TransGlobe Energy Corporation (“TransGlobe” or the “Company”) (TSX:TGL)(NASDAQ:TGA) today announces its 2015 year-end reserves and update. All dollar values are expressed in United States dollars unless otherwise stated.


  • 2015 year-end corporate Proved plus Probable (“2P”) reserves are 28.7 million barrels (“MMbbls”), which is 14% lower than year-end 2014 due to:
    • 2015 production of 5.3 MMbbls (16% of 2014 year end 2P reserves)
    • Sale of 1.0 MMbbls of 2P reserves at East Ghazalat (3% of 2014 year end 2P reserves)
    • Technical additions of 1.6 MMbbls of 2P reserves due to performance at West Gharib, West Bakr and NW Gharib (5% of 2014 year end 2P reserves)
  • 2015 year-end after tax future net revenues of $195 million (2P reserves discounted at 10%, forecast pricing), a 43% decrease from year-end 2014.
  • 2015 production averaged ~14,500 Bopd with a fourth quarter production rate of approximately 13,400 Bopd.
  • Significant cost saving initiatives were undertaken in 2015 to reduce both operating and G&A costs. These cost savings were achieved through dispositions, reduced staffing, merger of our two operating JVs in Egypt and also through the weakening of the Canadian dollar and Egyptian pound. The focus on further cost savings and capital expenditure deferrals continue in 2016.
  • Cash at year-end 2015 of approximately $126 million.
  • The Company held approximately 923 thousand barrels of entitlement oil in inventory at year-end. Next cargo lifting scheduled for February 2016.


The Company’s 2015 and 2014 year-end reserves were prepared by the independent reserves evaluation firm of DeGolyer and MacNaughton Canada Limited (“DeGolyer”), in accordance with National Instrument 51-101 and the Canadian Oil and Gas Evaluation Handbook.

The following is a summary of DeGolyer’s evaluation for the year ended December 31, 2015 with comparatives to the year ended December 31, 2014. The recovery and reserve estimates of crude oil, natural gas liquids (“NGLs”) and natural gas reserves provided in this news release are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGL and natural gas reserves may be greater than, or less than, the estimates provided herein. All reserves presented are based on DeGolyer’s forecast pricing, effective December 31, 2015 and December 31, 2014, respectively.

Year-End Reserves Summary

(Working Interest, before Royalties)

Oil Reserves Dec. 31
Dec. 31
Dec. 31
Dec. 31
Proved (“1P”) 17.5 9.7 22.1 12.3 (21 %) (21 %)
Proved Plus Probable (“2P”) 28.7 15.9 33.5 18.0 (14 %) (12 %)
Proved Plus Probable Plus Possible (“3P”) 39.9 21.8 43.3 22.4 (8 %) (3 %)

* Net reserves are our working interest share reserves after deducting royalty obligations before tax

Definitions of Reserves Categories:

  • Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
  • Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
  • Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

2015 Reserve Changes

Reserves at 2015 year-end were lower compared to reserves at 2014 year-end primarily due 2015 production, divestment of East Ghazalat and minimal drilling activity in 2015. The Company drilled five wells (three at NW Gharib, one at West Gharib and one at West Bakr), in the first quarter of 2015 prior to releasing the drilling rigs. Production was partially replaced by positive revisions at West Gharib and West Bakr, which were the result of production performance from the West Bakr H and K fields and the West Gharib Arta field.

The following table summarizes the reserve revisions by reserve category.

2015 Reserve Summary of Revisions and Additions*
(Working interest, before Royalties)
2014 Year End Reserves 22.1 33.5 43.3
West Gharib Revisions 0.0 0.4 1.3
West Bakr Revisions 1.0 1.4 2.5
NW Gharib Revisions 0.0 (0.2 ) (0.7 )
East Ghazalat Sale (0.3 ) (1.0 ) (1.3 )
2015 Production (5.3 ) (5.3 ) (5.3 )
2015 Year End Reserves 17.5 28.7 39.9
Change vs Year End 2014 (%) (21 %) (14 %) (8 %)

* Numbers may not add exactly due to rounding

Estimated Future Net Revenues

All evaluations and reviews of future net revenues are stated prior to any provision for interest costs or general and administrative costs, and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimated future net revenues shown below are representative of the fair market value of the Company’s properties. There is no assurance that such price and cost assumptions will be attained, and variances could be material. The recovery and reserve estimates of crude oil, NGL and natural gas reserves provided herein are estimates only, and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGL and natural gas reserves may be greater than or less than the estimates provided herein.

The estimated future net revenues for the years ended 2015 and 2014 presented below in millions of U.S. dollars (“$MM”), are calculated using DeGolyer’s price forecast at December 31, 2015 and December 31, 2014, respectively. The reduction in future net revenues is primarily due to lower reserves and a lower price forecast at year end 2015. The reduction in future net revenues was partially offset by lower future development costs of $ 29 million at December 31, 2015 (compared to $60 million at December 31, 2014) for the 2P case and an improved pricing differential at West Bakr.

Forecast Pricing

Present Value of Future Net Revenues, After Tax ($MM)
Independent Evaluator’s Price Forecast

Present Value December 31, 2015 Discounted at December 31, 2014 Discounted at
By Category 0% 5% 10% 15% 20% 0% 5% 10% 15% 20%
Proved $ 144 $ 122 $ 106 $ 93 $ 83 $ 342 $ 292 $ 255 $ 226 $ 203
Proved plus Probable $ 290 $ 234 $ 195 $ 165 $ 143 $ 503 $ 410 $ 344 $ 296 $ 260
Proved plus Probable plus Possible $ 426 $ 330 $ 266 $ 220 $ 187 $ 652 $ 512 $ 419 $ 354 $ 306

The following table summarizes DeGolyer’s reference price forecast used to estimate future net revenues:

Brent Forecast Pricing ($/Bbl) 2016 2017 2018 2019 2020
Year-end 2015 $ 52.00 $ 60.10 $ 63.34 $ 69.86 $ 75.58
Year-end 2014 $ 75.40 $ 82.03 $ 88.90 $ 96.01 $ 97.85


With the dramatic drop in oil prices, 2015 was the year to reduce costs, preserve capital, optimize production and prepare for the 2016 exploration phase 1 commitment program in the eastern desert.

Production averaged approximately 13,400 Bopd during the fourth quarter of 2015 and 12,800 Bopd in December. The Company did not lift crude oil during the fourth quarter of 2015. The next tanker lifting is scheduled for February of 2016. The Company is working with EGPC to schedule additional liftings for the balance of 2016. At year-end 2015, the Company had approximately 923 thousand barrels of entitlement oil in inventory. It is expected production will be in the 12,000 Bopd range during the first quarter of 2016. The forecast 10% reduction in production is principally due to natural declines, shut in/curtailed high cost (high water cut) producers and delayed recompletion/workover investments in response to significantly lower oil prices in December/January.

Operating costs were reduced in 2015, from the original 2015 plan, through the divestment of high operating cost projects in Egypt and Yemen, and through significant gains made on merging the operations of the Company’s two eastern desert joint venture companies, to eliminate redundancies and improve efficiencies through shared contracting and re-tendering. With the support of EGPC, it is expected that additional efficiencies will be achieved in 2016 with the consolidation of the JV companies into one building with a common leadership team. As a result, the Company is targeting a further drop in operating costs to the $50 million range in 2016.

G&A costs were also reduced in 2015 primarily due to lower expenses (consulting, insurance, travel, and other expenses), and a weakening Canadian dollar and Egyptian pound. The cost reductions were partially offset by termination/retirement fees associated with a 20+% reduction in staff in both Calgary and Cairo during 2015.

Drilling is scheduled to commence in the eastern desert in March/April with one development well in the West Bakr K-south field and up to 22 exploration wells on the exploration concessions (NW Gharib, SW Gharib and SE Gharib) which will satisfy the entire remaining commitments of phase 1 exploration in these blocks. This 2016 exploration drilling program (as disclosed in the Q3 2014 press release November 12, 2015) is targeting a total risked undiscovered resource potential of between 8 and 26 million barrels (on a P-50 and P-mean basis respectively). The Company is in discussions with EGPC for a possible 6 month extension to the first exploration phase (November 2016 to May 2017) to move a portion of the expenditure commitment into 2017. The Company expects to mobilize a second drilling rig later in 2016, dependent on the status of the extension request. It is expected that drilling costs will be 20+% lower than the 2014 program due to re-tendering and well planning conducted in 2015.

The Company continues to actively manage the business for a “lower for longer” oil price by preserving capital while driving down the cost structure across the business.

TransGlobe Energy Corporation is a Calgary-based, growth-oriented oil and gas exploration and development company whose activities are primarily concentrated in the Arab Republic of Egypt. TransGlobe’s common shares trade on the Toronto Stock Exchange under the symbol TGL and on the NASDAQ Exchange under the symbol TGA. TransGlobe’s convertible debentures trade on the Toronto Stock Exchange under the symbol TGL.DB.

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