TransAtlantic Petroleum Announces First Quarter 2020 Financial Results and Provides an Operations Update
- Average daily net sales volumes were approximately 2,498 barrels of oil equivalent per day (“BOEPD”) in the first quarter of 2020, as compared to 2,763 BOEPD in the fourth quarter of 2019 and 3,082 BOEPD in the first quarter of 2019.
- Revenues for the first quarter of 2019 were
$8.4 million, as compared to $16.5 millionfor the fourth quarter of 2019 and $19.0 millionfor the first quarter of 2019.
- Operating loss for the first quarter of 2020 was
$22.1 million, as compared to operating income of $5.1 millionfor the fourth quarter of 2019 and $3.2 millionfor the first quarter of 2019.
- Net loss was
$24.0 millionfor the first quarter of 2020, as compared to a net loss of $2.5 millionin the fourth quarter of 2019 and a net loss of $3.9 millionin the first quarter of 2019.
- Adjusted EBITDAX for the first quarter of 2020 was
$8.0 million, as compared to $8.5 millionfor the fourth quarter of 2019 and $12.3 millionfor the first quarter of 2019.1
- Outstanding debt as of
March 31, 2020was $10.6 million, as compared to $20.0 millionas of December 31, 2019.
1 Adjusted EBITDAX is a non-GAAP financial measure. See the reconciliation at the end of the press release.
First Quarter 2020 Results of Operations
|For the Three Months Ended|
|Natural gas (MMCF)||56||53||50|
|Total net sales (MBOE)||227||254||277|
|Average net sales (BOEPD)||2,498||2,763||3,082|
|Realized Commodity Prices:|
|Oil ($/Bbl unhedged)||$||37.18||$||65.10||$||69.00|
|Oil ($/Bbl hedged)||$||67.68||$||65.10||$||69.00|
|Natural gas ($/MCF)||$||4.30||$||5.98||$||5.94|
Total revenues were
Adjusted EBITDAX for the three months ended
Liquidity and Capital Resources
The Company’s primary sources of liquidity for the first quarter of 2020 were its cash and cash equivalents, cash flow from operations, and the sale of assets. At
As a result of the decline in Brent crude prices, the current near term price outlook and resulting lower current and projected cash flows from operations, the Company has reduced its planned capital expenditures to those necessary for production lease maintenance and those projecting a return on invested capital at current prices. In order to mitigate the impact of reduced prices on the Company’s 2020 cash flows and liquidity, the Company implemented cost reduction measures to reduce its operating costs and general and administrative expenses. In connection therewith, the Company intends to prioritize funding operating expenditures over general and administrative expenditures, whenever possible.
Türkiye Petrol Rafinerileri A.Ş. (“TUPRAS”), a privately-owned oil refinery in
The price of the oil delivered pursuant to the purchase and sale agreement with TUPRAS is determined under the Petroleum Market Law No. 5015 under the laws of the
In the second quarter of 2020, the Company borrowed approximately
As of the date hereof, based on cash on hand and projected future cash flow from operations, the Company’s current liquidity position is severely constrained and is forecast to worsen during 2020 as revenues are insufficient to meet the Company’s ordinary course expenditures and debt obligations. Based on current cash flow forecasts, the Company may be unable to pay the scheduled monthly installments on the 2019 Term Loan in the fourth quarter of 2020 unless it can increase revenues, obtain additional financing, or restructure its current obligations. To date, the Company has been unable to restructure its current obligations or obtain additional financing to alleviate these liquidity issues. As a result, substantial doubt exists regarding the Company’s ability to continue as a going concern. The Company’s management is actively pursuing improving its working capital position in order to remain a going concern for the foreseeable future.
During 2020, the Company plans to continue its recompletion, workover, and production optimization plans in its producing fields including Bahar, Yeniev, Goksu, Pinar, Southeast Bahar, Catak, and Karagoz. Drilling additional wells will be dependent on oil prices.
In the first quarter of 2020, the Company started construction of phase II electrification of the Bahar field to replace diesel generated power with gas generated power, which will be distributed to each well in the field. The phase II electrification was completed and operational in the second quarter of 2020.
The Company whipstocked the Goksu-4H well in
In the first quarter of 2020, the Company started implementation of a full field waterflood of the Arpatepe field. The Company plans to recomplete four well in the field as water injection wells and one well as a water source well. Additionally, the Company plans to build a central facility and gathering system to handle increased volumes, however this is subject to change due to budget constraints and partner requests.
During 2020, the Company plans to continue its recompletion, workover, and production optimization operations in the Selmo field.
The Company is currently evaluating future activity in
The Company will host a live webcast and conference call on
A live webcast of the conference call and replay will be available through the Company’s website at www.transatlanticpetroleum.com. To access the webcast and replay, click on “Investors,” select “Events and Presentations,” and click on “Listen to webcast” under the event list. The webcast requires IOS, Microsoft Windows Media Player, or RealOne Player.
A telephonic replay of the call will be available through
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
|For the Three Months Ended|
|Costs and expenses:|
|Transportation and processing||1,160||1,299||1,319|
|Exploration, abandonment and impairment||20,338||–||5,113|
|Seismic and other exploration||45||97||77|
|General and administrative||2,352||3,538||3,054|
|Depreciation, depletion and amortization||2,989||3,048||3,716|
|Accretion of asset retirement obligations||53||56||52|
|Total costs and expenses||30,456||11,336||15,833|
|Other (expense) income:|
|Loss on sale||(10,128||)||–||–|
|Interest and other expense||(2,212||)||(2,656||)||(2,478||)|
|Interest and other income||121||171||174|
|Gain (loss) on commodity derivative contracts||7,513||(936||)||(110||)|
|Foreign exchange loss||(128||)||(2,384||)||(1,273||)|
|Total other expense||(4,834||)||(5,805||)||(3,687||)|
|Loss before income taxes||(26,930||)||(670||)||(479||)|
|Income tax benefit (expense)||2,965||(1,855||)||(3,423||)|
|Other comprehensive income (loss):|
|Foreign currency translation adjustment||7,921||(1,492||)||(4,226||)|
|Comprehensive (loss) income||$||(16,044||)||$||(4,017||)||$||(8,128||)|
|Net loss per common share|
|Basic net loss per common share||$||(0.38||)||$||(0.04||)||$||(0.07||)|
|Weighted average common shares outstanding||62,310||57,758||52,483|
|Diluted net loss per common share||$||(0.38||)||$||(0.04||)||$||(0.07||)|
|Weighted average common and common equivalent shares outstanding||62,310||57,758||52,483|
Summary Consolidated Statements of Cash Flows (Unaudited)
(in thousands of
|For the Three Months Ended
|Net cash provided by operating activities||$||14,091||$||4,514|
|Net cash used in investing activities||(1,644||)||(9,326||)|
|Net cash (used in) provided by financing activities||(9,393||)||15,812|
|Effect of exchange rate changes on cash||62||(1,018||)|
|Net increase in cash, cash equivalents, and restricted cash||$||3,116||$||9,982|
Summary Consolidated Balance Sheets
(in thousands of
|Cash and cash equivalents||$||12,780||$||9,664|
|Accounts receivable, net|
|Oil and natural gas sales||6,181||13,299|
|Joint interest and other||1,267||1,218|
|Prepaid and other current assets||12,380||12,375|
|Total current assets||36,827||44,208|
|Property and equipment:|
|Oil and natural gas properties (successful efforts method)|
|Equipment and other property||12,947||10,202|
|Less accumulated depreciation, depletion and amortization||(91,286||)||(106,610||)|
|Property and equipment, net||59,130||84,518|
|Other long-term assets:|
|Note receivable - related party||3,732||3,951|
|Total other assets||7,256||7,778|
|LIABILITIES, SERIES A PREFERRED SHARES AND SHAREHOLDERS' EQUITY|
|Accounts payable - related party||6,985||4,262|
|Total current liabilities||33,607||42,170|
|Asset retirement obligations||3,602||4,749|
|Deferred income taxes||18,747||22,728|
|Total long-term liabilities||31,941||40,704|
|Commitments and contingencies|
|Series A preferred shares,
|Series A preferred shares-related party,
|Accumulated other comprehensive loss||(139,426||)||(147,347||)|
|Total shareholders' (deficit) equity||(8,385||)||7,580|
|Total liabilities, Series A preferred shares and shareholders' equity||$||103,213||$||136,504|
Reconciliation of Net Loss to Adjusted EBITDAX (Unaudited)
(in thousands of
|For the Three Months Ended|
|Interest and other, net||2,091||2,485||2,304|
|Income tax (benefit) expense||(2,965||)||1,855||3,423|
|Exploration, abandonment, and impairment||20,338||-||5,113|
|Seismic and other exploration expense||45||97||77|
|Foreign exchange loss||128||2,384||1,273|
|Share-based compensation expense||115||121||102|
|(Gain) loss on commodity derivative contracts||(7,513||)||936||110|
|Cash settlements on commodity derivative contracts||6,547||-||-|
|Accretion of asset retirement obligation||53||56||52|
|Depreciation, depletion, and amortization||2,989||3,048||3,716|
|Loss on sale||10,128||-||-|
Adjusted EBITDAX (“Adjusted EBITDAX”) is a non-GAAP financial measure that represents net loss plus interest and other income, net, income tax (benefit) expense, exploration, abandonment, and impairment, seismic and other exploration expense, foreign exchange loss, share-based compensation expense, (gain) loss on commodity derivative contracts, cash settlements on commodity derivative contracts, accretion of asset retirement obligation, depreciation, depletion, and amortization, and loss on sale.
The Company believes Adjusted EBITDAX assists management and investors in comparing the Company’s performance on a consistent basis without regard to depreciation, depletion, and amortization, impairment of oil and natural gas properties, exploration expenses, and foreign exchange gains and losses among other items, 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 not a measure of financial performance under GAAP. Accordingly, it should not be considered as a substitute for net income prepared in accordance with GAAP. Net income may vary materially from Adjusted EBITDAX. Investors should carefully consider the specific items included in the computation of Adjusted EBITDAX.
The Company 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
(NO STOCK EXCHANGE, SECURITIES COMMISSION, OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.)
This news release contains statements concerning the Company’s ability to continue as a going concern, its drilling program, the evaluation of its prospects in
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, the Company’s ability to continue as a going concern; well development results; access to sufficient capital; market prices for natural gas, natural gas liquids, and oil products, including price changes resulting from coronavirus fears as well as oil oversupply concerns; estimates of reserves and economic assumptions; the ability to produce and transport natural gas, natural gas liquids, and oil products, including price changes resulting from coronavirus fears as well as oil oversupply concerns; the results of exploration and development drilling and related activities; the effects of the coronavirus on the Company’s operations, demand for oil and natural gas as well as governmental actions in response to the coronavirus; economic conditions in the countries and provinces in which the Company carries on business, especially economic slowdowns; actions by governmental authorities; the unwinding of the Company’s hedges against a decline in the price of oil; receipt of required approvals; increases in taxes; legislative and regulatory initiatives relating to fracture stimulation activities; changes in environmental and other regulations; renegotiations of contracts; political uncertainty, including sanctions, armed conflicts, and actions by insurgent groups; outcomes of litigation; the negotiation and closing of material contracts; and other risks described in the Company’s filings with the
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 of natural gas (“MCF”) to one stock tank barrel, or 42 U.S. gallons liquid volume (“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.
Source: TransAtlantic Petroleum Ltd.