TransGlobe Energy Corporation (“TransGlobe” or the “Company”)
(TSX:TGL) (NASDAQ:TGA) announces an operational update.
All dollar values are expressed in US dollars unless
otherwise stated.
Highlights
- Annual 2017 average production is trending to ~15.4 MBoepd, a
27% increase over 2016
- Lifted and sold ~510 thousand barrels of entitlement crude oil
in Egypt in late November for estimated net proceeds of
approximately $24.5 mm (inclusive of realized hedging loss and
marketing costs).
- Three Cardium Hz wells in Canada placed on production during
October, averaging ~196 Boepd/well (85% oil & liquids) during
first 30 days of continuous production.
- Drilled and cased NWG 38A2 appraisal Red Bed oil well in
November.
PRODUCTION
Corporate production is expected to average
~15.4 MBoepd for 2017 (12.8 Mbopd from Egypt and 2.6 MBoepd from
Canada) representing an increase of ~3.3 MBoepd or 27% over 2016
production of 12.1 MBoepd. Corporate production in 2017 was 93%
weighted to oil and liquids (7% weighted to natural gas in Canada)
providing excellent torque to strengthening oil prices.
In Egypt, production was impacted by the release
of the workover rig in early August due to escalating safety and
performance issues. A replacement rig was contracted and
mobilized in late September and a second workover rig was
operational December 1st. The reduction of the backlog of well
workovers is anticipated in early 2018 with two workover rigs in
operation.
In Canada, the company equipped and tied in the
three new Cardium horizontal wells during October. It is early
days, but using the first 30 calendar days of stabilized
production, the new wells averaged 589 Boepd (509 Bpd of oil and
liquids) or 196 Boepd/well. In aggregate the wells have exceeded
TransGlobe’s internal IP30 estimate of 184 boepd. Two of the wells
had IP30 rates of 259 boepd and 209 boepd respectively with the
third well having an IP30 rate of 120 boepd. The poorer performing
well experienced pressure communication with an offset well during
completions and subsequently only 85% of the planned frac sand
tonnage was placed in formation. All three wells have significant
fluid levels, so it may take several months of production to
drawdown the wells sufficiently to evaluate the wells performance
from the respective horizontal sections. Early production generally
comes from the heel of the well, where the pressure drawdown is the
greatest. These early results are very encouraging. The Company is
therefore planning for an expanded Cardium drilling campaign for
2018.
MARKETING
In Egypt, the Company lifted and sold ~510,000
barrels of entitlement oil in November for net proceeds of ~$24.5
million (inclusive of realized hedging loss and marketing costs).
Based on estimated sales and production for Q4, it is expected that
the Company will exit 2017 with approximately 800 thousand barrels
of inventoried entitlement crude oil, representing a 35% reduction
from December 2016.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
Subsequent to the third quarter press release
(November 9, 2017), the Company drilled NWG 38A2 which was cased as
a Red Bed oil well in the NWG 38 pool. The NWG 38 A2 appraisal well
was drilled to a total depth of 5,315 feet and encountered
approximately 112 feet of Red Bed formation with an estimated 17
feet of net oil pay based on open-hole logs and MDT samples. The
well is scheduled for completion in early 2018 and will be tied
into the NWG early production facility (“EPF”).
NWG 38 A2 is located approximately 0.4 km west
of the NWG 38 A discovery well and intersected the NWG 38 red bed
pool in a structurally lower position (~43 feet lower) increasing
the known “oil down to” for the 38A pool, which is currently
producing ~700 Bopd from two wells. Based on NWG 38A2 pressure
data, the company has initiated permitting to drill a structurally
down dip injector and commence a pressure maintenance scheme (water
flood) in the first half of 2018 to increase recoveries similar to
the Arta Red Bed pool in the adjacent West Gharib Concession. The
drilling rig is stacked on site pending approval of additional
drilling locations in the Eastern Desert concessions in early 2018.
The Company is currently finalizing the 2018 work plan and budget
which will be announced in January.
About TransGlobe
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 an outlook. In particular, forward-looking information
and statements contained in this document include, but are not
limited to, anticipated drilling, completion and testing plans,
including, the anticipated timing thereof, prospects being targeted
by the Company, and rig mobilization plans; expected future
production from certain of the Company's drilling locations;
TransGlobe's plans to drill additional wells, including the types
of wells, anticipated number of locations and the timing of
drilling thereof; the timing of rig movement and mobilization and
drilling activity; the Company's plans to file development lease
applications for certain of its discoveries, including the expected
timing of filing of such applications and the expected timing of
receipt of regulatory approvals; anticipated production and
ultimate recoveries from wells; the Company’s plans at South
Alamein, to potentially file a development plan (including the
expected timing thereof) the Company's initial drilling program at
Harmattan, including the anticipated timing of wells on production;
TransGlobe's plans to continue exploration, development and
completion programs in respect of various discoveries; future
requirements necessary to determine well performance and estimated
recoveries; and other matters.
Forward-looking statements or information are
based on a number of factors and assumptions which have been used
to develop such statements and information but which may prove to
be incorrect. Although the Company believes that the expectations
reflected in such forward-looking statements or information are
reasonable, undue reliance should not be placed on forward-looking
statements because the Company can give no assurance that such
expectations will prove to be correct. Many factors could cause
TransGlobe's actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or
on behalf of, TransGlobe.
In addition to other factors and assumptions
which may be identified in this news release, assumptions have been
made regarding, among other things, anticipated production volumes;
the timing of drilling wells and mobilizing drilling rigs; the
number of wells to be drilled; the Company's ability to obtain
qualified staff and equipment in a timely and cost-efficient
manner; the regulatory framework governing royalties, taxes and
environmental matters in the jurisdictions in which the Company
conducts and will conduct its business; future capital expenditures
to be made by the Company; future sources of funding for the
Company's capital programs; geological and engineering estimates in
respect of the Company's reserves and resources; the geography of
the areas in which the Company is conducting exploration and
development activities; current commodity prices and royalty
regimes; availability of skilled labour; future exchange rates; the
price of oil; the impact of increasing competition; conditions in
general economic and financial markets; availability of drilling
and related equipment; effects of regulation by governmental
agencies; future operating costs; uninterrupted access to areas of
TransGlobe's operations and infrastructure; recoverability of
reserves and future production rates; that TransGlobe will have
sufficient cash flow, debt or equity sources or other financial
resources required to fund its capital and operating expenditures
and requirements as needed; that TransGlobe's conduct and results
of operations will be consistent with its expectations; that
TransGlobe will have the ability to develop its properties in the
manner currently contemplated; current or, where applicable,
proposed industry conditions, laws and regulations will continue in
effect or as anticipated as described herein; that the estimates of
TransGlobe's reserves and resource volumes and the assumptions
related thereto (including commodity prices and development costs)
are accurate in all material respects; and other matters.
Forward-looking statements or information are
based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause
actual results to differ materially from those anticipated by the
Company and described in the forward-looking statements or
information. These risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements or
information include, among other things, operating and/or drilling
costs are higher than anticipated; unforeseen changes in the rate
of production from TransGlobe's oil and gas properties; changes in
price of crude oil and natural gas; adverse technical factors
associated with exploration, development, production or
transportation of TransGlobe's crude oil reserves; changes or
disruptions in the political or fiscal regimes in TransGlobe's
areas of activity; changes in tax, energy or other laws or
regulations; changes in significant capital expenditures; delays or
disruptions in production due to shortages of skilled manpower
equipment or materials; economic fluctuations; competition; lack of
availability of qualified personnel; the results of exploration and
development drilling and related activities; obtaining required
approvals of regulatory authorities; volatility in market prices
for oil; fluctuations in foreign exchange or interest rates;
environmental risks; ability to access sufficient capital from
internal and external sources; failure to negotiate the terms of
contracts with counterparties; failure of counterparties to perform
under the terms of their contracts; and other factors beyond the
Company's control. Readers are cautioned that the foregoing list of
factors is not exhaustive. Please consult TransGlobe’s public
filings at www.sedar.com and www.sec.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.
Oil and Gas Advisories
BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of six thousand cubic feet of
natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based
on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil as compared to natural gas is significantly different
from the energy equivalency of 6:1, utilizing a conversion on a 6:1
basis may be misleading as an indication of value.
References in this press release to production
test rates, are useful in confirming the presence of hydrocarbons,
however such rates are not determinative of the rates at which such
wells will commence production and decline thereafter and are not
indicative of long term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production for TransGlobe. A
pressure transient analysis or well-test interpretation has not
been carried out in respect of all wells. Accordingly, the Company
cautions that the production test results should be considered to
be preliminary.
Certain type curve information included to in
this news release, including IP30, represents estimates of the
production decline and ultimate volumes expected to be recovered
from wells over the life of the well. This information is based on
management-generated type curves based on a combination of
historical performance of older wells and management's expectation
of what might be achieved from future wells. The information
represents what management thinks an average well will achieve.
Individual wells may be higher or lower but over a larger number of
wells management expects the average to come out to the type curve.
Over time type curves can and will change based on achieving more
production history on older wells or more recent completion
information on newer wells.
The following abbreviations used in this press
release have the meanings set forth below:
Bopd
barrels of oil per dayBoepd barrels of oil
equivalent per dayGJ/d giga joules
per day$C/JG Canadian dollars per giga
joule
For further information, please contact:
Investor RelationsTelephone: 403.444.4787 Email:
investor.relations@trans-globe.comWeb
site: http://www.trans-globe.com
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