TransGlobe Energy Corporation has entered into an agreement to sell all of its Canadian oil and gas assets to Direct Energy Marketing Limited, one of North America's largest energy and energy-related services providers.

Pursuant to a binding purchase and sale agreement, Direct Energy will acquire all of TransGlobe's Canadian properties, including current production of approximately 1,450 barrels of oil equivalent per day ("boepd"), for Cdn$ 56.7 million, with an effective date of January 1, 2008. It is expected that closing of the transaction will occur on or about April 30, 2008 subject to standard and customary closing conditions.

The proceeds from the sale of TransGlobe's Canadian assets will be utilized to reduce the debt incurred when TransGlobe acquired producing assets in Egypt late in 2007 and early in 2008. This will result in a debt-to-forward-cash-flow ratio of less than 0.7:1 and debt-to-market-capitalization ratio of less than 20%.

"We are very satisfied with the offer from Direct Energy; the transaction metrics of Cdn$39,100 per daily boe produced and Cdn$14.87 per boe of P+P reserves are well in line with similar transactions in western Canada over the past nine months. Our strategic decision to divest of our Canadian assets in order to focus entirely on our Middle East/North Africa properties has already been validated: while we are selling approximately 1,450 boepd of Canadian production, we have increased the output of our recently acquired Egyptian assets from the total 2,500 barrels of oil per day ("bopd") we purchased to approximately 3,300 bopd at this time. The fact that we have added 800 bopd of production in Egypt through the drill bit in just a few months proves that our opportunities overseas are very promising", commented Ross Clarkson, President and Chief Executive Officer of TransGlobe.

Tags: TransGlobe Energy Corporation