TransGlobe has provided an update on its operations and production guidance for 2009.
OPERATIONS UPDATE
Arab Republic of Egypt (“Egypt”), West Gharib (100% working interest):
Hana West Discovery
Hana West Discovery
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The Hana #18 discovery well on the Hana West structure, first reported in TransGlobe’s mid-quarter update on December 16, 2008, tested a combined rate of 2,820 barrels of oil per day (“Bopd”) after four tests and is currently producing at a pump-restricted rate of 660 Bopd of 27.5? API oil from the Asl formation (A zone).
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A first appraisal well drilled on the new pool discovery, Hana West #2, intersected the south-bounding fault below the Asl A and B zones in Hana #18. Hana West #2 encountered a new pool discovery in a lower horizon (Asl C zone), with an estimated 30 feet of net oil pay. Subsequently, the well was side-tracked (“ST”) to the northwest across the fault where it encountered approximately 229 feet of net oil pay in the Asl A and B zones. Hana West #2 ST is now being completed as an Asl B producer. A high-volume jet pump is being installed to allow higher production rates than can be achieved with a rod pump.
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The second appraisal well, Hana West #3, is currently drilling through the Asl reservoir zones. Test results are expected in the next two to three weeks.
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Drilling commenced at Hana West #4 on January 18, 2009.
East Hoshia, potential discovery
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The East Hoshia #2 exploration well was drilled to a total depth of 9,038 feet and initially completed as a potential Thebes oil discovery. Testing is ongoing in this well.
Seismic
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TransGlobe completed a 360+ km2 3-D seismic acquisition program covering the East Hoshia, Hoshia, North Hoshia, Arta and East Arta development areas in October 2008. Mapping and interpretation are underway.
Republic of Yemen (“Yemen”):
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Block 32 (13.8% working interest): The Tasour #25 development well was drilled and completed as a Qishn S-1 oil producer.
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Block 72 (33% working interest): The Block 72 joint venture partners have entered the Production Sharing Agreement’s second exploration period (30 months) commencing January 12, 2009. It is expected that one exploration well will be drilled in late 2009 or early 2010.
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Blocks S-1 and 75 (25% working interest): Development drilling at An Nagyah is scheduled to commence later in the first quarter when the drilling rig is expected to be available.
2009 GUIDANCE
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TransGlobe expects production to average 8,500 to 9,000 Bopd for 2009, representing a 16% to 22% increase over the 2008 average production of approximately 7,350 Boepd. This target includes preliminary results from the new Hana West discovery. Production from the West Gharib fields in Egypt is expected to average approximately 5,200 to 5,700 Bopd during 2009, with the balance of approximately 3,300 Bopd coming from the Yemen properties. Guidance could be revised upwards during the year should the successes at Hana West continue.
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TransGlobe is planning a reduced capital budget for 2009, funded from available working capital and cash flow. The 2009 capital program may require adjustments during the year due to the volatility in crude oil prices. The majority of capital program adjustments, if any, would occur in the budget allocated to the operated Egyptian properties.
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Using the mid-point of production guidance and assuming an average oil price for the year of $40.00/Bbl Dated Brent, cash flow from operations (cash generated from operating activities before changes in non-cash working capital) in 2009 is expected to total approximately $24.0 million. An increase in the oil price of $10.00/Bbl would raise anticipated cash flow by approximately $10.0 million for the year.
(Rigzone)
