TIDMTGL
RNS Number : 3885M
TransGlobe Energy Corporation
21 January 2021
This Announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR"). Upon
the publication of this Announcement, this inside information is
now considered to be in the public domain.
TRANSGLOBE ENERGY CORPORATION ANNOUNCES
AN OPERATIONS UPDATE
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, January 21, 2021 - TransGlobe Energy
Corporation ("TransGlobe" or the "Company") announces an operations
update. All dollar values are expressed in US dollars unless
otherwise stated.
UPDATES
-- Production averaged 12.4 MBoepd in Q4, 2020 and 13.5 MBoepd
for the year ended 2020, meeting updated guidance of 13.3 to 13.8
MBoepd provided on August 11, 2020;
-- Following the Egyptian General Petroleum Company's approval
of the amendment, extension and merger of the Company's Eastern
Desert concession agreements in December, 2020, the Company expects
ratification by Egypt's Parliament in Q2, 2021;
-- A 2021 work program and budget is being prepared for
implementation in parallel with the ratification process that
accelerates exploitation of the Eastern Desert merged concession
with the aim of increasing oil production;
-- Work has begun to expand the early production facility at
South Ghazalat in order to facilitate a planned Q2, 2021
recompletion of the SGZ-6X well to the deeper, more prospective
lower Bahariya reservoir;
-- Preparations are underway to stimulate and equip, in Q1,
2021, the 2-mile horizontal South Harmattan well drilled, but
uncompleted, in Q1, 2020. Further development activity targeting
the exciting South Harmattan oil resource is also anticipated in
2021;
-- Collected $32.3 million in receivables in Q4, 2020.
PRODUCTION
Production Summary (WI before royalties and taxes):
(Boepd) Q3 2020 Oct 2020 Nov 2020 Dec 2020 2020 Average
Egypt 9,812 10,303 10,045 10,448 11,178
-------- --------- --------- --------- -------------
Canada 2,232 1,921 2,195 2,234 2,283
-------- --------- --------- --------- -------------
Total 12,044 12,224 12,240 12,682 13,461
-------- --------- --------- --------- -------------
Company production met the lower end of production guidance for
2020 of 13.3 to 13.8 MBoepd. This is principally due to delayed
Egypt well maintenance, reflecting the weak economics of the fiscal
terms of the pre-consolidation concession agreements, and was in
line with the Company's focus on maintaining the Company's balance
sheet strength in 2020. Canadian production met expectations.
OPERATIONS UPDATE
Arab Republic of Egypt
Eastern Desert (100% WI)
During the quarter oil prices remained weak, with well repair
and maintenance activities focused only on those that generated
positive cash flow while negotiations to amend, extend and
consolidate the Company's Eastern Desert concession agreements
continued.
As previously disclosed, the Company announced a merged
concession agreement with a 15-year primary term and improved
Company economics in early December, 2020. Ratification of the
concession is anticipated in Q2, 2021, and the February 1, 2020
effective date for the improved concession terms supports increased
investment in parallel with ratification.
The Company is in the process of finalizing an enhanced 2021
work program and budget that reflects this breakthrough,
accelerating production and cash flow in 2021 through an
invigorated well maintenance program and development activities on
the contingent resource projects previously disclosed. At this
time, the joint venture operating organization in Egypt is sourcing
a drilling rig and the necessary equipment in support of this
program.
Western Desert - South Ghazalat (100% WI)
Work to expand the production handling capacity at South
Ghazalat has begun, in advance of a planned Q2, 2021 SGZ-6X
recompletion to the deeper, more prospective lower Bahariya
reservoir. The Company announced on November 19, 2018 that a 42
foot perforated interval in the Lower Bahariya had flowed 2,437
Bopd of light oil, 21 Bpd of water and 1.4 MMCFD of natural gas on
a 40/64" choke. Reservoir and surface facility management practices
are expected to constrain production from this interval following
the expected recompletion.
Canada
Preparations have commenced to stimulate and equip, during Q1,
2021, the 2-mile horizontal well drilled but not completed, as part
of the Company's 2020 Cardium drilling program in South Harmattan .
This well offsets the successful 2-mile horizontal oil well 2-20,
previously disclosed by the Company on January 30, 2020. The 2-20
well has been producing continuously since original tie-in in late
November of 2019, other than for maintenance conducted on
third-party facilities. This long-term production performance has
further strengthened our confidence in the potential of South
Harmattan.
Further development activity is anticipated in South Harmattan
in 2021. The Company holds 22.5 sections of land in the South
Harmattan area.
CORPORATE
The Company repaid $5 million on the $75 million Mercuria
prepayment facility agreement in Q4, 2020, leaving $15 million
drawn and outstanding on the facility. TransGlobe is actively
engaged with Mercuria on an amendment and extension to the facility
currently maturing in September, 2021.
TransGlobe collected $32.3 million of receivables in Q4, 2020
and ended the year with over $30 million of cash and no net
debt.
The material increase in recent oil prices and subsequent
positive impact to the forward strip have positively impacted
TransGlobe's 2021 budget planning and the Company has entered into
the following hedges to support a material 2021 capital
program:
Financial Brent crude oil
contracts
Contracted Monthly
Period Volumes Volume Bought Put Sold Call Sold Put
Hedged Contract (bbls) (bbls) US$/bbl US$/bbl US$/bbl
----------- ------------ ----------- ----------- ---------- --------- --------
Jan 2021 -
Jun 2021 3-Way Collar 300,000 50,000 48.00 53.25 40.00
Feb 2021 -
Dec 2021 3-Way Collar 550,000 50,000 50.00 60.00 40.00
------------ -------------- ---------- ----------- ---------- --------- --------
Financial AECO natural gas contracts
Contracted Daily Swap
Period Hedged Contract Volumes (GJs) Volume (GJs) C$/GJ
--------------------------- ----------- --------------- ------------- -------------
Jan 2021 - Dec 2021 Swap 1,387,000 3,800 2.76
---------------------------- ------------- -------------- ------------- ------------
Business continuity plans remain effective across our locations
in response to COVID-19 with no health or safety impacts, or
production disruption due to illness.
CEO's Statement
"With the announcement of the consolidation, amendment and
extension of our Eastern Desert PSCs now behind us and with oil
prices firming up in the $50-$55 / Bbl range, we are working
diligently on high grading opportunities as we finalize a work
program that reflects both the significant resource potential and
the greatly improved cash flow generating capacity of our assets.
We are excited about the investment alternatives now available to
the Company in 2021 to grow production, cash flow, and reserves in
both Egypt and Canada."
About TransGlobe
TransGlobe Energy Corporation is a cash flow-focused 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 and the AIM
market of the London Stock Exchange under the symbol TGL and on the
NASDAQ Exchange under the symbol TGA.
For further information, please contact:
TransGlobe Energy Corporation +1 403 264 9888
Randy Neely, President and CEO investor.relations@trans-globe.com
Eddie Ok, CFO http://www.trans-globe.com
or via Tailwind Associates
or
FTI Consulting
Tailwind Associates (Investor Relations) +1 403 618 8035
Darren Engels darren@tailwindassociates.ca
http://www.tailwindassociates.ca
FTI Consulting (Financial PR) +44(0) 20 3727 1000
Ben Brewerton transglobeenergy@fticonsulting.com
Genevieve Ryan
Canaccord Genuity (Nomad & Joint-Broker)
Henry Fitzgerald-O'Connor
James Asensio +44(0) 20 7523 8000
Shore Capital (Joint Broker)
Jerry Keen
Toby Gibbs +44(0) 20 7408 4090
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", "strengthened",
"confidence", "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 strategy to grow its annual cash
flow; 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; to negotiate future military access
(including the expected timing thereof), 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; the ratification of the
amendment, extension, and consolidation of the Company's Eastern
Desert Concessions; 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.goedgar.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. Ron Hornseth, B.Sc., General Manager - Canada 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 the technical information
contained in this report. Mr. Hornseth is a professional engineer
who obtained a Bachelor of Science in Mechanical Engineering from
the University of Alberta. He is a member of the Association of
Professional Engineers and Geoscientists of Alberta ("APEGA") and
the Society of Petroleum Engineers ("SPE") and has over 20 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.
The following abbreviations used in this press release have the
meanings set forth below:
Bopd barrels of oil per day
Bpd barrels per day
BOE barrel of oil equivalent
MBopd thousand barrels of oil per day
Boepd barrels of oil equivalent per day
MBoepd thousand barrels of oil equivalent per day
MBbl thousand barrels
MMCFD million cubic feet per day
WI working interest
Light and Medium Heavy Natural Gas
Crude Crude Natural Gas Liquids Total
bbl/d bbl/d Mcf/d bbl/d boe/d
Q3 2020
Egypt 746 9,066 9,812
Canada 661 4,633 798 2,232
Total 1,407 9,066 4,633 798 12,044
Oct 2020
Egypt 733 9,570 10,303
Canada 638 3,852 640 1,921
Total 1,372 9,570 3,852 640 12,224
Nov 2020
Egypt 765 9,280 10,045
Canada 596 4,776 803 2,195
Total 1,360 9,280 4,776 803 12,240
Dec 2020
Egypt 814 9,634 10,448
Canada 621 4,744 822 2,234
Total 1,435 9,634 4,744 822 12,682
2020 Average
Egypt 875 10,303 11,178
Canada 711 4,722 785 2,283
Total 1,586 10,303 4,722 785 13,461
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END
UPDFFFELLIIIFIL
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