News

November 10, 2009

TransGlobe Energy Upgrades Revenues Forecast As Higher Oil Prices And Production Boost Its Earning Potential

For all oil and gas producers, the recovery in the price of oil to over US$75 a barrel from the lows seen earlier this year has been very welcome, boosting depleted balance sheets with some solid cash flows. Perversely, the drop from last summer’s heady heights of US$140 a barrel has also been something of a blessing for producers as the sudden slump that came at the back end of 2008 also cooled an overheated services and rig sector that was eating away at margins. This volatility does mean, however, that year-on-year quarterly numbers are looking rather impoverished – hardly surprising given that Q3 2009 commodity prices were about half the level in the same quarter 2008 – but that comparisons with the Q1 and Q2 2009 numbers are much more positive.

This is certainly the case at TransGlobe Energy Corporation, which produces nearly 9,000 barrels per day from properties in Egypt and Yemen.  While its Q3 financials were hit by the fall in oil prices from last year, the drop was partly offset by a 28 per cent rise in production to 8,864 barrels per day.  Even with the lower commodity price environment, the company generated positive cash flows of US$12.6 million and posted a net loss of US$1.6 million, a significant improvement over...