TransGlobe Energy Corporation (TSX:TGL) (NASDAQ:TGA)
(“TransGlobe” or the “Company”) announces the 2018 capital budget
and promotions.
All dollar values are expressed in US
dollars unless otherwise stated.
HIGHLIGHTS
- 2018 capital budget of $41.3 million (before capitalized
G&A) - Egypt $29.1 million - Canada
$12.2 million (C$15.3 million)
- 2018 production of 14.2 to 15.6 MBoepd with a mid-point of 14.9
MBoepd - Egypt 12.0 to 13.0 MBopd in 2018 -
Canada 2.2 to 2.6 MBoepd in 2018
- 2018 drilling program includes 5 Western Desert exploration
wells, 8 Eastern Desert development wells and 6 Canadian horizontal
Cardium wells
- Randy Neely is promoted to President and Edward Ok is promoted
to VP Finance and CFO
2018 CAPITAL GUIDANCE
The Company’s 2018 capital program of $41.3
million (before capitalized G&A) includes $29.1 million for
Egypt and $12.2 million (C$15.3 million) for Canada. The 2018
capital program is balanced to anticipated funds flow using a
$55/bbl Brent oil price forecast. The capital program may be
increased if the recent run-up in Brent prices is sustained.
Egypt
The $29.1 million Egypt program has $11.8
million (41%) allocated to exploration and $17.3 million (59%) to
development. The $11.8 million 2018 exploration program is
focused entirely on the Western Desert with 5 exploration wells
planned (2 wells in South Ghazalat, 2 wells in NW Sitra and 1 well
in South Alamein). The $17.4 million 2018 development program
is focused entirely on the Eastern Desert which includes: 8
development wells (5 in West Bakr, 2 in NW Gharib and 1 in West
Gharib) and development/maintenance projects in West Bakr, NW
Gharib and West Gharib.
The primary focus of the 2018 Egypt plan is to
sustain/grow Eastern Desert production and to evaluate the
Company’s 1 million+ acres of exploration lands. The exploration
program is designed to test an independent structure at South
Alamein to prove up additional oil reserves on the concession and
to test four independent structures on South Ghazalat and N.W.
Sitra. The South Ghazalat and N.W. Sitra exploration wells
are basin opening wells which could also de-risk 13 of the 21
additional prospects mapped on 3-D seismic. No production is
budgeted from the Western Desert exploration assets in 2018.
Canada
The $12.2 million (C$15.3 million) Canada
program consists of 6 (5.5 net) horizontal (multi-stage frac) wells
targeting the Cardium light oil resource at Harmattan and
additional maintenance/development capital. The Cardium
drilling program in 2018 provides growth in oil and liquids
production. The development program is expected to increase
the Canadian oil and liquids weighting to 67% from 60% in 2017.
The 2018 well design will be similar to the 2017
which targeted one mile horizontal laterals with multi-stage
facture stimulations placing ~600 tonnes of proppant per
well. The final 2018 completion design will incorporate
lessons learned and results from the 2017 program. Based on
2017 results, the Company is budgeting ~$2.0 million (C$2.5
million) per well to drill, complete, equip and tie-in for the 2018
program.
The approved 2018 capital program is summarized
in the following table:
Concession |
|
TransGlobe 2018 Capital ($MM) |
|
|
|
Gross Well Count |
|
|
Development |
|
Exploration |
|
Total |
|
(Drilling) |
|
|
Wells* |
|
Other |
|
|
Wells |
|
Other |
|
|
|
|
|
Devel |
|
Explor |
|
Total |
West Gharib |
|
|
2.6 |
|
|
1.1 |
|
|
|
— |
|
|
— |
|
|
|
|
3.7 |
|
|
1 |
|
|
— |
|
|
— |
|
|
West Bakr |
|
|
7.3 |
|
|
3.1 |
|
|
|
|
— |
|
|
— |
|
|
|
|
10.4 |
|
|
5 |
|
|
— |
|
|
5 |
|
|
NW Gharib |
|
|
2.4 |
|
|
0.9 |
|
|
|
|
- |
|
|
- |
|
|
|
|
3.3 |
|
|
2 |
|
|
- |
|
|
2 |
|
|
NW Sitra |
|
|
— |
|
|
— |
|
|
|
|
5.2 |
|
|
0.2 |
|
|
|
|
5.4 |
|
|
— |
|
|
2 |
|
|
2 |
|
|
South Ghazalat |
|
|
— |
|
|
— |
|
|
|
|
3.3 |
|
|
0.2 |
|
|
|
|
3.5 |
|
|
— |
|
|
2 |
|
|
2 |
|
|
South
Alamein |
|
|
— |
|
|
— |
|
|
|
|
2.8 |
|
|
- |
|
|
|
|
2.8 |
|
|
— |
|
|
1 |
|
|
1 |
|
|
Egypt |
|
$ |
12.3 |
|
$ |
5.1 |
|
|
|
$ |
11.342 |
|
$ |
0.4 |
|
|
|
$ |
29.1 |
|
|
8 |
|
|
5 |
|
|
13 |
|
|
Canada |
|
$ |
11.2 |
|
$ |
1.1 |
|
|
|
|
— |
|
|
— |
|
|
|
$ |
12.2 |
|
|
6 |
|
|
— |
|
|
6 |
|
|
Total
2018 |
|
$ |
23.4 |
|
$ |
6.6 |
|
|
|
$ |
11.3 |
|
$ |
0.4 |
|
|
|
$ |
41.3 |
|
|
14 |
|
|
5 |
|
|
19 |
|
|
Splits (%) |
|
|
71% |
|
|
29% |
|
|
100 |
% |
|
74 |
% |
|
26 |
% |
|
100 |
% |
|
*Wells includes new wells, completions,
workovers, recompletions and equipping.
2018 PRODUCTION OUTLOOK
The 2018 production outlook for the Company is
provided as a range to reflect timing and performance
contingencies.
Total corporate production is expected to range
between 14.2 MBoepd and 15.6 MBoepd for 2018 (mid-point of 14.9
MBoepd) with a 94% weighting to oil and liquids. Egypt
oil production is expected to range between 12.0 and 13.0 MBopd in
2018. Canadian production is expected to range between 2.2
and 2.6 MBoepd in 2018, adjusting for a one month shut-in for plant
and facility turn-arounds scheduled for May in the Harmattan area.
The May shut-in reduces corporate production by approximately 200
Boepd on an annualized basis.
MANAGEMENT PROMOTIONS
As part of TransGlobe’s succession plan, the
Company is pleased to announce that Randy Neely has been promoted
to President and Edward Ok has been promoted to VP Finance and CFO,
effective immediately. Randy Neely has served as TransGlobe’s
VP Finance and CFO since joining the Company in 2012. Eddie
Ok initially joined the Company as Deputy Finance Manager in the
Company’s Cairo office in 2012 and then became the Company
Controller based in Calgary in January 2015.
Prior to joining TransGlobe, Mr. Neely spent 19
years in executive and financial positons, including CFO at Pearl
(Blackpearl) Exploration, Zodiac Exploration and Trident
Exploration. Prior to that he had spent three and a half
years with TD Securities investment banking and eight years in
various positions with KPMG.
Prior to joining TransGlobe, Mr. Ok was most
recently at Zodiac Exploration and has over 10 years of corporate
finance and accounting experience. Mr. Ok holds a Bachelor of
Commerce from the University of Alberta, is a Chartered Accountant
licensed in the Province of Alberta and a Certified Public
Accountant licensed in Washington State.
Mr. Ross Clarkson, CEO, stated: “I am very
pleased to have Randy and Eddie moving into levels of increased
responsibility in the organization. They have both
demonstrated the leadership, initiative and ability to drive the
future growth of the Company. Randy has been instrumental in
navigating the difficulties and challenges the Company has faced as
a result of the downturn in oil prices over the past three years
including the refinancing of our convertible debentures in Q1
2017. Randy is very well known by all of our large
shareholders and credit holders and has been working closely with
the key decision makers within the Ministry of Petroleum and EGPC
over the past five plus years. These promotions recognize
their demonstrated strength as leaders within the
organization”.
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.com Web site:
http://www.trans-globe.com |
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