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TransGlobe Announces Approval of New Development Lease

Source: www.gulfoilandgas.com 5/29/2019, Location: Egypt

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TransGlobe Energy Corporation (TransGlobe) announces an approval of a new development lease and an operations update.

UPDATES
- South Ghazalat Development Lease approved, targeting an initial ~1000 Bopd from the upper Bahariya formation with first oil expected in Q4 of 2019;

- Production averaging ~17.0 MBoepd during May (month to date) consistent with April production of 17.0 MBoepd and 7% higher than Q1 average production;

- Drilled and cased the K-63 Development well as an Asl A formation oil well with an internally estimated 74 feet of net oil pay;

- HW-2X discovery well drilled in April continues to clean up and is currently producing ~700 Bopd (field estimate).

PRODUCTION
Production Summary (WI before royalties):
Egypt
Q1: 13.6(Mboepd)
2019 Apri : 14.6(Mboepd)
2019 May 2019(to dae) : 14.8(Mboepd

Canada
Q1:2.3(Mboepd)
2019 Aprl :2.4(Mboepd)
2019 May 2019(to dae) :2.2(Mboepd)

Total
Q1 :15.9(Mboepd)
2019 April 17.0(Mboepd)
2019 May 2019(to date 17.0(Mboepd)

Corporate production increased during the second quarter due to drilling and well optimization results in Egypt and new wells in Canada, which was partially offset by reduced ethane production in Canada.

OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
Western Desert South Ghazalat (100% WI)
The Company received notice that the Development Lease ("DL") application for the SGZ-6X discovery well which tested ~3,840 Bopd of light oil* has been approved by the Ministry of Petroleum.

The 29.8 km (7,340 acre) DL has a twenty (20) year primary term with a 5 year extension available. In addition to the $1 million DL bonus (as per the concession agreement), the Company has committed to drill a minimum of one exploration well on the DL within the first four years of the primary term. Upon receiving approval of the South Ghazalat DL, and having met all the commitments for the first two exploration phases, the Company elected not to enter the final 18 month exploration period and relinquished the balance of the South Ghazalat exploration lands.

The near term development plan is targeting first oil production from the SGZ-6X discovery well in Q4 of 2019. The initial development includes the construction of an early production facility ("EPF") and equipping the SGZ-6X well for production. The Company is targeting to initially produce the SGZ-6X well at ~1,000 Bopd from the Upper Bahariya formation to assess reservoir performance. Subject to finalizing transportation agreements with neighboring operators, the 34 API oil will initially be trucked to a nearby facility (~15 km) which is pipeline connected to the El Hamra Terminal located on the Mediterranean coast. Concurrently the Company is planning to drill an appraisal well in Q3/4 (subject to rig availability) which, if successful, would be tied into the EPF and potentially be producing prior to year-end. In addition, the Company has initiated a project to merge and reprocess two existing 3D seismic surveys over the DL area to better define prospects and leads identified from current mapping for future exploration and appraisal drilling.

Eastern Desert (100% WI)
In West Bakr, the K-63 development well was drilled to a total depth of 4,741 feet and cased as an Asl A formation oil well. The K-63 well encountered an internally estimated 74 feet of net oil pay in the main Asl A pool based on well logs and samples. It is expected that K-63 will be completed and placed on production by early June, along with the previously drilled H-30 development well (internally estimated 25 feet of net oil pay). Also in West Bakr, the HW-2X discovery well (internally estimated 113 feet of net oil pay) is producing ~700 Bopd (field estimate).

The drilling rig is scheduled to move to NW Gharib to drill an exploration well at NWG 38D-1 targeting the Red Bed formation in an adjacent fault block to the east of the producing 38A pool. The Company initiated water injection in the NWG 38A Red Bed pool during the quarter to maintain reservoir pressure and increase recoveries.

*The Company previously reported that SGZ-6X tested a combined 3,840 barrels per day of light oil from the upper and lower Bahariya. The lower Bahariya formation flowed naturally at an average rate of 2,437 barrels per day of light (38 API) oil, 21 barrels per day of water and 1.4 million cubic feet of natural gas per day on a 40/64 inch choke from a 42 foot perforated interval. A total of 918 barrels of oil and 7 barrels of water were produced during the 10 hour test. The upper Bahariya formation flowed at an average rate of 1,403 barrels per day of light (35 API) oil, 210 barrels per day of water and 1.0 million cubic feet of natural gas per day on a 64/64 inch choke from a 23 foot perforated interval. A total of 456 barrels of oil and 65 barrels of water were produced during the 8 hour test. Although encouraging, test rates are not necessarily indicative of long-term performance or ultimate recovery.

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