TransGlobe Energy Corporation entered into an agreement to acquire privately-held GHP Exploration for U.S. $40.2 million. Under terms of the agreement, TransGlobe Energy will pay U.S. $40.2 million for a 30% interest in eight development leases and associated infrastructure in the Arab Republic of Egypt.
The transaction, expected to close February 2008, effectively expands TransGlobe's presence in the Arab Republic of Egypt. Expected to be accretive on a net income and cash flow per share basis, the transaction is expected to be funded from an expansion of TransGlobe's existing credit facility and working capital.
The eight approved West Gharib development leases encompass 178 square kilometers (approximately 44,059 acres) and are valid for 20 years. Modern 3-D seismic covers the majority of the development leases. One additional development lease is currently awaiting final approval signature by the Egyptian Petroleum Minister. TransGlobe has drilled and cased the Hana #11 well in the West Gharib area and anticipates releasing the completion testing results near the end of January. The drilling rig has moved to Hana #13, an appraisal/development location approximately 1 mile (1.6 kilometers) north of Hana #11. The Company has also signed an agreement for a second deep rig for the area which is anticipated to arrive in mid 2008.
Current gross oil production from the eight development leases is approximately 3,000 Bopd. GHP's working interest share of production is approximately 900 Bopd (approximately 450 net Bopd after the production sharing split with the Government of Egypt). There are eight oil fields on the lands which are producing from 25 wells. Independent reserve auditors have assessed GHP's working interest share of the eight leases to contain 1.7 MMBbls proved reserves and 3.0 MMBbls of proved plus probable reserves.
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