EX-3 4 a2018q-3fs.htm EXHIBIT 3 Exhibit
 


Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
(Unaudited - Expressed in thousands of US Dollars, except per share amounts)
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
 
 
September 30
 
 
September 30
 
 
 
Notes
 
2018

 
2017

 
2018

 
2017

REVENUE
 
 
 
 
 
 
 
 
 
 
Petroleum and natural gas sales, net of royalties
 
17
 
$
42,453

 
$
44,839

 
$
135,622

 
$
107,739

Finance revenue
 
 
 
180

 
15

 
399

 
59

 
 
 
 
42,633

 
44,854

 
136,021

 
107,798

 
 
 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
 
 
Production and operating
 
 
 
12,242

 
14,522

 
40,182

 
39,922

Selling costs
 
 
 
527

 
424

 
1,653

 
1,926

General and administrative
 
 
 
5,104

 
3,809

 
16,683

 
11,617

Foreign exchange loss
 
 
 
216

 
3

 
195

 
70

Finance costs
 
5
 
1,222

 
1,485

 
3,923

 
4,750

Depletion, depreciation and amortization
 
9
 
8,751

 
10,760

 
26,077

 
29,635

Asset retirement obligation accretion
 
10
 
72

 
74

 
205

 
191

Loss on financial instruments
 
4
 
5,725

 
5,139

 
28,486

 
912

Impairment loss
 
8
 
14,138

 
10,314

 
14,138

 
79,025

Gain on disposition of assets
 
 
 
(5
)
 
—

 
(207
)
 
—

 
 
 
 
47,992

 
46,530

 
131,335

 
168,048

 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss) before income taxes
 
 
 
(5,359
)
 
(1,676
)
 
4,686

 
(60,250
)
 
 
 
 
 
 
 
 
 
 
 
Income tax expense – current
 
 
 
6,924

 
5,179

 
19,728

 
16,104

NET LOSS FOR THE PERIOD
 
 
 
$
(12,283
)
 
$
(6,855
)
 
$
(15,042
)
 
$
(76,354
)
 
 
 
 
 
 
 
 
 
 
 
OTHER COMPREHENSIVE INCOME (LOSS)
 
 
 
 
 
 
 
 
 
 
Currency translation adjustments
 
 
 
1,000

 
4,070

 
(679
)
 
3,455

COMPREHENSIVE LOSS FOR THE PERIOD
 
 
 
$
(11,283
)
 
$
(2,785
)
 
$
(15,721
)
 
$
(72,899
)
 
 
 
 
 
 
 
 
 
 
 
Net loss per share
 
 
 
 
 
 
 
 
 
 
Basic
 
15
 
$
(0.17
)
 
$
(0.09
)
 
$
(0.21
)
 
$
(1.06
)
Diluted
 
15
 
$
(0.17
)
 
$
(0.09
)
 
$
(0.21
)
 
$
(1.06
)
See accompanying notes to the Condensed Consolidated Interim Financial Statements

Q3-2018
 
1
 


Condensed Consolidated Interim Balance Sheets
(Unaudited - Expressed in thousands of US Dollars)
 
 
 
 
As at

 
As at

 
 
Notes
 
September 30, 2018

 
December 31, 2017

ASSETS
 
 
 
 
 
 
Current
 
 
 
 
 
 
Cash and cash equivalents
 
6
 
$
62,663

 
$
47,449

Accounts receivable
 
4
 
10,932


18,090

Prepaids and other
 

 
3,862

 
4,745

Product inventory
 
7
 
7,799


11,474

 
 
 
 
85,256

 
81,758

Non-Current
 
 
 
 
 
 

Intangible exploration and evaluation assets
 
8
 
34,376

 
41,478

Property and equipment
 

 


 


Petroleum and natural gas assets
 
9
 
191,444

 
200,981

Other assets
 
9
 
3,127

 
3,485

 
 
 
 
$
314,203

 
$
327,702

 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
Current
 
 
 
 
 
 
Accounts payable and accrued liabilities
 

 
$
28,488

 
$
27,104

Derivative commodity contracts
 
4
 
4,417

 
4,015

 
 
 
 
32,905

 
31,119

Non-Current
 
 
 
 
 
 
Derivative commodity contracts
 
4
 
23,707

 
3,955

Long-term debt
 
11
 
52,532

 
69,999

Asset retirement obligation
 
10
 
11,322

 
12,332

Other long-term liabilities
 

 
1,315

 
290

 
 
 
 
121,781

 
117,695

 
 
 
 
 
 
 
SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Share capital
 
13
 
152,084

 
152,084

Accumulated other comprehensive income
 

 
2,114

 
2,793

Contributed surplus
 

 
23,992

 
23,329

Retained earnings
 

 
14,232

 
31,801

 
 
 
 
192,422

 
210,007

 
 
 
 
$
314,203

 
$
327,702

Commitments and Contingencies (Note 12)
See accompanying notes to the Condensed Consolidated Interim Financial Statements

Approved on behalf of the Board:
Signed by:
“Ross G. Clarkson”
“Steven Sinclair”
 
 
Ross G. Clarkson
Steven Sinclair
CEO
Director
Director
 



2
 
Q3-2018
 


Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
(Unaudited - Expressed in thousands of US Dollars)
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
 
 
September 30
 
 
September 30
 
 
 
Notes
 
2018

 
2017

 
2018

 
2017

 
 
 
 
 
 
 
 
 
 
 
Share Capital
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
 
13
 
$
152,084

 
$
152,084

 
$
152,084

 
$
152,084

Balance, end of period
 
 
 
$
152,084

 
$
152,084

 
$
152,084

 
$
152,084

 
 
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
 
 
 
$
1,114

 
$
(615
)
 
$
2,793

 
$
—

Currency translation adjustment
 
 
 
1,000

 
4,070

 
(679
)
 
3,455

Balance, end of period
 
 
 
$
2,114

 
$
3,455

 
$
2,114

 
$
3,455

 
 
 
 
 
 
 
 
 
 
 
Contributed Surplus
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
 
 
 
23,828

 
23,081

 
23,329

 
22,695

Share-based compensation expense
 
14
 
164

 
164

 
663

 
550

Balance, end of period
 
 
 
$
23,992

 
$
23,245

 
$
23,992

 
$
23,245

 
 
 
 
 
 
 
 
 
 
 
Retained Earnings
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
 
 
 
$
29,042

 
$
41,038

 
$
31,801

 
$
110,537

Net loss
 
 
 
(12,283
)
 
(6,855
)
 
(15,042
)
 
(76,354
)
Dividends
 
16
 
(2,527
)
 
—

 
(2,527
)
 
—

Balance, end of period
 
 
 
$
14,232

 
$
34,183

 
$
14,232

 
$
34,183

See accompanying notes to the Condensed Consolidated Interim Financial Statements


Q3-2018
 
3
 


Condensed Consolidated Interim Statements of Cash Flows
(Unaudited - Expressed in thousands of US Dollars)
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
 
 
September 30
 
 
September 30
 
 
 
Notes
 
2018

 
2017

 
2018

 
2017

CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OPERATING
 
 
 
 
 
 
 
 
 
 
Net loss
 
 
 
$
(12,283
)
 
$
(6,855
)
 
$
(15,042
)
 
$
(76,354
)
Adjustments for:
 
 
 
 
 
 
 
 
 
 
Depletion, depreciation and amortization
 
9
 
8,751

 
10,760

 
26,077

 
29,635

Asset retirement obligation accretion
 
10
 
72

 
74

 
205

 
191

Deferred lease inducement
 
 
 
(23
)
 
(22
)
 
(68
)
 
(65
)
Impairment loss
 
 
 
14,138

 
10,314

 
14,138

 
79,025

Share-based compensation
 
14
 
1,624

 
236

 
5,309

 
886

Finance costs
 
5
 
1,222

 
1,485

 
3,923

 
4,750

Unrealized loss on financial instruments
 
4
 
3,295

 
3,235

 
20,157

 
537

Unrealized loss on foreign currency translation
 
 
 
227

 
(10
)
 
205

 
(31
)
Gain on asset dispositions
 
 
 
(5
)
 
—

 
(207
)
 
—

Asset retirement obligations settled
 
10
 
—

 
—

 
(257
)
 
—

Changes in non-cash working capital
 
18
 
30,621

 
1,220

 
4,930

 
(23,387
)
Net cash generated by operating activities
 
 
 
47,639

 
20,437

 
59,370

 
15,187

 
 
 
 
 
 
 
 
 
 
 
INVESTING
 
 
 
 
 
 
 
 
 
 
Additions to intangible exploration and evaluation assets
 
8
 
(5,455
)
 
(2,257
)
 
(7,036
)
 
(16,372
)
Additions to petroleum and natural gas assets
 
9
 
(7,185
)
 
(7,678
)
 
(15,859
)
 
(12,151
)
Additions to other assets
 
9
 
(143
)
 
(198
)
 
(378
)
 
(558
)
Proceeds from asset dispositions
 
 
 
5

 
—

 
207

 
—

Changes in restricted cash
 
 
 
—

 
3,046

 
—

 
13,511

Changes in non-cash working capital
 
18
 
3,229

 
557

 
2,594

 
1,073

Net cash used in investing activities
 
 
 
(9,549
)
 
(6,530
)
 
(20,472
)
 
(14,497
)
 
 
 
 
 
 
 
 
 
 
 
FINANCING
 
 
 
 
 
 
 
 
 
 
Interest paid
 
5
 
(1,233
)
 
(1,426
)
 
(3,714
)
 
(7,008
)
Increase in long-term debt
 
11
 
146

 
125

 
395

 
85,265

Repayment of convertible debentures
 
 
 
—

 
—

 
—

 
(73,375
)
Repayments of long-term debt
 
11
 
(10,000
)
 
(5,000
)
 
(17,797
)
 
(16,041
)
Dividends paid
 
16
 
(2,527
)
 
—

 
(2,527
)
 
—

Changes in non-cash working capital
 
18
 
(3
)
 
—

 
(3
)
 
—

Net cash used in financing activities
 
 
 
(13,617
)
 
(6,301
)
 
(23,646
)
 
(11,159
)
Currency translation differences relating to cash and cash equivalents
 
 
 
102

 
78

 
(38
)
 
465

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
 
 
24,575

 
7,684

 
15,214

 
(10,004
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
 
 
 
38,088

 
13,780

 
47,449

 
31,468

CASH AND CASH EQUIVALENTS, END OF PERIOD
 
 
 
$
62,663

 
$
21,464

 
$
62,663

 
$
21,464

See accompanying notes to the Condensed Consolidated Interim Financial Statements


4
 
Q3-2018
 


NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
As at September 30, 2018 and December 31, 2017 and for the three and nine month periods ended September 30, 2018 and 2017
(Unaudited - Expressed in US Dollars)
1. CORPORATE INFORMATION
TransGlobe Energy Corporation ("TransGlobe" or the "Company") and its subsidiaries are engaged in oil and natural gas exploration, development and production, and the acquisition of oil and natural gas properties. The Company's shares are traded on the Toronto Stock Exchange (“TSX”), the London Stock Exchange's Alternative Investment Market ("AIM") and the Global Select Market of the NASDAQ Stock Market (“NASDAQ”). TransGlobe is incorporated in Alberta, Canada and the address of its registered office is 2300, 250 – 5th Street SW, Calgary, Alberta, Canada, T2P 0R4.
2. BASIS OF PREPARATION
These Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. The accounting policies used in the preparation of these Condensed Consolidated Interim Financial Statements were the same as those used in the preparation of the most recent Annual Consolidated Financial Statements for the year ended December 31, 2017, except for the adoption of new accounting standards discussed in Note 3.
These Condensed Consolidated Interim Financial Statements were authorized for issue by the Board of Directors on November 6, 2018.
These Condensed Consolidated Interim Financial Statements do not contain all the disclosures required for full annual financial statements and should be read in conjunction with the December 31, 2017 Consolidated Financial Statements.
3. CHANGES IN ACCOUNTING POLICIES
New accounting standards
IFRS 9 "Financial Instruments: Classification and Measurement"

Effective January 1, 2018, the Company adopted IFRS 9 Financial Instruments, which replaced IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces a single approach to determine whether a financial asset is measured at amortized cost or fair value. The approach is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of its financial assets. For financial liabilities, IFRS 9 stipulates that where the fair value option is applied to financial liabilities, the change in fair value resulting from an entity’s own credit risk is recorded in other comprehensive income rather than net earnings, unless this creates an accounting mismatch. In addition, it incorporates a new expected credit loss model for calculating impairment on financial assets, which will result in more timely recognition of expected credit losses. IFRS 9 also includes a simplified hedge accounting model, aligning hedge accounting more closely with risk management.

On initial recognition, financial instruments are measured at fair value. Measurement in subsequent periods depends on the classification of the financial instrument as described below:

•
Fair value through profit or loss - financial instruments under this classification include cash and cash equivalents, and derivative commodity contracts; and
•
Amortized cost - financial instruments under this classification include accounts receivable, accounts payable and accrued liabilities, other long-term liabilities and long-term debt.

Refer to Note 4 for the classification and measurement of these financial instruments.

The Company does not apply hedge accounting. TransGlobe also does not require a provision for credit losses, as discussed further in Note 4. As a result of adopting IFRS 9, there was no effect on the Company's retained earnings or prior period amounts.

IFRS 15 "Revenue from Contracts with Customers"

Effective January 1, 2018, TransGlobe adopted IFRS 15 Revenue from Contracts with Customers, which replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue from contracts with customers is recognized. Under IFRS 15, revenue is recognized when a customer obtains control of the good or services as stipulated in a performance obligation. Determining whether the timing of the transfer of control is at a point in time or over time requires judgement and can significantly affect when revenue is recognized. In addition, the entity must also determine the transaction price and apply it correctly to the goods or services contained in the performance obligation.
The Company's revenue is derived exclusively from contracts with customers, except for immaterial amounts related to interest and other income. Royalties are considered to be part of the price of the sale transaction and are therefore presented as a reduction to revenue. Revenue associated with the sale of crude oil, natural gas and natural gas liquids (“NGLs”) is measured based on the consideration specified in contracts with customers. Revenue from contracts with customers is recognized when or as the Company satisfies a performance obligation by transferring a good or service to a customer. A good or service is transferred when the customer obtains control of the good or service. The transfer of control of oil, natural gas and NGLs usually coincides with title passing to the customer and the customer taking physical possession. TransGlobe mainly satisfies its performance obligations at a point in time and the amounts of revenue recognized relating to performance obligations satisfied over time are not significant.

Q3-2018
 
5
 

Revenues associated with the sales of the Company’s crude oil in Egypt are recognized by reference to actual volumes sold and quoted market prices in active markets (Dated Brent), adjusted according to specific terms and conditions as applicable as per the sales contracts. Revenue is

measured at the fair value of the consideration received or receivable. For reporting purposes, the Company records the government’s share of production as royalties and taxes as all royalties and taxes are paid out of the government’s share of production.

Revenues from the sale of crude oil, natural gas, condensate and NGLs are recognized by reference to actual volumes delivered at contracted delivery points and prices. Prices are determined by reference to quoted market prices in active markets (crude oil - NYMEX WTI, natural gas - AECO C, condensate - NYMEX WTI, NGLs - various based on product), adjusted according to specific terms and conditions applicable as per the sales contracts. Revenues are recognized prior to the deduction of transportation costs. Revenues are measured at the fair value of the consideration received. TransGlobe pays royalties to the Alberta provincial government and other mineral rights owners in accordance with the established royalty regime.

The Company reviewed its sales contracts with customers and determined IFRS 15 did not have a material impact on its revenue recognition and accordingly no material impact on the Condensed Consolidated Interim Financial Statements. TransGlobe adopted this standard using the modified retrospective approach, whereby the cumulative effect of initial adoption of the standard is recognized as an adjustment to retained earnings. There was no effect on the Company's retained earnings or prior period amounts as a result of adopting this standard.
Revenue segregated by product type and geographical market is disclosed in Note 17.
Standards issued but not yet effective
IFRS 16 "Leases"

In January 2016, the IASB issued IFRS 16 Leases, replacing IAS 17 Leases. IFRS 16 establishes a set of principles that both parties to a contract apply to provide relevant information about leases in a manner that faithfully represents those transactions. The current standard (IAS 17) requires lessees and lessors to classify their leases as either finance leases or operating leases, with separate accounting treatment depending on the classification of the lease. Under the new standard, the accounting treatment associated with an operating lease will no longer exist, and lessees will be required to recognize assets and liabilities associated with all leased items. The standard is effective for fiscal years beginning on or after January 1, 2019 with early adoption permitted if the Company is also applying IFRS 15 Revenue from Contracts with Customers.
 
IFRS 16 will be adopted by the Company on January 1, 2019. TransGlobe is currently evaluating the impact of the standard including identifying and reviewing contracts that are impacted. The Company expects that the standard will have a material impact on the consolidated financial statements and additional new disclosures.
4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Fair values of financial instruments
The Company has classified its cash and cash equivalents as assets at fair value through profit or loss and its derivative commodity contracts as financial liabilities at fair value through profit or loss. Both are measured at fair value with subsequent changes recognized through earnings. Accounts receivable are classified as assets at amortized cost; accounts payable and accrued liabilities, other long-term liabilities and long-term debt are classified as liabilities at amortized cost, all of which are measured initially at fair value, and subsequently at amortized cost. Transaction costs attributable to financial instruments carried at amortized cost are included in the initial measurement of the financial instrument and are subsequently amortized using the effective interest rate method.
Carrying value and fair value of financial assets and liabilities are summarized as follows:
 
 
September 30, 2018
 
December 31, 2017
 
 
Carrying

 
Fair

 
Carrying

 
Fair

Classification ($000s)
 
Value

 
Value

 
Value

 
Value

Financial assets at fair value through profit or loss
 
62,663

 
62,663

 
47,449

 
47,449

Financial assets at amortized cost
 
10,932

 
10,932

 
18,090

 
18,090

Financial liabilities at fair value through profit or loss
 
28,124

 
28,124

 
7,970

 
7,970

Financial liabilities at amortized cost
 
82,335

 
83,288

 
97,103

 
98,329

Assets and liabilities as at September 30, 2018 that are measured at fair value are classified into levels reflecting the method used to make the measurements. Fair values of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Assets and liabilities in Level 2 include valuations using inputs other than quoted prices for which all significant inputs are observable, either directly or indirectly. Level 3 valuations are based on inputs that are unobservable and significant to the overall fair value measurement.
The Company’s cash and cash equivalents, and derivative commodity contracts are assessed on the fair value hierarchy described above. TransGlobe’s cash and cash equivalents are classified as Level 1. Derivative commodity contracts are classified as Level 2. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy level. There were no transfers between levels in the fair value hierarchy in the period.
Derivative commodity contracts
The nature of TransGlobe’s operations exposes it to fluctuations in commodity prices, interest rates and foreign currency exchange rates. TransGlobe monitors and, when appropriate, uses derivative financial instruments to manage its exposure to these fluctuations. All transactions of this nature entered into by TransGlobe are related to an underlying financial position or to future crude oil and natural gas production. TransGlobe does not use derivative financial instruments for speculative purposes. TransGlobe has elected not to designate any of its derivative financial instruments as accounting hedges and thus accounts for changes in fair value in earnings at each reporting period. TransGlobe has not obtained collateral or other

Q3-2018
 
6
 

security to support its financial derivatives as management reviews the creditworthiness of its counterparties prior to entering into derivative contracts. The derivative financial instruments are initiated within the guidelines of the Company's corporate hedging policy. This includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions.
In conjunction with the prepayment agreement (see Note 11), TransGlobe has also entered into a marketing contract with Mercuria Energy Trading S.A. ("Mercuria") to market nine million barrels of TransGlobe's entitlement production. The pricing of the crude oil sales will be based on market prices at the time of sale.
There were 5 outstanding derivative commodity contracts as at September 30, 2018 (December 31, 2017 - 11 contracts), the fair values of which have been presented as liabilities on the Condensed Consolidated Interim Balance Sheet.
The following tables summarize TransGlobe’s outstanding derivative commodity contract positions as at September 30, 2018:
Financial Brent Crude Oil Contracts
Period Hedged
 
Contract
 
Volume (bbls)
 
Bought Put
USD$/bbl
 
Sold Call
USD$/bbl
 
Sold Put
USD$/bbl
Jul 2020 - Dec 20201
 
3-Way Collar
 
300,000
 
54.00
 
63.45
 
45.00
Jan 2020 - Jun 20202
 
3-Way Collar
 
300,000
 
54.00
 
61.25
 
46.50
Jan 2019 - Dec 20193
 
3-Way Collar
 
396,000
 
53.00
 
62.10
 
46.00
Jan 2019 - Dec 20194
 
3-Way Collar
 
399,996
 
54.00
 
61.35
 
46.00
Oct-2018
 
3-Way Collar
 
250,000
 
54.00
 
65.30
 
45.00
1  50,000 barrels ("bbls") per calendar month through Jul 2020 - Dec 2020
2  50,000 bbls per calendar month through Jan 2020 - Jun 2020
3  33,000 bbls per calendar month through Jan 2019 - Dec 2019
4  33,333 bbls per calendar month through Jan 2019 - Dec 2019
The gains and losses on financial instruments for the three and nine months ended September 30, 2018 and 2017 comprised the following:
 
Three Months Ended September 30
Nine Months Ended September 30
(000s)
2018

2017

2018

2017

Realized derivative loss on commodity contracts settled during the period
$
2,430

$
1,904

$
8,329

$
375

Unrealized derivative loss on commodity contracts outstanding at period end
3,295

3,235

20,157

386

Unrealized loss on financial instruments
—

—

—

151

 
$
5,725

$
5,139

$
28,486

$
912

Credit risk
Credit risk is the risk of financial loss if a customer or counterparty to a financial instrument fails to fulfill their contractual obligations. The Company’s exposure to credit risk primarily relates to cash equivalents and accounts receivable, the majority of which are in respect of oil and natural gas operations. The Company generally extends unsecured credit to these parties and therefore the collection of these amounts may be affected by changes in economic or other conditions. The Company has not experienced any material credit losses in its cash investments or in the collection of accounts receivable to date.
TransGlobe's accounts receivable related to the Canadian operations are with customers and joint interest partners in the petroleum and natural gas industry, and are subject to normal industry credit risks. Receivables from petroleum and natural gas marketers are normally collected in due course. The Company currently sells its production to several purchasers under standard industry sale and payment terms. Purchasers of TransGlobe's natural gas, crude oil and natural gas liquids are subject to a periodic internal credit review to minimize the risk of non-payment. The Company has continued to closely monitor and reassess the creditworthiness of its counterparties, including financial institutions.
Trade and other receivables are analyzed in the table below.
(000s)
 
 
 
 
Trade receivables
 
September 30, 2018

 
December 31, 2017

Neither impaired nor past due
 
$
2,443

 
$
10,534

 
 
 
 
 
Not impaired and past due in the following period:
 
 
 
 
Within 30 days
 
80

 
3,804

31-60 days
 
195

 
2,575

61-90 days
 
4,881

 
—

Over 90 days
 
3,333

 
1,177

 
 
$
10,932

 
$
18,090

The Company sold one cargo of crude oil during the three months ended September 30, 2018. Depending on the Company's assessment of the credit of crude cargo buyers, they may be required to post irrevocable letters of credit to support the sales prior to the cargo liftings. During the first nine months of 2018, the Company sold 318,291 barrels of inventoried entitlement crude oil to EGPC for $17.9 million. The Company collected $24.6 million of accounts receivable from EGPC during the first nine months of 2018. As at September 30, 2018, $6.7 million (December 31, 2017 - $14.2 million) of the total accounts receivable balance of $10.9 million (January 1, 2018 - $18.1 million) is due from EGPC.

Q3-2018
 
7
 


5. FINANCE COSTS
Finance costs recognized in earnings were as follows:
 
 
Three Months Ended September 30
 
 
Nine Months Ended September 30
 
(000s)
 
2018

 
2017

 
2018

 
2017

Interest on convertible debenture
 
$
—

 
$
—

 
$
—

 
$
1,089

Interest on long-term debt
 
1,018

 
1,276

 
3,320

 
2,731

Interest on note payable
 
—

 
—

 
—

 
532

Interest on borrowing base facility
 
118

 
115

 
331

 
164

Amortization of deferred financing costs
 
86

 
94

 
272

 
234

Finance costs
 
$
1,222

 
$
1,485

 
$
3,923

 
$
4,750

Interest paid
 
$
(1,233
)
 
$
(1,426
)
 
$
(3,714
)
 
$
(7,008
)
6. CASH AND CASH EQUIVALENTS
(000s)
 
September 30, 2018

 
December 31, 2017

Cash
 
$
17,213

 
$
46,051

Cash equivalents
 
45,450

 
1,398

 
 
$
62,663

 
$
47,449

As at September 30, 2018, the Company's cash equivalents balance consisted of short-term deposits with an original term to maturity at purchase of three months or less. All of the Company's cash and cash equivalents are on deposit with high credit-quality financial institutions.
7. PRODUCT INVENTORY
Product inventory consists of the Company's entitlement crude oil barrels, which are valued at the lower of cost or net realizable value. Cost includes operating expenses and depletion associated with the unsold entitlement crude oil as determined on a concession by concession basis.
As at September 30, 2018, the Company had 496 thousand barrels of entitlement oil in inventory valued at approximately $15.74 per barrel (December 31, 2017 - 777 thousand barrels valued at approximately $14.77 per barrel).
8. INTANGIBLE EXPLORATION AND EVALUATION ASSETS
(000s)
 
Balance at December 31, 2017
$
41,478

Additions
7,036

Impairment loss
(14,138
)
Balance at September 30, 2018
$
34,376

During the nine months ended September 30, 2018, the Company recorded an impairment loss of $14.1 million on its exploration and evaluation assets which is fully related to the North West Sitra concession. It was determined that an impairment loss was necessary as no commercially viable quantities of oil were discovered in this concession and no further drilling activities are planned. The recoverable amount of the North West Sitra cash-generating unit is $nil.
During the nine months ended September 30, 2017, the Company recorded an impairment loss of $79.0 million on its exploration and evaluation assets. The impairment loss was split between the South West Gharib concession ($1.2 million), the North West Gharib concession ($67.5 million) and the South Alamein concession of ($10.3 million).
During the nine months ended September 30, 2018, the Company spent $5.3 million and $1.1 million on exploration and evaluation activities at North West Sitra and South Ghazalat, respectively. The ending balance of intangible exploration and evaluation assets as at September 30, 2018 includes $12.8 million in South Alamein (December 31, 2017 - $13.3 million), $21.1 million in South Ghazalat (December 31, 2017 - $20.0 million), $nil in North West Sitra (December 31, 2017 - $8.2 million), and $0.5 million in Canada.


8
 
Q3-2018
 


9. PROPERTY AND EQUIPMENT
 
 
Petroleum & Natural Gas Assets

 
Other Assets

 
 
(000s)
 
 
 
Total

Balance at December 31, 2017
 
$
652,831

 
$
15,525

 
$
668,356

Additions
 
15,859

 
378

 
16,237

Changes in estimate for asset retirement obligations
 
(468
)
 
—

 
(468
)
Effect of movement in foreign exchange rates
 
(1,890
)
 
—

 
(1,890
)
Balance at September 30, 2018
 
$
666,332

 
$
15,903

 
$
682,235

 
 
 
 
 
 
 
Accumulated depletion, depreciation, amortization and impairment losses at December 31, 2017
 
$
451,850

 
$
12,040

 
$
463,890

Depletion, depreciation and amortization for the period1
 
23,038

 
736

 
23,774

Balance at September 30, 2018
 
$
474,888

 
$
12,776

 
$
487,664

1  Depletion, depreciation and amortization for the period includes amounts capitalized to product inventory for barrels produced but not sold in the period.
Net Book Value
 
 
 
 
 
 

At December 31, 2017
 
$
200,981

 
$
3,485

 
$
204,466

At September 30, 2018
 
$
191,444

 
$
3,127

 
$
194,571


10. ASSET RETIREMENT OBLIGATION
(000s)
 
Balance at December 31, 2017
$
12,332

Additional obligations recognized
212

Changes in estimates for asset retirement obligation
(278
)
Obligations settled
(257
)
Asset retirement obligation accretion
205

Changes in discount rates
(402
)
Effect of movements in foreign exchange rates
(490
)
Balance at September 30, 2018
$
11,322

TransGlobe has estimated the net present value of its asset retirement obligation to be $11.3 million as at September 30, 2018 (December 31, 2017 - $12.3 million) based on a total undiscounted future liability, after inflation adjustment, of $19.0 million (December 31, 2017 - $19.6 million). These payments are expected to be made between 2018 and 2066. TransGlobe calculated the present value of the obligations using discount rates between 2.21% and 2.42% to reflect the market assessment of the time value of money as well as risks specific to the liabilities that have not been included in the cash flow estimates. The inflation rate used in determining the cash flow estimate was 2% per annum.
11. LONG-TERM DEBT
As at September 30, 2018, the significant interest-bearing loans and borrowings are comprised as follows:
(000s)
 
September 30, 2018

 
December 31, 2017

Prepayment agreement
 
$
44,046

 
$
58,792

Reserves-based lending facility1
 
8,486

 
11,207

Balance at September 30, 2018
 
$
52,532

 
$
69,999

1  As at September 30, 2018 and December 31, 2017, the Company had in place a revolving Canadian reserves-based lending facility totaling C$30.0 million ($24.0 million), of which C
   $11.0 million was drawn (December 31, 2017 - C$14.0 million).
The following table reconciles the changes in TransGlobe's long-term debt:
(000s)
 
Balance at December 31, 2017
$
69,999

Draws on facility
395

Repayment of long-term debt
(17,797
)
Amortization of deferred financing costs
272

Effect of movements in foreign exchange rates
(337
)
Balance at September 30, 2018
$
52,532

The Company's interest-bearing loans and borrowings are measured at amortized cost. As at September 30, 2018, the Company was in compliance with all debt covenants.

Q3-2018
 
9
 

The estimated future debt payments on long-term debt as of September 30, 2018 are as follows:
(000s)
 
2020
8,486

2021
44,046

 
$
52,532


12. COMMITMENTS AND CONTINGENCIES
As part of its normal business, the Company entered into arrangements and incurred obligations that will impact the Company’s future operations and liquidity. The principal commitments of the Company are as follows:
($000s)
 
 
 
Payment Due by Period 1,2
 
 
Recognized
 
 
 
 
 
 
 
 
in Financial
 
Contractual

 
Less than

 
 

 
 
Statements
 
Cash Flows

 
1 year

 
1-3 years

Accounts payable and accrued liabilities
 
Yes - Liability
 
28,488

 
28,488

 
—

Long-term debt
 
Yes - Liability
 
52,532

 
—

 
52,532

Other long-term liabilities
 
Yes - Liability
 
1,315

 
—

 
1,315

Financial derivative instruments
 
Yes - Liability
 
28,124

 
4,417

 
23,707

Office and equipment leases3
 
No
 
3,413

 
2,203

 
1,210

Total
 
 
 
113,872

 
35,108

 
78,764

1 Payments exclude ongoing operating costs, finance costs and payments made to settle derivatives.
2 Payments denominated in foreign currencies have been translated at September 30, 2018 exchange rates.
3 Office and equipment leases include all drilling rig contracts.
Pursuant to the PSC for North West Sitra in Egypt, the Company had a minimum financial commitment of $10.0 million and a work commitment for two wells and 300 square kilometers of 3-D seismic during the initial three-and-a-half year exploration period, which commenced on January 8, 2015. The Company requested and received a six month extension of the initial exploration period to January 7, 2019. As at September 30, 2018, the Company has met its financial and operating commitments, with the acquisition of 600 square kilometers of 3-D seismic in 2017 and the drilling of two wells in the first nine months of 2018. The Company has now completed the initial exploration period work program and based on well results in not planning to enter the second exploration phase.
In the normal course of its operations, the Company may be subject to litigation and claims. Although it is not possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of such contingencies would not have a material adverse impact on the results of operations, financial position or liquidity of the Company.
The Company is not aware of any material provisions or other contingent liabilities as at September 30, 2018.
13. SHARE CAPITAL
Authorized
The Company is authorized to issue an unlimited number of common shares with no par value.
Issued
 
 
Nine Months Ended
 
 
Year Ended
 
 
 
September 30, 2018
 
 
December 31, 2017
 
(000s)
 
Shares

 
Amount

 
Shares

 
Amount

Balance, beginning and end of period
 
72,206

 
$
152,084

 
72,206

 
$
152,084


10
 
Q3-2018
 


14. SHARE-BASED PAYMENTS
Stock options
The following table summarizes information about the stock options outstanding and exercisable at the dates indicated:
 
 
Nine Months Ended
 
 
Year ended
 
 
 
September 30, 2018
 
 
December 31, 2017
 
 
 
 
 
Weighted-

 
 
 
Weighted-

 
 
Number

 
Average

 
Number

 
Average

 
 
of

 
Exercise

 
of

 
Exercise

(000s except per share amounts)
 
Options

 
Price (C$)

 
Options

 
Price (C$)

Options outstanding, beginning of period
 
4,959

 
5.10

 
6,046

 
6.87

Granted
 
1,071

 
2.62

 
1,043

 
2.16

Forfeited
 
—

 
—

 
(1,281
)
 
6.75

  Expired
 
(1,154
)
 
9.13

 
(849
)
 
11.43

Options outstanding, end of period
 
4,876

 
3.60

 
4,959

 
5.10

Options exercisable, end of period
 
2,766

 
4.52

 
2,925

 
6.87

Compensation expense of $0.7 million was recorded in general and administrative expenses in the Condensed Consolidated Interim Statements of Loss and Comprehensive Loss and Contributed Surplus during the nine month period ended September 30, 2018 (September 30, 2017 - $0.5 million) for equity-settled share-based payment transactions. The fair value of all common stock options granted is estimated on the date of grant using the lattice-based trinomial option pricing model.
All options granted vest annually in equal installments over a three-year period and expire five years after the grant date. No employee stock options were exercised during the nine month periods ended September 30, 2018 and 2017. As at September 30, 2018 and December 31, 2017, the entire balance in Contributed Surplus related to previously recognized share-based compensation expense on equity-settled stock options.
Restricted share unit (RSU), performance share unit (PSU) and deferred share unit (DSU) plans
The number of RSUs, PSUs and DSUs outstanding as at September 30, 2018 are as follows:
 
Restricted

 
Performance

 
Deferred

 
Share

 
Share

 
Share

(000s)
Units

 
Units

 
Units

Units outstanding, beginning of period
970

 
1,376

 
595

Granted
387

 
672

 
225

Exercised
(356
)
 
(316
)
 
—

Forfeited
(157
)
 
(55
)
 
—

Reinvested
8

 
16

 
8

Units outstanding, end of period
852

 
1,693

 
828

During the nine month period ended September 30, 2018, compensation expense of $4.6 million (September 30, 2017 - $0.3 million) was recorded in general and administrative expenses in the Condensed Consolidated Interim Statements of Loss and Comprehensive Loss for share units granted under the three plans described above. The expense related to the share units granted under these plans is measured at fair value using the lattice-based trinomial pricing model and is recognized over the vesting period, with a corresponding liability recognized on the Condensed Consolidated Interim Balance Sheets. Until the liability is ultimately settled, it is re-measured at each reporting date with changes to fair value recognized in earnings.
15. PER SHARE AMOUNTS
The basic weighted-average number of common shares outstanding for the nine months ended September 30, 2018 and 2017 was 72,205,369. The diluted weighted-average number of common shares outstanding for the nine months ended September 30, 2018 was 73,124,103 (September 30, 2017 - 72,205,369). These outstanding share amounts were used to calculate net loss per share in the respective periods.
In determining diluted net loss per share, the Company assumes that the proceeds received from the exercise of “in-the-money” stock options are used to repurchase common shares at the average market price. In calculating the weighted-average number of diluted common shares outstanding for the period ended September 30, 2018, the Company excluded 1,640,000 stock options (September 30, 2017 – 5,344,520) as their exercise price was greater than the average common share market price in the period.
16. DIVIDENDS
During the quarter the Company paid out a dividend of $0.035 per share on September 14, 2018 to shareholders of record on August 31, 2018.

17. SEGMENTED INFORMATION
The Company has two reportable operating segments for the three and nine months ended September 30, 2018 and 2017: the Arab Republic of Egypt and Canada. The Company, through its operating segments, is engaged primarily in oil exploration, development and production, and the acquisition of oil and gas properties.

Q3-2018
 
11
 

TransGlobe's management regularly reviews funds flow from operations generated by each of TransGlobe's operating segments. Funds flow from operations is a measure of profit or loss that provides TransGlobe's management with the ability to assess the operating segments’ profitability and, correspondingly, the ability of each operating segment to sustain capital, enable future growth through capital investment and to repay debt.
 
 
Egypt
 
Canada
 
Corporate
 
Total
 
 
Nine Months Ended
 
 
Nine Months Ended
 
 
Nine Months Ended
 
 
Nine Months Ended
 
 
 
September 30
 
 
September 30
 
 
September 30
 
 
September 30
 
(000s)
 
2018

 
2017

 
2018

 
2017

 
2018

 
2017

 
2018

 
2017

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil sales
 
$
209,310

 
$
163,984

 
$
9,356

 
$
6,635

 
$
—

 
$
—

 
$
218,666

 
$
170,619

Natural gas sales
 
—

 
—

 
1,975

 
3,594

 
—

 
—

 
1,975

 
3,594

Natural gas liquids sales
 
—

 
—

 
5,875

 
5,424

 
—

 
—

 
5,875

 
5,424

Less: Royalties
 
(88,624
)
 
(68,543
)
 
(2,270
)
 
(3,355
)
 
—

 
—

 
(90,894
)
 
(71,898
)
Petroleum and natural gas sales, net of royalties
 
120,686

 
95,441

 
14,936

 
12,298

 
—

 
—

 
135,622

 
107,739

Finance revenue
 
77

 
3

 
—

 
2

 
322

 
54

 
399

 
59

Total segmented revenue
 
120,763

 
95,444

 
14,936

 
12,300

 
322

 
54

 
136,021

 
107,798

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segmented expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production and operating
 
34,344

 
35,344

 
5,838

 
4,578

 
—

 
—

 
40,182

 
39,922

Selling costs
 
1,653

 
1,926

 
—

 
—

 
—

 
—

 
1,653

 
1,926

General and administrative
 
3,659

 
4,577

 
871

 
884

 
12,153

 
6,156

 
16,683

 
11,617

Share-based compensation
 
—

 
—

 
—

 
—

 
(5,309
)
 
(886
)
 
(5,309
)
 
(886
)
Lease inducement
 
—

 
—

 
—

 
—

 
68

 
65

 
68

 
65

Settlement of asset retirement obligations
 
—

 
—

 
257

 
—

 
—

 
—

 
257

 
—

Realized foreign exchange loss
 
—

 
—

 
—

 
—

 
(10
)
 
101

 
(10
)
 
101

Realized derivative loss on commodity contracts
 
7,879

 
375

 
450

 
—

 
—

 
—

 
8,329

 
375

Income tax expense
 
19,728

 
16,104

 
—

 
—

 
—

 
—

 
19,728

 
16,104

Segmented funds flow from operations
 
$
53,500

 
$
37,118

 
$
7,520

 
$
6,838

 
$
(6,580
)
 
$
(5,382
)
 
$
54,440

 
$
38,574

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018

 
2017

Reconciliation of funds flow from operations to net loss:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds flow from operations
 
 
 
 
 
 
 
 
 
 
 
 
 
$
54,440

 
$
38,574

Depletion, depreciation and amortization
 
 
 
 
 
(26,077
)
 
(29,635
)
Accretion
 
 
 
 
 
 
 
 
 
 
 
 
 
(205
)
 
(191
)
Deferred lease inducement
 
 
 
 
 
 
 
 
 
 
 
 
 
68

 
65

Impairment of exploration and evaluation assets
 
 
 
 
 
(14,138
)
 
(79,025
)
Stock-based compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
(5,309
)
 
(886
)
Finance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
(3,923
)
 
(4,750
)
Unrealized loss on financial instruments
 
 
 
 
 
(20,157
)
 
(537
)
Unrealized gain (loss) on foreign currency translation
 
 
 
 
 
(205
)
 
31

Asset retirement obligations settled
 
 
 
 
 
 
 
 
 
 
 
 
 
257

 
—

Proceeds from asset dispositions
 
 
 
 
 
 
 
 
 
 
 
 
 
207

 
—

Net loss
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(15,042
)
 
$
(76,354
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration and development
 
$
20,063

 
$
24,667

 
$
3,142

 
$
4,384

 
$
—

 
$
—

 
$
23,205

 
$
29,051

Corporate
 
—

 
—

 
—

 
—

 
68

 
30

 
68

 
30

Total capital expenditures
 
$
20,063

 
$
24,667

 
$
3,142

 
$
4,384

 
$
68

 
$
30

 
$
23,273

 
$
29,081



12
 
Q3-2018
 

 
 
Egypt
 
Canada
 
Corporate
 
Total
 
 
Three Months Ended
 
 
Three Months Ended
 
 
Three Months Ended
 
 
Three Months Ended
 
 
 
September 30
 
 
September 30
 
 
September 30
 
 
September 30
 
(000s)
 
2018

 
2017

 
2018

 
2017

 
2018

 
2017

 
2018

 
2017

Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oil sales
 
$
68,861

 
$
63,403

 
$
3,131

 
$
2,141

 
$
—

 
$
—

 
$
71,992

 
$
65,544

Natural gas sales
 
—

 
—

 
528

 
949

 
—

 
—

 
528

 
949

Natural gas liquids sales
 
—

 
—

 
1,825

 
1,879

 
—

 
—

 
1,825

 
1,879

Less: Royalties
 
(31,278
)
 
(22,506
)
 
(614
)
 
(1,027
)
 
—

 
—

 
(31,892
)
 
(23,533
)
Petroleum and natural gas sales, net of royalties
 
37,583

 
40,897

 
4,870

 
3,942

 
—

 
—

 
42,453

 
44,839

Finance revenue
 
27

 
1

 
—

 
2

 
153

 
12

 
180

 
15

Total segmented revenue
 
37,610

 
40,898

 
4,870

 
3,944

 
153

 
12

 
42,633

 
44,854

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segmented expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Production and operating
 
10,677

 
13,242

 
1,565

 
1,280

 
—

 
—

 
12,242

 
14,522

Selling costs
 
527

 
424

 
—

 
—

 
—

 
—

 
527

 
424

General and administrative
 
1,133

 
2,083

 
345

 
318

 
3,626

 
1,408

 
5,104

 
3,809

Share-based compensation
 
—

 
—

 
—

 
—

 
(1,624
)
 
(236
)
 
(1,624
)
 
(236
)
Lease inducement
 
—

 
—

 
—

 
—

 
23

 
22

 
23

 
22

Realized foreign exchange loss (gain)
 
—

 
—

 
—

 
—

 
(11
)
 
13

 
(11
)
 
13

Realized derivative loss on commodity contracts
 
2,430

 
1,904

 
—

 
—

 
—

 
—

 
2,430

 
1,904

Income tax expense
 
6,924

 
5,179

 
—

 
—

 
—

 
—

 
6,924

 
5,179

Segmented funds flow from operations
 
$
15,919

 
$
18,066

 
$
2,960

 
$
2,346

 
$
(1,861
)
 
$
(1,195
)
 
$
17,018

 
$
19,217

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
September 30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018

 
2017

Reconciliation of funds flow from operations to net loss:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Funds flow from operations
 
 
 
 
 
 
 
 
 
 
 
 
 
$
17,018

 
$
19,217

Depletion, depreciation and amortization
 
 
 
(8,751
)
 
(10,760
)
Accretion
 
 
 
 
 
 
 
 
 
 
 
 
 
(72
)
 
(74
)
Deferred lease inducement
 
 
 
 
 
 
 
 
 
 
 
 
 
23

 
22

Impairment of exploration and evaluation assets
 
 
 
(14,138
)
 
(10,314
)
Stock-based compensation
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,624
)
 
(236
)
Finance costs
 
 
 
 
 
 
 
 
 
 
 
 
 
(1,222
)
 
(1,485
)
Unrealized loss on financial instruments
 
 
 
(3,295
)
 
(3,235
)
Unrealized gain (loss) on foreign currency translation
 
 
 
(227
)
 
10

Proceeds from asset dispositions
 
 
 
 
 
 
 
 
 
 
 
 
 
5

 
—

Net loss
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(12,283
)
 
$
(6,855
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exploration and development
 
$
10,113

 
$
6,070

 
$
2,636

 
$
4,060

 
$
—

 
$
—

 
$
12,749

 
$
10,130

Corporate
 
—

 
—

 
—

 
—

 
34

 
3

 
34

 
3

Total capital expenditures
 
$
10,113

 
$
6,070

 
$
2,636

 
$
4,060

 
$
34

 
$
3

 
$
12,783

 
$
10,133



Q3-2018
 
13
 


The carrying amounts of reportable segment assets and liabilities are as follows:
 
 
At September 30, 2018
 
 
At December 31, 2017
 
(000s)
 
Egypt

 
Canada

 
Total

 
Egypt

 
Canada

 
Total

Assets
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
$
8,047

 
$
2,439

 
$
10,486

 
$
14,956

 
$
2,684

 
$
17,640

Intangible exploration and evaluation assets
 
34,376

 
—

 
34,376

 
41,478

 
—

 
41,478

Property and equipment
 
 
 
 
 
 
 
 
 
 
 
 
Petroleum and natural gas assets
 
123,367

 
68,077

 
191,444

 
127,363

 
73,618

 
200,981

Other assets
 
2,195

 
24

 
2,219

 
2,381

 
27

 
2,408

Other
 
64,102

 
4,312

 
68,414

 
49,769

 
3,467

 
53,236

Segmented assets
 
232,087

 
74,852

 
306,939

 
235,947

 
79,796

 
315,743

Non-segmented assets
 
 
 
 
 
7,264

 
 
 
 
 
11,959

Total assets
 
 
 
 
 
$
314,203

 
 
 
 
 
$
327,702

 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
$
16,277

 
$
4,043

 
$
20,320

 
$
17,035

 
$
4,004

 
$
21,039

Derivative commodity contracts
 
28,124

 
—

 
28,124

 
7,813

 
157

 
7,970

Long-term debt
 
44,047

 
8,485

 
52,532

 
58,792

 
11,207

 
69,999

Asset retirement obligation
 
—

 
11,322

 
11,322

 
—

 
12,332

 
12,332

Segmented liabilities
 
88,448

 
23,850

 
112,298

 
83,640

 
27,700

 
111,340

Non-segmented liabilities
 
 
 
 
 
9,483

 
 
 
 
 
6,355

Total liabilities
 
 
 
 
 
$
121,781

 
 
 
 
 
$
117,695

18. SUPPLEMENTAL CASH FLOW INFORMATION
Changes in non-cash working capital consisted of the following:
 
 
Three Months Ended September 30
 
 
Nine Months Ended September 30
 
(000s)
 
2018

 
2017

 
2018

 
2017

Operating Activities
 
 
 
 
 
 
 
 
(Increase) decrease in current assets:
 
 
 
 
 
 
 
 
Accounts receivable
 
$
30,558

 
$
(7,797
)
 
$
7,158

 
$
(34,871
)
Prepaids and other
 
427

 
(625
)
 
1,101

 
(903
)
Product inventory
 
(666
)
 
2,820

 
1,371

 
4,856

(Decrease) increase in current liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
(791
)
 
6,822

 
(5,793
)
 
7,531

    Other long-term liabilities
 
$
1,093

 
$
—

 
$
1,093

 
$
—

 
 
$
30,621

 
$
1,220

 
$
4,930

 
$
(23,387
)
Investing Activities
 
 
 
 
 
 
 
 
Increase in current assets:
 
 
 
 
 
 
 
 
Prepaids and other
 
$
3

 
$
—

 
$
—

 
$
—

Increase in current liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
3,226

 
557

 
2,594

 
1,073

 
 
$
3,229

 
$
557

 
$
2,594

 
$
1,073

Financing Activities
 
 
 
 
 
 
 
 
Decrease in current liabilities:
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
 
(3
)
 
—

 
(3
)
 
—

 
 
$
(3
)
 
$
—

 
$
(3
)
 
$
—


14
 
Q3-2018