TransGlobe Energy Corporation is pleased to provide an update on its operations and production. Two oil wells were completed since the last update provided on November 25, 2009. The Company's first horizontal well in Egypt at Arta #12 was drilled to a total depth of 5,217 feet with a 1,519 foot horizontal section in the Nukhul reservoir.
The well was placed on production during the first week of December at a rate of 30 barrels of oil per day ("Bopd") of 19° API oil, with no water cut. A multi-staged fracture stimulation program is being designed to improve access to the reservoir and potentially increase production rates. The stimulation program is expected to be completed in the next sixty (60) days, subject to the availability of stimulation equipment. If successful, additional horizontal wells will be drilled in the Arta field.
A development/appraisal well at Hana West #8 was drilled to a total depth of 6,971 feet and cased as a multi-zone oil well. The well was completed in the lower Rudeis formation and placed on production at a rate of 730 Bopd on December 27, 2009. The well also encountered an extension to the main Hana pool (Kareem/Markha formation) and a new oil pool in the Shagar formation, which have not been completed. The rig was then moved to a step-out location at Hana #20 on the south end of the Hana field. The Hana #20 well reached a total depth of 5,505 feet in eight (8) days on January 3, 2010, making it the fastest well ever drilled in the Hana field. The open-hole well logs indicate 32 feet of net oil pay was encountered in the Kareem/Markha sands. It is anticipated the well will be placed on production in mid-January.
Following Hana #20, the drilling rig is scheduled to move to North Hoshia #2, to drill a step out appraisal well targeting the Nukhul and Thebes formations in the North Hoshia pool.
TransGlobe's 2009 average oil production increased 22% over 2008. The Company's 2009 average production was 8,970 Bopd (in-line with Company guidance) comprised of 5,830 Bopd from West Gharib and 3,140 Bopd from Yemen. The December 31, 2009 exit sales rate was 9,428 Bopd (6,474 Bopd from West Gharib and 2,954 Bopd from Yemen), primarily due to the addition of new wells at Arta and Hana West in Egypt.
TransGlobe has projected funds flow from operations for 2010 of $55.0 million, based on an average Dated Brent oil price of $65.00/Bbl and mid-point of production guidance. The 2010 funds flow sensitivity to a change in oil price is approximately $1.0 million per dollar change in Dated Brent (i.e. $65.0 million for $75.00/Bbl Dated Brent). The 2010 funds flow forecast is based on an estimated production target of 9,300 to 9,700 Bopd (firm, plus contingent budget), with a targeted exit rate over 10,000 Bopd.