Form 10-Q for quarterly period ended September 30, 2006

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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V7a6CM+lf7jJ2XLQTri9glvUjEh2nKmjwdlqQRJJXdE6rmJYBsgK8Xa8Bl1m+5hr iuKjfHe2wJHzO7DUbsdLeg== 0001193125-06-226843.txt : 20061107 0001193125-06-226843.hdr.sgml : 20061107 20061107171622 ACCESSION NUMBER: 0001193125-06-226843 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060930 FILED AS OF DATE: 20061107 DATE AS OF CHANGE: 20061107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATP OIL & GAS CORP CENTRAL INDEX KEY: 0001123647 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760362774 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32647 FILM NUMBER: 061194796 BUSINESS ADDRESS: STREET 1: 4600 POST OAK PL STREET 2: STE 200 CITY: HOUSTON STATE: TX ZIP: 77027 BUSINESS PHONE: 7136223311 MAIL ADDRESS: STREET 1: 4600 POST OAK PLACE STREET 2: SUITE 200 CITY: HOUSTON STATE: TX ZIP: 77027 10-Q 1 d10q.htm FORM 10-Q FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006 Form 10-Q for quarterly period ended September 30, 2006

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-32261

ATP OIL & GAS CORPORATION

(Exact name of registrant as specified in its charter)

Texas

76-0362774

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

4600 Post Oak Place, Suite 200

Houston, Texas 77027

(Address of principal executive offices)

(Zip Code)

(713) 622-3311

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the issuer’s common stock, par value $0.001, as of November 6, 2006, was 30,143,245.

ATP OIL & GAS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)

Consolidated Balance Sheets: September 30, 2006 and December 31, 2005		3

Consolidated Statements of Operations: For the three and nine months ended September 30, 2006 and 2005		4

Consolidated Statements of Cash Flows: For the nine months ended September 30, 2006 and 2005		5

Consolidated Statements of Comprehensive Income (Loss): For the three and nine months ended September 30, 2006 and 2005		6

Notes to Consolidated Financial Statements		7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		17

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		25

ITEM 4. CONTROLS AND PROCEDURES		25

PART II. OTHER INFORMATION		26

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ATP OIL & GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)


	September 30, 2006			December 31, 2005
Assets
Current assets:
Cash and cash equivalents	$	61,263		$	65,566
Restricted cash		26,298			12,209
Accounts receivable (net of allowance of $308 and $367)		148,714			83,571
Deferred tax asset		4,633			—
Derivative asset		1,272			—
Other current assets		12,464			4,454

Total current assets		254,644			165,800

Oil and gas properties (using the successful efforts method of accounting)
Proved properties		1,348,746			890,402
Unproved properties		33,936			8,882

		1,382,682			899,284
Less: Accumulated depletion, impairment and amortization		(400,646	)		(271,863	)

Oil and gas properties, net		982,036			627,421

Furniture and fixtures (net of accumulated depreciation)		1,136			1,175
Deferred tax asset		1,342			4,025
Derivative asset		177			—
Deferred financing costs, net		24,337			17,922
Other assets, net		11,549			7,420

Total assets	$	1,275,221		$	823,763


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accruals	$	208,987		$	144,675
Current maturities of long-term debt		5,250			3,500
Current maturities of long-term capital lease		22,962			8,679
Asset retirement obligation		13,201			7,097
Derivative liability		—			1,282

Total current liabilities		250,400			165,233

Long-term debt		513,301			337,489
Long-term capital lease		—			34,437
Asset retirement obligation		87,967			60,267
Deferred tax liability		5,738			—
Other long-term liabilities and deferred obligations		—			8,826

Total liabilities		857,406			606,252


Shareholders’ equity:
Preferred stock: $0.001 par value, 10,000,000 shares authorized; 325,000 issued and outstanding at September 30, 2006; 175,000 issued and outstanding at December 31, 2005		364,198			184,858
Common stock: $0.001 par value, 100,000,000 shares authorized; 30,219,085 issued and 30,143,245 outstanding at September 30, 2006; 29,668,517 issued and 29,592,677 outstanding at December 31, 2005		30			29
Additional paid-in capital		148,125			149,267
Accumulated deficit		(103,649	)		(101,333	)
Accumulated other comprehensive income (loss)		10,022			(4,693	)
Unearned compensation		—			(9,706	)
Treasury stock		(911	)		(911	)

Total shareholders’ equity		417,815			217,511

Total liabilities and shareholders’ equity	$	1,275,221		$	823,763

See accompanying notes to consolidated financial statements.

ATP OIL & GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30, 2006			September 30, 2005			September 30, 2006			September 30, 2005
Revenues:
Oil and gas production	$	132,822		$	26,342		$	286,952		$	96,810


Costs and operating expenses:
Lease operating		22,848			4,796			54,800			15,377
Exploration		1,660			3,067			2,168			5,574
General and administrative		4,643			3,893			14,477			13,247
Stock-based compensation		3,160			—			8,686			—
Depreciation, depletion and amortization		55,026			12,289			115,545			47,993
Impairment of oil and gas properties		11,760			—			11,760			—
Accretion		2,255			622			5,473			1,801
Loss on abandonment		349			248			3,855			324

		101,701			24,915			216,764			84,316

Income from operations		31,121			1,427			70,188			12,494


Other income (expense):
Interest income		1,377			1,518			3,157			3,006
Interest expense		(14,780	)		(9,760	)		(38,049	)		(24,644	)
Other income (expense)		—			(6	)		—			2

		(13,403	)		(8,248	)		(34,892	)		(21,636	)

Income (loss) before income taxes		17,718			(6,821	)		35,296			(9,142	)


Income tax (expense) benefit:
Current		(2,195	)		—			(4,036	)		—
Deferred		(2,814	)		—			(4,236	)		—

		(5,009	)		—			(8,272	)		—

Net income (loss)		12,709			(6,821	)		27,024			(9,142	)

Preferred stock dividends		(11,536	)		(3,756	)		(29,340	)		(3,756	)

Net income (loss) available to common shareholders	$	1,173		$	(10,577	)	$	(2,316	)	$	(12,898	)

Net income (loss) per common share – basic and diluted	$	0.04		$	(0.36	)	$	(0.08	)	$	(0.44	)


Weighted average number of common shares:
Basic		29,776			29,109			29,643			29,005
Diluted		30,406			29,922			30,342			29,833

See accompanying notes to consolidated financial statements.

ATP OIL & GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)


	Nine Months Ended
	September 30, 2006			September 30, 2005
Cash flows from operating activities
Net income (loss)	$	27,024		$	(9,142	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities –
Depreciation, depletion and amortization		115,545			47,993
Impairment of oil and gas properties		11,760			—
Accretion		5,473			1,801
Deferred income taxes		4,236			—
Dry hole costs		—			5,164
Amortization of deferred financing costs		4,387			2,982
Stock-based compensation		8,686			—
Ineffectiveness of cash flow hedges		45			(189	)
Other noncash items		4,424			1,320
Changes in assets and liabilities –
Accounts receivable and other current assets		(81,935	)		7,269
Accounts payable and accruals		9,955			4,185
Other assets		(1,146	)		—
Other long-term liabilities and deferred obligations		(3,108	)		7

Net cash provided by operating activities		105,346			61,390


Cash flows from investing activities
Additions and acquisitions of oil and gas properties		(390,916	)		(272,603	)
Additions to furniture and fixtures		(331	)		(427	)
Increase in restricted cash		(13,296	)		(12,312	)

Net cash used in investing activities		(404,543	)		(285,342	)


Cash flows from financing activities
Proceeds from long-term debt		178,500			132,113
Payments of long-term debt		(2,188	)		(2,300	)
Deferred financing costs		(11,116	)		(10,416	)
Issuance of preferred stock, net of issuance costs		145,463			169,440
Payments of capital lease		(20,869	)		—
Exercise of stock options		4,416			3,536
Other		—			(68	)

Net cash provided by financing activities		294,206			292,305

Effect of exchange rate changes on cash		688			(3,757	)

Increase (decrease) in cash and cash equivalents		(4,303	)		64,596
Cash and cash equivalents, beginning of period		65,566			102,774

Cash and cash equivalents, end of period	$	61,263		$	167,370

Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	26,717		$	20,194

See accompanying notes to consolidated financial statements.

ATP OIL & GAS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

(Unaudited)


	Three Months Ended					Nine Months Ended
	September 30, 2006		September 30, 2005			September 30, 2006			September 30, 2005
Net income (loss) available to common shareholders	$	1,173	$	(10,577	)	$	(2,316	)	$	(12,898	)


Other comprehensive income (loss), net of tax:
Reclassification adjustment for settled contracts (net of income tax of $0)		1,429		297			3,439			5
Change in fair value of outstanding hedge positions (net of income tax of $0)		514		1,505			(3,832	)		(734	)
Foreign currency translation adjustment		4,327		(2,650	)		15,108			(5,667	)

Other comprehensive income (loss)		6,270		(848	)		14,715			(6,396	)

Comprehensive income (loss)	$	7,443	$	(11,425	)	$	12,399		$	(19,294	)

See accompanying notes to consolidated financial statements.

ATP OIL & GAS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 — Organization

ATP Oil & Gas Corporation (“ATP”) was incorporated in Texas in 1991. We are engaged in the acquisition, development and production of oil and natural gas properties in the Gulf of Mexico and the North Sea. We seek to acquire and develop properties that are economically attractive to us but are not strategic to major or large exploration-oriented independent oil and gas companies. These properties usually contain proved undeveloped reserves (“PUD”) or reservoirs where previous drilling has encountered hydrocarbons that appear to us to contain commercially productive quantities of oil and gas even though the reservoirs do not meet the SEC definition of proved reserves. Occasionally we will acquire properties that are already producing or where limited low-risk exploration opportunities exist. We believe that our strategy provides assets for us to develop and produce without the risk, cost or time of traditional exploration.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods. All intercompany transactions are eliminated upon consolidation. The interim financial information and notes hereto should be read in conjunction with our 2005 Annual Report on Form 10-K, as amended. The results of operations for the nine months ended September 30, 2006 are not necessarily indicative of results to be expected for the entire year.

Note 2 — Recent Accounting Pronouncements

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 108. This Bulletin provides the Staff’s views on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. The guidance in SAB No. 108 is effective for financial statements of fiscal years ending after November 15, 2006. Adoption of this guidance is not expected to materially impact our financial statements.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Statement of Accounting Standards (“SFAS”) No. 157. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, where fair value has been determined to be the relevant measurement attribute. This statement is effective for financial statements of fiscal years beginning after November 15, 2007. Adoption of this standard is not expected to materially impact our financial statements.

In July 2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FAS 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. We are still evaluating the potential impact that implementing FIN 48 may have on our financial statements.

Note 3 — Oil and Gas Properties

During the third quarter of 2006, ATP acquired 100% of the working interest in Atwater Valley Block 63 and the remaining 25% working interest not previously acquired in Mississippi Canyon (“MC”) Blocks 941 and 943. During the second quarter of 2006, ATP acquired 75% of the working interest in MC Blocks 941 and 943, and

100% of the working interest in MC Block 942. During the first quarter of 2006, ATP acquired 100% of the working interest in Green Canyon Block 37. The total cash consideration paid for acquisitions during the nine months ended September 30, 2006 was $33.3 million.

During October 2005, ATP acquired substantially all of the oil and gas assets of a privately held company, consisting of 19 blocks located on the Gulf of Mexico Outer Continental Shelf. The final adjustments to the purchase price were recorded during the three months ended September 30, 2006. The final adjusted purchase price was $41.7 million in cash, plus net liabilities assumed totaling an estimated $28.9 million for future property abandonment operations. The purchase price was allocated $65.6 million to proved oil and gas property and $5.0 million to unproved property.

In accordance with SFAS No. 144, “Accounting for the Impairments or Disposal of Long-Lived Assets,” we review our oil and gas properties for impairment. During the three and nine months ended September 30, 2006, we recorded an impairment of certain of our oil and gas properties totaling $11.8 million, representing the excess carrying costs over the discounted present values of the estimated future production from those properties.

Note 4 — Asset Retirement Obligations

Following is a reconciliation of the beginning and ending asset retirement obligation for the period ended September 30, 2006 (in thousands):


	Nine Months Ended September 30, 2006
Asset retirement obligation at January 1	$	67,364
Liabilities incurred		32,203
Liabilities settled		(3,537	)
Changes in estimates		(1,567	)
Accretion		5,473
Foreign currency translation		1,232

Asset retirement obligation at end of period	$	101,168

Note 5 — Long-Term Debt

Long-term debt consisted of the following (in thousands):


	September 30, 2006			December 31, 2005
Term loan, net of unamortized discount of $5,137 and $6,386	$	518,551		$	340,989
Less current maturities		(5,250	)		(3,500	)

Total long-term debt	$	513,301		$	337,489

On June 22, 2006 (the “Restatement Date”), ATP, the Lenders (“Lenders,” as defined in Article 1) and Credit Suisse (as Administrative Agent and Collateral Agent for the Lenders) entered into the Second Amended and Restated Credit Agreement (the “Term Loan Facility”). The Term Loan Facility will mature on April 14, 2010, and will amortize in equal quarterly installments (beginning September 30, 2006) in an aggregate annual amount equal to 1% of the original principal amount of the Facility through March 31, 2009, with the balance payable in equal quarterly installments during the final year of the Facility.

Pursuant to the Restated Credit Agreement, the Company borrowed additional amounts under terms and provisions (after giving effect to the amendments to be made to the existing credit agreement on the Restatement Date) identical to the existing term loans as of the Restatement Date, in an aggregate principal amount of $178.5 million, the proceeds of which will be used by the Company (a) to pay fees and expenses incurred in connection with the Term Loan Facility and (b) from time to time solely for general corporate purposes.

The Restated Credit Agreement amends and restates the existing credit agreement. Pursuant to the Restated Credit Agreement, the existing credit agreement was amended to effect, among other things, the following:

•

increase the secured term loan facility from $350.0 million to $525.0 million;

•

decrease the interest rate margin on any LIBOR loan from 5.50% to 3.25%;

•

decrease the interest rate margin on any base rate loan from 4.50% to 2.25%;

•

amend the U.K. and Netherlands subsidiary companies’ guarantees and security agreements (and in the case of the U.K. subsidiary, remove a first mortgage lien) to 65% stock pledges along with agreements not to pledge their assets in conjunction with any other borrowings;

•

increase the limit on Capital Lease Obligations and Synthetic Lease Obligations from $50.0 million to $200.0 million at any time;

•

increase the limit on Unsecured Indebtedness from $30.0 million to $60.0 million at any time;

•

and advances of up to an aggregate $300.0 million at any time to any foreign subsidiary company to fund capital expenditures and other development costs in respect of oil and gas properties in the North Sea;

•

allow for limited repurchases of the Company’s outstanding common stock; and,

•

allow for the payment of cash dividends on outstanding Preferred Stock.

The Restated Credit Agreement contains the following modifications to financial covenants:

•

Minimum Reserve Coverage Ratio (ratio of the aggregate value of proved plus 50% of probable reserves to total Net Debt) is 3.0 to 1.0 (formerly 2.5 to 1.0 without consideration of probable reserves); and,

•

the Debt to Reserve Amount test (requirement to maintain Net Debt of less than $2.50 per unit of Proved Developed Reserves) has been eliminated.

As of the Restatement Date, the Company increased its aggregate borrowings under the Term Loan Facility by $178.5 million (from the balance outstanding as of March 31, 2006) to an aggregate outstanding principal amount of $525.0 million. From this increase in borrowings, the Company received net proceeds of $167.4 million after deducting $11.1 million for fees and expenses.

The Term Loan Facility bears interest at either the base rate plus a margin of 2.25% or LIBOR plus a margin of 3.25% at the election of ATP. At September 30, 2006, the weighted average rate on outstanding borrowings was approximately 8.73%.

As of September 30, 2006, we were in compliance with all of the financial covenants of our Term Loan Facility. Significant adverse changes in our expected production levels, commodity prices and reserves or material delays or cost overruns could have a material adverse affect on our financial condition and results of operations and result in our non-compliance with these covenants. An event of non-compliance with any of the required covenants could result in a material mandatory repayment under the Term Loan Facility.

Note 6 — Preferred Stock

The Company’s preferred stock, par value $0.001 per share, consisted of the following (in thousands):


	September 30, 2006		December 31, 2005
Series A 13¹/2% cumulative perpetual preferred stock; 175,000 shares issued and outstanding at September 30, 2006 and December 31, 2005; liquidation preference at September 30, 2006 and December 31, 2005 of $1,166 and $1,056 per share, respectively	$	204,125	$	184,858
Series B 12¹/2% cumulative perpetual preferred stock; 150,000 shares issued and outstanding at September 30, 2006; liquidation preference of $1,067 per share		160,073		—
Junior participating preferred stock pursuant to the Shareholders Rights Plan; none issued		—		—

Series A Preferred

On August 2, 2005, ATP entered into a Subscription Agreement for the private placement of 175,000 shares of its 13.5% Series A cumulative perpetual preferred stock, par value, $0.001 per share (the “Series A Preferred Stock”), at a price of $1,000.00 per share. The Series A Preferred Stock is not convertible into the Company’s common stock. Aggregate gross proceeds to the Company were $175.0 million and the Company paid $5.25 million in placement agent commissions. The issuance of the Series A Preferred Stock was exempt from the registration requirements of the Securities Act of 1933, as amended, and was offered and issued only to institutional accredited investors.

The Statement of Resolutions establishing the Series A Preferred Stock provides for: (1) an initial liquidation preference of $1,000.00 per share; (2) cumulative quarterly dividends at an initial rate of 13.5%, subject to escalation in the applicable dividend rate under certain conditions; (3) no voting rights (except as required by law or

after the occurrence of various extraordinary events); (4) special provisions in the event of a Fundamental Change (as defined in the Statement of Resolutions) in the Company or the satisfaction of the Company’s currently outstanding debt; (5) limitations on incurrence of additional debt; and (6) restrictions on transfer or sale of the Series A Preferred Stock.

The Company has the right to redeem the Series A Preferred Stock at its option at any time after a Fundamental Change or the later of February 3, 2006 or the specified debt satisfaction date at a premium that declines until February 3, 2009, at which time the Series A Preferred Stock may be redeemed at 100% of the liquidation preference plus accrued and unpaid dividends.

In the event of a Fundamental Change in the Company or the repayment of the currently outstanding debt, the Company must notify the preferred stockholders whether it will offer to redeem the Series A Preferred Stock. If the Company chooses not to offer to redeem the Series A Preferred Stock, then it will be deemed a Fundamental Change offer default or a debt satisfaction offer default, as the case may be, and the applicable dividend rate will escalate by 5% per quarter, to a maximum of 25%. Such escalation will continue until either of such defaults is cured, unless the Company has previously exercised its optional redemption right with respect to all of the shares of Series A Preferred Stock then outstanding. The Company is under no obligation to offer to redeem the Series A Preferred Stock under any circumstances.

Series B Preferred

On March 20, 2006, ATP entered into a Subscription Agreement for the private placement of 150,000 shares of its 12.5% Series B cumulative perpetual preferred stock, par value, $0.001 per share (the “Series B Preferred Stock”), at a price of $1,000.00 per share. The Series B Preferred Stock is not convertible into the Company’s common stock. Aggregate gross proceeds to the Company were $150.0 million and the Company paid $4.5 million in placement agent commissions. The issuance of the Series B Preferred Stock was exempt from the registration requirements of the Securities Act of 1933, as amended, and was offered and issued only to institutional accredited investors.

The Statement of Resolutions establishing the Series B Preferred Stock provides for: (1) an initial liquidation preference of $1,000.00 per share; (2) cumulative quarterly dividends at an initial annual rate of 12.5%, subject to escalation in the applicable annual dividend rate under certain conditions; (3) no voting rights (except as required by law or after the occurrence of various extraordinary events); (4) special provisions in the event of a Fundamental Change in the Company or the satisfaction of the Company’s currently outstanding debt; (5) limitations on incurrence of additional debt; and (6) restrictions on transfer or sale of the Preferred Stock.

The Company has the right to redeem the Series B Preferred Stock at its option at any time at a premium that declines until February 3, 2009, at which time the preferred stock may be redeemed at 100% of the liquidation preference plus accrued and unpaid dividends.

In the event of a Fundamental Change in the Company or the repayment of the currently outstanding debt, the Company must notify the preferred stockholders whether it will offer to redeem the Series B Preferred Stock. If the Company chooses not to offer to redeem the Series B Preferred Stock, then it will be deemed a Fundamental Change offer default or a debt satisfaction offer default, as the case may be, and the applicable dividend rate will escalate by 5% per quarter, to a maximum of 25%. Such escalation will continue until either of such defaults is cured, unless the Company has previously exercised its optional redemption right with respect to all of the shares of Series B Preferred Stock then outstanding. The Company is under no obligation to offer to redeem the Series B Preferred Stock under any circumstances.

As of September 30, 2006, noncash preferred dividends were accrued for the Series A Preferred Stock and the Series B Preferred Stock in the amount of $29.1 million and $10.1 million, respectively. Such dividends may be paid in cash under the terms of each series of preferred stock upon the earlier to occur of full repayment of our existing Term Loan or April 15, 2011.

Note 7 — Stock–Based Compensation

Effective January 1, 2006, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Accounting for Share-Based Payment,” as amended, using the modified prospective transition method which requires, among other things, current recognition of compensation expense for share-based compensation granted after January 1, 2006, and for that portion of prior period share-based compensation for which the requisite service

has not been rendered that was outstanding as of January 1, 2006. We recognized stock option compensation expense of approximately $0.4 million and $1.4 million for the three months and nine months ended September 30, 2006, respectively.

For periods prior to January 1, 2006, we applied to our stock-based compensation awards the intrinsic method of accounting as set forth in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. The following table illustrates the effect on net income (loss) and earnings per share if we had applied the fair value recognition provisions of SFAS 123(R) to stock-based employee compensation during 2005 (in thousands, except for per-share data):


	Three Months Ended September 30, 2005			Nine Months Ended September 30, 2005
Net loss available to common shareholders, as reported	$	(10,577	)	$	(12,898	)
Total stock based employee compensation benefit determined under fair value for all awards, net of related tax effects		(125	)		(375	)

Pro forma net loss	$	(10,702	)	$	(13,273	)


Earnings per share:
Basic and diluted earnings per share – as reported	$	(0.36	)	$	(0.44	)
Basic and diluted earnings per share – pro forma		(0.37	)		(0.46	)

The fair values of options granted during the three months and nine months ended September 30, 2006 and 2005 were estimated at the date of grant using a Black-Scholes option-pricing model assuming no dividends and with the following weighted average assumptions for grants in 2006 and 2005:


	Three Months Ended				Nine Months Ended
	September 30, 2006		September 30, 2005		September 30, 2006		September 30, 2005
Weighted average volatility	52	%	46	%	51	%	47	%
Expected term (in years)	4.3		4.5		4.3		4.5
Risk-free rate	4.8	%	4.1	%	4.6	%	3.7	%

Volatilities are based on the historical volatility of our closing common stock price. Expected term of options granted is derived from output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the options is based on the comparable U.S. Treasury rates in effect at the time of each grant. The weighted average grant-date fair value of options granted during the three months ended September 30, 2006 and 2005 was $13.80 and $10.28, respectively. The total intrinsic value of options exercised during the three months ended September 30, 2006 and 2005 was $0.2 million and $5.7 million, respectively.

The weighted average grant-date fair value of options granted during the nine months ended September 30, 2006 and 2005 was $16.21 and $6.51, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2006 and 2005 was $12.2 million and $8.4 million, respectively. The following table sets forth a summary of option transactions for the nine-month period ended September 30, 2006:


	Number of Options		Weighted Average Grant Price		Aggregate Intrinsic Value ($000) (1)		Weighted Average Remaining Contractual Life
							(in years)
Outstanding at January 1	1,016,361		$	14.38
Granted	218,250			38.32
Exercised	(449,752	)		9.82
Canceled	(22,418	)		31.38
Expired	(15,715	)		8.90

Outstanding at end of period	746,726			23.73	$	10,148	3.66

Vested and expected to vest	690,203			23.74		9,376	3.58

Options exercisable at end of period	155,212			15.33		3,355	3.02

(1)	Based upon the difference between the market price of the common stock on the last trading date of the quarter and the option exercise price of in-the-money options.

A summary of the status of ATP’s nonvested stock options as of September 30, 2006 and changes during the nine months ended September 30, 2006 is presented below:


	Number of Options		Weighted Average Grant-date Fair Value
Nonvested at January 1	540,864		$	6.28
Granted	209,750			11.76
Vested	(145,182	)		5.74
Forfeited	(13,918	)		8.36

Nonvested at end of period	591,514			8.31

At September 30, 2006, unrecognized compensation expense related to nonvested stock option grants totaled $2.9 million. Such unrecognized expense will be recognized as vesting occurs over a weighted average period of 2.9 years.

On September 25, 2006, we granted 3,000 shares of restricted stock with a weighted average grant date fair value of $36.61 per share to an employee. On June 14, 2006, we granted 21,816 shares of restricted stock with a weighted average grant date fair value of $36.68 per share to our non-employee directors. Such restricted stock grants vest over a three-year period. On April 4, 2006, we granted 31,500 shares of restricted stock with a weighted average grant date fair value of $44.63 per share to our non-employee directors. Such restricted stock grants vest on January 15, 2007. On February 9, 2006, we granted 44,500 shares of restricted stock with a weighted average grant date fair value of $37.82 per share to employees. Such restricted stock grants vest over a three-year period. Each of the above restricted stock grants is subject to forfeiture, and cannot be sold, transferred or disposed of during the restriction period. The holders of the shares have voting and dividend rights with respect to such shares. We will recognize compensation expense over the vesting period of these shares. During the three months and nine months ended September 30, 2006, we recognized aggregate compensation expense of $2.7 million and $7.3 million, respectively, related to outstanding restricted stock grants.

The following table sets forth the restricted stock transactions for the nine months ended September 30, 2006:


	Number of Shares	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value ($000) (2)
Outstanding at January 1	265,363	$	36.79
Granted (1)	100,816		39.67

Outstanding at end of period	366,179		37.58	$	13,527

(1)	The weighted average grant date fair value of restricted stock granted for the nine months ended September 30, 2006 was $39.67. No restricted stock grants were outstanding at September 30, 2005.

(2)	Based upon the closing market price of the common stock on the last trading date of the quarter.

At September 30, 2006, unrecognized compensation expense related to restricted stock totaled $6.4 million. Such unrecognized expense will be recognized as vesting occurs over a weighted average period of 2.0 years.

Note 8 — Earnings Per Share

Basic earnings per share is computed by dividing net income or loss by the weighted average number of shares of common stock (other than unvested restricted stock) outstanding during the period. Diluted earnings per share is determined on the assumption that outstanding stock options and warrants have been converted using the average price for the period. For purposes of computing earnings per share in a loss year, potential common shares are excluded from the computation of weighted average common shares outstanding if their effect is antidilutive. In the

table below, approximately 813,000 and 828,000 potential common stock equivalents have been excluded from the calculations for the three months and nine months ended September 30, 2005, respectively, because their effect would be antidilutive.

Basic and diluted net income (loss) per share is computed based on the following information (in thousands, except per share amounts):


	Three Months Ended						Nine Months Ended
	September 30, 2006			September 30, 2005			September 30, 2006			September 30, 2005
Income
Net income (loss)	$	12,709		$	(6,821	)	$	27,024		$	(9,142	)
Less preferred dividends		(11,536	)		(3,756	)		(29,340	)		(3,756	)

Net income (loss) available to common shareholders	$	1,173		$	(10,577	)	$	(2,316	)	$	(12,898	)


Shares outstanding
Weighted average shares outstanding - basic		29,776			29,109			29,643			29,005
Effect of potentially dilutive securities - stock options and warrants		471			813			565			828
Unvested restricted stock		159			–			134			–

Weighted average shares outstanding - diluted		30,406			29,922			30,342			29,833

Net income (loss) available to common shareholders per share – basic and diluted	$	0.04		$	(0.36	)	$	(0.08	)	$	(0.44	)

Note 9 — Derivative Instruments and Price Risk Management Activities

Derivative financial instruments are utilized from time to time to manage or reduce commodity price risk related to our production. All derivatives are carried on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the consolidated statement of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in current earnings. Derivative contracts that do not qualify for hedge accounting, if any, are recorded at fair value on our consolidated balance sheet and the associated unrealized gains and losses are recorded as a component of revenues in the current period. As of September 30, 2006, all of our derivatives qualified for hedge accounting treatment.

We occasionally use derivative instruments with respect to a portion of our oil and gas production to manage our exposure to price volatility and to maintain compliance with our debt covenants. These instruments may take the form of futures contracts, swaps or options. A put option requires us to pay the counterparty the fair value of the option at the purchase date and receive from the counterparty the excess, if any, of the fixed floor price over the floating market price. The costs to purchase put options are amortized over the option period.

At September 30, 2006 and December 31, 2005, Accumulated Other Comprehensive Income (Loss) included $1.7 million and $1.3 million of unrealized gains, respectively, on our cash flow hedges. Gains and losses are reclassified from Accumulated Other Comprehensive Income to the consolidated statement of operations as a component of oil and gas revenues in the period the hedged production occurs. If any ineffectiveness occurs, amounts are recorded directly to the consolidated statement of operations as a component of oil and gas revenues.

At September 30, 2006, we had oil and natural gas derivatives that qualified as cash flow hedges with respect to our future production as follows:


Area	Period	Type	Volumes	Average Price	Floor Price		Net Fair Value Asset (Liability)
				$/MMBtu	$/Bbl		($000)
Oil (Bbls)
Gulf of Mexico	2006	Puts	506,000	—	$	57.50	188
Gulf of Mexico	2007	Puts	860,000	—		58.56	1,262

We also manage our exposure to oil and gas price risks by periodically entering into fixed-price delivery contracts. These physical contracts qualified and have been designated for the normal purchase and sale exemption under SFAS 133, as amended. This exemption permits, at our option, the use of the accrual basis of accounting as opposed to fair value accounting for the contracts. At September 30, 2006, we had fixed-price contracts in place for the following natural gas and oil volumes:


Period	Volumes	Average Fixed Price (1)
Natural gas (MMBtu)
Gulf of Mexico:
2006	1,073,000	$	9.76
2007	1,350,000		10.83
North Sea:
2006	1,070,000	$	13.39
2007	3,180,000		10.23
Oil (Bbl) – Gulf of Mexico:
2006	294,400	$	65.21
2007	1,434,000		70.60
2008	366,000		76.55

(1)	Includes the effect of basis differentials.

Note 10 — Commitments and Contingencies

Contingencies

The hurricane season of 2005 resulted in significant delays in our development activities, additional costs to these developments, repairs to existing producing properties and production losses and deferments in 2005 and 2006 at many of our producing properties. Most of the physical damage to our assets was covered by our insurance. At September 30, 2006 and December 31, 2005, we had a receivable for approximately $14.8 million and $13.5 million, respectively (net of $0.5 million in deductibles for hurricanes Katrina and Rita) for our expected insurance recovery of damage assessment costs and repairs which were made during the periods. In addition, we expect to recover amounts under our loss of production insurance policy, however due to the uncertainty of the ultimate amount no receivable has been recorded for that expected recovery.

During 2005, we purchased additional interest in the Tors property in the U.K. sector of the North Sea, and agreed to pay the seller contingent consideration of £2.0 million 180 days after first production, interest on such amount if the payment date meets certain criteria, and a second and third contingent payment of £1.0 million each after certain cumulative production amounts have been achieved from the property. During June 2006, we recorded a liability for $3.6 million (£2.0 million) for the initial obligation.

During 2001, we purchased three properties in the U.K. Sector - North Sea. In accordance with the purchase agreement, we also committed to pay future consideration contingent upon the successful development and operation of the properties. The contingent consideration for each property includes amounts to be paid upon achieving first commercial production and upon achieving designated cumulative production levels. The first threshold of initial commercial production was achieved in 2004 on one property and such related contingent consideration was paid and capitalized as acquisition costs. Upon achievement of the second threshold for the one

property, the remaining contingent consideration will be accrued and capitalized at that time. Future development has commenced on the other two properties and when they reach their respective thresholds, the appropriate consideration will be recorded.

In February 2003, we acquired a 50% working interest in a block located in the Dutch Sector - North Sea. The remaining 50% interest is owned by a Dutch company who participates on behalf of the Dutch state. In April 2003, we received €7.4 million from the partner related to development costs on this block. We agreed to develop the property within 60 months from receipt of the funds or return the funds with interest if commercial production is not achieved at the expiration of such time. At December 31, 2005, the amount is reflected as a long-term liability of $8.8 million in the accompanying financial statements. The property was developed during 2005 and commenced production in February 2006, at which time we reclassified this liability as a reduction in the basis of our oil and gas properties since our obligation under the agreement has now been fulfilled.

At the time of receipt, we determined the payment was not taxable at that time due to the obligation for substantial future performance. During a recent tax audit of our Dutch subsidiary, the tax authorities have concluded that receipt of the payment was a taxable event at the time of receipt and taxes and interest are currently due on this payment in the amount of approximately €3.4 million ($4.3 million). Accordingly, we have provided for this contingency and recorded a current liability in the amount of the taxes and interest. We recorded a deferred tax asset for this contingency, however we have not recorded a valuation allowance against this deferred tax asset as it resulted from a timing difference on the revenue recognition of the receipt of the payment. We do not agree with the position that has been taken by the Dutch tax authorities and, if necessary, we will defend our position vigorously.

Litigation

We are, in the ordinary course of business, a claimant and/or defendant in various legal proceedings. Management does not believe that the outcome of these legal proceedings, individually, and in the aggregate will have a materially adverse effect on our financial condition, results of operations or cash flows.

Note 11 — Segment Information

The Company’s operations are focused in the Gulf of Mexico and in the U.K. and Dutch sectors of the North Sea. Management reviews and evaluates the operations separately of its Gulf of Mexico segment and its North Sea segment. Each segment is an aggregation of operations subject to similar economic and regulatory conditions such that they are likely to have similar long-term prospects for financial performance. The operations of both segments include natural gas and liquid hydrocarbon production and sales. The Company evaluates the segments based on income (loss) from operations. Segment activity for the three months and nine months ended September 30, 2006 and 2005 is as follows (in thousands):


	Gulf of Mexico		North Sea			Total
For the Three Months Ended –

September 30, 2006:
Revenues	$	102,963	$	29,859		$	132,822
Depreciation, depletion and amortization		41,475		13,551			55,026
Impairment of oil and gas properties		11,760		—			11,760
Income from operations		22,489		8,632			31,121
Additions to oil and gas properties		137,855		82,423			220,278

September 30, 2005:
Revenues	$	26,342	$	—		$	26,342
Depreciation, depletion and amortization		12,252		37			12,289
Income from operations		3,423		(1,996	)		1,427
Additions to oil and gas properties		64,439		61,207			125,646


For the Nine Months Ended –

September 30, 2006:
Revenues	$	228,547	$	58,405		$	286,952
Depreciation, depletion and amortization		87,993		27,552			115,545
Impairment of oil and gas properties		11,760		—			11,760
Income from operations		55,004		15,184			70,188
Total assets		874,947		400,274			1,275,221
Additions to oil and gas properties		308,873		174,525			483,398

September 30, 2005:
Revenues	$	90,475	$	6,335		$	96,810
Depreciation, depletion and amortization		44,370		3,623			47,993
Income from operations		14,931		(2,437	)		12,494
Total assets		521,581		182,426			704,007
Additions to oil and gas properties		169,016		103,587			272,603

Note 12 — Subsequent Event

During the fourth quarter of 2006, the Company expects to receive approximately $7.3 million of Loss of Production Income insurance proceeds related to the impact of the 2005 hurricanes. These amounts have not been recognized in prior periods due to uncertainties as to amount and timing, and therefore will be recognized as income during the period as realized.

ATP OIL & GAS CORPORATION AND SUBSIDIARIES

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

General

ATP Oil & Gas Corporation is engaged in the acquisition, development and production of oil and natural gas properties in the Gulf of Mexico and the North Sea. We seek to acquire and develop properties that are economically attractive to us but are not strategic to major or large exploration-oriented independent oil and gas companies. These properties usually contain proved undeveloped reserves (“PUD”) or reservoirs where previous drilling has encountered hydrocarbons that appear to us to contain commercially productive quantities of oil and gas even though the reservoirs do not meet the SEC definition of proved reserves. Occasionally we will acquire properties that are already producing or where limited low-risk exploration opportunities exist. We believe that our strategy provides assets for us to develop and produce without the risk, cost or time of traditional exploration.

We seek to create value and reduce operating risks through the acquisition and development of properties that have:

•

significant undeveloped reserves and reservoirs;

•

close proximity to developed markets for oil and natural gas;

•

existing infrastructure of oil and natural gas pipelines and production / processing platforms; and

•

relatively stable regulatory environment for offshore oil and natural gas development and production.

Our focus is on acquiring properties that have become non-core or non-strategic to their current owners for a variety of reasons. For example, larger oil companies from time to time adjust their capital spending or shift their focus to exploration prospects which they believe offer greater reserve potential. Some projects provide lower economic returns to a company due to its cost structure within that company. Also, due to timing or budget constraints, a company may be unwilling or unable to develop a property before the expiration of the lease. Because of our cost structure, expertise in our areas of focus and ability to develop projects, the properties may be more financially attractive to us than the seller. Given our strategy of acquiring properties that contain undeveloped reserves and reservoirs, our operations typically are lower risk than exploration-focused Gulf of Mexico and North Sea operators.

We focus on developing projects in the shortest time possible between initial significant investment and first revenue generated in order to maximize our rate of return. Since we operate practically all of the properties in which we acquire a working interest, we are able to significantly influence the development concept and timing of a project’s development. We typically initiate new development projects by simultaneously obtaining the various required components such as the pipeline and the production platform or subsea well completion equipment. We believe this strategy, combined with our strong technical abilities to evaluate and implement a project’s requirements, allows us to efficiently complete the project and commence production.

To enhance the economics and return on investment of a project, we sometimes develop the project to a value creation point and either sell an interest or bring in partners on a promoted basis during the high capital development phase. For example, in 2005 we sold a 15% interest on a promoted basis in our Tors project in the U.K. Sector of the North Sea after the field development plan was obtained.

Source of Revenue

We derive our revenues from the sale of oil and natural gas that is produced from our properties. Revenues are a function of the volume produced and the prevailing market price at the time of sale. The price of oil and natural gas is the primary factor affecting our revenues. To achieve more predictable cash flows and to reduce our exposure to downward price fluctuations, we utilize derivative instruments to hedge future sales prices on a significant portion of our oil and natural gas production. The use of certain types of derivative instruments may prevent us from realizing the full benefit of upward price movements.

Third Quarter 2006 Highlights

Our financial and operating performance for the third quarter of 2006 included the following highlights:

•

Achieved a second consecutive quarter of record production with an average rate of 174.1 MMcfe/d;

•

Recorded quarterly revenue of $132.8 million and net income available to common shareholders of $1.2 million;

•

Added six wells to production during the first nine months of 2006, with nine additional near-term wells scheduled to come online, three in the fourth quarter 2006 and six in the first half 2007;

•

Acquired seven blocks in the Gulf of Mexico in 2006 and executed the contract to build a MinDOC floating production platform, which will service the company’s deepwater properties – Mirage, Morgus, and Telemark.

A more complete overview and discussion of full year expectations can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2005 Annual Report on Form 10-K, as amended.

Results of Operations

Three Months Ended September 30, 2006 Compared to Three Months Ended September 30, 2005

For the three months ended September 30, 2006, we reported net income available to common shareholders of $1.2 million, or $0.04 per basic and diluted share on total revenue of $132.8 million, as compared with a net loss available to common shareholders of $10.6 million, or $0.36 per basic and diluted share, on total revenue of $26.3 million for the three months ended September 30, 2005.

Oil and Natural Gas Revenues. Revenues presented in the table and in the discussion below represent revenues from sales of our oil and natural gas production volumes, and exclude the impact, if any, of hedging ineffectiveness. Production sold under fixed price delivery contracts, which have been designated for the normal purchase and sale exemption under SFAS 133, are also included in these amounts. Approximately 16% and 80% of our natural gas production was sold under these contracts for the three months ended September 30, 2006 and 2005, respectively. Approximately 66% and 63% of our oil production was sold under these contracts for the comparable periods. The realized prices below may differ from the market prices in effect during the periods depending on when the fixed price delivery contract was executed.


	Three Months Ended September 30,						% Change in 2006 from 2005
	2006			2005			% Change in 2006 from 2005
Production:
Natural gas (MMcf)		8,726			2,718		221	%
Oil and condensate (MBbls)		1,215			181		571	%
Total (MMcfe)		16,017			3,807		321	%

Revenues from production (in thousands):
Natural gas	$	60,045		$	18,981		216	%
Effects of cash flow hedges		2,934			(117	)	2,607	%

Total	$	62,979		$	18,864		234	%

Oil and condensate	$	71,056		$	7,463		852	%
Effects of cash flow hedges		(1,140	)		—		—

Total	$	69,916		$	7,463		837	%

Natural gas, oil and condensate	$	131,101		$	26,444		396	%
Effects of cash flow hedges		1,794			(117	)	1,633	%

Total	$	132,895		$	26,327		405	%


Average sales price per unit:
Natural gas (per Mcf)	$	6.88		$	6.98		(1	)%
Effects of cash flow hedges (per Mcf)		0.34			(0.04	)	950	%

Total (per Mcf)	$	7.22		$	6.94		4	%

Oil and condensate (per Bbl)	$	58.46		$	41.16		42	%
Effects of cash flow hedges (per Bbl)		(0.94	)		—		—

Total (per Bbl)	$	57.52		$	41.16		40	%

Natural gas, oil and condensate (per Mcfe)	$	8.19		$	6.95		18	%
Effects of cash flow hedges (per Mcfe)		0.11			(0.03	)	467	%

Total (per Mcfe)	$	8.30		$	6.92		20	%

Revenues from production increased 405% in the third quarter of 2006 compared to the same period in 2005. During the third quarter of 2006, our production increased 321% from the comparative period in 2005 due to significant production from our new developments at L-06 in the Dutch Sector North Sea, Tors in the UK sector North Sea and Mississippi Canyon 711 (Gomez) in the Gulf of Mexico. The comparable revenues were impacted favorably by a 20% increase in our average sales price per unit.

Lease Operating. Lease operating expenses for the third quarter of 2006 increased to $22.8 million ($1.43 per Mcfe) from $4.8 million ($1.26 per Mcfe) in the third quarter of 2005. The increase was primarily attributable to the aforementioned increase in production as well as increases in insurance costs and the expenses attributable to uninsured hurricane repairs. The increase per unit of production was primarily attributable to the increase in insurance and other operating costs and the uninsured hurricane repairs.

Exploration. Exploration expense for the periods included geological and geophysical costs incurred in connection with evaluating oil and gas properties. Additionally, during the third quarter of 2005, exploration expense included approximately $3.1 million related to an exploratory, step-out well at our producing Eugene Island 30/71 complex.

General and Administrative. General and administrative expense increased to $4.6 million for the third quarter of 2006 compared to $3.9 million for the same period of 2005 primarily due to increases in legal, professional and consulting fees, partially offset by the prior year provision for the ATP Employee Volvo Challenge Plan.

Depreciation, Depletion and Amortization. Depreciation, depletion and amortization (“DD&A”) expense increased $42.7 million (348%) during the third quarter of 2006 to $55.0 million from $12.3 million for the same period in 2005. The overall DD&A expense increase was mainly due to increased production from our newly developed properties in 2006. The average DD&A rate was $3.44 per Mcfe in the third quarter of 2006 compared to $3.23 per Mcfe in the same quarter of 2005.

Impairment of oil and gas properties. We recorded an impairment of oil and gas properties for the third quarter of 2006 totaling $11.8 million related to certain producing properties acquired during 2005. This amount represents the excess carrying costs over the discounted present values of the estimated future production from those properties.

Accretion. Accretion expense increased to $2.3 million for the third quarter of 2006 compared to $0.6 million for the same period of 2005 primarily due to the accretion associated with the new abandonment liabilities incurred late in 2005 and early 2006.

Income Taxes. We recorded a tax provision of $5.0 million during the quarter ended September 30, 2006, related to our foreign jurisdictions, based on the expected 2006 effective tax rate of each jurisdiction. The rates were determined based on the projected results of operations for the year, the valuation allowance released and permanent differences affecting the overall tax rate in each foreign jurisdiction. In the U.S., the tax provision recorded on our book income was offset by a release of valuation allowance. In the comparable quarter of 2005 we recorded a tax benefit based on our losses, which was offset by a valuation allowance.

Nine Months Ended September 30, 2006 Compared to Nine Months Ended September 30, 2005

For the nine months ended September 30, 2006, we reported net loss available to common shareholders of $2.3 million, or $0.08 per basic and diluted share on total revenue of $287.0 million as compared with a net loss available to common shareholders of $12.9 million, or $0.44 per share, on total revenue of $96.8 million for the nine months ended September 30, 2005.

Oil and Natural Gas Revenues. Revenues presented in the table and in the discussion below represent revenues from sales of our oil and natural gas production volumes, and exclude the impact, if any, of hedging ineffectiveness. Production sold under fixed price delivery contracts, which have been designated for the normal purchase and sale exemption under SFAS 133, are also included in these amounts. Approximately 22% and 57% of our natural gas production was sold under these contracts for the nine months ended September 30, 2006 and 2005, respectively. Approximately 63% and 59%, respectively, of our oil production was sold under these contracts for the comparable periods. The realized prices below may differ from the market prices in effect during the periods depending on when the fixed price delivery contract was executed.


	Nine Months Ended September 30,					% Change in 2006 from 2005
	2006			2005		% Change in 2006 from 2005
Production:
Natural gas (MMcf)		22,380			11,033	103	%
Oil and condensate (MBbls)		2,181			584	273	%
Total (MMcfe)		35,469			14,537	144	%

Revenues from production (in thousands):
Natural gas	$	160,739		$	72,245	122	%
Effects of cash flow hedges		2,479			40	6,098	%

Total	$	163,218		$	72,285	126	%

Oil and condensate	$	125,793		$	24,337	417	%
Effects of cash flow hedges		(2,014	)		—	—

Total	$	123,779		$	24,337	409	%

Natural gas, oil and condensate	$	286,532		$	96,582	197	%
Effects of cash flow hedges		465			40	1,063	%

Total	$	286,997		$	96,622	197	%


Average sales price per unit:
Natural gas (per Mcf)	$	7.18		$	6.55	10	%
Effects of cash flow hedges (per Mcf)		0.11			—	—

Total (per Mcf)	$	7.29		$	6.55	11	%

Oil and condensate (per Bbl)	$	57.66		$	41.67	38	%
Effects of cash flow hedges (per Bbl)		(0.92	)		—	—

Total (per Bbl)	$	56.74		$	41.67	36	%

Natural gas, oil and condensate (per Mcfe)	$	8.08		$	6.64	22	%
Effects of cash flow hedges (per Mcfe)		0.01			—	—

Total (per Mcfe)	$	8.09		$	6.65	22	%

Revenues from production increased 197% in the nine months ended September 30, 2006 compared to the same period in 2005. During the 2006 period our production increased 144% from the comparative period in 2005 due to significant production from our new developments at L-06 in the Dutch Sector North Sea, Tors in the UK sector North Sea and Mississippi Canyon 711 (Gomez) in the Gulf of Mexico. The comparable revenues were impacted favorably by a 22% increase in our average sales price per unit.

Lease Operating. Lease operating expenses for the nine months ended September 30, 2006 increased to $54.8 million ($1.55 per Mcfe) from $15.4 million ($1.06 per Mcfe) in the same period of 2005. The increase was primarily attributable to the aforementioned increase in production as well as increases in insurance costs and the expenses attributable to repair of uninsured hurricane repairs. The increase per unit of production was primarily attributable to the increase in insurance and other operating costs and the uninsured hurricane repairs.

Exploration. During the nine months ended September 30, 2005, exploration expense includes one exploratory, step-out well at our producing Eugene Island 30/71 complex. This well found non-commercial quantities of hydrocarbons, resulting in exploration and dry hole expense of approximately $5.6 million.

General and Administrative. General and administrative expense increased to $14.5 million for the nine months ended September 30, 2006 compared to $13.2 million for the same period of 2005. The increase was primarily attributable to an increase in professional and consulting fees related to development activity incurred in the nine month period, partially offset by a decrease in compensation expense due to compensation related to the ATP Employee Volvo Challenge Plan which was charged to expense in the first three quarters of 2005 versus only the first quarter in 2006. No significant charges were made under the Plan subsequent to the first quarter of 2006.

Depreciation, Depletion and Amortization. DD&A expense increased $67.5 million (141%) during the nine months ended September 30, 2006 to $115.5 million from $48.0 million for the same period in 2005. The overall DD&A expense increase was mainly due to increased production from our newly developed properties in 2006. The average DD&A rate was $3.26 per Mcfe in the nine months ended September 30, 2006 compared to $3.30 per Mcfe in the comparable period of 2005.

Impairment of oil and gas properties. We recorded an impairment of oil and gas properties for the nine months ended September 30, 2006 totaling $11.8 million related to certain producing properties acquired during 2005. This amount represents the excess carrying costs over the discounted present values of the estimated future production from those properties.

Accretion. Accretion expense increased to $5.5 million for the nine months ended September 30, 2006 compared to $1.8 million for the comparable period of 2005 primarily due to the accretion associated with the new abandonment liabilities incurred late in 2005 and early 2006.

Loss on Abandonment. During the nine months ended September 30, 2006 we recorded a $3.9 million loss on abandonment primarily because we were unexpectedly required to abandon a Gulf of Mexico well with a drilling rig instead of the intended lower cost method originally estimated.

Income Taxes. We recorded a tax provision of $8.3 million during the nine months ended September 30, 2006 related to our foreign jurisdictions, based on the expected 2006 effective tax rate of each jurisdiction. The rates were determined based on the projected results of operations for the year, the valuation allowance released and permanent differences affecting the overall tax rate in each foreign jurisdiction. In the U.S., the tax provision recorded on our book income was offset by a release of valuation allowance. In the comparable period of 2005 we recorded a tax benefit based on our losses, which was offset by a valuation allowance.

Liquidity and Capital Resources

At September 30, 2006, we had working capital of approximately $4.2 million, an increase of approximately $3.7 million from December 31, 2005.

We have financed our acquisition and development activities through a combination of bank borrowings and proceeds from our equity offerings, as well as cash from operations and the sale on a promoted basis of interests in selected properties. We intend to finance our near-term development projects in the Gulf of Mexico and North Sea through available cash flows, remaining proceeds from our preferred stock and debt proceeds and potentially by selling a portion of our interests in the development projects. As operator of all of our projects in development, we have the ability to significantly control the timing of most of our capital expenditures. We believe the cash flows from operating activities combined with our ability to control the timing of substantially all of our future development and acquisition requirements will provide us with the flexibility and liquidity to meet our future planned capital requirements.


Cash Flows	Nine Months Ended
	September 30, 2006		September 30, 2005
Cash provided by (used in):
Operating activities	105,346		61,390
Investing activities	(404,543	)	(285,342	)
Financing activities	294,206		292,305

Cash provided by operating activities during the nine months ended September 30, 2006 and 2005 was $105.3 million and $61.4 million, respectively. Cash flow from operations increased due to higher oil and gas production revenues during the nine months ended September 30, 2006 from the comparable period of 2005. The increase in sales revenue was attributable to higher oil and gas production and higher average oil and gas prices during the nine months ended September 30, 2006. The increase in cash flows as a result of the increased revenues was offset by the higher lease operating expense associated with that production and by the timing of payments and receipts in our payables and receivables.

Cash used in investing activities was $404.5 million and $285.3 million during the nine months ended September 30, 2006 and 2005, respectively. Cash expended in the Gulf of Mexico and North Sea was approximately $257.9 million and $133.0 million in the nine months ended September 30, 2006. Cash expended in the Gulf of Mexico and North Sea was approximately $169.0 million and $103.6 million in the comparable period of 2005.

Cash provided by financing activities was $294.2 million and $292.3 million during the nine months ended September 30, 2006 and 2005, respectively. Such amount for the 2006 period was primarily due to the increase in our Term Loan Facility of $167.4 million (net of issuance costs) and the issuance of 12.5% Series B Cumulative Preferred Stock for $145.5 million (net of issuance costs), partially offset by capital lease and debt payments.

Term Loan

Long-term debt consisted of the following (in thousands):


	September 30, 2006			December 31, 2005
Term loan, net of unamortized discount of $5,137 and $6,386	$	518,551		$	340,989
Less current maturities		(5,250	)		(3,500	)

Total long-term debt	$	513,301		$	337,489

•

increase the secured term loan facility from $350.0 million to $525.0 million;

•

decrease the interest rate margin on any LIBOR loan from 5.50% to 3.25%;

•

decrease the interest rate margin on any base rate loan from 4.50% to 2.25%;

•

increase the limit on Capital Lease Obligations and Synthetic Lease Obligations from $50.0 million to $200.0 million at any time;

•

increase the limit on Unsecured Indebtedness from $30.0 million to $60.0 million at any time;

•

increase the amount of Permitted Business Investments (including Acquisitions) from $75.0 million to the greater of $150.0 million or 7.5% of the PV-10 reserves value in any fiscal year, and permit loans and advances of up to an aggregate $300.0 million at any time to any foreign subsidiary company to fund capital expenditures and other development costs in respect of oil and gas properties in the North Sea;

•

allow for limited repurchases of the Company’s outstanding common stock; and,

•

allow for the payment of cash dividends on outstanding Preferred Stock.

The Restated Credit Agreement contains the following modifications to financial covenants:

•

the Debt to Reserve Amount test (requirement to maintain Net Debt of less than $2.50 per unit of Proved Developed Reserves) has been eliminated.

Commitments and Contingencies

In preparing financial statements at any point in time, management is periodically faced with uncertainties, the outcomes of which are not within its control and will not be known for prolonged periods of time. As discussed in Note 10 to the Consolidated Financial Statements, we are involved in actions from time to time, which if determined adversely, could have a material negative impact on our financial position, results of operations and cash flows. Management, with the assistance of counsel makes estimates, if determinable, of ATP’s probable liabilities and records such amounts in the consolidated financial statements. Such estimates may be the minimum amount of a range of probable loss when no single best estimate is determinable. Disclosure is made, when determinable, of any additional possible amount of loss on these claims, or if such estimate cannot be made, that fact is disclosed. Along with our counsel, we monitor developments related to these legal matters and, when appropriate, we make adjustments to recorded liabilities to reflect current facts and circumstances. Although it is difficult to predict the ultimate outcome of these matters, management is not aware of any amounts that need to be recorded and believes that the recorded amounts, if any, are reasonable.

Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based on consolidated financial statements which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts or assets, liabilities, revenues and expenses. We believe that certain accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Our 2005 Annual Report on Form 10-K, as amended, includes a discussion of our critical accounting policies.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Risk

We are exposed to changes in interest rates. Changes in interest rates affect the interest earned on our cash and cash equivalents and the interest rate paid on borrowings under the Term Loan. See the discussion of our Term Loan in Note 5 to the consolidated financial statements. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes.

Foreign Currency Risk.

The net assets, net earnings and cash flows from our wholly owned subsidiaries in the U.K. and the Netherlands are based on the U.S. dollar equivalent of such amounts measured in the applicable functional currency. These foreign operations have the potential to impact our financial position due to fluctuations in the local currency arising from the process of re-measuring the local currency in U.S. dollars. We have not utilized derivatives or other financial instruments to hedge the risk associated with the movement in foreign currencies relative to the U.S dollar.

Commodity Price Risk

Our revenues, profitability and future growth depend substantially on prevailing prices for oil and gas. Prices also affect the amount of cash flow available for capital expenditures and our ability to borrow and raise additional capital. Lower prices may also reduce the amount of oil and gas that we can economically produce. We currently sell a portion of our oil and gas production under price sensitive or market price contracts. We periodically use derivative instruments to hedge our commodity price risk. We hedge a portion of our projected oil and gas production through a variety of financial and physical arrangements intended to support oil and gas prices at targeted levels and to manage our exposure to price fluctuations. We may use futures contracts, swaps and fixed price physical contracts to hedge our commodity prices. Realized gains and losses from our price risk management activities are recognized in oil and gas sales when the associated production occurs. For derivatives designated as cash flow hedges, the unrecognized gains and losses are included as a component of other comprehensive income (loss) to the extent the hedge is effective. See Note 9 to the Consolidated Financial Statements for additional information. We do not hold or issue derivative instruments for speculative purposes.

Our internal hedging policy provides that we examine the economic effect of entering into a commodity contract with respect to the properties that we acquire. We generally acquire properties at prices that are below the management’s estimated value of the estimated proved reserves at the then current oil and gas prices. We may enter into short-term hedging arrangements if (1) we are able to obtain commodity contracts at prices sufficient to secure an acceptable internal rate of return on a particular property or on a group of properties or (2) if deemed necessary by the terms of our existing credit agreements.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In order to ensure that the information we must disclose in our filings with the Securities and Exchange Commission is recorded, processed, summarized, and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-

15(e), as of September 30, 2006. Based on that evaluation, such officers have concluded that, as of September 30, 2006, our disclosure controls and procedures were effective in timely alerting them to material information relating to us (and our consolidated subsidiaries) required to be included in our periodic SEC filings.

Changes in Internal Control Over Financial Reporting

During the three months ended September 30, 2006, we have made no change to our internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Forward-Looking Statements and Associated Risks

This Quarterly Report contains projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company’s current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected as a result of certain factors. A discussion of these factors is included in the Company’s 2005 Form 10-K, as amended.

PART II. OTHER INFORMATION

Items 1, 1A, 2, 3 & 4 are not applicable and have been omitted.

Item 5. — Other Information

Amendments to Bylaws

On November 1, 2006, the Board of Directors of ATP adopted resolutions to amend Article II, Section 12(a)(2) and Article III, Section 1(c) of the Company’s Bylaws. The first amendment deletes from the Notice of Shareholder Business and Nominations: Annual Meeting of Shareholders bylaw a reference to Rule 14a-11 under the Securities Exchange Act of 1934, which rule was previously repealed by the Securities and Exchange Commission. The second amendment revises the bylaw governing the filling of newly created director positions through an increase in the number of directors to limit such increases to two director positions between successive annual meetings of the Company, as required by applicable law. Previously, Article III, Section 1(c) set no limit on the number of directors who could be appointed to newly created director positions between successive annual meetings of the Company.

A copy of ATP’s complete bylaws, as amended effective November 1, 2006, is attached to this Current Report on Form 10-Q as Exhibit 3.1.

Item 6. Exhibits

Exhibits



3.1		Amended and Restated Bylaws of ATP Oil & Gas Corporation.

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized.


	ATP Oil & Gas Corporation

Date: November 7, 2006	By:	/s/ Albert L. Reese, Jr.
		Albert L. Reese, Jr.
		Chief Financial Officer

EX-3.1 2 dex31.htm AMENDED AND RESTATED BYLAWS Amended and Restated Bylaws

Exhibit 3.1

AMENDMENT TO THE BYLAWS

ATP OIL & GAS CORPORATION

THIS AMENDMENT (this “Amendment”) TO THE BYLAWS OF ATP OIL & GAS CORPORATION, a Texas corporation (the “Corporation”), dated November 1, 2006, was unanimously approved by the Board of Directors of the Company (the “Board”) at a Board meeting occurring on that date, pursuant to the provisions of Article IX of the Bylaws of the Corporation (the “Bylaws”).

W I T N E S S E T H:

WHEREAS, the Board has determined it is advisable and in the best interests of the Corporation and its shareholders to amend certain of its bylaws;

WHEREAS, Article IX of the Bylaws authorizes the Board to amend or repeal the Bylaws;

NOW, THEREFORE, the Board hereby amends the Bylaws in accordance with the provisions set forth below.

A. AMENDMENTS TO THE BYLAWS. THE BYLAWS ARE AMENDED AS FOLLOWS:

(1) Article II, Section 12(a)(2) of the Bylaws is hereby amended to read in its entirety as follows:

“(2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (a)(1) of Section 12 of this Bylaw, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90^th day, nor earlier than the close of business on the 120^th day, prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120^th day prior to such annual meeting and not later than the close of business on the later of the 90^th day prior to such annual meeting or the 10^th day following the day on which public announcement of the

date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class or series and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.”

(2) Article III, Section (1)(c) of the Bylaws is hereby amended to read in its entirety as follows:

“(c) Vacancies in the board of directors resulting from death, resignation, retirement, disqualification or removal from office may be filled by no less than a majority vote of the remaining directors then in office, though less than a quorum, who are designated to represent the same class or classes of shareholders that such vacant position, when filled, is to represent or by the sole remaining director (but not by the shareholders except as required by law), and each director so chosen shall receive the classification of such vacant directorship to which he has been appointed. Any vacancies which result in the number of directors being less than six shall be promptly filled according to the procedures set forth in this paragraph. A directorship to be filled by reason of an increase in the number of directors may be filled by (i) the affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon at an annual or special meeting of shareholders called for that purpose or (ii) the board of directors for a term of office continuing

only until the next election of one or more directors by the shareholders; provided, that the board of directors may not fill more than two such directorships during the period between any two successive annual meetings of shareholders. Any newly created directorship shall receive the classification that at least a majority of the board of directors designates.”

B. MISCELLANEOUS.

(1) This Amendment shall be governed by the laws of the State of Texas.

(2) Except as specifically provided herein, the Bylaws shall remain in full force and effect.

AMENDED AND RESTATED

BYLAWS

ATP OIL & GAS CORPORATION

A TEXAS CORPORATION

TABLE OF CONTENTS


ARTICLE I. REGISTERED OFFICE		1

ARTICLE II. SHAREHOLDERS		1
Section 1.	Place of Meetings	1
Section 2.	Quorum; Required Vote for Shareholder Action; Adjournment of Meetings	1
Section 3.	Annual Meetings	1
Section 4.	Special Meetings	2
Section 5.	Closing Transfer Books; Record Date	2
Section 6.	Notice of Meetings	3
Section 7.	Voting List	3
Section 8.	Proxies	3
Section 9.	Voting; Elections; Inspectors	4
Section 10.	Conduct of Meetings	5
Section 11.	Treasury Shares	5
Section 12.	Notice of Shareholder Business and Nominations	5

ARTICLE III. BOARD OF DIRECTORS		7
Section 1.	Power; Number; Classification; Term of Office; Election Procedures	7
Section 2.	Quorum; Required Vote for Director Action	9
Section 3.	Meetings; Order of Business	9
Section 4.	First Meeting	9
Section 5.	Regular Meetings	9
Section 6.	Special Meetings	9
Section 7.	Compensation	9
Section 8.	Presumption of Assent	9
Section 9.	Approval or Ratification of Acts or Contracts by Shareholders	9

ARTICLE IV. COMMITTEES		10
Section 1.	Designation; Powers	10
Section 2.	Procedure; Meetings; Quorum	10
Section 3.	Substitution of Members	10
Section 4.	Dissolution	10

ARTICLE V. OFFICERS		11
Section 1.	Number, Titles and Term of Office	11
Section 2.	Salaries	11
Section 3.	Removal	11
Section 4.	Vacancies	11
Section 5.	Powers and Duties of the Chief Executive Officer	11
Section 6.	Powers and Duties of the Chairman of the Board	11
Section 7.	Powers and Duties of the President	11


Section 8.	Vice Presidents	12
Section 9.	Treasurer	12
Section 10.	Assistant Treasurers	12
Section 11.	Secretary	12
Section 12.	Assistant Secretaries	12
Section 13.	Action With Respect to Securities of Other Corporations	13

ARTICLE VI. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS		13
Section 1.	Right to Indemnification	13
Section 2.	Advance Payment	13
Section 3.	Indemnification of Employees and Agents	14
Section 4.	Appearance as a Witness	14
Section 5.	Nonexclusivity of Rights	14
Section 6.	Insurance	14
Section 7.	Shareholder Notification	14
Section 8.	Savings Clause	15

ARTICLE VII. CAPITAL STOCK		15
Section 1.	Certificates of Stock	15
Section 2.	Transfer of Shares	15
Section 3.	Ownership of Shares	16
Section 4.	Regulations Regarding Certificates	16
Section 5.	Lost, Stolen, Destroyed or Mutilated Certificates	16

ARTICLE VIII. MISCELLANEOUS PROVISIONS		16
Section 1.	Fiscal Year	16
Section 2.	Corporate Seal	16
Section 3.	Notice and Waiver of Notice	16
Section 4.	Resignations	17
Section 5.	Facsimile Signatures	17
Section 6.	Books and Records	17
Section 7.	Reliance Upon Books, Reports and Records	17
Section 8.	Action Without a Meeting or by Telephone Conference Meeting	17

ARTICLE IX. AMENDMENTS		18

BYLAWS

ATP OIL & GAS CORPORATION

A TEXAS CORPORATION

ARTICLE I.

REGISTERED OFFICE

The registered office of the Corporation required by the Texas Business Corporation Act to be maintained in the State of Texas shall be the registered office named in the original Articles of Incorporation of the Corporation or such other office (which need not be a place of business of the Corporation) as may be designated from time to time by the Board of Directors in the manner provided by law.

ARTICLE II.

SHAREHOLDERS

Section 1. Place of Meetings. All meetings of the shareholders shall be held at the principal place of business of the Corporation or at such other place within or without the State of Texas as shall be specified or fixed in the notices or waivers of notice thereof.

Section 2. Quorum; Required Vote for Shareholder Action; Adjournment of Meetings. Unless otherwise required by law or provided in the Articles of Incorporation or these bylaws, the holders of issued and outstanding shares representing a majority of the votes entitled to be cast thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of shareholders for the transaction of business, and the act of a majority of the voting power of such stock so represented at any meeting of shareholders at which a quorum is present shall constitute the act of the meeting of shareholders.

Notwithstanding the other provisions of the Articles of Incorporation or these bylaws, the chairman of the meeting or the holders of a majority of the voting power of the issued and outstanding stock present in person or represented by proxy at any meeting of shareholders, whether or not a quorum is present, shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting. At such adjourned meeting any business may be transacted that might have been transacted at the meeting as originally called.

Section 3. Annual Meetings. An annual meeting of the shareholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, within or without the State of

Texas, on such date and at such time as the Board of Directors shall fix and set forth in the notice of the meeting, which date shall be within 13 months subsequent to the date of incorporation or the last annual meeting of shareholders, whichever most recently occurred.

Section 4. Special Meetings. Unless otherwise provided in the Articles of Incorporation, special meetings of the shareholders for any proper purpose or purposes may be called at any time by (a) the Chairman of the Board (if any), the President, the Board of Directors, or such other person or persons as may be authorized in the Articles of Incorporation or (b) unless the Articles of Incorporation provide otherwise, the holders of issued and outstanding shares representing at least ten percent of all the votes entitled to be cast at the proposed special meeting.

If not otherwise stated in or fixed in accordance with the remaining provisions hereof, the record date for determining shareholders entitled to call a special meeting is the date any shareholder first signs the notice of that meeting.

Only business within the purpose or purposes described in the notice (or waiver thereof) required by these bylaws may be conducted at a special meeting of the shareholders.

Section 5. Closing Transfer Books; Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or share dividend, or in order to make a determination of shareholders for any other purpose, the Board of Directors of the Corporation may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, 60 days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting.

In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than 60 days and, in the case of a meeting of shareholders, not less than ten days, prior to the date on which the particular action requiring such determination of shareholders is to be taken.

If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive a distribution (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such distribution or share dividend is adopted, as the case may be, shall be the record date for such determination of shareholders.

When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided herein, such determination shall also apply to any adjournment thereof except where the determination has been made through the closing of stock transfer books and the stated period of closing has expired.

Section 6. Notice of Meetings. Written or printed notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than 60 days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary or the officer or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, any such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid.

Any notice required to be given to any shareholder, under any provision of the Texas Business Corporation Act or the Articles of Incorporation or these bylaws need not be given to the shareholder if (a) notice of two consecutive annual meetings and all notices of meetings held during the period between those annual meetings, if any, or (b) all (but in no event less than two) payments of distributions or interest on securities during a 12-month period have been mailed to that person by first-class mail, addressed to him at his address as shown on the records of the Corporation, and have been returned undeliverable. Any action or meeting taken or held without notice to such person shall have the same force and effect as if the notice had been duly given and, if the action taken by the Corporation is reflected in any articles or document filed with the Secretary of State, those articles or that document may state that notice was duly given to all persons to whom notice was required to be given. If such a person delivers to the Corporation written notice setting forth his then current address, the requirement that notice be given to that person shall be reinstated.

Section 7. Voting List. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make, at least ten days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten days prior to such meeting, shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original stock transfer books shall be prima-facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting.

Section 8. Proxies. A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. Proxies for use at any meeting of shareholders or in connection with the taking of any action by written consent shall be filed with the Secretary, or such other officer as the Board of Directors may from time to time determine by resolution, before or at the time of the meeting or execution of the written consent, as the case may be. All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the secretary of the meeting who shall decide all questions touching upon the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions.

No proxy shall be valid after 11 months from the date of its execution unless otherwise provided in the proxy. A proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. Proxies coupled with an interest shall include the appointment as proxy of any of the persons set forth in the Texas Business Corporation Act, including without limitation:

(a) a pledgee;

(b) a person who purchased or agreed to purchase, or owns or holds an option to purchase, the shares;

(d) an employee of the Corporation whose employment contract requires the appointment; or

(e) a party to a voting agreement executed under Section B, Article 2.30 of the Texas Business Corporation Act.

Should a proxy designate two or more persons to act as proxies, unless such instrument shall provide to the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, the Corporation shall not be required to recognize such proxy with respect to such issue if such proxy does not specify how the shares that are the subject of such proxy are to be voted with respect to such issue.

Section 9. Voting; Elections; Inspectors. Unless otherwise required by law or provided in the Articles of Incorporation, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders.

All voting, except as required by the Articles of Incorporation or where otherwise required by law, may be by a voice vote; provided, however, that a vote by ballot shall be taken upon demand therefor by shareholders holding issued and outstanding shares representing a majority of the voting power present in person or by proxy at any meeting. Every vote by ballot shall be taken by written ballots, each of which shall state the name of the shareholder or proxy voting and such other information as may be required under the procedure established for the meeting.

At any meeting at which a vote is taken by ballots, the chairman of the meeting may appoint one or more inspectors, each of whom shall subscribe an oath or affirmation to execute faithfully the duties of inspector at such meeting with strict impartiality and according to the best of his ability. Such inspector shall receive the ballots, count the votes and make and sign a certificate of the result thereof. The chairman of the meeting may appoint any person to serve as inspector, except no candidate for the office of director shall be appointed as an inspector.

At each election of directors each shareholder entitled to vote thereat shall, unless otherwise provided by law or by the Articles of Incorporation, have the right to vote the number of shares owned by him for as many persons as there are to be elected and for whose election he has a right to vote. Unless expressly prohibited by the Articles of Incorporation, a shareholder shall have the right to cumulate his votes by giving one candidate as many votes as the number of such directors multiplied by his shares shall equal, or by distributing such votes on the same principle among any number of such candidates. Any shareholder who intends to cumulate his votes shall give written notice of such intention to the Secretary of the Corporation on or before the day preceding the election at which such shareholder intends to cumulate his votes. Any shareholder may cumulate his votes if such shareholder or any other shareholder gives the written notice provided for herein.

Section 10. Conduct of Meetings. All meetings of the shareholders shall be presided over by the chairman of the meeting, who shall be the Chairman of the Board (if any), or if he is not present, the President, or if neither the Chairman of the Board (if any) nor President is present, a chairman elected at the meeting. The Secretary of the Corporation, if present, shall act as secretary of such meetings, or if he is not present, an Assistant Secretary (if any) shall so act; if neither the Secretary nor an Assistant Secretary (if any) is present, then a secretary shall be appointed by the chairman of the meeting. The chairman of any meeting of shareholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him in order.

Section 11. Treasury Shares. Neither the Corporation nor any other person shall vote, directly or indirectly, at any meeting, shares of the Corporation’s own stock owned by the Corporation, shares of the Corporation’s own stock owned by another corporation the majority of the voting stock of which is owned or controlled by the Corporation, and shares of the Corporation’s own stock held by the Corporation in a fiduciary capacity; and such shares shall not be counted in determining the total number of outstanding shares at any given time.

Section 12. Notice of Shareholder Business and Nominations

(a) Annual Meetings of Shareholders. (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at such meeting and who complies with the notice procedures set forth in this Bylaw.

(2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (a)(1) of Section 12 of this Bylaw, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30

days before or more than 60 days after such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class or series and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.

(3) Notwithstanding anything in the second sentence of paragraph (a)(2) of Section 12 of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement of the increased Board is first made by the Corporation.

(b) Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Bylaw, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Bylaw. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the Board of Directors, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the shareholder’s notice required by paragraph (a)(2) of this Bylaw shall be delivered to the Secretary

at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.

(c) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Bylaw shall be eligible to serve as directors, and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, the chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in compliance with this Bylaw, to declare that such defective proposal or nomination shall be disregarded.

(2) For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(3) Notwithstanding the foregoing provisions of this Bylaw, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights (a) of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) of the holders of any series of Preferred Stock to elect directors under specified circumstances.

ARTICLE III.

BOARD OF DIRECTORS

Section 1. Power; Number; Classification; Term of Office; Election Procedures. The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and shareholders:

The number, classification, and terms of the board of directors of the Corporation and the procedures to elect directors, to remove directors, and to fill vacancies in the board of directors shall be as follows:

(a) Unless otherwise provided in the Articles of Incorporation, the number of directors that shall constitute the whole board of directors shall from time to time be fixed exclusively by the board of directors by a resolution adopted by a majority of the whole board of directors serving at the time of that vote. Except in the event of a vacancy contemplated by

Section 1(c) of this Article III, in no event shall the number of directors that constitute the whole board of directors be fewer than six. No decrease in the number of directors shall have the effect of shortening the term of any incumbent director. Directors of the Corporation need not be elected by written ballot unless the by-laws of the Corporation otherwise provide. Unless otherwise provided in the Articles of Incorporation, directors need not be shareholders of the Corporation or residents of the State of Texas.

(b) The board of directors of the Corporation shall be divided into three classes designated Class I, Class II, and Class III, respectively, all as nearly equal in number as possible, with each director then in office receiving the classification that at least a majority of the board of directors designates. The initial term of office of directors of Class I shall expire at the annual meeting of shareholders of the Corporation in 2001, of Class II shall expire at the annual meeting of shareholders of the Corporation in 2002, and of Class III shall expire at the annual meeting of shareholders of the Corporation in 2003, and in all cases as to each director until his successor is elected and qualified or until his earlier death, resignation or removal. At each annual meeting of shareholders beginning with the annual meeting of shareholders in 2001, each director elected to succeed a director whose term is then expiring shall hold his office until the third annual meeting of shareholders after his election and until his successor is elected and qualified or until his earlier death, resignation or removal. If the number of directors that constitutes the whole board of directors is changed as permitted by this Article Three, the majority of the whole board of directors that adopts the change shall also fix and determine the number of directors comprising each class; provided, however, that any increase or decrease in the number of directors shall be apportioned among the classes as equally as possible.

(c) Vacancies in the board of directors resulting from death, resignation, retirement, disqualification, removal from office, or other cause and newly-created directorships resulting from any increase in the authorized number of directors may be filled by no less than a majority vote of the remaining directors then in office, though less than a quorum, who are designated to represent the same class or classes of shareholders that the vacant position, when filled, is to represent or by the sole remaining director (but not by the shareholders except as required by law), and each director so chosen shall receive the classification of the vacant directorship to which he has been appointed or, if it is a newly-created directorship, shall receive the classification that at least a majority of the board of directors designates and shall hold office until the first meeting of shareholders held after his election for the purpose of electing directors of that classification and until his successor is elected and qualified or until his earlier death, resignation, or removal from office. Any such vacancies which result in the number of directors being less than six shall be promptly filled according to the procedures set forth in this paragraph.

(d) A director of any class of directors of the Corporation may be removed before the expiration date of that director’s term of office, only for cause, by an affirmative vote of the holders of not less than a majority of the votes of the outstanding shares of the class or classes or series of stock then entitled to be voted at an election of directors of that class or series, voting together as a single class, cast at the annual meeting of shareholders or at any special meeting of shareholders called by a majority of the whole board of directors for this purpose.

Section 2. Quorum; Required Vote for Director Action. Unless otherwise required by law or provided in the Articles of Incorporation or these bylaws, a majority of the total number of directors shall constitute a quorum for the transaction of business of the Board of Directors, and the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

Section 3. Meetings; Order of Business. Meetings of the Board of Directors may be held at such place or places as shall be determined from time to time by resolution of the Board of Directors. At all meetings of the Board of Directors business shall be transacted in such order as shall from time to time be determined by the Chairman of the Board (if any), or in his absence by the President (if the President is director), or by resolution of the Board of Directors.

Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business an the ground that the meeting is not lawfully called or convened.

Section 4. First Meeting. In connection with any annual meeting of shareholders at which directors were elected, the Board of Directors may, if a quorum is present, hold its first meeting for the transaction of business immediately after and at the same place as such annual meeting of the shareholders. Notice of such meeting at such time and place shall not be required.

Section 5. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places as shall be designated from time to time by resolution of the Board of Directors. Notice of such regular meetings shall not be required.

Section 6. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board (if any), the President or, on the written request of any one director, by the Secretary, in each case on at least 24 hours personal, written, telegraphic, cable or wireless notice to each director. Such notice, or any waiver thereof pursuant to Article VIII, Section 3 hereof, need not state the purpose or purposes of such meeting, except as may otherwise be required by law or provided for by the Articles of Incorporation or these bylaws.

Section 7. Compensation. Unless restricted by the Articles of Incorporation, the Board of Directors shall have the authority to fix the compensation, if any, of directors.

Section 8. Presumption of Assent. A director who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

Section 9. Approval or Ratification of Acts or Contracts by Shareholders. The Board of Directors in its discretion may submit any act or contract for approval or ratification at any annual meeting of the shareholders, or at any special meeting of the shareholders called for the purpose of considering any such act or contract, and any act or contract that shall be approved or be ratified by the vote of the shareholders holding a majority of the issued and outstanding shares

of stock of the Corporation entitled to vote and present in person or by proxy at such meeting (provided that a quorum is present), shall be as valid and as binding upon the Corporation and upon all the shareholders as if it shall have been approved or ratified by every shareholder of the Corporation.

ARTICLE IV.

COMMITTEES

Section 1. Designation; Powers. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members one or more committees, each of which, to the extent provided in such resolution, shall have and may exercise all of the authority of the Board of Directors, except that no such committee shall have the authority of the Board of Directors in reference to amending the Articles of Incorporation, approving a plan of merger or consolidation, recommending to the shareholders the sale, lease, or exchange of all or substantially all of the property and assets of the Corporation otherwise than in the usual and regular course of its business, recommending to the shareholders a voluntary dissolution of the Corporation or a revocation thereof, amending, altering, or repealing these bylaws or adopting new bylaws for the Corporation, filling vacancies in the Board of Directors or any such committee, filling any directorship to be filled by reason of an increase in the number of directors, electing or removing officers of the Corporation or members of any such committee, fixing the compensation of any member of such committee, or altering or repealing any resolution of the Board of Directors that by its terms provides that it shall not be so amendable or repealable in such manner; and, unless such resolution or the Articles of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of shares of the Corporation.

Section 2. Procedure; Meetings; Quorum. Any committee designated pursuant to Section 1 of this Article shall choose its own chairman and secretary, shall keep regular minutes of its proceedings and report the same to the Board of Directors when requested, shall fix its own rules or procedures, and shall meet at such times and at such place or places as may be provided by such rules, or by resolution of such committee or of the Board of Directors. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum, and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution.

Section 3. Substitution of Members. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee.

Section 4. Dissolution. The Board of Directors may dissolve any committee at any time, unless otherwise provided in the Articles of Incorporation or these bylaws.

ARTICLE V.

OFFICERS

Section 1. Number, Titles and Term of Office. The officers of the Corporation shall be a President and a Secretary and such other officers as the Board of Directors may from time to elect or appoint, including, without limitation, a chairman of the Board, one or more Vice Presidents (any one or more of whom may be designated Executive Vice President or Senior Vice President), a Treasurer, one or more Assistant Treasurers and one or more Assistant Secretaries. Each officer shall hold office until his successor shall be duly elected and shall qualify or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Any number of offices may be held by the same person. Except for the Chairman of the Board, if any, no officer need be a director.

Section 2. Salaries. The salaries or other compensation, if any, of the officers and agents of the Corporation shall be fixed from time to time by the Board of Directors.

Section 3. Removal. Any officer or agent or member of a committee elected or appointed by the Board of Directors may be removed, either with or without cause, by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent or member of a committee shall not of itself create contract rights.

Section 4. Vacancies. Any vacancy occurring in any office of the Corporation may be filled by the Board of Directors.

Section 5. Powers and Duties of the Chief Executive Officer. The President shall be the chief executive officer of the Corporation unless the Board of Directors designates the Chairman of the Board (if any) or other officer as chief executive officer. Subject to the control of the Board of Directors, the chief executive officer shall have general executive charge, management and control of the properties, business and operations of the Corporation with all such powers as may be reasonably incident to such responsibilities; he may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation and may sign all certificates for shares of capital stock of the Corporation; and he shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him by the Board of Directors.

Section 6. Powers and Duties of the Chairman of the Board. The chairman of the Board (if any) shall preside at all meetings of the shareholders and of the Board of Directors; and the Chairman shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the Board of Directors.

Section 7. Powers and Duties of the President. Unless the Board of Directors otherwise determines, the President shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation; and, unless the Board of Directors otherwise determines, he shall, in the absence of the Chairman of

the Board or if there be no Chairman of the Board, preside at all meetings of the shareholders and (should he be a director) of the Board of Directors; and the President shall have such other powers and duties as designated in accordance with these bylaws and as from time to time may be assigned to him by the Board of Directors.

Section 8. Vice Presidents. The Vice President(s), if any, shall perform such duties and have such powers as the Board of Directors may from time to time prescribe. In addition, in the absence of the Chairman of the Board (if any) or President, or in the event of their inability or refusal to act, (i) a Vice President designated by the Board of Directors or (ii) in the absence of such designation, the Vice President who is present and who is senior in terms of time as a Vice President of the Corporation, shall perform the duties of the Chairman of the Board (if any), or the President, as the case may be, and when so acting shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board (if any), or the President; provided that he shall not preside at meetings of the Board of Directors unless he is a director.

Section 9. Treasurer. The Treasurer, if any, shall have responsibility for the custody and control of all the funds and securities of the Corporation, and he shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the Board of Directors. He shall perform all acts incident to the position of Treasurer subject to the control of the chief executive officer and the Board of Directors; and the Treasurer shall, if required by the Board of Directors, give such bond for the faithful discharge of his duties in such form as the Board of Directors may require.

Section 10. Assistant Treasurers. Each Assistant Treasurer, if any, shall have the usual powers and duties pertaining to his office, together with such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the chief executive officer or the Board of Directors or the Treasurer. The Assistant Treasurers shall exercise the powers of the Treasurer during that officer’s absence or inability or refusal to act.

Section 11. Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors, and the minutes of all meetings of the shareholders, in books provide d for that purpose; he shall attend to the giving and serving of all notices; he may in the name of the Corporation affix the seal (if any) of the Corporation to all contracts of the Corporation and attest thereto; he may sign with the other appointed officers all certificates for shares of capital stock of the Corporation; he shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct, all of which shall at all reasonable times be open to inspection of any director upon application at the office of the Corporation during business hours; he shall have such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the chief executive officer or the Board of Directors; and he shall in general perform all duties incident to the office of Secretary, subject to the control of the chief executive officer and the Board of Directors.

Section 12. Assistant Secretaries. Each Assistant Secretary, if any, shall have the usual powers and duties pertaining to his office, together with such other powers and duties as designated in these bylaws and as from time to time may be assigned to him by the chief

executive officer or the Board of Directors or the Secretary. The Assistant Secretaries shall exercise the powers of the Secretary during that officer’s absence or inability or refusal to act.

Section 13. Action With Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, each of the chief executive officer and the Treasurer (if any), or either of them, shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of shareholders of or with respect to any action of shareholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.

ARTICLE VI.

INDEMNIFICATION OF DIRECTORS,

OFFICERS, EMPLOYEES AND AGENTS

Section 1. Right to Indemnification. Subject to the limitations and conditions as provided in this Article VI, each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative arbitrative or investigative (hereinafter a “proceeding”), or any appeal in such a proceeding or any inquiry or investigation that could lead to such a proceeding, by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise shall be indemnified by the Corporation to the fullest extent permitted by the Texas Business Corporation Act, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment) against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including, without limitation, attorneys’ fees) actually incurred by such person in connection with such proceeding, and indemnification under this Article VI shall continue as to a person who has ceased to serve in the capacity which initially entitled such person to indemnity hereunder. The rights granted pursuant to this Article VI shall be deemed contract rights, and no amendment, modification or repeal of this Article VI shall have the effect of limiting or denying any such rights with respect to actions taken or proceedings arising prior to any such amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Article VI could involve indemnification for negligence or under theories of strict liability.

Section 2. Advance Payment. The right to indemnification conferred in this Article VI shall include the right to be paid or reimbursed by the Corporation the reasonable expenses incurred by a person of the type entitled to be indemnified under Section 1 who was, is or is threatened to be made a named defendant or respondent in a proceeding in advance of the final disposition of the proceeding and without any determination as to the person’s ultimate

entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such person in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of a written affirmation by such director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification under this Article VI and a written undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such indemnified person is not entitled to be indemnified under this Article VI or otherwise.

Section 3. Indemnification of Employees and Agents. The Corporation, by adoption of a resolution of the Board of Directors, may indemnify and advance expenses to an employee, or agent of the Corporation to the same extent and subject to the same conditions under which it may indemnify and advance expenses to directors and officers under this Article VI; and, the Corporation may indemnify and advance expenses to persons who are not or were not directors, officers, employees or agents of the Corporation but who are or were serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a person to the same extent that it may indemnify and advance expenses to directors under this Article VI.

Section 4. Appearance as a Witness. Notwithstanding any other provision of this Article VI, the Corporation may pay or reimburse expenses incurred by a director or officer in connection with his or her appearance as a witness or other participation in a proceeding at a time when he or she is not a named defendant or respondent in the proceeding.

Section 5. Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this Article VI shall not be exclusive of any other right which a director or officer or other person indemnified pursuant to Section 3 of this Article VI may have or hereafter acquire under any law (common or statutory), provision of the Articles of Incorporation of the Corporation or these bylaws, agreement, vote of shareholders or disinterested directors or otherwise.

Section 6. Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any person who is or was serving as a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, proprietorship, employee benefit plan, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under this Article VI.

Section 7. Shareholder Notification. To the extent required by law, any indemnification of or advance of expenses to a director or officer in accordance with this Article VI shall be reported in writing to the shareholders with or before the notice or waiver of notice of the next shareholders’ meeting or with or before the next submission to shareholders of a consent

to action without a meeting and, in any case, within the 12-month period immediately following the date of the indemnification or advance.

Section 8. Savings Clause. If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and hold harmless each director, officer or any other person indemnified pursuant to this Article VI as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article VI. that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE VII.

CAPITAL STOCK

Section 1. Certificates of Stock. The certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with that required by law and the Articles of Incorporation, as shall be approved by the Board of Directors. The Chairman of the Board (if any), President or a Vice President (if any) shall cause to be issued to each shareholder one or more certificates, which shall be signed by the Chairman of the Board (if any), President or a Vice President (if any) and the Secretary or an Assistant Secretary (if any) or the Treasurer or an Assistant Treasurer (if any) certifying the number of shares (and, if the stock of the Corporation shall be divided into classes or series, the class and series of such shares) owned by such shareholder in the Corporation; provided, however, that any of or all the signatures on the certificate may be facsimile. If the Board of Directors shall have provided for a seal, such certificates shall bear such seal or a facsimile thereof. The stock record books and the blank stock certificate books shall be kept by the Secretary, or at the office of such transfer agent or transfer agents as the Board of Directors may from time to time by resolution determine. In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature or signatures shall have been placed upon any such certificate or certificates shall have ceased to be such officer, transfer agent or registrar before such certificate is issued by the Corporation, such certificate may nevertheless be issued by the Corporation with the same affect as if such person were such officer, transfer agent or registrar at the date of issue. The stock certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder’s name and number of shares.

Each certificate shall conspicuously bear any legend required pursuant to Article 2.19 or Article 2.22 of the Texas Business Corporation Act, as well as any other legend required by law.

Section 2. Transfer of Shares. The shares of stock of the Corporation, shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives, upon surrender and cancellation of certificates for a like number of shares (or upon compliance with the provisions of Section 5 of this Article VII, if applicable). Upon such surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession,

assignment or authority to transfer (or upon compliance with the provisions of Section 5 of this Article VII, if applicable) and of compliance with any transfer restrictions applicable thereto contained in an agreement to which the Corporation is a party or of which the Corporation has knowledge by reason of legend with respect thereto placed an any such surrendered stock certificate, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 3. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share or shares of capital stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

Section 4. Regulations Regarding Certificates. The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of capital stock of the Corporation.

Section 5. Lost, Stolen, Destroyed or Mutilated Certificates. The Board of Directors may determine the conditions upon which a new certificate of stock may be issued in place of a certificate that is alleged to have been lost, stolen, destroyed or mutilated; and may, in its discretion, require the owner of such certificate or his legal representative to give bond, with sufficient surety, to indemnify the Corporation and each transfer agent and registrar against any and all losses or claims which may arise by reason of the issuance of a new certificate in the place of the one so lost, stolen, destroyed or mutilated.

ARTICLE VIII.

MISCELLANEOUS PROVISIONS

Section 1. Fiscal Year. The fiscal year of the Corporation shall be such as established from time to time by the Board of Directors.

Section 2. Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation. The Secretary shall have charge of the seal (if any). If and when so directed by the Board of Directors, duplicates of the seal may be kept and used by the Treasurer, if any, or by any Assistant Secretary or Assistant Treasurer.

Section 3. Notice and Waiver of Notice. Whenever any notice is required to be given by law, the Articles of Incorporation or these bylaws, except with respect to notices of meetings of shareholders (with respect to which the provisions of Article II, Section 6 apply) and except with respect to notices of special meetings of directors (with respect to which the provisions of Article VIII, Section 6 apply), said notice shall be deemed to be sufficient if given (a) by telegraphic, cable or wireless transmission or (b) by deposit of same in a post office box in a sealed prepaid wrapper addressed to the person entitled thereto at his address as it appears on the

records of the Corporation, and such notice shall be deemed to have been given on the day of such transmission or mailing, as the case may be.

Whenever notice is required to be given by law, the Articles of Incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice.

Section 4. Resignations. Any director, member of a committee or officer may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the chief executive officer or secretary. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

Section 5. Facsimile Signatures. In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors.

Section 6. Books and Records. The Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders and Board of Directors and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each. Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time.

Section 7. Reliance Upon Books, Reports and Records. Neither a director nor a member of any committee of directors shall be liable if, in the exercise of ordinary care, he relied and acted in good faith (a) upon financial statements or other information of the Corporation represented to him to be correct in all material respects by the President or by the officer of the Corporation having charge of its books of account, or reported by an independent public or certified public accountant or firm of such accountants to present fairly the financial position of the Corporation, or (b) upon the written opinion of an attorney for the Corporation; nor shall he be so liable if, in the exercise of ordinary care and in good faith, in voting for or assenting to a distribution by the Corporation, he considered the assets of the Corporation to be of their book value.

Section 8. Action Without a Meeting or by Telephone Conference Meeting. Any action permitted or required by law, the Articles of Incorporation or these bylaws, to be taken at a meeting of the shareholders, the Board of Directors or any committee designated by the Board of Directors may be taken without a meeting if a consent in writing, setting forth the action to be taken is signed by all the shareholders or members of the Board of Directors or committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote at a meeting and may be stated as such in any document or instrument filed with the Secretary of State, and the execution of such consent shall constitute attendance or presence in person at a meeting of shareholders, the Board of Directors or any such committee, as the case may be. Subject to the requirements by law, the Articles of Incorporation or these bylaws for notice of

meetings, unless otherwise restricted by the Articles of Incorporation, members of the Board of Directors, or members of any committee designated by the Board of Directors, may participate in and hold a meeting of such Board of Directors or any committee of directors, as the case may be, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

ARTICLE IX.

AMENDMENTS

The Board of Directors may amend or repeal the Corporation’s bylaws, or adopt new bylaws, unless: (a) the Articles of Incorporation or the Texas Business Corporation Act reserves the power exclusively to the shareholders in whole or part; or (b) the shareholders, in amending, repealing or adopting particular bylaw, expressly provide that the Board of Directors may not amend or repeal that bylaw.

Unless the Articles of Incorporation or a bylaw adopted by the shareholders provides otherwise as to all or some portion of the Corporation’s bylaws, the Corporation’s shareholders may amend, repeal or adopt the Corporation’s bylaws even though the bylaws may also be amended, repealed or adopted by the Board of Directors.

EX-31.1 3 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

EXHIBIT 31.1

ATP OIL & GAS CORPORATION

Section 302 Certification of Principal Executive Officer

I, T. Paul Bulmahn, Chief Executive Officer and President (Principal Executive Officer) certify that:

1.	I have reviewed this Form 10-Q for the quarterly period ended September 30, 2006 of ATP Oil & Gas Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	November 7, 2006	/s/ T. Paul Bulmahn
		T. Paul Bulmahn Chairman and President

EX-31.2 4 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

EXHIBIT 31.2

ATP OIL & GAS CORPORATION

Section 302 Certification of Principal Financial Officer

I, Albert L. Reese, Jr., Chief Financial Officer (Principal Financial Officer) certify that:

1.	I have reviewed this Form 10-Q for the quarterly period ended September 30, 2006 of ATP Oil & Gas Corporation;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date:	November 7, 2006	/s/ Albert L. Reese, Jr.
		Albert L. Reese, Jr. Chief Financial Officer

EX-32.1 5 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, T. Paul Bulmahn, Chairman and Chief Executive Officer of ATP Oil & Gas Corporation (the “Company”), do hereby certify that the Quarterly Report on Form 10-Q (the “Report”) for the quarterly period ended September 30, 2006, filed with the Securities Exchange Commission on the date hereof:

fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly represents, in all material respects, the financial condition and the results of operations of the Company.

EX-32.2 6 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Albert L. Reese, Jr., Chief Financial Officer of ATP Oil & Gas Corporation (the “Company”), do hereby certify that the Quarterly Report on Form 10-Q (the “Report”) for the quarterly period ended September 30, 2006, filed with the Securities Exchange Commission on the date hereof:

fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly represents, in all material respects, the financial condition and the results of operations of the Company.

-----END PRIVACY-ENHANCED MESSAGE-----

Date: November 7, 2006

/s/ T. Paul Bulmahn

T. Paul Bulmahn

Chairman and President