions of dollars of coverage, including, but not limited to, policies covering ATPs offshore operations on production platforms in the Gulf of Mexico (including hurricane protection), construction, workers compensation, general liabilities, property and casualty, directors and officers, and office (collectively, the Policies). I believe that maintenance of insurance coverage under the Policies is essential to the operation of ATPs business, and I understand that it is required under the laws of many jurisdictions in which ATP operates as well as pursuant to a number of ATPs contracts. 65. ATP seeks to continue to maintain its existing Policies, and to renew, revise,

extend, supplement, change or enter into new insurance coverage as needed in its business judgment. I believe that payment of any Policy premiums, if any, relating to prepetition ATP and its

insurance coverage is necessary to continued coverage under such policies.

subsidiaries annually incur approximately $42 million in aggregate premiums and related fees to procure and maintain the Insurance Program. The premium due for most of the Policies already has been paid in full for the current policy year, or, as discussed further below, is being financed under premium financing agreements. However, with respect to the Policies recently obtained by ATP covering its operations in the Gulf of Mexico, including its offshore operations on the ATP Innovator and ATP Titan platforms (the Offshore Policies), ATP owes approximately $35 million in remaining premiums, which are payable in installments over the next six to twelve 24
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months. The continuation of the Offshore Policies is both necessary and critical to ATPs ability to operate its business. 66. ATP also seeks authority to continue to make payments under the Premium

Finance Agreement dated February 10, 2012 between Imperial Credit Corporation and ATP (the Premium Financing Agreement). Under the terms of the Premium Financing Agreement, ATPs counterparty may cancel the Financed Policies for non-payment, and may accelerate and declare due and payable the entire unpaid premiums, upon ATPs failure to pay the monthly premium financing obligations. The Premium Financing Agreement enables ATP to finance its numerous D&O related policies, including some that pertain to its non-filed subsidiaries; however, we think this is appropriate since the remaining payments due on the agreement are relatively modest and there is no practical way to carve-out individual policies without breaching the agreement and imperiling the D&O coverage of ATP that is essential. Accordingly, I believe it is in the best interests of ATP, its estate, its creditors and other parties in interest for ATP to continue to make payments under the Premium Financing Agreement, and consequently to obtain the authority (but not direction) to continue to make all payments required to be made under those agreements. 67. Finally, to assist it in its efforts to obtain the insurance coverage necessary to

operate its businesses in a reasonable, prudent and cost-effective manner, ATP utilizes the expertise, experience and services of McGriff, Seibels & Williams Inc. (McGriff). Among other things, McGriff represents ATP in negotiations with its various insurance underwriters. ATP remits most of the premium payments on its Policies to McGriff for payment by McGriff to the Carriers. I submit that it is in the best interests of its creditors and estates to continue this business relationship with McGriff.

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v.

Motion Of Debtor For An Interim And Final Order To (i) Prohibit Utility Companies From Discontinuing, Altering, Or Refusing Service; (ii) Deem Utility Companies Adequately Assured Of Future Payment And (iii) Establish Procedures For Determining Requests For Additional Adequate Assurance.

68.

In connection with the operation of its business, ATP currently utilizes electricity,

telephone services, sanitation and similar services (Utility Services) through numerous accounts with various utility companies (collectively, the Utility Companies). By its motion, ATP seeks to implement procedures to provide its Utility Companies with adequate assurance of future payment, as follows. 69. ATP proposes to provide each of the Utility Companies, as additional adequate

assurance, a cash deposit in an amount equal to the greater of: (i) one-half (1/2) of one months utility payment (based on the average monthly payment for such utility services during the three (3) months prior to the Petition Date); or (ii) the deposit currently held by such utility (collectively, the Utility Deposits). A list of the names and addresses of the Utility

Companies and proposed Utility Deposits is attached as Exhibit A to the Utilities Motion. 70. The proposed procedures provide that a Utility Company must make an initial

request for a Utility Deposit within 20 days of the Petition Date. In the event that any Utility Company believes the Utility Deposit does not provide satisfactory assurance, the proposed procedures allow such Utility Company to serve a request for an additional deposit on ATP and its counsel within 25 days of the Petition Date. 71. ATP shall then have a brief period to seek to resolve the request by agreement

without further order of this Court. If ATP believes that the additional request is unreasonable and/or is unable to resolve the request, then ATP shall request a hearing before this Court seeking a determination from the Court that the proposed deposit, plus any additional consideration that may be offered by ATP, constitute adequate assurance of payment within the 26
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meaning of Section 366 of the Bankruptcy Code. Pending such a hearing, any Utility Company that is the subject of the unresolved request may not alter, refuse, or discontinue services ATP nor recover or setoff against a prepetition deposit. In addition, any Utility Company that fails to make a timely request shall be deemed to have been provided with adequate assurance of payment within the meaning of section 366 of the Bankruptcy Code. 72. I believe the proposed procedures are reasonable and it is my understanding they

are consistent with those provided by debtors in similar Chapter 11 cases. In addition, I submit that uninterrupted utility service is essential to ATPs ability to maintain its operations, and therefore the emergency relief requested in the motion is necessary to prevent irreparable harm to ATPs business. vi. Debtors Emergency Motion For An Order Authorizing the Debtor To Immediately Pay Prepetition Obligations To Certain Critical Vendors (the Critical Vendor Motion)

73.

In its day-to-day operations, ATP relies heavily on many suppliers and service

providers (the Vendors). As a recognized operator for offshore operations in the Gulf of Mexico, ATP relies upon its Vendors for the manpower and specialized goods and services necessary for offshore development and production of oil and gas properties. 74. ATP has identified the prompt completion of the pipeline to the so-called Clipper

Wells, and the resulting ability to immediately begin production therefrom, as a key component of its strategy to improve cash flow and generate the liquidity necessary to maximize value for the Debtors stakeholders. Numerous Vendors provide goods and services for the Clipper pipeline project including: (i) the manufacture of rigged steel pipe and flexible tubing, pipeline end terminations (PLETs), jumpers, and other hardware required to connect the Clipper Wells to the closest available offshore platform; (ii) the shipment of the steel pipe and tubing from its spooling ground on the coast of Louisiana to an offshore location in the deepwater of the Gulf of 27
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Mexico, aboard the Deep Blue, a specialized pipelay and subsea construction vessel operated by Technip (the Deep Blue); (iii) the provision of the manpower to lay the pipe and install the tubing, PLETs and other hardware on location; (iv) the manufacture and installation of

interconnecting piping, instrumentation/electrical controls and specialized valves; and (v) the manufacture and installation of primary components of the subsea control system. 75. To date, ATP has incurred costs of approximately $73 million on the manufacture

of the rigged pipe and flexible tubing, PLETs and jumpers required to complete the Clipper Wells pipeline. The pipe has been spooled and, along with the related components, loaded onto the Deep Blue, which is en route to the Clipper site and is expected to arrive at the end of this week. Consequently, if the Vendors providing goods and services on the Clipper pipeline project are unable or unwilling to perform their services or provide their goods in connection with the project in a prompt and timely fashion, the Deep Blue likely would return to shore and offload the spooled pipe, rendering it useless except as scrap, and continue to its next scheduled job. Thus, ATP not only would lose the $73 million it has expended to get to this point, it also likely would be unable to complete the Clipper project and begin production from the Clipper Wells for approximately one year. reorganization. 76. To complete the Clipper project, ATP has engaged a general contractor that in This delay would be devastating to ATP and its prospect for

turn has hired a team of approximately 15 subcontractors. While all of these subcontractors are essential to the projects success and are necessary to complete the pipeline construction, ATP has identified three that are absolutely vital to the near-term completion of the project (the Critical Vendors). Each of these Critical Vendors is suffering its own financial distress as a result of ATPs inability to pay the general contractor the amounts due for the respective

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subcontractors goods, materials, and/or services on this project to date; each has stated that it cannot and will not perform its remaining work on the Clipper project unless its prepetition claims are paid, and each is necessary to ensure that that ATP will be able to complete the Clipper project within the time frame contemplated by the Debtors DIP loan facility and its business plan. 77. are as follows: A&B Valve. A&B Valve and Piping Systems, L.L.C. (A&B Valve) has manufactured the majority of the valves used on the Clipper project in compliance with the projects rigid subsea and host platform specifications. Safety, dependability and product integrity have paramount importance here because the valves are used in high-pressure and subsea hydrocarbon service, and A&B Valves products meet that high standard. ATP has ordered twenty-six topside valves and four PLET valves from A&B, which A&B refuses to release until it receives payment of outstanding amounts owed to it. Aker Solutions. Aker Solutions (Aker) is providing two of the three primary components (subsea control module, umbilical and master control station/hydraulic power unit) that make up the subsea control system (SCM or pod). There will be a pod installed on each subsea tree, which translates the electrical signals received from the master control station/hydraulic power unit (MCS/HPU) on the host platform into hydraulic signals that then provides the motive force to operate the components (valves, chokes, etc.) on the subsea tree. These electrical signals and the hydraulic fluid are carried from the MCS/HPU to the pod via the umbilical, which is a bundle of steel tubes and electrical conductors that, like the pod, is designed specifically for the conditions of the Clipper Subsea Field. A standard part of any subsea field development is a systems integration test (SIT). In the SIT, the pod is connected to one end of the umbilical and a test set that emulates the functions of the MCS/HPU is connected to the other while all the components are still onshore. All the functions the MCS/HPU and pod are to control are tested to verify proper construction and detect leaks or electrical troubles prior to the umbilical being shipped offshore for installation. The goods, materials and services to be provided by these three Critical Vendors

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The Clipper SIT is scheduled to start the week commencing August 20, 2012 and must be completed by September 1, 2012. The deadline is due to the scheduled arrival of the reel-installation vessel, Chickasaw. Given the size and weight of the approximately 15-mile long umbilical the Chickasaw is one of the few vessels in the Gulf of Mexico that can handle the load. The other vessels that can perform the task are contracted and have been contracted since early 2012 through the end of 2012. Thus, if the SIT is not completed comfortably before September 1, 2012, the umbilical will not be installed until sometime in the first quarter of 2013 at the earliest. Aker is currently holding delivery of the pod until they are paid in full for the component. PES. Performance Energy Services (PES) fabricates all of the interconnecting piping (ICP) and instrumentation/electrical controls (I&E) necessary to safely tie the Clipper Wells into the host platforms hydrocarbon processing facility. PES has been involved in the Clipper project from its inception and has been supplying personnel to install both ICP and I&E on the host platform, who have been working offshore on the project since April 2012. Accordingly, the PES personnel have become familiar with the host platform operator and the host platform operator has become comfortable working with them. PES has stated that it will pull its crews from the host platform if it does not receive payment of its outstanding claims. The payment of these Critical Vendors is necessary to preserve the value of

78.

ATPs business and, in particular, the ongoing Clipper project. In light of the tight timeframe involved in laying the pipe currently aboard the Deep Blue, ATP will almost certainly not be able to find replacement providers for the goods and/or services provided by the three Critical Vendors. In addition, because of the remote location offshore and the hazardous nature of the work involved, even if ATP were to find replacement providers immediately, those providers would likely not be able to safely and effectively perform the work required to complete the project. Should any of the Critical Vendors delay or cease providing their critical goods and/or services, even on a temporary basis, the Debtors business would be irreparably harmed. 79. Aside from paying the prepetition claims of these three Critical Vendors, no

practical alternative exists by which the Debtor can complete the Clipper project in a timely manner as contemplated under its DIP loan facility. 30
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80.

As a result, I believe that authority to pay the outstanding prepetition obligations

of the Critical Vendors is in the best interests of the Debtor, its estate, creditors and parties in interest and is necessary to avoid irreparable harm. E. Retention Applications i. Debtors Application Pursuant to Sections 327, 328 and 329 of the Bankruptcy Code and Rules 2014, 2016 and 6003 of the Federal Rules of Bankruptcy Procedure for Authorization to Retain Mayer Brown LLP as General Bankruptcy Counsel (the Mayer Brown Retention Application)

81.

ATP has filed the Mayer Brown Retention Application, by which ATP seeks

authority to employ and retain Mayer Brown LLP (Mayer Brown) as its general bankruptcy counsel, as of the Petition Date, in connection with various matters, including ATPs commencement and prosecution of this Chapter 11 case. 82. The employment of Mayer Brown, as outlined in the Mayer Brown Retention

Application, is appropriate and necessary to enable ATP to execute faithfully its duties as a debtor and debtor-in-possession. Mayer Brown has stated its desire and willingness to act as counsel in the Chapter 11 case and render the necessary professional services as attorneys for ATP. The Company has selected Mayer Brown to provide it representation in the Chapter 11 case because of Mayer Browns familiarity with ATPs business and because of the expertise and experience of its national bankruptcy practice. 83. ATP is unaware of any connection that Mayer Brown has to ATP, except as

described in the declaration in support of Mayer Browns retention. ATP has been informed that neither Mayer Brown, nor any of its professional personnel, have any relationship with ATP that would impair Mayer Browns ability to serve as general bankruptcy counsel.

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84.

I submit that approval of the Mayer Brown Retention Application is necessary

given the myriad of issues confronting ATP, is in the best interests of ATPs estate, its creditors, and all other parties-in-interest, and should be granted in all respects. ii. Application for Employment of Munsch Hardt Kopf & Harr, P.C., as Conflicts Counsel (the Munsch Hardt Retention Application)

85.

ATP has filed the Munsch Hardt Retention Application, by which ATP seeks

authority to employ and retain Munsch Hardt Kopf & Harr, P.C. (Munsch Hardt), as special conflicts counsel, as of the Petition Date. 86. Given ATPs involvement in the oil & gas markets and the scope and variety of

its financing and other transactions, it was likely that any firm with the required breadth of required expertise and experience would, necessarily, have numerous contacts and connections, not only with ATP, but with many of its creditors and other parties in interest in the chapter 11 cases. 87. In recognition of these realities, and the complexity and variety of the legal issues

likely to confront ATP, and the number of parties likely to be involved one way or another in this Chapter 11 Case, ATP recognizes that there will be situations in which Mayer Brown may have a conflict and thus determined that in addition to Mayer Brown, it should employ Munsch Hardt as special conflicts counsel (Conflicts Counsel) to act in matters where Mayer Brown is unable to represent the Debtor. 88. In choosing Conflicts Counsel, ATP looked for a firm that would complement

Mayer Brown and the services and skills Mayer Brown would bring to its representation of the Debtor. ATP thus looked to engage as Conflicts Counsel a firm that was primarily a litigation firm, without the many relationships with financial institutions that a firm like Mayer Brown, of necessity, has. 32
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89.

ATP thus selected Musch Hardt as Conflicts Counsel to represent it in litigation

matters where Mayer Brown is unable to act, including those in which the party to the litigation is a client of Mayer Brown. ATP believes that Mayer Brown and Munsch Hardt will coordinatre their efforts and clearly delineate their respective duties to minimize any duplication of effort and create a seamless representation of ATP, without undue costs or expenses for the estates. 90. I submit that approval of the Munsch Hardt Retention Application is necessary, is

in the best interests of ATPs estate, its creditors, and all other parties-in-interest, and should be granted in all respects. iii. Application Pursuant to Sections 327 and 328 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure for Authorization to Retain Opportune LLP as the Debtors Financial Advisors

91.

ATP has filed an application seeking approval of the retention and employment of

Opportune LLP (Opportune) as the Companys financial advisors as of the Petition Date in connection with various matters. Opportune specializes in operational and financial consulting in all sectors of the energy industry, and it has developed particular expertise in the offshore oil and gas exploration and drilling industry in which ATP operates. Here, Opportune is intimately familiar with ATPs cash flow projections, 13-week budget and other financial and accounting needs. 92. Opportunes financial advisory services have included a wide range of activities

targeted at stabilizing and improving a companys financial position, including developing or validating forecasts, business plans and related assessments of a businesss strategic position; monitoring and managing cash, cash flow and supplier relationships; assessing and recommending cost reduction strategies; and designing and negotiating financial restructuring packages. In the past, Opportune has provided these types of services to companies such as 33
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Union Bank, Wells Fargo Bank, N.A., Royal Bank of Canada, Bank of Scotland, Aurora Oil & Gas Corporation, and numerous others. 93. In addition, Opportune is familiar with ATPs business, financial affairs and

capital structure. Opportune has been engaged by the Company in various capacities since March 7, 2012. In particular, Opportune provides consulting services relating to ATPs

corporate structure and financial affairs. 94. ATP is unaware of any connection that Opportune has to ATP, except as

described in the declaration in support of Opportunes retention. ATP has been informed that neither Opportune, nor any of its professional personnel, have any relationship with ATP that would impair Opportunes ability to serve as financial advisor. Moreover, I believe that the services to be provided by Opportune will not be duplicative of any services that ATPs other professionals in this Chapter 11 case may provide, including any services provided by its proposed investment banker, Jefferies & Company, Inc. 95. Accordingly, I submit that the retention of Opportune on the terms and conditions

set forth herein is necessary and appropriate, is in the best interests of ATPs estate, its creditors, and all other parties-in-interest, and should be granted in all respects. iv. Application Pursuant to Sections 327 and 328 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure for Authorization to Retain Jefferies & Company, Inc. as the Debtors Investment Banker

96.

ATP has filed an application seeking approval of its retention and employment of

Jefferies & Company, Inc. (Jefferies) as its investment bankers as of the Petition Date in connection with various matters, including to provide services related to postpetition financing arrangements and potential transactional options that would maximize ATPs enterprise value. Jefferies services are necessary to assist ATP in evaluating the complex financial and economic 34
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issues raised in ATPs reorganization proceedings and to effectively fulfill its statutory duties as debtor-in-possession. 97. Jefferies has substantial expertise in providing restructuring and capital markets

advisory services to Chapter 11 debtors and debtors-in-possession. In particular, ATP seeks Jefferies assistance in further developing and implementing its restructuring strategy and in negotiations with creditors over the terms thereof, including any changes to ATPs capital structure and the terms and valuation of any additional debt or equity instruments that might be issued in connection with such a restructuring. 98. ATP is unaware of any connection that Jefferies has to ATP, except as described ATP has been informed that neither Jefferies, nor any of its

in Jefferies declaration.

professional personnel, have any relationship with ATP that would impair Jefferies ability to serve as its investment banker. Moreover, ATP believes that the services to be provided by Jefferies will not be duplicative of any services that ATPs other professionals in this Chapter 11 case may provide, including any services provided by its proposed financial advisor, Opportune. 99. Accordingly, I submit that the retention of Jefferies on the terms and conditions

set forth herein is necessary and appropriate, is in the best interests of ATPs estate, its creditors, and all other parties-in-interest, and should be granted in all respects. v. Application for Authorization to Employ and Retain Kurtzman, Carson Consultants, as Claims, Balloting, and Notice Agent.

100.

ATP seeks to employ KCC as its claims, balloting, and noticing agent for the

Chapter 11 case. There are likely to be hundreds of creditors and parties-in-interest in this proceeding and I understand from discussions with counsel that this would impose heavy administrative and other burdens on the Court and the Clerk without the services of a claims and noticing agent. In addition, in connection with any proposed plan of reorganization, ATP has 35
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determined that it will require the services of KCC to act as solicitation agent with respect to, inter alia, the mailing of a disclosure statement, the plan and related ballots, and maintaining and tallying ballots in connection with the voting on such plan. 101. To relieve and assist with these burdens, ATP requests the appointment of KCC

as claims, balloting, and noticing agent in this Chapter 11 case. KCC is one of the countrys leading Chapter 11 administrators with expertise in noticing, claims processing, claims reconciliation, distribution of disclosure statement and plan materials, and ballot distribution tabulation. KCC has acted as claims and noticing agent in hundreds of bankruptcy cases, and is extremely well-qualified to provide ATP with the services for which they are to be retained in this Chapter 11 case. 102. I believe that the agreement with KCC contemplates compensation at a level that

is reasonable and appropriate for services of this nature, and I understand that it is consistent with or below the compensation arrangement charged by KCC in other cases in which it has been retained to perform similar services. ATP needs to employ a claims agent with proven

competence and I believe that KCC so qualifies. In light of KCCs experience and the efficient and cost-effective methods that it has developed, ATPs estate and creditors will clearly benefit from the appointment of KCC as the claims and noticing agent in this Chapter 11 case. 103. I also understand that pursuant to Rule 2002(a)(1) of the Federal Rules of

Bankruptcy Procedure, twenty (20) days notice is required for the first meeting of creditors. ATP believes that the assistance of KCC as noticing agent is necessary to comply with this and other noticing requirements in these cases, making the approval of the KCCs application necessary to avoid immediate and irreparable harm to ATPs estate.

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104.

ATP is unaware of any connection that KCC has to ATP, except as described in

KCCs application and accompanying declaration. ATP has been informed that neither KCC, nor any of its professional personnel, have any relationship with ATP that would impair KCCs ability to serve as claims and noticing agent.

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