ATP Oil and Gas - The New CEO Resigns

Many frustrated shareholders of ATP Oil and Gas believe that poor management is to blame for the company’s sub-par performance, and were relieved and heartened last week when the company announced the arrival of a new CEO.  The feeling was short-lived.  Yesterday, ATP announced that the new CEO, Matt McCarroll, has left the company because the two sides were unable to agree on an employment contract.  ATP’s stock fell by 9% Friday, and Bloomberg reported that the company’s May 2015 bonds fell to 45.75 cents on the dollar to yield nearly 50% in intra-day trading.

It’s unclear what the company’s next move will be.  Presumably Chairman Paul Bulmahn will return to the CEO role, at least in an interim position.  The company may have made the initial change because of a lack of faith in Bulmahn, or out of a sense that McCarroll was such a rare and special talent that ATP was willing to adapt itself around him.  If it’s the former, then the company will likely begin a search for a permanent CEO immediately; in the latter case, it’s possible that ATP will stick with Bulmahn indefinitely.  The latter seems more likely, given the abrupt nature of Bulmahn's resignation, and that it coincided with McCarroll becoming available after selling his company. 
Often, a company's number two officer is a leading candidate for the CEO position when the incumbent moves on.  Based on recent developments, however, it seems safe to assume that President Leland Tate is not in the running to be the next CEO.

At minimum, this episode makes ATP management look unprofessional.  In addition, a pending change at the top is a distraction.  After all, management's time, attention and energy are among any company's most precious resources.  Without more detail, though, it’s difficult to draw many firm conclusions, but anxious shareholders will be in a state of uncertainty for the immediate future.

(My original write-up on ATP Oil and Gas can be found here).

Disclosure: The author was long ATP options at the time this article was published.

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