TransGlobe Expands Footprint in Western Desert of Egypt

TransGlobe Energy Corporation announces the signing of a Share Purchase Agreement (the “SPA”) with two United States based energy companies (collectively, the “Vendors”) to acquire the shares of their direct and indirect wholly owned subsidiaries which hold the Vendor’s Egyptian Assets (the “Acquisition”).

The Acquisition:
TransGlobe announces the signing of the SPA to acquire the shares of a wholly owned Cayman Islands subsidiary of the Vendors (“EgyptCo”). EgyptCo’s subsidiaries hold a 50% non-operated working interest in the South Alamein concession and a 60% operated working interest in the South Mariut concession, both located in the Western Desert of the Arab Republic of Egypt (“Egypt”). This transaction is expected to close by early June 2012 and is subject to customary closing conditions.

TransGlobe cannot make assurances that it will successfully close the subject transaction. All dollar values are expressed in United States dollars unless otherwise stated.

The transaction highlights include:

  • $15 million plus inventory, fixed assets and working capital
  • All-cash deal, effective April 1, 2012
  • 50% working interest in the South Alamein concession, which combined with the previously announced Cepsa acquisition (June 29, 2011) will increase TransGlobe’s interest to 100%
  • 60% working interest and operatorship of the South Mariut concession
  • Increase of 674,523 net exploration acres in Egypt’s prolific Western Desert
  • Near term (100% operated) development project, of the Boraq 2 Oil Discovery in South Alamein
  • Near term (60% operated) exploration well (Al-Azayem-1) in South Mariut
  • Greatly expanded exploration opportunity base in the Western Desert
  • Maps and additional information can be found on the Company’s website, starting May 3, 2012 at

South Alamein, Egypt (100% working interest, TransGlobe operated);

(SUBJECT TO CLOSING of the Acquisition and the Cepsa Transaction (as defined below) including the necessary Government approval)

On June 29, 2011, the Company announced it had entered into a Sale and Purchase Agreement to acquire Cepsa Egypt’s 50% operated working interest in the South Alamein concession for $3 million plus an inventory adjustment, effective on and subject to approval from the Egyptian Government (“Cepsa Transaction”). The deed of assignment was signed by the Egyptian General Petroleum Corporation (“EGPC”) on March 29, 2012 and is awaiting final approval by the Minister of Petroleum.

TransGlobe’s intended acquisition includes the remaining 50% non-operated working interest in the South Alamein concession. TransGlobe will assume operatorship and 100% working interest of the South Alamein concession upon closing both transactions, which is expected to occur in Q2 2012.

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 gross size of this exploration concession is 1,423 square kilometers (355,832 acres) following a 25% relinquishment of non-prospective acreage on April 4, 2012, and moves the concession into the final 2 year exploration phase. The concession includes an oil discovery well, Boraq-2X. The primary Cretaceous zone tested at a rate of 800 to 1,323 bopd of 34 API oil with no water and a 13% pressure drawdown during a 28 hour drill stem test (DST). A secondary Cretaceous zone tested at a rate of 274 Bopd of 32-35 API oil and 4% water during a 23 hour DST. Test rates are not necessarily indicative of long-term performance but it is anticipated that the well should be capable of producing approximately 1,700 Bopd. Initial work by TransGlobe will focus on appraisal and development of the Boraq-2X oil 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. An extensive 3-D seismic acquisition program was acquired over the entire South Alamein concession area.
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TransGlobe’s technical team has identified a number of leads on the remaining exploration acreage that are being progressed to drill-ready prospects. Drilling on these prospects could commence by end of 2012.

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 Cepsa Transaction which is expected to occur in the Q2 2012.

South Mariut, Egypt (60% operated working interest);
(SUBJECT TO CLOSING of the Acquisition)

TransGlobe’s intended acquisition includes a 60% operated working interest in the South Mariut concession. The interest in the South Mariut concession is subject to waiver or non-exercise of the 40% working interest partner’s 30-day preferential right of purchase. The current gross size of this exploration concession is approximately 3,350 square kilometers (~828,000 acres). It is located in the Western Desert of Egypt and is onshore along the Mediterranean coast line, adjacent to prolific offshore hydrocarbon fields and southwest of the city of Alexandria. The southern boundary of the South Mariut concession is approximately 20 kilometers north of the South Alamein concession. The South Mariut concession is in the first, three-year extension period which expires on April 5, 2013. A further two-year extension is available under the production sharing contract.

The concession joint venture partners have acquired over 1,200 square kilometers of 3-D seismic over the original area and executed several studies supporting the prospectivity of the South Mariut concession area. The joint venture partners have approved (subject to rig availability) a $9.6 million exploration well (Al-Azayem -1) for 2012. The partners have received all the necessary well permit approvals and are in discussion with several contractors to supply a 2,000 horsepower drilling rig. The well is targeting several stacked horizons with four-way closures identified on 3-D seismic, with total depth expected at approximately 14,500 feet in Jurassic-aged strata.

TransGlobe has internally estimated a combined undiscovered 236 million barrels of Petroleum Initially in Place on a probabilistic P-mean basis for this prospect.

The South Mariut concession production sharing terms are as follows: cost oil of 35%, sharing of profit oil with 18% to the Contractor, 82% to the Government of Egypt, with 100% excess cost recovery oil to the Government. Capital investments are amortized over five years and operating costs are fully recovered in the quarter incurred and paid. All taxes and royalties are paid out of the Government’s share of profit oil.

Press Release


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