TransGlobe Energy Corporation Announces Third Quarter 2019 Financial and Operating Results for the three and nine months ended September 30, 2019

TransGlobe Energy Corporation (“TransGlobe” or the “Company”) (AIM & TSX:  “TGL” & NASDAQ: “TGA”) is pleased to announce its financial and operating results for the three and nine months ended September 30, 2019.  All dollar values are expressed in United States dollars unless otherwise stated. TransGlobe’s Condensed Consolidated Interim Financial Statements together with the notes related thereto, as well as TransGlobe’s Management’s Discussion and Analysis for the three and nine month periods ended September 30, 2019 and 2018, are available on TransGlobe’s website at www.trans-globe.com.

Highlights:

• Third quarter production averaged 15,943 boe/d (Egypt 13,750 bbls/d, Canada 2,193 boe/d), a decrease of 997 boe/d (6%) over the previous quarter, and sales averaged 14,122 boe/d. Production to date in October averaged approximately 15,206 boe/d (Egypt ~ 13,228 bbls/d, Canada ~ 1,978 boe/d);
• Production for the nine months ended September 30, 2019 averaged 16,269 boe/d (Egypt 14,010 bbls/d, Canada 2,259 boe/d), which was above guidance and 15% higher than the same period in 2018;
• 2019 production guidance is now expected to range from 15,500 to 16,000 boe/d with a midpoint of 15,750 boe/d for the year;
• Positive third quarter funds flow of $9.4 million ($0.13 per share). Third quarter net earnings of $3.0 million ($0.04 per share);
• Ended the third quarter with positive working capital of $47.2 million, including cash and cash equivalents of $24.4 million;
• NWG 38D-1 (drilled in Q2-2019) is confirmed as an oil discovery following completion and perforation, and will be put on production in Q4-2019 following stimulation;
• Completed SGZ-6X as an upper Bahariya oil producer in the Western Desert (approval received in Q3-2019), with construction of an early production facility on schedule for late Q4-2019, targeting an initial production rate of approximately 1,000 bbls/day;
• Drilled four horizontal Cardium oil wells in the Harmattan area of Canada during the quarter, including three development wells and one outpost appraisal well;
• Sold 380 thousand barrels (“mbbls”) of inventoried entitlement crude oil to EGPC in September 2019;
• Continues to review opportunities for inorganic growth in line with our M&A strategy;
• Paid a dividend of $0.035 per share on September 13, 2019 to shareholders of record on August 30, 2019.

FINANCIAL AND OPERATING RESULTS
(US$000s, except per share, price, volume amounts and % change)

CORPORATE SUMMARY

TransGlobe Energy Corporation (“TransGlobe” or the “Company”) produced an average of 15,943 barrels of oil equivalent per day (“boe/d”) during the third quarter of 2019. Egypt production was 13,750 barrels of oil per day (“bbls/d”) and Canada production was 2,193 boe/d. Production for the quarter was within the full year 2019 guidance of between 15,500 to 16,000 boe/d and 6% lower than the previous quarter, due to natural declines.

TransGlobe’s Egyptian crude oil is sold at a quality discount to Dated Brent. The Company received an average price of $54.58 per barrel in Egypt during the quarter. In Canada, the Company received an average of $49.94 per barrel of oil and $0.70 per thousand cubic feet (“mcf”) of natural gas during the quarter.

During the quarter, the Company had funds flow from operations of $9.4 million and ended the quarter with positive working capital of $47.2 million, including cash and cash equivalents of $24.4 million. The Company had net earnings in the quarter of $3.0 million, including a $2.6 million unrealized derivative gain on commodity contracts which represents a fair value adjustment on the Company’s hedging contracts as at September 30, 2019.

In Egypt, the Company sold 380.4 thousand barrels (“mbbls”) of entitlement crude oil during the quarter and had 902.6 mbbls of entitlement crude oil inventory at September 30, 2019. The increase in inventoried crude oil is attributed to higher oil production than forecasted in the first half of 2019 due to successful drilling and well workover results. All Canadian production was sold during the quarter.

The Company continued its negotiations in Egypt throughout the quarter with the government to amend, extend and consolidate its Eastern Desert operations.

In the Eastern Desert, the NWG 38D-1 exploration well drilled in the second quarter of 2019 was completed, perforated, and is currently producing oil to surface at a low rate, confirming the well as an oil discovery in the Red Bed formation. NWG 38D-1 will require stimulation in Q4-2019 prior to being put into full production. Data recovered and analyzed from the well shows it in pressure communication with the adjacent NWG 38A pool.

In the Western Desert, the SGZ-6X discovery well (tested at 3,840 bbls of light oil per day) was completed during the third quarter of 2019 as an oil producer in the upper Bahariya formation. Construction of an Early Production Facility (“EPF”) in South Ghazalat is on schedule, from which oil will be transported to the nearby South Dabaa receiving facility and onwards via existing pipeline infrastructure to market. First oil is expected late in Q4-2019. Concurrently, the Company has submitted permits and is sourcing a drilling rig to drill an appraisal well in the SGZ-6X pool during Q4-2019 which, if successful, will be completed and connected to the new South Ghazalat EPF. In addition, a project to merge and reprocess two existing 3D seismic surveys over the development lease area will also be completed in Q4-2019.

In Canada, the Company drilled and cased three Cardium development oil wells (one mile horizontal wells) in the Harmattan area and one Cardium outpost appraisal well (two mile horizontal well) in the South Harmattan area which completed the 2019 drilling program. Subsequent to the quarter, the four horizontal wells have been completed and stimulated and are being equipped for production.

The Company paid a dividend of $0.035 per share on September 13, 2019 to shareholders of record on August 30, 2019.

STRATEGY UPDATE

The Company’s management and board held its annual strategy session in early October, and reconfirmed its commitment to growth through material cash generative mergers and acquisitions to build significantly greater scale, profitability, and long-term sustainability within the next three to five years.  To achieve these growth ambitions, the Company intends to leverage its operating and financial capabilities as well as its unique position as a recognized partner of choice in the region, and is actively assessing several opportunities.

OPERATIONS UPDATE

ARAB REPUBLIC OF EGYPT

EASTERN DESERT

West Gharib, West Bakr, and North West Gharib (100% working interest, operated)

Operations and Exploration

During the third quarter of 2019, the Company completed and perforated the NWG 38D-1 exploration well drilled in the second quarter of 2019. This well is currently producing oil to the surface at a low rate, confirming the well as an oil discovery in the Red Bed formation. NWG 38D-1 will require stimulation, similar to NWG 38A-1, in Q4-2019 prior to being put into full production. Data recovered and analyzed from the well shows it in pressure communication with the adjacent NWG 38A pool. While encouraging, any potential for additional drilling and reserves additions will be assessed following stimulation and production of the well.

Production

Production averaged 13,750 bbls/d during the quarter, a decrease of 6% (913 bbls/d) from the previous quarter. This decrease is primarily due to natural declines, the completion of the 2019 Eastern Desert drilling program in the second quarter, and pressure management of the shared M-pool, consistent with production guidance for fiscal 2019 of 15,500 to 16,000 boe/d.

Production to date in October averaged ~ 13,228 bbls/d.

Sales

The Company sold 380.4 mbbls of inventoried entitlement crude oil to EGPC during the quarter.

WESTERN DESERT

South Ghazalat (100% working interest, operated)

Operations and Exploration

At South Ghazalat, the SGZ-6X discovery well (tested at 3,840 bbls of light oil per day) was completed during the third quarter of 2019 as an oil producer in the upper Bahariya formation. Construction of an Early Production Facility (“EPF”) is on schedule, from which oil will be transported to the nearby South Dabaa receiving facility and onwards via existing pipeline infrastructure to market. The first oil is expected late in Q4-2019.

Concurrently, the Company submitted permits and is sourcing a drilling rig to drill an appraisal well in SGZ-6X pool during Q4-2019, which if successful, will be completed and connected to the new South Ghazalat EPF. In addition, a project to merge and reprocess two existing 3D seismic surveys over the development lease area is also expected to be completed in Q4-2019.

CANADA

Operations and Exploration

During the quarter, the Company drilled and cased three Cardium development oil wells (one-mile horizontal wells) in the Harmattan area and one Cardium outpost appraisal well (two-mile horizontal well) in the South Harmattan area, which completed the 2019 drilling program. Subsequent to the quarter, the four horizontal wells have been completed and stimulated (approximately 40 stages per mile) and are being equipped for production.

Production

In Canada, oil production averaged 666 bbls/d during the quarter, a decrease of 122 bbls/d (15%) from the previous quarter, primarily due to natural declines. Total Q3-2019 production was 4% (84 boe/d) lower than the previous quarter.

Production to date averaged ~ 1,978 boe/d in October with ~ 586 bbls/d of oil.

Condensed Consolidated Interim Statements of Earnings (Loss) and Comprehensive Income (Loss)

(Unaudited – Expressed in thousands of US Dollars, except per share amounts)

Condensed Consolidated Interim Balance Sheets

(Unaudited – Expressed in thousands of US Dollars)

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Unaudited – Expressed in thousands of US Dollars)

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited – Expressed in thousands of US Dollars)