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FOR: TRANSGLOBE ENERGY CORPORATION

TSX SYMBOL:
 TGL
NASDAQ SYMBOL:
 TGA

TransGlobe Energy Corporation Third Interim Report For The Three And Nine Months Ended September 30, 2004

Nov 02, 2004 - 04 08 ET

CALGARY, ALBERTA--(CCNMatthews - Nov. 2, 2004) - TransGlobe Energy 
Corporation ("TransGlobe" or the "Company") is pleased to announce its 
financial and operating results for the three and nine months ended 
September 30, 2004. All dollar values are expressed in United States 
dollars unless otherwise stated. Conversion of natural gas to oil is 
made on the basis of 6,000 cubic feet of natural gas being equivalent to 
one barrel of crude oil.

HIGHLIGHTS

- Record average sales volumes of 3,918 Boepd and record average 
production volumes of 4,303 Boepd in Q3

- October production volumes averaged in excess of 4,500 Boepd

- Block 32, Republic of Yemen (13.81% Working Interest)

- Tasour #13 completed at 2,240 Bopd (309 Bopd to TransGlobe)

- Tasour #14 completed at 2,820 Bopd (389 Bopd to TransGlobe)

- Block S-1, Republic of Yemen (25% Working Interest)

- Development oil wells completed at An Nagyah #9, #10 and #11

- Trucking production increased to approximately 5,000 Bopd (1,250 Bopd 
to TransGlobe) in October

- Facilities and pipeline project commissioning expected June 2005

- Canada

- Drilled seven gas wells in Q3 at Cynthia, Gadsby, Twining and Nevis - 
100% successful

- Q3 cash flow from operations of $4,363,000 and net income of $2,541,000

OUTLOOK

Total Company production in October is in excess of 4,500 Boepd due to 
increased trucking volumes from An Nagyah on Block S-1 in Yemen and the 
addition of new wells in Canada and Block 32. The Company's 2004 exit 
production rate is now expected to be over 5,000 Boepd. The Block S-1 
development and the new Canadian production is expected to increase the 
Company's total production to approximately 6,000 Boepd by mid-2005.

On the financial front, cash flow from operations and net income are 
higher on both the three and nine month comparisons to the same period 
in 2003. The cash flow from operations and net income would have been 
even higher if the full Block S-1 production had been sold in the third 
quarter. There were no scheduled tanker liftings for Block S-1 
production in August, September and October which resulted in an 
increase in oil inventory. The inventory at September 30 was 
approximately 38,000 barrels (net TransGlobe barrels after subtracting 
the Yemen government's production sharing oil). Vintage and TransGlobe 
are working on a new marketing arrangement to allow for more regular 
tanker liftings and thereby reduce significant oil inventories in the 
future. Total consolidated sales volumes averaged 3,918 Boepd in Q3 
whereas total consolidated production volumes averaged 4,303 Boepd with 
the difference being an increase to inventory booked on Block S-1.

/T/

FINANCIAL AND OPERATING UPDATE

(Expressed in thousands of U.S. Dollars)

                        Three Months Ended         Nine Months Ended
                                   Sept.30                   Sept.30
                      ----------------------------------------------
Financial              2004   2003  Change      2004   2003   Change
--------------------------------------------------------------------
Oil and gas revenue,
 net of royalties     8,227  4,159     98%    19,874 12,673      57%
Operating expense     1,772    828    114%     4,251  2,585      64%
General and
 administrative
 expense                605    168    260%     1,842    783     135%
Depletion,
 depreciation and
 accretion expense    2,601  1,902     37%     6,149  4,961      24%
Income taxes            416    929   (55)%     2,195  1,796      22%
Cash flow from
 operations           4,363  2,193     99%    10,999  7,453      48%
  Basic and diluted
   per share           0.08   0.04              0.20   0.14
Net income            2,541    291    773%     5,151  2,492     107%
  Basic per share      0.05   0.01              0.10   0.05
  Diluted per share    0.04   0.01              0.09   0.05
Capital expenditures  7,641  3,445    122%    15,292 10,219      50%
Working capital                               (1,203) 2,137   (156)%
Common shares
 outstanding
  Basic
   (weighted average)                         54,081 51,949       4%
  Diluted
   (weighted average)                         56,376 53,091       6%


Sales volumes
--------------------------------------------------------------------
Oil and liquids
 (Bopd)               3,274  2,514     30%     2,818  2,400      17%
 Average price
 ($ per barrel)       38.56  27.97     38%     35.24  27.79      27%
Gas (Mcfpd)           3,865  1,105    250%      2,66  1,030     159%
 Average price 
 ($ per Mcf)           4.92   5.24    (6)%      5.05   5.47     (8)%
Total (Boed) (6 : 1)  3,918  2,698     45%     3,263  2,572      27%
Operating expense
 ($ per Boe)           4.91   3.34     47%      4.75   3.68      29%

/T/

EXPLORATION UPDATE

Block 32, Republic of Yemen (13.81087% working interest)

The Tasour #13 step-out appraisal well was drilled on the western flank 
of the Tasour field. The Tasour #13 well was put on production with 
initial production of 2,240 barrels of oil per day (309 barrels of oil 
per day to TransGlobe) and 5,740 barrels of water per day.

Subsequent to the third quarter, the drilling rig was moved to Tasour 
#14, one of several development locations within the western field 
extension defined by Tasour #13. The Tasour #14 well was drilled 
approximately 900 m east of Tasour #13. Tasour #14 was put on production 
with initial production of 2,820 barrels of oil per day (389 barrels of 
oil per day to TransGlobe) and 1,330 barrels of water per day.

Following Tasour #14, the drilling rig went to an adjacent non-owned 
block as per the terms of the rig sharing contract with Block 53. It is 
anticipated that the drilling rig will return to Block 32 early in 2005 
to commence drilling on the potential eastern extension of the Tasour 
field in addition to several development/appraisal wells planned in 2005.

The oil production from the Tasour Field is expected to average 
approximately 18,000 Bopd during the fourth quarter of 2004, of which 
TransGlobe's working interest share is approximately 2,486 Bopd.

Block S-1, Republic of Yemen (25% working interest)

During the quarter, three producing oil wells (An Nagyah #9, #10 and 
#11) and one exploratory dry hole (Al Hareth #1) were drilled.

The An Nagyah #9 well was drilled to a total depth of 1,146 meters and 
was completed as an Upper Lam oil well after flowing at a stabilised 
rate of 530 barrels of light (43 degree API) oil per day. The An Nagyah 
#9 well encountered a 20 meter oil bearing interval in the Upper Lam 
sandstones.

The An Nagyah #10 well was drilled to a total depth of 1,144 meters and 
was completed as an Upper Lam oil well, flowing at a stabilized rate of 
1,547 barrels of light (43 degree API) oil per day. The An Nagyah #10 
well encountered a 33 meter oil bearing interval in the Upper Lam 
sandstones.

The An Nagyah #11 well was drilled to a total depth of 1,394 meters and 
was completed as an Upper Lam oil well. The An Nagyah #11 well was 
tested from a 164 meter horizontal Upper Lam sandstone section at a 
stabilised rate of 3,100 barrels of light (43 degree API) oil per day 
and 1.72 million cubic feet of natural gas per day on a 56/64 inch choke 
at 365 psi flowing pressure. No water was produced during the test 
period. This is the first horizontal well drilled in the An Nagyah field 
and the first Lam formation horizontal well in the Republic of Yemen.

The early production (trucking) facilities were installed at An Nagyah 
during the first quarter of 2004 with an initial capacity of 2,500 Bopd 
(625 Bopd to TransGlobe). Since commencing production in the second 
quarter of 2004, the trucking facilities have been steadily expanded to 
the current capacity of approximately 5,000 Bopd (1,250 Bopd to 
TransGlobe). With the addition of the horizontal well at An Nagyah #11, 
the current productive well capacity is approximately 8,000 Bopd which 
exceeds the capacity of the early production facilities. It is expected 
that the trucking facilities will be expanded to 6,000+ Bopd (1,500+ 
Bopd to TransGlobe) prior to the year end. The oil production is being 
trucked 18 miles to the Jannah Hunt facility where it enters the 
pipeline to the Ras Isa loading terminal on the Red Sea.

Trucking operations will be phased out following the construction of a 
central production facility ("CPF") at An Nagyah and a 28 kilometer (18 
mile) pipeline to the Jannah Hunt export pipeline. The pipeline and 
facilities are expected to be operational by mid 2005. The 10 inch 
pipeline is designed to allow an ultimate capacity of 80,000 Bopd so 
that future discoveries can be placed on stream quickly. The CPF is 
designed for an initial capacity of 10,000 to 12,000 Bopd (2,500 to 
3,000 Bopd to TransGlobe), with expansion capabilities.

The drilling rig is currently at the An Nagyah #12 well located between 
the An Nagyah #5 and #4 wells. The An Nagyah #12 well will also be 
drilled horizontally with a planned horizontal section of 700 meters. 
Following An Nagyah #12, a well is planned to test a possible field 
extension on the southern edge of the An Nagyah field. This will be 
followed by an exploration well on a separate structure located nine 
kilometers southwest of the An Nagyah field. Additional development 
wells on An Nagyah and several exploration wells are planned for the 
2005 drilling program.

In addition to the current drilling activities, a workover rig will be 
mobilized in the fourth quarter to workover the An Nagyah #2 well and 
complete the Harmel #2 appraisal well. The An Nagyah #2 well was the 
discovery well for the Lam oil reservoir and has been shut-in since 
testing was completed. Initial testing of An Nagyah #2 included tests in 
both the oil reservoir as well as the gas cap. The objective of the 
workover will be to seal off the gas cap perforations and complete the 
well as a producing oil well.

After An Nagyah #2 operations are complete, the workover rig will be 
moved to the Harmel #2 appraisal well to begin the completion 
operations. Harmel #2 was drilled in June 2004 to appraise the shallow 
oil reservoirs found in the discovery well, Harmel #1. The cores from 
Harmel #2 have been analyzed, and current plans encompass stimulating 
the supra-salt reservoirs in the Harmel #2 well and placing both Harmel 
wells on production. Production and test data obtained from the #1 and 
#2 wells will help to determine the commerciality of the medium gravity 
oil (22 degree API) discovery at Harmel. The Harmel structure identified 
on 3-D seismic could require 80 to 90 shallow wells (700 to 800 meters 
in depth) to be fully developed.

Block 72, Republic of Yemen (33% working interest)

DNO ASA (operator at 34%), TG Holdings Yemen Inc. (33%) and Ansan Wikfs 
(Hadramaut) Limited (33%)("Block 72 Joint Venture Group") were selected 
as the successful bidders for Block 72 in the Yemen International Bid 
Round for Exploration and Production of Hydrocarbons. TG Holdings Yemen 
Inc. is a wholly owned subsidiary of TransGlobe Energy Corporation. The 
ratification of the Block 72 Production Sharing Agreement by the Yemen 
parliament is expected before the end of 2004.

Block 72 encompasses 1,822 square kilometers (approximately 450,234 
acres) and is located in the western Masila Basin adjacent to the 
billion barrel Canadian Nexen Masila Block. The Block 72 Joint Venture 
Group plans to carry out a seismic acquisition program and the drilling 
of two exploration wells during the first exploration period of thirty 
months. It is anticipated that seismic will be acquired during 2005, 
with drilling commencing in late 2005 or early 2006.

Nuqra Block 1, Arab Republic of Egypt (50% working interest, Operator)

As announced in the second quarter, TransGlobe Petroleum Egypt Inc. 
("TransGlobe Egypt"), a wholly owned subsidiary of TransGlobe Energy 
Corporation, entered into a Farmout Agreement with Quadra Egypt Limited 
("QEL"), a subsidiary of Quadra Resources Corp. headquartered in 
Calgary, and Rampex Petroleum International ("Rampex") headquartered in 
Cairo, Egypt. This agreement provides TransGlobe Egypt the opportunity 
to participate and earn a 50% working interest in the Nuqra Concession 
by paying 100% of the initial $6.0 million of expenditures in the Stage 
1 and Stage 2 work programs. TransGlobe Egypt is the operator of the 
Nuqra Block.

The Nuqra Concession is located in Upper Egypt near the city of Luxor on 
the east bank of the Nile River. The concession encompasses over 
two-thirds of the Kom Ombo Basin, a rift basin analogous to the Gulf of 
Suez Basin, the Marib Basin in the Republic of Yemen, and the Muglad 
Basin in Sudan, all of which contain major reserves. The Nuqra 
Concession contains more than 30,000 square kilometers or 7,500,000 
acres of exploration lands with 13 seismically defined leads identified 
from over 4,000 km of existing 2-D seismic. Seismic and well data have 
confirmed the existence of Jurassic and Cretaceous sediments and the 
presence of a petroleum system which could potentially hold significant 
oil reserves.

Mr. Mitchell Wren has joined the Company as General Manager of 
TransGlobe Petroleum Egypt Inc. in Cairo and is currently establishing 
the Cairo office. The proposed work program for the balance of 2004 and 
2005 will consist of geological field studies, re-processing of existing 
2-D seismic and field acquisition of additional 2-D seismic data. It is 
anticipated that exploration drilling will commence after 2005.

Canada

To date, the Company has drilled 15 wells (11.2 net wells) in 2004 
resulting in 12 gas wells, 2 oil wells and 1 dry hole for an overall 
success rate of 93%. It is anticipated that Canadian production will 
increase to approximately 1,250 to 1,500 Boepd early in 2005 when the 
remainder of the 2004 wells are completed and pipeline connected. 
Production in the third quarter averaged 846 Boepd representing a 74% 
increase over the second quarter 2004 production. Production was 
partially curtailed by approximately 140 Boepd during the quarter due to 
natural gas compression capacity limitations at third party operated 
facilities in the Nevis and Twining areas. It is anticipated that 
additional compression will be installed by early 2005.

The majority of the Company's Canadian 2005 drilling program is expected 
to commence in June 2005 after spring breakup. It is expected that 
drilling equipment and services will be available at better prices 
during the summer months. Traditionally, the winter months (December 
through April) are the busiest and most expensive time to conduct 
drilling operations in Canada. The Company plans to drill 10 to 15 wells 
in Canada during 2005. All the prospects are focused towards natural gas 
in Central Alberta. Successful wells could be on production quickly as 
these prospects are near existing infrastructure and can generally be 
accessed year round.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's discussion and analysis ("MD&A") should be read in 
conjunction with the unaudited interim financial statements for the 
three and nine months ended September 30, 2004 and 2003, the audited 
financial statements and MD&A for the year ended December 31, 2003 
included in the Company's annual report. Additional information relating 
to the Company, including the Company's Annual Information Form, is on 
SEDAR at www.sedar.com. All dollar values are expressed in U.S. dollars, 
unless otherwise stated. The calculations of barrels of oil equivalent 
("Boe") are based on a conversion rate of six thousand cubic feet of 
natural gas to one barrel of crude oil.

This Management's Discussion and Analysis (MD&A) 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. All statements in this interim report, other than statements of 
historical facts, that address future production, reserve potential, 
exploration drilling, exploitation activities and events or developments 
that the Company expects, are forward-looking statements. Although 
TransGlobe believes the expectations expressed in such forward-looking 
statements are based on reasonable assumptions, such statements are not 
guarantees of future performance and actual results or developments may 
differ materially from those in the forward-looking statements. Factors 
that could cause actual results to differ materially from those in 
forward-looking statements include, but are not limited to, oil and gas 
prices, exploitation and exploration successes, continued availability 
of capital and financing, and general economic, market or business 
conditions.

/T/

SELECTED QUARTERLY FINANCIAL INFORMATION

(US$000's, except       Sept. 30  June 30  Mar. 31   Dec. 31 Sept. 30
 per share amounts)         2004     2004     2004      2003     2003
---------------------------------------------------------------------
Oil and gas sales,
 net of royalties          8,227    5,779    5,868     4,488    4,159

Cash flow from
 operations                4,363    2,749    3,887     1,894    2,193
Cash flow from
 operations per share
 - Basic and diluted        0.08     0.05     0.07      0.04     0.04

Net income                 2,541      447    2,163     3,414      291
Net income per share
 - Basic                    0.05     0.01     0.04      0.06     0.01
 - Diluted                  0.04     0.01     0.04      0.06     0.01

Total assets              44,478   38,798   35,753    35,601   29,212
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Cash flow from operations is a non-GAAP measure that represents cash 
generated from operating activities before changes in non-cash working 
capital. We consider this a key measure as it demonstrates our ability 
to generate the cash flow necessary to fund future growth through 
capital investment. Cash flow from operations may not be comparable to 
similar measures used by other companies.

Cash flow from operations increased by $1,614,000 (59%) in Q3 compared 
to Q2-2004 mainly as a result of increased volumes from drilling success 
and increased commodity prices. Net income increased by $2,094,000 
(468%) in Q3 compared to Q2-2004 mainly as a result of the above and the 
recognition of a future income tax recovery in Canada.

RESULTS OF OPERATIONS

Net income for the three months ended September 30, 2004 was $2,541,000 
($0.05 per basic share and $0.04 per diluted share) compared to a net 
income of $291,000 ($0.01 per share, basic and diluted) in the 
comparable period 2003. Cash flow from operations for the three months 
ended September 30, 2004 was $4,363,000 ($0.08 per share, basic and 
diluted) compared to $2,193,000 ($0.04 per share, basic and diluted) in 
the comparable period in 2003.

Net income increased 773% and cash flow from operations increased 99% in 
the three months ended September 30, 2004 compared to the same period in 
2003. The following is a brief summary of the primary changes that 
occurred during Q3-2004 that will be discussed in more detail throughout 
this MD&A:

- Sales volumes increased 45% in the three months ended September 30, 
2004 compared to the same period 2003.

- Commodity prices increased 31% in the three months ended September 30, 
2004 compared to the same period 2003.

- Future income tax recovery amounted to $1,160,000 in the three months 
ended September 30, 2004 without a corresponding amount in the same 
period in 2003.

- Stock compensation expense amounted to $381,000 in the three months 
ended September 30, 2004 without a corresponding amount in the same 
period in 2003.

/T/

OPERATING RESULTS

Daily Sales Volumes, Working Interest Before Royalties

                                         Three Months     Nine Months
                                                Ended           Ended
                                         September 30    September 30
                                         ------------    ------------
                                          2004   2003     2004   2003
---------------------------------------------------------------------
Yemen  - Oil                       Bopd  3,072  2,456    2,661  2,348
Canada - Oil and liquids           Bopd    202     58      157     52
       - Gas                      Mcfpd  3,865  1,105    2,666  1,030
---------------------------------------------------------------------
Barrels of oil equivalent (6 : 1) Boepd  3,918  2,698    3,263  2,572
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

The Company has set an average production target of 3,600 Boed for 2004 
representing a 37% increase over 2003.

Consolidated Net Operating Results

Net operating income is a non-GAAP measure. Management believes that net 
operating income is a useful supplemental measure to analyse 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. Net operating income may not be comparable to 
similar measures used by other companies.

/T/

                                            Consolidated
                               --------------------------------------
                                Nine Months Ended   Nine Months Ended
                               ------------------  ------------------
                               September 30, 2004  September 30, 2003
($000's, except                ------------------  ------------------
 per Boe amounts)                       $   $/Boe          $    $/Boe
---------------------------------------------------------------------
Oil and gas sales                  30,948   34.62     19,840    28.25
Royalties                          11,074   12.39      7,167    10.21
Operating expenses                  4,251    4.75      2,585     3.68
---------------------------------------------------------------------
Net operating income(x)            15,623   17.48     10,088    14.36
---------------------------------------------------------------------
---------------------------------------------------------------------


                                            Consolidated
                               --------------------------------------
                               Three Months Ended  Three Months Ended
                               ------------------  ------------------
                               September 30, 2004  September 30, 2003
($000's, except                ------------------  ------------------
 per Boe amounts)                       $   $/Boe          $    $/Boe
---------------------------------------------------------------------
Oil and gas sales                  13,380   37.12      7,021    28.29
Royalties                           5,153   14.30      2,862    11.53
Operating expenses                  1,772    4.91        828     3.34
---------------------------------------------------------------------
Net operating income(x)             6,455   17.91      3,331    13.42
---------------------------------------------------------------------

(x) Net operating income amounts do not reflect Yemen income tax
    expense which is paid through oil allocations with the Ministry
    of Oil and Minerals ("MOM") in the Republic of Yemen (Q3-2004 -
    $1,560,000, $4.33/Boe; Q3-2003, - $929,000, $3.74/Boe), (Q1, Q2
    and Q3-2004 - $3,328,000, $3.72/Boe; Q1, Q2 and Q3-2003 -
    $1,796,000, $2.56/Boe).

Segmented Net Operating Results

In 2004 the Company operated in two geographic areas, segmented
as the Republic of Yemen and Canada. MD&A will follow under each
of these segments.

Republic of Yemen

                                Nine Months Ended   Nine Months Ended
                               ------------------  ------------------
                               September 30, 2004  September 30, 2003
($000's, except                ------------------  ------------------
 per Boe amounts)                       $   $/Boe          $    $/Boe
---------------------------------------------------------------------
Oil sales                          25,810   35.40     17,844    27.84
Royalties                          10,202   13.99      6,875    10.73
Operating expenses                  3,269    4.48      2,143     3.34
---------------------------------------------------------------------
Net operating income(x)            12,339   16.93      8,826    13.77
---------------------------------------------------------------------


                               Three Months Ended  Three Months Ended
                               ------------------  ------------------
                               September 30, 2004  September 30, 2003
($000's, except                ------------------  ------------------
 per Boe amounts)                       $   $/Boe          $    $/Boe
---------------------------------------------------------------------
Oil sales                          10,943   38.72      6,336    28.05
Royalties                           4,743   16.79      2,776    12.29
Operating expenses                  1,354    4.79        663     2.94
---------------------------------------------------------------------
Net operating income(x)             4,846   17.14      2,897    12.82
---------------------------------------------------------------------

(x) Net operating income amounts do not reflect Yemen income tax
    expense which is paid through oil allocations with the Ministry
    of Oil and Minerals ("MOM") in the Republic of Yemen (Q3-2004 -
    $1,560,000, $4.33/Boe; Q3-2003, - $929,000, $3.74/Boe), (Q1, Q2
    and Q3-2004 - $3,328,000, $3.72/Boe; Q1, Q2 and Q3-2003 -
    $1,796,000, $2.56/Boe).

/T/

Net operating income in Yemen increased 40% in the nine months and 67% 
in the three months ended September 30, 2004 compared to the same 
periods of 2003 primarily as a result of the following:

- Sales volumes increased 13% for the nine months and 25% for the three 
months ended September 30 compared to the same periods of 2003 primarily 
as a result of Block S-1 production commencing at the end of the first 
quarter 2004. During the third quarter sales volumes for Block S-1 and 
Block 32 were 522 Bopd and 2,550 Bopd, respectively. Production volumes 
for Block S-1 were higher than sales volumes, averaging 907 Bopd during 
the second quarter. The difference is carried in oil inventory of 61,790 
barrels (38,571 barrels after the Yemen government's production sharing 
oil).

- Oil prices increased 27% for the nine months and 38% for the three 
months ended September 30 compared to the same periods of 2003.

- Operating expenses on a Boe basis increased 34% for the nine months 
and 63% for the three months ended September 30 compared to the same 
periods of 2003, mainly as a result of the increased export pipeline 
tariff on Block 32 for all of 2004 and only part of 2003 following 
recovery of all historical costs in 2003. Block 32 operating expenses 
averaged $4.36 per barrel during the third quarter compared to $2.94 per 
barrel during the third quarter 2003. Also, Block S-1 has significantly 
higher operating costs during the initial trucking phase averaging $7.75 
per barrel. This is a reflection of higher costs associated with 
trucking and higher fixed costs per Boe until volumes are increased when 
full scale production commences in 2005.

The Block 32 Production Sharing agreement allows for the recovery of 
operating costs and capital costs from oil production. Operating costs 
are recovered in the quarter expended. The capital costs are amortized 
over two years with 50% recovered in the quarter expended and the 
remaining 50% recovered in the first quarter of the following calendar 
year. The Company will receive a larger share of production in the first 
quarter of each year as 50% of the previous year's historical costs are 
recovered. The amount of oil required to recover capital and operating 
costs will vary depending upon the prevailing oil prices. The Company 
received 38% of its working interest share of production (after royalty 
and tax) in the third quarter of 2004 compared to 65% in the first 
quarter of 2004. The Company expects to receive between 36% to 41% of 
its working interest share of production in the balance of the year 
depending upon production volumes, oil prices, operating costs and 
eligible capital expenditures.

The Block S-1 Production Sharing agreement allows for the recovery of 
operating costs and capital costs from oil production. Operating costs 
are recovered in the quarter expended. New capital costs are amortized 
over eight quarters with one eighth (12.5%) recovered each quarter. In 
addition to current ongoing investments, the Company will also recover 
eligible historical costs on a "last in, first out" basis. It is 
expected that the Company will receive maximum cost oil for the balance 
of 2004 and all of 2005. The amount of oil required to recover capital 
and operating costs will vary depending upon the prevailing oil prices, 
operating costs and the amount of new capital invested. It is expected 
that the Company will continue to receive 62.5% of its working interest 
share of production (net barrels, after royalty and tax) for the balance 
of 2004 and the year 2005.

/T/

Canada

                                Nine Months Ended   Nine Months Ended
                               ------------------  ------------------
                               September 30, 2004  September 30, 2003
($000's, except                ------------------  ------------------
 per Boe amounts)                       $   $/Boe          $    $/Boe
---------------------------------------------------------------------
Oil sales                             757   36.54        244    26.97
Gas sales (6 : 1)                   3,690   30.30      1,537    32.82
NGL sales                             647   28.98        125    23.52
Other sales                            44       -         90        -
---------------------------------------------------------------------
                                    5,138   31.17      1,996    32.61
Royalties                             872    5.29        292     4.77
Operating expense                     982    5.96        442     7.23
---------------------------------------------------------------------
Net operating income                3,284   19.92      1,262    20.61
---------------------------------------------------------------------
---------------------------------------------------------------------


                              Three Months Ended  Three Months Ended
---------------------------------------------------------------------
                              September 30, 2004  September 30, 2003
---------------------------------------------------------------------
($000's, except per Boe amounts)    $      $/Boe       $       $/Boe
---------------------------------------------------------------------
---------------------------------------------------------------------
Oil sales                         364      39.50      86       26.10
Gas sales (6 : 1)               1,747      29.52     532       31.44
NGL sales                         309      32.90      46       22.50
Other sales                        17          -      21           -
---------------------------------------------------------------------
                                2,437      31.31     685       30.76
Royalties                         410       5.27      86        3.86
Operating expense                 418       5.37     165        7.41
---------------------------------------------------------------------
Net operating income            1,609      20.67     434       19.49
---------------------------------------------------------------------
---------------------------------------------------------------------

Net operating income in Canada increased 271% in the three months
ended September 30, 2004 compared to the same period of 2003
primarily as a result of the following:

-  Sales volumes increased 249% as a direct result of the 2003 and
   2004 drilling programs.
-  Commodity prices increased 2% on a Boe basis.
-  Operating costs decreased 28% on a Boe basis as a result of wells
   drilled in 2003 and 2004 that were placed on production since Q3
   2003, which have a lower operating cost than the previous wells
   on production.

GENERAL AND ADMINISTRATIVE EXPENSES (G&A)

                               Nine Months Ended   Nine Months Ended
---------------------------------------------------------------------
                              September 30, 2004  September 30, 2003
---------------------------------------------------------------------
($000's, except Boe amounts)        $      $/Boe        $      $/Boe
---------------------------------------------------------------------
---------------------------------------------------------------------
G&A (gross)                     2,490       2.79    1,167       1.66
Capitalized G&A                  (533)     (0.60)    (347)     (0.49)
Overhead recoveries              (115)     (0.13)     (37)     (0.05)
---------------------------------------------------------------------
G&A (net)                       1,842       2.06      783       1.12
---------------------------------------------------------------------
---------------------------------------------------------------------


                              Three Months Ended  Three Months Ended
---------------------------------------------------------------------
                              September 30, 2004  September 30, 2003
---------------------------------------------------------------------
($000's, except Boe amounts)        $      $/Boe       $       $/Boe
---------------------------------------------------------------------
---------------------------------------------------------------------
G&A (gross)                       839       2.33     329        1.33
Capitalized G&A                  (168)     (0.47)   (133)      (0.54)
Overhead recoveries               (66)     (0.18)    (28)      (0.11)
---------------------------------------------------------------------
G&A (net)                         605       1.68     168        0.68
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

General and administrative expenses increased 135% in the nine months 
and 260% in the three months ended September 30, 2004 compared to the 
same periods of 2003. On a Boe basis, general and administrative 
expenses increased 84% in the nine months and 147% in the three months 
ended September 30, 2004 compared to the same periods of 2003 as a 
result of:

- Effective January 1, 2004 the Company adopted the new accounting 
standard of Canadian Institute of Chartered Accountants ("CICA") section 
3870, "Stock-based Compensation and Other Stock-based Payments", 
retroactively without restatement of prior periods. This Canadian 
accounting standard requires the Company to record a compensation 
expense over the vesting period based on the fair value of options 
granted to employees and directors since January 1, 2002. Stock 
compensation expense is included in general and administrative expenses. 
Non-cash stock compensation expense amounted to $859,000 ($0.96/Boe) for 
the nine months and $381,000 ($1.06/Boe) for the three months ended 
September 30, 2004.

Based on stock option grants subsequent to January 1, 2002, it is 
expected that the effect of the compensation expense on 2004 earnings 
will be approximately $1.2 million with no effect on cash flow from 
operations.

/T/

DEPLETION, DEPRECIATION AND ACCRETION EXPENSE (DD&A)

                               Nine Months Ended   Nine Months Ended
---------------------------------------------------------------------
                              September 30, 2004  September 30, 2003
---------------------------------------------------------------------
($000's, except Per Boe amounts)    $      $/Boe        $      $/Boe
---------------------------------------------------------------------
---------------------------------------------------------------------
Republic of Yemen               4,771       6.54    4,491       7.01
Canada                          1,378       8.36      470       7.68
---------------------------------------------------------------------
                                6,149       6.88    4,961       7.06
---------------------------------------------------------------------
---------------------------------------------------------------------


                              Three Months Ended  Three Months Ended
---------------------------------------------------------------------
                              September 30, 2004  September 30, 2003
---------------------------------------------------------------------
($000's, except per Boe amounts)    $      $/Boe       $       $/Boe
---------------------------------------------------------------------
---------------------------------------------------------------------
Republic of Yemen               2,099        7.43  1,691        7.49
Canada                            502        6.45    211        9.48
---------------------------------------------------------------------
                                2,601        7.22  1,902        7.66
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

In Yemen, unproven properties in the amount of $5.5 million were 
excluded from costs subject to depletion and depreciation. This 
represents a portion of the costs incurred in Block S-1. These costs 
will be included in the depletable base as Block S-1 is developed or as 
impairment is determined.

In Yemen, DD&A on a Boe basis decreased 7% in the nine months and 1% in 
the three months ended September 30, 2004 compared to the same period of 
2003 primarily as a result of an increase in Yemen proved reserves that 
lowered the depletion rate in 2004.

In Canada, DD&A on a Boe basis decreased 32% in the three months ended 
September 30, 2004 compared to the same period of 2003 primarily as a 
result of an increase in Canadian proven reserves that lowered the 
depletion rate for the three months ended September 30, 2004. DD&A on a 
Boe basis increased 9% in the nine months ended September 30, 2004 
compared to the same period of 2003 primarily as a result of an increase 
in Canadian production which increased the depletion rate for the nine 
months ended September 30, 2004.

INCOME TAXES

Current income tax expense in Q3-2004 of $1,576,000 represents income 
taxes of $1,560,000 (Q3-2003 - $929,000) incurred and paid under the 
laws of the Republic of Yemen pursuant to the PSA on Block 32 and Block 
S-1 and $16,000 paid in Canada. The increase in Yemen is primarily the 
result of the following:

- Increased volumes mainly as a result of production start up on Block 
S-1.

- Increase in oil prices.

- An increase in the Yemen government's share of production sharing oil 
on Block 32 as a result of recovery of all historical costs during 
Q2-2003. The Yemen government's share of production sharing oil includes 
royalties and taxes.

In Q3-2004, the Company recognized $1,535,000 of the $1,687,000 
(adjusted for foreign exchange) unrecognized future tax benefits in 
Canada outstanding at June 30, 2004 as a direct result of the successful 
Canadian drilling program carried out in 2004 and increased commodity 
prices. The Company has unrecognized future tax benefits in Canada in 
the amount of $152,000 which may be recognized in the future with 
continued drilling successes in Canada.

/T/

CAPITAL EXPENDITURES/DISPOSITIONS

Capital Expenditures

                                    Three Months         Nine Months
                                  Ended Sept. 30      Ended Sept. 30
---------------------------------------------------------------------
($000's)                           2004     2003       2004     2003
---------------------------------------------------------------------
---------------------------------------------------------------------
Republic of Yemen                 3,175    1,812      7,376    7,303
Canada                            3,757    1,633      7,207    2,916
Arab Republic of Egypt              709        -        709        -
---------------------------------------------------------------------
Total capital expenditures        7,641    3,445     15,292   10,219
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Capital expenditures in 2004 are mainly comprised of the following:

Block 32, Yemen ($2,189,000)

- 3-D seismic program at Tasour, Tasour facility upgrades, drilling two 
wells at Tasour.

Block S-1, Yemen ($5,153,000)

- Drilling and completing of seven wells at An Nagyah, drilling one well 
at Harmel, drilling one well at Al Hareth and costs associated with 
commercial development of An Nagyah.

Other, Yemen ($34,000)

- Mainly costs associated with obtaining Block 72 in Yemen.

Nuqra Block 1, Egypt ($709,000)

- Costs associated with acquiring the Block.

Canada ($7,207,000)

- Costs mainly related to the drilling of twelve wells, tie-in of four 
of these wells plus the tie-in of two wells drilled in prior years as 
part of the 2004 exploration and development program.

- Other costs related to oil and gas lease acquisitions for future 
drilling associated with the 2004 and 2005 exploration and development 
programs.

OUTSTANDING SHARE DATA

Common shares issued and outstanding as at September 30, 2004 are 
54,096,439.

LIQUIDITY AND CAPITAL RESOURCES

Funding for the Company's capital expenditures in the third quarter of 
2004 was provided by cash flow from operations and working capital.

At September 30, 2004 the Company had a working capital deficiency of 
$1,203,000, zero debt and a revolving credit facility of $3,963,000, an 
acquisition/development credit facility of $1,585,000 and a letter of 
credit facility of $2,000,000.

The Company expects to fund the balance of its 2004 exploration and 
development program (remaining budget of $11 million firm and 
contingent) through the use of working capital, cash flow, debt and 
possible equity financing. The use of our credit facilities during 2004 
and 2005 is expected to remain within conservative guidelines of a debt 
to cash flow ratio of less than 1:1. The Company is currently 
negotiating a new increased revolving credit facility which is expected 
to be finalized in November 2004.

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:

/T/

                        Three Months               Twelve Months
---------------------------------------------------------------------
($000's)                        2004        2005      2006      2007
---------------------------------------------------------------------
---------------------------------------------------------------------
Office and equipment leases     $ 39       $ 146     $ 147      $ 49
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

In June 2004, the Company entered into a one year fixed price contract 
to sell 10,000 barrels of oil per month in Block 32 commencing July 1, 
2004 at $33.90 per barrel for Dated Brent plus or minus the Yemen 
Government's official selling price differential.

In February 2004, the Company entered into a contract to sell 1,500 
gigajoules (GJ) per day (approximately 1,500 Mcfpd) of natural gas in 
Canada from April 1 to October 31, 2004 for Cdn$5.795/GJ which is now 
expired.

In December 2003, the Company issued flow through shares with terms 
providing that the Company renounce Canadian tax deductions in the 
amount of Cdn$3,000,000 to subscribers with the entire amount to be 
expended by the Company by December 31, 2004. As at September 30, 2004 
the Company has fulfilled this expenditure commitment.

Pursuant to the Company's farm-in agreement on the Nuqra Concession in 
Egypt, the Company is committed to spend $6 million over the next 5 
years to earn its 50% working interest. As part of this commitment the 
Company issued a $2 million letter of credit on July 8, 2004 to Ganoub 
El Wadi Holding Petroleum Company which expires on February 14, 2007. 
This letter of credit is secured by a guarantee granted by Export 
Development Canada.

/T/

Consolidated Statements Of Income and Deficit

(Unaudited - Expressed in thousands of U.S. Dollars)


                                  Three Months           Nine Months
                            Ended September 30    Ended September 30
                                2004      2003       2004       2003
---------------------------------------------------------------------
---------------------------------------------------------------------
                                     (Restated            (Restated
                                 Notes 2 and 3)       Notes 2 and 3)

REVENUE
Oil and gas sales
 net of royalties            $ 8,227   $ 4,159   $ 19,874   $ 12,673
Other income                       6         4          9         10
---------------------------------------------------------------------
                               8,233     4,163     19,883     12,683
---------------------------------------------------------------------

EXPENSES
 Operating                     1,772       828      4,251      2,585
 General and administrative      605       168      1,842        783
  Foreign exchange (gain) loss   277        45        274         66
 Interest                         21         -         21          -
 Depletion, depreciation
  and accretion                2,601     1,902      6,149      4,961
---------------------------------------------------------------------
                               5,276     2,943     12,537      8,395
---------------------------------------------------------------------

Net income before
 income taxes                  2,957     1,220      7,346      4,288
Income taxes
Current                        1,576       929      3,355      1,796
Future                        (1,160)        -     (1,160)         -
---------------------------------------------------------------------
NET INCOME                     2,541       291      5,151      2,492
---------------------------------------------------------------------
Deficit, beginning of period  (3,994)  (10,025)    (6,393)   (12,298)
Retroactive application of
 changes in accounting
 policies (Notes 2 and 3)          -         -       (211)        72
---------------------------------------------------------------------
Deficit, beginning of period,
 as restated                  (3,994)  (10,025)    (6,604)   (12,226)
---------------------------------------------------------------------
DEFICIT, END OF PERIOD      $ (1,453) $ (9,734)  $ (1,453)  $ (9,734)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income per share:
 (Note 5)
  Basic                       $ 0.05    $ 0.01     $ 0.10     $ 0.05
  Diluted                     $ 0.04    $ 0.01     $ 0.09     $ 0.05
---------------------------------------------------------------------
---------------------------------------------------------------------



Consolidated Balance Sheets

(Unaudited - Expressed in thousands of U.S. Dollars)

                                         September 30,  December 31,
                                                 2004          2003
---------------------------------------------------------------------
---------------------------------------------------------------------
                                                         (Restated
                                                       Notes 2 and 3)

ASSETS
Current
Cash and cash equivalents                     $ 1,455        $ 4,452
Accounts receivable                             3,282          2,383
Oil inventory                                     943              -
Prepaid expenses                                  108            161
---------------------------------------------------------------------
                                                5,788          6,996
---------------------------------------------------------------------
Property and equipment
Republic of Yemen                              20,703         18,563
Canada                                         14,546          8,470
Arab Republic of Egypt                            709              -
---------------------------------------------------------------------
                                               35,958         27,033
Future income tax asset                         2,732          1,572
---------------------------------------------------------------------
                                             $ 44,478       $ 35,601
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES
Current
  Accounts payable and accrued liabilities    $ 6,991        $ 4,459
Asset retirement obligations (Note 3)             715            467
---------------------------------------------------------------------
                                                7,706          4,926
---------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital (Note 4)                         37,083         36,996
Contributed surplus (Note 2)                    1,142              -
Deficit (Notes 2 and 3)                        (1,453)        (6,321)
---------------------------------------------------------------------
                                               36,772         30,675
---------------------------------------------------------------------
                                             $ 44,478       $ 35,601
---------------------------------------------------------------------
---------------------------------------------------------------------



Consolidated Statements Of Cash Flows

(Unaudited - Expressed in thousands of U.S. Dollars )


                                  Three Months           Nine Months
                            Ended September 30    Ended September 30
                                2004      2003       2004       2003
---------------------------------------------------------------------
---------------------------------------------------------------------
CASH FLOWS RELATED TO THE      (Restated Notes       (Restated Notes
FOLLOWING ACTIVITIES:                  2 and 3)              2 and 3)

OPERATING
Net income                   $ 2,541    $  291    $ 5,151    $ 2,492
Adjustments for
Depletion, depreciation
 and accretion                 2,601     1,902      6,149      4,961
Future income taxes           (1,160)        -     (1,160)         -
Stock-based compensation
 (Note 2)                        381         -        859          -
---------------------------------------------------------------------
Cash flow from operations      4,363     2,193     10,999      7,453
Change in non-cash
 working capital                (632)      502     (2,208)     2,582
---------------------------------------------------------------------
                               3,731     2,695      8,791     10,035
---------------------------------------------------------------------

FINANCING
Issue of Common shares             -         -         87        196
Repurchase of Common shares        -         -          -        (41)
Change in non-cash
 working capital                  10         -         10          -
---------------------------------------------------------------------
                                  10         -         97        155
---------------------------------------------------------------------

INVESTING
Exploration and development
 expenditures
Republic of Yemen             (3,175)   (1,812)    (7,376)    (7,303)
Canada                        (3,757)   (1,633)    (7,207)    (2,916)
Arab Republic of Egypt          (709)        -       (709)         -
Changes in non-cash
 working capital               1,981     1,139      3,407      1,366
---------------------------------------------------------------------
                              (5,660)   (2,306)   (11,885)    (8,853)
---------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS         (1,919)      389     (2,997)     1,337
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD           3,374     3,543      4,452      2,595
---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
 END OF PERIOD               $ 1,455   $ 3,932    $ 1,455    $ 3,932
---------------------------------------------------------------------
---------------------------------------------------------------------

Supplemental Disclosure:
Cash interest paid           $    21   $     -    $    21    $     -
Cash taxes paid              $ 1,576   $   929    $ 3,355    $ 1,796
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Notes To The Consolidated Financial Statements

(Unaudited)

1. Basis of presentation

The interim consolidated financial statements of TransGlobe Energy 
Corporation ("TransGlobe" or the "Company") for the three and the nine 
month periods ended September 30, 2004 and 2003 have been prepared by 
management in accordance with accounting principles generally accepted 
in Canada on the same basis as the audited consolidated financial 
statements as at and for the year ended December 31, 2003, except as 
outlined in Note 2. These interim consolidated financial statements 
should be read in conjunction with the consolidated financial statements 
and the notes thereto in TransGlobe's annual report for the year ended 
December 31, 2003.

2. Changes in accounting policies

(a) Asset retirement obligations

Effective January 1, 2004 the Company retroactively adopted the Canadian 
Institute of Chartered Accountants ("CICA") section 3110, "Asset 
Retirement Obligations". The new recommendations require the recognition 
of the fair value of obligations associated with the retirement of 
tangible long-lived assets be recorded in the period the asset is put 
into use, with a corresponding increase to the carrying amount of the 
related asset. The obligations recognized are statutory, contractual or 
legal obligations. The liability is accreted over time for changes in 
the fair value of the liability through charges to accretion expense 
which is included in depletion, depreciation and accretion expense. The 
costs capitalized to the related assets are amortized to earnings in a 
manner consistent with the depletion and depreciation of the underlying 
asset. Note 3 discloses the impact of the adoption of CICA section 3110 
on the financial statements.

(b) Stock-based compensation

Effective January 1, 2004 the Company adopted the new accounting 
standard of CICA section 3870, "Stock-based Compensation and Other 
Stock-based Payments", retroactively without restatement of prior 
periods. This Canadian accounting standard requires the Company to 
record a compensation expense over the vesting period based on the fair 
value of options granted to employees and directors since January 1, 
2002. Stock compensation expense is included in general and 
administrative expenses. This change resulted in an increase to opening 
deficit of $283,000, an increase to opening contributed surplus of 
$283,000 and an expense of $859,000 for the nine months and $381,000 for 
the three months ended September 30, 2004.

(c) Property and equipment - oil and gas

Effective January 1, 2004 the Company adopted Accounting Guideline 16, 
"Oil and Gas Accounting - Full Cost" ("AcG-16"), which replaces 
Accounting Guideline 5, "Full Cost Accounting in the Oil and Gas 
Industry". AcG-16 modifies how the ceiling test is performed and is 
consistent with CICA section 3063, "Impairment of Long-lived Assets". 
The recoverability of a cost centre is tested by comparing the carrying 
value of the cost centre to the sum of the undiscounted cash flows 
expected from the cost centre's use and eventual disposition. If the 
carrying value is unrecoverable the cost centre is written down to its 
fair value. This approach incorporates risks and uncertainties in the 
expected future cash flows which are discounted using a risk free rate. 
The adoption of AcG-16 had no effect on the Company's financial results.

(d) Impairment of long-lived assets

Effective January 1, 2004 the Company adopted CICA section 3063, 
"Impairment of Long-lived Assets", which had no effect on the 
consolidated financial statements.

3. Asset retirement obligations

The Company retroactively adopted the new recommendations on the 
recognition of the obligations to retire long-lived tangible assets. The 
change was effective January 1, 2004 and the new accounting policy was 
applied retroactively. The impact was as follows:

/T/

Consolidated Balance Sheet - as at December 31, 2003

---------------------------------------------------------------------
(000's)                         As Reported    Change    As Restated
---------------------------------------------------------------------
---------------------------------------------------------------------
Assets
  Net property and equipment       $ 26,646     $ 387       $ 27,033
Liabilities and shareholders' equity
  Asset retirement obligations            -       467            467
  Provision for site restoration
   and abandonment                      153      (153)             -
  Deficit                            (6,393)       72         (6,321)
---------------------------------------------------------------------
---------------------------------------------------------------------

Consolidated Statement of Income and Deficit


                                 Nine Months Ended September 30, 2003
---------------------------------------------------------------------
(000's)                         As Reported    Change    As Restated
---------------------------------------------------------------------
---------------------------------------------------------------------
Depletion, depreciation
 and accretion                     $  4,961     $   -       $  4,961
Net income                            2,492         -          2,492
---------------------------------------------------------------------
---------------------------------------------------------------------


                                Three Months Ended September 30, 2003
---------------------------------------------------------------------
(000's)                         As Reported    Change    As Restated
---------------------------------------------------------------------
---------------------------------------------------------------------
Depletion, depreciation
 and accretion                     $  1,902     $   -       $  1,902
Net income                              291         -            291
---------------------------------------------------------------------
---------------------------------------------------------------------

At September 30, 2004, the estimated total undiscounted amount
required to settle the asset retirement obligations was $1,069,000.
These obligations will be settled at the end of the useful lives of
the underlying assets, which currently extend up to 10 years into the
future. This amount has been discounted using a credit-adjusted
risk-free interest rate of 6.5%.

Changes to asset retirement obligations were as follows:
---------------------------------------------------------------------
                                                         Nine months
                                                      ended Sept. 30,
(000's)                                                         2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Asset retirement obligations, December 31, 2003                $ 467
Liabilities incurred during period                               223
Liabilities settled during period                                  -
Accretion                                                         25
---------------------------------------------------------------------
Asset retirement obligations, September 30, 2004                 715
---------------------------------------------------------------------
---------------------------------------------------------------------

4. Share capital

The Company is authorized to issue an unlimited number of common
shares with no par value.

Continuity of common shares
(000's)                                                2004
---------------------------------------------------------------------
---------------------------------------------------------------------
                                              Shares          Amount
---------------------------------------------------------------------
Balance, December 31, 2003                    53,743        $ 36,996
Stock options exercised                          353              87
---------------------------------------------------------------------
Balance, September 30, 2004                   54,096        $ 37,083
---------------------------------------------------------------------
---------------------------------------------------------------------

Continuity of stock options

                                                            Weighted
                                                             Average
(000's, except per share amounts)          Number of  Exercise Price
                                             Options       Per Share
---------------------------------------------------------------------
---------------------------------------------------------------------
Balance, December 31, 2003                     2,759          $ 0.36
Granted                                        1,100            2.48
Exercised                                       (353)           0.24
---------------------------------------------------------------------
Balance, September 30, 2004                    3,506          $ 1.04
---------------------------------------------------------------------
---------------------------------------------------------------------

Stock-based compensation

The fair values of all stock options granted are estimated on the
date of grant using the Black-Scholes option-pricing model. No stock
options were granted during the three months ended September 30,
2004. The weighted average fair market value of stock options
granted during the nine months ended September 30, 2004 and the
assumptions used in their determination are as noted below:


                                                         Nine months
                                                               Ended
                                                      Sept. 30, 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average fair market value per option                 $ 1.36
Risk-free interest rate (percent)                               5.30
Expected life (years)                                           4.00
Volatility (percent)                                           66.64
Expected annual dividend per share                                 -
---------------------------------------------------------------------
---------------------------------------------------------------------

5. Per share amounts

The weighted average number of common shares and diluted common
shares outstanding during the nine months ended September 30, 2004
was 54,081,000 (2003 - 51,949,000) and 56,376,000
(2003 - 53,091,000), respectively and during the three months ended
September 30, 2004 was 54,096,000 (2003 - 52,285,000) and 56,392,000
(2003 - 53,686,000), respectively.

6. Segmented information


                                   Three Months        Nine Months
                              Ended September 30  Ended September 30
(000's)                           2004      2003      2004      2003
---------------------------------------------------------------------
---------------------------------------------------------------------
                                       (Restated           (Restated
                                   Notes 2 and 3)      Notes 2 and 3)

Oil and gas sales, net
 of royalties
  Republic of Yemen            $ 6,200   $ 3,560  $ 15,608  $ 10,969
  Canada                         2,027       599     4,266     1,704
---------------------------------------------------------------------
                                 8,227     4,159    19,874    12,673
---------------------------------------------------------------------
Operating expenses
  Republic of Yemen              1,354       663     3,269     2,143
  Canada                           418       165       982       442
---------------------------------------------------------------------
                                 1,772       828     4,251     2,585
---------------------------------------------------------------------
Depletion, depreciation
 and accretion
  Republic of Yemen              2,099     1,691     4,771     4,491
  Canada                           502       211     1,378       470
---------------------------------------------------------------------
                                 2,601     1,902     6,149     4,961
---------------------------------------------------------------------
Segmented operations             3,854     1,429     9,474     5,127
Other income                         6         4         9        10
General and administrative         605       168     1,842       783
Interest                            21         -        21         -
Foreign exchange (gain) loss       277        45       274        66
Income taxes                       416       929     2,195     1,796
---------------------------------------------------------------------
Net income                     $ 2,541     $ 291   $ 5,151   $ 2,492
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

7. Commitments

In June 2004, the Company entered into a one year fixed price contract 
to sell 10,000 barrels of oil per month in Block 32 commencing July 1, 
2004 at $33.90 per barrel for Dated Brent plus or minus the Yemen 
Government's official selling price differential.

The above includes 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. All statements in this 
release, other than statements of historical facts, that address future 
production, reserve potential, exploration drilling, exploitation 
activities and events or developments that the Company expects are 
forward-looking statements. Although TransGlobe believes the 
expectations expressed in such forward-looking statements are based on 
reasonable assumptions, such statements are not guarantees of future 
performance and actual results or developments may differ materially 
from those in the forward-looking statements. Factors that could cause 
actual results to differ materially from those in forward-looking 
statements include oil and gas prices, exploitation and exploration 
successes, continued availability of capital and financing, and general 
economic, market or business conditions.

/T/

s/s/ Ross Clarkson

Ross G. Clarkson
President & C.E.O.

/T/

-30-


FOR FURTHER INFORMATION PLEASE CONTACT:

TransGlobe Energy Corporation
Ross G. Clarkson
President & C.E.O.
(403) 264-9888
(403) 264-9898 (FAX)

or

TransGlobe Energy Corporation
Lloyd W. Herrick
Vice President & C.O.O.
(403) 264-9888
(403) 264-9898 (FAX)
Email: trglobe@trans-globe.com
Website: www.trans-globe.com

or

Executive Offices:
#2900, 330 -5th Avenue, S.W.,
Calgary, AB T2P 0L4