TransGlobe Energy Corporation (“TransGlobe” or the “Company”) (AIM
& TSX: “TGL” & NASDAQ: “TGA”) announces an operations
update.
All dollar values are expressed in US dollars
unless otherwise stated.
UPDATES
- Production averaged ~15.9 MBoepd in
Q3 2019 (Egypt ~13.7 MBopd, Canada ~2.1 MBoepd) versus 16.9 MBoepd
in Q2 2019;
- NWG 38D-1 (drilled in Q2) confirmed
as an oil discovery following completion and perforation, and will
be put on production in Q4 following stimulation;
- Completed SGZ-6X as an Upper
Bahariya oil producer in Western Desert, with construction of an
early production facility on schedule for Q4 2019 first oil
targeting an initial production rate of ~1,000 Bopd;
- Drilled four (100% working
interest) horizontal Cardium oil wells in the Harmattan area of
Canada during the quarter, including three development wells and
one outpost (appraisal) well;
- Ongoing negotiations with Egyptian
government to amend, extend and consolidate Eastern Desert
concession agreements;
- Continue to review opportunities
for inorganic growth in line with our M&A strategy;
- Sold ~380 MBbls of entitlement oil
to EGPC in the quarter;
- Next Egypt cargo lifting scheduled
for the end of October, 2019; and
- Semi-annual dividend of $2.5
million ($0.035/share) paid September 13, 2019;
PRODUCTION
Company production decreased slightly during the
quarter primarily due to natural declines, completion of the 2019
Eastern Desert drilling program in Q2, and pressure management of
the shared M-Pool, consistent with our previously advised increased
production guidance for 2019 of 15 -16 MBoepd.
Production Summary:
(MBoepd) |
July 2019 |
August 2019 |
September 2019 |
Average |
Egypt |
14.6 |
13.7 |
12.9 |
13.7 |
Canada |
2.3 |
2.2 |
2.0 |
2.1 |
Total |
16.9 |
15.9 |
14.9 |
15.9 |
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MARKETING
In Egypt, the Company sold 380 MBbl of
entitlement oil to EGPC during Q3. In addition, the Company has
confirmed its next cargo lifting of entitlement oil is scheduled
for the end of October, 2019.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
Eastern Desert
The NWG 38D-1 exploration well (drilled in Q2)
was completed, perforated, and is currently producing oil to
surface at a low rate, confirming the well as an oil discovery in
the Red Bed formation. NWG 38D-1 will require stimulation (similar
to NWG 38A-1) in Q4 prior to putting into full production. Data
recovered and analysed from the well shows it to be in pressure
communication with the adjacent NWG 38A pool. While encouraging,
any potential for additional drilling and reserves additions will
be assessed following stimulation and production of the well.
Western Desert
Following the grant in June, 2019 of a 20 year
development lease at South Ghazalat, the SGZ-6X discovery well
(3,840 Bopd* of light oil) was completed during Q3 as an oil
producer in the upper Bahariya formation. Construction of an early
production facility (“EPF”) in South Ghazalat is on schedule, from
which oil will be transported to the nearby South Dabaa receiving
facility and onwards via existing pipeline infrastructure to
market. First oil is expected late in Q4, 2019.
Concurrently, the Company has submitted permits
and is sourcing a drilling rig to drill an appraisal well in the
SGZ-6X pool during Q4, 2019 which, if successful, will be completed
and connected to the new South Ghazalat EPF. In addition, a project
to merge and reprocess two existing 3D seismic surveys over the
development lease area will also be completed in Q4 2019.
* SGZ-6X tested a combined 3,840 barrels per day
of light oil from the upper and lower Bahariya. The lower Bahariya
formation flowed naturally at an average rate of 2,437 barrels per
day of light (38 API) oil, 21 barrels per day of water and 1.4
million cubic feet of natural gas per day on a 40/64 inch choke
from a 42 foot perforated interval. A total of 918 barrels of oil
and 7 barrels of water were produced during the 10 hour test. The
upper Bahariya formation flowed at an average rate of 1,403 barrels
per day of light (35 API) oil, 210 barrels per day of water and 1.0
million cubic feet of natural gas per day on a 64/64 inch choke
from a 23 foot perforated interval. A total of 456 barrels of oil
and 65 barrels of water were produced during the 8 hour test.
Although encouraging, test rates are not necessarily indicative of
long-term performance or ultimate recovery.
CANADA
During the quarter, the Company drilled and
cased three Cardium development oil wells (one mile horizontal
wells) in the Harmattan area and one Cardium outpost (appraisal)
well (two mile horizontal well) in the South Harmattan area which
completed the 2019 drilling program. The four horizontal wells are
in the process of being completed and stimulated (~40 stages per
mile) and will be placed on production in Q4 2019.
STRATEGY UPDATE
The Company’s management and board held its
annual strategy session in early October, and reconfirmed its
commitment to growth through material cash generative mergers and
acquisitions to build significantly greater scale, profitability,
and long-term sustainability within the next three to five years.
To achieve these growth ambitions, the Company intends to
leverage its operating and financial capabilities as well as its
unique position as a recognized partner of choice in the region,
and is actively assessing several opportunities.
ABOUT TRANSGLOBE
TransGlobe Energy Corporation is a cash flow
focused oil and gas exploration and development company whose
current activities are concentrated in the Arab Republic of Egypt
and Canada. TransGlobe’s common shares trade on the Toronto Stock
Exchange and the AIM market of the London Stock Exchange under the
symbol TGL and on the NASDAQ Exchange under the symbol TGA.
Advisory on Forward-Looking Information
and Statements
Certain statements included in this news release
constitute forward-looking statements or forward-looking
information under applicable securities legislation. Such
forward-looking statements or information are provided for the
purpose of providing information about management's current
expectations and plans relating to the future. Readers are
cautioned that reliance on such information may not be appropriate
for other purposes. Forward-looking statements or information
typically contain statements with words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "may", "will",
"would" or similar words suggesting future outcomes or statements
regarding an outlook. In particular, forward-looking information
and statements contained in this document include, but are not
limited to, the Company's strategy to grow its annual cash flow;
expectations regarding its M&A efforts; anticipated drilling,
completion and testing plans, including, the anticipated timing
thereof, prospects being targeted by the Company, and rig
mobilization plans; expected future production from certain of the
Company's drilling locations; TransGlobe's plans to drill
additional wells, including the types of wells, anticipated number
of locations and the timing of drilling thereof; the timing of rig
movement and mobilization and drilling activity; the Company's
plans to file development lease applications for certain of its
discoveries, including the expected timing of filing of such
applications and the expected timing of receipt of regulatory
approvals; anticipated production and ultimate recoveries from
wells; to negotiate future military access (including the expected
timing thereof), including the anticipated timing of wells on
production; TransGlobe's plans to continue exploration, development
and completion programs in respect of various discoveries; future
requirements necessary to determine well performance and estimated
recoveries; and other matters.
Forward-looking statements or information are
based on a number of factors and assumptions which have been used
to develop such statements and information but which may prove to
be incorrect. 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. Many factors could cause
TransGlobe's actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or
on behalf of, TransGlobe.
In addition to other factors and assumptions
which may be identified in this news release, assumptions have been
made regarding, among other things, anticipated production volumes;
the timing of drilling wells and mobilizing drilling rigs; the
number of wells to be drilled; the Company's ability to obtain
qualified staff and equipment in a timely and cost-efficient
manner; the regulatory framework governing royalties, taxes and
environmental matters in the jurisdictions in which the Company
conducts and will conduct its business; future capital expenditures
to be made by the Company; future sources of funding for the
Company's capital programs; geological and engineering estimates in
respect of the Company's reserves and resources; the geography of
the areas in which the Company is conducting exploration and
development activities; current commodity prices and royalty
regimes; availability of skilled labour; future exchange rates; the
price of oil; the impact of increasing competition; conditions in
general economic and financial markets; availability of drilling
and related equipment; effects of regulation by governmental
agencies; future operating costs; uninterrupted access to areas of
TransGlobe's operations and infrastructure; recoverability of
reserves and future production rates; that TransGlobe will have
sufficient cash flow, debt or equity sources or other financial
resources required to fund its capital and operating expenditures
and requirements as needed; that TransGlobe's conduct and results
of operations will be consistent with its expectations; that
TransGlobe will have the ability to develop its properties in the
manner currently contemplated; current or, where applicable,
proposed industry conditions, laws and regulations will continue in
effect or as anticipated as described herein; that the estimates of
TransGlobe's reserves and resource volumes and the assumptions
related thereto (including commodity prices and development costs)
are accurate in all material respects; and other matters.
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 which may cause actual
results to differ materially from the forward-looking statements or
information include, among other things, operating and/or drilling
costs are higher than anticipated; unforeseen changes in the rate
of production from TransGlobe's oil and gas properties; changes in
price of crude oil and natural gas; adverse technical factors
associated with exploration, development, production or
transportation of TransGlobe's crude oil reserves; changes or
disruptions in the political or fiscal regimes in TransGlobe's
areas of activity; changes in tax, energy or other laws or
regulations; changes in significant capital expenditures; delays or
disruptions in production due to shortages of skilled manpower
equipment or materials; economic fluctuations; competition; lack of
availability of qualified personnel; the results of exploration and
development drilling and related activities; obtaining required
approvals of regulatory authorities; volatility in market prices
for oil; fluctuations in foreign exchange or interest rates;
environmental risks; ability to access sufficient capital from
internal and external sources; failure to negotiate the terms of
contracts with counterparties; failure of counterparties to perform
under the terms of their contracts; and other factors beyond the
Company's control. Readers are cautioned that the foregoing list of
factors is not exhaustive. Please consult TransGlobe’s public
filings at www.sedar.com and www.sec.goedgar.shtml for further,
more detailed information concerning these matters, including
additional risks related to TransGlobe's business.
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 required by
applicable securities laws. The forward-looking statements or
information contained in this news release are expressly qualified
by this cautionary statement.
Oil and Gas Advisories
Mr. Darrin Drall, P.Eng., - Manager Engineering
for TransGlobe Energy Corporation, and a qualified person as
defined in the Guidance Note for Mining, Oil and Gas Companies,
June 2009, of the London Stock Exchange, has reviewed and approved
the technical information contained in this announcement. Mr. Drall
obtained a Bachelor of Science Degree in Engineering from the
University of Manitoba. He is a Registered Professional
Engineer in the province of Alberta (Association of Professional
Engineers and Geoscientists of Alberta) and in the province of
Saskatchewan (Association of Professional Engineers and
Geoscientists of Saskatchewan) and has over 30 years’ experience in
oil and gas.
BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of six thousand cubic feet of
natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based
on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
from the energy equivalency of 6:1, utilizing a conversion on a 6:1
basis may be misleading as an indication of value.
References in this press release to production
test rates, are useful in confirming the presence of hydrocarbons,
however such rates are not determinative of the rates at which such
wells will commence production and decline thereafter and are not
indicative of long term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production for TransGlobe. A
pressure transient analysis or well-test interpretation has not
been carried out in respect of all wells. Accordingly, the Company
cautions that the production test results should be considered to
be preliminary.
The following abbreviations used in this press
release have the meanings set forth below:
Bopd |
|
barrels of oil per day |
MBopd |
|
thousand barrels of oil per day |
Boepd |
|
barrels of oil equivalent per day |
MBoepd |
|
thousand barrels of oil equivalent per day |
MBbl |
|
thousand barrels |
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For further information, please contact: |
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Investor
Relations |
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Telephone: +1 403.264.9888 |
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Email:
investor.relations@trans-globe.com |
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Web site:
http://www.trans-globe.com |
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TransGlobe
Energy |
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Via FTI Consulting |
Randy Neely, President and Chief
Executive Officer |
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Eddie Ok, Chief Financial
Officer |
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Canaccord Genuity
(Nomad & Joint Broker) |
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+44 (0) 20 7523 8000 |
Henry Fitzgerald-O'Connor |
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James Asensio |
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GMP First Energy (Joint
Broker) |
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+44 (0) 20 7448 0200 |
Jonathan Wright |
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FTI Consulting (Financial
PR) |
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+44 (0) 20 3727 1000 |
Ben Brewerton |
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Genevieve Ryan |
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transglobeenergy@fticonsulting.com |
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