Thursday, Canadian oil and gas company TransGlobe Energy Corp. (TGA, TGL.TO) reported a profit for its fourth quarter, compared to prior year's loss, helped by a derivative gain on commodity contracts. Meanwhile, funds flow from operations fell 56% on lower oil and gas sales. Further, the company said its production grew 28% in February, and also backed its forecast for fiscal 2009.
Fourth-quarter net earnings were US$7.64 million or US$0.13 per share, compared to a net loss US$719 thousand or US$0.02 per share in the same quarter last year.
The latest quarter results included income from discontinued operations of US$158 thousand, compared to last year's income of US$1.59 million. The company noted that the discontinued operations reflected its Canadian segment of operations, which was sold on April 30, 2008 to focus on the development of its Middle East/North Africa assets.
On a continuing operations basis, excluding Canadian operations, net income was US$7.48 million or US$0.12 per share, compared to prior year's net loss of US$2.31 million or US$0.04 per share.
On a non-GAAP basis, funds flow from operations fell 56% to US$6.13 million or US$0.10 per share from US$13.94 million or US$0.23 per share a year ago. Meanwhile, funds flow from continuing operations declined 41% to US$5.58 million or US$0.09 per share from US$9.43 million or US$0.16 per share last year.
Revenues for the quarter were US$30.25 million compared to US$16.92 million in the prior-year quarter.
Oil and gas sales fell 39% to US$29.29 million from US$47.70 million a year ago. Oil and gas sales, net of royalties and other declined 38% to US$18.27 million from US$29.34 million in 2007. Excluding Canadian Operations, oil sales dropped 29% to US$29.15 million from US$40.79 million last year, and oil sales, net of royalties and other, fell 25% to US$17.77 million from US$23.60 million in 2007.
Derivative gain on commodity contracts was US$12.46 million in the quarter, compared to prior year's loss of US$6.79 million.
Total production in the quarter was 6,893 barrels of oil equivalent per day, or boepd, up 1% from 6,837 boepd a year ago. Total production from continuing operations climbed 29% to 6,893 barrels of oil per day, or bopd, from 5,333 bopd last year.
For the fiscal year 2008, TransGlobe's net income surged 146% to US$31.52 million or US$0.52 per share from US$12.80 million or US$0.21 per share last year. Net income from continuing operations grew 177% to US$23.17 million or US$0.38 per share from US$8.38 million or US$0.14 per share last year.
Funds flow from operations rose 14% to US$59.27 million or US$0.98 per share from US$52.14 million or US$0.86 per share a year ago. Funds flow from continuing operations went up 44% to US$52.36 million or US$0.86 per share from US$36.29 million or US$0.60 per share last year.
Yearly revenues surged to US$126.41 million from US$59.83 million last year. Oil and gas sales grew 71% year-over-year to US$233.70 million, and oil and gas sales, net of royalties and other, grew 51% to US$132.39 million.
Excluding Canadian operations, oil sales rose 98% to US$222.54 million, and oil sales, net of royalties and other climbed 82% to US$123.23 million.
Production from continuing operations increased 30% to 7,342 Bopd in 2008 from 5,651 Bopd in 2007.
Further, TransGlobe said its production In February 2009 averaged 9,382 Bopd, representing a 28% increase over 2008 production.
Looking ahead to fiscal 2009, TransGlobe still expects funds flow from operations of US$24 million, a 60% decline from prior year's US$59.3 million, mainly due to lower oil prices. The company noted that an increase or decrease in the oil price of US$10.00/Bbl would change anticipated funds flow by approximately US$10.0 million for the year.
The company continues to project that production for the year would average between 8,500 and 9,000 bopd, representing a 16% to 22% increase from last year, with a mid-point growth of 19%. Exploration and development spending is budgeted to be US$35.2 million, a 20% decrease from 2008.
The company added that its management has taken action to maintain the company's strong balance sheet including reduced capital spending, cost efficiency opportunities and raising up to CUS$23.0 million, before expenses, in the first quarter through an issuance of common shares.
TGA is currently trading at US$2.72, up US$0.04, on a volume of 15 thousand shares.
TGL.TO is currently at C$3.57, up C$0.15 or 4.39%.
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