TIDMTGL
RNS Number : 3855P
TransGlobe Energy Corporation
20 June 2022
TRANSGLOBE ENERGY CORPORATION
OPERATIONS UPDATE
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, June 20, 2022 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") announces an operations update. All
dollar values are expressed in US dollars unless otherwise
stated.
OVERVIEW
-- Production averaged 12.1 MBoepd in Q2, 2022 to 11 June (See
"Oil & Gas Advisories" for production by product type);
-- Full Canadian production restored in May following completion
of planned maintenance at a major processing plant owned by a third
party. Canadian June production has averaged 2,727 boed for the
month to 11 June following the turnaround;
-- As budgeted, production in Canada will be impacted over the
coming quarter as wells will be shut in temporarily to protect the
stimulation operations on the adjacent new wells;
-- Two 100% working interest 2-mile horizontal Cardium reservoir
development wells were drilled in Q2, 2022 to date in Canada;
-- Drilled and cased four Egypt Eastern Desert development wells in Q2, 2022 to date; and
-- The Company sold a 451 Mbbl cargo of Egypt entitlement crude
oil for proceeds of $46 million.
RANDY NEELY, PRESIDENT AND CEO'S STATEMENT
"The Company's operations continue to be in-line with plan, with
both Egypt and Canada generating production within guidance.
Canadian production was curtailed for part of April and much of May
as a result of planned third party plant maintenance which was
completed on schedule.
A full (451 MBbls) cargo lifting was completed in the second
quarter. While the proceeds for this recent lifting were the
highest realized since 2014, we also experienced a higher Brent
differential as compared to recent liftings which appears to be
related to increased supply being available to the blend's
traditional buyers.
Corporately, we continue to examine portfolio optimization
opportunities and other value enhancing strategies that are
complementary to our previously announced distribution policy".
PRODUCTION
Production Summary (WI before royalties and taxes):
(Boepd) Q1 2022 Apr 2022 May 2022 Jun 2022 YTD Average
(to Jun 11(th)
)
Egypt 10,045 10,318 10,395 10,443 10,189
-------- --------- --------- ---------------- ------------
Canada 2,355 1,731 1,333 2,727 2,069
-------- --------- --------- ---------------- ------------
Total 12,400 12,049 11,728 13,170 12,259
-------- --------- --------- ---------------- ------------
* See "Oil & Gas Advisories" for production by product
type.
Corporate production remains in line with 2022 annual guidance
of 12.4-13.4 MBoepd. In Egypt, Eastern Desert oil production
continues to respond positively to ongoing drilling, offset by
higher water cuts than anticipated at South Ghazalat. As
anticipated, all Canadian wells were returned to production from
mid-May following planned scheduled maintenance at our third-party
gas processor.
OPERATIONS UPDATE
Arab Republic of Egypt
Eastern Desert (100% WI)
The Company continued to use the EDC-64 rig in its Eastern
Desert drilling campaign, managing to drill and case four
additional development wells in the K-Field during the quarter to
date.
The K-71 well, reported on in the previous operations update of
April 6, 2022, was put on production from the Asl-B reservoir only
and is currently producing at 480 Bopd (heavy crude, field
estimate) and 20% water cut. The Asl-A reservoir was not perforated
and was internally estimated to have 19 m of net oil pay. The Asl-A
is a potential future recompletion.
The K-78 well was drilled to a total depth of 1,420 meters. The
well was fully logged and evaluated with an internally estimated
21.8 meters of net oil pay in the Asl-A reservoir and 10.2 meters
of net oil pay in the Asl-B reservoir. The Asl-B was perforated and
put on production with a current field estimated rate of 10 Bopd
(heavy crude, field estimate) and 97% water cut. The well is being
evaluated for either a work over to shut-off water production from
the Asl-B reservoir, or to move ahead with an early recompletion to
the Asl-A reservoir.
The K-75 well was drilled to a total depth of 1,396 meters. The
well was fully logged and evaluated. The well encountered 4.9
meters of net oil pay in the Asl-A. The Asl-A was perforated and
the well is scheduled to be put on production.
The K-74 well was drilled to a total depth of 1,399 meters. The
well was fully logged and evaluated. The well encountered 9.6
meters of net oil pay in the Asl-A reservoir. The Asl-A was
perforated and the well is scheduled to be put on production.
The K-73 well was drilled to a total depth of 1,406 meters. The
well was fully logged and evaluated with an internally estimated
20.6 meters of net oil pay in the Asl-A reservoir and 1.9 meters in
the Asl-B reservoir. The well is currently waiting on completion
and tie-in.
The K-77 well in K-Field has recently been spudded by the EDC-64
rig.
The Arta-76 and NWG-1E vertical wells, previously reported as
drilled in the April 6, 2022 operations update, have been
stimulated. These wells confirmed the presence of oil in the
Nukhul, were cored to provide data to update the reservoir models,
and have successfully delineated the reservoir for optimal
targeting of the forthcoming horizontal wells. Both wells are
expected to be used for microseismic monitoring of the multi-stage
stimulation of the horizontal wells, and this data will be used to
calibrate our stimulation model for optimization of the future
horizontal well development program. Meanwhile, the two wells have
been put on production with the Arta-76 currently producing at 14
Bopd with a 28% water cut, and NWG-1E currently producing while
cleaning up at 32 Bopd with an 70% water cut (both heavy crude,
field estimate).
The Company continues working to proactively mitigate potential
supply chain issues by engaging alternative materials suppliers. In
the short term, materials shortages causing delays to the tie-in of
some recently drilled wells are being addressed.
Western Desert - South Ghazalat (100% WI)
A problem with the rigless artificial lift system deployed on
SGZ-6X well at South Ghazalat is under investigation. On artificial
lift, the lower Bahariya reservoir at SGZ-6X was producing 128 Bopd
of light crude oil with an 82% watercut (field estimate) prior to
well shut-in.
Canada
During the quarter to date, two 100% working interest 2-mile
Harmattan horizontal Cardium reservoir wells were drilled in the
South Harmattan area, completing the four well winter drill
campaign. Stimulation and equipping of all four wells is
anticipated to commence in June 2022, with first production
anticipated in August 2022.
The Company has spudded a 100% working interest 1-mile Harmattan
horizontal Cardium reservoir well, the start of a three horizontal
well Harmattan Cardium reservoir summer drill program.
CORPORATE
The Company sold a 451 Mbbl cargo of Egypt entitlement crude oil
for proceeds of $46 million.
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 +1 403 618 8035
Relations) darren@tailwindassociates.ca
Darren Engels http://www.tailwindassociates.ca
Canaccord Genuity (Nomad & Joint-Broker)
Henry Fitzgerald-O'Connor
James Asensio +44(0) 20 7523 8000
Shore Capital (Joint Broker)
Toby Gibbs
John More +44(0) 20 7408 4090
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 expectation that it will maintain
a single drilling rig plus a light rig for well maintenance /
recompletion activities in the Eastern Desert throughout 2022; the
Company's expectations that further development activities in the
South Harmattan area will be focused on increasing production and
reducing uncertainty; prospects being targeted by the Company; rig
mobilization plans; 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; that
TransGlobe will maintain its dividend policy; 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, the Company will not be able to maximize its free
cash flow and accelerate the maturation of contingent resources
into reserves; that the Company's balance sheet will not strengthen
in the coming months; 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.
The Company's future dividend payments, if any, and the level
thereof is uncertain. Any decision to maintain its dividend policy
or 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.
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.
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.
Further, this press release includes estimates of pay thickness
and production rates in the K-Field, Arta-Field and NWG-Field in
the Eastern Desert of Egypt (100% WI), which are considered to be
anticipated results or information that indicate the potential
value or quantities of resources under National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities because the
disclosure in question may, in the opinion of a reasonable person,
indicate the potential value or quantities of resources in respect
of the Company's resources or a portion of its resources. Such
estimates have been prepared internally by management of TransGlobe
and have not been prepared or reviewed by an independent qualified
reserves evaluator or auditor. Anticipated results are subject to
certain risks and uncertainties, including those described above
under "Advisory on Forward-Looking Information and Statements" and
various geological, technical, operational, engineering,
commercial, and technical risks, including, but not limited to, the
risk that TransGlobe's exploration and development drilling and
related activities may provide different results; the risk that
TransGlobe may encounter unexpected drilling results; the
occurrence of unexpected events involved in the exploration for,
and the operation and development of, oil and gas; delays in
anticipated timing of drilling and completion of wells; geological,
technical, drilling and processing problems and other difficulties
in producing petroleum reserves; and the risk that if any resources
are discovered that it will not be commercially viable to produce
any portion thereof. In addition, the geotechnical analysis and
engineering to be conducted in respect of such resources is not
complete. Such risks and uncertainties may cause the anticipated
results disclosed herein to be inaccurate. Actual results may vary,
perhaps materially. There is no certainty that TransGlobe will
achieve the anticipated results from the K-Field and H-Field in the
Eastern Desert of Egypt or that any resources will be discovered.
If discovered, there is also no certainty that it will be
commercially viable to produce any portion of the resources.
References in this press release to initial production rates are
useful in confirming the presence of hydrocarbons, however such
rates are not determinative of the rates at which such wells will
continue production 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 production test
results and initial production 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
Boepd barrels of oil equivalent per day
Bpd barrels per day
BOE barrel of oil equivalent
Boepd barrels of oil equivalent per day
MBoepd thousand barrels of oil equivalent per day
MBbl thousand barrels of oil
MCFD thousand cubic feet per day
WI working interest
Production Disclosure (WI before royalties and taxes)
Light and Heavy Crude Conventional Natural Total
Medium Crude Natural Gas Gas Liquids
Bopd Bopd MCFD Bpd Boepd
--------------------- -------------- ------------ ------------- ------------- -------
YTD-2022 Production
(To June 11,
2022)
Egypt 1,011 9,178 10,189
Canada 707 4,051 687 2,069
Total 1,719 9,178 4,051 687 12,259
JUN-2022 Production
(To June 11,
2022)
Egypt 1,037 9,406 10,443
Canada 865 5,257 986 2,727
Total 1,901 9,406 5,257 986 13,170
MAY-2022 Production
Egypt 1,032 9,363 10,395
Canada 415 2,704 468 1,333
Total 1,447 9,363 2,704 468 11,728
APR-2022 Production
Egypt 1,024 9,294 10,318
Canada 610 3,360 562 1,731
Total 1,634 9,294 3,360 562 12,049
Q1-2022 Production
Egypt 997 9,048 10,045
Canada 821 4,598 768 2,355
Total 1,818 9,048 4,598 768 12,400
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END
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