TransGlobe Energy Corporation (TransGlobe" or the "Company) is pleased to provide guidance for 2013 and a mid-quarter update for the fourth quarter of 2012. All dollar values are expressed in United States dollars unless otherwise stated.
Operations and Exploration
In the second half of 2012 the Company focused the drilling campaign on new prospects for potential reserve additions. The West Gharib area has once again proved to be our best project with four new pool discoveries during the second half of 2012. These new discoveries will provide a conservative reserve addition for 2012. Significant additional reserves and production could result from successful appraisal drilling on the new pools during 2013 and 2014.
During the fourth quarter, the Company drilled three wells resulting in two oil wells at Hoshia (one new pool discovery) and one dry hole at Fadl. The rig is currently drilling at Hoshia and will move to the Arta/East Arta area in 2013 for continued development drilling and appraisal of the 2012 new pool discoveries.
The Company commenced a completion and stimulation program in mid-October to evaluate new pools and pool extensions which were drilled in the third and fourth quarters of this year. During the quarter the company successfully completed four Arta/East Arta wells. Three of the completions were in new pools at Arta/East Arta which expands the company's future drilling inventory.
At Arta/East Arta the company has tested oil from two new Upper Nukhul pools. One is located on a separate structure east of the main Arta pool and the second is on a horst block west of the main Arta pool. Both wells have been stimulated and are being placed on production. It is expected they will be similar to the typical Arta Field Upper Nukhul wells which produce approximately 200 Bopd, based on the average 90 day production rate. The new pools could provide up to an additional 15 appraisal/development locations for 2013/14. These new pool discoveries will also provide additional exploration targets for the adjacent NW Gharib concession which the Company successfully acquired at the 2011/12 EGPC Bid round (November 6, 2012 press release).
In addition the Company has completed a new pool discovery in the Thebes formation located on the North/East corner of the East Arta concession. The well encountered approximately 550 feet of fractured carbonate in the Thebes formation on an untested horst block. The well was completed, stimulated and has been on production for approximately 20 days. The well is currently producing approximately 100 Bpd of 22 API oil with a 45% water cut. Based on the encouraging early production results the company has identified up to eight appraisal/development locations for the 2013/14 drilling program. This new pool discovery will also provide additional exploration targets on the adjacent NW Gharib Concession (100% TG).
At Hoshia, the Company drilled a separate Lower Rudeis pool immediately south of the Hoshia Lower Rudeis pool. The new pool is not in pressure communication with the Hoshia pool based on virgin MDT pressures obtained in the well. The new well will be perforated and placed on pump at an expected initial production rate of 400 to 600 Bopd based on historical well performance in the original Hoshia pool. It is expected that two or more appraisal wells will be required to fully delineate/develop this new pool in 2013.
Production averaged 12,461 Bopd to TransGlobe during November which represents a 26% increase over the October production of 9,867 Bopd. October production was lower due to an illegal eight day labor protest at the start of the October which deferred approximately 100,000 barrels of production.
Production in December has averaged approximately 12,470 Bopd to date.
The Company expects to start trucking a portion of the Hana/Hana West production to the newly constructed facilities at the West Bakr K station for delivery through the West Bakr pipeline system into the GPC export system prior to year end. By diverting up to 2,500 Bopd of Hana/Hana West production through the West Bakr pipeline system, it is expected West Gharib will be able to utilize a portion of the Hana/Hana West capacity at the GPC truck terminal to deliver additional West Gharib production which has been curtailed due to GPC truck terminal constraints. Additional, unidentified constraints could be experienced in the GPC processing facilities when the combined production approaches the 20,000+ Bopd level. The Company is working with GPC to identify bottlenecks and optimize throughput. Currently West Gharib and West Bakr are delivering approximately 18,000 Bopd into the GPC system.
Concurrently, work continues on Phase 2 expansions of the new Hoshia and Arta South multi-well batteries ("MWB") which were built in 2012. In addition, work has commenced on the new MWB located in the North West corner of East Arta which is targeting a Q-1, 2013 startup and plans have been finalized for a new Arta Main MWB in the central part of Arta, which is targeting a Q4, 2013 startup.
The Company continues to progress a number of longer term infrastructure projects in the West Gharib/West Bakr fields to deliver West Gharib production to GPC by pipeline and thereby eliminate oil trucking outside the West Gharib field area.