“This acquisition represents an important milestone for TransAtlantic. It is a major step in our pursuit to build a premier producing oil & gas company,” said Matthew McCann, CEO of the Company.
“The acquisition would not have been possible without the commitment Malone Mitchell made to TransAtlantic,” Mr. McCann said. Mr. Mitchell, who loaned the Company funds sufficient to enable the purchase of Incremental, commented on the acquisition, “Incremental is a great fit with TransAtlantic. Incremental has an outstanding staff and portfolio of assets. It is a pretty straightforward acquisition formula: buy the right assets supported by the right people at the right price.” Mr. Mitchell further noted, “Incremental affords the opportunity to drive additional shareholder value by fully developing Incremental’s Selmo and Edirne fields.”
The acquisition expands the Company’s rig fleet from four to seven rigs and increases the highly qualified workforce of field staff, engineers, and geologists in one of the Company’s target countries. Incremental’s portfolio consists of the producing Selmo oil field, the Edirne gas field and additional exploration acreage in Turkey, and three prospects in the U.S. Incremental’s portfolio provides the Company with a base of production with significant potential upside. For the year ended December 31, 2008, Incremental generated revenues and EBITDA of U.S. $45 million and U.S. $21 million, respectively.
Selmo Oil Field (100% interest) – The Company has begun analyzing opportunities to fully develop Selmo, which produced over 493,000 barrels of oil in 2008 and is ranked as the second largest oil field in Turkey in terms of cumulative production. Situated on the northern edge of the prolific Zagros fold belt of Iran and Iraq in southeastern Turkey, oil from Selmo has been recovered from less than 50 wells, with average well spacing exceeding 180 acres per well. “With low recovery factors relative to the original oil in place, and the low density of wells in the field, we see the opportunity to increase production and the ultimate recoverable oil by drilling additional wells within the field,” Mr. McCann said.
Mr. Mitchell added, “This is exactly the type of opportunity we were looking for. We will enhance Incremental’s existing operations by bringing our expertise and equipment to Incremental’s already significant base of operations. We anticipate realizing the benefits of our lower costs in a vertically integrated business model.”
Near Term Production Growth Opportunities
Edirne Gas Project (55% interest) – The Edirne gas project will become the Company’s second major production project in Turkey. Located in the Thrace Basin of northwestern Turkey, Edirne’s large concession area and favorable geological environment for gas accumulations is demonstrated by seven discoveries from eight wells drilled to date. Edirne has numerous prospects on the remainder of the license that may add to future gas production. It is important to highlight that Turkey’s state-owned pipeline company and gas pricing benchmark, Botas, is currently pricing natural gas at over U.S. $10 per thousand cubic feet.
McFlurrey Gas Project (50% interest) – The Company will earn a 50% interest (37.5% revenue interest) by drilling two wells. The wells, which are less than 5,000 feet, are planned for the second quarter of 2009 and are estimated to cost less than U.S. $2 million to drill and complete.
The wells are about four miles from the nearest pipeline and the Company would have to build a line to sell gas. Located in the fertile San Joaquin Basin in central California, the two wells in McFlurrey effectively offset several older “show wells,” which tested gas at significant rates.
License 4262 (formerly 60%, now 100% interest) – The Company started its involvement with Incremental in September 2008, when TransAtlantic Turkey Ltd. (“TransAtlantic Turkey”), a wholly-owned subsidiary of the Company, farmed-in to Incremental’s 4262 exploration license. In exchange for a 60% interest, TransAtlantic Turkey agreed to drill one well to a depth of approximately 10,500 feet. By acquiring Incremental, the Company will receive additional interest with no additional cost, as TransAtlantic Turkey was previously carrying 100% of Incremental’s cost.
Incremental’s remaining portfolio consists of several large exploration targets near Ankara, Turkey and two prospects in California.
“We’re excited about the Company’s future and look forward to adding additional value for TransAtlantic’s shareholders,” said Matthew McCann, CEO of TransAtlantic.
This news release contains statements concerning plans to acquire shares in a company, plans to drill oil and gas wells, as well as other expectations, plans, goals, objectives, assumptions, information or statements 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, oil and gas prices remaining relatively consistent with their current prices, access to the fields, availability of drilling rigs and other equipment, obtaining drilling success consistent with expectations, stock exchange, shareholder and regulatory approvals being obtained and estimated timelines being met and the actual costs being consistent with estimated costs.
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 political stability of the countries in which the Company operates, reliance on those countries’ current hydrocarbon and tax laws and regulations, operating hazards, drilling risks, inherent uncertainties in interpreting engineering and geological data, competition, reduced availability of drilling and other well services, volatility of oil and gas prices, fluctuations in currency and interest rates, the Company’s ability to access external sources of debt and equity capital, imprecision in estimating the timing and costs of drilling and development, the Company’s ability to secure adequate product transportation, changes in environmental and other regulations or the interpretation of such regulations, the ability to obtain necessary stock exchange, shareholder and regulatory approvals, satisfaction of closing conditions, 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.