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ATP Oil and Gas (ATPG) has been in a tough position due to liquidity concerns and issues of management not being able to hit certain targets.
ATPG is in a tight spot because its interest expense is so high that its nearly impossible for ATP to turn a profit. The only way the company can turn a profit is by increasing production. However, since the company is running low on funds it's hard to believe ATPG will be able to remain solvent long enough to increase production.
The stock does not seem appropriate here as there is way too much uncertainty for the future of the company; nobody knows what is going on. ATPG even hired a CEO at the beginning of this month, and then he resigned a week later.
While the equity seems like a poor play, the bonds may be a much better buy. As ATPG's losses mount, the company could go bankrupt in the next two years.
Analysts such as Ravi Kamath have been saying that ATPG could file for bankruptcy as soon as November... Continue to read.
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