TransGlobe Energy announces its 2020 capital budget, 2019 year-end reserves
TransGlobe Energy has announced its 2020 capital budget, 2020 production guidance, and 2019 year-end reserves. All dollar values are expressed in US dollars unless otherwise stated.
2020 BUDGET HIGHLIGHTS
- TransGlobe has set its 2020 capital budget at $37.1 MM (before capitalized G&A);
- Egypt $23.7 MM
- Canada $13.4 MM
- 2020 average production guidance is set at 14.5 to 15.5 Mboepd with a midpoint of 15.0 Mboepd;
- The Company is taking a cautious approach to guidance with a significant portion of investment scheduled for the second half of the year following 2019 where production increases exceeded expectations
- Egypt 11.9 – 12.7 Mbopd
- Canada 2.6 – 2.8 Mboepd
- The 2020 drilling program includes 16 Egypt wells (12 development and 4 exploration) and 4 Canadian horizontal Cardium wells (4 development) at South Harmattan.
- Production averaged 15.3 MBoepd in December 2019 and 16.0 Mboepd for the year ended 2019 versus the most recently updated 2019 guidance of 15.5 to 16.0 MBoepd provided on October 30, 2019;
- South Ghazalat-6X’s upper Bahariya reservoir was brought on stream on December 24, 2019 at a field estimated initial rate of 800 – 1,000 Bopd light and medium crude, as planned. However, the well rate has been restricted to a field estimated 250 – 350 Bopd light and medium crude to evaluate the well, manage the reservoir and optimize the separation of oil, gas and water;
- The SHAMS-2 rig, contracted in Egypt to drill HW-2A (Eastern Desert appraisal well to HW-2X) followed by SGZ-6A (Western Desert appraisal well on upper and lower Bahariya to SGZ-6X), has mobilized to location at HW-2A and is undergoing inspection prior to the commencement of drilling;
- NWG-38D-1 has been stimulated and is cleaning up;
- Negotiations continue with the Egyptian government to amend, extend and consolidate the Company’s Eastern Desert concession agreements;
- In Canada, as previously announced, the 2-mile well in South Harmattan has achieved a calculated IP30 estimated at 417 Boepd and a calculated estimated IP60 is 341 Boepd both calculated on a productive day basis. Although the production history is relatively short and not necessarily indicative of long-term performance or ultimate recovery, due to the nature and extent of the undeveloped area targeted by the well, the Company is very encouraged about the resource potential of the 18.5 undeveloped 100% working interest sections of land that it holds in the South Harmattan area.
2019 RESERVES SUMMARY
- Total gross proved reserves (“1P”) of 25.4 MMboe decreased 1.5 MMboe or 5% from year-end 2018 (YE 2018: 26.9 MMboe) primarily due to annual production of ~5.8 MMboe, that was substantially offset by ~2.8 MMboe of positive net revisions and ~2.0 MMboe of drilling additions.
- Total gross proved plus probable reserves (“2P”) of 45.3 MMboe increased ~1.2 MMboe or 3% from year-end 2018 (YE 2018: 44.1 MMboe) resulting primarily from ~4.4 MMboe of positive net revisions and ~3.4 MMboe of drilling additions offset by ~5.8 MMboe of annual production.
- 2P reserves were comprised of 59% Egypt (medium/heavy oil) and 41% Canada (14% conventional natural gas, 13% natural gas liquids and 14% light crude oil).
- Replaced 82% and 135% of 2019 production (~5.8 MMboe) on a respective 1P and 2P gross reserves basis (excluding economic factors).
- Total proved plus probable plus possible (“3P”) gross reserves of 63.3 MMboe (YE 2018: 61.8 MMboe) representing a 1.5 MMboe or 2% increase.
- 2P drilling additions of 3.4 MMbbl resulted from the successful extension of H field with the HW-2X well, infill drilling at K field with K-63 and the conversion of undeveloped reserves at Northwest Gharib and M and H fields.
- Positive 2P technical revisions of 3.8 MMbbl occurred at West Bakr due to better performance resulting from production optimization projects. Optimization projects also resulted in positive technical revisions of 0.6 MMbbl at West Gharib and other concessions revisions were essentially neutral.
- 2P drilling additions of 2.0 MMboe resulted from the extension at Harmattan with the successful drilling of the 2-mile horizontal outpost well in South Harmattan.
- Minor 2P negative technical revisions of 0.2 MMboe resulted from reduced Wabamun gas locations and performance. 2P Economic factors yielded a negative revision of 0.8 MMboe due to lower commodity price forecasts, primarily from natural gas.
- Net present value of future net revenues of $288 MM after tax (2P reserves discounted at 10%, forecast pricing), 11% lower compared to year-end 2018.
- Canadian net present value of future net revenues in USD (2P reserves discounted at 10%, forecast pricing after tax) of $102 MM is 13% lower compared to 2018 primarily due to reduced gas locations and commodity pricing.
- Egyptian net present value of future net revenues in USD (2P reserves discounted at 10%, forecast pricing after tax) decreased 11% year over year to $185 MM primarily due to higher royalties at West Bakr.
Randy Neely, Chief Executive Officer of TransGlobe, said:
‘We are pleased with the results of the 2019 drilling program and we aim to build upon this success in 2020. The 2020 plan is focused on the most value accretive projects within the portfolio to maximize free cash flow to fund future value growth opportunities and bolster the current production base.
In Egypt, the focus is on growing production in the Eastern Desert while we continue to evaluate the potential of the South Ghazalat acreage. In Canada, the focus is on developing South Harmattan where we have made a potentially significant discovery of resources in a new, effectively undrilled area, where we already have a significant footprint.
Our 2020 budget underlines the confidence we have in the potential of the TransGlobe portfolio.’