ATP Oil & Gas Corporation Announces Record Production and Second Quarter 2006 Results

Business Wire, August 3, 2006

HOUSTON -- ATP Oil & Gas Corporation (NASDAQ:ATPG) today announced an operations update and second quarter 2006 results:

--Achieved record quarterly production of 13.5 Bcfe, an increase of 128% over first quarter 2006 production of 5.9 Bcfe;

--Recorded quarterly revenue of $108.9 million and net income available to common shareholders of $6.4 million;

--Improved the financial strength of our Term Loan by reducing the interest rate from LIBOR plus 5.50% to LIBOR plus 3.25% and increasing the size from $350.0 million to $525.0 million;

--Added new production in the second quarter from Tors and South Marsh Island 166, bringing to five the number of wells placed on production in the first half of 2006;

--Acquired four deepwater properties -- Mirage, Morgus, Oasis, and Telemark -- bringing to five the number of deepwater blocks acquired in 2006; and

--Finalizing completion of the third well at Mississippi Canyon 711 - well tie-in early 2007

Results of Operations

Oil and natural gas revenues were $108.9 million from production of 13.5 Bcfe for the second quarter of 2006. Comparable amounts in the second quarter of 2005 for oil and natural gas revenues were $33.5 million from production of 5.0 Bcfe. Improvements in the prices of hedged volumes and overall higher commodity prices in the second quarter of 2006 resulted in a 20% increase in average realized prices to $8.05 per Mcfe, compared to $6.73 per Mcfe in the same period in 2005.

Lease operating expenses (LOE) for the second quarter totaled $21.3 million or $1.57 per Mcfe compared to $6.0 million or $1.21 per Mcfe for the second quarter of 2005. The increase was primarily attributable to the aforementioned increase in production. Included in second quarter LOE was uninsured hurricane repairs performed on our oil and gas properties in the Gulf of Mexico. LOE in the Gulf of Mexico was $1.65 per Mcfe, of which approximately 19% was associated with properties that did not contribute to production for the period. For those properties with production, LOE in the Gulf of Mexico amounted to $1.35 per Mcfe. LOE in the North Sea was $1.35 per Mcfe for the second quarter.

General and administrative expenses (G&A) totaled $4.1 million for the second quarter, compared to $5.2 million for the second quarter of 2005. The decrease was primarily due to compensation related to the ATP Employee Volvo Challenge Plan which was charged to expense in 2005. The plan was satisfied in the first quarter of 2006 and no such provision was necessary in the second quarter of 2006.

Depreciation, depletion, and amortization (DD&A) per Mcfe was $3.20 for the second quarter, slightly above $3.07 for the second quarter 2005.

ATP recorded a tax provision during the second quarter, 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 that had previously been recorded at each jurisdiction and any permanent differences affecting the overall tax rate.

ATP recorded net income available to common shareholders of $6.4 million or $0.21 per basic and diluted share in the second quarter, compared to net loss available to common shareholders in the second quarter 2005 of $3.3 million or $0.11 per basic and diluted share.

The Company's selected operating statistics and financial information, included within this press release, contain additional information on our activities for the second quarter 2006 and the comparable period in 2005.

Three Months Ended  Six Months Ended
                                       June 30,           June 30,
                                   ----------------   ----------------
                                     2006     2005      2006     2005
                                   ----------------   ----------------
Selected Operating Statistics

Production
 Natural gas (MMcf)                   8,621   3,721    13,654   8,315
 Oil and condensate (MBbls)             816     205       966     403
 Natural gas equivalents (MMcfe)     13,518   4,951    19,452  10,730
  Gulf of Mexico (GOM, in MMcfe)      9,989   4,580    15,315   9,818
  North Sea (MMcfe)                   3,529     371     4,137     912

Average Prices (includes effect of
 cash flow hedges)
  Natural gas (per Mcf)            $   7.06 $  6.55  $   7.28 $  6.41
   Natural gas (per Mcf) - GOM         7.48    6.74      7.44    6.36
   Natural gas (per Mcf) - N. Sea      6.44    5.47      6.89    6.95
  Oil and condensate (per Bbl) - GOM  58.83   43.57     56.64   41.87
  Natural gas, oil and condensate
   (per Mcfe)                          8.05    6.73      7.92    6.55
  Lease operating expense (per Mcfe)   1.57    1.21      1.64    0.99
   Lease operating expense (per Mcfe)
    - GOM                              1.65    1.21      1.72    0.96
   Lease operating expense (per Mcfe)
    - N. Sea                           1.35    1.25      1.35    1.25

Other Expenses, per Mcfe
 Depreciation, depletion and
  amortization (DD&A)              $   3.20 $  3.07  $   3.11 $  3.33
  DD&A - GOM                           3.15    3.01      3.04    3.27
  DD&A - N. Sea                        3.34    3.80      3.38    3.93

Selected Financial Data
(In Thousands, Except Per Share Data)

Oil and gas revenues, including
 settled derivatives (1)           $108,877 $33,316  $154,102 $70,295
Net income (loss)                    17,360  (3,322)   14,315  (2,321)
Preferred dividends                 (10,986)      -   (17,804)      -
Net income (loss) available to
 common shareholders                  6,374  (3,322)   (3,489) (2,321)

Net income (loss) per share - basic
 and diluted                       $   0.21 $ (0.11) $  (0.12)$ (0.08)

Average number of common shares
 outstanding
 Basic                               29,715  28,979    29,576  28,952
                                    ================  ================
 Diluted                             30,396  29,794    30,302  29,788
                                    ================  ================
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(1) See oil and gas revenue reconciliation on the last page of this
    press release.