TransAtlantic Petroleum Ltd. (TSX:TNP) (NYSE
American:TAT) (the “Company” or “TransAtlantic”) today announced
the financial results for the quarter ended March 31, 2018 and
provided an operations update. Additional information can be found
on the Company’s website at http://www.transatlanticpetroleum.com.
Summary
- The Company continues its marketing process with Tudor
Pickering Holt & Co. with the expectation that it will receive
indications of interest during the second quarter of 2018.
- Revenues for the first quarter of 2018 were $16.9 million, as
compared to $15.2 million for the fourth quarter of 2017 and $16.4
million for the first quarter of 2017.1
- Operating income for the first quarter of 2018 was $4.8
million, as compared to $1.9 million for the fourth quarter of 2017
and $4.5 million for the first quarter of 2017.
- Net loss from continuing operations was $1.8 million for the
first quarter of 2018, as compared to $4.0 million in the fourth
quarter of 2017 and $16.0 million in the first quarter of 2017, of
which $15.2 million was from the sale of Thrace Basin Natural Gas
(Turkiye) Corporation (“TBNG”).
- Adjusted EBITDAX from continuing operations for the first
quarter of 2018 was $8.3 million, as compared to $8.4 million for
the fourth quarter of 2017 and $9.4 million for the first quarter
of 2017.2
- Average daily net sales volumes from continuing operations were
approximately 2,885 barrels of oil equivalent per day (“BOEPD”) in
the first quarter of 2018, as compared to 2,799 BOEPD in the fourth
quarter of 2017 and 3,833 BOEPD in the first quarter of 2017.
- The Company’s 2018 year-to-date daily net wellhead production
is approximately 2,885 BOEPD, comprised of 2,760 barrels of oil per
day (“BOPD”) and 0.7 million cubic feet of natural gas per day
(“MMCFPD”).
- Net debt as of March 31, 2018 was $8.2 million, as compared to
$9.7 million as of December 31, 2017.3
__________________________
1 Beginning January 1, 2018, the Company adopted
Accounting Standards Update No. 2014-09, Revenue from Contacts with
Customers (Topic 606), requiring transportation and processing
expenses previously netted from revenue classified as expenses.
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 March 31, 2018 total debt was $24.5
million and cash and cash equivalents was $16.3 million. For
December 31, 2017 total debt was $28.6 million and cash and cash
equivalents was $18.9 million.
First Quarter 2018 Results of Continuing
Operations
|
|
|
For the Three Months Ended |
|
March 31, 2018 |
|
|
December 31, 2017 |
|
|
March 31, 2017 |
Net Sales: |
|
|
|
|
|
|
|
|
|
|
Oil
(MBBL) |
|
248 |
|
|
|
246 |
|
|
|
314 |
Natural
gas (MMCF) |
|
67 |
|
|
|
68 |
|
|
|
184 |
Total net
sales (MBOE) |
|
260 |
|
|
|
258 |
|
|
|
345 |
Average
net sales (BOEPD) |
|
2,885 |
|
|
|
2,799 |
|
|
|
3,833 |
Realized Commodity
Prices: |
|
|
|
|
|
|
|
|
|
|
Oil
($/Bbl unhedged) |
$ |
65.71 |
|
|
$ |
59.90 |
|
|
$ |
47.26 |
Oil
($/Bbl hedged) |
$ |
60.32 |
|
|
$ |
59.90 |
|
|
$ |
47.26 |
Natural
gas ($/MCF) |
$ |
5.00 |
|
|
$ |
4.41 |
|
|
$ |
4.96 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues were $16.9 million for the three
months ended March 31, 2018, as compared to $15.2 million for the
three months ended December 31, 2017 and $16.4 million for the
three months ended March 31, 2017. The Company had a net loss from
continuing operations of $1.8 million, or $0.04 per share (basic
and diluted), for the three months ended March 31, 2018, as
compared to a net loss from continuing operations of $4.0 million,
or $0.08 per share (basic and diluted), for the three months ended
December 31, 2017, and a net loss from continuing operations of
$16.0 million, or $0.34 per share (basic and diluted), for the
three months ended March 31, 2017, of which $15.2 million was from
the sale of TBNG. Capital expenditures and seismic and corporate
expenditures totaled $5.2 million for the three months ended March
31, 2018, as compared to $3.2 million for the three months ended
December 31, 2017 and $6.5 million for the three months ended March
31, 2017.
Adjusted EBITDAX from continuing operations for
the three months ended March 31, 2018 was $8.3 million, as compared
to $8.4 million for the three months ended December 31, 2017 and
$9.4 million for the three months ended March 31, 2017.
Operational Update
Southeastern Turkey.
Selmo
In January 2018, the Company spud the Selmo-81H2
well, which is the first of a six-well Selmo development program.
Completion is ongoing, and the Company expects to commence
production in the second quarter of 2018. The Company expects to
resume drilling in the Selmo field in the third quarter of
2018.
Bahar
The Company expects to drill one development
well in the Bahar field in 2018. The Company may drill an
additional Bahar development well in the fourth quarter of 2018,
contingent on financing.
Molla
In March 2018, the Company spud the Yeniev-1
exploration well, targeting the Bedinan, Hazro, and Mardin
formations. The Company expects to complete drilling operations on
the well in the second quarter of 2018. The Company has completed
3-D on the eastern Molla Block extension. The Company expects to
complete processing of this data in the second quarter of 2018. The
Company expects to complete interpretation and analysis in the
third quarter of 2018.
Northwestern Turkey. The Company continues to
evaluate its prospects in the Thrace Basin, in light of the recent
positive production test results at the Yamalik-1 exploration well,
operated by Valeura Energy Inc. (“Valeura”) with their partner
Statoil Banarli Turkey B.V. (“Statoil”). The Yamalik-1 exploration
well is directly adjacent to the Company’s 120,000 net acres in the
Thrace Basin of which it believes approximately 50,000 net acres
(100% working interest, 87.5% net revenue interest) is analogous to
the Valeura and Statoil acreage. The Company expects to resume
production operations on its Yildurm-1 well on the Temrez license
in 2018. Contingent on financing, the Company may commence a
three-well drilling program on its Temrez license starting in the
fourth quarter of 2018.
Bulgaria. The Company has prepared plans to side
track and re-drill the Devinci R-1 well, which it plans to commence
during 2018, contingent on financing.
The Company’s 2018 year-to-date daily net
wellhead production has been approximately 2,885 BOEPD, comprised
of 2,760 BOPD and 0.7 million MMCFPD.
2018 Annual Meeting
The Company will host its 2018 Annual Meeting of
Shareholders on Tuesday, June 19th at 10:00 a.m. Central time
(11:00 a.m. Eastern time) in the ballroom of the Warwick Melrose
Hotel, which is located at 3015 Oak Lawn Ave, Dallas, Texas, 75219.
After the meeting, the Company will offer an audio recording of the
Annual Meeting. To listen to the audio recording, please visit the
Company’s website at www.transatlanticpetroleum.com, click on
“Investors” and select “Annual Meeting.”
Conference
Call
On January 16, 2018, the Company announced the
formation of a strategic committee of the board of directors and
the engagement of a financial advisor to market the Company and
explore strategic alternatives to increase shareholder value. The
marketing process is ongoing, and the Company expects to receive
indications of interest during the second quarter of 2018.
Therefore, the Company has decided not to hold an earnings call to
discuss its results for the first quarter of 2018.
Quarterly Report on Form
10-Q
On May 9, 2018, the Company filed its Quarterly
Report on Form 10-Q for the quarter ended March 31, 2018.
TransAtlantic Petroleum
Ltd.Consolidated Statements of Comprehensive
Income (Loss) (Unaudited)(U.S.
Dollars and shares in thousands, except per share
amounts)
|
|
|
|
For the Three Months Ended |
|
|
March 31, 2018 |
|
|
Dec 31, 2017 |
|
|
March 31, 2017 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Total
revenues |
$ |
16,926 |
|
|
$ |
15,187 |
|
|
$ |
16,436 |
|
Costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Production |
|
2,869 |
|
|
|
3,451 |
|
|
|
3,087 |
|
|
|
1,193 |
|
|
|
– |
|
|
|
|
|
Exploration, abandonment and impairment |
|
40 |
|
|
|
685 |
|
|
|
106 |
|
Cost of
purchased natural gas |
|
– |
|
|
|
– |
|
|
|
568 |
|
Seismic
and other exploration |
|
159 |
|
|
|
1,677 |
|
|
|
15 |
|
General
and administrative |
|
3,337 |
|
|
|
3,514 |
|
|
|
3,590 |
|
Depreciation, depletion and amortization |
|
4,459 |
|
|
|
3,901 |
|
|
|
4,497 |
|
Accretion
of asset retirement obligations |
|
46 |
|
|
|
46 |
|
|
|
48 |
|
Total costs and expenses |
|
12,103 |
|
|
|
13,274 |
|
|
|
11,911 |
|
Operating income (loss) |
|
4,823 |
|
|
|
1,913 |
|
|
|
4,525 |
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
|
|
Loss on
sale of TBNG |
|
– |
|
|
|
– |
|
|
|
(15,226 |
) |
Interest
and other expense |
|
(2,782 |
) |
|
|
(1,857 |
) |
|
|
(2,371 |
) |
Interest
and other income |
|
254 |
|
|
|
435 |
|
|
|
293 |
|
Gain
(loss) on commodity derivative contracts |
|
(725 |
) |
|
|
(2,151 |
) |
|
|
988 |
|
Foreign
exchange (loss) gain |
|
(2,058 |
) |
|
|
(806 |
) |
|
|
(2,123 |
) |
Total other expense |
|
(5,311 |
) |
|
|
(4,379 |
) |
|
|
(18,439 |
) |
Loss from
continuing operations before income taxes |
|
(488 |
) |
|
|
(2,466 |
) |
|
|
(13,914 |
) |
Income
tax expense |
|
(1,287 |
) |
|
|
(1,573 |
) |
|
|
(2,135 |
) |
Net
loss |
|
(1,775 |
) |
|
|
(4,039 |
) |
|
|
(16,049 |
) |
Other
comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation adjustment |
|
(2,343 |
) |
|
|
(6,278 |
) |
|
|
20,919 |
|
Comprehensive
income (loss) |
$ |
(2,343 |
) |
|
$ |
(6,278 |
) |
|
$ |
20,919 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
common share |
|
|
|
|
|
|
|
|
|
|
|
Basic net
loss per common share |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.04 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.34 |
) |
Weighted
average common shares outstanding |
|
50,374 |
|
|
|
50,319 |
|
|
|
47,298 |
|
Diluted
net loss per common share |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.04 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.34 |
) |
Weighted
average common and common equivalent shares outstanding |
|
50,374 |
|
|
|
50,319 |
|
|
|
47,298 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TransAtlantic Petroleum
Ltd.Summary Consolidated Statements of Cash Flows
(Unaudited)(in thousands of U.S.
Dollars)
|
|
|
|
For the Three Months Ended Mar
31, |
|
|
2018 |
|
|
2017 |
|
Net cash provided by
operating activities from continuing operations |
$ |
7,810 |
|
|
$ |
1,859 |
|
Net cash provided by
(used in) investing activities from continuing operations(1) |
|
(7,014 |
) |
|
|
11,241 |
|
Net cash used in
financing activities from continuing operations |
|
(4,125 |
) |
|
|
(11,379 |
) |
Effect of exchange rate
changes on cash |
|
(716 |
) |
|
|
(369 |
) |
Net increase (decrease)
in cash, cash equivalents, and restricted cash |
$ |
(4,045 |
) |
|
$ |
1,352 |
|
|
|
|
|
|
|
|
|
TransAtlantic Petroleum
Ltd.Summary Consolidated Balance
Sheets(in thousands of U.S. Dollars, except share
data)
|
|
|
|
|
|
|
March 31, 2018 |
|
|
December 31, 2017 |
|
ASSETS |
(unaudited) |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
16,251 |
|
|
$ |
18,926 |
|
Accounts
receivable, net |
|
|
|
|
|
|
|
Oil and
natural gas sales |
|
15,554 |
|
|
|
15,808 |
|
Joint
interest and other |
|
1,569 |
|
|
|
1,576 |
|
Related
party |
|
1,269 |
|
|
|
1,023 |
|
Prepaid
and other current assets |
|
4,957 |
|
|
|
3,866 |
|
Inventory |
|
7,158 |
|
|
|
7,494 |
|
Total
current assets |
|
46,758 |
|
|
|
48,693 |
|
Property and
equipment: |
|
|
|
|
|
|
|
Oil and
natural gas properties (successful efforts method) |
|
|
|
|
|
|
|
Proved |
|
194,577 |
|
|
|
193,647 |
|
Unproved |
|
19,359 |
|
|
|
24,445 |
|
Equipment
and other property |
|
14,223 |
|
|
|
14,075 |
|
|
|
228,159 |
|
|
|
232,167 |
|
Less
accumulated depreciation, depletion and amortization |
|
(127,894 |
) |
|
|
(129,183 |
) |
Property
and equipment, net |
|
100,265 |
|
|
|
102,984 |
|
Other long-term
assets: |
|
|
|
|
|
|
|
Other
assets |
|
571 |
|
|
|
2,247 |
|
Note
receivable - related party |
|
6,507 |
|
|
|
6,726 |
|
Total
other assets |
|
7,078 |
|
|
|
8,973 |
|
Total
assets |
$ |
154,101 |
|
|
$ |
160,650 |
|
LIABILITIES,
SERIES A PREFERRED SHARES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
$ |
5,082 |
|
|
$ |
4,853 |
|
Accounts
payable - related party |
|
4,554 |
|
|
|
3,141 |
|
Accrued
liabilities (1) |
|
11,131 |
|
|
|
10,014 |
|
Derivative liability |
|
1,633 |
|
|
|
2,215 |
|
Asset
retirement obligations - Current |
|
2 |
|
|
|
– |
|
Loans
payable |
|
15,100 |
|
|
|
15,625 |
|
Total
current liabilities |
|
37,502 |
|
|
|
35,848 |
|
Long-term
liabilities: |
|
|
|
|
|
|
|
Asset
retirement obligations |
|
4,680 |
|
|
|
4,727 |
|
Accrued
liabilities |
|
8,721 |
|
|
|
8,810 |
|
Deferred
income taxes |
|
19,161 |
|
|
|
19,611 |
|
Loans
payable |
|
9,400 |
|
|
|
13,000 |
|
Total
long-term liabilities |
|
41,962 |
|
|
|
46,148 |
|
Total
liabilities |
|
79,464 |
|
|
|
81,996 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
Series A
preferred shares, $0.01 par value, 426,000 shares authorized;
426,000 shares issued and outstanding with a liquidation preference
of $50 per share as of March 31, 2018 and December 31, 2017,
respectively |
|
21,300 |
|
|
|
21,300 |
|
Series A
preferred shares-related party, $0.01 par value, 495,000 shares
authorized; 495,000 shares issued and outstanding with a
liquidation preference of $50 per share as of March 31, 2018 and
December 31, 2017, respectively |
|
24,750 |
|
|
|
24,750 |
|
Shareholders'
equity: |
|
|
|
|
|
|
|
Common
shares, $0.10 par value, 100,000,000 shares authorized; 50,383,870
shares and 50,319,156 shares issued and outstanding as of March 31,
2018 and December 31, 2017, respectively |
|
5,038 |
|
|
|
5,032 |
|
Treasury
stock |
|
(970 |
) |
|
|
(970 |
) |
Additional paid-in-capital |
|
575,506 |
|
|
|
575,411 |
|
Accumulated other comprehensive loss |
|
(127,109 |
) |
|
|
(124,766 |
) |
Accumulated deficit |
|
(423,878 |
) |
|
|
(422,103 |
) |
Total
shareholders' equity |
|
28,587 |
|
|
|
32,604 |
|
Total
liabilities, Series A preferred shares and shareholders'
equity |
$ |
154,101 |
|
|
$ |
160,650 |
|
|
|
|
|
|
|
|
|
Reconciliation of Net Loss from
Continuing Operations to Adjusted EBITDAX
(Unaudited)(in thousands of U.S.
Dollars)
|
|
|
|
For the Three Months Ended |
|
|
Mar 31, 2018 |
|
|
Dec 31, 2017 |
|
|
Mar 31, 2017 |
|
Net loss from
continuing operations |
$ |
(1,775 |
) |
|
$ |
(4,039 |
) |
|
$ |
(16,049 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Interest
and other, net |
|
2,528 |
|
|
|
1,422 |
|
|
|
2,078 |
|
Current
and deferred income tax expense |
|
1,287 |
|
|
|
1,573 |
|
|
|
2,135 |
|
Exploration, abandonment, and impairment |
|
40 |
|
|
|
685 |
|
|
|
106 |
|
Seismic
and other exploration expense |
|
159 |
|
|
|
1,677 |
|
|
|
15 |
|
Foreign
exchange loss (gain) |
|
2,058 |
|
|
|
806 |
|
|
|
2,123 |
|
Share-based compensation expense |
|
101 |
|
|
|
136 |
|
|
|
136 |
|
(Gain)
loss on commodity derivative contracts |
|
725 |
|
|
|
2,151 |
|
|
|
(988 |
) |
Cash
settlements on commodity derivative contracts |
|
(1,339 |
) |
|
|
- |
|
|
|
- |
|
Accretion
of asset retirement obligation |
|
46 |
|
|
|
46 |
|
|
|
48 |
|
Depreciation, depletion, and amortization |
|
4,459 |
|
|
|
3,901 |
|
|
|
4,497 |
|
Loss on
sale of TBNG |
|
- |
|
|
|
- |
|
|
|
15,226 |
|
Net other
items |
|
- |
|
|
|
- |
|
|
|
30 |
|
Adjusted EBITDAX from
continuing operations |
$ |
8,289 |
|
|
$ |
8,358 |
|
|
$ |
9,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAX from continuing operations
(“Adjusted EBITDAX”) is a non-GAAP financial measure that
represents net loss from continuing operations 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 from continuing operations
prepared in accordance with GAAP. Net income or income from
continuing operations may vary materially from Adjusted EBITDAX.
Investors should carefully consider the specific items included in
the computation of Adjusted EBITDAX.
About TransAtlantic
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 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 marketing of the Company, the Company’s drilling program, the
evaluation of the Company’s prospects in the Thrace Basin in
Turkey, the Molla Area of Southeast Turkey, and Bulgaria, the
drilling, completion, and cost of wells, the production and sale of
oil and natural gas, the holding of an earnings conference call,
and the issuance of an operations update, as well as other
expectations, plans, goals, objectives, assumptions, and
information about future events, conditions, results of operations,
and 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.
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 SEC.
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.
Contacts:
Chad D. BurkhardtVice President, General Counsel
and Corporate Secretary(214) 265-4705
TransAtlantic Petroleum Ltd.16803 Dallas
ParkwayAddison, Texas
75001http://www.transatlanticpetroleum.com