CALGARY, ALBERTA--TransGlobe Energy Corporation (TSE, symbol
"TGL"; OTC-BB symbol "TGLEF") announces its financial and
operating results for the year ended December 31, 2000. The
Company 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.
* 50% increase in proven reserves
* 800% increase in production during 2000
* First oil production from the Tasour field on Block 32, Republic
* Additional 4% working interest acquired in Block 32, Republic of
* Seven wells drilled in Yemen resulting in two oil wells, an oil
discovery and a gas condensate discovery.
* Four new gas wells brought into production in Canada
* U.S. properties sold, proceeds reinvested in Republic of Yemen
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 early in 2000. Vintage Petroleum International
Inc., a 100 percent subsidiary of Vintage Petroleum Inc. ("VPI"
NYSE), the operator of the project, drilled four wells in the
first exploration period with very encouraging results. Two wells
were drilled into a large gas condensate pool with excellent
reservoir quality. There are geochemical indications that a
potential oil rim exists downdip from the gas condensate.
Additional drilling is required to determine if an oil rim is
indeed present on the An Naeem structure, similar to the adjacent
Halewah field which produces 15,000 barrels of oil per day
("Bopd") from an oil rim down dip of a large gas cap.
The second exploration well, Harmel #1, encountered medium gravity
oil in three shallow zones. The well was recently pump tested
using a variable speed hydraulic pump. The test yielded combined
daily production ranging between 180 and 470 barrels of oil. The
medium gravity sweet crude was tested from three separate zones
between 465 to 673 meters (1,526 to 2,208 feet). The Ministry of
Oil and Mineral Resources ("MOMR") has recently approved a nine
month extension to the First Exploration Period to allow Vintage
and TransGlobe to drill an appraisal well on the Harmel structure
and to carry out longer term production testing. The appraisal
well will provide the additional reservoir information necessary
to determine if sufficient reserves exist to establish
commerciality. Should development proceed, as many as forty
additional shallow wells could be required to exploit the
structure fully. A structural closure of up to 25 square
kilometers (10 square miles) can be mapped on good quality 3-D
seismic data. The Harmel #1 discovery is located approximately 10
kilometers (6 miles) from the nearest pipeline tie-in point. The
combination of shallow drilling depths and nearby pipeline
facilities will enhance development economics significantly.
Production testing of Fordus #1, the third exploration well on
Block S-1, was completed in December 2000. Four separate zones
were tested without recovering any significant hydrocarbons. The
Fordus #1 well was subsequently plugged and abandoned.
In addition to potential follow-up drilling locations at An Naeem,
Harmel and the Shell discovery at An Nagyah, TransGlobe has
identified more than twenty additional undrilled prospects and
leads utilizing 2-D and 3-D seismic on the 1,100,000 acre Block.
The 2001 exploration program will encompass the acquisition of 230
square kilometers of new 3-D seismic to be followed by one
exploration well in 2001 and additional drilling in 2002. The
Second Exploration Period of 2.5 years will commence in March
2002. The 2001 seismic and drilling program will partially satisfy
the Second Exploration Period work commitments. A production
period of twenty years could be entered into should Vintage and
TransGlobe wish to proceed with development of an oil field.
Block 32, Republic of Yemen (13.81% working interest)
The Block 32 joint venture group drilled two wells during 2000,
resulting in one oil well at Tasour #4 and a dry hole at Tasour D.
The Tasour #5 well, which was drilling at year end, was
subsequently completed as an oil well.
The Block 32 development construction was completed during 2000
and the Tasour field was placed on production in November 2000.
The project cost came in 15% under budget and is the fastest field
development ever done in the Republic of Yemen. Production
averaged 6,350 Bopd (875 Bopd net to TransGlobe) for the two
months ended December 31, 2000. Production in 2001 is expected to
average 7,200 Bopd (994 Bopd to TransGlobe). The development
project consisted of the construction of an 8 inch diameter
pipeline, 40 miles in length, and production facilities. The
Tasour central production facilities are designed to process
15,000 Bopd, but can be expanded to match the 8 inch pipeline
capacity of 25,000 Bopd for a relatively small incremental
investment. The Development Area, which is approximately 570
square kilometres (220 square miles), 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.
TransGlobe's independent engineering consultants, Fekete
Associates Inc. of Calgary, have assigned proven plus probable
reserves of 6.6 million barrels (914,200 barrels net to
TransGlobe) for the Tasour "B" structure in their evaluation dated
January 1, 2001. This is essentially unchanged from the previous
The Company expanded its interest in Block 32 by purchasing an
additional four percent working interest for a total of
$2,136,163. The transaction was effective January 1, 2000 and
increased the Company's working interest to 13.81087%. The Company
made an initial payment of $1,176,163. A potential future
obligation totaling $960,000 will be due in six payments of
$160,000 for each cumulative million barrels of gross oil
production commencing at 7 million barrels to a maximum of 12
million barrels of oil from the Block. The purchase agreement and
assignment of interest is subject to approval by MOMR in the
Republic of Yemen.
The Block 32 partnership plans to expand the production from the
Development area during the coming years. There are currently
eleven prospects and leads identified on the mapping of the 2-D
seismic grid. A new 2-D seismic acquisition program of 120
kilometers is planned to commence in June 2001. This program is
expected to refine the drilling locations on three to four
prospects located in the northwest area of Block 32. A drilling
program consisting of one development well in the Tasour field and
one exploration well is planned for the fourth quarter of 2001. A
successful development well will maintain production levels in the
Tasour field and deplete the pool efficiently. If the new
exploration drilling proves successful then a fast track tie-in to
the Tasour facilities could raise production levels significantly
During 2000, the Company drilled four wells resulting in three gas
wells and one dry hole. One well was drilling at year end and was
cased as a potential gas well in 2001. Additional activities
included several well workover/re-activations and two
Canadian production averaged 119 barrels of oil equivalent per day
("Boepd") in the year 2000, with a December exit rate of 180 Boepd
(60% gas at 10:1).
The proven reserves were increased by 143% from 206 thousand
barrels of oil equivalent (Mboe) to 502 Mboe, representing a 682%
replacement of the 2000 annual production. All the reserve
additions were natural gas and liquids which, when combined with
the record prices for natural gas, have significantly increased
the net present value of the Canadian reserves. On an escalated
pricing basis, the net present value of the proven reserves
discounted at 15% increased 400% from $1.1 million in 1999 to $5.5
million in 2000. (Using constant pricing has increased 560% from
$1.2 million in 1999 to $8.0 million in 2000).
TransGlobe increased its undeveloped land position to 10,000 net
acres and generated a number of drillable gas prospects within its
Canadian core focus area in central Alberta. The Company has
budgeted to drill several gas prospects during the year 2001, in
addition to planned re-entries and workovers. TransGlobe is well
positioned to profit from record natural gas prices in North
America through expanded gas production.
During the year 2000 the Company sold all its oil and gas
properties in the United States. The net proceeds of $606,059 were
utilitized to fund a portion of the Company's acquisition of an
additional 4% working interest in Block 32, Yemen. Production in
the United States averaged 42 Boepd for the year 2000 compared to
100 Boepd in 1999. The decision to divest these assets was made in
early 2000 and the Company did not engage in any further
development or exploration activity on these lands.
Year Ended Fifteen Months Ended
December 31, December 31,
Financial (U.S. Dollars) (U.S. Dollars)
Oil and gas revenue net
of royalties $2,403,266 $1,096,232
Cash flow from operations 929,529 190,923
Basic per share $0.02 $0.01
Net income (loss) 307,967 (232,828)
Basic per share $0.01 ($0.01)
Capital expenditures - Canada 1,118,266 527,477
Capital expenditures - U.S. 17,909 97,266
Capital expenditures - Yemen 4,855,141 1,821,369
Proceeds from property disposal 606,059 1,101,945
Debt ** - $748,405
Common shares outstanding
Basic 50,500,801 33,417,244
Fully diluted 57,822,107 38,977,559
Oil and liquids (bopd) 245 121*
Gas (mcfpd) 548 554*
Total (boepd) 299 176*
*Includes acquired Moiibus production from April 28th forward.
**Redeemed on February 29, 2000 and converted to share capital
The average oil price for the year 2000 was $25.68 per barrel
compared to $15.70 per barrel for the fifteen month period ended
December 31, 1999. The average natural gas price for 2000 was
$3.93 per Mcf compared to $2.01 per Mcf for 1999.
The netback per barrel of oil equivalent ("Boe") was $17.37 during
2000 and $9.87 per Boe in 1999. The increase in the netback
between periods is attributed to the increase in commodity prices
in the year 2000.
The Company financed the Block 32 development program and
exploration program on Block S-1 with proceeds from three equity
issues, the sale of the United States properties and the exercise
of warrants due in 2000.
The Company has a $760,000 revolving loan facility and a $665,000
non-revolving acquisition facility with a Canadian chartered bank.
At December 31, 2000, $77,634 was drawn on the revolving loan
Based on current projections, all of the 2001 capital program can
be funded from cash flow and the undrawn loan facility.
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.
TRANSGLOBE ENERGY CORPORATION
Ross G. Clarkson
President & C.E.O.