Stock Quote:
TGL  $ 1.88  $ -0.01
TGA  $ 1.47  $ -0.01
BZF18  $ 61.99  $ -0.73

Concession Summary

Concession (WI)
Size (Acres)
Gross Net
Year Acquired Type First Production
West Gharib 100% 22,775 22,775 2007 Development Jan 2000
NW Gharib 100% 11,205* 11,205* 2013 Development Dec 2016
West Bakr 100% 11,143 11,143 2011 Development June 1980
South Ghazalat 100% 349,302 349,302 2013 Exploration N/A
South Alamein 100% 197,806 197,806 2012 Exploration N/A
NW Sitra 100% 483,126 483,126 2015 Exploration N/A
Company Total 100% 1,073,081 1,073,081      

*Pending approval of Development Lease applications

 

Egypt West Gharib NW Gharib West Bakr South Ghazalat South Alamein NW Sitra
Expiry Date 2019-2026 2036 2020 2020 2018 2022
Extentions (years)            
Exploration N/A N/A N/A 3/2/2  N/A 3.5/3.5
Development + 5  +5 + 5 

20

+5

20

+5 

20

+5

Cost Oil 30% 25% 30% 25% 30% 28%
Profit Oil 70% 75% 70% 75% 70% 72%
Profit Oil Thresholds (bopd)            
1st Threshold 5,000 5,000 50,000 5,000 5,000 5,000
2nd Threshold 10,000 10,000 >50,000 10,000 10,000 10,000
3rd Threshold 15,000 >10,000 N/A >10,000 25,000 15,000
Thereafter 20,000 N/A N/A N/A >25,000 25,000
Contractor Profit Share            
1st Threshold 30.0% 15.0% 15.0% 17.0% 14.0% 24.0%
2nd Threshold 27.5% 14.5% 13.0% 16.5% 13.5% 23%
3rd Threshold 25.0% 14.0% 13.0% 16.0% 13.0% 22%
Thereafter 22.5% N/A N/A N/A 12.5% 21%

 

Production Sharing Agreements (PSAs)

A: In many countries, including Egypt and Yemen, oil companies are governed by PSAs. PSAs are a different approach from North American practices, where oil and natural gas producers obtain working interest leases over mineral rights and then pay royalties and/or taxes to applicable governments and/or the freehold mineral rights holder.

All of the Company’s international projects are governed by production sharing contracts between the host government and the contractor (joint venture partners). In Egypt and Yemen, TransGlobe enters into a separate PSA for each block in which it has interests. Not only is each PSA a separate contract with the government, it must also be passed into law to become effective. This process generally takes six to twelve months after signing.

The government and the contractors each take their share of production based on the terms and conditions of the respective contracts. While PSAs vary in detail, they all determine the proportion of oil or natural gas produced by a company that is payable to the government. This proportion represents the government’s fiscal take and is roughly comparable with taxes and royalties as are customary in North America. The Company’s share of all taxes and royalties is paid out of the government’s share of production. The apportionment into a company’s share and the government’s share is based on a formula that is different in each PSA, but in general is as follows:

SUMMARY OF INTERNATIONAL PRODUCTION SHARING AGREEMENTS ("PSA")

Country

Egypt

Block   West Gharib West Bakr   East Ghazalat South Alamein South Mariut
Basin   Eastern Desert Eastern Desert   Western Desert Western Desert Western Desert
Year acquired   2007 2011   2010 2012 2012
Status   Development Development   Exploration Exploration Exploration
Operator   TransGlobe TransGlobe   Vegas TransGlobe TransGlobe
TransGlobe WI (%)   100% 100%   50% 100% 60%
Block Area (sq km)   141 45   645 1,423 3,350
Block Area (acres)   34,856 11,600   159,300 558,120 828,000
Expiry date   2019-2026 2020   Dec. 2012 April 2014 April 2013
Extensions: Exploration   N/A N/A   2nd Extension 18 months N/A 2nd Extension 24 months
Development   + 5 yr + 5 yr   20 yr 20 yr 20 yr

Country

Yemen

Block 32 72 S-1 75
Basin Masila Masila Marib Marib
Year acquired 1997 2004/2005 1998 2007
Status Development Exploration Development Exploration
Operator DNO Total OXY OXY
TransGlobe WI (%) 13.81087% 20% 25% 25%
Block Area (sq km) 591 1,822 1,152 1,050
Block Area (acres) 146,070 450,234 284,700 262,500
Expiry date Nov. 2020 Sept. 2012 Oct. 2023 Mar. 2013
Extensions: Exploration N/A N/A N/A 2nd Phase
36 months
Development 5 yr 20 yr + 5 yr 5 yr 20 yr + 5 yr

SUMMARY OF INTERNATIONAL PSA TERMS

All of the Company’s international blocks are production sharing contracts between the host government and the Contractor (joint venture partners). The government and the Contractor take their share of production based on the terms and conditions of the respective contracts. The Contractors’ share of all taxes and royalties are paid out of the Governments’ share of production.

Certain PSAs provide for the Government to receive a percentage gross royalty on the gross production. The remaining oil production, after deducting the gross royalty, is split between cost sharing oil and production sharing oil. Cost sharing oil is up to a maximum percentage as defined in the specific PSA. Cost oil is assigned to recover approved operating and capital costs spent on the specific project. Each PSA is ring fenced for cost recovery and production sharing purposes. The remaining production sharing oil (total production, less gross royalty, less cost oil) is shared between the government and the Contractor as defined in the specific PSAs.

The following tables summarizes the Company’s international PSA terms for the first production tranche for each block. All the PSAs have different terms for production levels above the first tranche, which are unique to each PSA. The Government’s share of production increases and the Contractor’s share of production decreases as the production volumes go to the next production tranche.

Country

 

Egypt

Yemen

Block   West Gharib West Bakr East Ghazalat South Alamein South Mariut 32* 72 S-1 75
First Production Tranche (MBopd)   0 - 5 / 5 - 10 / 10+ 0 - 50 0 - 5 0 - 5 / 5 - 10 0 - 5 0 - 25 0 - 25 0 - 12.5 0 - 25
Gross Royalty %   0% 0% 0% 0% 0% 3% 3% 3% 3%
Max Cost Oil %   30% 30% 25% 30% 35% 60% 50% 50% 50%
Excess Cost Oil %   30% 0% 0% 0% 0% Prod. Sharing Prod. Sharing Prod. Sharing Prod. Sharing
Depreciation per Quarter                    
Operating   100% 100% 100% 100% 100% 100% 100% 100% 100%
Capital   6.25% 5% 5% 5% 5% 20% 12.5% 12.5% 12.5%
Production Sharing Oil:                    
Contractor   30% / 27.5% / 25% 15% 20% 14% / 13.5% 18% 34% 32.4% 34.2% 34.2%
Government   70% / 72.5% / 75% 85% 80% 86% / 86.5% 82% 66% 67.6% 65.8% 65.8%