TransGlobe Energy Corporation announces Operational Update

transglobeHighlights:
Company production for January 2017 averaged ~16,817 Boepd (~14,013 Bopd Egypt).
December 2016 average rate ~14,140 Boepd (13,074 Bopd Egypt).
Q4-2016 production averaged 12,882 Boepd (12,790 Bopd Egypt).
First oil production from North West Gharib (“NWG”) concession late December 2016.
NWG 3 on production ~1,000 Bopd flowing.
Drilled 3 wells since mid-quarter update (December 20, 2016) resulting in one oil discovery (NWG 26ST), one oil well (Arta 74) and one dry hole (SWG 2).

Production:
Total Company production averaged 16,817 Boepd in January, comprised of 14,013 Bopd in Egypt and 2,804 Boepd in Canada (60% oil and liquids).

In Egypt production averaged 14,013 Bopd in January with the addition of ~1,000 Bopd from NWG 3 in late December.

Production in Q4-2016 averaged 12,790 Bopd in line with guidance for the quarter. Monthly production averaged 12,248 in October, 13,058 Bopd in November and 13,074 Bopd in December, with a year-end final week exit rate above 13,800 Bopd.

The NWG development plan for the NWG 3, NWG 16 and NWG 38 area was approved on December 10th. The Company completed the NWG 3 early production facility (“EPF”) in mid-December. NWG 3 has been producing at a stabilized average flowing rate of ~1,000 Bopd since December 26th. The well was briefly shut in for a multi-rate flow test and build-up in mid-January to provide additional reservoir information. It is expected that NWG 3 will eventually require a downhole pump similar to wells in the East Arta and Arta pools to the South.

Production from the NWG EPF is trucked to the Company’s pipeline terminal at West Bakr K Station. The Company’s entitlement oil from NWG will be lifted and sold with the Company’s West Gharib and West Bakr entitlement oil as part of the Ras Gharib blend.

Marketing:
The Company arranged for the sale of ~350,000 barrels of production in Q1-2017 in equal monthly allotments. Proceeds for sales in Q1 are expected to be in the range of ~$15 to $17 million depending on Dated Brent and Ras Gharib pricing. In addition, the Company finalized a 2017 lifting schedule with EGPC for three cargos which are scheduled for Q2 (June), Q3 and Q4-2017. The Company is in advanced discussions to finalize a long term marketing arrangement with an international crude oil marketing firm. A typical Ras Gharib cargo lifting is 500-540 Mbbls. At year-end 2016, the Company had an estimated 1.25 million entitlement barrels in inventory.

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2016/17 Drilling Program Eastern Desert:
Subsequent to the mid-Q4 press release (December 20, 2016) the Company drilled an additional three wells resulting in one oil discovery (NWG 26 ST), one development oil well (Arta 74) and one dry hole (SWG 2). Currently one rig is drilling an exploration well at SWG 4 targeting a pre-rift prospect and a second drilling rig is drilling NWG 28 targeting a Miocene prospect south of the West Bakr K field.

Arta 74 was drilled to a total depth of 4,167 feet and encountered 105 feet of gross reservoir with 56 feet net oil pay in the Arta Red Bed pool based on internal estimates. The well is scheduled for completion and initial production in February.

NWG 26 ST (side-track) was drilled to a total depth of 4,105 feet targeting a potential Red Bed discovery at NWG 26 which had been abandoned due to hole conditions. The NWG 26ST well encountered approximately 155 feet of gross Red Bed conglomerates with 36 feet of net oil pay based on internal estimates. It is expected that the tighter conglomerate encountered in NWG 26 ST will require a fracture stimulation, similar to the Red Bed conglomerates in the West Gharib concession.

SWG 2 was drilled to a total depth of 7,340 feet targeting Pre-rift Matulla/Raha/Nubia clastic structures. The well encountered minor hydrocarbon shows while drilling however reservoir sands were wet. The well was plugged and abandoned.

In addition, the Company has received access approvals on 28 appraisal and exploration wells in NWG focused on the Red Bed discoveries at NWG 27 NWG 38, NWG 26 ST and additional untested exploration prospects located immediately adjacent to the NWG 3/38 development lease.

Western Desert Activities:
At South Alamein, the Company is finalizing an initial drilling program targeting the Boraq area of the concession. The initial drilling campaign will consist of one well on the Boraq structural complex plus re-entering the Boraq 2 discovery well for additional testing. The Company completed mine/ordinance clearance and is finalizing contracts for the 2017 campaign. Successful appraisal wells could lead to filing a Boraq development plan as early as Q2/Q3-2017 with first production targeted to year-end 2017/early 2018. In parallel, the Company will evaluate the remaining exploration prospects on the concession, targeting an exploration drilling program commencing in late 2017 and extending into 2018. The South Alamein Concession was acquired in July 2012 and contains the Boraq 2X discovery (see May 1, 2012 press release for more details) and several additional exploration targets. The Boraq 2X discovery tested approximately 1,600 Bopd from two zones. The primary Cretaceous zone tested at a rate of 800 to 1,323 Bopd of 34 API oil with no water and a 13% pressure drawdown during a 28 hour drill stem test (DST). A secondary Cretaceous zone tested at a rate of 274 Bopd of 32-35 API oil and 4% water during a 23 hour DST. Test rates are not necessarily indicative of long-term performance or ultimate recovery but it is anticipated that the well should be capable of producing approximately 1,600 Bopd.

At Northwest Sitra, the Company mobilized crews to commence a 600 km2 3-D seismic acquisition program. Mine clearance is complete and surveying is underway. It is expected that field acquisition will be completed by April/May.

(TransGlobe Energy Corporation Press Release)

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