MLV Initiates Coverage of TAT

KIM PACANOVSKY, McNicoll, Lewis & Vlak LLC (12/29/2010)
"Attractive assets: TransAtlantic holds a meaningful 1.3 million net acre land position in the Thrace Basin, Turkey's most productive gas province. Current production is 22 MMcfe/d with 10 MMcfe/d shut-in awaiting pipelines with an additional 35 new conventional prospects in the Thrace Basin, which also holds unconventional gas potential from tight sands, with +1 Tcf of potential.

With its large acreage position in Turkey and ability to capture a higher margin from its drilling activities via employing its own rigs and services, TAT is uniquely positioned to benefit from the Turkish government's desire to increase domestic hydrocarbon production. We estimate that production will grow from an estimated 16 Bcfe in 2010 to roughly 40 Bcfe in 2011. With this strong production growth, we estimate 2010 cash flow will grow from $16.7M–$78M in 2011.

Tight gas potential in the Thrace Basin: Only six wells in the history of the basin have been fracked, and not with state-of-the-art technology. Positive results from the frac activity underway will have huge implications for recoverable gas in the Basin. Exploration results in the 'Iraq Jr.' area of SE Turkey: TAT's recent exploration success in the Bakuk region is regarded as the company's most important exploration success to date."

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