March 16, 2015

TransAtlantic Petroleum Announces Fourth Quarter and Year-End 2014 Financial Results and Provides an Operations Update

HAMILTON, Bermuda, March 16, 2015 (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, 2014 and provided an operations update. Additional information and an updated company presentation can be found on TransAtlantic's website at www.TransAtlanticPetroleum.com.

Highlights

  • Earnings per share increased to $0.77 in 2014 from a loss of $0.36 per share in 2013.
  • Increased Adjusted EBITDAX from continuing operations in 2014 by 16% to $89.6 million (Adjusted EBITDAX is a non-GAAP financial measure that is defined and reconciled to net income at the end of this press release).
  • Record average net sales volumes of 5,969 barrels of oil equivalent per day ("BOEPD") in the fourth quarter of 2014 compared to 5,033 BOEPD in the previous quarter and 4,391 BOEPD in the fourth quarter of 2013.
  • Record wellhead production of 1.9 million barrels of oil equivalent ("MMBOE") in 2014, as compared to 1.6 MMBOE in 2013.
  • Increased revenue to $140.7 million in 2014, an increase of 8% from $130.8 million in 2013 despite 12% decrease in average sales price.
  • Drilled 29 gross and 21.7 net wells with a net success rate of 89%.
  • Successfully completed acquisition of Stream Oil & Gas, now known as TransAtlantic Albania Ltd., resulting in addition of 13.9 MMBOE of Proved Developed reserves at December 31, 2014.
  • Achieved record reserves growth. Total proved reserves increased 168% to 32.7 MMBOE. This includes standalone organic growth of 40% in Turkey.
  • Successfully issued private convertible notes for $55 million.
 For the Three Months Ended
 December 31, 2014September 30, 2014December 31, 2013
Net Sales:   
Oil (MBbls) 420 341 233
Natural gas (MMCF) 775 731 1,028
Total net sales (MBOE) 549 463 404
Average net sales (BOEPD) 5,969 5,033 4,391
Realized Commodity Prices:      
Oil ($/Bbl unhedged)  $ 53.19  $ 86.01  $ 104.04
Oil ($/Bbl hedged)  $ 56.66  $ 83.00  $ 100.33
Natural gas ($/MCF unhedged)  $ 9.16  $ 8.49  $ 8.93
Natural gas ($/MCF hedged)  $ 9.16  $ 8.49  $ 8.93

Total revenues were $29.9 million for the three months ended December 31, 2014, compared to $36.1 million for the three months ended September 30, 2014 and $33.9 million for the three months ended December 31, 2013. For the three months ended December 31, 2014, TransAtlantic had a net profit from continuing operations of $15.4 million, or $0.39 per share (basic and diluted), compared to a net profit from continuing operations of $8.3 million, or $0.22 per share (basic and diluted), for the three months ended September 30, 2014 and 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. The net profit for the fourth quarter of 2014 included $35.0 million of derivative gains, $11.4 million of exploration, abandonment and impairment charges and $0.6 million of foreign exchange losses.

Adjusted EBITDAX from continuing operations for the three months ended December 31, 2014 was $16.2 million, compared to $24.1 million for the three months ended September 30, 2014 and $20.9 million for the three months ended December 31, 2013. The fourth quarter of 2014 EBITDAX included the impact of oil price declines which lowered revenue by approximately $13.0 million versus the third quarter. G&A increased approximately $2.7 million for the fourth quarter of 2014 compared to the same quarter in 2013 due to acquisition and financing costs for Stream, severance due to downsizing and the write-off of a partner's receivable in Bulgaria.

2014 Annual Results

Revenues for the twelve months ended December 31, 2014 were $140.7 million, compared to $130.8 million for the twelve months ended December 31, 2013. The increase in annual revenues was primarily attributable to a 24% increase in net sales volumes countered with a 12% decrease in average price per BOE. For the twelve months ended December 31, 2014, TransAtlantic had a net profit from continuing operations of $29.1 million, or $0.77 per share (basic and diluted), compared to a net loss from continuing operations of $13.3 million, or $0.36 per share (basic and diluted), for the twelve months ended December 31, 2013.  The 2014 net profit included a derivative gain of $37.5 million compared to a loss of $2.7 million in 2013, $19.9 million of exploration, abandonment and impairment charges compared to $27.3 million in 2013, and $4.3 million of seismic and other exploration expenses compared to $14.0 million in 2013.

Adjusted EBITDAX from continuing operations for the twelve months ended December 31, 2014 was $89.6 million compared to $77.0 million for the twelve months ended December 31, 2013 as a result of increased net sales and revenue.   

Capitalization and Liquidity

As of December 31, 2014, TransAtlantic had $35.1 million of cash on hand. The Company's total outstanding debt was $158.6 million (representing a net debt leverage ratio of 1.4x on 2014 Adjusted EBITDAX) at December 31, 2014. Total outstanding debt included short-term debt of $52.6 million. In addition, TransAtlantic has an oil hedging portfolio with a value of $31.6 million at December 31, 2014.

Between December 29, 2014 and February 20, 2015, TransAtlantic sold $55.0 million of convertible notes in a non-brokered private placement. The notes bear interest at a rate of 13.0% per annum and mature on July 1, 2017. As of December 31, 2014, the Company recorded $47.4 million of loans payable related to the convertible notes.

During the first quarter of 2015, the Board of Directors of TransAtlantic authorized a share repurchase plan of up to two million shares subject to available working capital.

Malone Mitchell 3rd, TransAtlantic's Chairman and CEO commented: "The proceeds from our production sales, the notes, our existing hedge positions, and current cost-cutting actions give us sufficient liquidity to further the development of our projects, assimilate the Stream acquisition, restructure the balance sheet from current to longer term debt maturities, pay debt as scheduled and to reacquire some shares at these opportune prices."

Impact of Foreign Currency Exchange

The Company records its foreign operations' assets, liabilities and transactions in functional currency, which for Turkey is the New Turkish Lira, for Bulgaria is the Bulgarian Lev and for Albania is the US Dollar. For more information regarding the effects of foreign currency exchange on company operations and reported financials please refer to the Annual Report on Form 10-K for the year ended December 31, 2014.

Operational Update

TransAtlantic's 2015 year-to-date net production has been approximately 6,295 BOEPD, comprised of 4,569 barrels of oil per day ("BOPD") and 8.7 million cubic feet of natural gas per day ("MMCFPD"). During the first quarter of 2015, the Company completed three wells in Turkey and reduced costs.

In the first quarter of 2015, the Company drilled and completed the Gurgen-3 well, which produced at an initial rate of 1.5 MMCFPD. The Company also drilled and logged the Pinar-1 well, revealing approximately 100 feet of potential pay zone in the Bedinan and Hazro formations. The well is expected to be completed in the second quarter of 2015. In addition, the Company has begun completion operations on the Ebyat-2 exploration well, which was drilled on the Idil block in Southeastern Turkey late in the fourth quarter of 2014.

The Company's efforts in Albania are fully underway. The Company has installed and empowered a new management team in Tirana led by Doug Nester, Vice President of Albania, and restructured its field operations. TransAtlantic has begun to integrate the well and geological data from the fields and prioritize a workover program which could begin in the second quarter of 2015. In addition, the Company expects to resume drilling the Delvina-D34H1 gas well in March of 2015.

TransAtlantic's geological team continues to high grade prospects, focusing on the highest risk adjusted return for the 2015 Drilling Program in the current price environment. The Company's engineering teams are optimizing well design, streamlining operations and negotiating with service providers in order to reduce 2015 well costs.

In the second quarter of 2015, TransAtlantic expects to resume drilling in Southeastern Turkey in the Bahar and Goksu fields.

First Quarter 2015 Operations Update

TransAtlantic expects to issue a quarterly operations update by April 8, 2015.

Conference Call

The Company has scheduled a conference call for Tuesday, March 17, 2015 at 7:30 a.m. Central (8:30 a.m. Eastern) to discuss fourth quarter and annual 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 64124639. A replay will be available through March 18, 2015 and may be accessed by dialing (855) 859-2056 or (404) 537-3406. The conference ID is 64124639.

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, 2014 on March 16, 2015.

TransAtlantic Petroleum Ltd.
Consolidated Statements of Comprehensive Income (Loss)
           
   For the Twelve Months Ended
 For the Three Months EndedDec 31,
 Dec 31, 2014Sept 30, 2014Dec 31, 201320142013
 (Unaudited)(Unaudited)(Unaudited)    
Revenues:          
Total revenues  $ 29,944  $ 36,077  $ 33,922  $ 140,728  $ 130,827
Costs and expenses:          
Production 6,681 4,521 5,156 19,999 18,602
Transportation costs 284 - - 284 -
Exploration, abandonment and impairment 11,366 582 9,341 19,864 27,333
Cost of purchased natural gas 788 342 437 2,055 2,247
Seismic and other exploration 70 29 7,624 4,285 14,009
Revaluation of contingent consideration - - - (2,500) (5,000)
General and administrative 10,965 6,648 8,237 31,625 29,020
Depreciation, depletion and amortization 12,223 14,026 11,278 48,927 41,322
Accretion of asset retirement obligations 106 103 141 413 508
Total costs and expenses 42,483 26,251 42,214 124,952 128,041
Operating (loss) income (12,539) 9,826 (8,292) 15,776 2,786
Other income (expense):          
Interest and other expense (1,801) (1,440) (1,165) (6,213) (3,929)
Interest and other income 272 252 376 1,124 1,340
Gain (loss) on commodity derivative contracts 35,021 10,993 (3,063) 37,454 (2,698)
Foreign exchange (loss) gain (606) (6,542) (3,710) (5,998) (9,663)
Total other income (expense) 32,886 3,263 (7,562) 26,367 (14,950)
Income (loss) from continuing operations before income taxes 20,347 13,089 (15,854) 42,143 (12,164)
Current income tax (expense) benefit (586) (291) 455 (1,784) (128)
Deferred income tax (expense) benefit (4,408) (4,485) 1,011 (11,263) (979)
Net income (loss) from continuing operations 15,353 8,313 (14,388) 29,096 (13,271)
Net (loss) income from discontinued operations - - (194) (20) (442)
Net income (loss) 15,353 8,313 (14,582) 29,076 (13,713)
Other comprehensive income (loss):          
Foreign currency translation adjustment (3,466) (12,656) (9,968) (14,325) (36,973)
Comprehensive income (loss)  $ 11,887 $ (4,343) $ (24,550)  $ 14,751 $ (50,686)
           
Net income (loss) per common share          
Basic net income (loss) per common share          
Continuing operations  $ 0.39  $ 0.22 $ (0.39)  $ 0.77 $ (0.36)
Discontinued operations $ -  $ -  $ (0.01) $ (0.00) $ (0.01)
Weighted average common shares outstanding 39,024 37,483 37,339 37,829 37,069
Diluted net income (loss) per common share          
Continuing operations $ 0.39  $ 0.22 $ (0.39)  $ 0.77 $ (0.36)
Discontinued operations $ -  $ -  $ (0.01) $ (0.00) $ (0.01)
Weighted average common and common equivalent shares outstanding 39,223 37,607 37,339 38,031 37,069
           
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 Year Ended December 31,
U.S. Dollars in thousands20142013
Net cash provided by operating activities from continuing operations  $ 78,114  $ 68,776
Net cash used in investing activities from continuing operations (117,196) (105,109)
Net cash provided by financing activities from continuing operations 61,561 36,960
Net cash provided by (used in) discontinued operations 438 (410)
Effect of exchange rate changes on cash (666) (2,104)
Net decrease in cash and cash equivalents  $ 22,251 $ (1,887)
     
     
TransAtlantic Petroleum Ltd.
Summary Consolidated Balance Sheets
     
 As of
U.S. Dollars in thousandsDecember 31, 2014December 31, 2013
ASSETS    
Current assets:    
Cash and cash equivalents  $ 35,132  $ 12,881
Accounts receivable 50,193 46,971
Prepaid and other current assets 23,365 5,072
Deferred income taxes 329 2,239
Assets held for sale 28 536
Total current assets 109,047 67,699
Property and equipment, gross 531,812 355,165
Less accumulated depreciation, depletion and amortization (141,977) (104,193)
Property and equipment, net 389,835 250,972
Total other assets 47,521 27,915
Total assets  $ 546,403  $ 346,586
LIABILITIES & SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 57,895  $ 39,802
Accrued liabilities and other 31,561 21,268
Deferred income taxes 2,138 --
Derivative liabilities -- 3,737
Loans payable 52,606 43,284
Liabilities held for sale 6,928 7,559
Total current liabilities 151,128 115,650
Total liabilities 334,939 179,269
Total shareholders' equity 211,464 167,317
Total liabilities and shareholders' equity  $ 546,403  $ 346,586
     

Reconciliation of Net Income (loss) to Adjusted EBITDAX (Unaudited)

 For the Three Months EndedFor the Twelve Months Ended
U.S. Dollars in thousandsDec 31, 2014Sept 30, 2014Dec 31, 201320142013
Net income (loss) from continuing operations  $ 15,353  $ 8,313 $ (14,388)  $ 29,096 $ (13,271)
Adjustments:          
Interest and other, net 1,529 1,188 789 5,089 2,589
Current and deferred income tax expense (benefit) 4,994 4,776 (1,466) 13,047 1,107
Exploration, abandonment, and impairment 11,366 582 9,341 19,864 27,333
Seismic expense 96 29 7,547 4,076 13,668
Foreign exchange loss 606 6,542 3,710 5,998 9,663
Share-based compensation 477 244 388 1,434 1,716
(Gain) loss on commodity derivative contracts (35,021) (10,993) 3,063 (37,454) 2,698
Cash settlements on commodity derivative contracts 1,459 (1,026) (865) (2,100) (3,520)
Accretion of asset retirement obligation 106 103 141 413 508
Depreciation, depletion, and amortization 12,223 14,026 11,278 48,927 41,322
Revaluation of contingent consideration -- -- -- (2,500) (5,000)
Bad debt expense 1,487 -- -- 1,487 --
Net other items 1,500 273 1,336 2,215 (1,815)
Adjusted EBITDAX from continuing operations  $ 16,175  $ 24,057  $ 20,874  $ 89,592  $ 76,998

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, Albania 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.

CONTACT: Lizzy Chesnut

         Investor Relations

         (214) 265-4716

         

         Wil Saqueton

         VP & CFO

         (214) 220-4323

         

         TransAtlantic Petroleum Ltd.

         16803 Dallas Parkway

         Addison, Texas 75001

         http://www.transatlanticpetroleum.com


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