TransGlobe Energy Provides Mid-quarter Update For Q4, And Guidance For 2014

(RTTNews) - TransGlobe Energy Corp. (TGA, TGL.TO) provided a mid-quarter update for the fourth quarter of 2013, and guidance for 2014.

The company said it drilled two wells since the end of the third quarter resulting in an oil well at Hana and one dry hole at Fadl. Year to date the Company has drilled 17 wells resulting in 15 oil wells and two dry holes at West Gharib.

The rig is currently drilling a development well at Hana and is scheduled to drill nine wells in West Gharib during the first-quarter and the second-quarter of 2014 prior to moving to the new Northwest Gharib Concession for the balance of 2014.

The company said it plans to drill up to 17 wells and acquire 3D seismic in 2014 with additional wells and 3D seismic planned for 2015.

The company noted that it is planning to commence drilling in the second quarter, subject to receiving well approvals. A second drilling rig is scheduled to move from the West Gharib concession and commence drilling in North West Gharib in the third quarter.

Production averaged about 6,000 Bopd in October and 5,500 Bopd in November. November production was lower due to a number of pump changes and workovers along with service rig mechanical issues that hampered well servicing efficiency. An additional service rig has been contracted on a short-term basis in order to alleviate the servicing back-log and increase production.

Production averaged 12,000 Bopd in October and 11,900 Bopd in November. Well stimulations and completions have been ongoing but new production additions have been offset by natural declines and higher than anticipated levels of well servicing. Currently, six wells are waiting for servicing to be conducted in December with an additional five wells scheduled for stimulation during December and January.

Production guidance for 2014 is expected to range between 20,000 and 21,000 barrels of oil per day or "Mopd". The mid-point of 20.5 MBopd represents an 11% increase over 2013 estimated production of 18.5 MBopd.

The significant variables in production estimates include the proportion of the year that Block S-1 in Yemen is on production and development drilling results in Egypt.

Funds flow from operations for 2014 is forecast to be $146 million ($1.93 per share) based on an average Brent oil price of $100.00/Bbl using the mid-point of production guidance of 20.5 MBopd.

The 2014 funds flow guidance of $146 million ($100.00/Bbl Brent) represents an 8% increase over 2013 estimated funds flow of $135 million (based on estimated average Brent of $106.32/Bbl in 2013). If $110.00/Bbl Brent pricing is used, the 2014 funds flow of $161 million would represent a 19% increase over 2013 estimated funds flow.

The company expects to spend $100 million on exploration and development projects in 2014. The Company will fund these expenditures through cash generated from operating activities and working capital.

The company noted that it has not provided guidance for any wells in 2014 due to the prolonged delays in receiving military approvals for new wells. It has the financial capacity to increase the 2014 capital program if the necessary approvals can be obtained.