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DALLAS, TX / ACCESSWIRE / December 21, 2020 / TransGlobe Energy Corporation (NASDAQ:TGA): The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/TGA Q3FY20.pdf
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. 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 re-entered 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.
TransGlobe is an international oil and gas player with over 20 years of experience across diverse geological basins in several countries with a variety of fiscal regimes. With a focus on capital discipline while building a profitable, growth oriented international portfolio, TransGlobe is well positioned to navigate future market volatility.
Well established production - TransGlobe's average production in F19 was 16.0 Mboepd and recently reported 15.0 Mboepd, 14.3 Mboepd, and 12.0 Mboepd for Q120, Q220, and Q320, respectively. Due to the reduced 2020 capital expenditure program, corporate production in F20 is expected to range between 13.3 and 13.8 Mboepd.
And a solid reserve base - Based on a February 2020 GLJ Petroleum Consultants evaluation, the Company reported 25.4 MMboe total proved (1P) reserves as well as 45.3 MMboe total proved + probable (2P) reserves. Additionally, TGA's 2P reserves have remained relatively flat in the past 3 years through exploration success and effective resource maturation.
Unique position in Egypt - TGA has operated in Egypt for 15 years and is considered a best-in-class operator. The Company has a strong relationship with the Egyptian Government and in December 2020, it finalized negotiations to amend, extend and consolidate three concessions (located in Eastern Desert) into a single new concession. Importantly, the consolidation provides a platform for TGA to grow its Egyptian business at lower oil prices.
Poised for long-term growth in Egypt - The Company's growth profile should improve post concession, as the field life extends from a near-term expiry to 2040, updated fiscal terms and extension will allow TGA to target an additional 59 MMbbl of contingent resources, and improved netbacks is expected to drive improved cash flows of 120% to 240% at benchmark crude oil prices of $40.00/bbl to $60.00/bbl. The Company is also targeting inorganic growth opportunities through acquisitions.
Additional upside in Canda - In 2020, TGA drilled a development well in South Harmattan before the price of oil significantly declined. Well completion was deferred until oil prices improve. TGA also deferred drilling three horizontal wells. Furthermore, the 2019 outpost well derisked up to 72 additional horizontal well locations. As such, TGA believes in the medium-term, it will see production growth at South Harmattan to create value to shareholders.
Valuation - Given the different geographic locations of TransGlobe's operating assets, we are using a sum-of-the-parts analysis. Based on our analysis, we arrive at a combined valuation range of ~ $1.80 to ~$3.20, with a midpoint of ~ $2.45. See page 9 and 10 for details.
About Stonegate Capital Partners
Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.
Stonegate Capital Partners
SOURCE: Stonegate Capital Partners
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