CALGARY, ALBERTA--TransGlobe Energy Corporation (TSE, symbol
"TGL"; NASD OTC-BB symbol "TGLEF") announces its financial and
operating results for the fifteen month period ended December 31,
1999. The Company has changed its year end from September 30 to
December 31, effective in 1999, therefore the 1999 year is for the
fifteen month period ended December 31. All dollar values are
expressed in United States dollars unless otherwise stated.
(x) TransGlobe positioned for first oil production in 2000 from
Block 32, Yemen
(x) Exploration drilling in progress on Block S-1, Yemen
(x) Closed rights offering financing for $0.9 million in January,
(x) Strengthened balance sheet moving into 2000
INTERNATIONAL EXPLORATION UPDATE
Block S-1, Republic of Yemen (25% working interest)
Following the 1999 3-D seismic program on Block S-1, exploration
drilling commenced on February 24, 2000. Vintage Petroleum
International Inc., a 100 percent subsidiary of Vintage Petroleum
Inc. ("VPI" NYSE), the operator of the project, will drill three
wells in the exploration phase and is targeting prospects with a
combined reserve potential of 100 million barrels of recoverable
The first well is currently drilling to test the An Naeem
structure, a three kilometre extension of the Halewah field.
Jannah Hunt Oil Co. (JHOC, a subsidiary of Yemen Hunt Oil Co.)
currently produces approximately 25,000 barrels of oil per day
("bopd") from 12 wells in the Halewah field. Block S-1 is adjacent
to the Yemen Hunt Oil Co. block which has proven reserves of
approximately 900 million barrels of oil and 7 TCF of gas and is
also adjacent to Block 20, where Adair International ("AIGI" NASD
OTC-BB) has signed a Memorandum of Understanding with the Ministry
of Oil and Mineral Resources ("MOMR").
The three wells comprise a portion of a farm out commitment by
Vintage. The farm out agreement allows Vintage to earn a 75
percent working interest in Block S-1 by funding 100 percent of
the first $20 million of the Block S-1 exploration work.
TransGlobe will retain a 25 percent working interest after Vintage
earns. The current three well drilling program will test three
separate structures identified by the 1999 3-D seismic program.
Block 32, Republic of Yemen (9.81% working interest)
On February 5, 2000 the MOMR approved the Development Plan and
Development Area for the Tasour field located on Block 32. The
Development Area, which is approximately 380 square kilometres
(151,000 acres) encompasses all of the Tasour structure as well as
eleven additional prospects, identified to date, that could be
drilled in the future. The development/production period will
extend until 2020 with an optional five year extension.
The Block 32 Joint Venture Group development plan for the Tasour
field consists of the construction of production facilities and a
65 kilometer (40 mile) 8 inch pipeline to connect with Canadian
Occidental's export pipeline to the coast. Initial production is
targeting 5,000 to 7,000 bopd (approximately 500 to 700 bopd net
to TransGlobe) from the two existing Tasour oil wells (Tasour #1 &
#3). Completion of facilities and pipeline construction is
projected for September 2000 with first oil sales expected during
October 2000. TransGlobe's independent engineering consultants,
Fekete Associates Inc. of Calgary have assigned proven plus
probable (P50) reserves of 6.9 million barrels (678,000 barrels
net to TransGlobe) for the Tasour "B" structure. This compares
with 12.4 million barrels of probable reserves (P50) assigned to
the Tasour "B" structure at January 1, 1999.
A seismic acquisition program to define additional Tasour
development locations and to firm up additional exploratory
locations was completed March 8, 2000. Results of the seismic
evaluation will be used to finalize a development drilling program
planned for late 2000. Depending on the results of the development
wells, production could increase to 15,000 to 20,000 bopd
(approximately 1,500 to 2,000 bopd net to TransGlobe) by mid 2001.
Once constructed and operational, the production facilities will
allow for cost effective early production from future exploration
locations. By utilizing the Tasour facilities and pipeline,
discoveries of new oil can be rapidly converted into early cash
flow, significantly enhancing future investments in Block 32.
CANADA AND UNITED STATES
During 1999, TransGlobe drilled two (one net) wells in the Rimbey
area of Alberta, resulting in one small Glauconite gas well and
one dry hole.
Subsequent to year end, TransGlobe drilled a Viking gas well (50%
working interest) on its Elk Island prospect. The well was drilled
and cased at no cost to TransGlobe under the terms of the farm-out
agreement with an industry partner. Although the initial drill
stem test of 1.1 million cubic feet of gas per day was very
encouraging the subsequent completion and flow test indicated the
well has limited reserves.
Going forward, the Company will drill two gas wells subject to rig
availability and continue to expand and develop the existing
prospect inventory in Alberta.
Fifteen Months Twelve Months
Ended December 31, Ended September 30,
Financial 1999 1998
(U.S. Dollars) (U.S. Dollars)
Oil and gas revenue net
of royalties $1,096,232 $1,054,774
Cash flow from operations 190,923 109,595
Basic per share $0.01 $0.01
Net loss (232,828) (7,692,405)
Basic per share ($0.01) ($0.42)
Capital expenditures - Canada 527,477 24,915
Capital expenditures - U.S. 97,266 1,723,628
Capital expenditures - Yemen 1,821,369 2,351,953
Proceeds from property disposal 1,101,945 -
Debt (xx) $748,405 $1,486,421
Common shares outstanding
Basic 33,417,244 18,846,118
Fully diluted 38,977,559 21,445,038
Oil and liquids (bopd) 121(x) 162
Gas (mcfpd) 554(x) 648
Total (boepd) 176(x) 227
(x) Includes acquired Moiibus production from April 28th forward.
(xx) Redeemed on February 29, 2000 and converted to share capital
Canadian production during the fifteen month period ended December
31, 1999 averaged 76 barrels of oil equivalent per day ("boepd").
This production was acquired during the year with the acquisition
of Moiibus Resource Corporation in April, 1999. Production in the
United States averaged 100 boepd in 1999 compared to 227 in 1998.
The decline in production is attibutable to the sale of the Madera
gas property in 1999.
The average oil and natural gas liquids price for the fifteen
month period ended December 31, 1999 increased to $15.70 per
barrel as compared to $13.59 per barrel for the twelve month
period ended Septemer 30, 1998. The average natural gas price for
1999 was $2.01 per mcf compared to $2.51 per mcf for 1998.
The netback per barrel of oil equivalent ("boe") was $9.87 during
1999 and $10.79 in 1998. The difference in the netback between
periods is due to the variance in price and change in properties
over the two periods.
On January 21, 2000, the Company successfully completed a rights
offering financing and raised $935,022 by issuing 2,597,283
shares. The proceeds from the Rights Offering will be used to pay
a portion of the Company's estimated share of Block 32 facilities
and pipeline construction costs and to drill additional
development wells on the Tasour discovery.
On February 29, 2000 the Company called for redemption the
$748,404.50 10% convertible subordinated secured debentures due
January 1, 2004 (the "Debentures"), and all holders elected to
convert the Debentures into fully paid and non-assessable common
shares of the Company at US$0.15 per share. As a result,
4,989,354 common shares were issued in respect of the principal
and 12,769 common shares in respect to accrued interest.
TransGlobe has 41,555,089 common shares outstanding as at March 8,
With the convertible debenture redeemed, TransGlobe has no debt
outstanding and an undrawn bank line of Cdn$1,000,000.
This release includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the US Private
Securities Litigation Reform Act of 1995. All statements in this
release, other than statements of historical facts, that address
future production, reserve potential, exploration drilling,
exploitation activities and events or developments that the
company expects, are forward-looking statements. Although
TransGlobe believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such statements are not guarantees of future performance and
actual results or developments may differ materially from those in
the forward-looking statements. Factors that could cause actual
results to differ materially from those in forward-looking
statements include oil and gas prices, exploitation and
exploration successes, continued availability of capital and
financing, and general economic, market or business conditions.
On Behalf of the Board of Directors of
TRANSGLOBE ENERGY CORPORATION
Lloyd W. Herrick
Vice President & C.O.O.