TransGlobe Energy Corporation announces its financial and operating results for the three-month period ended March 31, 2008. All dollar values are expressed in United States dollars unless otherwise stated. The conversion to barrels of oil equivalent ("Boe") of natural gas to oil is made on the basis of six thousand cubic feet of natural gas being equivalent to one barrel ("Bbl") of crude oil. With the sale of TransGlobe's Canadian assets having closed on April 30, the results from the Canadian segment of operations are being presented as "discontinued operations" in this document.
HIGHLIGHTS
• Record production of 7,845 barrels of oil equivalent per day in the first quarter;
• Record cash flow from operations in the first quarter of $17.9 million ($0.30/diluted share);
• First quarter net income of $4.5 million ($0.07/diluted share);
• Completed acquisition of GHP, 900+ Bopd of production in West Gharib (Egypt), effective February 5, 2008;
• Year-to-date drilled four new oil wells, three on West Gharib and one on Block 32 in Yemen;
• Block 75 Production Sharing Agreement (Yemen) fully approved on March 8, 2008;
• Closed sale of Canadian assets April 30, 2008 for Cdn $56.7 million (effective January 1, 2008);
• Increased 2008 production guidance to average 7,300-7,500 Boepd;
• Increased 2008 cash flow from operations guidance to $68.0-$70.0 million.
• Moved from American Stock Exchange to NASDAQ Global Select Market effective January 18, 2008, retaining the trading symbol "TGA";
Corporate Summary
The first quarter of 2008 brought significant additional growth to TransGlobe, with production averaging a record 7,845 Boepd. The acquisition of approximately 900 barrels of oil per day ("Bopd") in the West Gharib area was completed on February 5, adding to the approximately 1,600 Bopd acquired on September 25, 2007. The Company has further increased production from the West Gharib fields by approximately 900 Bopd to approximately 3,400 Bopd since assuming operatorship. Based on the initial drilling success and the planned extensive development program, the production guidance for 2008 has now been increased to 7,300 to 7,500 Boepd (previous guidance: 6,900-7,100 Boepd). Total April production averaged 8,720 Boepd (7,270 Bopd from continuing operations).
The Company achieved record cash flow from operations in the quarter of $17.9 million. During the first quarter, oil prices averaged $96.90/Bbl for dated Brent, the benchmark price of TransGlobe's Middle East/North Africa production, representing a new historic high. Oil prices continued to rise throughout the month of April, setting new records. Accordingly, the Company has revised the budget price assumptions for dated Brent from $80.00/Bbl to $100.00/Bbl for the balance of the year. The revised production forecast and oil price assumptions result in an increased cash flow forecast for 2008 of $68.0 to $70.0 million (previous guidance called for $53.0 to $57.0 million).
Net income per share totaled $0.07 for the first quarter. The Company recorded total derivative losses for the period of $3.9 million. Of this amount, $1.5 million represents a cash expense and the balance of $2.4 million represents an unrealized loss on derivative contracts. TransGlobe's derivative contracts are a requirement under the bank lending facilities. These facilities were used to cover the costs of the initial West Gharib acquisition. Managing risk in commodity price fluctuations through derivative contracts is common practice in the oil and gas industry in order to protect cash flows.
With the acquisition of GHP, the sale of the Canadian assets, and organic growth achieved at West Gharib in a short period of time, TransGlobe has successfully transitioned to a pure Middle East/North Africa growth company. The Company is well underway to achieving its mid-term objective of "10 by 10" - 10,000 Boepd by 2010. An additional 10-12 wells are planned in Egypt for the balance of the year as well as enhanced recovery projects in West Gharib. In Yemen, a further six to eight wells are planned, which could increase both production and reserves.
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