TGA>..2.43...solid, money maker...good potential as well:
(BSNS WIRE) TransGlobe Energy Corporation First Interim Report for the T=1
TransGlobe Energy Corporation First Interim Report for the T=1
Energy Editors / News Editors / Business Editors
CALGARY, Alberta--(BUSINESS WIRE)--TGA TGL.TO--
TransGlobe Energy Corporation ("TransGlobe" or the
"Company") (AMEX:TGA) (TSX:TGL) is pleased to announce its financial
and operating results for the three month period ended March 31, 2004.
All dollar values are expressed in United States dollars unless
otherwise stated. Conversion of natural gas to oil is made on the
basis of 6,000 cubic feet of natural gas being equivalent to one
barrel of oil.
HIGHLIGHTS
- Production of 2,760 Boepd in Q1-2004
- Cash flow of $3.88 million in Q1-2004
- An Nagyah pool extended by An Nagyah # 5, Block S-1
- Block S-1 early production facilities installed Q-1
- Trucking oil from An Nagyah #4 and An Nagyah #5
-0-
*T
FINANCIAL AND OPERATING UPDATE
(Expressed in thousands of U.S. Dollars, except per share and
volume amounts)
Three Months Ended March 31
-----------------------------
Financial 2004 2003 Change
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Oil and gas sales, net of royalties 5,868 4,375 34%
Operating expense 1,127 776 45%
General and administrative expense 429 274 57%
Depletion and depreciation 1,614 1,466 10%
Income taxes 559 429 30%
Cash flow from operations 3,887 2,891 34%
Basic and diluted per share 0.07 0.06
Net income 2,163 1,425 52%
Basic and diluted per share 0.04 0.03
Capital expenditures 2,060 3,271 (37)%
Working capital 4,449 4,367 2%
Common shares outstanding
Basic (weighted average) 54,049 51,515 5%
Diluted (weighted average) 56,089 52,539 7%
Production
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Oil and liquids (Bpd) 2,425 2,356 3%
Average price ($ per barrel) 31.39 29.73 6%
Gas (Mcfpd) 2,008 966 108%
Average price ($ per Mcf) 5.27 5.56 (5)%
Total (Boed) (6 : 1) 2,760 2,517 10%
Operating expense ($ per Boe) 4.49 3.44 31%
*T
EXPLORATION UPDATE
Block 32, Republic of Yemen (13.81087% working interest)
In late 2003, the Block 32 Joint Venture Group approved a 100
square kilometer 3-D seismic acquisition survey over the greater
Tasour area to refine future drilling locations. Field acquisition of
data commenced in the 1st quarter and is expected to finish by early
May. It is anticipated that the 3-D seismic data will be processed
and interpreted by late June 2004. Further development/appraisal
drilling of three to four wells in the western and potential eastern
extension is planned for the second half of 2004. Also, one infill
well (Tasour #12) is planned for the central Tasour pool, with
drilling expected to commence in mid May 2004.
Block S-1, Republic of Yemen (25% working interest)
During the quarter, the first development/appraisal well of the
2004 program (An Nagyah #5) commenced drilling on the western area of
the An Nagyah field on March 8, 2004. An Nagyah #5 was drilled to a
total depth of 1,300 meters and completed as an Upper Lam 'A' oil
producer. The well flow tested at a rate of 1,150 Bopd of 45 degree
API oil. The second development/appraisal well (An Nagyah #6),
positioned between An Nagyah #2 and An Nagyah # 4, commenced drilling
on April 7, 2004. An Nagyah #6 was drilled to a total depth of 1,207
meters and completed as an Upper Lam 'A' oil producer. The well flow
tested at a rate of 1,140 Bopd of 42 degree API oil. The well is
being equipped for early production via trucking which is expected to
commence in early May. The drilling rig is being moved to the An
Nagyah #7 location to further appraise the western extension of the
field. It is expected the An Nagyah #7 will commence drilling in
early May. Following An Nagyah #7, it is expected the drilling rig
will be move to Harmel #2 to appraise the shallow depth, medium
gravity oil discovered in Harmel #1. Additional development wells in
the An Nagyah pool are expected to be drilled in the third and fourth
quarters of 2004 and into 2005.
The early production (trucking) facilities at the An Nagyah field
were installed during the first quarter 2004 and field production
operations commenced on An Nagyah #4 on March 28, 2004. With the
addition of An Nagyah #5 in April, production has been increased to
approximately 2,000 Bopd. With the addition of An Nagyah #6 in May it
is anticipated that production will increase to 2,500 Bopd
(approximately 625 Bopd to TransGlobe) as the trucking operation is
expanded. The oil production is currently being trucked 18 miles to
the Jannah Hunt facility where it is blended with the Marib light
crude and transported by pipeline to the Ras Isa loading terminal on
the Red Sea.
The construction of a central production facility ("CPF") at An
Nagyah and a 28 kilometer (18 mile) pipeline to the Jannah Hunt
Halewah export pipeline is planned during 2004, with an anticipated
completion by early 2005. The pipeline design was increased from an 8
inch to a 10 inch pipeline to allow future discoveries to be placed
on stream quickly (ultimate capacity of 80,000 Bopd). The CPF is
designed for an initial capacity of 10,000 Bopd (2,500 Bopd to
TransGlobe), with expansion capabilities. The detailed engineering
bids were received and the contract is expected to be awarded by late
April/early May. Bid requests for long lead time major equipment have
been issued and will be awarded during the 2nd Quarter of 2004.
Canada
During the 1st quarter the Company participated in drilling 1
(0.18 net) gas well at Nevis, which is expected to be completed and
tied in during the 2nd quarter. TransGlobe plans to drill thirteen
additional wells during 2004. The wells will be drilled after spring
breakup (April/May), during the summer months when it is expected
that drilling equipment and services will be available at better
prices. Traditionally, the winter months (December through March) are
the busiest and most expensive time to conduct drilling operations.
Drilling commenced at Morningside on April 26 and it is expected that
drilling will commence at Nevis and Lone Pine as two additional rigs
are mobilized in early May. All of the prospects are natural gas
focused and are located in Central Alberta, which generally affords
year round access.
Production averaged 470 Boepd during the 1st quarter of 2003. An
additional 470 Boepd of production at Nevis, Twining and Morningside
is awaiting installation of pipelines and facilities. Permits and
approvals have been obtained for the majority of the projects and
field work is expected to commence in May/June. It is anticipated
that these projects could be on production June/July of 2004.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's discussion and analysis ("MD&A") should be read in
conjunction with the unaudited interim financial statements for the
three months ended March 31, 2004 and 2003, the audited financial
statements and MD&A for the year ended December 31, 2003 included in
the Company's annual report. Additional information relating to the
Company, including the Company's Annual Information Form, is on SEDAR
at www.sedar.com. All dollar values are expressed in U.S. dollars,
unless otherwise stated. The calculations of barrels of oil
equivalent ("Boe") are based on a conversion rate of six thousand
cubic feet of natural gas to one barrel of crude oil.
This Management's Discussion and Analysis (MD&A) may include
certain statements that may be deemed to be "forward-looking
statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. All statements in this interim report,
other than statements of historical facts, that address future
production, reserve potential, exploration drilling, exploitation
activities and events or developments that the Company expects, are
forward-looking statements. Although TransGlobe believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements. Factors that
could cause actual results to differ materially from those in
forward-looking statements include, but are not limited to, oil and
gas prices, exploitation and exploration successes, continued
availability of capital and financing, and general economic, market
or business conditions.
-0-
*T
SELECTED QUARTERLY FINANCIAL INFORMATION
(US$000's, except Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31
per share amounts) 2004 2003 2003 2003 2003
---------------------------------------------------------------------
Oil and gas sales,
net of royalties 5,868 4,488 4,159 4,139 4,375
Cash flow from
operations 3,887 1,894 2,193 2,369 2,891
Cash flow from
operations per share
- Basic and Diluted 0.07 0.04 0.04 0.05 0.06
Net income 2,163 3,414 291 776 1,425
Net income per share
- Basic and Diluted 0.04 0.06 0.01 0.01 0.03
Total assets 35,753 35,601 29,212 28,024 26,523
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*T
Cash flow from operations is a non-GAAP measure that represents
cash generated from operating activities before changes in non-cash
working capital. We consider this a key measure as it demonstrates
our ability to generate the cash flow necessary to fund future growth
through capital investment. Cash flow from operations may not be
comparable to similar measures used by other companies.
RESULTS OF OPERATIONS
Net income for the three months ended March 31, 2004 was
$2,163,000 ($0.04 per share, basic and diluted) compared to a net
income of $1,425,000 ($0.03 per share, basic and diluted) in the
comparable period 2003. Cash flow from operations for the three
months ended March 31, 2004 was $3,887,000 ($0.07 per share, basic
and diluted) compared to $2,891,000 ($0.06 per share, basic and
diluted) in the comparable period in 2003.
Net income and cash flow from operations increased 52% and 34%
respectively. The following is a brief summary of the primary changes
that occurred during Q1-2004 that will be discussed in more detail
throughout this MD&A:
- 10% higher production volumes
- 5% higher commodity prices
- Royalty costs decreased in Q1-2004 compared to Q1-2003 as a
result of cost oil reallocation on Block 32, Yemen in Q1-2003 of
approximately $902,000.
-0-
*T
OPERATING RESULTS
Daily Production, Working Interest before royalties
Mar. 31, Mar. 31, %
2004 2003 Change
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Yemen - Oil Bopd 2,290 2,307 (1)
Canada - Oil and liquids Bopd 135 49 176
- Gas Mcfpd 2,008 966 108
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Barrels of oil equivalent (6 : 1) Boepd 2,760 2,517 10
--------------------------------------------------------------------
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*T
The Company has set an average production target of 3,400 Boepd
for 2004 representing a 30% increase over 2003.
-0-
*T
Consolidated Net Operating Results
Consolidated
-------------------------------------
Mar. 31, 2004 Mar. 31, 2003
(US$000's, except -------------------------------------
per Boe amounts) $ $/Boe $ $/Boe
--------------------------------------------------------------------
Oil and gas sales 7,897 31.44 6,817 30.08
Royalties 2,029 8.08 2,442 10.77
Operating expenses 1,127 4.49 776 3.42
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Net operating income(1) 4,741 18.87 3,599 15.89
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(1) Net operating income amounts do not reflect Yemen income tax
expense which is paid through oil allocations with Ministry
of Oil and Minerals (MOM) in the Republic of Yemen
(Q1-2004 - $559,000 $2.23/Boe; Q1-2003 - $429,000, $1.89/Boe).
Segmented Net Operating Results
In 2004 the Company operated in two geographic areas, segmented as
the Republic of Yemen and Canada. MD&A will follow under each of
these segments.
Republic of Yemen
Mar. 31, 2004 Mar. 31, 2003
(US$000's, except -------------------------------------
per Boe amounts) $ $/Boe $ $/Boe
--------------------------------------------------------------------
Oil sales 6,577 31.56 6,174 29.74
Royalties 1,811 8.69 2,344 11.29
Operating expenses 862 4.14 638 3.07
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Net operating income(1) 3,904 18.73 3,192 15.38
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(1) Net operating income amounts do not reflect Yemen income tax
expense which is paid through oil allocations with MOM in the
Republic of Yemen (Q1-2004 - $559,000, $2.68/Boe; Q1-2003 -
$429,000, $2.07/Boe.)
Net operating income in Yemen increased 22% in the first three months
of 2004 compared to the same period of 2003 primarily as a result of
the following: |
