SOURCE: TransAtlantic Petroleum Ltd.

TransAtlantic Petroleum Ltd.

October 05, 2011 08:30 ET

TransAtlantic Petroleum Ltd. Announces Its Intent to Sell Its Drilling Services Business, the Engagement of PPHB as Its Financial Advisor, the Extension of Dalea Credit Agreement Maturity Date, and Increased Turkish Natural Gas Prices

HAMILTON, BERMUDA--(Marketwire - Oct 5, 2011) - TransAtlantic Petroleum Ltd. (TSX: TNP) (NYSE Amex: TAT) announced today that it intends, through a process to be directed by the Company's special committee of independent directors, to sell its drilling services business, which is operated through its wholly owned subsidiaries Viking International Limited ("Viking International") and Viking Geophysical Services, Ltd. ("Viking Geophysical"). Additionally, the Company announced a maturity extension on the Dalea credit agreement and increased Turkish natural gas pricing.

Engagement of Financial Advisor
On September 30, 2011, the Company and the Company's special committee entered into an engagement letter with Parks Paton Hoepfl & Brown, LLC ("PPHB"), under which PPHB will act as the exclusive financial advisor to the Company and the special committee in connection with the sale, transfer or other disposition of Viking International and Viking Geophysical.

The Company intends to complete the marketing of its drilling services business by early December 2011 and consummate the sale of its drilling services business in the first quarter of 2012. Accordingly, the Company expects to treat its drilling services business as "discontinued operations" for U.S. GAAP accounting purposes in its quarterly report on Form 10-Q for the quarter ended September 30, 2011.

N. Malone Mitchell, 3rd, the Company's chairman and chief executive officer, said, "We believe it is prudent for TransAtlantic to consider the sale of our drilling services business at this time for several reasons. First, it has become apparent that TransAtlantic will need significant additional capital investment in order to grow our drilling services business in an appropriate manner. Each dollar invested in drilling services is a dollar that could otherwise be invested in our core business of drilling new wells and increasing our oil and gas production. Second, we do not believe that the equity markets are giving due credit to our drilling services business, assets and growth opportunities, and as a result the value of our drilling services business is not accurately reflected in our current share price. Third, the net proceeds from a sale of our drilling services business would provide additional capital for the growth of our exploration and production business and allow TransAtlantic to retire substantially all of its outstanding debt. Finally, a sale of the drilling services business would simplify our accounting function and reduce general and administrative expense."

Mr. Mitchell added, "The anticipated sale of TransAtlantic's drilling services business represents a change from our strategy of vertical integration. This strategy has served TransAtlantic well since its inception, but I believe our shareholders will be better served by separating our two businesses in order to focus our efforts and capital on our core business, which is the exploration and production of oil and natural gas. Additionally, the introduction of modern technology and increased competition in the drilling services market in Turkey has led to lower third party drilling services costs than existed prior to our arrival in that market. We anticipate that any sale of our drilling services business will be subject to long-term agreements among TransAtlantic, Viking International and Viking Geophysical, under which Viking International and Viking Geophysical would continue to provide substantially all of our required drilling services at favorable rates, thus providing TransAtlantic the ability to continue to efficiently manage its exploration and production costs."

Potential Participation by Mr. Mitchell
Mr. Mitchell has informed PPHB and the special committee that he may participate in the purchase of the Company's drilling services business. Any such participation by Mr. Mitchell will be pursuant to the bid procedures to be established by the special committee and PPHB.

Extension of Dalea Credit Agreement Maturity
Dalea Partners, LP, an affiliate of Mr. Mitchell, has agreed in principle to extend the maturity date of its credit agreement with the Company from December 31, 2011 to March 31, 2012. There will be no other changes to the existing terms and conditions of the credit agreement, and the Company expects to complete documentation of this amendment in October 2011.

Increased Turkish Natural Gas Prices
Effective October 1, 2011 Botas Boru Hatlari Ile Petrol Tasima AS ("BOTAŞ"), Turkey's state-owned pipeline company, has increased residential and industrial natural gas pricing by approximately 14%. At the current exchange rate of approximately 1.91 Turkish lira per United States dollar, the Company expects to receive almost $7.00 per thousand cubic feet of natural gas produced during October. As natural gas production now represents more than 50% of the Company's current net production, the Company expects this increase to have an immediate positive impact on our wellhead natural gas price realizations.

About TransAtlantic
TransAtlantic Petroleum Ltd. is an international energy company engaged in the acquisition, development, exploration, and production of crude oil and natural gas. The Company holds interests in developed and undeveloped oil and gas properties in Turkey, Morocco, Bulgaria and Romania. The Company owns its own drilling rigs and oilfield service equipment, which it currently uses to develop its properties in Turkey and to provide oilfield services and drilling services to third parties in Turkey and Iraq.

(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 the marketing and sale of the Company's drilling services business, the U.S. GAAP accounting treatment of the Company's drilling services business, the amendment of the Dalea credit agreement, the impact of Turkish natural gas prices on the Company's revenues, 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 the continuing ability of the Company to operate effectively internationally, reliance on current oil and gas laws, rules and regulations, volatility of oil and gas prices, fluctuations in currency and interest rates, imprecision of resource estimates, the results of exploration, development and drilling, imprecision in estimates of future production capacity, changes in environmental and other regulations or the interpretation of such regulations, the ability to obtain necessary regulatory approvals, weather and general economic and business conditions.

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 Information

  • 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