TransGlobe Energy Corporation announces 2012 year-end contingent resources and propsective resource evaluation

Wednesday, January 30, 2013      
 
  • Best Case Contingent Resources of 2.0 million barrels.
  • The Mean estimate of total undiscovered oil initially in place ("UPIIP") for the 38 evaluated prospects is 1 billion barrels.

TransGlobe Energy Corporation (TSX:TGL) (NASDAQ:TGA) ("TransGlobe" or the "Company") today announced its 2012 year-end contingent resources. In addition the Company is pleased to announce the results of an independent prospective resource evaluation of 38 individual oil prospects located in the Egyptian Western Desert within the South Alamein (100% WI), South Mariut (60% WI) and East Ghazalat (50% WI) exploration concessions.

The Company's 2012 year-end contingent resources and the prospective resource evaluations were prepared by the independent reserves evaluation firm of DeGolyer and MacNaughton Canada Limited ("DMCL"). Both evaluations were performed in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities Section 5.9 ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH") Volume 1, and are effective December 31, 2012.

All dollar values are expressed in United States dollars unless otherwise stated.

CONTINGENT RESOURCE HIGHLIGHTS

  • Best Case Contingent Resources of 2.0 million barrels
  • Estimated Future Net Revenue for Best Case Contingent Resource is $29.1 million (at 10% discounting)

PROSPECTIVE RESOURCE HIGHLIGHTS

  • The Mean estimate of total undiscovered oil initially in place ("UPIIP") for the 38 evaluated prospects is 1 billion barrels
  • The Mean estimate of total Prospective Resource is 200 million barrels
  • The Mean estimate of total Working Interest Prospective Resource is 170 million barrels
  • Company announced a 2013 Capital program (December 11, 2012), which includes exploration wells to evaluate 10 of the 38 prospects in the report. The planned 10 wells will evaluate approximately 75 of the 170 million barrels (44%) of Mean Working Interest Prospective Resources during 2013.

CONTINGENT RESOURCES

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The following is a summary of DMCL evaluation for the year ended December 31, 2012. The Company did not have Contingent Resources evaluated at year ended December 31, 2011. The recovery and contingent resource estimates of crude oil, natural gas liquids ("NGLs") and natural gas resources provided in this news release are estimates only, and there is no guarantee that the estimated resources will be recovered. Actual crude oil, NGL and natural gas resources may be greater than, or less than, the estimates provided herein. All Contingent Resources presented are based on DMCL forecast pricing effective December 31, 2012.

Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is no certainty that it will be commercially viable to produce any portion of the resources.

2012 Year-End Contingent Resource Summary
(Working Interest, before royalties)
Contingent Resources at December 31, Low Case Best Case High Case
2012
(thousands of barrels "Mbbl")
Egypt 475 1,430 2,848
Yemen 330 584 600
Total 805 2,014 3,448
* Numbers may not add exactly due to rounding


Uncertainty Ranges as described by the COGEH handbook as low, best and high estimates for resources as follows:

Low Estimate: this is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

High Estimate: This is considered to be an optimistic estimate of the quantity that will be actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

Contingencies

In Egypt, Contingent Resources were assigned to the Boraq 2 oil discovery in the South Alamein concession which was acquired in 2012. The Contingent Resources assigned to Boraq are contingent on the approval of a development plan. During 2012 the Company prepared and submitted an eight well drilling program for approvals, which includes two appraisal/development wells at Boraq and six exploration wells on the concession. Upon receiving the necessary approvals, the Company plans to proceed with the appraisal/development of the Boraq 2 discovery in 2013.

In Yemen, Reserve volumes which had historically been assigned to the Osaylan oil pool in Block S-1 were removed from the Company Reserves and reclassified as Contingent Resources at year-end 2012. The assigned Contingent Resources are contingent on future drilling which has been curtailed in the area due to political instability and related security issues.

Contingent Resources Estimated Future Net Revenues

All evaluations and reviews of future net cash flow are stated prior to any provision for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which resources have been assigned. It should not be assumed that the estimated future net cash flow shown below is representative of the fair market value of the Company's properties. There is no assurance that such price and cost assumptions will be attained, and variances could be material. The recovery and resource estimates of crude oil, NGL and natural gas resources provided herein are estimates only, and there is no guarantee that the estimated resources will be recovered. Actual crude oil, NGL and natural gas resources may be greater than or less than the estimates provided herein.

The estimated future net revenues for year ended 2012 presented below in millions of U.S. dollars ("$MM") are calculated using DMCL price forecast at December 31, 2012 and constant pricing for 2012. In the constant price case, the prices were held constant for the life of the resources.

Forecast and Constant Pricing Contingent Resources

Present Value of Future Net Revenues, After Tax ($MM)*

Independent Evaluator's Price Forcast Constant Pricing
Contingent Resource
Present Value December 31, 2012 Discounted at December 31, 2012 Discounted at
By Area 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
Low Case
Egypt $10.9 $9.8 $8.9 $8.2 $7.5 $11.8 $10.6 $9.6 $8.8 $8.1
Yemen $4.8 $3.9 $3.1 $2.5 $2.1 $5.4 $4.3 $3.4 $2.8 $2.3
Total Low $15.7 $13.7 $12.0 $10.7 $9.6 $17.2 $14.9 $13.0 $11.6 $10.4
Best Case
Egypt $32.7 $28.2 $24.7 $21.8 $19.4 $35.4 $30.5 $26.6 $23.5 $21.0
Yemen $8.2 $6.0 $4.4 $3.4 $2.6 $8.7 $6.4 $4.8 $3.6 $2.8
Total Best $40.9 $34.2 $29.1 $25.2 $22.0 $44.1 $36.9 $31.4 $27.1 $23.8
High Case
Egypt $70.9 $58.6 $49.6 $42.7 $37.3 $76.0 $62.9 $53.2 $45.9 $40.0
Yemen $9.0 $6.4 $4.7 $3.5 $2.7 $9.6 $6.9 $5.1 $3.8 $2.9
Total High $79.9 $65.0 $54.3 $46.2 $40.0 $85.6 $69.8 $58.3 $49.7 $42.9

* Numbers may not add exactly due to rounding

The following table summarizes DMCL reference price forecast used to estimate future net revenues:

DMCL Forecast Pricing ($/bbl)
Brent Forecast Pricing ($/Bbl) 2013 2014 2015 2016 2017
Year-end 2012 $111.00 $108.35 $105.72 $107.88 $106.62

Constant Pricing ($/Bbl) Year-end 2012
Egypt $100.77
Yemen $110.05


PROSPECTIVE RESOURCES

The DMCL prospective resources estimates were prepared in accordance with the requirements of Canadian National Instrument 51-101 Standards of Disclosure, for Oil and Gas Activities Section 5.9 ("NI 51-101").

Capitalized terms related to resources classifications used in this press release, are based on the definitions and guidelines in Section 5.3.5 of the Canadian Oil and Gas Evaluation Handbook ("COGEH"), Volume 1.

Historic well data, regional geology and seismic data were reviewed by DMCL to prepare a probabilistic Prospective Resources Estimate. The following table shows the gross estimated prospective resources expressed in millions of barrels. These estimates have not been adjusted for the probability of geologic success (Pg).

The following tables summarize DMCL independent evaluation of the Prospective Resources associated with these 38 prospects:

Gross Estimated Prospective Resources
Low Best High Mean
(Millions of Barrels "MMbbls") Estimate Estimate Estimate Estimate
Gross Pool Prospective Oil Resources 131.5 191.6 279.1 200.0
Gross Working Interest Prospective Oil Resources 110.8 162.9 238.9 170.4

Notes:

Low, best, high and mean estimates in the table set out above are P90, P50, P10 and mean respectively as defined below.

Pg has not been applied to the volumes in the table set out above.

Application of any geological and economic chance factor does not equate prospective resources to contingent resources or reserves.

Recovery efficiency is applied to prospective resources in the table set out above. The prospective resources presented above are based on the statistical aggregation method.

There is no certainty that any portion of the prospective resources estimated herein will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources evaluated.

Mean Estimate Prospective Resources

Exploration Concession Number ofProspectsEvaluated Gross
Mean
UPIIP (MMbbl)
Gross Mean
Prospective
Resources (MMbbl)
Geological
Risk Pg
(%)
Gross Pg
adjusted
Mean
Prospective
Resources (MMbbl)
TransGlobe
Working
Interest (%)
Gross WI
Pg adjusted
Mean
Prospective
Resources (MMbbl)
South Alamein 20 669 133.8 15% 20.2 100% 20.2
South Mariut 2 177 35.1 19% 6.6 60% 3.9
East Ghazalat 16 154 31.1 14% 4.2 50% 2.1
Total 38 1,000 200.0 16% 31.0 26.2

Notes:

The probability of geologic success ("Pg") is defined as the probability of discovering reservoirs that flow petroleum at a measurable rate. Pg is estimated by quantifying the probability of each of the following individual geologic factors: trap, source, reservoir and migration. The product of these four probabilities or chance factors is computed as the Pg. Application of any geological and economic chance factor does not equate prospective resources to contingent resources or reserves.

Recovery efficiency is applied to prospective resources in the table set out above. The prospective resources presented above are based on the statistical aggregation method.

There is no certainty that any portion of the prospective resources estimated herein will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources evaluated.

2013 Drilling Plans

The company announced December 11, 2012, a 2013 Capital Budget of $129 million with $53 million (41%) allocated to Exploration. The $53 million Exploration budget includes 23 exploration wells and seismic, which is primarily focused on Egypt (96%). In the Western desert, 10 of the exploration wells are planned to test 10 of the 38 prospects summarized in the independent resource report. The total working interest Mean Prospective Resource (prior to the application of geologic success) to be evaluated by the 2013 ten well exploration program, is approximately 75 million barrels.


 

Article Tags

TransGlobe Energy Egypt Middle East Finance Operations Update Production Update North Africa


This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More


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