Case Document 2180 Filed in TXSB on 07/03/13 Page 1 of 8

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1 Case Document 2180 Filed in TXSB on 07/03/13 Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION In re: Case No ATP OIL & GAS CORPORATION Chapter 11 Debtor. OBJECTION AND RESERVATION OF RIGHTS OF STINGRAY PIPELINE, MANTA RAY OFFSHORE GATHERING, AND WEST CAMERON DEHYDRATION TO PROPOSED FINAL ORDER (A) APPROVING THE SALE OF CERTAIN OF DEBTOR S ASSETS FREE AND CLEAR OF CLAIMS AND LIENS AND (B) APPROVING THE ASSUMPTION AND ASSIGNMENT OF CONTRACTS [Relates to Dkt. Nos. 1252, 1396, 1725, 1816, 1918, 2082, 2113, and 2171, among others] ( Stingray ), Manta Ray Offshore Gathering Company, L.L.C. ( Manta Ray ) and West Cameron Dehydration Company, L.L.C. ( West Cameron, and collectively with Stingray and Manta Ray, Objectors ), through counsel, file this Objection to Proposed Final Order (A) Approving the Sale of Certain of Debtor s Assets Free and Clear of Claims and Liens and (B) Approving the Assumption and Assignment of Contracts and Leases (Dkt No. 1252)( Debtor s Proposed Final Order ), and state as follows. JURISDICTION AND VENUE 1. This Court has jurisdiction pursuant to 28 U.S.C. 157 and Venue of the Debtor s Chapter 11 case in this district is proper pursuant to 28 U.S.C and This is a core proceeding pursuant to 28 U.S.C. 157(b). SUMMARY 2. These Objectors are compelled to object to the Debtor s Final Sale Order because it purports to authorize assumption of executory contracts without providing a full cure of Debtor s monetary defaults. Post-petition amounts that have arisen after previous objection deadlines are now due and in default. In connection with Debtor s proposed assumption, Debtor must pay all amounts due at the time of assumption, whether they arose pre- or post-petition, as a

2 Case Document 2180 Filed in TXSB on 07/03/13 Page 2 of 8 condition of Debtor s proposed assumption. Additionally, while it is Debtor s prerogative to assume contracts in the good faith exercise of its business judgment, Debtor appears to overlook certain contracts with these Objectors that Debtor has not identified for assumption, even though the contracts are legally and logically connected with certain integrated and closely related executory contracts of these Objectors that Debtor indicates it wishes to assume and assign. PROCEDURAL BACKGROUND 3. On August 17, 2012, (the Petition Date ), the Debtor filed a voluntary petition for relief pursuant to Chapter 11 of the Bankruptcy Code in this Court. 4. Stingray, Manta Ray and West Cameron and the Debtor are parties to several existing contracts relating to the gathering, transportation and dehydration of natural gas and other hydrocarbons produced by Debtor and transported via pipeline facilities and processed at dehydration facilities owned and operated by Stingray, Manta Ray and West Cameron. 5. The Debtor conducted a sale of substantially all of its assets. At the conclusion of the auction, Debtor selected the bid of Credit Suisse AG as administrative and collateral agent to the DIP Lenders (the Successful Bidder ) as the Successful Bid (as defined in the Bidding Procedures) with the highest and best bid submitted at the Auction. 6. The Debtor has proposed to assume and assign to the Successful Bidder certain of Debtor s contracts with Stingray, Manta Ray and West Cameron. Debtor has listed, among others, the following Manta Ray contracts as executory contracts Debtor proposes to assume and assign, and has stated the cure amounts for those contracts are as follows: Firm Gas Gathering Agreement # with a pre-petition arrearage of $12, and Facilities Agreement # with a pre-petition arrearage of $9, However, due to Debtor s failure to pay some amounts due post-petition, Facilities Agreement # now has an additional $6, that has accrued, and is past due - 2 -

3 Case Document 2180 Filed in TXSB on 07/03/13 Page 3 of 8 and payable on a post-petition basis. Thus, to cure monetary defaults under that agreement, Debtor would now need to pay not less than $15,161.14, rather than the $9, amount Debtor previously acknowledged as due at assumption. While Debtor omitted this post-petition arrearage from Debtor s proposed cure amount, Manta Ray did not assert this post-petition amount when these Objectors filed their Limited Objection (Dkt No. 1725) to Debtor s Bidding Procedures Order, pointing out errors in Debtor s proposed cure amounts, because the postpetition arrearage had not accrued at the time that objection was required to be filed. 8. With respect to its executory contracts with Stingray, Debtor has failed to list certain contracts that Stingray submits are not severable from, but are integrated with, or at least inextricably connected with, those Stingray contracts that Debtor proposes to assume. Generally, when a party wishes to ship gas and liquids production on the Stingray system, there are multiple contracts that must be signed for the various services needed to accommodate that production. When a party proposes to assign a Measurement Agreement, logic would require that it also naturally propose to assign the associated Transportation Agreement; otherwise it would be required to pay measurement charges for production it would not be able to deliver due to not having a related Transportation Agreement. Additionally, shippers are not allowed to ship production on the Stingray system unless they have also signed a Joinder Agreement regarding the Stingray Onshore Separation Facility, which is co-owned by all shippers on the Stingray System who share in its operating costs, a Dehydration Agreement, and a Liquids Transportation Agreement. 9. For example, with respect to West Cameron Lease Block 432, Debtor has proposed to assume the Measurement Agreement #102507, but has failed to list the related Transportation Agreement # and Reserve Dedication and Discount Commodity Rate Agreement # RDDA, Liquids Transportation Agreement #115961, Dehydration - 3 -

4 Case Document 2180 Filed in TXSB on 07/03/13 Page 4 of 8 Agreement # or the Joinder Agreement for #105012, and has failed to list Addendum No. 1 to Financial and Accounting Guidelines that accompany the SOS Agreement, all of which are legally related and logically connected to the Measurement Agreement for WC 432 which Debtor proposes to assume. Logic would require that these agreements be assumed and assigned in conjunction with one another. 10. Similarly, Debtor proposes to assume and assign Liquids Hydrocarbons Transport Agreement # dated January 1, 2010, Reserve Dedication and Discount Commodity Rate Agreement # RDDA dated November 1, 2003, and Dehydration Agreement # dated November 1, 2003, all in relation to oil and gas operations on GB 142. It appears to be an oversight that Debtor has not identified or listed the related Transportation Agreement # dated April 28, 1999, Facilities Agreement # dated September 11, 2003, or Addendum No. 1 to Financial and Accounting Guidelines of Stingray Pipeline Company dated July 1, 1989 (SOS Agreement entered into for the GB 142 production through Joinder Agreement # dated October 20, 2003) that are legally connected with, and logically related to, the GB 142 agreements Debtor proposes to assume. 11. Further, with regard to Measurement Agreement #102507, due to Debtor s failure to pay some amounts due post-petition under that agreement, an additional $3, has now accrued on a post-petition basis and is past due and payable. So in addition to the pre-petition arrearage of $4, due under Measurement Agreement #102507, Debtor must now pay an additional $3, as a condition of assumption and assignment of that Measurement Agreement. This post-petition arrearage was not mentioned by Debtor, and could not have been included in Stingray s prior objection to Debtor s proposed cure payment (Dkt. 1725), because that post-petition arrearage had not then accrued. Thus, to cure monetary defaults under Measurement Agreement # with Stingray at the time that agreement is assumed and - 4 -

5 Case Document 2180 Filed in TXSB on 07/03/13 Page 5 of 8 assigned, Debtor would now need to pay not less than $7,001.49, rather than the $4, amount Debtor previously acknowledged as due at assumption. 12. There are additionally amounts due to Stingray under contracts Debtor has failed to list but which are inextricably connected to contracts Debtor has listed, so clarification is needed as to which contracts are in fact being assumed and assigned. Presumably, all amounts due among Debtor, the Successful Bidder, and Stingray will need to be addressed by these parties to ensure a proper accounting. 13. Objectors reserve their rights to assert entitlement to recover amounts that have accrued, or may accrue, post-petition, either pending assumption or rejection of the affected contracts, in accordance with applicable law. Objectors also reserve their rights with respect to claims arising from Debtor s rejection of their contracts. 14. In Objectors view, it would seem to be unnecessarily time consuming to occupy the Court s time with a detailed recitation of each anomaly affecting Debtor s proposed assumption of its executory contracts with Stingray, Manta Ray and West Cameron that either are, or probably ought to be, listed for assumption, and each discrepancy with regard to the proposed cure amounts accumulated because of the accrual of post-petition arrearages that must be paid as a condition of the assumption of those contracts. Rather than do so in further narrative form, Stingray, Manta Ray and West Cameron have attached, marked as Exhibit A, a spreadsheet that lists the affected contracts, their pre-petition amounts due, post-petition amounts due, and the erroneous cure payment amounts previously identified by Debtor. A possible credit due with respect to one Manta Ray agreement that Debtor proposes to assume and assign is also shown, but should be offset by post-petition amounts due Manta Ray. Stingray, Manta Ray, and West Cameron reserve their rights to exercise rights of recoupment and setoff, subject to obtaining relief from the automatic stay, as appropriate

6 Case Document 2180 Filed in TXSB on 07/03/13 Page 6 of Stingray, Manta Ray and West Cameron propose to have one or more business representatives of theirs, and as the Court may direct, one or more business representatives of the financial advisor for the successful bidder--and, if desired, the financial advisor for ATP--confer about these issues so that proper relief is included in the Debtor s Final Sale Order at the time it is entered. WHEREFORE,, Manta Ray Offshore Gathering Company, L.L.C. and West Cameron Dehydration Company, L.L.C. respectfully request that this Court sustain this objection and require changes to the Form of Debtor s Final Sale Order so that with respect to all executory contracts with Stingray, Manta Ray and West Cameron that ATP proposes to assume and assign, the Debtor s Final Sale Order will accurately identify the executory contracts that ATP proposes to assume and assign, and accurately state the cure amounts required to be paid at the time of assumption, as to amounts due both pre-petition and post-petition. Stingray, Manta Ray and West Cameron respectfully request that the Court direct a business representative for the Successful Bidder s financial adviser to confer with a business representative for Stingray, Manta Ray and West Cameron to resolve these issues. Dated: July 3, Respectfully submitted, /s/ Mark S. Finkelstein Mark S. Finkelstein State Bar No SD Tex. No McKinney Street, Suite 1100 Houston, Texas (713) (Tel.) (713) (Fax) mfinkelstein@smfalaw.com COUNSEL FOR STINGRAY PIPELINE COMPANY, L.L.C., MANTA RAY OFFSHORE GATHERING COMPANY, L.L.C., AND WEST CAMERON DEHYDRATION COMPANY, L.L.C

7 Case Document 2180 Filed in TXSB on 07/03/13 Page 7 of 8 OF COUNSEL: SHANNON, MARTIN, FINKELSTEIN & ALVARADO A PROFESSIONAL CORPORATION Elizabeth D. Alvarado Texas Bar No McKinney Street, Suite 1100 Houston, Texas (713) (Tel.) (713) lalvarado@smfalaw.com ( - 7 -

8 Case Document 2180 Filed in TXSB on 07/03/13 Page 8 of 8 CERTIFICATE OF SERVICE I certify that, on July 3, 2013, I caused a true copy of the foregoing document to be served via the Court s CM/ECF on the Debtor and all other parties in interest who receive service via electronic case filing and via on the Objection Notice Parties below: (i) Counsel for the Debtor: Mayer Brown LLP, 700 Louisiana Street, Suite 3400, Houston, Texas 77002, Attn: Charles S. Kelley (CKelley@mayerbrown.com); (ii) Investment Banker for the Debtor: Jefferies & Company Inc., 300 Crescent Court, Suite 500, Dallas, Texas 75201, Attn: Stephen Straty (sstraty@jefferies.com); (iii) Counsel for the DIP Agent: Cravath, Swaine & Moore LLP, Worldwide Plaza, 825 Eighth Avenue, New York, New York 10019, Attn: Paul H. Moore LLP, Worldwide Plaza, 825 Eighth Avenue, New York, New York, 10019, Attn: Paul H. Zumbro (pzumbro@cravath.com); (iv) Counsel to certain DIP Lenders: Bingham McCutchen LLP, 339 Park Avenue, New York, New York 10022, Attn: Ronald J. Silverman (ronald.silverman@bingham.com) and Winstead PC, 500 Winstead Building, 2728 N. Harwood Street, Dallas, Texas 75201, Attn: Phillip Lamberson (plamberson@winstead.com); (v) Counsel to the Creditors Committee: Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, New York 10005, Attn: Evan R. Fleck (efleck@milbank.com); (vi) Counsel to the Equity Committee: Diamond McCarthy LLP, 909 Fannin Street, Suite 1500, Houston, Texas 77010, Attn: Kyung S. Lee (klee@diamondmccarthy.com); (vii) Counsel to the Ad Hoc Committee of Second Lien Notes: Wachtell, Lipton, Rosen & Katz LLP, 51 West 52nd Street, New York, New York 10019, Attn: Scott K. Charles (skcharles@wlrk.com); and (viii) Office of the United States Trustee for the Southern District of Texas: 515 Rusk Avenue, Suite 3516, Houston, Texas 77002, Attn: Nancy Lynn Holley (Nancy.Holley@usdoj.gov). /s/ Mark S. Finkelstein Mark S. Finkelstein - 8 -

9 Case Document Filed in TXSB on 07/03/13 Page 1 of 2 EXHIBIT A STINGRAY PIPELINE COMPANY, L.L.C., MANTA RAY OFFSHORE GATHERING COMPANY, L.L.C. and WEST CAMERON DEHYDRATION COMPANY, L.L.C. Creditor Manta Ray Offshore Gathering Company, LLC Manta Ray Offshore Gathering Company, LLC Contract Contract No. Enbridge's Cure Amounts Credits Due Net Cure Amount Firm Gas Gathering Agreement effective on 6/01/2007 between Manta Ray Offshore and ATP Oil & Gas. This agreement was amended and effective dated changed from 2/1/2004 to 6/1/2007 SS 351, 358 CURE AMOUNTS FOR ATP CONTRACTS Pre Petition Post Petition ATP's Cure Amounts Source of ATP's Cure Amount # $12, $0.00 $8, $3, $12, Dkt Access and information on an EBB using the web in relation to oil and gas transport operations dated February 1, 2004 # IWWA $0.00 Dkt Manta Ray Offshore Gathering Company, LLC Manta Ray Offshore Gathering Company, LLC Facilities Agreement dated August 21, 2003 SS 358 Transfer of certain rights pertaining to Firm Gathering Agreement in relation to Oil and Gas operations dated February 1, 2004 [Manta Ray has no record of this] # $9, $6, $15, $9, Dkt $0.00 Dkt Liquids Transportation Agreement dated November 1, 2003 (Terminated 12/31/09 and replaced with Liquids Transportation Agreement # below) # $0.00 Dkt Transportation Rate Schedule ITS Agreement dated April 28, 1999 GB 142, 186, 187 & WC 663 # not listed n/a Reserve Dedication and Discount Commodity Rate Agreement dated November 1, 2003 GB 142, 186 and 187 # RDDA $0.00 Dkt and WC 663 Liquids Separation and Handling Agreement dated November 10, 2008 HIA 589 # $0.00 Dkt Interruptible Transport rate agreement in relation (sic) to oil & gas operations dated December 1, 2010 [Stingray has $0.00 Dkt no record of this] Interruptible Transport rate agreement in relation to oil & gas operations dated November 1, 2002 WC 284 & WC 432 # not listed n/a Reserve Dedication and Discount Commodity Rate Agreement dated November 1, 2002 WC 284 & WC 432 # RDDA not listed n/a Liquids Hydrocarbons Transport Agreement in relation to oil and gas operations dated January 1, 2010 GB 142 # $ $ $0.00 Dkt Measurement agreement for measurement services in relation to oil and gas operations dated November 14, 1994 WC 432 Transport Rate Schedule FTS Agreement in relation to oil and gas operations dated December 1, 2008, as amended [expired by its own terms on 12/31/08] # $4, $3, $7, $1, Dkt $0.00 Dkt Page 1 of 2

10 Case Document Filed in TXSB on 07/03/13 Page 2 of 2 EXHIBIT A STINGRAY PIPELINE COMPANY, L.L.C., MANTA RAY OFFSHORE GATHERING COMPANY, L.L.C. and WEST CAMERON DEHYDRATION COMPANY, L.L.C. Creditor CURE AMOUNTS FOR ATP CONTRACTS Contract Contract No. Enbridge's Cure Amounts Credits Due Net Cure Amount Facilities Agreement, Offshore Sub sea Connection to the 16 Lateral Located in Garden Banks Block 191, Offshore Louisiana, Between Stingray Pipeline Company and ATP Oil & Gas Corporation, dated September 11, 2003, effective July 15, 2003 Pre Petition Post Petition ATP's Cure Amounts Source of ATP's Cure Amount # $9, $6, $15, not listed n/a Addendum No. 1 to Financial and Accounting Guidelines of Stingray Pipeline Company dated July 1, 1989 (SOS Agreement entered into through Joinder Agreement # dated 11/14/02 for WC 432 ) Addendum No. 1 to Financial and Accounting Guidelines of Stingray Pipeline Company dated July 1, 1989 (SOS Agreement entered into through Joinder Agreement # dated 10/20/03 for GB 142) Interconnect Agreement dated November 14, 1994 WC 408, 432 Joinder # $4, $4, not listed n/a Joinder # $5, $12, $18, not listed n/a # not listed n/a West Cameron Dehydration Company, L.L.C. Liquids Transportation Agreement dated January 1, 2010 WC 432 # not listed n/a Dehydration Agreement Effective November 1, 2003 GB 142 # $2, $0.00 $2, $0.00 Dkt West Cameron Dehydration Company, Dehydration Agreement Effective November 1, 2002 WC 432 # $ $ $1, not listed n/a L.L.C. SUBTOTALS $44, $32, $8, $68, $22, Page 2 of 2