UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER TO RULE 13A or 15D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
| For the Month of: November 2002 (1) | File No.: 0-11378 |
(Translation of Registrant’s Name into English)
#2900, 330 – 5th Avenue S.W., Calgary, AB T2P 0L4
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20F or Form 40F
| Form 20F [ X ] | Form 40F [ ] |
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
| Yes [ ] | No [ X ] |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with rule 12g-3-2(b): 82 - ____________ .
| FORM 6K | Page 2 |
Submitted herewith:
News releases as filed on SEDAR and disseminated through CCNMatthews as follows:
November 18, 2002: TransGlobe Energy Corporation Announces 2002 Third Quarter Results
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TransGlobe Energy Corporation | |
| (Registrant) |
| Date: | November 18, 2002 | By: | /s/ David C. Ferguson |
| David C. Ferguson | |||
| Vice President, Finance & CFO |
NEWS RELEASE
FOR IMMEDIATE RELEASE
TRANSGLOBE ENERGY CORPORATION ANNOUNCES
2002 THIRD QUARTER RESULTS
Monday, November 18, 2002 - TransGlobe Energy Corporation (“TransGlobe” or the “Company”) is pleased to announce its financial and operating results for the three month and nine month period ended September 30, 2002. All dollar values are expressed in United States dollars unless otherwise stated. Per barrel of oil equivalent (“Boe”) amounts have been calculated using a conversion of 6,000 cubic feet of natural gas to one barrel of oil.
HIGHLIGHTS
- Record Cash Flow from operations of $2,111,302 for the third quarter of 2002
- Drilling commenced on both Blocks in Yemen - eight to ten wells planned for 2002/2003
- Tasour #7 field extension well successful in main producing zone, additional oil pool found
- Drilling program on Block 32 expanded for 2003
FINANCIAL AND OPERATING UPDATE
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||
| Financial | 2002 | 2001 | Change | 2002 | 2001 | Change | ||||||
|
|
||||||||||||
| Oil and gas sales, net of royalties | 2,964,411 | 1,928,521 | 54 | % | 7,794,741 | 6,906,606 | 13 | % | ||||
| Operating expense | 503,202 | 390,719 | 29 | % | 1,379,642 | 1,168,551 | 18 | % | ||||
| General and administrative expense | 141,586 | 135,134 | 5 | % | 546,371 | 451,370 | 21 | % | ||||
| Depletion and depreciation | 1,138,000 | 581,000 | 96 | % | 3,094,000 | 2,070,000 | 49 | % | ||||
| Income taxes | 182,034 | 152,150 | 20 | % | 588,560 | 503,808 | 17 | % | ||||
| Cash flow from operations | 2,111,302 | 1,266,471 | 67 | % | 5,329,060 | 4,811,090 | 11 | % | ||||
| Basic per share | 0.04 | 0.03 | 33 | % | 0.10 | 0.10 | - | |||||
| Diluted per share | 0.04 | 0.02 | 100 | % | 0.10 | 0.09 | 11 | % | ||||
| Net income | 1,040,470 | 685,471 | 52 | % | 2,228,598 | 2,724,872 | (18 | )% | ||||
| Basic and diluted per share | 0.02 | 0.01 | 100 | % | 0.04 | 0.05 | (20 | )% | ||||
| Capital expenditures | 1,739,731 | 1,758,329 | (1 | )% | 3,929,637 | 3,506,270 | 12 | % | ||||
| Working capital | 2,938,267 | 1,473,166 | 99 | % | ||||||||
| Common shares outstanding | ||||||||||||
| Basic (weighted average) | 51,434,361 | 50,589,446 | ||||||||||
| Diluted (weighted average) | 51,926,087 | 51,148,975 | ||||||||||
| Production | ||||||||||||
| Oil and liquids (Bpd) | 1,460 | 1,067 | 37 | % | 1,450 | 1,192 | 22 | % | ||||
| Average price ($ per barrel) | 27.26 | 23.16 | 18 | % | 24.38 | 23.41 | 4 | % | ||||
| Gas (Mcfpd) | 816 | 1,122 | (27 | )% | 925 | 1,143 | (19 | )% | ||||
| Average price ($ per Mcf) | 2.27 | 2.24 | 1 | % | 2.42 | 4.17 | (42 | )% | ||||
| Total (Boed) (6 : 1) | 1,596 | 1,254 | 27 | % | 1,604 | 1,383 | 16 | % | ||||
| Operating expense ( $ per Boe) | 3.43 | 3.39 | 1 | % | 3.15 | 3.10 | 2 | % | ||||
2
EXPLORATION UPDATE
The Company has drilled the first two wells of an eight to ten well exploration/appraisal drilling program planned for the balance of 2002 and 2003 in the Republic of Yemen. Drilling commenced on both Yemen projects during September resulting in one multi-zone producing oil well and one dry hole.
In Canada the Company recently drilled two gas wells and will participate in an additional exploration well prior to year end.
Block 32, Republic of Yemen (13.81087% working interest)
The Tasour #7 step out well was completed and tied in as a multi-zone producing
oil well. The well was completed and placed on production at 8,501 barrels of
oil per day (“Bopd”), which is the capacity of the pump. The Tasour
#7 well encountered the main Upper Qishn producing zone in a structurally higher
position than the existing producers, thereby extending the field to the south
to an area that was previously assumed to be below the oil water contact. In
addition to the full oil column in the main producing zone, the well also discovered
a new pool in the Qishn sands below the main zone. The new zone is also being
produced with the main Upper Qishn reservoir. The results from Tasour #7 are
expected to increase the recoverable oil reserves for the Tasour field.
The drilling rig has moved to a non-owned adjacent block for two wells as part of a multi-well, rig sharing contract to reduce costs. The drilling rig should be available to the Block 32 joint venture group in December 2002 to drill Tasour #8. The Tasour #8 well will appraise the main field extension and new pool discovery set up by the Tasour # 7 well. An exploratory prospect at Ghoraf #1 on the western portion of Block 32 will be drilled following Tasour #8. In total the Block 32 joint venture group has approved a pro gram of four firm wells and one contingent well for the balance of 2002 and 2003. In addition to the expanded drilling program, work will begin on a 2-D seismic program early in 2003 to delineate several of the undrilled exploration prospects on the Block. These prospects could be drilled in future drilling programs.
Block S-1, Republic of Yemen (25% working interest)
The first of a four well program on Block S-1, the Osaylan #1 exploration well,
commenced drilling during September 2002. The well was drilled to a total depth
of 1,902 meters (6,242 feet) and was abandoned after encountering minor oil
shows. The primary target, the Alif reservoir sandstone, was encountered. However
the logs did not indicate commercial hydrocarbons were present. Evaluations
of core analysis, fluid analysis and petrophysical interpretation will be carried
out to determine if additional work on the Osaylan structure is warranted.
The second well, An Nagyah #2, commenced drilling on October 31, 2002 and is currently drilling. The An Nagyah # 2 well will evaluate the An Nagyah #1 discovery, previously drilled by Shell, which had indicated pay in the Lam formation. The An Nagyah prospect is a 3–D seismically defined structure with potential in both the Alif and Lam formations.
The third well will be drilled at An Naeem #3 to test a potential oil rim on the gas condensate discovery made at An Naeem during the 2000 drilling program.
Canada
At Nevis the Company drilled a 52% working interest well to evaluate a Leduc
reef structure identified on 3-D seismic. Although the well did not encounter
the anticipated full reef build up, the Leduc was completed and tested to evaluate
the potential for additional work on the structure. The well is being completed
as a gas well in a shallower horizon. It is expected that the well will commence
gas production by the end of the year, subject to securing capacity in an adjacent
pipeline.
At Morningside, the Company drilled and completed an exploratory shallow gas test at 6-30 (58% working interest). The 6-30 well may be tied in with the 3-28 gas well (100% working interest). The tie-in of 3-28 was deferred pending the results of 6-30. The 6-30 and 3-28 gas wells are expected to initially contribute an additional 110 Boepd of new production to the Comp any after the pipeline tie-in is completed in Q1 2003.
3
OPERATING UPDATE
Production
In Yemen Block 32, production from the Tasour field averaged 10,304 Bopd (1,423
Bopd to TransGlobe) during the third quarter 2002 compared to 7,415 Bopd (1,024
Bopd to TransGlobe) during the third quarter 2001. The Tasour #7 well came on
production at the end of September and is currently producing in excess of 8,500
Bopd (1,173 Bopd to TransGlobe). The Tasour field is producing at a record level
of up to 16,000 Bopd (2,209 Bopd to TransGlobe) which is the current capacity
of the export pumps. TransGlobe expects that the Tasour field will produce at
or near current levels until additional wells are drilled in December 2002 and
during 2003. Contingent upon successful drilling results and production performance,
the installation of additional export pumps may be undertaken during 2003 to
raise the export capacity to 25,000 Bopd through the eight inch pipeline connecting
the Tasour CPF (central production facility) to the Nexen export pipeline. If
future wells at Tasour prove successful, it is TransGlobe’s view that the
total production for the Tasour field may reach more than 20,000 Bopd (2,762
Bopd to TransGlobe) in 2003.
Production from Canada averaged 173 Boepd during the third quarter of 2002 compared to 230 Boepd during the third quarter 2001. In early July, gas production at Nevis and Cherhill was shut in for two weeks in response to very low Canadian spot gas prices which were below $2.00 Cdn/Mcf. Production was restored in mid July as spot gas prices stabilized in the $2.50-$3.00 Cdn/Mcf range. Effective July 1, 2002 the Company sold a minor interest producing property which represented approximately 8 Boepd of production.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Management’s discussion and analysis (“MD&A”) should be read in conjunction with the unaudited interim financial statements for the three months and nine months ended September 30, 2002 and 2001 and the audited financial statements and MD&A for the year ended December 31, 2001 included in the Company’s annual report. All dollar values are expressed in United States dollars unless otherwise stated.
Operating Results
Net income for the third quarter 2002 was $1,040,470 ($0.02 per share) compared
to a net income of $685,471 ($0.01 per share) in 2001 with cash flow from operations
of $2,111,302 ($0.04 per share) compared to $1,266,471 ($0.03 per share) in
2001. The increase in net income and cash flow in the third quarter is primarily
a result of a 27% increase in production along with an 18% increase in oil and
liquids prices. Net income for the nine months 2002 decreased to $2,228,598
from $2,724,872 in the corresponding period 2001 mainly as a result of increased
depletion and depreciation charges.
Revenue net of royalties was $2,964,411 for the third quarter 2002 compared to $1,928,521 for the same period in 2001. In the third quarter 2002, revenues net of royalties were $2,750,801 and $213,610 from Yemen and Canada respectively. In the same period 2001, revenues net of royalties amounted to $1,678,285 in Yemen and $250,236 in Canada. Revenues net of royalties in Yemen increased 64% due to a 39% increase in production and an 18% increase in oil prices. The average oil price for the Company’s production in Yemen for the third quarter 2002 was $27.40 per barrel compared to $23.24 in the third quarter 2001. Oil production from the Tasour field in Yemen is marketed by Nexen Marketing International Ltd. and the oil price is based on an average dated Brent price less a quality/transportation differential between the dated Brent blend and the Yemen Masila crude oil blend. Revenue in Canada decreased due to a 25% decrease in production. Gas prices averaged $2.27 per Mcf in Canada for the third quarter 2002 and $2.24 per Mcf for the same period 2001. Oil and liquids prices in Canada averaged $22.07 per barrel for the third quarter 2002 and $21.08 per barrel for the same period 2001. Consolidated revenues net of royalties for the nine months 2002 increased 13% from the corresponding period 2001 mainly as a result of a 16% increase in production for the period.
Operating costs of $503,202 averaged $3.43 per Boe in the third quarter 2002 compared to $390,719 ($3.39 per Boe) in 2001. The increase is a direct result of increased production volumes. Operating costs averaged $2.98 and $7.12 per Boe in the third quarter 2002 in Yemen and Canada, respectively. The high Boe costs in Canada are a reflection of third party processing, transportation and compression fees. Operating costs of $1,379,642 remained flat on a Boe basis, averaging $3.15 for the nine months 2002 compared to $1,168,551 ($3.10 per Boe) for the comparable period in 2001.
4
The netback per Boe was $16.76 during the third quarter 2002. The comparable figure for the same period in 2001 was $13.33 per Boe. The increase is primarily a result of a 20% increase in overall commodity prices in the quarter. The netback per Boe for the nine months 2002 was $14.65 compared to $15.20 for the same period 2001. This 4% decrease is a reflection of the decrease in gas prices and a small increase in operating and royalty costs for the nine months.
General and administrative expense was $141,586 ($0.96 per Boe) for the three month period ended September 30, 2002 as compared to $135,134 ($1.17 per Boe) in the comparable period. The reduction on a Boe basis is a result of increased production volumes during the quarter. During the nine months 2002, general and administrative expenses increased to $546,371 ($1.25 per Boe) from $451,370 ($1.20 per Boe) in the comparable period 2001.
Depletion and depreciation was $1,138,000 for the third quarter 2002 compared to $581,000 in the same period 2001. The increase is attributable to the inclusion of significantly higher costs in the depletable base in the Republic of Yemen. In Yemen, unproven properties in the amount of $10,452,861 were excluded from costs subject to depletion and depreciation. This amount represents all costs incurred on Block S-1 and a portion of the costs on Block 32 relating to exploration and development not directly incurred on the currently producing property. These costs will be included in the depletable base over the period of the development term of 20-25 years as the Blocks become fully developed. Depletion and depreciation increased to $3,094,000 for the nine months 2002 compared to $2,070,000 for the nine months 2001, reflecting the increase in the depletable costs in the Republic of Yemen.
Current income tax expense in the amount of $249,202 in the third quarter 2002 represents income taxes incurred and paid under the laws of the Republic of Yemen pursuant to the Production Sharing A greement on Block 32 compared to $152,150 in the same period 2001. The increase is due to increased revenues from Block 32 in the Republic of Yemen. Future income tax recovery of $67,168 is a result of offsetting unrecorded future tax benefits against the future tax effect of tax renunciations to flow through shareholders.
Capital Expenditures
Capital expenditures in the third quarter 2002 were $1,451,018 and $288,713
in Yemen and Canada respectively compared to $1,484,378 and $273,951 in Yemen
and Canada respectively in third quarter 2001. Expenditures in Yemen on Block
32 were primarily for drilling and completing Tasour #7, Masila capacity expansion
and well workovers at Tasour. Block S-1 expenditures were primarily for contractual
bonus payments, pre-drilling inventory and drilling at Osaylan #1.
Canadian capital expenditures in the third quarter 2002 relate mainly to the drilling at Nevis and Morningside and capitalized geological overhead. Proceeds on disposal of oil and gas properties in the amount of $156,805 represent the disposition of the Wildmint property and disposal of surplus equipment.
Liquidity and Capital Resources
TransGlobe expects to fund its capital requirements for the balance of 2002
and 2003 out of working capital, cash flow, debt and equity financing as may
be required. At September 30, 2002, the Company had working capital of $2,938,267,
a revolving credit facility of Cdn$2,500,000 and an acquisition credit facility
of Cdn$2,000,000 to support its capital expenditure program. The Company has
flexibility in adjusting its Canadian capital expenditure program should commodity
price fluctuations affect cash flows and thus its ability to borrow funds.
OUTLOOK
The Company has revised its 2002 cash flow estimate upwards to $7,600,000 or $0.15 per share. The revision is due to higher than anticipated oil prices, the excellent production performance of the Tasour field and expected increased production with the addition of the Tasour #7 well. This revised forecast is based on an average oil price of $24.00 for the Tasour production in the fourth quarter 2002.
5
Consolidated Statements of Operations
(Unaudited - Expressed in U.S. Dollars)
| Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||
| REVENUE | ||||||||||||
| Oil and gas sales net of royalties | $ | 2,964,411 | $ | 1,928,521 | $ | 7,794,741 | $ | 6,906,606 | ||||
| Interest income | 6,081 | 11,808 | 41,926 | 15,870 | ||||||||
| 2,970,492 | 1,940,329 | 7,836,667 | 6,922,476 | |||||||||
| EXPENSES | ||||||||||||
| Operating | 503,202 | 390,719 | 1,379,642 | 1,168,551 | ||||||||
| General and administrative | 141,586 | 135,134 | 546,371 | 451,370 | ||||||||
| Foreign exchange loss (gain) | (41,527 | ) | (4,147 | ) | (15,767 | ) | (193 | ) | ||||
| Interest | 6,727 | 2 | 15,263 | 4,068 | ||||||||
| Depletion and depreciation | 1,138,000 | 581,000 | 3,094,000 | 2,070,000 | ||||||||
| 1,747,988 | 1,102,708 | 5,019,509 | 3,693,796 | |||||||||
| Net income before income taxes | 1,222,504 | 837,621 | 2,817,158 | 3,228,680 | ||||||||
| Income taxes - future | (67,168 | ) | - | (67,168 | ) | - | ||||||
| - current | 249,202 | 152,150 | 655,728 | 503,808 | ||||||||
| 182,034 | 152,150 | 588,560 | 503,808 | |||||||||
| NET INCOME FOR THE PERIOD | 1,040,470 | 685,471 | 2,228,598 | 2,724,872 | ||||||||
| DEFICIT, BEGINNING OF PERIOD | (16,536,570 | ) | (18,747,534 | ) | (17,724,698 | ) | (20,786,935 | ) | ||||
| DEFICIT, END OF PERIOD | $ | (15,496,100 | ) | $ | (18,062,063 | ) | $ | (15,496,100 | ) | $ | (18,062,063 | ) |
| Net income per basic and diluted share | $ | 0.02 | $ | 0.01 | $ | 0.04 | $ | 0.05 | ||||
6
Consolidated Balance Sheets
(Expressed in U.S. Dollars)
| September 30, 2002 | December 31, 2001 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current | ||||||
| Cash | $ | 2,018,222 | $ | 1,174,846 | ||
| Accounts receivable | 1,633,160 | 975,773 | ||||
| Prepaid expenses and inventory | 70,378 | 60,687 | ||||
| 3,721,760 | 2,211,306 | |||||
| Capital assets | ||||||
| Republic of Yemen | 13,955,774 | 13,591,437 | ||||
| Canada | 3,371,241 | 3,044,746 | ||||
| $ | 21,048,775 | $ | 18,847,489 | |||
| LIABILITIES | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 783,493 | $ | 828,959 | ||
| Provision for site restoration and abandonment | 118,209 | 106,209 | ||||
| 901,702 | 935,168 | |||||
| SHAREHOLDERS’ EQUITY | ||||||
| Share capital | 35,643,173 | 35,637,019 | ||||
| Deficit | (15,496,100 | (17,724,698 | ) | |||
| 20,147,073 | 17,912,321 | |||||
| $ | 21,048,775 | $ | 18,847,489 | |||
7
Consolidated Statements of Cash Flows
(Unaudited - Expressed in U.S. Dollars)
| Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||
| CASH FLOWS RELATED TO THE | ||||||||||||
| FOLLOWING ACTIVITIES: | ||||||||||||
| OPERATING | ||||||||||||
| Net income | $ | 1,040,470 | $ | 685,471 | $ | 2,228,598 | $ | 2,724,872 | ||||
| Items not involving cash: | ||||||||||||
| Performance bonus expense paid in | ||||||||||||
| shares | - | - | 73,630 | 16,218 | ||||||||
| Depletion and depreciation | 1,138,000 | 581,000 | 3,094,000 | 2,070,000 | ||||||||
| Future income taxes | (67,168 | ) | - | (67,168 | ) | - | ||||||
| Cash flow from operations | 2,111,302 | 1,266,471 | 5,329,060 | 4,811,090 | ||||||||
| Changes in non-cash working capital | (471,810 | ) | 145,742 | (914,966 | ) | 770,394 | ||||||
| 1,639,492 | 1,412,213 | 4,414,094 | 5,581,484 | |||||||||
| FINANCING | ||||||||||||
| Issue of share capital | - | 27,500 | (308 | ) | 55,000 | |||||||
| Revolving demand loan (repayment) | (1,071,758 | ) | - | - | (77,634 | ) | ||||||
| (1,071,758 | ) | 27,500 | (308 | ) | (22,634 | ) | ||||||
| INVESTING | ||||||||||||
| Purchase of capital assets | ||||||||||||
| Republic of Yemen | (1,451,018 | ) | (1,484,378 | ) | (3,228,337 | ) | (2,544,196 | ) | ||||
| Canada | (288,713 | ) | (273,951 | ) | (701,300 | ) | (962,074 | ) | ||||
| Proceeds on disposal of oil and gas | ||||||||||||
| properties | 156,805 | - | 156,805 | - | ||||||||
| Changes in non-cash working capital | 559,691 | 231,860 | 202,422 | (868,225 | ) | |||||||
| (1,023,235 | ) | (1,526,469 | ) | (3,570,410 | ) | (4,374,495 | ) | |||||
| NET INCREASE (DECREASE) IN CASH | (455,501 | ) | (86,756 | ) | 843,376 | 1,184,355 | ||||||
| CASH, BEGINNING OF PERIOD | 2,473,723 | 1,336,025 | 1,174,846 | 64,914 | ||||||||
| CASH, END OF PERIOD | $ | 2,018,222 | $ | 1,249,269 | $ | 2,018,222 | $ | 1,249,269 | ||||
| Cash flow from operations per share | ||||||||||||
| Basic | $ | 0.04 | $ | 0.03 | $ | 0.10 | $ | 0.10 | ||||
| Diluted | $ | 0.04 | $ | 0.02 | $ | 0.10 | $ | 0.09 | ||||
| Supplemental disclosure | ||||||||||||
| Cash interest paid | $ | 6,727 | $ | 2 | $ | 15,263 | $ | 4,068 | ||||
| Cash taxes paid | $ | 249,202 | $ | 152,150 | $ | 655,728 | $ | 503,808 | ||||
8
Notes to the Consolidated Financial Statements
1. Basis of presentation
The interim consolidated financial statements of TransGlobe Energy Corporation
(“TransGlobe” or the “Company”) for the three month and
nine month periods ended September 30, 2002 and 2001 have been prepared by management
in accordance with accounting principles generally accepted in Canada on the
same basis as the audited consolidated financial statements as at and for the
year ended December 31, 2001, except as outlined in Note 2. These interim consolidated
financial statements should be read in conjunction with the consolidated financial
statements and the notes thereto in TransGlobe’s annual report for the
year ended December 31, 2001.
2. Change in accounting policies
Effective January 1, 2002, Canadian accounting standards require disclosure
of the impact on net earnings of using the fair market value method for stock
options issued on or after January 1, 2002.
Also effective January 1, 2002, Canadian accounting standards require that revolving debt with terms of 364 days or less is to be included in current liabilities. There have been no changes in the terms or conditions of the facility.
3. Share capital
The Company is authorized to issue 500,000,000 common shares with no par value.
| Continuity of common shares | ||||
| Shares | Amount | |||
| Balance, December 31, 2001 | 51,244,801 | $ | 35,637,019 | |
| Stock bonus | 250,000 | 73,630 | ||
| Private placement, issue costs | - | (308 | ) | |
| Tax effect of flow through shares | - | (67,168 | ) | |
| Balance, September 30, 2002 | 51,494,801 | $ | 35,643,173 | |
| Continuity of warrants | ||||
| Balance, December 31, 2001 | 4,414,806 | |||
| Expired | (4,414,806 | ) | ||
| Balance, September 30, 2002 | - | |||
| Continuity of stock options | ||||
| Balance, December 31, 2001 | 2,379,500 | |||
| Granted | 1,400,000 | |||
| Exercised | - | |||
| Expired | (155,000 | ) | ||
| Balance, September 30, 2002 | 3,624,500 | |||
The Company accounts for its stock-based compensation plans using the intrinsic -value of the options granted whereby no costs have been recognized in the financial statements for stock options granted to employees and directors at market values. Effective January 1, 2002 under Canadian generally accepted accounting principles, the impact of using the fair value method on compensation costs and recorded net earnings must be disclosed. If the fair value method had been used, the Company’s net earnings per share would approximate the following pro forma amounts (the pro forma amounts shown do not include the compensation costs associated with stock options granted prior to January 1, 2002):
9
| Three Months Ended | Nine Months Ended | |||||
| September 30, 2002 | September 30, 2002 | |||||
| Compensation costs | $ | 65,000 | $ | 75,000 | ||
| Net earnings: | ||||||
| As reported | $ | 1,040,470 | $ | 2,228,598 | ||
| Pro forma | $ | 975,470 | $ | 2,153,598 | ||
| Net earnings per common share | ||||||
| Basic and diluted | ||||||
| As reported | $ | 0.02 | $ | 0.04 | ||
| Pro forma | $ | 0.02 | $ | 0.04 | ||
The fair value of each option granted on the date of grant using the Black-Scholes option-pricing model with weighted average assumptions for grants is as follows:
| Risk free interest rate (%) | 5.05 | |
| Expected lives (years) | 5.00 | |
| Expected volatility (%) | 66.35 | |
| Dividend per share | 0.00 | |
4. Per share amounts
The weighted average number of common shares and diluted common shares outstanding during the nine months ended September 30, 2002 was 51,434,361 (2001 – 50,589,446) and 51,926,087 (2001 – 51,148,975), respectively.
5. Segmented information
| Three Months Ended Sept. 30 | Nine Months Ended Sept. 30 | |||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||
| Oil and gas sales net of royalties | ||||||||||||
| Republic of Yemen | $ | 2,750,801 | $ | 1,678,285 | $ | 7,088,656 | $ | 5,556,696 | ||||
| Canada | 213,610 | 250,236 | 706,085 | 1,349,910 | ||||||||
| 2,964,411 | 1,928,521 | 7,794,741 | 6,906,606 | |||||||||
| Operating | ||||||||||||
| Republic of Yemen | 390,025 | 281,410 | 1,025,540 | 843,371 | ||||||||
| Canada | 113,177 | 109,309 | 354,102 | 325,180 | ||||||||
| 503,202 | 390,719 | 1,379,642 | 1,168,551 | |||||||||
| Depletion and depreciation | ||||||||||||
| Republic of Yemen | 1,065,000 | 488,000 | 2,864,000 | 1,798,000 | ||||||||
| Canada | 73,000 | 93,000 | 230,000 | 272,000 | ||||||||
| 1,138,000 | 581,000 | 3,094,000 | 2,070,000 | |||||||||
| Segmented operations | 1,323,209 | 956,802 | 3,321,099 | 3,668,055 | ||||||||
| Other income | 6,081 | 11,808 | 41,926 | 15,870 | ||||||||
| General and administrative | 141,586 | 135,134 | 546,371 | 451,370 | ||||||||
| Foreign exchange loss (gain) | (41,527 | ) | (4,147 | ) | (15,767 | ) | (193 | ) | ||||
| Interest | 6,727 | 2 | 15,263 | 4,068 | ||||||||
| Income taxes | 182,034 | 152,150 | 588,560 | 503,808 | ||||||||
| Net income | $ | 1,040,470 | $ | 685,471 | $ | 2,228,598 | $ | 2,724,872 | ||||
10
6. Commitments
The Company has issued a three year letter of credit in the amount of $1,500,000
in support of the commitments of the second exploration period on Block S-1
in Yemen. This letter of credit is secured by a guarantee obtained from Export
Development Canada. The Company’s obligation to Export Development Canada
is secured by a first floating charge debenture (subordinated to the Bank’s
interest in the Canadian assets and first to the foreign assets). This letter
of credit will be released upon the fulfillment of the remaining Block S-1 second
exploration period commitments which consist of drilling two wells. One well
has been drilled and the other is presently drilling.
The above includes certain statements that may be deemed to be “forward -looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995. All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the company expects are forward -looking statements. Although TransGlobe believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include oil and gas prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions.
| TRANSGLOBE ENERGY CORPORATION | For further information, please contact: |
| Ross G. Clarkson, President & C.E.O. | |
| - or - | |
| /s/ Ross G. Clarkson | Lloyd W. Herrick, Vice President & C.O.O. |
| Ross G. Clarkson | Executive Offices: |
| President & C.E.O. | Ste. 2900, 330 – 5th Avenue. S.W., Calgary, AB T2P 0L4 |
| Tel: (403) 264-9888 Fax: (403) 264-9898 | |
| Website: http://www.trans-globe.com | |
| E-mail: trglobe@trans-globe.com |