|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|
*Pending approval of Development Lease applications
|Egypt||West Gharib||NW Gharib||West Bakr||South Ghazalat||South Alamein||NW Sitra|
|Development||+ 5||+5||+ 5||
|Profit Oil Thresholds (bopd)|
|Contractor Profit Share|
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")
|Block||West Gharib||West Bakr||East Ghazalat||South Alamein||South Mariut|
|Basin||Eastern Desert||Eastern Desert||Western Desert||Western Desert||Western Desert|
|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|
|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|
|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.
|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|
|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%|