TransGlobe Energy Corporation Announces First Quarter 2013 Financial and Operating Results

TransGlobe Energy Corporation Announces First Quarter 2013 Financial and 
Operating Results 
CALGARY, ALBERTA -- (Marketwired) -- 05/07/13 -- TransGlobe Energy
Corporation ("TransGlobe" or the "Company") (TSX:TGL) (NASDAQ:TGA) is
pleased to announce its financial and operating results for the three
months ended March 31, 2013. All dollar values are expressed in
United States dollars unless otherwise stated.  


 
--  First quarter production averaged 18,001 Bopd (17,909 Bopd sales); 
    
--  First quarter funds flow of $36.0 million; 
    
--  First quarter earnings of $24.9 million (includes a $3.0 million
    unrealized gain on convertible debentures); 
    
--  Spent $18.2 million on exploration and development during the quarter; 
    
--  Drilled 11 wells in the quarter resulting in 8 oil wells and 3 dry
    holes; 
    
--  Two new Lower Nukhul discoveries in the Arta and East Arta Blocks have
    added to the appraisal location inventory; 
    
--  Collected $75.2 million in accounts receivable from the Egyptian
    Government during the quarter; 
    
--  Ended the quarter with $112.2 million in cash and cash equivalents;
    positive working capital of $278.0 million or $167.0 million net of debt
    (including convertible debentures).

 
A conference call to discuss TransGlobe's 2013 first quarter results
presented in this news release will be held Tuesday, May 7, 2013 at
9:00 AM Mountain Time (11:00 AM Eastern Time) and is accessible to
all interested parties by dialing 1-416-695-6616 or toll-free
1-800-766-6630 (see also TransGlobe's news release dated May 1,
2013). The webcast may be accessed at
http://events.digitalmedia.telus.com/transglobe/050713/index.php. 
FINANCIAL AND OPERATING RESULTS  
(US$000s, except per share, price, volume amounts and % change) 


 
                                                Three months ended March 31 
----------------------------------------------------------------------------
Financial                                       2013       2012    % Change 
----------------------------------------------------------------------------
Oil and gas revenue                          159,915    159,426           - 
Oil and gas revenue net of royalties          79,366     77,212           3 
Derivative gain (loss) on commodity                                         
 contracts                                         -       (124)          - 
Production and operating expense              14,532     11,966          21 
General and administrative expense             7,100      6,688           6 
Depletion, depreciation and amortization                                    
 expense                                      11,180     11,749          (5)
Income taxes                                  23,921     21,585          11 
Funds flow from operations                    36,005     36,088           - 
  Basic per share                               0.49       0.49             
  Diluted per share                             0.44       0.48             
Net earnings                                  24,878     10,975         127 
Net earnings - diluted                        21,427     10,975          95 
  Basic per share                               0.34       0.15             
  Diluted per share                             0.26       0.15             
Capital expenditures                          18,193      4,472         307 
Working capital                              277,997    263,693           5 
Long-term debt                                17,097     57,910         (70)
Convertible debentures                        93,842    105,835         (11)
Common shares outstanding                                                   
  Basic (weighted average)                    73,805     73,061           1 
  Diluted (weighted average)                  82,228     75,333           9 
Total Assets                                 672,675    648,012           4 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Operating                                                                   
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average production volumes (Bopd)             18,001     16,795           7 
Average sales volumes (Bopd)                  17,909     16,720           7 
Average price ($ per Bbl)                      99.21     104.78          (5)
Operating expense ($ per Bbl)                   9.02       7.86          15 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
CORPORATE SUMMARY 
TransGlobe Energy Corporation's ("TransGlobe" or the "Company") total
production averaged 18,001 barrels of oil per day ("Bopd") during the
quarter. The increase in production over Q-4 2012 was due to
production increases at West Gharib and West Bakr late in the
quarter.  
In the Eastern Desert the Company continues to grow production
primarily due to successful drilling and facility
expansion/optimization projects. Year-to-date the Company has drilled
13 wells in the Eastern Desert resulting in 12 oil wells and 1 dry
hole. Recent successful Lower Nukhul oil wells located on the Western
edges of the Arta and East Arta leases in West Gharib have
significantly enhanced the exploration potential of the newly awarded
North West Gharib concession. In addition, the Company is currently
drilling an infill well in the K field which is targeting un-swept
oil in the main Asl "A" pool. The previous four oil wells the Company
has drilled in the K field encountered an average 113 feet of net oil
pay per well. All four wells are producing deeper Asl sands
discovered below the main A pool.  
In the Western Desert the Company has drilled three exploration
commitment wells at South Mariut which were under budget but dry. The
Company is currently evaluating the results with its partner and it
is likely the Block will be relinquished based on recent results.
Including the most recent wells, the Company will have invested
approximately $20 million in the South Mariut concession. At South
Alamein the start of the planned 8-well drilling program has been
delayed waiting on military approvals for access. At East Ghazalat,
drilling has commenced on a four-well drilling program (two Safwa
development and two exploration) with two drilling rigs. 
Dated Brent oil prices were strong in the first quarter, averaging
$112.59 per barrel. The West Gharib and West Bakr crude is sold at a
quality discount to Dated Brent and received a blended price of
$99.05 during the quarter. The Company had funds flow of $36.0
million and ended the quarter with positive working capital of $278.0
million or $167.0 million net of debt (including the convertible
debentures). The Company collected $75.2 million of accounts
receivable from the Egyptian government during the quarter which
reduced accounts receivable (net of excess cost oil due to Egyptian
General Petroleum Company ("EGPC")), by $16.4 million to $204.6
million. 
The Company had net earnings in the quarter of $24.9 million, which
included a $3.0 million non-cash unrealized gain on convertible
debentures. The $3.0 million gain represents a fair value adjustment
in accordance with IFRS, but does n
ot represent a cash gain or a
change in the future cash outlay required to repay the convertible
debentures.  
In the Company's view, the political environment in the Arab Republic
of Egypt ("Egypt") continues to evolve and business processes and
operations are proceeding as normal. The Company has a strong
financial position and continues to pursue business development
opportunities both within and outside of Egypt. 
Annual General and Special Meeting of Shareholders  
Wednesday, May 8, 2013 at 3:00 p.m. Mountain Time  
Centennial Place West, Bow Glacier Room  
3rd Floor, 250 5th Street S.W., Calgary, Alberta, Canada 
OPERATIONS UPDATE 
Operations Update 
ARAB REPUBLIC OF EGYPT 
West Gharib, Arab Republic of Egypt (100% working interest, operated) 
Operations and Exploration 
Five wells were drilled during the first quarter resulting in four
(Arta/East Arta) Upper Nukhul oil wells and one (East Arta) dry well. 
Subsequent to the quarter three additional oil wells have been
drilled in the Arta/East Arta area which encountered Lower Nukhul.
The East Arta well successfully appraised a Lower Nukhul pool on the
north west edge of the East Arta block which had been discovered
prior to the 2012 EGPC bid round. The new East Arta well encountered
a Lower Nukhul reservoir with 90 feet of net pay. The original
discovery well initially produced 550 Bopd and is currently producing
370 Bopd after 17 months of production. Based on 3-D seismic mapping
the majority of the Lower Nukhul pool extends on to the NW Gharib
block. The pool is estimated to contain between 10 and 40 million
barrels of Petroleum-Initially-In-Place ("PIIP") (P90 to P10
respectively) based on internal estimates. Approximately 22
additional locations on 40 acre spacing will be required to define
the extents of this Lower Nukhul pool. 
One of the subsequent Arta wells that was drilled west of the main
Arta field also discovered a new Lower Nukhul oil reservoir with 18
feet of net pay. The pool is estimated to contain between 2 and 10
million barrels of PIIP (P90 to P10 respectively) based on internal
estimates. Approximately 10 appraisal locations will be required to
define the pool which potentially extends on to the NW Gharib
concession. 
One drilling rig is currently drilling in the West Gharib concession. 
Production 
Production from West Gharib averaged 12,970 Bopd to TransGlobe during
the first quarter, a 12% (1,407 Bopd) increase from the previous
quarter. An illegal eight-day protest at the start of October 2012
resulted in approximately 1,000 Bopd of production being deferred in
that quarter.  
Production averaged 12,270 Bopd during January; 13,232 Bopd in
February; 13,433 Bopd in March; and 13,798 Bopd in April. Production
increases in February, March and April are attributed to new wells,
production optimization and increased take-away capacity attributed
to the West Bakr K station trucking terminal.  
The Company commissioned a truck receiving terminal at the West Bakr
K station to receive West Gharib production in late December. The new
K station receiving terminal is designed to receive the majority of
the Hana/Hana West production from West Gharib, which is then shipped
via the West Bakr pipeline to the GPC receiving terminal. By
diverting up to 2,500 Bopd of Hana/Hana West production through the
West Bakr pipeline system, West Gharib is able to utilize a portion
of the Hana/Hana West capacity at the Government-controlled ("GPC")
truck terminal to deliver additional West Gharib production. Combined
West Gharib and West Bakr delivered 18,650 Bopd into the GPC system
in April and have successfully delivered over 21,000 Bopd on peak
days. Additional unidentified constraints could be experienced in the
GPC processing facilities when the combined production exceeds the
21,000 Bopd level. The Company continues to work with GPC to identify
bottlenecks and optimize throughput. 
Phase 2 expansions of the new Hoshia and Arta South multi-well
batteries ("MWB") were completed in early 2013. In addition, a new
MWB located in the northwest corner of East Arta was commissioned in
early March 2013 and plans have been finalized for a new Arta Main
MWB in the central part of Arta, targeting a Q4-2013 startup. The
startup of new MWB's has contributed to better water separation in
the field and increased oil delivery at the GPC terminal. 
The Company continues to progress a number of longer term
infrastructure projects in the West Gharib/West Bakr fields to
deliver West Gharib production to GPC by pipeline and thereby
eliminate oil trucking outside the West Gharib field area. 


 
Quarterly West Gharib Production (Bopd)         2013                    2012
----------------------------------------------------------------------------
                                                 Q-1     Q-4     Q-3     Q-2
----------------------------------------------------------------------------
Gross production rate                         12,970  11,563  12,182  12,356
TransGlobe working interest                   12,970  11,563  12,182  12,356
TransGlobe net (after royalties)               7,084   6,697   6,757   6,847
TransGlobe net (after royalties and tax) (i)   4,916   4,884   4,741   4,805
----------------------------------------------------------------------------
(i) Under the terms of the West Gharib Production Sharing Concession,       
    royalties and taxes are paid out the Government's share of production   
    sharing oil                                                             

 
West Bakr, Arab Republic of Egypt (100% working interest, operated)  
Operations and Exploration  
The Company drilled four wells during the first quarter resulting in
four oil wells (two oil wells in K field, one oil well in M field and
one oil well in H field).  
Subsequent to the quarter, the Company has drilled one oil well in
the H field.  
The rig is currently drilling in K field. To date the Company has
drilled and completed four directional wells in the K field targeting
multiple stacked Asl sands below the main Asl A zone with wells being
completed in the lower-most oil formations. Depending on the
performance of the respective wells/pools they may be recompleted or
possibly commingled with additional Asl sands not currently
producing. All four wells encountered oil pay in the main Asl A sand
with an average true vertical depth ("tvd") net oil pay of
approximately 113 feet per well and oil pay in the Asl B sand with an
average tvd net oil pay of approximately 65 feet per well. The Asl A
sands appear to be relatively un-swept in the main Asl A reservoir.
The wells encountered the Asl B reservoir in a structurally favorable
position and have a common oil water contact. One of the four wells
was completed as an Asl B oil well and was placed on production at an
initial pumping rate of approximately 800 Bopd in mid-February and is
producing at a stabilized rate of 500 Bopd. Additional oil pay was
encountered in the thinner Asl D, E and F sands depending on the
structural position of the respective wells. One well is completed in
the Asl D, one well in the Asl E and one well in the Asl E and F
sands with an overall average production pumping rate of
approximately 140 Bopd per well. The Asl formations are high quality,
unconsolidated sandstone reservoirs which typically produce sand with
the
 oil during the initial production phase resulting in an increased
frequency of pump changes and sand cleanouts.  
A new vertical K field well targeting the main Asl A pool is
currently drilling targeting un-swept oil in that field. The Asl A
pool has produced approximately 28 million barrels of oil since being
discovered in 1980, or approximately 17% of the internally estimated
169 million barrels in place. At year-end 2012, approximately 4.5
million barrels of proved plus probable ("2P") remaining reserves
were assigned to the Asl A pool which, combined with historical
production, equates to an ultimate recovery factor of approximately
19%. Management believes an additional 10% to 20% recovery factor for
the K field Asl A pool is possible primarily through infill and
down-spaced drilling opportunities. This could increase the ultimate
recovery to the 30%-40% range which is a more typical recovery factor
for a high quality sandstone reservoir with an active water drive. In
addition to the current drilling program the company has identified a
number of work-over/remedial well candidates to re-activate wells
with un-swept oil potential in the K field.  
It is expected that the drilling rig will continue working in West
Bakr throughout 2013.  
Production  
Production from West Bakr averaged 4,359 Bopd to TransGlobe during
the first quarter, an 8% (371 Bopd) decrease from the previous
quarter, primarily due a higher than normal number of pump changes
and sand clean-outs during January and February, when production was
4,126 Bopd and 4,199 Bopd respectively. Production increased to 4,737
Bopd in March and 4,692 Bopd in April. Production increases were
attributed to new wells at K field, M field and H field, as well as
improved pump performance in new K field wells and a successful
work-over/recompletions in the M and K fields.  


 
Quarterly West Bakr Production (Bopd)           2013                    2012
----------------------------------------------------------------------------
                                                 Q-1     Q-4     Q-3     Q-2
----------------------------------------------------------------------------
Gross production rate                          4,359   4,730   4,590   4,230
TransGlobe working interest                    4,359   4,730   4,590   4,230
TransGlobe net (after royalties)               1,373   1,569   1,268   1,244
TransGlobe net (after royalties and tax) (i)   1,061   1,230     939     941
----------------------------------------------------------------------------
(i) Under the terms of the West Gharib Production Sharing Concession,       
    royalties and taxes are paid out the Government's share of production   
    sharing oil                                                             

 
East Ghazalat Block, Arab Republic of Egypt (50% working interest) 
Operations and Exploration 
No wells were drilled during the first quarter. Subsequent to the
quarter, drilling commenced at Safwa 3, which is the first of a
two-well development/appraisal program for the Safwa development
area. In addition, a second larger drilling rig has been mobilized
for a two-well exploration program. Drilling commenced at the Safwa
South-1X exploration well which is targeting stacked zones in the
Cretaceous and Jurassic, and is programmed to reach a total depth of
11,350 feet. As disclosed in the January 11, 2013 press release, the
Safwa South-1X (formerly Safwa West) prospect was independently
evaluated as of December 31, 2012 by DeGolyer and MacNaughton Canada
Limited "DMCL". The Safwa South -1X well is targeting an un-risked
Mean Gross Prospective Resource volume of 7.0 million barrels. 
Production 
Production from East Ghazalat averaged 338 Bopd to TransGlobe during
the first quarter, a 28% (129 Bopd) decrease from the previous
quarter primarily due to the decline in natural flow from the only
flowing producer in the field. The well was converted to a pumping
oil well in late March which increased production approximately 200
Bopd. Production from East Ghazalat averaged 846 Bopd (423 Bopd to
TransGlobe) during April. 
Production is trucked to a receiving terminal at the Dapetco-operated
South Dabaa facility approximately 35 kilometers southwest of Safwa.  


 
Quarterly East Ghazalat Production (Bopd)       2013                    2012
----------------------------------------------------------------------------
                                                 Q-1     Q-4     Q-3     Q-2
----------------------------------------------------------------------------
Gross production rate                            677     934     163       -
TransGlobe working interest                      338     467      82       -
TransGlobe net (after royalties)                 170     235      41       -
TransGlobe net (after royalties and tax) (i)     135     187      33       -
----------------------------------------------------------------------------
(i) Under the terms of the East Ghazalat Production Sharing Concession,     
    royalties and taxes are paid out of the Government's share of           
    production.                                                             

 
South Alamein, Arab Republic of Egypt (100% working interest,
operated) 
Operations and Exploration 
The Company has approved a budget for 2013 which includes an initial
eight-well drilling program and the development of the Boraq 2 oil
discovery. The 2013 drilling program includes two Boraq appraisal
wells with the balance of the program focused on exploration
prospects in South Alamein.  
The Company is waiting for military surface access approvals, which
have been delayed. The Company is encouraged by the continued support
from EGPC and the Ministry of Oil and is cautiously optimistic that
the necessary approvals will be forthcoming over the next quarter or
two. 
It is difficult to provide a timeline for first oil production from
the Boraq discovery. The Company had assumed a Q4-2013 startup of
production for budget purposes with an average production rate of 460
Bopd for 2013. 
South Mariut, Arab Republic of Egypt (60% working interest, operated) 
Operations and Exploration 
The Company drilled two exploration wells (Al Azayem #1 and Al Nahda
#1) during the quarter which were dry and abandoned. 
The Al Azayem #1 well commenced drilling in the fourth quarter of
2012 and reached a total depth of 16,391 feet in January 2013. The
well was plugged and abandoned. The primary Cretaceous reservoirs did
not contain hydrocarbons. The Jurassic section of the well
encountered a gross section of approximately 4,000 feet of Jurassic
shale and tight carbonates. The Jurassic shale had good hydrocarbon
indicators recorded while drilling. Analysis of the drill cuttings
will be carried out to determine source rock properties. The total
well cost of approximately $9 million ($5.4 million to TransGlobe)
was lower than the budgeted $9.6 million cost for a 14,500 foot test. 
The Al Nahda #1 well was drilled to a total depth of 10,750 feet and
subsequently plugged and abandoned. The Al Nahda #1 well tested an
independent Cretaceous structure (four stacked zones) defined on 3-D
seismic which did not contain hydrocarbons. The total well cost was
approximately $3.3 million ($2.0 million to TransGlobe). 
Subsequent to the quarter, the third exploration well Al Hammam #1
was drilled to a total depth of 8,322 feet and subsequently plugged
and abandoned. The Al Hammam #1 tested a Cretaceous horst block
defined on 2-D seismic data which did not contain hydrocarbons. The
total well cost was approximately $2.7 million ($1.6 million to
TransGlobe). 
With the abandonment of Al Hammam #1, the partners have fulfilled
their commitments under the terms of the Concession Agreement and are
evaluating whether to commit to the second and final two-year
extension period. Based on the recent drilling results it is unlikely
that TransGlobe will proceed to the next extension period and
therefore will likely relinquish its inter
est in the South Mariut
Concession. 
EGPC BID ROUND RESULTS 
EGPC announced that TransGlobe was the successful bidder on four
concessions (100% working interest) in the 2011 EGPC bid round which
closed on March 29, 2012. It is expected that the new concessions
will be awarded in late 2013 following the ratification process which
culminates when each concession is passed into law by the People's
Assembly (Parliament).  
North West Gharib (100% WI) 
The Company's primary objective was obtaining the 655 square
kilometer (162,000 acre) North West Gharib concession which surrounds
and immediately offsets the Company's core West Gharib/West Bakr
producing concessions (approx. 45,000 acres). At North West Gharib
the Company expects to commence drilling shortly after ratification
and final approval of the concession into law. The Company has
identified more than 79 drilling locations based on existing well and
seismic data for the area. The Company would also acquire 3-D seismic
data on portions of the concession not covered by 3-D seismic, to
develop additional exploration targets.  
South West Gharib (100% WI) 
The 195 square kilometer (48,000 acre) South West Gharib concession
is located immediately south of the North West Gharib concession. The
Company will acquire 3-D seismic over the entire concession prior to
drilling exploration wells in the first exploration phase.  
South East Gharib (100% WI) 
The 508 square kilometer (125,000 acre) South East Gharib concession
is located immediately south of the South West Gharib concession. The
Company will acquire extensive 2-D and 3-D seismic over this area
prior to drilling exploration wells in the first exploration phase.  
South Ghazalat (100% WI) 
The 1,883 square kilometer (465,000 acre) South Ghazalat concession
is located in the Western Desert to the west of the company's East
Ghazalat concession in the prolific Abu Gharadig basin. The Company
will acquire extensive 3D seismic over this area prior to drilling
exploration wells in the first exploration phase.  
YEMEN EAST - Masila Basin  
Block 32, Republic of Yemen (13.81% working interest)  
Operations and Exploration  
No wells were drilled during the first quarter.  
Production  
Production sales from Block 32 averaged 1,556 Bopd (215 Bopd to
TransGlobe) during the quarter. The reported gross sales production
rate represents the amount of oil that was lifted and sold during the
quarter. It is expected that sales production rates and the field
production rates will vary quarter to quarter depending on the timing
of tanker liftings during the respective quarter. 
The actual field production during the first quarter averaged 2,416
Bopd (334 Bopd to TransGlobe) which is approximately 1% lower than
the previous quarter due to natural declines.  
Field production averaged approximately 2,244 Bopd (310 Bopd to
TransGlobe) during April. 


 
Quarterly Block 32 Production and Sales (Bopd)     2013                 2012
----------------------------------------------------------------------------
                                                    Q-1    Q-4    Q-3    Q-2
----------------------------------------------------------------------------
Gross field production rate                       2,416  2,442  2,532  2,575
Gross sales production rate                       1,556  3,271  1,501  2,839
TransGlobe working interest                         215    452    207    392
TransGlobe net (after royalties)                    138    253    123    232
TransGlobe net (after royalties and tax) (i)        113    185     96    179
----------------------------------------------------------------------------
(i) Under the terms of the Block 32 Production Sharing Agreement, royalties 
    and taxes are paid out of the Government's share of production sharing  
    oil.                                                                    

 
Block 72, Republic of Yemen (20% working interest) 
Operations and Exploration 
No new wells were drilled during the first quarter. The joint venture
partners have approved the Gabdain #3 exploration well, subject to
the resolution of logistic/security issues in the area. The current
exploration phase of the PSA has been extended to October 12, 2013.  
Gabdain #3 is targeting a large fractured basement prospect
originally drilled at Gabdain #1 in 2010. Gabdain #1 tested
approximately 170 Bopd light oil from the Kholan formation with 85%
drawdown (which overlies the basement) during a two-day production
test. Test rates are not necessarily indicative of long-term
performance. The basement fractures at Gabdain #1 were tight and
non-productive. The Gabdain #3 well is located approximately five
kilometers from Gabdain #1 and is targeting fractures in the
basement. It is expected that the 3,500 meter (11,500 feet)
exploration well will cost approximately $11.5 million ($2.3 million
to TransGlobe).  
YEMEN WEST - Marib Basin  
Block S-1, Republic of Yemen (25% working interest)  
Operations and Exploration  
No wells were drilled during the first quarter.  
Production  
Production sales from Block S-1 averaged 108 Bopd (27 Bopd to
TransGlobe) during the quarter. The reported gross sales production
rate represents an adjustment to a prior period inventory which was
lifted and sold in a prior quarter. The positive adjustment has been
booked as sales during the first quarter. It is expected that sales
production rates and the field production rates will vary quarter to
quarter depending on the timing of tanker lifting's during the
respective quarter. 
Field production remains shut-in primarily due to labor negotiations
with field employees and tender of service/support contracts in the
field. A settlement was reached with the field employees in early
April and the operator is currently finalizing the new service
contracts. It is difficult to predict when production will be
restored, but it is expected to commence in the second quarter. 


 
Quarterly Block S-1 Production and Sales (Bopd)    2013                 2012
----------------------------------------------------------------------------
                                                    Q-1    Q-4    Q-3    Q-2
----------------------------------------------------------------------------
Gross field production rate                           -  3,112  3,860      -
Gross sales production rate                         108  7,748    252      -
TransGlobe working interest                          27  1,937     63      -
TransGlobe net (after royalties)                     14  1,273     41      -
TransGlobe net (after royalties and tax) (i)         10  1,105     36      -
----------------------------------------------------------------------------
(i) Under the terms of the Block S-1 Production Sharing Agreement, royalties
    and taxes are paid out of the Government's share of production sharing  
    oil.                                                                    

 
Block 75, Republic of Yemen (25% working interest) 
Operations and Exploration 
No wells were drilled during the quarter. 
Future drilling has been suspended pending resolution of logistics
and security concerns.  
MANAGEMENT'S DISCUSSION AND ANALYSIS  
May 6, 2013  
The following discussion and analysis is management's opinion of
TransGlobe's historical financial and operating results and should be
read in conjunction with the unaudited Condensed Consolidated Interim
Financial Statements of the Company for the three months ended March
31, 2013 and 2012 and the audited Consolidated Financial Statements
and management's discussion and analysis ("MD&A") for the year ended
December 31, 2012 included in the Company's annual report. The
Condensed Consolidated Interim Financial Statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board in the currency of the United States (except where
otherwise noted). Additional information relating to t
he Company,
including the Company's Annual Information Form, is on SEDAR at
www.sedar.com. The Company's annual report on Form 40-F may be found
on EDGAR at www.sec.gov. 
READER ADVISORIES  
Forward-Looking Statements  
Certain statements or information contained herein may constitute
forward-looking statements or information under applicable securities
laws, including, but not limited to, management's assessment of
future plans and operations, anticipated increases to the Company's
reserves and production, the possible sale of the Company's assets in
Yemen, collection of accounts receivable from the Egyptian
Government, drilling plans and the timing thereof, commodity price
risk management strategies, adapting to the current political
situations in Egypt and Yemen, reserve estimates, management's
expectation for results of operations for 2013, including expected
2013 average production, funds flow from operations, the 2013 capital
program for exploration and development, the timing and method of
financing thereof, method of funding drilling commitments, and
commodity prices and expected volatility thereof. Statements relating
to "reserves" are deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and
assumptions, that the reserves described can be profitably produced
in the future.   
Forward-looking statements or information relate to the Company's
future events or performance. All statements other than statements of
historical fact may be forward-looking statements or information.
Such statements or information are often but not always identified by
the use of words such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe", and similar expressions.  
Forward-looking statements or information necessarily involve risks
including, without limitation, risks associated with oil and gas
exploration, development, exploitation, production, marketing and
transportation, loss of markets, economic and political instability,
volatility of commodity prices, currency fluctuations, imprecision of
reserve estimates, environmental risks, competition from other
producers, inability to retain drilling rigs and other services,
incorrect assessment of the value of acquisitions, failure to realize
the anticipated benefits of acquisitions, delays resulting from or
inability to obtain required regulatory approvals and ability to
access sufficient capital from internal and external sources. The
recovery and reserve estimates of the Company's reserves provided
herein are estimates only and there is no guarantee that the
estimated reserves will be recovered. Events or circumstances may
cause actual results to differ materially from those predicted, as a
result of the risk factors set out and other known and unknown risks,
uncertainties, and other factors, many of which are beyond the
control of the Company.  
In addition, forward-looking statements or information are based on a
number of factors and assumptions which have been used to develop
such statements and information in order to provide shareholders with
a more complete perspective on the Company's future operations. Such
statements and information may prove to be incorrect and readers are
cautioned that such statements and information may not be appropriate
for other purposes. Although the Company believes that the
expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements or information because the Company can
give no assurance that such expectations will prove to be correct. In
addition to other factors and assumptions which may be identified
herein, assumptions have been made regarding, among other things: the
impact of increasing competition; the general stability of the
economic and political environment in which the Company operates; the
timely receipt of any required regulatory approvals; the ability of
the Company to obtain qualified staff, equipment and services in a
timely and cost efficient manner; drilling results; the ability of
the operator of the projects which the Company has an interest in to
operate the field in a safe, efficient and effective manner; the
ability of the Company to obtain financing on acceptable terms; field
production rates and decline rates; the ability to replace and expand
oil and natural gas reserves through acquisition, development and
exploration; the timing and costs of pipeline, storage and facility
construction and expansion and the ability of the Company to secure
adequate product transportation; future commodity prices; currency,
exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters in the jurisdictions in
which the Company operates; and the ability of the Company to
successfully market and receive payment for its oil and natural gas
products.  
Readers are cautioned that the foregoing list is not exhaustive of
all factors and assumptions which have been used. As a consequence,
actual results may differ materially from those anticipated in the
forward-looking statements. Additional information on these and other
factors that could affect the Company's operations and financial
results are included in reports on file with Canadian securities
regulatory authorities and may be accessed through the SEDAR website
(www.sedar.com), EDGAR website (www.sec.gov) and at the Company's
website (www.trans-globe.com). Furthermore, the forward-looking
statements or information contained herein are made as at the date
hereof and the Company does not undertake any obligation to update
publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required by applicable securities laws.  
The reader is further cautioned that the preparation of financial
statements in accordance with IFRS requires management to make
certain judgments and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses. Estimating reserves is
also critical to several accounting estimates and requires judgments
and decisions based upon available geological, geophysical,
engineering and economic data. These estimates may change, having
either a negative or positive effect on net earnings as further
information becomes available, and as the economic environment
changes. 
MANAGEMENT STRATEGY AND OUTLOOK  
The 2013 outlook provides information as to management's expectation
for results of operations for 2013. Readers are cautioned that the
2013 outlook may not be appropriate for other purposes. The Company's
expected results are sensitive to fluctuations in the business
environment and may vary accordingly. This outlook contains
forward-looking statements that should be read in conjunction with
the Company's disclosure under "Forward-Looking Statements", outlined
on the first page of this MD&A.  
2013 Production Outlook  
Production for 2013 is expected to average between 21,000 and 24,000
Bopd. The range is due to a number of variables outside of the
Company's control such as government approvals relating to the start
of South Alamein production, development drilling results in Egypt
and the return to operations of Block S-1 in Yemen. 


 
Production Forecast                                                         
                                 2013 Guidance     2012 Actual      % Change
----------------------------------------------------------------------------
Barrels of oil per day         21,000 - 24,000          17,496       20 - 37
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
2013 Funds Flow From Operations Outlook  
Funds flow from operations guidance of $161.0 million ($2.13/share),
which is base
d on an annual average Dated Brent oil price of $100/Bbl
and using the mid-point of the production guidance.  


 
Funds Flow Forecast                                                         
($ millions)                     2013 Guidance     2012 Actual      % Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Funds flow from operations               161.0           153.5             5
Brent oil price ($ per bbl)             100.00          111.56          (10)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
2013 Capital Budget                                                         
($ millions)                                                            2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                                  124.0
Yemen                                                                    5.0
----------------------------------------------------------------------------
Total                                                                  129.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The 2013 capital program is split 58:42 between development and
exploration, respectively. The Company planned to participate in 51
wells in 2013. It is anticipated that the Company will fund its 2013
capital budget from funds flow from operations and working capital.  
The Company has begun a process to divest its Yemen assets in 2013. 
ADDITIONAL MEASURES  
Funds Flow from Operations  
This document contains the term "funds flow from operations", which
should not be considered an alternative to or more meaningful than
"cash flow from operating activities" as determined in accordance
with IFRS. Funds flow from operations is a measure that represents
cash generated from operating activities before changes in non-cash
working capital. Management considers this a key measure as it
demonstrates TransGlobe's ability to generate the cash flow necessary
to fund future growth through capital investment. Funds flow from
operations may not be comparable to similar measures used by other
companies.  
Reconciliation of Funds Flow from Operations 


 
                                                 Three months ended March 31
----------------------------------------------------------------------------
($000s)                                                 2013            2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from operating activities                   51,900           1,771
Changes in non-cash working capital                  (15,895)         34,317
----------------------------------------------------------------------------
Funds flow from operations(i)                         36,005          36,088
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Funds flow from operations does not include interest costs. Interest    
    expense is included in financing costs on the Condensed Consolidated    
    Interim Statements of Earnings and Comprehensive Income. Cash interest  
    paid is reported as a financing activity on the Condensed Consolidated  
    Interim Statements of Cash Flows.                                       

 
Debt-to-funds flow ratio  
Debt-to-funds flow is a measure that is used to set the amount of
capital in proportion to risk. The Company's debt-to-funds flow ratio
is computed as long-term debt, including the current portion, plus
convertible debentures over funds flow from operations for the
trailing twelve months. Debt-to-funds flow may not be comparable to
similar measures used by other companies.  
Netback  
Netback is a measure that represents sales net of royalties (all
government interests, net of income taxes), operating expenses and
current taxes. Management believes that netback is a useful
supplemental measure to analyze operating performance and provide an
indication of the results generated by the Company's principal
business activities prior to the consideration of other income and
expenses. Netback may not be comparable to similar measures used by
other companies.  
TRANSGLOBE'S BUSINESS  
TransGlobe is a Canadian-based, publicly traded, oil exploration and
production company whose activities are concentrated in two main
geographic areas: the Arab Republic of Egypt ("Egypt") and the
Republic of Yemen ("Yemen").  
SELECTED QUARTERLY FINANCIAL INFORMATION 


 
                                2013                  2012                  
----------------------------------------------------------------------------
($000s, except per share,                                                   
price and volume amounts)        Q-1       Q-4       Q-3       Q-2       Q-1
----------------------------------------------------------------------------
Average production volumes                                                  
 (Bopd)                       18,001    17,875    18,143    16,978    16,720
                                                                            
Average sales volumes                                                       
 (Bopd)                       17,909    19,148    17,124    16,978    16,720
Average price ($/Bbl)          99.21     98.70     96.88     95.84    104.78
Oil sales                    159,915   173,864   152,624   148,078   159,426
Oil sales, net of                     
                                      
 royalties                    79,366    92,281    74,540    73,633    77,212
Cash flow from operating                                                    
 activities                   51,900    65,250     2,368    24,603     1,771
Funds flow from                                                             
 operations(i)                36,005    46,839    35,397    35,174    36,088
Funds flow from operations                                                  
 per share                                                                  
 - Basic                        0.49      0.63      0.49      0.48      0.49
 - Diluted                      0.44      0.57      0.47      0.43      0.48
Net earnings                  24,878    34,836    11,774    30,149    10,975
Net earnings - diluted        21,427    32,156    11,774    20,821    10,975
Net earnings per share                                                      
 - Basic                        0.34      0.48      0.16      0.41      0.15
 - Diluted                      0.26      0.39      0.16      0.25      0.15
Total assets                 672,675   653,425   635,529   620,937   648,012
Cash and cash equivalents    112,180    82,974    45,732    72,230   127,313
Convertible debentures        93,842    98,742   102,920    95,043   105,835
Total long-term debt,                                                       
 including current portion    17,097    16,885    31,878    37,855    57,910
Debt-to-funds flow                                                          
 ratio(ii)                       0.7       0.8       1.0       1.0       1.2
----------------------------------------------------------------------------
 
                                                 2011                       
----------------------------------------------------------------------------
($000s, except per share,                                                   
price and volume amounts)               Q-4             
 Q-3             Q-2
----------------------------------------------------------------------------
Average production volumes                                                  
 (Bopd)                              12,054           13,406          11,826
                                                                            
Average sales volumes                                                       
 (Bopd)                              12,054           13,406          11,826
Average price ($/Bbl)                 99.12           104.00          105.57
Oil sales                           109,919          128,265         113,615
Oil sales, net of                                                           
 royalties                           60,609           71,769          62,513
Cash flow from operating                                                    
 activities                           2,330            3,456          54,354
Funds flow from                                                             
 operations(i)                       26,469           37,980          30,597
Funds flow from operations                                                  
 per share                                                                  
 - Basic                               0.36             0.52            0.42
 - Diluted                             0.35             0.51            0.40
Net earnings                         30,519           26,110          21,874
Net earnings - diluted               30,519           26,110          21,874
Net earnings per share                                                      
 - Basic                               0.42             0.36            0.30
 - Diluted                             0.41             0.35            0.29
Total assets                        525,806          465,262         420,956
Cash and cash equivalents            43,884          105,007         122,659
Convertible debentures                    -                -               -
Total long-term debt,                                                       
 including current portion           57,609           57,303          56,998
Debt-to-funds flow                                                          
 ratio(ii)                              0.5              0.5             0.6
----------------------------------------------------------------------------
(i)  Funds flow from operations is a measure that represents cash       
     generated from operating activities before changes in non-cash     
     working capital and may not be comparable to measures used by other
     companies.                                                         
(ii) Debt-to-funds flow ratio is measure that represents total long-term
     debt (including the current portion) plus convertible debentures   
     over funds flow from operations from the trailing 12 months and may
     not be comparable to measures used by other companies.             

 
During the first quarter of 2013, TransGlobe has: 


 
--  Experienced a significant increase in cash flow from operating
    activities from Q1-2012 due to increased collections on accounts
    receivable (collected $75.2 million in Egypt Q1-2013); 
    
--  Maintained a strong financial position, reporting a debt-to-funds flow
    ratio of 0.7 at March 31, 2013; 
    
--  Reported net earnings of $24.9 million; 
    
--  Achieved funds flow from operations of $36.0 million; and 
    
--  Spent $18.2 million on capital programs, which was funded entirely with
    funds flow from operations.

 
The accounting for the convertible debentures continued to have a
significant impact on important components of the Company's financial
statements: 


 
--  Reported an increase in net earnings of $13.9 million as compared to the
    first quarter of 2012. This increase was principally a result of the
    unrealized gain on convertible debentures of $3.0 million recognized in
    the first quarter of 2013, combined with an unrealized loss on
    convertible debentures of $7.8 million in the first quarter of 2012; and
    
--  Reported diluted earnings per share of $0.26 in Q1-2013, which varies
    significantly from basic earnings per share of $0.34. The prescribed
    calculation as required under IFRS resulted in a significant reduction
    in diluted earnings per share due to the effect of the convertible
    debentures. Diluted earnings per share prior to the dilutive effect of
    the convertible debentures was $0.33/share.

 
2013 TO 2012 NET EARNINGS VARIANCES 


 
                                                   $ Per Share              
                                            $000s      Diluted   % Variance 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q1-2012 net earnings                       10,975         0.15              
----------------------------------------------------------------------------
Cash items                                                                  
Volume variance                             8,958         0.12           81 
Price variance                             (8,469)       (0.10)         (77)
Royalties                                   1,665         0.02           15 
Expenses:                                                                   
Production and operating                   (2,566)       (0.03)         (23)
  Cash general and administrative            (273)           -           (2)
  Exploration                                 453         0.01            4 
  Current income taxes                        237            -            2 
  Realized foreign exchange gain                                            
   (loss)                                      (9)           -            - 
  Issue costs for convertible                                               
   debentures                               4,389         0.05           40 
  Interest on long-term debt                 (423)       (0.01)          (4)
Other income                                  (79)           -           (1)
----------------------------------------------------------------------------
Total cash items variance                   3,883         0.06           35 
----------------------------------------------------------------------------
Non-cash items                                                              
Unrealized derivative loss                    124            -            1 
Unrealized foreign exchange gain            1,155         0.01           11 
Depletion and depreciation                    569         0.01            5 
Unrealized gain (loss) on financial                                         
 instruments                               10,830         0.13           99 
Impairment loss                                16            -            - 
Stock-based compensation                     (138)           -           (1)
Deferred income taxes                      (2,573)       (0.03)         (23)
Deferred lease inducement                      (1)           -            - 
Amortization of deferred financing                                          
 costs                                         38            -            - 
----------------------------------------------------------------------------
Total non-cash items variance              10,020         0.12           92 
----------------------------------------------------------------------------
Q1-2013 net earnings                       24,878         0.33          127 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Other items affecting diluted                                               
 earnings per share                                                         
Con
vertible debentures                                   (0.07)         (54)
----------------------------------------------------------------------------
Q1-2013 net earnings per share -                                            
 diluted                                                  0.26           73 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Net earnings increased to $24.9 million in Q1-2013 compared to $11.0
million in Q1-2012, which was mostly due to decreased finance costs
combined with the positive effect of the change in unrealized
gain/loss on convertible debentures. The decrease in finance costs is
due to the issue costs for convertible debentures that were incurred
in Q1-2012 for which there is no corresponding expense in Q1-2013.
The earnings effect of increased sales volumes and decreased
royalties were offset by reduced prices and increased operating
costs. 
BUSINESS ENVIRONMENT  
The Company's financial results are influenced by fluctuations in
commodity prices, including price differentials. The following table
shows select market benchmark prices and foreign exchange rates: 


 
                                        2013              2012              
----------------------------------------------------------------------------
                                         Q-1     Q-4     Q-3     Q-2     Q-1
----------------------------------------------------------------------------
Dated Brent average oil price                                               
 ($/Bbl)                              112.59  109.97  109.61  108.19  118.49
U.S./Canadian Dollar average                                                
 exchange rate                         1.009   0.991   0.995   1.006   1.001
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The average price of Dated Brent oil was relatively unchanged in 2013
compared with 2012. All of the Company's production is priced based
on Dated Brent and shared with the respective governments through
PSCs. When the price of oil increases, it takes fewer barrels to
recover costs (cost recovery barrels) which are assigned 100% to the
Company. The contracts provide for cost recovery per quarter up to a
maximum percentage of total revenue. If the eligible cost recovery is
less than the maximum defined cost recovery, the difference is
defined as "excess". In Egypt, the Contractor's share of excess
ranges between 0% and 30% depending on the contract. In Yemen, the
excess is treated as production sharing oil. If the eligible cost
recovery exceeds the maximum allowed percentage, the unclaimed cost
recovery is carried forward to the next quarter. Typically maximum
cost recovery or cost oil ranges from 25% to 30% in Egypt and 50% to
60% in Yemen. The balance of the production after maximum cost
recovery is shared with the respective governments (production
sharing oil). Depending on the contract, the government receives 70%
to 86% of the production sharing oil or profit oil. Production
sharing splits are set in each contract for the life of the contract.
Typically the government's share of production sharing oil increases
when production exceeds pre-set production levels in the respective
contracts. During times of increased oil prices, the Company receives
less cost oil and may receive more production sharing oil. For
reporting purposes, the Company records the respective government's
share of production as royalties and taxes (all taxes are paid out of
the Government's share of production).  
During the political change in Egypt, business processes and
operations have generally proceeded as normal. The Company continues
to expand its footprint in Egypt as evidenced by the closing of
recent business acquisitions. While exploration and development
activities have generally been uninterrupted, the Company has
continued to experience delays in the collection of accounts
receivable from the Egyptian Government due to the economic impact
caused by the instability in the country. The Company is in continual
discussions with the Egyptian Government to determine solutions to
the delayed cash collections, and expects to recover the accounts
receivable balance in full. During the first quarter of 2013, the
Company collected $75.2 million in accounts receivable from the
Egyptian Government. 
OPERATING RESULTS AND NETBACK  
Daily Volumes, Working Interest before Royalties and Other (Bopd)  
Sales Volumes 


 
                                                 Three months ended March 31
----------------------------------------------------------------------------
                                                       2013             2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                17,667           16,423
Yemen                                                   242              297
----------------------------------------------------------------------------
Total Company                                        17,909           16,720
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Netback 


 
Consolidated                                                                
                                                 Three months ended March 31
----------------------------------------------------------------------------
                                                    2013                2012
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $     $/Bbl         $     $/Bbl
-----------------------------------------------------------
-----------------
----------------------------------------------------------------------------
Oil sales                              159,915     99.21   159,426    104.78
Royalties                               80,549     49.97    82,214     54.03
Current taxes                           23,074     14.32    23,311     15.32
Production and operating expenses       14,532      9.02    11,966      7.86
----------------------------------------------------------------------------
Netback                                 41,760     25.90    41,935     27.57
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                                       
                                                 Three months ended March 31
----------------------------------------------------------------------------
                                                    2013                2012
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              157,489     99.05   156,190    104.51
Royalties                               79,644     50.09    80,733     54.02
Current taxes                           22,790     14.33    22,829     15.28
Production and operating expenses       12,731      8.01     9,948      6.66
----------------------------------------------------------------------------
Netback                                 42,324     26.62    42,680     28.55
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The netback per Bbl in Egypt decreased 7% in Q1-2013 compared with
Q1-2012. The main reason for the decreased netback was the effect of
a 5% reduction in realized oil prices as compared to Q1-2012.
Production and operating expenses increased by 20% on a per Bbl
basis, which was principally a result of increased fuel costs and
third party oil treatment fees. The increase in production and
operating expenses resulted in an increase in cost oil allocated to
the Company, which reduced royalties and taxes on a per Bbl basis. In
Q1-2013, the average selling price was $13.54/Bbl lower than the
average Dated Brent oil price for the year of $112.59/Bbl which is a
result of a gravity/quality adjustment.  
Royalties and taxes as a percentage of revenue were 65% in Q1-2013,
consistent with the 66% ratio reported in Q1-2012. 


 
Yemen                                                                       
                                                Three months ended March 31 
----------------------------------------------------------------------------
                                                   2013                2012 
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                               2,426    111.39     3,236    119.73 
Royalties                                 905     41.55     1,481     54.80 
Current taxes                             284     13.04       482     17.83 
Production and operating expenses       1,801     82.69     2,018     74.67 
----------------------------------------------------------------------------
Netback                                  (564)   (25.89)     (745)   (27.57)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
In Yemen, the Company experienced a negative netback per Bbl of
$25.89 in the three months ended March 31, 2013. Operating expenses
on a per Bbl basis remained elevated in Q1-2013 as a result of
production being shut-in on Block S-1 for the entire quarter. While
production volumes were down, the Company continued to incur the
majority of the operating costs on Block S-1 which significantly
increased operating expenses per Bbl. The Block S-1 operating costs
will be recovered from cost oil when production resumes. 
Royalties and taxes as a percentage of revenue decreased to 49% from
61% in the three months ended March 31, 2013, compared with 2012. 
GENERAL AND ADMINISTRATIVE EXPENSES ("G&A") 


 
                                                Three months ended March 31 
----------------------------------------------------------------------------
                                                   2013                2012 
----------------------------------------------------------------------------
(000s, except Bbl amounts)                  $     $/Bbl         $     $/Bbl 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
G&A (gross)                             6,907      4.29     6,271      4.12 
Stock-based compensation                1,278      0.79     1,140      0.75 
Capitalized G&A and overhead                                                
 recoveries                            (1,085)    (0.67)     (723)    (0.47)
----------------------------------------------------------------------------
G&A (net)                               7,100      4.41     6,688      4.40 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
G&A expenses (net) increased 6% (no change on a per Bbl basis) in
Q1-2013 compared with Q1-2012. The increase is principally due to
increased costs associated with the acquisitions that were completed
in Q2-2012 and Q3-2012. 
FINANCE COSTS  
Finance costs for the three-month period ended March 31, 2013
decreased to $2.2 million compared with $6.2 million in the same
period in 2012. The Company incurred convertible debenture issue
costs of $4.4 million during the three months ended March 31, 2012,
which caused a significant increase in finance costs during that
period. The decrease in finance costs from Q1-2012 to Q1-2013 relates
principally to the absence of the convertible debenture issue costs
in the current period. 


 
----------------------------------------------------------------------------
                                                 Three months ended March 31
----------------------------------------------------------------------------
(000s)                                                 2013             2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest expense                           $          1,940 $          1,517
Issue costs for convertible debentures                    -            4,389
Amortization of deferred financing costs                262              300
----------------------------------------------------------------------------
Finance costs                              $          2,202 $          6,206
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The Company had $18.5 million ($17.1 million net of unamortized
deferred financing costs) of long-term debt outstanding at March 31,
2013 (March 31, 2012 - $60.0 million). The long-term debt that was
outstanding at March 31, 2013 bore interest at LIBOR plus an
applicable margin that varies from 3.75% to 4.75% depending on the
amount drawn under the facility.  
In February 2012, the Company sold, on a bought-deal basis, C$97.8
mill
ion ($97.9 million) aggregate principal amount of convertible
unsecured subordinated debentures with a maturity date of March 31,
2017. The debentures are convertible at any time and from time to
time into common shares of the Company at a price of C$15.10 per
common share. The debentures are not redeemable by the Company on or
before March 31, 2015 other than in limited circumstances in
connection with a change of control of TransGlobe. After March 31,
2015 and prior to March 31, 2017, the debentures may be redeemed by
the Company at a redemption price equal to the principal amount plus
accrued and unpaid interest, provided that the weighted-average
trading price of the common shares for the 20 consecutive trading
days ending five trading days prior to the date on which notice of
redemption is provided is not less than 125 percent of the conversion
price (or C$18.88 per common share). Interest of 6% is payable
semi-annually in arrears on March 31 and September 30. The second
semi-annual interest payment was made on March 31, 2013. At maturity
or redemption, the Company has the option to settle all or any
portion of principal obligations by delivering to the debenture
holders sufficient common shares to satisfy these obligations. 
DEPLETION AND DEPRECIATION ("DD&A") 


 
                                                 Three months ended March 31
----------------------------------------------------------------------------
                                                    2013                2012
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                   10,890      6.85    11,301      7.56
Yemen                                      202      9.27       248      9.18
Corporate                     
              88         -       200         -
----------------------------------------------------------------------------
                                        11,180      6.94    11,749      7.72
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
In Egypt, DD&A decreased 9% on a per Bbl basis in the three months
ended March 31, 2013 compared to 2012. This decrease is mostly due to
proved plus probable reserve additions during the third and fourth
quarters of 2012.  
In Yemen, DD&A remained consistent on a per Bbl basis in the three
months ended March 31, 2013 compared to 2012. 
CAPITAL EXPENDITURES 


 
                                                 Three months ended March 31
----------------------------------------------------------------------------
($000s)                                                 2013            2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                 17,688           4,415
Yemen                                                    495              18
Corporate                                                 10              39
----------------------------------------------------------------------------
Total                                                 18,193           4,472
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
In Egypt, total capital expenditures in 2013 were $17.7 million (2012
- $4.4 million). During Q1-2013, the Company drilled five wells in
West Gharib (four oil wells at Arta and one dry hole at East Arta).
The Company also drilled four oil wells at West Bakr and two dry
holes at South Mariut. Capital expenditures in Q1-2013 are behind
plan primarily due to delays in the South Alamein drilling program.  
OUTSTANDING SHARE DATA  
As at March 31, 2013, the Company had 73,872,738 common shares issued
and outstanding and 7,068,901 stock options issued and outstanding,
which are exercisable in accordance with their terms into a maximum
of 7,068,901 common shares of the Company.  
LIQUIDITY AND CAPITAL RESOURCES  
Liquidity describes a company's ability to access cash. Companies
operating in the upstream oil and gas industry require sufficient
cash in order to fund capital programs necessary to maintain and
increase production and reserves, to acquire strategic oil and gas
assets and to repay debt. TransGlobe's capital programs are funded
principally by cash provided from operating activities. A key measure
that TransGlobe uses to evaluate the Company's overall financial
strength is debt-to-funds flow from operations (calculated on a
12-month trailing basis). TransGlobe's debt-to-funds flow from
operations ratio, a key short-term leverage measure, remained strong
at 0.7 times at March 31, 2013 (December 31, 2012 - 0.8). This was
within the Company's target range of no more than 2.0 times.  
The following table illustrates TransGlobe's sources and uses of cash
during the periods ended March 31, 2013 and 2012: 


 
Sources and Uses of Cash                                                    
                                                Three months ended March 31 
----------------------------------------------------------------------------
($000s)                                                2013            2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash sourced                                                                
 Funds flow from operations(i)                       36,005          36,088 
 Issue of convertible debentures                          -          97,851 
 Exercise of options                   
                 396             268 
 Other                                                    -             507 
----------------------------------------------------------------------------
                                                     36,401         134,714 
Cash used                                                                   
 Capital expenditures                                18,193           4,472 
 Deferred financing costs                                50               - 
 Transfer to restricted cash                              1               1 
 Finance costs                                        3,373           5,196 
 Other                                                  580             164 
----------------------------------------------------------------------------
                                                     22,197           9,833 
----------------------------------------------------------------------------
                                                     14,204         124,881 
Changes in non-cash working capital                  15,002         (41,452)
----------------------------------------------------------------------------
Increase (decrease) in cash and cash                                        
 equivalents                                         29,206          83,429 
Cash and cash equivalents - beginning of                                    
 peri
od                                              82,974          43,884 
----------------------------------------------------------------------------
Cash and cash equivalents - end of period           112,180         127,313 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Funds flow from operations is a measure that represents cash generated  
    from operating activities before changes in non-cash working capital,   
    and may not be comparable to measures used by other companies.          

 
Funding for the Company's capital expenditures was provided by funds
flow from operations. The Company expects to fund its 2013
exploration and development program of $129.0 million and contractual
commitments through the use of working capital and cash generated by
operating activities. Fluctuations in commodity prices, product
demand, foreign exchange rates, interest rates and various other
risks including timely collections of accounts receivable from the
Egyptian Government may impact capital resources.  
Working capital is the amount by which current assets exceed current
liabilities. At March 31, 2013, the Company had working capital of
$278.0 million (December 31, 2012 - $262.2 million). The increase to
working capital in Q1-2013 is due almost entirely to increased cash
and cash equivalents, partially offset by a decrease in accounts
receivable. The majority of the Company's accounts receivable are due
from Egyptian General Petroleum Company ("EGPC"), and the recent
political changes in the country have increased EGPC's credit risk,
which has increased the Company's credit risk. The Company is in
continual discussions with EGPC and the Egyptian Government to
determine solutions to the delayed cash collections, and expects to
recover the entire accounts receivable balance in full. During the
first quarter of 2013, collections of accounts receivable outpaced
billings, resulting in a net decrease in accounts receivable from
Q4-2012 to Q1-2013 of $16.4 million.   
At March 31, 2013, TransGlobe had $71.0 million available under a
Borrowing Base Facility of which $18.5 million was drawn. As
repayments on the Borrowing Base Facility are not expected to
commence until the second quarter of 2014, the entire balance is
presented as a long-term liability on the Condensed Consolidated
Interim Balance Sheets. Repayments will be made as required according
to the scheduled reduction of the facility. 


 
($000s)                                  March 31, 2013   December 31, 2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Bank debt                                        18,450              18,450 
Deferred financing costs                         (1,353)             (1,565)
----------------------------------------------------------------------------
Long-term debt (net of deferred                                             
 financing costs)                                17,097              16,885 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
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                    Less                     More
                 in Financial  Contractual     than     1-3     4-5     than
                 Statements     Cash Flows   1 year   years   years  5 years
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts payable                                                            
 and accrued     Yes -                                                      
 liabilities     Liability          45,145   45,145       -       -        -
Long-term debt   Yes -                                                      
                 Liability          18,450        -  18,450       -        -
Convertible      Yes -                                                      
 debentures      Liability          93,842        -       -  93,842        -
Office and                                                                  
 equipment                                                                  
 leases (3)      No                 14,851    7,424   2,978   2,062    2,387
Minimum work                                                                
 commitments (4) No                  4,350    4,350       -       -        -
----------------------------------------------------------------------------
Total                              176,638   56,919  21,428  95,904    2,387
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Payments excluding ongoing operating costs, finance costs and payments  
    made to settle derivatives.                                             
(2) Payments denominated in foreign currencies have been translated at March
    31, 2013 exchange rates.                                                
(3) Office and equipment leases includes all drilling rig contracts         
(4) Minimum work commitments include contracts awarded for capital projects 
    and those commitments related to exploration and drilling obligations   

 
Pursuant to the PSC for Block 75 in Yemen, the Contractor (Joint
Interest Partners) has a remaining minimum financial commitment of
$3.0 million ($0.8 million to TransGlobe) for one exploration well in
the first exploration period, which has been extended to March 9,
2014.  
Pursuant to the August 18, 2008 asset purchase agreement for a 25%
financial interest in eight development leases on the West Gharib
Concession in Egypt, the Company has committed to paying the vendor a
success fee up to a maximum of $2.0 million if incremental reserve
thresholds are reached in the South Rahmi development lease, to be
evaluated annually. Based on the Company's annual Reserve Report
effective December 31, 2012, no additional fees are due in 2013.  
Pursuant to the June 7, 2012 share purchase agreement for a 60%
operated interest in the South Mariut concession in Egypt, the
Contractor (Joint Interest Partners) had a minimum financial
commitment of $9.0 million ($5.4 million to TransGlobe) for three
exploration wells which were commitments from the original
exploration period and were carried into the current three-year
extension period. The Company issued three $3.0 million letters of
credit to guarantee performance under the extension period. Two wells
were drilled during the quarter, and as at quarter end the $3.0
million letter of credit for the first well was released, which
reduced the outstanding letters of credit to a total of $6.0 million
($3.6 million to TransGlobe). Subsequent to the end of the quarter
the Company drilled the third commitment well.  
Pursuant to the June 7, 2012 and July 26, 2012 share purchase
agreements for a combined 100% operated interest in the South Alamein
PSC in Egypt, the Company has a commitment to drill one well (all
financial commitments have been met) prior to the termination of the
final two-year extension period, which expires on April 5, 2014.  
In the normal course of its operations, the Company may be subject to
litigations 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 March 31, 2013.  
CHANGES IN ACCOUNTING POLICIES  
New accounting policies  
IFRS 10 (new) "Consolidated Financial Statements" 
In May 2011, the IASB issued IFRS 10 to replace SIC-12,
"Consolidation - Special Purpose Entities", and parts of IAS 27,
"Consolidated and Separate Financial Statements". IFRS 10 establishes
principles for the presentation and preparation of consolidated
fina
ncial statements when an entity controls one or more other
entities. IFRS 10 is effective for annual periods beginning on or
after January 1, 2013; accordingly, the Company has adopted this
standard for the year ending December 31, 2013. The adoption of this
standard had no material impact on the Condensed Consolidated Interim
Financial Statements.  
IFRS 11 (new) "Joint Arrangements"  
In May 2011, the IASB issued IFRS 11 to replace IAS 31, "Interests in
Joint Ventures", and SIC-13, "Jointly Controlled Entities -
Non-monetary Contributions by Venturers". IFRS 11 requires entities
to follow the substance rather than legal form of a joint arrangement
and removes the choice of accounting method. IFRS 11 is effective for
annual periods beginning on or after January 1, 2013; accordingly,
the Company has adopted this standard for the year ending December
31, 2013. The adoption of this standard had no material impact on the
Condensed Consolidated Interim Financial Statements.  
IFRS 12 (new) "Disclosure of Interests in Other Entities"  
In May 2011, the IASB issued IFRS 12, which aggregates and amends
disclosure requirements included within other standards. IFRS 12
requires entities to provide disclosures about subsidiaries, joint
arrangements, associates and unconsolidated structured entities. IFRS
12 is effective for annual periods beginning on or after January 1,
2013; accordingly, the Company has adopted this standard for the year
ending December 31, 2013. The adoption of this standard had no
material impact on the Condensed Consolidated Interim Financial
Statements.  
IFRS 13 (new) "Fair Value Measurement"  
In May 2011, the IASB issued IFRS 13 to clarify the definition of
fair value and provide guidance on determining fair value. IFRS 13
amends disclosure requirements included within other standards and
establishes a single framework for fair value measurement and
disclosure. IFRS 13 is effective for annual periods beginning on or
after January 1, 2013; accordingly, the Company has adopted this
standard for the year ending December 31, 2013. The adoption of this
standard had no material impact on the Condensed Consolidated Interim
Financial Statements.  
IAS 1 (revised) "Presentation of Financial Statements"  
In June 2011, the IASB issued amendments to IAS 1 to require separate
presentation for items of other comprehensive income that would be
reclassified to profit or loss in the future from those that would
not. These amendments are effective for annual periods beginning on
or after July 1, 2012; accordingly, the Company has adopted these
amendments for the year ending December 31, 2013. These amendments
had no material impact on the Condensed Consolidated Interim
Financial Statements.  
IAS 19 (revised) "Employee Benefits"  
In June 2011, the IASB issued amendments to IAS 19 to revise certain
aspects of the accounting for pension plans and other benefits. The
amendments eliminate the corridor method of accounting for defined
benefit plans, change the recognition pattern of gains and losses,
and require additional disclosures. These amendments are effective
for annual periods beginning on or after January 1, 2013;
accordingly, the Company has adopted these amendments for the year
ending December 31, 2013. These amendments had no material impact on
the Condensed Consolidated Interim Financial Statements.  
IAS 28 (revised) "Investments in Associates and Joint Ventures"  
In May 2011, the IASB issued amendments to IAS 28 to prescribe the
accounting for investments in associates and set out the requirements
for applying the equity method when accounting for investments in
associates and joint ventures. These amendments are effective for
annual periods beginning on or after January 1, 2013; accordingly,
the Company has adopted these amendments for the year ending December
31, 2013. These amendments had no material impact on the Condensed
Consolidated Interim Financial Statements.  
Future changes to accounting policies  
As at the date of authorization of the Condensed Consolidated Interim
Financial Statements the following Standards and Interpretations
which have not yet been applied in the Condensed Consolidated Interim
Financial Statements have been issued but are not yet effective:  
IFRS 9 (revised) "Financial Instruments: Classification and
Measurement"  
In November 2009, the IASB issued IFRS 9 as part of its project to
replace IAS 39, "Financial Instruments: Recognition and Measurement".
In October 2010, the IASB updated IFRS 9 to include the requirements
for financial liabilities. IFRS 9 replaces the multiple rules in IAS
39 with a single approach to determine whether a financial asset is
measured at amortized cost or fair value. The approach in IFRS 9 is
based on how an entity manages its financial instruments in the
context of its business model and the contractual cash flow
characteristics of the financial assets. IFRS 9 is effective for
annual periods beginning on or after January 1, 2015. The Company is
currently evaluating the impact of this standard on its Condensed
Consolidated Interim Financial Statements.  
IFRS 10 (revised) "Consolidated Financial Statements"  
In October 2012, the IASB issued amendments to IFRS 10 to define
investment entities, provide an exception to the consolidation of
investment entities by a parent company, and prescribe fair value
measurement to measure such entities. These amendments are effective
for annual periods beginning on or after January 1, 2014. The Company
is currently evaluating the impact of these amendments on its
Condensed Consolidated Interim Financial Statements.  
IFRS 12 (revised) "Disclosure of interests in other entities"  
In October 2012, the IASB issued amendments to IFRS 12 to prescribe
disclosures about significant judgments and assumptions used to
determine whether an entity is an investment entity as well as other
disclosures regarding the measurement of such entities. These
amendments are effective for annual periods beginning on or after
January 1, 2014. The Company is currently evaluating the impact of
these amendments on its Condensed Consolidated Interim Financial
Statements.  
IAS 32 (revised) "Financial Instruments: Presentation"  
In December 2011, the IASB issued amendments to IAS 32 to address
inconsistencies when applying the offsetting criteria. These
amendments clarify some of the criteria required to be met in order
to permit the offsetting of financial assets and financial
liabilities. These amendments are effective for annual periods
beginning on or after January 1, 2014. The Company is currently
evaluating the impact of these amendments to its Condensed
Consolidated Interim Financial Statements.  
INTERNAL CONTROLS OVER FINANCIAL REPORTING  
TransGlobe's management designed and implemented internal controls
over financial reporting, as defined under National Instrument 52-109
Certification of Disclosure in Issuers' Annual and Interim Filings,
of the Canadian Securities Administrators and as defined in Rule
13a-15 under the US Securities Exchange Act of 1934. Internal
controls over financial reporting is a process designed under the
supervision of the Chief Executive Officer and the Chief Financial
Officer and effected by the Board of Directors, management and other
personnel to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS, focusing in particular
on controls over information contained in the annual and interim
financial statements. Due to its inherent limitations, internal
controls over financial reporting may not prevent or detect
misstatements on a timely basis. A system of internal controls over
financial reporting, no matter how well conceived or operated, can
provide only reasonable, not absolute, assurance that the objectives
of the internal controls over financial reporting are met. Also,
projections of any evaluation of the effectiveness of internal
control over financial 
reporting to future periods are subject to the
risk that the controls may become inadequate because of changes in
conditions, or that the degree of compliance with policies or
procedures may deteriorate.  
No changes were made to the Company's internal control over financial
reporting during the period ended March 31, 2013 that have materially
affected, or are reasonably likely to materially affect, the internal
controls over financial reporting. 
Condensed Consolidated Interim Statements of Earnings and
Comprehensive Income  
(Unaudited - Expressed in thousands of U.S. Dollars, except per share
amounts) 


 
                                                Three months ended March 31 
                                                      2013             2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
REVENUE                                                                     
  Oil sales, net of royalties              $        79,366  $        77,212 
  Derivative gain (loss) on commodity                                       
   contracts                                             -             (124)
  Finance revenue                                       46              125 
----------------------------------------------------------------------------
                                                    79,412           77,213 
----------------------------------------------------------------------------
                                                                            
EXPENSES                                                                    
  Production and operating                          14,532           11,966 
  General and administrative                         7,100            6,688 
  Foreign exchange (gain) loss                      (1,518)            (372)
  Finance costs                                      2,202            6,206 
  Exploration                                          107              560 
  Depletion, depreciation and amortization          11,180           11,749 
  Unrealized (gain) loss on financial                                       
   instruments                                      (2,990)           7,840 
  Impairment of exploration and evaluation                                  
   assets                                                -               16 
----------------------------------------------------------------------------
                                                    30,613           44,653 
----------------------------------------------------------------------------
                                                                            
Earnings before income taxes                        48,799           32,560 
----------------------------------------------------------------------------
                                                                            
Income tax expense (recovery) - current             23,074           23,311 
  - deferred                                           847           (1,726)
----------------------------------------------------------------------------
                                                    23,921           21,585 
----------------------------------------------------------------------------
NET EARNINGS AND COMPREHENSIVE INCOMEFOR                                    
 THE PERIOD                                $        24,878  $        10,975 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Earnings per share                                                          
  Basic                                    $          0.34  $          0.15 
  Diluted                                  $          0.26  $          0.15 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Condensed Consolidated Interim Balance Sheets  
(Unaudited - Expressed in thousands of U.S. Dollars) 


 
                                                    As at              As at
                                           March 31, 2013  December 31, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ASSETS                                                                      
Current                                                                     
  Cash and cash equivalents              $        112,180 $           82,974
  Accounts receivable                             204,625            221,017
  Prepaids and other                                5,909              6,813
  Product inventory                                   428                  -
----------------------------------------------------------------------------
                                                  323,142            310,804
Non-Current                                                                 
  Restricted cash                                     783                782
  Intangible exploration and evaluation                                     
   assets                                          51,890             48,414
  Property and equipment                                                    
    Petroleum properties                          284,533            280,895
    Other assets                                    4,147              4,350
  Goodwill                                          8,180              8,180
----------------------------------------------------------------------------
                                         $        672,675 $          653,425
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
LIABILITIES                                                                 
Current                                                                     
  Accounts payable and accrued                                              
   liabilities                           $         45,145 $           48,587
----------------------------------------------------------------------------
                                                   45,145             48,587
Non-Current                                                                 
  Long-term debt                                   17,097             16,885
  Convertible debentures                           93,842             98,742
  Deferred taxes                                   53,210             52,363
  Other long-term liabilities                         940                988
----------------------------------------------------------------------------
                                                  210,234            217,565
----------------------------------------------------------------------------
                                                                            
SHAREHOLDERS' EQUITY                                                        
  Share capital                                   159,259            158,721
  Contributed surplus                              12,879             11,714
  Retained earnings                               290,303            265,425
----------------------------------------------------------------------------
                                                  462,441            435,860
----------------------------------------------------------------------------
                                         $        672,675 $          653,425
----------------------------------------------------------------------------
---------------------------
-------------------------------------------------

 
Condensed Consolidated Interim Statement of Changes in Shareholders'
Equity  
(Unaudited - Expressed in thousands of U.S. Dollars) 


 
                                                Three months ended March 31 
                                                       2013            2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Share Capital                                                               
  Balance, beginning of period               $      158,721  $      154,263 
  Stock options exercised                               396             268 
  Transfer from contributed surplus on                                      
   exercise of options                                  142             100 
----------------------------------------------------------------------------
  Balance, end of period                     $      159,259  $      154,631 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Contributed Surplus                                                         
  Balance, beginning of period               $       11,714  $        8,538 
  Share-based compensation expense                    1,307             814 
  Transfer to share capital on exercise of                                  
   options                                             (142)           (100)
----------------------------------------------------------------------------
  Balance, end of period                     $       12,879  $        9,252 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Retained Earnings                                                           
  Balance, beginning of period               $      265,425  $      177,691 
  Net earnings and total comprehensive                                      
   income                                            24,878          10,975 
----------------------------------------------------------------------------
  Balance, end of period                     $      290,303  $      188,666 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Condensed Consolidated Interim Statements of Cash Flows  
(Unaudited - Expressed in thousands of U.S. Dollars) 


 
                                                Three months ended March 31 
                                                       2013            2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CASH FLOWS RELATED TO THE                                                   
 FOLLOWINGACTIVITIES:                                                       
                                                                            
OPERATING                                                                   
  Net earnings for the period                $       24,878  $       10,975 
  Adjustments for:                                                          
    Depletion, depreciation and amortization         11,180          11,749 
    Deferred lease inducement                           115             114 
    Impairment of exploration and evaluation                                
     costs                                                -              16 
    Stock-based compensation                          1,278           1,140 
    Finance costs                                     2,202           6,206 
    Income tax expense                               23,921          21,585 
    Unrealized (gain) loss on commodity                                     
     contracts                                            -             124 
    Unrealized (gain) loss on financial                                     
     instruments                                     (2,990)          7,840 
    Unrealized (gain) loss on foreign                                       
     currency translation                            (1,505)           (350)
  Income taxes paid                                 (23,074)        (23,311)
  Changes in non-cash working capital                15,895         (34,317)
----------------------------------------------------------------------------
Net cash generated by (used in) operating                                   
 activities                                          51,900           1,771 
----------------------------------------------------------------------------
                                                                            
INVESTING                                                                   
  Additions to intangible exploration and                                   
   evaluation assets                                 (3,476)           (271)
  Additions to petroleum properties                 (14,677)         (3,961)
  Additions to other assets                             (40)           (240)
  Changes in restricted cash                             (1)             (1)
  Changes in non-cash working capital                  (893)         (7,940)
----------------------------------------------------------------------------
Net cash generated by (used in) investing                                   
 activities                                         (19,087)        (12,413)
----------------------------------------------------------------------------
                                                                            
FINANCING                                                                   
  Issue of common shares for cash                       396             268 
  Financing costs                                       (50)              - 
  Interest paid                                      (3,373)           (807)
  Issue of convertible debentures                         -          97,851 
  Issue costs for convertible debentures                  -          (4,389)
  Increase (decrease) in other long-term                                    
   liabilities                                         (144)           (164)
  Changes in non-cash working capital                     -             805 
----------------------------------------------------------------------------
Net cash generated by (used in) financing                                   
 activities                                          (3,171)         93,564 
----------------------------------------------------------------------------
Currency translation differences relating to                                
 cash and cash equivalents                             (436)            507 
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND                                         
 CASHEQUIVALENTS                                     29,206          83,429 
CASH AND CASH EQUIVALENTS, BEGINNING OF                                     
 PERIOD                                              82,974          43,884 
----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD     $      112,180  $      127,313 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
TransGlobe Energy Corporation is a Calgary-based, growth-oriented oil
and gas exploration and development company focused on the 
Middle
East/North Africa region with production operations in the Arab
Republic of Egypt and the Republic of Yemen. TransGlobe's common
shares trade on the Toronto Stock Exchange under the symbol TGL and
on the NASDAQ Exchange under the symbol TGA. 
Cautionary Statement to Investors:  
This news release may include certain statements that may be deemed
to be "forward-looking statements" within the meaning of the U.S.
Private Securities Litigation Reform Act of 1995. Such statements
relate to possible future events. All statements other than
statements of historical fact may be forward-looking statements.
Forward-looking statements are often, but not always, identified by
the use of words such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions. These statements involve known and
unknown risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in such
forward-looking statements. Although TransGlobe's forward-looking
statements are based on the beliefs, expectations, opinions and
assumptions of the Company's management on the date the statements
are made, such statements are inherently uncertain and provide no
guarantee of future performance. In particular, this press release
contains forward-looking statements regarding the Company's
appraisal, development and evaluation plans and the focus of the
Company's exploration budget. In addition, information and statements
relating to "resources" are deemed to be forward-looking information
and statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the resources described exist
in the quantities predicted or estimated, and that the resources
described can be profitably produced in the future. Actual results
may differ materially from TransGlobe's expectations as reflected in
such forward-looking statements as a result of various factors, many
of which are beyond the control of the Company. 
These factors include, but are not limited to, unforeseen changes in
the rate of production from TransGlobe's oil and gas properties,
changes in price of crude oil and natural gas, adverse technical
factors associated with exploration, development, production or
transportation of TransGlobe's crude oil and natural gas reserves,
changes or disruptions in the political or fiscal regimes in
TransGlobe's areas of activity, changes in tax, energy or other laws
or regulations, changes in significant capital expenditures, delays
or disruptions in production due to shortages of skilled manpower,
equipment or materials, economic fluctuations, and other factors
beyond the Company's control. With respect to forward-looking
statements contained in this press release, assumptions have been
made regarding, among other things: the Company's ability to obtain
qualified staff and equipment in a timely and cost-efficient manner;
the regulatory framework governing royalties, taxes and environmental
matters in the jurisdictions in which the Company conducts and will
conduct its business; future capital expenditures to be made by the
Company; future sources of funding for the Company's capital
programs; geological and engineering estimates in respect of the
Company's reserves and resources; and the geography of the areas in
which the Company is conducting exploration and development
activities. TransGlobe does not assume any obligation to update
forward-looking statements if circumstances or management's beliefs,
expectations or opinions should change, other than as required by
law, and investors should not attribute undue certainty to, or place
undue reliance on, any forward-looking statements. Please consult
TransGlobe's public filings at www.sedar.com and
www.sec.gov/edgar.shtml for further, more detailed information
concerning these matters, including additional risks related to
TransGlobe's business. 
Contacts:
TransGlobe Energy Corporation
Scott Koyich
Investor Relations
(403) 264-9888
investor.relations@trans-globe.com
www.trans-globe.com