DALLAS, TX / ACCESSWIRE / July 16, 2018 / TransGlobe Energy Corporation (NASDAQ: TGA)
COMPANY DESCRIPTION
TransGlobe Energy Corporation ("Company") ("TGA") is an independent oil and gas exploration and production company, with current operations in Alberta, Canada, and the Arab Republic of Egypt. TGA also operated in Yemen for 19 years, before selling those interests in 2015. The Company has operated in Egypt since 2004 and holds interests in production sharing concessions in the Eastern Desert and the Western Desert regions. TransGlobe operated in Canada from 1999 to 2008 and recently reentered Canada in December 2016. The Company's Canadian holdings include production and working interests in Cardium light oil and Mannville liquid-rich gas assets in the Harmattan area, located in west central Alberta. TransGlobe Energy is headquartered in Calgary, Alberta, and has approximately 70 employees.
SUMMARY
TransGlobe has been in the international oil and gas industry for over 20 years and has drilled more than 400 gross wells in varying geological formations, political climates and economic environments. Through the execution of a disciplined business plan involving cost-cutting measures, a strategic acquisition, and key contracts with the Egyptian government and third-party marketers, TGA's management has steered the Company through a difficult period involving low oil prices and political turmoil, and, as a result, TransGlobe is well-positioned to return to profitability over the near-term.
- TransGlobe has a current production base of roughly 14,375 Boepd (average for Q118), and a number of low-risk development projects in Canada and Egypt, along with some potentially high-impact exploration opportunities in Egypt. The most recent 2018 capital budget includes a total of ~$41.3M, with ~$29.1M allocated to Egypt and ~$12.2M to Canada.
- Following a chaotic period in the aftermath of the Arab Spring uprising in 2011, Egypt has regained political and economic stability. Consequently, TransGlobe has plans to complete 5 exploration wells in the Western Desert in 2018. In the Eastern Desert, the focus is on sustaining and developing producing concessions. Recent tests in the Boraq field yielded disappointing results, but management notes an additional prospect in the area as a target for 2018 exploration program.
- At year-end 2016, TGA acquired some producing high-quality light oil and liquidsrich gas plays in west central Alberta, Canada. The acquisition was designed to diversify TGA geographically as well as expand operations outside areas with geopolitical risk, and it came with 149 potential drilling opportunities. The historical low operating costs and favorable royalty and tax structure of the area support growth at current oil prices and provide opportunities to increase reserves and production in proven plays using advanced horizontal drilling and multi-stage frac technology.
- Based on a 12/31/17 GLJ Petroleum Consultants evaluation, the Company reports 27.6 MMboe total proved (1P reserves) as well as 45.9 MMboe total proved + probable (2P reserves), both an 8% decrease from 2016 year-end, primarily due to production during 2017. TGA had total sales of 11,753 Boepd in Q118. The Company sold 235,930 barrels of entitlement crude oil to EGPC for ~$13.2M to cover Egypt's in-country expenditures. The first lifting of 2018 was ~452K bbls in April, and EGPC has confirmed 4 liftings in 2018. Notably, as of March 31, 2018, the Company had ~1.0M barrels of entitlement oil in inventory valued at $14.96 per barrel on its balance sheet as well as $31.1M in cash and equivalents (including restricted cash).
- For 2018, corporate production is expected to range between 14,200 and 15,600 Boepd (midpoint 14,900) with a 94% weighting to oils and liquids; this includes 12,000 to 13,000 Bopd for Egypt, and 2,200 to 2,600 Boepd for Canada, which includes a one month shut-in for plant and facility turnarounds in Canada. On a comparable company basis for FY18 estimates, TGA currently trades at an EV/S multiple of 1.3x while its peers trade at an average multiple of 2.9x, and at an EV/EBITDA of 2.5x vs. the average of its peers at 4.9x. On a P/E ratio, the Company currently trades at 14.9x vs. the average of its peers at 17.5x, and on a P/CFPS basis, TGA trades at 2.7x based on 2018E vs. the average of its peers at 4.2x.
The full report can be accessed by clicking on the following link:
http://stonegateinc.com/reports/TGA_UPDATE_JUNE_2018.pdf
About Stonegate Capital Partners
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SOURCE: Stonegate Capital Partners