TransGlobe Energy Corporation announces an operations update. All dollar values are expressed in US dollars unless otherwise stated.

HIGHLIGHTS

• Production averaged ~15.9 MBoepd in Q3 2019 (Egypt ~13.7 MBopd, Canada ~2.1 MBoepd) versus 16.9 MBoepd in Q2 2019;
• NWG 38D-1 (drilled in Q2) confirmed as an oil discovery following completion and perforation, and will be put on production in Q4 following stimulation;
• Completed SGZ-6X as an Upper Bahariya oil producer in Western Desert, with construction of an early production facility on schedule for Q4 2019 first oil targeting an initial production rate of ~1,000 Bopd;
• Drilled four (100% working interest) horizontal Cardium oil wells in the Harmattan area of Canada during the quarter, including three development wells and one outpost (appraisal) well;
• Ongoing negotiations with Egyptian government to amend, extend and consolidate Eastern Desert concession agreements;
• Continue to review opportunities for inorganic growth in line with our M&A strategy;
• Sold ~380 MBbls of entitlement oil to EGPC in the quarter;
• Next Egypt cargo lifting scheduled for the end of October, 2019; and
• Semi-annual dividend of $2.5 million ($0.035/share) paid September 13, 2019;

PRODUCTION

Company production decreased slightly during the quarter primarily due to natural declines, completion of the 2019 Eastern Desert drilling program in Q2, and pressure management of the shared M-Pool, consistent with our previously advised increased production guidance for 2019 of 15 -16 MBoepd.

MARKETING

In Egypt, the Company sold 380 MBbl of entitlement oil to EGPC during Q3. In addition, the Company has confirmed its next cargo lifting of entitlement oil is scheduled for the end of October, 2019.

ARAB REPUBLIC OF EGYPT

Eastern Desert
The NWG 38D-1 exploration well (drilled in Q2) 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 (similar to NWG 38A-1) in Q4 prior to putting into full production. Data recovered and analysed from the well shows it to be 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.

Western Desert
Following the grant in June, 2019 of a 20 year development lease at South Ghazalat, the SGZ-6X discovery well (3,840 Bopd* of light oil) was completed during Q3 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. 

* SGZ-6X tested a combined 3,840 barrels per day of light oil from the upper and lower Bahariya. The lower Bahariya formation flowed naturally at an average rate of 2,437 barrels per day of light (38 API) oil, 21 barrels per day of water and 1.4 million cubic feet of natural gas per day on a 40/64 inch choke from a 42 foot perforated interval. A total of 918 barrels of oil and 7 barrels of water were produced during the 10 hour test. The upper Bahariya formation flowed at an average rate of 1,403 barrels per day of light (35 API) oil, 210 barrels per day of water and 1.0 million cubic feet of natural gas per day on a 64/64 inch choke from a 23 foot perforated interval. A total of 456 barrels of oil and 65 barrels of water were produced during the 8 hour test. Although encouraging, test rates are not necessarily indicative of long-term performance or ultimate recovery.

CANADA

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. The four horizontal wells are in the process of being completed and stimulated (~40 stages per mile) and will be placed on production in Q4 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.

Link to TransGlobe Energy Egypt country profile