Petroleum Africa
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Monday, August 9, 2021
TransGlobe Energy company highlighted its exploration activity and production numbers out of Egypt in its Q2 2021 update. The company achieved an average production of 10,727 barrels per day (bpd) from its assets in the North African country during the quarter.
TransGlobe produced an average of 13,077 barrels of oil equivalent per day (boe/d) during the second quarter of 2021. Egypt production was 10,727 barrels of oil per day (bopd) and Canada production was 2,350 boepd. Production for the quarter was slightly above full year 2021 guidance of 12,000 to 13,000 boe/d and 7% higher than the previous quarter. The increase is primarily due to improved well optimization activities in Egypt, the impact of the SGZ-6X lower Bahariya recompletion, and a return to production in Canada of the 2-20 well, taken offline to allow for the 13-16 completion plus the latter’s production contribution.
During Q2-2021, the Company had funds flow from operations of $17.1 million and ended the quarter with positive working capital of $17.1 million, including cash of $43.6 million. The Company had net earnings in the quarter of $7.7 million, inclusive of a $1.2 million unrealized derivative loss on commodity contracts which represents a fair value adjustment on the Company’s hedging contracts at June 30, 2021.
Egypt Summary
TransGlobe’s Egyptian crude oil is sold at a quality discount to Dated Brent. The company received an average price of $60.27 per barrel in Egypt during the quarter.
In Egypt, the Company sold 366.3 thousand barrels (Mbbls) of entitlement crude oil to the Egyptian General Petroleum Company (EGPC) and sold one cargo lifting of 498.6 Mbbls of entitlement crude oil. The overlift portion of the cargo (~129.5 Mbbls) was settled against outstanding receivables from EGPC during the quarter. At June 30, 2021 entitlement crude oil inventory was 140.3 Mbbls. The decrease in inventoried crude oil is attributed to a significant increase in sales volumes as a result of the Q2-2021 cargo lifting, partially offset by an increase in production. Subsequent to the quarter, TransGlobe sold a ~500 Mbbl cargo of Egypt entitlement crude oil. The cargo volumes were in excess of crude oil inventories at the time of lifting. The Company expects to reach a settlement on the overlift in Q3-2021.
As announced on December 3, 2020, the company has reached an agreement with EGPC to merge its three existing Eastern Desert concessions with a 15-year primary term and improved company economics. As previously announced, the Company held discussions with the Ministry of Petroleum during Q2-2021, and was informed that due to the recent Egyptian election combined with internal process changes for ratification, the Ministry is now expecting ratification to occur in the second half of 2021. The February 1, 2020 effective date for the improved concession terms and assurances from the Ministry is supportive of increased investment in advance of ratification.
In Egypt, following the mobilization of the rig from the Western Desert, the Company drilled two development oil wells in the Eastern Desert at West Bakr. The HW-8 development oil well was drilled to a total depth of 1,640.5 meters, successfully encountering oil-bearing sands in the Yusr-C and Bakr formations, and was brought into production at a field estimated 622 bbls/d late in the quarter. The K-64 development oil well was drilled to a total depth of 1,538.0 meters, successfully encountering oil-bearing sands in the Asl-A, Asl-B and Asl-D formations, and was brought into production at a field estimated 609 bbls/d subsequent to the quarter.
In anticipation of increased gross fluid offtake to be generated by new projects in the new merged concession area, the company has accelerated plans to upgrade its water management systems in H2-2021. The company remains forward looking and prepared to use its operational control to take advantage of any sustained upward movement in oil price.
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