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TransGlobe's Third-Quarter Revenue Soars

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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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