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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