CALGARY, Alberta, Oct. 16, 2017 (GLOBE NEWSWIRE) — TransGlobe Energy Corporation (“TransGlobe” or the “Company”) (TSX:TGL) (NASDAQ:TGA) announces an operational update. All dollar values are expressed in US dollars unless otherwise stated.
- Produced on average ~14.9 MBoepd (~12.2 MBopd Egypt, ~2.6 MBoepd Canada), down from Q2 due to well servicing in Egypt and voluntary shut-in of dry gas in Canada during September.
- Sold ~793,000 barrels of entitlement crude oil in Egypt during the quarter through one tanker lifting (September) and direct sales to EGPC for net proceeds of ~$34.5 million (inclusive of realized hedging loss).
- Drilled three Cardium Hz wells in Canada (July/Aug) and completed/frac’d/equipped (Sept/Oct) at an average cost of ~$1.75 million ($2.2 million Cdn) per well.
- Commenced testing at South Alamein; Boraq 2 flowed at 1,140 Bopd from the AR-E formation during a short test to confirm productivity, rig currently moving to Boraq 5 to test the AR-G and AR-E formations.
- Received approval on NWG development leases 2, 3 & 4 during September, initial production scheduled for Q4’17/Q1’18.
Corporate production in Q3 was impacted by delays in well servicing in Egypt during August/September and shut-in Canadian gas production during September due to low spot gas prices at AECO.
In Egypt, the Company released the workover/completion rig supporting the Eastern Desert operations in early August due to escalating safety and performance issues. A replacement rig was contracted and mobilized in late September to begin restoring approximately 1,500+ Bopd of shut-in production associated with pump/rod replacements. A second workover rig was contracted in early October for the Eastern Desert to accelerate removal of the backlog of well workovers. The second rig is expected to be operational in November following mobilization and certification.
In Canada, ~100 Boepd (~600 Mcfd) of dry gas was shut-in August 30 due to low spot AECO gas prices associated with system outages (expansion/maintenance) on the TransCanada system. In September, the Company hedged approximately 4,300 GJ/Day (~4.1 MMcfd) of Q4 gas production at $2.065 C/GJ. The 600 Mcfd of dry gas will remain shut-in until spot prices improve. The majority of the Company’s ~6.0 MMcfd of Canadian gas production is liquids rich gas or gas production associated with light oil production. This production will remain on stream as the majority of revenue is derived from oil and liquids sales.
Total Company production averaged approximately 14.9 MBoepd in the third quarter, comprised of 12.2 MBopd in Egypt and 2.6 MBoepd in Canada (57% light oil and liquids). The nine-month average production is approximately 16.0 Mboepd and the 2017 average production guidance of 15.5 to 16.5 Mboepd remains intact.
ARAB REPUBLIC OF EGYPT
In the Western Desert the Company mobilized a completion rig to South Alamein in September to commence a two well testing program at Boraq. The Boraq 2 well was re-entered and tested light oil from the AR-E channel to re-establish oil production prior to filing a development plan for the Boraq area. The short retest of Boraq 2 produced 550 bbls of oil over a 14 hour period. The well was flowing at an average rate of 1,140 Bopd of 35 API oil on a 64/64 inch choke over an 8 hour flow period prior to being shut in for buildup. Boraq 2 was shut in and suspended pending submission and approval of the Boraq development plan and a 20 year development lease. The workover rig is moving to the Boraq 5 well to begin completion and testing the two, log indicated oil zones encountered in the well (AR-G and AR-E). The testing of Boraq 5 is anticipated to be finished by mid-November.
In the Eastern Desert, the Company received approval for three development leases at North West Gharib (“NWG”) in September. The discoveries at NWG DL #2, #3 and #4 are scheduled to start production in Q4’17 and Q1’18. In addition, the Company is preparing to re-activate the drilling rig in Q4’17 to commence a drill program of up to four wells, planned for the Eastern Desert.
The Company drilled and completed three horizontal Cardium oil wells in Harmattan during the quarter. The three horizontal wells were drilled during July/August and completed in September/October with 40 stage (15 t/stage) frac’s. The number of stages and size of the frac’s is more than double the average done on the Company’s existing Harmattan wells by the previous owner. The Company is optimistic the increased stimulation will result in higher production rates and ultimate oil recoveries for the project. The wells are being equipped and placed into production this month. The initial flow rates are very encouraging, although a 30 and 60 day average rate (IP 30/60) will be more representative of the ultimate potential of the wells. The Company expects to have initial production rates by year-end, following the frac flow back and clean up period. The three wells were drilled, completed and equipped for approximately $1.75 million ($2.2 million Cdn) per well. This is significantly below the initial estimated cost of Cdn $2.7 million per well.
In addition, the Company acquired 2.5 sections (1,600 acres) of Cardium rights in the Harmattan area at government land sales. The new lands have increased the Company’s internally estimated Cardium drilling location inventory by 8 to 10 locations.
In Egypt, the Company lifted and sold ~443,000 barrels of entitlement oil in September for proceeds of ~$21.5 million ($19.6 net of realized hedging loss). The quality differential to Brent has improved this year to approximately $8.00 per barrel as compared to the -$10 to -$15 differentials experienced during 2015 and 2016. This has resulted in a significant improvement to the current netbacks and future economics of Eastern Desert developments. In addition, the Company sold ~350,000 barrels of inventoried entitlement crude oil barrels to EGPC for $14.9 million for in-country operational expenses. Total Company oil inventories in Egypt were reduced to just under one million barrels as of September 30th. The fourth quarter oil lifting, originally scheduled for December, is now moved up to late November.
TransGlobe Energy Corporation is a Calgary-based, growth-oriented oil and gas exploration and development company whose current activities are concentrated in the Arab Republic of Egypt and Canada. TransGlobe’s common shares trade on the Toronto Stock Exchange under the symbol TGL and on the NASDAQ Exchange under the symbol TGA.