TAT - TransAtlantic Petroleum Announces Third Quarter 2019 Financial Results and Provides an Operations Update

November, 12 2019 05:02 PM TransAtlantic Petroleum Ltd (Bermuda)

HAMILTON, Bermuda, Nov. 12, 2019 (GLOBE NEWSWIRE) -- TransAtlantic Petroleum Ltd. (TSX: TNP) (NYSE American: TAT) (the “Company” or “TransAtlantic”) today announced its financial results for the quarter ended September 30, 2019 and provided an operations update. Additional information can be found on the Company’s website at http://www.transatlanticpetroleum.com.

Summary

Net income was $1.1 million for the third quarter of 2019, as compared to a net loss of $0.01 million for the second quarter of 2019 and a net loss of $1.7 million for the third quarter of 2018.
Average daily net sales volumes were 2,662 barrels of oil equivalent per day (“BOEPD”) in the third quarter of 2019, as compared to 2,873 BOEPD in the second quarter of 2019 and 2,917 BOEPD in the third quarter of 2018. Average daily net sales volumes for the trailing seven-day period were 2,745 BOEPD.
Revenues were $14.7 million for the third quarter of 2019, as compared to $17.2 million for the second quarter of 2019 and $20.1 million for the third quarter of 2018.
Operating income was $4.1 million for the third quarter of 2019, as compared to $6.3 million for the second quarter of 2019 and $11.0 million for the third quarter of 2018.
Adjusted EBITDAX was $7.8 million for the third quarter of 2019, as compared to $10.7 million for the second quarter of 2019 and $13.9 million for the third quarter of 2018.¹
Net debt was $11.6 million as of September 30, 2019, as compared to $17.5 million as of June 30, 2019.² Bank debt was reduced by $5.8 million in the third quarter of 2019, and capital expenditures were $10.2 million for the third quarter of 2019.

_________________

¹ Adjusted EBITDAX is a non-GAAP financial measure. See the reconciliation at the end of the press release.
² 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 September 30, 2019, total debt was $26.1 million, and cash and cash equivalents was $14.5 million. For June 30, 2019, total debt was $31.2 million, and cash and cash equivalents was $13.7 million.

Third Quarter 2019 Results of Operations


For the Three Months Ended


September 30, 2019


June 30, 2019


September 30, 2018

Net Sales:











Oil (MBBL)

237



253



261

Natural gas (MMCF)

47



48



45

Total net sales (MBOE)

245



261



268

Average net sales (BOEPD)

2,662



2,873



2,917

Realized Commodity Prices:











Oil ($/Bbl unhedged)
$
60.12


$
66.57


$
76.32

Oil ($/Bbl hedged)
$
60.12


$
66.57


$
74.36

Natural gas ($/MCF)
$
6.18


$
5.41


$
4.23

The Company had net income of $1.1 million, or $0.02 per share (basic and diluted), for the three months ended September 30, 2019, as compared to a net loss $0.01 million, or $0.00 per share (basic and diluted), for the three months ended June 30, 2019, and a net loss of $1.7 million, or $0.03 per share (basic and diluted), for the three months ended September 30, 2018. Total revenues were $14.7 million for the three months ended September 30, 2019, as compared to $17.2 million for the three months ended June 30, 2019 and $20.1 million for the three months ended September 30, 2018. Capital expenditures and seismic and corporate expenditures totaled $10.2 million for the three months ended September 30, 2019, as compared to $6.2 million for the three months ended June 30, 2019 and $6.1 million for the three months ended September 30, 2018.

Adjusted EBITDAX was $7.8 million for the three months ended September 30, 2019, as compared to $10.7 million for the three months ended June 30, 2019 and $13.9 million for the three months ended September 30, 2018.

Operational Update

Southeastern Turkey

Molla

Yeniev Field

In the third quarter of 2019, completion operations continued on the Yeniev-4 well, which had been drilled to a total measured depth of 9,520 feet targeting the Bedinan, Hazro, and Mardin formations. The Company successfully recovered 84 feet of core from the Bedinan sandstone, which is currently undergoing analysis to assist in infill development planning and secondary recovery evaluation. The well was completed naturally in the lower Bedinan sandstone with an unstimulated initial production rate of 167 barrels of oil per day (“Bopd”). In the third quarter of 2019, the Company drilled the Yeniev-5 well to a total measured depth of 7,060 feet targeting the Mardin formation. The Company successfully recovered 159 feet of core from two intervals within the Mardin, both of which showed live streaming oil on the cores. Completion operations are ongoing.

In October 2019, the Company drilled the Yeniev-6 well to a total measured depth of 9,650 feet, targeting the Mardin and Bedinan formations. Completion operations are ongoing.

The West Yeniev-1 well underwent production optimization with the installation of artificial lift in the third quarter of 2019. Production increased to 173 Bopd from 104 Bopd when the well was flowing naturally. Further production optimization is planned in the fourth quarter of 2019 with the goal of further increasing production.

Bahar Field

The Company drilled the Bahar-12 well in the third quarter of 2019, targeting the Bedinan and Hazro formations. A three-stage Bedinan stimulation was executed. The well had an initial production rate of 382 Bopd flowing naturally. The Company successfully recovered a total of 274 feet of core from intervals within the Bedinan and Hazro formations. The Company intends to analyze the cores to assist in optimizing reservoir development.

Bati-Yasince Field

In the third quarter of 2019, the Company reentered the Bati-Yasince-1 well, targeting the Hazro formation. The Company drilled the well to a total measured depth of 8,628 feet. Completion operations are ongoing.

Arpatepe Field

In the third quarter of 2019, the Company engaged in technical design and planning of a water-flood of the Arpatepe field. Following completion of the design and planning, the Company plans to recomplete the Arpatepe-2 well as a water injection well and execute the first phase of the water-flood.

Selmo

During the third quarter of 2019, the Company continued recompletion, workover, and production optimization operations in the Selmo field.

Northwestern Turkey

Thrace Basin BCGA

The Company continues to evaluate its prospects in the Thrace Basin’s Basin Center Gas Accumulation (“Thrace Basin BCGA”) in light of the recent exploration activity by Valeura Energy Inc. with its partner Equinor ASA (formerly Statoil ASA) on a license directly adjacent to the Company’s 120,000 net acres in the Thrace Basin of which the Company believes approximately 50,000 net acres (100% working interest, 87.5% net revenue interest) is in the Thrace Basin BCGA.

In the second quarter of 2019, the Company drilled the Karli-1 well to a total measured depth of 1,289 feet and encountered several shallow gas sand intervals. While the shallow gas horizon proved non-productive, the well is strategically positioned to test the Company’s Thrace Basin BCGA acreage.

Bulgaria

The Company is currently evaluating future activity in Bulgaria.

Conference Call

The Company will host a live webcast and conference call on Wednesday, November 13, 2019 at 7:30 a.m. Central time (8:30 a.m. Eastern time) to discuss third quarter 2019 financial results and provide an operations update. Investors who would like to participate in the conference call should call (877) 878-2762 or (678) 809-1005 approximately ten minutes prior to the scheduled start time and ask for the TransAtlantic conference call. The conference ID is 1544107.

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 November 15, 2019 and may be accessed by dialing (855) 859 -2056 or (404) 537-3406. The conference ID is 1544107.


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


For the Nine Months Ended


September 30, 2019


September 30, 2018


September 30, 2019


September 30, 2018

Revenues:















Total revenues
$
14,653


$
20,140


$
50,909


$
55,264

Costs and expenses:















Production

3,162



2,307



8,376



7,980

Transportation and processing

1,262



1,054



3,802



3,385

Exploration, abandonment and impairment

488



162



6,267



393

Seismic and other exploration

48



122



233



340

General and administrative

2,503



2,539



8,247



9,662

Depreciation, depletion and amortization

3,021



2,938



10,179



10,673

Accretion of asset retirement obligations

56



35



157



124

Total costs and expenses

10,540



9,157



37,261



32,557

Operating income

4,113



10,983



13,648



22,707

Other (expense) income:















Interest and other expense

(2,780
)


(2,776
)


(7,769
)


(7,649
)
Interest and other income

381



211



534



842

Gain (loss) on commodity derivative contracts

403



(1,290
)


(30
)


(5,156
)
Foreign exchange loss

(797
)


(2,991
)


(2,185
)


(6,987
)
Total other expense

(2,793
)


(6,846
)


(9,450
)


(18,950
)
Income before income taxes

1,320



4,137



4,198



3,757

Income tax expense

(250
)


(5,857
)


(7,039
)


(8,258
)
Net income (loss)

1,070



(1,720
)


(2,841
)


(4,501
)
Other comprehensive loss:















Foreign currency translation adjustment

808



(11,765
)


(3,834
)


(23,217
)
Comprehensive income (loss)
$
1,878


$
(13,485
)

$
(6,675
)

$
(27,718
)
















Net income (loss) per common share















Basic net income (loss) per common share
$
0.02


$
(0.03
)

$
(0.05
)

$
(0.09
)
Weighted average common shares outstanding

57,680



50,597



54,249



50,465

Diluted net income (loss) per common share
$
0.02


$
(0.03
)

$
(0.05
)

$
(0.09
)
Weighted average common and common equivalent shares outstanding

57,680



50,597



54,249



50,465


TransAtlantic Petroleum Ltd.
Summary Consolidated Statements of Cash Flows (Unaudited)
(in thousands of U.S. Dollars)


For the Nine Months Ended September 30,


2019


2018

Net cash provided by operating activities
$
25,704


$
25,216

Net cash used in investing activities

(25,188
)


(20,962
)
Net cash provided by (used in) financing activities

4,958



(2,440
)
Effect of exchange rate changes on cash

(914
)


(8,535
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
$
4,560


$
(6,721
)


TransAtlantic Petroleum Ltd.
Summary Consolidated Balance Sheets
(in thousands of U.S. Dollars, except share data)


September 30, 2019


December 31, 2018

ASSETS
(unaudited)





Current assets:







Cash and cash equivalents
$
14,452


$
9,892

Accounts receivable, net







Oil and natural gas sales

12,032



12,912

Joint interest and other

1,567



982

Related party

853



878

Prepaid and other current assets

12,331



8,696

Derivative asset

384



–

Note receivable - related party

–



5,828

Inventory

4,804



5,167

Total current assets

46,423



44,355

Property and equipment:







Oil and natural gas properties (successful efforts method)







Proved

170,237



163,006

Unproved

14,911



15,695

Equipment and other property

13,091



14,408



198,239



193,109

Less accumulated depreciation, depletion and amortization

(108,646
)


(105,850
)
Property and equipment, net

89,593



87,259

Other long-term assets:







Other assets

3,107



986

Note receivable - related party

4,150



–

Total other assets

7,257



986

Total assets
$
143,273


$
132,600

LIABILITIES, SERIES A PREFERRED SHARES AND SHAREHOLDERS' EQUITY







Current liabilities:







Accounts payable
$
6,067


$
3,896

Accounts payable - related party

3,552



2,922

Accrued liabilities

13,956



13,073

Derivative liability

414



–

Loans payable

18,912



22,000

Total current liabilities

42,901



41,891

Long-term liabilities:







Asset retirement obligations

4,836



4,667

Accrued liabilities

9,994



7,259

Deferred income taxes

22,720



20,314

Loans payable

7,143



–

Total long-term liabilities

44,693



32,240

Total liabilities

87,594



74,131

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 September 30, 2019 and December 31, 2018

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 September 30, 2019 and December 31, 2018

24,750



24,750

Shareholders' equity:







Common shares, $0.10 par value, 200,000,000 shares authorized; 52,722,966 shares and 52,413,588 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively

5,771



5,241

Treasury stock

(970
)


(970
)
Additional paid-in-capital

580,843



577,488

Accumulated other comprehensive loss

(145,855
)


(142,021
)
Accumulated deficit

(430,160
)


(427,319
)
Total shareholders' equity

9,629



12,419

Total liabilities, Series A preferred shares and shareholders' equity
$
143,273


$
132,600


Reconciliation of Net Income (Loss) to Adjusted EBITDAX (Unaudited)
(in thousands of U.S. Dollars)


For the Three Months Ended


For the Nine Months Ended


September 30, 2019


June 30, 2019


September 30, 2018


September 30, 2019


September 30, 2018

Net income (loss)
$
1,070


$
(9
)

$
(1,720
)

$
(2,841
)

$
(4,501
)
Adjustments:



















Interest and other, net

2,399



2,532



2,565



7,235



6,807

Income tax expense

250



3,366



5,857



7,039



8,258

Exploration, abandonment, and impairment

488



666



162



6,267



393

Seismic and other exploration expense

48



108



122



233



340

Foreign exchange loss

797



115



2,991



2,185



6,987

Share-based compensation expense

119



77



122



298



340

(Gain) loss on commodity derivative contracts

(403
)


323



1,290



30



5,156

Cash settlements on commodity derivative contracts

-



-



(511
)


-



(3,710
)
Accretion of asset retirement obligation

56



49



35



157



124

Depreciation, depletion, and amortization

3,021



3,442



2,938



10,179



10,673

Adjusted EBITDAX
$
7,845


$
10,669


$
13,851


$
30,782


$
30,867

Adjusted EBITDAX is a non-GAAP financial measure that represents net income (loss) plus interest and other income, net, income tax 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, and depreciation, depletion, and amortization.

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.

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 Company’s drilling program, the evaluation of the Company’s prospects in southeastern Turkey, the Thrace Basin in northwestern Turkey, and Bulgaria, the drilling, completion, and cost of wells, the production and sale of oil and natural gas, and the holding of an earnings conference call, 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 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 Securities and Exchange Commission.

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:

Tabitha T. Bailey
Vice President, General Counsel, and Corporate Secretary
(214) 265-4708

TransAtlantic Petroleum Ltd.
16803 Dallas Parkway, Suite 200
Addison, Texas 75001
http://www.transatlanticpetroleum.com

Company Name:	TransAtlantic Petroleum Ltd (Bermuda)
Stock Symbol:	TAT
Market:	NYSE
Website:	transatlanticpetroleum.com

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