HAMILTON, Bermuda, May 8, 2014 (GLOBE NEWSWIRE) -- TransAtlantic Petroleum Ltd. (TSX:TNP) (NYSE-MKT:TAT) (the "Company" or "TransAtlantic") today announced financial results for the quarter ended March 31, 2014, disclosed terms of its new credit facility and provided updates on its operations and potential acquisition in Poland.
Highlights
- Average net sales for the first quarter of 2014 were 4,622 BOEPD, a 5% increase over the fourth quarter of 2013 and a 12% increase over the first quarter of 2013
- Net income from continuing operations for the first quarter of 2014 was $4.0 million
- Adjusted EBITDAX from continuing operations for the first quarter of 2014 was $21.9 million, a 5% increase over the fourth quarter of 2013 and a 15% increase over the first quarter of 2013 (Adjusted EBITDAX is a non-GAAP financial measure that is defined and reconciled to net income at the end of this press release)
First Quarter 2014 Results
| For the Three Months Ended | |||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | |
| Net Sales: | |||
| Oil (MBbls) | 260 | 233 | 239 |
| Natural gas (MMCF) | 934 | 1,028 | 801 |
| Total net sales (MBOE) | 416 | 404 | 373 |
| Average net sales (BOEPD) | 4,622 | 4,391 | 4,144 |
| Realized Commodity Pricing: | |||
| Oil ($/Bbl unhedged) | $97.05 | $104.04 | $103.00 |
| Oil ($/Bbl hedged) | $94.16 | $100.33 | $97.76 |
| Natural gas ($/MCF unhedged) | $8.30 | $8.93 | $10.12 |
| Natural gas ($/MCF hedged) | $8.30 | $8.93 | $10.12 |
Total revenues were $33.6 million for the three months ended March 31, 2014, compared to $33.9 million for the three months ended December 31, 2013 and $34.0 million for the three months ended March 31, 2013. For the three months ended March 31, 2014, TransAtlantic had net income from continuing operations of $4.0 million, or $0.11 per share (basic and diluted), compared to a net loss from continuing operations of $14.4 million, or $(0.39) per share (basic and diluted), for the three months ended December 31, 2013 and net income from continuing operations of $3.0 million, or $0.08 per share (basic and diluted), for the three months ended March 31, 2013. Net income for the first quarter of 2014 included $1.3 million of foreign exchange losses, a $2.5 million gain on the revaluation of a contingent consideration, a $1.0 million gain on our commodity derivative contracts and $4.1 million of exploration, abandonment and impairment charges (of which approximately $1.1 million represented cash expenses during the quarter). Capital expenditures, including seismic and corporate expenditures, totaled $26.1 million for the three months ended March 31, 2014, compared to $31.6 million for the three months ended December 31, 2013 and $18.7 million for the three months ended March 31, 2013.
Adjusted EBITDAX from continuing operations for the three months ended March 31, 2014 was $21.9 million, compared to $20.9 million for the three months ended December 31, 2013 and $19.0 million for the three months ended March 31, 2013.
New Credit Facility
On May 6, 2014, TransAtlantic and its subsidiaries entered into a new $150.0 million senior secured credit facility that matures on March 31, 2019. The initial borrowing base is $78.0 million and will be re-determined semi-annually based on reserves. TransAtlantic will add additional commodity hedges for crude oil, per the terms of the new credit agreement. The Company intends to use borrowings from the senior secured credit facility to pay off in full its amended and restated credit facility and to fund its development and exploration activities in Turkey.
Operational Update
TransAtlantic's average net sales for April 2014 were approximately 4,300 BOEPD, comprised of 2,800 BOPD and 9.1 MMCFPD. The Company is presently operating three drilling rigs in southeastern Turkey. Year to date, TransAtlantic has spudded nine wells and completed nine wells. The Company plans to drill between 33 and 49 total gross wells in 2014.
Southeastern Turkey – Şelmo Field Redevelopment
TransAtlantic recently spudded its seventh MSD horizontal well, Şelmo-54H (100% working interest), which has a planned total measured depth of more than 8,000 feet. The Company is currently completing its sixth MSD horizontal well, Şelmo-84H (100% working interest), which was drilled to a total measured depth of approximately 7,000 feet. The Company's fifth MSD horizontal well, the Şelmo-92H (100% working interest), is producing 190 BOPD. Its fourth horizontal well, the Şelmo-86H (100% working interest), reached target depth in April 2014 and is currently being completed. TransAtlantic has two Şelmo LSD wells awaiting completion. The Company expects to spud five additional horizontal wells in the Şelmo field in 2014.
In the first quarter of 2014, TransAtlantic initiated a waterflood pilot test program in the Şelmo field. The Company has begun to inject water into the field and believes that secondary recovery will increase the field's production. TransAtlantic intends to conduct at least two additional waterflood pilot tests in the Şelmo field in 2014.
The Company is also conducting a polymer injection program in the Şelmo field to increase net oil production. Four of the initial five wells that received polymer treatments delivered positive results. For a total cost of $1.0 million, five wells were treated in early April 2014 and oil production has increased by approximately 250 BOPD. TransAtlantic will evaluate the polymer injection results for 30-60 days before proceeding with polymer injection in five additional wells. The Company believes it has at least 20 additional polymer injection well candidates.
Southeastern Turkey – Molla Drilling Program
TransAtlantic completed shooting its 800 km2 (300 square mile) Molla 3D seismic program. The final phase of processed data is expected to be delivered in the third quarter of 2014.
The Company is drilling the Bahar-2ST well (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 well experienced wellbore instability at approximately 10,000 feet and is currently being sidetracked. In May 2014, TransAtlantic intends to spud the Bahar-3 (100% working interest), a vertical well planned to yield additional confirmation of the Bahar structure. The Company is preparing locations for the Bahar-4 (100% working interest) and Bahar-6 (100% working interest) wells.
TransAtlantic recently completed and tested the Çatak-1 (100% working interest) vertical well. After finding oil shows in the Bedinan and completing the well, production was deemed uneconomic. The total cost to drill and complete the Çatak-1 was $5.6 million.
Southeastern Turkey – Arpatepe Development
TransAtlantic recently achieved target depth of 8,200 feet on the Arpatepe-7 (non-operated, 50% working interest), a Bedinan appraisal well. Drill stem tests showed oil in the Bedinan formation. The well was cased, and the Company anticipates testing the well in the next two weeks. The Arpatepe-7 well opened a new fault block and encountered two previously undiscovered sands, both of which will be tested. TransAtlantic plans to drill the Arpatepe-8 (non-operated, 50% working interest) vertical development well and initiate a waterflood pilot test on the Arpatepe license in 2014.
Southeastern Turkey – Idil Exploration
TransAtlantic is preparing to drill a vertical exploration well on its Idil license in 2014. The Company's joint venture partner, Onshore Petroleum Company AS ("Onshore"), has been assigned a 50% interest in the Idil license and will fund 100% of TransAtlantic's initial exploration well, up to $3.5 million. Expenses over $3.5 million will be split equally between Onshore and TransAtlantic.
Northwestern Turkey – Thrace Basin Development
The seismic data from TransAtlantic's 234 km2 (90 square mile) Osmanlı 3D seismic program in the Thrace Basin is approximately 90% processed and is expected to be completed in the next several weeks. The Company expects to use its new 3D seismic to target the Osmanlı area with between eight and twelve conventional, shallow, vertical appraisal wells.
TransAtlantic's first two horizontal wells in the Mezardere siltstone are currently on long-term production tests. The BTD-2H (41.5% working interest) is currently producing 1.7 MMCFPD gross and the TDR-11H (41.5% working interest) is currently producing 800 MCFPD gross. The Company plans to further complete the wells with coil tubing to open additional stages in the next several weeks. TransAtlantic is preparing a multi-well horizontal campaign and expects to drill between four and eight additional horizontal wells in the Mezardere and Teslimkoy formations in 2014.
Bulgaria
TransAtlantic achieved target depth on the Deventci-R2 (50% working interest) in the first quarter of 2014. After perforation, the well tested approximately 2 MMCFPD with condensate. The Company is currently conducting a long-term pressure build-up test to evaluate connectivity to the reservoir. Following well testing, TransAtlantic expects to request government approval to stimulate the well. The Deventci-R2 is a directional exploration well targeting the Dolni Lukovit zone at a depth of approximately 14,500 feet.
Update on Potential Acquisition in Poland
TransAtlantic is pursuing ongoing discussions with San Leon Energy plc and Hutton Energy plc about an acquisition of certain assets in Poland. However, after conducting geological and engineering due diligence on the original properties under consideration, TransAtlantic decided that it will not proceed with the full acquisition in Poland as previously described in its March 27, 2014 press release.
Annual Meeting
The Company has scheduled its 2014 annual meeting of shareholders for Tuesday, May 27, 2014 at 10:00 a.m. Central. The annual meeting will be held at TransAtlantic's U.S. headquarters, which is located at 16803 Dallas Parkway, Addison, Texas, 75001. The Company will host a live webcast of the event on its website. To view the live webcast of the annual meeting, or to register your attendance, please visit the Company's website at www.transatlanticpetroleum.com, click on "Investors" and select "Annual Meeting."
Second Quarter 2014 Operations Update
TransAtlantic expects to issue a quarterly operations update for the second quarter of 2014 during the week of July 7, 2014.
Conference Call
The Company has scheduled a conference call for Friday, May 9, 2014 at 7:30 a.m. Central (8:30 a.m. Eastern) to discuss first quarter 2014 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 33733285. A replay will be available through May 16, 2014 and may be accessed by dialing (855) 859-2056 or (404) 537-3406. The conference ID is 33733285.
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.
Quarterly Report on Form 10-Q
On May 8, 2014, TransAtlantic filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.
| TransAtlantic Petroleum Ltd. | |||
| Consolidated Statements of Comprehensive Income (Loss) | |||
| For the Three Months Ended | |||
| U.S. Dollars and shares in thousands, except per share amounts | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
| (Unaudited) | (Unaudited) | (Unaudited) | |
| Revenues: | |||
| Total revenues | $33,646 | $33,922 | $34,044 |
| Costs and expenses: | |||
| Production | 4,131 | 5,156 | 5,527 |
| Exploration, abandonment and impairment | 4,141 | 9,341 | 3,864 |
| Cost of purchased natural gas | 485 | 437 | 712 |
| Seismic and other exploration | 3,294 | 7,624 | 243 |
| Revaluation of contingent consideration | (2,500) | -- | -- |
| General and administrative | 6,552 | 8,237 | 7,523 |
| Depreciation, depletion and amortization | 10,090 | 11,278 | 8,976 |
| Accretion of asset retirement obligations | 98 | 141 | 129 |
| Total costs and expenses | 26,291 | 42,214 | 26,974 |
| Operating income (loss) | 7,355 | (8,292) | 7,070 |
| Other income (expense): | |||
| Interest and other expense | (1,203) | (1,165) | (890) |
| Interest and other income | 273 | 376 | 375 |
| Gain (loss) on commodity derivative contracts | 962 | (3,063) | (776) |
| Foreign exchange loss | (1,344) | (3,710) | (487) |
| Total other expense | (1,312) | (7,562) | (1,778) |
| Income (loss) from continuing operations before income taxes | 6,043 | (15,854) | 5,292 |
| Current income tax (expense) benefit | (69) | 455 | (1,339) |
| Deferred income tax (expense) benefit | (1,981) | 1,011 | (921) |
| Net income (loss) from continuing operations. | 3,993 | (14,388) | 3,032 |
| Net loss from discontinued operations, net of taxes | (20) | (194) | (93) |
| Net income (loss) | $3,973 | $(14,582) | $2,939 |
| Foreign currency translation adjustment | (3,295) | (9,968) | (2,836) |
| Comprehensive income (loss) | $678 | $(24,550) | $103 |
| Basic and diluted net income (loss) per common share: | |||
| From continuing operations1 | $0.11 | $(0.39) | $0.08 |
| From discontinued operations1 | $0.00 | $(0.01) | $0.00 |
| Basic weighted average number of shares outstanding1 | 37,392 | 37,339 | 36,888 |
| Diluted weighted average number of shares outstanding1 | 37,392 | 37,339 | 36,888 |
| 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 amounts and 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 Three Months Ended Mar. 31, | ||
| U.S. Dollars in thousands | 2014 | 2013 |
| (Unaudited) | (Unaudited) | |
| Net cash provided by operating activities from continuing operations | $28,151 | $19,649 |
| Net cash used in investing activities from continuing operations | (31,192) | (21,666) |
| Net cash provided by financing activities from continuing operations | 6,640 | 7,000 |
| Net cash provided by (used in) discontinued operations | 480 | (56) |
| Effect of exchange rate changes on cash | (252) | (267) |
| Net increase in cash and cash equivalents | $3,827 | $4,660 |
| TransAtlantic Petroleum Ltd. | |||
| Summary Consolidated Balance Sheets | |||
| As of | |||
| U.S. Dollars in thousands | March 31, 2014 | December 31, 2013 | |
| (Unaudited) | |||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $16,708 | $12,881 | |
| Accounts receivable | 40,630 | 46,971 | |
| Prepaid and other current assets | 5,681 | 5,072 | |
| Deferred income taxes | 2,322 | 2,239 | |
| Assets held for sale | 29 | 536 | |
| Total current assets | 65,370 | 67,699 | |
| Property and equipment, net | 252,524 | 250,972 | |
| Total other assets | 27,059 | 27,915 | |
| Total assets | $344,953 | $346,586 | |
| LIABILITIES & SHAREHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Accounts payable | $31,453 | $39,802 | |
| Accrued liabilities and other | 20,441 | 21,268 | |
| Derivative liabilities | 3,384 | 3,737 | |
| Loan payable | 26,700 | 43,284 | |
| Liabilities held for sale | 7,455 | 7,559 | |
| Total current liabilities | 89,433 | 115,650 | |
| Total liabilities | 176,622 | 179,269 | |
| Total shareholders' equity | 168,331 | 167,317 | |
| Total liabilities and shareholders' equity | $344,953 | $346,586 | |
| Reconciliation of Net Income (Loss) to Adjusted EBITDAX (Unaudited) | |||
| For the Three Months Ended | |||
| U.S. Dollars in thousands | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 |
| Net income (loss) from continuing operations | $3,993 | $(14,388) | $3,032 |
| Adjustments: | |||
| Interest and other, net | 930 | 789 | 515 |
| Current and deferred income tax (benefit) expense | 2,050 | (1,466) | 2,260 |
| Exploration, abandonment, and impairment | 4,141 | 9,341 | 3,864 |
| Seismic expense | 3,037 | 7,547 | 108 |
| Foreign exchange loss | 1,344 | 3,710 | 487 |
| Share-based compensation | 396 | 388 | 381 |
| (Gain) loss on commodity derivative contracts | (962) | 3,063 | 776 |
| Cash settlements on commodity derivative contracts | (752) | (865) | (1,252) |
| Accretion of asset retirement obligation | 98 | 141 | 129 |
| Depreciation, depletion, and amortization | 10,090 | 11,278 | 8,976 |
| Revaluation of contingent consideration | (2,500) | -- | -- |
| Net other items | -- | 1,336 | (257) |
| Adjusted EBITDAX from continuing operations | $21,865 | $20,874 | $19,019 |
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 operational update, the holding of an annual meeting of shareholders, 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 barrel of oil. A BOE conversion ratio of six MCF to one barrel 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.