TFSA Investors: This Global Energy Giant Could Benefit From Rising Oil Prices


TransGlobe (TSX: TGL) (NASDAQ: TGA) is engaged in the exploration, development and production of crude oil and natural gas in Egypt and Canada. The Company regularly reviews potential acquisitions and new international exploration blocks to complement TransGlobe’s exploration and development activities.

Global operations

For more than 16 years, TransGlobe has been present in Egypt. The company also operated in Canada from 1999 to 2008 and returned to Canada in December 2016. In Egypt, the company currently has an interest in four facilities, including West Gharib, West Bakr, NW Gharib and Ghazala. In Canada, the Company has production interests and direct interests in certain facilities of the Cardium light oil and Mannville liquid-rich gas assets in Alberta.

Preservation of capital

In 2020, the company reduced TransGlobe’s 2020 capital program and suspended the dividend in order to preserve cash. These decisions were made in response to global reactions to the spread of COVID-19 and related economic fallout, which have created significant volatility, uncertainty and turmoil in the oil and gas industry. Demand for oil has deteriorated dramatically due to the pandemic and the corresponding preventive measures taken globally to mitigate the spread of the virus.

Attractive valuation

In addition, members of the Organization of the Petroleum Exporting Countries (OPEC) were initially unable to reach agreement on crude oil production levels, in which case Saudi Arabia and Russia embarked on efforts to increase aggressively producing. These events worsened the impact of a significant drop in demand for oil and an increase in supply from OPEC members trying to gain market share.

As market conditions improved in the second half of 2020 as governments began to ease foreclosure restrictions, the company reported lower operating results in 2020 due to these events, which continue to negatively affect the business. by TransGlobe. Despite this, TransGlobe is highly valued.

Focused on sustainability

Recently, TransGlobe committed to taking measures appropriate to the size of the company and the resources available to better understand and assess the significance of environmental risks to the company’s operations. These steps include the board’s oversight of climate-related risks and opportunities and the role of management in assessing and managing climate-related risks and opportunities.

TransGlobe provided initial information on the company’s sustainability performance with respect to climate change risks. It will provide additional information in accordance with the recommendations issued by the working group for climate-related financial information.

Management experience

Drawing on significant experience in the oil and gas industry, TransGlobe’s management team has a proven track record in bringing together all of the key elements of a successful exploration and production company. These include strong expertise in technical skills in financial planning and controls, the ability to execute business development opportunities, financial markets expertise and an entrepreneurial spirit that enables TransGlobe to identify, evaluate and effectively execute the business plan of the company.

Mitigate Oil Price Risk

Any decline in the prices of oil and natural gas adversely affects the financial position of the Company. To mitigate price risks, TransGlobe closely monitors the various commodity markets and has established a hedging program to fix net cash flows on production volumes. This should serve shareholders well in the long run.

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Foolish contributor Nikhil kumar has no position in any of the stocks mentioned.


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