TransAtlantic Petroleum (TAT) Sees FY15 Capital Budget at $38M

TransAtlantic Petroleum (NYSE: TAT) announced a corporate update, a preliminary 2015 capital expenditure budget and an update on its operations.

Corporate Update

TransAtlantic presently holds $35 million of cash on hand and a portfolio of commodity derivative contracts with a present value of approximately $40 million at a Brent crude oil price of $50 per barrel. The Company has hedged approximately 1.5 million barrels of Brent crude oil at a weighted average minimum price of $85 per barrel for the period Q1 2015 through Q1 2019. TransAtlantic intends to reserve its cash flow from commodity derivatives to repay debt.

Currently, the Company's cash flow is primarily derived from sales in Turkey and is expected to be used for debt repayment and capital expenditures. Sales in Albania are covering operating and overhead expenses, and TransAtlantic is repairing the financial structure of its Albanian assets subsequent to their acquisition.

Preliminary 2015 Capital Expenditure Budget

TransAtlantic's board of directors has approved an initial 2015 capital expenditure budget of up to $38 million. The Company estimates annual capital expenditures of $38 million would be required to maintain flat production for the year. TransAtlantic intends to operate within its 2015 cash flow, and will adjust its capital budget based on changes in commodity prices, oilfield service costs and well results.

The Company expects oilfield service and equipment costs to decrease by 20-30% in the first half of 2015. TransAtlantic plans to utilize existing inventory to perform the majority of its 2015 capital program, which will result in a cash savings of greater than 20%. In addition to generating cost savings on operating expenses, the Company is pursuing a 30% reduction in general and administrative costs by the third quarter of 2015. TransAtlantic has eliminated a significant amount of discretionary spending by restricting spending authority throughout the organization.

The Company expects to spend approximately $12 million of the 2015 capital expenditure budget on five gross (four net) obligation wells to hold its most promising licenses. The obligation wells will be drilled under nearly any well cost or commodity price scenario.

"We are reducing our company expenditures based on the belief that the current oil price may persist for twelve months or more before increasing in 2016," commented N. Malone Mitchell 3rd, TransAtlantic's Chairman and Chief Executive Officer. "Our recent convertible notes offering gave us the flexibility we needed to restructure the balance sheet of our new Albanian oil and gas operations. We are pleased to have a balanced portfolio of oil and gas assets, and expect to emphasize gas development in 2015, which may produce an even higher return than it did in 2014, due to lower service costs and the continuation of high gas prices in the region."

"We will watch the price of oil closely and when we consider activity above our minimum work obligation, will only drill wells with an acceptable return on invested capital," he continued. "Alternately, we will build cash reserves and repay debt, and/or repurchase shares under a share repurchase program, which the board approved last week."

Operations Update

TransAtlantic's average net production for January 2015 was approximately 6,700 BOEPD, comprised of approximately 5,200 BOPD of oil and approximately 8.9 MMCFPD of natural gas. Presently, the Company has one active rig in southeast Turkey. The Pinar-1 vertical well (100% working interest) is nearing its target depth of 11,700 feet. Sample logs while drilling indicate oil and gas shows in the Bedinan formation. The Company expects to test the Pinar-1 in the first quarter of 2015.

TransAtlantic intends to drill the Delvina-34H1 (100% working interest) in Albania and expects to test the well in the summer of 2015.

The Company plans to issue a reserves update as soon as year-end 2014 reserves are finalized. Turkish reserves are complete and TransAtlantic expects to complete Albanian reserves by the end of February 2015.

Fourth Quarter 2014 Earnings Call

TransAtlantic will provide operational and financial results on its fourth quarter 2014 earnings call, which it expects to host in mid-March 2015.

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