TransAtlantic Petroleum Announces Third Quarter 2018 Financial Results and Provides an Operations Update
- For an update on the Company’s strategic alternatives process, please see below.
- Revenues for the third quarter of 2018 were
$20.1 million, up 11% from $18.2 millionfor the second quarter of 2018 and up 59% from $12.7 millionfor the third quarter of 2017.1
- Operating income for the third quarter of 2018 was
$11.0 million, up 59% from $6.9 millionfor the second quarter of 2018 and up 3,995% from a $0.3 millionoperating loss for the third quarter of 2017.
December 31, 2017to September 30, 2018, the Turkish Lira to the U.S.Dollar declined 58.8%. At September 30, 2018, the exchange rate was 5.9902 as compared to 3.7719 at December 31, 2017. This resulted in a foreign exchange loss of $7.0 millionfor the nine months ended September 30, 2018.
- Net loss for the third quarter of 2018 was
$1.7 million, up 71% from $1.0 millionfor the second quarter of 2018 and down 60% from $4.4 millionfor the third quarter of 2017.
- Adjusted EBITDAX for the third quarter of 2018 was
$13.9 million, up 59% from $8.7 millionfor the second quarter of 2018 and up 90% from $7.3 millionfor the third quarter of 2017.2
- Average daily net sales volumes in the third quarter of 2018 were approximately 2,917 barrels of oil equivalent per day (“BOEPD”), up 6% from 2,746 BOEPD in the second quarter of 2018 and up 2% from 2,862 BOEPD in the third quarter of 2017.
- The Company’s year-to-date average daily net wellhead production through
October 2018was approximately 2,865 BOEPD, comprised of 2,762 barrels of oil per day (“BOPD”) and 0.6 million cubic feet of natural gas per day (“MMCFPD”), and the Company’s October 2018average daily net wellhead production was approximately 2,946 BOEPD, comprised of 2,842 BOPD and 0.6 MMCFPD.
- Total debt as of
September 30, 2018was $26.2 million, down 14% from $30.4 millionas of June 30, 2018. Net debt as of September 30, 2018was $12.6 million, up 10% from $11.5 millionas of June 30, 2018.3
2 Adjusted EBITDAX is a non-GAAP financial measure. See the reconciliation at the end of the press release.
3 Net debt is a non-GAAP financial measure consisting of total debt as reflected on the Company’s balance sheet minus cash and cash equivalents as reflected on the Company’s balance sheet. For
Second Quarter 2018 Results of Operations
|For the Three Months Ended|
|Natural gas (MMCF)||45||56||58|
|Total net sales (MBOE)||268||250||263|
|Average net sales (BOEPD)||2,917||2,746||2,862|
|Realized Commodity Prices:|
|Oil ($/BBL unhedged)||$||76.32||$||74.10||$||47.88|
|Oil ($/BBL hedged)||$||74.36||$||66.37||$||47.88|
|Natural gas ($/MCF)||$||4.23||$||4.84||$||4.82|
Total revenues were
Adjusted EBITDAX for the three months ended
Impact of Foreign Currency Exchange
The Company’s operations and revenue streams are primarily located in
Income Statement Effect
Balance Sheet Effect
For the nine months ended
For more information regarding the effects of foreign currency exchange on the Company’s operations and reported financial results, please refer to the Annual Report on Form 10-K for the year ended
Strategic Alternatives Process
In light of the improvement in fundamentals and the Company’s outlook on current prospects, the board of directors believes that continuing to explore and develop the Company’s inventory is currently the best opportunity to maximize shareholder value. As a result, the Company has adopted a 2019 capital expenditure plan that includes
The Company expects that cash on hand and cash flow from operations will be sufficient to fund its 2019 capital expenditure plan. If not, the Company will either curtail its 2019 capital expenditures or seek other funding sources. The Company’s projected 2019 capital expenditure plan is subject to change.
Costs associated with the strategic alternatives process, which include professional expenses and travel, were approximately
During the third quarter of 2018, the Company spud two wells and continued workover and recompletion production optimizations in southeastern
Workover and recompletion production optimizations in the Selmo field are ongoing. The Company does not expect to drill additional wells in the Selmo field during the remainder of 2018.
In the third quarter of 2018, the Company finished drilling and completed both the Bahar-8 and Bahar-10 wells. The Company put both wells on production in November. In the fourth quarter of 2018, the Company plans to spud the SE Bahar-1 well on the southeastern flank of the Bahar field to test the Dadas Sand and Mardin formations.
In the second quarter of 2018, the Company drilled the Yeniev-1 well. The Yeniev-1 well is a discovery on a new structure in the Molla area with the potential for a significant number of future offset drilling locations. By natural flow, the Yiniev-1 well produced 45,922 bbl (330 Bopd) through
In the second quarter of 2018, the Company was awarded a production license for the M44-b2-1 block, which covers 37,700 acres contiguous to its acreage in West Molla. This license includes the Catak, Pinar, and Yeniev wells.
Since the first quarter of 2018, the Pinar-1 well had been intermittently producing due to a mechanical blockage in the well. The equipment causing the blockage was recovered in the third quarter of 2018 and the Pinar-1 well was fracture stimulated in the Bedinan formation. The well was put on production in September of 2018, with an initial production rate of 65 Bopd.
In the third quarter of 2018, the Cavuslu-1 well was put on production with an initial production rate of 31 Boped from the Mardin formation. Additional oil that was tested in the Bedinan and Dadas formations will be added after a long-term test period.
The Company has completed the 3D seismic processing and initial interpretation of East Molla 3D seismic and has identified several prospects, which it 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 production test results at the Yamalik-1 exploration well operated by Valeura Energy Inc. (“Valeura”) with their partner
The Company expects to spud the Karli-1 well, a gas exploration well in the Thrace Basin BCGA, following its drilling efforts with respect to its
The Company has prepared plans to side track and re-drill the Deventci R-1 well, which is scheduled to commence in the fourth quarter of 2018.
The Company’s year-to-date average daily net wellhead production through
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
Quarterly Report on Form 10-Q
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
|For the Three Months Ended||For the Nine Months Ended|
|Oil and natural gas sales||$||20,098||$||12,424||$||54,859||$||40,475|
|Sales of purchased natural gas||-||-||1||654|
|Costs and expenses:|
|Transportation and processing||1,054||-||3,385||-|
|Exploration, abandonment and impairment||162||141||393||249|
|Cost of purchased natural gas||-||-||1||568|
|Seismic and other exploration||122||2,966||340||3,046|
|General and administrative||2,539||2,532||9,662||9,303|
|Depreciation, depletion and amortization||2,938||4,272||10,673||13,024|
|Accretion of asset retirement obligations||35||49||124||144|
|Total costs and expenses||9,157||12,957||32,557||35,132|
|Operating income (loss)||10,983||(282||)||22,707||6,320|
|Other income (expense):|
|Loss on sale of TBNG||-||-||-||(15,226||)|
|Interest and other expense||(2,776||)||(2,322||)||(7,649||)||(6,981||)|
|Interest and other income||211||182||842||663|
|(Loss) gain on derivative contracts||(1,290||)||(1,365||)||(5,156||)||299|
|Foreign exchange loss||(2,991||)||(48||)||(6,987||)||(1,055||)|
|Total other expense||(6,846||)||(3,553||)||(18,950||)||(22,300||)|
|Income (loss) from operations before income taxes||4,137||(3,835||)||3,757||(15,980||)|
|Income tax expense||(5,857||)||(518||)||(8,258||)||(3,856||)|
|Other comprehensive income (loss):|
|Foreign currency translation adjustment||(11,765||)||(1,223||)||(23,217||)||21,828|
|Comprehensive (loss) income||$||(13,485||)||$||(5,576||)||$||(27,718||)||$||1,992|
|Net loss per common share|
|Basic net loss per common share||$||(0.03||)||$||(0.09||)||$||(0.09||)||$||(0.42||)|
|Weighted average common shares outstanding||50,597||47,725||50,465||47,725|
|Diluted net loss per common share||$||(0.03||)||$||(0.09||)||$||(0.09||)||$||(0.42||)|
|Weighted average common and common equivalent shares outstanding||50,597||47,725||50,465||47,725|
Summary of Consolidated Statements of Cash Flows (Unaudited)
(in thousands of
|For the Nine Months Ended
|Net cash provided by operating activities||$||25,216||$||16,079|
|Net cash provided by (used in) investing activities||(20,962||)||3,096|
|Net cash provided by (used in) financing activities||(2,440||)||(29,661||)|
|Effect of exchange rate changes on cash||(8,535||)||(118||)|
|Net increase (decrease) in cash, cash equivalents, and restricted cash||$||(6,721||)||$||(10,604||)|
Summary Consolidated Balance Sheets
(in thousands of
|Cash and cash equivalents||$||13,576||$||18,926|
|Accounts receivable, net|
|Oil and natural gas sales||21,563||15,808|
|Joint interest and other||907||1,576|
|Prepaid and other current assets||7,688||3,866|
|Total current assets||49,565||48,693|
|Property and equipment:|
|Oil and natural gas properties (successful efforts method)|
|Equipment and other property||12,008||14,075|
|Less accumulated depreciation, depletion and amortization||(90,134||)||(129,183||)|
|Property and equipment, net||72,798||102,984|
|Other long-term assets:|
|Note receivable - related party||6,068||6,726|
|Total other assets||6,843||8,973|
|LIABILITIES, SERIES A PREFERRED SHARES AND SHAREHOLDERS' EQUITY|
|Accounts payable - related party||3,059||3,141|
|Asset retirement obligations - current||4.00||-|
|Total current liabilities||46,089||35,848|
|Asset retirement obligations less current portion||3,353||4,727|
|Deferred income taxes||16,894||19,611|
|Total long-term liabilities||31,853||46,148|
|Commitments and contingencies|
|Series A preferred shares,
|Series A preferred shares-related party,
|Accumulated other comprehensive loss||(147,983||)||(124,766||)|
|Total shareholders' equity||5,214||32,604|
|Total liabilities, Series A preferred shares and shareholders' equity||$||129,206||$||160,650|
Reconciliation of Net Loss to Adjusted EBITDAX (Unaudited)
(in thousands of
|For the Three Months Ended||For the Nine Months Ended|
|Interest and other expense||2,776||2,091||2,322||7,649||6,981|
|Interest and other income||(211||)||(377||)||(182||)||(842||)||(663||)|
|Income tax expense||5,857||1,114||518||8,258||3,856|
|Exploration, abandonment, and impairment||162||191||141||393||249|
|Seismic and other exploration expense||122||59||2,966||340||3,046|
|Foreign exchange loss||2,991||1,938||48||6,987||1,055|
|Share-based compensation expense||122||117||142||340||556|
|(Gain) loss on derivative contracts||1,290||3,141||1,365||5,156||(299||)|
|Cash settlements on commodity derivative contracts||(511||)||(1,860||)||-||(3,710||)||32|
|Accretion of asset retirement obligation||35||43||49||124||144|
|Depreciation, depletion, and amortization||2,938||3,276||4,272||10,673||13,024|
|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 expense, interest and other income, income tax expense, exploration, abandonment, and impairment, seismic and other exploration expense, foreign exchange loss, share-based compensation expense, loss (gain) on 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, 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 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 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.