TransGlobe Energy entered into a C$30 million ($22 million) credit agreement for a revolving reserve-based lending facility with Alberta Treasury Branches.
The amount available to be drawn on the RBL will be dependent upon the borrowing base, which is determined with reference to the company’s proved oil and gas reserves in Canada, as evaluated in the most recent reserve reports and delivered pursuant to the credit agreement. As of the closing date, the borrowing base was set at C$30 million ($22 million).
Redeterminations of the borrowing base are scheduled semi-annually, with the first redetermination scheduled for November 30, 2017. Amounts drawn on the RBL bear interest at a rate of either ATB Prime or CDOR (Canadian Dollar Offered Rate) plus an applicable margin that varies from 1.25% to 3.25% depending upon the company’s net debt to trailing cash flow ratio.
The RBL is secured by a first floating charge over all real and personal property and after acquired assets of TransGlobe, and an unconditional undertaking to grant a first fixed charge on all real property interests upon request by ATB. The company’s foreign subsidiaries that hold the production in the Arab Republic of Egypt have not granted guarantees or security for the obligations of the company under the RBL.
TransGlobe will initially use the funds available under the RBL to repay the existing C$15 million ($11 million) vendor-take-back loan outstanding which had an interest rate of 10% per annum and repayment of principal over 24 months. The remaining funds will be used as necessary to carry out the company’s capital expenditure program in Canada.
The company’s 2017 capital program of $56.4 million (before capitalized G&A) consists of a $35.2 million firm budget and a $21.2 million contingent budget, and includes $40.2 million for Egypt and $16.2 million (C$22.4 million) for Canada. It is expected that 2017 production will average between 15,500 and 18,500 boepd, representing a 30% to 55% increase over 2016 production. The 2017 production outlook is provided as a range to reflect the firm and contingent budget.
TransGlobe Energy is a Calgary-based, growth-oriented oil and gas exploration and development company whose current activities are concentrated in the Arab Republic of Egypt and Canada.