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COMMITMENTS AND CONTINGENCIES
As part of its normal business, the Company entered into arrangements and incurred obligations that will impact the Company's future operations and liquidity. The principal commitments of the Company are as follows:
($000s) Payment Due by Period (1 2)---------------------------------------------------------------------------- Recognized in Financial More Statements Less than Contractual than 1-3 4-5 5 Cash Flows 1 year years years years--------------------------------------------------------------------------------------------------------------------------------------------------------Accounts payable and accrued liabilities Yes - Liability 48,587 48,587 - - -Long-term debt Yes - Liability 18,450 - 18,450 - -Convertible Yes - Liability 98,742 - - 98,742 - debenturesOffice and equipment No 14,728 6,819 2,324 2,072 3,513 leases (3)Minimum work No 4,350 4,350 - - - commitments (4)----------------------------------------------------------------------------Total 184,857 59,756 20,774 100,814 3,513--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Payments exclude ongoing operating costs, finance costs and payments made to settle derivatives.(2) Payments denominated in foreign currencies have been translated at December 31, 2012 exchange rates.(3) Office and equipment leases includes all drilling rig contracts.(4) Minimum work commitments include contracts awarded for capital projects and those commitments related to exploration and drilling obligations.
Pursuant to the PSC for Block 75 in Yemen, the Contractor (Joint Interest Partners) has a remaining minimum financial commitment of $3.0 million ($0.8 million to TransGlobe) for one exploration well in the first exploration period, which has been extended to March 9, 2014.
Pursuant to the August 18, 2008 asset purchase agreement for a 25% financial interest in eight development leases on the West Gharib Concession in Egypt, the Company has committed to paying the vendor a success fee to a maximum of $2.0 million if incremental reserve thresholds are reached in the South Rahmi development lease, to be evaluated annually. Based on the Company's annual Reserve Report effective December 31, 2012, no additional fees are due in 2013.
Pursuant to the June 7, 2012 share purchase agreement for a 60% operated interest in the South Mariut concession in Egypt, the Contractor (Joint Interest Partners) has a minimum financial commitment of $9.0 million ($5.4 million to TransGlobe) for three exploration wells ($3.0 million each) which were commitments from the original exploration period and were carried into the first three-year extension period, which expires on April 5, 2013. The Company issued three $3.0 million letters of credit to guarantee performance under this extension period and finished drilling the first of three planned wells subsequent to December 31, 2012 which has reduced the letters of credit to $6.0 million ($3.6 million to TransGlobe). There is a further two-year extension available under the terms of the PSC.
