HAMILTON, Bermuda, March 13, 2014 (GLOBE NEWSWIRE) -- TransAtlantic Petroleum Ltd. (TSX:TNP) (NYSE-MKT:TAT) (the "Company" or "TransAtlantic") today announced financial results for the quarter and year ended December 31, 2013 and provided an operations update.
Highlights
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TransAtlantic's average net sales year-to-date were approximately 4,700 BOEPD and reflected several shut-in wells. One well was shut-in to prepare for sidetracking operations and several others were shut-in for conversion to waterflood injection pilot tests
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Average net sales for the fourth quarter of 2013 increased 8% quarter-over-quarter
- Adjusted EBITDAX from continuing operations for the fourth quarter of 2013 was $20.9 million (Adjusted EBITDAX is a non-GAAP financial measure that is defined and reconciled to net income at the end of this press release)
Fourth Quarter 2013 Results
| For the Three Months Ended | ||||||
| December 31, 2013 | September 30, 2013 | December 31, 2012 | ||||
| Net Sales: | ||||||
| Oil (MBbls) | 233 | 230 | 263 | |||
| Natural gas (MMCF) | 1,028 | 868 | 864 | |||
| Total net sales (MBOE) | 404 | 375 | 407 | |||
| Average net sales (BOEPD) | 4,391 | 4,076 | 4,424 | |||
| Realized Commodity Pricing: | ||||||
| Oil ($/Bbl unhedged) | $ 104.04 | $ 103.04 | $ 100.41 | |||
| Oil ($/Bbl hedged) | $ 100.33 | $ 99.05 | $ 97.64 | |||
| Natural gas ($/MCF unhedged) | $ 8.93 | $ 9.16 | $ 9.89 | |||
| Natural gas ($/MCF hedged) | $ 8.93 | $ 9.16 | $ 9.89 | |||
Total revenues were $33.9 million for the three months ended December 31, 2013, compared to $32.3 million for the three months ended September 30, 2013 and $38.0 million for the three months ended December 31, 2012. For the three months ended December 31, 2013, TransAtlantic had a net loss from continuing operations of $14.4 million, or $0.39 per share (basic and diluted), compared to a net loss from continuing operations of $4.8 million, or $0.13 per share (basic and diluted) for the three months ended September 30, 2013 and a net loss from continuing operations of $13.9 million, or $0.38 per share (basic and diluted), for the three months ended December 31, 2012. The net loss for the fourth quarter of 2013 included $3.7 million of foreign exchange losses, $2.2 million of unrealized mark-to-market derivative losses and $9.3 million of exploration, abandonment and impairment charges (of which approximately $3.1 million represented cash expenses during the quarter).
Adjusted EBITDAX from continuing operations for the three months ended December 31, 2013 was $20.9 million, compared to $19.9 million for the three months ended September 30, 2013 and $22.4 million for the three months ended December 31, 2012.
2013 Annual Results
Revenues for the twelve months ended December 31, 2013 were $130.8 million, compared to $143.9 million for the twelve months ended December 31, 2012. The reduction in annual revenues was primarily attributable to a 6% decline in net sales coupled with a $5.3 million reduction in sales of purchased natural gas. For the twelve months ended December 31, 2013, TransAtlantic had a net loss from continuing operations of $13.3 million, or $0.36 per share (basic and diluted), compared to a net loss from continuing operations of $6.4 million, or $0.17 per share (basic and diluted) for the twelve months ended December 31, 2012. The 2013 net loss included $27.3 million of exploration, abandonment and impairment charges compared to $40.0 million in 2012, $14.0 million of seismic and other exploration expenses compared to $5.0 million in 2012, $29.0 million of general and administrative expenses, compared to $33.9 million in 2012 and interest and other expenses of $3.9 million compared to $8.3 million in 2012.
Adjusted EBITDAX from continuing operations for the twelve months ended December 31, 2013 was $77.0 million compared to $87.6 million for the twelve months ended December 31, 2012 as a result of decreased net sales and revenue.
Capitalization and Liquidity
As of December 31, 2013, TransAtlantic's total outstanding debt was $69.8 million (representing a leverage ratio of 0.91x on 2013 annual Adjusted EBITDAX). Total outstanding debt included short-term debt of $43.3 million. Short-term debt consisted of $20.0 million of borrowings under the Company's TBNG credit facility and $23.3 million that was reclassified from long-term debt under its senior secured credit facility. The TBNG credit facility borrowings were executed with a one year term in order to obtain a 115 basis point reduction in borrowing costs, which resulted in a one year fixed interest rate of 4.60%. The Company expects to renew these borrowings for an additional year upon their maturity. TransAtlantic is in the process of refinancing its senior secured credit facility. In January 2014, the Company executed a mandate letter with two financial institutions and anticipates extending the maturity of its senior secured credit facility for three years to 2019, with initial commitment reductions to begin in 2016. TransAtlantic expects to complete the senior secured credit facility refinancing in the second quarter of 2014.
As of December 31, 2013, the Company had $12.9 million of cash on hand and available borrowing capacity of $9.0 million under its existing credit facilities. TransAtlantic expects to generate positive free cash flow in 2014.
Impact of Foreign Currency Exchange
The Company records its foreign operations' assets, liabilities and transactions in local currency, which for Turkey is the New Turkish Lira and for Bulgaria is the Bulgarian Lev. For its consolidated financial reporting, TransAtlantic reports the financial results and position of all of its domestic and foreign entities in one common currency, the U.S. Dollar. During 2013, the New Turkish Lira devalued approximately 20% versus the U.S. Dollar. As a result, the Company's assets and liabilities in Turkey at December 31, 2013 are reported at an approximately 20% lower value than their value at December 31, 2012. Conversely, in 2012 the New Turkish Lira appreciated approximately 6% versus the U.S. Dollar and the Company's assets and liabilities in Turkey at December 31, 2012 were reported at an approximately 6% higher value than their value at December 31, 2011. This change in value is reported as a Foreign Currency Translation Adjustment ("FCTA") on the Consolidated Statements of Comprehensive Income (Loss) and is 100% non-cash. Note that FCTA is not a component of Net Income (Loss) and is thus excluded from earnings per share calculations.
TransAtlantic also records foreign exchange gains and losses on individual transactions that occur throughout the year. These gains and losses are reported on the Consolidated Statements of Comprehensive Income (Loss) under Other Income (Expense) as "Foreign exchange (loss) gain" and include both cash and non-cash components. The foreign exchange gains or losses arising from activities to develop and produce crude oil do not have a net cash impact due to the fact that the Company's crude oil prices are fixed to the U.S. Dollar. The foreign exchange gains or losses arising from activities to develop and produce natural gas do have a cash impact. For 2013, TransAtlantic estimates the total cash impact of foreign exchange gains and losses was a cash loss of less than $500,000.
Operational Update
TransAtlantic's average net sales year-to-date were approximately 4,700 BOEPD, comprised of 2,900 BOPD and 10.8 MMCFPD. Several wells were shut-in to prepare for sidetrack operations and conversion to waterflood injection pilot tests. The Company is presently operating three drilling rigs in southeastern Turkey.
Southeastern Turkey – Şelmo Field Redevelopment
The Company continues its horizontal drilling campaign in the Şelmo field and is increasing its water-handling capabilities in order to increase throughput in the field. TransAtlantic recently drilled the Şelmo-64H1 (100% working interest), a horizontal well targeting the LSD formation at a true vertical depth of approximately 5,800 feet and a cost of approximately $3.0 million to drill and complete.
The Company is currently drilling its fifth MSD horizontal well, the Şelmo-92H (100% working interest) and preparing to complete its fourth MSD horizontal well, the Şelmo-86H (100% working interest). TransAtlantic expects to spud seven additional horizontal wells in the Şelmo field in 2014.
In the first quarter of 2014, the Company initiated a waterflood pilot test program in the Şelmo field. Two Şelmo wells have been shut-in and are undergoing conversion to injector wells. TransAtlantic believes secondary recovery will increase production from the Şelmo field and intends to conduct at least two additional waterflood pilot tests in the field in 2014.
Southeastern Turkey – Molla Drilling Program
TransAtlantic has completed shooting approximately 80% of its planned 800 km2 (300 square miles) Molla 3D seismic program. The Company is currently interpreting processed data for the Bahar field and surrounding structures. The remaining 20% of the seismic program, which includes the Göksu field, is expected to be completed in the second quarter of 2014. The final phase of processed data is projected to be delivered in the third quarter of 2014.
This week, the Company began sidetracking the Bahar-2 well (Bahar-2ST, 100% working interest) to test the Bedinan formation west of the original bottom-hole location at a true vertical depth of approximately 10,500 feet. The Bahar-2H was shut-in mid-February 2014 to prepare for the sidetrack operation and was previously plugged back to the Hazro formation, where it was producing 50 BOPD. Following the Bahar-2ST, TransAtlantic intends to drill the Bahar-3, a vertical well planned to yield additional confirmation of the Bahar structure. The Company plans to complete the Çatak-1 vertical well by the end of March 2014.
Southeastern Turkey – Arpatepe Development
TransAtlantic recently drilled the Ambarcık-2 (50% working interest), a Bedinan exploration well on its Arpatepe license. The well did not encounter commercial quantities of hydrocarbons and has been suspended. The Company expects to utilize the well as a water source for its Arpatepe waterflood pilot test.
Meanwhile, the Arpatepe-1 vertical well has produced more than 315,000 barrels of oil in 5.8 years. In late February 2014, the Company spudded the Arpatepe-7 (50% working interest), a Bedinan appraisal well with expected total depth of 8,200 feet. TransAtlantic plans to drill one additional appraisal well and initiate a waterflood pilot test on its Arpatepe license in 2014.
Northwestern Turkey – Thrace Basin Development
TransAtlantic recently drilled its first horizontal well in the Mezardere siltstone, the BTD-2H (41.5% working interest) to a total measured depth of 4,050 feet and completed the well with an eight-stage hydraulic fracture stimulation. Initial gross production for the BTD-2H was 2 MMCFPD. The Company's second horizontal well in the Mezardere siltstone, the TDR-11H (41.5% working interest) has been drilled to a total measured depth of approximately 5,250 feet and is currently awaiting completion. Based on well results, TransAtlantic has budgeted between two and four additional Mezardere horizontal wells and between three and five Teslimkoy horizontal wells in 2014. TransAtlantic also expects to drill between eight and twelve conventional shallow wells in the Thrace Basin this year.
The seismic data from the Company's Osmanlı 3D seismic program of approximately 234 km2 (90 square miles) in the Thrace Basin is approximately 50% processed. It is expected to be completed in the next several weeks. TransAtlantic's partners have elected to participate in evaluating the Osmanlı 3D seismic data.
Bulgaria
TransAtlantic achieved target depth on the Deventci-R2 (50% working interest) in January 2014, and the well is currently awaiting completion. The Company has had difficulty opening the seal at the bottom of the tubing string and expects to pull the tubing and re-run the tubing assembly. The Deventci-R2 is a directional exploration well targeting the Dolni Lukovit zone at a depth of approximately 14,500 feet.
Quarterly Operations Update
TransAtlantic expects to issue a quarterly operations update by April 4, 2014. Year to date, the Company has spudded seven wells and completed six new wells. TransAtlantic expects to drill between 33 and 49 total gross wells in 2014.
Conference Call
The Company has scheduled a conference call for Friday, March 14, 2014 at 7:30 a.m. Central (8:30 a.m. Eastern) to discuss fourth quarter 2013 financial results.
Investors who would like to participate in the conference call should dial (877) 878-2762 or (678) 809-1005 approximately 10 minutes prior to the scheduled start time and ask for the TransAtlantic conference call. The conference ID is 5078259. A replay will be available through March 21, 2014 and may be accessed by dialing (855) 859-2056 or (404) 537-3406. The conference ID is 5078259.
An enhanced webcast of the conference call and replay will be available through the Company's website at www.transatlanticpetroleum.com. To access the live webcast and replay, click on "Investors," select "Events & Presentations," and click on "Listen to webcast" under the event listing. The webcast requires iOS, Microsoft Windows Media Player or RealOne Player.
Annual Report on Form 10-K
TransAtlantic filed its Annual Report on Form 10-K for the year ended December 31, 2013 on March 13, 2014.
| TransAtlantic Petroleum Ltd. | |||||
| Consolidated Statements of Comprehensive Income (Loss) | |||||
| For the Three Months Ended | For the Twelve Months Ended Dec. 31, | ||||
| U.S. Dollars and shares in thousands, except per share amounts | Dec. 31, 2013 | Sept. 30, 2013 | Dec. 31, 2012 | 2013 | 2012 |
| (unaudited) | |||||
| Revenues: | |||||
| Total revenues | $ 33,922 | $ 32,345 | $ 37,994 | $ 130,827 | $ 143,908 |
| Costs and expenses: | |||||
| Production | 5,156 | 4,591 | 5,334 | 18,602 | 17,804 |
| Exploration, abandonment and impairment | 9,341 | 2,243 | 28,210 | 27,333 | 39,993 |
| Cost of purchased natural gas | 437 | 479 | 2,196 | 2,247 | 7,694 |
| Seismic and other exploration | 7,624 | 5,052 | 2,639 | 14,009 | 5,040 |
| Revaluation of contingent consideration | -- | -- | -- | (5,000) | -- |
| General and administrative | 8,237 | 6,367 | 8,646 | 29,020 | 33,947 |
| Depreciation, depletion and amortization | 11,278 | 11,487 | 1,517 | 41,322 | 28,215 |
| Accretion of asset retirement obligations | 141 | 114 | 131 | 508 | 710 |
| Total costs and expenses | 42,214 | 30,033 | 48,673 | 128,041 | 133,403 |
| Operating (loss) income | (8,292) | 2,012 | (10,679) | 2,786 | 10,505 |
| Other income (expense): | |||||
| Interest and other expense | (1,165) | (919) | (1,977) | (3,929) | (8,340) |
| Interest and other income | 376 | 282 | 917 | 1,340 | 2,418 |
| Loss on commodity derivative contracts | (3,063) | (3,137) | (271) | (2,698) | (5,548) |
| Foreign exchange (loss) gain | (3,710) | (2,923) | (1,983) | (9,663) | 1,083 |
| Total other expense | (7,562) | (6,697) | (3,314) | (14,950) | (10,387) |
| (Loss) income from continuing operations before income taxes | (15,854) | (4,685) | (13,993) | (12,164) | 118 |
| Current income tax benefit (expense) | 455 | 1,284 | (792) | (128) | (4,674) |
| Deferred income tax benefit (expense) | 1,011 | (1,417) | 843 | (979) | (1,817) |
| Net loss from continuing operations. | (14,388) | (4,818) | (13,942) | (13,271) | (6,373) |
| Net (loss) income from discontinued operations, net of taxes | (194) | (155) | 1,715 | (442) | 22,619 |
| Net (loss) income | $ (14,582) | $ (4,973) | $ (12,227) | $ (13,713) | $ 16,246 |
| Foreign currency translation adjustment | (9,968) | (10,626) | 4,574 | (36,973) | 22,224 |
| Comprehensive (loss) income | $ (24,550) | $ (15,599) | $ (7,653) | $ (50,686) | $ 38,470 |
| Basic and diluted net (loss) income per common share: | |||||
| From continuing operations 1 | $ (0.39) | $ (0.13) | $ (0.38) | $ (0.36) | $ (0.17) |
| From discontinued operations1 | $ (0.01) | $ 0.00 | $ 0.05 | $ (0.01) | $ 0.62 |
| Basic weighted average number of shares outstanding1 | 37,339 | 37,150 | 36,870 | 37,069 | 36,742 |
| Diluted weighted average number of shares outstanding1 | 37,339 | 37,150 | 37,065 | 37,069 | 36,742 |
| 1 On March 4, 2014, the Company's shareholders approved a 1-for-10 reverse stock split, which became effective March 6, 2014. As a result, all common share transactions described herein have been adjusted to reflect the 1-for-10 reverse stock split. | |||||
| TransAtlantic Petroleum Ltd. | ||
| Summary Consolidated Statements of Cash Flows | ||
| For the Twelve Months Ended Dec. 31, | ||
| U.S. Dollars in thousands | 2013 | 2012 |
| Net cash provided by operating activities from continuing operations | $ 68,776 | $ 69,346 |
| Net cash used in investing activities from continuing operations | (105,109) | (69,908) |
| Net cash provided by (used in) financing activities from continuing operations | 36,960 | (125,697) |
| Net cash (used in) provided by discontinued operations | (410) | 125,331 |
| Effect of exchange rate changes on cash | (2,104) | 580 |
| Net decrease in cash and cash equivalents | $ (1,887) | $ (348) |
| TransAtlantic Petroleum Ltd. | ||
| Summary Consolidated Balance Sheets | ||
| As of | ||
| U.S. Dollars in thousands | December 31, 2013 | December 31, 2012 |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 12,881 | $ 14,768 |
| Accounts receivable | 46,971 | 52,769 |
| Prepaid and other current assets | 5,072 | 2,339 |
| Deferred income taxes | 2,239 | 1,895 |
| Assets held for sale | 536 | 1,619 |
| Total current assets | 67,699 | 73,390 |
| Property and equipment, net | 250,972 | 256,152 |
| Total other assets | 27,915 | 28,716 |
| Total assets | $346,586 | $358,258 |
| LIABILITIES & SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $ 39,802 | $ 28,498 |
| Accrued liabilities and other | 21,268 | 30,790 |
| Derivative liabilities | 3,737 | 3,908 |
| Loan payable | 43,284 | -- |
| Liabilities held for sale | 7,559 | 8,416 |
| Total current liabilities | 115,650 | 71,612 |
| Total liabilities | 179,269 | 144,431 |
| Total shareholders' equity | 167,317 | 213,827 |
| Total liabilities and shareholders' equity | $ 346,586 | $ 358,258 |
| Reconciliation of Net Loss to Adjusted EBITDAX (Unaudited) | |||||
| For the Three Months Ended | For the Twelve Months Ended Dec. 31, | ||||
| U.S. Dollars in thousands | Dec. 31, 2013 | Sept. 30, 2013 | Dec. 31, 2012 | 2013 | 2012 |
| Net (loss) income from continuing operations | $ (14,388) | $ (4,818) | $ (13,942) | $ (13,271) | $ (6,373) |
| Adjustments: | |||||
| Interest and other, net | 789 | 637 | 1,060 | 2,589 | 5,922 |
| Income tax (benefit) expense | (1,466) | 133 | (51) | 1,107 | 6,491 |
| Exploration, abandonment, and impairment | 9,341 | 2,243 | 28,210 | 27,333 | 39,993 |
| Seismic expense | 7,547 | 4,978 | 2,391 | 13,668 | 4,291 |
| Foreign exchange loss (gain) | 3,710 | 2,923 | 1,983 | 9,663 | (1,083) |
| Share-based compensation | 388 | 450 | 1,053 | 1,716 | 2,559 |
| Loss on commodity derivative contracts | 3,063 | 3,137 | 271 | 2,698 | 5,548 |
| Cash settlements on commodity derivative contracts | (865) | (919) | (729) | (3,520) | (3,829) |
| Accretion of asset retirement obligation | 141 | 114 | 131 | 508 | 710 |
| Depreciation, depletion, and amortization | 11,278 | 11,487 | 1,517 | 41,322 | 28,215 |
| Revaluation of contingent consideration | -- | -- | -- | (5,000) | -- |
| Net other items | 1,336 | (445) | 538 | (1,815) | 5,187 |
| Adjusted EBITDAX from continuing operations | $ 20,874 | $ 19,920 | $ 22,432 | $ 76,998 | $ 87,631 |
Adjusted EBITDAX is a non-GAAP financial measure that represents earnings from continuing operations before income taxes, interest, depreciation, depletion, amortization, impairment, abandonment, and exploration expenses, unrealized derivative gains and losses, foreign exchange gains and losses, non-cash share-based compensation expense and significant non-recurring expenses.
The Company believes Adjusted EBITDAX assists management and investors in comparing the Company's performance and ability to fund capital expenditures and working capital requirements on a consistent basis without regard to depreciation, depletion and amortization and impairment of oil and natural gas properties and exploration expenses, which can vary significantly from period to period. In addition, management uses Adjusted EBITDAX as a financial measure to evaluate the Company's operating performance. Adjusted EBITDAX is also widely used by investors and rating agencies.
Adjusted EBITDAX is not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income, income from operations, or cash flow provided by operating activities prepared in accordance with GAAP. Net income, income from operations, or cash flow provided by operating activities may vary materially from Adjusted EBITDAX. Investors should carefully consider the specific items included in the computation of Adjusted EBITDAX. The Company has disclosed Adjusted EBITDAX to permit a comparative analysis of its operating performance and debt servicing ability relative to other companies.
About TransAtlantic
TransAtlantic Petroleum Ltd. is an international oil and natural gas company engaged in the acquisition, exploration, development and production of oil and natural gas. The Company holds interests in developed and undeveloped properties in Turkey and Bulgaria.
(NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.)
Forward-Looking Statements
This news release contains statements concerning the drilling, completion and cost of wells, the production and sale of oil and natural gas, the acquisition and processing of seismic data, the holding of an earnings conference call, the issuance of an Annual Report on Form 10-K, as well as other expectations, plans, goals, objectives, assumptions or information about future events, conditions, results of operations or performance that may constitute forward-looking statements or information under applicable securities legislation. Such forward-looking statements or information are based on a number of assumptions, which may prove to be incorrect. In addition to other assumptions identified in this news release, assumptions have been made regarding, among other things, the ability of the Company to continue to develop and exploit attractive foreign initiatives.
Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements or information. These risks and uncertainties include, but are not limited to, market prices for natural gas, natural gas liquids and oil products; estimates of reserves and economic assumptions; the ability to produce and transport natural gas, natural gas liquids and oil; the results of exploration and development drilling and related activities; economic conditions in the countries and provinces in which the Company carries on business, especially economic slowdowns; actions by governmental authorities, receipt of required approvals, increases in taxes, legislative and regulatory initiatives relating to fracture stimulation activities, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflict; outcomes of litigation; the negotiation and closing of material contracts; shortages of drilling rigs, equipment or oilfield services.
The forward-looking statements or information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Note on BOE
Barrels of oil equivalent, or BOE, are derived by the Company by converting natural gas to oil in the ratio of six thousand cubic feet ("MCF") of natural gas to one bbl of oil. A BOE conversion ratio of six MCF to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. BOE may be misleading, particularly if used in isolation.