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TransGlobe Energy Announces Operations Update

Source: www.gulfoilandgas.com 12/20/2017, Location: Africa

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TransGlobe Energy Corporation (TransGlobe) (TGL) announces an operational update. All dollar values are expressed in US dollars unless otherwise stated.

Highlights
- Annual 2017 average production is trending to ~15.4 MBoepd, a 27% increase over 2016
- Lifted and sold ~510 thousand barrels of entitlement crude oil in Egypt in late November for estimated net proceeds of approximately $24.5 mm (inclusive of realized hedging loss and marketing costs).
- Three Cardium Hz wells in Canada placed on production during October, averaging ~196 Boepd/well (85% oil & liquids) during first 30 days of continuous production.
- Drilled and cased NWG 38A2 appraisal Red Bed oil well in November.

Production
Corporate production is expected to average ~15.4 MBoepd for 2017 (12.8 Mbopd from Egypt and 2.6 MBoepd from Canada) representing an increase of ~3.3 MBoepd or 27% over 2016 production of 12.1 MBoepd. Corporate production in 2017 was 93% weighted to oil and liquids (7% weighted to natural gas in Canada) providing excellent torque to strengthening oil prices.

In Egypt, production was impacted by the release of the workover rig in early August due to escalating safety and performance issues. A replacement rig was contracted and mobilized in late September and a second workover rig was operational December 1st. The reduction of the backlog of well workovers is anticipated in early 2018 with two workover rigs in operation.

In Canada, the company equipped and tied in the three new Cardium horizontal wells during October. It is early days, but using the first 30 calendar days of stabilized production, the new wells averaged 589 Boepd (509 Bpd of oil and liquids) or 196 Boepd/well. In aggregate the wells have exceeded TransGlobe’s internal IP30 estimate of 184 boepd. Two of the wells had IP30 rates of 259 boepd and 209 boepd respectively with the third well having an IP30 rate of 120 boepd. The poorer performing well experienced pressure communication with an offset well during completions and subsequently only 85% of the planned frac sand tonnage was placed in formation. All three wells have significant fluid levels, so it may take several months of production to drawdown the wells sufficiently to evaluate the wells performance from the respective horizontal sections. Early production generally comes from the heel of the well, where the pressure drawdown is the greatest. These early results are very encouraging. The Company is therefore planning for an expanded Cardium drilling campaign for 2018.

Marketing
In Egypt, the Company lifted and sold ~510,000 barrels of entitlement oil in November for net proceeds of ~$24.5 million (inclusive of realized hedging loss and marketing costs). Based on estimated sales and production for Q4, it is expected that the Company will exit 2017 with approximately 800 thousand barrels of inventoried entitlement crude oil, representing a 35% reduction from December 2016.

Operations Update
Arab Republic of Egypt
Subsequent to the third quarter press release (November 9, 2017), the Company drilled NWG 38A2 which was cased as a Red Bed oil well in the NWG 38 pool. The NWG 38 A2 appraisal well was drilled to a total depth of 5,315 feet and encountered approximately 112 feet of Red Bed formation with an estimated 17 feet of net oil pay based on open-hole logs and MDT samples. The well is scheduled for completion in early 2018 and will be tied into the NWG early production facility (“EPF”).

NWG 38 A2 is located approximately 0.4 km west of the NWG 38 A discovery well and intersected the NWG 38 red bed pool in a structurally lower position (~43 feet lower) increasing the known “oil down to” for the 38A pool, which is currently producing ~700 Bopd from two wells. Based on NWG 38A2 pressure data, the company has initiated permitting to drill a structurally down dip injector and commence a pressure maintenance scheme (water flood) in the first half of 2018 to increase recoveries similar to the Arta Red Bed pool in the adjacent West Gharib Concession. The drilling rig is stacked on site pending approval of additional drilling locations in the Eastern Desert concessions in early 2018. The Company is currently finalizing the 2018 work plan and budget which will be announced in January.

TGS-NOPEC Geophysical Company (TGS) and Schlumberger announced a new 2D seismic project offshore Egypt.

The project will comprise acquisition of a 10,000 km 2D long-offset broadband multi-client seismic survey. Advanced new acquisition and imaging techniques will provide better illumination of complex subsalt structures. The project will integrate all legacy seismic and non-seismic data. Acquisition will commence mid-December and is expected to complete in late Q1 2018.

This project is part of an agreement entered with South Valley Egyptian Petroleum Holding Company (GANOPE) in which Schlumberger and TGS have a minimum 15-year period of exclusive multi-client rights in a ~70,000 km2 open area offshore the Egyptian Red Sea.

"The unexplored offshore Egyptian Red Sea area is made up of large, untested structures and well-established hydrocarbon systems, which offer exceptional growth opportunities for oil companies. New imaging technologies are required to improve subsurface understanding and increase exploration success rates. The upcoming new multi-client 2D seismic acquisition program is the initial step in mitigating the complex salt imaging challenges of this unique opportunity," said Kristian Johansen, CEO, TGS.

Maurice Nessim, president, WesternGeco, Schlumberger, added: "Our comprehensive geological understanding, innovative seismic imaging techniques and full integration of non-seismic methods will define new exploration trends in these prospective basins. The Schlumberger unique play-to-prospect integrated subsurface evaluation capabilities will enable customers to develop new prospectivity insight and accelerate their exploration decisions in this structurally complex area. Our program will have significant impact on the exploration potential for the entire Red Sea (600,000 km2 across 5 countries). Our collaborative approach will help customers to identify high potential play segments, assess exploration risks and accelerate hydrocarbon maturation cycles."

GANOPE is responsible for managing the hydrocarbon resource potential at South Valley. This project is supported by industry funding.

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