Tai, perhaps we will achieve Nirvana yet? <g>
100% imp. over year ago Q
Clearly worth holding.
C
++++++++++++++++++++++++++++++++++++++++++++++++++++
Transglobe's earnings rise to $2.54-million (U.S.)
2004-11-02 17:08 ET - News Release
Mr. Ross Clarkson reports
TRANSGLOBE ENERGY CORPORATION THIRD INTERIM REPORT FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004
TransGlobe Energy Corp. has released its financial and operating results for the three and nine months ended Sept. 30, 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 crude oil.
Highlights:
record average sales volumes of 3,918 barrels of oil equivalent per day and record average production volumes of 4,303 barrels of oil equivalent per day in the third quarter; and
October production volumes averaged in excess of 4,500 barrels of oil equivalent per day.
Block 32, Yemen (13.81-per-cent working interest)
Tasour No. 13 completed at 2,240 barrels of oil per day (309 barrels of oil per day to TransGlobe); and
Tasour No. 14 completed at 2,820 barrels of oil per day (389 barrels of oil per day to TransGlobe).
Block S-1, Yemen (25 per cent Working Interest)
development oil wells completed at An Nagyah No. 9, No. 10 and No. 11;
trucking production increased to approximately 5,000 barrels of oil per day (1,250 barrels of oil per day to TransGlobe) in October; and
facilities and pipeline project commissioning expected June, 2005.
Canada
drilled seven gas wells in the third quarter at Cynthia, Gadsby, Twining and Nevis -- 100 per cent successful; and
third quarter cash flow from operations of $4,363,000 and net income of $2,541,000.
Outlook
Total company production in October is in excess of 4,500 barrels of oil equivalent per day due to increased trucking volumes from An Nagyah on block S-1 in Yemen and the addition of new wells in Canada and block 32. The company's 2004 exit production rate is now expected to be over 5,000 barrels of oil equivalent per day. The block S-1 development and the new Canadian production is expected to increase the company's total production to approximately 6,000 barrels of oil equivalent per day by mid-2005.
On the financial front, cash flow from operations and net income are higher on both the three- and nine-month comparisons with the same period in 2003. The cash flow from operations and net income would have been even higher if the full block S-1 production had been sold in the third quarter. There were no scheduled tanker liftings for block S-1 production in August, September and October, which resulted in an increase in oil inventory. The inventory at Sept. 30 was approximately 38,000 barrels (net TransGlobe barrels after subtracting the Yemen government's production sharing oil). Vintage and TransGlobe are working on a new marketing arrangement to allow for more regular tanker liftings and thereby reduce significant oil inventories in the future. Total consolidated sales volumes averaged 3,918 barrels of oil equivalent per day in the third quarter, whereas total consolidated production volumes averaged 4,303 barrels of oil equivalent per day, with the difference being an increase to inventory booked on block S-1.
OPERATING HIGHLIGHTS
Three months ended Sept. 30
(in thousands of U.S. dollars)
2004 2003 Change
Oil and gas
revenue, net of
royalties 8,227 4,159 98%
Operating expense 1,772 828 114%
General and
administrative
expense 605 168 260%
Depletion,
depreciation and
accretion expense 2,601 1,902 37%
Income taxes 416 929 (55)%
Cash flow from
operations 4,363 2,193 99%
Basic and diluted
per share 0.08 0.04
Net income 2,541 291 773%
Basic per share 0.05 0.01
Diluted per share 0.04 0.01
Capital
expenditures 7,641 3,445 122%
Sales volumes
Oil and liquids
(boed) 3,274 2,514 30%
Average price
($ per barrel) 38.56 27.97 38%
Gas (mcfpd) 3,865 1,105 250%
Average price
($ per mcf) 4.92 5.24 (6)%
Total (boed) (6:1) 3,918 2,698 45%
Operating expense
($ per boe) 4.91 3.34 47%
OPERATING HIGHLIGHTS
Nine months ended Sept. 30
(in thousands of U.S. dollars)
2004 2003 Change
Oil and gas
revenue, net
of royalties 19,874 12,673 57%
Operating
expense 4,251 2,585 64%
General and
administrative
expense 1,842 783 135%
Depletion,
depreciation
and accretion
expense 6,149 4,961 24%
Income taxes 2,195 1,796 22%
Cash flow from
operations 10,999 7,453 48%
Basic and
diluted
per share 0.20 0.14
Net income 5,151 2,492 107%
Basic per share 0.10 0.05
Diluted per
share 0.09 0.05
Capital
expenditures 15,292 10,219 50%
Working capital (1,203) 2,137 (156)%
Sales volumes
Oil and liquids
(boed) 2,818 2,400 17%
Average price
($ per barrel) 35.24 27.79 27%
Gas (mcfpd) 2,66 1,030 159%
Average price
($ per mcf) 5.05 5.47 (8)%
Total (boed)
(6:1) 3,263 2,572 27%
Operating expense
($ per boe) 4.75 3.68 29%
Exploration update
Block 32, Yemen (13.81-per-cent working interest)
The Tasour No. 13 step-out appraisal well was drilled on the western flank of the Tasour field. The Tasour No. 13 well was put on production with initial production of 2,240 barrels of oil per day (309 barrels of oil per day to TransGlobe) and 5,740 barrels of water per day.
Subsequent to the third quarter, the drilling rig was moved to Tasour No. 14, one of several development locations within the western field extension defined by Tasour No. 13. The Tasour No. 14 well was drilled approximately 900 metres east of Tasour No. 13. Tasour No. 14 was put on production with initial production of 2,820 barrels of oil per day (389 barrels of oil per day to TransGlobe) and 1,330 barrels of water per day.
Following Tasour No. 14, the drilling rig went to an adjacent non-owned block as per the terms of the rig sharing contract with block 53. It is anticipated that the drilling rig will return to block 32 early in 2005 to commence drilling on the potential eastern extension of the Tasour field in addition to several development/appraisal wells planned in 2005.
The oil production from the Tasour field is expected to average approximately 18,000 barrels of oil per day during the fourth quarter of 2004, of which TransGlobe's working interest share is approximately 2,486 barrels of oil per day.
Block S-1, Yemen (25-per-cent working interest)
During the quarter, three producing oil wells (An Nagyah No. 9, No. 10 and No. 11) and one exploratory dry hole (Al Hareth No. 1) were drilled.
The An Nagyah No. 9 well was drilled to a total depth of 1,146 metres and was completed as an Upper Lam oil well after flowing at a stabilized rate of 530 barrels of light (43-degree API) oil per day. The An Nagyah No. 9 well encountered a 20-metre oil-bearing interval in the Upper Lam sandstones.
The An Nagyah No. 10 well was drilled to a total depth of 1,144 metres and was completed as an Upper Lam oil well, flowing at a stabilized rate of 1,547 barrels of light (43-degree API) oil per day. The An Nagyah No. 10 well encountered a 33-metre oil-bearing interval in the Upper Lam sandstones.
The An Nagyah No. 11 well was drilled to a total depth of 1,394 metres and was completed as an Upper Lam oil well. The An Nagyah No. 11 well was tested from a 164-metre horizontal Upper Lam sandstone section at a stabilized rate of 3,100 barrels of light (43 degree API) oil per day and 1.72 million cubic feet of natural gas per day on a 56/64-inch choke at 365 pounds per square inch of flowing pressure. No water was produced during the test period. This is the first horizontal well drilled in the An Nagyah field and the first Lam formation horizontal well in Yemen.
The early production (trucking) facilities were installed at An Nagyah during the first quarter of 2004 with an initial capacity of 2,500 barrels of oil per day (625 barrels of oil per day to TransGlobe). Since commencing production in the second quarter of 2004, the trucking facilities have been steadily expanded to the current capacity of approximately 5,000 barrels of oil per day (1,250 barrels of oil per day to TransGlobe). With the addition of the horizontal well at An Nagyah No. 11, the current productive well capacity is approximately 8,000 barrels of oil per day, which exceeds the capacity of the early production facilities. It is expected that the trucking facilities will be expanded to 6,000 plus barrels of oil per day (1,500 plus barrels of oil per day to TransGlobe) prior to year-end. The oil production is being trucked 18 miles to the Jannah Hunt facility, where it enters the pipeline to the Ras Isa loading terminal on the Red Sea.
Trucking operations will be phased out following the construction of a central production facility at An Nagyah and a 28-kilometre (18-mile) pipeline to the Jannah Hunt export pipeline. The pipeline and facilities are expected to be operational by mid-2005. The 10-inch pipeline is designed to allow an ultimate capacity of 80,000 barrels of oil per day so that future discoveries can be placed on stream quickly. The central production facility is designed for an initial capacity of 10,000 to 12,000 barrels of oil per day (2,500 to 3,000 barrels of oil per day to TransGlobe), with expansion capabilities.
The drilling rig is currently at the An Nagyah No. 12 well located between the An Nagyah No. 5 and No. 4 wells. The An Nagyah No. 12 well will also be drilled horizontally with a planned horizontal section of 700 metres. Following An Nagyah No. 12, a well is planned to test a possible field extension on the southern edge of the An Nagyah field. This will be followed by an exploration well on a separate structure located nine kilometres southwest of the An Nagyah field. Additional development wells on An Nagyah and several exploration wells are planned for the 2005 drilling program.
In addition to the current drilling activities, a workover rig will be mobilized in the fourth quarter to workover the An Nagyah No. 2 well and complete the Harmel No. 2 appraisal well. The An Nagyah No. 2 well was the discovery well for the Lam oil reservoir and has been shut in since testing was completed. Initial testing of An Nagyah No. 2 included tests in both the oil reservoir as well as the gas cap. The objective of the workover will be to seal off the gas cap perforations and complete the well as a producing oil well.
After An Nagyah No. 2 operations are complete, the workover rig will be moved to the Harmel No. 2 appraisal well to begin the completion operations. Harmel No. 2 was drilled in June, 2004, to appraise the shallow oil reservoirs found in the discovery well, Harmel No. 1. The cores from Harmel No. 2 have been analyzed and current plans encompass stimulating the supra-salt reservoirs in the Harmel No. 2 well and placing both Harmel wells on production. Production and test data obtained from the No. 1 and No. 2 wells will help to determine the commerciality of the medium-gravity oil (22-degree API) discovery at Harmel. The Harmel structure identified on three-dimensional seismic could require 80 to 90 shallow wells (700 to 800 metres in depth) to be fully developed.
Block 72, Yemen (33-per-cent working interest)
DNO ASA (operator at 34 per cent), TG Holdings Yemen Inc. (33 per cent) and Ansan Wikfs (Hadramaut) Ltd. (33 per cent) were selected as the successful bidders for block 72 in the Yemen international bid round for exploration and production of hydrocarbons. TG Holdings Yemen Inc. is a wholly owned subsidiary of TransGlobe Energy Corp. The ratification of the block 72 production sharing agreement by the Yemen parliament is expected before the end of 2004.
Block 72 encompasses 1,822 square kilometres (approximately 450,234 acres) and is located in the western Masila basin adjacent to the billion-barrel Canadian Nexen Masila block. The block 72 joint venture group plans to carry out a seismic acquisition program and the drilling of two exploration wells during the first exploration period of 30 months. It is anticipated that seismic will be acquired during 2005, with drilling commencing in late 2005 or early 2006.
Nuqra block 1, Egypt (50-per-cent working interest, operator)
As announced in the second quarter, TransGlobe Petroleum Egypt Inc., a wholly owned subsidiary of TransGlobe Energy Corp., entered into a farm-out agreement with Quadra Egypt Ltd., a subsidiary of Quadra Resources Corp. headquartered in Calgary, and Rampex Petroleum International, headquartered in Cairo, Egypt. This agreement provides TransGlobe Egypt the opportunity to participate and earn a 50-per-cent working interest in the Nuqra concession by paying 100 per cent of the initial $6-million of expenditures in the phase 1 and phase 2 work programs. TransGlobe Egypt is the operator of the Nuqra block.
The Nuqra concession is located in upper Egypt near the city of Luxor on the east bank of the Nile River. The concession encompasses over two-thirds of the Kom Ombo basin, a rift basin analogous to the Gulf of Suez basin, the Marib basin in Yemen, and the Muglad basin in Sudan, all of which contain major reserves. The Nuqra concession contains more than 30,000 square kilometres, or 7.5 million acres, of exploration lands with 13 seismically defined leads identified from over 4,000 kilometres of existing two-dimensional seismic. Seismic and well data have confirmed the existence of Jurassic and Cretaceous sediments and the presence of a petroleum system that could potentially hold significant oil reserves.
Mitchell Wren has joined the company as general manager of TransGlobe Petroleum Egypt Inc. in Cairo and is currently establishing the Cairo office. The proposed work program for the balance of 2004 and 2005 will consist of geological field studies, reprocessing of existing two-dimensional seismic and field acquisition of additional two-dimensional seismic data. It is anticipated that exploration drilling will commence after 2005.
Canada
To date, the company has drilled 15 wells (11.2 net wells) in 2004, resulting in 12 gas wells, two oil wells and one dry hole for an overall success rate of 93 per cent. It is anticipated that Canadian production will increase to approximately 1,250 to 1,500 barrels of oil equivalent per day early in 2005, when the remainder of the 2004 wells are completed and pipeline connected. Production in the third quarter averaged 846 barrels of oil equivalent per day, representing a 74 per cent increase over the second quarter of 2004 production. Production was partially curtailed by approximately 140 barrels of oil equivalent per day during the quarter due to natural gas compression capacity limitations at third-party-operated facilities in the Nevis and Twining areas. It is anticipated that additional compression will be installed by early 2005.
The majority of the company's Canadian 2005 drilling program is expected to commence in June, 2005, after spring breakup. It is expected that drilling equipment and services will be available at better prices during the summer months. Traditionally, the winter months (December through April) are the busiest and most expensive time to conduct drilling operations in Canada. The company plans to drill 10 to 15 wells in Canada during 2005. All the prospects are focused towards natural gas in central Alberta. Successful wells could be on production quickly, as these prospects are near existing infrastructure and can generally be accessed year-round.
CONSOLIDATED STATEMENT OF INCOME
AND DEFICIT
Three months ended Sept. 30
(in thousands of U.S. dollars
except per share amounts)
2004 2003
Revenue
Oil and gas sales
net of royalties $8,227 $4,159
Other income 6 4
------- -------
8,233 4,163
------- -------
Expenses
Operating 1,772 828
General and
administrative 605 168
Foreign exchange
(gain) loss 277 45
Interest 21 -
Depletion,
depreciation
and accretion 2,601 1,902
------- -------
5,276 2,943
------- -------
Net income before
income taxes 2,957 1,220
Income taxes
Current 1,576 929
Future (1,160) -
------- -------
Net income $2,541 $291
------- -------
(Deficit), beginning
of period (3,994) (10,025)
Retroactive
application of
changes in
accounting
policies - -
------- -------
(Deficit), beginning
of period, as
restated (3,994) (10,025)
------- -------
(Deficit), end
of period $(1,453) $(9,734)
======= =======
Net income
per share
Basic $0.05 $0.01
Diluted $0.04 $0.01
======= =======
CONSOLIDATED STATEMENT OF INCOME
AND DEFICIT
Nine months ended Sept. 30
(in thousands of U.S. dollars
except per share amounts)
2004 2003
Revenue
Oil and gas sales
net of royalties $19,874 $12,673
Other income 9 10
------- -------
19,883 12,683
------- -------
Expenses
Operating 4,251 2,585
General and
administrative 1,842 783
Foreign exchange
(gain) loss 274 66
Interest 21 -
Depletion,
depreciation
and accretion 6,149 4,961
------- -------
12,537 8,395
------- -------
Net income before
income taxes 7,346 4,288
Income taxes
Current 3,355 1,796
Future (1,160) -
------- -------
Net income $5,151 $2,492
------- -------
(Deficit), beginning
of period (6,393) (12,298)
Retroactive
application of
changes in
accounting policies (211) 72
------- -------
(Deficit), beginning
of period,
as restated (6,604) (12,226)
------- -------
(Deficit), end of
period $(1,453) $(9,734)
======= =======
Net income per
share
Basic $0.10 $0.05
Diluted $0.09 $0.05 |
