Update: Resilient in the storm
TransAtlantic (TAT) released solid FY14 results on 16 March, which showed good operational momentum. TAT is making progress on the integration of Stream’s Albanian assets and on its various production growth initiatives in Turkey, notably horizontal drilling and the waterflood pilot at Selmo, and drilling success at Molla. The relatively short-cycle nature of TAT’s assets in Turkey and Albania, low break-evens and capex flexibility mean its business model is more resilient than for many E&Ps. Management has reacted quickly to lower oil prices and is cutting capex by two-thirds as it aims to operate within cash flow this year. Despite lower spend, we expect broadly flat production in 2015 at c 6mboe/d, and see double-digit growth resuming in 2016 as the Albanian fields ramp-up. Our unchanged core NAV of $11.2/share offers considerable upside from the current share price.
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