TransGlobe West Bakr Inc (TGWB), a wholly owned subsidiary of TransGlobe Energy Corporation, has entered into a Sale and Purchase Agreement (SPA) to acquire all the Egyptian assets of The Egyptian Petroleum Development Co. Ltd. (of Japan) (EPEDECO) for $60 million plus or minus adjustments, effective July 1, 2010 subject to approval from the Egyptian Government.

EPEDECO holds a 100% working interest in the West Bakr Production Sharing Concession (PSC). EPEDECO is the operator of the West Bakr Concession through its joint venture operating company (West Bakr Petroleum Company). Subject to Government approval, TGWB will assume operatorship of the West Bakr Concession agreement.

The West Bakr PSC is located onshore in the western Gulf of Suez rift basin of Egypt adjacent to TransGlobe’s West Gharib Concession.

The two West Bakr development leases encompass 45.2 square kilometers (approximately 11,600 acres) and are valid until 2020 with an optional five-year extension to 2025. Modern 3-D seismic covers the development leases. Current gross oil production from the three producing fields is approximately 4,000 Bopd (approximately 1,140 net Bopd after the production sharing split with the Government of Egypt).

There are three oil fields on the lands with cumulative production of approximately 50 MMBbl. The Company’s independent reserve evaluator (DeGolyer and MacNaughton Canada Limited) assigned remaining Proved reserves of 7.4 MMBbl and Proved plus Probable reserves of 8.8 MMBbl, effective July 1, 2010. The Company has identified a number of optimization/development projects and drilling opportunities that could increase production and recoverable reserves.

The transaction highlights include:

  • $60 million all-cash deal, effective July 1, 2010, with operatorship of three fields with 28 producing wells; funded through working capital and existing credit facility
  • Immediately accretive to funds flow from operations and net income
  • 100% working interest in production and reserves. 4,000 barrels of oil per day (Bopd); 7.4 million barrels (MMBbl) Proved reserves; 8.8 MMBbl Proved plus Probable reserves
  • Transaction metrics are approximately $15,000 per producing barrel of oil for the assets, or $6.82 per Proved plus Probable barrel of oil
  • 45.2 square kilometers (11,600 acres) in two development leases
  •  Located immediately adjacent to TransGlobe’s existing West Gharib development leases
  • Integration opportunities with the TransGlobe West Gharib operations
  • Numerous development optimization projects identified