TIDMTGL
RNS Number : 6969F
TransGlobe Energy Corporation
11 March 2020
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 REVISED 2020 BUDGET AND
GUIDANCE
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, March 11, 2020 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") announces an amendment to its 2020
capital budget and guidance.
2020 Outlook
The 2020 production outlook for the Company is provided as a
range to reflect timing and performance contingencies.
Global reaction to the spread of COVID-19 and the resultant
reduction in oil demand has negatively affected current and future
forecasts of oil prices in 2020. This has been compounded by OPEC+,
led by Saudi Arabia and Russia, failing to reach an agreement on
constraining output in face of lower global demand to support
global oil prices and Saudi Arabia and Iraq's stated intention to
discount April deliveries and increase supply into the market. Oil
prices are now markedly lower than those the Company used as the
basis for its 2020 capital program.
TransGlobe maintains a strong balance sheet with modest debt,
and its operated 100% position across its producing assets gives it
significant capital flexibility and a high degree of discretion in
its forward investment program. The Company intends to use all
available tools to minimize balance sheet risk and position itself
for future success.
The Company has re-evaluated its priorities in the short term
and is taking decisive action to reduce its previously announced
capital program in 2020, and focus only on those investments that
are critical to HSE and value preservation. In addition, and to
balance the reduction in capital investment, the Company is
analyzing operating costs both in Egypt and Canada to identify all
possible optimization opportunities.
In light of the global oil price disruption, the Company has
decided to suspend its first quarter dividend payment to manage
cash, until such a time that it is appropriate to reinstate. The
Board of Directors will evaluate its decision on a semi-annual
basis going forward. TransGlobe regularly communicates with its
lenders, with current long term debt outstanding of $37 million and
remains confident in its ability to weather the current oil price
disruption. The Company currently holds $26.5 million in cash on
hand.
Contingency plans have been implemented to protect TransGlobe's
staff and contractors and ensure business continuity in light of
COVID-19. At this time, the virus is not expected to have a
significant impact on the Company's day-to-day operations.
As a result of the reduced 2020 capital program, total corporate
production is now expected to range between 13.3 and 14.3 Mboepd
(mid-point of 13.8 Mboepd) for 2020 with a 93% weighting to oil and
liquids. Egypt oil production is expected to range between 11.3 and
12.1 Mbopd (mid-point of 11.7 Mbopd) in 2020. Canadian production
is expected to range between 2.0 and 2.2 Mboepd (mid-point of 2.1
Mboepd) in 2020. The 2020 mid-point production guidance broken out
by product type is summarized below:
Mid-point production guidance Egypt Canada Total
-------------------------------------- ------- ------ ------
Light and medium crude oil (Bbls/d) 957 706 1,663
Heavy crude oil (Bbls/d) 10,743 - 10,743
Natural gas (Mcf/d) - 5,394 5,394
Natural gas liquids (Bbls/d) - 495 495
---------------------------------------- ------ ------ ------
Total (Boepd) 11,700 2,100 13,800
---------------------------------------- ------ ------ ------
The Company is not providing guidance on its estimated funds
flow from operations for 2020 given funds flow from operations and
inventory in any given period are dependent upon the timing and
market price of crude oil sales in Egypt, each of which is
uncertain.
The below chart provides a comparison of well netbacks in the
Company's Egyptian and Canadian assets under multiple price
sensitivities. A typical Cardium well produces both oil, natural
gas, and NGLs. The price of each commodity varies significantly,
therefore the below chart presents the netback of each revenue
stream separately.
Netback sensitivity
-------------------------------------- ----- ----- ----- ----- -----
Benchmark crude oil price ($/Bbl) 30.00 40.00 50.00 60.00 70.00
Benchmark natural gas price ($/Mcf) 0.75 0.95 1.10 1.30 1.50
Netback (US$/Boe)
Egypt - crude oil(1) (2.07) 2.06 5.84 8.07 10.31
Canada - crude oil(2) 13.94 22.74 31.04 39.28 47.50
Canada - natural gas and NGLs(2) (2.28) (0.82) 0.10 1.36 2.90
---------------------------------------- ----- ----- ----- ----- -----
(1) Egypt assumptions: using anticipated 2020 Egypt production
profile, Gharib Blend price differential estimate of $12.00/bbl
applied consistently at all price points, concession differentials
of 4%, 5% and 3% applied to WG/WB/NWG, respectively, operating
costs estimated at $9.50/bbl, and maximum cost recovery resulting
from accumulated cost pools in WG and NWG.
(2) Canada assumptions: using anticipated 2020 Canada production
profile, Edmonton Light price differential estimate of C$5.40/bbl,
Edmonton Light to Harmattan discount of C$2.50 per bbl, operating
costs estimated at C$11.40/boe, NGL mixture price at 45% of
Edmonton Light, and takes into consideration Canadian tax
pools.
2020 Revised Capital Budget
The Company's revised 2020 budgeted capital program is $7.1
million (before capitalized G&A) and includes $5.0 million for
Egypt and $2.1 million for Canada. This reduced plan includes two
wells (one in Egypt and one in Canada) that were spudded prior to
the recent oil price disruption and capital related to HSE, select
recompletions and workovers as well as certain land retention
commitments.
Egypt
The $5.0 million Egypt program is 100% allocated to development.
The primary focus of the 2020 Egypt budget is the drilling of the
HW-2A development well at West Bakr, targeting the Yusr sands. This
well spudded prior to the price disruption. Other expenditures
include required HSE equipment, contractual training bonuses and
select recompletion and well optimization projects that have robust
economics even in low price environments.
Canada
The $2.1 million Canada program consists of one horizontal
(multi-stage stimulated) well targeting the Cardium light oil
resource in South Harmattan (the 100/13-16-029-03W5/0 well). This
well also spudded prior to the price disruption. The well will be
drilled but will not be completed in order to preserve the economic
value of the flush production that comes from the initial phase of
production for this type of well.
The revised 2020 capital program is summarized in the following
table:
TransGlobe 2020 Capital ($MM) Gross Well Count
------------- ---------------------------------------- -------------------------------
Development Exploration Drilling
--------------- ------------- -------------------------------
Concession Wells Other(1) Wells Total(2) Development Exploration Total
------------- ----- -------- ------------- -------- ----------- ----------- -----
West Gharib - - - - - - -
West Bakr 1.2 3.8 - 5.0 1 - 1
NW Gharib - - - - - - -
South
Ghazalat - - - - - - -
------------- ----- -------- ------------- -------- ----------- ----------- -----
Egypt 1.2 3.8 - 5.0 1 - 1
Canada 1.7 0.4 - 2.1 1 - 1
-------------- ----- -------- ------------- -------- ----------- ----------- -----
2020 Total 2.9 4.2 - 7.1 2 - 2
-------------- ----- -------- ------------- -------- ----------- ----------- -----
Splits (%) 100% 0% 100% 100% 0% 100%
-------------- --------------- ------------- -------- ----------- ----------- -----
1 Other includes completions, workovers, recompletions and equipping.
This table may not total due to rounding.
2020 Hedging
TransGlobe's operations expose it to fluctuations in commodity
prices, interest rates and foreign currency exchange rates.
TransGlobe monitors and when appropriate, uses derivative financial
instruments to manage its exposure to these fluctuations. Each of
TransGlobe's hedging transactions are related to an underlying
financial position or future crude oil and natural gas production.
The Company had the following 2020 hedges in place as at March 1,
2020:
Financial Brent crude oil contracts
--------------------------------------------------------------------------------------
Remaining Monthly
Period Volume Volume Bought Put Sold Call Sold Put
Hedged Contract (bbl) (bbl) US$/bbl US$/bbl US$/bbl
----------- ------------ ----------- ----------- ---------- --------- --------
Jul 2020 -
Dec 2020 3-Way Collar 300,000 50,000 54.00 70.00 45.00
Mar 2020 -
Jun 2020 3-Way Collar 320,000 50,000 54.00 70.00 46.50
Mar 2020 -
Jun 2020 3-Way Collar 100,000 25,000 55.00 72.70 45.00
March 2020 Collar 195,000 195,000 50.00 51.45 -
------------ -------------- ---------- ----------- ---------- --------- --------
TransGlobe believes by taking these swift cost cutting measures
that the Company will be positioned to take advantage of
opportunities for growth that may be created in these disruptive
times. In addition, the Company will continue to monitor commodity
prices and can react positively to improvements if warranted. In
the meantime all of our staff are currently safe and continuing to
work to maximize shareholder value.
Advisory on Forward-Looking 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", "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, plans
to re-evaluate the decision reinstate dividends on a semi-annual
basis going forward, the Company's ability to weather the current
oil price disruption, the expected impact of the COVID-19 on the
Company's day-to-day operations, estimated corporate production for
2020, estimated well netbacks in the Company's Egyptian and
Canadian assets under multiple price sensitivities and plans to
drill but not complete the 100/13-16-029-03W5/0 well.
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
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.
The following abbreviations used in this press release have the
meanings set forth below:
Bopd barrels of oil per day
MBopd thousand barrels of oil per day
Bbl barrels
Bbls/d barrels per day
Boe barrel of oil equivalent
Boepd barrels of oil equivalent per day
MBoepd thousand barrels of oil equivalent per day
Mbbls/d thousand barrels per day
Mcf thousand cubic feet
Mcf/d thousand cubic feet per day
For further information, please
contact:
TransGlobe Energy Via FTI Consulting
Randy Neely, President and Chief
Executive Officer
Eddie Ok, Chief Financial Officer
Canaccord Genuity (Nomad & Sole
Broker) +44 (0) 20 7523 8000
Henry Fitzgerald-O'Connor
James Asensio
FTI Consulting (Financial PR) +44 (0) 20 3727 1000
Ben Brewerton transglobeenergy@fticonsulting.com
Genevieve Ryan
Tailwind Associates (Investor Relations)
Darren Engels darren@tailwindassociates.ca
http://www.tailwindassociates.ca
+1 403.618.8035
investor.relations@trans-globe.com
http://www.trans-globe.com
+1 403.264.9888
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDKZGMFZMDGGZG
(END) Dow Jones Newswires
March 11, 2020 03:00 ET (07:00 GMT)
Transglobe Energy (LSE:TGL)
Gráfico Histórico do Ativo
De Jan 2025 até Fev 2025
Transglobe Energy (LSE:TGL)
Gráfico Histórico do Ativo
De Fev 2024 até Fev 2025
