Watch List: TGA

[dan_s]

We are working on an updated company profile for former Sweet 16 member TransGlobe Energy (TGA). The only reason I dropped TGA from the S-16 was because of the unrest in Egypt. Things do seem to be settling down in Egypt so TGA is looking better. A significant amount of TGA's production in Yemen is still offline due to rebels blowing up an export pipeline. Yemen is one messed up neighborhood!

I am working on my TGA forecast model and I will post it under the Watch List tab tonight.

Read below and note what I have highlighted.

All of the Company's production is priced to Brent and shared with the respective governments through Production Sharing Agreements. When the price of oil goes up, it takes fewer barrels to recover costs (cost recovery barrels are assigned 100% to the Company) which generally results in more production sharing oil or profit oil. Production sharing oil is split with the respective Government. The splits are fixed for the life of the contract and do not change with the price of oil. During times of increased oil prices, the Company receives less cost oil and more production sharing oil (or profit oil). During times of increased oil prices, the Government receives more production sharing oil due to lower cost oil. For reporting purposes, the Company records the respective Government's share of production as royalties and taxes (all taxes are paid out of the Government's share of production).

The political unrest in the Middle East / North Africa region has contributed to market volatility in oil prices. The Brent oil prices were $105 per barrel in the first quarter and over $120 per barrel in April and early May. During the quarter, the Company had record funds flow of $24.3 million, repaid $30.0 million of debt and closed a Cdn$75.0 million financing to exit the quarter with positive working capital of $135.3 million and long-term debt of $60.0 million.

Subsequent to the quarter, the Company has collected an additional $59.1 million of receivables, primarily in Egypt.

The Company has a very strong financial position and is working on several business development opportunities in Egypt to expand its opportunity base.

[ghrcap]

This manager likes your plays, Dan.
http://seekingalpha.com/article/272079- ... urce=yahoo

[dan_s]

George;

I will call you when I get to Las Vegas on Tuesday.

[ghrcap]

Good. We can handicap the first game in the Miami-Dallas series while your wife cleans up on slots.

[dan_s]

In 30+ trips to Vegas my wife has "cleaned up on slots" once.

[dan_s]

All EPG Premium Members should have received a "Flash Alert" on TGA. Read it carefully.

TGA, with a high percentage of assets and future growth potential in Egypt, has significant upside. It is not for everyone. High geopolitical risk but high reward potential.