TransAtlantic Petroleum Ltd. Announces Second Quarter 2012 Financial Results

HAMILTON, Bermuda, Aug. 14, 2012 (GLOBE NEWSWIRE) -- TransAtlantic Petroleum Ltd. (TSX:TNP) (NYSE Amex:TAT) (the "Company" or "TransAtlantic") announces financial results for the quarter ended June 30, 2012.

Selected Highlights
  • Adjusted EBITDAX from continuing operations for the second quarter of 2012 totaled $21.2 million (Adjusted EBITDAX is a non-GAAP financial measure that is defined and reconciled to net income later in this press release);
  • Second quarter of 2012 results were impacted by $15.1 million of unrealized mark-to-market derivative gains, $1.3 million of foreign exchange losses, a $2.0 million non-cash expense related to a contingent liability on a property in Bulgaria, a $1.2 million non-cash expense related to inventory count adjustments, $15.1 million net income from discontinued operations, and other items totaling $0.2 million of expense reductions.
  • Net debt (outstanding borrowings less cash and cash equivalents) reduced to $4.9 million at June 30, 2012, allowing a change to the going concern assumption in TransAtlantic's Quarterly Report on Form 10-Q.

Second Quarter 2012 Results

For the three months ended June 30, 2012, total net sales increased to approximately 413 thousand barrels of oil equivalent ("Mboe"), compared to net sales of approximately 362 Mboe for the same period last year and approximately 452 Mboe in the first quarter of 2012. During the three months ended June 30, 2012, the Company sold an average of 4,544 boe per day. Total net sales were comprised of approximately 233 thousand net barrels ("Mbbls") of oil at an average rate of approximately 2,564 net bbls per day and approximately 1,081 net million cubic feet ("MMcf") of natural gas at an average rate of approximately 11.9 net MMcf per day.

For the quarter ended June 30, 2012, the Company's average realized price (unhedged) was $97.45 per bbl of oil and $8.48 per thousand cubic feet ("Mcf") of natural gas, compared to an average realized price of $109.28 per bbl and $7.34 per Mcf in the quarter ended June 30, 2011 and $108.38 per bbl and $7.60 per Mcf in the quarter ended March 31, 2012.

Total revenues increased to $32.5 million for the three months ended June 30, 2012 compared to $31.6 million realized in the same period in 2011 and $34.9 million for the three months ended March 31, 2012. Net income from continuing operations for the three months ended June 30, 2012 was $7.9 million, or $0.02 per share (basic and diluted), compared to a net loss of $1.9 million, or $0.01 per share (basic and diluted), for the three months ended June 30, 2011 and $2.6 million, or $0.01 per share (basic and diluted) for the three months ended March 31, 2012. Reported net income for the second quarter of 2012 included $15.1 million of unrealized mark-to-market derivative gains, $1.3 million of foreign exchange losses, a $2.0 million non-cash expense related to a contingent liability on a property in Bulgaria, a $1.2 million non-cash expense related to inventory count adjustments, $15.1 million net income from discontinued operations, and other items totaling $0.2 million of expense reductions.

Adjusted EBITDAX from continuing operations for the three months ended June 30, 2012 was $21.2 million compared to $17.7 million for the three months ended June 30, 2011 and $22.4 million for the quarter ended March 31, 2012.

Change of Going Concern Assumption

TransAtlantic's financial statements have included a "going concern" assumption since the Company's Annual Report on Form 10-K, filed on April 21, 2011. Following the close of the sale of TransAtlantic's oilfield services business on June 13, 2012, the Company used a portion of the net cash proceeds of $155.7 million to pay off its $73.0 million credit agreement with Dalea, its $11.0 million credit facility with Dalea, its $0.9 million promissory note with Viking Drilling, LLC, and its $1.8 million credit agreement with a Turkish bank. Subsequently, TransAtlantic used $45.2 million of the proceeds to reduce borrowings under its senior secured credit agreement ("credit facility") with Standard Bank Plc and BNP Paribas (Suisse) SA.

As of June 30, 2012 the Company had outstanding borrowings on the credit facility of $32.8 million, cash and cash equivalents of approximately $27.9 million, and $44.7 million of availability under its credit facility. As a result, management believes that the conditions that led to the substantial doubt about our ability to continue as a going concern at December 31, 2011 no longer exist at June 30, 2012.

TransAtlantic Petroleum Ltd.
Consolidated Statements of Operations
(unaudited)
 
  For the Three Months Ended June 30,  For the Six Months Ended June 30,
U.S. dollars and shares in thousands, except per share amounts  2012 2011 2012 2011
         
Revenues:        
Oil and natural gas sales   $ 31,876  $ 30,755  $ 66,537  $ 59,431
Other   652  844  926  1,247
Total revenues   32,528  31,599  67,463  60,678
Costs and expenses:        
Production   5,032  4,156  8,667  8,258
Exploration, abandonment and impairment   6,884  4,463  9,680  11,695
Seismic and other exploration   768  1,725  1,432  3,977
Contingent consideration and contingency changes   --   1,250  --   1,250
General and administrative   9,613  9,319  19,361  18,404
Depreciation, depletion and amortization   9,434  8,477  18,603  13,107
Accretion of asset retirement obligation   163  338  415  552
Total costs and expenses   31,894  29,728  58,158  57,243
Operating income   634  1,871  9,305  3,435
Other (expense) income:        
Interest and other expense   (2,018)  (3,560)  (5,277)  (7,157)
Interest and other income   348  177  621  334
Gain (loss) on commodity derivative contracts   14,304  154  1,869  (9,157)
Foreign exchange gain (loss)   (1,344)  165  2,928  169
Total other (expense) income   11,290  (3,064)  141  (15,811)
Income (loss) from continuing operations before income taxes   11,924  (1,193)  9,446  (12,376)
Current income tax benefit (expense)   (422)  (1,124)  (2,442)  (3,662)
Deferred income tax benefit (expense)   (3,642)  461  (1,783)  2,335
Net income (loss) from continuing operations.   7,860  (1,856)  5,221  (13,703)
Net income (loss) from discontinued operations  (5,969)  (17,293)  (6,146)  (26,377)
Gain on disposal of discontinued operations   27,214  --   27,214  -- 
Income Tax Provision   (6,193)  (666)  (8,173)  (890)
Net income (loss) from discontinued operations  15,052  (17,959)  12,895  (27,267)
Net income (loss)  $ 22,912  $ (19,815)  $ 18,116  $ (40,970)
Other comprehensive income (loss)   345  (14,812)  14,719  (12,513)
Comprehensive income (loss)   $ 23,257  $ (34,627)  $ 32,835  $ (53,483)
Basic and diluted net loss per common share:        
From continuing operations   $ 0.02  $ (0.01)  $ 0.01  $ (0.04)
From discontinued operations  $ 0.04  $ (0.05)  $ 0.04  $ (0.08)
Basic weighted average number of shares outstanding  366,536  351,165  366,486  346,181
Diluted weighted average number of shares outstanding  368,855  351,165  368,288  346,181
         
         
TransAtlantic Petroleum Ltd.
Summary Consolidated Statements of Cash Flows
(unaudited)
 
  For the Six Months Ended
U.S. dollars in thousands June 30, 2012 June 30, 2011
     
Net cash provided by operating activities from continuing operations   $ 46,959 $ 35,263
Net cash used in investing activities from continuing operations   (26,880)  (32,037)
Net cash provided by (used in) financing activities from continuing operations   (125,757)  8,630
Net cash provided by (used in) discontinued operations   118,053  (20,179)
Effect of exchange rate changes on cash and cash equivalents   388  (49)
Net increase (decrease) in cash and cash equivalents   $ 12,763  $ (8,372)
     
     
TransAtlantic Petroleum Ltd.
Summary Consolidated Balance Sheets
 
  As of
U.S. dollars in thousands June 30, 2012 December 31, 2011
  (unaudited)  
ASSETS    
Current assets:    
Cash and cash equivalents   $ 27,879  $ 15,116
Accounts receivable   48,084  42,694
Prepaid and other current assets   9,665  8,810
Deferred income taxes   1,712  2,124
Assets held for sale   2,098  128,117
Total current assets   89,438  196,861
Property and equipment, net   242,913  235,724
Other   23,738  13,187
Total assets   $ 356,089  $ 445,772
     
LIABILITIES & SHAREHOLDERS' EQUITY    
Current liabilities:    
Accounts payable   34,146  26,056
Short term debt   --   80,732
Accrued liabilities and other   32,154  19,481
Derivative liabilities   1,180  3,716
Liabilities held for sale   9,372  26,714
Total current liabilities   76,852  156,699
Total liabilities   144,497  269,568
Total shareholders' equity   211,592  176,204
Total liabilities and shareholders' equity   $ 356,089  $ 445,772
     
Reconciliation of Net Income to Adjusted EBITDAX
 
  For the Three Months Ended June 30,  For the Six Months Ended June 30,
U.S. dollars in thousands  2012 2011 2012 2011
         
Net income (loss) from continuing operations   $ 7,860  $ (1,856)  $ 5,221  $ (13,703)
Adjustments:        
Interest and other, net   1,670  3,383  4,656  6,823
Income tax benefit   4,064  663  4,225  1,327
Exploration, abandonment, and impairment   6,884  4,463  9,680  11,695
Seismic and other exploration   510  939  693  2,428
Foreign exchange loss  1,344  (165)  (2,928)  (169)
Share-based compensation   608  400  1,103  957
Derivative (gain) loss   (14,304)  (154)  (1,869)  9,157
Accretion of asset retirement obligation   163  338  415  552
Depreciation, depletion, and amortization   9,434  8,477  18,603  13,107
Revaluation of contingent consideration   --   1,250  --   1,250
Bulgaria License Penalty   2,000  --   2,000  -- 
Inventory book to physical adjustment   1,223  --   1,223  -- 
Net other items   (237)  --   584  -- 
Adjusted EBITDAX from continuing operations   $ 21,219  $ 17,738  $ 43,606  $ 33,424
         

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 losses and non-cash share-based compensation expense.

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, impairment of natural gas and oil 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. Information regarding income taxes, interest, depreciation, depletion, amortization, impairment, abandonment, and exploration expense is unavailable on a forward looking basis. 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 energy company engaged in the acquisition, development, exploration and production of oil and natural gas. The Company holds interests in developed and undeveloped oil and natural gas properties in Turkey, Bulgaria and Romania.

The TransAtlantic Petroleum Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=12745

(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 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 we carry 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; 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, is 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 6 Mcf to 1 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: Chad Potter, VP, Financial and Investor Relations         Phone: (214) 220-4323         Internet: http://www.transatlanticpetroleum.com         Address: 16803 Dallas Parkway                  Suite 200                  Addison, Texas 75001

TransAtlantic Petroleum Ltd. Logo

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