Interviews

AN INTERVIEW WITH Mr. RANDALL C. NEELY, C.A., CFA President and CEO, Director TransGlobe Energy Corporation

Published on : 2019-11-19

TransGlobe Energy Corporation, in an interview with Petroleum Today Magazine highlights the remarkable strides Egypt has taken to modernize its petroleum sector and the opportunities for further investment, TransGlobe ,s steering strategy towards stable production along with the company ,s aim to expand it ,s operations in Egypt through synergistic acquisitions


Can we update our readers insight on the TransGlobe strategy in light of the current oil market?

Given the ongoing oil price volatility, TransGlobe is continually focused on strict capital discipline through operational cost controls andminimizing our exposure to financial leverage by remaining debtaverse. Despite fluctuations in the markets, we position ourselves as a nimble company with the ability to create value through a balanced portfolio of exploitation, development and exploration opportunities across our diversified onshore assets in Egypt and Canada. This approach has enabled us to build our production base and generate strong cash flows, as demonstrated by recently declaring and payingour first dividend (US$0.035 in August 2018) since 2015.

Where are the most promising areas / concessions the company is working in?

We are most excited about our low-risk development operations in Egypt and are especially focused on the continued expansion of our Eastern Desert Concessions. As such, we are currently working alongside the Egyptian General Petroleum Company (EGPC) to extend the concessions and amend our licenses to encourage the increased development and recovery of the oil in place through secondary and tertiary applications as well as horizontal drilling and multi-stage completions. Subject to approval from the Egyptian government, the amendments sought should allow for improved efficiencies and increased reserve recovery from known oil pools through enhanced recovery techniques.


TransGlobe has been working in Egypt for more than a decade, what are some attractions in the Egyptian petroleum sector? The production and distribution of oil is an integral part of Egypt’s economy and the country has developed a well-established service industry to support exploration and development operations, exemplified by the increasingly large and talented workforce. This presents an exciting opportunity for TransGlobe to operate within. On the other hand, the challenges that we face include inflexible contract terms that aren’t always reflective of the underlying assets and varying interpretations of any grey areas. Nevertheless, the leaders within the Ministry and EGPC are admirably working towards modernizing the industry which should lead to a stronger and more investible operating environment.

What is the amount of TransGlobe`s 2019 allocated budget here in Egypt with reference to other countries?


And how many wells do you plan to drill during the current calendar year? Our 2019 capital program equates to $34.1 million (before capitalized G&A), which includes $24.1 million for Egypt and $10.0 million (C$13.0 million) for Canada. This plan is strategically aimed at maximizing free cash flow to direct at future value growth opportunities in Egypt and outside of Egypt. This strategy is also in line with our 2018 drilling campaign where we drilled eight development wells in Egypt – 4 in West Bakr, 2 in North West Gharib and 2 in West Gharib – compared to six development wells in Canada.  

What is the operational update on the South Ghazalat exploration? We recently announced in our 2018 yearend reserves update that a successful discovery at South Ghazalat and successful extensions at West Bakr resulted in positive additions of gross 2P reserves of 2.1 MMboe. Based on the positive test rates from South Ghazalat, we are in the process of preparing a development plan for the discovery. In addition to this, we are also integrating the well results into our existing database and mapping to evaluate further exploration / appraisal drilling opportunities in the area to accelerate potential early development options and hopefully lead to additional discoveries.

What is the growth strategy of TransGlobe worldwide and in Egypt?


We are primarily focused on development and production with a core view of generating strong cash flows and longterm value accretion. By steering the bulk of the company’s efforts towards stable production, we have been able to create a uniquely competitive position in the market. Given our strength in looking at older, under-loved and under-developed assets, we cancapitalize our individual skillsets to improve field rejuvenation possibilities. Further to this, we are also looking to expand our operations in Egypt or similarregions through synergistic acquisitions, and in doing so, we hope to triple our production output and more importantly cash flow in the medium term. Having said that, having a little exploration success along the way is always welcome.

Why did you exit the business in Canada then decided to re-enter the business in 2015?


Our decision to exit and later re-enter Canada came from a strategic desire to diversify our portfolio of development assets and gain exposure to the increasing technological advancements in North American drilling and completion techniques. Our Canadian re-entry was part of the Company›s ongoing strategy of portfolio diversification into countries with attractive netbacks to support growth. This decision inevitably played to our core strength of value creation through development drilling and reservoir management.

What are your plans to mitigate oil price downturn?


We have been able to weather unpredictable markets by maintaining control over our own operations and focusing on opportunities where we can operate most efficiently. Because we are the operator of all our Egyptian assets and the majority of our Canadian assets, if oil prices shift materially we can react quickly. We’re not forced to push ahead when it isn’t favorable to do so and we can therefore control our costs accordingly. Conversely, in periods of rapid price appreciation we are able to move swiftly in order to capitalize on those opportunities to our greatest benefit.

You have a great journey with different positions and exposure, we would like to hear your story?


I was born in Eastern Canada but spent my formative years in the Yukon Territory, where I established many close friends that I still have today. Post high school I spent a few years working odd jobs, including an oil exploration supply ship in the Arctic Ocean, and traveling.  That traveling brought me to Egypt for the first time in 1986, when I visited Cairo, Aswan and Luxor, an amazing experience for a 19 year old.  Realizing I couldn’t travel and work odd jobs the rest of my life, I enrolled in Business at the University of Calgary, graduated in ‘92 and joined the chartered accounting firm of KPMG in Calgary. Following that I spent about four years as an energy investment banker until one of my clients enticed me into the energy business where I have been ever since.   

Finally, we would like to know about TransGlobe CSR policies and activities in Egypt?


TransGlobe have been supporting the Ras Gharib hospital for many years, as a recipient of choice as suggested by our Joint venture employees. Our production assets are close to city of Ras Gharib on the Gulf of Suez and a large number of our joint venture employees live in Ras Gharib and have a strong attachment to the hospital. In 2013, TransGlobe provided support to of fund the establishment of the first intensive care unit at the hospital and we continue to support the unit with donations to fund the acquisition of specialist heart and lifesaving equipment on a regular basis. TransGlobe makes the donations to the hospital whenever a significant HSE achievement is reached so that we are improving safety continually as well as supporting an essential local facility in Ras Gharib. In addition to this, TransGlobe has 2 staff members on the CSR committee, which is a subcommittee of the Egypt oil and Gas technical committee. Although only recently formed, this committee is already very active in liaising with other IOC’s to share and align CSR activities across the industry.

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