HAMILTON, BERMUDA — (Marketwire) — 09/22/11 — (TSX: TNP) (NYSE Amex: TAT) is pleased to announce that it has entered into an agreement with LNG Energy Ltd. (“LNG”) (TSX-V: LNG) pursuant to which LNG will invest $7.5 million USD to immediately commence drilling a 10,500 foot (approximately 3,200 meter) exploration well on the A-Lovech exploration license in Bulgaria. The objective of the well will be to core and test the unconventional Etropole formation. The agreement, between LNG and the Company–s wholly owned subsidiary, TransAtlantic Worldwide, Ltd. (“Worldwide”), provides that LNG will invest $7.5 million USD which will be used by Worldwide–s subsidiary and operator of the well, Direct Petroleum Bulgaria EOOD (“Direct Bulgaria”), to commence drilling the Peshtene R-11 well this week.
“With its participation in a number of licenses in the shale play in Poland, LNG brings hands-on experience to the exploration of the Etropole formation for natural gas. The drilling of an Etropole test well will increase our technical understanding of the play and is the first step in our effort to unlock the long-term potential in the Etropole,” said Gary Mize, the Company–s President.
The A-Lovech exploration license, which is 100% owned and operated by Direct Bulgaria, covers an area of approximately 565,000 acres (2,288 square kilometers) in northwestern Bulgaria, all of which is prospective for the Etropole formation. This agreement with LNG covers the southern portion of the A-Lovech exploration license, an area of approximately 405,000 acres (1,640 square kilometers). Direct Bulgaria will file an application for a production concession over this southern portion of the A-Lovech license (the “Etropole Concession”) later this fall; the results of the Peshtene R-11 well will be used in support of the application.
Subject to various conditions, including the issuance of the Etropole Concession by the government of Bulgaria, LNG will fund up to an additional $12.5 million, of which $7.5 million will be used to drill a second well or for other exploration activities on the Etropole Concession. In return, and subject to approval by the government of Bulgaria, LNG will form a Bulgarian subsidiary to acquire a 50% working interest in the Etropole Concession. In the event certain conditions, including the issuance of the Etropole Concession, are not satisfied, then LNG would have no further obligations under the agreement.
N. Malone Mitchell, 3rd, TransAtlantic–s Chairman and Chief Executive Officer, stated, “We have been encouraged by natural gas shows in the Etropole formation in a number of wells drilled in the vicinity of the planned Peshtene R-11, including one well that tested gas from the Etropole formation. We are excited to partner with LNG to accelerate our campaign to target and exploit the natural gas potential of the unconventional Etropole formation. Should the Etropole prove productive, this location lies less than 10 km from existing pipeline infrastructure, and production will benefit from regional natural gas prices that are currently around $10/Mcf.”
With respect to the balance of the A-Lovech exploration license, Direct Bulgaria has already applied for a production concession over the northern 160,000 acres (648 square kilometers) called the “Koynare Area”; the Koynare Area contains a conventional gas discovery in the Jurassic-aged Orzirovo formation and is also prospective for the Etropole. The discovery well, the Deventci R-1, is currently producing approximately 250 thousand cubic feet per day on a limited test basis, which is processed in a compressed natural gas facility adjacent to the well. The Company plans to appraise this discovery by drilling a second well, the Deventci R-2, in November 2011. The Company is also seeking a partner to participate with it in developing the Koynare Area and has retained FirstEnergy Capital as its exclusive advisor to assist in that search.
TransAtlantic Petroleum Ltd. is a vertically integrated, international energy company engaged in the acquisition, development, exploration, and production of crude oil and natural gas. The Company holds interests in developed and undeveloped oil and gas properties in Turkey, Bulgaria and Romania. The Company owns its own drilling rigs and oilfield service equipment, which it uses to develop its properties in Turkey. In addition, the Company provides oilfield services and contract drilling services to third parties in Turkey.
This news release contains statements regarding the drilling, testing and coring of exploration wells, applications for production concessions, the transfer of interests in a production concession, the timing for such drilling, testing and coring of exploration wells, applications for production concessions and transfer of interests in a production concession, as well as other expectations, plans, goals, objectives, assumptions or information 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, the ability of the Company to continue to develop and exploit attractive foreign initiatives.
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 continuing ability of the Company to operate effectively internationally, reliance on current oil and gas laws, rules and regulations, volatility of oil and gas prices, fluctuations in currency and interest rates, imprecision of resource estimates, the results of exploration, development and drilling, imprecision in estimates of future production capacity, changes in environmental and other regulations or the interpretation of such regulations, the ability to obtain necessary regulatory approvals, weather and general economic and business conditions. If one or more of these risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected.
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.