TransGlobe Energy Corporation (“TransGlobe”) announces its 2021 capital budget and production guidance. All dollar values are expressed in US dollars unless otherwise stated.
2021 BUDGET HIGHLIGHTS
-2021 capital budget of $27.2MM (before capitalized G&A);
- Egypt $16.6MM
- Canada $10.6MM
-With a significant portion of investment scheduled in the second half of the year, 2021 average production guidance is set at 12.0 to 13.0 MBoepd with a midpoint of 12.5 MBoepd:
- Egypt 9.7 – 10.5 MBopd;
- Canada 2.3 – 2.5 MBoepd;
- With the drilling program back-end loaded the Company expects exit production to be in the range of 13.5 to 14.0 MBoepd;
The 2021 drilling program includes 12 Egypt wells and 3 Canadian Cardium wells in South Harmattan.
Randy Neely, Chief Executive Officer of TransGlobe, said:
“With the approval of the agreement to merge our Eastern Desert concessions behind us and recent commodity price improvements, the Company is rapidly moving forward to re-start investment in Egypt and Canada to support our growth plans in both countries. In Egypt, the focus will be chiefly on growing production in the Eastern Desert while we work to mature our contingent resource portfolio and restart our evaluation of the South Ghazalat acreage. In Canada, the focus will be on developing South Harmattan with a specific goal of decreasing the uncertainty across the northern land holdings. Our 2021 budget underlines the confidence we have in the potential of the TransGlobe portfolio and paves the way to resume dividend distributions in 2022.”
2021 CAPITAL GUIDANCE
The Company’s 2021 capital program of $27.2MM (before capitalized G&A) includes $16.6MM for Egypt and $10.6MM for Canada. The 2021 Plan was prepared to focus on value accretive projects within its portfolio, maximize free cash flow to direct at future value growth opportunities and to increase the Company’s production base.
As announced in early December, 2020, the Company reached an agreement with the Egyptian General Petroleum Company (“EGPC”) to merge its three existing Eastern Desert concessions with a 15-year primary term and improved Company economics. Ratification of the concession is anticipated in Q2, 2021, and the February 1, 2020 effective date for the improved concession terms supports increased investment in parallel with ratification.
The $16.6MM Egypt program is entirely allocated to development. The primary focus of the 2021 Egypt plan is to accelerate the exploitation of the Company’s Eastern Desert acreage with the aim of increasing oil production, while evaluating and increasing production from the more prospective lower Bahariya reservoir on the South Ghazalat development lease in the Western Desert.
The 2021 development program is principally focused on the Eastern Desert and includes: nine development wells in West Bakr (three in H and six in K pools), one Red Bed appraisal well in the NW Gharib 3X pool, two development wells targeting the Arta Nukhul reservoir in West Gharib, two recompletions in West Bakr, two recompletions in West Gharib, three conversions to water injectors in West Gharib, and development/maintenance projects in the Eastern Desert (West Bakr, NW Gharib and West Gharib). A recompletion of SGZ-6X well to the more prospective lower Bahariya reservoir is also planned.
Egypt production is expected to average between 9.7 and 10.5 MBopd for the year and an exit rate of 10.4 to 10.7 MBopd.
The $10.6MM Canada program consists of drilling three (three net) horizontal wells and completing one (one net) standing well, all targeting the Cardium light oil resource at Harmattan, with additional maintenance/development capital. The Cardium drilling program in 2021 consists of one 2-mile and two 1-mile development wells in South Harmattan. The one 2-mile horizontal well drilled, but not completed, in South Harmattan in 2020 will also be stimulated, equipped and brought into production.
Canada production is expected to average between 2.3 and 2.5 MBoepd for the year and an exit rate of 3.1 to 3.3 MBoepd.