Randall Neely, CEO, TransGlobe Energy (TGA)
Randall C. Neely, CA, CFA, ICD.D, was appointed President and Chief Executive Officer of TransGlobe Energy Corporation (NASDAQ:TGA) in January 2019 and to the board of directors in May 2018.
He was previously appointed as President in January 2018 and Vice President, Finance and Chief Financial Officer in May 2012.
Mr. Neely has 25 years of experience in executive and financial roles, including Chief Financial Officer of Zodiac Exploration, Pearl (Blackpearl) Exploration & Production and Trident Exploration.
Prior to working directly in the oil and gas industry, Mr. Neely spent three and a half years in investment banking with TD Securities and eight years with KPMG LLP.
Mr. Neely holds both the Chartered Accountant and Chartered Financial Analyst designations and has completed his ICD.D.
In his exclusive 3,627 word interview, exclusive to the Wall Street Transcript, Randall Neely explains how a Canadian company produces oil in Egypt.
“TransGlobe Energy (NASDAQ:TGA) is a small-cap or a micro-cap oil and gas company.
We are primarily a producer, although we do some exploration.
We produce between 12,000 and 13,000 barrels of oil equivalent, or BOE — a measure of equivalent energy to a barrel of oil — per day.
In Egypt we produce, call it about 10,000 barrels of heavy oil per day, and in Canada, plus or minus around 3,000 BOE a day. We produce light oil, natural gas liquids, and natural gas in Canada…
Our success in this area has been what we’re known for, which is applying what I’ll call technology, but really is just oilfield best-practices — western oilfield practices — in a new area. In Egypt, for example, the application of water flooding.
When you produce oil, you typically produce water and sometimes a lot more water than oil. Usually, you take that produced water and you dispose of it, typically back down hole or you let it evaporate, but in some sort of environmentally sensitive way you deal with the water.
What we do with the water is reinject it so we actually push it back into the ground.
If you push that water back in the ground, it produces more oil. That application of water flooding has been used for a long time in North America, but in the Middle East, it wasn’t typically used.
Then you have pumping technology — the different types of pumps you would use.
We use progressive cavity pumps or PCP pumps, a pump that was developed in Western Canada probably 30 years ago. We found it to be very applicable to the type of oil development we have in Egypt.
You’re also looking at other things that you might do with drilling technologies that we use in Canada quite successfully, like horizontal drilling and multistage completions.
That’s an approach that isn’t used a whole lot in Egypt, because they’re looking mostly at conventional reservoirs — easier-to-produce reservoirs rather than the harder, denser, unconventional rock that takes more persuasion to produce.
Horizontal drilling opens up more pore space across the rock formation. Then you might apply hydraulic fracturing so you can crack the rock to get more oil out of it.”
Exploiting global oil resources is a lengthy detailed process.
“In Egypt, you work through what’s called production-sharing contracts.
You bid to acquire them in bid rounds or an auction from the government. If you win the bid, you have an agreement between yourself and the government to produce the oil and for the sharing of that oil.
We’ve had contracts in the country for quite a few years. These contracts were aged and not really appropriate contracts for the type of development we had because of the age and costs associated with these fields.
We worked with the government for several years to restructure them and to consolidate them so that they would be more efficient so that we could continue to try to squeeze out more oil from these existing reservoirs.
That deal was approved by the board of the Egyptian General Petroleum Corporation in December 2020.
Over the course of 2021, it made its way ultimately to the Parliament of Egypt and was voted on, because each one of these production-sharing contracts becomes a law. That was approved in late 2021.
In December 2021, we announced that we had the approval of the Egyptian government for the ratification of this agreement.
That’s a huge step for TransGlobe [Energy] (NASDAQ:TGA).
It really resets the bar for us in terms of the contracts, and for the profitability and the investability of these contracts.
We’ve always felt there was a lot of opportunity left there but we would only be able to pursue it if we had the right terms that would make it profitable for us and worthwhile attempting.
Not only fiscally, but also we needed to have time, we needed to have additional years.
So this agreement extended this contract for an additional 15 years plus the option to extend it another five years after that, so in total another 20 years to exploit the resources in the ground.
It’s a big turnaround for us in Egypt.
In Canada, we’ve got a nice project there, which we call South Harmattan. We found this new area in late 2019 and released the information on it in early 2020 right into the pandemic and no one really paid any attention to it.
But we came back and drilled three additional wells in the summer of 2021, completed those wells in the fall, brought them on production and they’ve come on really, really well.
We are quite excited about the asset in Canada and what it could potentially become…
I would say our entity is one where we’re focused on cash flow, we’re focused on development; we do very little exploration.
You’re not going to see the company go from 12,000 or 13,000 barrels a day to 20,000 or 30,000 or 40,000 barrels a day, because of some discovery that you were going to make.
We’re really just talking about trying to hit singles and get on base, and make money.
We call it blue-collar oil and gas. It’s not very flashy, but we’re going to make a lot of money.”
Creating value in the deserts of Egypt is not an easy task for TransGlobe Energy (NASDAQ:TGA) and Randall Neely. Read the complete detail only in the 3,627 word interview, exclusive to the Wall Street Transcript.
Randall C. Neely, President & CEO
email: investor.relations@trans-globe.com
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