TransGlobe Energy Corporation Announces 2013 Year-End Reserves,
Operations Update and Conference Call
CALGARY, ALBERTA--(Marketwired - Jan 28, 2014) - TransGlobe
Energy Corporation (TSX:TGL)(NASDAQ:TGA) ("TransGlobe" or the
"Company") today announces its 2013 year-end reserves and
operations update before the opening of stock markets. All dollar
values are expressed in United States dollars unless otherwise
stated. A conference call and webcast to discuss reserves will be
held the same day:
Time: |
7:30 a.m. Mountain Time (9:30 a.m. Eastern Time) |
Dial-in: |
(416) 340-2216 or toll-free at 1-866-226-1792 |
Webcast: |
http://www.gowebcasting.com/5197 |
RESERVES
The Company's 2013 and 2012 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.
The following is a summary of DeGolyer's evaluation for the year
ended December 31, 2013 with comparatives to the year ended
December 31, 2012. 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, 2013 and
December 31, 2012, respectively.
Year-End Reserves Summary* (Working Interest, before
Royalties)
Oil Reserves |
Dec. 31 2013 (MMBbl) Gross |
Dec. 31 2013 (MMBbl) Net** |
Dec. 31 2012 (MMBbl) Gross |
Dec. 31 2012 (MMBbl) Net** |
Increase (Decrease) (%) Gross |
Increase (Decrease) (%) Net** |
Proved ("1P") |
|
|
|
|
|
|
Egypt |
28.8 |
14.6 |
29.8 |
14.0 |
(3%) |
5% |
Yemen |
2.8 |
1.5 |
3.0 |
1.6 |
(6%) |
(7%) |
Total 1P |
31.6 |
16.2 |
32.8 |
15.6 |
(3%) |
3% |
|
|
|
|
|
|
|
Proved Plus Probable ("2P") |
|
|
|
|
|
|
Egypt |
40.8 |
20.1 |
43.9 |
19.9 |
(7%) |
1% |
Yemen |
4.5 |
2.4 |
4.9 |
2.6 |
(8%) |
(7%) |
Total 2P |
45.3 |
22.5 |
48.7 |
22.5 |
(7%) |
0% |
|
|
|
|
|
|
|
Proved Plus Probable Plus Possible ("3P") |
|
|
|
|
|
|
Egypt |
49.7 |
24.0 |
56.5 |
24.7 |
(12%) |
(3%) |
Yemen |
5.6 |
3.1 |
5.9 |
3.2 |
(5%) |
(4%) |
Total 3P |
55.3 |
27.1 |
62.4 |
27.9 |
(11%) |
(3%) |
* Numbers may not add exactly due to rounding. |
** Net reserves are after royalties before tax. |
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.
2013 Reserve Changes
In 2013, 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 fell 3 percent from 2012,
representing a production replacement of 85 percent. On a 2P basis,
the year-over-year decrease was 7 percent, equal to a production
replacement of 53 percent, while on a 3P basis, the year-over-year
decrease was 12 percent, equal to a production replacement of minus
4 percent.
At West Gharib, year-end 2012 undeveloped reserve bookings were
brought on production throughout 2013 which generally extended
producing pools to the boundaries of the West Gharib lands. As a
result, there were minimal new reserve additions to replace the 4.6
million barrels produced from West Gharib during 2013.
At West Bakr, significant reserve additions were achieved in the
K and H fields due to detailed reservoir simulation, development
drilling and production optimization. Overall, 2P reserves at West
Bakr increased 22% on a year over year basis which represented a
268% replacement of the 1.8 million barrels produced from West Bakr
during 2013.
East Ghazalat reserves were down year over year due to the 2013
appraisal drilling results and the corresponding decrease in the
number of undeveloped drilling locations.
In the Republic of Yemen ("Yemen"), reserves were reduced
primarily due to production and reduced field activity associated
with labor unrest in the country.
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 2013 and 2012
presented below in millions of U.S. dollars ("$MM"), are calculated
using DeGolyer's price forecast at December 31, 2013 and December
31, 2012, respectively, and constant pricing using the Securities
and Exchange Commissions' ("SEC") average price (the 12-month
average price using the first day of the month prices during 2013
and 2012, respectively). In the constant price cases, the prices
were held constant for the life of the reserves.
Forecast
Pricing
Present Value of
Future Net Revenues, After Tax ($MM)* Independent Evaluator's Price
Forecast
Present Value |
December 31, 2013 Discounted at |
December 31, 2012 Discounted at |
By Area |
0% |
5% |
10% |
15% |
20% |
0% |
5% |
10% |
15% |
20% |
Proved |
|
|
|
|
|
|
|
|
|
|
|
Egypt |
$606 |
$515 |
$449 |
$400 |
$361 |
$718 |
$596 |
$513 |
$453 |
$408 |
|
Yemen |
$56 |
$51 |
$46 |
$42 |
$39 |
$64 |
$56 |
$50 |
$45 |
$41 |
Total 1P |
$663 |
$566 |
$495 |
$442 |
$400 |
$782 |
$653 |
$563 |
$498 |
$449 |
Proved plus Probable |
|
|
|
|
|
|
|
|
|
|
|
Egypt |
$789 |
$648 |
$549 |
$478 |
$424 |
$960 |
$768 |
$642 |
$553 |
$489 |
|
Yemen |
$87 |
$75 |
$65 |
$58 |
$52 |
$100 |
$83 |
$71 |
$61 |
$54 |
Total 2P |
$876 |
$722 |
$615 |
$536 |
$476 |
$1,060 |
$851 |
$712 |
$615 |
$543 |
Proved plus Probable plus Possible |
|
|
|
|
|
|
|
|
|
|
|
Egypt |
$939 |
$752 |
$626 |
$537 |
$471 |
$1,171 |
$933 |
$775 |
$664 |
$581 |
|
Yemen |
$113 |
$92 |
$78 |
$67 |
$59 |
$126 |
$102 |
$84 |
$72 |
$63 |
Total 3P |
$1,052 |
$844 |
$704 |
$605 |
$531 |
$1,297 |
$1,035 |
$860 |
$736 |
$644 |
* Numbers may not add exactly due to rounding. |
The following table summarizes DeGolyer's reference price
forecast used to estimate future net revenues:
DeGolyer Forecast Pricing
($/Bbl) |
|
|
|
|
|
Brent Forecast Pricing ($/Bbl) |
2014 |
2015 |
2016 |
2017 |
2018 |
Year-end 2013 |
$106.00 |
$101.80 |
$101.64 |
$101.51 |
$101.42 |
Year-end 2012 |
$108.35 |
$105.72 |
$107.88 |
$106.62 |
$107.10 |
Constant
Pricing
Present Value of
Future Net Revenues, After Tax ($MM)* Constant Pricing
Present Value |
December 31, 2013 Discounted at |
December 31, 2012 Discounted at |
By Area |
0% |
5% |
10% |
15% |
20% |
0% |
5% |
10% |
15% |
20% |
Proved |
|
|
|
|
|
|
|
|
|
|
|
Egypt |
$640 |
$543 |
$474 |
$421 |
$380 |
$731 |
$610 |
$526 |
$465 |
$419 |
|
Yemen |
$61 |
$54 |
$49 |
$44 |
$41 |
$66 |
$58 |
$52 |
$47 |
$43 |
Total 1P |
$701 |
$597 |
$522 |
$465 |
$421 |
$797 |
$668 |
$578 |
$511 |
$461 |
Proved plus Probable |
|
|
|
|
|
|
|
|
|
|
|
Egypt |
$825 |
$680 |
$578 |
$503 |
$446 |
$970 |
$782 |
$656 |
$568 |
$502 |
|
Yemen |
$95 |
$80 |
$69 |
$61 |
$55 |
$104 |
$86 |
$73 |
$63 |
$56 |
Total 2P |
$920 |
$760 |
$647 |
$564 |
$501 |
$1,074 |
$867 |
$729 |
$631 |
$557 |
Proved plus Probable plus Possible |
|
|
|
|
|
|
|
|
|
|
|
Egypt |
$978 |
$787 |
$658 |
$566 |
$497 |
$1,186 |
$951 |
$793 |
$681 |
$597 |
|
Yemen |
$122 |
$99 |
$84 |
$72 |
$64 |
$133 |
$107 |
$88 |
$75 |
$66 |
Total 3P |
$1,100 |
$887 |
$742 |
$638 |
$560 |
$1,319 |
$1,058 |
$881 |
$756 |
$663 |
* Numbers may not add exactly due to rounding. |
The Constant Pricing used to estimate future net revenues is as
follows, with Egypt prices based on prices received for West
Gharib, West Bakr and East Ghazalat production and Yemen prices
based on prices received for production from Blocks 32 and S-1.
Pursuant to the SEC pronouncement in 2009, the Constant Price
cases are based on the average of the reference price received on
the first of each month during the year adjusted for respective
differentials at year-end.
Constant Pricing ($/Bbl) |
2013 |
2012 |
Egypt |
$93.17 |
$102.60 |
Yemen |
$106.07 |
$108.41 |
PRODUCTION UPDATE
The following table summarizes Company production for October,
November, December of 2013 and January month to date ("MTD") in
2014, in addition to the estimated production average for the year
2013. Production numbers will differ from sales numbers primarily
due to the timing of lifting's in Yemen.
|
2013 Monthly Production (Bopd) |
Full Year |
January 2014 |
Concession |
October |
November |
December |
2013 Average |
Month-to-Date |
West Gharib |
11,998 |
11,892 |
12,023 |
12,511 |
11,700 |
West Bakr |
5,992 |
5,509 |
5,207 |
5,065 |
5,900 |
East Ghazalat |
216 |
367 |
419 |
316 |
380 |
Egypt Totals |
18,206 |
17,768 |
17,649 |
17,893 |
17,980 |
Block S-1 |
0 |
959 |
276 |
102 |
770 |
Block 32 |
303 |
294 |
230 |
308 |
250 |
Yemen Totals |
303 |
1,253 |
506 |
410 |
1,020 |
TransGlobe Totals |
18,509 |
19,021 |
18,155 |
18,303 |
19,000 |
West Gharib production has been in the 12,000 Bopd range for the
past 4 months. Well stimulations and completions have been ongoing
however production increases have been offset by natural declines
and well servicing. An additional 6 wells are scheduled for
completions and/or stimulations during the first quarter.
West Bakr production declined from 6,000 Bopd in October, to
5,500 Bopd in November and 5,200 Bopd in December due to a number
of pump changes and workovers along with service rig mechanical
issues that hampered well servicing efficiency. An additional
service rig was contracted on a short-term basis in order to
alleviate the servicing back-log in November/December and boost
overall production. January production has increased to average
5,900 Bopd MTD primarily due to new wells and an active workover
program in December.
Yemen Block S1 production was restarted in November following
extensive labor negotiations throughout 2013. Subsequently Block S1
was shut in for a portion of December and January due to
disruptions on the export pipeline which has been repaired. Block
32 production has also been impacted by local tribal issues and
sporadic disruptions on the Masila export pipeline to the Indian
Ocean during December and January.
OPERATIONS UPDATE (ARAB REPUBLIC OF EGYPT)
Subsequent to the Mid Q4 update (December 9, 2013) the Company
has drilled five wells resulting in three oil wells, one water
injector and one dry hole.
At West Gharib (100% working interest) the Company drilled a
Lower Nukhul oil well at Arta (waiting completion) and a water
injector at Hana to optimize the Hana water flood. The rig is
currently drilling a Lower Nukhul development well at Arta and is
scheduled to drill up to nine wells in West Gharib during Q1 and Q2
of 2014 prior to moving to the new North West Gharib ("NWG")
concession for the remainder of 2014.
At West Bakr (100% working interest), the Company drilled oil
wells in H and K fields. The H field well encountered two oil zones
and was completed and is currently producing approximately 300 Bopd
from the lower-most zone. The K field well encountered oil in three
zones (Asl A, B & E) and is scheduled for completion in the Asl
E formation. The drilling rig is currently drilling in K field and
is scheduled to continue working in West Bakr with 17 wells planned
for 2014.
At South Alamein (100% working interest), the Company drilled
and abandoned the West Manar exploration well. West Manar was
drilled to a total depth of 7,300 feet and cost approximately $1.9
million to drill and abandon, and the rig was subsequently
released. This concession remains a high-potential exploration area
for the Company however future exploration drilling is dependent on
receiving the necessary military approvals to access the broader
Boraq area of the concession.
At East Ghazalat (50% working interest, non-operated) drilling
commenced on a shallow (planned 4,400 feet) exploration well at
East Ghazalat #3. East Ghazalat #3 is located approximately 3
kilometers east of the Safwa development lease and is targeting a
new play, a Cretaceous reef feature. Should this well be
successful, it will significantly de-risk this play and which could
result in additional drilling. A total of 14 drilling targets have
been identified on the existing 3D seismic data, which DeGolyer
independently evaluated as of December 31, 2012 and estimated the
prospective resources in this play type to contain 6 million
barrels (gross unrisked) on a P-mean basis. Following East Ghazalat
#3, the drilling rig is scheduled to drill two development wells in
the Safwa field.
New Exploration Blocks, Eastern & Western Desert (100%
working interest):
The Company has prepared and submitted an initial 18 wells for
the necessary approvals on the North West Gharib ("NWG") block in
the Eastern Desert. The Company has identified 79 drilling
locations based on existing 3D seismic and geological modeling of
the area. The Company is targeting the second quarter of 2014 to
commence exploration drilling at NWG. Based on current mapping the
Company has internally estimated a prospective resource of 71
million barrels on an un-risked deterministic basis for the entire
NWG block. The 2014 drilling program will target up to 58 million
barrels of the total 71 million barrels of prospective resource
identified to date.
Based on surface and remote-sensing mapping, the same structural
configuration that created the pools found in the West Gharib
concession is likely present in the NWG, SW Gharib ("SWG") and SE
Gharib ("SEG") blocks. The historical field size distribution data
indicates that the average field size in the broader onshore Gulf
of Suez (Eastern Desert) area is roughly 20 million barrels per
field of recoverable resource. The Company has identified an
additional 15 areas of interest ("leads") in the NWG block, 4 leads
on the SWG block and 2 leads on the SEG block that will be followed
up and further refined by field mapping and the high-resolution
seismic acquisition program.
In the Western Desert, the South Ghazalat concession will be
covered by an 800 km2 seismic acquisition program during the
initial evaluation. This large block is situated on the western
margin of the prolific Abu Gharadig Basin, immediately west of the
non-operated East Ghazalat block, where a Jurassic gas-condensate
discovery was made and announced late in 2013.
The total seismic program will consist of approximately 1,800
square kilometers of 3D seismic and 300 kilometers of 2D seismic.
Subject to approvals and crew availability, the Company's target is
to commence acquisition in the Eastern Desert during Q2 of 2014. It
is expected the full program, providing broad coverage of the new
concessions, will be completed in early 2015.
New EGPC Bid Round: EGPC has recently announced a new bid round
which offers 15 blocks across Egypt. The company plans to evaluate
the offered blocks. As a result, the Company may bid on several new
exploration blocks that would augment the recently acquired
~800,000 acres of exploration acreage.
BUSINESS ENVIRONMENT
The Company collected $275.2 million from EGPC in 2013, which
includes collections of $127.4 million during the fourth quarter
which consisted of a full and partial cargo lifting, offsets
(including the signature bonuses on new concessions) and cash
payments. At year-end 2013, the total receivable had been reduced
to approximately $148 million (net of excess cost oil of ~17
million) which represents a 25% reduction in total receivables year
over year. In addition the average aging of the receivables has
reduced to the 6-7 month range from the 8-10 month range year over
year.
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.
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.
TransGlobe Energy CorporationSteve LangmaidInvestor
Relations403.444.4787investor.relations@trans-globe.comwww.trans-globe.com
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