TransGlobe Energy Corporation is pleased to provide a mid-quarter production and operations update for the fourth quarter of 2011 and 2012 Forecasts
West Gharib, (100% working interest, TransGlobe operated)
Operations and Exploration
During the fourth quarter, the Company has drilled eleven wells in the Arta/East Arta area resulting in eight oil wells, one potential oil well, one water injector and one dry hole to date. Two drilling rigs are scheduled to remain in the West Gharib area into 2012. The third rig (1,500 HP) will be released in late December, at the end of the contract.
West Gharib production averaged 10,918 Bopd in October and 11,250 Bopd in November. Production to date in December has averaged 11,746 Bopd.
Production during the fourth quarter was curtailed due to process capacity constraints at the GPC operated Ras Gharib terminal. By mid-July the increased trucked volumes at West Gharib were exceeding the process capacity to receive oil and water at the GPC terminal. The Company initiated a number of projects to reduce the amount of water trucked with the oil and to increase tankage/processing capacity allocations at the GPC terminal.
Production increases in November and December are attributed to improved water separation in the field and to new wells. In addition, the Company commissioned a new multi-well battery in the Arta field during the second week of December, which will improve water separation in the field and increase oil sales.
It is estimated that approximately 700 Bopd remains curtailed.
West Bakr, (SUBJECT TO CLOSING, 100% working interest, TransGlobe operated)
On March 28, 2011, the Company announced it had 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”).
The West Bakr PSC is located onshore in the western Gulf of Suez rift basin of Egypt adjacent to TransGlobe’s West Gharib Concession and is producing approximately 4,000 Bopd gross (before the production sharing split with the Government of Egypt). The Company has identified a number of optimization/development projects and drilling opportunities that could increase production and recoverable reserves.
The Company has been advised that the Deed of Assignment has received final approval from the Government of Egypt. TransGlobe expects to close the acquisition prior to year-end or in early January 2012.
East Ghazalat Block, (50% working interest)
Operations and Exploration
On July 12, 2011, the Safwa development lease was approved by the Government of Egypt. The Safwa development lease has a 20-year term expiring in 2031 and covers approximately 11,040 acres or 15 development blocks. The Safwa Development lease could be extended an additional 5 years to 2036.
The East Ghazalat exploration concession is in the first two-year extension period which expires June, 2012. An additional two-year extension is available following a relinquishment of 25% of the original concession area. All work commitments have been met.
The operator has proposed a 2012 budget and work plan to complete and equip the existing four wells for production commencing in Q2 and to drill up to four new wells by year end.
It is expected that the existing wells will initially be capable of producing 400-600 Bopd per well from the Bahariya formation, which could contribute an additional 800 to 1,200 Bopd of light, sweet crude (34° API) to the Company.
South Alamein, (SUBJECT TO CLOSING – 50% working interest, TransGlobe operated)
On June 29, 2011, the Company announced it had entered into a Sale and Purchase Agreement (“SPA”) to acquire Cepsa Egypt’s 50% operated working interest in the South Alamein Concession for $3.0 million plus an inventory adjustment, effective on and subject to approval from the Egyptian Government. El Paso South Alamein (“El Paso SA”), a subsidiary of Houston-based El Paso Corporation, holds the remaining 50% interest in the South Alamein Production Sharing Contract (“PSC”). TransGlobe will assume operatorship of the South Alamein Concession upon closing of this transaction.
The South Alamein Concession is located onshore in the Western Desert of Egypt and includes portions of the prolific Alamein and Tiba basins. The current size of this exploration concession is 2,258 square kilometers (558,120 acres). The concession includes an oil discovery well, Boraq-2X, which tested a combined 1,700 Bopd of 38° to 40° API oil from two Cretaceous zones. Initial work by TransGlobe will focus on appraisal and development of the Boraq-2X discovery which includes drilling at least two appraisal wells and readying the Boraq-2X well for production. The Boraq-2X discovery is close to existing infrastructure which should reduce development time and capital.
The Company plans to submit a revised budget and development plan for the Boraq discovery to the Egyptian Government for approval following the closing of the transaction.
The South Alamein PSC is in the first, three-year extension period which expires on April 5, 2012. A further two-year extension to April 5, 2014 is available following a 30% relinquishment of the original concession area. An extensive 3-D seismic acquisition program was executed over the entire South Alamein Concession area. This has resulted in several well-defined prospects throughout the area and will provide TransGlobe with numerous exploration drilling opportunities. TransGlobe expects to carry out an exploration drilling program after the Boraq field is brought into production.
TransGlobe expects to close the acquisition after receiving the necessary Egyptian Government approvals.