A successful international oil and gas explorer focused in Egypt and Yemen
TransGlobe Energy Corporation
Reserves
RESERVES AND ESTIMATED FUTURE NET REVENUES
In 2009 and 2010, DeGolyer and MacNaughton Canada Limited ("DeGolyer") of Calgary, Alberta, independent petroleum engineering consultants based in Calgary and part of the DeGolyer and MacNaughton Worldwide Petroleum Consulting group headquartered in Dallas, Texas, were retained by the Company's Reserve Committee, to independently evaluate 100 percent of TransGlobe's reserves as at December 31, 2009 and December 31, 2010.
Total Proved ("1P") reserves for the Company increased 6 percent from 19.2 million barrels of oil ("MMBbl") at December 31, 2009 to 20.5 MMBbl at December 31, 2010, representing a 133 percent production replacement in 2010.
Total Proved plus Probable ("2P") reserves for the Company increased by 26 percent from 24.2 MMBbl at December 31, 2009 to 30.4 MMBbl at December 31, 2010, representing a production replacement of 272 percent in 2010.
Total Proved plus Probable plus Possible ("3P") reserves for the Company increased by 37 percent from 30.5 MMBbl at December 31, 2009 to 41.9 MMBbl at December 31, 2010, representing a production replacement of 176 percent in 2009.
The Company's Reserves Committee, comprised of independent directors, has reviewed and recommended acceptance of the 2009 year-end reserve evaluations prepared by DeGolyer.
The 2009 and 2010 year-end reserves were prepared by the Company's independent reserve evaluators in accordance with the Canadian National Instrument (NI) 51-101 policy.
Disclosure provided herein in respect of Boe may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
The recovery and reserve estimates of crude oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGL and natural gas reserves may be greater than, or less than, the estimates provided herein. Note that columns may not add due to rounding.
All reserves (gross and net) presented are based on DeGoyler's forecast pricing effective December 31, 2010 and December 31, 2009, respectively.
RESERVES
| 2010 | 2009 | |||||||
| Light & Medium Crude Oil |
Heavy Oil |
Total Bbl |
Total Bbl |
|||||
| Company | Gross* | Net** | Gross* | Net** | Gross* | Net** | Gross* | Net** |
| By Category | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) |
| Proved | ||||||||
Producing |
9.5 | 5.3 | 4.6 | 2.6 | 14.1 | 7.9 | 14.2 | 7.8 |
Non-producing |
2.0 | 1.1 | 1.2 | 0.6 | 3.2 | 1.7 | 1.7 | 0.8 |
Undeveloped |
1.8 | 0.9 | 1.4 | 0.8 | 3.2 | 1.7 | 3.3 | 1.8 |
| Total Proved | 13.3 | 7.3 | 7.2 | 4.0 | 20.5 | 11.3 | 19.2 | 10.4 |
| Probable | 4.8 | 2.3 | 5.1 | 2.8 | 9.9 | 5.1 | 5.0 | 2.5 |
| Proved plus Probable | 18.1 | 9.6 | 12.3 | 6.8 | 30.4 | 16.4 | 24.2 | 12.9 |
| Possible | 5.2 | 2.4 | 6.3 | 3.2 | 11.5 | 5.6 | 6.3 | 3.2 |
| Proved plus Probable plus Possible | 23.3 | 12.0 | 18.6 | 10.0 | 41.9 | 22.0 | 30.5 | 16.1 |
* Gross reserves are the Company's working interest share before the deduction of royalties. ** Net reserves are the Company's working interest share after the deduction of royalties. Net reserves in Egypt and Yemen include the company's share of future cost recovery and production sharing oil after the Government's royalty interest but before reserves relating to income taxes payable. Under this method, a portion of the reported reserves will increase as oil prices decrease (and vice versa) as the barrels necessary to achieve cost recovery change with prevailing oil prices. | ||||||||
| 2010 | 2009 | |||||||
| Light & Medium Crude Oil |
Heavy Oil |
Total Bbl |
Total Bbl |
|||||
| Company | Gross | Net | Gross | Net | Gross | Net | Gross | Net |
| By Area | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) | (MMBbl) |
| Proved | ||||||||
Egypt |
8.0 | 4.5 | 7.2 | 4.0 | 15.2 | 8.5 | 13.0 | 7.1 |
Yemen |
5.3 | 2.8 | 0.0 | 0.0 | 5.3 | 2.8 | 6.2 | 3.3 |
| Total Proved | 13.3 | 7.3 | 7.2 | 4.0 | 20.5 | 11.3 | 19.2 | 10.4 |
| Proved plus Probable | ||||||||
| Egypt | 11.5 | 6.2 | 12.3 | 6.8 | 23.8 | 13.0 | 16.8 | 8.9 |
| Yemen | 6.6 | 3.4 | 0.0 | 0.0 | 6.6 | 3.4 | 7.4 | 4.0 |
| Total Proved plus Probable | 18.1 | 9.6 | 12.3 | 6.8 | 30.4 | 16.4 | 24.2 | 12.9 |
| Proved plus Probable plus Possible | ||||||||
| Egypt | 15.9 | 8.2 | 18.6 | 10.0 | 34.5 | 18.2 | 22.4 | 11.8 |
| Yemen | 7.4 | 3.8 | 0.0 | 0.0 | 7.4 | 3.8 | 8.1 | 4.3 |
| Total Proved plus Probable plus Possible | 23.3 | 12.0 | 18.6 | 10.0 | 41.9 | 22.0 | 30.5 | 16.1 |
ESTIMATED FUTURE NET REVENUES
All evaluations and reviews of future net cash flow are stated prior to any provision for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimated future net cash flow shown below is representative of the fair market value of the Company's properties. There is no assurance that such price and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of crude oil, NGL and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, NGL and natural gas reserves may be greater than or less than the estimates provided herein.
The estimated future net reserves for years ended 2010 and 2009 presented below in millions of U.S. dollars ("$MM") are caluclated using DeGolyer's price forecast at December 31, 2010 and December 31, 2009, respectively, and constant pricing using the Securities and Commissions' ("SEC") average price (the 12-month average price using in the first day of the month prices during 2010 and 2009, respectively).
In constant price cases, the prices were held constant for the life of the reserves.
Present Value of Future Net Revenues, After Tax* Constant Pricing |
||||||||||
December 31, 2010 Discounted at |
December 31, 2009 Discounted at |
|||||||||
| ($MM) | Undis-Counted |
5% |
10% |
15% |
20% |
Undis-Counted |
5% |
10% |
15% |
20% |
| Proved | ||||||||||
Egypt * |
311 | 265 | 232 | 206 | 185 | 223 | 181 | 152 | 132 | 116 |
Yemen * |
77 | 68 | 60 | 53 | 48 | 66 | 56 | 48 | 42 | 37 |
Total Proved |
388 | 333 | 291 | 259 | 233 | 289 | 237 | 201 | 174 | 153 |
| Proved plus Probable | ||||||||||
Egypt * |
442 | 370 | 316 | 275 | 241 | 272 | 222 | 187 | 161 | 142 |
Yemen * |
99 | 84 | 73 | 64 | 57 | 81 | 66 | 56 | 48 | 41 |
Total Proved plus Probable |
541 | 455 | 390 | 339 | 299 | 353 | 288 | 243 | 209 | 183 |
Proved plus Probable plus Possible |
||||||||||
Egypt * |
612 | 492 | 409 | 348 | 301 | 350 | 274 | 222 | 185 | 158 |
Yemen * |
113 | 95 | 82 | 71 | 63 | 87 | 71 | 59 | 50 | 43 |
Total Proved plus Probable plus Possible |
725 | 587 | 491 | 419 | 364 | 436 | 345 | 281 | 236 | 202 |
* Egypt and Yemen future net revenues presented are after Egypt and Yemen income tax, respectively. | ||||||||||
Pursuant to the SEC pronouncement in 2009, the constant price cases are based on the average of the reference price received on the first of each month during the year adjusted for respective differentials at year-end.
The following tables summarize the constant pricing used to estimate future net revenues:
2010 |
2009 |
|
$/Bbl |
$/Bbl |
|
| Egypt * | 69.50 |
54.52 |
| Yemen ** | 77.81 |
59.61 |
* Egypt prices are based on prices received for production from West Gharib.
** Yemen prices are based on prices received for production from Block 32 and Block S-1.
Present Value of Future Net Revenues, Before Income Tax* Independent Evaluator's Price Forecast |
||||||||||
December 31, 2010 Discounted at |
December 31, 2009 Discounted at |
|||||||||
| ($MM) | Undis-Counted |
5% |
10% |
15% |
20% |
Undis-Counted |
5% |
10% |
15% |
20% |
| Proved | ||||||||||
Egypt * |
380 | 320 | 277 | 244 | 219 | 39.2 |
35.5 |
32.3 |
29.6 |
27.3 |
Yemen * |
100 | 86 | 75 | 67 | 60 | 35.9 |
31.4 |
27.7 |
24.7 |
22.1 |
Total Proved |
481 | 406 | 353 | 311 | 279 | 75.1 |
66.9 |
60.1 |
54.3 |
49.3 |
| Proved plus Probable | ||||||||||
Egypt * |
544 | 451 | 384 | 332 | 291 | 84.8 |
75.8 |
68.1 |
61.5 |
55.9 |
Yemen * |
127 | 107 | 92 | 80 | 71 | 44.5 |
38.4 |
33.5 |
29.5 |
26.1 |
Total Proved plus Probable |
672 | 558 | 475 | 412 | 362 | 129.3 |
114.2 |
101.6 |
91.0 |
82.1 |
Proved plus Probable plus Possible |
||||||||||
Egypt * |
771 | 610 | 502 | 425 | 366 | 92.3 |
83.2 |
75.4 |
68.6 |
62.6 |
Yemen * |
145 | 121 | 103 | 89 | 78 | 45.2 |
39.1 |
34.1 |
30.0 |
26.6 |
Total Proved plus Probable plus Possible |
916 | 731 | 605 | 514 | 444 | 137.4 |
122.3 |
109.5 |
98.6 |
89.2 |
* Egypt and Yemen future net revenues presented are after Egypt and Yemen income tax, respectively. | ||||||||||
The following table summarizes the independent evaluator's price forecast used to estimate future net revenues:
Egypt |
Yemen |
|||
$/Bbl |
$/Bbl |
|||
| Year | 2010 |
2009 |
2010 |
2009 |
| 2011 | 82.17 | 75.75 | 92.00 |
80.78 |
| 2012 | 81.12 | 78.35 | 90.78 |
83.26 |
| 2013 | 81.92 | 81.00 | 91.63 |
85.84 |
| 2014 | 83.67 | 83.76 | 93.53 |
88.52 |
| 2015 | 86.45 | 85.60 | 96.50 |
90.50 |
| Thereafter* | 2.0% | 2.0% | 2.0% |
2.0% |
* Percentage change represents the increase in each year after 2015 to the end of the reserve life.