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TransGlobe's Third-Quarter Revenue Soars

Stocks in this article: TGA

Once these most recent quarterly results are finalized, they will be run through Ratings' model and our ratings will be adjusted accordingly. To keep up to date on all of our ratings, visit Ratings Screener.

Energy and energy-related services provider TransGlobe Energy's (TGA) Q3 FY08 revenue tripled to $51.47 million from $14.76 million in Q3 FY07. Meanwhile, TGA's Oil and gas revenue more than doubled to $66.71 million from $26.33 million in Q3 FY07, driven by higher oil prices and increased production volumes. Moreover, oil and gas revenue net of royalties and other surged to $36.58 million from $15.79 million.

Average production volumes soared 81.1% to 6,935 barrels of oil equivalent per day (Boepd) from 3,830 Boepd, while the average price for oil and liquids climbed 39.9% to $104.55 per barrel from $74.71 per barrel. Moreover Egypt sold 3,096 Bopd of oil while Yemen sold 3,839 Bopd. Production from West Gharib averaged 3,278 Bopd (3,096 Bopd to TransGlobe) during the quarter, representing a 13.0% decrease in total field production over the previous quarter. These production decreases are primarily due to a number of pump changes and access to workover rigs, which deferred oil production during the quarter. Additionally, netback (revenue net of royalties, operating expenses and current taxes) grew to $21.74 million or $34.08 per barrel (Bbl) from $10.48 million or $29.72 Bbl a year ago. Segment-wise, oil sales net of royalties and other from Yemen spiked 34.2% to $20.69 million from $15.41 million, while revenue from Egypt increased several times to $15.89 million from $380,000 in the year-ago quarter.

The company's gross margin increased 698 basis points to 90.11% from 83.13% a year ago. Operating expenses rose 52.1% to $5.09 million from $3.35 million, while general and administrative expenses surged 42.6% to $2.07 million from $1.45 million. Despite the steep rise in operating expenses operating margin rose by 2,071 basis points to 68.69% from 47.98%. Interest expenses grew to $0.78 million from $0.09 million in the year ago quarter. As a result, the interest coverage fell to 45.15 from 76.98. Finally, the company's net income from continuing operations, excluding Canadian operations multiplied 5 times to $24.79 million or $0.41 per share compared to $5.20 million or $0.07 per share, led by a $14.89 million unrealized gains on derivative contracts.

During Q3 FY08, cash and cash equivalents dropped 18.6% to $8.59 million from $10.55 million. The company's total debt fell 7.3% to $57.13 million compared to $61.65 million in the same quarter last year, while shareholders' equity advanced 18.5% to $146.51 million from $123.60 million. Consequently, the debt-to-equity ratio improved to 0.39 from 0.50. The company's Return on assets increased by 88 basis points to 9.88% from 9.00% in Q3 FY07. Moreover, return on equity dropped 225 basis points to 10.22% from 12.47%.

During Q3 FY08, TGA completed the acquisition of an additional 25.0% financial interest in 8 non-Hana development leases of West Gharib properties from its partner for a consideration of $18.00 million. TransGlobe now holds a 100.00% working interest in the West Gharib Concession in Egypt. Additionally, TGA repurchased 300,000 shares at an average price of Cdn$3.87 per share under the Normal Course Issuer Bid.

Going forward, TransGlobe projects its full-year 2008 production guidance to be 7,450 Boepd and expects capital expenditure of $38.00 million.

A detailed report covering this quarterly release is now available. To purchase the report, click here .

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