TransGlobe Energy Corporation (“TransGlobe” or the “Company”) is
pleased to announce its financial and operating results for the
three months and year ended December 31, 2020. 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 years ended December
31, 2020 and 2019, are available on TransGlobe's website at
www.trans-globe.com.
2020 HIGHLIGHTS:
- 2020 production averaged 13,425
boe/d (Egypt 11,147 bbls/d, Canada 2,278 boe/d), a decrease of 16%
from 2019 primarily due to deferred well interventions in Egypt
during low oil prices, the curtailed 2020 capital program and
natural declines;
- Sales averaged 15,437 boe/d in 2020
with an average realized price of $33.41/boe; 2020 average realized
price on Egyptian sales of $35.94/bbl and Canadian sales of
$18.82/boe;
- Inventoried entitlement crude oil
in Egypt decreased to 227.9 Mbbls as at December 31, 2020 from
964.5 Mbbls as at December 31, 2019;
- Ended the year with 38.9 MMboe of
2P reserves, down 14% from 2019 year end of 45.3 MMboe;
- Funds flow from operations of $30.4
million ($0.42 per share) in 2020;
- 2020 net loss of $77.4 million
($1.07 per share), is inclusive of a $73.5 million non-cash
impairment loss and a $0.2 million unrealized loss on derivative
commodity contracts;
- The Company ended the year with
positive working capital of $15.3 million, including cash and cash
equivalents of $34.5 million;
- Drilled and completed one
development oil well and performed four recompletions in Egypt
during 2020;
- Drilled one horizontal Cardium oil
well in Canada during 2020;
- Business continuity plans remain
effective across our locations in response to COVID-19 with minimal
health and safety impacts or disruption to production; and
- The Company announced a merged
concession agreement with a 15-year primary term and improved
Company economics on December 3, 2020. The agreement is currently
awaiting ratification by the Egyptian Parliament but will have a
Feb, 2020 effective date upon ratification.
2021 (TO DATE) HIGHLIGHTS:
-
January 2021 average production of 12,480 boe/d, February 2021
average production of 12,007 boe/d;
-
Completed monthly sales to EGPC of 167.0 Mbbl for proceeds of $8.6
million;
-
Stimulated and equipped the 2-mile horizontal South Harmattan well
drilled, but uncompleted, in Q1-2020;
-
Began work to expand the production handling capacity at South
Ghazalat; and
-
Work has begun on the SGZ-6X recompletion to the deeper, more
prospective lower Bahariya reservoir.
FINANCIAL AND OPERATING RESULTS
Additional financial information is provided in
the Company's audited Consolidated Financial Statements together
with the notes related thereto, as well as TransGlobe's
Management's Discussion and Analysis for the years ended December
31, 2020 and 2019. These documents, along with other documents
affecting the rights of securityholders and other information
relating to the Company, may be found on SEDAR at www.sedar.com and
in the Company's Annual Report on Form 40-F for the fiscal year
ended December 31, 2020, filed on EDGAR at www.sec.gov.
(US$000s, except per share, price, volume amounts and %
change)
|
|
Three Months Ended December 31 |
Years Ended December 31 |
|
Financial |
2020 |
|
2019 |
|
% Change |
2020 |
|
2019 |
|
% Change |
|
Petroleum and natural gas sales |
50,989 |
|
64,201 |
|
(21 |
) |
188,771 |
|
278,929 |
|
(32 |
) |
|
Petroleum and natural gas sales, net of royalties |
33,309 |
|
28,473 |
|
17 |
|
114,675 |
|
140,096 |
|
(18 |
) |
|
Realized derivative loss gain on commodity contracts |
(6 |
) |
(218 |
) |
97 |
|
6,801 |
|
(1,259 |
) |
640 |
|
|
Unrealized derivative loss on commodity contracts |
(941 |
) |
(1,201 |
) |
(22 |
) |
(180 |
) |
(1,586 |
) |
89 |
|
|
Production and operating expense |
19,326 |
|
15,119 |
|
28 |
|
64,462 |
|
50,626 |
|
27 |
|
|
Selling costs |
1,008 |
|
638 |
|
58 |
|
2,111 |
|
1,287 |
|
64 |
|
|
General and administrative expense |
3,593 |
|
3,868 |
|
(7 |
) |
11,990 |
|
16,611 |
|
(28 |
) |
|
Depletion, depreciation and amortization expense |
7,647 |
|
8,764 |
|
(13 |
) |
31,049 |
|
34,948 |
|
(11 |
) |
|
Income tax expense |
3,408 |
|
6,003 |
|
(43 |
) |
13,530 |
|
26,098 |
|
(48 |
) |
|
Cash flow generated by operating activities |
14,180 |
|
23,740 |
|
(40 |
) |
31,709 |
|
44,836 |
|
(29 |
) |
|
Funds flow from operations1 |
7,202 |
|
3,171 |
|
127 |
|
30,443 |
|
46,871 |
|
(35 |
) |
|
Basic per share |
0.10 |
|
0.04 |
|
|
0.42 |
|
0.65 |
|
|
|
Diluted per share |
0.10 |
|
0.04 |
|
|
0.42 |
|
0.65 |
|
|
|
Net loss |
(2,855 |
) |
(8,202 |
) |
(65 |
) |
(77,397 |
) |
(3,995 |
) |
1,837 |
|
|
Basic per share |
(0.04 |
) |
(0.11 |
) |
|
(1.07 |
) |
(0.06 |
) |
|
|
Diluted per share |
(0.04 |
) |
(0.11 |
) |
|
(1.07 |
) |
(0.06 |
) |
|
|
Capital expenditures |
255 |
|
10,996 |
|
(98 |
) |
7,498 |
|
36,932 |
|
(80 |
) |
|
Dividends declared |
- |
|
- |
|
- |
|
- |
|
5,078 |
|
(100 |
) |
|
Dividends declared per share |
- |
|
- |
|
|
- |
|
0.07 |
|
|
|
Working capital |
15,349 |
|
32,194 |
|
(52 |
) |
15,349 |
|
32,194 |
|
(52 |
) |
|
Long-term debt, including current portion |
21,464 |
|
37,041 |
|
(42 |
) |
21,464 |
|
37,041 |
|
(42 |
) |
|
Common shares outstanding |
|
|
|
|
|
|
|
Basic (weighted average) |
72,542 |
|
72,542 |
|
- |
|
72,542 |
|
72,514 |
|
- |
|
|
Diluted (weighted average) |
72,542 |
|
72,542 |
|
- |
|
72,542 |
|
72,514 |
|
- |
|
|
Total assets |
201,147 |
|
308,325 |
|
(35 |
) |
201,147 |
|
308,325 |
|
(35 |
) |
|
|
|
|
|
|
|
|
|
Operating |
|
|
|
|
|
|
|
Average production volumes (boe/d) |
12,384 |
|
15,362 |
|
(19 |
) |
13,425 |
|
16,041 |
|
(16 |
) |
|
Average sales volumes (boe/d) |
15,712 |
|
14,688 |
|
7 |
|
15,437 |
|
14,954 |
|
3 |
|
|
Inventory (Mbbls) |
227.9 |
|
964.5 |
|
(76 |
) |
227.9 |
|
964.5 |
|
(76 |
) |
|
Average realized sales price ($/boe) |
35.27 |
|
47.51 |
|
(26 |
) |
33.41 |
|
51.10 |
|
(35 |
) |
|
Production and operating expenses ($/boe) |
13.37 |
|
11.19 |
|
19 |
|
11.41 |
|
9.28 |
|
23 |
|
|
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. |
SELECTED ANNUAL INFORMATION
|
($000s, except per share amounts, price and volumes) |
2020 |
|
% Change |
2019 |
|
% Change |
2018 |
|
Operations |
|
|
|
|
|
|
Average production volumes |
|
|
|
|
|
|
Crude oil (bbls/d) |
11,858 |
|
(18 |
) |
14,527 |
|
14 |
|
12,708 |
|
NGLs (bbls/d) |
785 |
|
35 |
|
582 |
|
(25 |
) |
780 |
|
Natural gas (Mcf/d) |
4,686 |
|
(16 |
) |
5,594 |
|
(2 |
) |
5,707 |
|
Total (boe/d) |
13,425 |
|
(16 |
) |
16,041 |
|
11 |
|
14,439 |
|
Average sales volumes |
|
|
|
|
|
|
Crude oil (bbls/d) |
13,871 |
|
3 |
|
13,441 |
|
1 |
|
13,282 |
|
NGLs (bbls/d) |
785 |
|
35 |
|
582 |
|
(25 |
) |
780 |
|
Natural gas (Mcf/d) |
4,686 |
|
(16 |
) |
5,594 |
|
(2 |
) |
5,707 |
|
Total (boe/d) |
15,437 |
|
3 |
|
14,954 |
|
- |
|
15,013 |
|
Average realized sales prices |
|
|
|
|
|
|
Crude oil ($/bbl) |
35.80 |
|
(35 |
) |
55.31 |
|
(7 |
) |
59.57 |
|
NGLs ($/bbl) |
14.59 |
|
(36 |
) |
22.93 |
|
(16 |
) |
27.17 |
|
Natural gas ($/mcf) |
1.64 |
|
24 |
|
1.32 |
|
5 |
|
1.26 |
|
Total oil equivalent ($/boe) |
33.41 |
|
(35 |
) |
51.10 |
|
(6 |
) |
54.59 |
|
Inventory (Mbbls) |
227.9 |
|
(76 |
) |
964.5 |
|
70 |
|
568.1 |
|
Petroleum and natural gas sales |
188,771 |
|
(32 |
) |
278,929 |
|
(7 |
) |
299,144 |
|
Petroleum and natural gas sales, net of royalties |
114,675 |
|
(18 |
) |
140,096 |
|
(21 |
) |
176,227 |
|
Cash flow generated by operating activities |
31,709 |
|
(29 |
) |
44,836 |
|
(35 |
) |
69,192 |
|
Funds flow from operations1 |
30,443 |
|
(35 |
) |
46,871 |
|
(26 |
) |
63,282 |
|
Funds flow from operations per share: |
|
|
|
|
|
|
Basic |
0.42 |
|
|
0.65 |
|
|
0.87 |
|
Diluted |
0.42 |
|
|
0.65 |
|
|
0.86 |
|
Net (loss) earnings |
(77,397 |
) |
1,837 |
|
(3,995 |
) |
(125 |
) |
15,677 |
|
Net (loss) earnings per share: |
|
|
|
|
|
|
Basic |
(1.07 |
) |
|
(0.06 |
) |
|
0.22 |
|
Diluted |
(1.07 |
) |
|
(0.06 |
) |
|
0.22 |
|
Capital expenditures |
7,498 |
|
(80 |
) |
36,932 |
|
(9 |
) |
40,706 |
|
Dividends declared |
- |
|
- |
|
5,078 |
|
101 |
|
2,527 |
|
Dividends declared per share |
- |
|
- |
|
0.070 |
|
100 |
|
0.035 |
|
Total assets |
201,147 |
|
(35 |
) |
308,325 |
|
(3 |
) |
318,296 |
|
Cash and cash equivalents |
34,510 |
|
4 |
|
33,251 |
|
(36 |
) |
51,705 |
|
Working capital |
15,349 |
|
(52 |
) |
32,194 |
|
(37 |
) |
50,987 |
|
Total long-term debt, including current portion |
21,464 |
|
(42 |
) |
37,041 |
|
(29 |
) |
52,355 |
|
Net debt-to-funds flow from operations ratio2 |
0.20 |
|
|
0.10 |
|
|
0.02 |
|
Reserves |
|
|
|
|
|
|
Total proved (MMboe)3 |
22.8 |
|
(10 |
) |
25.4 |
|
(6 |
) |
26.9 |
|
Total proved plus probable (MMboe)3 |
38.9 |
|
(14 |
) |
45.3 |
|
3 |
|
44.1 |
|
1 |
Funds flow from operations (before finance costs) 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. |
| 2 |
Net debt-to-funds flow from operations ratio is a measure that
represents total long-term debt (including the current portion) net
of working capital, over funds flow from operations for the
trailing 12 months and may not be comparable to measures used by
other companies. |
| 3 |
As determined by the Company's 2020, 2019 & 2018 independent
reserves evaluator, GLJ Ltd. (“GLJ”), in their reports dated
February 9, 2021, February 4, 2020 and January 22, 2019 with
effective dates of December 31, 2020, December 31, 2019 and
December 31, 2018. The reports of GLJ have been prepared in
accordance with the standards contained in the Canadian Oil and Gas
Evaluation Handbook prepared jointly by The Society of Petroleum
Evaluation Engineers (Calgary Chapter) and the Canadian Institute
of Mining, Metallurgy & Petroleum (Petroleum Society), as
amended from time to time and National Instrument 51-101. |
In 2020 compared with 2019, TransGlobe:
- Reported a 16%
decrease in production volumes compared to 2019. In Egypt, the
decrease was primarily attributable to the curtailed 2020 capital
program, deferred well interventions and natural declines.
- Ended 2020 with
the inventoried crude oil of 227.9 Mbbls, a decrease of 736.6 Mbbls
over inventoried crude oil levels at December 31, 2020, primarily
due to annual sales volumes exceeding production volumes.
- Reported
positive funds flow from operations of $30.4 million (2019 - $46.9
million). The decrease in funds flow from operations from 2019 is
primarily due lower production and lower commodity prices;
- Petroleum and
natural gas sales decreased by 32%, primarily due to a 35% decrease
in average realized sales prices;
- Reported a net
loss of $77.4 million (2019 - net loss of $4.0 million) inclusive
of a $0.2 million unrealized derivative loss on commodity contracts
and a combined $73.5 million non-cash impairment loss on the
Company’s petroleum and natural gas (“PNG”) and exploration and
evaluation (“E&E”) assets;
- Ended the year
with positive working capital of $15.3 million, including $34.5
million in cash and cash equivalents as at December 31, 2020;
- Spent $7.5
million on capital expenditures, funded entirely from cash flow
from operations and cash on hand;
- Repaid $16.5
million of long-term debt with cash on hand.
OPERATING RESULTS AND
NETBACK
Daily Volumes, Working Interest before
Royalties
Production Volumes
|
|
2020 |
2019 |
|
Egypt crude oil (bbls/d) |
11,147 |
13,713 |
|
Canada crude oil (bbls/d) |
711 |
814 |
|
Canada NGLs (bbls/d) |
785 |
582 |
|
Canada natural gas (Mcf/d) |
4,686 |
5,594 |
|
Total Company (boe/d) |
13,425 |
16,041 |
Sales Volumes (excludes volumes held as
inventory)
|
|
2020 |
2019 |
|
Egypt crude oil (bbls/d) |
13,160 |
12,627 |
|
Canada crude oil (bbls/d) |
711 |
814 |
|
Canada NGLs (bbls/d) |
785 |
582 |
|
Canada natural gas (Mcf/d) |
4,686 |
5,594 |
|
Total Company (boe/d) |
15,437 |
14,954 |
Netback
Consolidated netback
|
|
2020 |
2019 |
|
($000s, except per boe amounts) |
$ |
$/boe |
$ |
$/boe |
|
Petroleum and natural gas sales |
188,771 |
33.41 |
278,929 |
51.10 |
|
Royalties2 |
74,096 |
13.11 |
138,833 |
25.44 |
|
Current taxes2 |
13,530 |
2.39 |
26,098 |
4.78 |
|
Production and operating expenses |
64,462 |
11.41 |
50,626 |
9.28 |
|
Selling costs |
2,111 |
0.37 |
1,287 |
0.24 |
|
Netback1 |
34,572 |
6.13 |
62,085 |
11.36 |
|
1 |
The Company achieved the netbacks above on sold barrels of oil
equivalent for the year ended December 31, 2020 and December 31,
2019 (these figures do not include TransGlobe's Egypt entitlement
crude oil held as inventory at December 31, 2020). |
| 2 |
Royalties and taxes are settled at the time of production.
Fluctuations in royalty and tax costs per bbl are due to timing
differences between the production and sale of the Company's
entitlement crude oil. |
Egypt
|
|
2020 |
2019 |
|
($000s, except per boe amounts) |
$ |
$/boe |
$ |
$/boe |
|
Oil sales |
173,086 |
35.94 |
256,193 |
55.59 |
|
Royalties2 |
71,741 |
14.89 |
136,616 |
29.64 |
|
Current taxes2 |
13,530 |
2.81 |
26,098 |
5.66 |
|
Production and operating expenses |
58,305 |
12.11 |
43,252 |
9.38 |
|
Selling costs |
2,111 |
0.44 |
1,287 |
0.28 |
|
Netback1 |
27,399 |
5.69 |
48,940 |
10.63 |
|
1 |
The Company achieved the netbacks above on sold barrels of oil
equivalent for the year ended December 31, 2020 and December 31,
2019 (these figures do not include TransGlobe's Egypt entitlement
crude oil held as inventory at December 31, 2020). |
| 2 |
Royalties and taxes are settled at the time of production.
Fluctuations in royalty and tax costs per bbl are due to timing
differences between the production and sale of the Company's
entitlement crude oil. |
Netback per barrel in Egypt decreased by 46% in
2020 compared to 2019. The decrease was due to a 35% lower realized
oil price, 57% higher selling costs and 29% higher production and
operating expenses.
Royalties and taxes as a percentage of revenue
were 49% in 2020 (2019 - 64%). Royalties and taxes are settled on a
production basis, therefore, the correlation of royalties and taxes
to oil sales fluctuates depending on the timing of entitlement oil
sales. If sales volumes had been equal to production volumes during
the year, royalties and taxes as a percentage of revenue would have
been 58% (2019 - 58%). In periods when the Company sells less than
its entitlement production, royalties and taxes as a percentage of
revenue will be higher than the terms set out in the PSCs. In
periods when the Company sells more than its entitlement
production, royalties and taxes as a percentage of revenue will be
lower than the terms set out in the PSCs. The relative decrease,
from 64% in 2019 to 49% in 2020, was due to sales outpacing
production in 2020, partially offset by Q1-2020 excess cost oil in
the West Bakr concession. Excess cost oil occurs when the current
costs and historic cost amortization, permissible within the PSC,
are less than the proportion of cost oil value. In the case of West
Bakr, 100% of excess cost oil belongs to EGPC, which effectively
increases the royalty burden.
In Egypt, the average selling price for the year
ended December 31, 2020 was $35.94/bbl (2019 - $55.59/bbl), which
was $5.82/bbl lower (2019 - $8.77/bbl lower) than the average Dated
Brent oil price of $41.76/bbl for 2020 (2019 - $64.36/bbl). The
difference between the average selling price and Dated Brent is due
to a gravity/quality adjustment and is also impacted by the
specific timing of direct sales.
In Egypt, production and operating expenses
fluctuate periodically due to changes in inventory volumes as a
portion of costs are capitalized and expensed when sold. Production
and operating expenses increased by 35% ($15.1 million) in 2020
compared with 2019. The increase was primarily related to a
decrease in crude oil inventory through sales to both EGPC and
Mercuria, where operating costs previously capitalized to inventory
were expensed in the period of sale ($14.0 million). The increase
was also caused by higher manpower costs as well as operating
expenses related to the South Ghazalat concession which began
operating in 2020, partially offset by a decrease in workovers and
production handling fees. The increase in production and operating
expenses per barrel from $9.38/bbl in 2019 to $12.11/bbl in 2020
was due to a 19% decrease in production primarily attributed to the
curtailed 2020 capital program, deferred well interventions and
natural declines.
Canada
|
|
2020 |
2019 |
|
($000s, except per boe amounts) |
$ |
$/boe |
$ |
$/boe |
|
Crude oil sales |
8,679 |
33.36 |
15,159 |
51.02 |
|
Natural gas sales |
2,815 |
9.85 |
2,705 |
7.95 |
|
NGL sales |
4,191 |
14.59 |
4,872 |
22.93 |
|
Total sales |
15,685 |
18.82 |
22,736 |
26.75 |
|
Royalties |
2,355 |
2.83 |
2,217 |
2.61 |
|
Production and operating expenses |
6,157 |
7.39 |
7,374 |
8.68 |
|
Netback |
7,173 |
8.60 |
13,145 |
15.46 |
Netbacks per boe in Canada decreased by 44% in
2020 compared with 2019. The decrease is mainly due to a 30% lower
realized sales price and an 8% increase in royalties, partially
offset by a 15% decrease in production and operating expenses.
In 2020, the Company's Canadian operations
incurred $0.1 million higher royalty costs than in 2019. The
increase in royalties was primarily due to an increase in mineral
taxes. Mineral taxes are an annual tax on PNG productive mineral
rights on freehold properties payable to the Crown. A further
increase in royalties was caused by a decrease in Gas Cost
Allowance (“GCA”) rebates received in 2020 compared to 2019.
Royalties amounted to 15% of petroleum and natural gas sales
revenue during 2020 compared to 10% during the prior year.
TransGlobe pays royalties to the Alberta provincial government and
landowners in accordance with an established royalty regime. In
Alberta, Crown royalty rates are based on reference commodity
prices, production levels and well depths, and are offset by
certain incentive programs in place to promote drilling activity by
reducing overall royalty expense.
Production and operating expenses decreased by
15% compared with 2019. The decrease was primarily due to a
decrease in transportation costs.
Consolidated Statements of Loss and Comprehensive
Loss
(Expressed in thousands of U.S. Dollars, except per
share amounts)
|
|
|
Years Ended December 31 |
|
|
|
2020 |
|
2019 |
|
|
|
|
REVENUE |
|
|
|
|
Petroleum and natural gas sales, net of royalties |
114,675 |
|
140,096 |
|
| |
Finance revenue |
106 |
|
471 |
|
|
|
Other
revenue |
641 |
|
- |
|
|
|
|
115,422 |
|
140,567 |
|
|
|
|
|
|
|
EXPENSES |
|
|
| |
Production and operating |
64,462 |
|
50,626 |
|
| |
Selling costs |
2,111 |
|
1,287 |
|
| |
General and
administrative |
11,990 |
|
16,611 |
|
| |
Foreign exchange loss
(gain) |
24 |
|
(147 |
) |
| |
Finance costs |
2,520 |
|
4,256 |
|
| |
Depletion, depreciation and
amortization |
31,049 |
|
34,948 |
|
| |
Asset retirement obligation
accretion |
259 |
|
215 |
|
| |
(Gain) loss on financial
instruments |
(6,621 |
) |
2,845 |
|
| |
Impairment loss |
73,495 |
|
7,937 |
|
|
|
Gain on
disposition of assets |
- |
|
(114 |
) |
|
|
|
179,289 |
|
118,464 |
|
|
|
|
|
|
| (Loss) earnings
before income taxes |
(63,867 |
) |
22,103 |
|
| |
|
|
|
| Income
tax expense - current |
13,530 |
|
26,098 |
|
|
NET LOSS |
(77,397 |
) |
(3,995 |
) |
|
|
|
|
|
| OTHER
COMPREHENSIVE INCOME |
|
|
|
|
Currency translation adjustments |
766 |
|
2,073 |
|
|
COMPREHENSIVE LOSS |
(76,631 |
) |
(1,922 |
) |
|
|
|
|
|
| Net loss
per share |
|
|
| |
Basic |
(1.07 |
) |
(0.06 |
) |
|
|
Diluted |
(1.07 |
) |
(0.06 |
) |
Consolidated Balance Sheets
(Expressed in thousands of U.S.
Dollars)
| |
|
|
As at |
As at |
|
|
|
|
|
December 31, 2020 |
December 31, 2019 |
|
|
|
|
|
|
|
|
| |
ASSETS |
| |
Current |
|
|
|
Cash and cash equivalents |
34,510 |
|
33,251 |
|
| |
|
Accounts receivable |
9,996 |
|
10,681 |
|
| |
|
Prepaids and other |
3,530 |
|
4,338 |
|
|
|
|
Product
inventory |
5,828 |
|
17,516 |
|
|
|
|
|
53,864 |
|
65,786 |
|
| |
Non-Current |
| |
|
Intangible exploration and
evaluation assets |
584 |
|
33,706 |
|
| |
|
Property and equipment |
|
|
|
| |
|
Petroleum and natural gas assets |
140,059 |
|
196,150 |
|
| |
|
Other |
2,917 |
|
4,296 |
|
|
|
|
Deferred taxes |
3,723 |
|
8,387 |
|
|
|
|
201,147 |
|
308,325 |
|
|
|
|
|
|
|
|
| |
LIABILITIES |
| |
Current |
| |
|
Accounts payable and accrued
liabilities |
21,667 |
|
32,156 |
|
| |
|
Derivative commodity
contracts |
398 |
|
217 |
|
| |
|
Current portion of lease
obligations |
1,553 |
|
1,219 |
|
| |
|
Current portion of long-term
debt |
14,897 |
|
- |
|
| |
|
|
38,515 |
|
33,592 |
|
| |
Non-Current |
| |
|
Long-term debt |
6,567 |
|
37,041 |
|
| |
|
Asset retirement
obligations |
13,042 |
|
13,612 |
|
| |
|
Other long-term
liabilities |
544 |
|
614 |
|
| |
|
Lease obligations |
461 |
|
589 |
|
|
|
|
Deferred taxes |
3,723 |
|
8,387 |
|
|
|
|
62,852 |
|
93,835 |
|
|
|
|
|
|
|
|
| |
SHAREHOLDERS’ EQUITY |
| |
|
Share capital |
152,805 |
|
152,805 |
|
| |
|
Accumulated other
comprehensive income |
1,900 |
|
1,134 |
|
| |
|
Contributed surplus |
25,109 |
|
24,673 |
|
|
|
|
(Deficit) Retained earnings |
(41,519 |
) |
35,878 |
|
|
|
|
138,295 |
|
214,490 |
|
|
|
|
201,147 |
|
308,325 |
|
Consolidated Statements of Changes in Shareholders’
Equity
(Expressed in thousands of U.S. Dollars)
| |
|
|
Years Ended December 31 |
|
|
|
|
|
2020 |
|
2019 |
|
|
|
|
| |
Share
Capital |
|
|
| |
|
Balance, beginning of
year |
152,805 |
|
152,084 |
|
| |
|
Stock options exercised |
- |
|
547 |
|
|
|
|
Transfer from contributed surplus on exercise of options |
- |
|
174 |
|
|
|
|
Balance, end of year |
152,805 |
|
152,805 |
|
|
|
|
|
|
|
| |
Accumulated Other Comprehensive Income |
|
|
| |
|
Balance, beginning of
year |
1,134 |
|
(939 |
) |
|
|
|
Currency translation adjustment |
766 |
|
2,073 |
|
|
|
|
Balance, end of year |
1,900 |
|
1,134 |
|
|
|
|
|
|
|
| |
Contributed Surplus |
|
|
| |
|
Balance, beginning of
year |
24,673 |
|
24,195 |
|
| |
|
Share-based compensation
expense |
436 |
|
652 |
|
|
|
|
Transfer to share capital on exercise of options |
- |
|
(174 |
) |
|
|
|
Balance, end of year |
25,109 |
|
24,673 |
|
|
|
|
|
|
|
| |
(Deficit)
Retained Earnings |
|
|
| |
|
Balance, beginning of
year |
35,878 |
|
44,951 |
|
| |
|
Net loss |
(77,397 |
) |
(3,995 |
) |
|
|
|
Dividends |
- |
|
(5,078 |
) |
|
|
|
Balance, end of year |
(41,519 |
) |
35,878 |
|
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. Dollars)
| |
|
|
|
Years Ended December 31 |
|
|
|
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
| |
OPERATING |
|
|
| |
|
Net loss |
(77,397 |
) |
(3,995 |
) |
| |
|
Adjustments
for: |
|
|
| |
|
|
Depletion, depreciation and
amortization |
31,049 |
|
34,948 |
|
| |
|
|
Asset retirement obligation
accretion |
259 |
|
215 |
|
| |
|
|
Impairment loss |
73,495 |
|
7,937 |
|
| |
|
|
Share-based compensation |
857 |
|
2,237 |
|
| |
|
|
Finance costs |
2,520 |
|
4,256 |
|
| |
|
|
Unrealized loss on financial
instruments |
180 |
|
1,586 |
|
| |
|
|
Unrealized (gain) on foreign
currency translation |
(62 |
) |
(153 |
) |
| |
|
|
Gain on asset disposition |
- |
|
(114 |
|
| |
|
Asset retirement
obligations settled |
(458 |
) |
(46 |
) |
|
|
|
Changes
in non-cash working capital |
1,266 |
|
(2,035 |
) |
|
|
Net cash generated by operating activities |
31,709 |
|
44,836 |
|
|
|
|
|
|
|
|
| |
INVESTING |
|
|
| |
|
Additions to
intangible exploration and evaluation assets |
(337 |
) |
(5,377 |
) |
| |
|
Additions to
petroleum and natural gas assets |
(6,726 |
) |
(30,626 |
) |
| |
|
Additions to other
assets |
(435 |
) |
(929 |
) |
| |
|
Proceeds from
asset dispositions |
- |
|
114 |
|
|
|
|
Changes
in non-cash working capital |
(3,544 |
) |
(291 |
) |
|
|
Net cash used in investing activities |
(11,042 |
) |
(37,109 |
) |
|
|
|
|
|
|
|
| |
FINANCING |
|
|
| |
|
Issue of common
shares for cash |
- |
|
547 |
|
| |
|
Interest paid |
(1,918 |
) |
(3,664 |
) |
| |
|
Increase in
long-term debt |
406 |
|
476 |
|
| |
|
Payments on lease
obligations |
(1,703 |
) |
(1,945 |
) |
| |
|
Repayments of
long-term debt |
(16,504 |
) |
(16,523 |
) |
| |
|
Dividends
paid |
- |
|
(5,078 |
) |
|
|
|
Changes
in non-cash working capital |
161 |
|
(200 |
) |
|
|
Net cash used in financing activities |
(19,558 |
) |
(26,387 |
) |
|
|
|
|
|
|
|
|
|
Currency translation differences relating to cash and cash
equivalents |
150 |
|
206 |
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS |
1,259 |
|
(18,454 |
) |
|
|
CASH
AND CASH EQUIVALENTS, BEGINNING OF YEAR |
33,251 |
|
51,705 |
|
|
|
CASH AND CASH EQUIVALENTS, END OF YEAR |
34,510 |
|
33,251 |
|
LIQUIDITY AND CAPITAL
RESOURCES
Liquidity describes a company’s ability to
access cash. Companies operating in the upstream oil and gas
industry require sufficient cash in order to fund capital programs
that maintain and increase production and reserves, to acquire
strategic oil and gas assets, to repay current liabilities and debt
and ultimately to provide a return to shareholders. TransGlobe’s
capital programs are funded by existing working capital and cash
provided from operating activities. The Company's cash flow from
operations varies significantly from quarter to quarter, depending
on the timing of oil sales from cargoes lifted in Egypt, and these
fluctuations in cash flow impact the Company's liquidity.
TransGlobe's management will continue to steward capital and focus
on cost reductions in order to maintain balance sheet strength
through the current volatile oil price environment.
Funding for the Company’s capital expenditures
is provided by cash flows from operations and cash on hand. The
Company expects to fund its 2021 exploration and development
program through the use of working capital and cash flow from
operations. Fluctuations in commodity prices, product demand,
foreign exchange rates, interest rates and various other risks may
impact capital resources and capital expenditures.
Working capital is the amount by which current
assets exceed current liabilities. As at December 31, 2020, the
Company had a working capital surplus of $15.3 million (December
31, 2019 - $32.2 million). The decrease in working capital is
primarily due to the $15.0 million outstanding balance of the
Mercuria prepayment agreement being reclassified as current during
the year, a decrease in cash resulting from repayments on long-term
debt, payments on accounts payable during the year, a decrease in
crude oil inventory due to increased sales to EGPC in 2020,
partially offset by a decrease in accounts payable.
As at December 31, 2020, the Company's cash
equivalents balance consisted of short-term deposits with an
original term to maturity at purchase of one month or less. All of
the Company's cash and cash equivalents are on deposit with high
credit-quality financial institutions.
Over the past 10 years, the Company experienced
delays in the collection of accounts receivable from EGPC. The
length of delay peaked in 2013, returned to historical delays of up
to six months in 2017, and has since fluctuated within an
acceptable range. As at December 31, 2020, amounts owing from EGPC
were $6.0 million. The Company considers there to be minimal credit
risk associated with amounts receivable from EGPC.
In Egypt, the Company completed a second crude
oil sale in Q4-2020 for total proceeds of $16.2 million, which were
collected in December 2020. The Company incurs a 30-day collection
cycle on sales to third-party international buyers. Depending on
the Company's assessment of the credit of crude oil purchasers,
they may be required to post irrevocable letters of credit to
support the sales prior to the cargo lifting. As at December 31,
2020, the Company held 227.9 Mbbls of entitlement oil as
inventory.
As at December 31, 2020, the Company had $86.0
million of revolving credit facilities with $21.5 million drawn and
$64.5 million available. The Company has a prepayment agreement
with Mercuria that allows for a revolving balance of up to $75.0
million, of which $15.0 million was drawn and outstanding as at
December 31, 2020. During 2020, the Company repaid $15.0 million of
this prepayment agreement. The Company also has a revolving
Canadian reserves-based lending facility with ATB that was renewed
and reduced as at June 30, 2020 from C$25.0 million ($19.2 million)
to C$15.0 million ($11.0 million). The reduction in the ATB
facility is a result of lower forecasted commodity prices and the
associated impact on asset value. During 2020, the Company repaid
C$2.0 million ($1.5 million) and had drawings of $C0.5 million
($0.4 million) on this facility, leaving C$8.3 million ($6.6
million) drawn and outstanding.
The Company actively monitors its liquidity to
ensure that cash flows, credit facilities and working capital are
adequate to support these financial liabilities, as well as the
Company’s capital programs.
To date, the Company has experienced no
difficulties with transferring funds abroad.
MANAGEMENT STRATEGY AND
OUTLOOK
The 2021 outlook provides information as to
management’s expectation for results of operations for 2021.
Readers are cautioned that the 2021 outlook may not be appropriate
for other purposes. The Company’s expected results are sensitive to
fluctuations in the business environment in the jurisdictions that
the Company operates in, and may vary accordingly. This
outlook contains forward-looking statements that should be read in
conjunction with the Company’s disclosure under “Advisory on
Forward-Looking Information and Statements” within this
announcement.
2021 Outlook
The 2021 production outlook for the Company is
provided as a range to reflect timing and performance
contingencies.
Global reaction to the spread of COVID-19 and
the related economic fallout has created significant volatility,
uncertainty, and turmoil in the oil and gas industry. Oil demand
significantly deteriorated as a result of the pandemic and
corresponding preventative measures taken globally to mitigate the
spread of the virus. While market conditions have recently
improved, The Company may record lower per boe results in 2021 due
to these events which may continue to negatively affect
TransGlobe’s business.
TransGlobe maintains a strong balance sheet with
modest debt and is the operator across all of its producing assets,
which gives the Company significant capital flexibility and a high
degree of discretion in its forward investment program. The Company
intends to use all available tools to minimize balance sheet risk
and position itself for future success.
With $15.0 million owed to Mercuria Energy
Trading SA (“Mercuria”) and $6.6 million owed to ATB Financial
(“ATB”), TransGlobe is in compliance with its debt covenants.
During 2020, the Company repaid $15.0 million on the prepayment
facility with Mercuria and $1.5 million to ATB. The Company exited
2020 with $34.5 million cash on hand. TransGlobe is actively
engaged with Mercuria on an amendment and extension to the facility
currently maturing in September, 2021.
As announced in early December, 2020, the
Company reached an agreement with the Egyptian General Petroleum
Company (“EGPC”) to merge its three existing Eastern Desert
concessions with a 15-year primary term and improved Company
economics. 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 advance of
ratification. Subject to ratification, the Company will pay EGPC a
signature bonus and an equalization payment in installments. An
initial equalization payment of $15.0 million and signature bonus
of $1.0 million are due on ratification, with five further annual
equalization payments of $10.0 million each being made over five
years (beginning February 1, 2022 until February 1, 2026). The
Company will also have minimum financial work commitments of $50.0
million per each five-year period of the primary development term,
commencing on the February 1, 2020 effective date.
With the approval of the agreement to merge the
Eastern Desert concessions and recent commodity price improvements,
the Company has moved forward to re-start investment in Egypt and
also in Canada to support growth plans in both countries. The
Company’s recently announced 2021 capital program of $27.2 million
(before capitalized G&A) includes $16.6 million for Egypt and
$10.6 million for Canada. The 2021 plan was prepared to focus on
value accretive projects within its portfolio, maximize free cash
flow to direct at future value growth opportunities and to increase
the Company’s production base.
Total corporate production is expected to range
between 12.0 and 13.0 Mboe/d (mid-point of 12.5 Mboe/d) for 2021
with a 93% weighting to oil and liquids. Egypt oil production is
expected to range between 9.7 and 10.5 Mbbls/d (mid-point of 10.1
Mbbls/d) in 2021. Canadian production is expected to range between
2.3 and 2.5 Mboe/d (mid-point of 2.4 Mboe/d) in 2021. The 2021
mid-point production guidance broken out by product type is
summarized below:
|
Mid-point production guidance |
Egypt |
Canada |
Total |
|
Light and medium crude oil (bbls/d) |
791 |
800 |
1,591 |
|
Heavy crude oil (bbls/d) |
9,309 |
- |
9,309 |
|
Conventional natural gas (Mcf/d) |
- |
4,800 |
4,800 |
|
Associated natural gas liquids (bbls/d) |
- |
800 |
800 |
|
Total (boe/d) |
10,100 |
2,400 |
12,500 |
The Company has and will continue to monitor its
economic thresholds for shutting-in production in Canada. In Egypt,
the Company continues to carry out economic reviews to determine
whether offline production should be brought back on or if well
interventions should be carried out. If oil prices return to the
lows in Q2 of 2020, the Company may choose to shut-in uneconomic
production and 2021 production guidance could be negatively
impacted.
Funds flow from operations in any given period
is dependent upon the timing and market price of crude oil sales in
Egypt. Because these factors are difficult to accurately predict,
the Company has not provided funds flow from operations guidance
for 2021. Funds flow from operations and inventory levels in Egypt
may fluctuate significantly from quarter to quarter due to the
timing of crude oil sales.
The below chart provides a comparison of well
netbacks in the Company’s Egyptian and Canadian assets under
multiple price sensitivities. The Egyptian netbacks reflect the
existing PSC terms in the Eastern Desert and do not reflect the
potential netbacks once ratification occurs to merge the Eastern
Desert PSCs. A typical Cardium well produces both oil and natural
gas/NGLs. The price of each commodity varies significantly,
therefore the below chart presents the netback of each revenue
stream separately.
|
Netback sensitivity |
|
|
|
|
|
|
Benchmark crude oil price ($/bbl)1 |
30.00 |
|
40.00 |
|
50.00 |
60.00 |
70.00 |
|
Benchmark natural gas price ($/Mcf)2 |
1.97 |
|
2.05 |
|
2.13 |
2.20 |
2.28 |
|
Netback ($/boe) |
|
|
|
|
|
|
Egypt - crude oil3 |
(4.80 |
) |
(0.70 |
) |
3.40 |
7.20 |
9.50 |
|
Canada - crude oil4 |
13.80 |
|
22.40 |
|
30.20 |
37.60 |
45.10 |
|
Canada - natural gas and NGLs4 |
2.40 |
|
4.50 |
|
6.40 |
8.20 |
10.00 |
|
1 |
Benchmark Egypt crude oil price is Dated Brent; benchmark Canada
crude oil price is WTI. |
| 2 |
Benchmark natural gas price is AECO. |
| 3 |
Egypt assumptions: using anticipated 2021 Egypt production profile,
Gharib Blend price differential estimate of $5.00/bbl applied
consistently at all price points, concession differentials of 4%,
5% and 5% applied to WG/WB/NWG, respectively, operating costs
estimated at ~$15.20/bbl, pre-concession merger ratification terms,
and maximum cost recovery resulting from accumulated cost
pools. |
| 4 |
Canada assumptions: using anticipated 2020 Canada production
profile, Edmonton Light price differential estimate of C$5.00/bbl,
Edmonton Light to Harmattan discount of C$2.50/bbl, operating costs
estimated at ~C$7.00/boe, NGL mixture price at 45% of Edmonton
Light, and takes into consideration Canadian tax pools. |
2021 Capital Budget
The Company’s 2021 capital program of $27.2
million (before capitalized G&A) includes $16.6 million for
Egypt and $10.6 million for Canada. The 2021 plan was prepared to
focus on value accretive projects within its portfolio, maximize
free cash flow to direct at future growth opportunities and to
increase the Company’s production base. The 2021 drilling program
includes 12 Egypt wells and 3 Canadian Cardium wells in South
Harmattan.
Egypt
As announced in early December, 2020, the
Company reached an agreement with the Egyptian General Petroleum
Company (“EGPC”) to merge its three existing concessions with a
15-year primary term and improved Company economics. 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 $16.6 million Egypt program is entirely
allocated to development activities. The primary focus of the 2021
Egypt plan is to accelerate the exploitation of the Company’s
Eastern Desert acreage with the aim of increasing oil production,
while evaluating and increasing production from the more
prospective lower Bahariya reservoir on the South Ghazalat
development lease in the Western Desert.
The 2021 development program is principally
focused on the Eastern Desert and includes: nine development wells
in West Bakr (three in H and six in K pools), one Red Bed appraisal
well in the NW Gharib 3X pool, two development wells targeting Arta
Nukhul reservoir in West Gharib, two recompletions in West Bark,
two recompletions in West Gharib, three conversions to water
injectors in West Gharib, and development & maintenance
projects in the Eastern Desert (West Bakr, NW Gharib and West
Gharib). A recompletion of the SGZ-6X well to the more prospective
lower Bahariya reservoir is also planned.
Egypt production is expected to average between
9.7 and 10.5 Mboe/d for the year and achieve an exit rate in the
range of 10.4 to 10.7 Mboe/d.
Canada
The $10.6 million Canada program consists of
drilling three (three net) horizontal wells and completing one (one
net) standing well, all targeting the Cardium light oil resource at
Harmattan, with additional maintenance/ development capital. The
Cardium drilling program in 2021 consists of one 2-mile and two
1-mile development wells in South Harmattan. The one 2-mile
horizontal well drilled, but not completed, in South Harmattan in
2020 will also be stimulated, equipped, and brought into
production.
Canada production is expected to average between
2.3 and 2.5 Mboe/d for the year and achieve an exit rate in the
range of 3.1 to 3.3 Mboe/d.
The approved 2021 capital program is summarized
in the following table:
|
|
TransGlobe 2021 Capital ($MM) |
Gross Well Count |
|
|
Development |
Exploration |
|
Drilling |
|
Concession |
Wells |
Other1 |
Wells |
Total2 |
Development |
Exploration |
Total |
|
West Gharib |
1.1 |
2.0 |
- |
3.1 |
2 |
- |
2 |
|
West Bakr |
9.3 |
0.5 |
- |
9.8 |
9 |
- |
9 |
|
NW Gharib |
0.9 |
- |
- |
0.9 |
1 |
- |
1 |
|
South Ghazalat |
- |
0.3 |
- |
0.3 |
- |
- |
- |
|
Egypt |
11.3 |
5.3 |
- |
16.6 |
12 |
- |
12 |
|
Canada |
9.0 |
1.6 |
- |
10.6 |
3 |
- |
3 |
|
2021 Total |
20.3 |
6.9 |
- |
27.2 |
15 |
- |
15 |
|
Splits (%) |
100% |
0% |
100% |
100% |
0% |
100% |
| 1 |
Other includes completions, workovers, recompletions and
equipping |
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:
|
bbl |
barrels |
|
bbls/d |
barrels per day |
|
Mbbls/d |
thousand barrels per day |
|
Mbbls |
thousand barrels |
|
boe |
barrel of oil equivalent |
|
boe/d |
barrels of oil equivalent per day |
|
Mboe/d |
thousand barrels of oil equivalent per day |
|
MMbtu |
One million British thermal units |
|
Mcf |
thousand cubic feet |
|
Mcf/d |
thousand cubic feet per day |
|
NGL |
Natural Gas Liquids |
Production Disclosure
|
Production Summary (WI before royalties and taxes): |
|
|
Feb - 21 |
Jan - 21 |
Q4 - 20 |
Q3 - 20 |
Q2 - 20 |
Q1 - 20 |
Q4 - 19 |
|
Egypt (bbls/d) |
9,975 |
10,372 |
10,268 |
9,812 |
11,990 |
12,544 |
12,831 |
|
Eastern Desert of Egypt (bbls/d) |
9,874 |
10,257 |
10,132 |
9,635 |
11,757 |
12,343 |
12,831 |
|
Heavy Crude (bbls/d) |
9,084 |
9,436 |
9,490 |
9,066 |
11,001 |
11,548 |
11,984 |
|
Light and Medium Crude (bbls/d) |
790 |
821 |
642 |
569 |
756 |
795 |
847 |
|
Western Desert of Egypt (bbls/d) |
101 |
115 |
136 |
177 |
233 |
201 |
- |
|
Light and Medium Crude (bbls/d) |
101 |
115 |
136 |
177 |
233 |
201 |
- |
|
Canada (boe/d) |
2,032 |
2,108 |
2,116 |
2,232 |
2,310 |
2,453 |
2,531 |
|
Light and Medium Crude (bbls/d) |
576 |
607 |
618 |
661 |
706 |
860 |
908 |
|
Natural Gas (Mcf/d) |
4,262 |
4,540 |
4,454 |
4,633 |
4,665 |
4,996 |
5,334 |
|
Associated Natural Gas Liquids (bbls/d) |
746 |
744 |
755 |
798 |
826 |
761 |
735 |
|
Total (boe/d) |
12,007 |
12,480 |
12,384 |
12,044 |
14,300 |
14,997 |
15,362 |
|
Production Guidance |
|
|
Low |
High |
Mid-Point |
|
Egypt (bbls/d) |
9,700 |
10,500 |
10,100 |
|
Heavy Crude (bbls/d) |
8,940 |
9,678 |
9,309 |
|
Light and Medium Crude (bbls/d) |
760 |
822 |
791 |
|
Canada (boe/d) |
2,300 |
2,500 |
2,400 |
|
Light and Medium Crude (bbls/d) |
767 |
833 |
800 |
|
Natural Gas (Mcf/d) |
4,600 |
5,000 |
4,800 |
|
Associated Natural Gas Liquids (bbls/d) |
767 |
833 |
800 |
|
Total (boe/d) |
12,000 |
13,000 |
12,500 |
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 CorporationRandy Neely,
President and CEOEddie Ok, CFO |
+1 403 264
9888investor.relations@trans-globe.comhttp://www.trans-globe.comor
via Tailwind Associates or FTI Consulting |
|
Tailwind Associates (Investor Relations)Darren
Engels |
+1 403 618
8035darren@tailwindassociates.cahttp://www.tailwindassociates.ca |
|
FTI Consulting (Financial PR)Ben
BrewertonGenevieve Ryan |
+44(0) 20 3727 1000transglobeenergy@fticonsulting.com |
|
Canaccord Genuity (Nomad & Joint-Broker)Henry
Fitzgerald-O’ConnorJames Asensio |
+44(0) 20 7523 8000 |
|
Shore Capital (Joint Broker)Jerry KeenToby
Gibbs |
+44(0) 20 7408 4090 |
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