TransAtlantic Petroleum Announces Second Quarter 2018 Financial Results and Provides an Operations Update
- In update to the Company’s previously announced strategic alternatives process, the special committee of the board of directors has received several proposals to acquire the Company or certain of its assets. Following evaluation of the proposals, the special committee is currently in discussions with a potential acquiror of the entire Company and expects to receive a formal offer from such party and begin negotiating a letter of intent within the next 30 days. There is no assurance that the Company will receive an offer or enter into any agreement with such party.
- Revenues for the second quarter of 2018 were
$18.2 million, as compared to $16.9 millionfor the first quarter of 2018 and $12.3 millionfor the second quarter of 2017.1
- Operating income for the second quarter of 2018 was
$6.9 million, as compared to $4.8 millionfor the first quarter of 2018 and $2.1 millionfor the second quarter of 2017.
- Net loss was
$1.0 millionfor the second quarter of 2018, as compared to $1.8 millionfor the first quarter of 2018 and net income of $0.6 millionfor the second quarter of 2017.
- Adjusted EBITDAX for the second quarter of 2018 was
$8.7 million, as compared to $8.3 millionfor the first quarter of 2018 and $6.8 millionfor the second quarter of 2017.2
- Average daily net sales volumes were approximately 2,746 barrels of oil equivalent per day (“BOEPD”) in the second quarter of 2018, as compared to 2,885 BOEPD in the first quarter of 2018 and 3,308 BOEPD in the second quarter of 2017.
- The Company’s year-to-date average daily net wellhead production through
July 2018was approximately 2,885 BOEPD, comprised of 2,772 barrels of oil per day (“BOPD”) and 0.7 million cubic feet of natural gas per day (“MMCFPD”), and the Company’s July 2018average daily net wellhead production was approximately 3,103 BOEPD, comprised of 3,003 BOPD and 0.6 MMCFPD.
- Net debt as of
June 30, 2018was $11.5 million, as compared to $8.2 millionas of March 31, 2018.3
2 Adjusted EBITDAX is a non-GAAP financial measure. See the reconciliation at the end of the press release.
3 Net debt is a non-GAAP financial measure consisting of total debt as reflected on the Company’s balance sheet minus cash and cash equivalents as reflected on the Company’s balance sheet. For
Second Quarter 2018 Results of Operations
|For the Three Months Ended|
|Natural gas (MMCF)||56||67||66|
|Total net sales (MBOE)||250||260||301|
|Average net sales (BOEPD)||2,746||2,885||3,308|
|Realized Commodity Prices:|
|Oil ($/BBL unhedged)||$||74.10||$||65.71||$||41.27|
|Oil ($/BBL hedged)||$||66.37||$||60.32||$||41.38|
|Natural gas ($/MCF)||$||4.84||$||5.00||$||4.77|
Total revenues were
Adjusted EBITDAX for the three months ended
Impact of Foreign Currency Exchange
During the three months ended
The Company records its foreign operations’ assets, liabilities, and transactions in the functional currency, which for
Strategic Alternatives Process
Costs associated with the strategic alternatives process, which include professional expenses and travel, were approximately
During the second quarter of 2018, the Company spud one well and continued workover and recompletion production optimizations in southeastern
The following summarizes the Company’s operations by location during the second quarter of 2018 and the Company’s drilling plans by location for the remainder of 2018:
In the second quarter of 2018, the Company vertically completed the Selmo-81H2 well and established commercial production of 68 BOPD.
Workover and recompletion production optimizations in the Selmo field are ongoing, but the Company does not expect to drill additional wells in the Selmo field in the second half of 2018.
The Company spud the Bahar-8 well targeting the Bedinan, Hazro, and Mardin formations in
After drilling the Bahar-8 well, the Company moved the rig to the Bahar-10 well location and spud the Bahar-10 well on
In the second quarter of 2018, the Company drilled the Yeniev-1 well to a total depth of 10,306 feet. Oil shows while drilling and log analysis indicate prospective pay in the Bedinan, Hazro, and Mardin formations. The Company perforated the first zone in the Bedinan formation on
The Yeniev-1 well is a discovery on a new structure in the Molla area, opening up potentially significant drilling locations and potentially leading to additional development drilling. The Company expects to drill two additional wells to further delineate this structure in the second half of 2018.
The Company continues to test the Cavuslu-1 well following the discovery of hydrocarbons in the Bedinan and Dadas formations. The Company recently completed the Mardin zone at 25-40 BOPD after acid stimulation. The Company will test this isolated zone for approximately 30 days. Following this testing, the Company expects to begin long-term production in one or more of the tested zones.
The Company expects to fracture stimulate the Bedinan formation in the Pinar-1 well during the third quarter of 2018.
The Company has completed the 3D seismic processing and initial interpretation of its East Molla 3D seismic and has identified several prospects, which the Company expects to drill in the first half of 2019, contingent on financing.
Thrace Basin BCGA
The Company continues to evaluate its prospects in the Thrace Basin BCGA in light of the recent positive production test results at the Yamalik-1 exploration well operated by Valeura Energy Inc. (“Valeura”) with their partner
The Company expects to resume production operations on the Yildurm-1 well in the second half of 2018
The Company has prepared plans to side track and re-drill the Devinci R-1 well, which the Company plans to commence in the third quarter of 2018.
The Company’s year-to-date average daily net wellhead production through
Due to the continuation of the strategic alternatives process, the Company has decided not to hold an earnings call to discuss its results for the second quarter of 2018.
Quarterly Report on Form 10-Q
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
|For the Three Months
|For the Six Months
|Oil and natural gas sales||$||18,100||$||12,283||$||34,761||$||28,051|
|Sales of purchased natural gas||1||-||1||654|
|Costs and expenses:|
|Transportation and processing||1,138||-||2,331||-|
|Exploration, abandonment and impairment||191||2||231||108|
|Cost of purchased natural gas||1||-||1||568|
|Seismic and other exploration||59||65||218||80|
|General and administrative||3,786||3,181||7,123||6,771|
|Depreciation, depletion and amortization||3,276||4,255||7,735||8,752|
|Accretion of asset retirement obligations||43||47||89||95|
|Total costs and expenses||11,297||10,264||23,400||22,175|
|Other income (expense):|
|Loss on sale of TBNG||-||-||-||(15,226||)|
|Interest and other expense||(2,091||)||(2,288||)||(4,873||)||(4,659||)|
|Interest and other income||377||188||631||481|
|(Loss) gain on derivative contracts||(3,141||)||676||(3,866||)||1,664|
|Foreign exchange (loss) gain||(1,938||)||1,116||(3,996||)||(1,007||)|
|Total other expense||(6,793||)||(308||)||(12,104||)||(18,747||)|
|Income (loss) from operations before income taxes||108||1,769||(380||)||(12,145||)|
|Income tax expense||(1,114||)||(1,203||)||(2,401||)||(3,338||)|
|Net income (loss)||(1,006||)||566||(2,781||)||(15,483||)|
|Other comprehensive income (loss):|
|Foreign currency translation adjustment||(9,109||)||2,132||(11,452||)||23,051|
|Comprehensive (loss) income||$||(10,115||)||$||2,698||$||(14,233||)||$||7,568|
|Net earnings (loss) per common share|
|Basic net earnings (loss) per common share||$||(0.02||)||$||0.01||$||(0.06||)||$||(0.33||)|
|Weighted average common shares outstanding||50,420||47,412||50,397||47,355|
|Diluted net earnings (loss) per common share||$||(0.02||)||$||0.01||$||(0.06||)||$||(0.33||)|
|Weighted average common and common equivalent shares
Summary of Consolidated Statements of Cash Flows (Unaudited)
(in thousands of
|For the Six Months Ended
|Net cash provided by operating activities||$||12,234||$||13,577|
|Net cash provided by (used in) investing activities||(11,446||)||6,092|
|Net cash provided by (used in) financing activities||1,735||(15,555||)|
|Effect of exchange rate changes on cash||(4,104||)||(1,713||)|
|Net increase (decrease) in cash, cash equivalents, and restricted cash||$||(1,581||)||$||2,401|
Summary Consolidated Balance Sheets
(in thousands of
|Cash and cash equivalents||$||18,715||$||18,926|
|Accounts receivable, net|
|Oil and natural gas sales||17,997||15,808|
|Joint interest and other||1,121||1,576|
|Prepaid and other current assets||7,333||3,866|
|Total current assets||52,517||48,693|
|Property and equipment:|
|Oil and natural gas properties (successful efforts method)|
|Equipment and other property||12,525||14,075|
|Less accumulated depreciation, depletion and amortization||(114,109||)||(129,183||)|
|Property and equipment, net||88,327||102,984|
|Other long-term assets:|
|Note receivable - related party||6,287||6,726|
|Total other assets||6,948||8,973|
|LIABILITIES, SERIES A PREFERRED SHARES AND SHAREHOLDERS' EQUITY|
|Accounts payable - related party||3,388||3,141|
|Asset retirement obligations - current||4||-|
|Total current liabilities||43,027||35,848|
|Asset retirement obligations less current portion||4,143||4,727|
|Deferred income taxes||16,957||19,611|
|Total long-term liabilities||40,138||46,148|
|Commitments and contingencies|
|Series A preferred shares,
shares issued and outstanding with a liquidation preference of
|Series A preferred shares-related party,
authorized; 495,000 shares issued and outstanding with a liquidation preference of
shares and 50,319,156 shares issued and outstanding as of
|Accumulated other comprehensive loss||(136,218||)||(124,766||)|
|Total shareholders' equity||18,578||32,604|
|Total liabilities, Series A preferred shares and shareholders' equity||$||147,792||$||160,650|
Reconciliation of Net Loss to Adjusted EBITDAX (Unaudited)
(in thousands of
|For the Three Months Ended||For the Six Months Ended|
|Interest and other, net||1,714||2,528||2,100||4,242||4,178|
|Current and deferred income tax expense||1,114||1,287||1,203||2,401||3,338|
|Exploration, abandonment, and impairment||191||40||2||231||108|
|Seismic and other exploration expense||59||159||65||218||80|
|Foreign exchange loss (gain)||1,938||2,058||(1,116||)||3,996||1,007|
|Share-based compensation expense||117||101||278||218||414|
|(Gain) loss on commodity derivative contracts||3,141||725||(676||)||3,866||(1,664||)|
|Cash settlements on commodity derivative contracts||(1,860||)||(1,339||)||32||(3,200||)||32|
|Accretion of asset retirement obligation||43||46||47||89||95|
|Depreciation, depletion, and amortization||3,276||4,459||4,255||7,735||8,752|
|Loss on sale of TBNG||-||-||-||-||15,226|
|Net other items||-||-||30|
Adjusted EBITDAX (“Adjusted EBITDAX”) is a non-GAAP financial measure that represents net loss plus interest and other, net, current and deferred income tax expense, exploration, abandonment, and impairment, seismic and other exploration expense, foreign exchange loss (gain), share based compensation expense, loss (gain) on commodity derivative contracts, cash settlements on commodity derivative contracts, accretion of asset retirement obligation, depreciation, depletion, and amortization, loss on sale of TBNG, and net other items.
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 and impairment of oil and natural gas properties and exploration expenses, 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 or income prepared in accordance with GAAP. Net income or 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 strategic alternatives process, the Company’s drilling program, the evaluation of the Company’s prospects in the Selmo field and the Molla area of southeastern
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, access to sufficient capital; 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 products; 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; renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflict; 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.
Vice President, General Counsel and Corporate Secretary
Source: TransAtlantic Petroleum Ltd.