TIDMTGL
RNS Number : 0363L
TransGlobe Energy Corporation
11 May 2022
The information contained within this Announcement is deemed by
TransGlobe Energy Corporation to constitute inside information as
stipulated under the Market Abuse Regulation (EU) No. 596/2014 as
it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR").
TRANSGLOBE ENERGY CORPORATION ANNOUNCES FIRST QUARTER 2022
FINANCIAL AND OPERATING RESULTS FOR THE THREE MONTHSED MARCH 31,
2022
AIM & TSX: "TGL" & NASDAQ: "TGA"
Calgary, Alberta, May 11, 2022 - TransGlobe Energy Corporation
("TransGlobe" or the "Company") is pleased to announce its
financial and operating results for the three months ended March
31, 2022. All dollar values are expressed in United States dollars
unless otherwise stated. TransGlobe's Condensed Consolidated
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, 2022 and 2021, are available on
TransGlobe's website at www.trans-globe.com .
FINANCIAL HIGHLIGHTS:
-- First quarter sales averaged 11,964 boe/d including one cargo
lifting of 459.6 Mbbls of entitlement crude oil sold for net
proceeds of $36.5 million;
-- Average realized price for Q1-2022 sales of $75.70/boe;
Q1-2022 average realized price on Egypt sales was $81.49/bbl and
Canadian sales of $52.11/boe;
-- Funds flow from operations of $27.1 million ($0.37 per share) in the quarter;
-- First quarter net earnings of $48.8 million ($0.67 per
share), inclusive of an $8.0 million gain on concession merger, a
$1.4 million unrealized derivative loss on commodity contracts and
a $26.0 million non-cash impairment reversal on the Company's
petroleum and natural gas ("PNG") assets;
-- Ended the first quarter with positive working capital of
$60.4 million, including cash of $37.2 million;
-- Achieved consolidated netbacks of $28.45 per boe, an increase
of 54% from the previous quarter primarily due to: the Company's
improved economic interest under the Merged Concession agreement
previously announced on January 20, 2022; improved natural gas
prices in Canada; and an overall increase in commodity prices;
-- Adopted a distribution policy to allocate a minimum of 75% of
its annual free cash flow to shareholders through dividends and
share buybacks;
-- Subsequent to quarter end, the Company sold a 450 Mbbl cargo
of Egypt entitlement crude oil with proceeds expected in early June
2022;
OPERATIONAL HIGHLIGHTS:
-- First quarter production averaged 12,446 boe/d (Egypt 10,090
bbls/d, Canada 2,356 boe/d), a decrease of 317 boe/d (2%) from the
previous quarter, primarily due to increased watercuts at South
Ghazalat and the fall-off in initial flush production from the
horizontal wells brought on stream in Q4-2021 in Canada;
-- Production in April averaged 11,580 boe/d (Egypt 10,043
bbls/d, Canada 1,537 boe/d), a decrease of 3% from Q1-2022
primarily due to a planned third-party facility outage in
Canada;
-- Ended the quarter with 43.4 Mbbls of entitlement crude oil
inventory, an increase of 43.4 Mbbls from Q4-2021 due to production
outpacing sales in Q1-2022 and reflecting the Company's improved
economic interest under the Merged Concession agreement;
-- Drilled and cased three development wells in the Eastern
Desert of Egypt. A fourth development well was drilled during
Q1-2022, with casing run subsequent to the quarter;
-- Drilled two horizontal Cardium development wells (one 2-mile,
and one 1-mile) in the South Harmattan area of Canada, with
stimulation and equipping anticipated in June and July 2022;
-- Drilled another two 2-mile horizontal development wells
targeting the Cardium reservoir in Harmattan subsequent to the
quarter, opportunistically retaining the Canadian rig to accelerate
the budgeted drilling program;
CORPORATE HIGHLIGHTS:
-- As announced on January 20, 2022, the Company executed its
agreement (the "Merged Concession agreement" or "Merged
Concession") with the Egyptian General Petroleum Corporation
("EGPC") to merge its three existing Eastern Desert concessions
with a 15-year primary term and improved Company economics;
-- The Company now expects capital spending to be in the range
of $70.5 million (before capitalized G&A) to cover drilling
program optimization in Canada; and, in Egypt, unexpected drilling
problems on K-71 in the Eastern Desert, additional long-lead oil
field equipment to manage supply challenges, and general inflation.
The Company is screening its asset portfolio for the disposal of
non-core assets that do not provide a material contribution to free
cashflow to help offset this capital increase; and
-- Announced on March 16, 2022 a dividend of $0.10 per share
($7.3 million) payable to shareholders of record on April 29,
2022.
FINANCIAL AND OPERATING RESULTS
Additional financial information is provided in the Company's
Condensed Consolidated Financial Statements together with the notes
related thereto, as well as TransGlobe's Management's Discussion
and Analysis for the three months ended 2022 and 2021. These
documents, along with other documents affecting the rights of
securityholders and other information relating to the Company, may
be found on SEDAR at www.sedar.com and in the Company's Annual
Report on Form 40-F for the fiscal year ended December 31, 2021,
filed on EDGAR at www.sec.gov .
(US$000s, except per share, price, volume amounts and %
change)
Three Months Ended March 31
Financial 2022 2021 % Change
------------------------------------------------------ ---------- -------- --------
Petroleum and natural gas sales 81,510 42,277 93
Petroleum and natural gas sales, net of royalties 52,954 18,052 193
Realized derivative loss on commodity contracts 50 1,545 (97)
Unrealized derivative loss on commodity contracts 1,356 2,970 (54)
Production and operating expense 13,279 9,449 41
Selling costs 483 34 1,321
General and administrative expense 6,865 5,037 36
Depletion, depreciation and amortization expense 6,870 4,815 43
Income tax expense 8,558 4,660 84
Cash flow used in operating activities (23,782) (3,940) 504
Funds flow from operations(1) 27,131 81 33,395
Basic per share(2) 0.37 0.00
Diluted per share(2) 0.37 0.00
Net earnings (loss) 48,810 (11,024) (543)
Basic per share 0.67 (0.15)
Diluted per share 0.66 (0.15)
Capital expenditures(3) 8,849 2,907 204
Working capital(6) 60,414 7,055 756
Long-term debt, including current portion 3,144 21,699 (86)
Common shares outstanding
Basic (weighted average) 72,790 72,542 -
Diluted (weighted average) 74,316 72,891 2
Total assets 323,663 197,150 64
------------------------------------------------------- --------- -------- --------
Operating
------------------------------------------------------ --------- -------- --------
Average production volumes (boe/d) 12,446 12,221 2
Average sales volumes (boe/d) 11,964 9,691 23
Inventory (Mbbls) 43.4 455.7 (90)
Average realized sales price ($/boe)(4) 75.70 48.47 56
Production and operating expenses ($/boe)(5) 12.33 10.83 14
------------------------------------------------------- --------- -------- --------
(1) Non-GAAP financial measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. The most directly
comparable GAAP measure for funds flow from operations is cash flow
generated by operating activities. Refer to "Non-GAAP and Other
Financial Measures" contained within the Q1-2022 MD&A.
(2) Non-GAAP ratio that does not have any standardized meaning
under IFRS and therefore may not be comparable to similar measures
presented by other companies. Includes a non-GAAP financial measure
component of funds flow from operations. Refer to "Non-GAAP and
Other Financial Measures" contained within the Q1-2022
MD&A.
(3) Non-GAAP financial measure that does not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. The most directly
comparable GAAP measure for capital expenditures is cash flow used
in investing activities. Refer to "Non-GAAP and Other Financial
Measures" contained within the Q1-2022 MD&A.
(4) Supplementary financial measure that is comprised of
petroleum and natural gas sales, as determined in accordance with
IFRS, divided by the Company's average daily production
volumes.
(5) Supplementary financial measure that is comprised of
production and operating expenses, as determined in accordance with
IFRS, divided by the Company's average daily production
volumes.
(6) Supplementary financial measure that is comprised of current
assets less current liabilities, as determined in accordance with
IFRS.
2022 2021
---------------------------------------------- -------
Average reference prices and exchange rates Q-1 Q-4 Q-3 Q-2 Q-1
---------------------------------------------- ------- ----- ----- ----- -----
Crude oil
Dated Brent average oil price ($/bbl) 100.30 79.59 73.47 68.83 60.82
Edmonton Sweet index ($/bbl) 92.64 73.19 66.61 63.01 52.54
Natural gas
AECO ($/MMBtu) 3.68 3.89 2.97 2.48 2.30
US/Canadian Dollar average exchange rate 1.27 1.26 1.26 1.23 1.27
------------------------------------------------ ------ ----- ----- ----- -----
CORPORATE SUMMARY
TransGlobe Energy Corporation ("TransGlobe" or the "Company")
produced an average of 12,446 barrels of oil equivalent per day
("boe/d") during the first quarter of 2022. Egypt production was
10,090 barrels of oil per day ("bbls/d") and Canada production was
2,356 boe/d. Production for the quarter was within full year 2022
guidance of 12,400 to 13,400 boe/d and 3% lower than the previous
quarter. The decrease was primarily due to increased watercuts at
South Ghazalat and the fall-off in initial flush production from
the horizontal wells brought on stream in Q4-2021 in Canada.
TransGlobe's Egyptian crude oil is sold at a quality discount to
Dated Brent. The Company received an average price of $81.49 per
barrel in Egypt during the quarter. In Canada, the Company received
an average of $89.19 per barrel of oil, $41.75 per barrel of NGLs
and $3.79 per thousand cubic feet ("Mcf") of natural gas during the
quarter.
During Q1-2022, the Company had funds flow from operations of
$27.1 million and ended the quarter with positive working capital
of $60.4 million, including cash of $37.2 million. The Company had
net earnings in the quarter of $48.8 million, inclusive of an $8.0
million gain on concession merger and a $1.4 million unrealized
derivative loss on commodity contracts which represents a fair
value adjustment on the Company's hedging contracts at March 31,
2022. Net income was also inclusive of a non-cash impairment
reversal of $26.0 million on the Company's petroleum and natural
gas ("PNG") assets that was recognized as a result of the Company's
improved commercial terms under the Merged Concession and a further
increase and stabilization of forecasted commodity prices in
Q1-2022 .
In Egypt, the Company sold one cargo lifting of 459.6 Mbbls of
entitlement crude oil during the quarter for net proceeds of $36.5
million, which were collected in March 2022. Subsequent to the
quarter, TransGlobe sold a 450 Mbbl cargo of entitlement crude oil
with proceeds expected in early June. All Canadian production was
sold during the quarter.
As announced on January 20, 2022, the agreement with the
Egyptian General Petroleum Corporation to merge the Company's three
existing Eastern Desert concessions was executed. In advance of the
Minister of Petroleum and Mineral Resources of the Arab Republic of
Egypt (the "Minister") executing the Merged Concession agreement
with TransGlobe, the Company paid the first modernization payment
($15.0 million) and signature bonus ($1.0 million) as part of the
conditions precedent to the official signing ceremony on January
19, 2022. On February 1, 2022, the Company paid the second
modernization payment ($10.0 million). In accordance with the
Merged Concession agreement, TransGlobe will make a further four
annual equalization payments of $10.0 million each beginning
February 1, 2023 until February 1, 2026. The Company also has
minimum financial work commitments of $50.0 million per each
five-year period of the primary development term, commencing on the
February 1, 2020 effective date. The results achieved in Q1-2022
are inclusive of the impact of the Merged Concession.
In Egypt, during the quarter, the Company drilled and cased
three development oil wells in the Eastern Desert, while a fourth
development oil well was drilled during Q1-2022, with casing run
subsequent to the quarter. The K-67 development well was drilled to
a total depth of 1,440 meters. The well was completed in the Asl-B
and is currently on production at a rate of 153 bbls/d (heavy
crude, field estimate). The second well, Arta-76, was drilled to a
total depth of 1,074 meters, and encountered an internally
estimated 12 meters of net oil pay in the Nukhul reservoir.
TransGlobe drilled and cased a third development oil well, NWG-1E,
to a total depth of 1,219 meters, encountering an internally
estimated 9 meters of oil pay in the Nukhul reservoir. Arta-76 and
NWG-1E will be stimulated as part of a multi-well stimulation
campaign in Q2-2022, subsequent to which they will be put on
production. T he Company drilled a fourth development well in the
Eastern Desert, K-71, to a total depth of 1,448 meters and
encountered an internally estimated 19 meters of net oil pay in the
Asl-A reservoir and 23 meters of net oil pay in the Asl-B
reservoir. The well was cased subsequent to the quarter and is
currently producing at a rate of 480 bbls/d (heavy crude, field
estimate) from the Asl-B reservoir.
In Canada, the Company successfully drilled one 2-mile and one
1-mile Harmattan horizontal Cardium reservoir wells in the South
Harmattan area, with stimulation and equipping anticipated in June
and July. Subsequent to the end of Q1 t he Company drilled two
additional 2-mile Cardium wells from the 15--11 surface
location.
As a result of macroeconomic events precipitated by the conflict
in Ukraine and COVID-19 lockdowns in China, the Company evaluated
the risks around the 2022/ 2023 capital program and committed to
the acquisition of equipment and materials to ensure a continuous
drilling program beyond late 2022 and into 2023. In addition,
seeking increased development efficiencies in the Company's Cardium
development in Canada and harnessing continued robust product
pricing and expected rapid returns, the Board has approved the
replacement of three originally budgeted 1-mile horizontal wells
with three 2-mile horizontal wells. Finally, significant additional
costs were incurred following unforeseen and significant hole
problems drilling K-71 in the Eastern Desert.
Due to these factors, along with general inflationary pressures
on equipment and services propelled by the macroeconomic situation,
the Company now expects capital spending to be in the range of
$70.5 million (before capitalized G&A) versus an original
budget of $57.7 million. The Company is screening its asset
portfolio for the disposal of non-core assets that do not provide a
material contribution to free cashflow to help offset this capital
increase.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
EASTERN DESERT
(100% working interest, operated)
Operations and Exploration
The Company continued to use the EDC-64 rig in its Eastern
Desert drilling campaign, managing to drill and case three
additional development wells in K-Field, Arta Field and the
NWG-Field during the quarter.
The K-68 well, drilled at the end of 2021, was completed in the
Asl-A reservoir in January and is currently producing at a rate of
91 bbls/d (heavy crude, field estimate).
K-67 was drilled to a total depth of 1,440 meters, and was fully
logged and evaluated. The well encountered an internally estimated
16 meters of net oil pay in the Asl-A and 17 meters of net oil pay
in the Asl-B. The well was completed in the Asl-B and is currently
on production at a rate of 153 bbls/d (heavy crude, field
estimate).
Arta-76 was drilled to a total depth of 1,074 meters and was
fully logged and evaluated. The well encountered an internally
estimated 12 meters of net oil pay in the Nukhul reservoir.
NWG-1E was drilled to a total depth of 1,219 meters and
encountered 9 meters of oil pay in the Nukhul reservoir after being
fully logged and evaluated.
Both Arta-76 and NWG-1E will be stimulated as part of a
multi-well stimulation campaign in Q2-2022, subsequent to which
they will be put on production.
The K-71 well experienced unforeseen and significant drilling
challenges but was ultimately drilled to a total depth of 1,448
meters, fully logged and evaluated. The well encountered an
internally estimated 19 meters of net oil pay in the Asl-A
reservoir and 23 meters of net oil pay in the Asl-B reservoir. The
well was cased subsequent to the quarter, and is currently
producing at a rate of 480 bbls/d (heavy crude, field estimate)
from the Asl-B reservoir.
Following K-71, the EDC-64 rig was redeployed to drill the K-78
well.
The Company is currently working to mitigate potential supply
chain issues brought about by the conflict in Ukraine and COVID-19
lockdowns in China by engaging alternative materials suppliers and
advancing materials orders. To date, TransGlobe's operations have
not been impacted by any material supply shortages.
Production
Production averaged 10,038 bbls/d during the quarter, an
increase of 3% (267 bbls/d) from the previous quarter. The increase
was primarily due to well optimizations in Egypt.
Production in April 2022 averaged 9,967 bbls/d.
Sales
The Company sold o ne cargo lifting of 459.6 Mbbls of
entitlement crude oil during the quarter.
Quarterly Eastern Desert Production (bbls/d) 2022 2021
-------------------------------------------------- -------
Q-1 Q-4 Q-3 Q-2
-------------------------------------------------- ------- ----- ------ ------
Gross production rate(1) 10,038 9,771 10,653 9,917
TransGlobe production sold (inventoried) (482) - 1,525 3,465
--------------------------------------------------- ------ ----- ------ ------
Total sales 9,556 9,771 12,178 13,382
--------------------------------------------------- ------ ----- ------ ------
Government share (royalties and tax) 4,440 5,549 6,050 5,229
TransGlobe sales (after royalties and tax)(2) 5,116 4,222 6,128 8,153
--------------------------------------------------- ------ ----- ------ ------
Total sales 9,556 9,771 12,178 13,382
--------------------------------------------------- ------ ----- ------ ------
(1) Quarterly production by concession (bbls/d):
Eastern Desert - 10,038 (Q1-2022)
West Gharib - 2,648 (Q4- 2021), 2,932 (Q3- 2021), and 3,024
(Q2-2021)
West Bakr - 6,804 (Q4- 2021), 7,257 (Q3-2021), and 6,327
(Q2-2021)
North West Gharib - 319 (Q4- 2021), 464 (Q3-2021), and 566
(Q2-2021)
(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
Following the cessation of natural flow of SGZ-6X well at South
Ghazalat in December 2021 due to low reservoir pressure, a rigless
artificial lift system was successfully deployed to restore
production. On artificial lift, the lower Bahariya reservoir at
SGZ-6X is currently producing at 130 bbls/d of light crude oil with
an 82.5% watercut (field estimate).
Production
Production averaged 52 bbls/d during the quarter, a decrease of
82% (242 bbls/d) from the previous quarter. The decrease was
primarily due to higher water cuts than anticipated and natural
declines.
Production in April 2022 averaged 76 bbls/d.
Sales
The Company sold 1,783 bbls of inventoried entitlement crude oil
to EGPC during the quarter.
Quarterly Western Desert Production (bbls/d) 2022 2021
-------------------------------------------------- -----
Q-1 Q-4 Q-3 Q-2
-------------------------------------------------- ----- --- --- ---
Gross production rate 52 294 623 810
Total sales 52 294 623 810
--------------------------------------------------- ---- --- --- ---
Government share (royalties and tax) 32 183 388 504
TransGlobe sales (after royalties and tax)(1) 20 111 235 306
--------------------------------------------------- ---- --- --- ---
Total sales 52 294 623 810
--------------------------------------------------- ---- --- --- ---
(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
Two 100% working interest (one 2-mile, and one 1-mile)
horizontal Cardium wells were drilled in the South Harmattan area.
Subsequent to the end of the first quarter, two additional 2-mile
horizontal wells were drilled and cased. The wells are expected to
be completed in June and July.
Production
In Canada, production averaged 2,356 boe/d during the quarter, a
decrease of 342 boe/d (13%) from the previous quarter and slightly
below full year 2022 guidance of 2,400 to 2,600 boe/d. The decrease
in production from the previous quarter is primarily due to the
fall-off in initial flush production from the horizontal wells
brought on stream in Q4-2021 and the planned shut-in of the highly
productive 15-11 horizontal well during drilling operations on the
15-11 surface location.
Production in April 2022 averaged 1,537 boe/d with 505 bbls/d of
oil. The decrease from Q1-2022 is due to the start of a planned
turnaround at a third-party processing facility, which is also
expected to impact May reported production.
Quarterly Canada Production 2022 2021
------------------------------- ------
Q-1 Q-4 Q-3 Q-2
------------------------------- ------ ----- ----- -----
Canada crude oil (bbls/d) 821 1,176 601 687
Canada NGLs (bbls/d) 768 716 677 857
Canada natural gas (Mcf/d) 4,598 4,832 4,734 4,834
-------------------------------- ----- ----- ----- -----
Total production (boe/d) 2,356 2,698 2,066 2,350
-------------------------------- ----- ----- ----- -----
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 March 31
2022 2021
---------------------------------------------------- -------------- ------------
REVENUE
Petroleum and natural gas sales, net of royalties 52,954 18,052
------------------------------------------------------- ------------- ------------
EXPENSES
Production and operating 13,279 9,449
Selling costs 483 34
General and administrative 6,865 5,037
Foreign exchange (gain) loss (8) 33
Finance costs 554 467
Depletion, depreciation and amortization 6,870 4,815
Asset retirement obligation accretion 73 66
Gain on concession merger (7,953) -
Loss on financial instruments 1,406 4,515
Impairment reversal (25,983) -
------------------------------------------------------- ------------- ------------
(4,414) 24,416
---------------------------------------------------- ------------- ------------
Earnings (loss) before income taxes 57,368 (6,364)
Income tax expense - current 8,558 4,660
----------------------------------------------------- ------------- ------------
NET EARNINGS (LOSS) 48,810 (11,024)
----------------------------------------------------- ------------- ------------
OTHER COMPREHENSIVE INCOME (LOSS)
Currency translation adjustments 732 394
------------------------------------------------------- ------------- ------------
COMPREHENSIVE INCOME (LOSS) 49,542 (10,630)
----------------------------------------------------- ------------- ------------
Net earnings (loss) per share
Basic 0.67 (0.15)
Diluted 0.66 (0.15)
------------------------------------------------------- ------------- ------------
Condensed Consolidated Interim Balance Sheets
(Unaudited - Expressed in thousands of U.S. Dollars)
As at As at
March 31, 2022 December 31, 2021
--------------------------------------------- --------------- -----------------
ASSETS
Current
Cash 37,245 37,929
Accounts receivable 74,675 12,217
Prepaids and other 4,503 4,024
Product inventory 726 -
------------------------------------------------ -------------- -----------------
117,149 54,170
Non-Current
Intangible exploration and evaluation assets 2,697 2,673
Property and equipment
Petroleum and natural gas assets 201,304 173,804
Other 2,513 2,202
Deferred taxes - 6,246
------------------------------------------------ -------------- -----------------
323,663 239,095
---------------------------------------------- -------------- -----------------
LIABILITIES
Current
Accounts payable and accrued liabilities 41,558 26,112
Share-based compensation liabilities 3,645 6,174
Modernization payment liabilities 9,374 -
Derivative commodity contracts 1,472 88
Lease obligations 686 764
------------------------------------------------ -------------- -----------------
56,735 33,138
Non-Current
Long-term debt 3,144 3,040
Asset retirement obligations 12,842 14,102
Share-based compensation liabilities 6,553 3,959
Modernization payment liabilities 24,152 -
Lease obligations 39 36
Deferred taxes - 6,246
------------------------------------------------ -------------- -----------------
103,465 60,521
---------------------------------------------- -------------- -----------------
SHAREHOLDERS' EQUITY
Share capital 153,118 153,021
Accumulated other comprehensive income 2,570 1,838
Contributed surplus 24,201 24,896
Retained earnings (deficit) 40,309 (1,181)
------------------------------------------------ -------------- -----------------
220,198 178,574
---------------------------------------------- -------------- -----------------
323,663 239,095
---------------------------------------------- -------------- -----------------
Condensed Consolidated Interim Statements of Changes in
Shareholders' Equity
(Unaudited - Expressed in thousands of U.S. Dollars)
Three Months Ended March 31
2022 2021
--------------------------------------------------------- -------------- ------------
Share Capital
Balance, beginning of period 153,021 152,805
Stock options exercised (664) -
Transfer from contributed surplus on exercise of options 761 -
------------------------------------------------------------ ------------- ------------
Balance, end of period 153,118 152,805
------------------------------------------------------------ ------------- ------------
Accumulated Other Comprehensive Income
Balance, beginning of period 1,838 1,900
Currency translation adjustment 732 394
------------------------------------------------------------ ------------- ------------
Balance, end of period 2,570 2,294
------------------------------------------------------------ ------------- ------------
Contributed Surplus
Balance, beginning of period 24,896 25,109
Share-based compensation expense 66 99
Transfer to share capital on exercise of options (761) -
------------------------------------------------------------ ------------- ------------
Balance, end of period 24,201 25,208
------------------------------------------------------------ ------------- ------------
Retained Earnings (Deficit)
Balance, beginning of period (1,181) (41,519)
Net earnings (loss) 48,810 (11,024)
Dividends (7,320) -
------------------------------------------------------------ ------------- ------------
Balance, end of period 40,309 (52,543)
------------------------------------------------------------ ------------- ------------
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited - Expressed in thousands of US Dollars)
Three Months Ended March 31
2022 2021
---------------------------------------------------------- -------------- ------------
OPERATING
Net earnings (loss) 48,810 (11,024)
Adjustments for:
Depletion, depreciation and amortization 6,870 4,815
Asset retirement obligation accretion 73 66
Impairment reversal (25,983) -
Share-based compensation 3,430 2,771
Finance costs 554 470
Unrealized loss on financial instruments 1,356 2,970
Unrealized loss on foreign currency translation 73 4
Gain on concession merger (7,953) -
Asset retirement obligations settled (99) 9
Changes in working capital (50,913) (4,021)
----------------------------------------------------------- ------------- ------------
Net cash used in operating activities (23,782) (3,940)
------------------------------------------------------------ ------------- ------------
INVESTING
Additions to intangible exploration and evaluation assets (24) (563)
Additions to petroleum and natural gas assets (8,631) (2,330)
Additions to other assets (194) (14)
Changes in working capital 30 1,825
----------------------------------------------------------- ------------- ------------
Net cash used in investing activities (8,819) (1,082)
------------------------------------------------------------ ------------- ------------
FINANCING
Issue of common shares (664) -
Interest paid (36) (293)
Increase in long-term debt 55 79
Payments on lease obligations (489) (592)
Increase in modernization payment liabilities 59,027 -
Payments on modernization payment liabilities (26,000) -
Changes in working capital 32 (1)
----------------------------------------------------------- ------------- ------------
Net cash generated by (used in) financing activities 31,925 (807)
------------------------------------------------------------ ------------- ------------
Currency translation differences relating to cash (8) (12)
------------------------------------------------------------ ------------- ------------
NET DECREASE IN CASH (684) (5,841)
CASH, BEGINNING OF PERIOD 37,929 34,510
------------------------------------------------------------ ------------- ------------
CASH, OF PERIOD 37,245 28,669
------------------------------------------------------------ ------------- ------------
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 estimated 2022 capital spending
in Egypt and Canada, including the capital spending to be allocated
to each well; the Company's anticipated 2022 capital budget; the
Company's anticipated 2022 production, including the allocation of
such production between development and exploration wells and other
spending; the Company's anticipated
exit production rates; the Company's expectations that it will
increase investments and growth in Egypt and Canada; the Company's
, strategy and focus in 2022, including the drilling of wells and
growing production; the Company's plans to maximize free cash flow,
to increase the Company's production base and return to shareholder
distributions; the number of and location of wells to be drilled by
the Company in 2022 and the anticipated timing thereof; the focus
of the Egypt 2022 capital program; the ability of the Company's
long-lead capital items to provide continuity into 2023; and other
matters.
Forward-looking information and statements contained in this
news release include the payment of dividends, including the timing
and amount thereof, and the Company's intention to declare and pay
dividends in the future under its current dividend policy. Without
limitation of the foregoing, future dividend payments, if any, and
the level thereof is uncertain, as the Company's dividend policy
and the funds available for the payment of dividends from time to
time will be dependent upon, among other things, free cash flow,
financial requirements for the Company's operations and the
execution of its strategy, ongoing production maintenance, growth
through acquisitions, fluctuations in working capital and the
timing and amount of capital expenditures and anticipated business
development capital, payment irregularity in Egypt, debt service
requirements and other factors beyond the Company's control.
Further, the ability of the Company to pay dividends will be
subject to applicable laws (including the satisfaction of the
liquidity and solvency tests contained in applicable corporate
legislation) and contractual restrictions contained in the
instruments governing its indebtedness.
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; the Company's estimated 2022
capital spending and production will be as anticipated and
allocated in the manner described herein 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; the Company's 2022 production in Egypt
and Canada will be less than anticipated; the Company's exit
production rates will be less than anticipated; the Company will
not increase investments and growth in Egypt and Canada; the
Company will successfully drill less than the number of wells that
it anticipates; the Company will be unable to maximize free cash
flow and increase the Company's production base; the Company does
not pay dividends in the future; the amount and allocation of 2022
capital spending disclosed herein will be different than
anticipated; the Company's drilling plans and the anticipated
timing thereof will be different than as disclosed herein; the
Company's long-lead capital items will not provide continuity into
2023; the netback generated by the Company's Eastern Desert acreage
will be less than anticipated; the netback generated in Canada is
less than anticipated; 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.
This news release contains a number of oil and gas metrics which
do not have standardized meanings or standard methods of
calculation and therefore such measures may not be comparable to
similar measures used by other companies and should not be used to
make comparisons. Such metrics have been included herein to provide
readers with additional measures to evaluate TransGlobe's operating
results; however, such measures are not reliable indicators of the
future performance of TransGlobe and future performance may not
compare to the performance in previous periods and therefore such
metrics should not be unduly relied upon. Management of TransGlobe
uses these oil and gas metrics for its own performance measurements
and to provide securityholders with measures to compare
TransGlobe's operations over time. Readers are cautioned that the
information provided by these metrics, or that can be derived from
the metrics presented in this news release, should not be relied
upon for investment or other purposes.
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:
bbl barrels
bbls/d barrels per day
Mbbls/d thousand barrels per day
Mbbls thousand barrels
boe barrel of oil equivalent
boe/d barrels of oil equivalent per day
Mboe/d thousand 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
Financial Measures Advisories
TransGlobe's Condensed Consolidated Financial Statements and
notes thereto (the "financial statements") and Management's
Discussion and Analysis ("MD&A") as at and for the three months
ended March 31, 2022, are available on TransGlobe's website at
www.trans-globe.com and under the Company's SEDAR profile at
www.sedar.com. The disclosure under the section "Non-GAAP and Other
Financial Measures" in TransGlobe's MD&A as at and for the
three months ended March 31, 2022 is incorporated by reference into
this news release.
NON-GAAP AND OTHER FINANCIAL MEASURES
Throughout the MD&A and in other materials disclosed by the
Company, TransGlobe employs certain measures to analyze financial
performance, financial position, and cash flow. These non-GAAP and
other financial measures do not have any standardized meaning
prescribed under IFRS and therefore may not be comparable to
similar measures presented by other entities. The non-GAAP and
other financial measures should not be considered to be more
meaningful than GAAP measures which are determined in accordance
with IFRS, such as net earnings (loss), cash flow from operating
activities, and cash flow used in investing activities, as
indicators of the Company's performance.
Non-GAAP financial measures
Capital Expenditures
TransGlobe uses capital expenditures to measure its capital
investments compared to the Company's annual capital budgeted
expenditures. The Company's capital budget excludes the accounting
impact of any accrual changes. The most directly comparable measure
under IFRS is cash flow used in investing activities. The table
below details the composition of capital expenditures and its
reconciliation to cash flow used in investing activities.
Three Months Ended March 31
($000s) 2022 2021
--------------------------------------- --------------- --------------
Net cash used in investing activities (8,819) (1,082)
Changes in non-cash working capital (30) (1,825)
--------------------------------------- ------------- ------------
Capital expenditures (8,849) (2,907)
--------------------------------------- ------------- ------------
2022 2021 2020
--------- ---- ------------------------------------------ -----------------------------
($000s) Q-1 Q-4 Q-3 Q-2 Q-1 Q-4 Q-3 Q-2
--------- ---- --- --- --- --- --- --- ---
Net cash used
in investing
activities (8,819) (9,082) (5,982) (3,075) (1,082) (1,254) (2,320) (2,823)
Changes in
non-cash
working
capital (30) 388 (5,642) (522) (1,825) 1,000 1,883 1,594
---------------- ------ ------ --------- ------ ------ ------ ------ ------
Capital
expenditures (8,849) (8,694) (11,624) (3,597) (2,907) (254) (437) (1,229)
---------------- ------ ------ --------- ------ ------ ------ ------ ------
Funds flow from operations
TransGlobe uses funds flow from operations to measure the
Company's ability to generate the necessary funds to maintain
production at current levels, enable future growth through capital
investment and repay debt. Management believes that such a measure
provides an insightful assessment of TransGlobe's operations on a
continuing basis by eliminating certain non-cash charges. The most
directly comparable measure under IFRS is cash flow generated by
operating activities. The tables below details the composition of
funds flow from operations and its reconciliation to cash flow
generated by operating activities.
Three Months Ended March 31
($000s) 2022 2021
--------------------------------------- ---------------- -------------
Net cash used in operating activities (23,782) (3,940)
Changes in non-cash working capital 50,913 4,021
--------------------------------------- -------------- -----------
Funds flow from operations(1) 27,131 81
--------------------------------------- -------------- -----------
1 Funds flow from operations does not include interest costs.
Interest expense is included in financing costs on the Condensed
Consolidated Interim Statements of Earnings (Loss) and
Comprehensive Income (Loss). Cash interest paid is reported as a
financing activity on the Condensed Consolidated Interim Statements
of Cash Flows.
2022 2021 2020
--------- ---- ------------------------------------------ -----------------------------
($000s) Q-1 Q-4 Q-3 Q-2 Q-1 Q-4 Q-3 Q-2
--------- ---- --- --- --- --- --- --- ---
Net cash (used
in) generated
by operating
activities (23,782) (1,956) 27,026 23,832 (3,940) 14,180 (3,349) 24,551
Changes in
non-cash
working
capital 50,913 17,225 (14,645) (6,732) 4,021 (6,978) 3,672 (27,315)
----------------- ------- ------ ------- ------ ------ ------ ------ -------
Funds flow from
operations(1) 27,131 15,269 12,381 17,100 81 7,202 323 (2,764)
----------------- ------- ------ ------- ------ ------ ------ ------ -------
1 Funds flow from operations does not include interest costs.
Interest expense is included in financing costs on the Condensed
Consolidated Interim Statements of Earnings (Loss) and
Comprehensive Income (Loss). Cash interest paid is reported as a
financing activity on the Condensed Consolidated Interim Statements
of Cash Flows.
Netback
Netback is a measure of operating results and is computed as
petroleum and natural gas sales, net of royalties (all government
interests, net of income taxes), production and operating expenses,
current taxes and selling costs. The Company's netbacks include
sales and associated costs of production from inventoried crude oil
sold during the period. Royalties and taxes associated with
inventoried crude oil are recognized in the financial statements at
the time of production. As a result, netbacks fluctuate depending
on the timing of entitlement crude oil sales. Management believes
that netback is a useful supplemental measure to analyze operating
performance and provide an indication of the results generated by
the Company's principal business activities prior to the
consideration of other income and expenses. Netback does not have
any standardized meaning under IFRS and therefore may not be
comparable to similar measures used by other companies.
Refer to the "Netback" section of this MD&A which includes
the most directly comparable GAAP measure, petroleum and natural
gas sales.
Non-GAAP financial ratios
Netback per boe
TransGlobe calculates netback per boe as netback divided by
average daily production. Netback is a non-GAAP financial measure
component of netback per boe. Management believes that netback per
boe is a key industry performance measure of operational efficiency
and one that provides investors with information that is also
commonly presented by other crude oil and natural gas producers.
The Company's netback per boe is disclosed in the "Netback" section
within this MD&A.
Funds flow from operations per share
TransGlobe presents funds flow from operations per share by
dividing funds flow from operations by the Company's diluted or
basic weighted average common shares outstanding. Funds flow from
operations is a non-GAAP financial measure. Management believes
that funds flow per share provides investors an indicator of funds
generated from the business that could be allocated to each
shareholder's equity position.
Supplementary Financial Measures
"Average realized sales price" is comprised of total petroleum
and natural gas sales, divided by the Company's average daily
production volumes.
"DD&A expense per boe" is comprised of DD&A expense, as
determined in accordance with IFRS, divided by the Company's
average daily production volumes.
"G&A expense per boe" is comprised of G&A expense, as
determined in accordance with IFRS, divided by the Company's
average daily production volumes.
"Production and operating expenses per boe" is comprised of
production and operating expenses, as determined in accordance with
IFRS, divided by the Company's average daily production
volumes.
"Royalties and taxes as a percentage of revenue" is comprised of
royalties and current taxes, as determined in accordance with IFRS,
divided by the Company's petroleum and natural gas sales.
"Royalties and taxes per boe" is comprised of royalties and
current taxes, as determined in accordance with IFRS, divided by
the Company's average daily production volumes.
"Selling costs per bbl" is comprised of selling costs, as
determined in accordance with IFRS, divided by the Company's
average daily production volumes.
"Working capital" is a supplementary financial measure that is
comprised of current assets less current liabilities, as determined
in accordance with IFRS.
Production Disclosure
Production Summary (WI before royalties and taxes):
April Q1 - Q4 - Q3 - Q2 - Q1 -
- 22 22 21 21 21 21
------- ------- ------- ------- ------- -------
Egypt (bbls/d) 10,043 10,090 10,065 11,276 10,727 10,238
------- ------- ------- ------- ------- -------
Eastern Desert of Egypt
(bbls/d) 9,967 10,038 9,770 10,653 9,917 10,052
------- ------- ------- ------- ------- -------
Heavy Crude (bbls/d) 9,360 9,404 9,225 10,014 9,736 9,419
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 607 634 545 639 181 633
------- ------- ------- ------- ------- -------
Western Desert of Egypt
(bbls/d) 76 52 295 623 810 186
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 76 52 295 623 810 186
------- ------- ------- ------- ------- -------
Canada (boe/d) 1,537 2,356 2,698 2,066 2,350 1,983
------- ------- ------- ------- ------- -------
Light and Medium Crude
(bbls/d) 505 821 1,176 601 687 564
------- ------- ------- ------- ------- -------
Natural Gas (Mcf/d) 3,104 4,598 4,832 4,734 4,834 4,259
------- ------- ------- ------- ------- -------
Associated Natural Gas
Liquids (bbls/d) 514 768 716 677 857 710
------- ------- ------- ------- ------- -------
Total (boe/d) 11,580 12,446 12,763 13,342 13,077 12,221
------- ------- ------- ------- ------- -------
About TransGlobe
TransGlobe Energy Corporation is a cash flow-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)
John More
Toby Gibbs +44(0) 20 7408 4090
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
QRFGGGDUBDBDGDB
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May 11, 2022 02:02 ET (06:02 GMT)
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