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 $55 million.
| For the Three Months Ended | |||
| December 31, 2014 | September 30, 2014 | December 31, 2013 | |
| Net Sales: | |||
| Oil (MBbls) | 420 | 341 | 233 |
| Natural gas (MMCF) | 775 | 731 | 1,028 |
| Total net sales (MBOE) | 549 | 463 | 404 |
| Average net sales (BOEPD) | 5,969 | 5,033 | 4,391 |
| Realized Commodity Prices: | |||
| Oil ($/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 Ended | Dec 31, | ||||
| Dec 31, 2014 | Sept 30, 2014 | Dec 31, 2013 | 2014 | 2013 | |
| (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 thousands | 2014 | 2013 |
| 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 thousands | December 31, 2014 | December 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 Ended | For the Twelve Months Ended | ||||
| U.S. Dollars in thousands | Dec 31, 2014 | Sept 30, 2014 | Dec 31, 2013 | 2014 | 2013 |
| 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.