TransGlobe Energy Corporation ("TransGlobe" or the "Company")
(TSX:TGL) (NASDAQ:TGA) is pleased to provide an operations update
for the third quarter of 2013. All dollar values are expressed in
United States dollars unless otherwise stated.
HIGHLIGHTS
-- Drilled 10 wells in Q3, resulting in 9 oil wells and 1 gas/condensate
well (100% success)
-- 2013 YTD drilled 35 wells resulting in 29 oil wells, 1 gas/condensate
well and 5 dry holes (86% success)
-- TransGlobe's production averaged 17,651 Bopd in July; 17,834 Bopd in
August; and 19,238 Bopd in September
-- West Bakr concession currently producing at the highest rate in its 30
year history
-- Received $142.7 million to date from EGPC during 2013; additional tanker
liftings are scheduled for November
-- New concessions approved by Cabinet and forwarded to President;
ratification is expected in late 2013
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
West Gharib, Arab Republic of Egypt (100% working interest,
operated)
Operations and Exploration
The Company drilled five wells in the third quarter resulting in
five oil wells (four at East Arta and one at Hoshia).
At East Arta four wells were drilled and cased as oil wells and
will be completed and stimulated in the fourth quarter. One Lower
Nukhul well was drilled on the northwest edge of the block, one
Upper Nukhul well was drilled in the southeast quadrant of the
block and two Thebes wells were drilled on the North East edge of
the block.
One well was drilled at Hoshia and will be completed as a Lower
Rudeis oil well and placed on production in October.
The Company maintained an active fracture stimulation program
that began in mid-June 2013 and continued throughout the third
quarter. Since mid-June, a total of 12 wells have been stimulated
and placed on production, including 11 at Arta/East Arta and one at
Hoshia.
Production
Production averaged 12,024 Bopd in July, 12,305 Bopd in August
and 12,464 Bopd in September.
Production was lower in July due to natural declines in
production which were not offset by new wells as planned due to a
prolonged contract approval process for well stimulations. A new
well stimulation contract was approved in June and a multi-well
stimulation program that began in mid-June has carried on
continuously through to the end of the third quarter. The
production increases that have been achieved in August and
September are due in large part to newly stimulated wells being
placed on production. The company currently has nine cased wells
scheduled for stimulation in the fourth quarter in addition to the
planned drilling for the balance of the year.
West Bakr, Arab Republic of Egypt (100% working interest,
operated)
Operations and Exploration
The Company drilled four wells in the third quarter resulting in
four oil wells (two in the H field, one in the M field and one in
the K field).
The company drilled two development wells in the H field with
one placed on production at a rate of approximately 500 Bopd and
the second well expected to be completed and on production by
mid-October.
In the K field the Company drilled an infill location in the
north central portion of the field which was cased with oil pay in
the Asl A and Asl F sands. Testing will be completed on the Asl F
before moving uphole to the primary Asl A target.
In the M field a step-out well was drilled during the quarter
along the western limit of the field. The well encountered oil pay
in four sands and was completed in the Asl C at initial rates of
300 Bopd.
It is expected that the drilling rig will continue working in
West Bakr throughout 2014.
Production
Production averaged approximately 5,070 Bopd in July, 5,007 Bopd
in August and 6,270 Bopd in September. The September increase is
attributed to newly drilled wells being brought on production along
with a number of recompletions in wells with multiple stacked pay
zones. In multi-zone wells, the lowermost intervals have initially
been completed which are often thin with indications of bottom
water. As these zones decline in productivity and show increasing
water production, they are either plugged-back or commingled with
uphole, thicker and more productive oil zones.
East Ghazalat Block, Arab Republic of Egypt (50% working
interest)
Operations and Exploration
The North Dabaa 1X exploration well was drilled to a total depth
of 14,740 feet and cased as a Cretaceous oil and Jurassic gas
condensate discovery. Based on open hole well logs and samples, the
well encountered approximately 8 feet of net oil pay in the Abu
Roash formation and 23 feet of net gas/condensate pay in the
Khatatba formation.
The Khatatba formation (9,882 - 9,906 feet) was completed and
flow tested using the drilling rig for a total duration of 72.5
hours. During this period, approximately 48.9 million cubic feet of
gas ("MMcf") and 4,893 barrels ("Bbl") of 56.9 degrees API
condensate were recovered on choke sizes varying from 18/64 inch to
64/64 inch and corresponding wellhead drawdowns of 2% to 44%. This
represents average rates during the entire flow test of 16.2
million cubic feet of gas per day ("MMcfd") and 1,620 barrels per
day ("Bpd") of condensate. An extended flow period of 26 hours was
performed on a 64/64 inch choke during the test resulting in rates
of 26.0 MMcfd of gas and 2,571 Bpd of condensate. Shut-in periods
were conducted during the test, however a detailed well test
analysis has not been performed. The test results should be
considered as preliminary and are not necessarily indicative of
long-term performance. The well was suspended and the drilling rig
was released. The new pool discovery will require additional
drilling to determine the extent and commerciality of the
discovery.
The Abu Roash oil zone will be completed and production tested
at a future date using a workover rig.
The North Dabaa 1X exploration well was drilled, cased,
completed and tested for a total estimated cost of $6.6 million
($3.3 million to TransGlobe).
The North Dabaa 1X discovery is located approximately 1.4
kilometers east of the Company's newly awarded 100% working
interest South Ghazalat concession which is awaiting Government
ratification.
Production
Production from East Ghazalat averaged 241 Bopd to TransGlobe in
July, 198 Bopd in August and approximately 188 Bopd in September.
Approximately 420 Bopd (210 Bopd to TransGlobe) has been shut in
since early July due to two pump failures. The operator has
mobilized a workover/completion rig to the Safwa field and is
currently installing new bottom hole pumps. Following the pump
repairs the rig is scheduled to complete and test the Cretaceous
oil zones in the North Dabaa 1X exploration well.
South Alamein, Arab Republic of Egypt (100% working interest,
operated)
Operations and Exploration
The Company approved a budget for 2013 which included 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 has been working closely with EGPC and the Ministry
of Oil since early 2012 to obtain military surface access approvals
in the South Alamein concession. In early June, the Company
received military approval for the West Manar and Taef exploration
wells. A drilling rig has been contracted and it is expected that
drilling will commence in October. The wells are targeting an
estimated 11 million barrels and 25 million barrels of P mean
un-risked prospective resources respectively. The estimated
prospective resources were independently evaluated as of December
31, 2012 by DeGolyer and McNaughton Canada Limited as disclosed in
the January 11, 2013 press release.
NEW CONCESSIONS - EGPC BID ROUND
On November 6, 2012, 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. The Company
has been advised that the new concessions have been approved by the
Cabinet and presented to the President for signature. It is
expected that the new concessions will be ratified in late 2013
when each concession is passed into law.
REPUBLIC OF YEMEN
Block 32, Republic of Yemen (13.81% working interest)
Operations and Exploration
An exploration well (Salsala 1) located in the south western
corner of the block is currently nearing total depth. Based on
internal estimates provided by the Operator, the Salsala 1 prospect
is estimated to contain an un-risked prospective gross resource
potential of 2.6 million barrels on a P mean (most likely)
basis.
Production
Field production has averaged approximately 2,295 Bopd (317 Bopd
to TransGlobe) during the third quarter.
Block S-1, Republic of Yemen (25% working interest)
Operations and Exploration
No wells were drilled during the third quarter.
Production
Field production has remained shut-in during 2013 primarily due
to labor negotiations with field employees and tender of
service/support contracts in the field. A settlement was reached
with the field employees in early April and the operator awarded
new service contracts in late May/early June. The new contractors
are currently negotiating with the local tribes to provide labor
for the respective contracts. It is difficult to predict when the
contractor negotiations will be concluded and production will be
restored.
If gross field production is restored to pre-shut in levels of
approximately 6,800 Bopd, Block S-1 could contribute approximately
1,700 Bopd to TransGlobe going forward.
For guidance purposes, the Company assumed production will
commence in Q4 which would contribute an average of approximately
400 Bopd to TransGlobe in 2013.
BUSINESS ENVIRONMENT
The Company's operations were largely unaffected by the civil
protests and political turmoil that took place in Egypt throughout
the third quarter. During the third quarter, the interim Government
appointed a new Minister of Petroleum and Mineral Resources, along
with a new EGPC Chairman. These individuals have publicly stated
their intention to focus on increasing investment in oil
exploration and development activity in Egypt, which is viewed as
positive by TransGlobe.
The Company has collected $142.7 million from EGPC to date in
2013, and expects to collect a total of $230 million to $250
million by year end, representing a 46% to 59% increase over 2012
collections. The majority of the remaining collections will come in
the form of a full cargo lifting and a partial cargo lifting, both
scheduled for November, which have been allocated to the Company.
These full and partial liftings are expected to result in
collections of approximately $65 million based on current pricing.
Further collections in the fourth quarter are expected in the form
of both cash and the offset of accounts payable to Government
affiliates.
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. TransGlobe's Convertible Debentures trade on the Toronto Stock
Exchange under the symbol TGL.DB.
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.
Contacts: TransGlobe Energy Corporation Scott Koyich Investor
Relations 403.264.9888investor.relations@trans-globe.com
www.trans-globe.com
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