Robert McWhirter Transglobe Energy TGL-T COMMENT Feb 01, 2013

Oil/gas based in Egypt. Has been under pressure because of the quasi-nationalization of a gold company, which is subject to debate. Thinks this one is well away from any concerns about nationalization as the oil/gas patch is a huge producer of foreign exchange for Egypt. They employ locals at very good safe conditions and above average working conditions. Just won 4 blocks in Egypt’s 1^st post-revolution onshore licensing round, which is significant as it gives them a great opportunity to expand over the next 2-3 years and to move towards the 40,000 barrels production target that they have.

Has been taking his weighting down over the last 1.5 months. This is a situation where you need to separate the company from the country they are operating in, Egypt. Egypt has been experiencing some tremendous political upheaval and it seems that the situation is becoming more unstable..

Likes the management team and the oil field is very prolific and are extracting oil at very, very low op costs. Biggest issue is that it is located in Egypt. With Egypt’s sovereign issues being questioned, it is questionable if this company can collect the receivables from the government.

Trading very cheaply because of the Yemen issues, but more importantly the Egyptian political issues. There have been no difficulties in the field. Longer-term, you want to stay with it because it will do quite well but will require some patience.

Have built up production and concentrated for a long time in the Middle East. Have transitioned nicely into Egypt and have made some tremendous discoveries there. They find that they are getting paid very quickly. Quality of the oil and the net backs they are getting are quite handsome. Extraordinarily profitable company. Political risks scare many investors off.

Has been hit. Market has been discounting companies in Egypt because payments have been delayed. But they are doing better in the field. Trading at low levels relative to their barrels of production. Egypt will recover.

The problem with this stock is that it hadn’t been moving up with a lot of the other oil stocks over the last year. On energy stocks, you want to wait for the next 6 months before buying in the sector. This one may have a little more downside yet.

They are in Egypt and he is worried how likely they are to collect their receivables there. He has owned their bond, but generally likes to take the geopolitical risk out of the equation.

An oil stock in Egypt. Clean balance sheet. Everything looks good and it screens well, but he wakes up in the morning wondering what is happening in Egypt, and are they going to get paid from the government. He doesn’t mind this one, it is just that he can buy oil stocks in Canada and not worry about the International risk. The best way to play this is through their convertible debenture, which is trading at around $.85 on the $1. The yield to maturity is 11%.