TIDMTGL
RNS Number : 7921H
TransGlobe Energy Corporation
06 August 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 SECOND QUARTER 2021
FINANCIAL AND OPERATING RESULTS FOR THE THREE AND SIX MONTHSED JUNE
30, 2021
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, August 6, 2021 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") is pleased to announce its
financial and operating results for the three and six months ended
June 30, 2021. 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 and six months ended June 30, 2021 and
2020, are available on TransGlobe's website at www.trans-globe.com
.
FINANCIAL HIGHLIGHTS:
-- Second quarter sales averaged 16,542 boe/d including 366.3
Mbbls sold to EGPC for net proceeds of $22.2 million and one cargo
lifting of 498.6 Mbbls of entitlement crude oil for net proceeds of
$29.1 million (collected in May 2021). The overlift portion of the
cargo (129.5 Mbbls) was settled against outstanding receivables
from EGPC during the quarter;
-- Average realized price for Q2-2021 sales of $56.48/boe;
Q2-2021 average realized price on Egyptian sales of $60.27/bbl and
Canadian sales of $33.61/boe;
-- Funds flow from operations of $17.1 million ($0.24 per share)
in the quarter;
-- Second quarter net earnings of $7.7 million ($0.11 per
share), inclusive of a $1.2 million unrealized loss on derivative
commodity contracts;
-- Ended the second quarter with positive working capital of
$17.1 million, including cash of $43.6 million;
-- Subsequent to the quarter, the Company sold a 500 Mbbl cargo
of Egypt entitlement crude oil with proceeds expected in August
2021;
OPERATIONAL HIGHLIGHTS:
-- Second quarter production averaged 13,077 boe/d (Egypt 10,727
bbls/d, Canada 2,350 boe/d), an increase of 856 boe/d (7%) from the
previous quarter. Increase primarily due to improved well
optimization activities in Egypt, the full oil production impact of
the SGZ-6X lower Bahariya recompletion, and return to production in
Canada of the 2-20 well following the 13-16 completion and
stimulation plus the latter's production contribution;
-- Production in July averaged 13,414 boe/d (Egypt 11,308
bbls/d, Canada 2,106 boe/d), an increase of 3% from Q2-2021;
-- Ended the quarter with 140.3 Mbbls of entitlement crude oil
inventory, a decrease of 315.4 Mbbls from Q1-2021. This decrease is
due to an increase in sales volumes as a result of the Q2 cargo
lifting, partially offset by an increase in production;
-- Drilled two development oil wells at West Bakr in the Eastern
Desert, Egypt, both successfully encountering oil-bearing sands and
placed on production;
-- On June 30, 2021 the Company spud the first of three 100%
working interest horizontal oil development wells (one 2-mile, two
1-mile) located approximately four miles to the northwest of the
2-20 location in TransGlobe's Cardium extension into the South
Harmattan area in Canada, with drilling and casing completed in
July; and
CORPORATE HIGHLIGHTS:
-- 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 February 2020 effective date
upon ratification . As such, the results achieved in Q2-2021 and
year to-date are exclusive of any effective date adjustments that
will be made upon ratification.
FINANCIAL AND OPERATING RESULTS
(US$000s, except per share, price, volume amounts and %
change)
Three Months Ended June 30 Six Months Ended June 30
Financial 2021 2020 % Change 2021 2020 % Change
------------------------- --------- -------- -------- --------- -------- --------
Petroleum and natural
gas sales 85,018 24,549 246 127,295 104,736 22
Petroleum and natural
gas sales, net of
royalties 50,595 11,392 344 68,647 64,626 6
Realized derivative
(loss) gain on
commodity contracts (3,646) 1,977 (284) (5,191) 6,145 (184)
Unrealized derivative
(loss) gain on
commodity contracts (1,248) (3,348) (63) (4,218) 1,028 (510)
Production and
operating expense 19,722 10,406 90 29,171 33,663 (13)
Selling costs 1,671 423 295 1,705 1,049 63
General and
administrative
expense 3,670 3,951 (7) 8,707 5,855 49
Depletion,
depreciation and
amortization expense 6,959 5,657 23 11,774 17,909 (34)
Income tax expense 5,605 2,445 129 10,265 7,030 46
Cash flow generated by
operating activities 23,832 24,551 (3) 19,892 20,878 (5)
Funds flow from
operations(1) 17,100 (2,764) (719) 17,181 22,918 (25)
Basic per share 0.24 (0.03) 0.24 0.32
Diluted per share 0.24 (0.03) 0.24 0.32
Net earnings (loss) 7,722 (13,367) (158) (3,302) (68,585) (95)
Basic per share 0.11 (0.19) (0.05) (0.95)
Diluted per share 0.11 (0.19) (0.05) (0.95)
Capital expenditures 3,597 1,229 193 6,504 6,806 (4)
Working capital 17,136 35,112 (51) 17,136 35,112 (51)
Long-term debt,
including current
portion 16,951 27,071 (37) 16,951 27,071 (37)
Common shares
outstanding
Basic (weighted
average) 72,542 72,542 - 72,542 72,542 -
Diluted (weighted
average) 72,922 72,542 1 72,954 72,542 1
Total assets 208,479 221,347 (6) 208,479 221,347 (6)
-------------------------- -------- -------- -------- --------- -------- --------
Operating
------------------------- -------- -------- -------- --------- -------- --------
Average production
volumes (boe/d) 13,077 14,300 (9) 12,652 14,648 (14)
Average sales volumes
(boe/d) 16,542 12,470 33 13,135 17,702 (26)
Inventory (Mbbls) 140.3 408.7 (66) 140.3 408.7 (66)
Average realized sales
price ($/boe) 56.48 21.63 161 53.54 32.51 65
Production and
operating expenses
($/boe) 13.10 9.17 43 12.27 10.45 17
-------------------------- -------- -------- -------- --------- -------- --------
(1) Funds flow from operations (before finance costs) is a
measure that represents cash generated from operating activities
before changes in non-cash working capital and may not be
comparable to measures used by other companies. See "Non-GAAP
Financial Measures".
2021 2020
---------------------------------------------- -------------
Average reference prices and exchange rates Q-2 Q-1 Q-4 Q-3 Q-2
---------------------------------------------- ------ ----- ----- ----- -----
Crude oil
Dated Brent average oil price ($/bbl) 68.83 60.82 44.29 42.96 29.34
Edmonton Sweet index ($/bbl) 63.07 52.54 38.50 37.35 21.71
Natural gas
AECO ($/MMBtu) 2.48 2.30 2.18 1.69 1.41
US/Canadian Dollar average exchange rate 1.23 1.27 1.30 1.33 1.39
------------------------------------------------ ----- ----- ----- ----- -----
CORPORATE SUMMARY
TransGlobe Energy Corporation ("TransGlobe" or the "Company")
produced an average of 13,077 barrels of oil equivalent per day
("boe/d") during the second quarter of 2021. Egypt production was
10,727 barrels of oil per day ("bbls/d") and Canada production was
2,350 boe/d. Production for the quarter was slightly above full
year 2021 guidance of 12,000 to 13,000 boe/d and 7% higher than the
previous quarter. The increase is primarily due to improved well
optimization activities in Egypt, the impact of the SGZ-6X lower
Bahariya recompletion, and a return to production in Canada of the
2-20 well, taken offline to allow for the 13-16 completion plus the
latter's production contribution.
TransGlobe's Egyptian crude oil is sold at a quality discount to
Dated Brent. The Company received an average price of $60.27 per
barrel in Egypt during the quarter. In Canada, the Company received
an average of $63.05 per barrel of oil, $27.03 per barrel of NGLs
and $2.58 per thousand cubic feet ("Mcf") of natural gas during the
quarter.
During Q2-2021, the Company had funds flow from operations of
$17.1 million and ended the quarter with positive working capital
of $17.1 million, including cash of $43.6 million. The Company had
net earnings in the quarter of $7.7 million, inclusive of a $1.2
million unrealized derivative loss on commodity contracts which
represents a fair value adjustment on the Company's hedging
contracts at June 30, 2021.
In Egypt, the Company sold 366.3 thousand barrels ("Mbbls") of
entitlement crude oil to the Egyptian General Petroleum Company
("EGPC") and sold one cargo lifting of 498.6 Mbbls of entitlement
crude oil . The overlift portion of the cargo (129.5 Mbbls) was
settled against outstanding receivables from EGPC during the
quarter. At June 30, 2021 entitlement crude oil inventory was 140.3
Mbbls. The decrease in inventoried crude oil is attributed to a
significant increase in sales volumes as a result of the Q2-2021
cargo lifting, partially offset by an increase in production.
Subsequent to the quarter, TransGlobe sold a 500 Mbbl cargo of
Egypt entitlement crude oil. The cargo volumes were in excess of
crude oil inventories at the time of lifting. The Company expects
to reach a settlement on the overlift in Q3-2021 . All Canadian
production was sold during the quarter.
As announced on December 3, 2020, the Company has reached an
agreement with EGPC to merge its three existing Eastern Desert
concessions with a 15-year primary term and improved Company
economics. As previously announced, the Company held discussions
with the Ministry of Petroleum during Q2-2021, and was informed
that due to the recent Egyptian election combined with internal
process changes for ratification, the Ministry is now expecting
ratification to occur in the second half of 2021. The February 1,
2020 effective date for the improved concession terms and
assurances from the Ministry is supportive of increased investment
in advance of ratification.
In Egypt, following the mobilization of the rig from the Western
Desert, the Company drilled two development oil wells in the
Eastern Desert at West Bakr. The HW-8 development oil well was
drilled to a total depth of 1,640.5 meters, successfully
encountering oil-bearing sands in the Yusr-C and Bakr formations,
and was brought into production at a field estimated 622 bbls/d
late in the quarter. The K-64 development oil well was drilled to a
total depth of 1,538.0 meters, successfully encountering
oil-bearing sands in the Asl-A, Asl-B and Asl-D formations, and was
brought into production at a field estimated 609 bbls/d subsequent
to the quarter.
In anticipation of increased gross fluid offtake to be generated
by new projects in the new merged concession area, the Company has
accelerated plans to upgrade its water management systems in
H2-2021. The Company remains forward looking and prepared to use
its operational control to take advantage of any sustained upward
movement in oil price.
In Canada, the previously drilled and equipped 2-mile horizontal
well at South Harmattan has achieved a calculated IP30 estimate of
286 boe/d ( 247 bbls/d light oil, 131 Mcf/d gas, 17 bbls/d NGL) and
a calculated IP60 estimated at 242 boe/d (199 bbls/d light oil, 144
Mcf/d gas, 19 bbls/d NGL), both on a productive day basis. Lease
construction was completed in support of the drilling of three 100%
working interest horizontal oil development wells (one 2-mile and
two 1-mile) located approximately four miles to the northwest of
the 2-20 location in TransGlobe's Cardium extension into the South
Harmattan area. The first well of this back-to-back drilling
program spud on June 30, 2021 and was drilled and cased in July.
Subsequent to the quarter, the second and third wells in the
Canadian drilling program were drilled and cased. All three wells
were drilled on time and on budget.
Dependent upon anticipated rig efficiencies, the Company expects
to drill two additional wells (an exploration well, SGZ-7B, and a
well in K-field) as a part of the 2021 drilling program. These new
drills, combined with accelerated spend on its water management
systems, noted above, and cost increases incurred in the Canadian
drilling and development program, are expected to result in an
approximate $5.8 million increase to the previously announced
capital budget of $27.2 million (before capitalized G&A) in
2021. Due to timing of the drilling of the K-field well and the
SGZ-7B well, the Company is not adjusting its expected production
guidance for 2021 of 12.0 to 13.0 Mboe/d with a midpoint of 12.5
Mboe/d.
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.
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 June 30, 2021, the Company had a working
capital surplus of $17.1 million (December 31, 2020 - $15.3
million). The increase in working capital is primarily due to an
increase in cash resulting from collections on accounts receivable
in the period and an increase in accounts receivable due to
increased sales in Q2-2021, partially offset by a corresponding
decrease in crude oil inventory, an increase in accounts payable
and an increase in the derivative commodity contracts liability
from increased commodity pricing.
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 has experienced delays in
the collection of accounts receivable from EGPC. The length of
delay peaked in 2013, returned to historical delays of up to nine
months in 2017, and has since fluctuated within an acceptable
range. As at June 30, 2021, amounts owing from EGPC were $9.3
million. The Company considers there to be minimal credit risk
associated with amounts receivable from EGPC.
In Egypt, the Company sold 366.3 Mbbls of entitlement crude oil
to EGPC in Q2-2021 for net proceeds of $22.2 million and sold one
cargo lifting of 498.6 Mbbls of entitlement crude oil for net
proceeds of $29.1 million. The overlift portion of the cargo (129.5
Mbbls) was settled against outstanding receivables from EGPC during
the quarter. During the second quarter of 2021, the Company
collected a total of $17.7 million of accounts receivable from
EGPC, an additional $2.4 million has been collected subsequent to
the quarter. 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 June 30, 2021, crude oil held as
inventory was 140.3 Mbbls.
As at June 30, 2021, the Company had $93.2 million of revolving
credit facilities with $17.0 million drawn and $76.2 million
available. The Company has a prepayment agreement with Mercuria
that allows for a revolving balance of up to $75.0 million, of
which $10.0 million was drawn and outstanding as at June 30, 2021.
During the six months ended June 30, 2021, the Company repaid $5.0
million on this prepayment facility. The Company also has a
revolving Canadian reserves-based lending facility with ATB that
was renewed and increased as at June 30, 2021 from C$15.0 million
($11.0 million) to C$22.5 million ($18.2 million), of which C$8.6
million ($7.0 million) was drawn and outstanding. During the six
months ended June 30, 2021, the Company had drawings of C$0.3
million ($0.2 million) on this facility.
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.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
EASTERN DESERT
West Gharib, West Bakr, and North West Gharib (100% working
interest, operated)
Operations and Exploration
Following mobilization of the rig from the Western Desert, the
Company drilled a development oil well in the Eastern Desert at
West Bakr. The HW-8 development well was drilled to a total depth
of 1,640.5 meters, successfully encountering oil-bearing sands in
the Yusr-C and Bakr formations.
The reservoir section was fully logged and evaluated, with an
internally estimated 5.9 meters of net oil pay in the Yusr-C sand
and 28.1 meters of net oil pay across four sands in the Bakr
reservoir. The Bakr reservoir was brought into production late in
the quarter at a field estimated 622 bbls/d.
HW-8 was the first well in TransGlobe's 12 well development
program in 2021 designed to grow oil production and increase
reserves in the Eastern Desert.
The second well in this program, K-64, a development well in the
Eastern Desert at West Bakr, was drilled to a total depth of 1,538
meters, successfully encountering oil-bearing sands in the Asl-A,
Asl-B and Asl-D formations.
The reservoir section was fully logged and evaluated, with an
internally estimated 20.9 meters of net oil pay in the Asl-A sand,
17.8 meters of net oil pay across the Asl-B sand and 9.7 meters of
net oil pay in the Asl-D sand. Subsequent to the quarter, the Asl-B
was brought into production at a field estimated 609 bbls/d in
mid-July. The Asl-A is expected to be recovered through a future
recompletion of this well and the Asl-D through other well drainage
points.
In anticipation of increased gross fluid offtake to be generated
by new projects in the new merged concession area, the Company has
accelerated plans to upgrade its water management systems in
H2-2021. Dependent upon anticipated rig efficiencies, the Company
also expects to drill an additional well in K-field as a part of
the 2021 drilling program.
The substantial capital investment in 2021 is supported by the
Company's previously disclosed merger of its three Eastern Desert
concessions into a single agreement, currently awaiting
ratification.
Production
Production averaged 9,917 bbls/d during the quarter, a decrease
of 1% (133 bbls/d) from the previous quarter. The decrease was
primarily due to natural declines prior to the bringing into
production of the first 2021 Eastern Desert drill wells .
Production in July 2021 averaged 10,611 bbls/d.
Sales
The Company sold 338.5 Mbbls of entitlement crude oil to EGPC
and sold o ne cargo lifting of 498.6 Mbbls of entitlement crude oil
to third-party buyers during the quarter. The overlift portion of
the cargo (129.5 Mbbls) was settled against outstanding receivables
from EGPC during the quarter.
Quarterly Eastern Desert Production (bbls/d) 2021 2020
-------------------------------------------------- ---------------
Q-2 Q-1 Q-4 Q-3
-------------------------------------------------- ------- ------ ------ ------
Gross production rate(1) 9,917 10,050 10,129 9,635
TransGlobe production sold (inventoried) 3,465 (2,531) 3,328 (1,432)
--------------------------------------------------- ------ ------ ------ ------
Total sales 13,382 7,519 13,457 8,203
--------------------------------------------------- ------ ------ ------ ------
Government share (royalties and tax) 5,229 5,680 5,715 5,452
TransGlobe sales (after royalties and tax)(2) 8,153 1,839 7,742 2,751
--------------------------------------------------- ------ ------ ------ ------
Total sales 13,382 7,519 13,457 8,203
--------------------------------------------------- ------ ------ ------ ------
(1) Quarterly production by concession (bbls/d):
West Gharib - 3,024 (Q2-2021), 3,076 (Q1-2021), 3,113 (Q4-2020),
and 2,808 (Q3-2020)
West Bakr - 6,327 (Q2-2021), 6,415 (Q1-2021), 6,656 (Q4-2020),
and 6,498 (Q3-2020)
North West Gharib - 566 (Q2-2021), 559 (Q1-2021), 360 (Q4-2020),
and 329 (Q3-2020)
(2) Under the terms of the Production Sharing Concession
Agreements, royalties and taxes are paid out of the government's
share of production sharing oil.
WESTERN DESERT
South Ghazalat (100% working interest, operated)
Operations and Exploration
Following evaluation of the reservoir pressure and Gas Oil Ratio
("GOR") data from the initial production phase of the lower
Bahariya reservoir at SGZ--6X in the South Ghazalat field, the well
has been put on GOR control management to preserve reservoir
pressure and maximize recovery. The well is currently producing at
a field estimated 680 - 730 bbls/d of light oil with a 24%
watercut. Further reservoir pressure data is being collected to
evaluate the impact of aquifer pressure support to the reservoir as
that is activated.
With stronger oil prices and spare capacity available in the
South Ghazalat production facility and dependent upon anticipated
rig efficiencies, the Company expects to accelerate the drilling of
an exploration well on the SGZ--7B prospect to the east of SGZ-6X.
The earliest SGZ-7B could be drilled is Q4-2021.
Production
Production averaged 810 bbls/d during the quarter, an increase
of 331% (622 bbls/d) from the previous quarter. The increase was
due to the oil production impact of the SGZ-6X lower Bahariya
recompletion over a whole quarter.
Production in July 2021 averaged 697 bbls/d.
Sales
The Company sold 27.8 Mbbls of inventoried entitlement crude oil
to EGPC during the quarter.
Quarterly Western Desert Production (bbls/d) 2021 2020
-------------------------------------------------- --------- --------
Q-2 Q-1 Q-4 Q-3
-------------------------------------------------- ---- --- --- ---
Gross production rate 810 188 139 177
Total sales 810 188 139 177
--------------------------------------------------- --- --- --- ---
Government share (royalties and tax) 504 117 86 110
TransGlobe sales (after royalties and tax)(1) 306 71 53 67
--------------------------------------------------- --- --- --- ---
Total sales 810 188 139 177
--------------------------------------------------- --- --- --- ---
(1) Under the terms of the Production Sharing Concession
Agreements, royalties and taxes are paid out of the government's
share of production sharing oil.
CANADA
Operations and Exploration
The 2-mile horizontal South Harmattan 13-16 oil well, stimulated
and equipped in Q1-2021, has achieved a calculated IP30 estimated
at 286 boe/d (247 bbls/d light oil, 131 Mcf/d gas 17 bbls/d NGL)
and a calculated IP60 estimated at 242 boe/d (199 bbls/d light oil,
144 Mcf/d gas 19 bbls/d NGL), both on a productive day basis.
Lease construction was completed in support of the drilling of
three 100% horizontal oil development wells (one 2-mile, two
1-mile) in the north of TransGlobe's Cardium extension into the
South Harmattan area. The first well of this back-to-back drilling
program spud on June 30, 2021 and was drilled and cased in July.
Subsequent to the quarter, the second and third wells in the
Canadian drilling program were drilled and cased. All three wells
were drilled on time and on budget. The Company expects all three
wells to be completed, stimulated and brought into production by
early Q4-2021.
Production
In Canada, production averaged 2,350 boe/d during the quarter,
an increase of 367 boe/d (19%) from the previous quarter and within
full year 2021 guidance of 2,300 to 2,500 boe/d. The increase in
production from the previous quarter is primarily due to the return
to production of the 2-20 well following the 13-16 completion and
stimulation, plus the latter's production contribution.
Production in July 2021 averaged 2,106 boe/d with 605 bbls/d of
oil. The decrease from Q2-2021 is due to natural declines and the
initial high decline rate on the recently completed 13-16 South
Harmattan Cardium Horizontal well.
Quarterly Canada Production 2021 2020
------------------------------- -------------
Q-2 Q-1 Q-4 Q-3
------------------------------- ------ ----- ----- -----
Canada crude oil (bbls/d) 687 564 618 661
Canada NGLs (bbls/d) 857 710 755 798
Canada natural gas (Mcf/d) 4,834 4,259 4,454 4,633
-------------------------------- ----- ----- ----- -----
Total production (boe/d) 2,350 1,983 2,116 2,232
-------------------------------- ----- ----- ----- -----
Condensed Consolidated Interim Statements of Earnings (Loss) and
Comprehensive Income (Loss)
(Unaudited - Expressed in thousands of U.S. Dollars, except per
share amounts)
Three Months Ended June 30 Six Months Ended June 30
2021 2020 2021 2020
----------------------- ------------- -------------- ----------- ------------
REVENUE
Petroleum and natural gas
sales, net of royalties 50,595 11,392 68,647 64,626
Finance revenue 3 34 6 92
Other revenue 33 222 33 222
-------------------------- ------------ -------------- ----------- ------------
50,631 11,648 68,686 64,940
----------------------- ------------ -------------- ----------- ------------
EXPENSES
Production and operating 19,722 10,406 29,171 33,663
Selling costs 1,671 423 1,705 1,049
General and administrative 3,670 3,951 8,707 5,855
Foreign exchange loss 10 113 43 165
Finance costs 333 589 803 1,404
Depletion, depreciation
and amortization 6,959 5,657 11,774 17,909
Asset retirement
obligation accretion 45 60 111 128
Loss (gain) on financial
instruments 4,894 1,371 9,409 (7,173)
Impairment loss - - - 73,495
-------------------------- ------------ -------------- ----------- ------------
37,304 22,570 61,723 126,495
----------------------- ------------ -------------- ----------- ------------
Earnings (loss) before
income taxes 13,327 (10,922) 6,963 (61,555)
Income tax expense -
current 5,605 2,445 10,265 7,030
------------------------ ------------ -------------- ----------- ------------
NET EARNINGS (LOSS) 7,722 (13,367) (3,302) (68,585)
------------------------ ------------ -------------- ----------- ------------
OTHER COMPREHENSIVE
INCOME (LOSS)
Currency translation
adjustments 772 2,247 1,166 (2,559)
-------------------------- ------------ -------------- ----------- ------------
COMPREHENSIVE INCOME
(LOSS) 8,494 (11,120) (2,136) (71,144)
------------------------ ------------ -------------- ----------- ------------
Net earnings (loss) per
share
Basic 0.11 (0.19) (0.05) (0.95)
Diluted 0.11 (0.19) (0.05) (0.95)
-------------------------- ------------ -------------- ----------- ------------
Condensed Consolidated Interim Balance Sheets
(Unaudited - Expressed in thousands of U.S. Dollars)
As at As at
June 30, 2021 December 31, 2020
--------------------------------------------- -------------- -----------------
ASSETS
Current
Cash and cash equivalents 43,639 34,510
Accounts receivable 13,641 9,996
Prepaids and other 2,864 3,530
Product inventory 3,703 5,828
------------------------------------------------ ------------- -----------------
63,847 53,864
Non-Current
Intangible exploration and evaluation assets 1,162 584
Property and equipment
Petroleum and natural gas assets 137,202 140,059
Other 2,559 2,917
Deferred taxes 3,709 3,723
------------------------------------------------ ------------- -----------------
208,479 201,147
---------------------------------------------- ------------- -----------------
LIABILITIES
Current
Accounts payable and accrued liabilities 30,758 21,667
Derivative commodity contracts 4,605 398
Current portion of lease obligations 1,348 1,553
Current portion of long-term debt 10,000 14,897
------------------------------------------------ ------------- -----------------
46,711 38,515
Non-Current
Long-term debt 6,951 6,567
Asset retirement obligations 13,863 13,042
Other long-term liabilities 859 544
Lease obligations 33 461
Deferred taxes 3,709 3,723
------------------------------------------------ ------------- -----------------
72,126 62,852
---------------------------------------------- ------------- -----------------
SHAREHOLDERS' EQUITY
Share capital 152,805 152,805
Accumulated other comprehensive income 3,066 1,900
Contributed surplus 25,303 25,109
Deficit (44,821) (41,519)
------------------------------------------------ ------------- -----------------
136,353 138,295
---------------------------------------------- ------------- -----------------
208,479 201,147
---------------------------------------------- ------------- -----------------
Condensed Consolidated Interim Statements of Changes in
Shareholders' Equity
(Unaudited - Expressed in thousands of U.S. Dollars)
Six Months Ended June 30
2021 2020
---------------------------------------------- ------------- -----------
Share Capital
----------------------------------------------- ------------ -----------
Balance, beginning and end of period 152,805 152,805
------------------------------------------------- ------------ -----------
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period 1,900 1,134
Currency translation adjustment 1,166 (2,559)
------------------------------------------------- ------------ -----------
Balance, end of period 3,066 (1,425)
------------------------------------------------- ------------ -----------
Contributed Surplus
Balance, beginning of period 25,109 24,673
Share-based compensation expense 194 245
------------------------------------------------- ------------ -----------
Balance, end of period 25,303 24,918
------------------------------------------------- ------------ -----------
(Deficit) Retained Earnings
Balance, beginning of period (41,519) 35,878
Net loss (3,302) (68,585)
------------------------------------------------- ------------ -----------
Balance, end of period (44,821) (32,707)
------------------------------------------------- ------------ -----------
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited - Expressed in thousands of US Dollars)
Three Months Ended June 30 Six Months Ended June 30
2021 2020 2021 2020
-------------------- ------------- ------------- ----------- ------------
OPERATING
Net earnings (loss) 7,722 (13,367) (3,302) (68,585)
Adjustments for:
Depletion, depreciation
and amortization 6,959 5,657 11,774 17,909
Asset retirement
obligation accretion 45 60 111 128
Impairment loss - - - 73,495
Share-based
compensation 816 884 3,587 (417)
Finance costs 333 589 803 1,404
Unrealized loss (gain)
on financial
instruments 1,248 3,348 4,218 (1,028)
Unrealized loss on
foreign currency
translation 8 65 12 32
Asset retirement
obligations settled (31) - (22) (20)
Changes in non-cash
working capital 6,732 27,315 2,711 (2,040)
--------------------- ------------ ------------- ----------- ------------
Net cash generated by
operating activities 23,832 24,551 19,892 20,878
---------------------- ------------ ------------- ----------- ------------
INVESTING
Additions to
intangible
exploration and
evaluation assets (15) (7) (578) (337)
Additions to
petroleum and
natural gas assets (3,557) (1,161) (5,887) (6,322)
Additions to other
assets (25) (61) (39) (147)
Changes in non-cash
working capital 522 (1,594) 2,347 (662)
--------------------- ------------ ------------- ----------- ------------
Net cash used in
investing activities (3,075) (2,823) (4,157) (7,468)
---------------------- ------------ ------------- ----------- ------------
FINANCING
Interest paid (291) (512) (584) (1,130)
Increase in long-term
debt 146 72 225 168
Payments on lease
obligations (479) (381) (1,071) (775)
Repayments of
long-term debt (5,000) (10,000) (5,000) (10,000)
Changes in non-cash
working capital (8) - (9) -
--------------------- ------------ ------------- ----------- ------------
Net cash used in
financing activities (5,632) (10,821) (6,439) (11,737)
---------------------- ------------ ------------- ----------- ------------
Currency translation
differences relating
to cash and cash
equivalents (155) 100 (167) (87)
---------------------- ------------ ------------- ----------- ------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 14,970 11,007 9,129 1,586
CASH AND CASH
EQUIVALENTS,
BEGINNING OF PERIOD 28,669 23,830 34,510 33,251
---------------------- ------------ ------------- ----------- ------------
CASH AND CASH
EQUIVALENTS, OF
PERIOD 43,639 34,837 43,639 34,837
---------------------- ------------ ------------- ----------- ------------
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 thousand barrels
boe barrel of oil equivalent
boe/d 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):
Jul - Q2 - Q1 - Q4 - Q3 - Q2 -
21 21 21 20 20 20
------- ------- ------- ------- ------- -------
Egypt (bbls/d) 11,308 10,727 10,238 10,268 9,812 11,990
------- ------- ------- ------- ------- -------
Eastern Desert of Egypt
(bbls/d) 10,611 9,917 10,052 10,132 9,635 11,757
------- ------- ------- ------- ------- -------
Heavy Crude (bbls/d) 10,399 9,736 9,419 9,490 9,066 11,001
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 212 181 633 642 569 756
------- ------- ------- ------- ------- -------
Western Desert of Egypt
(bbls/d) 697 810 186 136 177 233
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 697 810 186 136 177 233
------- ------- ------- ------- ------- -------
Canada (boe/d) 2,106 2,350 1,983 2,116 2,232 2,310
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 605 687 564 618 661 706
------- ------- ------- ------- ------- -------
Natural Gas (Mcf/d) 4,456 4,834 4,259 4,454 4,633 4,665
------- ------- ------- ------- ------- -------
Associated Natural Gas
Liquids (bbls/d) 758 857 710 755 798 826
------- ------- ------- ------- ------- -------
Total (boe/d) 13,414 13,077 12,221 12,384 12,044 14,300
------- ------- ------- ------- ------- -------
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 cashflow 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
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
This information is provided by RNS, the news service of the
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END
IR GGGDIDXGDGBL
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