Transglobe Energy Corporation Announces 2001 Second Quarter Results

Aug 21, 2001 - 01 43 ET

CALGARY, ALBERTA--TransGlobe Energy Corporation ("TransGlobe" or 
"the Company") (TSE, symbol "TGL"; OTC-BB symbol "TGLEF") is 
pleased to announce its financial and operating results for the 
six months ended June 30, 2001. All dollar values are expressed in
United States dollars unless otherwise stated.  


* Record daily production of 1,370 barrels of oil equivalent for 
first six months 

* Record cash flow of $3,544,619 and earnings of $2,039,401 for 
first six months 

* 120 km 2-D seismic acquisition program completed on Block 32, 

* 230 square km 3-D seismic acquisition program commenced on Block
S-1, Yemen 

* Successful gas exploration in Canada 



                             Three                  Six
                             Months                 Months
                             Ended                  Ended
                             June 30                June 30
Financial    2001        2000      Change  2001       2000     Change
Oil and gas 
 revenue net 
 royalties   $2,488,120 $ 221,917  1,021% $4,978,085 $  488,732  919%
 expense     $  329,313 $  93,132    254% $  777,832 $  179,169  334%
   $/Boe     $     2.70 $    8.85   (69)% $     3.14 $     7.35 (57)%
 expense     $  187,467 $ 244,424   (23)% $  320,190 $  461,871 (31)%
 depreciation$  755,000 $  79,500    850% $1,489,000 $  172,000  766%
Income taxes $  182,491         -      -  $  351,658       -       -
Cash flow
 operations  $1,805,319 $(115,684)     -  $3,544,619 $ (158,339)   -
 Basic and 
  per share  $     0.04         -      -  $     0.07       -       -
Net income
 (loss)      $1,034,101 $(195,184)     -  $2,039,401 $ (335,633)   -
 Basic and
  diluted per
  share      $     0.02 $   (0.01)     -  $     0.04 $    (0.01)   -
 expenditures$  628,566 $ 609,692      3% $1,747,941 $1,031,490   69%
Working capital                           $1,937,524 $  194,719  895%

Common shares outstanding
   average)                               50,535,332 39,597,897   28%
   average)                               51,238,336 43,099,324   19%

Oil and
 liquids (Bpd)    1,227        89  1,279%      1,255        99 1,168%
Gas (Mcfpd)       1,147       297    286%      1,153       357   223%
Total (Boed)
 (10 : 1)         1,342       119  1,028%      1,370       135   915%



Block 32, Republic of Yemen ( 13.81087% working interest) 

The 2001 seismic acquisition program, consisting of 120 kilometers
of 2-D seismic, commenced in late May and was completed in early 
August. The data is currently being processed. The primary focus 
of this year's seismic program is to further define the Tasour 
field and to refine drilling locations on several prospects 
located in the northwestern portion of the Block 32 development 
area. The new seismic in the northwestern portion of the 
development area was shot to evaluate the trend mapped towards 
Block 32 from the non-owned Sharyoof discovery on the adjacent 
Block 53. Two Qishn wells were drilled on Block 53 at Sharyoof 
with well tests of 5,000 and 16,500 barrels of oil per day 
("Bopd") respectively. It is expected that drilling operations 
will commence in October/November with at least one Tasour 
development well followed by an exploration well in the northwest 
portion of the development block. Now that the Tasour facilities 
and pipeline are operational they can be used to develop any new 
discoveries quickly, which significantly enhances future 
investment in Block 32. 

Block S-1, Republic of Yemen ( 25 % working interest) 

The 230 square kilometer 3-D seismic and surface geo-chemistry 
acquisition program commenced in June 2001. The completion of the 
acquisition, processing and interpretation are projected for 
December 2001. A new exploration drilling program, along with an 
appraisal well on the Harmel structure, is expected to start in 
the first quarter of 2002. The 3-D seismic program is designed to 
evaluate a potential trend of the Alif and Lam formations 
identified on existing 2-D seismic. The trend extends from the 
adjacent Jannah Hunt, Dhahab and Al Nasr oil fields (currently 
producing in excess of 40,000 Bopd) southeast to the Shell 
discovery at An Nagyah. An exploration well is planned for this 
area in early 2002. The proposed Harmel #2 appraisal well will be 
designed to test and evaluate the shallow oil zones encountered in
Harmel #1. To save costs Harmel #2 will be drilled in conjunction 
with the exploration drilling program during the first quarter of 
2002. Assuming Harmel #2 encounters similar oil reservoirs to 
Harmel #1, a pilot project is planned to complete and equip both 
Harmel #1 and #2 for longer-term production to determine the 
feasibility of a full-scale commercial development. Although the 
production rates are low by Yemen standards, the Harmel 
structure's size and the shallow drilling depth enhance the 
economics of a potential development. The gas condensate discovery
at An Naeem #1 and #2 will be further evaluated during 2001 to 
determine if an oil rim does indeed exist down dip. TransGlobe's 
management continues to view Block S-1 as highly prospective for 
large oil accumulations and will focus a significant amount of 
exploration effort on the area. It will take several years to 
evaluate the potential of Block S-1 due to the size of the block 
and the numerous potential reservoir zones. 


At Morningside, Alberta, the Company re-entered and successfully 
completed a Mannville Gas well (100% working interest) which is 
expected to produce 400-500 thousand cubic feet per day of natural
gas ("Mcfpd") and 10-20 barrels per day of liquids.  In addition 
to the re-entry, the Company acquired an additional section of 
land in July (75% working interest) and will re-enter an abandoned
well on the section for Mannville gas production.  TransGlobe has 
increased its working interest to 75% from 37.5% in the 
Morningside 8-20 well drilled over year end.  The 8-20 well will 
be recompleted for potential Mannville gas production in August. 
It is anticipated that the three Morningside wells (2.5 net wells)
will be tied in for production prior to the winter heating season.

The Company acquired a suspended oil well in a new property at 
Morinville, Alberta. The well was successfully re-completed  as a 
dual zone gas well that tested in excess of 1,000 Mcfd. It is 
expected that the gas well (32% working interest) will be tied in 
for production by year end. 

At Elk Island the Company drilled a Mannville gas test (50% 
working interest) which was plugged and abandoned. 


Two significant events affected operations between the six month 
periods ended June 30, 2001 and 2000. The most significant event 
is the new production from the Tasour field on Block 32, Yemen; 
this field started producing in November, 2000. The other 
significant event is the absence of operations in the United 
States in 2001. The Company divested its oil and gas properties in
the United States effective October 31, 2000. Proceeds from the 
sale of these properties were re-invested in Yemen. 


The first full two quarters of production for the Tasour field in 
Yemen yielded an average production rate of 1,193 Bopd to 
TransGlobe. The field commenced production in November, 2000. It 
is expected that production from the Tasour field will average 
approximately 7,200 Bopd (994 Bopd to TransGlobe) for the year 

Production from Canada averaged 177 barrels of oil equivalent per 
day ("Boed") in the first half of 2001 compared to 90 Boed in 2000
for the comparable period. The increase in production is 
attributable to two new gas wells brought into production at the 
end of 2000 and the acquisition/tie-in of a gas well at Nevis in 
July 2000. With the sale of the United States properties and the 
addition of gas production from new wells drilled or recompleted 
in Canada, 65% of TransGlobe's Canadian production was gas and 35%
was oil and liquids in the first half of 2001. Production in the 
United States averaged 45 Boed in the first half of 2000, 
primarily oil, from four wells in Montana. 


Management's discussion and analysis ("MD&A") should be read in 
conjunction with the unaudited interim financial statements for 
the three months and six months ended June 30, 2001 and 2000 and 
the audited financial statements and MD&A for the year ended 
December 31, 2000 included in the Company's annual report. All 
dollar values are expressed in United States dollars unless 
otherwise stated. 

Operating Results 

Net income for the first six months of 2001 was $2,039,401 ($0.04 
per share) compared to a net loss of $335,633 in 2000 with cash 
flow from operations of $3,544,619 ($0.07 per share) compared to a
deficiency of $158,339 respectively. The increase in net income 
and cash flow in 2001 is primarily a result of the addition of 
production from Yemen on Block 32. 

Revenue net of royalties was $4,978,085 for the first six months 
of 2001 compared to $488,732 for the same period in 2000 
reflecting the impact of Yemen production on TransGlobe's 
operations. In 2001, revenues net of royalties were $3,878,411 and
$1,099,674 from Yemen and Canada respectively. In 2000, revenues 
net of royalties amounted to $334,836 in Canada and $153,896 in 
the United States. The properties in the United States were 
divested in 2000 to fund activity in Yemen. Revenue in Canada 
increased due to a 118% increase in gas prices and a 97% increase 
in production. Gas prices averaged $5.17 per Mcf in Canada in 2001
and $2.37 per Mcf in 2000. Oil prices in Canada averaged $24.60 
per barrel in 2001 and $26.27 per barrel in 2000. The average oil 
price for the Company's production in Yemen for the first six 
months of 2001 was $23.46 per barrel. The Tasour field oil 
production in Yemen is marketed by Nexen Marketing International 
Ltd. and the oil price is based on a Brent price less a 
quality/transportation differential between the Brent blend and 
the Yemen Masila crude oil blend. 

Operating costs of $777,832 averaged $3.14 per Boe in the first 
two quarters of 2001 compared to $179,169 ($7.35 per Boe) in 2000.
The decrease on a relative basis is due to the Yemen Block 32 
operations which averaged $2.60 per barrel in 2001. 

The netback per Boe was $16.94 during the first two quarters of 
2001. The comparable figure for the same period in 2000 was $12.71
per Boe. The increase in netbacks between periods is primarily due
to the addition of Yemen production, the increase in Canadian gas 
prices and a reduction in per unit operating costs. 

General and administrative expenses were $320,190 ($1.29 per Boe) 
for the six month period ended June 30, 2001 as compared to 
$461,871 in the comparable period. In 2000, costs of $140,000 were
associated with legal fees incurred to defend the Company against 
a shareholder's claim, in the State of Florida, relating to a 1996
private placement transaction concluded by previous management. 
The claim was settled later in 2000. In addition, the Company 
recognized a bad debt of $40,000 in 2000. 

Depletion and depreciation was $1,489,000 for the first two 
quarters of 2001 compared to $172,000 in 2000. The increase is 
attributable to the inclusion of a depletable base from Block 32 
in the Republic of Yemen. The rate of depletion for the Yemen 
properties was 41% for the first two quarters reflecting the 
conservative proven reserves assigned to the Tasour field at year 
end 2000. Unproven properties in the amount of $10,384,000 were 
excluded from costs subject to depletion and depreciation 
representing all costs incurred in Block S-1 and costs on Block 32
relating to exploration and development not directly incurred on 
the currently producing property. These costs will be included in 
the depletable base over the period of the development term of 
20-25 years as the Block is fully developed. 

Current income tax in the amount of $351,658 represents income 
taxes incurred and paid under the laws of the Republic of Yemen 
pursuant to the production sharing agreement on Block 32 in the 
first two quarters of 2001. 

Capital Expenditures 

Capital expenditures were $1,059,818 and $688,123 in Yemen and 
Canada respectively in 2001. Expenditures in Yemen were primarily 
for drilling and completing Tasour #5 on Block 32, costs for the 
Harmel long term production test and annual Yemen government bonus
payments on Block S-1. Canadian capital expenditures in 2001 
relate to several Crown land purchases, drilling wells at 
Morningside and Elk Island and recompletion costs in the 
Morinville, Morningside and Thorsby areas. 


The Company's growth strategy for 2001 will continue to favor 
exploration and development on the Yemen properties. Seismic 
acquisition is currently underway on both our Yemen projects and 
drilling is planned for 2001/2002. In the Block 32 development 
area drilling and seismic work will be carried out on the Tasour 
structure as well as seismic and exploration drilling on some of 
the additional eleven prospects. The 2001 Block 32 joint venture 
budget and work program includes the acquisition of 120 kilometers
of 2-D seismic, drilling at least one development well in the 
Tasour field and one exploration well.  In Block S-1 it is 
expected that the 230 square kilometer 3-D seismic program will be
processed and interpreted by the end of 2001, with a multi-well 
drilling program consisting of an appraisal well at Harmel and 
several exploration wells commencing in the first quarter of 2002.

The Canadian focus will continue to be on the exploration and 
development of gas prospects in Central Alberta to capitalize on 
the strong North American natural gas prices.  In addition to the 
acreage the Company has assembled on gas prospects at Cherhill, 
Thorsby, Rimbey, Mikwan, Fort Kent and Wrentham, a number of new 
prospects have been posted for upcoming land sales this fall. 

The Company's management intends to continue with the successful 
business plan developed over the previous three years.  That 
strategy is to focus the majority of our capital and efforts on 
our highly prospective projects in Yemen.  We will continue to 
grow the Canadian production as the financial and operating 
platform supporting our international endeavors. 

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. 


Lloyd W. Herrick, Vice President & C.O.O. 



TransGlobe Energy Corporation
Ross G. Clarkson
President & C.E.O.
(403) 264-9888
(403) 264-9898 (FAX)


TransGlobe Energy Corporation
Lloyd W. Herrick
Vice President & C.O.O.
(403) 264-9888
(403) 264-9898 (FAX)