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TransGlobe Energy Corporation Announces 2012 Year-End Contingent Resources and Propsective Resource Evaluation

TransGlobe Energy Corporation Announces 2012 Year-End Contingent Resources and 
Propsective Resource Evaluation 
CALGARY, ALBERTA -- (Marketwire) -- 01/29/13 -- TransGlobe Energy
Corporation (TSX:TGL) (NASDAQ:TGA) ("TransGlobe" or the "Company")
today announced its 2012 year-end contingent resources. In addition
the Company is pleased to announce the results of an independent
prospective resource evaluation of 38 individual oil prospects
located in the Egyptian Western Desert within the South Alamein (100%
WI), South Mariut (60% WI) and East Ghazalat (50% WI) exploration
concessions. 
The Company's 2012 year-end contingent resources and the prospective
resource evaluations were prepared by the independent reserves
evaluation firm of DeGolyer and MacNaughton Canada Limited ("DMCL").
Both evaluations were performed in accordance with National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities Section 5.9 ("NI 51-101") and the Canadian Oil and Gas
Evaluation Handbook ("COGEH") Volume 1, and are effective December
31, 2012. 
All dollar values are expressed in United States dollars unless
otherwise stated. 
CONTINGENT RESOURCE HIGHLIGHTS 


 
--  Best Case Contingent Resources of 2.0 million barrels 
--  Estimated Future Net Revenue for Best Case Contingent Resource is $29.1
    million (at 10% discounting) 

 
PROSPECTIVE RESOURCE HIGHLIGHTS 


 
--  The Mean estimate of total undiscovered oil initially in place ("UPIIP")
    for the 38 evaluated prospects is 1 billion barrels 
--  The Mean estimate of total Prospective Resource is 200 million barrels 
--  The Mean estimate of total Working Interest Prospective Resource is 170
    million barrels 
--  Company announced a 2013 Capital program (December 11, 2012), which
    includes exploration wells to evaluate 10 of the 38 prospects in the
    report. The planned 10 wells will evaluate approximately 75 of the 170
    million barrels (44%) of Mean Working Interest Prospective Resources
    during 2013. 

 
CONTINGENT RESOURCES 
The following is a summary of DMCL evaluation for the year ended
December 31, 2012. The Company did not have Contingent Resources
evaluated at year ended December 31, 2011. The recovery and
contingent resource estimates of crude oil, natural gas liquids
("NGLs") and natural gas resources provided in this news release are
estimates only, and there is no guarantee that the estimated
resources will be recovered. Actual crude oil, NGL and natural gas
resources may be greater than, or less than, the estimates provided
herein. All Contingent Resources presented are based on DMCL forecast
pricing effective December 31, 2012. 
Contingent Resources are those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from known
accumulations using established technology or technology under
development, but which are not currently considered to be
commercially recoverable due to one or more contingencies. There is
no certainty that it will be commercially viable to produce any
portion of the resources. 


 
2012 Year-End Contingent Resource Summary                                   
(Working Interest, before royalties)                                        
                                                                            
Contingent Resources at December 31,        Low Case   Best Case   High Case
2012                                                                        
(thousands of barrels "Mbbl")                                               
----------------------------------------------------------------------------
                                                                            
Egypt                                            475       1,430       2,848
Yemen                                            330         584         600
----------------------------------------------------------------------------
Total                                            805       2,014       3,448
----------------------------------------------------------------------------
(i) Numbers may not add exactly due to rounding                             

 
Uncertainty Ranges as described by the COGEH handbook as low, best
and high estimates for resources as follows: 
Low Estimate: this is considered to be a conservative estimate of the
quantity that will actually be recovered. It is likely that the
actual remaining quantities recovered will exceed the low estimate.
If probabilistic methods are used, there should be at least a 90
percent probability (P90) that the quantities actually recovered will
equal or exceed the low estimate. 
Best Estimate: This is considered to be the best estimate of the
quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater or less
than the best estimate. If probabilistic methods are used, there
should be at least a 50 percent probability (P50) that the quantities
actually recovered will equal or exceed the best estimate. 
High Estimate: This is considered to be an optimistic estimate of the
quantity that will be actually be recovered. It is unlikely that the
actual remaining quantities recovered will exceed the high estimate.
If probabilistic methods are used, there should be at least a 10
percent probability (P10) that the quantities actually recovered will
equal or exceed the high estimate. 
Contingencies 
In Egypt, Contingent Resources were assigned to the Boraq 2 oil
discovery in the South Alamein concession which was acquired in 2012.
The Contingent Resources assigned to Boraq are contingent on the
approval of a development plan. During 2012 the Company prepared and
submitted an eight well drilling program for approvals, which
includes two appraisal/development wells at Boraq and six exploration
wells on the concession. Upon receiving the necessary approvals, the
Company plans to proceed with the appraisal/development of the Boraq
2 discovery in 2013. 
In Yemen, Reserve volumes which had historically been assigned to the
Osaylan oil pool in Block S-1 were removed from the Company Reserves
and reclassified as Contingent Resources at year-end 2012. The
assigned Contingent Resources are contingent on future drilling which
has been curtailed in the area due to political instability and
related security issues. 
Contingent Resources Estimated Future Net Revenues 
All evaluations and reviews of future net cash flow 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 resources 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 resource estimates of crude oil, NGL and natural gas
resources provided herein are estimates only, and there is no
guarantee that the estimated resources will be recovered. Actual
crude oil, NGL and natural gas resources may be greater than or less
than the estimates provided herein. 
The estimated future net revenues for year ended 2012 presented below
in millions of U.S. dollars ("$MM") are calculated using DMCL price
forecast at December 31, 2012 and constant pricing for 2012. In the
constant price case, the prices were held constant for the life of
the resources. 
Forecast and Constant Pricing Contingent Resource
s 
Present Value of Future Net Revenues, After Tax ($MM)(i) 


 
                 Independent Evaluator's Price                              
                            Forcast                  Constant Pricing       
----------------------------------------------------------------------------
  Contingent                                                                
    Resource                                                                
----------------------------------------------------------------------------
                  December 31, 2012 Discounted  December 31, 2012 Discounted
 Present Value                at                            at              
----------------------------------------------------------------------------
    By Area         0%    5%   10%   15%   20%    0%    5%   10%   15%   20%
----------------------------------------------------------------------------
      Low Case                                                              
----------------------------------------------------------------------------
         Egypt   $10.9  $9.8  $8.9  $8.2  $7.5 $11.8 $10.6  $9.6  $8.8  $8.1
----------------------------------------------------------------------------
         Yemen    $4.8  $3.9  $3.1  $2.5  $2.1  $5.4  $4.3  $3.4  $2.8  $2.3
----------------------------------------------------------------------------
     Total Low   $15.7 $13.7 $12.0 $10.7  $9.6 $17.2 $14.9 $13.0 $11.6 $10.4
----------------------------------------------------------------------------
     Best Case                                                              
----------------------------------------------------------------------------
         Egypt   $32.7 $28.2 $24.7 $21.8 $19.4 $35.4 $30.5 $26.6 $23.5 $21.0
----------------------------------------------------------------------------
         Yemen    $8.2  $6.0  $4.4  $3.4  $2.6  $8.7  $6.4  $4.8  $3.6  $2.8
----------------------------------------------------------------------------
    Total Best   $40.9 $34.2 $29.1 $25.2 $22.0 $44.1 $36.9 $31.4 $27.1 $23.8
----------------------------------------------------------------------------
     High Case                                                              
----------------------------------------------------------------------------
         Egypt   $70.9 $58.6 $49.6 $42.7 $37.3 $76.0 $62.9 $53.2 $45.9 $40.0
----------------------------------------------------------------------------
         Yemen    $9.0  $6.4  $4.7  $3.5  $2.7  $9.6  $6.9  $5.1  $3.8  $2.9
----------------------------------------------------------------------------
    Total High   $79.9 $65.0 $54.3 $46.2 $40.0 $85.6 $69.8 $58.3 $49.7 $42.9
----------------------------------------------------------------------------

 
(i) Numbers may not add exactly due to rounding 
The following table summarizes DMCL reference price forecast used to
estimate future net revenues: 


 
    DMCL Forecast Pricing ($/bbl)                                           
------------------------------------                                        
   Brent Forecast Pricing ($/Bbl)       2013    2014    2015    2016    2017
----------------------------------------------------------------------------
                    Year-end 2012    $111.00 $108.35 $105.72 $107.88 $106.62
                                                                            
 Constant Pricing ($/Bbl)               Year-end 2012 
------------------------------------------------------
 Egypt                                        $100.77 
------------------------------------------------------
 Yemen                                        $110.05 
------------------------------------------------------

 
PROSPECTIVE RESOURCES 
The DMCL prospective resources estimates were prepared in accordance
with the requirements of Canadian National Instrument 51-101
Standards of Disclosure, for Oil and Gas Activities Section 5.9 ("NI
51-101"). 
Capitalized terms related to resources classifications used in this
press release, are based on the definitions and guidelines in Section
5.3.5 of the Canadian Oil and Gas Evaluation Handbook ("COGEH"),
Volume 1. 
Historic well data, regional geology and seismic data were reviewed
by DMCL to prepare a probabilistic Prospective Resources Estimate.
The following table shows the gross estimated prospective resources
expressed in millions of barrels. These estimates have not been
adjusted for the probability of geologic success (Pg). 
The following tables summarize DMCL independent evaluation of the
Prospective Resources associated with these 38 prospects: 


 
Gross Estimated Prospective Resources                                       
                                                                            
                                           Low      Best     High     Mean  
(Millions of Barrels "MMbbls")           Estimate Estimate Estimate Estimate
----------------------------------------------------------------------------
Gross Pool Prospective Oil Resources      131.5    191.6    279.1    200.0  
Gross Working Interest Prospective Oil                                      
 Resources                                110.8    162.9    238.9    170.4  

 
Notes: 
Low, best, high and mean estimates in the table set out above are
P90, P50, P10 and mean respectively as defined below. 
Pg has not been applied to the volumes in the table set out above. 
Application of any geological and economic chance factor does not
equate prospective resources to contingent resources or reserves. 
Recovery efficiency is applied to prospective resources in the table
set out above. The prospective resources presented above are based on
the statistical aggregation method. 
There is no certainty that any portion of the prospective resources
estimated herein will be discovered. If discovered, there is no
certainty that it will be commercially viable to produce any portion
of the prospective resources evaluated. 
Mean Estimate Prospective Resources 


 
                                                 Gross Mean                 
                   Number of        Gross       Prospective     Geological  
Exploration        Prospects         Mean        Resources       Risk Pg    
 Concession        Evaluated    UPIIP (MMbbl)     (MMbbl)           (%)     
----------------------------------------------------------------------------
South Alamein          20            669           133.8           15%      
South Mariut           2             177            35.1           19%      
East Ghazalat          16            154            31.1           14%      
----------------------------------------------------------------------------
Total                  38           1,000          200.0           16%      
 
                                   Gross Pg                      Gross WI   
                                   adjusted                    Pg adjusted  
                                     Mean                          Mean     
                                 Prospective     TransGlobe    Prospective  
Exploration                       Resources       Working       Resources   
 Concession                        (MMbbl)      Interest (%)     (MMbbl)    
----------------------------------------------------------------------------
South Alamein                        20.2    
       100%           20.2     
South Mariut                         6.6            60%            3.9      
East Ghazalat                        4.2            50%            2.1      
----------------------------------------------------------------------------
Total                                31.0                          26.2     

 
Notes: 
The probability of geologic success ("Pg") is defined as the
probability of discovering reservoirs that flow petroleum at a
measurable rate. Pg is estimated by quantifying the probability of
each of the following individual geologic factors: trap, source,
reservoir and migration. The product of these four probabilities or
chance factors is computed as the Pg. Application of any geological
and economic chance factor does not equate prospective resources to
contingent resources or reserves. 
Recovery efficiency is applied to prospective resources in the table
set out above. The prospective resources presented above are based on
the statistical aggregation method. 
There is no certainty that any portion of the prospective resources
estimated herein will be discovered. If discovered, there is no
certainty that it will be commercially viable to produce any portion
of the prospective resources evaluated. 
2013 Drilling Plans 
The company announced December 11, 2012, a 2013 Capital Budget of
$129 million with $53 million (41%) allocated to Exploration. The $53
million Exploration budget includes 23 exploration wells and seismic,
which is primarily focused on Egypt (96%). In the Western desert, 10
of the exploration wells are planned to test 10 of the 38 prospects
summarized in the independent resource report. The total working
interest Mean Prospective Resource (prior to the application of
geologic success) to be evaluated by the 2013 ten well exploration
program, is approximately 75 million barrels. 
RESOURCE DISCLOSURE 
The resource estimates set forth in this news release have been
evaluated by an independent qualified evaluator in accordance with NI
51-101 and the COGE Handbook. The resources have been categorized in
accordance with the definitions as set out in the COGE Handbook,
which are set out below: 
Undiscovered oil initially-in-place or UPIIP is that quantity of
petroleum that is estimated, on a given date, to be contained in
accumulations yet to be discovered. The recoverable portion of
undiscovered petroleum initially-in-place is referred to as
prospective resources; the remainder is unrecoverable. 
Prospective Resources - are those quantities of oil and gas estimated
to be potentially recoverable from undiscovered accumulations. There
is no certainty that the Prospective Resources will be discovered. If
discovered, there is no certainty that it will be commercially viable
to produce any portion of the prospective resources. Application of
any geological and economic chance factor does not equate prospective
resources to contingent resources or reserves. 
In addition, the following mutually exclusive Classification of
Resources were used: 
Low Estimate - This is considered to be a conservative estimate of
the quantity that will actually be recovered from the accumulation.
This term reflects a P90 confidence level where there is a 90% chance
that a successful discovery will be more than this resources
estimate. 
Best Estimate - This is considered to be the best estimate of the
quantity that will actually be recovered from the accumulation. This
term is a measure of central tendency of the uncertainty distribution
and in this case reflects a 50% confidence level where the successful
discovery will have a 50% chance of being more than this resources
estimate. 
High Estimate - This is considered to be an optimistic estimate of
the quantity that will actually be recovered from the accumulation.
This term reflects a P10 confidence level where there is a 10% chance
that the successful discovery will be more than this resources
estimate. Note that these distributions do not include consideration
of the probability of success of discovering and producing commercial
quantities of oil, but rather represent the likely distribution of
the oil deposits, if discovered. 
Mean Estimate - In accordance with petroleum industry standards, the
mean estimate is the probability-weighted average, which typically
has a probability in the P45 to P15 range, depending on the variance
of prospective resources volume or associated value. Therefore, the
probability of a prospect or accumulation containing the
probability-weighted average volume or greater is usually between 45
and 15 percent. The mean estimate is the preferred probabilistic
estimate of resources volumes. 
The probability of geologic success ("Pg"): is defined as the
probability of discovering reservoirs that flow petroleum at a
measurable rate. Pg is estimated by quantifying the probability of
each of the following individual geologic factors: trap, source,
reservoir and migration. The product of these four probabilities or
chance factors is computed as the Pg. 
Pg-adjusted Mean Estimate: The Pg-adjusted mean estimate, or
"geologic risk-adjusted mean estimate", is the probability- weighted
average of the hydrocarbon quantities potentially recoverable if a
prospect portfolio were drilled, or if a family of similar prospects
were drilled. The Pg-adjusted mean estimate is a "blended" quantity.
It is a mean estimation of both volumetric uncertainty and geological
risk (chance). This statistical measure considers and quantifies the
geological success and geological failure outcomes. Consequently, it
represents the average or mean "geologic' outcome of a drilling and
exploration program. The Pg-adjusted mean estimate is calculated as
follows: 
Pg - adjusted mean estimate ("Risked P-Mean") = Pg X mean estimate. 
DMCL is a wholly owned subsidiary of D&M (http://www.demac.com/), a
global consulting firm providing a variety of services related to the
upstream sector of the petroleum industry, including evaluation of
the hydrocarbon potential of exploration areas, estimation and
classification of reserves to be recovered from new discoveries,
verification of hydrocarbon reserves, production forecasting, and
appraisal of properties for prospective acquisition, divestiture,
issuance of securities, or financing purposes. The firm offers
expertise in the primary scientific specialties related to petroleum
evaluation including Evaluation of Prospective Resources. 
DMCL has acted independently in the preparation of the Report. DMCL
and its employees have no direct or indirect ownership in the
property appraised or the area of study described. 
With respect to Assumptions and Limiting Conditions within the
Report, the Report is limited to a discussion of the potential
undiscovered oil and gas Prospective Resources of the subject
property. The Report does not attempt to place a value thereon. DMCL
reserves the right to revise its opinions of reserves and resources,
if new information is deemed sufficiently credible to do so. The
accuracy of any estimate is a function of available time, data and of
geological, engineering and commercial interpretation and judgment.
While the resources estimates presented herein are believed to be
reasonable, they should be viewed with the understanding that
additional analysis or new data may justify their revision and DMCL
reserves the right to make such revision. 
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. In particular, this press release
contains forward-looking statements regarding the Company's
appraisal, development and evaluation plans and the focus of the
Company's exploration budget. In addition, information and statements
relating to "resources" are deemed to be forward-looking information
and statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the resources described exist
in the quantities predicted or estimated, and that the resources
described can be profitably produced in the future. 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. With respect to forward-looking
statements contained in this press release, assumptions have been
made regarding, among other things: 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; and the geography of the areas in
which the Company is conducting exploration and development
activities. 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, including additional risks related to
TransGlobe's business.
Contacts:
TransGlobe Energy Corporation
Investor Relations
Scott Koyich
403.264.9888
investor.relations@trans-globe.com
www.trans-globe.com
 
 
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