TransGlobe Energy Corporation (TSX:TGL) (NASDAQ:TGA)
(“TransGlobe” or the “Company”) announces a mid-second quarter 2018
update.
All dollar values are expressed in US dollars
unless otherwise stated.
Highlights
- Published AIM listing documents June 1st, 2018; application has
been made for admission to trading in London on June 29th
- Drilled three oil wells during the quarter (K45, Arta 54, NWG
38A-Inj)
- Stimulated four oil wells during the quarter (Arta 48 & 54,
NWG 1AX & 5X)
- Two cargoes sold during the second quarter (452 Mbbls April 7th
and 450 Mbbls June 15th), next cargo scheduled for mid-July
- Mobilized two drilling rigs to the western desert (NW Sitra)
for the 2018 exploration drilling program. Expect to commence
drilling at NW Sitra 9 and at NW Sitra 12, prior to month end
following rig inspections and acceptance testing
- Completed the planned three week turnaround at Harmattan during
May and back on production May 26th
- Acquired 100% working interest in 16 sections (10,240 acres) of
Cardium rights at Crown land sales year to date on a Cardium
prospect south/south west of Harmattan pool
PRODUCTION
Corporate production averaged ~14.3 MBoepd
during April, ~12.4 MBoepd during May and has averaged ~14.8 MBoepd
to date in June. May production was impacted by a planned
shut in of Canadian production associated with a turnaround at a
third party operated gas plant in the Harmattan area.
Production Summary:
(MBoepd) |
April |
May |
June (to date) |
Egypt |
11.9 |
11.6 |
12.0 |
Canada |
2.4 |
0.8 |
2.8 |
Total |
14.3 |
12.4 |
14.8 |
Note: In addition to the planned May turnaround
at Harmattan, the Company shut in an additional 80 Boepd of natural
gas production on May 11th due to low gas prices.
MARKETING
In Egypt, the Company completed two crude oil
cargo sales during the quarter. The first cargo was lifted in
April (452,000 barrels) for proceeds of ~$26.5 million and the
second cargo was lifted in June (~450,000 barrels) with proceeds
due in mid-July.
In addition, the Company sold an additional
~82,000 barrels of entitlement oil directly to EGPC during April
for proceeds of $4.6 million to offset local expenses.
The Company is scheduled to lift a third cargo
in mid-July, and expects to finalize the timing of the fourth cargo
with EGPC in Q3/Q4.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
Eastern DesertThe Company
drilled three oil wells during the second quarter at K-45, Arta 54
and NWG 38A-Inj.
In West Bakr the K-45 well was the second South
K-field well this year, targeting the main Asl A sand in a crestal
position in South K-field. The well was drilled to a total
depth of 5,831 feet and encountered the main Asl A sand
approximately 66 feet structurally higher than the K-46 well and is
structurally the highest well in South K-field Asl A & B
pools. The K-45 well encountered an internally estimated 195
feet of net oil pay comprising 120 feet of net oil pay in the Asl A
pool (A1, A2 and A3) and 75 feet of net oil pay in the Asl B pool.
The K-45 well was completed during May in the Asl B formation and
is currently producing at a rate of 380 Bopd.
In West Gharib the Arta 54 well was the second
well drilled this year in the boundary area between the Arta pool
and the offsetting NWG development lease #3. Arta 54 was
drilled to a total depth of 3,711 feet and encountered
approximately 128 feet of Nukhul/Red Bed formation with an
internally estimated 24.5 feet of net oil pay. The well was
completed and placed on production at a pre-frac rate of 60+
Bopd. Arta 54 was facture stimulated and will be placed back
on production this week.
In NorthWest Gharib (“NWG”) the NWG 38A-Inj well
was planned as a water injector to provide reservoir pressure
support to enhance recovery for the pool. The well was
drilled to a total depth of 5,552 feet and encountered 92 feet of
Red Bed with an internally estimated net oil pay of approximately
34 feet (scheduled for completion as an oil well prior to the end
of June). This well has extended the NWG 38 pool red bed zone to
the South by 0.4 kilometers and is approximately 83 feet
structurally lower than the NWG 38A-2 well which was the previous
lowest known oil in the pool. With the NWG 38A-Inj well
results, the current known oil column in the NWG 38A pool is
approximately 575 feet. The Company will now drill NWG 38A-7,
located approximately 0.4 kilometers southeast of NWG 38A-Inj,
targeting the same red bed pool in a structurally lower
position. Should the NWG 38A-7 well also encounter additional
oil column, the Company has planned an additional well further
south at NWG 38A-8 as a contingency for reservoir pressure
support.
The drilling rig has been temporarily stacked at
NWG 38A-Inj pending military approvals of the NWG 38A-7 well and
two wells in M field at West Bakr which are expected by end of
June. It is expected that the three well drilling program
will be completed in early Q3.
The Company also completed a four well (Arta 48,
Arta 54, NWG 1AX, NWG 5X) stimulation program during May/June
targeting Nukhul and tight Red Bed conglomerate wells. The
wells have all been fraced and are being placed on production for
post frac clean up. It is expected that each of the wells
will produce at an initial 30 day average rate of 120 to 150 Bopd
after recovering frac fluid based on offsetting producers.
Western DesertIn North West
Sitra (“NWS”) the Company began mobilizing two drilling rigs to
location the second week of June. The smaller 1,000 HP
drilling rig is rigging up at NWS 9 and the larger 2,000 HP
drilling rig is moving to NWS 12. It is expected that
drilling will commence prior to month end following the respective
inspection/acceptance processes.
NWS 9 is targeting a stacked Cretaceous prospect
with a planned drilling time of approximately 30 days. NWS 12 is
targeting a deeper stacked Cretaceous/Jurassic prospect with a
planned drilling time of approximately 60 days.
In addition, well site preparation is underway
on South Ghazalat (“SG”) for the planned SG 1 and SG 2 exploration
wells. SG 1 and SG 2 are targeting multi-stacked Cretaceous
prospects.
The 1,000 HP drilling rig (currently on NWS 9)
will be used to drill SG 1 and 2, following drilling/testing of NWS
9.
In South Alamein, the Company has received a
seven month extension to the PSC to allow further time for military
approvals of drilling locations.
CANADA
During the scheduled May shut down period, the
Company completed inspection/maintenance work on the main oil
processing battery and the main natural gas compressor for the
Harmattan area.
Concurrently the Company is finalizing the 2018
Cardium drilling program, which is scheduled to commence in
August. The 2018 Cardium development program of up to six
horizontal wells is planned to be drilled from a common pad to
improve efficiencies and reduce costs. The Company is planning
to drill one two-mile extended reach horizontal (“ERH”) well to
evaluate the performance of ERH wells in the Harmattan area.
The remainder of the 2018 program will be one-mile horizontal
wells.
Also, during 2018 the Company has acquired 100%
working interest in 16 sections (10,240 acres) of Cardium rights at
Crown land sales (March and May) on a Cardium prospect south/south
west of the Harmattan pool. Based on historical well logs and
core data on the lands and offsetting lands, the Company believes
that a significant portion of the acreage is prospective for
Cardium oil development utilizing the horizontal well multi-stage
frac technology employed in the adjacent Harmattan pool. The
Harmattan pool has been developed by drilling four wells per
section. The Company is evaluating the merits of drilling an
exploratory horizontal well on the new lands as part of the 2018
development drilling program or the 2019 program.
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, the Company's intention to seek a listing on
AIM to enhance liquidity for the Company’s shareholders and provide
more direct access to the London capital markets; the date that
Admission is expected to become effective and dealings will
commence; the Company's strategy to grow its annual cash flow;
expectations regarding its acquisition efforts; the suitability of
the Company for the London capital markets; 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
negotiate future military access (including the expected timing
thereof) the Company's 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.
In making the forward-looking statements
contained in this document, the Company has made assumptions
regarding, but not limited to: the process and requirements to list
on AIM; assumptions regarding expected liquidity for the Company’s
shareholders; access to, and receptivity of, the London capital
markets; the date that Admission is expected to become effective
and dealings will commence. 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, including uncertainty in obtaining
required approvals from TransGlobe's nominated advisor; uncertainty
in obtaining required approvals from the London Stock Exchange;
failure to achieve the perceived benefits of the AIM market;
general economic and financial conditions of the AIM market; and
other factors beyond the Company's control.
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
Mr. Brett Norris, M.Sc., P Geo, - Vice President
Exploration 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
and approved the technical information contained in this
announcement. Mr Norris obtained a Master’s of Science Degree in
Geology from the University of Western Ontario. He is a
Registered Professional Geoscientist in the province of Alberta and
has of 30 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.
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 in this
news release, 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: 403.264.9888 Email:
investor.relations@trans-globe.com Web site:
http://www.trans-globe.com |
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