TransGlobe Energy Corporation (TSX: TGL) (NASDAQ: TGA)
("TransGlobe" or the "Company") today announced its 2008 year-end
reserves. All dollar values are expressed in United States dollars
unless otherwise stated.
The Company's 2008 and 2007 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. Following is a summary of DeGolyer's
evaluation for the year ended December 31, 2008 with comparatives
to the year ended December 31, 2007.
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, 2008 and
December 31, 2007, respectively.
2008 Significant Events
In 2008, the Company's activities focused primarily on its
operated West Gharib concession in the Arab Republic of Egypt
("Egypt"). Building on the initial 55 percent working interest
acquired in September 2007, the Company acquired the remaining 45
percent working interest with two additional acquisitions, in
February and in August 2008. Production was increased and secondary
recovery projects were initiated in the Hana and Hoshia fields.
Late in 2008, TransGlobe made an oil discovery at Hana West, which
could increase 2009 production and reserves significantly. In
April, the Canadian assets were sold, which represented
approximately 23 percent (proved plus probable) of the 2007
year-end Company reserves. The sold Canadian reserves were more
than offset by the Egyptian acquisitions and the increased reserves
on the acquired properties resulting from the development and
exploration work carried out in 2008. TransGlobe has transitioned
into a pure Middle East/North Africa ("MENA") oil and gas
exploration company.
The Company's proved reserves in Egypt grew 108 percent over
2007, representing a production replacement of 369 percent. On a
proved plus probable ("2P") basis, the year-over-year increase was
135 percent, equal to a production replacement of 713 percent. The
most important reserves additions during the year resulted from the
infill drilling at Hana, the partial recognition of reserves
associated with enhanced recovery projects at both the Hana and
Hoshia fields, and the new pool discovery at Hana West in November
2008. Water injection pilot tests were initiated in both the Hana
and Hoshia fields during 2008, resulting in the assignment of
2Preserves for the pilot areas and proved plus probable plus
possible ("3P") reserves for full-field water floods. In addition,
preliminary 3P reserves were assigned to the Hana and the Hoshia
fields for tertiary recovery using ASP (Alkaline Surfactant
Polymer) flooding. ASP flooding techniques have been successfully
developed in analogous reservoirs in Western Canada.
Proved plus probable reserves of 3.5 million barrels were
assigned to the portion of the Hana West discovery drilled by
December 31, 2008. The Company plans to drill several appraisal
wells on the Hana West pool during the first half of 2009 which, if
successful, could further increase reserves assigned to this pool.
The Hana West discovery is too new to quantify reserves for
secondary and tertiary recovery projects. However, due to the
excellent reservoir quality and higher-quality oil encountered in
the wells drilled to date, Hana West is expected to be an excellent
candidate for secondary recovery (water flood) and possibly
tertiary applications in the future.
The Company's reserves in Yemen increased approximately four
percent over the prior year, representing a production replacement
of 116 percent on a proved basis and 124 percent on a 2P basis. The
Yemen reserve increases were primarily attributed to improved
recovery factors at the An Nagyah, Tasour and Godah fields.
Year-End 2008 Reserves(1)
Proved Reserves
TransGlobe's total proved reserves increased six percent from
11.9 million barrels of oil equivalent ("MMBoe") at December 31,
2007 to 12.6 MMBoe at December 31, 2008. This increase in proved
reserves represents a production replacement in 2008 of 127
percent.
Proved Plus Probable Reserves
Total 2P reserves grew 21 percent from 16.4 MMBoe at December
31, 2007 to 19.8 MMBoe at December 31, 2008. The increase in 2P
reserves represents a production replacement in 2008 of 226
percent.
Proved Plus Probable Plus Possible Reserves
The Company's 3P reserves totaled 28.0 MMBoe at December 31,
2008. This reserves category was not previously reported by
TransGlobe and therefore, comparative numbers for 2007 are not
presented.
(1)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 2008 Reserves
December December
31, 31, Increase
2008 2007
MMBoe(1) MMBoe(1) (%)
----------------------------------------------------------------------------
Proved
Egypt 5.8 2.8 107
Yemen 6.8 6.6 3
Canada(2) 0 2.5 (100)
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Total Proved 12.6 11.9 6
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Proved Plus Probable
Egypt 12.0 5.1 135
Yemen 7.8 7.5 4
Canada(2) 0 3.8 (100)
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Total Proved Plus Probable 19.8 16.4 21
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Proved Plus Probable Plus Possible
Egypt 20.1 N/A N/A
Yemen 7.9 N/A N/A
Canada(2) 0 N/A N/A
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Total Proved Plus Probable Plus Possible 28.0 N/A N/A
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(1) Working interest before royalties.
(2) TransGlobe sold all of its Canadian assets as of April 30, 2008, with an
effective date of January 1, 2008.
"We are very pleased with the increase in our reserves base. Our
exploration success in 2008 proves that our strategy of focusing on
the Middle East/North Africa region, our area of expertise, is
working. We will continue to add value for our shareholders by
keeping a healthy balance between lower-risk development work and
higher-risk, higher-reward exploration, adding further reserves as
we go", commented Ross Clarkson, President and Chief Executive
Officer of TransGlobe.
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 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 presented below in U.S.
dollars are calculated using DeGolyer's price forecast and also
constant pricing at December 31, 2008, using the average price
received December 31 of the respective reporting periods. In the
constant price case, the prices were held constant for the life of
the reserves.
Present Value of Future Net Revenues, After Tax ($MM)
Independent Evaluator's Price Forecast
December 31, 2008 December 31, 2007
Present Value Discounted at Discounted at
By Area 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
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Proved
Egypt $ 120 $ 105 $ 93 $ 83 $ 75 $ 54 $ 47 $ 41 $ 37 $ 33
Yemen $ 109 $ 90 $ 75 $ 64 $ 56 $ 125 $ 107 $ 94 $ 83 $ 74
Canada(1) $ 0 $ 0 $ 0 $ 0 $ 0 $ 68 $ 58 $ 50 $ 44 $ 39
----------------------------------------------------------------------------
Total Proved $ 229 $ 195 $ 168 $ 147 $ 131 $ 247 $ 212 $ 185 $ 163 $ 146
----------------------------------------------------------------------------
Proved plus
Probable
Egypt $ 220 $ 189 $ 165 $ 146 $ 131 $ 91 $ 76 $ 65 $ 56 $ 50
Yemen $ 131 $ 106 $ 88 $ 74 $ 64 $ 143 $ 121 $ 104 $ 91 $ 81
Canada(1) $ 0 $ 0 $ 0 $ 0 $ 0 $ 109 $ 87 $ 73 $ 62 $ 53
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Total Proved
plus
Probable $ 351 $ 295 $ 253 $ 220 $ 194 $ 343 $ 285 $ 242 $ 209 $ 184
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proved plus
Probable
plus Possible
Egypt $ 366 $ 299 $ 249 $ 212 $ 182
Yemen $ 133 $ 108 $ 90 $ 76 $ 65 Not Reported
Canada(1) $ 0 $ 0 $ 0 $ 0 $ 0
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Total 3P $ 499 $ 407 $ 339 $ 287 $ 247
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(1) The numbers for Canada are presented before tax.
Present Value of Future Net Revenues, After Tax ($MM)
Constant Pricing
December 31, 2008 December 31, 2007
Present Value Discounted at Discounted at
By Area 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
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Proved
Egypt $ 39 $ 36 $ 32 $ 30 $ 27 $ 61 $ 52 $ 46 $ 41 $ 37
Yemen $ 36 $ 31 $ 28 $ 25 $ 22 $ 145 $ 122 $ 106 $ 93 $ 83
Canada(1) $ 0 $ 0 $ 0 $ 0 $ 0 $ 74 $ 63 $ 54 $ 47 $ 42
----------------------------------------------------------------------------
Total
Proved $ 75 $ 67 $ 60 $ 54 $ 49 $ 280 $ 237 $ 206 $ 181 $ 161
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Proved plus
Probable
Egypt $ 85 $ 76 $ 68 $ 62 $ 56 $ 104 $ 87 $ 74 $ 64 $ 56
Yemen $ 44 $ 38 $ 34 $ 29 $ 26 $ 167 $ 140 $ 119 $ 104 $ 92
Canada(1) $ 0 $ 0 $ 0 $ 0 $ 0 $ 120 $ 95 $ 78 $ 66 $ 57
----------------------------------------------------------------------------
Total Proved
plus
Probable $ 129 $ 114 $ 102 $ 91 $ 82 $ 392 $ 322 $ 271 $ 234 $ 204
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proved plus
Probable plus
Possible
Egypt $ 92 $ 83 $ 75 $ 69 $ 63
Yemen $ 45 $ 39 $ 34 $ 30 $ 27 Not Reported
Canada(1) $ 0 $ 0 $ 0 $ 0 $ 0
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Total 3P $ 137 $ 122 $ 109 $ 99 $ 89
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(1) The numbers for Canada are presented before tax.
The following table summarizes D&M's price forecast used to estimate future
net revenues:
WTI Forecast
Pricing ($/Bbl) 2008 2009 2010 2011 2012 2013
----------------------------------------------------------------------------
Year-end 2008 $ 57.00 $ 69.53 $ 76.38 $ 86.99 $ 94.74
Year-end 2007 $ 90.00 $ 86.52 $ 84.87 $ 83.32 $ 82.78 $ 82.19
The constant pricing used to estimate future net revenues is as
follows, with Egypt prices based on prices received for West Gharib
production and Yemen prices based on prices received for production
from Blocks 32 and S-1:
Constant Pricing ($/Bbl) Dec. 31, 2008 Dec. 31, 2007
----------------------------------------------------------------------------
Egypt $ 25.64 $ 69.60
Yemen $ 38.39 $ 92.45
Corporate Presentation
TransGlobe is pleased to advise it has posted an updated
corporate presentation on its Web site at www.trans-globe.com.
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, 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.
The calculation of barrels of oil equivalent ("Boe") is based on
a conversion rate of six thousand cubic feet ("Mcf") of natural gas
to one barrel ("Bbl") of crude oil. Boes may be misleading,
particularly if used in isolation. A Boe conversion ratio of 6
Mcf:1 Bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead.
Contacts: TransGlobe Energy Corporation Anne-Marie Buchmuller
Manager, Investor Relations & Assistant Corporate Secretary
(403) 268-9868 (403) 472-0053 (FAX) Email:
anne-marieb@trans-globe.com Website: www.trans-globe.com
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