FINANCING / Transglobe Energy Corporation Announces Successful Rights
Offering And Improved Year End Results
TSE, ASE SYMBOL: TGL
OTC Bulletin Board SYMBOL: TGLEF
DECEMBER 31, 1998
CALGARY, ALBERTA--TransGlobe Energy Corporation (ASE, symbol
"TGL"; TSE symbol "TGL"; OTC-BB symbol "TGLEF") announced its
financial and operating results for the fiscal year ended
September 30, 1998. (All dollar values are expressed in the United
States dollars unless otherwise stated.)
During fiscal 1998, the Company incurred $1,723,628 in capital
expenditures in the United States compared to $4,010,788 in 1997.
The capital expenditures in Yemen were $2,351,953 in fiscal 1998
compared to $3,607,343 in 1997.
Oil and gas revenue increased to $1,054,744 compared to $1,039,998
in 1997 while operating expenses declined to $161,608 compared to
$180,050 for 1997. Compared to 1997, the oil and gas revenue
increased as a result of higher oil and condensate production
notwithstanding a sharp decline in oil prices. Oil production
increased to 141 barrels of oil per day during fiscal 1998
compared to 12 barrels of oil in 1997. Gas production declined to
648 million cubic feet per day ("mcfpd") from 767 a year ago due
to normal production declines. On a per barrel of oil equivalent
("BOE") basis, the operating expenses were $1.64 per BOE in fiscal
1998, compared to $2.82 in 1997. The oil price received by the
Company during fiscal 1998 averaged $13.36 compared to $18.09 in
1997, a 26 percent decline. The average gas price during fiscal
1998 was $2.51 per million cubic feet compared to $2.67 per mcf in
1997.
General and administrative expenses were reduced to $830,570 from
$1,253,223 a year ago, a saving of 34 percent. The Company's
management is continuing to review these expenses and expects to
implement further reductions during the next two quarters.
The Company performed a ceiling test as at September 30, 1998 and
determined that the net book value of the oil and gas properties
exceeded the future net revenue by $6,575,000. This amount was
consequently charged to operations. The current year's write-down
was necessitated by the significant drop in product prices (the
oil price as at September 30, 1998 was $10.95 per barrel which was
used by independent engineers in the Company's reserve
evaluation), and the anticipated sale of the Madera property
subsequent to year end. The Company signed a sale agreement on its
Madera property in December 1998 for net proceeds of $1.15 million
to retire debt obligations. The sale is expected to close in early
January 1999 after completion of title work. The Company reported
a loss of $7,692,405 ($0.42 per share) for the year ended
September 30, 1998 as compared to a loss of $6,268,791 ($0.46 per
share) for 1997.
On December 21, 1998, the Company successfully completed a rights
offering financing and raised $679,131 by issuing 4,527,540
shares. Ninety-six percent of the shares available in the rights
offering were subscribed. The funds will be applied to the
appraisal drilling program in Block 32. At September 30, 1998, the
Company had a working capital deficiency of $1,147,085. The
repayment of the arms length debenture of Cdn$700,000 and the
reduction of the long-term debt to $150,000 from the proceeds of
the Madera Property coupled with the funds generated from the
rights offering will bring the Company's working capital to
approximately $600,000 at January 31, 1999.
TransGlobe generated positive cash flows of $109,595 for fiscal
1998 as compared to negative cash flows of $193,378 for the same
period in 1997. This result was achieved in an environment of
extremely low oil prices and demonstrates the management's ability
to respond to the industry wide adverse operating and financial
conditions.
This release includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements in this
release, 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 oil and gas prices, exploitation and
exploration successes, continued availability of capital and
financing, and general economic, market or business conditions.
On behalf of the Board of Directors of
TRANSGLOBE ENERGY CORPORATION
"Ross G. Clarkson, President & CEO"
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