8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 24, 2010

TRANSATLANTIC PETROLEUM LTD.

(Exact name of registrant as specified in its charter)

Bermuda	001-34574	None
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5910 N. Central Expressway, Suite 1755 Dallas, Texas	75206
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 220-4323

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On August 30, 2010, TransAtlantic Petroleum Ltd. (the “Company”) filed a Form 8-K to report that TransAtlantic Worldwide, Ltd. (“TransAtlantic Worldwide”), a wholly-owned subsidiary of the Company, acquired all of the shares of Amity Oil International Pty Ltd (“Amity”) and Zorlu Petrogas Petrol Gaz ve Petrokimya Ürünleri Inşaat Sanayi ve Ticaret A.Ş. (“Petrogas” and, together with Amity, “Amity Petrogas”). This Amendment No. 1 to the Current Report on Form 8-K/A is being filed to provide the financial statements described in Item 9.01 below.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

Attached as Exhibit 99.1 hereto and incorporated by reference herein are the audited and unaudited combined financial statements of Amity Petrogas along with the report of the independent auditors as follows:

• Audited combined balance sheet as of December 31, 2009 and unaudited combined balance sheet as of June 30, 2010.

• Audited combined statement of operations and comprehensive income for the year ended December 31, 2009 and unaudited combined statements of operations and comprehensive income for the six months ended June 30, 2010 and 2009.

• Audited combined statement of cash flow for the year ended December 31, 2009 and unaudited combined statements of cash flow for the six months ended June 30, 2010 and 2009.

• Notes to the combined financial statements.

(b) Pro Forma Financial Information.

Attached as Exhibit 99.2 hereto and incorporated by reference herein are the unaudited pro forma condensed combined financial statements of the Company as follows:

• Unaudited pro forma condensed combined statements of operations for the year ended December 31, 2009 and the six months ended June 30, 2010.

• Unaudited pro forma condensed combined balance sheet as of June 30, 2010.

(d) Exhibits.

Exhibit No.	Description of Exhibit
23.1	Consent of KPMG LLP.
99.1	Audited Combined Financial Statements of Amity Petrogas as of and for the Year Ended December 31, 2009 and Unaudited Combined Financial Statements of Amity Petrogas as of and for the Six Months Ended June 30, 2010 and 2009.
99.2	Unaudited Pro Forma Condensed Combined Statements of Operations of TransAtlantic Petroleum Ltd. for the Year Ended December 31, 2009 and for the Six Months Ended June 30, 2010 and Unaudited Pro Forma Condensed Combined Balance Sheet of TransAtlantic Petroleum Ltd. as of June 30, 2010.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 12, 2010

TRANSATLANTIC PETROLEUM LTD.
By:	/S/    JEFFREY S. MECOM
	Jeffrey S. Mecom
	Vice President and Corporate Secretary

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
23.1	Consent of KPMG LLP.
99.1	Audited Combined Financial Statements of Amity Petrogas as of and for the Year Ended December 31, 2009 and Unaudited Combined Financial Statements of Amity Petrogas as of and for the Six Months Ended June 30, 2010 and 2009.
99.2	Unaudited Pro Forma Condensed Combined Statements of Operations of TransAtlantic Petroleum Ltd. for the Year Ended December 31, 2009 and for the Six Months Ended June 30, 2010 and Unaudited Pro Forma Condensed Combined Balance Sheet of TransAtlantic Petroleum Ltd. as of June 30, 2010.

4

EX-23.1

Exhibit 23.1

KPMG LLP
Chartered Accountants	Telephone	(403) 691-8000
2700 205 – 5th Avenue SW	Telefax	(403) 691-8008
Calgary AB T2P 4B9	Internet	www.kpmg.ca

CONSENT OF INDEPENDENT AUDITORS

To the Board of Directors of TransAtlantic Petroleum Ltd.

We consent to the incorporation by reference in the registration statements on Form S-3 (Nos. 333-167418 and 333-163976), and Form S-8 (No. 333-162814) of TransAtlantic Petroleum Ltd. of our report dated November 12, 2010 with respect to the combined balance sheet of Amity Petrogas as of December 31, 2009, and the related combined statements of operations and comprehensive income and cash flow for the year then ended, which report appears in the Form 8-K/A of TransAtlantic Petroleum Ltd. filed on November 12, 2010.

/s/ KPMG LLP

Calgary, Canada

November 12, 2010

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG

network of independent member firms affiliated with KPMG International, a Swiss cooperative.

KPMG Canada provides services to KPMG LLP.

EX-99.1

Exhibit 99.1

Combined Financial Statements of

AMITY PETROGAS

For the unaudited six month periods ended June 30, 2010 and 2009 and the audited year ended

December 31, 2009

Independent Auditors’ Report

The Board of Directors

of TransAtlantic Petroleum Ltd.

We have audited the accompanying combined balance sheet of Amity Petrogas as of December 31, 2009, and the related combined statements of operations and comprehensive income, and cash flows for the year then ended. These combined financial statements are the responsibility of TransAtlantic Petroleum Ltd.’s management. Our responsibility is to express an opinion on these combined financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Amity Petrogas’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Amity Petrogas as of December 31, 2009, and the results of operations and cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Calgary, Canada

November 12, 2010

AMITY PETROGAS

Combined Balance Sheets

(Amounts expressed in US dollars)

	Notes		June 30, 2010		December 31, 2009
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents			$	122,500	$	4,833,045
Accounts receivable				—		35,358
Prepaid expenses and other current assets				391,320		883,912
				513,820		5,752,315
Investments		6		—		2,874,039
Due from related parties		7		47,943,043		57,956,834
Drilling services and other equipment		3		8,097,473		9,982,916
Oil and gas properties		3		21,227,951		20,079,072
				77,268,467		90,892,861
Total assets			$	77,782,287	$	96,645,176
LIABILITIES AND OWNERS’ EQUITY
Current liabilities:
Loans payable		5	$	—	$	11,399,000
Due to related parties		7		5,246		12,105,188
Accounts payable				1,982,865		2,858,475
Vacation pay liabilities				113,894		120,545
Current taxes payable				638,106		657,445
Other current liabilities				829,622		1,110,644
				3,569,733		28,251,297
Retirement pay liabilities		8		134,407		155,344
Deferred income taxes		4		326,161		300,271
Asset retirement obligations		11		191,634		185,990
				652,202		641,605
Total liabilities				4,221,935		28,892,902
Owners’ equity				73,560,352		67,752,274
Subsequent events		12
Total liabilities and owners’ equity			$	77,782,287	$	96,645,176

The accompanying notes are an integral part of these consolidated financial statements.

3

AMITY PETROGAS

Combined Statements of Operations and Comprehensive Income

(Amounts expressed in US dollars)

	Notes		Six months ended June 30,						Year ended December 31,
			2010			2009			2009
			(unaudited)
Revenues:
Oil and gas sales		7	$	13,340,805		$	16,031,665		$	27,223,765
Interest and other income		7		2,228,325			3,389,445			4,353,102
Total revenues				15,569,130			19,421,110			31,576,867
Expenses:
Production				3,306,670			3,802,428			5,841,293
Depreciation, depletion and amortization				1,020,839			872,109			2,003,414
Accretion of asset retirement obligations				5,644			5,634			10,687
Exploration, abandonment and impairment				—			—			2,213,990
General and administrative expenses				1,448,803			1,572,432			4,200,501
Foreign exchange loss (gain)				(1,995,552	)		237,622			4,435,126
Financing expenses		7		1,257,938			2,153,266			2,318,012
Total costs and expenses				5,044,342			8,643,491			21,023,023
Income before income taxes				10,524,788			10,777,619			10,553,844
Income taxes:		4
Current				1,439,448			1,606,769			2,868,525
Deferred				39,047			196,003			131,610
				1,478,495			1,802,772			3,000,135
Net income for the period				9,046,293			8,974,847			7,553,709
Other comprehensive income (loss):
Foreign currency translation adjustment				(3,238,215	)		(1,159,803	)		300,078
Comprehensive income			$	5,808,078		$	7,815,044		$	7,853,787
Owners’ equity, beginning of period				67,752,274			59,898,487			59,898,487
Owners’ equity, end of period			$	73,560,352		$	67,713,531		$	67,752,274

The accompanying notes are an integral part of these consolidated financial statements.

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AMITY PETROGAS

Combined Statements of Cash Flow

(Amounts expressed in US dollars)

	Six months ended June 30,						Year ended December 31,
	2010			2009			2009
	(unaudited)
Operating activities:
Net income	$	9,046,293		$	8,974,847		$	7,553,709
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, depletion and amortization		1,020,839			872,109			2,003,414
Unrealized foreign exchange (gain) loss		(2,049,540	)		(565,137	)		223,478
Deferred income taxes		39,047			196,003			131,610
Exploration, abandonment, impairment		—			—			2,213,990
Accretion of asset retirement obligations		5,644			5,634			10,687
Changes in operating assets and liabilities:
Accounts receivable		35,358			524,104			630,789
Prepaid expenses and other current assets		557,355			(116,504	)		375,443
Current liabilities		(1,013,791	)		(1,533,404	)		(714,455	)
Due to related parties		(12,099,942	)		9,454,713			11,207,313
Retirement pay liabilities		(14,778	)		63,218			66,844
Due from related parties		10,013,791			(2,901,225	)		(10,494,018	)
Net cash provided in operating activities		5,540,276			14,974,358			13,208,804
Investing activities:
Additions to property, plant and equipment		(1,720,246	)		(4,540,495	)		(5,402,347	)
Disposition (acquisition) of investments and advances		2,874,039			(458,069	)		(471,394	)
Net cash provided (used) in investing activities		1,153,793			(4,998,564	)		(5,873,741	)
Financing activities:
Loan payable		(11,399,000	)		(8,851,000	)		(3,601,000	)
Net cash used in financing activities		(11,399,000	)		(8,851,000	)		(3,601,000	)
Increase (decrease) in cash and cash equivalents		(4,704,931	)		1,124,794			3,734,063
Effect of exchange rate		(5,614	)		(12,879	)		4,775
Cash and cash equivalents, beginning of period		4,833,045			1,094,207			1,094,207
Cash and cash equivalents, end of period	$	122,500		$	2,206,122		$	4,833,045
Supplemental disclosures of cash flow information:
Cash paid/received during the period for:
Interest paid	$	1,334,006		$	1,222,133		$	3,887,919
Income taxes paid		1,340,914			1,973,603			3,090,042
Interest received		2,288,325			3,389,445			6,019,012

The accompanying notes are an integral part of these consolidated financial statements.

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AMITY PETROGAS

Notes to the Combined Financial Statements

1. Description of business and basis of presentation

Amity Oil International Pty Ltd (“Amity”) and Zorlu Petrogas Petrol Gaz ve Petrokimya Ürünleri Inşaat Sanayi ve Ticaret A.Ş. (“Petrogas” and, collectively with Amity, “Amity Petrogas” or the “Company”) are engaged in the exploration, production, transportation and sale of crude oil and natural gas in Turkey. Amity and Petrogas were under the common control of Zorlu Holding A.Ş. (“Zorlu Holding”), including Zorlu Enerji Elektrik Üretim A.Ş. (“Zorlu Enerji”) and entities affiliated with Zorlu Enerji. Amity and Petrogas were acquired by TransAtlantic Worldwide, Ltd., a wholly-owned subsidiary of TransAtlantic Petroleum Ltd. (TransAtlantic Petroleum Ltd. and its subsidiaries are referred to collectively as “TransAtlantic”) from Zorlu Enerji on August 25, 2010.

These combined financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for the intention of being included in the Form 8-K/A. These combined financial statements include the accounts of Amity and Petrogas and have been prepared based upon the separate records maintained by Amity and Petrogas and may not necessarily be indicative of the actual operations that would have occurred if the Company had been operated collectively during those periods. All material inter-entity transactions have been eliminated.

The due from related parties and due to related parties at June 30, 2010 in the amounts of $47,943,043 and $5,246, respectively, were not acquired by TransAtlantic at the date of acquisition.

The interim combined financial statements as at June 30, 2010 and for the six month periods ended June 30, 2010 and 2009 reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented.

2. Summary of significant accounting policies

Investments

Investments are initially recognized and measured at cost.

Investments are not amortized but are assessed for objective evidence of impairment at each balance sheet date. When there is objective evidence that the investment has been impaired, and there is a decline in the recoverable amount below cost that is other than temporary, the amount of the impairment loss is the difference between the carrying amount of the investment and its fair value.

Cash and cash equivalents

Cash and cash equivalents include term deposits and investments with original maturities of three months or less at the date of acquisition. The Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. The Company determines the appropriate classification of its investments in cash and cash equivalents and marketable securities at the time of purchase and reevaluates such designation at each balance sheet date.

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AMITY PETROGAS

Notes to the Combined Financial Statements

Oil and gas properties

In accordance with the successful efforts method of accounting for oil and gas properties, costs of productive wells, developmental dry holes and productive leases are capitalized into appropriate groups of properties based on geographical and geological similarities. These capitalized costs are amortized using the unit-of-production method based on estimated proved reserves. Proceeds from sales of properties are credited to property costs, and a gain or loss is recognized when a significant portion of an amortization base is sold or abandoned.

Exploration costs, such as exploratory geological and geophysical costs, delay rentals and exploration overhead, are charged to expense as incurred. Exploratory drilling costs, including the cost of stratigraphic test wells, are initially capitalized but charged to exploration expense if and when the well is determined to be non-productive. The determination of an exploratory well’s ability to produce must be made within one year from the completion of drilling activities. The acquisition costs of unproved acreage are initially capitalized and are carried at cost, net of accumulated impairment provisions, until such acreage is transferred to proved properties or charged to exploration expense as impairments of unproved properties.

Drilling and other equipment

Drilling and other equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives (ranging from 3 to 15 years) of the respective assets. The costs of normal maintenance and repairs are charged to expense as incurred. Material expenditures that increase the life of an asset are capitalized and depreciated over the estimated remaining useful life of the asset. The cost of equipment sold, or otherwise disposed of, and the related accumulated depreciation are removed from the accounts and any gain or loss is reflected in current operations.

Revenue recognition

Revenue from the sale of crude oil is recognized upon delivery to the purchaser when title passes.

Asset retirement obligations

The Company recognizes a liability for the present value of all legal obligations associated with the retirement of tangible, long-lived assets and capitalizes an equal amount as a cost of the asset. The cost associated with the abandonment obligation is included in the computation of depreciation, depletion and amortization. The liability accretes until the Company settles the obligation. The Company uses a credit-adjusted risk-free interest rate in its calculation of asset retirement obligations.

Foreign currency translation

The functional currency of the Company is the Turkish Lira (“TL”). Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 830, Foreign Currency Matters (“ASC 830”) (formerly Statement of Financial Accounting Standards (“SFAS”) No. 52, Foreign Currency Translation), requires the assets, liabilities, and results of operations of a foreign operation to be measured using the functional currency of that foreign operation. Because the functional currency is the local currency, translation adjustments will result from the process of translating the Company’s financial statements into the U.S. Dollar reporting currency.

7

AMITY PETROGAS

Notes to the Combined Financial Statements

These translation adjustments will be reported separately and accumulated in the balance sheet as a component of accumulated other comprehensive income (loss). The accounting basis of the assets and liabilities affected by the change are adjusted to reflect the difference between the exchange rate when the asset or liability arose and the exchange rate on the date of the change. The change in functional currency will have no impact on the Company’s actual foreign-based revenues and expenditures in these countries.

Fair value measurements

The Company follows ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (formerly SFAS No. 157, Fair Value Measurements), which became effective for financial assets and liabilities of the Company on January 1, 2008 and non-financial assets and liabilities of the Company on January 1, 2009. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but applies to assets and liabilities that are required to be recorded at fair value under other accounting standards. The impact to the Company from the adoption of ASC 820 in 2009 was not material.

Impairment of long-lived assets

The Company follows the provisions of ASC 360, Property, Plant, and Equipment (“ASC 360”) (formerly SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets). ASC 360 requires that the Company’s long-lived assets, including drilling services and other equipment, and cost method investments be assessed for potential impairment in their carrying values whenever events or changes in circumstances indicate such impairment may have occurred. Oil and gas properties are evaluated by field for potential impairment. Other properties are evaluated for impairment on a specific asset basis or in groups of similar assets as applicable. An impairment is recognized when the estimated undiscounted future net cash flows of an asset are less than its carrying value. If an impairment occurs, the carrying value of the impaired asset is reduced to fair value.

8

AMITY PETROGAS

Notes to the Combined Financial Statements

Income taxes

The Company follows the asset and liability method prescribed by ASC 740, Income Taxes (“ASC 740”) (formerly SFAS No. 109, Accounting for Income Taxes). Under this method of accounting for income taxes, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in enacted tax rates is recognized in income in the period that includes the enactment date. Pursuant to ASC 740, the Company does not have any unrecognized tax benefits other than those for which a valuation allowance has been provided thereon.

Recent accounting pronouncements

Effective January 1, 2009, the Company adopted the authoritative guidance for fair value measurements as they relate to nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis. The guidance defines fair value, establishes a framework for measuring fair value when an entity is required to use a fair value measure for recognition or disclosure purposes and expands the disclosures about fair value measures. The adoption did not have a material impact on the Company’s financial statements. The Company previously adopted the guidance as it relates to financial assets and liabilities that are measured at fair value and for nonfinancial assets and liabilities that are measured at fair value on a recurring basis.

9

AMITY PETROGAS

Notes to the Combined Financial Statements

The Company adopted ASC 805, Business Combinations (“ASC 805”) (formerly SFAS No. 141-R, Business Combinations), and ASC 810-10-65, Consolidation (“ASC 810-10-65”) (formerly SFAS No. 160, Non-Controlling Interests in Consolidated Financial Statements). ASC 805 requires most identifiable assets, liabilities, non-controlling interests and goodwill acquired in a business combination to be recorded at fair value. The statement applies to all business combinations, including combinations among mutual entities and combinations by contract alone. Under ASC 805, all business combinations are accounted for by applying the acquisition method. Accordingly, transactions costs related to acquisitions are recorded as a reduction of earnings in the period they are incurred and costs related to issuing debt or equity securities that are related to the transaction will continue to be recognized in accordance with other applicable rules under U.S. GAAP. ASC 805 is effective for periods beginning on or after December 15, 2008. The adoption of ASC 805 did not have an impact on the Company’s combined financial statements. ASC 810-10-65 requires non-controlling interests (previously referred to as minority interests) to be treated as a separate component of equity, not as a liability or other item outside of permanent equity. The statement applies to the accounting for non-controlling interests and transactions with non-controlling interest holders in consolidated financial statements. ASC 810-10-65 is effective for periods beginning on or after December 15, 2008 and the adoption of the guidance did not have a material impact on the Company’s combined financial statements.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“SFAS 168”). SFAS 168 replaced SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (“SFAS 162”), and established the ASC as the sole source of authoritative U.S. GAAP recognized by the FASB, excluding SEC guidance, to be applied by nongovernmental entities. SFAS 168 is effective for interim and annual periods ending after September 15, 2009. The Company has revised its references to pre-ASC U.S. GAAP and noted no impact on its financial condition or results of operations.

The FASB issued ASC 855, Subsequent Events (“ASC 855”) (formerly SFAS No. 165, Subsequent Events), on May 28, 2009. ASC 855 establishes general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Although there is new terminology, the standard is based on the same principles as those that existed in the auditing standards.

10

AMITY PETROGAS

Notes to the Combined Financial Statements

Effective January 1, 2010, the Company adopted the authoritative guidance for variable-interest entities (“VIE”). The guidance requires the Company to qualitatively assess if it is the primary beneficiary of the VIE and, if so, the VIE must be consolidated. The adoption of the guidance did not have an impact on the Company.

The Company has reviewed other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its combined balance sheet, combined statements of operations and comprehensive loss and combined statements of cash flow. Based on that review, the Company believes that none of these pronouncements will have a significant effect on current or future earnings or operations.

3. Oil and gas properties and drilling services and other equipment

The historical cost of oil and gas properties presented on a gross basis with accumulated depletion is summarized as follows:

	June 30, 2010			December 31, 2009
	(unaudited)
Oil and gas properties, proved	$	21,463,329		$	22,423,941
Oil and gas properties, unproved		8,168,579			5,727,652
Gross oil and gas properties		29,631,908			28,151,593
Accumulated depletion		(8,403,957	)		(8,072,521	)
Net oil and gas properties	$	21,227,951		$	20,079,072

The historical cost of drilling services and other equipment presented on a gross basis with accumulated depreciation and amortization is summarized as follows:

	June 30, 2010			December 31, 2009
	(unaudited)
Drilling services and other equipment		5,266,512			5,023,859
Supplies inventory		2,169,698			3,963,959
Office equipment and furniture		2,345,427			2,459,467
Gross drilling services equipment, and other		9,781,637			11,447,285
Accumulated depreciation and amortization		(1,684,164	)		(1,464,369	)
Net drilling services and other equipment	$	8,097,473		$	9,982,916

Uncertainties affect the recoverability of proved and unproved oil and gas properties costs as the recovery of the costs outlined above are dependent upon the Company obtaining government approvals, obtaining and maintaining licenses in good standing, and achieving commercial production or sales.

11

AMITY PETROGAS

Notes to the Combined Financial Statements

4. Income taxes

The Company is subject to taxation in accordance with the tax regulations and the legislation effective in Turkey. In Turkey, the corporate tax rate is 20%.

The income tax provision differs from the amount that would be obtained by applying the Turkish tax rate of 20% to income before taxes for the period as follows:

	June 30, 2010			June 30, 2009			December 31, 2009
	(unaudited)
Income before income taxes	$	10,524,788		$	10,777,619		$	10,553,844
Tax charge at Turkish statutory income tax rate of 20%		2,104,958			2,155,524			2,110,769
Effect of non-deductible expenses		583,652			383,038			722,501
Effect of income not subject to tax		(1,334,229	)		(1,007,551	)		(785,867	)
Change in valuation allowance		109,664			247,937			930,078
Other		14,450			23,824			22,654
Income taxes	$	1,478,495		$	1,802,772		$	3,000,135

At June 30, 2010 and 2009, net deferred tax liability was as follows:

	June 30,
	2010			2009
	(unaudited)
Deferred income tax liabilities:
Other assets		(69,910	)		(95,994	)
Deferred income tax assets:
Asset retirement obligations		38,327			37,198
Property and equipment, net		86,820			135,597
Net operating loss carry forwards		3,142,791			3,029,185
Other		51,942			57,564
Valuation allowance		(3,576,131	)		(3,463,821	)
Net deferred tax liability	$	(326,161	)	$	(300,271	)

At December 31, 2009, net operating loss carry forwards were as follows:

Year	Amount TL		Amount U.S. Dollars		Expiration date
2004		65,192	$	43,297		2009
2006		10,565,280		7,016,856		2011
2007		3,487,784		2,316,387		2012
2008		3,579,632		2,377,387		2013
2009		5,107,333		3,391,999		2014
Total		22,805,221	$	15,145,926

12

AMITY PETROGAS

Notes to the Combined Financial Statements

5. Loans payable

Fixed rate term loans

During the year ended December 31, 2009, the Company entered into an unsecured term loan for TL 7,000,000 (approximately $4,649,000). The loan bore interest at a fixed interest rate of 16.25% per annum, and principal and accrued interest under the unsecured term loan were payable in their entirety at maturity. This loan was repaid in April 2010.

In addition, the Company entered into an additional unsecured term loan agreement during the year ended December 31, 2009 for $5,250,000. The loan bore interest at a fixed interest rate of 8.75% per annum, and principal and accrued interest under the unsecured term loan were payable in their entirety at maturity. The loan was repaid in April 2010.

Variable rate term loan

During the year ended December 31, 2009, the Company entered into an unsecured term loan for $1,500,000. The loan bore interest at a floating rate of LIBOR plus 6.5% per annum, and principal and accrued interest under the unsecured term loan were payable in their entirety on November 10, 2010. The loan was repaid in May 2010.

	June 30, 2010		December 31, 2009
Third-Party
Fixed Rate Debt
Term Loan	$	—	$	5,250,000
Term Loan		—		4,649,000
Variable Rate Debt
Term Loan		—		1,500,000
	$	—	$	11,399,000

6. Investments

	Six months ended June 30,			Year ended December 31,
	2010			2009
	(unaudited)
Balance, beginning of period	$	2,874,039		$	2,390,102
Increase in investments		—			483,937
Sale of investments		(2,874,039	)		—
Balance, end of period	$	—		$	2,874,039

13

AMITY PETROGAS

Notes to the Combined Financial Statements

The details of the Company’s investments at the dates indicated were as follows:

	Effective ownership of the entities (%)		At June 30, 2010		At December 31, 2009
Zorlu Doğalgaz İth. İhr. A.Ş.		1.00	$	—	$	44,040
Rotor Elektrik Üretim A.Ş.		5.00		—		2,788,490
Zorlu Hidroelektrik Üretim A.Ş.		5.00		—		33,207
Zorlu Rüzgar Enerjisi Elektrik Üretim A.Ş.		5.00		—		8,302
Total			$	—	$	2,874,039

During the six month period ended June 30, 2010, the Company sold each of these investments to affiliates of Zorlu Holding for an amount equal to the cost of the investment.

7. Related party transactions

The Company enters into related party transactions from time to time in the normal course of business. Due to and from balances with related parties at the dates indicated were as follows:

	June 30, 2010		December 31, 2009
	(unaudited)
Due from related parties:	$	47,943,043	$	56,456,834

At December 31, 2009, amounts due from related parties totaling $54,956,834 bore interest at a fixed rate of 7.5% per annum for amounts due over 30 days, were unsecured and had no specific repayment terms. The remaining amounts due from related parties totaling $1,500,000 bore interest at a fixed rate of 6.5% per annum, were unsecured and had no specific repayment terms.

At June 30, 2010, amounts due from related parties bore interest at a fixed rate of 7.5% per annum, were unsecured and had no specific repayment terms.

	June 30, 2010		December 31, 2009
	(unaudited)
Due to related parties:	$	5,246	$	12,105,188

At December 31, 2009, amounts due to related parties included $4,649,000 which bore interest at a fixed rate of 16.25% per annum, and $4,500,000 that did not bear interest. The remaining balance of $2,956,188 bore interest at a fixed rate of 7.5% per annum. All due to related party balances were unsecured and had no specific repayment terms.

At June 30, 2010, amounts due to related parties included $5,246 which bore interest at a fixed rate of 16.25% per annum.

14

AMITY PETROGAS

Notes to the Combined Financial Statements

For the six months ended June 30, 2010, related party sales to Zorlu Holding and its subsidiaries totaled $9,398,607, interest income totaled $2,132,776, interest expense totaled $1,164,863, other income totaled $24,245 and other general and administrative expense totaled $1,246,404.

For the six months ended June 30, 2009, related party sales to Zorlu Holding and its subsidiaries totaled $9,567,392, interest income totaled $2,687,332, interest expense totaled $1,058,438, other income totaled $370,575 and general and administrative expense totaled $1,557,693.

For the year ended December 31, 2009, related party sales to Zorlu Holding and its subsidiaries totaled $16,246,624, purchases from Zorlu Holding and its subsidiaries totaled $80,720, interest income totaled $4,107,649, interest expense totaled $1,576,960, other income totaled $169,880 and other general and administrative expense totaled $2,152,068.

8. Retirement pay liabilities

In accordance with existing labor legislation in Turkey, the Company is required to make lump-sum payments to employees whose employment is terminated due to retirement or for reasons other than resignation or misconduct. Such payments are calculated on the basis of 30 days’ pay (limited to a maximum of TL 2,365 at December 31, 2009) per year of employment at the rate of pay applicable at the date of retirement or termination.

As of June 30, 2010 and December 31, 2009, the provision for retirement pay liability was calculated by estimating the present value of the future probable obligation of the Company arising from the retirement of the employees. As of June 30, 2010 and December 31, 2009, the fair values of retirement pay liabilities were $134,407 and $155,344, respectively.

The principal assumptions used at the balance sheet dates were as follows:

	June 30, 2010			December 31, 2009
	(unaudited)
Discount rate		11	%		11	%
Estimated salary increase rate		4.8	%		4.8	%

Effective January 1, 2010, the maximum amount for the 30 days’ retirement pay was increased to TL 2,427.

9. Commitments and contingencies

The Company’s commitments under its licenses require the Company to complete certain work projects on the relevant license within a specified period of time. The Company’s current commitments under its licenses are due in 2010 and 2011. If the Company fails to complete a work project by the specified deadline, the Company would lose its rights in such license.

15

AMITY PETROGAS

Notes to the Combined Financial Statements

			Payments Due by Year
	Total		2010		2011		2012		2013		2014		Thereafter
	(in thousands)
Licenses	$	3,770	$	2,270	$	1,500		—		—		—		—

The Company’s commitments pursuant to petroleum licenses as of June 30, 2010 included commitments to:

• Drill one well on License 4037 in 2010;

• Complete a 3D seismic survey on License 4037 in 2010;

• Drill one well each on the Izmir and Mugla Licenses in 2010;

• Drill one well on License 3864 in 2010 if the Turkish General Directorate for Petroleum Affairs extends the license for a period of two years;

• Drill one well on License 4350 in either 2010 or 2011; and

• Drill one well on License 4288 in 2010.

10. Fair value measurements

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments and accounts receivable. The Company’s cash and cash equivalents were held at five financial institutions in Turkey.

The Company records an allowance for doubtful accounts with respect to accounts receivable using historical collection experience and writes off accounts when it is concludes that collection is not probable. As of June 30, 2010 and December 31, 2009, 98% of all trade and loans receivable were with the related parties which are listed under related party transactions (see note 7).

The Company does not require collateral or other security to support normal credit sales or loans to related parties as collection is probable. Allowance for doubtful accounts as of June 30, 2010 and December 31, 2009 was zero. Unless otherwise noted, an interest rate of 7.5% on amounts due over 30 days is applied to loans provided to related parties, and any unpaid portion of the interest is reflected in the due from related parties balance.

The Company has adopted ASC 820, which became effective for financial assets and liabilities of the Company on January 1, 2008 and for non-financial assets and liabilities of the Company on January 1, 2009. This standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, but applies to assets and liabilities that are required to be recorded at fair value under other accounting standards.

ASC 820 characterizes inputs used in determining fair value according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair value measurement hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

16

AMITY PETROGAS

Notes to the Combined Financial Statements

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Measured based on prices or valuation models that required inputs that are both significant to the fair value measurement and less observable for objective sources (i.e., supported by little or no market activity).

As required by ASC 820, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values, stated below, takes into account the market for the Company’s financial assets and liabilities, the associated credit risk and other factors as required ASC 820. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

The following table summarizes the valuation of the Company’s financial assets and liabilities as of June 30, 2010:

	Fair Value Measurement Classification
	Quoted Prices in Active  Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable  Inputs (Level 2)			Significant Unobservable  Inputs (Level 3)
Assets (liabilities)	$	—	$	—		$	—
Due to related parties				(5,246	)		—
Due from related parties		—		47,943,043			—
Total	$	—	$	47,937,797		$	—

The following table summarizes the valuation of the Company’s financial assets and liabilities as of December 31, 2009:

	Fair Value Measurement Classification
	Quoted Prices in Active Markets for Identical Assets  or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable  Inputs (Level 3)
Assets (liabilities)	$	—	$	—		$	—
Due to related parties		—		(12,105,188	)		—
Loans		—		(11,399,000	)		—
Due from related parties		—		57,956,834			—
Total	$	—	$	34,452,646		$	—

17

AMITY PETROGAS

Notes to the Combined Financial Statements

11. Asset retirement obligations

As part of its development of oil and gas properties, the Company incurs asset retirement obligations (“ARO”). The Company’s ARO results from its responsibility to abandon and reclaim its net share of all working interest properties and facilities. At June 30, 2010, the net present value of the Company’s total ARO was estimated to be $191,634, with the undiscounted value being $200,000. Total ARO at June 30, 2010 shown in the table below consists of amounts for future plugging and abandonment liabilities on the Company’s wellbores and facilities based on internal and third-party estimates of such costs, adjusted for an inflation rate of approximately 6.5% per annum, and discounted to present value using the Company’s credit-adjusted risk-free rate of 7.2% per annum. The following table summarizes the changes in the Company’s ARO for the six months ended June 30, 2010 and for the year ended December 31, 2009:

	June 30, 2010		December 31, 2009
Asset retirement obligation at January 1, 2010 and January 1, 2009	$	185,990	$	152,686
Additions		—		22,617
Accretion expense		5,644		10,687
Asset retirement obligation at June 30, 2010 and December 31, 2009	$	191,634	$	185,990

12. Subsequent events

TransAtlantic transaction

On August 25, 2010, TransAtlantic Worldwide, Ltd. acquired all of the shares of Amity and 99.6% of the shares of Petrogas, which was a subsidiary of Amity at the closing of the acquisition. Four wholly-owned subsidiaries of TransAtlantic Worldwide, Ltd. acquired the remaining 0.4% of the shares of Petrogas. The cash purchase price for the acquisition was $96.5 million.

18

EX-99.2

Exhibit 99.2

TRANSATLANTIC PETROLEUM LTD.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements give effect to the following transactions of TransAtlantic Petroleum Ltd. (“TransAtlantic” or the “Company”).

Amity and Petrogas Acquisition

On August 25, 2010, TransAtlantic Worldwide, Ltd., a wholly-owned subsidiary of the Company (“TransAtlantic Worldwide”), acquired all of the shares of Amity Oil International Pty Ltd (“Amity”) and Zorlu Petrogas Petrol Gaz ve Petrokimya Ürünleri Inşaat Sanayi ve Ticaret A.Ş. (“Petrogas”) in exchange for $96.5 million in cash, of which $200,000 was paid by four wholly-owned subsidiaries of TransAtlantic Worldwide to the minority shareholders of Petrogas. The purchase price is subject to adjustments to reflect the activities conducted by Amity and Petrogas from July 1, 2010 until August 25, 2010.

Through the acquisition of Amity and Petrogas, TransAtlantic Worldwide acquired interests ranging from 50% to 100% of 18 exploration licenses and one production lease, consisting of approximately 1.3 million gross acres (1.0 million net acres) in the Thrace Basin and 730,000 gross and net acres in central Turkey, and equipment.

TransAtlantic Worldwide and the Company funded $66.5 million of the purchase price from borrowings under that certain credit agreement, dated as of June 28, 2010 (the “Dalea Credit Agreement”), by and between the Company and Dalea Partners, LP (“Dalea”), and $30.0 million of the purchase price from borrowings under the short-term secured credit agreement between TransAtlantic Worldwide and Standard Bank Plc, dated as of August 25, 2010 (the “Credit Agreement”). N. Malone Mitchell, 3^rd, the chairman of the Company’s board of directors, and his wife own 100% of Dalea.

Consideration:

Payment of cash for the acquisition of all the outstanding shares of Amity and 99.6% of the shares of Petrogas	$	96,300
Payment of cash for the acquisition of 0.4% of the shares of Petrogas from minority shareholders of Petrogas		200
Total cash consideration		96,500
Fair value of total consideration transferred	$	96,500

Acquisition-Related Costs:

Included in general and administrative expenses on the Company’s consolidated statement of operations	$	1,700
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed:
Assets:
Cash	$	123
Total financial assets		123
Other current assets, consisting primarily of prepaid expenses:		391
Oil and gas properties:
Proved properties		55,535
Unproved properties		53,880
Drilling services and related equipment		4,256
Inventory		4,492
Total oil and gas properties, drilling services and other equipment		118,163
Liabilities:
Accounts payable, consisting of normal trade obligations		(1,983	)
Accrued liabilities, consisting primarily of accrued compensated employee absences		(1,716	)
Deferred income taxes		(17,926	)
Asset retirement obligations, consisting of future plugging and abandonment liabilities on Amity and Petrogas’ developed wellbores as of July 1, 2010, based on internal and third-party estimates of such costs, adjusted for a historic Turkish inflation rate of approximately 6.5%, and discounted to present value using the Company’s credit-adjusted risk-free rate of 7.25%		(552	)
Total liabilities		(22,177	)
Total identifiable net assets	$	96,500

1

In March 2009, the Company acquired Incremental Petroleum Pty Ltd (formerly Incremental Petroleum Limited) (“Incremental”). Incremental’s results of operations from March 6, 2009 through December 31, 2009 are included in TransAtlantic’s historic results of operations.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2009 gives effect to: (i) the Incremental acquisition as if the entire 100% interest was obtained on January 1, 2009, and (ii) the acquisition of Amity and Petrogas as if the entire 100% interest was obtained on January 1, 2009. The unaudited pro forma condensed combined statement of operations combines the historical results of TransAtlantic, Incremental, Amity and Petrogas for the year ended December 31, 2009. The historical results of TransAtlantic were derived from its audited consolidated statement of operations and comprehensive loss for the year ended December 31, 2009. The historical results of operations for Incremental for the period from January 1, 2009 through March 5, 2009 were derived from its accounting records.

Incremental’s results of operations from January 1, 2010 through June 30, 2010 are included in TransAtlantic’s historic results of operations. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2010 gives effect to the acquisition of Amity and Petrogas as if the entire 100% interest was obtained on January 1, 2009.

The historic financial statements of Incremental are presented in accordance with International Financial Accounting Standards (“IFRS”). The unaudited pro forma statements are prepared in accordance with Regulation S-X and the accounting policies used in the preparation of the pro forma statements are in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), which are consistent with those used in TransAtlantic’s audited financial statements as of and for the year ended December 31, 2009 and unaudited financial statements as of and for the six months ended June 30, 2010 and 2009.

The unaudited pro forma condensed combined financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had Incremental, Amity and Petrogas been consolidated with TransAtlantic during the periods shown. The pro forma adjustments are based on information available at the time of the preparation of these unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined financial statements, including the notes thereto, should be read in conjunction with the historical audited financial statements of TransAtlantic and the historical audited combined financial statements of Amity and Petrogas.

2

TRANSATLANTIC PETROLEUM LTD.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

As of June 30, 2010

(thousands of U.S. Dollars)

	TransAtlantic Historical			Amity and Petrogas Historical		U.S. GAAP and Pro Forma Adjustments			Pro Forma Amounts
ASSETS
Cash and cash equivalents	$	74,132		$	123	$	96,500	B	$	74,255
							(96,500	) A
Other current assets		33,072			391		—			33,463
Total current assets		107,204			514		—			107,718
Oil and gas properties, net (successful efforts method)		95,571			21,228		88,187	A		204,986
Drilling services and other equipment		148,654			8,097		651	A		157,402
Total property and equipment		244,225			29,325		88,838			362,388
Less: accumulated depletion, depreciation and amortization		(16,854	)		—		—			(16,854	)
Total property and equipment, net		227,371			29,325		88,838			345,534
Other assets		22,831			47,943		(47,943	) P		22,831
Total assets		357,406			77,782		40,895			476,083
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities		30,035			3,565		1,700	Q		35,300
Loans payable		69,389			5		92,165	B		161,559
Other current liabilities		240			—		—			240
Total current liabilities		99,664			3,570		93,865			197,099
Other long term liabilities		12,258			652		360	A		13,270
							17,600	A		17,600
Loans payable		10,755			—		—			10,755
Total liabilities		122,677			4,222		111,825			238,724
Common shares		3,043			—		—			3,043
Additional paid in capital		382,687			73,560		(73,560	) A		387,017
		—			—		4,330	B
Accumulated other comprehensive income		2,140			—		—			2,140
Accumulated deficit		(153,141	)		—		(1,700	) Q		(154,841	)
Total stockholders’ equity		234,729			73,560		(69,230	)		237,359
Total liabilities and stockholders’ equity	$	357,406		$	77,782	$	40,895		$	476,083

See accompanying Notes to these Unaudited Pro Forma Condensed Combined Financial Statements

3

TRANSATLANTIC PETROLEUM LTD.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2010

(thousands of U.S. Dollars, except per share amounts)

	TransAtlantic Historical			Amity  and Petrogas Historical			U.S. GAAP and Pro Forma Adjustments			Combined Pro Forma Amounts
Revenues:
Oil and gas sales	$	27,153		$	13,341		$	—		$	40,494
Oilfield services		3,843			—			—			3,843
Total revenues		30,996			13,341			—			44,337
Costs and expenses:
Production		8,895			3,307			—			12,202
Exploration, abandonment and impairment		17,799			—			—			17,799
Seismic and other exploration		2,747			—			—			2,747
International oil and gas activities		6,858			—			—			6,858
General and administrative expenses		13,034			1,449			—			14,483
Depreciation, depletion and amortization		9,136			1,021			3,068	L		13,225
Accretion of asset retirement obligations		105			5			15	J		125
Total costs and expenses		58,574			5,782			3,083			67,439
Operating loss (income)		27,578			(7,559	)		3,083			23,102
Other expense (income):
Interest and other expense		1,180			1,258			3,087	BM		5,525
Interest and other income		(145	)		(2,228	)		—			(2,373	)
Gain on commodity derivative contracts		(3,637	)		—			—			(3,637	)
Foreign exchange loss (gain)		481			(1,996	)		—			(1,515	)
Loss (income) before income taxes		25,457			(10,525	)		6,170			21,102
Income tax provision		2,317			1,478			(614	) N		3,181
Net loss (income) attributable to TransAtlantic Petroleum Ltd.	$	27,774		$	(9,047	)	$	5,556		$	24,283
Net loss per common share attributable to TransAtlantic Petroleum Ltd.:
Basic and diluted	$	0.09							R	$	0.08
Weighted average shares outstanding:
Basic and diluted		303,989							R		303,989

See accompanying Notes to these Unaudited Pro Forma Condensed Combined Financial Statements

4

TRANSATLANTIC PETROLEUM LTD.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2009

(thousands of U.S. Dollars, except per share amounts)

	TransAtlantic Historical			Incremental Historical (IFRS)			Amity and Petrogas Historical			U.S. GAAP and Pro Forma Adjustments			Combined Pro Forma Amounts
Revenues:
Revenues	$	—		$	4,195		$	—		$	(41	) C	$	—
											(4,154	) D
Oil and gas sales		27,681			—			27,224			(212	) H		58,847
											4,154	D
Oilfield services		1,588			—			—			—			1,588
Total revenues		29,269			4,195			27,224			(253	)		60,435
Costs and expenses:
Production		10,168			—			5,841			942	F		18,059
											1,108	I
Exploration, abandonment and impairment		24,791			—			2,214			—			27,005
Seismic and other exploration		10,538			—			—			73	E		10,611
General and administrative		16,129			—			4,201			919	G		21,249
Employee benefits expense		—			1,799			—			(942	) F		—
											(857	) G
Takeover defense		—			62			—			(62	) G		—
International oil and gas activities		12,349			—			—			—			12,349
Royalty expense		—			212			—			(212	) H		—
Raw materials and consumables used		—			893			—			(893	) I		—
Field costs		—			215			—			(215	) I		—
Accretion of discount on asset retirement obligations		164			—			11			52	J		227
Finance costs		—			15			—			(15	) K		—
Depreciation, depletion and amortization		7,942			652			2,003			4,390	L		14,987
Total costs and expenses		82,081			3,848			14,270			4,288			104,487
Operating loss (income)		52,812			(347	)		(12,954	)		4,541			44,052
Other expense (income):
Interest and financing expense		2,748			—			2,318			7,110	BM		12,176
Interest and other income		(213	)		—			(4,353	)		(26	) C		(4,592	)
Loss on commodity derivative contracts		1,922			—			—			—			1,922
Foreign exchange loss (gain)		3,449			(8	)		4,435			—			7,876
Other		—			546			—			(15	) C		531
Loss (income) before income tax provision		60,718			191			(10,554	)		11,610			61,965
Income tax provision		1,299			107			3,000			(1,087	)  N		3,319
Net loss (income)		62,017			298			(7,554	)		10,523			65,284
Non controlling interests, net of tax		129			—			—			(129	) O		—
Net loss (income) attributable to TransAtlantic Petroleum Ltd.	$	62,146		$	298		$	(7,554	)	$	10,394		$	65,284
Net loss per common share attributable to TransAtlantic Petroleum Ltd.:
Basic and diluted	$	0.29										R	$	0.31
Weighted average shares outstanding:
Basic and diluted		212,320										R		212,355

See accompanying Notes to these Unaudited Pro Forma Condensed Combined Financial Statements

5

TRANSATLANTIC PETROLEUM LTD.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Description of U.S. GAAP and Pro Forma Adjustments

A Records the acquisition of Amity and Petrogas in thousands of U.S. Dollars.

B Records interest expense on amounts borrowed under the Dalea credit agreement and the short-term secured credit agreement with Standard Bank at rates ranging from 3.75% per annum to three month LIBOR plus 2.5% per annum and the fair value of warrants issued totaling $4,330,000 under the Dalea credit agreement. Total borrowings were $96.5 million.

C Reclassifies interest and other income, which is included in revenue on Incremental’s Consolidated Income Statement, as presented under IFRS. Consistent with U.S. GAAP, these amounts should be included in other income (expense).

D Reclassifies oil and gas sales revenue, which is included in revenue on Incremental’s Consolidated Income Statement, as presented under IFRS. Consistent with U.S. GAAP, these amounts should be included in oil and gas sales revenue.

E Records exploration expense incurred by Incremental, which is capitalized under IFRS, but expensed under the U.S. GAAP successful efforts method. Such charges consist primarily of seismic data processing and related direct expenses incurred by Incremental to study such data, along with other geological and geophysical activities.

F Reclassifies costs related to those individuals directly associated with Incremental’s oil and gas producing operations. Such costs are included in employee benefits expense on Incremental’s Consolidated Income Statement, as presented under IFRS. Consistent with U.S. GAAP, these amounts should be included in production expense.

G Reclassifies employee benefits expense and takeover defense, which are shown separately on Incremental’s Consolidated Income Statement, as presented under IFRS. These charges represent general and administrative expenses as reported under U.S. GAAP.

H Reclassifies royalty expense which is shown as an expense on Incremental’s Consolidated Income Statement, as presented under IFRS. In conformance with TransAtlantic’s accounting policies, these amounts are shown as a reduction of revenue because Incremental was never entitled to these amounts.

I Reclassifies raw materials and consumables used and field costs, which are shown separately on Incremental’s Consolidated Income Statement, as presented under IFRS. These charges represent lease operating expenses as reported under U.S. GAAP, and would have been included in production expense on TransAtlantic’s consolidated statement of operations had the Incremental acquisition occurred on January 1, 2009.

J Records accretion of discount on asset retirement obligations based on TransAtlantic’s estimate of the present value of those obligations.

K Finance costs on Incremental’s Consolidated Income Statement, as presented under IFRS, represent accretion of discount on asset retirement obligations.

L Adjusts historic depletion and depreciation expense to amounts indicated based on the units-of-production method in accordance with U.S. GAAP computed from the amounts allocated to oil and gas properties and TransAtlantic’s estimated proved reserve quantities related to the acquisition of oil and gas properties. Depreciation of rigs and other equipment is provided using the straight-line method over estimated remaining useful lives of approximately seven years. The Company has recorded the assets acquired and the liabilities assumed at their estimated fair values.

M Records interest expense on amounts borrowed under a credit agreement with Dalea at the fixed contractual interest rate of 10% per annum as if those amounts had been outstanding since January 1, 2009. TransAtlantic borrowed $59.0 million under this credit agreement to fund the Incremental acquisition.

N Provides income tax on the pro forma adjustments above related to Incremental’s Turkish operations and the acquisition of Amity and Petrogas using an expected statutory income rate of 20%. The tax effect of pro forma adjustments related to U.S. or Australian operations is zero because the Company has a net deferred tax asset which is reduced to zero by a valuation allowance. For results of operations in Turkey, the Company has a net deferred tax liability.

O Removes net loss attributable to non-controlling interests in Incremental as such amounts would not have been recognized if the Incremental acquisition had occurred on January 1, 2009.

P Removes the related party loans payable and receivable which were settled prior to the closing of the acquisition of Amity and Petrogas.

Q Records acquisition costs related to the purchase of Amity and Petrogas.

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R Pro forma basic and diluted loss per share for the year ended December 31, 2009 based on TransAtlantic’s weighted average shares outstanding is as follows (in thousands, except per share amount):

Numerator: pro forma combined net loss	$	65,284
Denominator: Weighted average shares outstanding as reported		212,355
Pro forma loss per share	$	0.31

Pro forma basic and diluted loss per share for the six months ended June 30, 2010 is based on TransAtlantic’s weighted average shares outstanding and is as follows (in thousands, except per share amount):

Numerator: pro forma combined net loss	$	24,283
Denominator: Weighted average shares outstanding as reported		303,989
Pro forma loss per share	$	0.08

* * * * * * *

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TRANSATLANTIC PETROLEUM LTD.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

2. Standardized Measure of Oil and Gas Quantities (Unaudited)

The following table presents certain unaudited pro forma combined information concerning TransAtlantic’s, Amity’s and Petrogas’ proved oil and gas reserves at December 31, 2009, giving effect to the acquisition of Amity and Petrogas as if it had occurred on December 31, 2009. There are numerous uncertainties inherent in estimating the quantities of proved reserves and projecting future rates of production and timing of development expenditures. The following reserve data represents estimates only and reflects prices and costs as of December 31, 2009, and should not be construed as being exact. Amounts are in thousands of U.S. Dollars.

	TransAtlantic Historical			Amity and Petrogas Historical			Pro Forma Combined
Proved Reserve Quantities:
Total proved reserves:
Oil (thousands of barrels)	$	10,426		$	—		$	10,426
Gas (MMCF)		7,339			14,553			21,892
Proved developed reserves:
Oil (thousands of barrels)		5,649			—			5,649
Gas (MMCF)		4,787			11,688			16,475
Standardized Measure of Discounted Cash Flows
Future cash inflows	$	700,003		$	116,128		$	816,131
Future production costs		(161,173	)		(4,367	)		(165,540	)
Future development costs		(46,234	)		(3,640	)		(49,874	)
Future income tax expense		(94,468	)		(18,434	)		(112,902	)
Future net cash flows		398,128			89,687			487,815
10% annual discount for estimated timing of cash flows		(148,119	)		(22,012	)		(170,131	)
Standardized measure of discounted future net cash flows related to proved reserves	$	250,009		$	67,675		$	317,684

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