Continental Focus, International Reach

Development Lease Approved in Western Desert

Thursday, May 30, 2019

TransGlobe Energy received approval for a new development lease in Egypt. In the Western Desert on the South Ghazalat, the company received notice that its Development Lease (DL) application for the SGZ-6X discovery well was approved by the Ministry of Petroleum.

The SGZ-6Z discovery well tested at a rate of 3,840 bpd of light oil.

The 29.8 sq km DL has a 20-year primary term with a five-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, TransGlobe 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 EPF and equipping the SGZ-6X well for production. The company is targeting to initially produce the SGZ-6X well at about 1,000 bpd from the Upper Bahariya formation to assess reservoir performance. Subject to finalizing transportation agreements with neighboring operators, the crude produced will initially be trucked to a nearby facility which is connected by pipeline to the El Hamra Terminal.

Concurrently, TransGlobe is planning to drill an appraisal well in Q3/Q4 (subject to rig availability) which, if successful, would be tied into the EPF and potentially be producing prior to year-end. In addition, it 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.