TransGlobe Energy Corporation Announces 2012 Year-End Reserves

TransGlobe Energy Corporation Announces 2012 Year-End Reserves 
CALGARY, ALBERTA -- (Marketwire) -- 01/23/13 -- TransGlobe Energy
Corporation ("TransGlobe" or the "Company") (TSX:TGL) (NASDAQ:TGA)
today announced its 2012 year-end reserves. All dollar values are
expressed in United States dollars unless otherwise stated.  
The Company's 2012 and 2011 year-end reserves were prepared by the
independent reserves evaluation firm of DeGolyer and MacNaughton
Canada Limited ("DeGolyer"), in accordance with National Instrument
51-101.  
RESERVES 
The following is a summary of DeGolyer's evaluation for the year
ended December 31, 2012 with comparatives to the year ended December
31, 2011. The recovery and reserve estimates of crude oil, natural
gas liquids ("NGLs") and natural gas reserves provided in this news
release are estimates only, and there is no guarantee that the
estimated reserves will be recovered. Actual crude oil, NGL and
natural gas reserves may be greater than, or less than, the estimates
provided herein. All reserves presented are based on DeGolyer's
forecast pricing, effective December 31, 2012 and December 31, 2011,
respectively.  
Year-End 2012 Reserves(i) 
Proved Reserves ("1P") 
TransGlobe's total proved reserves increased 16 percent to 32.8 MMBbl
at December 31, 2012 from 28.2 MMBbl at December 31, 2011. This
increase in proved reserves represents a production replacement in
2012 of 172 percent. The Company produced 6.4 MMBbl of reserves
during 2012. 
Proved Plus Probable Reserves ("2P")  
Total 2P reserves grew 10 percent to 48.7 MMBbl at December 31, 2012
from 44.2 MMBbl at December 31, 2011. The increase in 2P reserves
represents a production replacement in 2012 of 170 percent. 
Proved Plus Probable Plus Possible Reserves ("3P")  
Total 3P reserves grew 4 percent to 62.4 MMBbl at December 31, 2012
from 59.8 MMBbl at December 31, 2011. The increase in 3P reserves
represents a production replacement in 2012 of 141 percent. 
(i) Definitions of Reserves Categories: 


 
--  Proved reserves are those reserves that can be estimated with a high
    degree of certainty to be recoverable. It is likely that the actual
    remaining quantities recovered will exceed the estimated proved
    reserves. 
--  Probable reserves are those additional reserves that are less certain to
    be recovered than proved reserves. It is equally likely that the actual
    remaining quantities recovered will be greater or less than the sum of
    the estimated proved plus probable reserves. 
--  Possible reserves have a less likely chance of being recovered than
    probable reserves. This term is often used for reserves which are
    claimed to have at least a 10 percent certainty of being produced. 
 
Year-End Reserves Summary(i)                                                
(Working Interest, before Royalties)                                        
                                                                            
                                     December 31,   December 31,   Increase 
                                             2012           2011 (Decrease) 
Oil Reserves                              (MMBbl)        (MMBbl)        (%) 
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Proved                                                                      
Egypt                                        29.8           24.3         22 
Yemen                                         3.0            3.8        (22)
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Total 1P                                     32.8           28.2         16 
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Proved Plus Probable                                                        
Egypt                                        43.9           38.4         14 
Yemen                                         4.9            5.8        (16)
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Total 2P                                     48.7           44.2         10 
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Proved Plus Probable Plus Possible                                          
Egypt                                        56.5           52.9          7 
Yemen                                         5.9            6.9        (14)
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Total 3P                                     62.4           59.8          4 
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(i) Numbers may not add exactly due to rounding                             

 
2012 Reserve Changes 
In 2012, the Company's activities focused primarily on the continued
development of its operated West Gharib and West Bakr (acquired at
the end of 2011) concessions in the Arab Republic of Egypt ("Egypt"). 
In Egypt, the Company's 1P reserves grew 22 percent over 2011,
representing a production replacement of 189 percent. On a 2P basis,
the year-over-year increase was 14 percent, equal to a production
replacement of 189 percent, while on a 3P basis, the year-over-year
increase was 7 percent, equal to a production replacement of 158
percent.  
At West Gharib, the most significant reserve additions during the
year were attributed to the water flood performance and
development/appraisal drilling in the Lower Nukhul Pool at Arta/East
Arta. Positive reserve additions to a lesser extent were also
attributed to development/appraisal drilling at Arta/East Arta in the
Upper Nukhul. 
At West Bakr, the most significant reserve additions during the year
were attributed to development appraisal drilling in the K and H
fields and improved water flood performance in the H field. 
In the Republic of Yemen ("Yemen"), reserves were reduced primarily
due to a curtailment of future drilling activities in Block S-1 due
to political instability. The reserves associated with the Osaylan
pool (1P of 0.4 MMBbl, 2P & 3P of 0.6 MMBbl at year end 2011) were
reclassified as Contingent Resources at year end 2012. The Company's
Yemen 1P, 2P and 3P reserves were decreased by 22%, 16% and 14%
respectively from the 2011 year-end numbers. 
Estimated Future Net Revenues 
All evaluations and reviews of future net cash flows are stated prior
to any provision for interest costs or general and administrative
costs, and after the deduction of estimated future capital
expenditures for wells, to which reserves have been assigned. It
should not be assumed that the estimated future net cash flow shown
below is representative of the fair market value of the Company's
properties. There is no assurance that such price and cost
assumptions will be attained, and variances could be material. The
recovery and reserve estimates of crude oil, NGL and natural gas
reserves provided herein are estimates only, and there is no
guarantee that the estimated reserves will be recovered. Actual crude
oil, NGL and natural gas reserves may be greater than or less than
the estimates provided herein. 
The estimated future net revenues for years ended 2012 and 2011
presented below in millions of U.S. dollars ("$MM"), are calculated
using DeGolyer's price forecast at December 31, 2012 and December 31,
2011, respectively, and constant pricing using the Securities and
Exchange Commissions' ("SEC") average price (the 12-month average
price using the first day of the month prices during 2012 and 2011,
respectively). In the constant price cases, the prices were held
constant for the life of the reserves. 


 
Forecast Pricing                                                            
                                                                            
          Present Value of Future Net Revenues, After Tax ($MM)(i)          
                   Independent Evaluator's Price Forecast                   
                                                                            
Present Value                                December 31, 2012 Discounted at
By Area                           0%        5%       10%       15%       20%
----------------------------------------------------------------------------
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Proved                                                                      
 Egypt                          $718      $596      $513      $453      $408
 Yemen                           $64       $56       $50       $45       $41
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Total 1P                        $782      $653      $563      $498      $449
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Proved plus Probable                                                        
 Egypt                          $960      $768      $642      $553      $489
 Yemen                          $100       $83       $71       $61       $54
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Total 2P                      $1,060      $851      $712      $615      $543
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Proved plus Probable                                                        
 plus Possible                                                              
 Egypt                        $1,171      $933      $775      $664      $581
 Yemen                          $126      $102       $84       $72       $63
----------------------------------------------------------------------------
Total 3P                      $1,297    $1,035      $860      $736      $644
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Forecast Pricing                                                            
                                                                            
          Present Value of Future Net Revenues, After Tax ($MM)(i)          
                   Independent Evaluator's Price Forecast                   
                                                                            
Present Value                                December 31, 2011 Discounted at
By Area                           0%        5%       10%       15%       20%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proved                                                                      
 Egypt                          $544      $471      $417      $375      $342
 Yemen                           $74       $65       $58       $52       $47
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Total 1P                        $617      $536      $475      $427      $389
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Proved plus Probable                                                        
 Egypt                          $802      $674      $581      $511      $456
 Yemen                          $130      $104       $86       $74       $65
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Total 2P                        $931      $778      $667      $585      $521
----------------------------------------------------------------------------
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Proved plus Probable                                                        
 plus Possible                                                              
 Egypt                        $1,062      $862      $723      $622      $545
 Yemen                          $157      $124      $102       $86       $74
----------------------------------------------------------------------------
Total 3P                      $1,220      $986      $825      $708      $620
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(i) Numbers may not add exactly due to rounding                             

 
The following table summarizes DeGolyer's reference price forecast
used to estimate future net revenues: 


 
                                                                            
DeGolyer Forecast                                                           
 Pricing ($/bbl)                                                            
----------------------                                                      
Brent Forecast Pricing                                                      
 ($/Bbl)                   2012     2013     2014     2015     2016     2017
----------------------------------------------------------------------------
 Year-end 2012                   $111.00  $108.35  $105.72  $107.88  $106.62
 Year-end 2011          $106.00  $104.67  $105.42  $106.25  $106.08  $108.20
                                                                            
Constant Pricing                                                            
                                                                            
          Present Value of Future Net Revenues, After Tax ($MM)(i)          
                              Constant Pricing                              
                                                                            
                       Present Value of Future Net Reserves ($MM)           
Present Value                                December 31, 2012 Discounted at
By Area                           0%        5%       10%       15%       20%
----------------------------------------------------------------------------
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Proved                                                                      
 Egypt                          $731      $610      $526      $465      $419
 Yemen                           $66       $58       $52       $47       $43
----------------------------------------------------------------------------
Total 1P                        $797      $668      $578      $511      $461
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Proved plus Probable                                                        
 Egypt                          $970      $782      $656      $568      $502
 Yemen                          $104       $86       $73       $63       $56
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Total 2P                      $1,074      $867      $729      $631      $557
----------------------------------------------------------------------------
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Proved plus Probable                                                        
 plus Possible                                                              
 Egypt                        $1,186      $951      $793      $681      $597
 Yemen                          $133      $107       $88       $75       $66
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Total 3P                      $1,319    $1,058      $881      $756      $663
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Constant Pricing                                                            
                                                                            
          Present Value of Future Net Revenues, After Tax ($MM)(i)          
                              Constant Pricing                              
                                                                            
                       Present Value of Future Net Reserves ($MM)           
Present Value                                December 31, 2011 Discounted at
By Area                           0%        5%       10%       15%       20%
----------------------------------------------------------------------------
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Proved                                                                      
 Egypt                          $569      $494      $437      $394      $359
 Yemen                           $83       $73       $64       $58       $52
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Total 1P                        $652      $566      $502      $451      $411
----------------------------------------------------------------------------
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Proved plus Probable                                                        
 Egypt                          $832      $702      $607      $535      $478
 Yemen                          $136      $109       $91       $78       $69
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Total 2P                        $968      $811      $698      $613      $547
----------------------------------------------------------------------------
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Proved plus Probable                                                        
 plus Possible                                                              
 Egypt                        $1,095      $894      $753      $650      $571
 Yemen                          $164      $131      $108       $91       $79
----------------------------------------------------------------------------
Total 3P                      $1,259    $1,024      $860      $741      $650
----------------------------------------------------------------------------
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(i) Numbers may not add exactly due to rounding                             

 
The Constant Pricing used to estimate future net revenues is as
follows, with Egypt prices based on prices received for West Gharib,
West Bakr and East Ghazalat production and Yemen prices based on
prices received for production from Blocks 32 and S-1.  
Pursuant to the SEC pronouncement in 2009, the Constant Price cases
are based on the average of the reference price received on the first
of each month during the year adjusted for respective differentials
at year-end. 


 
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Constant Pricing ($/Bbl)                                 2012           2011
----------------------------------------------------------------------------
Egypt                                                 $102.60         $97.86
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Yemen                                                 $108.41        $109.71
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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. 
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. Statements relating to "resources"
are forward-looking statements as they involve the implied
assessment, based on estimates and assumptions that the resources
described exist in the quantities predicted or estimated. 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, upon completion of the
primary term of any current exploration and/or production license,
TransGlobe would secure an extension or additional license for any
accumulation or discovered prospect; that TransGlobe intends to
proceed with development and operation of any commercially viable
discovered prospect, 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.
Contacts:
TransGlobe Energy Corporation
Investor Relations
Scott Koyich
403.264.9888
investor.relations@trans-globe.com
www.trans-globe.com