TransGlobe Energy Corporation ("TransGlobe" or the "Company")
(TSX:TGL) (NASDAQ:TGA) is pleased to provide a mid-quarter
production and operations update for the second quarter of 2012.
All dollar values are expressed in United States dollars unless
otherwise stated.
HIGHLIGHTS
-- Closed company acquisitions from EP Energy LLC on June 7, 2012.
-- Purchased wholly owned subsidiary companies (100%) which hold a 60%
operated interest in the South Mariut Concession and a 50% non-
operated interest in the South Alamein Concession in Egypt.
-- Total purchase price of US $21.7 million ($15.0 million purchase
price plus $6.7 million for inventory and fixed assets).
-- Contracted a 2,000 HP drilling rig to drill the Al Azayem 1 exploration
prospect at South Mariut.
-- Company production of 17,040 barrels of oil per day ("Bopd") in May.
-- Egypt production of 16,690 Bopd in May (12,574 Bopd West Gharib and
4,116 Bopd West Bakr).
-- Yemen production of 350 Bopd in May (350 Bopd Block 32 and Block S-1
shut-in).
-- The Company has received $34.8 million of receivables from the Egyptian
Government during the second quarter to date.
-- Three drilling rigs currently working in Egypt (West Gharib, West Bakr
and East Ghazalat).
OPERATIONS
Corporate Production:
TransGlobe's production averaged; 16,745 Bopd in April (Egypt
16,362 Bopd, Yemen 383 Bopd); 17,040 Bopd in May (Egypt 16,690
Bopd, Yemen 350 Bopd) and 17,300 Bopd in June to date.
Currently 2,850 Bopd of production is shut-in (600 Bopd
curtailed at West Gharib and 2,250 Bopd of production from Block
S-1 Yemen remains shut-in due to damage to the export pipeline). In
addition the Company has approximately 2,400 Bopd of production
behind casing (waiting on completions and fracture stimulations) at
West Gharib due to facility constraints at General Petroleum
Corporation ("GPC") receiving terminal.
ARAB REPUBLIC OF EGYPT
West Gharib, Arab Republic of Egypt (100% working interest,
TransGlobe operated)
Operations and Exploration
During the second quarter, the Company drilled 5 wells in the
Arta/East Arta area resulting in 5 oil wells to date. One rig is
currently drilling in the West Gharib. The rig will be targeting
exploration, step-out and appraisal wells primarily in the
Arta/East Arta area for the balance of the year.
Production
West Gharib production averaged 12,052 Bopd in April and
increased to 12,574 Bopd in May. Current production is
approximately 12,950 Bopd in June.
Production increases in May and June are attributed to improved
water separation in the field and to new wells. Facility
optimization projects and warmer temperatures in May/June
contributed to improved water separation. The Company commissioned
a new multi-well battery in the Hoshia field during late May and
continues to progress a number of projects to reduce the amount of
water trucked with the oil and to increase tankage and processing
capacity allocations at the GPC operated terminal. The Company has
recently received approval from the Egyptian General Petroleum
Corporation ("EGPC") to utilize the West Bakr facilities to
transport a portion of the West Gharib production to the GPC
terminal which will increase oil sales. The Company is targeting to
initially truck the Hana/Hana West production to the West Bakr K
station facility for processing by Q3/Q4 of this year.
It is estimated that approximately 600 Bopd of production
remains curtailed in June due to facility constraints. Of the
fourteen oil wells drilled in 2012, twelve wells are awaiting
completion and stimulation. It is estimated that 2,400 Bopd of
additional production inventory exists from these twelve wells. The
estimate is based on historical performance from Upper Nukhul
producers which have averaged 200 Bopd during the first 90 days of
production following fracture stimulation. The wells will be
completed and brought into production to offset natural declines
and as additional sales capacity becomes available.
West Bakr, Arab Republic of Egypt (100% working interest,
TransGlobe operated)
Operations and Exploration
Subsequent to the quarter, the Company moved a drilling rig from
the West Gharib concession and drilling commenced in late April in
the H field. The first well was completed as a producing oil well
in the H field and was placed on production in early June at an
initial, reduced rate of 100 Bopd. The pump speed will be gradually
increased to 300 Bopd during June to minimize initial sand
production which is common in the high quality sandstone reservoirs
in West Bakr. The second well was drilled in the M field and
encountered the target reservoirs on the down-thrown side of a
fault. The well was subsequently plugged back to surface casing and
suspended for a future side-track to the up-thrown side of the
fault. Technical evaluation of the well and seismic data is
underway to determine the sidetrack location. The rig is currently
drilling on the K field, which is the first well drilled in the K
field in 24 years. The initial three well 2012 drilling program has
been increased to six wells (2 wells in H, 2 wells in M & 2
wells in K). In addition to the planned six well program, the West
Bakr team has identified an additional fourteen drilling
targets.
The Company recently initiated an engineering study to identify
and assess potential infrastructure synergies between West Bakr and
the adjacent West Gharib operations. The initial study is focused
on the utilization of excess processing and export pipeline
capacity in the West Bakr concession to maximize the oil delivered
to GPC and to reduce trucking expense. The Company has received
EGPC approval to transport a portion of the West Gharib production
through the West Bakr facilities and pipeline to the GPC terminal.
In addition, the Company is working with GPC and EGPC to expand
existing export capacity and secure alternate sales points within
the existing government operated infrastructure.
The produced West Bakr oil ranges from 17 degrees to 20 degrees
API and is pipeline connected to the GPC operated Ras Gharib
terminal on the coast. The West Gharib production is currently
trucked to the same terminal. The West Bakr blend has historically
received Dated Brent minus 22 to 25% pricing.
Production
Production from West Bakr averaged 4,310 Bopd during April;
4,116 Bopd during May; and 4,000 Bopd in June. Production during
the quarter was significantly impacted by a number of work-overs
and pump changes associated with poor quality pumps and pump parts
which were in operation. The Company has changed pump suppliers and
expects to achieve improved performance similar to the West Gharib
operations as the equipment is repaired or replaced over the
balance of 2012.
South Mariut, Arab Republic of Egypt (60% working interest,
TransGlobe operated)
On June 7, 2012 the Company acquired a company from EP Energy
LLC which holds an operated 60% working interest in the South
Mariut Production Sharing Concession ("PSC").
The South Mariut concession is located in the Western Desert of
Egypt and is onshore along the Mediterranean coast line, adjacent
to prolific offshore hydrocarbon fields and southwest of the city
of Alexandria. The current gross size of this exploration
concession is approximately 3,350 square kilometers (approx.
828,000 acres). The South Mariut concession is in the first,
three-year extension period which expires on April 5, 2013. A
further two-year extension is available under the terms of the
PSC.
The South Mariut partners have acquired approximately 1,200
square kilometers of 3-D seismic and executed several studies
supporting the prospectivity of the South Mariut concession
area.
The joint venture partners have approved a $9.6 million
exploration well (Al Azayem 1) for 2012. The Company has received
all the necessary approvals and has contracted a 2,000 horsepower
drilling rig for Al Azayem 1. It is expected that rig mobilization
could commence in the next two weeks with a possible spud date of
late July (subject to rig inspection and acceptance). The planned
90 day well is targeting several stacked horizons with four-way
closures identified on 3-D seismic. The total depth is expected at
approximately 14,500 feet in Jurassic reservoirs. TransGlobe has
internally estimated a combined 236 million barrels gross of
undiscovered Petroleum initially in Place ("PIIP") on a
probabilistic P-mean basis for this prospect.
South Alamein, Arab Republic of Egypt (100%(i) working interest,
TransGlobe operated)
On June 7, 2012 the Company acquired a company from EP Energy
LLC which holds a 50% interest in the South Alamein PSC.
(i) On June 29, 2011 the Company announced the acquisition of a
50% working interest in the South Alamein PSC from Cepsa Egypt SA
B.V. ("Cepsa"). The Cepsa asset acquisition is conditional upon
Government approval of a deed of assignment. The deed of assignment
has been sent to the Minister of Petroleum for approval. When
acquired, the Company will hold a 100% working interest in the
South Alamein PSC.
The South Alamein concession is located onshore in the Western
Desert of Egypt and includes portions of the prolific Alamein and
Tiba basins. The current gross size of this exploration concession
is 1,423 square kilometers (355,832 acres) following a 25%
relinquishment of non-prospective acreage on April 4, 2012. The
concession is in the final 2-year exploration phase. The concession
includes an oil discovery well, Boraq-2X. The primary Cretaceous
zone tested at a rate of 800 to 1,323 Bopd of 34 API oil with no
water and a 13% pressure drawdown. Test rates are not necessarily
indicative of long-term performance but it is anticipated that when
combined with secondary tested zones within the Cretaceous, the
well should be capable of initial production of approximately 1,700
Bopd. Initial work by TransGlobe will focus on appraisal and
development of the Boraq-2X oil discovery, which includes drilling
at least two appraisal wells and readying the Boraq-2X well for
production. The Boraq-2X discovery is close to existing
infrastructure which should reduce development time and capital. An
extensive 3-D seismic acquisition program was acquired over the
entire South Alamein concession area. TransGlobe's technical team
has initially identified six, drill-ready exploration prospects on
the concession.
The timing of the Boraq development and future exploration wells
at South Alamein is dependent upon the Egyptian Government
approvals.
East Ghazalat Block, Arab Republic of Egypt (50% working
interest)
Operations and Exploration
Subsequent to the quarter a two well exploration program was
approved. The first well, East Ghazalat 1X, was targeting the
Selmeya prospect approximately 4 kilometers north west of the Safwa
development lease. East Ghazalat 1X was drilled to a total depth of
4,400 feet and subsequently abandoned in late May. Drilling
commenced on East Ghazalat 2X in early June. The planned 4,450 foot
East Ghazalat 2X well is located approximately 2 kilometers east of
the Safwa development lease and is targeting the Eradah prospect.
TransGlobe has internally estimated 4 million barrels gross of
undiscovered PIIP on a probabilistic P-mean basis for this
prospect.
Concurrent with the two well exploration program, the operator
has commenced a work plan to complete and equip the existing four
Safwa wells for production which could commence in mid/late July.
Production will be initially trucked approximately 35 kilometers to
the Dapetco operated facility at South Dabaa for sale to EGPC.
Dapetco has provided an initial capacity of 1,000 Bopd (500 Bopd to
TransGlobe) for Safwa production. It is expected that additional
capacity will be required as Safwa is developed.
REPUBLIC OF YEMEN
Block 32, Republic of Yemen (13.81% working interest)
Production
Production averaged approximately 2,773 Bopd (383 Bopd to
TransGlobe) during April; 2,538 Bopd (350 Bopd to TransGlobe)
during May; and 2,543 Bopd (351 Bopd to TransGlobe) to date in
June.
Block 72, Republic of Yemen (20% working interest)
Operations and Exploration
The Operator received a nine-month extension to September 11,
2012 for the second exploration period. The joint venture partners
approved one contingent exploration/appraisal well for 2012. The
well is subject to further technical evaluation of the original
discovery well at Gabdain #1 and logistic/security issues in
Yemen.
Block S-1, Republic of Yemen (25% working interest)
Production
Production from TransGlobe's An Nagyah field on Block S-1 has
remained shut-in since the export pipeline from Marib to the Ras
Eisa port on the Red Sea was damaged October 8, 2011.
The pipeline has not been repaired due to local tribal groups
preventing access to the pipeline. Typically the pipeline can be
repaired within 24 to 48 hours once access to the pipeline has been
obtained. TransGlobe's working interest share of production was
approximately 2,250 Bopd prior to being shut-in on October 8,
2011.
Block 75, Republic of Yemen (25% working interest)
Operations and Exploration
The PSA for Block 75 was ratified and signed into law effective
March 8, 2008. The first, three-year exploration phase has a work
commitment of 3-D seismic and one exploration well. The 3-D seismic
was acquired in 2009. One exploration well was planned as part of
the 2011 Block S-1/75 drilling program; however the drilling
program was cancelled in the first quarter of 2011 due to logistics
and security concerns. The first exploration phase has been
extended to March 9, 2013.
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 403.264.9888investor.relations@trans-globe.com
www.trans-globe.com
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