TransGlobe Energy Corporation Announces Second Quarter 2013 Financial and Operating Results

TransGlobe Energy Corporation Announces Second Quarter 2013 Financial and 
Operating Results 
CALGARY, ALBERTA -- (Marketwired) -- 08/12/13 -- TransGlobe Energy
Corporation (TSX:TGL) (NASDAQ:TGA) ("TransGlobe" or the "Company") is
pleased to announce its financial and operating results for the three
and six months ended June 30, 2013. All dollar values are expressed
in United States dollars unless otherwise stated.   


 
--  Second quarter production averaged 18,417 Bopd (18,539 Bopd sales);  
    
--  Second quarter funds flow of $32.9 million;  
    
--  Second quarter earnings of $10.4 million (includes a $19.7 million
    impairment loss at South Mariut and a $9.1 million gain on convertible
    debentures);  
    
--  Spent $19.3 million on exploration and development during the quarter;  
    
--  Drilled 14 wells in the quarter resulting in 12 oil wells and 2 dry
    holes;  
    
--  Drilled 5 wells subsequent to the quarter resulting in 4 oil wells and 1
    gas/condensate well; 
    
--  Two new oil pool discoveries in West Bakr; 
    
--  Collected $31.7 million in accounts receivable from the Egyptian
    Government during the quarter;  
    
--  Ended the quarter with $101.4 million in cash and cash equivalents;
    positive working capital of $286.8 million or $189.8 million net of debt
    (including convertible debentures); 
    
--  Amended the Borrowing Base Facility to re-establish the borrowing base
    at $100 million and to extend the term of the facility to December 31,
    2017. 

 
A conference call to discuss TransGlobe's 2013 second quarter results
presented in this news release will be held Monday, August 12, 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 August 6,
2013). The webcast may be accessed at 
http://www.gowebcasting.com/4458. 
FINANCIAL AND OPERATING RESULTS  
(US$000s, except per share, price, volume amounts and % change) 


 
                   Three months ended June 30    Six months ended June 30   
----------------------------------------------------------------------------
Financial              2013      2012 % Change      2013      2012 % Change 
----------------------------------------------------------------------------
                                                                            
Oil revenue        152,646   148,078         3   312,561  307,504         2 
Oil revenue, net                                                            
 of royalties       76,223    73,633         4   155,589  150,845         3 
Derivative gain                                                             
 (loss) on                                                                  
 commodity                                                                  
 contracts               -        (1)      100         -     (125)      100 
Production and                                                              
 operating                                                                  
 expense            17,529    11,436        53    32,061   23,402        37 
General and                                                                 
 administrative                                                             
 expense             6,319     6,791        (7)   13,419   13,479         - 
Depletion,                                                                  
 depreciation and                                                           
 amortization                                                               
 expense            12,060    11,762         3    23,240   23,511        (1)
Income taxes        19,416    21,333        (9)   43,337   42,918         1 
Funds flow from                                                             
 operations(i)      32,887    35,174        (7)   68,892   71,262        (3)
 Basic per share      0.45      0.48                0.94     0.97           
 Diluted per                                                                
  share               0.40      0.43                0.84     0.89           
Net earnings        10,397    30,149       (66)   35,275   41,124       (14)
Net earnings                                                                
 (loss) - diluted     (183)   20,821         -    21,244   40,408       (47)
 Basic per share      0.14      0.41                0.48     0.56           
 Diluted per                                                                
  share                  -      0.25                0.26     0.50           
Capital                                                                     
 expenditures       19,295    14,450        34    37,488   18,922        98 
Corporate                                                                   
 acquisition             -    23,097      (100)        -   23,097      (100)
Working capital    286,805   240,236        19   286,805  240,236        19 
Long-term debt,                                                             
 including                                                                  
 current portion    15,224    37,855       (60)   15,224   37,855       (60)
Convertible                                                                 
 debentures         81,830    95,043       (14)   81,830   95,043       (14)
Common shares                                                               
 outstanding                                                                
 Basic (weighted-                                                           
  average)          73,884    73,235         1    73,845   73,148         1 
 Diluted                                                                    
  (weighted-                                                                
  average)          82,345    82,056         -    82,094   80,096         2 
Total assets       670,996   620,937         8   670,996  620,937         8 
----------------------------------------------------------------------------
 

 
----------------------------------------------------------------------------
(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.              
----------------------------------------------------------------------------
Operating                                                                   
----------------------------------------------------------------------------
Average production volumes                                                  
 (Bopd)                     18,417  16,941       9   18,209  16,868       8 
Average sales volumes                                                       
 (Bopd)                     18,539  16,978       9   18,225  16,850       8 
Average price ($ per Bbl)    90.48   95.84      (6)   94.75  100.27      (6)
Operating expense ($ per                                                    
 Bbl)                        10.39    7.40      40     9.72    7.63      27 
----------------------------------------------------------------------------

 
CORPORATE SUMMARY  
TransGlobe Energy Corporation's ("TransGlobe" or the "Company") total
production averaged 18,417 barrels of oil per day ("Bopd") during the
second quarter which is up slightly from the previous quarter
production of 18,001 Bopd.  
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
22 wells in the Eastern Desert resulting in 21 oil wells and 1 dry
hole. At West Bakr the Company has new oil discoveries in West Bakr H
and M fields which will lead to additional drilling in the future. At
West Gharib the Company finalized a well stimulation contract in June
and has embarked on a completion/stimulation program to complete and
stimulate 15 wells that were waiting on stimulation in addition to
new wells being drilled in 2013.  
In the Western Desert the Company participated in four wells at East
Ghazalat which resulted in two small development oil wells, a
gas/condensate discovery and an exploration dry hole. At South
Alamein the Company received military access approval for two
exploration wells in June, which are expected to commence drilling in
Q4-2013. At South Mariut, the Company met its three well obligation
and relinquished the concession. 
Dated Brent oil prices were lower in the second quarter, averaging
$102.44 per barrel, down 9% from $112.59 per barrel in Q1-2013. The
West Gharib and West Bakr crude is sold at a quality discount to
Dated Brent and received a blended price of $90.48 during the
quarter. The Company had funds flow of $32.9 million and ended the
quarter with positive working capital of $286.8 million or $189.8
million net of debt (including the convertible debentures). The
Company collected $31.7 million of accounts receivable from the
Egyptian government during the quarter which resulted in an increased
accounts receivable (net of excess cost oil due to Egyptian General
Petroleum Company ("EGPC")) to $222.3 million (Q1-2013 - $204.6
million) at the end of the quarter. The Company is currently in the
process of finalizing a schedule of payments to be received from EGPC
for the remainder of 2013. The total payments from EGPC in 2013 are
expected to be in the range of $220 million to $250 million which
includes an additional one and a half cargo liftings in the second
half of this year worth an estimated $70 million to $75 million
depending on the prevailing oil prices at the time of lifting. A
typical full cargo lifting is approximately 510,000 barrels of oil. 
The Company expanded and extended its $100,000,000 borrowing base
facility on June 24, 2013. The syndicate consists of Sumitomo Mitsui
Banking Corporation (agent and technical bank), Export Development
Canada and International Finance Corporation each with a 33.33%
commitment. The commitment is a 4.5 year term with stepped
reductions. 
The Company had net earnings in the quarter of $10.4 million, which
includes a $19.7 million impairment on the relinquished South Mariut
concession and a $9.1 million non-cash unrealized gain on convertible
debentures. The $9.1 million gain represents a fair value adjustment
in accordance with IFRS, but does not represent a cash gain or a
change in the future cash outlay required to repay the convertible
debentures. 
In late June and early July, the government led by Mohamed Morsi was
removed and a new interim government was installed following massive
protests at the end of June. During this period of extraordinary
political change, the Company's field operations and offices were not
directly impacted. The Company continues to grow in Egypt but at a
slower rate than originally planned for 2013 due to delayed approval
processes and overall macro-economic pressures in Egypt which have
impacted our ability to spend the capital originally budgeted for
Egypt. We expect that disruptions to normal business and supply
processes will continue in the medium term as Egypt works through its
current macro-economic challenges. This has and will continue to
impact our ability to execute our programs with the same
predictability that we have historically experienced in Egypt. 
The Company has a strong financial position and continues to pursue
business development opportunities both within and outside of Egypt. 
OPERATIONS UPDATE 
ARAB REPUBLIC OF EGYPT  
West Gharib, Arab Republic of Egypt (100% working interest, operated) 
Operations and Exploration 
The Company drilled five wells in the second quarter resulting in
five oil wells (four at Arta/East Arta and one at Hana). Subsequent
to the quarter two oil wells were drilled at East Arta.  
The Q2 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 well has been
perforated, stimulated and recently placed on production at an
initial rate of 180 Bopd. The original discovery well initially
produced 550 Bopd and is currently producing 470 Bopd after 22 months
of production. Based on 3-D seismic mapping the majority of the Lower
Nukhul pool appears to extend 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 extent of this Lower
Nukhul pool. 
Two of the Arta wells were drilled west of the main Arta field to
appraise a new Upper Nukhul oil discovery drilled in the third
quarter 2012. The Arta west discovery well also encountered a new
Lower Nukhul sand which was wet. The two appraisal wells encountered
Upper Nukhul oil and one of the wells encountered a Lower Nukhul oil
reservoir with 18 feet of net pay. The Lower Nukhul 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 block. The Arta west discovery well was
completed (unstimulated) in the Upper Nukhul and is producing
approximately 35 Bopd after 8 months of production. Appraisal wells
(Upper and Lower Nukhul) are being completed and are scheduled for
stimulation this quarter. 
A development oil well was also drilled in the southern portion of
the main Arta pool and another in the Hana pool. Both wells are
scheduled for completion in the third quarter.  
Subsequent to the quarter an Upper Nukhul oil well was drilled in the
south eastern portion of the East Arta block to appraise a new pool
drilled in Q3 of 2012 and a Thebes formation oil well was drilled to
appraise the Thebes discovery drilled in the north east corner of
East Arta in Q3 of 2012.  
Year to date the Company has drilled 12 wells resulting in 11 oil
wells and one dry hole at West Gharib. The rig is currently drilling
a second appraisal well in the Lower Nukhul pool on the north west
edge of East Arta. 
Production 
Production from West Gharib averaged 12,829 Bopd to TransGlobe during
the second quarter, a 1% (141 Bopd) decrease from the previous
quarter. 
Production averaged 13,798 Bopd in April, 12,359 Bopd in May, 12,346
Bopd in June and 12,024 Bopd in July.  
Production was lower in May, June and July due to a combination of
unscheduled pump changes, several unrelated labor disputes which
restricted our ability to truck oil to the GPC truck terminal and
natural declines in production which were not offset by new wells as
planned due to a prolonged contract approval process for well
stimulations. A new well stimulation contract was approved in
mid-June and the equipment was mobilized to the field in late June.
Seven wells were stimulated in late June/July and placed on
production during July. The company currently has an additional 12
cased wells scheduled for stimulation this year in addition to the
planned drilling for the balance of the year, where is expected to
restore production to the 13,000 to 14,000 Bopd level in Q3/Q4.  
The truck receiving terminal constructed at West Bakr K station (year
end 2012) allowed the company to produce West Gharib at reduced rates
during several unrelated labor disputes which restricted trucking to
the GPC truck terminal during May and June. The Company continues to
progress a number of infrastructure projects in the West Gharib/West
Bakr fields designed to ultimately deliver all West Gharib production
to GPC by pipeline and eliminate oil trucking outside the West Gharib
field area. 


 
Quarterly West Gharib Production (Bopd)                                     
                                                  2013            2012      
----------------------------------------------------------------------------
                                                 Q-2     Q-1     Q-4     Q-3
----------------------------------------------------------------------------
Gross production rate                         12,829  12,970  11,563  12,182
TransGlobe working interest                   12,829  12,970  11,563  12,182
TransGlobe net (after royalties)               7,066   7,084   6,697   6,757
TransGlobe net (after royalties and tax)(i)    4,995   4,916   4,884   4,741
----------------------------------------------------------------------------
(i) Under the terms of the West Gharib Production Sharing concession,       
    royalties and taxes are paid out of the Government's share of production
    sharing oil.                                                            

 
West Bakr, Arab Republic of Egypt (100% working interest, operated)  
Operations and Exploration  
The Company has drilled four wells in the second quarter resulting in
four oil wells (two oil wells in the H field, one oil well in the M
field and one oil well in the K field). Subsequent to the quarter,
one oil well was drilled in H field and one oil well in M field.  
The company drilled one development oil well in the H field which was
placed on production at approximately 200 Bopd and one exploration
well (H East 1X) which resulted in a new pool discovery East of H
field. The H East 1X well has averaged approximately 350 Bopd during
the first 20 days of production. Based on initial results, the
company is planning to add several appraisal wells to the 2013/14
drilling program.  
In K field the Company drilled a vertical development well in the
main Asl A pool which encountered 148 feet of net Asl A oil pay based
on logs. The well was initially completed and placed on production at
approximately 100 Bopd but encountered a rapid increase in water
production possibly due to a potentially swept (lower pressure) upper
portion of the thick Asl A formation. Packer isolation testing of the
well is ongoing with plans to conduct a remedial cement squeeze and
re-perforation of the less water-prone intervals within the Asl A.  
The main 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 planned K field 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.  
In M field a successful appraisal/exploration well was drilled which
encountered the main Asl A zone and three additional Asl oil zones
(new pools) below the main zone. In total, the well encountered
approximately 233 feet of net oil pay over the four zones. The well
is currently completed in the Asl D (the lower most zone) and is
producing approximately 700 Bopd.  
Subsequent to the quarter, two wells were drilled resulting in oil
wells in H and M fields. The H field development oil well encountered
three of the producing oil zones in the H field. The well will be
placed on production in mid-August from the lower most zone. The M
field appraisal well extended the M west pool to the north and
encountered approximately 160 feet of net oil pay over 4 zones. The
well will be completed and placed on production this month.  
The rig is currently moving to a development well in K field. It is
expected that the drilling rig will continue working in West Bakr
throughout 2013. 
Production  
Production from West Bakr averaged 4,889 Bopd to TransGlobe during
the second quarter, a 12% (530 Bopd) increase from the previous
quarter. Production averaged approximately 4,692 Bopd in April, 4,817
Bopd in May, 5,160 Bopd in June and 5,070 Bopd in July.   
Production increases were attributed to new wells (K field, M field
and H field) and a successful work-over/recompletions program in the
M and K fields. 


 
Quarterly West Bakr Production (Bopd)                                       
                                                  2013            2012      
----------------------------------------------------------------------------
                                                 Q-2     Q-1     Q-4     Q-3
----------------------------------------------------------------------------
Gross production rate                          4,889   4,359   4,730   4,590
TransGlobe working interest                    4,889   4,359   4,730   4,590
TransGlobe net (after royalties)               1,624   1,373   1,569   1,268
TransGlobe net (after royalties and tax)(i)    1,274   1,061   1,230     939
----------------------------------------------------------------------------
                                                                            
(i) Under the terms of the West Bakr Production Sharing concession,         
    royalties and taxes are paid out of the Government's share of production
    sharing oil.                                                            

 
East Ghazalat, Arab Republic of Egypt (50% working interest)  
Operations and Exploration  
The Company has participated in two Safwa development wells and one
exploration well (South Safwa 1X) during the second quarter resulting
in two oil wells and one dry hole respectively. Subsequent to the
quarter, a second exploration well (North Dabaa 1X) was drilled and
cased as a potential Cretaceous oil and Jurassic gas/condensate well. 
The two development wells (Safwa 3 and Sabbar 2) were drilled and
completed as pumping Upper Bahariya oil wells. Safwa 3 was poorly
developed and initially produced approximately 25 to 30 Bopd prior to
being suspended. The Sabbar 2 well is producing approximately 80 Bopd
after a month's production. 
The Safwa South-1X exploration well was drilled to a total depth of
11,150 feet, targeting stacked zones in the Cretaceous and Jurassic.
The well was abandoned as the target formations were not hydrocarbon
bearing. The well cost approximately $2.8 million ($1.4 million to
TransGlobe). 
The North Dabaa 1X exploration well was drilled to a total depth of
14,740 feet and cased as a potential Cretaceous oil and Jurassic gas
condensate well. Based on open hole well logs and samples, the well
encountered approximately 8 feet of net oil pay in the Abu Roash
formation and 23 feet of net gas/condensate pay in the Khatatba
formation. The well will be tested utilizing the drilling rig prior
to its release. 
Production 
Production from East Ghazalat averaged 393 Bopd to TransGlobe during
the second quarter, a 16% (55 Bopd) increase from the previous
quarter. Production from East Ghazalat averaged 423 Bopd to
TransGlobe in April, 390 Bopd in May, 366 Bopd in June and 241 Bopd
in July. July production is lower primarily due to the shut-in of
Safwa 2 which was waiting on a service rig to install a new bottom
hole pump. Prior to the pump failure, the well had been producing
approximately 370 Bopd (185 Bopd to TransGlobe). The operator has
mobilized a work-over rig to change the pump.  


 
Quarterly East Ghazalat Production (Bopd)                                   
                                                  2013            2012      
----------------------------------------------------------------------------
                                                 Q-2     Q-1     Q-4     Q-3
----------------------------------------------------------------------------
Gross production rate                            786     677     934     163
TransGlobe working interest                      393     338     467      82
TransGlobe net (after royalties)                 189     170     235      41
TransGlobe net (after royalties and tax)(i)      149     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
    sharing oil.                                                            

 
South Alamein, Arab Republic of Egypt (100% working interest,
operated)  
Operations and Exploration  
The Company approved a budget for 2013 which included 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 has been working closely with EGPC and the Ministry of
Oil since early 2012, to obtain military surface access approvals in
the South Alamein concession. In early June, the Company received
military approval for two exploration wells (West Manar and Taef).
The Company is cautiously optimistic that additional well approvals
will be forthcoming in the near term. The Company has identified
several drilling rigs for the initial two-well drilling program (with
two option wells) and is targeting October to commence drilling. The
West Manar and Taef exploration prospects are targeting an estimated
11 million barrels and 25 million barrels of P mean un-risked
prospective resources respectively. The estimated prospective
resources were independently evaluated as of December 31, 2012 by
DeGolyer MacNaughton Canada Limited ("DMCL") disclosed in the January
11, 2013 press release. 
Production 
Concurrently the Company is discussing a potential development lease
with EGPC for the Boraq discovery which could facilitate early
production from Boraq when military access approval is received.
Originally the Company had budgeted for a Q4-2013 startup of
production from Boraq (approximately 1,800 Bopd) with an average
production rate of 460 Bopd for 2013. First oil from Boraq has been
deferred to 2014 primarily due to delayed military approvals.  
South Mariut, Arab Republic of Egypt (60% working interest, operated) 
During the quarter, the Company drilled one exploration well (Al
Hammam #1) to a total depth of 8,322 feet which was subsequently
plugged and abandoned. 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
elected to not proceed to the second and final two-year extension
period.  
The Company has incurred a charge of $19.7 million against earnings
for South Mariut in the second quarter. The $19.7 million impairment
charge includes $10.0 million of drilling expenses and $9.7 million
of associated exploration/acquisition expenses. 
NEW CONCESSIONS EGPC BID ROUND 
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 ratified in late 2013 or 2014 when each concession is passed
into law. The new Energy Minister has announced that getting new
concessions approved is a priority for his Ministry. 
North West Gharib Arab Republic of Egypt (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 intends to identify additional
exploration targets by acquiring 3-D seismic data on portions of the
Concessions for which such data does not currently exist. 
South West Gharib Arab Republic of Egypt (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 Arab Republic of Egypt (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 Arab Republic of Egypt (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.  
REPUBLIC OF YEMEN  
Block S-1, Republic of Yemen (25% working interest)  
Operations and Exploration  
No wells were drilled during the second quarter.  
Production  
Field production has remained shut-in during 2013 primarily due to
labour 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 awarded new
service contracts in late May/early June. The new contractors
continue negotiations with the local tribes to provide labor for the
respective contracts. It is difficult to predict when the contractor
negotiations will be concluded and production will be restored.  
If gross field production is restored to pre-shut in levels of
approximately 6,800 Bopd, Block S-1 could contribute approximately
1,700 Bopd to TransGlobe going forward.  
For guidance purposes, the Company is assuming production will
commence in Q4-2013 which would contribute an average of
approximately 400 Bopd to TransGlobe in 2013. 


 
Quarterly Block S-1 Production and Sales (Bopd)                             
                                                  2013            2012      
----------------------------------------------------------------------------
                                                 Q-2     Q-1     Q-4     Q-3
----------------------------------------------------------------------------
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 PSA, royalties and taxes are paid out  
    of the Government's share of production sharing oil.                    

 
Block 32, Republic of Yemen (13.81% working interest)  
Operations and Exploration  
One development well was drilled at Godah during the quarter. The
Godah 13 oil well is currently producing approximately 350 Bopd
(gross).  
Subsequent to the quarter drilling commenced on the 4,300 meter
Salsala 1 exploration well in early July. Salsala 1 is located in the
south western corner of the Block. The well is expected to take
approximately 40 to 60 days to reach total depth. Based on internal
estimates provided by the Operator, the Salsala 1 well is targeting
an un-risked prospective gross resource potential of 2.6 million
barrels on a P mean (most likely) basis. 
Production  
Production sales from Block 32 averaged 3,100 Bopd (428 Bopd to
TransGlobe) during the second 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.  
Field production during the second quarter averaged 2,211 Bopd (305
Bopd to TransGlobe) which is approximately 8% lower than the previous
quarter due to natural declines and unscheduled pump changes during
the quarter.  
Field production averaged approximately 2,290 Bopd (316 Bopd to
TransGlobe) during July. 


 
Quarterly Block 32 Production and Sales (Bopd)                              
 
                                                  2013            2012      
----------------------------------------------------------------------------
                                                 Q-2     Q-1     Q-4     Q-3
----------------------------------------------------------------------------
Gross field production rate                    2,211   2,416   2,442   2,532
Gross sales production rate                    3,100   1,556   3,271   1,501
TransGlobe working interest                      428     215     452     207
TransGlobe net (after royalties)                 264     210     253     123
TransGlobe net (after royalties and tax)(i)      211     113     185      96
----------------------------------------------------------------------------
(i) Under the terms of the Block 32 PSA, 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 second quarter. The joint
interest 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).  
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  
August 9, 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 for the Company for the three and six months
ended June 30, 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 the 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, developm
ent, 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 Forecast                                                         
                                                              2012          
                                           2013 Guidance    Actual  % Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Barrels of oil per day                   19,000 - 20,000    17,496    9 - 14
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
2013 Updated Funds Flow From Operations Outlook  
On June 20, 2013, the Company provided an update of its expected
capital program, production and funds flow for 2013. Funds flow from
operations guidance of $145.0 million ($1.92/share) is based on an
average Dated Brent oil price of $100/Bbl (after Q2-2013) and assumes
the mid-point of the production guidance. Variations in production
and commodity prices during the remainder of 2013 could significantly
change this outlook. An increase or decrease in the average Dated
Brent oil price of $10/Bbl for the remainder of the year would result
in a corresponding change in anticipated 2013 funds flow by
approximately $8.2 million or $0.11/share. 


 
Funds Flow Forecast                                                         
                                                             2012           
($ millions)                              2013 Guidance    Actual  % Change 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Funds flow from operations
                        145.0     153.5        (6)
Dated Brent oil price ($ per Bbl)                100.00    111.56       (10)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
2013 Capital Budget                                                         
($ millions)                                                   2013 Guidance
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                                   75.0
Yemen                                                                    5.0
----------------------------------------------------------------------------
Total                                                                   80.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The 2013 capital program is split 72:28 between development and
exploration, respectively. The Company plans to participate in 46
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's Yemen divestiture process has been extended until Block
S-1 production is resumed. 
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   Six Months Ended  
                                           June 30             June 30      
----------------------------------------------------------------------------
($000s)                                   2013      2012      2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from operating activities     16,347    24,603    68,247    26,374
Changes in non-cash working capital     16,540    10,571       645    44,888
----------------------------------------------------------------------------
Funds flow from operations(i)           32,887    35,174    68,892    71,262
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Funds flow from operations does not include interest or financing 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-2        Q-1       Q-4       Q-3
----------------------------------------------------------------------------
Average production volumes (Bopd)      18,417     18,001    17,875    18,143
Average sales volumes (Bopd)           18,539     17,909    19,148    17,124
Average price ($/Bbl)                   90.48      99.21     98.70     96.88
Oil sales                             152,646    159,915   173,864   152,624
Oil sales, net of royalties            76,223     79,366    92,281    74,540
Cash flow from operating activities    16,347     51,900    65,250     2,368
Funds flow from operations(i)          32,887     36,005    46,839    35,397
Funds flow from operations per                                              
 share                                                                      
 - Basic                                 0.45       0.49      0.63      0.49
 - Diluted                               0.40       0.44      0.57      0.47
Net earnings                           10,397     24,878    34,836    11,774
Net earnings (loss) - diluted            (183)    21,427    32,156    11,774
Net earnings per share                                                      
 - Basic                                 0.14       0.34      0.48      0.16
 - Diluted                                  -       0.26      0.39      0.16
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Total assets                          670,996    672,675   653,425   635,529
Cash and cash equivalents             101,435    112,180    82,974    45,732
Convertible debentures                 81,830     93,842    98,742   102,920
Total long-term debt, including                                             
 current portion                       15,224     17,097    16,885    31,878
Debt-to-funds flow ratio(ii)              0.6        0.7       0.8       1.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
                                            2012                2011        
----------------------------------------------------------------------------
(000s, except per share, price and                                          
 volume amounts)                           Q-2       Q-1       Q-4       Q-3
----------------------------------------------------------------------------
Average production volumes (Bopd)       16,978    16,720    12,054    13,406
Average sales volumes (Bopd)            16,978    16,720    12,054    13,406
Average price ($/Bbl)                    95.84    104.78     99.12    104.00
Oil sales                              148,078   159,426   109,919   128,265
Oil sales, net of royalties             73,633    77,212    60,609    71,769
Cash flow from operating activities     24,603     1,771     2,330     3,456
Funds flow from operations(i)           35,174    36,088    26,469    37,980
Funds flow from operations per                                              
 share                                                                      
 - Basic                                  0.48      0.49      0.36      0.52
 - Diluted                                0.43      0.48      0.35      0.51
Net earnings                            30,149    10,975    30,519    26,110
Net earnings (loss) - diluted           20,821    10,975    30,519    26,110
Net earnings per share                                                      
 - Basic                                  0.41      0.15      0.42      0.36
 - Diluted                                0.25      0.15      0.41      0.35
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Total assets                           620,937   648,012   525,806   465,262
Cash and cash equivalents               72,230   127,313    43,884   105,007
Convertible debentures                  95,043   105,835         -         -
Total long-term debt, including                                             
 current portion                        37,855    57,910    57,609    57,303
Debt-to-funds flow ratio(ii)               1.0       1.2       0.5       0.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(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 second quarter of 2013, TransGlobe has:  


 
--  Maintained a strong financial position, reporting a debt-to-funds flow
    ratio of 0.6 at June 30, 2013; 
    
--  Reported net earnings of $10.4 million, which includes an impairment
    loss of $19.7 million on the Company's South Mariut assets and a $9.1
    million unrealized non-cash gain on convertible debentures; 
    
--  Experienced a reduction in oil sales compared to Q1-2013 primarily as a
    result of reduced oil prices; 
    
--  Achieved funds flow from operations of $32.9 million; 
    
--  Experienced reduced cash flow from operating activities as compared to
    Q1-2013, which is mostly due to lower collections on accounts receivable
    balances; and 
    
--  Spent $19.3 million on capital programs and acquisitions, which were
    funded entirely with cash on hand. 

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


 
--  Reported an unrealized gain on convertible debentures of $9.1 million in
    the second quarter of 2013 (2012 - $8.8 million); and 
    
--  Reported no diluted earnings per share in Q2-2013, which varies
    significantly from basic earnings per share of $0.14. The prescribed
    calculation 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
    $0.14. 

 
2013 TO 2012 NET EARNINGS VARIANCES 


 
                                                $ Per Share                 
                                      $000s         Diluted      % Variance 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2-2012 net earnings(i)              30,149            0.40                 
----------------------------------------------------------------------------
Cash items                                                                  
Volume variance                      13,036            0.15              42 
Price variance                       (8,468)          (0.10)            (28)
Royalties                            (1,978)          (0.02)             (7)
Expenses:                                                                   
 Production and operating            (6,093)          (0.07)            (20)
 Cash general and                                                           
  administrative                        917            0.01               3 
 Exploration                             40               -               - 
 Current income taxes                   229               -               1 
 Realized foreign exchange                                                  
  gain (loss)                           (27)              -               - 
 Issue costs for convertible                                                
  debentures                            241               -               1 
 Interest on long-term debt             315               -               1 
Other income                             57               -               - 
----------------------------------------------------------------------------
Total cash items variance            (1,731)          (0.03)             (7)
----------------------------------------------------------------------------
Non-cash items                                                              
Unrealized derivative loss                1               -               - 
Unrealized foreign exchange                                                 
 gain                                   435            0.01               1 
Depletion, depreciation and                                                 
 amortization                          (298)              -              (1)
Unrealized gain (loss) on                                                   
 financia
l instruments                  260               -               1 
Impairment loss                     (19,709)          (0.25)            (65)
Stock-based compensation               (447)          (0.01)             (1)
Deferred income taxes                 1,688            0.02               6 
Deferred lease inducement                 2               -               - 
Amortization of deferred                                                    
 financing costs                         47               -               - 
----------------------------------------------------------------------------
Total non-cash items                                                        
 variance                           (18,021)          (0.23)            (59)
----------------------------------------------------------------------------
Q2-2013 net earnings                 10,397            0.14             (66)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Other items affecting                                                       
 diluted earnings per share                                                 
Convertible debentures                                (0.14)            (34)
----------------------------------------------------------------------------
Q2-2013 net earnings per                                                    
 share - diluted                                          -            (100)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Diluted earnings per share for Q2-2012 is presented prior to the        
    dilutive effect of the convertible debentures in that period.           

 
Net earnings decreased to $10.4 million in Q2-2013 compared to $30.1
million in Q2-2012, which was mainly due to an impairment loss
recognized on the Company's South Mariut assets in Q2-2013, combined
with increased production and operating costs. The earnings impact of
increased volumes were mostly offset by price reductions and
increased royalties. 
BUSINESS ENVIRONMENT  
The Company's financial results are significantly influenced by
fluctuations in commodity prices, including price differentials. The
following table shows select market benchmark prices and foreign
exchange rates:  


 
                                          2013                2012          
----------------------------------------------------------------------------
                                         Q-2     Q-1     Q-4     Q-3     Q-2
----------------------------------------------------------------------------
Dated Brent average oil price                                               
 ($/Bbl)                              102.44  112.59  109.97  109.61  108.19
U.S./Canadian Dollar average                                                
 exchange rate                         1.023   1.009   0.991   0.995   1.006
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The price of Dated Brent oil averaged 9% lower in Q2-2013 compared
with Q1-2013. 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. Timing differences often exist between
the Company's recognition of costs and their recovery as the Company
accounts for costs on an accrual basis, whereas cost recovery is
determined on a cash basis. 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. While exploration and
development activities have only been subjected to short-term
interruptions, 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 political and civil 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 six months of 2013, the Company collected
$106.9 million in accounts receivable from the Egyptian Government.
The Company expects to receive approximately $115 million in the
second half of 2013 through monthly cash payments and through an
additional one and a half cargo liftings. These cargo liftings have a
current estimated value of $70 million to $75 million depending on
the prevailing oil price at the time of lifting. A typical full cargo
lifting is approximately 510,000 barrels.  
In late June civil protests in Egypt led to the Egyptian military
removing the President from his office. Immediately following his
removal an interim government was appointed and a road map to new
elections, that are expected to take place in early 2014, was
announced. These events have had no significant impact on the
Company's current operations. At this time it is not possible for
TransGlobe to predict how the transition to a newly-elected
government will impact the Company in the long-term. However, the
interim government officials appointed and the significant financial
support pledged from neighboring countries are viewed as positive by
TransGlobe.  
OPERATING RESULTS AND NETBACK  
Daily Volumes, Working Interest before Royalties (Bopd)  
Production Volumes 


 
                                     Three Months Ended   Six Months Ended  
                                           June 30             June 30      
----------------------------------------------------------------------------
                                          2013      2012      2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                   18,111    16,586    17,890    16,505
Yemen                                      306       356       319       364
----------------------------------------------------------------------------
Total Company                           18,417    16,942    18,209    16,869
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Sales Volumes 


 
                                     Three Months Ended   Six Months Ended  
                                           June 30             June 30      
----------------------------------------------------------------------------
                                          2013      2012      2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                   18,111    16,586    17,890    16,505
Yemen                                      428       392       335       345
----------------------------------------------------------------------------
Total Company                           18,539    16,978    18,225    16,850
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Netback  
Consolidated 


 
                                            Six Months Ended June 30        
----------------------------------------------------------------------------
                                            2013                2012        
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $      /Bbl         $      /Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              312,561     94.75   307,504    100.27
Royalties                              156,972     47.59   156,659     51.08
Current taxes                           44,116     13.37    44,582     14.54
Production and operating expenses       32,061      9.72    23,402      7.63
----------------------------------------------------------------------------
Netback                                 79,412     24.07    82,861     27.02
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                           Three Months Ended June 30       
----------------------------------------------------------------------------
                                            2013                2012        
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              152,646     90.48   148,078     95.84
Royalties                               76,423     45.30    74,445     48.18
Current taxes                           21,042     12.47    21,271     13.77
Production and operating expenses       17,529     10.39    11,436      7.40
----------------------------------------------------------------------------
Netback                                 37,652     22.32    40,926     26.49
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
Egypt 


 
                                            Six Months Ended June 30        
----------------------------------------------------------------------------
                                            2013                2012        
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              306,034     94.51   300,412    100.01
Royalties                              154,496     47.71   153,616     51.14
Current taxes                           43,326     13.38    43,572     14.51
Production and operating expenses       28,081      8.67    19,042      6.34
----------------------------------------------------------------------------
Netback                                 80,131     24.75    84,182     28.02
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                           Three Months Ended June 30       
----------------------------------------------------------------------------
                                            2013                2012        
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              148,545     90.13   144,222     95.55
Royalties                               74,852     45.42    72,883     48.29
Current taxes                           20,536     12.46    20,743     13.74
Production and operating expenses       15,350      9.31     9,094      6.03
----------------------------------------------------------------------------
Netback                                 37,807     22.94    41,502     27.49
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The netback per Bbl in Egypt decreased 17% and 12%, respectively, in
the three and six months ended June 30, 2013 compared with the same
periods of 2012. The main reason for the decreased netback was the
effect of a 6% and 5% reduction in realized oil prices, respectively,
in the three and six months ended June 30, 2013 compared with the
same periods of 2012. Production and operating expenses increased by
$3.28/Bbl and $2.33/Bbl, respectively, which was principally a result
of increased third party oil treatment fees, increased diesel
consumption and pricing, and the addition of East Ghazalat production
in the third quarter of 2012 which has higher operating costs on a
per Bbl basis. 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. The average selling
price during the three months ended June 30, 2013 was $90.13/Bbl,
which represents a gravity/quality adjustment of approximately
$12.31/Bbl to the average Dated Brent oil price for the period of
$102.44/Bbl.  
Royalties and taxes as a percentage of revenue decreased slightly to
64% and 65%, respectively, in the three and six months ended June 30,
2013, compared with the 65% and 66% ratios reported in the same
periods of 2012. 
Yemen 


 
                                          Six Months Ended June 30          
----------------------------------------------------------------------------
                                         2013                  2012         
----------------------------------------------------------------------------
(000s, except per Bbl amounts)           $      $/Bbl          $      $/Bbl 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                            6,527     107.64      7,092     112.95 
Royalties                            2,476      40.83      3,043      48.46 
Current taxes                          790      13.03      1,010      16.09 
Production and operating                                                    
 expenses                            3,980      65.64      4,360      69.44 
----------------------------------------------------------------------------
Netback                               (719)    (11.86)    (1,321)    (21.04)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                         Three Months Ended June 30         
----------------------------------------------------------------------------
                                         2013                  2012         
----------------------------------------------------------------------------
(000s, except per Bbl amounts)           $      $/Bbl          $      $/Bbl 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                            4,101     105.29      3,856     108.10 
Royalties                            1,571      40.34      1,562      43.79 
Current taxes                          506      12.99        528      14.80 
Production and operating                                                    
 expenses                            2,179      55.95      2,342      65.65 
----------------------------------------------------------------------------
Netback                               (155)     (3.99)      (576)    (16.14)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
In Yemen, the Company experienced negative netbacks per Bbl of $3.99
and $11.86, respectively, in the three and six months ended June 30,
2013. Production and operating expenses on a per Bbl basis remained
elevated in Q2-2013 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 production and
operating costs on Block S-1 which significantly increased production
and operating expenses per Bbl. Block S-1 production and operating
expenses contributed $12.88/Bbl and $27.30/Bbl, respectively, to the
production and operating expenses per Bbl in the tables above for the
three and six months ended June 30, 2013. After being shut-in for
several months, when production resumed on Block S-1 in July 2012 and
again in November 2012 all operating expenses accumulated during the
shut-in period were recovered through cost oil within the first two
months of production. Similarly, the Block S-1 production and
operating costs incurred while shut-in during 2013 will be recovered
from cost oil when production resumes.  
Royalties and taxes as a percentage of revenue decreased to 51% and
50%, respectively, in the three and six months ended June 30, 2013,
compared with 54% and 57% in the same periods of 2012. 
GENERAL AND ADMINISTRATIVE EXPENSES ("G&A") 


 
                                          Six Months Ended June 30          
----------------------------------------------------------------------------
                                         2013                  2012         
----------------------------------------------------------------------------
(000s, except per Bbl amounts)           $      $/Bbl          $      $/Bbl 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
G&A (gross)                         12,706       3.85     12,881       4.20 
Stock-based compensation             2,562       0.78      1,977       0.64 
Capitalized G&A and overhead                                                
 recoveries                         (1,849)     (0.56)    (1,379)     (0.45)
----------------------------------------------------------------------------
G&A (net)                           13,419       4.07     13,479       4.39 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                         Three Months Ended June 30         
----------------------------------------------------------------------------
                                         2013                  2012         
----------------------------------------------------------------------------
(000s, except per Bbl amounts)           $      $/Bbl          $      $/Bbl 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
G&A (gross)                          5,799       3.44      6,610       4.28 
Stock-based compensation             1,284       0.76        837       0.54 
Capitalized G&A and overhead                                                
 recoveries                           (764)     (0.45)      (656)     (0.43)
----------------------------------------------------------------------------
G&A (net)                            6,319       3.75      6,791       4.39 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
G&A expenses (net) in the three and six months ended June 30, 2013
remained relatively consistent compared with the same periods in
2012. On a per Bbl basis, decreases of 15% and 7%, respectively, in
the three and six months ended June 30, 2013 compared with 2012 are
mainly the result of increased sales volumes in 2013. 
FINANCE COSTS  
Finance costs for the three and six months ended June 30, 2013
decreased to $2.2 million and $4.4 million, respectively (2012 - $2.8
million and $9.0 million, respectively). The Company incurred
convertible debenture issue costs of $4.6 million during the six
months ended June 30, 2012, which caused a significant increase in
finance costs during that period. The decrease in finance costs
during the first half of 2013 relates principally to the absence of
the convertible debenture issue costs in the current year. 


 
                                     Three Months Ended   Six Months Ended  
                                           June 30             June 30      
----------------------------------------------------------------------------
(000s)                                    2013      2012      2013      2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Interest expense                      $  1,929  $  2,244  $  3,869  $  3,761
Issue costs for convertible                                                 
 debentures                                  -       241         -     4,630
Amortization of deferred financing                                          
 costs                                     283        30       545       630
----------------------------------------------------------------------------
Finance costs                         $  2,212  $  2,815  $  4,414  $  9,021
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
The Company had $18.5 million ($15.2 million net of unamortized
deferred financing costs) of long-term debt outstanding at June 30,
2013 (June 30, 2012 - $40.0 million). On June 11, 2013, the Company
finalized an amendment to the Borrowing Base Facility, which
re-established the borrowing base at $100.0 million and extended the
term of the facility to December 31, 2017. The long-term debt that
was outstanding under the Borrowing Base Facility at June 30, 2013
bore interest at LIBOR plus an applicable margin that varies from
5.0% to 5.5% depending on the amount drawn under the facility.  
In February 2012, the Company sold, on a bought-deal basis, C$97.8
million ($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. 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") 


 
                                            Six Months Ended June 30        
----------------------------------------------------------------------------
                                            2013                2012        
----------------------------------------------------------------------------
(000s, except per Bbl amounts)               $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                   22,430      6.93    22,864      7.61
Yemen                                      634     10.46       449      7.15
Corporate                                  176         -       198         -
----------------------------------------------------------------------------
                                        23,240      7.05    23,511      7.67
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                           Three Months Ended June 30       
----------------------------------------------------------------------------
                                                   2013                 2012
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $      $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                  11,540      7.00    11,563       7.66
Yemen                                     432     11.09       201       5.63
Corporate                                  88         -        (2)          
----------------------------------------------------------------------------
                                       12,060      7.15    11,762       7.61
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
In Egypt, DD&A decreased 9% on a per Bbl basis for the three and six
month periods ended June 30, 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 increased 97% and 46%, respectively, on a per Bbl
basis for the three and six month periods ended June 30, 2013
compared to 2012. These increases are due to a smaller reserve base
over which capital costs are being depleted and increased future
development costs in the first six months of 2013 as compared to
2012. 
IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS 
On the South Mariut block, the Company drilled two exploration wells
during the first quarter of 2013 and one exploration well during the
second quarter of 2013, all of which were dry. The Company and its
joint interest partner fulfilled their commitments under the terms of
the South Mariut Concession Agreement, and elected not to commit to
the second and final two-year extension period and subsequently
relinquished the block. Because the Company and its partners have no
plans for further exploration in the South Mariut block, the Company
recorded an impairment loss on the South Mariut exploration and
evaluation assets in the amount of $19.7 million during the second
quarter of 2013. The impairment relates to all intangible exploration
and evaluation asset costs carried at South Mariut as at June 30,
2013. 
CAPITAL EXPENDITURES 


 
                                                 Six Months Ended June 30   
----------------------------------------------------------------------------
($000s)                                                  2013           2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                  36,093         18,467
Yemen                                                   1,377            373
Acquisitions                                                -         23,097
Corporate                                                  18             82
----------------------------------------------------------------------------
Total                                                  37,488         42,019
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
In Egypt, total capital expenditures in the first six months of 2013
were $36.1 million (2012 - $18.5 million). During the first six
months of the year, the Company drilled ten wells at West Gharib
(seven oil wells at Arta, one oil well at Hana, along with one oil
well and one dry hole at East Arta). The Company also drilled eight
oil wells at West Bakr, two oil wells and one dry hole at East
Ghazalat, and three dry holes at South Mariut.  
OUTSTANDING SHARE DATA  
As at June 30, 2013, the Company had 73,894,138 common shares issued
and outstanding and 7,000,101 stock options issued and outstanding,
which are exercisable in accordance with their terms into a maximum
of 7,000,101 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 0.6 times at June 30, 2013 (December 31, 2012 - 0.8). This is
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 June 30, 2013 and 2012: 


 
                          Sources and Uses of Cash                          
                                                   Six Months Ended June 30 
----------------------------------------------------------------------------
($000s)                                                   2013         2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash sourced                                                                
 Funds flow from operations(i)                          68,892       71,262 
 Transfer from restricted cash                               -          807 
 Issue of convertible debentures                             -       97,851 
 Exercise of stock options                                 500        1,522 
 Other                                                       -          168 
----------------------------------------------------------------------------
                                                        69,392      171,610 
Cash used                                                                   
 Capital expenditures                                   37,488       18,922 
 Deferred financing costs                                2,205            - 
 Transfer to restricted cash                                 1            - 
 Acquisitions                                                -       23,097 
 Repayment of long-term debt                                 -       20,000 
 Finance costs                                           3,558        6,023 
 Other                                                   1,517          329 
----------------------------------------------------------------------------
                                                        44,769       68,371 
----------------------------------------------------------------------------
                                                        24,623      103,239 
Changes in non-cash working capital                     (6,162)     (74,510)
----------------------------------------------------------------------------
Increase in cash and cash equivalents                   18,461       28,729 
Cash and cash equivalents - beginning of period         82,974       43,884 
----------------------------------------------------------------------------
Cash and cash equivalents - end of period              101,435       72,613 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Funds flow from operations is a measure that represents cash generated  
    from operating activities before changes in non-cash working capital.   

 
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, which is estimated at $80.0
million ($42.5 million remaining), 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 June 30, 2013, the Company had working capital of
$286.8 million (December 31, 2012 - $262.2 million). The increase to
working capital in Q2-2013 is principally the result of an increase
in cash and cash equivalents. The majority of the Company's accounts
receivable are due from Egyptian General Petroleum Company ("EGPC"),
and the continued 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. In addition to receiving variable monthly cash payments, the
Company is scheduled to receive one and a half cargo liftings in the
second half of 2013 at an estimated value of $70 million to $75
million depending on the prevailing oil price at the time of lifting.
A typical full cargo lifting is approximately 510,000 barrels.  
At June 30, 2013, TransGlobe had $100.0 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 2017, 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)                                  June 30, 2013    December 31, 2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Bank debt                                       18,450               18,450 
Deferred financing costs                        (3,226)              (1,565)
----------------------------------------------------------------------------
Long-term debt (net of deferred                                             
 financing costs)                               15,224               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 in                              
                                     Financial    Contractual    Less than 1
                                    Statements     Cash Flows           year
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts payable and accrued                                                
 liabilities                     Yes-Liability         47,031         47,031
Long-term debt                   Yes-Liability         18,450              -
Convertible debentures           Yes-Liability         81,830              -
Office, equipment and drilling                                              
 rig leases                                 No         18,346         11,328
Minimum work commitments(3)                 No            750            750
----------------------------------------------------------------------------
Total                                                 166,407         59,109
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
($000s)                                  Payment Due by Period(1,2)         
----------------------------------------------------------------------------
                                                                 More than 5
                                     1-3 years      4-5 years          years
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts payable and accrued                                                
 liabilities                                 -              -              -
Long-term debt                               -         18,450              -
Convertible debentures                       -         81,830              -
Office, equipment and drilling                                              
 rig leases                              2,638          2,030          2,350
Minimum work commitments(3)                  -              -              -
----------------------------------------------------------------------------
Total                                    2,638        102,310          2,350
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Payments exclude ongoing operating costs, finance costs and payments    
    made to settle derivatives.                                             
(2) Payments denominated in foreign currencies have been translated at June 
    30, 2013 exchange rates.                                                
(3) Minimum work commitments include contracts awarded for capital projects 
    and those commitments related to exploration and drilling obligations.  

 
The Company is subject to certain office, equipment and drilling rig
leases.  
Pursuant to the PSA 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 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 were due in 2013.  
Pursuant to the June 7, 2012 and July 26, 2012 share purchase
agreements for a combined 100% operated interest in the South Alamein
concession 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
litigation proceedings 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 June 30, 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
financial 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 June 30, 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      Six Months Ended
                                               June 30               June 30
                                       2013       2012       2013       2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
REVENUE                                                                     
 Oil sales, net of royalties      $ 76,223   $ 73,633   $155,589   $150,845 
 Derivative gain (loss) on                                                  
  commodity contracts                    -         (1)         -       (125)
 Finance revenue                       183        126        229        251 
----------------------------------------------------------------------------
                                    76,406     73,758    155,818    150,971 
----------------------------------------------------------------------------
                                                                            
EXPENSES                                                                    
 Production and operating           17,529     11,436     32,061     23,402 
 General and administrative          6,319      6,791     13,419     13,479 
 Foreign exchange (gain) loss       (2,210)    (1,802)    (3,728)    (2,174)
 Finance costs                       2,212      2,815      4,414      9,021 
 Exploration                            71        111        178        671 
 Depletion, depreciation and                                                
  amortization                      12,060     11,762     23,240     23,511 
 Unrealized (gain) loss on                                                  
  financial instruments             (9,098)    (8,838)   (12,088)      (998)
 Impairment of exploration and                                              
  evaluation assets                 19,710          1     19,710         17 
----------------------------------------------------------------------------
                                    46,593     22,276     77,206     66,929 
----------------------------------------------------------------------------
                                                                            
Earnings before income taxes        29,813     51,482     78,612     84,042 
Income tax expense (recovery) -                                             
 current                            21,042     21,271     44,116     44,582 
  - deferred                        (1,626)        62       (779)    (1,664)
----------------------------------------------------------------------------
                                    19,416     21,333     43,337     42,918 
----------------------------------------------------------------------------
NET EARNINGS AND COMPREHENSIVE                                              
 INCOME FORTHE PERIOD               $10,397    $30,149    $35,275    $41,124
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Earnings per share                                                          
 Basic                            $   0.14   $   0.41   $   0.48   $   0.56 
 Diluted                          $      -   $   0.25   $   0.26   $   0.50 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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


 
                                                          As at        As at
                                                       June 30,     December
                                                           2013     31, 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
ASSETS                                                                      
Current                                                                     
 Cash and cash equivalents                          $   101,435  $    82,974
 Accounts receivable                                    222,318      221,017
 Prepaids and other                                      10,083        6,813
----------------------------------------------------------------------------
                                                        333,836      310,804
Non-Current                                                                 
 Restricted cash                                            783          782
 Intangible exploration and evaluation assets            33,220       48,414
 Property and equipment                                                     
  Petroleum properties                                  291,047      280,895
  Other assets                                            3,930        4,350
 Goodwill                                                 8,180        8,180
----------------------------------------------------------------------------
                                                    $   670,996  $   653,425
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
LIABILITIES                                                                 
Current                                                                     
 Accounts payable and accrued liabilities           $    47,031  $    48,587
----------------------------------------------------------------------------
                                                         47,031       48,587
Non-Current                                                                 
 Long-term debt                                          15,224       16,885
 Convertible debentures                                  81,830       98,742
 Deferred taxes                                          51,585       52,363
 Other long-term liabilities                                881          988
----------------------------------------------------------------------------
                                                        196,551      217,565
----------------------------------------------------------------------------
                                                                            
SHAREHOLDERS' EQUITY                                                        
 Share capital                                          159,401      158,721
 Contributed surplus                                     14,344       11,714
 Retained earnings                                      300,700      265,425
----------------------------------------------------------------------------
                                                        474,445      435,860
----------------------------------------------------------------------------
                                                    $   670,996  $   653,425
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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


 
                                    Three Months Ended      Six Months Ended
                                               June 30               June 30
                                       2013       2012       2013       2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Share Capital                                                               
 Balance, beginning of period     $159,259   $154,631   $158,721   $154,263 
 Stock options exercised               104      1,254        500      1,522 
 Transfer to share capital on                                               
  exercise of options                   38        435        180        535 
----------------------------------------------------------------------------
 Balance, end of period           $159,401   $156,320   $159,401   $156,320 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Contributed Surplus                                                         
 Balance, beginning of period     $ 12,879   $  9,252   $ 11,714   $  8,538 
 Stock-based compensation                                                   
  expense                            1,503      1,027      2,810      1,841 
 Transfer to share capital on                                               
  exercise of options                  (38)      (435)      (180)      (535)
----------------------------------------------------------------------------
 Balance, end of period           $ 14,344   $  9,844   $ 14,344   $  9,844 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Retained Earnings                                                           
 Balance, beginning of period     $290,303   $188,666   $265,425   $177,691 
 Net earnings                       10,397     30,149     35,275     41,124 
----------------------------------------------------------------------------
 Balance, end of period           $300,700   $218,815   $300,700   $218,815 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

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


 
                                    Three Months Ended      Six Months Ended
                                               June 30               June 30
                                       2013       2012       2013       2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:                             
                                                                            
OPERATING                                                                   
 Net earnings for the period      $ 10,397   $ 30,149   $ 35,275   $ 41,124 
 Adjustments for:                                                           
  Depletion, depreciation and                                               
   amortization                     12,060     11,762     23,240     23,511 
  Deferred lease inducement            113        115        228        229 
  Impairment of exploration and                                             
   evaluation costs                 19,710          1     19,710         17 
  Stock-based compensation           1,284        837      2,562      1,977 
  Finance costs                      2,212      2,815      4,414      9,021 
  Income tax expense                19,416     21,333     43,337     42,918 
  Unrealized (gain) loss on                                                 
   commodity contracts                   -          1          -        125 
  Unrealized (gain) loss on                                                 
   financial instruments            (9,098)    (8,838)   (12,088)      (998)
  Unrealized (gain) loss on                                                 
   foreign currency translation     (2,165)    (1,730)    (3,670)    (2,080)
 Income taxes paid                 (21,042)   (21,271)   (44,116)   (44,582)
 Changes in non-cash working                                                
  capital                          (16,540)   (10,571)      (645)   (44,888)
----------------------------------------------------------------------------
Net cash generated by (used in)                                             
 operating activities               16,347     24,603     68,247     26,374 
----------------------------------------------------------------------------
                                                                            
INVESTING                                                                   
 Additions to intangible                                                    
  exploration and evaluation                                                
  assets                            (1,040)    (1,250)    (4,516)    (1,521)
 Additions to petroleum                                                     
  properties                       (18,229)   (12,811)   (32,906)   (16,772)
 Additions to other assets             (26)      (389)       (66)      (629)
 Business acquisitions                   -    (23,097)         -    (23,097)
 Changes in restricted cash              -        808         (1)       807 
 Changes in non-cash working                                                
  capital                           (4,624)   (24,145)    (5,517)   (32,085)
----------------------------------------------------------------------------
Net cash generated by (used in)                                             
 investing activities              (23,919)   (60,884)   (43,006)   (73,297)
----------------------------------------------------------------------------
                                                                            
FINANCING                                                                   
 Issue of common shares for cash       104      1,254        500      1,522 
 Financing costs                    (2,155)      (383)    (2,205)      (383)
 Interest paid                        (185)      (586)    (3,558)    (1,393)
 Issue of convertible debentures         -          -          -     97,851 
 Issue costs for convertible                                                
  debentures                             -       (241)         -     (4,630)
 Repayments of long-term debt            -    (20,000)         -    (20,000)
 Decrease in other long-term                                                
  liabilities                         (141)      (165)      (285)      (329)
 Changes in non-cash working                                                
  capital                                -      1,658          -      2,463 
----------------------------------------------------------------------------
Net cash generated by (used in)                                             
 financing activities               (2,377)   (18,463)    (5,548)    75,101 
Currency translation differences                                            
 relating to cash and cash                                                  
 equivalents                          (796)      (339)    (1,232)       168 
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH                                             
 AND CASH EQUIVALENTS              (10,745)   (55,083)    18,461     28,346 
                                                                            
CASH AND CASH EQUIVALENTS,                                                  
 BEGINNING OF PERIOD               112,180    127,313     82,974     43,884 
----------------------------------------------------------------------------
                                                                            
CASH AND CASH EQUIVALENTS, END                                              
 OF PERIOD                        $101,435   $ 72,230   $101,435   $ 72,230 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

 
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:
Investor Relations
Transglobe Energy Corporation
Scott Koyich
(403) 264-9888
investor.relations@trans-globe.com
www.trans-globe.com