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TRANSGLOBE ENERGY CORPORATION ANNOUNCES THIRD QUARTER 2021 FINANCIAL AND OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

 

AIM & TSX:  "TGL" & NASDAQ:  "TGA"

 

Calgary, Alberta, November 3, 2021 - TransGlobe Energy Corporation ("TransGlobe" or the "Company") is pleased to announce its financial and operating results for the three and nine months ended September 30, 2021. 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 and nine months ended September 30, 2021 and 2020, are available on TransGlobe's website at www.trans-globe.com.

FINANCIAL HIGHLIGHTS:

§  Third quarter sales averaged 14,868 boe/d including 307.5 Mbbls sold to EGPC for net proceeds of $20.9 million and one cargo lifting of 499.6 Mbbls of entitlement crude oil for net proceeds of $33.3 million (collected in August 2021). The overlift portion of the cargo (~221.7 Mbbls) will be settled through future entitlement crude oil production at West Gharib;

§  Average realized price for Q3-2021 sales of $60.85/boe; Q3-2021 average realized price on Egyptian sales of $64.73/bbl and Canadian sales of $36.82/boe;

§  Funds flow from operations of $12.4 million ($0.17 per share) in the quarter;

§  Third quarter net earnings of $37.1 million ($0.51 per share), inclusive of a $31.5 million non-cash impairment reversal and a $1.3 million unrealized gain on derivative commodity contracts;

§  Ended the third quarter with positive working capital of $17.7 million, including cash of $54.0 million;

OPERATIONAL HIGHLIGHTS:

§  Third quarter production averaged 13,342 boe/d (Egypt 11,276 bbls/d, Canada 2,066 boe/d), an increase of 265 boe/d (2%) from the previous quarter, primarily due to well optimization activities and new drilling in Egypt, partially offset by natural declines while awaiting the production start from new drilling in Canada;

§  Production in October averaged ~13,882 boe/d (Egypt ~10,964 bbls/d, Canada ~2,918 boe/d), an increase of 4% from Q3-2021;

§  Ended the quarter with nil entitlement crude oil inventory, a decrease of 140.3 Mbbls from Q2-2021. This decrease is due to an increase in sales volumes as a result of the Q3-2021 cargo lifting, partially offset by a slight increase in production;

§  Drilled two development oil wells at West Bakr in the Eastern Desert, Egypt, both successfully encountering oil-bearing sands and placed on production. A third development oil well was spud at West Bakr subsequent to the quarter; 

§  Drilled one well at North West Gharib in the Eastern Desert, Egypt;

§  Drilled an oil exploration well on the SGZ-7B prospect at South Ghazalat in the Western Desert, Egypt subsequent to the quarter;

§  Drilled, completed, and equipped the one 2-mile and two 1-mile horizontal wells in the northern area of the Company's Cardium reservoir extension in South Harmattan;

§  Brought the 2-mile well in South Harmattan on production;

CORPORATE HIGHLIGHTS:

§  Amounts outstanding under the Mercuria prepayment agreement were repaid in full during the quarter. On September 27, 2021 the prepayment agreement was amended to $10 million (undrawn) and extended to December 31, 2021 to coincide with the expiry of the Company's remaining Brent crude oil hedges of 150 Mbbls; and

§  The Company announced a merged concession agreement with a 15-year primary term and improved Company economics on December 3, 2020. The agreement is currently awaiting ratification by the Egyptian Parliament but will have a February 2020 effective date upon ratification. As such, the results achieved in Q3-2021 and year to-date are exclusive of any effective date adjustments that will be made upon ratification.

FINANCIAL AND OPERATING RESULTS

(US$000s, except per share, price, volume amounts and % change)

	Three Months Ended September 30									Nine Months Ended September 30
Financial	2021			2020			% Change			2021			2020			% Change
Petroleum and natural gas sales2		83,234			33,046			152			210,528			137,782			53
Petroleum and natural gas sales, net of royalties2		42,316			16,740			153			110,963			81,366			36
Realized derivative (loss) gain on commodity contracts		(2,188	)		662			(431	)		(7,379	)		6,807			(208	)
Unrealized derivative gain (loss) on commodity contracts		1,327			(267	)		(597	)		(2,891	)		761			(480	)
Production and operating expense		16,741			11,473			46			45,912			45,136			2
Overlift		15,551			-			100			15,551			-			100
Selling costs		2,161			54			3,902			3,866			1,103			250
General and administrative expense		4,230			2,542			66			12,937			8,397			54
Depletion, depreciation and amortization expense		6,592			5,493			20			18,366			23,402			(22	)
Income tax expense		6,096			3,092			97			16,361			10,122			62
Cash flow generated by (used in) operating activities		27,026			(3,349	)		(907	)		46,918			17,529			168
Funds flow from operations1		12,381			323			3,733			29,562			23,241			27
Basic per share		0.17			0.00						0.41			0.32
Diluted per share		0.17			0.00						0.41			0.32
Net earnings (loss)		37,080			(5,957	)		(722	)		33,778			(74,542	)		(145	)
Basic per share		0.51			(0.08	)					0.47			(1.03	)
Diluted per share		0.51			(0.08	)					0.46			(1.03	)
Capital expenditures		11,624			437			2,560			18,128			7,243			150
Working capital		17,667			12,708			39			17,667			12,708			39
Long-term debt, including current portion		6,882			25,946			(73	)		6,882			25,946			(73	)
Common shares outstanding
Basic (weighted average)		72,542			72,542			-			72,542			72,542			-
Diluted (weighted average)		72,980			72,542			1			72,983			72,542			1
Total assets		267,263			205,583			30			267,263			205,583			30
Operating
Average production volumes (boe/d)		13,342			12,044			11			12,884			13,774			(6	)
Average sales volumes (boe/d)2		14,868			10,680			39			13,719			15,344			(11	)
Inventory (Mbbls)		-			534.2			(100	)		-			534.2			(100	)
Average realized sales price ($/boe)2		60.85			33.63			81			56.21			32.77			72
Production and operating expenses ($/boe)2		12.24			11.68			5			12.26			10.74			14

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".

²    Excludes the impact of the Q3-2021 overlift of $15.6 million (221.7 Mbbls).

 

 

		2021												2020
Average reference prices and exchange rates		Q-3				Q-2				Q-1				Q-4				Q-3
Crude oil
Dated Brent average oil price ($/bbl)			73.47				68.83				60.82				44.29				42.96
Edmonton Sweet index ($/bbl)			66.61				63.01				52.54				38.50				37.35
Natural gas
AECO ($/MMBtu)			2.97				2.48				2.30				2.18				1.69
US/Canadian Dollar average exchange rate			1.26				1.23				1.27				1.30				1.33

 

CORPORATE SUMMARY

TransGlobe Energy Corporation ("TransGlobe" or the "Company") produced an average of 13,342 barrels of oil equivalent per day ("boe/d") during the third quarter of 2021. Egypt production was 11,276 barrels of oil per day ("bbls/d") and Canada production was 2,066 boe/d. Production for the quarter was slightly above full year 2021 guidance of 12,000 to 13,000 boe/d and 2% higher than the previous quarter. The increase was primarily due to well optimization activities and new drilling in Egypt, partially offset by natural declines while awaiting the production start from new drilling in Canada.

TransGlobe's Egyptian crude oil is sold at a quality discount to Dated Brent. The Company received an average price of $64.73 per barrel in Egypt during the quarter. In Canada, the Company received an average of $65.43 per barrel of oil, $35.40 per barrel of NGLs and $2.71 per thousand cubic feet ("Mcf") of natural gas during the quarter.

During Q3-2021, the Company had funds flow from operations of $12.4 million and ended the quarter with positive working capital of $17.7 million, including cash of $54.0 million. The Company had net earnings in the quarter of $37.1 million, inclusive of a $1.3 million unrealized derivative gain on commodity contracts which represents a fair value adjustment on the Company's hedging contracts at September 30, 2021. Net income was also inclusive of a non-cash impairment reversal of $31.5 million on the Company's petroleum and natural gas ("PNG") assets that was recognized due to the sustained increase and stabilization in forecasted commodity prices in 2021.

The Mercuria prepayment agreement was fully repaid during the quarter with the final $10.0 million being paid in August 2021. On September 27, 2021 the prepayment agreement was amended to $10.0 million (undrawn) and extended to December 31, 2021 to coincide with the expiry of the Company's remaining Brent crude oil hedges of 150 thousand barrels ("Mbbls").

In Egypt, the Company sold 307.5 Mbbls of entitlement crude oil to the Egyptian General Petroleum Company ("EGPC") and sold one cargo lifting of 499.6 Mbbls of entitlement crude oil to third-party buyers during the quarter. The cargo resulted in an overlift of 221.7 Mbbls by TransGlobe. The overlift will be settled as the Company delivers the equivalent future entitlement production from West Gharib to EGPC. All Canadian production was sold during the quarter.

As announced on December 3, 2020, the Company has reached an agreement with EGPC to merge its three existing Eastern Desert concessions with a 15-year primary term and improved Company economics. As previously announced, the Company is now expecting ratification to occur in Q4-2021. The February 1, 2020 effective date for the improved concession terms is supportive of increased investment in advance of ratification.

In Egypt, the Company drilled two development oil wells in the Eastern Desert at West Bakr. The K-62 development well was drilled to a total depth of 1,473 meters, and encountered oil-bearing sands in the Asl-A formation. The second well in West Bakr, K-65, was drilled to a total depth of 1,730 meters, and encountered oil-bearing sands in the Asl-A, Asl-B, Asl-C, Asl-D and Asl-E formations. The Company drilled one additional well in the Eastern Desert at North West Gharib, NWG-3B-2, to a total depth of 1,627 meters to assess Red Bed potential in the northern area of TransGlobe's development leases. The well encountered Red Bed sands which were wet. The results are under evaluation to identify any up-dip sidetrack potential.

 

In Canada, the Company successfully drilled, completed, and equipped one 2-mile and two 1-mile horizontal wells in the northern area of the Cardium reservoir extension at South Harmattan, first identified by the 2-20 well in 2019. The 2-mile well was brought on production at the end of Q3-2021, while the other two wells were brought on production in October. All three wells initially flowed without the assistance of pumps. As of month end, two of the wells ceased flowing naturally, as anticipated, and are now equipped with pumps. The third well continues to flow naturally and will be equipped with a pump when the unassisted flow ceases. Initial production rates (IP30 and IP60) will be made available once sufficient data has been acquired.