The Energy Report - TransGlobe Energy Corporation TSX:TGL; NASDAQ:TGA

>About The Energy Report/Streetwise

>Legal

>Site Index

TransGlobe Energy Corporation

TICKER: TSX:TGL; NASDAQ:TGA

DESCRIPTION: TransGlobe Energy Corporation is an international exploration and production company based in Calgary, Alberta, Canada with oil and natural gas interests in Egypt and Yemen. The company has interests in seven international blocks totaling 4.9 million acres, with active programs of exploration and development drilling underway. In Egypt, following two significant acquisitions in late 2007 and early 2008, TransGlobe operates approximately 6,200 barrels of medium quality oil per day (bopd). In Yemen the company’s interests have production of approximately 3,000 bopd of light, sweet crude and are operated by highly reputable international oil and gas companies (Occidental Petroleum Corporation and DNO International ASA). Since inception, TransGlobe has recorded continuous growth in production, reserves and funds flow, on both a gross and per share basis.

WEBSITE: http://www.trans-globe.com/

The information below is based on the most recent information we have received from analysts and the companies participating in The Gold Report. We encourage you to visit the company's web site for updates.

"We are initiating coverage of TransGlobe with a BUY rating and C$6.40 price target. We like the company based on its high level of activity and feel that the stock is a buy given that its current share price is fully supported by its Core NAV of C$5.40/sh. TransGlobe is currently trading on 2.6x 2011 EV/DACF with self-funded growing operations and we believe offers a free option on its Egyptian and Yemenese upside.

TransGlobe Energy Corporation is an international exploration and production company, with operations in Yemen and Egypt and headquartered in Calgary. . .Reserves at year-end stood at 24.2 mmboe of 2P and production at the end of January exceeded the 10 mboe/d mark.

We feel that TransGlobe's share price is undervalued relative to its exploration prospectivity and investors are overlooking management's track record for delivering consistent production and cash flow. Further, management is slowly transforming the firm into a more balanced exploration, production and development story with a bigger focus on Egypt, and we believe will be one of several more attractive takeout candidates for mid-tier producers in the region looking for high-quality acquisition candidates."
-TOBY PIERCE, GMP SECURITIES (03/09/10)

We are initiating research coverage on TransGlobe with a BUY investment rating and a $4.80/share 12-month target price.

What We Like About TGL:

Consistent year on year production and reserves growth: TGL has a good track record of production and reserves growth over the long term. Since 2002, production has grown annually by 27.5% on average. 2P reserves are up 38.4% on average. Per share production and reserves growth has also been consistent.

The recent farm-in adds more potential exploration upside: On January 25, 2010 TransGlobe announced a farm-in on the East Ghazalat concession located in the Abu Gharadiq basin of Egypt's Western Desert. TGL will participate in the drilling of three exploration wells in H1/10 and we like the increased exposure to exploration upside.

The potential option value of An Naeem: This large natural gas discovery was made in 2000 but the gas has remained stranded due to no gas market in Yemen. Negotiations continue with the government to commercialize the discovery but the timing of any cash flow is still uncertain in our opinion.

-ALEXANDER KLEIN, DUNDEE SECURITIES (02/08/10)

"On Wednesday, TransGlobe released its 2009 year-end reserve report. The company saw 40% 2P reserve growth in Egypt while Yemen 2P reserves saw a 5% decline, reflecting the mature nature of these producing assets. Total company 2P reserves increased 22% to 24.2 million barrels and reserve value increased 122% over end of 2008.

An increase in its Egyptian reserves reflects the impact of the company's successful 2009 development drilling and incremental waterflood recovery programs. Ongoing development in Egypt, coupled with the company's new East Ghazalat Concession farm-in provides further upside and further potential incremental reserve additions. As a result of the increase in reserve base and including his estimated exploration potential upside, Canaccord Adams Oil & Gas Analyst Fredrick Kozak increased his target price. The next catalyst for the stock is expected to be the exploration well results on the company's new East Ghazalat Concession expected in mid-to-late February, as well as results from the near-continuous drilling program ongoing in the West Gharib Concession."
- Morning Coffee, Canaccord Capital (01/29/10)

"On January 28, TransGlobe released its 2009 year-end reserve report. The company saw 40% 2P reserve growth in Egypt while Yemen 2P reserves saw a 5% decline, reflecting the mature nature of these producing assets. Total company 2P reserves increased 22% to 24.2 million barrels and reserve value increased 122% over end of 2008.

. . .Our valuation is based on a sum-of-the parts valuation of the company’s fully diluted Proved plus Probable (2P) reserves (See Figure 4), as well as risked potential exploration upside from its Egyptian opportunities (See Figure 5). Our base case valuation has increased to C$5.30/share (from C$3.98/share) while our exploration upside from Egypt could contribute an additional C$2.18 in potential upside. However, the first East Ghazalat results are expected within the month. This concession in Egypt's Western Desert has the potential to be a game-changer for the company. Including the new 2P asset valuation as well as a portion of the exploration upside, we are increasing our target price to C$7.00 from C$6.25."
-J. FREDERICK KOZAK, CANACCORD ADAMS (01/28/10)

"On January 25, TransGlobe announced it had completed a farm-in agreement with Vegas Oil & Gas SA whereby TransGlobe would receive a 50% interest in the East Ghazalat Concession in Egypt’s Western Desert in exchange for paying 100% of the costs (up to US$9 million maximum) to drill the first three exploration wells on the concession.

The company also provided a production update and reported strong incremental production additions from West Gharib, which has again taken total company production to over 10,000 bbl/d.

The concession farm-in is located in Egypt's prolific Western Desert and adds a third new exploration asset for the company in Egypt. While not currently operated by TransGlobe, the concession will provide the company with material near-term potential resource upside.

As a result of the increased exploration upside potential, we have increased our target price to C$6.25 from C$5.25."
-J. FREDERICK KOZAK, CANACCORD ADAMS (01/26/10)

PRINT THIS PAGE EMAIL THIS PAGE