Trans....peteI knew very little about TransAtlantic Pete, until it started to get mention on this board. Tonight in his Energy Summary - 7th, Carswell does a good job of reviewing their recent history. I thought some on the board would be interested... read on....
Malone Mitchell's thinly traded TransAtlantic Petroleum Ltd. (TNP) had a particularly good day. It rocketed up 79 cents to $1.99 on 134,700 shares, on top of the 39 cents it added on Friday after releasing a year-end operational update and -- more interestingly -- finding a buyer for its Albanian assets, which went up for sale less than four months ago. Albanian newspapers do not seem at all pleased about the sale. By way of background, TransAtlantic's announcement of an Albanian marketing process came on Nov. 17, almost a year to the day after the company first entered Albania, which it did through the all-share takeover of Stream Oil, issuing shares at a deemed price of $10.89 (U.S.). The stock has had a long fall since then. The Albanian assets contributed to the fall, as they did not end up realizing the "significant potential for growth" that TransAtlantic's chairman and chief executive officer, Mr. Mitchell, touted at the time of the takeover. The assets were then producing about 1,000 barrels of oil equivalent a day, but were producing just 700 barrels a day by the time they went up for sale. They were not generating enough cash flow to pay for their operations. TransAtlantic was getting cash flow from its core assets in Turkey (which produced about 5,000 barrels a day in the fourth quarter of 2015, according to the year-end update), but its credit facility limited its ability to transfer that cash flow to Albania. As for external sources of cash, such as joint venturers, the oil price crash put paid to that idea. TransAtlantic cut short its Albanian adventure and put the assets up for sale in November.
Now it says it found a buyer and has already closed the deal. It says it sold its interest in Stream to a company called GBC Oil Co. in exchange for: (i) a future $2.3-million payment to Raiffeisen Bank to pay down a loan facility (which, according to SEDAR filings, was entered into by Stream in September, 2014, and had $6.1-million (U.S.) outstanding as of Sept. 30, 2015); and (ii) the assumption of $29.2-million in liabilities owed by Stream. TransAtlantic has also indemnified GBC for $12.9-million in liabilities related to an Albanian gas field. Local news outlets are in uproar. National television station Top Channel, the Gazeta Mapo, Shqiptarja and others are reporting that GBC is a "phantom" company and that TransAtlantic is doing this transfer agreement as a way to avoid paying 13 million euros owed to the state. They quote unnamed sources from state-owned producer Albpetrol (which has licence agreements with TransAtlantic for the assets) as saying that Albpetrol has never heard of the sale or GBC, will not give its approval until various conditions are met, and has begun procedures to terminate the asset contracts because Stream and TransAtlantic did not meet their obligations. TransAtlantic did not respond to a request for comment about the media reports. Investors do not seem concerned.