TransAtlantic Petroleum has acquired Energy Operations Turkey, LLC ("EOT") for total consideration of $7.75 million, including a $1.5 million promissory note payable in one year. EOT's assets include a 50% interest in License 3118, where in 2008 EOT participated in two oil discoveries, interests in ten other exploration licenses, inventory and seismic data. The acquisition provides TransAtlantic with the opportunity to expand its operations, achieve scale, and extend its vertical integration strategy in southeastern Turkey.
Expanding Production Base
License 3118 (50% interest), which covers approximately 96,000 gross acres, is located near the city of Diyarbakir in southeastern Turkey. In April and September 2008, EOT participated in the drilling of the Arpatepe-1 and Arpatepe-2 wells, which represent Turkey's first and second economic discoveries of crude oil from deeper, Paleozoic sandstone formations. The wells, which flowed naturally and were not stimulated, had initial production rates of 440 and 190 gross barrels per day from limited perforations. The wells are currently producing an aggregate of approximately 120 gross barrels per day. Matthew McCann, the Company's CEO, said, "Arpatepe represents an opportunity to establish an additional leg of production to complement our production in the Selmo oil field and the Thrace Basin gas field. In addition to the two existing producing wells, which have potential beyond their current production rates, EOT has a number of highly prospective drilling locations."
Applying Cost Discipline
The Company is preparing to mobilize its new I-13 rig to Turkey to be available for drilling at License 3118 and other licenses. The new rig will join the Company's I-9 rig in southeastern Turkey, which has been mobilized to the Company's Selmo oil field. This will increase the Company's rig count in Turkey to five. "By applying our experience with scale and vertical integration, we aim to lower the drilling and completion costs for all the wells we drill. At Arpatepe, we could see an increase in economic production by committing to drill a number of development-type wells," stated Malone Mitchell, the Company's Chairman.
Creating Exploration Upside
License 3118 includes 400 kilometers of recently acquired 2D seismic and 400 kilometers of previously shot 2D seismic that has either recently been reprocessed or is currently being reprocessed. Additionally, the EOT acquisition includes interests in ten other exploration licenses, although some will expire this year subject to certain conditions.
"We remain disciplined in our capital allocation process and committed to driving solid long-term results from these assets," said Mr. McCann.
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