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Sample Issue -- December 27, 2007
TransGlobe Puts Canadian Assets On The Block
Calgary-based TransGlobe Energy Corporation says it plans to
seek a buyer for its Canadian assets as it focuses on its properties in Yemen
and Egypt where it has experienced higher growth rates and a higher return on
investment.
The company anticipates the sale could be completed by April 2008, subject to
satisfactory terms being achieved.
In Canada, two (0.7 net) potential gas wells and 10 (two net) Horseshoe
Canyon coalbed methane wells were drilled in the Thorsby and Morningside areas
in November and December.
TransGlobe is projecting a 2008 capital budget of $48 million, funded from
cash flow and working capital and split equally between exploration and
development. Estimated cash flow from operations for 2008 is between $47 million
and $51 million based on an average dated Brent oil price of $80 per bbl and an
average AECO gas price of $6 per mcf.
The forecast is based on an estimated production target of 5,500 to 5,700
bbls of oil equivalent (BOE) per day, assuming the Canadian properties are sold
in April.
Total production in the fourth quarter of this year is expected to average
approximately 7,000 BOE a day, a 34% increase over the third quarter due to the
addition of the West Gharib producing assets in Egypt. TransGlobe's production
is 85% oil and natural gas liquids and 15% natural gas.
In West Gharib where the company has an operated 45% to 70% working interest,
the development well currently drilling at Hana #11 (70% working interest) is
expected to reach total depth in the next week. The well has encountered oil in
the main producing zone of the Hana field and will be drilled to a total depth
of more than 2 700 metres to evaluate several exploration targets below the Hana
field. The next scheduled well at Hana #13 may also be drilled to evaluate
deeper horizons, depending upon the results of the current well. The wells can
be placed on production immediately following completion and testing, during
January.
TransGlobe is finalizing an agreement for a third drilling rig to begin
operations in West Gharib by July 2008.
In the Nuqra Block 1 in Egypt (50% working interest and operator), the
successful identification of a 460 metre interval of mature source rocks in the
shallower Cretaceous section of the Narmer #1 exploration well and the discovery
of oil on a non-owned block in the Cretaceous section of Al Baraka #1 on the
west side of the Nile has encouraged the company to continue with additional
exploration drilling on the block.
The existing seismic data was re-mapped and several Cretaceous targets were
identified on the block for a future drilling program. The company is discussing
rig sharing possibilities with the adjacent operators to facilitate a mid-2008
drilling program. TransGlobe said the acquisition of the West Gharib concession
should facilitate cost effective exploration in the Nuqra block.
In Block 72 in Yemen (33% working interest), a seismic acquisition program,
consisting of 410 square kilometres of 3-D (three-dimensional) seismic and 98
kilometres of 2-D (two dimensional) seismic is currently underway and is
expected to be completed during the first quarter of 2008. An exploration well
is expected to commence drilling in the second half of 2008, following the
interpretation of the new seismic data. Two firm exploration wells are planned
for 2008, plus one contingent well. The first exploration phase of Block 72 has
been extended 12 months to January of 2009.
Also in Yemen, a production sharing agreement (PSA) is proceeding through the
government approval and parliamentary ratification process and is expected to be
completed in 2008.
TG Holdings Yemen Inc., a wholly-owned subsidiary of
TransGlobe (33% non-working interest) was part of a joint venture group operated
by DNO ASA (operator at 34%) that successfully bid on Block 84
in December 2006.
The 183,000 acre block in the Masila basin is adjacent to the Nexen
Inc. Masila block where more than one billion bbls of oil have been
discovered. The Block 84 joint venture group plans to carry out a 400 square
kilometre 3-D seismic acquisition program and drill four exploration wells
during the first exploration period of 42 months.
The PSA is now before the Yemen parliament for final approval and
ratification in Block 75 in the Marib basin of Yemen West where TG Holdings has
a 25% working interest with operator Occidental Petroleum
Corporation. The joint venture group plans to carry out a 3-D seismic
acquisition program and the drilling of one exploration well during the first
exploration period of 36 months.
A combined seismic program of approximately 400 square kilometres is planned
for early 2008 to define additional exploration drilling locations on the
northwest portion of Block S-1 (25% working interest) and the north portion of
Block 75. Drilling is planned for late 2008 or early 2009.
The timing of the 3-D seismic acquisition program and subsequent drilling is
contingent upon receiving final approval and ratification of the Block 75
PSA.
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