TransGlobe Energy Corporation (“TransGlobe” or the “Company”)
(TSX:TGL) (NASDAQ:TGA) is pleased to announce its financial
and operating results for the three and six months ended June 30,
2017. All dollar values are expressed in United States
dollars unless otherwise stated. TransGlobe's Condensed
Consolidated Interim Financial Statements together with the notes
related thereto, as well as TransGlobe's Management's Discussion
and Analysis for the three month periods ended June 30, 2017 and
2016, are available on TransGlobe's website at www.trans-globe.com.
Financial Highlights: |
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|
|
• |
|
Second quarter
production averaged 16,465 Boepd (19,259 Boepd sales) versus 11,472
Bopd (11,783 Bopd sales) in Q2-2016, a 44% increase, reflecting
increased volumes in Egypt and the December 2016 Canadian
acquisition; |
|
|
|
• |
|
Completed one direct
sale tanker-lifting of TransGlobe's entitlement oil for proceeds of
$18.5 million (sale proceeds collected in July) and sold 302,648
barrels of inventoried entitlement crude oil to EGPC for $12.5
million to cover in-country expenditures during the second
quarter; |
|
|
|
• |
|
Inventory of 1,274,057
barrels of entitlement crude oil at quarter-end, and next lifting
is scheduled for mid-September; |
|
|
|
• |
|
Positive second quarter
funds flow of $16.9 million ($0.23 per share); |
|
|
|
• |
|
Second quarter net loss
of $56.6 million (includes a $67.5 million impairment loss and a
$6.6 million unrealized gain on derivative commodity contracts).
Excluding the impairment charge and the unrealized gain on
derivative commodity contracts, the Company would have achieved a
positive net profit for the quarter of $4.3 million. |
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|
|
• |
|
Spent $8.2 million on
exploration and development during the quarter; |
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• |
|
Ended the quarter with
positive working capital of $60.3 million, which includes cash and
cash equivalents of $21.6 million (including restricted cash); |
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|
• |
|
Finalized C$30.0
million revolving Canadian reserve-based lending facility, of which
$10.0 million (C$13.6 million) was drawn on May 16, 2017 to repay
the remaining outstanding vendor take-back note; |
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|
Operational Highlights: |
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|
• |
|
Drilled five wells in
Egypt (two exploration and three development), resulting in three
dry holes and two oil wells (K-47 and NWG 38A); and |
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• |
|
Drilled and cased the
Boraq 5 appraisal well as a potential Abu Roash oil well. |
A conference call to discuss TransGlobe’s 2017
second quarter results presented in this news release will be held
Monday, August 14, 2017 at 9:00 AM Mountain Time (11:00 AM Eastern
Time) and is accessible to all interested parties by dialing
416-340-2216 or toll free at 1-800-377-0758. The webcast may
be accessed at http://www.gowebcasting.com/8557.
FINANCIAL AND OPERATING RESULTS(US$000s, except
per share, price, volume amounts and % change)
|
Three months ended June 30 |
|
Six months ended June 30 |
Financial |
2017 |
|
2016 |
|
% Change |
|
2017 |
|
2016 |
|
% Change |
Petroleum
and natural gas sales |
64,711 |
|
|
|
32,461 |
|
|
|
99 |
|
|
111,265 |
|
|
|
61,483 |
|
|
|
81 |
|
Petroleum
and natural gas sales, net of royalties |
40,439 |
|
|
|
19,786 |
|
|
|
104 |
|
|
62,900 |
|
|
|
37,213 |
|
|
|
69 |
|
Realized
derivative gain (loss) on commodity contracts |
1,529 |
|
|
|
(698 |
) |
|
|
— |
|
|
1,529 |
|
|
|
(956 |
) |
|
|
— |
|
Unrealized derivative gain (loss) on commodity contracts |
6,578 |
|
|
|
— |
|
|
|
— |
|
|
2,849 |
|
|
|
— |
|
|
|
— |
|
Production and operating expense |
14,923 |
|
|
|
10,640 |
|
|
|
40 |
|
|
25,046 |
|
|
|
23,761 |
|
|
|
5 |
|
Transportation costs |
156 |
|
|
|
— |
|
|
|
— |
|
|
354 |
|
|
|
— |
|
|
|
— |
|
Selling
costs |
1,502 |
|
|
|
47 |
|
|
|
3,096 |
|
|
1,502 |
|
|
|
875 |
|
|
|
72 |
|
General
and administrative expense |
3,362 |
|
|
|
4,125 |
|
|
|
(18 |
) |
|
7,808 |
|
|
|
7,648 |
|
|
|
2 |
|
Depletion, depreciation and amortization expense |
10,363 |
|
|
|
8,083 |
|
|
|
28 |
|
|
18,875 |
|
|
|
18,099 |
|
|
|
4 |
|
Income
taxes |
5,505 |
|
|
|
2,683 |
|
|
|
105 |
|
|
10,925 |
|
|
|
3,661 |
|
|
|
198 |
|
Cash flow
generated by (used in) operating activities |
(2,753 |
) |
|
|
6,011 |
|
|
|
— |
|
|
(5,250 |
) |
|
|
7,437 |
|
|
|
— |
|
Funds
flow from operations1 |
16,855 |
|
|
|
2,026 |
|
|
|
732 |
|
|
19,357 |
|
|
|
(804 |
) |
|
|
2,508 |
|
Basic per
share |
0.23 |
|
|
|
0.03 |
|
|
|
|
|
0.26 |
|
|
|
(0.01 |
) |
|
|
|
Diluted
per share |
0.23 |
|
|
|
0.03 |
|
|
|
|
|
0.26 |
|
|
|
(0.01 |
) |
|
|
|
Net
earnings (loss) |
(56,622 |
) |
|
|
(12,050 |
) |
|
|
(370 |
) |
|
(69,499 |
) |
|
|
(28,299 |
) |
|
|
(146 |
) |
Basic per share |
(0.78 |
) |
|
|
(0.17 |
) |
|
|
|
|
(0.96 |
) |
|
|
(0.39 |
) |
|
|
|
Diluted per share |
(0.78 |
) |
|
|
(0.17 |
) |
|
|
|
|
(0.96 |
) |
|
|
(0.39 |
) |
|
|
|
Capital
expenditures |
8,230 |
|
|
|
4,837 |
|
|
|
70 |
|
|
18,948 |
|
|
|
9,102 |
|
|
|
108 |
|
Working
capital |
60,319 |
|
|
|
65,413 |
|
|
|
(8 |
) |
|
60,319 |
|
|
|
65,413 |
|
|
|
(8 |
) |
Long-term
debt |
83,725 |
|
|
|
— |
|
|
|
— |
|
|
83,725 |
|
|
|
— |
|
|
|
— |
|
Convertible debentures |
— |
|
|
|
70,639 |
|
|
|
(100 |
) |
|
— |
|
|
|
70,639 |
|
|
|
(100 |
) |
Note
payable |
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Common
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
Basic (weighted average) |
72,206 |
|
|
|
72,206 |
|
|
|
— |
|
|
72,206 |
|
|
|
72,206 |
|
|
|
— |
|
Diluted (weighted average) |
72,206 |
|
|
|
72,206 |
|
|
|
— |
|
|
72,206 |
|
|
|
72,206 |
|
|
|
— |
|
Total assets |
337,596 |
|
|
|
433,013 |
|
|
|
(22 |
) |
|
337,596 |
|
|
|
433,013 |
|
|
|
(22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
|
|
|
|
|
|
|
|
|
|
Average
production volumes (Boepd) |
16,465 |
|
|
|
11,472 |
|
|
|
44 |
|
|
16,597 |
|
|
|
11,765 |
|
|
|
41 |
|
Average
sales volumes (Boepd) |
19,259 |
|
|
|
11,783 |
|
|
|
63 |
|
|
16,558 |
|
|
|
12,955 |
|
|
|
28 |
|
Inventory
(MBbls) |
1,274 |
|
|
|
707 |
|
|
|
67 |
|
|
1,274 |
|
|
|
707 |
|
|
|
67 |
|
Average
sales price ($ per Boe) |
36.92 |
|
|
|
30.27 |
|
|
|
22 |
|
|
37.13 |
|
|
|
26.08 |
|
|
|
42 |
|
Operating expense ($ per Boe) |
8.51 |
|
|
|
9.92 |
|
|
|
(14 |
) |
|
8.36 |
|
|
|
10.08 |
|
|
|
(17 |
) |
Note: |
|
|
|
|
|
|
|
|
|
|
|
1 Funds flow from operations is a measure that
represents cash generated from operating activities before changes
in non-cash working capital and may not be comparable to measures
used by other companies. |
Average reference prices |
|
2017 |
|
2016 |
|
|
Q-2 |
|
Q-1 |
|
Q-4 |
|
Q-3 |
|
Q-2 |
Crude oil |
|
|
|
|
|
|
|
|
|
|
Dated
Brent average oil price (US$/Bbl) |
|
49.67 |
|
|
53.68 |
|
|
49.19 |
|
|
45.79 |
|
|
45.52 |
|
Edmonton
Sweet index (US$/bbl) |
|
46.03 |
|
|
48.37 |
|
|
46.18 |
|
|
41.99 |
|
|
42.51 |
|
Natural gas |
|
|
|
|
|
|
|
|
|
|
AECO
(C$/mmbtu) |
|
2.78 |
|
|
2.69 |
|
|
3.09 |
|
|
2.32 |
|
|
1.40 |
|
U.S./Canadian Dollar average exchange rate |
|
1.345 |
|
|
1.323 |
|
|
1.334 |
|
|
1.305 |
|
|
1.289 |
|
CORPORATE SUMMARY
TransGlobe Energy Corporation ("TransGlobe" or
the "Company") produced an average of 16,465 barrels of oil
equivalent per day ("boepd") during the second quarter of 2017,
which was within the full-year 2017 production guidance range of
15,500 to 16,500 boepd. Egypt production was 13,851 barrels
of oil per day ("bopd"), and Canada production was 2,614 boepd.
The Company completed one direct sale tanker
lifting during the quarter, consisting of 515,626 barrels of
entitlement crude oil. The tanker lifting was marketed by
Mercuria Energy Trading S.A., ("Mercuria") in June. Proceeds
of $18.5 million were received in July. The Company's next
cargo lifting from Egypt is scheduled for mid-September 2017. In
addition to the lifting the Company sold 302,648 barrels of
inventoried entitlement crude oil to the Egyptian General Petroleum
Company ("EGPC") during the second quarter for $12.5 million. The
EGPC proceeds were used to cover in-country expenditures during the
first half of 2017. All Canadian production was sold during the
quarter.
During the quarter TransGlobe entered into a
credit agreement for a revolving Canadian reserve-based lending
facility (“RBL”) with Alberta Treasury Branches (“ATB”). The
Company utilized funds available under the RBL to repay the
remaining C$13.6 million vendor-take-back loan outstanding.
Long-term debt net of working capital was $23.4 million as at June
30, 2017.
Dated Brent oil prices averaged $49.67 per
barrel in the second quarter of 2017. TransGlobe's Gulf of
Suez crude is sold at a quality discount to Dated Brent and
received a blended price of $39.31 per barrel during the
quarter. TransGlobe's Canadian production received an average
of $44.47 per barrel of oil and $2.14 per mcf of natural gas during
the second quarter. The Company had funds flow of $16.9
million ($0.23 per share) and ended the quarter with positive
working capital of $60.3 million, which includes cash and cash
equivalents of $21.6 million (including restricted cash).
The Company experienced a net loss in the
quarter of $56.6 million, which includes a $67.5 million non-cash
impairment loss on the Company's exploration and evaluation assets
at NW Gharib and a $6.6 million unrealized derivative gain on
commodity contracts (mark-to-market gain on the Company's hedging
contracts). The recoverable amount of the North West Gharib
cash-generating unit is $4.4 million. The Company's remaining NW
Gharib exploration and evaluation assets were written down to nil.
The impairment loss recognized in the quarter is a result of
reducing the overall carrying value of the North West Gharib
concession to the discounted present value of the internally
estimated proved plus probable reserves recognized as at the end of
the quarter. This impairment was taken after consideration of the
uncertainly of the timing of additional exploration and development
on the existing and pending development leases and the current
forward outlook for Gharib blend pricing. TransGlobe signed the
North West Gharib Production Sharing Agreement ("PSC") (won in the
EGPC bid round in 2011/2012) on November 7, 2013. The Company
entered into these exploration commitments when the oil price
environment was significantly stronger. Brent oil prices averaged
between $108 bbl to $112 bbl from 2011 to 2013.
The Company drilled five wells in Egypt during
the quarter resulting in three dry holes and two oil wells. The
second rig operating in the Eastern desert was released and is
currently stacked on the NWG license waiting to drill a side track
to NWG # 3A. There are three development leases pending approval on
the NWG license. The Company anticipates these will be
approved during the third quarter and expects to recommence a
drilling program in the Eastern desert when approval is
granted. Following the quarter end the Company commenced a
three well drilling program on the Harmattan property in Canada.
The Canadian program was reduced to three wells (from a four to
eight program) in response to lower commodity prices in Q2/Q3. With
two of the three wells drilled and cased, drilling costs are
trending 20% to 30% below plan due to drilling performance.
Following the quarter the Company completed the drilling and cased
the Boraq 5 well in the South Alamein concession in Egypt.
Two potential oil zones were encountered. The Company plans
to retest Boraq 2 and to test Boraq 5 in September/October.
Brent oil prices were weaker during the quarter
but have since firmed up to above $50 per barrel. The fundamentals
seem to be slowly improving (lower world inventories, increasing
demand). The selling differential for the Ras Gharib heavy
oil also is showing signs of improvement. The Company’s cost
structure for operating expenses and G&A has been improved
significantly over the past three years. The increased oil sales
during the quarter resulted in a significant improvement to funds
flow, posting the highest number in eight quarters.
Management will continue to steward the balance sheet
conservatively and focus on a return to profitability in this low
oil price environment.
The Company is investigating methods to increase
its liquidity and general market support, including alternative
listings.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
EASTERN DESERT
West Gharib, Arab Republic of Egypt
(100% working interest, operated)
Operations and Exploration
No wells were drilled during the second
quarter.
Production
Production from West Gharib averaged 6,389 Bopd
to TransGlobe during the second quarter, a 4% (293 Bopd) decrease
from the previous quarter. First quarter production additions from
the infill development wells in the Arta Red Bed pool were offset
by natural declines and well servicing of high volume
producers.
Production averaged 6,036 Bopd during July.
Sales
TransGlobe sold 302,648 barrels of inventoried
entitlement crude oil (after royalties and tax) to EGPC for $12.5
million in the second quarter of 2017 to cover in-country
expenditures. TransGlobe held 635,414 barrels of West Gharib
entitlement oil as inventory at the end of the second quarter.
Quarterly West
Gharib Production (Bopd) |
|
2017 |
|
2016 |
|
|
Q-2 |
|
Q-1 |
|
Q-4 |
|
Q-3 |
Gross production
rate |
|
6,389 |
|
|
|
6,683 |
|
|
6,601 |
|
|
6,629 |
|
|
TransGlobe working
interest |
|
6,389 |
|
|
|
6,683 |
|
|
6,601 |
|
|
6,629 |
|
|
TransGlobe inventory
held (lifted) |
|
(92 |
) |
|
|
3 |
|
|
3,339 |
|
|
(1,819 |
) |
|
Total sales |
|
6,481 |
|
|
|
6,680 |
|
|
3,262 |
|
|
8,448 |
|
|
Government share (royalties and tax) |
|
3,155 |
|
|
|
3,304 |
|
|
3,262 |
|
|
3,277 |
|
|
TransGlobe sales (after royalties and tax)1 |
|
3,326 |
|
|
|
3,376 |
|
|
— |
|
|
5,171 |
|
|
1 Under the terms of the West Gharib Production
Sharing Concession, royalties and taxes are paid out of the
Government's share of production sharing oil. |
West Bakr, Arab Republic of Egypt (100%
working interest, operated)
Operations and Exploration
During the second quarter, the K-47 development
well was drilled and cased as an Asl A oil well in the South-K
field. K-47 was drilled to a total depth of 1,372 meters
(4,500 feet) and encountered an internally estimated 23.5 meters
(77 feet) of net oil pay in the targeted Asl A formation. The
well was completed and put on production in late May and produced
at an average initial 30-day rate of 235 Bopd.
Further, the Company recompleted two wells in
the K field in late June, producing at a combined rate of 370
Bopd. Additional low cost, behind-pipe opportunities in the K
and H fields are being scheduled, with related production volumes
projected in the third and fourth quarter of 2017.
Production
Production from West Bakr averaged 6,085 Bopd to
TransGlobe during the second quarter, a 3% (199 Bopd) decrease from
the previous quarter, primarily due to well servicing and natural
declines.
Production averaged 5,751 Bopd during July.
Sales
TransGlobe lifted and sold 515,626 barrels of
Ras Gharib blend in June, all of which was allocated to West Bakr
entitlement crude inventory (after royalties and tax).
Subsequent to the quarter, the Company received $18.5 million
(~$37.72/barrel) for the June lifting, prior to hedging gains of an
additional $1.5 million. TransGlobe held 559,310 barrels of West
Bakr entitlement oil as inventory at the end of the second
quarter.
Quarterly West
Bakr Production (Bopd) |
|
2017 |
|
2016 |
|
|
Q-2 |
|
Q-1 |
|
Q-4 |
|
Q-3 |
Gross production
rate |
|
6,085 |
|
|
|
6,284 |
|
|
6,134 |
|
|
5,104 |
|
TransGlobe working
interest |
|
6,085 |
|
|
|
6,284 |
|
|
6,134 |
|
|
5,104 |
|
TransGlobe inventory
held (lifted) |
|
(3,202 |
) |
|
|
2,545 |
|
|
2,484 |
|
|
2,067 |
|
Total sales |
|
9,287 |
|
|
|
3,739 |
|
|
3,650 |
|
|
3,037 |
|
Government share (royalties and tax) |
|
3,621 |
|
|
|
3,739 |
|
|
3,650 |
|
|
3,037 |
|
TransGlobe sales (after royalties and tax)1 |
|
5,666 |
|
|
|
— |
|
|
— |
|
|
— |
|
1 Under the terms of the West Bakr Production Sharing
Concession, royalties and taxes are paid out of the Government's
share of production sharing oil. |
North West Gharib, Arab Republic of
Egypt (100% working interest, operated)
Operations and Exploration
During the second quarter, the Company
drilled one exploration well and two appraisal wells resulting in
one Red bed oil well and two dry holes.
NWG 38A 1 was drilled as an appraisal well to
the NWG-38A Red Bed oil producer (~600 Bopd) in the NWG Development
Lease #1 (“NWG DL #1”). The NWG 38A1 appraisal well was
drilled to a total depth of 5,100 ft. The well came in 115
feet structurally higher than NWG-38-A, and is internally estimated
to have 36.5 feet of tight Red Bed conglomerate oil pay. The
well started production in late June for an unstimulated production
test. The well is scheduled for stimulation during the third
quarter.
NWG 3A 1 was drilled as an appraisal well to
NWG-3X Red Bed oil producer (~600 Bopd) in NWG DL #1. NWG 3A
appraisal was drilled to a total depth of 5,150 feet. NWG-3A
encountered a thick Red Bed sequence (~270 feet) in a structurally
low position with an estimated 80 feet of high quality Red Bed
reservoir which was wet. NWG-3A was plugged back to the base
of surface casing and suspended for a future sidetrack.
The drilling rig was shut down and stacked on location following
the NWG 3A well which concluded the planned eastern desert drilling
program for the first half of 2017. It is expected that
drilling in the eastern desert could commence by the fourth
quarter, starting with a side track from NWG 3A 1 targeting the Red
Bed in an up dip structural position.
The NWG 40 B exploration well, was drilled to a
depth of 5,322 feet, fully satisfying all first phase work
commitments for the NWG Concession. The well was abandoned
after encountering wet Red Bed reservoir.
Subsequent to the quarter, NWG 16X (tight Red
Bed conglomerate discovery in 2014) in NWG DL #1 was stimulated,
tied into the NWG early production facility (EPF) and placed on
production averaging approximately 100 Bopd over the first 30 days
(IP30).
In addition, the Company completed and
stimulated one well on each of the NWG 1 and NWG 5 discoveries
(discovered in 2014) in late March. Both wells were put on
short term pump production tests to partially recover the
stimulation fluid and establish new oil production from the
discoveries. The wells produced ~150 to 180 Bopd.
Following the short production tests, the wells were shut-in
pending approval of the respective development leases. The
Company filed development lease applications for the NWG 1 and NWG
5 discoveries prior to May 6th, which was the expiry date of the
first exploration phase on NWG. It is expected that new
development leases could receive approval from the Minister of Oil
during the third quarter.
The NWG 5 discovery is an upper Nukhul discovery
similar to and located immediately south of the Arta Upper Nukhul
pool in the West Gharib concession. The NWG 5 discovery wells
(discovery well and one appraisal well) are expected to produce at
similar rates to TransGlobe’s Arta Nukhul wells which typically
have an initial 30 day production rate (IP 30) of 150-180 Bopd with
ultimate recoveries of 120-150 MBbls per well on primary
production.
The NWG 1 discovery is located immediately north
of the Arta Red Bed (Lower Nukhul) pool in the West Gharib
concession. The NWG 1 wells (discovery well and one appraisal
well) encountered a tight Red Bed conglomerate sequence which
requires stimulation to produce. Longer-term production from
the NWG 1 wells will be required to establish expected per well
recoveries and the associated reserve assignments.
In addition, the Company filed a development
lease application for the area immediately north of NWG DL #1 on
May 3 which includes the NWG 26 and 27 discovery wells.
TransGlobe has fully evaluated the NWG
exploration lands and all commitments have been met at the end of
the first exploration period (May 6, 2017). The Company has elected
not to enter the second exploration period and has filed
development lease applications on the discovery areas. The
Company has relinquished the remaining exploration lands that are
not covered by development lease applications.
Production
Production from NW Gharib averaged 1,377 Bopd to
TransGlobe during the second quarter, a 40% (395 Bopd) increase
from the previous quarter, primarily due to well optimization at
NWG 3.
Production has averaged 1,187 Bopd during
July.
Sales
TransGlobe did not sell its entitlement share of
production (after royalties and tax) from NWG during the quarter,
which resulted in an ending inventory position (under-lift) of
79,334 barrels.
Quarterly North
West Gharib Production (Bopd) |
|
2017 |
|
2016 |
|
|
|
Q-2 |
|
Q-1 |
|
Q-4 |
|
Q-3 |
|
Gross production
rate |
|
1,377 |
|
|
982 |
|
|
55 |
|
|
— |
|
TransGlobe working
interest |
|
1,377 |
|
|
982 |
|
|
55 |
|
|
— |
|
TransGlobe inventory
held (lifted) |
|
499 |
|
|
356 |
|
|
20 |
|
|
— |
|
Total sales |
|
878 |
|
|
626 |
|
|
35 |
|
|
— |
|
Government share (royalties and tax) |
|
878 |
|
|
626 |
|
|
35 |
|
|
— |
|
TransGlobe sales (after royalties and tax)1 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
1 Under the terms of the North West Gharib Production Sharing
Concession, royalties and taxes are paid out of the Government's
share of production sharing oil. |
|
South West Gharib, Arab Republic of
Egypt (100% working interest, operated)
Operations and Exploration
No wells were drilled during the second
quarter. The Company elected to relinquish the
concession following completion of the first phase exploration
commitment work program.
WESTERN DESERT
South Alamein, Arab Republic of Egypt
(100% working interest, operated)
Operations and Exploration
The Boraq 5, commenced drilling in May, to test
the down dip extent of the two pools discovered at Boraq 2. The
Boraq 5 well has encountered significant drilling
difficulties. The first attempt to reach the target
encountered significant caving and lost circulation resulting in a
requirement to sidetrack the well to a different location. The well
reached a total depth of 8,900 feet measured depth and encountered
up to 15 feet of possible pay in the AR ‘G’ Cretaceous oil
pool. The well missed the AR-E channel sands. The well
was therefore plugged back and again sidetracked to a structurally
up dip location targeting AR-E channel and the AR-G pool. The side
track also encountered significant drilling difficulties but
eventually reached a total depth of 8,755 feet measured depth and
encountered six feet of AR E channel and 19 feet AR G
formation. The well was cased as a potential oil well, which
will be tested following the Boraq 2 test. The drilling rig
is now released and a work over rig will be mobilized for the two
well testing program.
The initial drilling campaign consists of one
well (Boraq 5) on the Boraq structural complex plus re-entering the
Boraq 2 discovery well for additional testing. Successful
appraisal wells could lead to filing a Boraq development plan as
early as Q3/Q4-2017 with first production targeted to year-end
2017/early 2018. In parallel, the Company is evaluating the
remaining exploration prospects on the concession, targeting an
exploration drilling program commencing in late 2017 and extending
into 2018. The South Alamein concession contains the Boraq 2X
discovery and several additional exploration targets. The
Boraq 2X discovery tested approximately 1,600 Bopd from two
zones. The primary Cretaceous zone tested at a rate of 800 to
1,323 Bopd of 34 API oil with no water and a 13% pressure drawdown
during a 28 hour drill stem test (DST). A secondary
Cretaceous zone tested at a rate of 274 Bopd of 32-35 API oil and
4% water during a 23 hour DST. Test rates are not necessarily
indicative of long-term performance or ultimate recovery.
South Ghazalat, Arab Republic of Egypt
(100% working interest, operated)
Operations and Exploration
At South Ghazalat, the Company has met all
financial commitments for the first exploration phase and is
targeting to have a drill-ready prospect inventory prepared during
2017. South Ghazalat could be drilled (two wells) in
conjunction with North West Sitra in the 2018 exploration
program.
North West Sitra, Arab Republic of Egypt
(100% working interest, operated)
At NW Sitra, the Company completed the 600 km2
seismic acquisition program at the end of March. The new data
is being processed with prospect mapping planned for the second
half of 2017.
CANADA
Operations and Exploration
No wells were drilled during the second
quarter.
TransGlobe took over field operations on
February 1st and initiated surface land acquisition/permitting for
up to eight wells in the Harmattan area. The initially
planned 2017 program consisted of up to eight horizontals
(multi-stage frac) wells targeting the Cardium light oil resource
at Harmattan. In light of reduced commodity prices in Q2 the
Company reduced the initial program to three wells which, commenced
July 19th. The first well was drilled to a total depth of
3,541 meters (11,579 feet) measured depth and cased as a potential
Cardium oil well. The second well was drilled to a total
depth of 3,703 meters (12,146 feet) measured depth and cased as a
potential Cardium oil well. The third well is currently
drilling. The three wells are being drilled from the same
well pad with one mile horizontals. The planned completion program
for each well is a 40 stage frac with approximately 15 tonnes of
proppant per stage. The Company is targeting to have the
wells completed and place on production by the end of the third
quarter.
The wells were estimated to cost C$2.5 - C$2.7
million per well to drill, completed and place on production.
The Company continues to evaluate properties for
acquisition in the greater Harmattan area.
Production
Production from Canada averaged 2,613 Boepd to
TransGlobe during the second quarter, a 6% (169 Bopd) decrease from
the previous quarter.
Production has averaged 2,636 Boepd during
July.
Quarterly
Canada Production (Boepd) |
|
|
|
|
|
|
|
|
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
Q-2 |
|
Q-1 |
|
Q-4 |
|
Q-3 |
Canada crude oil
(bbls/d) |
|
|
|
|
|
|
|
|
|
|
496 |
|
|
565 |
|
|
18 |
|
|
— |
|
Canada NGLs
(bbls/d) |
|
|
|
|
|
|
|
|
|
|
919 |
|
|
1,037 |
|
|
34 |
|
|
— |
|
Canada natural gas
(mcf/d) |
|
|
|
|
|
|
|
|
|
|
7,191 |
|
|
7,075 |
|
|
230 |
|
|
— |
|
Total
production (boe/d) |
|
|
|
|
|
|
|
|
|
|
2,613 |
|
|
2,782 |
|
|
90 |
|
|
— |
|
READER ADVISORIES
Forward-Looking Statements
This news release may include certain statements
that may be deemed to be “forward-looking statements” within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995. Such statements relate to possible future events. All
statements other than statements of historical fact may be
forward-looking statements. Forward-looking statements are often,
but not always, identified by the use of words such as “seek”,
“anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”,
“will”, “project”, “predict”, “potential”, “targeting”, “intend”,
“could”, “might”, “should”, “believe” and similar expressions.
These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements. Although TransGlobe’s forward-looking statements are
based on the beliefs, expectations, opinions and assumptions of the
Company’s management on the date the statements are made, such
statements are inherently uncertain and provide no guarantee of
future performance. In particular, this press release contains
forward-looking statements regarding the Company's appraisal,
development and evaluation plans and the focus of the Company's
exploration and development budget. In addition, information and
statements relating to “resources” are deemed to be forward-looking
information and statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the resources
described exist in the quantities predicted or estimated, and that
the resources described can be profitably produced in the future.
Actual results may differ materially from TransGlobe’s expectations
as reflected in such forward-looking statements as a result of
various factors, many of which are beyond the control of the
Company. These factors include, but are not limited to, 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 and natural
gas 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,
and other factors beyond the Company’s control. With respect to
forward-looking statements contained in this press release,
assumptions have been made regarding, among other things: 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; and the geography of the areas in which the
Company is conducting exploration and development activities.
TransGlobe does not assume any obligation to update forward-looking
statements if circumstances or management’s beliefs, expectations
or opinions should change, other than as required by law, and
investors should not attribute undue certainty to, or place undue
reliance on, any forward-looking statements. 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.
For further information, please contact:
Investor Relations
Telephone: (403) 264-9888
Email: investor.relations@trans-globe.com
Web site: www.trans-globe.com
OR
Public Relations
FTI Consulting
+44 (0) 203 727 1000
Ben Brewerton / Ed Westropp / Emerson Clarke
energy@fticonsulting.com
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