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TransGlobe Axes 2020 Capex by 80%; Scales Back Salaries, Cuts Staff

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   |    Thursday,April 02,2020

TransGlobe Energy Corp. reported a Q1 financial, operations and corporate update.

All dollar values are expressed in US dollars unless otherwise stated

Key 2020 Updates:

  • The previously announced ~80% reduction in 2020 capital program has been fully implemented
  • The Company has reduced monthly G&A costs across the business by ~35% through headcount reduction, universal salary rollbacks (including a rollback of non-executive director remuneration of 10%) and reducing all discretionary expenditures
  • The Company currently holds cash of $26.7 million


  • Production guidance for 2020 remains unchanged at an average of 13,300 to 14,300 Boepd
  • Production averaged ~14,965 Boepd in Q1 2020 to date (January ~15,188 Boepd, February ~15,169 Boepd and March to date ~14,551 Boepd) versus 15,345 Boepd in Q4 2019


  • A 452 Mbbls cargo of Gharib blend crude was lifted in mid-March with proceeds (inclusive of hedging gains) of $14.6 million anticipated in April
  • Sold ~758.5 Mbbls to EGPC in Q1 2020 for net proceeds of ~$37.3 million
  • Drilled a Yusr development well in Egypt (HW-2A) with rig release imminent
  • Drilled a 2-mile horizontal Cardium development well in the South Harmattan area, Canada (100/13-16-029-03W5/0) and released rig

Ops Update


A 2-mile Cardium development well has been successfully drilled and the rig released. Stimulation and equipping for production will await improved oil prices. By extending the well trajectory by a further 218 meters into an adjacent section, this well holds an additional 7.5 sections of land in the South Harmattan fairway. Prudently extending the well allowed TransGlobe to cost effectively secure future upside potential in South Harmattan.

The 2-mile horizontal 2-20 well, completed in Q4 2019 and de-risking the South Harmattan fairway, continues to produce at field estimated rates of 234 Boepd (197 Bopd light oil, 119 Mcf/d gas, 18 Bopd NGL).  The Company is very encouraged that production performance remains in line with Company expectations for this significant new resource play.

Crude oil prices in Western Canada have been significantly impacted by the current oversupply into the market exacerbated by the COVID-19-related demand contraction. TransGlobe’s light oil production continues to be produced at a positive field netback.  In addition, natural gas prices have been relatively strong through the first quarter averaging Cdn $1.83/MMbtu. Nonetheless, the Company is exploring all avenues with its contractors and suppliers to reduce operating costs in its Canadian operations.

Arab Republic of Egypt

Western Desert – South Ghazalat (100% WI)
SGZ-6X well is producing from the Upper Bahariya reservoir at a rate restricted to a field estimated 200 – 250 Bopd light and medium crude to evaluate the well, manage the reservoir and optimize the separation of oil, gas and water.

Eastern Desert (100% WI)
During the first quarter of 2020, the Company drilled a development oil well in the Eastern Desert at West Bakr. The HW-2A development well was drilled to a total depth of 1,639 meters.  Due to stuck pipe, only the Yusr-B reservoir was fully logged and evaluated with an internally estimated 0.3 meters of net oil pay. The other Yusr reservoirs and the upper Bakr reservoir, though all exhibiting good oil shows, were not logged at this time. HW-2A is expected to be completed in April 2020 as a producer on 5.4m of oil bearing Yusr-C reservoir observed on the mud logs. The SHAMS-2 rig will be demobilized following the HW-2A completion.

Discussions with our joint venture operating partner are ongoing to reduce operating expenditures.  Any material operating cost reductions in Egypt will require the assistance of the Company’s Egyptian joint venture partner, the Egyptian General Petroleum Corporation (“EGPC”);

Constructive negotiations with EGPC to amend, extend and consolidate the Company’s Eastern Desert concession agreements have continued through the period, with both parties recognizing the attractiveness of a revised agreement to stabilize and ultimately improve investment in production, following a return to a more normalized commodity price environment.


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