TransGlobe Energy Corporation announces approval of new development lease, operations update

5/29/2019

CALGARY -- TransGlobe Energy Corporation announces an approval of a new development lease and an operations update. All dollar values are expressed in US dollars unless otherwise stated.

Summary

  • South Ghazalat Development Lease approved, targeting an initial ~1000 bopd from the upper Bahariya formation with first oil expected in fourth-quarter 2019;
  • Production averaging ~17.0 MMboepd during May (month to date) consistent with April production of 17.0 MMboepd and 7% higher than the first-quarter average production;\
  • Drilled and cased the K-63 Development well as an Asl A formation oil well with an internally estimated 74 ft of net oil pay;
  • HW-2X discovery well drilled in April continues to clean up and is currently producing ~700 bopd (field estimate).

Corporate production increased during the second quarter due to drilling and well optimization results in Egypt and new wells in Canada, which was partially offset by reduced ethane production in Canada.

Operations update

Arab Republic of Egypt

Western Desert – South Ghazalat (100% WI)

The company received notice that the Development Lease (“DL”) application for the SGZ-6X discovery well which tested ~3,840 bopd of light oil* has been approved by the Ministry of Petroleum.

The 29.8 km² (7,340 acre) DL has a twenty (20) year primary term with a 5 year extension available. In addition to the $1 million DL bonus (as per the concession agreement), the Company has committed to drill a minimum of one exploration well on the DL within the first four years of the primary term. Upon receiving approval of the South Ghazalat DL, and having met all the commitments for the first two exploration phases, the Company elected not to enter the final 18 month exploration period and relinquished the balance of the South Ghazalat exploration lands.

The near term development plan is targeting first oil production from the SGZ-6X discovery well in the fourth quarter of 2019. The initial development includes the construction of an early production facility (“EPF”) and equipping the SGZ-6X well for production. The company is targeting to initially produce the SGZ-6X well at ~1,000 bopd from the Upper Bahariya formation to assess reservoir performance. Subject to finalizing transportation agreements with neighboring operators, the 34 API oil will initially be trucked to a nearby facility (~15 km) which is pipeline connected to the El Hamra Terminal located on the Mediterranean coast. Concurrently the company is planning to drill an appraisal well in third quarter/fourth quarter (subject to rig availability) which, if successful, would be tied into the EPF and potentially be producing prior to year-end. In addition, the Company has initiated a project to merge and reprocess two existing 3D seismic surveys over the DL area to better define prospects and leads identified from current mapping for future exploration and appraisal drilling.

Eastern Desert (100% WI)

In West Bakr, the K-63 development well was drilled to a total depth of 4,741 ft and cased as an Asl A formation oil well. The K-63 well encountered an internally estimated 74 feet of net oil pay in the main Asl A pool based on well logs and samples. It is expected that K-63 will be completed and placed on production by early June, along with the previously drilled H-30 development well (internally estimated 25 feet of net oil pay). Also in West Bakr, the HW-2X discovery well (internally estimated 113 ft of net oil pay) is producing ~700 bopd (field estimate).

The drilling rig is scheduled to move to NW Gharib to drill an exploration well at NWG 38D-1 targeting the Red Bed formation in an adjacent fault block to the east of the producing 38A pool. The company initiated water injection in the NWG 38A Red Bed pool during the quarter to maintain reservoir pressure and increase recoveries.

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