Transglobe Energy has continued to use the EDC-64 rig in its Eastern Desert drilling campaign, managing to drill and case three additional development wells in K-Field and H-Field during the quarter.

Eastern Desert (100% WI)

K-66 was drilled to a total depth of 1,809 meters, encountering good gas and oil shows in the Asl-A, Asl-B, Asl-D, Asl-E, and Asl-F reservoirs. Hole instability issues prevented wireline logging of certain zones, however the Asl-A and Asl-B were logged and evaluated, with an internally estimated 25.1 meters of net oil pay in the Asl-A and 20.3 meters net oil pay in the Asl-B.

The Asl-B was perforated, put on production, and is currently producing at a rate of 160 Bopd heavy crude oil (field estimate). The well is expected to be recompleted on the Asl-A once the Asl-B is exhausted. The deeper zones encountered by the well, the Asl-D, Asl-E, and Asl-F reservoirs, are being considered as targets in future drilling. Heavy crude is the expected product type for all zones mentioned.

HE-2 was drilled to 1,800 meters total depth, encountering an internally estimated net oil pay of 4 meters in the Asl-B reservoir after being fully logged and evaluated. The expected product type is heavy crude. The well was perforated in the Asl-B and is currently on production at a rate of 220 Bopd heavy crude oil (field estimate).

K-68 was drilled to a total depth of 1,403 meters. The well was fully logged and evaluated, with an internally estimated 22.9 meters of net oil pay in the Asl-A reservoir and 4.6 meters of net oil pay in the Asl-B reservoir. The well will be perforated in the Asl-A reservoir and put on production in January 2022. The Asl-B is expected to be recovered through existing up-dip completions on that reservoir. Both zones are expected to be heavy crude oil.

Subsequent to the quarter the EDC-64 rig is being moved to the K-67 well location, in the K-Field.

As previously disclosed, the Company announced a merged concession agreement with a 15-year primary term and improved Company economics in early December, 2020, and parliamentary ratification and Presidential signature into law of the new Agreement in December, 2021. The Company and Egyptian counterparties anticipate signing the new Agreement, along with payment by the Company of the first modernization payment ($15 million) and signature bonus ($1 million), in the coming weeks. The effective date for the improved concession terms in the new Agreement is February 1, 2020.

The Company is in the process of finalizing a 2022 work program and budget that reflects our focus on free cash flow through continued development activities on the contingent resource projects previously disclosed, and production-sustaining infrastructure improvements. The Company anticipates maintaining a single drilling rig, along with a light rig for well maintenance and recompletion activities in the Eastern Desert throughout 2022.

Western Desert – South Ghazalat (100% WI)

Natural flow of SGZ-6X well at South Ghazalat ceased in December due to low reservoir pressure, and rigless-deployed artificial lift equipment has been mobilized to site in an attempt to restore production. Immediately prior to the well ceasing production, the lower Bahariya reservoir at SGZ-6X was producing at a field estimated 240 Bopd of light crude oil with a 71.5% watercut.

Initial well testing of the oil-bearing lower Bahariya reservoir discovered in the SGZ-7B exploration well drilled in October, 2021 has indicated low productivity and sub-commercial flowrates. The well has been suspended pending further evaluation of options to improve productivity on the lower Bahariya reservoir, and to assess the commercial potential of the gas-bearing upper Bahariya reservoir.