TGA issued an operations update. I will review it carefully and update my forecast model tomorrow morning.
"To date, the Company's West Gharib production operations have not been affected by the recent political demonstrations in Egypt. The Company continues to the monitor the situation and has daily communication with our Cairo staff and our Joint Venture operating company. All employees are safe and accounted for. The Company will take all steps to adapt to the situation and will attempt to mitigate any adverse consequences."
At first glance:
> 4th quarter production came in slightly below my forecast
> TGA sells its oil under a contract tied to Brent crude, so their realized oil prices are probably a lot higher than what I had in my forecast.
TGA Update
TGA Update
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA Update
Report in the Calgary paper yesterday:
CALGARY - TransGlobe Energy shares fell 10 per cent on the Toronto Stock Exchange Monday morning as political unrest continued in Egypt, where the company has promising oil operations.
Ross Clarkson, president and chief executive of the Calgary-based company, said it is monitoring the situation but is continuing operations as usual for now.
"We have a number of Canadian and some American employees in the country, expats, and we are evaluating that on a day-by-day basis as to whether we'll go down to more of a skeleton staff," he said Monday, adding the call is being left to TransGlobe's country manager.
"Most of it's run by Egyptians, anyway, almost our entire operation is run by Egyptian staff."
TransGlobe has just six expatriate staff among 32 direct employees and 150 in its field operations company, he said. Its main office is in Cairo but on the eastern edge of the city, far away from the central square where most of the protests have been happening.
TransGlobe was a top pick for Salmon Partners analyst Gordon Currie in mid-2010, he said Monday, but dropped to a hold as the price rose. It ended the year at $15.89, up 353 per cent for all of 2010 thanks to its Egyptian oil discoveries.
The recent sell-off - TransGlobe is off 30 per cent since Christmas Eve - creates a potential buying opportunity.
"The likelihood is that things won't be affected in the long run and business will continue as normal, in which case this makes for a great buying opportunity," said Currie.
"But there's uncertainty as to who might form the government and what their policy to the petroleum industry might be so investors are understandably concerned."
Meanwhile, the price of ICE Brent, the base for the price TransGlobe gets for its oil, rose above $100 US per barrel for the first time since 2008 in part because of violence in Egypt and other Middle Eastern or European countries.
"We went forward with a $75 Brent in our budgeting so we're well ahead right now," said Clarkson, adding the company will revisit its capital budget of $90 million, up from last year's $70 million, in June.
He said TransGlobe has not had any trouble with getting supplies where it's drilling in Egypt.
"Because we're out in the desert, we're pretty self-contained but I suppose at some point it could (affect supplies)," he said. "On drilling operations it could eventually slow us down there. Right now, we are continuing."
It transports its oil via a tanker terminal on the Gulf of Suez, just a few kilometres from production, where it gets about 10 per cent less than Brent.
CALGARY - TransGlobe Energy shares fell 10 per cent on the Toronto Stock Exchange Monday morning as political unrest continued in Egypt, where the company has promising oil operations.
Ross Clarkson, president and chief executive of the Calgary-based company, said it is monitoring the situation but is continuing operations as usual for now.
"We have a number of Canadian and some American employees in the country, expats, and we are evaluating that on a day-by-day basis as to whether we'll go down to more of a skeleton staff," he said Monday, adding the call is being left to TransGlobe's country manager.
"Most of it's run by Egyptians, anyway, almost our entire operation is run by Egyptian staff."
TransGlobe has just six expatriate staff among 32 direct employees and 150 in its field operations company, he said. Its main office is in Cairo but on the eastern edge of the city, far away from the central square where most of the protests have been happening.
TransGlobe was a top pick for Salmon Partners analyst Gordon Currie in mid-2010, he said Monday, but dropped to a hold as the price rose. It ended the year at $15.89, up 353 per cent for all of 2010 thanks to its Egyptian oil discoveries.
The recent sell-off - TransGlobe is off 30 per cent since Christmas Eve - creates a potential buying opportunity.
"The likelihood is that things won't be affected in the long run and business will continue as normal, in which case this makes for a great buying opportunity," said Currie.
"But there's uncertainty as to who might form the government and what their policy to the petroleum industry might be so investors are understandably concerned."
Meanwhile, the price of ICE Brent, the base for the price TransGlobe gets for its oil, rose above $100 US per barrel for the first time since 2008 in part because of violence in Egypt and other Middle Eastern or European countries.
"We went forward with a $75 Brent in our budgeting so we're well ahead right now," said Clarkson, adding the company will revisit its capital budget of $90 million, up from last year's $70 million, in June.
He said TransGlobe has not had any trouble with getting supplies where it's drilling in Egypt.
"Because we're out in the desert, we're pretty self-contained but I suppose at some point it could (affect supplies)," he said. "On drilling operations it could eventually slow us down there. Right now, we are continuing."
It transports its oil via a tanker terminal on the Gulf of Suez, just a few kilometres from production, where it gets about 10 per cent less than Brent.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA Update
TGA oil production and realized prices up in Q4:
3rd quarter production:
> Egypt = 7,601 bopd
> Yemen = 2,537
4th quarter production:
> Egypt = 7,941 bopd
> Yemen = 2,848 bopd
TGA sells all of its oil production under contracts tied to Brent crude which is currently selling for $102/bbl. Eqypt oil sells for ~90% of Brent. Yemen oil sells for about $1/bbl less than Brent.
OXY to keep drilling on Yemen Block S-1 which should push TGA's net production in Yemem over 3,000 bopd soon.
January production was 10,897 bopd. My current forecast (which will be posted under the Sweet 16 late today) assumes an exit rate for 2011 of 14,000 bopd (Egypt 10,500 + Yemen 3,500).
During the 2nd half of this year, their production in Egypt should get a 2,000 bopd boost from East Ghazalat:
East Ghazalat Block, Arab Republic of Egypt (50% working interest)
The operator, Vegas Oil and Gas SA, filed a declaration of Commercial Discovery for the Safwa field and is finalizing the initial Safwa development lease and development plan. In addition, the operator has requested approval to start early production. The commencement of first production will also be contingent on the availability of supplies and services in Egypt. Two wells were drilled in November and December resulting in an oil well at Safwa #2 and a dry hole at Nakhil #1. The drilling rig was moved to TransGlobe's Nuqra Block in January.
My new Fair Value estimate for TGA can be found at the bottom of the forecast model.
3rd quarter production:
> Egypt = 7,601 bopd
> Yemen = 2,537
4th quarter production:
> Egypt = 7,941 bopd
> Yemen = 2,848 bopd
TGA sells all of its oil production under contracts tied to Brent crude which is currently selling for $102/bbl. Eqypt oil sells for ~90% of Brent. Yemen oil sells for about $1/bbl less than Brent.
OXY to keep drilling on Yemen Block S-1 which should push TGA's net production in Yemem over 3,000 bopd soon.
January production was 10,897 bopd. My current forecast (which will be posted under the Sweet 16 late today) assumes an exit rate for 2011 of 14,000 bopd (Egypt 10,500 + Yemen 3,500).
During the 2nd half of this year, their production in Egypt should get a 2,000 bopd boost from East Ghazalat:
East Ghazalat Block, Arab Republic of Egypt (50% working interest)
The operator, Vegas Oil and Gas SA, filed a declaration of Commercial Discovery for the Safwa field and is finalizing the initial Safwa development lease and development plan. In addition, the operator has requested approval to start early production. The commencement of first production will also be contingent on the availability of supplies and services in Egypt. Two wells were drilled in November and December resulting in an oil well at Safwa #2 and a dry hole at Nakhil #1. The drilling rig was moved to TransGlobe's Nuqra Block in January.
My new Fair Value estimate for TGA can be found at the bottom of the forecast model.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA Update
My new Fair Value estimate for TGA can be found at the bottom of the forecast model.dan_s
I am having trouble finding the up date. Other than the value quoted in the recent newsletter.
Please tell me how to find the most resent information at the bottom of the forecast model ???
I am having trouble finding the up date. Other than the value quoted in the recent newsletter.
Please tell me how to find the most resent information at the bottom of the forecast model ???
Re: TGA Update
Kim has not yet posted the updated forecast model. When she does it will be under the Sweet 16 tab. Just click on the TGA logo to see it.
Our forecast models are only available to Premium Members so I don't want to post my new Fair Value estimate here.
I have lowered by Fair Value estimte by $2/share from what I have in the last Sweet 16 Detailed Update, only because of the unrest in Egypt. I am concerned about what is going on in Egypt. It definitely hangs a dark cloud over TGA. We need to watch that situation closely.
So far the increased oil prices are more than offsetting any difficulties that TGA is having getting services in the field.
Our forecast models are only available to Premium Members so I don't want to post my new Fair Value estimate here.
I have lowered by Fair Value estimte by $2/share from what I have in the last Sweet 16 Detailed Update, only because of the unrest in Egypt. I am concerned about what is going on in Egypt. It definitely hangs a dark cloud over TGA. We need to watch that situation closely.
So far the increased oil prices are more than offsetting any difficulties that TGA is having getting services in the field.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA Update
Kim is tied up today, so send me an e-mail if you'd like to see the new TGA forecast model.
dmsteffens@comcast.net
dmsteffens@comcast.net
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA Update
My updated forecast is now available under the Sweet 16 tab. Just click on the TGA logo.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA Update
For now, I'm leaving TGA in the Sweet 16 but I do believe the situation in Egypt will cap the stock's upside. If you are overweight in TGA, I suggest you use this morning's rally as a chance to lighten up.
Two of the companies on our Watch List, FST and PXP are ready to join the Sweet 16. PXP looks like it has the most upside of the two (in my opinion). I've also started working on PTEN (a former Sweet 16 member) and it looks VERY GOOD to me.
Two of the companies on our Watch List, FST and PXP are ready to join the Sweet 16. PXP looks like it has the most upside of the two (in my opinion). I've also started working on PTEN (a former Sweet 16 member) and it looks VERY GOOD to me.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA Update
This is from a newsletter I get on the options market.
Energies: Egyptian unrest has spread across North Africa. Despite the rock throwing, Molotov cocktails and proclaimed days of rage, the general consensus is the mini-contagion will have little influence on oil shipments or Suez Canal closures. On Friday, a mid-day rumor of Egyptian President Mubarak stepping down over the weekend sent crude spiraling down almost $2.00. Last week I penned, “While the temptation to fade this move and sell the heightened volatility is there, it is probably better to sit back and wait for a clearer picture.” I still think this is the case. If consensus is wrong, and further unrest develops, oil could move dramatically higher. There seems to be no clear picture in sight and no edge that I can find. The old adage seems to rule here, “When in doubt, get out.” This type of scenario seems like more of a gamble than a trade. Stay tuned.
Energies: Egyptian unrest has spread across North Africa. Despite the rock throwing, Molotov cocktails and proclaimed days of rage, the general consensus is the mini-contagion will have little influence on oil shipments or Suez Canal closures. On Friday, a mid-day rumor of Egyptian President Mubarak stepping down over the weekend sent crude spiraling down almost $2.00. Last week I penned, “While the temptation to fade this move and sell the heightened volatility is there, it is probably better to sit back and wait for a clearer picture.” I still think this is the case. If consensus is wrong, and further unrest develops, oil could move dramatically higher. There seems to be no clear picture in sight and no edge that I can find. The old adage seems to rule here, “When in doubt, get out.” This type of scenario seems like more of a gamble than a trade. Stay tuned.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group