TransAtlantic Petroleum Ltd. Provides Operations Update And Announces Delay In Filing Quarterly Report On Form 10-Q

HAMILTON, Bermuda, Aug. 9, 2012 (GLOBE NEWSWIRE) -- TransAtlantic Petroleum Ltd. (TSX:TNP) (NYSE:TAT) (the "Company" or "TransAtlantic") today provides an operational update and announces the Company's intent to file a Form 12b-25 to provide an additional five days to file its Quarterly Report on Form 10-Q for the three months ended June 30, 2012.

Selected Highlights
  • Successful new field discovery with the Bahar-1 exploration well establishing oil productivity from the Bedinan formation, as well as identifying hydrocarbon potential in the Hazro, Mardin, and Dadaş shale;
  • Recent award of a 61,561 acre (24,913 hectare) exploration license immediately offsetting the Company's existing Molla licenses with prospectivity for the Mardin and Bedinan formations, as well as the Dadaş shale;
  • Net debt (outstanding borrowings less cash and cash equivalents) reduced to $4.9 million at June 30, 2012;
  • Net sales volumes in the second quarter of 2012 averaged 4,544 barrels of oil equivalent ("boe") per day;

Form 10-Q for the Quarter Ended June 30, 2012

TransAtlantic intends to file a Form 12b-25 to provide an additional five days to file its Quarterly Report on Form 10-Q for the three months ended June 30, 2012. The Company requires additional time to complete the documentation and review process required for the Form 10-Q, principally due to the added accounting complexity associated with the sale of the Company's oilfield services business.
Second Quarter 2012 Operating Summary
       
  For the three months ended
  June 30, 2012 June 30, 2011 March 31, 2012
Net Sales      
Oil (Mbbls): 233 219 224
Natural Gas (MMcf): 1,081 862 1,367
Total Net Sales (Mboe): 413 362 452
Total Net Sales (boe/day): 4,544 3,985 4,965
       
Realized Commodity Pricing      
Oil ($/bbl – Unhedged): $97.45 $109.28 $108.38
Oil ($/bbl – Hedged): $94.14 $103.32 $101.80
       
Natural Gas ($/Mcf – Unhedged): $8.48 $7.34 $7.60
Natural Gas ($/Mcf – Hedged): $8.48 $7.34 $7.60

Operational Review

During the second quarter of 2012, TransAtlantic and its subsidiaries spudded 24 gross wells, completed 10 gross wells and executed 12 fracs in eight wellbores. The Company's 7-day average net production rate as of August 6, 2012 was approximately 4,194 net boe per day, including approximately 10.3 MMcf per day of natural gas and approximately 2,489 bbls per day of oil.

Thrace Basin

In the Thrace Basin of northwestern Turkey, the Company's net sales of natural gas for the second quarter of 2012 averaged approximately 11.6 MMcf per day, compared to an average of approximately 9.1 MMcf per day in the second quarter 2011 and 14.9 MMcf per day in the three months ended March 31, 2012.

Frac Program . TransAtlantic and its partners continue to advance the assessment phase of the Thrace Basin frac program and have recently executed the first three-stage frac completion. Since the program's inception, 32 re-entry fracs and 10 new drill completions have been executed including a single-stage, multi-zone completion and two multi-stage fracs. The program has entailed testing the productivity of individual zones within the Mezardere formation (Mezardere shale and Teslimkoy sands) in new and previously identified structures. Given the testing nature of the program, results have varied depending upon the structure, location and the characteristics of the individual zones being evaluated. In a development program, the Company expects to prioritize and optimize location and zone selection and stack multiple completions into a single wellbore, which is expected to improve average productivity per wellbore.

To date, the Thrace Basin frac program has shown that natural gas trapped in some of the lower-porosity, lower-permeability zones of the Mezardere formation can be recovered via fracture stimulation. Deeper testing of the basin has identified approximately 1,000 additional meters of gas saturated sands that have zones with the right characteristics for hydrocarbon recovery. The program has also found indications that the deeper zones generally do not have enough permeability to economically produce the natural gas accumulations using current technology or generate water volumes that can challenge well economics.

Using the information gathered to date, TransAtlantic and its partners have begun to delineate a distinct opportunity set from which to proceed with planning a continuous development program in the Tekirdag Field Area. Having established an optimal maximum vertical depth to drill each well and a probable range of completions per wellbore, the Company can better plan the logistics of current and future wells, which is expected to improve operational efficiency, reduce well costs and provide enough new production to more than offset base decline rates of existing production. The Tekirdag Field Area development program is currently expected to begin moving forward during the third quarter of 2012 with an expected ultimate spacing of 50-acres per well. While the frac crew executes a multi-well frac program in southeastern Turkey, the Company and its partners will continue drilling to build a completion inventory, and proceed with an ongoing comprehensive look-back analysis of the Thrace Basin frac program's drilling, completion and production activity.

The following table details the Company's frac results in the Thrace Basin for wells completed since April 1, 2012 (excluding deep targets):

 
Well Working Interest (%) Frac Date # Stages Net Pay (meters) Porosity (%) Peak 24-hour Test Rate (MMcf/day) Initial 7-Day Average (MMcf/day)
Dogu Karya-1 41.5% 5/22/2012 1 4 10 0.2 0.04
TDR-8* 41.5% 5/29/2012 1 3 9 -- --
Kayi-7 41.5% 6/13/2012 1 5 15 0.4 0.4
Guney Kayi-1 41.5% 6/20/2012 3 22 11 0.6 0.4
DTD-1 41.5% 7/11/2012 1 10 16 -- --
TDR 8* 41.5% 7/16/2012 1 8 11 0.3 0.2
Koseilyas-1 41.5% 7/19/2012 1 8 12 1.3 0.7
*TDR-8 underwent two separate completions, one each in the Kesan and Teslimkoy formations. The fracs encountered a water bearing zone. TDR-8 is awaiting further testing after isolating the water bearing zone.  

The latest well in the program, the BTD-3, is the first deep frac in the Tekirdag Field Area and was recently completed in the Kesan formation at approximately 2,500 meters with test rates in excess of 1 MMcf/d while still flowing back.

Southeastern Turkey

Molla (100% working interest) . TransAtlantic recently drilled the Bahar-1 well at a location approximately seven miles (11 kilometers) north of the Goksu wells. During drilling, oil shows were encountered in the Hazro and Mardin formations and oil and natural gas was encountered in the Bedinan. Approximately 40 feet (12 meters) of core was taken from the Dadaş shale formation. The Bedinan has not previously been shown to be productive in this immediate area. After perforation, the well has recovered 36 API oil and 1,200 btu natural gas but has high skin damage. TransAtlantic plans to stimulate the Bedinan, after which the Company expects to perform a vertical fracture stimulation into the Dadaş shale while the frac crew is in southeastern Turkey. TransAtlantic plans to spud a horizontal well targeting the Dadaş shale later in 2012 or in early 2013.

The Company expects to spud the Goksu-3H during the third quarter of 2012, targeting the Mardin formation at an offsetting location to the Goksu-1 and Goksu-2 locations. The well is being planned to include a 3,000 foot (1,000 meter) horizontal section.

Gaziantep (62.5% working interest) . TransAtlantic and its partners have recently drilled the Alibey-1H, the Company's first horizontal well drilled in Turkey. The well has been logged and is awaiting completion while log data is fully analyzed. Extensive natural fractures were identified during logging.

Selmo (100% working interest) . Net sales at the Selmo oil field in the second quarter of 2012 averaged approximately 2,223 bbls per day, compared to approximately 2,268 bbls per day in the second quarter of 2011 and 2,225 bbls per day during the first quarter of 2012. During the second quarter of 2012, the Company completed three wells and began drilling activity on four additional wells. TransAtlantic expects to frac approximately 15 new and existing wells in the Selmo field during August and September 2012.

Arpatepe (50% working interest) . Net sales at the Arpatepe oil field averaged 107 bbls per day during the second quarter of 2012, as compared to approximately 125 bbls per day in the second quarter of 2011 and 111 bbls per day during the first quarter of 2012. During the second quarter of 2012, the non-operated Arpatepe-5 development well was placed onto production at an initial seven day average gross rate of 63 bbls per day. The Arpatepe-6 well is awaiting completion. The Company's working interest partner recently reached total depth on the Bati Arpatepe-1 well, which is currently awaiting completion.

Outlook

The Company expects net production during the third quarter of 2012 to average between approximately 4,200 and 4,300 boe per day, with an exit rate influenced by the late quarter benefit of the Selmo frac program. TransAtlantic currently has four operated rigs running, including two rigs in the Thrace Basin and two rigs in southern Turkey. For the remainder of 2012, capital expenditures are expected to range between $50 million and $75 million. Approximately 50% of our planned spending will be directed toward the Thrace Basin, with the balance predominately directed toward projects in southeastern Turkey, including the Molla and Selmo fields.

Sale of Oilfield Services Business

On June 13, 2012, TransAtlantic closed the sale of its oilfield services business to a joint venture owned by Dalea Partners, LP ("Dalea", an affiliate of N. Malone Mitchell, 3rd, the Company's Chairman and Chief Executive Officer) and funds advised by Abraaj Investment Management Limited. Gross proceeds from the sale totaled approximately $167.2 million, comprised of approximately $155.7 million in cash and an $11.5 million promissory note from Dalea. The Company immediately used a portion of the proceeds 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 and cash on hand of approximately $27.9 million.

Derivative Profile

As of June 30, 2012, TransAtlantic had outstanding derivative contracts hedging a portion of its future oil production as set forth in the table below. No changes have been made to the Company's derivative portfolio subsequent to June 30, 2012. 
      Weighted Average Weighted Average Weighted Average
Type Period Quantity (bbl/day) Floor ($/bbl) Ceiling ($/bbl) Additional Call ($/bbl)
Collar July 1, 2012 to December 31, 2012 960 $64.69 $106.98 NM
Collar January 1, 2013 to December 31, 2013 400 $75.00 $125.50 NM
Collar January 1, 2014 to December 31, 2014 380 $75.00 $124.25 NM
3-way collar July 1, 2012 to December 31, 2012 240 $70.00 $100.00 $129.50
3-way collar July 1, 2012 to December 31, 2012 205 $85.00 $97.13 $162.13
3-way collar January 1, 2013 to December 31, 2013 831 $85.00 $97.13 $162.13
3-way collar January 1, 2014 to December 31, 2014 726 $85.00 $97.13 $162.13
3-way collar January 1, 2015 to December 31, 2015 1,016 $85.00 $91.88 $151.88

Conference Call

The Company has scheduled a conference call for Friday, August 10, 2012 at 10:00 a.m. Eastern (9:00 a.m. Central) to discuss the Company's operations update.

Investors who would like to participate in the conference call should dial 877-878-2762, or 678-809-1005 for international calls, approximately 10 minutes prior to the scheduled start time, and ask for the TransAtlantic conference call. The conference ID is 18229781. A replay will be available until 11:59 p.m. Eastern on August 25, 2012. The number for the replay is 855-859-2056, or 404-537-3406 for international calls, and the conference ID is 18229781.

An enhanced webcast of the conference call and replay will be available through the Company's website. To access the conference call and replay, click on "Investors," select "Events," and click on "Webcast" found below the event listing. The webcast requires Microsoft Windows Media Player or RealOne Player.

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 regarding expected results from future drilling, completion and fracture stimulation of exploration, appraisal and development wells, future production levels, future capital expenditures, expected filing of forms with the U.S. Securities and Exchange Commission, the hosting of conference calls, 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 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

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