Dundee Raises Target on TGL

GRANT DAUNHEIMER, Dundee Securities (04/20/2010)
"We are increasing our target price on TransGlobe to C$8.00/share from C$6.75/share. This increase stems from an 8% increase in our 2010 production forecast and a 7% increase in our 2010 Brent Oil forecast. These two changes combined lead to a 19% 2010 funds flow increase.

Potential Upside Remains from Expanded Arta Frac Program: At this time we have not incorporated any incremental production volumes for a potential expanded frac program at Arta. TransGlobe plans to drill two appraisal wells, Arta #13 and #14, which if successful could lead to a 20 or more well expanded drilling program at the Arta field. Thus the potential exists for our production forecasts to increase again if these appraisal wells are successful.

Near-Term Catalysts Are Many: We expect the multi-stage horizontal frac of Arta #12 to occur either late this month or early in May. This coupled with the vertical frac of Arta #6 remain the near-term catalysts for TransGlobe. Additionally, the Arta appraisal wells #13 and #14 are a critical first step for a potential expanded drilling program at Arta. On the exploration front, drill results from the East Ghazalat Sahab #1 well targeting an internal P50 estimate of 64 mmbbls (PIIP) should be available in the coming weeks. We like the improved growth momentum we see at TransGlobe and are maintaining our Buy recommendation."

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