Egyptian output boosts results for TransGlobe

Rising production from its Egyptian oil properties and higher prices more than doubled earnings at TransGlobe Energy Corp. in the second quarter, it said Monday.

But the Calgary-based company's stock continued to slide, falling 74 cents to $8.22 at the close. The stock is off about 50 per cent so far this year.

On a conference call with analysts, chief executive Ross Clarkson said output from the West Gharib block in Egypt has climbed so rapidly it has outstripped the company's delivery limit at a third-party terminal.

"I never thought I'd have to say we have too much oil but we actually have recently exceeded our (shipping) capacity," he said.

He added the company is working with the terminal owner to expand by the end of the year and soak up the 700 barrels per day that is not being produced.

He said during the second quarter, Egyptian production climbed 30 per cent to 11,300 barrels per day, providing the majority of total company output of 11,800 bpd.

Frederick Kozak, an analyst for Canaccord Genuity, said Transglobe managed to beat his estimates on production and cash flow.

"Numbers were great," he said, noting that the company's stock was knocked down Monday with the general market and, earlier in the year, in line with other international companies.

"I think it's probably a reflection of the nervousness in the markets (regarding the volatile Middle East)," he said.

A Bloomberg survey shows analysts' consensus target price of $17.29 and seven of nine rate it a buy.

During the three months ended June 30, most of TransGlobe's production from Yemen was shut down when a pipeline was attacked by rebels.

That pipeline returned to service and production began again in mid-July, allowing the company to ramp up to more than 14,000 bpd, with 2,800 from Yemen.

"When the West Bakr acquisition in Egypt closes, we will be approaching 20,000 bpd," Clarkson said.