TransGlobe Energy Corporation 2013 Guidance and Mid-Quarter Update
for Q4 2012
CALGARY, ALBERTA -- (Marketwire) -- 12/11/12 -- TransGlobe Energy
Corporation (TSX:TGL) (NASDAQ:TGA) ("TransGlobe" or the "Company") is
pleased to provide guidance for 2013 and a mid-quarter update for the
fourth quarter of 2012. All dollar values are expressed in United
States dollars unless otherwise stated.
-- 2013 Production Guidance of 21,000 to 24,000 Bopd (mid-point of 22,500
-- 22,500 Bopd represents a 29% increase over 2012 estimated production
of 17,400 Bopd
-- 2013 Funds flow Guidance of $161 million ($2.13/share)
-- Using 22,500 Bopd (mid-point of guidance) and $100/Bbl Brent pricing
-- 2013 Funds flow sensitivity to pricing of $17 million ($0.23/share)
per $10/Bbl Brent pricing
-- 2013 Capital Exploration and Development Budget of $129 million
-- Egypt $124 million (96%) and Yemen $5 million (4%)
-- Exploration $54 million (42%): 23 wells (19.9 net wells) and seismic
-- Development $75 million (58%): 28 wells (25.3 net wells) and
-- Increase of 148% over 2012 E&D expenditures of $52 million
-- 80% of 2013 funds flow guidance of $161 million
-- Announced 4 new concessions (100% WI) acquired at the 2011/2012 EGPC bid
-- 3 concessions (NW Gharib, SW Gharib and SE Gharib), proximal to the
Company's W Gharib/W Bakr properties, on shore Gulf of Suez
-- South Ghazalat concession in the Western desert
-- 800,000 net acres of exploration land
-- Four West Gharib new pool discoveries
-- TransGlobe's production averaged 17,338 Bopd in October; 18,660 Bopd in
November; and 18,089 Bopd in December to date
-- Block S-1 production (1,700 Bopd) shut-in since November 11th
-- Targeting first trucking of Hana/Hana West production to West Bakr K
station prior to year end
-- Received $64.5 million to date from EGPC during the quarter
TRANSGLOBE 2013 GUIDANCE
2013 Estimated Production and Funds Flow from Operations
Production guidance for 2013 is forecast to range between 21 and 24
thousand barrels of oil per day ("MBopd"). The mid-point of 22.5
MBopd represents a 29% increase over 2012 estimated production of
The significant variables in production estimates include: the repair
of the export pipeline for Block S-1 in Yemen, development drilling
results in Egypt and Government approvals relating to the start of
South Alamein production.
The mid-point of 22.5 MBopd includes the following assumptions;
-- Egypt production of 21.3 MBopd
-- Yemen production of 1.2 MBopd (Block S1 on production 50% of 2013)
Funds flow from operations ("funds flow") for 2013 is forecast to be
$161 million ($2.13/share) based on an average Brent oil price of
$100.00/Bbl using the mid-point of production guidance of 22.5 MBopd.
The 2013 funds flow sensitivity to a change in the oil price is
approximately $17 million ($0.23/share) per $10.00/Bbl change in
Brent. Funds flow would be $178 million ($2.36/share) at $110.00/Bbl
Brent and $144 million ($1.91/share) at $90.00/Bbl.
The 2013 funds flow of $161 million ($100/Bbl Brent) represents a 9%
increase over 2012 estimated funds flow of $147 million (Brent
averaged $109.05/Bbl in 2012). If $110/Bbl Brent pricing is used, the
2013 funds flow of $178 million would represent a 22% increase over
2012 estimated funds flow of $147 million.
Funds flow from operations is a non-GAAP measure that represents cash
generated from operating activities before changes in non-cash
2013 Capital Budget (Exploration and Development)
The 2013 Capital Budget has been set at $129 million. It is
anticipated the Company will fund its 2013 Capital Budget from cash
generated from operating activities and working capital.
The following table summarizes the 2013 Capital Budget:
TransGlobe Net Capital ($MM) Gross Well Count
Development Exploration Total (wells)
Wells Projects Wells Seismic Devel Expl Total
Desert $ 45.1 $ 19.1 $ 10.4 - $ 74.6 24 9 33
Desert $ 7.5 $ 1.5 $ 39.1 $ 1.6 $ 49.6 2 13 15
Round Blocks - - - - - - - -
Egypt Totals $ 52.6 $ 20.6 $ 49.5 $ 1.6 $124.2 26 22 48
Yemen Totals $ 1.0 $ 0.6 $ 3.2 - $ 4.8 2 1 3
Totals $ 53.6 $ 21.2 $ 52.7 $ 1.6 $129.0 28 23 51
Splits (%) 58% 42% 100% 55% 45% 100%
MID Q4 2012 UPDATE
ARAB REPUBLIC OF EGYPT
West Gharib, Arab Republic of Egypt (100% working interest, operated)
Operations and Exploration
In the second half of 2012 the Company focused the drilling campaign
on new prospects for potential reserve additions. The West Gharib
area has once again proved to be our best project with four new pool
discoveries during the second half of 2012. These new discoveries
will provide a conservative reserve addition for 2012. Significant
additional reserves and production could result from successful
appraisal drilling on the new pools during 2013 and 2014.
During the fourth quarter, the Company drilled three wells resulting
in two oil wells at Hoshia (one new pool discovery) and one dry hole
at Fadl. The rig is currently drilling at Hoshia and will move to the
Arta/East Arta area in 2013 for continued development drilling and
appraisal of the 2012 new pool discoveries.
The Company commenced a completion and stimulation program in
mid-October to evaluate new pools and pool extensions which were
drilled in the third and fourth quarters of this year. During the
quarter the company successfully completed four Arta/East Arta wells.
Three of the completions were in new pools at Arta/East Arta which
expands the company's future drilling inventory.
At Arta/East Arta the company has tested oil from two new Upper
Nukhul pools. One is located on a separate structure east of the main
Arta pool and the second is on a horst block west of the main Arta
pool. Both wells have been stimulated and are being placed on
production. It is expected they will be similar to the typical Arta
Field Upper Nukhul wells which produce approximately 200 Bopd, based
on the average 90 day production rate. The new pools could provide up
to an additional 15 appraisal/development locations for 2013/14.
These new pool discoveries will also provide additional exploration
targets for the adjacent NW Gharib concession which the Company
successfully acquired at the 2011/12 EGPC Bid round (November 6, 2012
In addition the Company has completed a new pool discovery in the
Thebes formation located on the North/East corner of the East Arta
concession. The well encountered approximately 550 feet of fractured
carbonate in the Thebes formation on an untested horst block. The
well was completed, stimulated and has been on production for
approximately 20 days. The well is currently producing approximately
100 Bpd of 22 API oil with a 45% water cut. Based on the encouraging
early production results the company has identified up to eight
appraisal/development locations for the 2013/14 drilling program.
This new pool discovery will also provide additional exploration
targets on the adjacent NW Gharib Concession (100% TG).
At Hoshia, the Company drilled a separate Lower Rudeis pool
immediately south of the Hoshia Lower Rudeis pool. The new pool is
not in pressure communication with the Hoshia pool based on virgin
MDT pressures obtained in the well. The new well will be perforated
and placed on pump at an expected initial production rate of 400 to
600 Bopd based on historical well performance in the original Hoshia
pool. It is expected that two or more appraisal wells will be
required to fully delineate/develop this new pool in 2013.
Production averaged 12,461 Bopd to TransGlobe during November which
represents a 26% increase over the October production of 9,867 Bopd.
October production was lower due to an illegal eight day labor
protest at the start of the October which deferred approximately
100,000 barrels of production.
Production in December has averaged approximately 12,470 Bopd to
The Company expects to start trucking a portion of the Hana/Hana West
production to the newly constructed facilities at the West Bakr K
station for delivery through the West Bakr pipeline system into the
GPC export system prior to year end. By diverting up to 2,500 Bopd of
Hana/Hana West production through the West Bakr pipeline system, it
is expected West Gharib will be able to utilize a portion of the
Hana/Hana West capacity at the GPC truck terminal to deliver
additional West Gharib production which has been curtailed due to GPC
truck terminal constraints. Additional, unidentified constraints
could be experienced in the GPC processing facilities when the
combined production approaches the 20,000+ Bopd level. The Company is
working with GPC to identify bottlenecks and optimize throughput.
Currently West Gharib and West Bakr are delivering approximately
18,000 Bopd into the GPC system.
Concurrently, work continues on Phase 2 expansions of the new Hoshia
and Arta South multi-well batteries ("MWB") which were built in 2012.
In addition, work has commenced on the new MWB located in the North
West corner of East Arta which is targeting a Q-1, 2013 startup and
plans have been finalized for a new Arta Main MWB in the central part
of Arta, which is targeting a Q4, 2013 startup.
The Company continues to progress a number of longer term
infrastructure projects in the West Gharib/West Bakr fields to
deliver West Gharib production to GPC by pipeline and thereby
eliminate oil trucking outside the West Gharib field area.
West Bakr, Arab Republic of Egypt (100% working interest, operated)
Operations and Exploration
During the quarter, the Company drilled one oil well in the K field
(K29) and one dry hole in M field.
The K 29 well encountered oil in the main Asl A zone and two
additional lower zones (the Asl B and D zones). The well was
completed in the Asl D and placed on pump in mid-November and is
producing at a rate of approximately 150 Bopd with 40% water cut.
The M east exploration well encountered the target zone in a
structurally low position and was wet. The well was suspended and
plugged back pending a review of the structural model for a potential
future side track to a structurally higher location.
The rig is currently drilling in the K field (K27) and is scheduled
to drill another well in K field (K30) prior to moving to M field. It
is expected that the drilling rig will continue working in West Bakr
Production averaged 4,776 Bopd to TransGlobe during November down
slightly from 4,863 Bopd during October due to unscheduled well
Production in December has averaged approximately 4,823 Bopd to date.
East Ghazalat Block, Arab Republic of Egypt (50% working interest,
Operations and Exploration
No wells were drilled during the quarter.
First oil production started September 9th at 200 Bopd (100 Bopd to
TransGlobe) from one of the four wells with the other three wells
placed on production over the following 30 days.
The Safwa field production averaged 1,098 Bopd (549 Bopd to
TransGlobe) during October and declined to 934 Bopd (467 Bopd to
TransGlobe) during November primarily due to lower production from
the only well which continues to flow without artificial lift. The
flowing well appears to have stabilized after 70 days of production
in the 350 Bopd range with flowing tubing pressure of 90 psi. It is
expected that the well will be placed on pump in 2013 when it is no
longer capable of flowing to surface.
December production has averaged 952 Bopd (476 Bopd to TransGlobe) to
Production is trucked to a receiving terminal at the Dapetco operated
South Dabaa facility approximately 35 kilometers southwest of Safwa,
where production is sold to EGPC.
South Alamein, Arab Republic of Egypt (100% working interest,
Operations and Exploration
The Company has approved a budget for 2013 which includes an initial
eight well drilling program and the development of the Boraq 2 oil
discovery. The 2013 drilling program includes two Boraq appraisal
wells with the balance of the program focused on exploration
prospects in South Alamein.
The Company is planning to commence drilling in early 2013, subject
to receiving the necessary permits and approvals. The Company is
targeting first production from the Boraq discovery in the fourth
quarter of 2013.
South Mariut, Arab Republic of Egypt (60% working interest, operated)
Operations and Exploration
During the quarter, drilling commenced on the first exploration well
(Al Azayem #1) of a planned three well exploration program. Results
from the Al Azayem #1 well are expected by year end or early January.
EGPC BID ROUND RESULTS
EGPC announced that TransGlobe was the successful bidder on four
concessions (100% working interest) in the 2011 EGPC bid round which
closed on March 29, 2012. It is expected that the new concessions
will be awarded in late 2013 following the ratification process which
culminates when each concession is passed into law by the People's
NW Gharib (100% WI)
The Company's primary objective was obtaining the 655 square
kilometer (162,000 acre) NW Gharib concession which surrounds and
immediately offsets the Company's core West Gharib/West Bakr
producing concessions (approx. 45,000 acres). At NW Gharib the
Company expects to commence drilling shortly after ratification and
final approval of the concession into law. The Company has identified
more than 45 drilling locations based on existing well and seismic
data for the area. Concurrently the Company would acquire additional
3D seismic data on the concession to develop additional exploration
SW Gharib (100% WI)
The 195 square kilometer (48,000 acre) SW Gharib concession is
located immediately south of the NW Gharib concession. The Company
will acquire 3D seismic over the entire concession prior to drilling
exploration wells in the first exploration phase.
SE Gharib (100%WI)
The 508 square kilometer (125,000 acre) SE Gharib concession is
located immediately south of the SW Gharib concession. The Company
will acquire extensive 2D and 3D seismic over this area prior to
drilling exploration wells in the first exploration phase.
S Ghazalat (100%WI)
The 1,883 square kilometer (465,000 acre) S Ghazalat concession is
located in the Western Desert to the west of the company's East
Ghazalat concession in the prolific Abu Gharadig basin. The Company
will acquire extensive 3D seismic over this area prior to drilling
exploration wells in the first exploration phase.
REPUBLIC OF YEMEN
No wells were drilled in Yemen during the quarter.
Block 32, Republic of Yemen (13.81% working interest)
Field production averaged 2,509 Bopd (346 Bopd to TransGlobe) during
October and 2,462 Bopd (340 Bopd to TransGlobe) during November.
Field production in December has averaged 2,317 Bopd (320 Bopd to
TransGlobe) to date.
Block S-1, Republic of Yemen (25% working interest)
Field production averaged 6,852 Bopd (1,713 Bopd to TransGlobe)
during October and 2,464 Bopd (616 Bopd to TransGlobe) during
November. The An Nagyah field was shut in following the shutdown of
the Marib export pipeline which was damaged by local tribes on
November 11th. Historically, damage to the pipeline can be repaired
within a few days of getting access to the pipeline. It is difficult
to predict when the government and the local tribes will be able to
negotiate access to the pipeline.
The Company amended the Block S-1 marketing contract effective July
2012 from a monthly purchase contract to a tanker lifting sales
contract. The unsold third quarter inventory was lifted and sold with
October production. The company received approximately $10.8 million
for the lifting in late November.
TransGlobe Energy Corporation is a Calgary-based, growth-oriented oil
and gas exploration and development company focused on the Middle
East/North Africa region with production operations in the Arab
Republic of Egypt and the Republic of Yemen. TransGlobe's common
shares trade on the Toronto Stock Exchange under the symbol TGL and
on the NASDAQ Exchange under the symbol TGA.
Cautionary Statement to Investors:
This news release may include certain statements that may be deemed
to be "forward-looking statements" within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. Such statements
relate to possible future events. All statements other than
statements of historical fact may be forward-looking statements.
Forward-looking statements are often, but not always, identified by
the use of words such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions. These statements involve known and
unknown risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in such
forward-looking statements. Although TransGlobe's forward-looking
statements are based on the beliefs, expectations, opinions and
assumptions of the Company's management on the date the statements
are made, such statements are inherently uncertain and provide no
guarantee of future performance. Actual results may differ materially
from TransGlobe's expectations as reflected in such forward-looking
statements as a result of various factors, many of which are beyond
the control of the Company. These factors include, but are not
limited to, 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 and natural gas 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, and other factors beyond the
Company's control. TransGlobe does not assume any obligation to
update forward-looking statements if circumstances or management's
beliefs, expectations or opinions should change, other than as
required by law, and investors should not attribute undue certainty
to, or place undue reliance on, any forward-looking statements.
Please consult TransGlobe's public filings at www.sedar.com and
www.sec.gov/edgar.shtml for further, more detailed information
concerning these matters.
TransGlobe Energy Corporation
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