YEMEN WEST - Marib Basin
Block S-1, Republic of Yemen (25% working interest)
Operations and Exploration
No wells were drilled during the first quarter.
Production
Production sales from Block S-1 averaged 108 Bopd (27 Bopd to TransGlobe) during the quarter. The reported gross sales production rate represents an adjustment to a prior period inventory which was lifted and sold in a prior quarter. The positive adjustment has been booked as sales during the first quarter. It is expected that sales production rates and the field production rates will vary quarter to quarter depending on the timing of tanker lifting's during the respective quarter.
Field production remains shut-in primarily due to labor negotiations with field employees and tender of service/support contracts in the field. A settlement was reached with the field employees in early April and the operator is currently finalizing the new service contracts. It is difficult to predict when production will be restored, but it is expected to commence in the second quarter.
Quarterly Block S-1 Production and Sales (Bopd) 2013 2012---------------------------------------------------------------------------- Q-1 Q-4 Q-3 Q-2----------------------------------------------------------------------------Gross field production rate - 3,112 3,860 -Gross sales production rate 108 7,748 252 -TransGlobe working interest 27 1,937 63 -TransGlobe net (after royalties) 14 1,273 41 -TransGlobe net (after royalties and tax) (i) 10 1,105 36 -----------------------------------------------------------------------------(i) Under the terms of the Block S-1 Production Sharing Agreement, royalties and taxes are paid out of the Government's share of production sharing oil.
Block 75, Republic of Yemen (25% working interest)
Operations and Exploration
No wells were drilled during the quarter.
Future drilling has been suspended pending resolution of logistics and security concerns.
MANAGEMENT'S DISCUSSION AND ANALYSIS
May 6, 2013
The following discussion and analysis is management's opinion of TransGlobe's historical financial and operating results and should be read in conjunction with the unaudited Condensed Consolidated Interim Financial Statements of the Company for the three months ended March 31, 2013 and 2012 and the audited Consolidated Financial Statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2012 included in the Company's annual report. The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board in the currency of the United States (except where otherwise noted). Additional information relating to the Company, including the Company's Annual Information Form, is on SEDAR at www.sedar.com. The Company's annual report on Form 40-F may be found on EDGAR at www.sec.gov.
READER ADVISORIES
Forward-Looking Statements
Certain statements or information contained herein may constitute forward-looking statements or information under applicable securities laws, including, but not limited to, management's assessment of future plans and operations, anticipated increases to the Company's reserves and production, the possible sale of the Company's assets in Yemen, collection of accounts receivable from the Egyptian Government, drilling plans and the timing thereof, commodity price risk management strategies, adapting to the current political situations in Egypt and Yemen, reserve estimates, management's expectation for results of operations for 2013, including expected 2013 average production, funds flow from operations, the 2013 capital program for exploration and development, the timing and method of financing thereof, method of funding drilling commitments, and commodity prices and expected volatility thereof. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.
