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Press release from GlobeNewswire (a Nasdaq OMX company)

TransAtlantic Petroleum Announces Financial Results for the Fourth Quarter and Year-End 2012

Wednesday, May 15, 2013

TransAtlantic Petroleum Announces Financial Results for the Fourth Quarter and Year-End 2012

15:27 EDT Wednesday, May 15, 2013

HAMILTON, Bermuda, May 15, 2013 (GLOBE NEWSWIRE) -- TransAtlantic Petroleum Ltd. (TSX:TNP) (NYSE-MKT:TAT) (the "Company" or "TransAtlantic") today reported its financial results for the quarter and year ended December 31, 2012.

Filing Delay Summary

On March 18, 2013, the Company announced that it needed additional time to file its Annual Report on Form 10-K for the year ended December 31, 2012 (the "Form 10-K") due to its discovery of prior period errors related to the allocation of well costs to the Company's depletion schedules during the years 2009, 2010 and 2011, and the need to determine the impact of these errors on prior and current period financial statements. On April 2, 2013, the Company announced that it had hired Pt Platinum Consulting, LLC to provide staff augmentation resources to assist the Company in reviewing certain accounting items and completing the remaining work needed to file the Form 10-K.

During the fourth quarter of 2012, the Company completed its analysis and discovered errors related to prior periods that consisted mainly of overstatements of depreciation, depletion and amortization expense of approximately $4.7 million and deferred income tax expense of $1.5 million that were offset by understatements of exploration, abandonment and impairment expense of $4.5 million and unrealized foreign exchange loss of $2.0 million during the years ended December 31, 2011, 2010 and 2009. The overall impact of these errors was not material to the prior period issued financial statements or to the financial statements for the year ended December 31, 2012.

Fourth Quarter Financial Results Summary

Total revenues for the quarter ended December 31, 2012 were $38.0 million, as compared to $34.8 million for the quarter ended December 31, 2011.

Net loss for the quarter ended December 31, 2012 was $12.2 million, as compared to a net loss of $71.7 million for the quarter ended December 31, 2011.

Net loss from continuing operations for the quarter ended December 31, 2012 was $13.9 million, as compared to a net loss from continuing operations of $59.0 million for the quarter ended December 31, 2011.

Adjusted EBITDAX from continuing operations for the quarter ended December 31, 2012 was $22.2 million, as compared to $17.6 million for the quarter ended December 31, 2011. Adjusted EBITDAX is a non-GAAP financial measure that is defined and reconciled to net income later in this press release.

The fourth quarter of 2012 results were impacted by $28.2 million of impairment expense primarily related to dry holes on two high risk exploration wells (Konak-1 and Durukoy-1) and impairment on several unproved natural gas properties. Additionally, the impact of the prior period errors resulted in a decrease in our net loss for the fourth quarter of 2012 of approximately $3.6 million.

Year-End Financial Results Summary

For the year ended December 31, 2012, total revenues were $143.9 million, as compared to total revenues of $128.9 million for the year ended December 31, 2011.

Net income for the year ended December 31, 2012 totaled $16.2 million, as compared to a net loss of $120.9 million for the year ended December 31, 2011.

Net loss from continuing operations for the year ended December 31, 2012 was $6.4 million, as compared to a net loss from continuing operations of $77.6 million for the year ended December 31, 2011.

Adjusted EBITDAX from continuing operations for the year ended December 31, 2012 was $87.4 million, as compared to $66.0 million for the year ended December 31, 2011.

At December 31, 2012, TransAtlantic had $14.8 million in cash and cash equivalents and $32.8 million in long-term debt.

 
 
TransAtlantic Petroleum Ltd.
Consolidated Statements of Comprehensive Income (Loss)
 
  For the Three Months Ended Dec. 31, For the Twelve Months Ended Dec. 31,
(U.S. Dollars and shares in thousands, except per share amounts)   2012 2011 2012 2011
    (as adjusted)   (as adjusted)
Revenues:        
Oil and natural gas sales $34,953 $33,055 $134,113 $124,162
Sales of purchased natural gas 2,336 1,255 7,882 2,668
Other 705 489 1,913 2,075
Total revenues 37,994 34,799 143,908 128,905
Costs and expenses:        
Production 5,334 6,439 17,804 18,475
Exploration, abandonment and impairment 28,210 45,165 39,993 60,952
Costs of purchased natural gas 2,196 1,177 7,694 2,645
Seismic and other exploration 2,639 3,743 5,040 11,542
Revaluation of contingent consideration -- 4,750 -- 6,000
General and administrative 8,646 8,791 33,947 36,305
Depreciation, depletion and amortization 1,517 16,395 28,215 39,008
Accretion of asset retirement obligation 131 249 710 1,142
Total costs and expenses 48,673 86,709 133,403 176,069
Operating (loss) income in (10,679) (51,910) 10,505  (47,164)
Other (expense) income:        
Interest and other expense  (1,977) (3,194) (8,340) (13,665)
Interest and other income 917 151 2,418 1,089
Loss on commodity derivative contracts (271) (5,729) (5,548) (8,426)
Foreign exchange (loss) gain (1,983) (2,767) 1,083 (11,973)
Total other expense (3,314) (11,539) (10,387) (32,975)
(Loss) income from continuing operations before income taxes (13,993) (63,449) 118 (80,139)
Current income tax (expense) benefit (792) 306 (4,674) (2,386)
Deferred income tax benefit (expense) 843 4,178 (1,817) 4,951
Net loss from continuing operations. (13,942) (58,965) (6,373) (77,574)
Net income (loss) from discontinued operations, net of taxes. 1,715 (12,774) 22,619 (43,369)
Net (loss) income (12,227) (71,739) 16,246 (120,943)
Other comprehensive income (loss) 4,574 (3,396) 22,224 (52,069)
Comprehensive (loss) income $(7,653) $(75,135) $38,470 $(173,012)
Basic and diluted net loss per common share:        
From continuing operations $(0.04) $(0.16) $(0.02) $(0.22)
From discontinued operations $0.00 $(0.03) $0.06 $(0.12)
Basic weighted average number of shares outstanding 368,708 365,729 367,415 355,971
Diluted weighted average number of shares outstanding 368,708 365,729 367,415 355,971
 
 
TransAtlantic Petroleum Ltd.
Summary Consolidated Statements of Cash Flows
 
  For the Twelve Months Ended
(U.S. Dollars in thousands) Dec. 31, 2012 Dec. 31, 2011
    (as adjusted)
Net cash provided by operating activities from continuing operations $51,970 $51,007
Net cash used in investing activities from continuing operations (52,532) (66,976)
Net cash provided by (used in) financing activities from continuing operations (125,697) 18,455
Net cash provided by (used in) discontinued operations 125,331 (20,431)
Effect of exchange rate changes on cash and cash equivalents 580 (1,615)
Net decrease in cash and cash equivalents $(348) $(19,560)
 
 
TransAtlantic Petroleum Ltd.
Summary Consolidated Balance Sheets
 
  As of
(U.S. Dollars in thousands) December 31, 2012 December 31, 2011
ASSETS   (as adjusted)
Current assets:    
Cash and cash equivalents $14,768 $15,116
Accounts receivable 52,769 51,636
Prepaid and other current assets 2,339 4,142
Deferred income taxes 1,895 2,124
Assets held for sale 1,619 127,168
Total current assets 73,390 200,186
Property and equipment, net 256,152 235,429
Other 28,716 13,187
Total assets $358,258 $448,802
     
LIABILITIES & SHAREHOLDERS' EQUITY    
Current liabilities:    
 Accounts payable $28,779 $26,178
 Short term debt -- 80,732
 Accrued liabilities and other 30,509 28,135
 Derivative liabilities 3,908 3,716
 Liabilities held for sale 8,416 25,864
Total current liabilities 71,612 164,625
Total liabilities 144,431 277,529
Total shareholders' equity 213,827 171,273
Total liabilities and shareholders' equity $358,258 $448,802
 
Reconciliation of Net Loss to Adjusted EBITDAX
 
  For the Three Months Ended December 31, For the Twelve Months Ended December 31,
(U.S. Dollars in thousands)   2012 2011 2012 2011
    (as adjusted)   (as adjusted)
Net loss from continuing operations $(13,942) $(58,965) $(6,373) $(77,574)
Adjustments:        
Interest and other, net 1,060 3,043 5,922 12,576
Income tax (benefit) expense (51) (4,484) 6,491 (2,565)
Exploration, abandonment, and impairment 28,210 45,165 39,993 60,952
Seismic and other exploration 2,391 1,897 4,291 7,572
Foreign exchange loss (gain) 1,983 2,767 (1,083) 11,973
Share-based compensation 1,053 333 2,559 1,679
Unrealized derivative (gain) loss (458) 4,791 1,719 3,572
Accretion of asset retirement obligation 131 249 710 1,142
Depreciation, depletion, and amortization 1,517 16,395 28,215 39,008
Revaluation of contingent consideration -- 4,750 -- 6,000
Other 311 1,688 4,960 1,688
Adjusted EBITDAX from continuing operations $22,205 $17,629 $87,404 $66,023

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, exploration expenses, and other non-cash charges 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 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 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 regarding 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; 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.

CONTACT: Wil Saqueton
VP & CFO
(214) 220-4323
http://www.transatlanticpetroleum.com
16803 Dallas Parkway, Suite 200
Addison, Texas 75001

TransAtlantic Petroleum Ltd. Logo

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