TransGlobe Energy Acquires Acreage in West Gharib Area of Egypt
TransGlobe Energy has signed a binding purchase and sale agreement to acquire two privately held companies, holding interests in eight development leases and associated infrastructure in the West Gharib Concession area in the Arab Republic of Egypt.
West Gharib, Egypt (45% to 70% operated working interest)
TransGlobe Petroleum International Inc., a wholly owned subsidiary of TransGlobe Energy Corporation, has entered into a binding purchase and sale agreement to acquire all the shares of Dublin International Petroleum (Egypt) Limited and Drucker Petroleum Inc. from Tanganyika Oil (Bermuda) I Ltd. for US$59 million, plus working capital adjustments, effective July 1, 2007. Dublin and Drucker together hold a 70% working interest in one development lease and a 45% working interest in seven additional development leases comprising the West Gharib Production Sharing Concession ("PSC"). Dublin International Petroleum (Egypt) operates the West Gharib Concession Agreement, and TransGlobe will assume operatorship at the closing of the transaction.
The West Gharib PSC is located onshore in the western Gulf of Suez rift basin of Egypt. Major oil and gas discoveries have been made in this prolific basin. To date eight billion barrels of oil and five trillion cubic feet of gas have been discovered. 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 approval by the Egyptian General Petroleum Corporation ("EGPC").
Current gross oil production from the eight development leases is approximately 3,000 Bopd. Dublin and Drucker's combined working interest share of production is approximately 1,500 Bopd (approximately 750 net Bopd after the production sharing split with the Government of Egypt). There are seven oil fields on the lands, which are producing from 24 wells. The oil produced ranges from 16 degrees API to 26 degrees API and is currently trucked 15 kilometers to the Ras Gharib terminal. Independent reserve auditors have assessed Dublin and Drucker's share of the eight leases to contain 3.24 MMBbls of working interest proved reserves and 6.30 MMBbls of working interest proved plus probable reserves. This acquisition will increase TransGlobe's reserves by approximately 35% for Proved and by 54% for Proved plus Probable.
TransGlobe intends to fund the acquisition with an expanded credit facility. A working capital adjustment comprised of cash, inventory and receivables (less payables) of approximately US$11.0 million will bring the total cost of the acquisition to US$70.0 million. It is expected that closing will occur in the fourth week of September, 2007 with an effective date of July 1, 2007 and is subject to standard and customary closing conditions. TransGlobe makes no assurances that it will successfully close the transaction.
Ross Clarkson, President & CEO said: "The acquisition of the West Gharib producing properties fits with the Company's strategy of expanding its interests in the Middle East as operator. The acquisition metrics are attractive at US$39,333 per producing barrel and US$18.21 per proved or US$9.37 per proved plus probable barrel. In addition, the West Gharib Development leases include over 30 identified development-drilling locations as well as additional exploitation and exploration potential. TransGlobe intends to proceed aggressively with developing the full potential of the discovered fields."
TransGlobe Energy is a growth-oriented international energy company engaged in the exploration, development and production of crude oil and natural gas in the Republic of Yemen, the Arab Republic of Egypt and Alberta, Canada. TransGlobe holds interests in over 1.34 million gross acres in Yemen (368,000 net acres) and 5.5 million acres in Egypt (2.7 million net acres). Financially strong, TransGlobe has reported seven consecutive years of net income.
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