TransGlobe Energy Corporation Announces Establishment of Reserve-Based Lending Facility on Canadian Assets
May 16 2017 - 5:27PM
TSX: “TGL” & NASDAQ:
“TGA”
TransGlobe Energy Corporation (“TransGlobe” or the "Company") is
pleased to announce that is has entered into a credit agreement for
a revolving reserve-based lending facility (“RBL”) with Alberta
Treasury Branches (“ATB”). All dollar values are expressed in
United States dollars unless otherwise stated.
Pursuant to the credit agreement, the RBL
commitment is a maximum of C$30 million. The amount available
to be drawn on the RBL will be dependent upon the borrowing base,
which is determined with reference to the Company’s proved oil and
gas reserves in Canada, as evaluated in the most recent reserve
report(s) and delivered pursuant to the credit agreement. As
of the closing date, the borrowing base was set at C$30
million. Redeterminations of the borrowing base are scheduled
semi-annually, with the first redetermination scheduled for
November 30, 2017. Amounts drawn on the RBL bear interest at
a rate of either ATB Prime or CDOR (Canadian Dollar Offered Rate)
plus an applicable margin that varies from 1.25% to 3.25% depending
upon the Company’s net debt to trailing cash flow ratio.
The RBL is secured by a first floating charge
over all real and personal property and after acquired assets of
TransGlobe, and an unconditional undertaking to grant a first fixed
charge on all real property interests upon request by ATB. The
Company's foreign subsidiaries that hold the production in the Arab
Republic of Egypt have not granted guarantees or security for the
obligations of the Company under the RBL.
The RBL includes the following financial
covenants:
- Working capital ratio must not be less than 1.0:1. Working
capital ratio is defined as the ratio of (i) current assets plus
any undrawn availability under the RBL, to (ii) current liabilities
less (to the extent included therein) any amount drawn under the
RBL; and
- Net debt to trailing cash flow ratio must not be greater than
3.0:1. Net debt is defined as total debt less current assets,
and trailing cash flow is defined as cash flow for the two most
recently completed fiscal quarters, annualized.
TransGlobe will initially use the funds
available under the RBL to repay the existing C$15 million
vendor-take-back loan outstanding which had an interest rate of 10%
per annum and repayment of principal over 24 months. The
remaining funds will be used as necessary to carry out the
Company’s capital expenditure program in Canada.
The Company’s 2017 capital program of $56.4
million (before capitalized G&A) consists of a $35.2 million
firm budget and a $21.2 million contingent budget, and includes
$40.2 million for Egypt and $16.2 million (C$22.4 million) for
Canada. It is expected that 2017 production will average
between 15,500 and 18,500 boepd, representing a 30% to 55% increase
over 2016 production. The 2017 production outlook is provided
as a range to reflect the firm and contingent budget.
TransGlobe Energy Corporation is a
Calgary-based, growth-oriented 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 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 future events. In particular, forward-looking information
and statements contained in this document include, but are not
limited to, statements regarding the terms of and availability of
the funds under the RBL with ATB; TransGlobe's ability to satisfy
the conditions for utilization of funds; TransGlobe's use of the
funds under the RBL; the term of the RBL; the methods of advance
and repayment of funds under the RBL; the funds available to be
drawn on the RBL; and anticipated 2017 production volumes.
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;
TransGlobe's ability to satisfy the conditions to the availability
of the RBL; uninterrupted access to areas of TransGlobe's
operations and infrastructure; recoverability of reserves and
future production rates; current and future commodity prices; 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; 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 being 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 of counterparties to perform
under the terms of their contracts; failure to satisfy the
conditions to utilization of the funding arrangement; that the
board of directors determines to use the initial advance in a
manner different from that set forth herein; 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.gov/edgar.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.
For further information, please contact:
Investor Relations
Steve Langmaid
Telephone: (403) 444-4787
Email: investor.relations@trans-globe.com
Web site: www.trans-globe.com
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