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TransGlobe Energy Corporation Announces Second Quarter 2020 Financial and Operating Results for the Three and Six Months Ended June 30, 2020

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AIM & TSX:  "TGL" & NASDAQ:  "TGA"

This Announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR"). Upon the publication of this Announcement, this inside information is now considered to be in the public domain.

CALGARY, Alberta, Aug. 11, 2020 (GLOBE NEWSWIRE) -- TransGlobe Energy Corporation ("TransGlobe" or the "Company") is pleased to announce its financial and operating results for the three and six months ended June 30, 2020. All dollar values are expressed in United States dollars unless otherwise stated. TransGlobe's Condensed Consolidated Interim Financial Statements together with the notes related thereto, as well as TransGlobe's Management's Discussion and Analysis for the three and six months ended June 30, 2020 and 2019, are available on TransGlobe's website at www.trans-globe.com.

HIGHLIGHTS:

  • TransGlobe is focused on conserving cash to proactively manage its balance sheet in the current low commodity price environment. The Company ended the second quarter with positive working capital of $35.1 million, including cash and cash equivalents of $34.8 million;
  • Second quarter production averaged 14,300 boe/d (Egypt 11,990 bbls/d, Canada 2,310 boe/d), a decrease of 697 boe/d (5%) from the previous quarter;
  • Production in July averaged ~12,439 boe/d (Egypt ~10,145 bbls/d, Canada ~2,294 boe/d), a decrease of 13% from Q2-2020, in line with revised budget expectations due to natural declines;
  • Sales averaged 12,470 boe/d including 312.6 mbbls sold to EGPC for net proceeds of $7.2 million in Q2-2020. Average realized price for Q2-20 sales of $21.63/boe; Q2-2020 average realized price on Egyptian sales of $23.96/bbl and Canadian sales of $11.01/boe;
  • Full year 2020 production guidance range narrowed to 13,300 to 13,800 boe/d to reflect deferred well interventions in Egypt (previously 13,300 to 14,300 boe/d);
  • Negative funds flow from operations of $2.8 million ($0.03 per share) in the quarter;
  • Second quarter net loss of $13.4 million ($0.19 per share), inclusive of a $3.3 million unrealized loss on derivative commodity contracts;
  • Consistent with the revised 2020 budget previously disclosed, there has been no drilling activity in Egypt or Canada during Q2-2020;
  • Business continuity plans remain effective across our locations in response to COVID-19 with no health and safety impacts or disruption to production;
  • Hedged TransGlobe's remaining unhedged forecasted 2020 Egypt entitlement oil production with dated Brent collars (costless), protecting a floor price of $30.00 purchased puts against $40.70 sold calls;
  • Despite restrictions on travel, constructive negotiations with EGPC to amend, extend and consolidate the Company's Eastern Desert concession agreements continued throughout the quarter; and
  • TransGlobe continues to actively evaluate M&A opportunities, with a view to not only better position the Company to weather the current downturn but also rebound strongly once commodity prices begin to strengthen.

FINANCIAL AND OPERATING RESULTS
(US$000s, except per share, price, volume amounts and % change)

  Three Months Ended June 30   Six Months Ended June 30  
Financial 2020   2019   % Change   2020   2019   % Change  
Petroleum and natural gas sales   24,549     81,123     (70 )   104,736     150,340     (30 )
Petroleum and natural gas sales, net of royalties   11,392     43,071     (74 )   64,626     80,423     (20 )
Realized derivative gain (loss) on commodity contracts   1,977     (707 )   380     6,145     (929 )   761  
Unrealized derivative (loss) gain on commodity contracts   (3,348 )   1,773     (289 )   1,028     (3,001 )   134  
Production and operating expense   10,406     12,410     (16 )   33,663     23,943     41  
Selling costs   423     98     332     1,049     573     83  
General and administrative expense   3,951     3,774     5     5,855     8,641     (32 )
Depletion, depreciation and amortization expense   5,657     9,245     (39 )   17,909     18,011     (1 )
Income tax expense   2,445     7,476     (67 )   7,030     13,679     (49 )
Cash flow generated by operating activities   24,551     22,125     11     20,878     9,054     131  
Funds flow from operations1   (2,764 )   19,116     (114 )   22,918     34,271     (33 )
Basic per share   (0.03 )   0.26           0.32     0.47        
Diluted per share   (0.03 )   0.26           0.32     0.47        
Net (loss) earnings   (13,367 )   10,046     (233 )   (68,585 )   1,240     (5,631 )
  Basic per share   (0.19 )   0.14           (0.95 )   0.02        
  Diluted per share   (0.19 )   0.14           (0.95 )   0.02        
Capital expenditures   1,229     8,097     (85 )   6,806     16,644     (59 )
Dividends declared   -     -     -     -     2,539     (100 )
Dividends declared per share   -     -           -     0.035        
Working capital   35,112     54,078     (35 )   35,112     54,078     (35 )
Long-term debt, including current portion   27,071     48,109     (44 )   27,071     48,109     (44 )
Common shares outstanding                                    
  Basic (weighted average)   72,542     72,542     -     72,542     72,485     -  
  Diluted (weighted average)   72,542     72,548     -     72,542     72,629     -  
Total assets   221,347     315,999     (30 )   221,347     315,999     (30 )
                                     
Operating                                    
Average production volumes (boe/d)   14,300     16,940     (16 )   14,648     16,436     (11 )
Average sales volumes (boe/d)   12,470     15,973     (22 )   17,702     15,513     14  
Inventory (mbbls)   408.7     735.0     (44 )   408.7     735.0     (44 )
Average realized sales price ($/boe)   21.63     55.81     (61 )   32.51     53.54     (39 )
Production and operating expenses ($/boe)   9.17     8.54     7     10.45     8.53     23  

1   Funds flow from operations (before finance costs) is a measure that represents cash generated from operating activities before changes in non-cash working capital and may not be comparable to measures used by other companies. See "Non-GAAP Financial Measures"

  2020 2019  
Average reference prices and exchange rates Q-2     Q-1     Q-4     Q-3     Q-2  
Crude oil                                      
Dated Brent average oil price ($/bbl)   29.34       50.44       63.41       61.93       68.92  
Edmonton Sweet index ($/bbl)   21.71       38.59       51.56       51.76       55.17  
Natural gas                                      
AECO ($/mmbtu)   1.41       1.43       1.88       1.04       0.89  
US/Canadian Dollar average exchange rate   1.39       1.35       1.32       1.32       1.34  

CORPORATE SUMMARY

TransGlobe Energy Corporation ("TransGlobe" or the "Company") produced an average of 14,300 barrels of oil equivalent per day ("boe/d") during the second quarter of 2020. Egypt production was 11,990 barrels of oil per day ("bbls/d") and Canada production was 2,310 boe/d. While production for the quarter was at the upper end of full year 2020 guidance of between 13,300 to 14,300 boe/d and 5% lower than the previous quarter, primarily due to natural declines, the Company has narrowed its full year 2020 guidance to 13,300 to 13,800 boe/d to reflect deferred well interventions in Egypt during low oil prices.

TransGlobe's Egyptian crude oil is sold at a quality discount to Dated Brent. The Company received an average price of $23.96 per barrel in Egypt during the quarter. In Canada, the Company received an average of $14.32 per barrel of oil, $11.43 per barrel of NGL and $1.31 per thousand cubic feet ("mcf") of natural gas during the quarter.

During Q2-2020, the Company had negative funds flow from operations of $2.8 million and ended the quarter with positive working capital of $35.1 million, including cash and cash equivalents of $34.8 million. The Company had a net loss in the quarter of $13.4 million, inclusive of a $3.3 million unrealized derivative loss on commodity contracts which represents a fair value adjustment on the Company's hedging contracts as at June 30, 2020.

In Egypt, the Company sold 312.6 mbbls to EGPC during the quarter, and had 402.4 mbbls of entitlement crude oil inventory at June 30, 2020. In Canada, the Company put spare oil storage capacity into service of ~12,000 bbls at its Canadian producing locations during the quarter to take advantage of strength in the forward pricing curve and has retained optionality to bring on flush production in a higher commodity price environment with the deferral of completion operations on the South Harmattan well drilled in the first quarter of 2020. The Company ended the quarter with 6.3 mbbls of Canadian light crude oil inventory.

Consistent with the Company's revised 2020 budget, there has been no drilling activity in Egypt or Canada during the second quarter.

Despite restrictions on travel, constructive negotiations with EGPC to amend, extend and consolidate the Company's Eastern Desert concession agreements continued through the quarter. With both parties recognizing the attractiveness of a revised agreement to stabilize and ultimately improve investment in production, following a return to a more sustainable commodity price environment, the Company is increasingly confident that a successful conclusion will be reached in the near-term.

The Company remains forward looking and prepared to use its operational control to take advantage of any sustained upward movement in oil price. TransGlobe continues to be vigilant in its search for attractive M&A opportunities while steadfastly retaining its focus on shareholder value creation.

Crisis Mitigation Measures

TransGlobe is focused on conserving cash to proactively manage its balance sheet in the current low commodity price environment. The Company has successfully implemented the previously announced 80% reduction in the 2020 capital program and continues to monitor general and administrative ("G&A") cost reductions. The Company estimates that G&A reductions will reduce go-forward monthly G&A by approximately 35%, however, the Company incurred non-recurring restructuring charges that impacted Q2-2020 results.

Material operating cost reductions in Egypt require the assistance of the Company's Egyptian joint venture partner, the Egyptian General Petroleum Corporation ("EGPC"). Discussions continue to further reduce operating expenditures.

The Company remains in constant communication with its lenders (Mercuria Energy Trading SA and ATB Financial) and does not anticipate deviating from its pre-crisis planned debt reduction schedule. The Company repaid $10.0 million on the $75.0 million prepayment facility agreement with Mercuria in April 2020, leaving $20.0 million drawn and outstanding of a revolving balance of up to $75.0 million.

Business continuity plans have been implemented in all our locations and operations continue as normal. The Company has had three reported cases of COVID-19 in its joint venture in Egypt, which were managed according to established Company, local and national quarantine guidelines. All three have recovered and returned to work with no onward infection spread reported.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity describes a company's ability to access cash. Companies operating in the upstream oil and gas industry require sufficient cash in order to fund capital programs that maintain and increase production and reserves, to acquire strategic oil and gas assets and to repay current liabilities and debt and ultimately to provide a return to shareholders. TransGlobe's capital programs are funded by its existing working capital and cash provided from operating activities. The Company's cash flow from operations varies significantly from quarter to quarter depending on the timing of oil sales from cargoes lifted in Egypt, and these fluctuations in cash flow impact the Company's liquidity. TransGlobe's management will continue to steward capital and focus on cost reductions in order to maintain balance sheet strength through the current volatile oil price environment.

Funding for the Company's capital expenditures is provided by cash flow from operations and cash on hand. The Company expects to fund its revised 2020 exploration and development program through the use of working capital and cash flow from operations. The Company also expects to pay down debt and explore business development opportunities with its working capital. Fluctuations in commodity prices, product demand, foreign exchange rates, interest rates and various other risks may impact capital resources and capital expenditures.

Working capital is the amount by which current assets exceed current liabilities. As at June 30, 2020, the Company had a working capital surplus of $35.1 million (December 31, 2019 - $32.2 million). The increase in working capital is primarily due to an increase in cash resulting from cash collections on accounts receivable in the period and an increase in accounts receivable due to increased sales to EGPC in 2020, partially offset by a corresponding decrease in crude oil inventory.

As at June 30, 2020, the Company's cash equivalents balance consisted of short-term deposits with an original term to maturity at purchase of one month or less. All of the Company's cash and cash equivalents are on deposit with high credit-quality financial institutions.

Over the past 10 years, the Company has experienced delays in the collection of accounts receivable from EGPC. The length of delay peaked in 2013, returned to historical delays of up to six months in 2017, and has since fluctuated within an acceptable range. As at June 30, 2020, amounts owing from EGPC were $14.7 million. The Company considers there to be minimal credit risk associated with amounts receivable from EGPC.

In Egypt, the Company sold 312.6 mbbls of crude oil to EGPC in Q2-2020 for net proceeds of $7.2 million. During the second quarter of 2020, the Company collected $21.7 million of accounts receivable from EGPC, an additional $2.0 million has been collected subsequent to the quarter. The Company incurs a 30-day collection cycle on sales to third-party international buyers. Depending on the Company's assessment of the credit of crude oil purchasers, they may be required to post irrevocable letters of credit to support the sales prior to the cargo lifting. As at June 30, 2020, crude oil held as inventory was 408.7 mbbls.

As at June 30, 2020, the Company had $86.0 million of revolving credit facilities with $27.4 million drawn and $58.6 million available. The Company has a prepayment agreement with Mercuria that allows for a revolving balance of up to $75.0 million, of which $20.0 million was drawn and outstanding as at June 30, 2020. During the six months ended June 30, 2020, the Company repaid $10.0 million on this prepayment facility. The Company also has a revolving Canadian reserves-based lending facility with ATB that was renewed and reduced as at June 30, 2020 from C$25.0 million ($18.4 million) to C$15.0 million ($11.0 million), of which C$10.0 million ($7.4 million) was drawn and outstanding. The reduction in the ATB facility is a result of lower forecasted commodity prices and the associated impact on asset value. During the six months ended June 30, 2020, the Company had drawings of C$0.2 million ($0.2 million) on this facility.

OPERATIONS UPDATE

ARAB REPUBLIC OF EGYPT

EASTERN DESERT

West Gharib, West Bakr, and North West Gharib (100% working interest, operated)

Operations and Exploration

Consistent with the Company's revised 2020 budget, there has been no drilling activity in the Eastern Desert during Q2 2020.

Production

Production averaged 11,757 bbls/d during the quarter, a decrease of 5% (586 bbls/d) from the previous quarter. This marginal decrease was primarily due to natural declines, with June production positively impacted by successful well maintenance in May and timing of production recognition. To reflect well intervention deferrals since May, production guidance, including South Ghazalat, has been narrowed for full year 2020 and is now 11,200 to 11,600 bbls/d.

Production in July 2020 averaged ~9,956 bbls/d.

Sales

The Company sold 304.6 mbbls of inventoried entitlement crude oil to EGPC during the quarter.

Quarterly Eastern Desert Production (bbls/d) 2020   2019  
  Q-2   Q-1   Q-4   Q-3  
Gross production rate1   11,757     12,343     12,831     13,750  
TransGlobe production (inventoried) sold   (1,761 )   7,937     (674 )   (1,821 )
Total sales   9,996     20,280     12,157     11,929  
                         
Government share (royalties and tax)   6,648     6,977     7,250     7,795  
TransGlobe sales (after royalties and tax)2   3,348     13,303     4,907     4,134  
Total sales   9,996     20,280     12,157     11,929  

1   Quarterly production by concession (bbls/d):
     West Gharib – 3,453 (Q2-2020), 3,664 (Q1-2020), 3,857 (Q4-2019), and 4,003 (Q3-2019)
     West Bakr – 7,935 (Q2-2020), 8,277 (Q1-2020), 8,489 (Q4-2019), and 8,978 (Q3-2019)
     North West Gharib – 369 (Q2-2020), 402 (Q1-2020), 485 (Q4-2019), and 769 (Q3-2019)
2   Under the terms of the Production Sharing Concession Agreements, royalties and taxes are paid out of the government's share of production sharing oil.

WESTERN DESERT

South Ghazalat (100% working interest, operated)

Operations and Exploration

The SGZ-6x well continues to produce from the Upper Bahariya reservoir at a rate restricted to a field estimated 150-200 bbls/d light and medium crude to evaluate the well, manage the reservoir and optimize the separation of oil, gas and water.

Production

Production averaged 233 bbls/d during the quarter, an increase of 15% (31 bbls/d) from the previous quarter.

Production in July 2020 averaged ~189 bbls/d.

Sales

The Company sold all of its entitlement crude oil production of 8.0 mbbls in the quarter to EGPC.

CANADA

Operations and Exploration

Consistent with the Company's revised 2020 budget, there has been no drilling or completion activity during Q2 2020.

The 2-mile horizontal 2-20 well, completed in Q4-2019 and de-risking the South Harmattan fairway, produced at field estimated rates of 140 boe/d (95 bbls/d light oil, 171 mcf/d gas, 17 bbls/d NGL) in July. The Company remains encouraged as the well continues to produce above expectations for this significant new resource play. The 2-20 well has de-risked 18.5 sections of land in the fairway representing 72 1-mile equivalent locations.

TransGlobe's light oil production continued to be produced at a positive field netback, despite lower crude oil prices in Western Canada early in the quarter, further supported by continued relatively strong natural gas prices. The Company put spare oil storage capacity into service of ~12,000 bbls at our Canadian producing locations during the quarter to take advantage of strength in the forward pricing curve and has retained optionality to bring on flush production in a higher commodity price environment with the deferral of completion operations on the South Harmattan well drilled in the first quarter of 2020.

Production

In Canada, production averaged 2,310 boe/d during the quarter, a decrease of 143 boe/d (6%) from the previous quarter. This marginal decrease was primarily due to natural declines. Production guidance has been narrowed for full year 2020 and is now 2,100 to 2,200 boe/d.

Ending light crude oil inventory in Canada was 6.3 mbbls at June 30, 2020.

Production in July 2020 averaged ~2,294 boe/d with ~667 bbls/d of oil. 

Quarterly Canada Production 2020   2019  
  Q-2   Q-1   Q-4   Q-3  
Canada crude oil (bbls/d)   706     860     908     666  
Canada NGLs (bbls/d)   826     761     735     585  
Canada natural gas (mcf/d)   4,665     4,996     5,331     5,652  
Total production (boe/d)   2,310     2,453     2,531     2,193  


Condensed Consolidated Interim Statements of (Loss) Income and Comprehensive (Loss) Income

(Unaudited - Expressed in thousands of U.S. Dollars, except per share amounts)

      Three Months Ended June 30     Six Months Ended June 30  
      2020     2019     2020     2019  
                                   
  REVENUE                              
    Petroleum and natural gas sales, net of royalties   11,392       43,071       64,626       80,423  
    Finance revenue   34       133       92       316  
    Other revenue   222       -       222       -  
        11,648       43,204       64,940       80,739  
                                   
  EXPENSES                              
    Production and operating   10,406       12,410       33,663       23,943  
    Selling costs   423       98       1,049       573  
    General and administrative   3,951       3,774       5,855       8,641  
    Foreign exchange loss   113       32       165       (55 )
    Finance costs   589       1,140       1,404       2,281  
    Depletion, depreciation and amortization   5,657       9,245       17,909       18,011  
    Asset retirement obligation accretion   60       49       128       105  
    Loss (gain) on financial instruments   1,371       (1,066 )     (7,173 )     3,930  
    Impairment loss   -       -       73,495       8,391  
        22,570       25,682       126,495       65,820  
                                   
  (Loss) Earnings before income taxes   (10,922 )     17,522       (61,555 )     14,919  
                                   
  Income tax expense - current   2,445       7,476       7,030       13,679  
  NET (LOSS) EARNINGS   (13,367 )     10,046       (68,585 )     1,240  
                                   
  OTHER COMPREHENSIVE INCOME (LOSS)                              
    Currency translation adjustments   2,247       1,119       (2,559 )     1,660  
  COMPREHENSIVE (LOSS) INCOME   (11,120 )     11,165       (71,144 )     2,900  
                                   
  Net (loss) earnings per share                              
    Basic   (0.19 )     0.14       (0.95 )     0.02  
    Diluted   (0.19 )     0.14       (0.95 )     0.02  


Condensed Consolidated Interim Balance Sheets

(Unaudited - Expressed in thousands of U.S. Dollars)

          As at     As at  
          June 30, 2020     December 31, 2019  
                       
  ASSETS  
  Current  
    Cash and cash equivalents       34,837       33,251  
    Accounts receivable       19,189       10,681  
    Derivative commodity contracts       810       -  
    Prepaids and other       4,313       4,338  
    Product inventory       9,518       17,516  
            68,667       65,786  
  Non-Current  
    Intangible exploration and evaluation assets       584       33,706  
    Property and equipment                  
      Petroleum and natural gas assets       144,520       196,150  
      Other       3,554       4,296  
    Deferred taxes       4,022       8,387  
          221,347       308,325  
                       
  LIABILITIES  
  Current  
    Accounts payable and accrued liabilities       32,630       32,156  
    Derivative commodity contracts       -       217  
    Current portion of lease obligations       925       1,219  
            33,555       33,592  
  Non-Current  
    Long-term debt       27,071       37,041  
    Asset retirement obligations       12,555       13,612  
    Other long-term liabilities       146       614  
    Lease obligations       407       589  
    Deferred taxes       4,022       8,387  
          77,756       93,835  
                       
  SHAREHOLDERS' EQUITY  
    Share capital       152,805       152,805  
    Accumulated other comprehensive (loss) income       (1,425 )     1,134  
    Contributed surplus       24,918       24,673  
    (Deficit) Retained earnings       (32,707 )     35,878  
          143,591       214,490  
          221,347       308,325  


Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

(Unaudited - Expressed in thousands of U.S. Dollars)

          Six Months Ended June 30  
          2020     2019  
                       
  Share Capital                  
    Balance, beginning of period       152,805       152,084  
    Stock options exercised       -       547  
    Transfer from contributed surplus on exercise of options       -       174  
    Balance, end of period       152,805       152,805  
                       
  Accumulated Other Comprehensive (Loss) Income                  
    Balance, beginning of period       1,134       (939 )
    Currency translation adjustment       (2,559 )     1,660  
    Balance, end of period       (1,425 )     721  
                       
  Contributed Surplus                  
    Balance, beginning of period       24,673       24,195  
    Share-based compensation expense       245       337  
    Transfer to share capital on exercise of options       -       (174 )
    Balance, end of period       24,918       24,358  
                       
  (Deficit) Retained Earnings                  
    Balance, beginning of period       35,878       44,951  
    Net (loss) earnings       (68,585 )     1,240  
    Dividends       -       (2,539 )
    Balance, end of period       (32,707 )     43,652  


Condensed Consolidated Interim Statements of Cash Flows

(Unaudited - Expressed in thousands of US Dollars)

            Three Months Ended June 30     Six Months Ended June 30  
            2020     2019     2020     2019  
                                         
  OPERATING                                  
    Net (loss) earnings       (13,367 )     10,046       (68,585 )     1,240  
    Adjustments for:                                  
      Depletion, depreciation and amortization       5,657       9,245       17,909       18,011  
      Asset retirement obligation accretion       60       49       128       105  
      Impairment loss       -       -       73,495       8,391  
      Share-based compensation       884       428       (417 )     1,343  
      Finance costs       589       1,140       1,404       2,281  
      Unrealized loss (gain) on financial instruments       3,348       (1,773 )     (1,028 )     3,001  
      Unrealized loss (gain) on foreign currency translation       65       (18 )     32       (70 )
    Asset retirement obligations settled       -       (1 )     (20 )     (31 )
    Changes in non-cash working capital       27,315       3,009       (2,040 )     (25,217 )
  Net cash generated by operating activities       24,551       22,125       20,878       9,054  
                                         
  INVESTING                                  
    Additions to intangible exploration and evaluation assets       (7 )     (788 )     (337 )     (788 )
    Additions to petroleum and natural gas assets       (1,161 )     (6,877 )     (6,322 )     (15,424 )
    Additions to other assets       (61 )     (432 )     (147 )     (432 )
    Changes in non-cash working capital       (1,594 )     (834 )     (662 )     (301 )
  Net cash used in investing activities       (2,823 )     (8,931 )     (7,468 )     (16,945 )
                                         
  FINANCING                                  
    Issue of common shares for cash       -       -       -       547  
    Interest paid       (512 )     (986 )     (1,130 )     (1,981 )
    Increase in long-term debt       72       135       168       256  
    Payments on lease obligations       (381 )     (491 )     (775 )     (890 )
    Repayments of long-term debt       (10,000 )     -       (10,000 )     (5,000 )
    Dividends paid       -       (2,539 )     -       (2,539 )
    Changes in non-cash working capital       -       -       -       (200 )
  Net cash used in financing activities       (10,821 )     (3,881 )     (11,737 )     (9,807 )
                                         
  Currency translation differences relating to cash and cash equivalents       100       77       (87 )     118  
  NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS       11,007       9,390       1,586       (17,580 )
  CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       23,830       24,735       33,251       51,705  
  CASH AND CASH EQUIVALENTS, END OF PERIOD       34,837       34,125       34,837       34,125  


Advisory on Forward-Looking Statements

Certain statements included in this news release constitute forward-looking statements or forward-looking information under applicable securities legislation. Such forward-looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "may", "will", "would" or similar words suggesting future outcomes or statements regarding an outlook. In particular, forward-looking information and statements contained in this document include, but are not limited to, the plans for the Company's 2020 Canadian drilling program and the details thereof; the Company's expectation relating to the performance of the South Harmattan Cardium prospect; and the expected benefits to the Company of consolidating, amending and extending the Company's Eastern Desert PSCs and other matters.

Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. Many factors could cause TransGlobe's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, TransGlobe.

In addition to other factors and assumptions which may be identified in this news release, assumptions have been made regarding, among other things, anticipated production volumes; the timing of drilling wells and mobilizing drilling rigs; the number of wells to be drilled; the Company's ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which the Company conducts and will conduct its business; future capital expenditures to be made by the Company; future sources of funding for the Company's capital programs; geological and engineering estimates in respect of the Company's reserves and resources; the geography of the areas in which the Company is conducting exploration and development activities; current commodity prices and royalty regimes; availability of skilled labour; future exchange rates; the price of oil; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; future operating costs; uninterrupted access to areas of TransGlobe's operations and infrastructure; recoverability of reserves and future production rates; that TransGlobe will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that TransGlobe's conduct and results of operations will be consistent with its expectations; that TransGlobe will have the ability to develop its properties in the manner currently contemplated; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that the estimates of TransGlobe's reserves and resource volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; and other matters.

Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward-looking statements or information include, among other things, operating and/or drilling costs are higher than anticipated; unforeseen changes in the rate of production from TransGlobe's oil and gas properties; changes in price of crude oil and natural gas; adverse technical factors associated with exploration, development, production or transportation of TransGlobe's crude oil reserves; the potential impacts of COVID-19 to the Company's business, operating results, cash flows and/or financial condition; changes or disruptions in the political or fiscal regimes in TransGlobe's areas of activity; changes in tax, energy or other laws or regulations; changes in significant capital expenditures; delays or disruptions in production due to shortages of skilled manpower equipment or materials; economic fluctuations; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; ability to access sufficient capital from internal and external sources; failure to negotiate the terms of contracts with counterparties; failure of counterparties to perform under the terms of their contracts; and other factors beyond the Company's control. Readers are cautioned that the foregoing list of factors is not exhaustive. Please consult TransGlobe's public filings at www.sedar.com and www.sec.goedgar.shtml for further, more detailed information concerning these matters, including additional risks related to TransGlobe's business.

The forward-looking statements or information contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.

Oil and Gas Advisories

Mr. Ron Hornseth, B.Sc., General Manager – Canada for TransGlobe Energy Corporation, and a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, June 2009, of the London Stock Exchange, has reviewed and approved the technical information contained in this report. Mr. Hornseth is a professional engineer who obtained a Bachelor of Science in Mechanical Engineering from the University of Alberta. He is a member of the Association of Professional Engineers and Geoscientists of Alberta ("APEGA") and the Society of Petroleum Engineers ("SPE") and has over 20 years' experience in oil and gas.

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

The following abbreviations used in this press release have the meanings set forth below:

bbl barrels
bbls/d barrels per day
mbbls thousand barrels
boe barrel of oil equivalent
boe/d barrels of oil equivalent per day
mmbtu One million British thermal units
mcf thousand cubic feet
mcf/d thousand cubic feet per day
NGL Natural Gas Liquids


Production Disclosure

Production Summary (WI before royalties and taxes):
  July - 20 Q2 - 20 Q1 - 20 Q4 - 19 Q3 - 19
Egypt (bbls/d) 10,145 11,990 12,544 12,831 13,750
Eastern Desert of Egypt (bbls/d) 9,956 11,757 12,343 12,831 13,750
Heavy Crude (bbls/d) 9,327 11,001 11,548 11,984 12,909
Light and Medium Crude (bbls/d) 629 756 795 847 841
Western Desert of Egypt (bbls/d) 189 233 201 - -
Light and Medium Crude (bbls/d) 189 233 201 - -
Canada (boe/d) 2,294 2,310 2,453 2,531 2,193
Light and Medium Crude (bbls/d) 667 706 860 908 666
Natural Gas (mcf/d) 4,542 4,665 4,996 5,334 5,652
Associated Natural Gas Liquids (bbls/d) 870 826 761 735 585
Total (boe/d) 12,439 14,300 14,997 15,362 15,943


Production Guidance
   
  Low High Mid-Point    
Egypt (bbls/d) 11,200 11,600 11,400    
Heavy Crude (bbls/d) 10,304 10,672 10,488    
Light and Medium Crude (bbls/d) 896 928 912    
Canada (boe/d) 2,100 2,200 2,150    
Light and Medium Crude (bbls/d) 646 677 661    
Natural Gas (mcf/d) 4,294 4,499 4,397    
Associated Natural Gas Liquids (bbls/d) 738 774 756    
Total (boe/d) 13,300 13,800 13,550    


For further information, please contact:

 
   
TransGlobe Energy   Via FTI Consulting
Randy Neely, President and Chief Executive Officer    
Eddie Ok, Chief Financial Officer  
     
Canaccord Genuity  (Nomad & Sole Broker)   +44 (0) 20 7523 8000
Henry Fitzgerald-O'Connor    
James Asensio    
     
FTI Consulting  (Financial PR)   +44 (0) 20 3727 1000
Ben Brewerton   transglobeenergy@fticonsulting.com
Genevieve Ryan  
   
Tailwind Associates  (Investor Relations)    
Darren Engels   darren@tailwindassociates.ca
http://www.tailwindassociates.ca
+1 403.618.8035
 

investor.relations@trans-globe.com
http://www.trans-globe.com
+1 403.264.9888 

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