NEWS RELEASE TRANSMITTED BY Marketwire



FOR: TRANSGLOBE ENERGY CORPORATION

TSX SYMBOL:
 TGL
NASDAQ SYMBOL:
 TGA

TransGlobe Energy: 2008 First Quarter Interim Report and Press Release

May 05, 2008 - 09 01 ET

CALGARY, ALBERTA--(Marketwire - May 5, 2008) - TransGlobe Energy Corporation ("TransGlobe" or the "Company") (TSX:TGL) (NASDAQ:TGA) is pleased to announce its financial and operating results for the three-month period ended March 31, 2008. All dollar values are expressed in United States dollars unless otherwise stated. The conversion to barrels of oil equivalent ("Boe") of natural gas to oil is made on the basis of six thousand cubic feet of natural gas being equivalent to one barrel ("Bbl") of crude oil. With the sale of TransGlobe's Canadian assets having closed on April 30, the results from the Canadian segment of operations are being presented as "discontinued operations" in this document.

HIGHLIGHTS

- Record production of 7,845 barrels of oil equivalent per day in the first quarter;

- Record cash flow from operations in the first quarter of $17.9 million ($0.30/diluted share);

- First quarter net income of $4.5 million ($0.07/diluted share);

- Completed acquisition of GHP, 900+ Bopd of production in West Gharib (Egypt), effective February 5, 2008;

- Year-to-date drilled four new oil wells, three on West Gharib and one on Block 32 in Yemen;

- Block 75 Production Sharing Agreement (Yemen) fully approved on March 8, 2008;

- Closed sale of Canadian assets April 30, 2008 for Cdn $56.7 million (effective January 1, 2008);

- Increased 2008 production guidance to average 7,300-7,500 Boepd;

- Increased 2008 cash flow from operations guidance to $68.0-$70.0 million.

- Moved from American Stock Exchange to NASDAQ Global Select Market effective January 18, 2008, retaining the trading symbol "TGA";

Corporate Summary

The first quarter of 2008 brought significant additional growth to TransGlobe, with production averaging a record 7,845 Boepd. The acquisition of approximately 900 barrels of oil per day ("Bopd") in the West Gharib area was completed on February 5, adding to the approximately 1,600 Bopd acquired on September 25, 2007. The Company has further increased production from the West Gharib fields by approximately 900 Bopd to approximately 3,400 Bopd since assuming operatorship. Based on the initial drilling success and the planned extensive development program, the production guidance for 2008 has now been increased to 7,300 to 7,500 Boepd (previous guidance: 6,900-7,100 Boepd). Total April production averaged 8,720 Boepd (7,270 Bopd from continuing operations).

The Company achieved record cash flow from operations in the quarter of $17.9 million. During the first quarter, oil prices averaged $96.90/Bbl for dated Brent, the benchmark price of TransGlobe's Middle East/North Africa production, representing a new historic high. Oil prices continued to rise throughout the month of April, setting new records. Accordingly, the Company has revised the budget price assumptions for dated Brent from $80.00/Bbl to $100.00/Bbl for the balance of the year. The revised production forecast and oil price assumptions result in an increased cash flow forecast for 2008 of $68.0 to $70.0 million (previous guidance called for $53.0 to $57.0 million).

Net income per share totaled $0.07 for the first quarter. The Company recorded total derivative losses for the period of $3.9 million. Of this amount, $1.5 million represents a cash expense and the balance of $2.4 million represents an unrealized loss on derivative contracts. TransGlobe's derivative contracts are a requirement under the bank lending facilities. These facilities were used to cover the costs of the initial West Gharib acquisition. Managing risk in commodity price fluctuations through derivative contracts is common practice in the oil and gas industry in order to protect cash flows.

With the acquisition of GHP, the sale of the Canadian assets, and organic growth achieved at West Gharib in a short period of time, TransGlobe has successfully transitioned to a pure Middle East/North Africa growth company. The Company is well underway to achieving its mid-term objective of "10 by 10" - 10,000 Boepd by 2010. An additional 10-12 wells are planned in Egypt for the balance of the year as well as enhanced recovery projects in West Gharib. In Yemen, a further six to eight wells are planned, which could increase both production and reserves.

/T/

                     Annual and Special Meeting of Shareholders
                                    to be held on
                          Wednesday, May 7, 2008 at 3:00 p.m.
                         Calgary Petroleum Club (Viking Room)
                                 319 - 5th Avenue S.W.
                                    Calgary, Alberta


FINANCIAL AND OPERATING RESULTS
($000s, except per share, price, volume amounts and % change)

                                              Three Months Ended March 31
                                             -------------------------------
Financial                                          2008      2007   Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and gas revenue                              60,419    25,754      135%
Oil and gas revenue net of royalties and other   35,915    17,251      108%
Operating expense                                 5,780     2,408      140%
General and administrative expense                2,272     1,203       89%
Depletion, depreciation and accretion expense    10,713     5,692       88%
Income taxes                                      7,150     2,076      244%
Cash flow from operations(1)                     17,873    12,010       49%
 Basic per share                                   0.30      0.20
 Diluted per share                                 0.30      0.20
Net income                                        4,458     5,980      (25)%
 Basic per share                                   0.07      0.10
 Diluted per share                                 0.07      0.10
Capital expenditures                              7,405    10,209      (27)%
Corporate acquisition                            44,218         -
Long-term debt                                   47,601         -
Common shares outstanding
 Basic (weighted average)                        59,712     59,538       0%
 Diluted (weighted average)                      60,567     60,497       0%
Total assets                                    249,401    118,981     110%
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(1) Cash flow from operations is a non-GAAP measure that represents cash
    generated from operating activities before changes in non-cash working
    capital.


Operating
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total production (Boepd) (6:1)(1)                 7,845     5,175       52%
Total sales (Boepd) (6:1)(1)                      7,845     5,341       47%
 Oil and liquids (Bopd)                           6,698     4,312       55%
  Average price ($ per Bbl)                       90.32     56.45       60%
 Gas (Mcfpd)                                      6,882     6,177       11%
  Average price ($ per Mcf)                        8.46      6.73       26%
Operating expense ($ per Boe)                      8.10      5.01       62%
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(1) The differences in production and sales volumes result from inventory
    changes.


Financial from Continuing Operations (excludes Canadian Operations)
----------------------------------------------------------------------------
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Oil and gas revenue from continuing operations   52,064    20,016      160%
Oil and gas revenue, net of royalties and
 other, from continuing operations               29,348    12,603      133%
Operating expense from continuing operations      3,923     1,364      188%
Depletion, depreciation and accretion expense
 from continuing operations                       7,989     3,006      166%
Cash flow from continuing operations(1)          13,164     8,406       57%
 Basic per share                                   0.22      0.14
 Diluted per share                                 0.22      0.14
Net income from continuing operations             2,390     5,136      (53)%
 Basic per share                                   0.04      0.09
 Diluted per share                                 0.04      0.08
Capital expenditures                              6,265     6,309       (1)%
----------------------------------------------------------------------------
(1) Cash flow from continuing operations is a non-GAAP measure that
    represents cash generated from continuing operating activities before
    changes in non-cash working capital.


Operating from Continuing Operations (excludes Canadian Operations)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total production from continuing operations
 (Boepd) (6:1)                                    6,322     3,892       62%
Total sales (Boepd) (6:1)                         6,322     3,892       62%
 Oil and liquids (Bopd)                           6,322     3,892       62%
  Average price ($ per barrel)                    90.49     57.14       58%
Operating expense ($ per Boe)                      6.82      3.89       76%
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/T/

OPERATIONS UPDATE

ARAB REPUBLIC OF EGYPT

West Gharib, Arab Republic of Egypt (100% working interest, TransGlobe operated)

Operations and Exploration

On February 5, 2008, TransGlobe Petroleum International Inc. ("TGPI", a wholly owned subsidiary of TransGlobe) acquired all of the shares of GHP for US$40.2 million, plus working capital adjustments with an effective date of September 30, 2007. GHP held a 30% working interest in the West Gharib Production Sharing Concession ("PSC"). The GHP acquisition added approximately 900 Bopd of production and 2.8 million barrels of proved plus probable reserves to TransGlobe on February 5, 2008.

Following the acquisition of GHP, TransGlobe holds a 100% working interest in the West Gharib PSC, which consists of nine development leases, including the East Hoshia development lease which was approved in January 2008. Eight of the nine development leases (excluding the Hana development lease) are encumbered with a 25% financial interest through an investment agreement between Dublin Petroleum (Egypt) Limited (a wholly owned subsidiary of TransGlobe) and a private company. The 25% financial interest is non-voting but otherwise is treated as a 25% participating interest partner.

Three wells have been drilled to date in 2008, resulting in three oil wells (two at Hana and one at Hoshia). The drilling rig is currently drilling at South Rahmi and is scheduled to drill continuously in West Gharib through 2009. In addition, a new 1,200 hp drilling rig has been contracted, which is scheduled to arrive from China in June of this year. It is expected that the new rig will be drilling at West Gharib by mid-July.

In addition to the planned drilling program (15+ wells in 2008), a new 300+ km2 3-D seismic acquisition program on the central/northern development blocks is scheduled for the third quarter of this year. Test lines are currently being acquired to assist in the final design of the new 3-D.

The Company has identified the Hana and Hoshia fields as water flood/enhanced recovery projects with pilot injection projects scheduled to commence mid-2008. Assuming the pilot projects support the early reservoir simulation work, it is expected that full field-enhanced recovery project(s) could be approved by year end. This could significantly increase the recoverable reserves assigned to the respective pools. Full field development would follow in 2009 and 2010.

Production

Production from West Gharib averaged 3,160 Bopd (2,432 Bopd to TransGlobe) during the quarter, representing a 53% increase to TransGlobe over the previous quarter. Production increases are primarily due to the acquisition of approximately 900 Bopd effective February 5 and drilling successes on the Hana field.

With the addition of three oil wells (two at Hana during Q-1 and one completed at Hoshia in April 2008), production from West Gharib averaged approximately 3,800 Bopd (approximately 3,350 Bopd to TransGlobe) in April, representing an increase of 30% on a gross field basis and an increase of 110% to TransGlobe since the fourth quarter of 2007.

/T/

Quarterly West Gharib Production (Bopd)
                                                  2008            2007
----------------------------------------------------------------------------
                                                    Q-1       Q-4     Q-3(1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross field production rate                       3,160     2,932       218
TransGlobe working interest                       2,432     1,594       118
TransGlobe net (after royalties)                  1,389       971        73
TransGlobe net (after royalties and tax)(2)         958       714        51
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(1) Production presented represents six days production averaged over the
    quarter.
(2) Under the terms of the West Gharib PSC, royalties and taxes are paid
    out of the government's share of production sharing oil.

/T/

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

Operations and Exploration

On the Nuqra Block, existing seismic data was remapped and several Cretaceous targets were identified for a future drilling program. One exploration well has been budgeted for 2008, on a contingency basis. The Company has discussed rig sharing possibilities with the adjacent operators to facilitate a potential 2008/2009 drilling program.

YEMEN EAST- Masila Basin

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

Operations and Exploration

Two wells have been drilled to date, resulting in one oil well (Godah #9) and one exploratory dry hole (Maleen #1). The drilling rig is scheduled to return to Block 32 in early June to drill an exploration well targeting a Qishn prospect east of Tasour.

Production

Production from Block 32 averaged 7,482 Bopd (1,033 Bopd to TransGlobe) during the quarter, essentially flat with the previous quarter. Production averaged approximately 7,580 Bopd (1,047 Bopd to TransGlobe) during April.

A six-inch gas pipeline connecting the Godah production facility to the Tasour Central Production Facility ("CPF") was constructed to supply associated gas production from the Godah pool to the Tasour CPF for fuel gas. It is expected that up to 60% of diesel being consumed for power generation can be replaced with natural gas, resulting in lower operating costs. The fuel-gas project is expected to be operational in the second quarter of 2008.

/T/

Quarterly Block 32 Production (Bopd)
                                           2008              2007
----------------------------------------------------------------------------
                                          Q-1       Q-4       Q-3       Q-2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross production rate                   7,482     7,582     8,913     8,488
TransGlobe working interest             1,033     1,047     1,231     1,172
TransGlobe net (after royalties)          579       620       845       900
TransGlobe net (after royalties
 and tax)(1)                              455       478       722       819
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----------------------------------------------------------------------------
(1) Under the terms of the Block 32 PSA royalties and taxes are paid out of
    the government's share of production sharing oil.

/T/

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

Operations and Exploration

Field acquisition of 410 km2 of 3-D seismic and 100 km of 2-D seismic was completed at the end of March 2008. The new seismic data will be processed and mapped by mid-2008, with two exploration wells scheduled for the second half of 2008.

The Block 72 joint venture group has a remaining commitment of one exploration well during the first exploration period, which has been extended to January 2009.

Block 84, Republic of Yemen (33% working interest)

Operations and Exploration

The Production Sharing Agreement ("PSA") for Block 84 was signed with the Ministry of Oil and Minerals ("MOM") on April 13, 2008. The PSA has been sent to Parliament for final approval and ratification, which is expected to occur later this year. A 400+ km2 3-D seismic acquisition program is planned for late 2008 with exploration drilling to commence in 2009. The timing of the 3-D seismic acquisition program is contingent upon receiving final approval and ratification of the Block 84 PSA.

Block 84 encompasses 731 km2 (approximately 183,000 acres) and is located in the Masila Basin adjacent to the Canadian Nexen Masila Block where more than one billion barrels of oil have been produced to date. The Block 84 joint venture group has committed to carry out a 3-D seismic acquisition program and the drilling of four exploration wells during the first exploration period of 42 months.

YEMEN WEST- Marib Basin

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

Operations and Exploration

The operator is currently sourcing a drilling rig and services for Block S-1 and 75. It is expected that drilling will commence on Block S-1 by the fourth quarter of 2008.

Gas injection commenced in the western portion of the An Nagyah field during the first quarter to improve production performance and increase recoverable reserves. In addition, the operator of the Block S-1 Joint Venture group has initiated discussions with MOM regarding a potential development scheme to produce and sell known deposits of gas on S-1. At present, TransGlobe has not booked the significant gas reserves associated with the An Naeem discovery. An approved gas development plan is required to proceed with recognizing the reserves and with development.

A combined 3-D seismic program is planned to commence in late 2008 to define additional exploration drilling locations on the northwest portion of Block S-1 and the north portion of Block 75.

Production

Production from Block S-1 averaged 11,378 Bopd (2,844 Bopd to TransGlobe) during the first quarter, representing an increase of 6% over the previous quarter. Production averaged approximately 11,500 Bopd (2,875 Bopd to TransGlobe) during April.

The new expanded CPF at An Nagyah became fully operational in the fourth quarter of 2007 and is now capable of processing 20,000+ Bopd of oil production and associated gas production.

/T/

Quarterly Block S-1 Production (Bopd)
                                             2008              2007
----------------------------------------------------------------------------
                                          Q-1       Q-4       Q-3       Q-2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross field production rate            11,378    10,768     9,924    11,167
TransGlobe working interest             2,844     2,692     2,481     2,792
TransGlobe net (after royalties)        1,593     1,469     1,418     1,577
TransGlobe net (after royalties
 and tax)(1)                            1,253     1,153     1,162     1,264
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Under the terms of the Block S-1 PSA royalties and taxes are paid out
    of the government's share of production sharing oil.

/T/

Block 75, Republic of Yemen (25% working interest)

Operations and Exploration

The PSA for Block 75 was ratified and signed into law effective March 8, 2008. A combined 3-D seismic program (Block S-1 and Block 75) is planned to commence in late 2008, with exploration drilling to commence in 2009.

Block 75 encompasses 1,050 km2 (approximately 262,500 acres) and is located in the Marib Basin adjacent to Block S-1. The Block 75 joint venture group has committed to carry out a 3-D seismic acquisition program and the drilling of one exploration well during the first exploration period of 36 months.

CANADA

Operations and Exploration

In December 2007, the Company announced the strategic decision to sell the Canadian division to fund and focus on growth opportunities in the Middle East/North Africa region. Early in 2008, the Company retained Tristone Capital as financial advisor to assist in the divestment of the Canadian properties. On April 16, 2008, the Company announced the signing of a purchase and sale agreement with Direct Energy Marketing Limited to sell all of TransGlobe's Canadian properties, including current production of approximately 1,450 Boepd, for Cdn$ 56.7 million with an effective date of January 1, 2008.

Closing occurred on April 30, 2008, resulting in an adjusted net payment of Cdn$52.0 million to TransGlobe at closing. The closing price was adjusted for net revenues and expenditures from January 1 through April 30, 2008 and other customary adjustment and closing conditions. Concurrently, the Company reduced its total debt by $55.0 million to the current level of $43.0 million. This translates in to a debt-to-forward-cash-flow ratio of less than 0.7:1 and debt-to-market-capitalization ratio of less than 20%.

Production

Production averaged 1,523 Boepd during the first quarter of 2008, essentially flat with the previous quarter. Production averaged approximately 1,450 Boepd in April.

/T/

Quarterly Canadian Production (Boepd)
                                             2008              2007
---------------------------------------------------------------------------
                                          Q-1       Q-4       Q-3      Q-2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
TransGlobe working interest             1,523     1,504     1,397    1,389
TransGlobe net (after royalties)        1,197     1,250     1,175    1,144
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/T/

MANAGEMENT'S DISCUSSION AND ANALYSIS

May 5, 2008

Management's discussion and analysis ("MD&A") should be read in conjunction with the unaudited interim financial statements for the three months ended March 31, 2008 and 2007 and the audited financial statements and MD&A for the year ended December 31, 2007 included in the Company's annual report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada 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 available on SEDAR at www.sedar.com. The Company's annual report on Form 40-F can be found in the Electronic Data Gathering, Analysis and Retrieval ("EDGAR") database at www.sec.gov.

Forward-Looking Statements

This 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, well production performance, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions.

Non-GAAP Measures

This document contains the term "cash flow from operations" and "cash flow from continuing operations", which should not be considered an alternative to, or more meaningful than "cash flow from operating activities" as determined in accordance with Generally Accepted Accounting Principles (GAAP). Cash flow from operations and cash flow from continuing operations are non-GAAP measures that represent 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. Cash flow from operations and cash flow from continuing operations may not be comparable to similar measures used by other companies.

Discontinued Operations

During 2008, TransGlobe committed to a plan to dispose of its Canadian segment of operations to allow the Company to focus its continuing operations on the development of its Middle East/North Africa assets. Accordingly, the Canadian segment has been reclassified as discontinued operations in the Consolidated Financial Statements. This is further discussed in the MD&A section entitled "Operating results from discontinued operations".

/T/

Reconciliation of Cash Flow from Operations and Cash Flow from Continuing
Operations

                                                Three Months Ended March 31
----------------------------------------------------------------------------
(000s)                                                      2008       2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from operating activities                     $ 16,316   $ 11,529
Changes in non-cash working capital from continuing
 operations                                                1,645      1,105
Changes in non-cash working capital from
 discontinued operations                                     (88)      (624)
----------------------------------------------------------------------------
Cash flow from operations                                 17,873     12,010
Less: Cash flow from discontinued operations               4,709      3,604
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Cash flow from continuing operations                    $ 13,164    $ 8,406
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

Netback is a non-GAAP measure that represents revenue net of royalties, 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.

Use of Barrel of Oil Equivalents

The calculation of barrels of oil equivalent ("Boe") is based on a conversion rate of six thousand cubic feet of natural gas to one barrel ("Bbl") of crude oil. Boes may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

OUTLOOK

TransGlobe has projected a 2008 capital budget of $58.6 million (excluding acquisitions).

- In Q1-2007, the Company spent $7.4 million of the capital budget, before acquisition.

The Company has increased production guidance to average 7,300-7,500 Boepd for 2008 (previously 6,900-7,100 Boepd).

- Production volumes were 7,845 Boepd in Q1-2008. Production volumes from continuing operations were 6,322 Boepd in Q1-2008.

- Production volumes averaged approximately 8,720 Boepd in April, comprised of 7,270 Bopd from continuing operations and 1,450 Boepd from the Canadian assets.

The Company has increased cash flow from operations guidance for 2008 to $68.0-$70.0 million (previously $53.0-$57.0 million), based on an average dated Brent oil price of $100.00/Bbl (previously $80.00/Bbl) for the balance of 2008.

- Cash flow from operations in Q1-2008 was $17.9 million.

- As of March 31, 2008, the year-to-date dated Brent oil price has averaged $96.90/Bbl and TransGlobe's realized gas price has averaged C$8.46/Mcf.

/T/

SELECTED QUARTERLY FINANCIAL INFORMATION

                               2008                     2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
($000s, except per share,
 price and volume amounts)      Q-1       Q-4       Q-3       Q-2       Q-1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Operations

 Average production
  volumes (Boepd)(1)          7,845     6,837     5,227     5,353     5,175
 Average sales volumes
  (Boepd)(1)                  7,845     6,837     5,227     5,353     5,341
 Average price ($/Boe)        84.63     75.83     67.04     63.68     53.58
 Oil and gas sales           60,420    47,699    32,240    31,016    25,754
 Oil and gas sales, net
  of royalties               35,915    29,343    20,764    20,553    17,251

 Cash flow from
  operations(2)              17,873    13,944    13,373    12,814    12,010
 Cash flow from
  operations per share
   - Basic                     0.30      0.23      0.22      0.22      0.20
   - Diluted                   0.30      0.23      0.22      0.21      0.20

 Net income (loss)            4,458      (719)    5,198     2,343     5,980
 Net income (loss) per
  share
   - Basic                     0.07     (0.02)     0.09      0.04      0.10
   - Diluted                   0.07     (0.01)     0.08      0.04      0.10

Total assets                249,401   204,219   202,718   125,664   118,981

----------------------------------------------------------------------------
----------------------------------------------------------------------------

Continuing Operations

 Average production
  volumes (Boepd)(1)          6,322     5,333     3,830     3,964     3,892
 Average sales volumes
  (Boepd)(1)                  6,322     5,333     3,830     3,964     3,892
 Average price from
  continuing operations
  ($/Boe)                     90.49     83.14     74.72     69.42     57.14
 Oil and gas sales           52,064    40,788    26,326    25,041    20,016
 Oil and gas sales, net
  of royalties               29,348    23,600    15,793    15,632    12,603

 Cash flow from
  continuing operations (2)  13,164     9,334     9,257     9,072     8,406
 Cash flow from
  continuing operations
  per share
   - Basic                     0.22      0.16      0.16      0.15      0.14
   - Diluted                   0.22      0.15      0.15      0.15      0.14

 Net income (loss)            2,390    (2,260)    4,205     1,453     5,136
 Net income (loss) per
  share
   - Basic                     0.04     (0.04)     0.07      0.02      0.09
   - Diluted                   0.04     (0.04)     0.07      0.02      0.08

----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) The differences in production and sales volumes result from inventory
    changes.
(2) Cash flow from operations and cash flow from continuing operations are
    non-GAAP measures that represent cash generated from operating
    activities and continuing operating activities, respectively, before
    changes in non-cash working capital.

/T/

Cash flow from operations and net income increased to $17.9 million and $4.5 million, respectively, in Q1-2008 compared with Q4-2007 mainly as a result of a 15% increase in sales volumes and a 12% hike in average commodity prices.

CORPORATE ACQUISITION

The Company further expanded its Egyptian operations in the first quarter through a corporate acquisition financed through bank debt of $40.0 million, plus cash on hand. The Company acquired all the shares of GHP Exploration (West Gharib) Ltd. ("GHP") for total consideration of $40.2 million, plus transaction costs and working capital adjustments, effective September 30, 2007. GHP holds a 30% working interest in the West Gharib Concession area in the Arab Republic of Egypt ("Egypt"). With the acquisition of GHP, the Company holds a 100% working interest in the West Gharib Production Sharing Concession ("PSC"), with a working interest of 100% in the Hana development lease and an effective working interest of 75% in the eight non-Hana development leases. TransGlobe is the operator of the West Gharib Concession.

The adjustment date of the acquisition is September 30, 2007, with all changes in working capital to February 5, 2008 (the closing date), including oil production from September 30, 2007 to February 5, 2008, recorded as a purchase price adjustment. Oil produced after February 5, 2008 is recorded as TransGlobe production.

/T/

2008 VARIANCES

                                                            $ Per
                                                            Share         %
                                                  $000s   Diluted  Variance
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q1-2007 net income                                5,980      0.10
----------------------------------------------------------------------------
Cash items
Volume variance                                  20,368      0.34       341
Price variance                                   11,681      0.19       195
Royalties                                       (15,303)    (0.25)     (256)
Expenses:
 Operating                                       (2,560)    (0.04)      (43)
 Realized derivative loss                        (1,504)    (0.02)      (25)
 Cash general and administrative                   (996)    (0.02)      (17)
 Current income taxes                            (5,230)    (0.09)      (87)
 Realized foreign exchange loss                     (63)        -        (1)
Interest on long-term debt                       (1,681)    (0.03)      (28)
Other income                                         46         -         1
Cash flow from discontinued operations              569      0.01        10
----------------------------------------------------------------------------
Total cash items variance                         5,327      0.09        90
----------------------------------------------------------------------------
Non-Cash items
Unrealized derivative loss                       (2,448)    (0.05)      (41)
Depletion, depreciation and accretion            (4,983)    (0.08)      (83)
Stock-based compensation                            (46)        -        (1)
Amortization of deferred financing costs            (27)        -         -
Non-cash income from discontinued
 operations                                         655      0.01        11
----------------------------------------------------------------------------
Total non-cash items variance                    (6,849)    (0.12)     (114)
----------------------------------------------------------------------------

Q1-2008 net income                                4,458      0.07       (24)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

Net income decreased 24% in Q1-2008 compared with Q1-2007 mainly as a result of a $2.4 million unrealized derivative loss in the quarter.

/T/

OPERATING RESULTS AND NETBACK

Daily Volumes, Working Interest Before Royalties and Other

                                               March 31, March 31,
                                                   2008      2007  % Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                   - Oil sales(1)   Bopd     2,432         -         -
Yemen                   - Oil sales      Bopd     3,890     3,892         -
----------------------------------------------------------------------------
Total continuing operations - daily
 sales volumes                           Bopd     6,322     3,892        62
----------------------------------------------------------------------------
Canada            - Oil and liquids      Bopd       376       420       (11)
                        - Gas sales     Mcfpd     6,882     6,177        11
----------------------------------------------------------------------------
Canada                                  Boepd     1,523     1,449         5
----------------------------------------------------------------------------
Total Company - daily sales volumes     Boepd     7,845     5,341        47
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)Egypt includes the operating results of GHP for the period February 5,
   2008 to March 31, 2008. In that period, production averaged 1,009 Bopd
   for a quarterly average of 621 Bopd.


Total Netback

                                                   Consolidated
----------------------------------------------------------------------------
                                         March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except per Boe amounts)              $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and gas sales                      60,419     84.63    25,754     53.58
Royalties and other                    24,504     34.32     8,503     17.69
Current taxes                           7,232     10.13     2,002      4.16
Operating expenses                      5,781      8.10     2,408      5.01
----------------------------------------------------------------------------

Netback                                22,902     32.08    12,841     26.72

----------------------------------------------------------------------------
----------------------------------------------------------------------------


Netback from Continuing Operations

                                                   Consolidated
----------------------------------------------------------------------------
                                         March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except per Boe amounts)              $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and gas sales                      52,064     90.49    20,016     57.14
Royalties and other                    22,716     39.48     7,413     21.16
Current taxes                           7,232     12.57     2,002      5.72
Operating expenses                      3,923      6.82     1,364      3.89
----------------------------------------------------------------------------

Netback                                18,193     31.62     9,237     26.37

----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

Segmented Net Operating Results

In Q1-2008 the Company had producing continuing operations in two geographic areas, segmented into Egypt and the Republic of Yemen ("Yemen"), and producing operations in Canada, which are held for sale. The MD&A for the continuing operations will follow. Please refer to "Operating Results from Discontinued Operations" for the MD&A on the Canadian segment.

/T/

Egypt
                                         March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except per Boe amounts)              $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and gas sales                      17,626     79.63         -         -
Royalties and other                     7,561     34.16         -         -
Current taxes                           3,124     14.11         -         -
Operating expenses                        711      3.21         -         -
----------------------------------------------------------------------------

Netback                                 6,230     28.15         -         -

----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The netback for Egypt for Q1-2008 includes average quarterly production of 621 Bopd from the GHP acquisition that closed on February 5, 2008 and 1,811 Bopd from the acquisition of Dublin International Petroleum (Egypt) Limited ("Dublin") and Drucker Petroleum Inc. ("Drucker") that was completed in Q3-2007. The average selling price during that period for this production was $79.63/Bbl, which represents a gravity/quality adjustment of approximately $17.27/Bbl to an average dated Brent price for the period of $96.90/Bbl.

/T/

Yemen

                                         March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except per Boe amounts)              $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and gas sales                      34,438     97.29    20,016     57.14
Royalties and other                    15,155     42.81     7,413     21.16
Current taxes                           4,108     11.60     2,002      5.72
Operating expenses                      3,212      9.07     1,364      3.89
----------------------------------------------------------------------------

Netback                                11,963     33.81     9,237     26.37

----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Yemen, netback increased 30% in the first three months of 2008 compared with the same period of 2007 primarily as a result of oil sales increasing by 72%. The increase in sales was mainly due to oil prices growing by 70% over Q1-2007. Sales volumes remained constant in Q1-2008 compared with Q1-2007.

- Royalty and current income tax costs increased 86% mainly as a result of higher commodity prices. Royalties and taxes as a percentage of revenue increased to 56% in Q1-2008 compared with 47% in Q1-2007. Royalty and tax rates fluctuate in Yemen due to changes in the amount of cost sharing oil, whereby the Block 32 and Block S-1 PSAs allow for the recovery of operating and capital costs through a reduction in MOM take of oil production.

- Operating expenses on a Boe basis increased 133% to $9.07/Bbl in Q1-2008 compared with $3.89/Boe in Q1-2007 mainly as a result of declining production in the Tasour field and 2006 adjustments made by the Block S-1 Operator, reflected in the March 31, 2007 operating expenses.

COMMODITY CONTRACTS

TransGlobe uses hedging arrangements as part of its risk management strategy to manage commodity price fluctuations and stabilize cash flows for future exploration and development programs. The Company has fair-valued these hedging transactions. As at March 31, 2008, the estimated fair value of the unrealized hedging transactions is a liability of $9.5 million, which results in an unrealized $2.4 million loss being recorded to the income statement for the quarter ended March 31, 2008 (2006 - $0.04 million gain). The estimated fair market value at March 31, 2008 was based on a dated Brent oil price of $100.30/Bbl.

/T/

                                                                Dated Brent
Period                           Volume              Type  Pricing Put-Call
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Crude Oil
 September 1, 2007
  -August 31, 2008    15,000 Bbls/month  Financial Collar    $60.00-$78.55
 January 1, 2008
  -December 31, 2008  12,000 Bbls/month  Financial Collar    $60.00-$81.20
 January 1, 2009
  -December 31, 2009  12,000 Bbls/month  Financial Collar    $60.00-$82.10
 November 1, 2007
  -March 31, 2008      5,000 Bbls/month  Financial Collar    $65.00-$89.35
 September 1, 2008
  -January 31, 2009   11,000 Bbls/month  Financial Collar    $60.00-$88.80
 February 1, 2009
  -December 31, 2009   6,000 Bbls/month  Financial Collar    $60.00-$86.10
 January 1, 2010
  -August 31, 2010    12,000 Bbls/month  Financial Collar    $60.00-$84.25
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The hedging program was expanded significantly in September 2007 to protect the cash flows from the added risk of commodity price exposure following a marked increase in TransGlobe's debt levels resulting from the Dublin and Drucker acquisitions.

The total volumes hedged per year are listed below:

/T/

                                               9 months
                                                   2008      2009      2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Bbls                                            227,000   221,000    96,000
Bopd                                                825       605       263
----------------------------------------------------------------------------
----------------------------------------------------------------------------


GENERAL AND ADMINISTRATIVE EXPENSES (G&A)

                                        March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except Boe amounts)                  $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
----------------------------------------------------------------------------
G&A (gross)                             2,509      3.51     1,471      3.07
Stock-based compensation                  314      0.44       268      0.56
Capitalized G&A                          (508)    (0.71)     (478)    (1.00)
Overhead recoveries                       (43)    (0.06)      (58)    (0.13)
----------------------------------------------------------------------------

G&A (net)                               2,272      3.18     1,203      2.50

----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

General and administrative expenses increased 89% (27% increase on a sales Boe basis) in the first three months of 2008 compared with the same period in 2007. The G&A per Boe is higher mainly as a result of increased production from the West Gharib acquisitions. Higher staffing levels and higher fees caused by increased compliance requirements also contributed to rise in total G&A expense for the Company.

/T/

DEPLETION, DEPRECIATION AND ACCRETION

                                        March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except per Boe amounts)              $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                   4,927     22.26        12         -
Yemen                                   3,062      8.65     2,994      8.55
----------------------------------------------------------------------------

                                        7,989     13.89     3,006      8.55

----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Egypt, depletion, depreciation and accretion ("DD&A") increased to $4.9 million in Q1-2008 due to DD&A charges on new production from the West Gharib PSC in Egypt. The high DD&A costs per Boe result from the fact that DD&A is depleted on proved reserves, while the purchase price for the Egypt acquisitions was based on proved plus probable reserves. This DD&A rate per Boe will decrease as the probable reserves are converted to proved reserves.

In Yemen, DD&A on a Boe basis remained essentially flat in Q1-2008 over Q1-2007.

In Egypt and Yemen, unproven property costs of $9.9 million and $6.5 million, respectively, were excluded from costs subject to depletion and depreciation.

/T/

CAPITAL EXPENDITURES/DISPOSITIONS

                                                     Q1-2008        Q1-2007
----------------------------------------------------------------------------
(000s)                                                     $              $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                  3,318          2,189
Yemen                                                  2,947          4,120
----------------------------------------------------------------------------
                                                       6,265          6,309
----------------------------------------------------------------------------
Acquisition                                           36,601              -
----------------------------------------------------------------------------
Total                                                 42,866          6,309
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Egypt, the Company drilled two wells at Hana in the West Gharib area during the quarter. In February 2008, the Company acquired the shares of GHP that holds a 30% working interest in the West Gharib PSC and valued the property, plant and equipment of GHP at $36.6 million. Goodwill of $3.4 million was recorded.

In Yemen, the Company drilled two wells on Block 32 and completed a 3-D seismic program on Block 72 in the quarter.

OUTSTANDING SHARE DATA

As at March 31, 2008, the Company had 59,766,539 common shares issued and outstanding.

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 proved 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.

The following table illustrates TransGlobe's sources and uses of cash during the periods ended March 31, 2008 and 2007:

/T/

Sources and Uses of Cash

                                               Three Months Ended March 31
----------------------------------------------------------------------------
($000s)                                                 2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash sourced
 Cash flow from continuing operations (1)             13,164          8,406
 Increase in long-term debt                           40,000              -
 Exercise of options                                     402            333
 Other                                                     7            (33)
----------------------------------------------------------------------------
                                                      53,573          8,706

Cash used
 Exploration and development expenditures              6,265          6,309
 Acquisition                                          44,218              -
 Bank financing costs                                  1,148              -
 Options surrendered for cash payments                   256              -
----------------------------------------------------------------------------
                                                      51,887          6,309
----------------------------------------------------------------------------
Net cash from continuing operations                    1,686          2,397
Net cash from discontinued operations                  1,719            850
Changes in non-cash working capital                   (4,199)        (5,007)
----------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents        (794)        (1,760)
Cash and cash equivalents -- beginning of period      12,729          8,836
----------------------------------------------------------------------------

Cash and cash equivalents -- end of period            11,935          7,076

----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Cash flow from continuing operations is a non-GAAP measure that
    represents cash generated from operating activities before changes in
    non-cash working capital.

/T/

Funding for the Company's capital expenditures and the GHP Acquisition in the first quarter of 2008 was provided by cash flow from operations, working capital and long-term debt.

Working capital is the amount by which current assets exceed current liabilities. At March 31, 2008 the Company had working capital of $15.4 million (December 31, 2007 - $5.5 million) including discontinued operations. Accounts receivable increased due primarily as a result of the GHP Acquisition in Q1-2008 and revenue receivable in Egypt. These receivables are not considered to be impaired. Accounts payable increased due to the GHP Acquisition and increased drilling activity in Egypt. The current portion of long-term debt includes the $48.0 million Term Loan that is to be repaid with the proceeds resulting from the disposition of the Canadian assets.

During February 2008, the Company increased its Term Loan of $8.0 million to $48.0 million. At March 31, 2008, the Revolving Credit Agreement of $50.0 million was fully drawn and $48.0 million was drawn against the Term Loan.

/T/

                                                   March 31,    December 31,
($000s)                                                2008            2007
----------------------------------------------------------------------------
Revolving Credit Agreement                           50,000          50,000
Term Loan Agreement                                  48,000           8,000
----------------------------------------------------------------------------
                                                     98,000          58,000
Unamortized transaction costs                       (2,399)         (1,315)
----------------------------------------------------------------------------
                                                     95,601          56,685
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Current portion of long-term debt                    48,000           4,727
----------------------------------------------------------------------------

Long-term debt                                       47,601          51,958
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The Company expects to fund its approved 2008 exploration and development program of $58.6 million ($7.4 million incurred to March 31, 2008) through the use of working capital and cash flow. The use of additional debt or equity financing during 2008 may also be utilized to accelerate existing projects or to finance new opportunities. Fluctuations in commodity prices, product demand, foreign exchange rates, interest rates and various other risks may impact capital resources.

Subsequent to March 31, 2008, the Company repaid $55.0 million of the long-term debt with the proceeds from the disposition of the Canadian assets and cash on hand.

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/

($000s)                                          Payment Due by Period(1,2)
----------------------------------------------------------------------------
                   Recognized                                          More
                 in Financial  Contractual  Less than    1-3    4-5  than 5
                   Statements   Cash Flows     1 year  years  years   years
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts
 payable and
 accrued
 liabilities    Yes-Liability       10,342     10,342      -      -       -
Long-term
 debt:
 Revolving
  Credit
  Agreement     Yes-Liability       50,000          - 50,000      -       -
 Term Loan
  Agreement     Yes-Liability       48,000     48,000      -      -       -
Office and
 equipment
 leases                    No          869        339    530      -       -
Minimum work
 commitments (3)           No       12,900        500  5,800  6,600       -
----------------------------------------------------------------------------

Total                              122,111     59,181  56,330 6,600       -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Payments exclude ongoing operating costs related to certain leases,
    interest on long-term debt and payments made to settle derivatives.
(2) Payments denominated in foreign currencies have been translated at
     March 31, 2008 exchange rates.
(3) Minimum work commitments include contracts awarded for capital
    projects and those commitments related to exploration and drilling
    obligations.

/T/

Pursuant to the East Hoshia Development Lease in Egypt, the Company and its partners have committed to drilling three exploration wells and submitted a letter of production guarantee for $4.0 million as security (expiring June 1, 2009).

Pursuant to the PSA for Block 72, Yemen, the Contractor (joint venture partners) has a minimum financial commitment of $4.0 million ($1.3 million to TransGlobe) during the first exploration period. The remaining commitment to TransGlobe is $0.5 million. This period has been extended to January 12, 2009 and applies to exploration work consisting of seismic acquisition (completed) and one remaining exploration well.

Pursuant to the bid awarded for Block 75, Yemen, the Contractor (joint venture partners) has a minimum financial commitment of $7.0 million ($1.8 million to TransGlobe) for the signature bonus and first exploration period work program consisting of seismic acquisition and one exploration well. The first 36-month exploration period commenced March 8, 2008. The Company issued a $1.5 million letter of credit (expiring November 15, 2011) to guarantee the Company's performance under the first exploration period. The letter is secured by a guarantee granted by Export Development Canada.

Pursuant to the bid awarded for Block 84, Yemen, the Contractor (joint venture partners) has a minimum financial commitment of $20.1 million ($6.6 million to TransGlobe) for the signature bonus and first exploration period work program consisting of seismic acquisition and four exploration wells. The first 42-month exploration period will commence when the PSA has been approved and ratified by the government of Yemen, anticipated to occur in 2008.

Upon the determination that proved recoverable reserves are 40 million barrels or greater for Block S-1 in Yemen, the Company will be required to pay a finders' fee to third parties in the amount of $0.3 million.

OPERATING RESULTS FROM DISCONTINUED OPERATIONS

The following represent results of operations from Canadian assets which have been designated as discontinued operations.

/T/

Net Operating Results

Canada

                                         March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except per Boe amounts)              $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
Oil sales                               1,632     91.18     1,079     52.36
Gas sales ($ per Mcf)                   5,300      8.46     3,742      6.73
NGL sales                               1,362     83.65       810     47.26
Other sales                                61         -       107         -
----------------------------------------------------------------------------
                                        8,355     60.30     5,738     44.00
Royalties and other                     1,788     12.91     1,090      8.36
Operating expenses                      1,858     13.40     1,044      8.01
----------------------------------------------------------------------------

Netback                                 4,709     33.99     3,604     27.63

----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The netback in Canada increased 31% in the three months ended March 31, 2008 compared with the same period in 2007 primarily as a result of a 46% increase in sales offset by higher royalty costs; and higher operating costs per Boe in Canada, where cost pressures for services continued, and an increased number of workovers.

/T/

DD&A

                                        March 31, 2008      March 31, 2007
----------------------------------------------------------------------------
(000s, except per Boe amounts)              $     $/Boe         $     $/Boe
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Canada                                  2,723     19.66     2,686     20.60
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Canada, DD&A decreased 5% per Boe to $19.66 in Q1-2008 compared with $20.60 in Q1-2007. DD&A was not recognized on the Canadian assets after the held for sale criterion had been met.

Future Income Taxes

The future income recovery included in net income from discontinued operations was $0.1 million in Q1-2008 (Q1-2007 expense of $0.1 million); this cost relates to a non-cash expense for taxes to be paid in the future as Canadian tax pools reverse.

/T/

Capital expenditures

                                      Three Months Ended Three Months Ended
($000s)                                   March 31, 2008     March 31, 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Canada                                             1,140              3,900
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

SUBSEQUENT EVENT

On April 15, 2008, TransGlobe entered into an agreement to sell all of its Canadian oil and gas assets for C$56.7 million, effective January 1, 2008. The gain on the sale is projected to be approximately $4.7 million. The closing of the transaction occurred on April 30, 2008, subject to standard and customary closing conditions. The Company repaid $55.0 million of debt with the proceeds from the sale and cash on hand.

CHANGES IN ACCOUNTING POLICIES

Effective January 1, 2008, the Company adopted the Canadian Institute of Chartered Accountants (CICA) Section 1535, Capital Disclosures as issued by the Accounting Standards Board ("AcSB"). The main features of this section are to establish requirements for an entity to disclose qualitative information about its objectives, policies and processes for managing capital, quantitative data about what it regards as capital, and whether it has complied with any externally imposed capital requirements and, if not, the consequences of such non-compliance.

Effective January 1, 2008, the Company adopted CICA Section 3862, Financial Instruments Disclosures, and CICA Section 3863, Financial Instruments Presentations, which require incremental disclosures regarding the significance of financial instruments for the entity's financial position and performance; and the nature, extent and management of risks arising from financial instruments to which the entity is exposed.

/T/

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Income and Retained Earnings

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

                                                Three Months Ended March 31
                                                    2008               2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------

REVENUE
  Oil and gas sales, net of royalties
   and other                                 $    29,348        $    12,603
  Derivative gain (loss) on commodity
   contracts (Note 14)                            (3,911)                41
  Other income                                        63                 17
----------------------------------------------------------------------------
                                                  25,500             12,661
----------------------------------------------------------------------------

EXPENSES
  Operating                                        3,923              1,364
  General and administrative                       2,272              1,203
  Interest on long-term debt                       1,681                  -
  Foreign exchange (gain) loss                        13                (50)
  Depletion, depreciation and
   accretion (Note 6)                              7,989              3,006
----------------------------------------------------------------------------
                                                  15,878              5,523
----------------------------------------------------------------------------
Income before income taxes                         9,622              7,138
----------------------------------------------------------------------------
Income taxes - current                             7,232              2,002
----------------------------------------------------------------------------
NET INCOME FROM CONTINUING OPERATIONS              2,390              5,136
NET INCOME FROM DISCONTINUED OPERATIONS
 (Note 4)                                          2,068                844
----------------------------------------------------------------------------
NET INCOME                                         4,458              5,980
Retained earnings, beginning of period            57,787             45,360
----------------------------------------------------------------------------

RETAINED EARNINGS, END OF PERIOD             $    62,245        $    51,340
----------------------------------------------------------------------------

Net income from continuing operations
 per share (Note 12)
   - Basic                                   $      0.04        $      0.09
   - Diluted                                 $      0.04        $      0.09
----------------------------------------------------------------------------

Net income from discontinued operations
 (Note 12)
   - Basic                                   $      0.03        $      0.01
   - Diluted                                 $      0.03        $      0.01
----------------------------------------------------------------------------

Net income per share (Note 12)
   - Basic                                   $      0.07        $      0.10
   - Diluted                                 $      0.07        $      0.10
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.


Consolidated Statements of Comprehensive Income

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

                                                Three Months Ended March 31
                                                    2008               2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income                                   $     4,458        $     5,980
Other comprehensive income (loss):
   Foreign currency translation
    adjustment                                    (1,802)               428
----------------------------------------------------------------------------
COMPREHENSIVE INCOME                         $     2,656        $     6,408
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.


Consolidated Balance Sheets

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

                                          March 31, 2008  December 31, 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------

ASSETS
Current
  Cash and cash equivalents                  $    11,935        $    12,729
  Accounts receivable                             25,293             14,408
  Prepaid expenses                                   415                320
  Discontinued operations (Note 4)                53,251              4,300
----------------------------------------------------------------------------
                                                  90,894             31,757
----------------------------------------------------------------------------
Goodwill (Note 5)                                  7,713              4,313
Property and equipment (Note 6)                  150,794            115,988
Discontinued operations (Note 4)                       -             52,161
----------------------------------------------------------------------------
                                             $   249,401        $   204,219
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES
Current
  Accounts payable and accrued liabilities   $    10,342        $     7,790
  Income taxes payable                               136                  -
  Derivative commodity contracts (Note 14)         9,505              7,098
  Current portion of long-term debt (Note 7)      48,000              4,727
  Liabilities of discontinued
   operations (Note 4)                             7,488              6,648
----------------------------------------------------------------------------
                                                  75,471             26,263
Long-term debt (Note 7)                           47,601             51,958
Asset retirement obligations (Note 8)                  -                  -
Discontinued operations (Note 4)                       -              2,755
----------------------------------------------------------------------------
                                                 123,072             80,976
----------------------------------------------------------------------------
Commitments and contingencies (Note 14)

SHAREHOLDERS' EQUITY
Share capital (Note 9)                            50,630             50,128
Contributed surplus (Note 10)                      3,490              3,562
Accumulated other comprehensive
 income (Note 11)                                  9,964             11,766
Retained earnings                                 62,245             57,787
----------------------------------------------------------------------------
                                                 126,329            123,243
----------------------------------------------------------------------------
                                             $   249,401        $   204,219
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.

Approved on behalf of the Board:

Ross G. Clarkson, Director               Fred J. Dyment, Director


Consolidated Statements of Cash Flows

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


                                                Three Months Ended March 31
                                                    2008               2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:

OPERATING
  Net income from continuing operations      $     2,390        $     5,136
  Adjustments for items not affecting cash:
   Depletion, depreciation and accretion           7,989              3,006
   Stock-based compensation (Note 9)                 314                268
   Amortization of deferred financing charges         64                 37
   Unrealized derivative (gain) loss on
    commodity contracts                            2,407                (41)
  Changes in non-cash working capital             (1,645)            (1,105)
----------------------------------------------------------------------------
  Cash provided by continuing operations          11,519              7,301
  Cash provided by discontinued operations         4,797              4,228
----------------------------------------------------------------------------
                                                  16,316             11,529
----------------------------------------------------------------------------

FINANCING
  Increase in long-term debt (Note 7)             40,000                  -
  Deferred financing costs                        (1,148)                 -
  Options surrendered for cash payments (Note 9)    (256)                 -
  Issue of common shares for cash (Note 9)           402                333
  Changes in non-cash working capital                274                  -
----------------------------------------------------------------------------
                                                  39,272                333
----------------------------------------------------------------------------

INVESTING
  Exploration and development expenditures        (6,265)            (6,309)
  Acquisition (Note 3)                           (44,218)                 -
  Changes in non-cash working capital             (2,828)            (3,902)
----------------------------------------------------------------------------
  Cash used by continuing operations             (53,311)           (10,211)
  Cash used by discontinued operations            (3,078)            (3,378)
----------------------------------------------------------------------------
                                                 (56,389)           (13,589)
----------------------------------------------------------------------------
Effect of exchange rate changes on cash
 and cash equivalents                                  7                (33)
----------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS           (794)            (1,760)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    12,729              8,836
----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD     $    11,935        $     7,076
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Supplemental Disclosure of Cash
 Flow Information
  Cash interest paid                         $     1,615        $         -
  Cash taxes paid                                  7,232              2,002
  Cash and cash equivalents is comprised
   of cash on hand and balances with banks        11,935              7,076
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited - Expressed in U.S. Dollars)

/T/

1. Basis of presentation

The interim consolidated financial statements include the accounts of TransGlobe Energy Corporation and its subsidiaries ("TransGlobe" or the "Company") for the three month periods ended March 31, 2008 and 2007 and are presented in accordance with Canadian generally accepted accounting principles on the same basis as the audited consolidated financial statements as at and for the year ended December 31, 2007, 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, 2007. In these interim consolidated financial statements, unless otherwise indicated, all dollars are expressed in United States (U.S.) dollars. All references to US$ or to $ are U.S. dollars and references to C$ are to Canadian dollars.

2. Changes in accounting policies

Effective January 1, 2008, the Company adopted the Canadian Institute of Chartered Accountants ("CICA") Section 1535, Capital Disclosures as issued by the Accounting Standards Board ("AcSB"). The main features of this section are to establish requirements for an entity to disclose qualitative information about its objectives, policies and processes for managing capital, quantitative data about what it regards as capital, and whether it has complied with any externally imposed capital requirements and, if not, the consequences of such non-compliance.

Effective January 1, 2008, the Company adopted CICA Section 3862, Financial Instruments Disclosures, and CICA Section 3863, Financial Instruments Presentations, which require incremental disclosures regarding the significance of financial instruments for the entity's financial position and performance; and the nature, extent and management of risks arising from financial instruments to which the entity is exposed.

The Company has applied these new standards prospectively in Note 13 - Capital disclosures for Section 1535 Capital Disclosures and in Note 14 - Financial instruments and risk management for Sections 3862 Financial Instruments Disclosures and 3863 Financial Instruments Presentations.

New accounting standards

In February 2008, the CICA issued Section 3064, Goodwill and intangible assets, replacing Section 3062, Goodwill and other intangible assets and Section 3450, Research and development costs. Various changes have been made to other sections of the CICA Handbook for consistency purposes. The new Section will be applicable to financial statements relating to fiscal years beginning on or after October 1, 2008. Accordingly, the Company will adopt the new standards for its fiscal year beginning January 1, 2009. It establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. The Company is currently evaluating the impact of the adoption of this new Section on its Consolidated Financial Statements.

In January 2006, the AcSB adopted a strategic plan for the direction of accounting standards in Canada. On February 13, 2008, the AcSB has confirmed that effective for interim and annual financial statements related to fiscal years beginning on or after January 1, 2011, International Financial Reporting Standards will replace Canada's current Generally Accepted Accounting Principles ("GAAP") for all publicly accountable profit-oriented enterprises. The Company is currently evaluating the impact of this changeover on its Consolidated Financial Statements.

3. Acquisitions

GHP Exploration (West Gharib) Ltd.

On February 5, 2008, TransGlobe acquired all of the common shares of GHP Exploration (West Gharib) Ltd. ("GHP") for cash consideration of $44.1 million, net of cash acquired. The results of GHP's operations have been included in the consolidated financial statements since that date. GHP holds a 30% interest in the West Gharib Concession area in Egypt. TransGlobe funded the acquisition from bank debt of $40.0 million and cash on hand.

The acquisition has been accounted for using the purchase method with TransGlobe as the acquirer, and the purchase price was allocated to the fair value of the assets acquired and the liabilities assumed as follows:

/T/

Cost of acquisition (000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash paid, net of cash acquired                                    $ 44,126
Transaction costs                                                        92
----------------------------------------------------------------------------
                                                                   $ 44,218
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Allocation of purchase price (000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property and equipment                                             $ 36,601
Goodwill                                                              3,400
Working capital, net of cash acquired                                 4,217
----------------------------------------------------------------------------
                                                                   $ 44,218
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The above allocation of the purchase price is preliminary and is based on the best available information at this time, and is subject to a customary working capital price adjustment clause.

Dublin International Petroleum (Egypt) Limited and Drucker Petroleum Inc.

On September 25, 2007, TransGlobe acquired all of the common shares of two private companies, Dublin International Petroleum (Egypt) Limited ("Dublin") and Drucker Petroleum Inc., ("Drucker") for cash consideration of $67.7 million. The results of Dublin's and Drucker's operations have been included in the consolidated financial statements since that date. Dublin and Drucker hold interests in eight development leases and associated infrastructure in the West Gharib Concession area in the Arab Republic of Egypt (Dublin is the operator of this Concession). TransGlobe funded the acquisition from cash on hand and bank debt of $63.0 million.

The acquisition has been accounted for using the purchase method with TransGlobe as the acquirer, and the purchase price was allocated to the fair value of the assets acquired and the liabilities assumed as follows:

/T/

Cost of acquisition (000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash paid, net of cash acquired                                    $ 67,684
Transaction costs                                                       317
----------------------------------------------------------------------------
                                                                   $ 68,001
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Allocation of purchase price (000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property and equipment                                             $ 54,823
Goodwill                                                              4,313
Working capital, net of cash acquired                                 8,865
----------------------------------------------------------------------------
                                                                   $ 68,001
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The above allocation of the purchase price is preliminary and is based on the best available information at this time, and is subject to a customary working capital price adjustment clause.

4. Discontinued operations

During 2008, TransGlobe committed to dispose of its Canadian segment of operations to allow the Company to focus its continuing operations on the development of its Middle East/North Africa assets. Once the sale is completed, the Company will no longer own any Canadian oil and natural gas interests. These assets meet the criteria for reporting as discontinued operations as at March 31, 2008.

The assets and liabilities of the Canadian operations have been reclassified as discontinued operations or liabilities of discontinued operations on the Consolidated Balance Sheets. Operating results related to these assets and liabilities have been included in net income from discontinued operations on the Consolidated Statements of Income and Retained Earnings.

/T/

                                                       As at          As at
                                                    March 31,   December 31,
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assets
 Current assets                                     $  4,314       $  4,300

 Property, plant and equipment                        47,058         50,298
 Future income tax asset                               1,879          1,863
----------------------------------------------------------------------------
                                                    $ 48,937       $ 52,161
----------------------------------------------------------------------------
Total assets                                        $ 53,251       $ 56,461
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities
 Current liabilities                                $  4,813       $  6,648

 Asset retirement obligation                           2,675          2,755
----------------------------------------------------------------------------
Total liabilities                                   $  7,488       $  9,403
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                                                       For the Three Months
                                                             Ended March 31
----------------------------------------------------------------------------
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue
 Oil and gas sales, net of royalties                $  6,567       $  4,648

Expenses
 Operating                                             1,857          1,044
 Depletion, depreciation and accretion                 2,724          2,686
----------------------------------------------------------------------------
                                                       4,581          3,730
Income from discontinued operations before taxes       1,986            918
Future income tax recovery (expense)                      82            (74)
----------------------------------------------------------------------------
Net income from discontinued operations             $  2,068       $    844
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Canada, the Company capitalized overhead costs relating to exploration and development activities during the three months ended March 31, 2008 of $0.4 million (2007 - $0.1 million). Unproven property costs of $1.8 million were excluded from the costs subject to depletion and depreciation for the three months ended March 31, 2008 (2007 - $Nil). Future development costs for proved reserves of $10.3 million (2007 - $8.3 million) were included in the depletion and depreciation calculations.

5. Goodwill

Changes in the carrying amount of the Company's goodwill are as follows:

/T/

                                                Three Months      12 Months
                                                       Ended          Ended
                                                    March 31,   December 31,
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Opening balance                                      $ 4,313        $     -
Acquired during period (Note 3)                        3,400          4,313
----------------------------------------------------------------------------
Closing balance                                      $ 7,713        $ 4,313
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

6. Property and equipment

The Company capitalized overhead costs relating to exploration and development activities during the three months ended March 31, 2008 of $0.1 million (2007 - $0.2 million) in Egypt and $0.02 million (2007 - $0.2 million) in Yemen.

Unproven property costs excluded from the costs subject to depletion and depreciation for the three months ended March 31, 2008 totalled $9.9 million (2007 - $9.9 million) in Egypt and $6.5 million (2007 - $2.4 million) in Yemen.

Future development costs for proved reserves included in the depletion calculations for the three months ended March 31, 2008 totalled $3.2 million (2007 - $Nil) in Egypt and $6.9 million (2007 - $12.4 million) in Yemen.

7. Long-term debt

/T/

                                                    March 31,   December 31,
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revolving Credit Agreement                          $ 50,000  $      50,000
Term Loan Agreement                                   48,000          8,000
----------------------------------------------------------------------------
                                                      98,000         58,000
Unamortized transaction costs                         (2,399)        (1,315)
----------------------------------------------------------------------------
                                                      95,601         56,685
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Current portion of long-term debt                     48,000          4,727
----------------------------------------------------------------------------
                                                    $ 47,601  $      51,958
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The Company has two borrowing facilities, a $50 million Revolving Credit Agreement and a Term Loan Agreement. In February 2008, the Company increased its Term Loan Agreement from $8.0 million to $48.0 million. Both borrowing facilities expire on September 19, 2010 and are secured by a first floating charge debenture over all assets of the Company, a general assignment of book debts, security pledge of the Company's subsidiaries and certain covenants. At March 31, 2008, both facilities were fully drawn. The Revolving Credit Agreement and the Term Loan Agreement bear interest at the Eurodollar Rate plus three percent and plus six percent, respectively. The Company incurred fees of $1.1 million in the quarter to increase its Term Loan Agreement.

The future debt payments on long-term debt, as of March 31, 2008, are as follows:

/T/

(000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2008                                                               $ 48,000
2009                                                                      -
2010                                                                 50,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

8. Asset retirement obligations ("ARO")

The balance of the ARO at March 31, 2008 and December 31, 2007 related in its entirety to the discontinued operations and thus has been reclassified to liabilities of discontinued operations (see Note 4). The following table presents the reconciliation of the beginning and ending obligations associated with the retirement of oil and gas properties, which are now part of the liabilities of discontinued operations:

/T/

(000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Asset retirement obligations, December 31, 2007                     $ 2,755
Liabilities incurred during period                                        -
Liabilities settled during period                                       (27)
Accretion                                                                41
Foreign exchange gain                                                   (94)
----------------------------------------------------------------------------
Asset retirement obligations, March 31, 2008                        $ 2,675
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

At March 31, 2008, the estimated total undiscounted amount required to settle the asset retirement obligations was $3.4 million. These obligations will be settled at the end of the useful lives of the underlying assets, which currently extend up to eight years into the future. This amount has been discounted using a credit-adjusted risk-free interest rate of 6.5%.

9. Share capital

a) Authorized

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

/T/

b) Issued

                                           Three Months                Year
                                                  Ended               Ended
                                         March 31, 2008   December 31, 2007
----------------------------------------------------------------------------
(000s)                                 Shares    Amount    Shares    Amount
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Common shares, beginning of period     59,627  $ 50,128    58,883  $ 49,360
Stock options exercised                   140       402       860       605
Stock options surrendered for cash
 payments                                   -      (256)        -         -
Stock based compensation on exercise        -       356         -       260
Purchase of common shares                   -         -      (116)      (97)
----------------------------------------------------------------------------

Common shares, end of period           59,767  $ 50,630    59,627  $ 50,128
----------------------------------------------------------------------------
----------------------------------------------------------------------------

c) Stock Options

                                           Three Months                Year
                                                  Ended               Ended
                                         March 31, 2008   December 31, 2007
----------------------------------------------------------------------------
                                               Weighted            Weighted
                                                Average             Average
                                       No. of  Exercise   No. of   Exercise
(000s, except per share amounts)      Options     Price  Options      Price
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Options outstanding, beginning of
 period                                 2,936  $   4.11    3,110   $   3.12
Granted                                   291      4.97    1,091       4.44
Exercised for common shares              (140)     2.16     (860)      0.53
Surrendered for cash payments            (150)     2.66        -          -
Forfeited                                (164)     4.71     (405)      5.01
----------------------------------------------------------------------------
Options outstanding, end of period      2,773  $   4.34    2,936   $   4.11
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Options exercisable, end of period      1,250  $   3.90    1,602   $   3.69
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

d) Stock-based compensation

Stock-based compensation expense of $0.3 million has been recorded in the Consolidated Statements of Income and Retained Earnings in 2008 (2007 - $0.3 million). The fair value of all common stock options granted is estimated on the date of grant using the lattice-based binomial option pricing model. The weighted average fair value of the options granted during 2008 and the assumptions used in their determination are noted below:

/T/

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Weighted average fair market value per option (C$)                    2.09
Risk-free interest rate (percent)                                      4.5
Expected life (years)                                                    5
Expected volatility (percent)                                        46.08
Expected dividend yield (percent)                                        0
Expected forfeiture rate (non-executive employees)
 (percent)                                                              12
Early exercise (Year 1/Year 2/Year 3/Year 4/Year 5)     (0%/10%/20%/30%/40%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

10. Contributed surplus

                                          Three Months Ended     Year Ended
                                                    March 31,   December 31,
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contributed surplus, beginning of period             $ 3,562        $ 2,863
Stock-based compensation expense                         284            959
Transfer to common shares on exercise of option         (356)          (260)
----------------------------------------------------------------------------
Contributed surplus, end of period                   $ 3,490        $ 3,562
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

11. Accumulated other comprehensive income

The balance of accumulated other comprehensive income consists of the following:

/T/

                                          Three Months Ended     Year Ended
                                                    March 31,   December 31,
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated other comprehensive income, beginning
 of period                                          $ 11,766       $  3,212
Other comprehensive income (loss):
 Foreign currency translation adjustment              (1,802)         8,554
----------------------------------------------------------------------------
Accumulated other comprehensive income, end of
 period                                             $  9,964       $ 11,766
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

12. Per share amounts

In calculating the net income per share basic and diluted, the following weighted average shares were used:

/T/

                                                               Three Months
                                                             Ended March 31
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Weighted average number of shares outstanding         59,712         59,538
Shares issuable pursuant to stock options              2,025          1,711
Shares to be purchased from proceeds of stock options
 under treasury stock method                          (1,170)          (752)
----------------------------------------------------------------------------
Weighted average number of diluted shares outstanding 60,567         60,497
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The treasury stock method assumes that the proceeds received from the exercise of "in-the-money" stock options are used to repurchase common shares at the average market price. In calculating the weighted average number of diluted common shares outstanding for the three month period ended March 31, 2008, the Company excluded 1,406,000 options (2007 - 1,157,000) because their exercise price was greater than the period average common share market price in the period.

13. Capital disclosures

The Company defines and computes its capital as follows:

/T/

                                                    March 31,   December 31,
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shareholders' Equity                               $ 126,329      $ 123,243
Long-term debt, including the current portion         95,601         56,685
Cash                                                 (11,935)       (12,729)
----------------------------------------------------------------------------
Total capital                                      $ 209,995      $ 167,199
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The Company's objectives when managing capital are to ensure the Company will continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders. The Company sets the amount of capital in proportion to risk and manages to ensure that the total of the long-term debt is not greater than two times the Company's cash flow from operations for the trailing twelve months. For the purposes of measuring the Company's ability to meet the above stated criteria, cash flow from operations is defined as the net income (including net income from discontinued operations) before any deduction for depletion, depreciation and accretion, amortization of deferred financing charges, non-cash stock based compensation, and non-cash derivative loss on commodity contracts.

/T/

                                                       12 Months Trailing
----------------------------------------------------------------------------
                                                    March 31,   December 31,
(000s)                                                  2008           2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Long-term debt, including the current portion       $ 95,601       $ 56,685
----------------------------------------------------------------------------

Net income                                          $ 11,280       $ 12,802
 Plus: Depletion, depreciation and accretion          36,193         31,172
  Amortization of deferred financing charges             180            153
  Non-cash stock based compensation                    1,132          1,086
  Non-cash derivative loss on commodity contracts      9,546          7,098
----------------------------------------------------------------------------
Cash flow from operations                           $ 58,331       $ 52,311
----------------------------------------------------------------------------
Ratio                                                    1.6            1.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The Company's financial objectives and strategy as described above have remained substantially unchanged over the last two completed fiscal years. These objectives and strategy are reviewed on an annual basis. The Company believes that its ratios are within reasonable limits, in light of the relative size of the Company and its capital management objectives.

The Company is also subject to financial covenants in its revolving credit and term loan agreements. The key financial covenants for the quarter are as follows:

- Interest coverage ratio of greater than 3.5 to 1.0, calculated as EBITDAX to interest expense, for the immediately preceding four consecutive fiscal quarters. For the purposes of the financial covenant calculations EBITDAX shall mean Consolidated Net Income before interest, income taxes, depreciation, depletion, amortization, and accretion, unrealized hedging losses and stock based compensation expense.

- Indebtedness to EBITDAX of less than 2.0 to 1.0. For the purposes of the financial covenant calculation, indebtedness shall mean the balance of the Revolving Credit Facility, the Term Loan, letters of credit, and any amounts payable in connection with a realized derivative loss.

- Current ratio (current assets to current liabilities, excluding the current portion of long-term debt) of greater than 1.0 to 1.0.

The Company is in compliance with all financial covenants.

14. Financial instruments and risk management

Carrying Values and Estimated Fair Values of Financial Assets and Liabilities

The Company has classified its cash and cash equivalents as assets held-for-trading and its derivative commodity contracts as liabilities held-for-trading, which are both measured at fair value with changes being recognized in net income. Accounts receivable are classified as loans and receivables; operating bank loans, accounts payable and accrued liabilities, and long-term debt, including interest payable, are classified as other liabilities, all of which are measure at amortized cost.

Carrying value and fair value of financial assets and liabilities are summarized as follows:

/T/

                                                         March 31, 2008
----------------------------------------------------------------------------
Classification (000s)                         Carrying Value     Fair Value
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financial assets held-for-trading                  $  11,935 $       11,935
Loans and receivables                                 25,293         25,293
Financial liabilities held-for-trading                 9,505          9,505
Other liabilities                                    106,079        108,478
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

Credit Risk

The majority of the accounts receivable are in respect of oil and gas operations. The Company generally extends unsecured credit to these customers and therefore the collection of accounts receivable may be affected by changes in economic or other conditions. Management believes the risk is mitigated by the size and reputation of the companies to which they extend credit. The Company has not experienced any material credit loss in the collection of accounts receivable to date.

Trade and other receivables from continuing operations are analyzed in the table below. With respect to the trade and other receivables that are neither impaired nor past due, there are no indications as of the reporting date that the debtors will not meet their payment obligations.

/T/

(000s)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Trade and other receivables at March 31, 2008
----------------------------------------------------------------------------
Neither impaired nor past due                                      $ 11,690
Impaired (net of valuation allowance)                                     -
Not impaired and past due in the following period:
 Within 30 days                                                       3,613
 31-60 days                                                           3,376
 61-90 days                                                           3,421
 Over 90 days                                                         3,193
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Egypt, the Company sold all of its 2008 production to one purchaser. In Yemen, the Company sold all of its 2008 Block 32 production to one purchaser and all of its 2008 Block S-1 production to one purchaser. In Canada, the Company sold primarily all of its 2008 gas production to one purchaser and primarily all of its 2008 oil production to another single purchaser.

Market Risk

Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The market price movements that the Company is exposed to include oil and natural gas prices (commodity price risk), foreign currency exchange rates and interest rates, all of which could adversely affect the value of the Company's financial assets, liabilities and financial results.

a) Commodity Price Risk

The Company's operational results and financial condition are partially dependent on the commodity prices received for its oil and natural gas production. Commodity prices have fluctuated widely during recent years.

Any movement in commodity prices would have a significant effect on the Company's financial condition. Therefore, the Company has entered into various financial derivative contracts to manage fluctuations in commodity prices in the normal course of operations.

/T/

                                                                Dated Brent
                                                                    Pricing
Period                               Volume             Type       Put-Call
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Crude Oil
 September 1, 2007-
  August 31, 2008         15,000 Bbls/month Financial Collar $ 60.00-$78.55
 January 1, 2008-
  December 31, 2008       12,000 Bbls/month Financial Collar $ 60.00-$81.20
 January 1, 2009-
  December 31, 2009       12,000 Bbls/month Financial Collar $ 60.00-$82.10
 November 1, 2007-
  March 31, 2008           5,000 Bbls/month Financial Collar $ 65.00-$89.35
 September 1, 2008-
  January 31, 2009        11,000 Bbls/month Financial Collar $ 60.00-$88.80
 February 1, 2009-
  December 31, 2009        6,000 Bbls/month Financial Collar $ 60.00-$86.10
 January 1, 2010-
  August 31, 2010         12,000 Bbls/month Financial Collar $ 60.00-$84.25
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The estimated fair value of unrealized commodity contracts is reported on the Consolidated Balance Sheet, with any change in the unrealized positions recorded to income. The fair values of these transactions are based on an approximation of the amounts that would have been paid to or received from counter-parties to settle the transactions outstanding as at the Consolidated Balance Sheet date with reference to forward prices and market values provided by independent sources. The actual amounts realized may differ from these estimates.

When assessing the potential impact of commodity price changes on our financial derivative commodity contracts the Company believes 10% volatility is a reasonable measure. The effect of a 10% increase in commodity prices would decrease the net income, for the three months ended March 31, 2008, by $4.7 million due to an increase in the unrealized derivative loss. The effect of a 10% decrease in commodity prices would increase the net income, for the three months ended March 31, 2008, by $4.1 million due to the unwinding of the unrealized derivative loss.

b) Foreign Currency Exchange Risk

The Company's operations are exposed to fluctuations in foreign currency exchange rates, on its Canadian operations. The Company manages its foreign currency exchange risk by maintaining foreign currency bank accounts and receivable accounts to offset foreign currency payables and planned expenditures.

As the Company's business is conducted primarily in U.S. dollars and its financial instruments are primarily denominated in U.S. dollars, the potential impact of fluctuations in foreign exchange rates on the Company's financial instruments would have a minimal impact on net income and other comprehensive income for the three months ended March 31, 2008.

c) Interest Rate Risk

Fluctuations in interest rates could result in a significant change in the amount the Company pays to service variable-interest, U.S.-dollar-denominated debt. No derivative contracts were entered into during 2008 to mitigate this risk. When assessing interest rate risk applicable to the Company's variable-interest, U.S.- dollar-denominated debt the Company believes 1% volatility is a reasonable measure. The effect of interest rates increasing by 1% would decrease the Company's net income, for the three months ended March 31, 2008, by $0.2 million. The effect of interest rates decreasing by 1% would increase the Company's net income, for the three months ended March 31, 2008, by $0.2 million.

Liquidity Risk

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 proved reserves, to acquire strategic oil and gas assets and to repay debt.

The Company actively maintains credit facilities to ensure it has sufficient available funds to meet current and foreseeable financial requirements at a reasonable cost. The following are the contractual maturities of financial liabilities at March 31, 2008:

/T/

(000s)                                            Payment Due by Period(1,2)
----------------------------------------------------------------------------
                                       Recognized
                                     in Financial    Contractual  Less than
                                       Statements     Cash Flows     1 year
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts payable and accrued
 liabilities                        Yes-Liability     $   10,342 $   10,342
Long-term debt:
  Revolving Credit Agreement        Yes-Liability         50,000          -
  Term Loan Agreement               Yes-Liability         48,000     48,000
Office and equipment leases                    No            869        339
Minimum work commitments(3)                    No         12,900        500
----------------------------------------------------------------------------
Total                                                 $  122,111 $   59,181
----------------------------------------------------------------------------
----------------------------------------------------------------------------



(000s)                                            Payment Due by Period(1,2)
----------------------------------------------------------------------------
                                                                  More than
                                        1-3 years      4-5 years    5 years
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts payable and accrued
 liabilities                          $         -     $        - $        -
Long-term debt:
  Revolving Credit Agreement               50,000              -          -
  Term Loan Agreement                           -              -          -
Office and equipment leases                   530              -          -
Minimum work commitments(3)                 5,800          6,600          -
----------------------------------------------------------------------------
Total                                 $    56,330     $    6,600 $        -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Payments exclude ongoing operating costs related to certain leases,
    interest on long-term debt and payments made to settle derivatives.
(2) Payments denominated in foreign currencies have been translated at
    March 31, 2008 exchange rates.
(3) Minimum work commitments include contracts awarded for capital projects
    and those commitments related to exploration and drilling obligations.

/T/

Pursuant to the East Hoshia Development Lease in Egypt, the Company and its partners have committed to drilling three exploration wells and submitted a letter of production guarantee for $4.0 million as security (expiring June 1, 2009).

Pursuant to the PSA for Block 72, Yemen, the Contractor (joint venture partners) has a minimum financial commitment of $4.0 million ($1.3 million to TransGlobe) during the first exploration period. The remaining amount to TransGlobe is $0.5 million. This period has been extended to January 12, 2009 and applies to exploration work consisting of seismic acquisition (completed) and one remaining exploration well.

Pursuant to the bid awarded for Block 75, Yemen, the Contractor (joint venture partners) has a minimum financial commitment of $7.0 million ($1.8 million to TransGlobe) for the signature bonus and first exploration period work program consisting of seismic acquisition and one exploration well. The first 36-month exploration period commenced March 8, 2008. The Company issued a $1.5 million letter of credit (expiring November 15, 2011) to guarantee the Company's performance under the first exploration period. The letter is secured by a guarantee granted by Export Development Canada.

Pursuant to the bid awarded for Block 84, Yemen, the Contractor (joint venture partners) has a minimum financial commitment of $20.1 million ($6.6 million to TransGlobe) for the signature bonus and first exploration period work program consisting of seismic acquisition and four exploration wells. The first 42-month exploration period will commence when the PSA has been approved and ratified by the government of Yemen, anticipated to occur in 2008.

Upon the determination that proved recoverable reserves are 40 million barrels or greater for Block S-1 in Yemen, the Company will be required to pay a finders' fee to third parties in the amount of $0.3 million.

Management believes that future cash flows from operations, working capital and availability under existing banking arrangements will be adequate to support these financial liabilities, as well as its capital programs.

The existing banking arrangements at March 31, 2008 consist of a Revolving Credit Facility and a Term Loan of $50.0 million and $48.0 million, respectively.

The table below shows cash outflows for financial derivative instruments based on a dated Brent oil price of $100.30/Bbl at March 31, 2008:

/T/

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Less than 1 year                                                 $    5,239
1-3 years                                                             4,266
----------------------------------------------------------------------------
----------------------------------------------------------------------------


15. Segmented information

----------------------------------------------------------------------------
                              Egypt             Yemen             Total
----------------------------------------------------------------------------
                          2008     2007     2008     2007     2008     2007
----------------------------------------------------------------------------
Revenue
  Oil and gas sales,
   net of royalties
   and other          $ 10,065  $     - $ 19,283 $ 12,603 $ 29,348 $ 12,603
  Other income              31        -        -        -       31        -
----------------------------------------------------------------------------
Total revenue           10,096        -   19,283   12,603   29,379   12,603
----------------------------------------------------------------------------
Segmented expenses
  Operating                711        -    3,212    1,364    3,923    1,364
  Depletion,
   depreciation and
   accretion             4,927       12    3,062    2,994    7,989    3,006
  Income taxes           3,124        -    4,108    2,002    7,232    2,002
----------------------------------------------------------------------------
Total segmented
 expenses                8,762       12   10,382    6,360   19,144    6,372
----------------------------------------------------------------------------
Segmented income      $  1,334  $   (12) $ 8,901  $ 6,243   10,235    6,231
----------------------------------------------------------------------------
Non-segmented expenses
  Derivative loss on
   commodity contracts                                       3,911      (41)
  General and
   administrative                                            2,272    1,203
  Interest on
   long-term debt                                            1,681        -
  Foreign exchange
   loss (gain)                                                  13      (50)
  Other income                                                 (32)     (17)
----------------------------------------------------------------------------
Total non-segmented
 expenses                                                    7,845    1,095
----------------------------------------------------------------------------
Net income from
 continuing operations                                       2,390    5,136
Net income from
 discontinued
 operations (Note 4)                                         2,068      844
----------------------------------------------------------------------------
Net income                                                $  4,458 $  5,980
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Capital expenditures  $  3,318 $  2,189 $  2,947 $  4,120 $  6,265 $  6,309
Acquisition                                                 36,601        -
----------------------------------------------------------------------------
                                                          $ 42,866 $  6,309
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Property, plant and
 equipment            $ 97,411 $ 62,316 $ 52,874 $ 53,163 $150,285 $115,479
Goodwill                 7,713    4,313        -        -    7,713    4,313
Other                   21,452   13,464    8,937    5,906   30,389   19,370
----------------------------------------------------------------------------
Segmented assets      $126,576 $ 80,093 $ 61,811 $ 59,069  188,387  139,162
Non-segmented assets                                         7,763    8,596
Discontinued
 operations                                                 53,251   56,461
----------------------------------------------------------------------------
Total assets                                              $249,401 $204,219
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

16. Comparative figures

Certain comparative figures have been reclassified to conform with current period presentation.

17. Subsequent event

On April 15, 2008, TransGlobe entered into an agreement to sell all of its Canadian oil and gas assets for C$56.7 million, effective January 1, 2008. The gain on the sale is projected to be approximately $4.7 million. The closing of the transaction occurred on April 30, 2008, subject to standard and customary closing conditions. The Company repaid $55.0 million of debt with the proceeds from the sale and cash on hand.

/T/

DIRECTORS AND OFFICERS                         TRANSFER AGENT AND REGISTRAR

Robert A. Halpin(1,2,3)               Computershare Trust Company of Canada
Director, Chairman of the Board                 Calgary, Toronto, Vancouver

Ross G. Clarkson
Director, President & CEO                                     LEGAL COUNSEL

Lloyd W. Herrick                             Burnet, Duckworth & Palmer LLP
Director, Vice President & COO                             Calgary, Alberta

Erwin L. Noyes(2,3,4)
Director                                                             BANKER

Geoffrey C. Chase(1,2,4)                                  Standard Bank Plc
Director                                                    London, England

Fred J. Dyment(1,3,4)
Director                                                            AUDITOR

David C. Ferguson                                     Deloitte & Touche LLP
Vice President, Finance, CFO &                             Calgary, Alberta
 Corporate Secretary

1 Audit Committee                                      EVALUATION ENGINEERS
2 Reserves Committee
3 Compensation Committee            DeGolyer and MacNaughton Canada Limited
4 Governance and Nominating                                Calgary, Alberta
 Committee

STOCK EXCHANGE LISTINGS                                         HEAD OFFICE

TSX: TGL                                    #2500, 605 - 5(th) Avenue, S.W.
NASDAQ: TGA                               Calgary, Alberta, Canada, T2P 3H5

                                                  Telephone: (403) 264-9888

INVESTOR RELATIONS                                Facsimile: (403) 264-9898

Anne-Marie Buchmuller
Manager, Investor Relations &
 Assistant Corporate Secretary                                 EGYPT OFFICE
                                              8, Abd El-Hamid Hassan Street

Telephone: (403) 268-9868                                    8(th) District
Email: investor.relations@trans-globe.com           Nasr City, Cairo, Egypt

Web site: www.trans-globe.com


Share Information                                   Q1-2008         Q1-2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------
TSX: Price per share - TSX (C$)
  High                                                 5.65            6.09
  Low                                                  4.31            3.50
  Close                                                5.00            4.55
Average daily trading volume                         69,390          32,269

NASDAQ: Price per share - NASDAQ (US$)(1)
  High                                                 5.80            5.17
  Low                                                  4.20            3.65
  Close                                                4.87            3.93
Average daily trading volume(1)                     180,889         204,403
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Figures before January 18, 2008 represent share information from the
    American Stock Exchange.

/T/



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
#2500, 605 - 5th Avenue, S.W.,
Calgary, AB T2P 3H5