(MENAFN- ProactiveInvestors - N.America) TransGlobe Energy Corporation (TSX:TGL; NASDAQ:TGA) the E&P firm with working interests in eight concessions in Egypt is rated a 'buy' by broker Dundee following fourth quarter and full year numbers yesterday.
It has reduced the target price by 10 cents however to C$2.65 on latest valuation grounds.
For 2015 the company reported a loss of $105.6 million compared to a $11.4mln profit in 2014.
The loss included non-cash impairment losses of $85.4 million and a non-cash mark-to-market loss on the convertible debentures of $6.6 million.
Oil revenues for the year came in at $21.4mln well down on the $92.4mln seen the year before.
Production averaged 14511 barrels of oil per day (Bopd) last year compared to 16103 in 2014 and in the fourth quarter was 13.425 compared to 15172 in 2014.
For 2016 the broker is forecasting average production of 11410 bopd down 21% year-on-year. The broker also notes that the firm expects first quarter 2016 production of 12000 bopd down 11% quarter-on-quarter.
The broker noted that TransGlobe had suspended its quarterly dividend of $0.025 a share - worth some $7.2mln annually .
It reckons that is a prudent measure given the de minimus scale of forecast FFO (funds from operations) should oil pricing not improve significantly.
Dundee analyst David Dudlyke also noted that the group's 2016 drilling programme comprising three development wells at West Bakr K South and 22 exploration wells across NW SW SE Gharib blocks will shortly get underway - after what it calls a year-long 'sabbatical'.
However the broker notes that if the oil price stays low 2016 estimated capex of $41mln could be reduced to $31mln - via reduced development drilling delayed maintenance and part-deferral of exploration.
Cash at end of year stood at US$127mln with net debt of US$63.1mln
Direct marketing drove a substantial $95mln reduction in EGPC (Egyptian General Petroleum Corporation) receivables to de minimus levels during 2015 - lifting the company's cash position and reducing its overall credit risk.
This was a noteable achievement but was overshadowed by the collapse in oil prices noted Dundee.
Shares in TransGlobe Energy closed yesterday at US$1.65 a pop.
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