TransGlobe Energy Corporation (TSX:TGL) (NASDAQ:TGA) ("TransGlobe"
or the "Company") today announced its 2012 year-end contingent
resources. In addition the Company is pleased to announce the
results of an independent prospective resource evaluation of 38
individual oil prospects located in the Egyptian Western Desert
within the South Alamein (100% WI), South Mariut (60% WI) and East
Ghazalat (50% WI) exploration concessions.
The Company's 2012 year-end contingent resources and the
prospective resource evaluations were prepared by the independent
reserves evaluation firm of DeGolyer and MacNaughton Canada Limited
("DMCL"). Both evaluations were performed in accordance with
National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities Section 5.9 ("NI 51-101") and the Canadian Oil and
Gas Evaluation Handbook ("COGEH") Volume 1, and are effective
December 31, 2012.
All dollar values are expressed in United States dollars unless
otherwise stated.
CONTINGENT RESOURCE HIGHLIGHTS
-- Best Case Contingent Resources of 2.0 million barrels
-- Estimated Future Net Revenue for Best Case Contingent Resource is $29.1
million (at 10% discounting)
PROSPECTIVE RESOURCE HIGHLIGHTS
-- The Mean estimate of total undiscovered oil initially in place ("UPIIP")
for the 38 evaluated prospects is 1 billion barrels
-- The Mean estimate of total Prospective Resource is 200 million barrels
-- The Mean estimate of total Working Interest Prospective Resource is 170
million barrels
-- Company announced a 2013 Capital program (December 11, 2012), which
includes exploration wells to evaluate 10 of the 38 prospects in the
report. The planned 10 wells will evaluate approximately 75 of the 170
million barrels (44%) of Mean Working Interest Prospective Resources
during 2013.
CONTINGENT RESOURCES
The following is a summary of DMCL evaluation for the year ended
December 31, 2012. The Company did not have Contingent Resources
evaluated at year ended December 31, 2011. The recovery and
contingent resource estimates of crude oil, natural gas liquids
("NGLs") and natural gas resources provided in this news release
are estimates only, and there is no guarantee that the estimated
resources will be recovered. Actual crude oil, NGL and natural gas
resources may be greater than, or less than, the estimates provided
herein. All Contingent Resources presented are based on DMCL
forecast pricing effective December 31, 2012.
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies. There is
no certainty that it will be commercially viable to produce any
portion of the resources.
2012 Year-End Contingent Resource Summary
(Working Interest, before royalties)
Contingent Resources at December 31, Low Case Best Case High Case
2012
(thousands of barrels "Mbbl")
----------------------------------------------------------------------------
Egypt 475 1,430 2,848
Yemen 330 584 600
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Total 805 2,014 3,448
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(i) Numbers may not add exactly due to rounding
Uncertainty Ranges as described by the COGEH handbook as low,
best and high estimates for resources as follows:
Low Estimate: this is considered to be a conservative estimate
of the quantity that will actually be recovered. It is likely that
the actual remaining quantities recovered will exceed the low
estimate. If probabilistic methods are used, there should be at
least a 90 percent probability (P90) that the quantities actually
recovered will equal or exceed the low estimate.
Best Estimate: This is considered to be the best estimate of the
quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater or less
than the best estimate. If probabilistic methods are used, there
should be at least a 50 percent probability (P50) that the
quantities actually recovered will equal or exceed the best
estimate.
High Estimate: This is considered to be an optimistic estimate
of the quantity that will be actually be recovered. It is unlikely
that the actual remaining quantities recovered will exceed the high
estimate. If probabilistic methods are used, there should be at
least a 10 percent probability (P10) that the quantities actually
recovered will equal or exceed the high estimate.
Contingencies
In Egypt, Contingent Resources were assigned to the Boraq 2 oil
discovery in the South Alamein concession which was acquired in
2012. The Contingent Resources assigned to Boraq are contingent on
the approval of a development plan. During 2012 the Company
prepared and submitted an eight well drilling program for
approvals, which includes two appraisal/development wells at Boraq
and six exploration wells on the concession. Upon receiving the
necessary approvals, the Company plans to proceed with the
appraisal/development of the Boraq 2 discovery in 2013.
In Yemen, Reserve volumes which had historically been assigned
to the Osaylan oil pool in Block S-1 were removed from the Company
Reserves and reclassified as Contingent Resources at year-end 2012.
The assigned Contingent Resources are contingent on future drilling
which has been curtailed in the area due to political instability
and related security issues.
Contingent Resources 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 resources 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 resource estimates of crude oil, NGL and natural
gas resources provided herein are estimates only, and there is no
guarantee that the estimated resources will be recovered. Actual
crude oil, NGL and natural gas resources may be greater than or
less than the estimates provided herein.
The estimated future net revenues for year ended 2012 presented
below in millions of U.S. dollars ("$MM") are calculated using DMCL
price forecast at December 31, 2012 and constant pricing for 2012.
In the constant price case, the prices were held constant for the
life of the resources.
Forecast and Constant Pricing Contingent Resources
Present Value of Future Net Revenues, After Tax ($MM)(i)
Independent Evaluator's Price
Forcast Constant Pricing
----------------------------------------------------------------------------
Contingent
Resource
----------------------------------------------------------------------------
December 31, 2012 Discounted December 31, 2012 Discounted
Present Value at at
----------------------------------------------------------------------------
By Area 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
----------------------------------------------------------------------------
Low Case
----------------------------------------------------------------------------
Egypt $10.9 $9.8 $8.9 $8.2 $7.5 $11.8 $10.6 $9.6 $8.8 $8.1
----------------------------------------------------------------------------
Yemen $4.8 $3.9 $3.1 $2.5 $2.1 $5.4 $4.3 $3.4 $2.8 $2.3
----------------------------------------------------------------------------
Total Low $15.7 $13.7 $12.0 $10.7 $9.6 $17.2 $14.9 $13.0 $11.6 $10.4
----------------------------------------------------------------------------
Best Case
----------------------------------------------------------------------------
Egypt $32.7 $28.2 $24.7 $21.8 $19.4 $35.4 $30.5 $26.6 $23.5 $21.0
----------------------------------------------------------------------------
Yemen $8.2 $6.0 $4.4 $3.4 $2.6 $8.7 $6.4 $4.8 $3.6 $2.8
----------------------------------------------------------------------------
Total Best $40.9 $34.2 $29.1 $25.2 $22.0 $44.1 $36.9 $31.4 $27.1 $23.8
----------------------------------------------------------------------------
High Case
----------------------------------------------------------------------------
Egypt $70.9 $58.6 $49.6 $42.7 $37.3 $76.0 $62.9 $53.2 $45.9 $40.0
----------------------------------------------------------------------------
Yemen $9.0 $6.4 $4.7 $3.5 $2.7 $9.6 $6.9 $5.1 $3.8 $2.9
----------------------------------------------------------------------------
Total High $79.9 $65.0 $54.3 $46.2 $40.0 $85.6 $69.8 $58.3 $49.7 $42.9
----------------------------------------------------------------------------
(i) Numbers may not add exactly due to rounding
The following table summarizes DMCL reference price forecast
used to estimate future net revenues:
DMCL Forecast Pricing ($/bbl)
------------------------------------
Brent Forecast Pricing ($/Bbl) 2013 2014 2015 2016 2017
----------------------------------------------------------------------------
Year-end 2012 $111.00 $108.35 $105.72 $107.88 $106.62
Constant Pricing ($/Bbl) Year-end 2012
------------------------------------------------------
Egypt $100.77
------------------------------------------------------
Yemen $110.05
------------------------------------------------------
PROSPECTIVE RESOURCES
The DMCL prospective resources estimates were prepared in
accordance with the requirements of Canadian National Instrument
51-101 Standards of Disclosure, for Oil and Gas Activities Section
5.9 ("NI 51-101").
Capitalized terms related to resources classifications used in
this press release, are based on the definitions and guidelines in
Section 5.3.5 of the Canadian Oil and Gas Evaluation Handbook
("COGEH"), Volume 1.
Historic well data, regional geology and seismic data were
reviewed by DMCL to prepare a probabilistic Prospective Resources
Estimate. The following table shows the gross estimated prospective
resources expressed in millions of barrels. These estimates have
not been adjusted for the probability of geologic success (Pg).
The following tables summarize DMCL independent evaluation of
the Prospective Resources associated with these 38 prospects:
Gross Estimated Prospective Resources
Low Best High Mean
(Millions of Barrels "MMbbls") Estimate Estimate Estimate Estimate
----------------------------------------------------------------------------
Gross Pool Prospective Oil Resources 131.5 191.6 279.1 200.0
Gross Working Interest Prospective Oil
Resources 110.8 162.9 238.9 170.4
Notes:
Low, best, high and mean estimates in the table set out above
are P90, P50, P10 and mean respectively as defined below.
Pg has not been applied to the volumes in the table set out
above.
Application of any geological and economic chance factor does
not equate prospective resources to contingent resources or
reserves.
Recovery efficiency is applied to prospective resources in the
table set out above. The prospective resources presented above are
based on the statistical aggregation method.
There is no certainty that any portion of the prospective
resources estimated herein will be discovered. If discovered, there
is no certainty that it will be commercially viable to produce any
portion of the prospective resources evaluated.
Mean Estimate Prospective Resources
Gross Mean
Number of Gross Prospective Geological
Exploration Prospects Mean Resources Risk Pg
Concession Evaluated UPIIP (MMbbl) (MMbbl) (%)
----------------------------------------------------------------------------
South Alamein 20 669 133.8 15%
South Mariut 2 177 35.1 19%
East Ghazalat 16 154 31.1 14%
----------------------------------------------------------------------------
Total 38 1,000 200.0 16%
Gross Pg Gross WI
adjusted Pg adjusted
Mean Mean
Prospective TransGlobe Prospective
Exploration Resources Working Resources
Concession (MMbbl) Interest (%) (MMbbl)
----------------------------------------------------------------------------
South Alamein 20.2 100% 20.2
South Mariut 6.6 60% 3.9
East Ghazalat 4.2 50% 2.1
----------------------------------------------------------------------------
Total 31.0 26.2
Notes:
The probability of geologic success ("Pg") is defined as the
probability of discovering reservoirs that flow petroleum at a
measurable rate. Pg is estimated by quantifying the probability of
each of the following individual geologic factors: trap, source,
reservoir and migration. The product of these four probabilities or
chance factors is computed as the Pg. Application of any geological
and economic chance factor does not equate prospective resources to
contingent resources or reserves.
Recovery efficiency is applied to prospective resources in the
table set out above. The prospective resources presented above are
based on the statistical aggregation method.
There is no certainty that any portion of the prospective
resources estimated herein will be discovered. If discovered, there
is no certainty that it will be commercially viable to produce any
portion of the prospective resources evaluated.
2013 Drilling Plans
The company announced December 11, 2012, a 2013 Capital Budget
of $129 million with $53 million (41%) allocated to Exploration.
The $53 million Exploration budget includes 23 exploration wells
and seismic, which is primarily focused on Egypt (96%). In the
Western desert, 10 of the exploration wells are planned to test 10
of the 38 prospects summarized in the independent resource report.
The total working interest Mean Prospective Resource (prior to the
application of geologic success) to be evaluated by the 2013 ten
well exploration program, is approximately 75 million barrels.
RESOURCE DISCLOSURE
The resource estimates set forth in this news release have been
evaluated by an independent qualified evaluator in accordance with
NI 51-101 and the COGE Handbook. The resources have been
categorized in accordance with the definitions as set out in the
COGE Handbook, which are set out below:
Undiscovered oil initially-in-place or UPIIP is that quantity of
petroleum that is estimated, on a given date, to be contained in
accumulations yet to be discovered. The recoverable portion of
undiscovered petroleum initially-in-place is referred to as
prospective resources; the remainder is unrecoverable.
Prospective Resources - are those quantities of oil and gas
estimated to be potentially recoverable from undiscovered
accumulations. There is no certainty that the Prospective Resources
will be discovered. If discovered, there is no certainty that it
will be commercially viable to produce any portion of the
prospective resources. Application of any geological and economic
chance factor does not equate prospective resources to contingent
resources or reserves.
In addition, the following mutually exclusive Classification of
Resources were used:
Low Estimate - This is considered to be a conservative estimate
of the quantity that will actually be recovered from the
accumulation. This term reflects a P90 confidence level where there
is a 90% chance that a successful discovery will be more than this
resources estimate.
Best Estimate - This is considered to be the best estimate of
the quantity that will actually be recovered from the accumulation.
This term is a measure of central tendency of the uncertainty
distribution and in this case reflects a 50% confidence level where
the successful discovery will have a 50% chance of being more than
this resources estimate.
High Estimate - This is considered to be an optimistic estimate
of the quantity that will actually be recovered from the
accumulation. This term reflects a P10 confidence level where there
is a 10% chance that the successful discovery will be more than
this resources estimate. Note that these distributions do not
include consideration of the probability of success of discovering
and producing commercial quantities of oil, but rather represent
the likely distribution of the oil deposits, if discovered.
Mean Estimate - In accordance with petroleum industry standards,
the mean estimate is the probability-weighted average, which
typically has a probability in the P45 to P15 range, depending on
the variance of prospective resources volume or associated value.
Therefore, the probability of a prospect or accumulation containing
the probability-weighted average volume or greater is usually
between 45 and 15 percent. The mean estimate is the preferred
probabilistic estimate of resources volumes.
The probability of geologic success ("Pg"): is defined as the
probability of discovering reservoirs that flow petroleum at a
measurable rate. Pg is estimated by quantifying the probability of
each of the following individual geologic factors: trap, source,
reservoir and migration. The product of these four probabilities or
chance factors is computed as the Pg.
Pg-adjusted Mean Estimate: The Pg-adjusted mean estimate, or
"geologic risk-adjusted mean estimate", is the probability-
weighted average of the hydrocarbon quantities potentially
recoverable if a prospect portfolio were drilled, or if a family of
similar prospects were drilled. The Pg-adjusted mean estimate is a
"blended" quantity. It is a mean estimation of both volumetric
uncertainty and geological risk (chance). This statistical measure
considers and quantifies the geological success and geological
failure outcomes. Consequently, it represents the average or mean
"geologic' outcome of a drilling and exploration program. The
Pg-adjusted mean estimate is calculated as follows:
Pg - adjusted mean estimate ("Risked P-Mean") = Pg X mean
estimate.
DMCL is a wholly owned subsidiary of D&M
(http://www.demac.com/), a global consulting firm providing a
variety of services related to the upstream sector of the petroleum
industry, including evaluation of the hydrocarbon potential of
exploration areas, estimation and classification of reserves to be
recovered from new discoveries, verification of hydrocarbon
reserves, production forecasting, and appraisal of properties for
prospective acquisition, divestiture, issuance of securities, or
financing purposes. The firm offers expertise in the primary
scientific specialties related to petroleum evaluation including
Evaluation of Prospective Resources.
DMCL has acted independently in the preparation of the Report.
DMCL and its employees have no direct or indirect ownership in the
property appraised or the area of study described.
With respect to Assumptions and Limiting Conditions within the
Report, the Report is limited to a discussion of the potential
undiscovered oil and gas Prospective Resources of the subject
property. The Report does not attempt to place a value thereon.
DMCL reserves the right to revise its opinions of reserves and
resources, if new information is deemed sufficiently credible to do
so. The accuracy of any estimate is a function of available time,
data and of geological, engineering and commercial interpretation
and judgment. While the resources estimates presented herein are
believed to be reasonable, they should be viewed with the
understanding that additional analysis or new data may justify
their revision and DMCL reserves the right to make such
revision.
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. In
particular, this press release contains forward-looking statements
regarding the Company's appraisal, development and evaluation plans
and the focus of the Company's exploration budget. In addition,
information and statements relating to "resources" are deemed to be
forward-looking information and statements, as they involve the
implied assessment, based on certain estimates and assumptions,
that the resources described exist in the quantities predicted or
estimated, and that the resources described can be profitably
produced in the future. 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. With respect to
forward-looking statements contained in this press release,
assumptions have been made regarding, among other things: the
Company's ability to obtain qualified staff and equipment in a
timely and cost-efficient manner; the regulatory framework
governing royalties, taxes and environmental matters in the
jurisdictions in which the Company conducts and will conduct its
business; future capital expenditures to be made by the Company;
future sources of funding for the Company's capital programs;
geological and engineering estimates in respect of the Company's
reserves and resources; and the geography of the areas in which the
Company is conducting exploration and development activities.
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, including additional risks related to
TransGlobe's business.
Contacts: TransGlobe Energy Corporation Investor Relations Scott
Koyich 403.264.9888investor.relations@trans-globe.com
www.trans-globe.com
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