TIDMTGL
RNS Number : 7440Y
TransGlobe Energy Corporation
13 May 2019
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
FIRST QUARTER 2019 FINANCIAL AND OPERATING RESULTS
For the three months ended March 31, 2019
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, May 13, 2019 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") is pleased to announce its
financial and operating results for the three months ended March
31, 2019. 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 three month periods ended March 31, 2019 and 2018,
are available on TransGlobe's website at www.trans-globe.com.
Highlights:
ø Production for the three months ended March 31, 2019 averaged 15,924
boe/d (Egypt 13,616 bbls/d, Canada 2,308 boe/d), an increase of
654 boe/d (4%) from the previous quarter;
ø Production in April averaged 16,964 boe/d (Egypt 14,583 bbls/d,
Canada 2,381 boe/d), an increase of 1,040 boe/d (7%) from Q1-2019;
ø Positive first quarter funds flow of $15.2 million ($0.21 per share).
First quarter net loss of $8.8 million, inclusive of an $8.4 million
impairment loss and $4.8 million unrealized loss on derivative commodity
contracts;
ø Declared a dividend of $0.035 per share ($2.5 million) to shareholders
of record on March 29, 2019, paid on April 18, 2019;
ø Ended the first quarter with positive working capital of $43.6 million,
including cash and cash equivalents of $24.7 million;
ø Drilled 2 oil wells in Egypt (M-10 Twin and NWG 38A-8) and re-entered/deepened
2 water disposal wells (K-8 WDW and K-10 WDW) during the quarter;
ø Submitted a development lease application for South Ghazalat in
February, targeting first production prior to year end;
ø Equipped and tied in six Cardium oil wells in the Harmattan area,
Canada (related to the 2018 capital program) during January 2019;
ø Sales averaged 15,047 boe/d with one cargo lifting of TransGlobe's
entitlement crude oil occurring in March;
ø Drilled a new pool oil well (HW-2X) in West Bakr with an internally
estimated 113 feet of net oil pay subsequent to the quarter, which
was placed on production at an initial rate of 625 bbls/d in early
May; and
ø Drilled a development oil well (H-30) with an internally estimated
25 feet of net Yusr oil pay subsequent to the quarter.
FINANCIAL AND OPERATING RESULTS
(US$000s, except per share, price, volume amounts and %
change)
Three Months Ended March 31
Financial 2019 2018 % Change
--------------------------------------------------- ---------- -------- ----------
Petroleum and natural gas sales 69,217 52,951 31
Petroleum and natural gas sales, net of
royalties 37,352 24,715 51
Realized derivative loss on commodity
contracts (222) (118) (88)
Unrealized derivative loss on commodity
contracts (4,774) (6,046) 21
Production and operating expense 11,533 10,641 8
Selling costs 475 46 933
General and administrative expense 4,867 3,996 22
Depletion, depreciation and amortization
expense 8,766 6,848 28
Income taxes expense 6,203 6,019 3
Cash flow used in operating activities (13,071) (7,155) (83)
Funds flow from operations(1) 15,155 3,923 286
Basic per share 0.21 0.05
Diluted per share 0.21 0.05
Net loss (8,806) (10,120) 13
Basic per share (0.12) (0.14)
Diluted per share (0.12) (0.14)
Capital expenditures 8,547 4,635 84
Dividends declared 2,539 - -
Dividends declared per share 0.035 -
Working capital 43,600 45,252 (4)
Long-term debt, including current portion 47,687 67,167 (29)
Common shares outstanding
Basic (weighted average) 72,427 72,206 -
Diluted (weighted average) 72,694 72,206 1
Total assets 308,113 312,691 (1)
---------------------------------------------------- --------- ------- ----------
Operating
--------------------------------------------------- ---------- -------- ----------
Average production volumes (boe/d) 15,924 14,375 11
Average sales volumes (boe/d) 15,047 11,753 28
Inventory (mbbls) 647.0 1,012.7 (36)
Average sales price ($ per boe) 51.11 50.06 2
Operating expense ($ per boe) 8.52 10.06 (15)
---------------------------------------------------- --------- ------- ----------
(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.
Average Reference Prices and Exchange 2019 2018
Rates
------------------------------------------- -----
Q-1 Q-4 Q-3 Q-2 Q-1
------------------------------------------- ----- ----- ----- ----- -------
Crude oil
Dated Brent average oil price (US$/bbl) 63.17 67.71 75.22 74.50 66.81
Edmonton Sweet index (US$/bbl) 49.96 32.51 62.68 62.43 56.98
Natural gas
AECO (C$/mmbtu) 2.62 1.56 1.18 1.18 2.08
US/Canadian Dollar average exchange
rate 1.33 1.32 1.30 1.29 1.26
-------------------------------------------- ----- ----- ----- ----- -----
CORPORATE SUMMARY
TransGlobe Energy Corporation ("TransGlobe" or the "Company")
produced an average of 15,924 barrels of oil equivalent per day
("boe/d") during the first quarter of 2019. Egypt production was
13,616 barrels of oil per day ("bbls/d") and Canada production was
2,308 boe/d. Production for the quarter was above the 2019 guidance
(14,000 - 15,000 boe/d) and 4% higher than the previous
quarter.
As at March 31, 2019 the Company had approximately 647.0
thousand barrels ("mbbls") of inventoried entitlement crude oil.
All Canadian production was sold during the quarter, and the
Company sold 452.6 mbbls of entitlement crude oil in Egypt.
TransGlobe's Egyptian crude oil is sold at a quality discount to
Dated Brent. The Company received an average price of $54.93 per
barrel during the quarter. In Canada, the Company received an
average of $48.53 per barrel of oil and $1.94 per thousand cubic
feet ("mcf") of natural gas in the first quarter of 2019.
During the first quarter of 2019, the Company had funds flow
from operations of $15.2 million and ended the quarter with
positive working capital of $43.6 million, including cash and cash
equivalents of $24.7 million. The Company experienced a net loss in
the quarter of $8.8 million, which included an $8.4 million
non-cash impairment loss on the Company's exploration and
evaluation assets in South Alamein and a $4.8 million unrealized
derivative loss on commodity contracts which represents a fair
value adjustment on the Company's hedging contracts as at March 31,
2019.
The Company declared a dividend of $0.035 per share, paid on
April 18, 2019 to shareholders of record on March 29, 2019.
In the Eastern Desert the Company drilled two development oil
wells during the first quarter of 2019. At West Bakr, the Company
drilled and completed the M-10 replacement well (M-10 Twin) as an
Asl A oil producer which was placed on production in February and
is currently producing 400 bbls/d. The Company also
re-entered/deepened two suspended oil wells and converted them to
water disposal wells (K-8 WDW and K-10 WDW). At North West Gharib,
the Company drilled the NWG 38A-8 well to a total depth of 1,631
meters (5,350 feet), targeting the southern area of the NWG 38A Red
Bed pool to provide water injection/reservoir pressure support for
the 38A pool. The well was completed and placed on production at an
initial average rate of 45 bbls/d and 100 barrels per day of water.
Based on early production results, the well was converted to water
injection during Q2-2019 to initiate pressure support for the NWG
38A pool.
Subsequent to the quarter, the Company drilled two wells in West
Bakr resulting in an oil discovery at HW-2X and a development oil
well at H-30. The HW-2X exploration well was drilled to a total
depth of 1,654 meters (5,425 feet) and cased as a Yusr oil well.
Based on open-hole logs and wireline samples, the well encountered
an internally estimated 34.5 meters (113 feet) of net oil pay in
the Yusr formation. The HW-2X well was completed and placed on
production in early May at an initial rate of 625 bbls/d. The H-30
development well was drilled to a total depth of 1,655 meters
(5,454 feet) and cased as a Yusr oil well. Based on open-hole logs
and wireline samples, the well encountered an internally estimated
7.8 meters (25 feet) of net oil pay in the Yusr formation. The H-30
well is scheduled for completion and first oil production by the
end of May. Following H-30, the drilling rig is scheduled to drill
a development well at West Bakr (K-63) and one exploration well at
North West Gharib (NWG 38 D-1).
In the Western Desert, the Company filed a development lease
application with EGPC in February for the South Ghazalat SGZ 6X oil
discovery. The Company is targeting production from this concession
prior to year end. At South Alamein, the Company was unsuccessful
in its attempts to secure military approval for its desired
drilling location. In light of recent events, TransGlobe has
recorded an impairment loss of $8.4 million and will continue to
negotiate access to the western portion of this concession.
In Canada, the Company equipped and tied in six (five net)
Cardium oil wells (from the 2018 capital program) in the Harmattan
area during January. Due to low ethane prices, TransGlobe's
third-party gas processing plant shut down their deep cut ethane
extraction plant in January. Approximately 250 boe/d of ethane was
sold as part of the gas stream in Q1-2019 at a higher energy
content resulting in a neutral impact to revenue. It is expected
that ethane volumes will remain in sales gas volumes until
Q4-2019.
Advisory on Forward-Looking 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,
statements relating to "reserves" which are, by their nature,
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions that the reserves or
resources, as applicable, described exist in the quantities
predicted or estimated and that the reserves can be profitably
produced in the future. The recovery and reserve estimates of
TransGlobe's reserves provided herein are estimates only and there
is no guarantee that the estimated reserves will be recovered.
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.
Forward-looking information and statements contained in this
document include the payment of dividends, including the timing and
amount thereof, and the Company's intention to declare and pay
dividends in the future under its current dividend policy. Without
limitation of the foregoing, future dividend payments, if any, and
the level thereof is uncertain, as the Company's dividend policy
and the funds available for the payment of dividends from time to
time will be dependent upon, among other things, free cash flow,
financial requirements for the Company's operations and the
execution of its strategy, ongoing production maintenance, growth
through acquisitions, fluctuations in working capital and the
timing and amount of capital expenditures and anticipated business
development capital, payment irregularity in Egypt, debt service
requirements and other factors beyond the Company's control.
Further, the ability of the Company to pay dividends will be
subject to applicable laws (including the satisfaction of the
liquidity and solvency tests contained in applicable corporate
legislation) and contractual restrictions contained in the
instruments governing its indebtedness.
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 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. Darrin Drall, P.Eng., - Manager Engineering 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. Drall obtained a
Bachelor of Science Degree in Engineering from the University of
Manitoba. He is a Registered Professional Engineer in the province
of Alberta (Association of Professional Engineers and Geoscientists
of Alberta) and in the province of Saskatchewan (Association of
Professional Engineers and Geoscientists of Saskatchewan) and has
over 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.
The following abbreviations used in this press release have the
meanings set forth below:
Bopd barrels of oil per day
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
For further information, please
contact:
Investor Relations
Telephone: +1 403.264.9888
Email: investor.relations@trans-globe.com
Web site: http://www.trans-globe.com
TransGlobe Energy Via FTI Consulting
Randy Neely, President and Chief
Executive Officer
Eddie Ok, Chief Financial Officer
Canaccord Genuity (Nomad & Joint
Broker) +44 (0) 20 7523 8000
Henry Fitzgerald-O'Connor
James Asensio
GMP First Energy (Joint Broker) +44 (0) 20 7448 0200
Jonathan Wright
FTI Consulting (Financial PR) +44 (0) 20 3727 1000
Ben Brewerton transglobeenergy@fticonsulting.com
Genevieve Ryan
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRFMMGMKLZDGLZM
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