TransGlobe Energy Announces Operations Update in Egypt

TransGlobe Energy Corporation (TransGlobe) provides an operations update, announces its intention to list its common stock on the London Stock Exchange’s AIM market and pending changes to the Board of Directors.

Q1 Highlights
• Company production for Q1-2018 was on plan averaging ~14,366 Boepd (~11,776 Bopd Egypt, ~2,590 Boepd Canada).
• Drilled a successful oil well at Arta 48 which will be placed on production in May following stimulation.
• Drilled a successful oil well at K-46 in the West Bakr South K-field with an estimated 96 feet of net oil pay in the Asl A and 15 feet of net oil pay in the Asl B.
• Currently drilling a second development well at K-45 South K field.
• Reached agreement with GPC to drill two additional wells in the M-field buffer-zone, which are expected to be drilled and put on production in late Q2 or Q3.
• Preparations for the 2018 Western Desert drilling program (5 exploration wells) are underway. Program expected to commence in June with two drilling rigs on NW Sitra.
• The 2018 Canadian drilling plan is targeting to commence drilling up to 8 (6 net) Cardium wells in July. This program could include a two-mile horizontal well to evaluate extended reach horizontals in the Harmattan area.
• Sold ~236 thousand barrels of crude oil to EGPC during Q1.
• Confirmed with EGPC four crude oil cargo liftings in 2018.

The first cargo was scheduled to begin lifting in late March, but due to bad weather it was slightly delayed. On April 7th a total of ~452 thousand barrels were lifted and will be booked as a Q2 sale.

Production
Total Company production for the first quarter was on plan, averaging approximately 14,366 Boepd, comprised of 11,776 Bopd in Egypt (100% oil) and 2,590 Boepd in Canada (57% light oil and liquids).

Total Company production averaged 14,248 Boepd in March, comprised of 11,739 Bopd in Egypt (100% oil) and 2,509 Boepd in Canada (60% light oil and liquids).

Operations Update
In the Eastern Desert the K-46 development well drilled in March was initially completed in the Asl B zone to obtain a production rate prior to perforating the main Asl A formation. The Asl B produced approximately 45 Bopd from an internally estimated 15 feet of net oil pay overlying a water zone. The Asl A formations (A1, A2 and A3), which encountered an internally estimated 96 feet of net oil pay are scheduled for completion later this month.

The Company is currently drilling the second South K-field development well at K-45 targeting the main Asl A sand in the crestal position on the South K field. The Asl B sand is also expected to be encountered in K-45.

Following K-45, the drilling rig is scheduled to move to West Gharib and NW Gharib to drill Arta 54 and NWG 38A-3 respectively. Arta 54 is targeting the Nukhul/Red bed formation at the northern edge of the main Arta pool. The NWG 38A-3 well is planned as a water injection well to provide reservoir pressure support and enhanced recovery in the NWG 38 Red Bed pool. The first three wells drilled in the NWG 38 pool did not encounter a water leg and are currently producing at a combined, reduced rate of approximately 920 bopd. It is expected that the current production rates will be optimized upon completion of the water injection scheme and stabilized reservoir pressures.

Following NWG 38A-3, the rig will return to the West Bakr concession and drill up to three development wells including two wells inside the recently negotiated reduced buffer zone targeting the M-field Asl A formation. Concurrently, the Company will be stimulating and completing two drilled and uncompleted wells (DUC’s) the NWG 1 and NWG 5 Development Areas (discovered in 2014), in addition to the West Gharib Arta 48 well currently awaiting stimulation. These NWG 1 and 5 wells encountered a tight Red Bed conglomerate sequence which requires stimulation to produce and are expected to produce at similar rates to TransGlobe's Arta Nukhul wells which typically have an initial 30 day production rate (IP 30) of 150-180 Bopd with ultimate recoveries of 120 -150 MBbls per well on primary production.

The Company also has an active recompletion campaign scheduled throughout the year, targeting low risk behind pipe opportunities in addition to water-flood optimization opportunities. The majority of these opportunities reside in the West Bakr K-field where the Company anticipates completion of Phase 2 and 3 of the K-field facility expansion to double/triple the current fluid handling capacity respectively. Concurrent with the K-field facility expansions the drilling rig was used to re-enter and deepen a legacy well (K-5) for water disposal. The K-5 water disposal well is scheduled for completion in late April/early May to handle additional planned water production from the expanded facilities. The expansion will allow for accelerated fluid withdrawal rates supporting incremental production volumes and additional reserves from both West Bakr K and M fields.

In the Western Desert the Company is preparing for the 2018 exploration drilling program expected to commence in the NW Sitra concession utilizing two drilling rigs in June. The larger (2,000 HP) drilling rig will drill NWS 12 targeting a stacked Cretaceous/Jurassic prospect. Subject to additional approvals, the larger rig can be moved to South Alamein to drill a Jurassic prospect following NWS 12. The smaller (~1,000 HP) drilling rig will drill NWS 9 targeting a stacked Cretaceous prospect. Following NWS 9, the rig will be moved to the South Ghazalat Concession to drill two independent stacked Cretaceous structures. The four, basin opening wells in NWS and S. Ghazalat could de-risk 13 of the 21 additional prospects currently mapped on 3-D seismic. No production is currently budgeted from the Western Desert exploration assets in 2018.

In Canada, the Company is preparing for a 3 to 4 week turnaround/maintenance program at the Company’s central oil processing battery and main natural gas compressor site. The work has been scheduled to coincide with a planned turnaround at the main natural gas processing plant in the Harmattan area which is operated by a third party. It is expected that the majority of the Canadian production will be shut-in during May due to this planned outage. The 2018 production guidance numbers include the planned turnaround.

In addition, the Company is finalizing the 2018 Cardium drilling program scheduled to commence in July. The 2018 Cardium development program of up to eight gross (six net) horizontal wells will be drilling from a common pad to improve efficiencies and reduce costs. The Company is planning to drill one two-mile extended reach horizontal (“ERH”) well to evaluate the performance of ERH wells in the Harmattan area. The remainder of the 2018 program will be one-mile horizontal wells.

AIM Listing
Beginning in early 2017, the Company undertook an extensive review of its existing stock market listings and its current and potential common share investors. The Company determined that its traditional North American investor base and liquidity has diminished significantly over the past six years, beginning with the Egyptian revolution in January of 2011 and continuing through the recent and prolonged downturn in oil prices from 2014 to 2017.

Although oil prices have shown tangible and structural improvement over the past six to nine months the Company’s share price and liquidity have not responded to that improvement despite significant increases in profitability and funds flow. The Company concluded that a listing on the London Stock Exchange’s AIM market will provide access to a significant pool of specialist investors who currently do not have adequate access to TransGlobe’s common shares due to time-zone challenges and European market investment requirements. The Company also believes that a listing on the AIM market may eventually improve its profile by placing TransGlobe alongside many of its international E&P peers. This may attract European analyst coverage focused on international companies similar to TransGlobe.

TransGlobe has retained Canaccord Genuity as its nominated advisor (“NOMAD”) and preparations are at an advanced stage for an AIM Admission filing.

In further support of the listing on the AIM market, the Company intends to establish an executive office in London by September 2018.

Pending Board of Directors Changes
As part of TransGlobe’s succession plan, the Company is pleased to announce that Randy Neely will stand for election to the Board of Directors at the upcoming Annual and Special Meetings of Shareholders. Mr. Neely was recently promoted to President on January 8, 2018 after serving as the Company’s VP Finance and CFO since joining the Company in 2012. In order to make room for Mr. Neely, Mr. Lloyd Herrick, VP and COO will not stand for re-election this year. Mr. Herrick has served on the Board as a non-independent director since joining the Company in 1999 and will remain with the Company as VP and COO.