TIDMTGL
RNS Number : 7443M
TransGlobe Energy Corporation
13 May 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 FIRST QUARTER 2020
FINANCIAL AND OPERATING RESULTS FOR THE THREE MONTHSED MARCH 31,
2020
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, May 13, 2020 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") is pleased to announce its
financial and operating results for the three months ended March
31, 2020. 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 months ended March 31, 2020 and 2019, are
available on TransGlobe's website at www.trans-globe.com .
HIGHLIGHTS:
-- First quarter production averaged 14,997 boe/d (Egypt 12,544
bbls/d, Canada 2,453 boe/d), a decrease of 365 boe/d (2%) from the
previous quarter;
-- Production in April averaged 14,351 boe/d (Egypt 12,111
bbls/d, Canada 2,240 boe/d), a decrease of 4% from Q1-2020;
-- Sales averaged 22,934 boe/d including one cargo lifting of
452.1 thousand barrels ("mbbls") for net proceeds (inclusive of
hedging gains) of $14.6 million (collected in April 2020) and 765.4
mbbls sold to EGPC for net proceeds of $37.0 million, in Q1-2020.
Average realized price for Egyptian sales in Q1-2020 of
$40.46/bbl;
-- Funds Flow from operations of $25.7 million ($0.35 per share)
in the quarter;
-- First quarter net loss of $55.2 million ($0.76 per share),
inclusive of a $73.5 million non-cash impairment loss and a $4.4
million unrealized gain on derivative commodity contracts;
-- Ended the first quarter with positive working capital of
$53.3 million, including cash and cash equivalents of $23.8
million;
-- Drilled a Yusr development well at West Bakr in Egypt
(HW-2A);
-- Drilled a 2-mile horizontal Cardium development well in the
South Harmattan area of Canada;
-- The majority of the 2020 capital program has been executed
with the capital spent in Q1;
-- In process of reducing monthly G&A costs across the
business by a targeted 35% through headcount reduction, universal
salary rollbacks and reduction of discretionary expenditures;
-- Business continuity plans activated across all locations in
response to COVID-19 with no health and safety impacts or
disruption to production;
-- Subsequent to the quarter entered into costless Dated Brent
collars ($30.00 / $40.70) for TransGlobe's remaining unhedged
forecasted 2020 Egypt entitlement oil production;
-- Negotiations continued throughout the quarter with the
Egyptian government to amend, extend and consolidate the Company's
Eastern Desert concession agreements; and
-- TransGlobe continues to actively evaluate M&A
opportunities, with a view to not only better position the Company
to weather the current crisis but also rebound strongly once
commodity prices begin to strengthen.
FINANCIAL AND OPERATING RESULTS
(US$000s, except per share, price, volume amounts and %
change)
Three Months Ended March 31
Financial 2020 2019 % Change
------------------------------------------------------------- ----------- --------- --------
Petroleum and natural gas sales 80,187 69,217 16
Petroleum and natural gas sales, net of royalties 53,234 37,352 43
Realized derivative gain (loss) on commodity contracts 4,168 (222) (1,977)
Unrealized derivative gain (loss) on commodity contracts 4,376 (4,774) (192)
Production and operating expense 23,257 11,533 102
Selling costs 626 475 32
General and administrative expense 1,904 4,867 (61)
Depletion, depreciation and amortization expense 12,252 8,766 40
Income tax expense 4,585 6,203 (26)
Cash flow used in operating activities 3,672 13,071 (72)
Funds flow from operations(1) 25,683 15,155 69
Basic per share 0.35 0.21
Diluted per share 0.35 0.21
Net loss 55,218 8,806 527
Basic per share 0.76 0.12
Diluted per share 0.76 0.12
Capital expenditures 5,577 8,547 (35)
Dividends declared - 2,539 (100)
Dividends declared per share - 0.035
Working capital 53,294 43,600 22
Long-term debt, including current portion 36,591 47,687 (23)
Common shares outstanding
Basic (weighted average) 72,542 72,427 -
Diluted (weighted average) 72,542 72,694 -
Total assets 241,219 308,113 (22)
-------------------------------------------------------------- ---------- --------- --------
Operating
------------------------------------------------------------- ---------- --------- --------
Average production volumes (boe/d) 14,997 15,924 (6)
Average sales volumes (boe/d) 22,934 15,047 52
Inventory (mbbls) 242.1 647.0 (63)
Average realized sales price ($/boe) 38.42 51.11 (25)
Production and operating expenses ($/boe) 11.14 8.52 31
-------------------------------------------------------------- ---------- --------- --------
(1) Funds flow from operations (before finance costs) is a
measure that represents cash generated from operating activities
before changes in non-cash working capital and may not be
comparable to measures used by other companies. See "Non-GAAP
Financial Measures"
Average reference prices and exchange rates 2020 2019
--------------------------------------------- ------ --------------------------
Q-1 Q-4 Q-3 Q-2 Q-1
--------------------------------------------- ------ ----- ----- ----- -----
Crude oil
Dated Brent average oil price ($/bbl) 50.44 63.41 61.93 68.92 63.17
Edmonton Sweet index ($/bbl) 38.59 51.56 51.76 55.17 49.96
Natural gas
AECO ($/MMBtu) 1.43 1.88 1.04 0.89 1.35
US/Canadian Dollar average exchange rate 1.35 1.32 1.32 1.34 1.33
----------------------------------------------- ----- ----- ----- ----- -----
CORPORATE SUMMARY
TransGlobe produced an average of 14,997 boe/d during the first
quarter of 2020. Egypt production was 12,544 bbls/d and Canada
production was 2,453 boe/d. Production for the quarter was 9%
higher than the full year 2020 guidance of between 13,300 to 14,300
boe/d and 2% lower than the previous quarter, primarily 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 $40.46 per
barrel in Egypt during the quarter. In Canada, the Company received
an average of $40.57 per barrel of oil and $1.61 per thousand cubic
feet ("mcf") of natural gas during the quarter.
During Q1-2020, the Company had funds flow from operations of
$25.7 million and ended the quarter with positive working capital
of $53.3 million, including cash and cash equivalents of $23.8
million. The Company had a net loss in the quarter of $55.2
million, inclusive of a $4.4 million unrealized derivative gain on
commodity contracts which represents a fair value adjustment on the
Company's hedging contracts as at March 31, 2020. The net loss was
also inclusive of a non-cash impairment loss of $40.0 million on
the Company's petroleum and natural gas ("PNG") assets and a
non-cash impairment loss of $33.5 million on the Company's
exploration and evaluation ("E&E") assets. The Company
recognized impairments on its PNG assets due to a significant
decrease in crude oil pricing during the quarter and the resulting
reduction in fair value of these assets. The Company recognized
impairments on its E&E assets principally due to the scale of
exploration results compared to investments to date and
consideration of the uncertainly of the timing of additional
exploration activities in these areas given the current economic
environment.
In Egypt, the Company sold a 452.1 mbbls cargo of entitlement
crude oil and 765.4 mbbls to EGPC during the quarter, and had 242.1
mbbls of entitlement crude oil inventory at March 31, 2020. The
decrease in inventoried crude oil is attributed to a significant
increase in sales and a slight decrease in production compared to
the previous quarter. All Canadian production was sold during the
quarter.
In the Eastern Desert, the Company drilled the HW-2A development
well at West Bakr. The well was drilled to a total depth of 1,639
meters and completed in April 2020 as a Yusr producer. In the
Western Desert, SGZ-6X well is producing from the Upper Bahariya
reservoir at a rate restricted to a field estimated 250 - 300
bbls/d light and medium crude to evaluate the well, manage the
reservoir and optimize the separation of oil, gas and water.
Discussions with EGPC, the Company's joint venture operating
partner, are ongoing to reduce operating expenditures. Any material
operating cost reductions in Egypt will require the assistance of
EGPC to implement. Further constructive negotiations with EGPC to
amend, extend and consolidate the Company's Eastern Desert
concession agreements have continued through the period, with both
parties recognizing the attractiveness of a revised agreement to
stabilize and ultimately improve investment in production,
following a return to a more sustainable commodity price
environment.
In Canada, a 2-mile Cardium development well has been
successfully drilled and the rig released. Stimulation and
equipping for production will await improved oil prices. Prudently
extending the well allowed TransGlobe to cost effectively secure
future upside potential in South Harmattan. Crude oil prices in
Western Canada have been significantly impacted by the current
oversupply into the market exacerbated by the COVID-19 related
demand contraction. The Company is exploring all avenues with its
contractors and suppliers to reduce operating costs in its Canadian
operations.
TransGlobe continues to actively evaluate M&A opportunities,
with a view to not only better position the Company to weather the
current crisis but also rebound strongly once commodity prices
begin to strengthen.
Crisis Mitigation Measures
TransGlobe is focused on conserving cash to proactively manage
its balance sheet in the current low commodity price environment.
The Company has successfully implemented the previously announced
80% reduction in the 2020 capital program. The Company has also
undertaken a general and administrative ("G&A") cost reduction
exercise across all locations through staff reductions, salary
rollbacks and reducing all discretionary expenditures. This also
includes a rollback of non-executive director remuneration of 10%.
The Company estimates that these actions will reduce on-going
monthly G&A by approximately 35%, but there were non-recurring
restructuring charges that have impacted Q1-2020 results and will
continue to impact Q2-2020 results.
The Company remains in constant communication with its lenders
(Mercuria Energy Trading and ATB Financial) and does not anticipate
deviating from its pre-crisis anticipated debt reduction
schedule.
In early March, the Company recognized the potential for an
extended period of price uncertainty, and acted to expeditiously
finalize sales arrangements for the recent build in Egyptian crude
oil inventory.
TransGlobe continues to review its price exposure in the current
crude oil price environment and, subsequent to the quarter, entered
into additional 2020 hedges to provide further downside protection
against a protracted near-term, low price environment. The Company
entered into costless Dated Brent collars for its remaining
unhedged forecasted 2020 Egypt entitlement oil production. An
additional 800 mbbls (100 mbbls monthly from May-December) have
been price-protected with a purchased put of $30.00/bbl and a sold
call of $40.70/bbl. The Company has and will continue to update its
economic thresholds for shutting in production in both Canada and
Egypt. All operations including what would normally be routine
operations, are subject to a thorough economic review prior to
expenditures being approved. At this time the Company has not
shut-in any material production but this is continually being
monitored.
The Company has had no reported cases of COVID-19 among its
staff, contractors or joint venture partners. Business continuity
plans have been implemented in all our locations and operations
continue as normal.
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 and to repay current liabilities and debt and ultimately to
provide a return to shareholders. TransGlobe's capital programs are
funded by its 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
through the current volatile oil price environment.
Funding for the Company's capital expenditures is provided by
cash flow from operations and cash on hand. The Company expects to
fund its 2020 exploration and development program through the use
of working capital and cash flow from operations. The Company also
expects to pay down debt and explore business development
opportunities with its working capital. 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 March 31, 2020, the Company had a
working capital surplus of $53.3 million (December 31, 2019 - $32.2
million). The increase in working capital is primarily the result
of an increase in accounts receivable due to the increase in sales
in Q1-2020, partially offset by a corresponding decrease in crude
oil inventory, and a decrease in cash due to the funding of the
2020 capital program to date.
As at March 31, 2020, the Company's cash equivalents balance
consisted of short-term deposits with an original term to maturity
at purchase of one month or less. 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 six
months in 2017, and has since fluctuated within an acceptable
range. As at March 31, 2020, amounts owing from EGPC were $29.4
million. The Company considers there to be minimal credit risk
associated with amounts receivable from EGPC.
In Egypt, the Company sold one crude oil cargo in Q1-2020 for
total proceeds of $14.6 million (inclusive of hedging gains), the
proceeds of which were collected in April 2020. The Company sold an
additional 765.4 mbbls of crude oil to EGPC for net proceeds of
$37.0 million in the quarter. As at March 31, 2020 the company had
collected $13.9 million, subsequent to the quarter an additional
$3.0 million has been collected. 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 March
31, 2020, the Company held 242.1 mbbls of entitlement crude oil as
inventory.
As at March 31, 2020, the Company had $92.6 million of revolving
credit facilities with $37.0 million drawn and $55.6 million
available. The Company has a prepayment agreement with Mercuria
that allows for a revolving balance of up to $75.0 million, of
which $30.0 million was drawn and outstanding. The Company also has
a revolving Canadian reserves-based lending facility with ATB
totaling C$25.0 million ($17.6 million), of which C$9.9 million
($7.0 million) was drawn and outstanding. During the three months
ended 2020, the Company had drawings of C$0.1 million ($0.1
million) on this facility. Subsequent to the quarter end the
Company re-paid $10.0 million on the $75.0 million prepayment
facility.
OPERATIONS UPDATE
Please see the table entitled "Production Disclosure" at the end
of this news release for the detailed constituent product types and
their respective quantities measured at the first point of sale for
all production amounts disclosed in this news release on a Bopd and
Boepd basis.
ARAB REPUBLIC OF EGYPT
EASTERN DESERT
West Gharib, West Bakr, and North West Gharib (100% working
interest, operated)
Operations and Exploration
During the first quarter of 2020, the Company drilled a
development oil well in the Eastern Desert at West Bakr. The HW-2A
development well was drilled to a total depth of 1,639 meters. Due
to stuck pipe, only the Yusr-B reservoir was fully logged and
evaluated with an internally estimated 0.3 meters of net oil pay on
this reservoir. The other Yusr reservoirs and the upper Bakr
reservoir, though all exhibiting good oil shows, were not logged at
this time. HW-2A was completed in April 2020 as a producer on 5.4
meters of oil bearing Yusr-C reservoir observed on the mud logs.
The SHAMS-2 rig was demobilized following the completion of
HW-2A.
The Company has initiated discussions with EGPC, our joint
venture operating partner, to reduce operating expenditures.
All well interventions and repairs following failure are
assessed for economic viability prior to execution, with the
postponement of those activities unable to carry their repair and
operating cost at current oil prices. At this time no material
impact to 2020 production expectations has resulted from activities
deferred in this way. The Company will continue to update its
economic thresholds for shutting in production.
Constructive negotiations with EGPC to amend, extend and
consolidate the Company's Eastern Desert concession agreements have
continued through the period, with both parties recognizing the
attractiveness of a revised agreement to stabilize and ultimately
improve investment in production, following a return to a more
sustainable commodity price environment.
Production
Production averaged 12,343 bbls/d during the quarter, a decrease
of 4% (488 bbls/d) from the previous quarter. This decrease is
primarily due to natural declines, with March production being
impacted by severe weather in Egypt. Production guidance remains
unchanged for fiscal 2020 of 11,300 to 12,100 bbls/d.
Production in April 2020 averaged 11,854 bbls/d.
Sales
The Company sold 758.5 mbbls of inventoried entitlement crude
oil to EGPC during the quarter and a cargo of 452.1 mbbls of Gharib
blend crude, which was lifted in mid-March.
Quarterly Eastern Desert Production (bbls/d) 2020 2019
-------------------------------------------------- ------- ------------------------
Q-1 Q-4 Q-3 Q-2
-------------------------------------------------- ------- ------ ------ ------
Gross production rate(1) 12,343 12,831 13,750 14,663
TransGlobe production (inventoried) sold 7,937 (674) (1,821) (967)
--------------------------------------------------- ------ ------ ------ ------
Total sales 20,280 12,157 11,929 13,696
--------------------------------------------------- ------ ------ ------ ------
Government share (royalties and tax) 6,977 7,250 7,795 8,320
TransGlobe sales (after royalties and tax)(2) 13,303 4,907 4,134 5,376
--------------------------------------------------- ------ ------ ------ ------
Total sales 20,280 12,157 11,929 13,696
--------------------------------------------------- ------ ------ ------ ------
(1) Quarterly production by concession (bbls/d):
West Gharib - 3,664 (Q1-2020), 3,857 (Q4-2019), 4,003 (Q3-2019),
and 4,256 (Q2-2019)
West Bakr - 8,277 (Q1-2020), 8,489 (Q4-2019), 8,978 (Q3-2019),
and 9,389 (Q2-2019)
North West Gharib - 402 (Q1-2020), 485 (Q4-2019), 769 (Q3-2019),
and 1,018 (Q2-2019)
(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.
WESTERN DESERT
South Ghazalat (100% working interest, operated)
Operations and Exploration
At South Ghazalat, the SGZ-6X well is currently producing from
the Upper Bahariya reservoir at a rate restricted to a field
estimated 250-300 bbls/d light and medium crude to evaluate the
well, manage the reservoir and optimize the separation of oil, gas
and water.
With the continued postponement of both appraisal and
exploration drilling at South Ghazalat in 2020, production from
SGZ-6X alone at current and near-term oil prices is insufficient to
cover its operating costs. The Company is working with EGPC to
further cut western desert operating costs to generate positive
cash flow from SGZ-6X operations, however, if this is not possible,
the Company is considering suspending South Ghazalat operations
until either oil prices improve or production off the lease can be
increased through new wells or a recompletion of SGZ-6X.
Production
Production averaged 201 bbls/d during the quarter, with March
production being impacted by severe weather in Egypt. This was the
first full quarter of production at South Ghazalat.
Production in April 2020 averaged 257 bbls/d.
Sales
The Company sold all of its entitlement crude oil production of
6.9 mbbls in the quarter to EGPC.
CANADA
Operations and Exploration
During the quarter, a 2-mile Cardium development well was
successfully drilled and the rig was released. Stimulation and
equipping for production will await improved oil prices. By
extending the well trajectory by a further 218 meters into an
adjacent section, this well holds an additional 7.5 sections of
land in the South Harmattan fairway. Prudently extending the well
allowed TransGlobe to cost effectively secure future upside
potential in South Harmattan.
The 2-mile horizontal 2-20 well, completed in Q4 2019 and
de-risking the South Harmattan fairway, continued to produce at
field estimated rates of 234 boe/d (197 bbls/d light oil, 119 mcf/d
gas, 18 bbls/d NGL) prior to being shut-in in mid-March to drill a
well from same location. The Company is very encouraged that
production performance remains in line with Company expectations
for this significant new resource play.
Crude oil prices in Western Canada have been significantly
impacted by current oversupply into the market exacerbated by the
COVID-19-related demand contraction. During the quarter
TransGlobe's light oil production continued to be produced at a
positive field netback. In addition, natural gas prices were
relatively strong through the first quarter averaging $1.43/MMBtu.
Nonetheless, the Company is exploring all avenues with its
contractors and suppliers to reduce operating costs in its Canadian
operations and will consider shutting in production if the
economics of shutting in are superior to producing and selling.
In the event the Company decides to suspend or limit oil sales,
it will be able to produce oil to tanks for approximately one month
at currently forecasted production, before needing to shut-in the
production.
Production
In Canada, production averaged 2,453 boe/d during the quarter, a
decrease of 78 boe/d (3%) from the previous quarter. This marginal
decrease was primarily due to natural declines and the shut-in of
the 2-20 well while drilling a well from the same location.
Production in April 2020 averaged 2,240 boe/d with 797 bbls/d of
oil.
Quarterly Canada Production 2020 2019
------------------------------- ------ -------------------
Q-1 Q-4 Q-3 Q-2
------------------------------- ------ ----- ----- -----
Canada crude oil (bbls/d) 860 908 666 788
Canada NGLs (bbls/d) 761 735 585 533
Canada natural gas (mcf/d) 4,996 5,331 5,652 5,733
-------------------------------- ----- ----- ----- -----
Total production (boe/d) 2,453 2,531 2,193 2,277
-------------------------------- ----- ----- ----- -----
Condensed Consolidated Interim Statements of Loss and
Comprehensive Loss
(Unaudited - Expressed in thousands of U.S. Dollars, except per
share amounts)
Three Months Ended March 31
2020 2019
-------------------------------------------------- --- --------------- -----------
REVENUE
Petroleum and natural gas sales, net of royalties 53,234 37,352
Finance revenue 58 183
---------------------------------------------------------- -------------- -----------
53,292 37,535
----------------------------------------------------- -------------- -----------
EXPENSES
Production and operating 23,257 11,533
Selling costs 626 475
General and administrative 1,904 4,867
Foreign exchange loss (gain) 52 (87)
Finance costs 815 1,141
Depletion, depreciation and amortization 12,252 8,766
Asset retirement obligation accretion 68 56
(Gain) loss on financial instruments (8,544) 4,996
Impairment loss 73,495 8,391
---------------------------------------------------------- -------------- -----------
103,925 40,138
----------------------------------------------------- -------------- -----------
Loss before income taxes (50,633) (2,603)
Income tax expense - current 4,585 6,203
--------------------------------------------------- -------------- -----------
NET LOSS (55,218) (8,806)
--------------------------------------------------- -------------- -----------
OTHER COMPREHENSIVE (LOSS) INCOME
Currency translation adjustments (4,806) 541
---------------------------------------------------------- -------------- -----------
COMPREHENSIVE LOSS (60,024) (8,265)
--------------------------------------------------- -------------- -----------
Net loss per share
Basic (0.76) (0.12)
Diluted (0.76) (0.12)
---------------------------------------------------------- -------------- -----------
Condensed Consolidated Interim Balance Sheets
(Unaudited - Expressed in thousands of U.S. Dollars)
As at As at
March 31, 2020 December 31, 2019
---------------------------------------------- --------------- -----------------
ASSETS
Current
Cash and cash equivalents 23,830 33,251
Accounts receivable 47,612 10,681
Derivative commodity contracts 4,159 -
Prepaids and other 4,044 4,338
Product inventory 6,183 17,516
------------------------------------------------- -------------- -----------------
85,828 65,786
Non-Current
Intangible exploration and evaluation assets 577 33,706
Property and equipment
Petroleum and natural gas assets 145,545 196,150
Other 3,935 4,296
Deferred taxes 5,334 8,387
------------------------------------------------- -------------- -----------------
241,219 308,325
----------------------------------------------- -------------- -----------------
LIABILITIES
Current
Accounts payable and accrued liabilities 31,394 32,156
Derivative commodity contracts - 217
Current portion of lease obligations 1,140 1,219
------------------------------------------------- -------------- -----------------
32,534 33,592
Non-Current
Long-term debt 36,591 37,041
Asset retirement obligations 11,632 13,612
Other long-term liabilities 195 614
Lease obligations 318 589
Deferred taxes 5,334 8,387
------------------------------------------------- -------------- -----------------
86,604 93,835
----------------------------------------------- -------------- -----------------
SHAREHOLDERS' EQUITY
Share capital 152,805 152,805
Accumulated other comprehensive (loss) income (3,672) 1,134
Contributed surplus 24,822 24,673
(Deficit) Retained earnings (19,340) 35,878
------------------------------------------------- -------------- -----------------
154,615 214,490
----------------------------------------------- -------------- -----------------
241,219 308,325
----------------------------------------------- -------------- -----------------
Condensed Consolidated Interim Statements of Changes in
Shareholders' Equity
(Unaudited - Expressed in thousands of U.S. Dollars)
Three Months Ended March 31
2020 2019
--------------------------------------------------------- -------------- ------------
Share Capital
Balance, beginning of period 152,805 152,084
Stock options exercised - 547
Transfer from contributed surplus on exercise of options - 174
------------------------------------------------------------ ------------- ------------
Balance, end of period 152,805 152,805
------------------------------------------------------------ ------------- ------------
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period 1,134 (939)
Currency translation adjustment (4,806) 541
------------------------------------------------------------ ------------- ------------
Balance, end of period (3,672) (398)
------------------------------------------------------------ ------------- ------------
Contributed Surplus
Balance, beginning of period 24,673 24,195
Share-based compensation expense 149 146
Transfer to share capital on exercise of options - (174)
------------------------------------------------------------ ------------- ------------
Balance, end of period 24,822 24,167
------------------------------------------------------------ ------------- ------------
(Deficit) Retained Earnings
Balance, beginning of period 35,878 44,951
Net loss (55,218) (8,806)
Dividends - (2,539)
------------------------------------------------------------ ------------- ------------
Balance, end of period (19,340) 33,606
------------------------------------------------------------ ------------- ------------
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited - Expressed in thousands of US Dollars)
Three Months Ended March 31
2020 2019
------------------------------------------------------------ -------------- ------------
OPERATING
Net loss (55,218) (8,806)
Adjustments for:
Depletion, depreciation and amortization 12,252 8,766
Asset retirement obligation accretion 68 56
Impairment loss 73,495 8,391
Share-based compensation (1,301) 915
Finance costs 815 1,141
Unrealized (gain) loss on financial instruments (4,376) 4,774
Unrealized gain on foreign currency translation (32) (52)
Asset retirement obligations settled (20) (30)
Changes in non-cash working capital (29,355) (28,226)
------------------------------------------------------------- ------------- ------------
Net cash used in operating activities (3,672) (13,071)
-------------------------------------------------------------- ------------- ------------
INVESTING
Additions to intangible exploration and evaluation assets (330) -
Additions to petroleum and natural gas assets (5,161) (8,547)
Additions to other assets (86) -
Changes in non-cash working capital 932 533
------------------------------------------------------------- ------------- ------------
Net cash used in investing activities (4,645) (8,014)
-------------------------------------------------------------- ------------- ------------
FINANCING
Issue of common shares for cash - 547
Interest paid (618) (995)
Increase in long-term debt 96 121
Payments on lease obligations (394) (399)
Repayments of long-term debt - (5,000)
Changes in non-cash working capital - (200)
------------------------------------------------------------- ------------- ------------
Net cash used in financing activities (916) (5,926)
-------------------------------------------------------------- ------------- ------------
Currency translation differences relating to cash and cash
equivalents (187) 41
-------------------------------------------------------------- ------------- ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (9,420) (26,970)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,250 51,705
-------------------------------------------------------------- ------------- ------------
CASH AND CASH EQUIVALENTS, OF PERIOD 23,830 24,735
-------------------------------------------------------------- ------------- ------------
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, the
plans for the Company's 2020 Canadian drilling program and the
details thereof; the Company's expectation relating to the
performance of the South Harmattan Cardium prospect; and the
expected benefits to the Company of consolidating, amending and
extending the Company's Eastern Desert PSCs 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; the potential impacts of COVID-19
to the Company's business, operating results, cash flows and/or
financial condition; 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 and approved 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.
This document includes an estimate of net oil pay thickness at
HW-2A development well, which estimate may be considered to be
anticipated results under National Instrument 51-101. The estimate
was prepared internally. The risks and uncertainties associated
with recovery of resources from HW-2A development well include, but
are not limited to: that the Company may encounter unexpected
drilling results; the occurrence of unexpected events in the
exploration for, and the operation and development of, oil and gas;
delays in anticipated timing of drilling and completion of wells;
geological, technical, drilling and processing problems; and other
difficulties in producing petroleum reserves.
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:
Bopd barrels of oil per day
bbl barrels
bbls/d barrels per day
mbbls thousand barrels
boe barrel of oil equivalent
boe/d barrels of oil equivalent per day
Boepd 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):
(Boepd) April Q1 - 20 Q4 - Q3 - Q2 -
- 20 19 19 19
------- -------- ------- ------- -------
Egypt (Bopd) 12,111 12,544 12,831 13,750 14,663
------- -------- ------- ------- -------
Eastern Desert of Egypt (Bopd) 11,854 12,343 12,831 13,750 14,663
------- -------- ------- ------- -------
Heavy Crude (bbls/d) 11,077 11,548 11,984 12,909 13,785
------- -------- ------- ------- -------
Light and Medium Crude (bbls/d) 777 795 847 841 878
------- -------- ------- ------- -------
Western Desert of Egypt (Bopd) 257 201 - - -
------- -------- ------- ------- -------
Light and Medium Crude (bbls/d) 257 201 - - -
------- -------- ------- ------- -------
Canada (Boepd) 2,240 2,453 2,531 2,193 2,277
------- -------- ------- ------- -------
Light and Medium Crude (bbls/d) 797 860 908 666 788
------- -------- ------- ------- -------
Natural Gas (mcf/d) 4,914 4,996 5,334 5,652 5,730
------- -------- ------- ------- -------
Associated Natural Gas Liquids
(bbls/d) 624 761 735 585 533
------- -------- ------- ------- -------
Total (Boepd) 14,351 14,997 15,362 15,943 16,940
------- -------- ------- ------- -------
Production Guidance
(Boepd) Low High Mid-Point
------- ------- ----------
Egypt (Bopd) 11,300 12,100 11,700
------- ------- ----------
Heavy Crude (bbls/d) 10,396 11,132 10,743
------- ------- ----------
Light and Medium Crude (bbls/d) 904 968 957
------- ------- ----------
Canada (Boepd) 2,000 2,200 2,100
------- ------- ----------
Light and Medium Crude (bbls/d) 672 740 706
------- ------- ----------
Natural Gas (mcf/d) 5,142 5,646 5,394
------- ------- ----------
Associated Natural Gas Liquids
(bbls/d) 471 519 495
------- ------- ----------
Total (Boepd) 13,300 14,300 13,800
------- ------- ----------
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
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(END) Dow Jones Newswires
May 13, 2020 02:00 ET (06:00 GMT)
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