This Announcement contains inside information as
defined in Article 7 of the Market Abuse Regulation No. 596/2014
(“MAR”). Upon the publication of this Announcement, this inside
information is now considered to be in the public domain.
TransGlobe Energy Corporation (“TransGlobe” or the “Company”)
announces a Q1 operations update.
All dollar values are
expressed in US dollars unless otherwise stated.
UPDATES
- Production averaged ~15.9 MBoepd in Q1 2019 (January ~15.8
MBoepd, February ~15.0 MBoepd and March ~16.9 MBoepd) versus 15.3
MBoepd in Q4 2018;
- Drilled 2 oil wells (M 10, NWG 38A8) and re-entered/deepened 2
water disposal wells (K 8 & K 10) during the quarter;
- Drilled a new pool oil well (HW 2X) in West Bakr with an
estimated 113 feet of net oil pay subsequent to the quarter;
- Submitted South Ghazalat 6X development lease to EGPC for
approval;
- Equipped and tied in six Cardium oil wells (2018 program) in
the Harmattan area, Canada during January;
- Net proceeds of ~$25 million received in April for a cargo
lifted in mid-March;
PRODUCTION
Production Summary:
(MBoepd) |
January 2019 |
February 2019 |
March 2019 |
Average |
Egypt |
13.0 |
13.2 |
14.6 |
13.6 |
Canada |
2.8 |
1.7 |
2.3 |
2.3 |
Total |
15.8 |
15.0 |
16.9 |
15.9 |
Corporate production increased during the first
quarter due to drilling and well optimization results in Egypt and
new wells in Canada, which was partially offset by reduced ethane
production in Canada.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
Eastern Desert
During the quarter:
- Drilled and completed the M-10
replacement well (M-10 Twin) as an Asl A oil producer which was
placed on production in February and is currently producing ~400
Bopd.
- Drilled the NWG 38A-8 well to a
total depth of 5,350 feet and cased as a potential Red Bed oil
well/water injector. NWG 38A-8 was targeting the southern area of
the NWG 38A Red Bed pool to provide water injection/reservoir
pressure support for the 38A pool. The well was completed and
placed on production at an initial average rate of 45 Bopd and 100
Bpd of water, confirming the well had intersected the oil water
contact for the pool. Based on early production results, the
well will be converted to water injection during Q2 to initiate
water injection and pressure support for the NWG 38A pool.
- Re-entered/deepened two suspended oil wells and converted them
to water disposal wells (K-8 WDW and K-10 WDW).
Subsequent to the quarter:
- Drilled a discovery oil well in H
Block. The HW-2X exploration well was drilled to a total depth of
1,654 meters (5,425 feet) and cased as a Yusr oil well. Based on
open-hole logs and wireline samples, the well encountered an
internally estimated 34.5 meters (113 feet) of net oil pay in the
Yusr formation. The HW 2X well is scheduled for completion this
month and expected to be on production in early May.
Following HW-2X, the drilling rig is scheduled to drill two
development wells at (H-30 and K-63) and one exploration well (NWG
38 D-1).
Western Desert
Based on the previously announced (11/19/18)
well test results* from SGZ-6X (3,840 Bopd of light oil), the
Company filed a South Ghazalat development lease application with
EGPC in late February. Subject to final approvals by EGPC, the
Ministry and necessary regulatory approvals, the Company is
targeting first production prior to year end. Concurrent to
the construction of an early production facility and equipping SGZ
6X for production, the Company has submitted permits to drill an
appraisal well in the SGZ 6X pool during the second half of 2019
and initiated a project to merge and reprocess two existing 3D
seismic surveys over the proposed development lease area. In
addition to the planned appraisal well, the Company is committed to
drill a minimum of one additional exploration well.
*The 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.
The Company continued South Alamein extension
discussions with EGPC during the first quarter and resubmitted a
request for military access to drill the SA 24X Jurassic
exploration prospect, which was rejected by the military in
April. Based on the 2017 well results in the Boraq area, the
limited commerciality of the original Boraq 2 discovery (2009) and
continued access restrictions in the eastern area of the
concession, the Company is exploring a variety of extension options
with EGPC, which include partial, or possibly complete,
relinquishment of the concession.
Canada
In early January, the Company completed the
equipping and tie-in of the six Cardium wells drilled and completed
in the Harmattan area in late 2018. The wells were brought on
production in a systematic manner in order to maximize ultimate
recoveries, however this process was hampered somewhat by facility
outages and extremely cold winter weather during the quarter.
The main gas processing plant (third party) for
the Company’s gas production shut down their deep cut ethane
extraction plant in January due to low ethane prices and pipeline
egress issues in Alberta. It is expected that the ethane will
remain in sales gas until the fourth quarter at a minimum, which
will be sold with a higher energy content and is expected to be
generally revenue neutral, due to the low prices for ethane. It is
estimated that approximately 250 boepd of ethane is now sold as
natural gas.
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 acquisition 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 dayMBopd thousand barrels of oil per dayBoepd
barrels of oil equivalent per dayMBoepd thousand barrels of
oil equivalent per dayMBbl thousand barrels
For further information,
please contact: Investor RelationsTelephone: +1
403.264.9888Email: investor.relations@trans-globe.comWeb
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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transglobeenergy@fticonsulting.com |
Genevieve Ryan |
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