TIDMTGL
RNS Number : 1377R
TransGlobe Energy Corporation
03 November 2021
This Announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR"). Upon
the publication of this Announcement, this inside information is
now considered to be in the public domain.
TRANSGLOBE ENERGY CORPORATION ANNOUNCES THIRD QUARTER 2021
FINANCIAL AND OPERATING RESULTS FOR THE THREE AND NINE MONTHSED
SEPTEMBER 30, 2021
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, November 3, 2021 - TransGlobe Energy
Corporation ("TransGlobe" or the "Company") is pleased to announce
its financial and operating results for the three and nine months
ended September 30, 2021. 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 months ended September 30, 2021
and 2020, are available on TransGlobe's website at
www.trans-globe.com .
FINANCIAL HIGHLIGHTS:
-- Third quarter sales averaged 14,868 boe/d including 307.5
Mbbls sold to EGPC for net proceeds of $20.9 million and one cargo
lifting of 499.6 Mbbls of entitlement crude oil for net proceeds of
$33.3 million (collected in August 2021). The overlift portion of
the cargo (221.7 Mbbls) will be settled through future entitlement
crude oil production at West Gharib;
-- Average realized price for Q3-2021 sales of $60.85/boe;
Q3-2021 average realized price on Egyptian sales of $64.73/bbl and
Canadian sales of $36.82/boe;
-- Funds flow from operations of $12.4 million ($0.17 per share)
in the quarter;
-- Third quarter net earnings of $37.1 million ($0.51 per
share), inclusive of a $31.5 million non-cash impairment reversal
and a $1.3 million unrealized gain on derivative commodity
contracts;
-- Ended the third quarter with positive working capital of
$17.7 million, including cash of $54.0 million;
OPERATIONAL HIGHLIGHTS:
-- Third quarter production averaged 13,342 boe/d (Egypt 11,276
bbls/d, Canada 2,066 boe/d), an increase of 265 boe/d (2%) from the
previous quarter, primarily due to well optimization activities and
new drilling in Egypt, partially offset by natural declines while
awaiting the production start from new drilling in Canada;
-- Production in October averaged 13,882 boe/d (Egypt 10,964
bbls/d, Canada 2,918 boe/d), an increase of 4% from Q3-2021;
-- Ended the quarter with nil entitlement crude oil inventory, a
decrease of 140.3 Mbbls from Q2-2021. This decrease is due to an
increase in sales volumes as a result of the Q3-2021 cargo lifting,
partially offset by a slight increase in production;
-- Drilled two development oil wells at West Bakr in the Eastern
Desert, Egypt, both successfully encountering oil-bearing sands and
placed on production. A third development oil well was spud at West
Bakr subsequent to the quarter;
-- Drilled one well at North West Gharib in the Eastern Desert,
Egypt;
-- Drilled an oil exploration well on the SGZ-7B prospect at
South Ghazalat in the Western Desert, Egypt subsequent to the
quarter;
-- Drilled, completed, and equipped the one 2-mile and two
1-mile horizontal wells in the northern area of the Company's
Cardium reservoir extension in South Harmattan;
-- Brought the 2-mile well in South Harmattan on production;
CORPORATE HIGHLIGHTS:
-- Amounts outstanding under the Mercuria prepayment agreement
were repaid in full during the quarter. On September 27, 2021 the
prepayment agreement was amended to $10 million (undrawn) and
extended to December 31, 2021 to coincide with the expiry of the
Company's remaining Brent crude oil hedges of 150 Mbbls; and
-- The Company announced a merged concession agreement with a
15-year primary term and improved Company economics on December 3,
2020. The agreement is currently awaiting ratification by the
Egyptian Parliament but will have a February 2020 effective date
upon ratification . As such, the results achieved in Q3-2021 and
year to-date are exclusive of any effective date adjustments that
will be made upon ratification.
FINANCIAL AND OPERATING RESULTS
(US$000s, except per share, price, volume amounts and %
change)
Three Months Ended September 30 Nine Months Ended September 30
Financial 2021 2020 % Change 2021 2020 % Change
------------------------- --------- -------- -------- -------- -------- --------
Petroleum and natural
gas sales(2) 83,234 33,046 152 210,528 137,782 53
Petroleum and natural
gas sales, net of
royalties(2) 42,316 16,740 153 110,963 81,366 36
Realized derivative
(loss) gain on
commodity contracts (2,188) 662 (431) (7,379) 6,807 (208)
Unrealized derivative
gain (loss) on
commodity contracts 1,327 (267) (597) (2,891) 761 (480)
Production and
operating expense 16,741 11,473 46 45,912 45,136 2
Overlift 15,551 - 100 15,551 - 100
Selling costs 2,161 54 3,902 3,866 1,103 250
General and
administrative
expense 4,230 2,542 66 12,937 8,397 54
Depletion,
depreciation and
amortization expense 6,592 5,493 20 18,366 23,402 (22)
Income tax expense 6,096 3,092 97 16,361 10,122 62
Cash flow generated by
(used in) operating
activities 27,026 (3,349) (907) 46,918 17,529 168
Funds flow from
operations(1) 12,381 323 3,733 29,562 23,241 27
Basic per share 0.17 0.00 0.41 0.32
Diluted per share 0.17 0.00 0.41 0.32
Net earnings (loss) 37,080 (5,957) (722) 33,778 (74,542) (145)
Basic per share 0.51 (0.08) 0.47 (1.03)
Diluted per share 0.51 (0.08) 0.46 (1.03)
Capital expenditures 11,624 437 2,560 18,128 7,243 150
Working capital 17,667 12,708 39 17,667 12,708 39
Long-term debt,
including current
portion 6,882 25,946 (73) 6,882 25,946 (73)
Common shares
outstanding
Basic (weighted
average) 72,542 72,542 - 72,542 72,542 -
Diluted (weighted
average) 72,980 72,542 1 72,983 72,542 1
Total assets 267,263 205,583 30 267,263 205,583 30
-------------------------- -------- -------- -------- -------- -------- --------
Operating
------------------------- -------- -------- -------- -------- -------- --------
Average production
volumes (boe/d) 13,342 12,044 11 12,884 13,774 (6)
Average sales volumes
(boe/d)(2) 14,868 10,680 39 13,719 15,344 (11)
Inventory (Mbbls) - 534.2 (100) - 534.2 (100)
Average realized sales
price ($/boe)(2) 60.85 33.63 81 56.21 32.77 72
Production and
operating expenses
($/boe)(2) 12.24 11.68 5 12.26 10.74 14
-------------------------- -------- -------- -------- -------- -------- --------
(1) Funds flow from operations (before finance costs) is a
measure that represents cash generated from operating activities
before changes in non-cash working capital and may not be
comparable to measures used by other companies. See "Non-GAAP
Financial Measures".
(2) Excludes the impact of the Q3-2021 overlift of $15.6 million (221.7 Mbbls).
2021 2020
---------------------------------------------- --------------------
Average reference prices and exchange rates Q-3 Q-2 Q-1 Q-4 Q-3
---------------------------------------------- ------ ----- ----- ----- -----
Crude oil
Dated Brent average oil price ($/bbl) 73.47 68.83 60.82 44.29 42.96
Edmonton Sweet index ($/bbl) 66.61 63.01 52.54 38.50 37.35
Natural gas
AECO ($/MMBtu) 2.97 2.48 2.30 2.18 1.69
US/Canadian Dollar average exchange rate 1.26 1.23 1.27 1.30 1.33
------------------------------------------------ ----- ----- ----- ----- -----
CORPORATE SUMMARY
TransGlobe Energy Corporation ("TransGlobe" or the "Company")
produced an average of 13,342 barrels of oil equivalent per day
("boe/d") during the third quarter of 2021. Egypt production was
11,276 barrels of oil per day ("bbls/d") and Canada production was
2,066 boe/d. Production for the quarter was slightly above full
year 2021 guidance of 12,000 to 13,000 boe/d and 2% higher than the
previous quarter. The increase was primarily due to well
optimization activities and new drilling in Egypt, partially offset
by natural declines while awaiting the production start from new
drilling in Canada.
TransGlobe's Egyptian crude oil is sold at a quality discount to
Dated Brent. The Company received an average price of $64.73 per
barrel in Egypt during the quarter. In Canada, the Company received
an average of $65.43 per barrel of oil, $35.40 per barrel of NGLs
and $2.71 per thousand cubic feet ("Mcf") of natural gas during the
quarter.
During Q3-2021, the Company had funds flow from operations of
$12.4 million and ended the quarter with positive working capital
of $17.7 million, including cash of $54.0 million. The Company had
net earnings in the quarter of $37.1 million, inclusive of a $1.3
million unrealized derivative gain on commodity contracts which
represents a fair value adjustment on the Company's hedging
contracts at September 30, 2021. Net income was also inclusive of a
non-cash impairment reversal of $31.5 million on the Company's
petroleum and natural gas ("PNG") assets that was recognized due to
the sustained increase and stabilization in forecasted commodity
prices in 2021 .
The Mercuria prepayment agreement was fully repaid during the
quarter with the final $10.0 million being paid in August 2021. On
September 27, 2021 the prepayment agreement was amended to $10.0
million (undrawn) and extended to December 31, 2021 to coincide
with the expiry of the Company's remaining Brent crude oil hedges
of 150 thousand barrels ("Mbbls").
In Egypt, the Company sold 307.5 Mbbls of entitlement crude oil
to the Egyptian General Petroleum Company ("EGPC") and sold one
cargo lifting of 499.6 Mbbls of entitlement crude oil to
third-party buyers during the quarter. The cargo resu lted in an
overlift of 221.7 Mbbls by TransGlobe. The overlift will be settled
as the Company delivers the equivalent future entitlement
production from West Gharib to EGPC. All Canadian production was
sold during the quarter.
As announced on December 3, 2020, the Company has reached an
agreement with EGPC to merge its three existing Eastern Desert
concessions with a 15-year primary term and improved Company
economics. As previously announced, the Company is now expecting
ratification to occur in Q4-2021. The February 1, 2020 effective
date for the improved concession terms is supportive of increased
investment in advance of ratification.
In Egypt, the Company drilled two development oil wells in the
Eastern Desert at West Bakr. The K-62 development well was drilled
to a total depth of 1,473 meters, and encountered oil-bearing sands
in the Asl-A formation. The second well in West Bakr, K-65, was
drilled to a total depth of 1,730 meters, and encountered
oil-bearing sands in the Asl-A, Asl-B, Asl-C, Asl-D and Asl-E
formations. T he Company drilled one additional well in the Eastern
Desert at North West Gharib, NWG-3B-2, to a total depth of 1,627
meters to assess Red Bed potential in the northern area of
TransGlobe's development leases. The well encountered Red Bed sands
which were wet. The results are under evaluation to identify any
up-dip sidetrack potential.
In Canada, the Company successfully drilled, completed, and
equipped one 2-mile and two 1-mile horizontal wells in the northern
area of the Cardium reservoir extension at South Harmattan, first
identified by the 2-20 well in 2019. The 2-mile well was brought on
production at the end of Q3-2021, while the other two wells were
brought on production in October. All three wells initially flowed
without the assistance of pumps. As of month end, two of the wells
ceased flowing naturally, as anticipated, and are now equipped with
pumps. The third well continues to flow naturally and will be
equipped with a pump when the unassisted flow ceases. Initial
production rates (IP30 and IP60) will be made available once
sufficient data has been acquired.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity describes a company's ability to access cash.
Companies operating in the upstream oil and gas industry require
sufficient cash in order to fund capital programs that maintain and
increase production and reserves, to acquire strategic oil and gas
assets , to repay current liabilities and debt and ultimately to
provide a return to shareholders . TransGlobe's capital programs
are funded by existing working capital and cash provided from
operating activities. The Company's cash flow from operations
varies significantly from quarter to quarter , depending on the
timing of oil sales from cargoes lifted in Egypt , and these
fluctuations in cash flow impact the Company's liquidity.
TransGlobe's management will continue to steward capital and focus
on cost reductions in order to maintain balance sheet strength.
Funding for the Company's capital expenditures is provided by
cash flow s from operations and cash on hand. The Company expects
to fund its 2021 exploration and development program through the
use of working capital and cash flow from operations. Fluctuations
in commodity prices, product demand, foreign exchange rates,
interest rates and various other risks may impact capital resources
and capital expenditures.
Working capital is the amount by which current assets exceed
current liabilities. As at September 30, 2021, the Company had a
working capital surplus of $17.7 million (December 31, 2020 - $15.3
million). The increase in working capital is primarily due to an
increase in cash resulting from collections on accounts receivable
in the period and an increase in accounts receivable due to
increased sales in Q3-2021. These increases were partially offset
by a decrease in crude oil inventory and increase in overlift
liability as a result of the Q3-2021 cargo lifting, an increase in
the derivative commodity contracts liability from increased
commodity pricing and an increase in accounts payable driven by the
2021 capital program.
All of the Company's cash and cash equivalents are on deposit
with high credit-quality financial institutions.
Over the past 10 years, the Company has experienced delays in
the collection of accounts receivable from EGPC. The length of
delay peaked in 2013, returned to historical delays of up to nine
months in 2017, and has since fluctuated within an acceptable range
. As at September 30, 2021, amounts owing from EGPC were $24.5
million. The Company considers there to be minimal credit risk
associated with amounts receivable from EGPC.
In Egypt, the Company sold 307.5 Mbbls of entitlement crude oil
to EGPC in Q3-2021 for net proceeds of $20.9 million and sold one
cargo lifting of 499.6 Mbbls of entitlement crude oil for net
proceeds of $33.3 million (collected in August 2021). The overlift
portion of the cargo (221.7 Mbbls) will be settled through future
entitlement crude oil production at West Gharib . During the third
quarter of 2021, the Company collected a total of $4.5 million of
accounts receivable from EGPC, an additional $3.7 million has been
collected subsequent to the quarter. The Company incurs a 30-day
collection cycle on sales to third-party international buyers.
Depending on the Company's assessment of the credit of crude oil
purchasers, they may be required to post irrevocable letters of
credit to support the sales prior to the cargo lifting. As at
September 30, 2021, the Company held no crude oil inventory.
As at September 30, 2021, the Company had $27.7 million of
revolving credit facilities with $6.9 million drawn and $20.8
million available. The Company has a prepayment agreement with
Mercuria that was amended to $10.0 million (undrawn) and extended
to December 31, 2021 to coincide with the expiry of TransGlobe's
remaining Brent crude oil hedges. During the quarter, the
prepayment agreement was fully repaid in the amount of $10.0
million. The Company also has a revolving Canadian reserves-based
lending facility with ATB totaling C$22.5 million ($17.7 million),
of which C$8.7 million ($6.9 million) was drawn and outstanding.
During the nine months ended September 30, 2021, the Company had
drawings of C$0.4 million ($0.3 million) on this facility .
The Company actively monitors its liquidity to ensure that cash
flows, credit facilities and working capital are adequate to
support these financial liabilities, as well as the Company's
capital programs.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
EASTERN DESERT
West Gharib, West Bakr, and North West Gharib (100% working
interest, operated)
Operations and Exploration
The Company continues to utilize the EDC-64 rig drilling
development oil wells.
In West Bakr, the Company successfully drilled two development
oil wells during Q3-2021 and moved on to a third well (K-66) at
quarter end.
The K-62 development well was drilled to a total depth of 1,473
meters, and encountered oil-bearing sands in the Asl-A formation.
The reservoir section has been fully logged and evaluated, with an
internally estimated 24.2 meters of net oil pay in the Asl-A
reservoirs. The Asl-A2 was completed for oil production and came on
production at a field estimated 120 bbls/d of oil.
The second well in West Bakr (K-65) was drilled to a total depth
of 1,730 meters, and encountered oil-bearing sands in the Asl-A,
Asl-B, Asl-C, Asl-D and Asl-E formations. The reservoir section has
been fully logged and evaluated, with an internally estimated 10.6
meters of net oil pay in the Asl-A sand, 12.5 meters of net oil pay
across the Asl-B sand, 6.1 meters of net oil pay across the Asl-C
sand, 5.5 meters of net oil pay across the Asl-D sand and 11.4
meters of net oil pay in the Asl-E sand (total net oil pay 46.1
meters). The Asl-E was completed for production in this well and
came on production at a field estimated 520 bbls/d oil. The Asl-A,
Asl-B, Asl-C, and Asl-D are expected to be recovered through future
recompletions of this well.
The Company drilled one well in North West Gharib (NWG-3B-2) to
a total depth of 1,627 meters to assess Red Bed potential in the
northern area of TransGlobe's development leases. The well
encountered Red Bed sands which were wet. The results are under
evaluation to identify any up-dip sidetrack potential.
Production
Production averaged 10,653 bbls/d during the quarter, an
increase of 7% (736 bbls/d) from the previous quarter. The increase
was primarily due to well optimization activities and new drilling,
partially offset by natural declines.
Production in October 2021 averaged 10,445 bbls/d.
Sales
The Company sold 285.9 Mbbls of entitlement crude oil to EGPC
and sold o ne cargo lifting of 499.6 Mbbls of entitlement crude oil
to third-party buyers during the quarter. The remaining overlift
position (221.7 Mbbls) will be settled as the Company delivers
equivalent future entitlement production from West Gharib .
Quarterly Eastern Desert Production (bbls/d) 2021 2020
-------------------------------------------------- ----------------------- ------
Q-3 Q-2 Q-1 Q-4
-------------------------------------------------- ------- ------ ------ ------
Gross production rate(1) 10,653 9,917 10,050 10,129
TransGlobe production sold (inventoried) 1,525 3,465 (2,531) 3,328
--------------------------------------------------- ------ ------ ------ ------
Total sales(3) 12,178 13,382 7,519 13,457
--------------------------------------------------- ------ ------ ------ ------
Government share (royalties and tax) 6,050 5,229 5,680 5,715
TransGlobe sales (after royalties and tax)(2) 6,128 8,153 1,839 7,742
--------------------------------------------------- ------ ------ ------ ------
Total sales(3) 12,178 13,382 7,519 13,457
--------------------------------------------------- ------ ------ ------ ------
(1) Quarterly production by concession (bbls/d):
West Gharib - 2,932 (Q3- 2021), 3,024 (Q2-2021), 3,076
(Q1-2021), and 3,113 (Q4-2020)
West Bakr - 7,257 (Q3-2021), 6,327 (Q2-2021), 6,415 (Q1-2021),
and 6,656 (Q4-2020)
North West Gharib - 464 (Q3-2021), 566 (Q2-2021), 559 (Q1-2021),
and 360 (Q4-2020)
(2) Under the terms of the Production Sharing Concession
Agreements, royalties and taxes are paid out of the government's
share of production sharing oil.
(3) Excludes the impact of the Q3-2021 overlift of 221.7 Mbbls.
WESTERN DESERT
South Ghazalat (100% working interest, operated)
Operations and Exploration
The Lower Bahariya reservoir at SGZ-6X continues to produce on
Gas Oil Ratio ("GOR") control at a field estimated 490 bbls/d of
light oil with a 54% watercut.
With improved oil prices and spare capacity available in the
South Ghazalat early production facility, the Company has
accelerated drilling of an oil exploration well on the SGZ--7B
prospect to the east of SGZ-6X. The SGZ-7B well was drilled to a
total depth of 5,240 feet MD and encountered gas-bearing sands in
the Upper Bahariya formation and oil-bearing sands in the Lower
Bahariya formation. It has been cased for further testing and
evaluation. This well fulfills the Company's commitment to EGPC as
part of the South Ghazalat development lease approval in 2019.
Production
Production averaged 623 bbls/d during the quarter, a decrease of
23% (187 bbls/d) from the previous quarter. The decrease was
primarily due to natural declines.
Production in October 2021 averaged 519 bbls/d.
Sales
The Company sold 21.6 Mbbls of inventoried entitlement crude oil
to EGPC during the quarter.
Quarterly Western Desert Production (bbls/d) 2021 2020
-------------------------------------------------- -------------- ----
Q-3 Q-2 Q-1 Q-4
-------------------------------------------------- ---- --- --- ----
Gross production rate 623 810 188 139
Total sales 623 810 188 139
--------------------------------------------------- --- --- --- ----
Government share (royalties and tax) 388 504 117 86
TransGlobe sales (after royalties and tax)(1) 235 306 71 53
--------------------------------------------------- --- --- --- ----
Total sales 623 810 188 139
--------------------------------------------------- --- --- --- ----
(1) Under the terms of the Production Sharing Concession
Agreements, royalties and taxes are paid out of the government's
share of production sharing oil.
CANADA
Operations and Exploration
The Company successfully drilled, completed, and equipped one
2-mile and two 1-mile horizontal wells in the northern area of
TransGlobe's Cardium reservoir extension at South Harmattan, first
identified by the 2-20 well in 2019. The 2-mile well was brought on
production at the end of September 2021, while the other two wells
commenced production in October. All three wells initially flowed
without artificial lift. Two of the wells ceased natural flow, as
anticipated, and are now equipped with pumps, while the third well
continues to flow unassisted.
Additional information on individual well performance will be
provided when sufficient stabilized production history has been
obtained late 2021 / early 2022.
In Canada, ethane extraction from gas stream at the 3rd party
processing facility resumed in October, resulting in increased
production on a boe basis.
Production
In Canada, production averaged 2,066 boe/d during the quarter, a
decrease of 284 boe/d (12%) from the previous quarter and below
full year 2021 guidance of 2,300 to 2,500 boe/d. The decrease in
production from the previous quarter is primarily due to natural
declines while awaiting the production start from new drilling.
Production in October 2021 averaged 2,918 boe/d with 1,310
bbls/d of oil. The increase from Q3-2021 is due to the new wells
being brought on stream and the resumption of ethane extraction at
the 3(rd) party processing facility.
Quarterly Canada Production 2021 2020
------------------------------- --------------------
Q-3 Q-2 Q-1 Q-4
------------------------------- ------ ----- ----- -----
Canada crude oil (bbls/d) 601 687 564 618
Canada NGLs (bbls/d) 677 857 710 755
Canada natural gas (Mcf/d) 4,734 4,834 4,259 4,454
-------------------------------- ----- ----- ----- -----
Total production (boe/d) 2,066 2,350 1,983 2,116
-------------------------------- ----- ----- ----- -----
Condensed Consolidated Interim Statements of Earnings (Loss) and
Comprehensive Income (Loss)
(Unaudited - Expressed in thousands of U.S. Dollars, except per
share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
2021 2020 2021 2020
-------------------------------------- ----------- ------- -------- -------
REVENUE
Petroleum and natural gas sales, net of
royalties 57,868 16,740 126,515 81,366
Finance revenue 2 9 8 101
Other revenue - 106 33 328
----------------------------------------- ---------- ------- -------- -------
57,870 16,855 126,556 81,795
-------------------------------------- ---------- ------- -------- -------
EXPENSES
Production and operating 16,741 11,473 45,912 45,136
Overlift 15,551 - 15,551 -
Selling costs 2,161 54 3,866 1,103
General and administrative 4,230 2,542 12,937 8,397
Foreign exchange (gain) loss (75) (65) (32) 100
Finance costs 227 552 1,030 1,956
Depletion, depreciation and amortization 6,592 5,493 18,366 23,402
Asset retirement obligation accretion 47 66 158 194
Loss (gain) on financial instruments 861 (395) 10,270 (7,568)
Gain on overlift liability (120) - (120) -
Impairment (reversal) loss (31,521) - (31,521) 73,495
----------------------------------------- ---------- ------- -------- -------
14,694 19,720 76,417 146,215
-------------------------------------- ---------- ------- -------- -------
Earnings (loss) before income taxes 43,176 (2,865) 50,139 (64,420)
Income tax expense - current 6,096 3,092 16,361 10,122
--------------------------------------- ---------- ------- -------- -------
NET EARNINGS (LOSS) 37,080 (5,957) 33,778 (74,542)
--------------------------------------- ---------- ------- -------- -------
OTHER COMPREHENSIVE INCOME (LOSS)
Currency translation adjustments (1,296) 1,188 (130) (1,371)
----------------------------------------- ---------- ------- -------- -------
COMPREHENSIVE INCOME (LOSS) 35,784 (4,769) 33,648 (75,913)
--------------------------------------- ---------- ------- -------- -------
Net earnings (loss) per share
Basic 0.51 (0.08) 0.47 (1.03)
Diluted 0.51 (0.08) 0.46 (1.03)
----------------------------------------- ---------- ------- -------- -------
Condensed Consolidated Interim Balance Sheets
(Unaudited - Expressed in thousands of U.S. Dollars)
As at As at
September 30, 2021 December 31, 2020
--------------------------------------------- ------------------- -----------------
ASSETS
Current
Cash and cash equivalents 53,952 34,510
Accounts receivable 29,030 9,996
Prepaids and other 3,642 3,530
Product inventory - 5,828
------------------------------------------------ ------------------ -----------------
86,624 53,864
Non-Current
Intangible exploration and evaluation assets 1,245 584
Property and equipment
Petroleum and natural gas assets 172,652 140,059
Other 2,334 2,917
Deferred taxes 4,408 3,723
------------------------------------------------ ------------------ -----------------
267,263 201,147
---------------------------------------------- ------------------ -----------------
LIABILITIES
Current
Accounts payable and accrued liabilities 49,319 21,667
Derivative commodity contracts 3,285 398
Current portion of lease obligations 922 1,553
Current portion of long-term debt - 14,897
Overlift liability 15,431 -
------------------------------------------------ ------------------ -----------------
68,957 38,515
Non-Current
Long-term debt 6,882 6,567
Asset retirement obligations 13,519 13,042
Other long-term liabilities 1,235 544
Lease obligations 51 461
Deferred taxes 4,408 3,723
------------------------------------------------ ------------------ -----------------
95,052 62,852
---------------------------------------------- ------------------ -----------------
SHAREHOLDERS' EQUITY
Share capital 152,805 152,805
Accumulated other comprehensive income 1,770 1,900
Contributed surplus 25,377 25,109
Deficit (7,741) (41,519)
------------------------------------------------ ------------------ -----------------
172,211 138,295
---------------------------------------------- ------------------ -----------------
267,263 201,147
---------------------------------------------- ------------------ -----------------
Condensed Consolidated Interim Statements of Changes in
Shareholders' Equity
(Unaudited - Expressed in thousands of U.S. Dollars)
Nine Months Ended September 30
2021 2020
---------------------------------------------- --------------- --------------
Share Capital
----------------------------------------------- -------------- --------------
Balance, beginning and end of period 152,805 152,805
------------------------------------------------- -------------- --------------
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period 1,900 1,134
Currency translation adjustment (130) (1,371)
------------------------------------------------- -------------- --------------
Balance, end of period 1,770 (237)
------------------------------------------------- -------------- --------------
Contributed Surplus
Balance, beginning of period 25,109 24,673
Share-based compensation expense 268 340
------------------------------------------------- -------------- --------------
Balance, end of period 25,377 25,013
------------------------------------------------- -------------- --------------
(Deficit) Retained Earnings
Balance, beginning of period (41,519) 35,878
Net earnings (loss) 33,778 (74,542)
------------------------------------------------- -------------- --------------
Balance, end of period (7,741) (38,664)
------------------------------------------------- -------------- --------------
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited - Expressed in thousands of US Dollars)
Three Months Ended September 30 Nine Months Ended September 30
2021 2020 2021 2020
-------------- -------------- ------------- ------------- -------------
OPERATING
Net earnings
(loss) 37,080 (5,957) 33,778 (74,542)
Adjustments
for:
Depletion,
depreciation and
amortization 6,592 5,493 18,366 23,402
Asset retirement
obligation
accretion 47 66 158 194
Impairment
(recovery) loss (31,521) - (31,521) 73,495
Share-based
compensation 1,403 (72) 4,990 (489)
Finance costs 227 552 1,030 1,956
Unrealized (gain)
loss on
financial
instruments (1,327) 267 2,891 (761)
Unrealized loss
(gain) on
foreign currency
translation 2 (26) 14 6
Gain on overlift (120) - (120) -
Asset
retirement
obligations
settled (2) - (24) (20)
Changes in
non-cash
working
capital 14,645 (3,672) 17,356 (5,712)
--------------- ------------- ------------- ------------- -------------
Net cash
generated by
(used in)
operating
activities 27,026 (3,349) 46,918 17,529
---------------- ------------- ------------- ------------- -------------
INVESTING
Additions to
intangible
exploration
and evaluation
assets (83) - (661) (337)
Additions to
petroleum and
natural gas
assets (11,494) (399) (17,381) (6,721)
Additions to
other assets (47) (38) (86) (185)
Changes in
non-cash
working
capital 5,642 (1,883) 7,989 (2,545)
--------------- ------------- ------------- ------------- -------------
Net cash used in
investing
activities (5,982) (2,320) (10,139) (9,788)
---------------- ------------- ------------- ------------- -------------
FINANCING
Interest paid (190) (396) (774) (1,526)
Increase in
long-term debt 95 114 320 282
Payments on
lease
obligations (499) (366) (1,570) (1,141)
Repayments of
long-term debt (10,000) (1,504) (15,000) (11,504)
Changes in
non-cash
working
capital 3 - (6) -
--------------- ------------- ------------- ------------- -------------
Net cash used in
financing
activities (10,591) (2,152) (17,030) (13,889)
---------------- ------------- ------------- ------------- -------------
Currency
translation
differences
relating to
cash and cash
equivalents (140) 49 (307) (38)
---------------- ------------- ------------- ------------- -------------
NET INCREASE
(DECREASE) IN
CASH AND CASH
EQUIVALENTS 10,313 (7,772) 19,442 (6,186)
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD 43,639 34,837 34,510 33,251
---------------- ------------- ------------- ------------- -------------
CASH AND CASH
EQUIVALENTS, OF PERIOD 53,952 27,065 53,952 27,065
---------------- ------------- ------------- ------------- -------------
Advisory on Forward-Looking Information and Statements
Certain statements included in this news release constitute
forward-looking statements or forward-looking information under
applicable securities legislation. Such forward-looking statements
or information are provided for the purpose of providing
information about management's current expectations and plans
relating to the future. Readers are cautioned that reliance on such
information may not be appropriate for other purposes.
Forward-looking statements or information typically contain
statements with words such as "anticipate", "strengthened",
"confidence", "believe", "expect", "plan", "intend", "estimate",
"may", "will", "would" or similar words suggesting future outcomes
or statements regarding an outlook. In particular, forward-looking
information and statements contained in this document include, but
are not limited to, the Company's strategy to grow its annual cash
flow; anticipated drilling, completion and testing plans,
including, the anticipated timing thereof, prospects being targeted
by the Company, and rig mobilization plans; expected future
production from certain of the Company's drilling locations;
TransGlobe's plans to drill additional wells, including the types
of wells, anticipated number of locations and the timing of
drilling thereof; the timing of rig movement and mobilization and
drilling activity; the Company's plans to file development lease
applications for certain of its discoveries, including the expected
timing of filing of such applications and the expected timing of
receipt of regulatory approvals; anticipated production and
ultimate recoveries from wells; to negotiate future military access
(including the expected timing thereof), including the anticipated
timing of wells on production; TransGlobe's plans to continue
exploration, development and completion programs in respect of
various discoveries; future requirements necessary to determine
well performance and estimated recoveries; the ratification of the
amendment, extension, and consolidation of the Company's Eastern
Desert Concessions; and other matters.
Forward-looking statements or information are based on a number
of factors and assumptions which have been used to develop such
statements and information but which may prove to be incorrect.
Although the Company believes that the expectations reflected in
such forward-looking statements or information are reasonable,
undue reliance should not be placed on forward-looking statements
because the Company can give no assurance that such expectations
will prove to be correct. Many factors could cause TransGlobe's
actual results to differ materially from those expressed or implied
in any forward-looking statements made by, or on behalf of,
TransGlobe.
In addition to other factors and assumptions which may be
identified in this news release, assumptions have been made
regarding, among other things, anticipated production volumes; the
timing of drilling wells and mobilizing drilling rigs; the number
of wells to be drilled; 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; the geography of the areas in
which the Company is conducting exploration and development
activities; current commodity prices and royalty regimes;
availability of skilled labour; future exchange rates; the price of
oil; the impact of increasing competition; conditions in general
economic and financial markets; availability of drilling and
related equipment; effects of regulation by governmental agencies;
future operating costs; uninterrupted access to areas of
TransGlobe's operations and infrastructure; recoverability of
reserves and future production rates; that TransGlobe will have
sufficient cash flow, debt or equity sources or other financial
resources required to fund its capital and operating expenditures
and requirements as needed; that TransGlobe's conduct and results
of operations will be consistent with its expectations; that
TransGlobe will have the ability to develop its properties in the
manner currently contemplated; current or, where applicable,
proposed industry conditions, laws and regulations will continue in
effect or as anticipated as described herein; that the estimates of
TransGlobe's reserves and resource volumes and the assumptions
related thereto (including commodity prices and development costs)
are accurate in all material respects; and other matters.
Forward-looking statements or information are based on current
expectations, estimates and projections that involve a number of
risks and uncertainties which could cause actual results to differ
materially from those anticipated by the Company and described in
the forward-looking statements or information. These risks and
uncertainties which may cause actual results to differ materially
from the forward-looking statements or information include, among
other things, operating and/or drilling costs are higher than
anticipated; 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 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; competition; lack of availability
of qualified personnel; the results of exploration and development
drilling and related activities; obtaining required approvals of
regulatory authorities; volatility in market prices for oil;
fluctuations in foreign exchange or interest rates; environmental
risks; ability to access sufficient capital from internal and
external sources; failure to negotiate the terms of contracts with
counterparties; failure of counterparties to perform under the
terms of their contracts; and other factors beyond the Company's
control. Readers are cautioned that the foregoing list of factors
is not exhaustive. Please consult TransGlobe's public filings at
www.sedar.com and www.sec.goedgar.shtml for further, more detailed
information concerning these matters, including additional risks
related to TransGlobe's business.
The forward-looking statements or information contained in this
news release are made as of the date hereof and the Company
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise unless required by
applicable securities laws. The forward-looking statements or
information contained in this news release are expressly qualified
by this cautionary statement.
Oil and Gas Advisories
Mr. Ron Hornseth, B.Sc., General Manager - Canada for TransGlobe
Energy Corporation, and a qualified person as defined in the
Guidance Note for Mining, Oil and Gas Companies, June 2009, of the
London Stock Exchange, has reviewed the technical information
contained in this report. Mr. Hornseth is a professional engineer
who obtained a Bachelor of Science in Mechanical Engineering from
the University of Alberta. He is a member of the Association of
Professional Engineers and Geoscientists of Alberta ("APEGA") and
the Society of Petroleum Engineers ("SPE") and has over 20 years'
experience in oil and gas.
BOEs may be misleading, particularly if used in isolation. A BOE
conversion ratio of six thousand cubic feet of natural gas to one
barrel of oil equivalent (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.
Given that the value ratio based on the current price of crude oil
as compared to natural gas is significantly different from the
energy equivalency of 6:1, utilizing a conversion on a 6:1 basis
may be misleading as an indication of value.
References in this press release to production test rates, are
useful in confirming the presence of hydrocarbons, however such
rates are not determinative of the rates at which such wells will
commence production and decline thereafter and are not indicative
of long term performance or of ultimate recovery. While
encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production for TransGlobe. A
pressure transient analysis or well-test interpretation has not
been carried out in respect of all wells. Accordingly, the Company
cautions that the production test results should be considered to
be preliminary.
The following abbreviations used in this press release have the
meanings set forth below:
bbl barrels
bbls/d barrels per day
Mbbls thousand barrels
boe barrel of oil equivalent
boe/d barrels of oil equivalent per day
MMBtu One million British thermal units
Mcf thousand cubic feet
Mcf/d thousand cubic feet per day
NGL Natural Gas Liquids
Production Disclosure
Production Summary (WI before royalties and taxes):
Oct - Q3 - Q2 - Q1 - Q4 - Q3 -
21 21 21 21 20 20
------- ------- ------- ------- ------- -------
Egypt (bbls/d) 10,964 11,276 10,727 10,238 10,268 9,812
------- ------- ------- ------- ------- -------
Eastern Desert of Egypt
(bbls/d) 10,445 10,653 9,917 10,052 10,132 9,635
------- ------- ------- ------- ------- -------
Heavy Crude (bbls/d) 9,818 10,014 9,736 9,419 9,490 9,066
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 627 639 181 633 642 569
------- ------- ------- ------- ------- -------
Western Desert of Egypt
(bbls/d) 519 623 810 186 136 177
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 519 623 810 186 136 177
------- ------- ------- ------- ------- -------
Canada (boe/d) 2,918 2,066 2,350 1,983 2,116 2,232
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 1,310 601 687 564 618 661
------- ------- ------- ------- ------- -------
Natural Gas (Mcf/d) 4,766 4,734 4,834 4,259 4,454 4,633
------- ------- ------- ------- ------- -------
Associated Natural Gas
Liquids (bbls/d) 794 677 857 710 755 798
------- ------- ------- ------- ------- -------
Total (boe/d) 13,882 13,342 13,077 12,221 12,384 12,044
------- ------- ------- ------- ------- -------
Production Guidance
Low High Mid-Point
------- ------- ----------
Egypt (bbls/d) 9,700 10,500 10,100
------- ------- ----------
Heavy Crude (bbls/d) 8,940 9,678 9,309
------- ------- ----------
Light and Medium Crude (bbls/d) 760 822 791
------- ------- ----------
Canada (boe/d) 2,300 2,500 2,400
------- ------- ----------
Light and Medium Crude (bbls/d) 767 833 800
------- ------- ----------
Natural Gas (Mcf/d) 4,600 5,000 4,800
------- ------- ----------
Associated Natural Gas Liquids
(bbls/d) 767 833 800
------- ------- ----------
Total (boe/d) 12,000 13,000 12,500
------- ------- ----------
About TransGlobe
TransGlobe Energy Corporation is a cashflow focused 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 and the AIM
market of the London Stock Exchange under the symbol TGL and on the
NASDAQ Exchange under the symbol TGA.
For further information, please contact:
TransGlobe Energy Corporation +1 403 264 9888
Randy Neely, President and CEO investor.relations@trans-globe.com
Eddie Ok, CFO http://www.trans-globe.com
or via Tailwind Associates
Tailwind Associates (Investor Relations) +1 403 618 8035
Darren Engels darren@tailwindassociates.ca
http://www.tailwindassociates.ca
Canaccord Genuity (Nomad & Joint-Broker)
Henry Fitzgerald-O'Connor
James Asensio +44(0) 20 7523 8000
Shore Capital (Joint Broker)
Jerry Keen
Toby Gibbs +44(0) 20 7408 4090
This information is provided by RNS, the news service of the
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