TransGlobe Energy Corporation

TransGlobe Energy Corporation

December 18, 2007 11:21 ET

TransGlobe Energy Corporation Mid-Quarter Update

CALGARY, ALBERTA--(Marketwire - Dec. 18, 2007) - TransGlobe Energy Corporation (TSX:TGL) (AMEX:TGA) ("TransGlobe" or the "Company") is announcing a mid-quarter production and operating update. All dollar values are expressed in United States dollars unless otherwise stated. Conversion of natural gas to oil is made on the basis of 6,000 cubic feet of natural gas being equivalent to one barrel of crude oil.

Production Summary

The Company's total production is expected to average approximately 7,000 Boepd during the fourth quarter of 2007. This represents a 34% increase over the third quarter of 2007 due to the addition of the West Gharib producing assets in Egypt.

Dated Brent oil prices were very strong averaging $82.50 per barrel in October and $92.61 during November, averaging 17% higher than the third quarter of 2007. North American natural gas prices showed continued weakness, averaging approximately C$6.00/Mcf during October/November. TransGlobe's production is 85% oil and natural gas liquids and 15% natural gas, mitigating the Company's sensitivity to gas pricing.



West Gharib, Arab Republic of Egypt (45% to 70% working interest, TransGlobe operated)

Operations and Exploration

The development well currently drilling at Hana #11 (70% working interest) is expected to reach total depth in the next week. Hana #11 has encountered oil in the main producing zone of the Hana field and will be drilled to a total depth of 9,000+ feet (2,700+ meters) to evaluate several exploration targets below the Hana field. The next scheduled well at Hana #13 may also be drilled to evaluate deeper horizons, depending upon the results of Hana #11. The Hana wells can be placed on production immediately following completion and testing, during January.

The Company is finalizing an agreement for a third drilling rig for the West Gharib area. The rig is scheduled to commence operations in West Gharib by July 2008.

Nuqra Block 1, Arab Republic of Egypt (50% working interest, Operator)

Operations and Exploration

The successful identification of a 460 meter (1,500 foot) interval of mature source rocks in the shallower Cretaceous section of the Narmer #1 exploration well and the discovery of oil on a non-owned block by Dana Gas in the Cretaceous section of Al Baraka #1 on the west side of the Nile has encouraged the Company to continue with additional exploration drilling on the Nuqra Block.

The existing seismic data was remapped and several Cretaceous targets were identified on the Nuqra Block for a future drilling program. Currently the Company is discussing rig sharing possibilities with the adjacent operators to facilitate a mid 2008 drilling program. TransGlobe has significantly increased its operating presence in Egypt with the acquisition of the West Gharib Concession which should facilitate cost effective exploration in the Nuqra Block.

YEMEN EAST - Masila Basin

Block 32, Republic of Yemen (13.81087% working interest)

Operations and Exploration

The Berhout #1 exploration well commenced drilling in November and was drilled to a total depth of 1,821 meters and subsequently plugged and abandoned. The drilling rig has moved to a development well at Godah #8 which is expected to be completed prior to year end. During 2008 there is one additional development well planned for the Godah field and three exploration wells in Block 32.

A six inch gas pipeline connecting the Godah production facility to the Tasour central production facility ("CPF") is being constructed to supply associated gas production to the Tasour CPF for fuel gas. It is expected that up to 60% of diesel being consumed for power generation can be replaced with natural gas, resulting in lower operating cost. The gas project is expected to be completed in the first quarter of 2008.

Block 72, Republic of Yemen (33% working interest)

Operations and Exploration

A seismic acquisition program, consisting of 410 km2 of 3-D and 98 km of 2-D seismic is currently underway and is expected to be completed during the first quarter of 2008. An exploration well is expected to commence drilling in the second half of 2008, following the interpretation of the new seismic data. Two firm exploration wells are planned for 2008, plus one contingent well. The first exploration phase of Block 72 has been extended 12 months to January of 2009.

Block 84, Republic of Yemen (33% working interest)

Operations and Exploration

In December 2006, the Ministry of Oil and Minerals ("MOM") selected the joint venture group comprised of DNO ASA (operator at 34%), TG Holdings Yemen Inc. (33%) and Ansan Wikfs (Hadramaut) Limited (33%) as the successful bidder for Block 84 in the Third International Bid Round for Exploration and Production of Hydrocarbons. TG Holdings Yemen Inc. is a wholly owned subsidiary of TransGlobe Energy Corporation. The Production Sharing Agreement is proceeding through the government approval and parliamentary ratification process, which is expected to be completed in 2008.

Block 84 encompasses 731 km2 (approximately 183,000 acres) and is located in the Masila Basin adjacent to the Nexen Masila Block where more than one billion barrels of oil have been discovered. The Block 84 joint venture group plans to carry out a 400 km2 3-D seismic acquisition program and drill four exploration wells during the first exploration period of 42 months.

YEMEN WEST- Marib Basin

Block S-1, Republic of Yemen (25% working interest)

Operations and Exploration

It has been proposed to the Ministry that natural gas from the An Naeem #1 well be injected into the western portion of the An Nagyah Lam A reservoir. The planned gas injection will provide additional pressure support in the western portion of the field to improve production performance and increase recoverable reserves. Subject to Ministry approval, gas injection could commence in 2008 when a 25 km pipeline from An Naeem to the An Nagyah CPF has been completed. The Block S-1 Joint Venture group is considering possibilities for a gas sales agreement utilizing known deposits of gas on S-1. At present, TransGlobe has not booked gas reserves associated with the An Naeem discovery. An approved gas development plan is required to proceed with recognizing the reserves and proceed with development.

A combined 400 km2 3-D seismic program is planned for early 2008 to define additional exploration drilling locations on the northwest portion of Block S-1 and the north portion of Block 75.

Block 75, Republic of Yemen (25% working interest)

Operations and Exploration

TG Holdings Yemen Inc., a wholly owned subsidiary of TransGlobe Energy Corporation, holds a 25% working interest in Block 75. Occidental Petroleum Corporation ("Oxy") is the operator of Block 75 with a 75% working interest. The PSA was signed with the Ministry of Oil and Minerals on March 31, 2007 and is now before the Yemen parliament for final approval and ratification. The Block 75 joint venture group plans to carry out a 3-D seismic acquisition program and the drilling of one exploration well during the First Exploration Period of 36 months. The combined seismic program for Block 75 and S-1 is approximately 400 km2. Drilling is planned for late 2008 or early 2009. The timing of the 3-D seismic acquisition program and subsequent drilling is contingent upon receiving final approval and ratification of the Block 75 PSA.


Operations and Exploration

Two (0.7 net) potential gas wells and 10 (2.0 net) Horseshoe Canyon coal bed methane wells were drilled in the Thorsby and Morningside areas during the November and December (non-operated).


Historically TransGlobe has experienced higher growth rates and a higher return on investment from the Yemen and Egypt properties. To enhance this trend the Company will allocate all its capital and human resources to explore and develop the Middle East assets. TransGlobe will therefore seek a buyer for the Canadian assets. It is anticipated a sale of the Canadian assets could be completed by April 2008, subject to satisfactory terms being achieved.

TransGlobe has projected its 2008 capital budget at $48 million, split equally between exploration and development opportunities. It is anticipated the Company will fund its 2008 capital budget from cash flow and working capital. TransGlobe has projected cash flow from operations for 2008 to be between $47 and $51 million based on an average dated Brent oil price of $80.00/Bbl and an average AECO gas price of C$6.00/Mcf. The 2008 cash flow forecast is based on an estimated production target of 5,500-5,700 Boepd, assuming Canada is sold in April.

Use of Boe Equivalents

The calculations of barrels of oil equivalent ("Boe") are based on a conversion rate of six thousand cubic feet of natural gas to one barrel of crude oil. Boe may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The above includes 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. All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although TransGlobe believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include oil and gas prices, well production performance, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions.


Lloyd W. Herrick, Vice President & COO

Contact Information

  • TransGlobe Energy Corporation
    Ross G. Clarkson
    President & C.E.O.
    (403) 264-9888
    (403) 264-9898 (FAX)
    TransGlobe Energy Corporation
    Lloyd W. Herrick
    Vice President & C.O.O.
    (403) 264-9888
    (403) 264-9898 (FAX)
    Executive Offices
    #2500, 605 - 5th Avenue, S.W.,
    Calgary, AB T2P 3H5