TIDMTGL
RNS Number : 1077F
TransGlobe Energy Corporation
17 March 2022
The information contained within this Announcement is deemed by
TransGlobe Energy Corporation to constitute inside information as
stipulated under the Market Abuse Regulation (EU) No. 596/2014 as
it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR").
TRANSGLOBE ENERGY CORPORATION ANNOUNCES YEAR 2021 FINANCIAL AND
OPERATING RESULTS
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, March 17, 2022 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") is pleased to announce its
financial and operating results for the three months and year ended
December 31, 2021. All dollar values are expressed in United States
dollars unless otherwise stated. TransGlobe's Consolidated
Financial Statements together with the notes related thereto, as
well as TransGlobe's Management's Discussion and Analysis for the
years ended December 31, 2021 and 2020, are available on
TransGlobe's website at www.trans-globe.com .
FINANCIAL HIGHLIGHTS:
-- 2021 sales averaged 13,478 boe/d in 2021 with an average
realized price of $58.79/boe; average realized price on Egyptian
sales of $62.94/bbl and Canadian sales of $38.40/boe;
-- Funds flow from operations of $44.8 million ($0.62 per share) in 2021;
-- 2021 net earnings of $40.3 million ($0.56 per share),
inclusive of a $31.5 million non-cash impairment reversal and a
$0.1 million unrealized loss on derivative commodity contracts;
-- The Company ended the year with positive working capital of
$21.0 million, including cash of $37.9 million;
OPERATIONAL HIGHLIGHTS:
-- 2021 production averaged 12,854 boe/d (Egypt 11,336 bbls/d,
Canada 1,518 boe/d), a decrease of 4% from 2020 primarily
attributable to natural declines in Egypt, partially offset by the
re-commencement of Eastern Desert drilling and well optimization
activities;
-- Inventoried entitlement crude oil in Egypt decreased to nil
as at December 31, 2021 from 227.9 Mbbls as at December 31,
2020;
-- Ended the year with 46.1 MMboe of 2P reserves, up 19% from 2020 year end of 38.9 MMboe;
-- Drilled and completed eight development oil wells and
performed six recompletions in the Eastern Desert in Egypt;
-- Drilled one exploration well and performed one recompletion in the Western Desert in Egypt;
-- Drilled three horizontal Cardium oil wells and completed one
standing well at Harmattan in Canada;
CORPORATE HIGHLIGHTS:
-- As previously announced, the amendment, extension and merger
of the Company's Eastern Desert concession agreements into a single
agreement (the "Merged Concession agreement") was ratified by
Egypt's Parliament and signed into law by the President in December
2021;
2022 (TO DATE) HIGHLIGHTS:
-- As previously announced, TransGlobe signed the Merged
Concession agreement at an official signing ceremony with the
Ministry of Petroleum held on January 19, 2022;
-- The Company remitted the initial modernization payment of
$15.0 million and signature bonus of $1.0 million as part of the
conditions precedent to the official signing of the Merged
Concession agreement;
-- In accordance with the Merged Concession agreement,
TransGlobe made another modernization payment to EGPC in the amount
of $10.0 million on February 1, 2022;
-- January 2022 average production of 12,291 boe/d, February
2022 average production of 12,392 boe/d;
-- A cargo of Gharib blend crude shipped at the end of January
2022, marketed by Mercuria Energy Trading;
-- Declared a dividend of $0.10 per common share, which will be
paid in cash on May 12, 2022 to shareholders of record on April 29,
2022.
FINANCIAL AND OPERATING RESULTS
Additional financial information is provided in the Company's
audited Consolidated Financial Statements together with the notes
related thereto, as well as TransGlobe's Management's Discussion
and Analysis for the years ended December 31, 2021 and 2020. These
documents, along with other documents affecting the rights of
securityholders and other information relating to the Company, may
be found on SEDAR at www.sedar.com and in the Company's Annual
Report on Form 40-F for the fiscal year ended December 31, 2021,
filed on EDGAR at www.sec.gov .
(US$000s, except per share, price, volume amounts and %
change)
Three Months Ended December 31 Years Ended December 31
Financial 2021 2020 % Change 2021 2020 % Change
------------------------- --------- -------- -------- --------- -------- --------
Petroleum and natural
gas sales(1) 93,428 50,989 83 303,956 188,771 61
Petroleum and natural
gas sales, net of
royalties(1) 58,043 33,309 74 169,006 114,675 47
Realized derivative
(loss) gain on
commodity contracts (3,096) (6) 51,500 (10,475) 6,801 (254)
Unrealized derivative
gain (loss) on
commodity contracts 2,803 (941) (398) (88) (180) (51)
Production and
operating expense 15,518 19,326 (20) 61,430 64,462 (5)
Overlift (828) - (100) 14,723 - 100
Selling costs 55 1,008 (95) 3,921 2,111 86
General and
administrative
expense 7,416 3,593 106 20,353 11,990 70
Depletion,
depreciation and
amortization expense 7,068 7,647 (8) 25,434 31,049 (18)
Income tax expense 6,050 3,408 78 22,411 13,530 66
Cash flow (used in)
generated by
operating activities (1,956) 14,180 (114) 44,962 31,709 42
Funds flow from
operations(2) 15,269 7,202 112 44,831 30,443 47
Basic per share(3) 0.21 0.10 0.62 0.42
Diluted per share(3) 0.21 0.10 0.61 0.42
Net earnings (loss) 6,560 (2,855) (330) 40,338 (77,397) (152)
Basic per share 0.09 (0.04) 0.56 (1.07)
Diluted per share 0.09 (0.04) 0.55 (1.07)
Capital
expenditures(4) 8,694 255 3,309 26,822 7,498 258
Working capital(7) 21,032 15,349 37 21,032 15,349 37
Long-term debt,
including current
portion 3,040 21,464 (86) 3,040 21,464 (86)
Common shares
outstanding
Basic (weighted
average) 72,550 72,542 - 72,544 72,542 -
Diluted (weighted
average) 73,750 72,542 2 73,182 72,542 1
Total assets 239,095 201,147 19 239,095 201,147 19
-------------------------- -------- -------- -------- --------- -------- --------
Operating
------------------------- -------- -------- -------- --------- -------- --------
Average production
volumes (boe/d) 12,763 12,384 3 12,854 13,425 (4)
Average sales volumes
(boe/d) 12,763 15,712 (19) 13,478 15,437 (13)
Inventory (Mbbls) - 227.9 (100) - 227.9 (100)
Average realized sales
price ($/boe)(5) 67.03 35.27 90 58.79 33.41 76
Production and
operating expenses
($/boe)(6) 13.22 13.37 (1) 12.49 11.41 9
-------------------------- -------- -------- -------- --------- -------- --------
(1) Petroleum and natural gas sales for the three and twelve
months ended December 31, 2021 are inclusive of overlift revenues
of ($0.8 million) and $14.7 million, respectively.
(2) Non-GAAP financial measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. The most directly
comparable GAAP measure for funds flow from operations is cash flow
generated by operating activities. Refer to "Non-GAAP and Other
Financial Measures" contained within the annual MD&A.
(3) Non-GAAP ratio that does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. Includes a non-GAAP financial measure
component of funds flow from operations. Refer to "Non-GAAP and
Other Financial Measures" contained within the annual MD&A.
(4) Non-GAAP financial measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. The most directly
comparable GAAP measure for capital expenditures is cash flow used
in investing activities. Refer to "Non-GAAP and Other Financial
Measures" contained within the annual MD&A.
(5) Supplementary financial measure that is comprised of
petroleum and natural gas sales, as determined in accordance with
IFRS, divided by the Company's average daily production
volumes.
(6) Supplementary financial measure that is comprised of
production and operating expenses, as determined in accordance with
IFRS, divided by the Company's average daily production
volumes.
(7) Supplementary financial measure that is comprised of current
assets less current liabilities, as determined in accordance with
IFRS.
SELECTED ANNUAL INFORMATION
($000s, except per share amounts, price and volumes) 2021 % Change 2020 % Change 2019
--------------------------------------------------------- ------- -------- -------- -------- -------
Operations
Average production volumes
Crude oil (bbls/d) 11,336 (4) 11,858 (18) 14,527
NGLs (bbls/d) 740 (6) 785 35 582
Natural gas (Mcf/d) 4,667 - 4,686 (16) 5,594
---------------------------------------------------------- ------- -------- -------- -------- -------
Total (boe/d) 12,854 (4) 13,425 (16) 16,041
---------------------------------------------------------- ------- -------- -------- -------- -------
Average sales volume
Crude oil (bbls/d) 11,960 (14) 13,871 3 13,441
NGLs (bbls/d) 740 (6) 785 35 582
Natural gas (Mcf/d) 4,667 - 4,686 (16) 5,594
---------------------------------------------------------- ------- -------- -------- -------- -------
Total (boe/d) 13,478 (13) 15,437 3 14,954
---------------------------------------------------------- ------- -------- -------- -------- -------
Average realized sales prices(1)
Crude oil ($/bbl) 63.12 76 35.80 (35) 55.31
NGLs ($/bbl) 32.16 120 14.59 (36) 22.93
Natural gas ($/Mcf) 2.93 79 1.64 24 1.32
---------------------------------------------------------- ------- -------- -------- -------- -------
Total oil equivalent ($/boe) 58.79 76 33.41 (35) 51.10
---------------------------------------------------------- ------- -------- -------- -------- -------
Inventory (Mbbls) - (100) 227.9 (76) 964.5
Petroleum and natural gas sales(2) 303,956 61 188,771 (32) 278,929
Petroleum and natural gas sales, net of royalties(2) 169,006 47 114,675 (18) 140,096
Cash flow generated by operating activities 44,962 42 31,709 (29) 44,836
Funds flow from operations(3) 44,831 47 30,443 (35) 46,871
Funds flow from operations per share(4) :
Basic 0.62 0.42 0.65
Diluted 0.61 0.42 0.65
Net earnings (loss) 40,338 (152) (77,397) 1,837 (3,995)
Net earnings (loss) per share:
Basic 0.56 (1.07) (0.06)
Diluted 0.55 (1.07) (0.06)
Capital expenditures(5) 26,822 258 7,498 (80) 36,932
Dividends declared - - - - 5,078
Dividends declared per share - - - - 0.070
---------------------------------------------------------- ------- -------- -------- -------- -------
Total assets 239,095 19 201,147 (35) 308,325
Cash and cash equivalents 37,929 10 34,510 4 33,251
Working capital(6) 21,032 37 15,349 (52) 32,194
Total long-term debt, including current portion 3,040 (86) 21,464 (42) 37,041
---------------------------------------------------------- ------- -------- -------- -------- -------
(1) Supplementary financial measure that is comprised of
petroleum and natural gas sales, as determined in accordance with
IFRS, less overlift revenue, divided by the Company's average daily
production volumes. Refer to "Non-GAAP and Other Financial
Measures" contained within the annual MD&A.
(2) Petroleum and natural gas sales for the year ended December
31, 2021 are inclusive of overlift revenues of $14.7 million.
(3) Non-GAAP measure that does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. The most directly comparable GAAP
measure for funds flow from operations is cash flow from operating
activities. Refer to "Non-GAAP and Other Financial Measures"
contained within the annual MD&A.
(4) Non-GAAP ratio that does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. Includes a non-GAAP financial measure
component of funds flow from operations. Refer to "Non-GAAP and
Other Financial Measures" contained within the annual MD&A.
(5) Non-GAAP financial measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. The most directly
comparable GAAP measure for capital expenditures is cash flow used
in investing activities. Refer to "Non-GAAP and Other Financial
Measures" contained within the annual MD&A.
(6) Supplementary financial measure that is comprised of current
assets less current liabilities, as determined in accordance with
IFRS.
In 2021 compared with 2020, TransGlobe:
-- Reported a 4% decrease in production volumes compared to
2020. This was primarily attributable to natural declines in Egypt,
partially offset by the re-commencement of Eastern Desert drilling
and well optimization activities;
-- Ended 2021 with nil crude oil inventory, a decrease of 227.9
Mbbls over inventoried crude oil levels at December 31, 2020. This
was primarily due to annual sales volumes exceeding production
volumes and the Q3-2021 cargo lifting that resulted in an
overlift;
-- Reported positive funds flow from operations of $44.8 million
(2020 - $30.4 million). The increase in funds flow from operations
from 2020 is primarily due to higher commodity prices, partially
offset by lower production and excess cost oil in West Bakr;
-- Petroleum and natural gas sales increased by 61%, primarily
due to a 76% increase in average realized sales prices, partially
offset by a 13% decrease in sales volumes in 2021;
-- Reported net earnings of $40.3 million (2020 - net loss of
$77.4 million) inclusive of a $0.1 million unrealized derivative
loss on commodity contracts and a combined $31.5 million non-cash
impairment reversal on the Company's petroleum and natural gas
("PNG") assets;
-- Ended the year with positive working capital of $21.0
million, including $37.9 million in cash as at December 31,
2021;
-- Spent $26.8 million on capital expenditures, funded entirely
from cash flow from operations and cash on hand; and
-- Repaid $18.9 million of long-term debt with cash on hand.
OPERATING RESULTS AND NETBACK
Daily Volumes, Working Interest before Royalties
Production Volumes
2021 2020
----------------------------- ------ ------
Egypt crude oil (bbls/d) 10,578 11,147
Canada crude oil (bbls/d) 758 711
Canada NGLs (bbls/d) 740 785
Canada natural gas (Mcf/d) 4,667 4,686
------------------------------ ------ ------
Total Company (boe/d) 12,854 13,425
------------------------------ ------ ------
Sales Volumes (excludes volumes held as inventory)
2021 2020
------------------------------ ------ ------
Egypt crude oil (bbls/d)(1) 11,202 13,160
Canada crude oil (bbls/d) 758 711
Canada NGLs (bbls/d) 740 785
Canada natural gas (Mcf/d) 4,667 4,686
------------------------------- ------ ------
Total Company (boe/d) 13,478 15,437
------------------------------- ------ ------
1 There are no sales volumes associated with overlift revenue.
Netback
Consolidated netback
2021 2020
--------------------------------------------------------- ------------------- ------------------
($000s, except per boe amounts) $ $/boe $ $/boe
--------------------------------------------------------- --------- -------- --------- -------
Petroleum and natural gas sales, excluding overlift(1) 289,233 58.79 188,771 33.41
Royalties(2) 134,950 27.43 74,096 13.11
Current taxes(2) 22,411 4.56 13,530 2.39
Production and operating expenses 61,430 12.49 64,462 11.41
Selling costs 3,921 0.80 2,111 0.37
---------------------------------------------------------- --------- -------- --------- -------
Netback(3) 66,521(1) 13.51(4) 34,572(1) 6.13(4)
---------------------------------------------------------- --------- -------- --------- -------
(1) Non-GAAP financial measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. Refer to
"Non-GAAP and Other Financial Measures" contained within the annual
MD&A.
(2) Royalties and taxes are settled at the time of production.
Fluctuations in royalty and tax costs per bbl are due to timing
differences between the production and sale of the Company's
entitlement crude oil.
(3) The Company achieved the netbacks above on sold barrels of
oil equivalent for the year ended December 31, 2021 and December
31, 2020.
(4) Non-GAAP ratio that does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. Includes a non-GAAP financial measure
component of netback. Refer to "Non-GAAP and Other Financial
Measures" contained within the annual MD&A.
Egypt
2021 2020
------------------------------------ ------------------- ------------------
($000s, except per boe amounts) $ $/boe $ $/boe
------------------------------------ --------- -------- --------- -------
Oil sales, excluding overlift(1) 257,338 62.94 173,086 35.94
Royalties(2) 129,891 31.77 71,741 14.89
Current taxes(2) 22,411 5.48 13,530 2.81
Production and operating expenses 54,379 13.30 58,305 12.11
Selling costs 3,921 0.96 2,111 0.44
------------------------------------- --------- -------- --------- -------
Netback(3) 46,736(1) 11.43(4) 27,399(1) 5.69(4)
------------------------------------- --------- -------- --------- -------
(1) Non-GAAP measure that does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. Refer to "Non-GAAP and Other
Financial Measures" contained within the annual MD&A.
(2) Royalties and taxes are settled at the time of production.
Fluctuations in royalty and tax costs per bbl are due to timing
differences between the production and sale of the Company's
entitlement crude oil.
(3) The Company achieved the netbacks above on sold barrels of
oil equivalent for the year ended December 31, 2021 and December
31, 2020.
(4) Supplementary financial measures that are comprised of
petroleum and natural gas sales, royalties, current taxes,
production and operating expenses and selling costs, determined in
accordance with IFRS, divided by the Company's average daily
production volumes. Refer to "Non-GAAP and Other Financial
Measures" contained within the annual MD&A.
Netback per barrel in Egypt increased by 101% in 2021 compared
to 2020. The increase was primarily due to 75% higher average
realized sales price, partially offset by 110% higher royalties and
taxes per bbl, 10% higher production and operating expenses per bbl
and 118% higher selling costs per bbl.
In Egypt, petroleum and natural gas sales increased by $84.3
million to $257.3 million from 2020. This was primarily due to an
increase in realized prices, partially offset by a decrease in
sales volumes from the prior year. The realized sales price for the
year ended December 31, 2021 was $62.94/bbl (2020 - $35.94/bbl),
which was $7.74/bbl lower (2020 - $5.82/bbl lower) than the average
Dated Brent oil price of $70.68/bbl for 2021 (2020 - $41.76/bbl).
The difference between the average selling price and Dated Brent is
due to a gravity/quality adjustment and is also impacted by the
specific timing of direct sales.
In Egypt, royalties and taxes in 2021 increased by $67.0 million
from 2020, representing 59% of petroleum and natural gas sales in
2021 (2020 - 49%). Royalties and taxes are settled on a production
basis, therefore, the correlation of royalties and taxes to oil
sales fluctuates depending on the timing of entitlement oil sales.
If sales volumes had been equal to production volumes during the
year, royalties and taxes as a percentage of revenue would have
been 63% (2020 - 58%). In periods when the Company sells less than
its entitlement production, royalties and taxes as a percentage of
revenue will be higher than the terms of the production sharing
concessions ("PSCs"). In periods when the Company sells more than
its entitlement production, royalties and taxes as a percentage of
revenue will be lower than the terms set out in the PSCs. The
increase in total royalties and taxes, and the relative increase
from 49% in 2020 to 59% in 2021, was due to excess cost oil in the
West Bakr concession, partially offset by sales outpacing
production in 2021. Excess cost oil occurs when the current costs
and historic cost amortization, permissible within the PSCs, are
less than the proportion of cost oil value. In the case of West
Bakr, 100% of excess cost oil belongs to EGPC, which effectively
increases the royalties and taxes burden.
In Egypt, production and operating expenses fluctuate
periodically due to changes in inventory volumes as a portion of
costs are capitalized and expensed when sold. Production and
operating expenses decreased by 7% ($3.9 million) in 2021 compared
with 2020. The decrease was primarily due to a decrease in crude
oil sales in 2021 compared to 2020, resulting in less operating
costs previously capitalized to inventory being expensed in 2021
compared to 2020 ($2.2 million). The decrease was also due to lower
production handling fees. These decreases were partially offset by
an increase in manpower cost and workovers. The increase in
production and operating expenses per bbl from $12.11/bbl in 2020
to $13.30/bbl in 2021 was primarily due to a comparative 5%
decrease in production in Egypt.
Selling costs increased by $1.8 million to $3.9 million in 2021.
Selling costs per bbl increased by 118% to $0.96/bbl in 2021. These
increases were due to the specific shipping terms of the two cargo
liftings that occurred in Egypt in 2021 when compared to the two
cargo liftings that occurred in 2020.
Canada
2021 2020
------------------------------------ ------------------- -----------------
($000s, except per boe amounts) $ $/boe $ $/boe
------------------------------------ --------- -------- -------- -------
Crude oil sales 18,225 65.87 8,679 33.36
Natural gas sales 4,984 17.55 2,815 9.85
NGL sales 8,686 32.16 4,191 14.59
------------------------------------- --------- -------- -------- -------
Total sales 31,895 38.40 15,685 18.82
------------------------------------- --------- -------- -------- -------
Royalties 5,059 6.09 2,355 2.83
Production and operating expenses 7,051 8.49 6,157 7.39
------------------------------------- --------- -------- -------- -------
Netback 19,785(1) 23.82(2) 7,173(1) 8.60(2)
------------------------------------- --------- -------- -------- -------
(1) Non-GAAP measure that does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. Refer to "Non-GAAP and Other
Financial Measures" contained within the annual MD&A.
(2) Supplementary financial measures that are comprised of
petroleum and natural gas sales, royalties, current taxes,
production and operating expenses and selling costs, determined in
accordance with IFRS, divided by the Company's average daily
production volumes. Refer to "Non-GAAP and Other Financial
Measures" contained within the annual MD&A.
Netbacks per boe in Canada increased by 177% in 2021 compared
with 2020. The increase was primarily due to a 104% higher average
realized sales price, partially offset by a 115% increase in
royalties per boe and a 15% increase in production and operating
expenses per boe.
In Canada, petroleum and natural gas sales increased by $16.2
million to $31.9 million from 2020. This was primarily due to an
increase in realized prices, partially offset by a decrease in
sales volumes from the prior year.
In Canada, royalties increased by $2.7 million from 2020,
representing 16% of petroleum and natural gas sales during 2021
compared to 15% during the prior year. This increase was primarily
due to an increase in crown royalties and in freehold and
overriding royalties as a result of improved commodity pricing, and
a decrease in Gas Cost Allowance ("GCA") rebates received in 2021
compared to 2020. This was partially offset by lower royalties due
to royalty holidays on the three oil wells drilled during 2021.
TransGlobe pays royalties to the Alberta provincial government and
landowners in accordance with an established royalty regime. In
Alberta, Crown royalty rates are based on reference commodity
prices, production levels and well depths, and are offset by
certain incentive programs in place to promote drilling activity by
reducing overall royalty expense.
Production and operating expenses increased by 15% ($0.9
million) in 2021 compared with 2020. The increase was primarily due
to an increase in chemical costs and power and utilities due to an
increase in commodity prices and the strengthening of the Canadian
dollar in 2021. This was partially offset by a decrease in
transportation costs and gas processing fees.
Consolidated Statements of Earnings (Loss) and Comprehensive
Income (Loss)
(Expressed in thousands of U.S. Dollars, except per share
amounts)
Years Ended December 31
2021 2020
---------------------------------------------------- ------------ ----------
REVENUE
Petroleum and natural gas sales, net of royalties 169,006 114,675
Finance revenue 9 106
Other revenue 32 641
------------------------------------------------------- ----------- ----------
169,047 115,422
---------------------------------------------------- ----------- ----------
EXPENSES
Production and operating 61,430 64,462
Overlift 14,723 -
Selling costs 3,921 2,111
General and administrative 20,353 11,990
Foreign exchange loss 47 24
Finance costs 1,141 2,520
Depletion, depreciation and amortization 25,434 31,049
Asset retirement obligation accretion 207 259
Loss (gain) on financial instruments 10,563 (6,621)
Impairment (reversal) loss (31,521) 73,495
------------------------------------------------------- ----------- ----------
106,298 179,289
---------------------------------------------------- ----------- ----------
Earnings (loss) before income taxes 62,749 (63,867)
Income tax expense - current 22,411 13,530
----------------------------------------------------- ----------- ----------
NET EARNINGS (LOSS) 40,338 (77,397)
----------------------------------------------------- ----------- ----------
OTHER COMPREHENSIVE INCOME (LOSS)
Currency translation adjustments (62) 766
------------------------------------------------------- ----------- ----------
COMPREHENSIVE INCOME (LOSS) 40,276 (76,631)
----------------------------------------------------- ----------- ----------
Net earnings (loss) per share
Basic 0.56 (1.07)
Diluted 0.55 (1.07)
------------------------------------------------------- ----------- ----------
Consolidated Balance Sheets
(Expressed in thousands of U.S. Dollars)
As at As at
December 31, 2021 December 31, 2020
------------------------------------------------------- ------------------ -----------------
ASSETS
Current
Cash 37,927 34,510
Accounts receivable 12,217 9,996
Prepaids and other 4,024 3,530
Product inventory - 5,828
---------------------------------------------------------- ----------------- -----------------
54,168 53,864
Non-Current
Intangible exploration and evaluation assets 2,673 584
Property and equipment
Petroleum and natural gas assets 173,804 140,059
Other 2,202 2,917
Deferred taxes 6,246 3,723
---------------------------------------------------------- ----------------- -----------------
239,093 201,147
-------------------------------------------------------- ----------------- -----------------
LIABILITIES
Current
Accounts payable and accrued liabilities 26,110 20,176
Current portion of share-based compensation liabilities 6,174 1,491
Derivative commodity contracts 88 398
Current portion of lease obligations 764 1,553
Current portion of long-term debt - 14,897
---------------------------------------------------------- ----------------- -----------------
33,136 38,515
Non-Current
Long-term debt 3,040 6,567
Asset retirement obligations 14,102 13,042
Share-based compensation liabilities 3,959 544
Lease obligations 36 461
Deferred taxes 6,246 3,723
---------------------------------------------------------- ----------------- -----------------
60,519 62,852
-------------------------------------------------------- ----------------- -----------------
SHAREHOLDERS' EQUITY
Share capital 153,021 152,805
Accumulated other comprehensive income 1,838 1,900
Contributed surplus 24,896 25,109
Deficit (1,181) (41,519)
---------------------------------------------------------- ----------------- -----------------
178,574 138,295
-------------------------------------------------------- ----------------- -----------------
239,093 201,147
-------------------------------------------------------- ----------------- -----------------
Consolidated Statements of Changes in Shareholders' Equity
(Expressed in thousands of U.S. Dollars)
Years Ended December 31
2021 2020
--------------------------------------------------------- ------------ ----------
Share Capital
Balance, beginning of year 152,805 152,805
Stock options exercised (340) -
Transfer from contributed surplus on exercise of options 556 -
------------------------------------------------------------ ----------- ----------
Balance, beginning and end of year 153,021 152,805
------------------------------------------------------------ ----------- ----------
Accumulated Other Comprehensive Income
Balance, beginning of year 1,900 1,134
Currency translation adjustment (62) 766
------------------------------------------------------------ ----------- ----------
Balance, end of year 1,838 1,900
------------------------------------------------------------ ----------- ----------
Contributed Surplus
Balance, beginning of year 25,109 24,673
Share-based compensation expense 343 436
Transfer to share capital on exercise of options (556) -
------------------------------------------------------------ ----------- ----------
Balance, end of year 24,896 25,109
------------------------------------------------------------ ----------- ----------
(Deficit) Retained Earnings
Balance, beginning of year (41,519) 35,878
Net earnings (loss) 40,338 (77,397)
------------------------------------------------------------ ----------- ----------
Balance, end of year (1,181) (41,519)
------------------------------------------------------------ ----------- ----------
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. Dollars)
Years Ended December 31
2021 2020
---------------------------------------------------------- ------------ ----------
OPERATING
Net earnings (loss) 40,338 (77,397)
Adjustments for:
Depletion, depreciation and amortization 25,434 31,049
Asset retirement obligation accretion 207 259
Impairment (recovery) loss (31,521) 73,495
Share-based compensation 9,267 857
Finance costs 1,141 2,520
Unrealized loss on financial instruments 88 180
Unrealized loss (gain) on foreign currency translation 12 (62)
Asset retirement obligations settled (135) (458)
Changes in working capital 131 1,266
----------------------------------------------------------- ----------- ----------
Net cash generated by operating activities 44,962 31,709
------------------------------------------------------------ ----------- ----------
INVESTING
Additions to intangible exploration and evaluation assets (2,089) (337)
Additions to petroleum and natural gas assets (24,636) (6,726)
Additions to other assets (97) (435)
Changes in working capital 7,601 (3,544)
----------------------------------------------------------- ----------- ----------
Net cash used in investing activities (19,221) (11,042)
------------------------------------------------------------ ----------- ----------
FINANCING
Issue of common shares (340) -
Interest paid (856) (1,918)
Increase in long-term debt 415 406
Payments on lease obligations (1,932) (1,703)
Repayments of long-term debt (18,937) (16,504)
Changes in working capital (365) 161
----------------------------------------------------------- ----------- ----------
Net cash used in financing activities (22,015) (19,558)
------------------------------------------------------------ ----------- ----------
Currency translation differences relating to cash (307) 150
------------------------------------------------------------ ----------- ----------
NET INCREASE IN CASH 3,419 1,259
CASH, BEGINNING OF YEAR 34,510 33,251
------------------------------------------------------------ ----------- ----------
CASH, OF YEAR 37,929 34,510
------------------------------------------------------------ ----------- ----------
LIQUIDITY AND CAPITAL RESOURCES
Liquidity describes a company's ability to access cash.
Companies operating in the upstream oil and gas industry require
sufficient cash in order to fund capital programs that maintain and
increase production and reserves, to acquire strategic oil and gas
assets, to repay current liabilities and debt and ultimately to
provide a return to shareholders. TransGlobe's capital programs are
funded by existing working capital and cash provided from operating
activities. The Company's cash flow from operations varies
significantly from quarter to quarter, depending on the timing of
oil sales from cargoes lifted in Egypt, and these fluctuations in
cash flow impact the Company's liquidity.
Funding for the Company's capital expenditures is provided by
cash flows from operations and cash on hand. The Company expects to
fund its 2022 exploration and development program through the use
of working capital and cash flow from operations. Fluctuations in
commodity prices, product demand, foreign exchange rates, interest
rates and various other risks may impact capital resources and
capital expenditures.
Working capital is the amount by which current assets exceed
current liabilities. As at December 31, 2021, the Company had a
working capital surplus of $21.0 million (December 31, 2020 - $15.3
million). The increase in working capital is primarily due to an
increase in cash resulting from collections on accounts receivable
during the year, an increase in accounts receivable due to
increased sales, and a decrease in the current portion of long-term
debt with full repayment of the Mercuria prepayment agreement
occurring in 2021. These increases were partially offset by a
decrease in crude oil inventory and an increase in accounts payable
driven by the 2021 capital program.
As at December 31, 2021, all of the Company's cash is on deposit
with high credit-quality financial institutions.
Over the past 10 years, the Company experienced delays in the
collection of accounts receivable from EGPC. The length of delay
peaked in 2013, returned to historical delays of up to six months
in 2017, and has since fluctuated within an acceptable range. As at
December 31, 2021, amounts owing from EGPC were $6.1 million. The
Company considers there to be minimal credit risk associated with
amounts receivable from EGPC.
In Egypt, the Company sold 1,120.0 Mbbls of entitlement crude
oil to EGPC in 2021 for net proceeds of $63.5 million. During the
year, the Company collected a total of $63.1 million of accounts
receivable from EGPC, an additional $6.6 million has been collected
subsequent to the year end. The Company incurs a 30-day collection
cycle on sales to third-party international buyers. Depending on
the Company's assessment of the credit of crude oil purchasers,
they may be required to post irrevocable letters of credit to
support the sales prior to the cargo lifting. As at December 31,
2021, the Company held no crude oil inventory.
As at December 31, 2021, the Company has a revolving Canadian
reserves-based lending facility with ATB totaling C$22.5 million
($17.7 million), of which C$3.9 million ($3.0 million) was drawn
and outstanding. During 2021, the Company repaid C$5.0 million
($3.9 million) and had drawings of C$0.5 million ($0.4 million) on
this facility. During 2021, the prepayment agreement with Mercuria
was fully repaid in the amount of $15.0 million.
The Company actively monitors its liquidity to ensure that cash
flows, credit facilities and working capital are adequate to
support these financial liabilities, as well as the Company's
capital programs.
To date, the Company has experienced no difficulties with
transferring funds abroad.
MANAGEMENT STRATEGY AND OUTLOOK
The 2022 outlook provides information as to management's
expectation for results of operations for 2022. Readers are
cautioned that the 2022 outlook may not be appropriate for other
purposes. The Company's expected results are sensitive to
fluctuations in the business environment in the jurisdictions that
the Company operates in, and may vary accordingly. This outlook
contains forward-looking statements that should be read in
conjunction with the Company's disclosure under "Advisory on
Forward-Looking Information and Statements" within this news
release.
2022 Outlook
The 2022 production outlook for the Company is provided as a
range to reflect timing and performance contingencies.
As announced on January 20, 2022, the Company has fully executed
its agreement (the "Merged Concession agreement") with the Egyptian
General Petroleum Corporation ("EGPC") to merge its three existing
Eastern Desert concessions with a 15-year primary term and improved
Company economics. In advance of the Minister of Petroleum and
Mineral Resources of the Arab Republic of Egypt (the "Minister")
executing the Merged Concession agreement with the Company, the
Company paid the first modernization payment ($15.0 million) and
signature bonus ($1.0 million) as part of the conditions precedent
to the official signing ceremony on January 19, 2022. On February
1, 2022, TransGlobe paid the second modernization payment ($10.0
million). In accordance with the Merged Concession agreement,
TransGlobe will make a further four annual equalization payments of
$10.0 million each beginning February 1, 2023 until February 1,
2026. The Company also has minimum financial work commitments of
$50.0 million per each five-year period of the primary development
term, commencing on the February 1, 2020 effective date.
The Merged Concession agreement consolidates the Company's three
existing producing concessions in the Eastern Desert which, in
December 2021, had a combined average production of 9,394 Bopd
(8,590 Bopd heavy crude; 803 Bopd light and medium crude). As the
Merged Concession agreement is effective as of February 1, 2020,
there will be an effective date adjustment owed to the Company for
the difference in the historic commercial terms and the revised
commercial terms applied against the production since the effective
date. The quantum of the effective date adjustment is expected to
be finalized with EGPC in the coming months.
Total corporate production is expected to range between 12.4 and
13.4 Mboe/d (mid-point of 12.9 Mboe/d) for 2022 with a 93%
weighting to oil and liquids. Egypt oil production is expected to
range between 10.0 and 10.8 Mbbls/d (mid-point of 10.4 Mbbls/d) in
2022. Canadian production is expected to range between 2.4 and 2.6
Mboe/d (mid-point of 2.5 Mboe/d) in 2022.
Funds flow from operations in any given period is dependent upon
the timing and market price of crude oil sales in Egypt. Because
these factors are difficult to accurately predict, the Company has
not provided funds flow from operations guidance for 2022. Funds
flow from operations and inventory levels in Egypt may fluctuate
significantly from quarter to quarter due to the timing of crude
oil sales.
2022 Capital Budget
The Company's 2022 capital program of $57.7 million (before
capitalized G&A) includes $33.1 million for Egypt and $24.6
million for Canada. The 2022 plan was prepared to focus on value
accretive projects within its portfolio, maximize free cash flow to
direct at future growth opportunities and to increase the Company's
production base and return to shareholder distributions. The 2022
drilling program includes 17 Egypt wells and 7 Canadian Cardium
wells in South Harmattan.
Egypt
The 2022 $33.1 million Egypt capital program is predominantly
weighted towards 13 development wells within the Eastern Desert,
including two Arta Nukhul horizontal multi-stage completion wells.
Additionally, two exploration wells are planned for the second half
of the year along with a further two water injection wells,
bringing the total planned number of wells in Egypt to 17. The
Egypt capital program includes $12.6 million of other spending, of
which half relates to materials, including long-lead capital items
which are expected to provide continuity into 2023. With the
finalization of the Merged Concession agreement, the primary focus
of the 2022 Egypt plan is to accelerate the exploitation of the
Company's Eastern Desert acreage while optimizing the potential of
modern, horizontal multi-stage completion wells in accessing the
Company's contingent resource base.
The 13 well development program, already underway, consists of
nine vertical development wells in K-field, the two previously
mentioned horizontal wells in Arta field, and two further vertical
wells in Arta field.
Egypt production is expected to average between 10.0 and 10.8
Mbbl/d for the year.
Canada
The $24.6 million Canada program consists of drilling seven
(seven net) horizontal wells all targeting the Cardium light oil
resource at South Harmattan along with additional
maintenance/development capital. The Cardium drilling program in
2022 consists of six 1-mile and one 2-mile wells. Two of these
wells are expected to be drilled in Q1-2022. The remaining five
wells are expected to be drilled in late June through August, and
all wells are expected to be completed and brought on-stream in
late summer to early fall 2022.
Canada production is expected to average between 2.4 and 2.6
Mboe/d for the year.
The approved 2022 capital program is summarized in the following
table:
TransGlobe 2022 Capital ($MM) Gross Well Count
----------------- -------------------------------------- ------------------------------------------
Development Exploration Drilling
--------------- ----------- ------------------------------------------
Concession Wells Other(1) Wells Total(2) Development Exploration Injection Total
----------------- ----- -------- ----------- -------- ----------- ----------- --------- -----
Eastern Desert 18.9 12.4 1.6 32.9 13 2 2 17
South Ghazalat - 0.2 - 0.2 - - - -
------------------ ----- -------- ----------- -------- ----------- ----------- --------- -----
Egypt 18.9 12.6 1.6 33.1 13 2 2 17
Canada 21.1 3.5 0.0 24.6 7 - - 7
------------------ ----- -------- ----------- -------- ----------- ----------- --------- -----
2022 Total 40.0 16.1 1.6 57.7 20 2 2 24
------------------ ----- -------- ----------- -------- ----------- ----------- --------- -----
(1) Other includes completions, workovers, recompletions and equipping.
(2) Table may not total due to rounding.
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", "strengthened",
"confidence", "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 estimated 2022 capital spending
in Egypt and Canada, including the capital spending to be allocated
to each well; the Company's anticipated 2022 capital budget; the
Company's anticipated 2022 production, including the allocation of
such production between development and exploration wells and other
spending; the Company's anticipated exit production rates; the
Company's expectations that it will increase investments and growth
in Egypt and Canada; the Company's , strategy and focus in 2022,
including the drilling of wells and growing production; the
Company's plans to maximize free cash flow, to increase the
Company's production base and return to shareholder distributions;
the number of and location of wells to be drilled by the Company in
2022 and the anticipated timing thereof; the focus of the Egypt
2022 capital program; the ability of the Company's long-lead
capital items to provide continuity into 2023; the expected timing
of determining the effective date adjustment with EGPC under the
Merged Concession agreement; the anticipated netback to be
generated by the Company's Eastern Desert acreage and in Canada;
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; the Company's estimated 2022
capital spending and production will be as anticipated and
allocated in the manner described herein 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; the Company's 2022 production in Egypt
and Canada will be less than anticipated; the Company's exit
production rates will be less than anticipated; the Company will
not increase investments and growth in Egypt and Canada; the
Company will successfully drill less than the number of wells that
it anticipates; the Company will be unable to maximize free cash
flow and increase the Company's production base; the Company does
not pay dividends in the future; the amount and allocation of 2022
capital spending disclosed herein will be different than
anticipated; the Company's drilling plans and the anticipated
timing thereof will be different than as disclosed herein; the
Company's long-lead capital items will not provide continuity into
2023; the netback generated by the Company's Eastern Desert acreage
will be less than anticipated; the netback generated in Canada is
less than anticipated; 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 Company's future dividend payments, if any, and the level
thereof is uncertain. Any decision to pay dividends will be subject
to the discretion of the board of directors of the Company and may
depend on a variety of factors, including, without limitation the
Company's business performance, financial condition, financial
requirements, growth plans, expected capital requirements and other
conditions existing at such future time including, without
limitation, contractual restrictions and satisfaction of the
solvency tests imposed on the Company under applicable corporate
law. There can be no assurance that dividends will be paid in the
future.
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.
This news release contains information that may be considered a
financial outlook under applicable securities laws about the
Company's anticipated capital expenditures for 2022 and the
Company's petroleum and natural gas sales (net of royalties), less
taxes and production and operating taxes disclosed under the
heading "Field Operating Netback per Bbl and Boe Calculations" in
this news release. Such financial information has been prepared by
management to provide an outlook of the Company's financial results
and activities and may not be appropriate for other purposes. This
information has been prepared based on a number of assumptions,
risk factors, limitations and qualifications including those
discussed in this news release. The actual results of operations of
the Company and the resulting financial results may vary from the
amounts set forth herein, and such variations may be material. The
Company and management believe that the financial outlook has been
prepared on a reasonable basis, reflecting management's best
estimates and judgments. The financial outlook contained in this
news release was made as of January 27, 2022 and the Company
disclaims any intent or obligation to update publicly the news
release, whether as a result of new information, future events or
otherwise, unless required pursuant to applicable law.
Oil and Gas Advisories
Mr. Ron Hornseth, B.Sc., General Manager - Canada 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 the technical information
contained in this report. Mr. Hornseth is a professional engineer
who obtained a Bachelor of Science in Mechanical Engineering from
the University of Alberta. He is a member of the Association of
Professional Engineers and Geoscientists of Alberta ("APEGA") and
the Society of Petroleum Engineers ("SPE") and has over 20 years'
experience in oil and gas.
This news release contains a number of oil and gas metrics which
do not have standardized meanings or standard methods of
calculation and therefore such measures may not be comparable to
similar measures used by other companies and should not be used to
make comparisons. Such metrics have been included herein to provide
readers with additional measures to evaluate TransGlobe's operating
results; however, such measures are not reliable indicators of the
future performance of TransGlobe and future performance may not
compare to the performance in previous periods and therefore such
metrics should not be unduly relied upon. Management of TransGlobe
uses these oil and gas metrics for its own performance measurements
and to provide securityholders with measures to compare
TransGlobe's operations over time. Readers are cautioned that the
information provided by these metrics, or that can be derived from
the metrics presented in this news release, should not be relied
upon for investment or other purposes.
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.
The following abbreviations used in this press release have the
meanings set forth below:
bbl barrels
bbls/d barrels per day
Mbbls/d thousand barrels per day
Mbbls thousand barrels
boe barrel of oil equivalent
boe/d barrels of oil equivalent per day
Mboe/d thousand barrels of oil equivalent per day
MMbtu One million British thermal units
Mcf thousand cubic feet
Mcf/d thousand cubic feet per day
NGL Natural Gas Liquids
Financial Measures Advisories
TransGlobe's audited consolidated financial statements and notes
(the "financial statements") and Management's Discussion and
Analysis ("MD&A") as at and for the three months and year ended
December 31, 2021, are available on TransGlobe's website at
www.trans-globe.com and under the Company's SEDAR profile at
www.sedar.com. The disclosure under the section "Non-GAAP and Other
Financial Measures" in TransGlobe's MD&A as at and for the
three months and year ended December 31, 2021 is incorporated by
reference into this news release.
NON-GAAP AND OTHER FINANCIAL MEASURES
Throughout the MD&A and in other materials disclosed by the
Company, TransGlobe employs certain measures to analyze financial
performance, financial position, and cash flow. These non-GAAP and
other financial measures do not have any standardized meaning
prescribed under IFRS and therefore may not be comparable to
similar measures presented by other entities. The non-GAAP and
other financial measures should not be considered to be more
meaningful than GAAP measures which are determined in accordance
with IFRS, such as net earnings (loss), cash flow from operating
activities, and cash flow used in investing activities, as
indicators of the Company's performance.
Non-GAAP financial measures
Capital Expenditures
TransGlobe uses capital expenditures to measure its capital
investments compared to the Company's annual capital budgeted
expenditures. The Company's capital budget excludes the accounting
impact of any accrual changes. The most directly comparable measure
under IFRS is cash flow used in investing activities. The table
below details the composition of capital expenditures and its
reconciliation to cash flow used in investing activities.
Years Ended December 31
($000s) 2021 2020 2019
---------------------------------------- -------- -------- --------
Net cash used in investing activities (19,221) (11,042) (37,109)
Proceeds from asset dispositions - - (114)
Changes in non-cash working capital (7,601) 3,544 291
----------------------------------------- -------- -------- --------
Capital expenditures (26,822) (7,498) (36,932)
----------------------------------------- -------- -------- --------
2021 2020
--------------------------- --------------------------------------- ----------------------------------
($000s) Q-4 Q-3 Q-2 Q-1 Q-4 Q-3 Q-2 Q-1
--------------------------- --------- -------- --------- ------- ------- ------- ------- -------
Net cash used in
investing activities (9,082) (5,982) (3,075) (1,082) (1,254) (2,320) (2,823) (4,645)
Changes in non-cash
working capital 388 (5,642) (522) (1,825) 1,000 1,883 1,594 (932)
--------------------------- --------- -------- --------- ------- ------- ------- ------- -------
Capital expenditures (8,694) (11,624) (3,597) (2,907) (254) (437) (1,229) (5,577)
--------------------------- --------- -------- --------- ------- ------- ------- ------- -------
Funds flow from operations
TransGlobe uses funds flow from operations to measure the
Company's ability to generate the necessary funds to maintain
production at current levels, enable future growth through capital
investment and repay debt. Management believes that such a measure
provides an insightful assessment of TransGlobe's operations on a
continuing basis by eliminating certain non-cash charges. The most
directly comparable measure under IFRS is cash flow generated by
operating activities. The tables below details the composition of
funds flow from operations and its reconciliation to cash flow
generated by operating activities.
Years Ended December 31
($000s) 2021 2020 2019
---------------------------------------------- -------- -------- -------
Cash flow generated by operating activities 44,962 31,709 44,836
Changes in non-cash working capital (131) (1,266) 2,035
----------------------------------------------- -------- -------- -------
Funds flow from operations(1) 44,831 30,443 46,871
----------------------------------------------- -------- -------- -------
(1) Funds flow from operations does not include interest costs.
Interest expense is included in financing costs on the Consolidated
Statements of Earnings (Loss) and Comprehensive Income (Loss). Cash
interest paid is reported as a financing activity on the
Consolidated Statements of Cash Flows.
2021 2020
------------------------------ ----------------------------------- -----------------------------------
($000s) Q-4 Q-3 Q-2 Q-1 Q-4 Q-3 Q-2 Q-1
------------------------------ ------- -------- ------- ------- ------- ------- -------- -------
Cash flow (used in)
generated by operating
activities (1,956) 27,026 23,832 (3,940) 14,180 (3,349) 24,551 (3,672)
Changes in non-cash working
capital 17,225 (14,645) (6,732) 4,021 (6,978) 3,672 (27,315) 29,355
------------------------------ ------- -------- ------- ------- ------- ------- -------- -------
Funds flow from
operations(1) 15,269 12,381 17,100 81 7,202 323 (2,764) 25,683
------------------------------ ------- -------- ------- ------- ------- ------- -------- -------
(1) Funds flow from operations does not include interest costs.
Interest expense is included in financing costs on the Consolidated
Statements of Earnings (Loss) and Comprehensive Income (Loss). Cash
interest paid is reported as a financing activity on the
Consolidated Statements of Cash Flows.
Net debt
TransGlobe considers net debt to be a key measure to assess the
Company's liquidity position at a point in time. The Company's net
debt is computed as long-term debt, including the current portion,
net of working capital. Net debt does not have any standardized
meaning under IFRS and therefore may not be comparable to similar
measures used by other companies. The tables below detail the
composition of net debt.
Years Ended December 31
($000s) 2021 2020 2019
----------------------------------------------------------------------- -------- -------- --------
Long-term debt, including the current portion 3,040 21,464 37,041
Current assets (54,170) (53,864) (65,786)
Current liabilities, excluding the current portion of long-term debt 33,138 23,618 33,592
------------------------------------------------------------------------ -------- -------- --------
Net debt (17,992) (8,782) 4,847
------------------------------------------------------------------------ -------- -------- --------
2021 2020
------------------------ -------------------------------------- --------------------------------------
($000s) Q-4 Q-3 Q-2 Q-1 Q-4 Q-3 Q-2 Q-1
------------------------ -------- -------- -------- -------- -------- -------- -------- --------
Long-term debt,
including the current
portion 3,040 6,882 16,951 21,699 6,567 25,946 27,071 36,591
Current assets (54,170) (86,624) (63,847) (51,360) (53,864) (55,139) (68,667) (85,828)
Current liabilities,
excluding current
portion of long-term
debt 33,138 68,957 36,711 29,305 38,515 22,636 33,555 32,534
------------------------ -------- -------- -------- -------- -------- -------- -------- --------
Net debt (17,992) (10,785) (10,185) (356) (8,782) (6,557) (8,041) (16,703)
------------------------ -------- -------- -------- -------- -------- -------- -------- --------
Petroleum and natural gas sales, excluding overlift
Petroleum and natural gas sales, excluding overlift is a measure
of operating results and is computed as petroleum and natural gas
sales, net of overlift revenue. Management believes that petroleum
and natural gas sales, excluding overlift is a useful supplemental
measure to analyze operating performance and provide an indication
of the results generated by the Company's principal business
activities prior to the consideration of overlift revenue.
Petroleum and natural gas sales, excluding overlift does not have
any standardized meaning under IFRS and therefore may not be
comparable to similar measures used by other companies.
The table below reconciles petroleum and natural gas sales,
excluding overlift to the most directly comparable GAAP measure,
petroleum and natural gas sales.
($000s) 2021 2020
------------------------------------------------------ -------- -------
Petroleum and natural gas sales 303,956 188,771
Overlift (14,723) -
------------------------------------------------------- -------- -------
Petroleum and natural gas sales, excluding overlift 289,233 188,771
------------------------------------------------------- -------- -------
(1) Petroleum and natural gas sales, excluding overlift are
equal for all periods disclosed prior to 2021.
Netback
Netback is a measure of operating results and is computed as
petroleum and natural gas sales, excluding overlift, net of
royalties (all government interests, net of income taxes),
production and operating expenses, current taxes and selling costs.
The Company's netbacks include sales and associated costs of
production from inventoried crude oil sold during the period.
Royalties and taxes associated with inventoried crude oil are
recognized in the financial statements at the time of production.
As a result, netbacks fluctuate depending on the timing of
entitlement crude oil sales. Management believes that netback is a
useful supplemental measure to analyze operating performance and
provide an indication of the results generated by the Company's
principal business activities prior to the consideration of other
income and expenses. Netback does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
used by other companies.
Refer to the "Netback" section of this MD&A which includes
the most directly comparable GAAP measure, petroleum and natural
gas sales.
Non-GAAP financial ratios
Netback per boe
TransGlobe calculates netback per boe as netback divided by
average daily production. Netback is a non-GAAP financial measure
component of netback per boe. Management believes that netback per
boe is a key industry performance measure of operational efficiency
and one that provides investors with information that is also
commonly presented by other crude oil and natural gas producers.
The Company's netback per boe is disclosed in the "Netback" section
within this MD&A.
Funds flow from operations per share
TransGlobe presents funds flow from operations per share by
dividing funds flow from operations by the Company's diluted or
basic weighted average common shares outstanding. Funds flow from
operations is a non-GAAP financial measure. Management believes
that funds flow per share provides investors an indicator of funds
generated from the business that could be allocated to each
shareholder's equity position.
Supplementary Financial Measures
"Average realized sales price" is comprised of total petroleum
and natural gas sales, excluding overlift, divided by the Company's
average daily production volumes.
"DD&A expense per boe" is comprised of DD&A expense, as
determined in accordance with IFRS, divided by the Company's
average daily production volumes.
"F&D costs" are calculated as the sum of development costs
plus the change in FDC for the period when appropriate, divided by
the change in reserves within the applicable reserves category,
excluding those reserves acquired or disposed.
"FD&A costs" are calculated as the sum of development costs
plus net acquisition costs plus the change in FDC for the period
when appropriate, divided by the change in reserves within the
applicable reserves category, inclusive of changes due to
acquisitions and dispositions.
"G&A expense per boe" is comprised of G&A expense, as
determined in accordance with IFRS, divided by the Company's
average daily production volumes.
"Production and operating expenses per boe" is comprised of
production and operating expenses, as determined in accordance with
IFRS, divided by the Company's average daily production
volumes.
"Royalties and taxes as a percentage of revenue" is comprised of
royalties and current taxes, as determined in accordance with IFRS,
divided by the Company's petroleum and natural gas sales.
"Royalties and taxes per boe" is comprised of royalties and
current taxes, as determined in accordance with IFRS, divided by
the Company's average daily production volumes.
"Selling costs per bbl" is comprised of selling costs, as
determined in accordance with IFRS, divided by the Company's
average daily production volumes.
"Working capital" is a supplementary financial measure that is
comprised of current assets less current liabilities, as determined
in accordance with IFRS.
Production Disclosure
Production Summary (WI before royalties and taxes):
Feb Jan - Q4 - Q3 - Q2 - Q1 - Q4 -
- 22 22 21 21 21 21 20
------- ------- ------- ------- ------- ------- -------
Egypt (bbls/d) 10,047 10,094 10,065 11,276 10,727 10,238 10,268
------- ------- ------- ------- ------- ------- -------
Eastern Desert of Egypt
(bbls/d) 9,993 10,094 9,770 10,653 9,917 10,052 10,132
------- ------- ------- ------- ------- ------- -------
Heavy Crude (bbls/d) 9,184 9,227 9,225 10,014 9,736 9,419 9,490
------- ------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 809 867 545 639 181 633 642
------- ------- ------- ------- ------- ------- -------
Western Desert of Egypt
(bbls/d) 54 - 295 623 810 186 136
------- ------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 54 - 295 623 810 186 136
------- ------- ------- ------- ------- ------- -------
Canada (boe/d) 2,345 2,197 2,698 2,066 2,350 1,983 2,116
------- ------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 853 817 1,176 601 687 564 618
------- ------- ------- ------- ------- ------- -------
Natural Gas (Mcf/d) 4,329 4,462 4,832 4,734 4,834 4,259 4,454
------- ------- ------- ------- ------- ------- -------
Associated Natural Gas
Liquids (bbls/d) 770 636 716 677 857 710 755
------- ------- ------- ------- ------- ------- -------
Total (boe/d) 12,392 12,291 12,763 13,342 13,077 12,221 12,384
------- ------- ------- ------- ------- ------- -------
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.
For further information, please contact:
TransGlobe Energy Corporation +1 403 264 9888
Randy Neely, President and CEO investor.relations@trans-globe.com
Eddie Ok, CFO http://www.trans-globe.com
or via Tailwind Associates
Tailwind Associates (Investor Relations) +1 403 618 8035
Darren Engels darren@tailwindassociates.ca
http://www.tailwindassociates.ca
Canaccord Genuity (Nomad & Joint-Broker)
Henry Fitzgerald-O'Connor
James Asensio +44(0) 20 7523 8000
Shore Capital (Joint Broker)
John More
Toby Gibbs +44(0) 20 7408 4090
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END
FR DZGMFFNGGZZG
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March 17, 2022 03:00 ET (07:00 GMT)
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