TransAtlantic Petroleum Ltd. (TSX: TNP) (NYSE
American: TAT) (the “Company” or “TransAtlantic”) today announced
changes in the Company’s board of directors and independent
registered accounting firm and provided an update on its hedging
program, its response to the recent oil price decline, upcoming
dividends on its 12.0% Series A Convertible Redeemable Preferred
Shares (“Series A Preferred Shares”), its potential reliance on a
Securities and Exchange Commission (“SEC”) order for reporting
relief, the extension of the deadlines for the work requirements
under the Company’s explorations licenses in Turkey, and the
Company’s 2020 Annual Meeting of Shareholders (the “Annual
Meeting”).
Board of Directors
The Company deeply regrets to announce that Bob
G. Alexander, a member of the Company’s board of directors, passed
away on April 5, 2020. Mr. Alexander had been a director of the
Company since 2010. Mr. Alexander had extensive experience as an
executive officer in the oil and natural gas services industry and
had extensive financial, executive leadership, and organizational
experience. He was a petroleum engineer, and the board of directors
regularly relied on his engineering expertise. Mr. Alexander served
on various committees of the board of directors, including serving
as chairman of the special committee formed in connection with the
sale of the Company’s oilfield services business.
On April 3, 2020, Mel G. Riggs, a member of the
Company’s board of directors, informed the board of directors that
he will not stand for re-election as a director and will step down
at the end of his term effective as of the Annual Meeting. Mr.
Riggs will continue to serve as a director until such time.
On April 6, 2020, the board of directors
appointed Mr. K. Kirk Krist as a director, effective April 7, 2020,
to fill the vacancy created by the death of Mr. Alexander. The
board of directors had previously identified Mr. Krist as director
nominee to stand for election at the Annual Meeting. Mr. Krist, 61,
has served as president and chief executive officer of The K. Kirk
Krist Company, a Houston-based private company specializing in oil
and gas leasing, land management, farmouts, mergers, investments,
venture capital, acreage swaps, mineral interests, overrides,
royalties, acquisitions and divestitures, since 1981. From 1997
until a 2010 sale to Halliburton (NYSE: HAL), Mr. Krist served as a
member of the board of directors, and from 2002 to 2006 as chairman
of the board of directors, of Boots & Coots International Well
Control, Inc. (Amex: WEL), a well control service company. Mr.
Krist served as chairman and chief executive officer of Applied
Snubbing Technology from 1997 until its sale in 1999 to Cudd
Pressure Control/RPC (NYSE: RES). Mr. Krist served as chief
executive officer and president of K. Kirk Krist & Associates,
Inc. (“KKK&A”), a Houston-based land management services
company, from 1981 until 1997 when Mr. Krist sold his interest in
KKK&A to its management team. Mr. Krist earned a B.B.A. from
the University of Texas.
Independent Registered Public Accounting
Firm
On April 7, 2020, after request by the audit
committee of the Company’s board of directors in connection with
the Company’s efforts to reduce general and administrative
expenses, RBSM LLP (“RBSM”) notified the Company that RBSM will not
seek re-appointment as the Company’s independent registered public
accounting firm for the year ending December 31, 2020 and has
resigned effective April 7, 2020.
Effective April 8, 2020, the Company’s board of
directors appointed DMF Sistem Uluslararası Bağımsız Denetim
Danışmanlık ve YMM A.Ş. (“DMF”) to serve as the Company’s
independent registered public accounting firm until the appointment
of an independent registered public accounting firm at the Annual
Meeting. The Company has consulted with DMF on certain Turkish tax
matters, and DMF has served as the Company’s statutory auditor in
Turkey since 2011.
Hedging Update
On April 3, 2020, the Company entered into a new
swap contract with DenizBank, A.S., which hedged approximately
2,000 barrels of oil per day of the Company’s oil production in
Turkey. The swap contract had a Brent strike price of $36.00 and is
in place from May 2020 through February 2021.
Response to Recent Oil Price
Decline
As discussed in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2019, in March 2020,
crude oil prices declined to approximately $25 per barrel for Brent
crude as a result of market concerns about the economic impact from
the coronavirus (“COVID‑19”) as well as the ability of OPEC and
Russia to agree on a perceived need to implement further production
cuts in response to weaker worldwide demand. In order to mitigate
the impact of reduced prices on the Company’s 2020 cash flows and
liquidity, the Company has implemented cost reduction measures to
reduce operating costs and general and administrative expenses,
including reductions in staff and compensation which the Company
expects to reduce labor expenses in Dallas, Texas by approximately
50%. The Company will continue to implement cost-cutting
initiatives during the second quarter of 2020.
Dividends on Series A Preferred
Shares
Given the Company’s current hedges, the recent
oil price decline, and the implemented cost reduction measures, the
Company currently anticipates that it may pay the remaining
quarterly dividends in 2020 on its 12.0% Series A Convertible
Redeemable Preferred Shares (“Series A Preferred Shares”) in its
Common Shares, par value $0.10 per share (“Common Shares”), as
permitted by the certificate of designation for the Series A
Preferred Shares. If the dividend is paid in Common Shares, the
dividend rate will be 16% of the liquidation preference on the
Series A Preferred Shares. Such payments may result in significant
dilution to the holders of Common Shares.
Potential Reliance on SEC Order for
Reporting Relief
As a result of the above reductions in staff and
compensation, associated shifts in accounting responsibilities, and
the suspension of in-person operations at the Company’s
headquarters as a result of COVID-19, the Company anticipates that
it may need to rely on SEC Order 34-88465 under the Securities
Exchange Act of 1934 (the “Exchange Act”) extending the deadlines
for filing certain reports for registrants impacted by COVID-19, in
connection with the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2020 (the “March 31, 2020 Form 10-Q”). The
Company will file the March 31, 2020 Form 10-Q as soon as
practicable and will provide an update as to the anticipated filing
date for the March 31, 2020 Form 10-Q prior to the original filing
deadline for the report.
License Deadline Extensions
The Company has applied for and received a
six-month extension on the deadlines for work requirements under
the Company’s explorations licenses in Turkey, including the Temrez
and Selmo exploration licenses.
Annual Meeting
The Company currently intends to host its Annual
Meeting on Friday, June 5, 2020 at 1:00 p.m. Central time (2:00
p.m. Eastern time) in Ballroom B at The Clubs of Prestonwood, 15909
Preston Road, Dallas, Texas 75248. After the meeting, the Company
will offer an audio recording of the Annual Meeting. To listen to
the audio recording, please visit the Company’s website at
www.transatlanticpetroleum.com, click on “Investors,” and select
“Annual Meeting.”
About TransAtlantic
The Company is an international oil and natural
gas company engaged in the acquisition, exploration, development,
and production of oil and natural gas. The Company holds interests
in developed and undeveloped 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 concerning
changes in the Company’s board of directors and independent
registered accounting firm, the Company’s hedging program, its
response to the recent oil price decline, upcoming dividends on its
Series A Preferred Shares, its potential reliance on an SEC order
for reporting relief, the extension of the deadlines for the work
requirements under the Company’s explorations licenses in Turkey,
and the holding of the Annual Meeting, as well as other
expectations, plans, goals, objectives, assumptions, and
information about future events, conditions, exploration,
production, results of operations, and 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.
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 Company’s
ability to continue as a going concern; well development results;
access to sufficient capital; market prices for natural gas,
natural gas liquids, and oil products, including price changes
resulting from coronavirus fears as well as oil oversupply
concerns; estimates of reserves and economic assumptions; the
ability to produce and transport natural gas, natural gas liquids,
and oil products, including price changes resulting from
coronavirus fears as well as oil oversupply concerns; the results
of exploration and development drilling and related activities; the
effects of the coronavirus on the Company’s operations, demand for
oil and natural gas as well as governmental actions in response to
the coronavirus; economic conditions in the countries and provinces
in which the Company carries on business, especially economic
slowdowns; actions by governmental authorities; the unwinding of
the Company’s hedges against a decline in the price of oil; receipt
of required approvals; increases in taxes; legislative and
regulatory initiatives relating to fracture stimulation activities;
changes in environmental and other regulations; renegotiations of
contracts; political uncertainty, including sanctions, armed
conflicts, and actions by insurgent groups; outcomes of litigation;
the negotiation and closing of material contracts; and other risks
described in the Company’s filings with the SEC.
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.
Contacts:
Tabitha T. BaileyVice President, General Counsel
and Corporate Secretary(214) 265-4708
TransAtlantic Petroleum Ltd.16803 Dallas
ParkwayAddison, Texas
75001http://www.transatlanticpetroleum.com
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