Transglobe Energy (TGA) Reports Weaker Q4 Results Due To Lower Crude Sales

TransGlobe Energy (NASDAQ:TGA) announced poorer than estimated fourth quarter CFPS of -$0.14 against consensus at -$0.05. The key reason of the miss was led by lower crude sales (mainly due to Egypt) and lower than estimated realized prices.  Analysts yet maintain “Sector Perform” rating on TransGlobe Energy with 1-year target price of C$3.25 per share.

Company posted revenue of $5.217million which was almost 75% lower than street estimate of $20.820 million. Earnings per share remained $-0.49 (Estimated $-0.09), which was below estimates by -445. %. Sales volumes for the year averaged 11,165 barrels a day, and only 7,165 barrels a day for fourth quarter. These figures are both lower than production, which resulted in an overall build of inventory of just under 342,000 barrels over 2016 to 1,265,000 barrels.

Egypt production is estimated to remain largely preset from its exit of 13,800 bbl/d, with full-year average production expected to be 13,000-15,500 bbl/d. Production for January and February was reported at 16,817 boe/d and 16,296 boe/d, respectively, because of combination of natural declines and well service and remedial water injection work which points toward a Q1 – 2017 expected production rate of 16,500 boe/d. Full-year production guidance remains at 15,500 – 18,500 boe/d.

Lack of activity in the Harmattan Cardium play through 2014-2016 (46 wells drilled) has put the market skeptical toward the upside. Company has done an expectional job in Egypt driving its driiling costs down from $0.8million to $0.5million. Company’s base 2017 average production guidance of 15,500-18,500 boe/d estimates a firm budget of $35 million that would balance to the lower end of the production range, with 9 wells planned for Egypt and 4 wells in Canada.

TransGlobe Energy Corporation (TGA) is a Canada-based company engaged in the oil and gas exploration and production industry. The Company’s main business activities consist of the exploration development and production of crude oil and natural gas liquids focused in Egypt.

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Amy Sue, CFA, is equity analyst and reports Basic Materials, Financial & REIT and Industrial Goods sectors. Prior joining Broadway Leader, Amy Sue worked with Wells Fargo. If you have a great story idea for Amy Sue, you can write at [editor@broadwayleader.com].

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