TransGlobe Energy Corporation ("TransGlobe" or the "Company") (TSX:
TGL) (NASDAQ: TGA) today announced its 2010 year-end reserves. All
dollar values are expressed in United States dollars unless
otherwise stated.
The Company's 2010 and 2009 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, 2010 with comparatives
to the year ended December 31, 2009.
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, 2010 and
December 31, 2009, respectively.
Year-End 2010 Reserves(i)
Proved Reserves ("1P")
TransGlobe's total proved reserves increased 6 percent to 20.5
million barrels of oil ("MMBbl") at December 31, 2010 from 19.2
MMBbl at December 31, 2009. This increase in proved reserves
represents a production replacement in 2010 of 133 percent. The
Company produced 3.6 MMBbl of reserves during 2010.
Proved Plus Probable Reserves ("2P")
Total 2P reserves grew 26 percent to 30.4 MMBbl at December 31,
2010 from 24.2 MMBbl at December 31, 2009. The increase in 2P
reserves represents a production replacement in 2010 of 272
percent.
Proved Plus Probable Plus Possible Reserves ("3P")
Total 3P reserves grew 37 percent to 41.9 MMBbl at December 31,
2010 from 30.5 MMBbl at December 31, 2009. The increase in 3P
reserves represents a production replacement in 2010 of 412
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
(Working Interest, before royalties)
December 31, December 31, Increase
2010 2009 (Decrease)
(MMBbl) (MMBbl) (%)
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Proved
Egypt 15.2 13.0 16
Yemen 5.3 6.2 (15)
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Total 1P 20.5 19.2 6
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Proved Plus Probable
Egypt 23.9 16.8 43
Yemen 6.5 7.4 (12)
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Total 2P 30.4 24.2 26
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Proved Plus Probable Plus Possible
Egypt 34.5 22.4 54
Yemen 7.4 8.1 (9)
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Total 3P 41.9 30.5 37
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2010 Reserve Changes
In 2010, the Company's activities focused primarily on the
development of its operated West Gharib concession and
exploration/appraisal of the East Ghazalat concession in the Arab
Republic of Egypt ("Egypt").
In Egypt, the Company's 1P reserves grew 16 percent over 2009,
representing a production replacement of 181 percent. On 2P basis,
the year-over-year increase was 43 percent, equal to a production
replacement of 369 percent while on a 3P basis, the year-over-year
increase was 54 percent, equal to a production replacement of 558
percent.
The most significant reserves additions during the year resulted
from exploration and appraisal drilling at Arta/East Arta in West
Gharib and the Safwa discovery in East Ghazalat. Arta/East Arta
accounted for approximately 81 percent of the corporate 1P reserve
additions, 72 percent of the corporate 2P reserve additions and 73
percent of the corporate 3P reserve additions during 2010. On a 2P
and 3P basis, the Safwa discovery was the other significant reserve
addition during 2010.
In the Republic of Yemen ("Yemen"), 2010 production was
partially replaced by improved recovery factors at the An Nagyah,
Tasour and Godah fields. The Company's 1P reserves in Yemen
decreased 15 percent over the prior year, representing a production
replacement of 6 percent. On a 2P basis, reserves in Yemen
decreased 12 percent over the prior year, representing a production
replacement of 13 percent. On a 3P basis, reserves in Yemen
decreased 9 percent over the prior year, representing a production
replacement of 23 percent.
Significant 2010 Reserve Additions
The emergence of the Nukhul oil pools in the Arta and East Arta
leases in 2010 has resulted in significant reserve growth during
2010. The Nukhul pools (Upper and Lower) will be the primary focus
for reserve additions (3P, 2P and 1P) and reserve conversions (from
3P to 2P to 1P) during 2011 and 2012. At year-end 2010, reserves
were assigned by DeGolyer to approximately 60 percent of the
currently mapped Arta/East Arta Nukhul oil pools based on
internally generated maps.
The following tables summarize the 2010 year-end reserves
assignments for the Upper Nukhul formation in the Arta/East Arta
leases and the per well reserve assignments by reserve
category.
Upper Nukhul Initial Reserves
(Arta / East Arta Pools)
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Initial Recovery
Reserve Reserves Factor PIIP(i)
Category (MMBbl) (%) (MMBbl)
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1P 3.5 10 35
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2P 6.6 12 52
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3P 10.3 14 70
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(i) Petroleum initially in place.
The Company estimates that 3P reserves have been assigned to
approximately 60 percent of the Arta and East Arta upper Nukhul
pools based on internally generated maps. Additional drilling will
be required to evaluate the reserve potential of the 40 percent of
the pools that are outside of the assigned areas.
Upper Nukhul Reserves at December 31, 2010
(Arta / East Arta Pools)
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Undeveloped Reserves
------------------------------------
Total
Developed Reserves Dec 31/10
Reserve Reserves(i) Undrilled per Well Reserves Reserves
Category (MMBbl) Wells (MBbl)(ii) (MMBbl) (MMBbl)
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1P 1.7 12 105 1.3 2.9
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28
2P 2.2 (12+16=28) 137 3.8 6.0
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45
3P 2.7 (12+16+17=45) 158 7.1 9.8
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(i) Developed Reserves assigned to 16 wells.
(ii) Thousand barrels ("MBbl").
The undeveloped Upper Nukhul wells are estimated to cost $1.3
million per well to drill, complete (including a fracture
stimulation) and equip for production. The cost of the respective
undeveloped wells is included in the Estimated Future Net Revenues
summarized in the tables below.
Lower Nukhul Reserves
(Arta / East Arta)
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Reserve Initial Recovery
Category Reserves Factor PIIP
(MMBbl) (%) (MMBbl)
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East Arta #7 - 1P 0.9 10 9
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- 2P 1.2 13 9
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- 3P 1.4 15 9
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Unassigned Area 27
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Total PIIP 36
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Reserves were assigned to the East Arta #7 well only in the
Lower Nukhul which represents approximately 25 percent of the total
mapped PIIP of 36 MMBbl at year-end 2010. The Lower Nukhul
encountered in East Arta #7 is a significantly better quality
reservoir than the Upper Nukhul as evidenced by the initial
production rate of 2,000 Bopd without a fracture stimulation. The
Company anticipates that the initial recovery factors assigned to
the Lower Nukhul could increase to the 20 to 30+ percent range over
time based on similar quality reservoirs in the West Gharib
concession. Additional production history from the Lower Nukhul
will be required to support changes to recovery factors. No
additional reserves were assigned to the Lower Nukhul formation for
undeveloped wells at year end 2010. Additional drilling will be
required to delineate the extent of the Lower Nukhul pool during
2011 and 2012.
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 for years ended 2010 and 2009
presented below in millions of U.S. dollars ("$MM") are calculated
using DeGolyer's price forecast at December 31, 2010 and December
31, 2009, respectively, and constant pricing using the Securities
and Exchange Commissions' ("SEC") average price (the 12-month
average price using in the first day of the month prices during
2010 and 2009, respectively).
In the constant price cases, 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
Present Value December 31, 2010 Discounted at
By Area 0% 5% 10% 15% 20%
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Proved
Egypt $ 380 $ 320 $ 277 $ 244 $ 219
Yemen $ 100 $ 86 $ 75 $ 67 $ 60
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Total 1P $ 481 $ 406 $ 353 $ 311 $ 279
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Proved plus Probable
Egypt $ 544 $ 451 $ 384 $ 332 $ 291
Yemen $ 127 $ 107 $ 92 $ 80 $ 71
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Total 2P $ 672 $ 558 $ 475 $ 412 $ 362
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Proved plus Probable plus Possible
Egypt $ 771 $ 610 $ 502 $ 425 $ 366
Yemen $ 145 $ 121 $ 103 $ 89 $ 78
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Total 3P $ 916 $ 731 $ 605 $ 514 $ 444
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Present Value December 31, 2009 Discounted at
By Area 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
Proved
Egypt $ 338 $ 266 $ 219 $ 186 $ 162
Yemen $ 108 $ 90 $ 77 $ 66 $ 58
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Total 1P $ 446 $ 356 $ 296 $ 252 $ 220
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Proved plus Probable
Egypt $ 416 $ 330 $ 272 $ 231 $ 201
Yemen $ 133 $ 107 $ 88 $ 74 $ 64
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Total 2P $ 549 $ 437 $ 361 $ 306 $ 265
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Proved plus Probable plus Possible
Egypt $ 550 $ 420 $ 334 $ 274 $ 231
Yemen $ 144 $ 115 $ 94 $ 79 $ 67
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Total 3P $ 694 $ 535 $ 428 $ 353 $ 298
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The following table summarizes DeGolyer's reference price forecast used to
estimate future net revenues:
DeGolyer Forecast Pricing ($/Bbl)
WTI Forecast Pricing ($/Bbl) 2010 2011 2012 2013 2014 2015
----------------------------------------------------------------------------
Year-end 2010 $ 88.00 $ 90.78 $ 93.64 $ 96.57 $ 99.58
Year-end 2009 $ 80.00 $ 82.88 $ 85.83 $ 88.88 $ 92.01 $ 93.85
Present Value of Future Net Revenues, After Tax ($MM)
Constant Pricing
Present Value December 31, 2010 Discounted at
By Area 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
Proved
Egypt $ 311 $ 265 $ 232 $ 206 $ 185
Yemen $ 77 $ 68 $ 60 $ 53 $ 48
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Total 1P $ 388 $ 333 $ 291 $ 259 $ 233
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Proved plus Probable
Egypt $ 442 $ 370 $ 316 $ 275 $ 241
Yemen $ 99 $ 84 $ 73 $ 64 $ 57
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Total 2P $ 541 $ 455 $ 390 $ 339 $ 299
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Proved plus Probable plus Possible
Egypt $ 612 $ 492 $ 409 $ 348 $ 301
Yemen $ 113 $ 95 $ 82 $ 71 $ 63
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Total 3P $ 725 $ 587 $ 491 $ 419 $ 364
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Present Value December 31, 2009 Discounted at
By Area 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
Proved
Egypt $ 223 $ 181 $ 152 $ 132 $ 116
Yemen $ 66 $ 56 $ 48 $ 42 $ 37
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Total 1P $ 289 $ 237 $ 201 $ 174 $ 153
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Proved plus Probable
Egypt $ 272 $ 222 $ 187 $ 161 $ 142
Yemen $ 81 $ 66 $ 56 $ 48 $ 41
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Total 2P $ 353 $ 288 $ 243 $ 209 $ 183
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Proved plus Probable plus Possible
Egypt $ 350 $ 274 $ 222 $ 185 $ 158
Yemen $ 87 $ 71 $ 59 $ 50 $ 43
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Total 3P $ 436 $ 345 $ 281 $ 236 $ 202
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The constant pricing used to estimate future net revenues is as
follows, with Egypt prices based on prices received for West Gharib
production and estimated for East Ghazalat 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) 2010 2009
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Egypt $ 69.50 $ 54.52
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Yemen $ 77.81 $ 59.61
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2010 YEAR-END RESERVES (Conference Call and Web Cast)
A conference call and web cast to discuss the 2010 year-end
reserves will be held today:
Time: 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time)
Dial-in: (416) 340-8527 or toll-free at 1-877-440-9795
Web cast:
http://events.digitalmedia.telus.com/transglobe/021411/index.php
Shortly after the conclusion of the call, a replay will be
available by dialing (905) 694-9451 or toll-free at 1-800-408-3035.
The pass code is 1471702#. The replay will expire at 11:59 p.m.
Eastern Time on February 21, 2011. Thereafter, a copy of the call
can be accessed on TransGlobe's 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, 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 403.264.9888 investor.relations@trans-globe.com
www.trans-globe.com
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