TIDMTGL
RNS Number : 3975H
TransGlobe Energy Corporation
06 April 2022
TRANSGLOBE ENERGY CORPORATION
OPERATIONS UPDATE
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, April 6, 2022 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") announces an operations update. All
dollar values are expressed in US dollars unless otherwise
stated.
OVERVIEW
-- Production averaged 12.4 MBoepd in Q1, 2022 (See "Oil &
Gas Advisories" for production by product type);
-- Two 100% working interest (one 2-mile, one 1-mile) Canada
Harmattan horizontal Cardium reservoir development wells were
drilled in Q1, 2022;
-- Drilled and cased three Egypt Eastern Desert development wells in Q1, 2022;
-- Production has been restored at the South Ghazalat SGZ-6X well;
-- A cargo of Egypt crude oil is scheduled to lift through the
end of April and into early May;
-- The Company ended Q1, 2022 with $37 million cash.
RANDY NEELY, PRESIDENT AND CEO'S STATEMENT
"We achieved a solid operational start to the year with drilling
in both Egypt and Canada generating production in line with
guidance, and we have opportunistically retained the Canadian rig
to accelerate the budgeted seven well drilling program as demand
for services and equipment increases.
Corporately, a second quarter lifting is a testament to the
continued alignment between Egyptian General Petroleum Corporation
("EGPC") and ourselves following the signing of the merged
concession agreement in January 2022. We continue to work closely
with EGPC to finalize the effective date adjustment to be paid to
TransGlobe.
With operations well in hand, the reinstated dividend, continued
strong commodity prices, and a distribution policy to allocate a
minimum of 75% of our annual free cash flow to shareholders through
dividends and share buybacks, TransGlobe's outlook for 2022 and
beyond is very encouraging."
PRODUCTION
Production Summary (WI before royalties and taxes):
(Boepd) Q4 2021 Jan 2022 Feb 2022 Mar 2022 YTD Average
Egypt 10,065 10,094 9,993 10,042 10,045
-------- --------- --------- --------- ------------
Canada 2,697 2,197 2,477 2,404 2,355
-------- --------- --------- --------- ------------
Total 12,762 12,291 12,470 12,446 12,400
-------- --------- --------- --------- ------------
* See "Oil & Gas Advisories" for production by product
type.
Corporate production in Q1 remains in line with 2022 annual
guidance of 12.4-13.4 MBoepd. In Egypt production was impacted by
poor weather in February and higher water cuts than anticipated at
South Ghazalat. As expected, Canadian base production declined over
the quarter with the fall-off in initial flush production from the
horizontal wells brought onstream in Q4, 2021. Canadian production
was also restricted in January and February due to extreme cold
weather, while the planned shut-in of the highly productive 4-2
horizontal well during drilling operations on the 15-11 surface
location negatively impacted March production.
OPERATIONS UPDATE
Arab Republic of Egypt
Eastern Desert (100% WI)
The Company continued to use the EDC-64 rig in its Eastern
Desert drilling campaign, managing to drill and case three
additional development wells in K-Field, Arta Field and NWG-Field
during the quarter.
The K-68 well, drilled at the end of 2021, was completed in the
Asl-A reservoir in January as previously reported in the Company's
January 10, 2022, operations update. It is currently producing at a
rate of 156 Bopd (heavy crude, field estimate).
K-67 was drilled to a total depth of 1,440 meters, and was fully
logged and evaluated. The well encountered an internally estimated
16 meters of net oil pay in the Asl-A and 17 meters of net oil pay
in the Asl-B. The well was completed in the Asl-B and is currently
on production at a rate of 174 Bopd (heavy crude, field
estimate).
Arta-76 was drilled to a total depth of 1,074 meters and was
fully logged and evaluated. The well encountered an internally
estimated 12 meters of net oil pay in the Nukhul reservoir.
NWG-1E was drilled to a total depth of 1,219 meters and
encountered 9 meters of oil pay in the Nukhul reservoir after being
fully logged and evaluated.
Both Arta-76 and NWG-1E will be stimulated as part of a
multi-well stimulation campaign in Q2, 2022, subsequent to which
they will be put on production.
The K-71 well was drilled to a total depth of 1,448 meters and
was fully logged and evaluated. The well encountered an internally
estimated 19 meters of net oil pay in the Asl-A reservoir and 23
meters of net oil pay in the Asl-B reservoir. The well is currently
being completed and will be put on production in April 2022.
Following K-71, the EDC-64 rig will move to the K-78 well.
The Company is currently working to proactively mitigate
potential supply chain issues brought about by the conflict in
Ukraine and the resultant sanctions by engaging alternative
materials suppliers. To date, TransGlobe's operations have not been
impacted by any material shortages.
Western Desert - South Ghazalat (100% WI)
Following the cessation of natural flow of SGZ-6X well at South
Ghazalat in December 2022 due to low reservoir pressure, a rigless
artificial lift system was successfully deployed to restore
production. On artificial lift, the lower Bahariya reservoir at
SGZ-6X is currently producing at 88 Bopd of light crude oil with an
89% watercut (field estimate).
Canada
Two 100% working interest (one 2-mile, and one 1-mile) Harmattan
horizontal Cardium reservoir wells were drilled in the South
Harmattan area of our Canada land holdings, with stimulation and
equipping anticipated in June 2022.
The Company has moved the rig on the 15-11 surface location in
anticipation of spudding another 100% working interest 2-mile
Harmattan horizontal Cardium reservoir well in mid-April, to take
advantage of a favorable rig rate and rig availability.
CORPORATE
The Company has a cargo of Gharib blend crude scheduled to ship
at the end of April through early May, with proceeds expected in
June, 2022.
TransGlobe ended Q1, 2022 with $37 million of cash and $3.1
million outstanding under its RBL facility.
An updated corporate presentation has been posted to the
Company's website.
About TransGlobe
TransGlobe Energy Corporation is a cash flow focused oil and gas
exploration and development company whose current activities are
concentrated in the Arab Republic of Egypt and Canada. TransGlobe's
common shares trade on the Toronto Stock Exchange and the AIM
market of the London Stock Exchange under the symbol TGL and on the
NASDAQ Exchange under the symbol TGA.
For further information, please contact:
TransGlobe Energy Corporation +1 403 264 9888
Randy Neely, President and CEO investor.relations@trans-globe.com
Eddie Ok, CFO http://www.trans-globe.com
or via Tailwind Associates
Tailwind Associates (Investor +1 403 618 8035
Relations) darren@tailwindassociates.ca
Darren Engels http://www.tailwindassociates.ca
Canaccord Genuity (Nomad & Joint-Broker)
Henry Fitzgerald-O'Connor
James Asensio +44(0) 20 7523 8000
Shore Capital (Joint Broker)
Toby Gibbs
John More +44(0) 20 7408 4090
Advisory on Forward-Looking Information and Statements
Certain statements included in this news release constitute
forward-looking statements or forward-looking information under
applicable securities legislation. Such forward-looking statements
or information are provided for the purpose of providing
information about management's current expectations and plans
relating to the future. Readers are cautioned that reliance on such
information may not be appropriate for other purposes.
Forward-looking statements or information typically contain
statements with words such as "anticipate", "strengthened",
"confidence", "believe", "expect", "plan", "intend", "estimate",
"may", "will", "would" or similar words suggesting future outcomes
or statements regarding an outlook. In particular, forward-looking
information and statements contained in this document include, but
are not limited to, that the Agreement will be signed by all
parties and the anticipated timing thereof; that the first
modernization payment and signature bonus will be paid and the
anticipated timing thereof; the Company's goal to maximize its free
cash flow and accelerate the maturation of contingent resources
into reserves; the anticipated shipment of the Company's cargo of
Gharib blend crude; the Company's expectations that it will be able
to fund its 2022 capital program through free cash flow generated
by operations; that the Company will revisit its dividend policy
and the anticipated timing thereof; that the Company's balance
sheet will strengthen in the coming months; the anticipated timing
of when Arta-76, NWG-1E and K-71 will be completed and put on
production; the Company's expectation that it will maintain a
single drilling rig plus a light rig for well maintenance /
recompletion activities in the Eastern Desert throughout 2022; the
Company's expectations that further development activities in the
South Harmattan area will be focused on increasing production and
reducing uncertainty; prospects being targeted by the Company; rig
mobilization plans; 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, that the Agreement will be signed by
all parties; that the first modernization payment and signature
bonus will be paid; anticipated production volumes; the timing of
drilling wells and mobilizing drilling rigs; that TransGlobe will
revisit its dividend policy; 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, the Company will not be able to maximize its free
cash flow and accelerate the maturation of contingent resources
into reserves; that the Company's balance sheet will not strengthen
in the coming months; 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.
The Company's future dividend payments, if any, and the level
thereof is uncertain. Any decision to implement a divided policy or
pay dividends will be subject to the discretion of the board of
directors of the Company and may depend on a variety of factors,
including, without limitation the Company's business performance,
financial condition, financial requirements, growth plans, expected
capital requirements and other conditions existing at such future
time including, without limitation, contractual restrictions and
satisfaction of the solvency tests imposed on the Company under
applicable corporate law. There can be no assurance that dividends
will be paid in the future.
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.
Further, this press release includes estimates of pay thickness
and production rates in the K-Field, Arta-Field and NWG-Field in
the Eastern Desert of Egypt (100% WI), which are considered to be
anticipated results or information that indicate the potential
value or quantities of resources under National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities because the
disclosure in question may, in the opinion of a reasonable person,
indicate the potential value or quantities of resources in respect
of the Company's resources or a portion of its resources. Such
estimates have been prepared internally by management of TransGlobe
and have not been prepared or reviewed by an independent qualified
reserves evaluator or auditor. Anticipated results are subject to
certain risks and uncertainties, including those described above
under "Advisory on Forward-Looking Information and Statements" and
various geological, technical, operational, engineering,
commercial, and technical risks, including, but not limited to, the
risk that TransGlobe's exploration and development drilling and
related activities may provide different results; the risk that
TransGlobe may encounter unexpected drilling results; the
occurrence of unexpected events involved in the exploration for,
and the operation and development of, oil and gas; delays in
anticipated timing of drilling and completion of wells; geological,
technical, drilling and processing problems and other difficulties
in producing petroleum reserves; and the risk that if any resources
are discovered that it will not be commercially viable to produce
any portion thereof. In addition, the geotechnical analysis and
engineering to be conducted in respect of such resources is not
complete. Such risks and uncertainties may cause the anticipated
results disclosed herein to be inaccurate. Actual results may vary,
perhaps materially. There is no certainty that TransGlobe will
achieve the anticipated results from the K-Field and H-Field in the
Eastern Desert of Egypt or that any resources will be discovered.
If discovered, there is also no certainty that it will be
commercially viable to produce any portion of the resources.
References in this press release to initial production rates are
useful in confirming the presence of hydrocarbons, however such
rates are not determinative of the rates at which such wells will
continue production 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 production test
results and initial production 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
Boepd barrels of oil equivalent per day
Bpd barrels per day
BOE barrel of oil equivalent
Boepd barrels of oil equivalent per day
MBoepd thousand barrels of oil equivalent per day
MCFD thousand cubic feet per day
WI working interest
Production Disclosure (WI before royalties and taxes)
Light and Heavy Crude Conventional Natural Gas Total
Medium Crude Natural Gas Liquids
Bopd Bopd MCFD Bpd Boepd
--------------------- -------------- ------------ ------------- ------------ -------
Q1-2022 Production
Egypt 997 9,048 10,045
Canada 821 4,598 768 2,355
Total 1,818 9,048 4,598 768 12,400
MAR-2022 Production
Egypt 997 9,045 10,042
Canada 780 4,838 818 2,404
Total 1,777 9,045 4,838 818 12,446
FEB-2022 Production
Egypt 992 9,001 9,993
Canada 871 4,483 859 2,477
Total 1,863 9,001 4,483 859 12,470
JAN-2022 Production
Egypt 1,002 9,092 10,094
Canada 817 4,462 636 2,197
Total 1,819 9,092 4,462 636 12,291
Q4-2021 Production
Egypt 840 9,225 10,065
Canada 1,176 4,832 716 2,697
Total 2,016 9,225 4,832 716 12,762
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