NEWS RELEASE TRANSMITTED BY Marketwire



FOR: TRANSGLOBE ENERGY CORPORATION

TSX SYMBOL:
 TGL
NASDAQ SYMBOL:
 TGA

TransGlobe Energy Corporation Announces Third Quarter 2010 Financial and Operating Results

Nov 04, 2010 - 07 01 ET

CALGARY, ALBERTA--(Marketwire - Nov. 4, 2010) - TransGlobe Energy Corporation ("TransGlobe" or the "Company") (TSX:TGL) (NASDAQ:TGA) is pleased to announce its financial and operating results for the three and nine period ended September 30, 2010. All dollar values are expressed in United States dollars unless otherwise stated.

HIGHLIGHTS

- Record third quarter production of 10,138 Bopd, (Egypt 7,601 Bopd, Yemen 2,537 Bopd); October production 10,589 Bopd;

- Record third quarter funds flow of $19.5 million ($0.28/share), a 55% increase over third quarter 2009;

- Third quarter net income of $8.8 million ($0.13/share), compared to a $1.6 million loss in the third quarter of 2009;

- Drilled 12 wells in third quarter resulting in nine oil wells (five at West Gharib, three at Block S-1 and one at Block 32);

- Nukhul pools at West Gharib continue to grow with appraisal drilling; new Nukhul pool oil discovery at East Arta #4, initial rate 500 Bopd;

- Successful development drilling program in Block S-1, Yemen; An Nagyah #29 initial rate over 2,000 Bopd;

- Sabbar #1 appraisal well on Safwa pool tested at 500 Bopd at East Ghazalat; PIIP estimates for Safwa increased by 280%;

- Added to S&P/TSX Small Cap Index.

CORPORATE SUMMARY

The total production from all Nukhul wells in West Gharib increased to 1,900 Bopd during the quarter from 130 Bopd just nine months ago. The Company has yet to define the areal extent of the Nukhul pools. This will be the focus of the fourth quarter drilling program. Full development of the fields is expected to continue through 2011 and 2012 with the potential to more than quadruple current Nukhul production. The West Gharib project area is now the primary producing asset in the Company's portfolio and continues to be the growth engine for the future.

In the Western Desert area, the third well in the Safwa field encountered better reservoir rock and tested at the highest rate to date. The result has increased the internally estimated P-mean case gross petroleum initially in place ("PIIP") by 280% to 58 million barrels after incorporating the Sabbar well results and remapping the 3-D seismic. Two additional wells are planned for the remainder of the year. Plans are underway to bring the discovery into production in 2011.

In the Nuqra Block in Egypt, the Company has firmed up its drilling plans and anticipates it will drill two exploratory wells starting in January 2011.

The drilling program in the Republic of Yemen ("Yemen") has increased production in the third quarter. Two high impact Basement exploration wells are expected to spud in Yemen within the next few weeks.

The successful 2010 drilling program is setting the stage for continued growth in 2011. The drilling plans and budget for 2011 will be released in early December.

A conference call to discuss TransGlobe's third quarter results presented in this report will be held on Thursday, November 4, 2010 at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time) and is accessible to all interested parties by dialing (416) 340-8018 or toll-free 1-866-223-7781 (see also TransGlobe's news release dated October 28, 2010). Online, the web cast may be accessed at http://events.digitalmedia.telus.com/transglobe/110410/index.php. A copy of TransGlobe's complete results for the three and nine months ended September 30, 2010 including Management's Discussion and Analysis and the Unaudited Interim Consolidated Financial Statements can be obtained at http://media3.marketwire.com/docs/1104tgl.pdf. The full report will also be made available through TransGlobe's website at www.trans-globe.com, SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml

/T/

FINANCIAL AND OPERATING RESULTS

(US$000s, except per share, price, volume amounts and % change)

                                 Three Months Ended       Nine Months Ended
                                       September 30            September 30
                            ------------------------------------------------
                                                  %                       %
Financial                       2010    2009 Change    2010     2009 Change
----------------------------------------------------------------------------
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Oil revenue                   66,470  46,818     42 189,661  117,754     61
Oil revenue, net of royalties
 and other                    38,980  28,495     37 112,022   74,017     51
Derivative gain (loss) on
 commodity contracts            (221)    152   (245)     68   (3,529)   102
Operating expense              6,708   6,971     (4) 18,742   17,378      8
General and administrative
 expense                       2,999   2,636     14   9,418    7,505     25
Depletion, depreciation and
 accretion expense             9,440  14,192    (33) 24,121   40,624    (41)
Income taxes                   9,785   6,161     59  27,619   14,966     85
Funds flow from operations(1) 19,535  12,603     55  55,635   35,361     57
 Basic per share                0.29    0.19           0.84     0.55
 Diluted per share              0.28    0.19           0.82     0.55
Net income (loss)              8,805  (1,618)        29,841  (10,933)   
 Basic per share                0.13   (0.02)          0.45    (0.17)
 Diluted per share              0.13   (0.02)          0.44    (0.17)
Capital expenditures          19,453  10,599     84  47,386   28,005     69
Long-term debt, including
 current portion              46,045  52,686    (13) 46,045   52,686    (13)
Common shares outstanding
 Basic (weighted-average)     66,775  65,328      2  66,085   64,135      3
 Diluted (weighted-average)   69,309  65,328      6  68,402   64,135      7
Total assets                 275,885 228,964     20 275,885  228,964     20
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(1) Funds flow from operations is a non-GAAP measure that represents cash
    generated from operating activities before changes in non-cash working
    capital.


Operating
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Average production volumes
 (Bopd)                       10,138   8,864     14   9,681    9,090      6
Average price ($ per Bbl)      71.27   57.41     24   71.76    47.45     51
Operating expense ($ per Bbl)   7.19    8.55    (16)   7.09     7.00      1
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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

Drilling

Delineation drilling of the Nukhul formation continues to be the primary focus of the expanded 2010 drilling program. During the third quarter, the Company drilled four oil wells (East Arta #3, East Arta #4, Arta #21 and Hana #23), one potential oil well (North Hoshia #3) and two dry holes (Hoshia #9 and West Hoshia #5). Subsequent to the quarter, four additional oil wells were drilled (Arta #22, Arta #23, East Arta #5 and East Arta #7).

Arta/East Arta

At present it appears that the Nukhul formation at Arta and East Arta is part of a large sandstone and conglomerate fan sequence. The recent drilling indicates the reservoir may comprise one large oil pool. The total potential productive area covers approximately 8,500 acres extending 14 kilometers north to south by 4 kilometers west to east. At Arta, the internally estimated PIP has increased to 54 million barrels of oil ("MMBbl") and the East Arta pool has a PIIP of 32 MMBbls, using a deterministic P50 case.  The undrilled area between the pools has a potential PIIP of 88 MMBbls using the same reservoir parameters. The net pay varies between the wells depending on where they are located on the structure and on the Nukhul fan deposit. The crestal wells have encountered thinner sands with 30 to 50 feet of net pay or carbonate wells with zero to 10 feet of net pay. Wells on the flank of the structure have much thicker sands and better reservoir quality. For example, the most recent well, East Arta #7, encountered more than 90 feet of net pay in high porosity and high permeability sands. There is also a significant amount of structural relief across the deposit. The oil column is greater than 1,650 feet from the crest of the pool (Arta #13) to the base of the reservoir at East Arta #7. The oil/water contact has not been found yet so additional drilling is planned to define the down dip extent of the pool. Future drill locations will be focused on the thicker, more productive, flank locations as the reservoir facies becomes better delineated.

Hana

The Hana #23 well was drilled, cased and completed as a producing Kareem oil well at an initial rate of 100 Bopd.

North Hoshia

The North Hoshia #3 was drilled, cased and completed as a potential Nukhul oil well. The well came in structurally low to the North Hoshia field and has tested water in the lower Nukhul formation. The well may be recompleted in the Upper Nukhul.

Hoshia

The Nukhul formation discovered in Hoshia #8 was frac'd during September and is producing at a post-frac rate of 150 Bopd.

West Gharib Forward Drilling Plans

The rigs are currently moving to East Arta #6 (a 1.1 km appraisal to East Arta #4) and Arta #19 on the south end of Arta, to be followed by wells at East Arta #8, #9 and #10.

The recent drilling has started to define a potentially large oil pool on TransGlobe's lands at Arta/East Arta. The development drilling plan for this pool will initially focus on drilling widely spaced delineation wells with approximately 640 acre spacing. The north portion of the Arta field is now largely delineated at 640 acre spacing. The East Arta area requires an additional six to eight delineation wells. The Arta/East Arta pool could require over 200 wells if developed on an initial well spacing of 40 acres. Down-spacing to 20 acre well spacing may be required in the future to increase oil recovery.

The Nukhul oil discovery at Hoshia #8 also requires five to eight development wells. A Nukhul test is also planned in the fourth quarter at South Rahmi #8 which may lead to additional development drilling.

In light of the expanding drilling inventory, the Nukhul development is being accelerated in 2011 with the addition of a third drilling rig.

Production

Production from West Gharib averaged 7,601 Bopd to TransGlobe during the third quarter, a 15% (970 Bopd) increase from the previous quarter. Production increases were attributable to increased Nukhul production from Arta and East Arta during the quarter. Production averaged 7,610 Bopd to TransGlobe during October.

Total Nukhul production has increased from an average of 130 Bopd in January 2010 to approximately 760 Bopd in the second quarter, 1,448 Bopd in the third quarter and 1,901 Bopd in October.

The Company has successfully fracture stimulated the Nukhul formation in 13 vertical wells and one horizontal well in the West Gharib area. The initial, pre-frac production from these wells was between 0 and 80 Bopd. The post-frac initial rates have ranged between 100 Bopd on the crest of the Arta pool and as high as 800 to 1,000 Bopd on the thicker wells drilled on the flank. The wide range in post-frac performance makes it challenging to type curve the post-frac performance, however three trends are emerging. The low productivity carbonate wells had an average post frac rate of 40 Bopd/well and are producing 0 to 35 Bopd/well. The crestal wells had an average post frac rate of 223 Bopd/well and are producing in the 80 to 170/well Bopd range. The flank wells (excluding East Arta #7) had an average post frac rate of 535 Bopd/well and are producing in the 320 to 500 Bopd/well range. East Arta #7 is also a flank well with a better quality thick reservoir. It is expected to be placed on production in the next two weeks at an initial rate of greater than 500 Bopd (without a frac).

/T/

Quarterly West Gharib Production (Bopd)

                                                   2010                2009
----------------------------------------------------------------------------
                                          Q-3       Q-2       Q-1       Q-4
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Gross production rate                   7,601     6,631     6,848     5,815
TransGlobe working interest             7,601     6,631     6,848     5,815
TransGlobe net (after royalties)        4,626     4,040     4,250     3,775
TransGlobe net (after royalties and
 tax)(1)                                3,460     3,009     3,222     2,951
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(1) Under the terms of the West Gharib Production Sharing Concession,
    royalties and taxes are paid out of the Government's share of production
    sharing oil.

/T/

East Ghazalat Block, Arab Republic of Egypt (50% working interest)

Operations and Exploration

A three well drilling program commenced on September 13 at the Sabbar #1 location. The Sabbar #1 well is the first of two planned appraisal wells on the Safwa structure.

The Sabbar #1 was drilled to a total depth of 4,600 feet, cased and completed as a Bahariya oil well. Sabbar #1 encountered 40+ feet of net pay in the Bahariya sandstones, 27 feet structurally higher than the Safwa discovery wells. A 45 foot interval was perforated and flowed naturally at a rate of 500 Bopd on a short test. Sabbar #1 is located approximately 1.7 kilometres northeast of Safwa NW-1 which tested 250 Bopd and Safwa #1 which tested 300 Bopd from the Upper Bahariya (un-stimulated). The positive results at Sabbar #1 have increased the internally estimated gross PIIP to 58 million barrels of oil ("MMBbl"), up from the initial estimate of 20.6 MMBbl of oil using the respective probabilistic P-mean cases.

Drilling commenced on Safwa #2 on October 25th. Safwa #2 is a step-out appraisal well located approximately 350 meters east of Safwa #1.

Following Safwa #2 the drilling rig will move to Nakhil #1 targeting a prospect which has an internally estimated gross PIIP of 10.4 MMBbl using the P-mean case. The Nakhil prospect is located approximately eight kilometres southwest of Safwa #1.

TransGlobe and the operator are evaluating early development options for the Safwa discovery including the commencement of production by mid-2011.

Nuqra Block 1, Arab Republic of Egypt (71.43% working interest, TransGlobe operated)

Operations and Exploration

TransGlobe has contracted the drilling rig currently working on East Ghazalat for a one-year period. Initially it will drill two exploration wells in Nuqra commencing in late December/early January. The rig will be available for Nukhul development drilling at West Gharib following the Nuqra program. The two exploration wells (Selsella #1 and Diwan #1) are targeting prospects with gross PIIP of 13.6 MMBbl and 46 MMBbl respectively, based on internally generated estimates using the respective probabilistic P-mean cases.

YEMEN EAST- Masila Basin

Block 32, Republic of Yemen (13.81% working interest)

Operations and Exploration

During the third quarter, the Safa #1 exploration well was drilled and abandoned.

Subsequent to the quarter, the Godah #12 development well was drilled and completed as a Qishn oil well. The drilling rig will be moved to Block 72 to drill the Gabdain #1 exploration well.

Production

Production from Block 32 averaged 4,232 Bopd (585 Bopd to TransGlobe) during the quarter, representing a 5% decrease from the previous quarter primarily due to natural declines.

Production averaged approximately 3,986 Bopd (550 Bopd to TransGlobe) during October.

/T/

Quarterly Block 32 Production (Bopd)

                                                   2010                2009
----------------------------------------------------------------------------
                                          Q-3       Q-2       Q-1       Q-4
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Gross production rate                   4,232     4,464     4,948     5,174
TransGlobe working interest               585       616       683       715
TransGlobe net (after royalties)          332       315       472       437
TransGlobe net (after royalties and
 tax)(1)                                  248       215       400       346
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(1) Under the terms of the Block 32 Production Sharing Agreement ("PSA"),
    royalties and taxes are paid out of the government's share of production
    sharing oil.

/T/

Block 72, Republic of Yemen (20% working interest)

Operations and Exploration

The Block 72 joint venture partnership entered the second, 30-month exploration period in January 2009 which carries a commitment of one exploration well.

The Block 72 joint venture partnership entered into a farm-out agreement with TOTAL E&P Yemen who is the Operator of Block 10 in the Masila Basin. Under the terms of the agreement, the Company reduced its working interest from 33% to 20%.

An exploration well (Gabdain #1) is planned for November/December of 2010. The operator (DNO) is currently moving the drilling rig from Block 32 to the Gabdain well site and it is expected that drilling will commence in the next two to three weeks. Gabdain #1 is targeting a fractured basement prospect identified on 3-D seismic on the northern portion of Block 72. The Gabdain fractured Basement prospect has an internally estimated gross PIIP of 185 MMBbl, using the probabilistic P-mean case.

YEMEN WEST- Marib Basin

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

Operations and Exploration

During the quarter, three horizontal wells were drilled and completed as Lam 'A' oil producers in the An Nagyah pool. The wells were comprised of two re-entries (An Nagyah #4 and #25) and a new horizontal development well at An Nagyah #29. The An Nagyah #2 vertical well was re-entered and completed as a horizontal producing Lam 'A' oil well in late October.

The drilling rig is currently mobilizing to An Nagyah #31 to drill a dual target exploration well. The An Nagyah #31 exploration well is targeting a separate Lam terrace adjacent to the producing An Nagyah field and a fractured Basement prospect under the main field. The well will be drilled vertically through the Lam formation and then directionally drilled at a high angle into the Basement structure. The well is targeting a gross PIIP of 21.2 MMBbl in the Lam prospect and 73.1 MMBbl in the fractured Basement prospect, based on internally generated estimates using the respective probabilistic P-mean case.

Production

Production from Block S-1 averaged 7,812 Bopd (1,952 Bopd to TransGlobe) during the third quarter, unchanged from the previous quarter. Curtailed production during July due to compressor overhauls was offset by new producers in August and September. Concurrent with the horizontal development drilling program, the operator is installing additional compression to increase gas injection capacity in December 2010 and in the second quarter of 2011.

Production averaged approximately 9,715 Bopd (2,429 Bopd to TransGlobe) during October, representing a 24% increase (477 Bopd increase to TransGlobe) from the third quarter, primarily due to the new producers at An Nagyah. The An Nagyah #29 horizontal is currently producing in excess of 2,000 Bopd.

/T/

Quarterly Block S-1 Production (Bopd)

                                                   2010                2009
----------------------------------------------------------------------------
                                          Q-3       Q-2       Q-1       Q-4
----------------------------------------------------------------------------
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Gross field production rate             7,812     7,836     8,652     8,504
TransGlobe working interest             1,952     1,959     2,163     2,126
TransGlobe net (after royalties)        1,003       995     1,169       867
TransGlobe net (after royalties and
 tax)(1)                                  756       744       906       585
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(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. The first, three-year exploration phase has a work commitment of 3-D seismic and one exploration well. The 3-D seismic was acquired in 2009. One exploration well is planned as part of the Block S-1/75 drilling program.

The Block 75 exploration well (Osaylan SW) is currently scheduled for the first quarter of 2011. The Osaylan SW exploration well is targeting a Lam formation exploration prospect which has an internally estimated gross PIIP of 184 MMBbl using the probabilistic P-mean case.

November 4, 2010

Management's discussion and analysis ("MD&A") should be read in conjunction with the unaudited interim financial statements for the three months and nine months ended September 30, 2010 and 2009 and the audited financial statements and MD&A for the year ended December 31, 2009 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 on SEDAR at www.sedar.com. The Company's annual report and Form 40-F may be found on EDGAR at www.sec.gov.

READER ADVISORIES

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. Such statements relate to possible future events. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although TransGlobe's forward-looking statements are based on the beliefs, expectations, opinions and assumptions of the Company's management on the date the statements are made, such statements are inherently uncertain and provide no guarantee of future performance. Actual results may differ materially from TransGlobe's expectations as reflected in such forward-looking statements as a result of various factors, many of which are beyond the control of the Company. These factors include, but are not limited to, unforeseen changes in the rate of production from TransGlobe's oil and gas properties, changes in price of crude oil and natural gas, adverse technical factors associated with exploration, development, production or transportation of TransGlobe's crude oil and natural gas reserves, changes or disruptions in the political or fiscal regimes in TransGlobe's areas of activity, changes in tax, energy or other laws or regulations, changes in significant capital expenditures, delays or disruptions in production due to shortages of skilled manpower, equipment or materials, economic fluctuations, and other factors beyond the Company's control. TransGlobe does not assume any obligation to update forward-looking statements, other than as required by law, if circumstances or management's beliefs, expectations or opinions should change and investors should not attribute undue certainty to, or place undue reliance on, any forward-looking statements. Please consult TransGlobe's public filings at www.sedar.com and www.sec.gov for further, more detailed information concerning these matters.

Non-GAAP Measures

Funds Flow from Operations

This document contains the term "funds flow from operations", which should not be considered an alternative to or more meaningful than "cash flow from operating activities" as determined in accordance with Generally Accepted Accounting Principles ("GAAP"). Funds flow from operations is a non-GAAP measure that represents cash generated from operating activities before changes in non-cash working capital. Management considers this a key measure as it demonstrates TransGlobe's ability to generate the cash flow necessary to fund future growth through capital investment. Funds flow from operations may not be comparable to similar measures used by other companies.

/T/

Reconciliation of Funds Flow from Operations

                                     Three Months Ended   Nine Months Ended
                                           September 30        September 30
----------------------------------------------------------------------------
($000s)                                  2010      2009      2010      2009
----------------------------------------------------------------------------
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Cash flow from operating activities    12,297     1,264    32,178    24,205
Changes in non-cash working capital     7,238    11,339    23,457    11,156
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Funds flow from operations             19,535    12,603    55,635    35,361
----------------------------------------------------------------------------
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/T/

Debt-to-funds flow ratio

Debt-to-funds flow is a non-GAAP measure that is used to set the amount of capital in proportion to risk. The Company's debt-to-funds flow ratio is computed as long-term debt, including the current portion, over funds flow from operations for the trailing twelve months. Debt-to-funds flow may not be comparable to similar measures used by other companies.

Netback

Netback is a non-GAAP measure that represents sales net of royalties (all government interests, net of income taxes), operating expenses and current taxes. Management believes that netback is a useful supplemental measure to analyze operating performance and provide an indication of the results generated by the Company's principal business activities prior to the consideration of other income and expenses. Netback may not be comparable to similar measures used by other companies.

TRANSGLOBE'S BUSINESS

TransGlobe is a Canadian-based, publicly traded, oil exploration and production company whose activities are concentrated in two main geographic areas, the Arab Republic of Egypt ("Egypt") and the Republic of Yemen ("Yemen"). Egypt and Yemen include the Company's exploration, development and production of crude oil. TransGlobe disposed of its Canadian oil and gas operations in 2008 to reposition itself as a 100% oil, Middle East/North Africa growth company.

/T/

SELECTED QUARTERLY FINANCIAL INFORMATION

                                                                       2010
----------------------------------------------------------------------------
($000s, except per share, price and
 volume amounts)                                    Q-3       Q-2       Q-1
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Average sales volumes (Bopd)                     10,138     9,206     9,694
Average price ($/Bbl)                             71.27     73.46     70.66
Oil sales                                        66,470    61,540    61,651
Oil sales, net of royalties and other            38,980    35,638    37,404
Cash flow from operating activities              12,297    15,627     4,254
Funds flow from operations(1)                    19,535    17,027    19,073
Funds flow from operations per share
 - Basic                                           0.29      0.26      0.29
 - Diluted                                         0.28      0.25      0.29
Net income (loss)                                 8,805     9,438    11,598
Net income (loss) per share
 - Basic                                           0.13      0.14      0.18
 - Diluted                                         0.13      0.14      0.17
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Total assets                                    275,885   263,345   248,446
Cash and cash equivalents                        15,412    21,437    18,845
Total long-term debt, including
 current portion                                 46,045    49,977    49,888
Debt-to-funds flow ratio (2)                        0.7       0.9       0.9
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                                                             2009      2008
----------------------------------------------------------------------------
($000s, except per share,
 price and volume amounts)      Q-4       Q-3       Q-2       Q-1       Q-4
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Average sales volumes
 (Bopd)                       8,656     8,864     9,619     8,788     6,893
Average price ($/Bbl)         62.84     57.41     48.62     35.88     46.18
Oil sales                    50,044    46,818    42,557    28,379    29,285
Oil sales, net of royalties
 and other                   28,788    28,495    26,462    19,060    18,272
Cash flow from operating
 activities                  12,594     1,264    15,052     7,889    11,252
Funds flow from operations(1) 9,703    12,603    14,117     8,641     6,134
Funds flow from operations
 per share
 - Basic                       0.15      0.19      0.22      0.14      0.10
 - Diluted                     0.15      0.19      0.22      0.14      0.10
Net income (loss)             2,516    (1,618)   (4,361)   (4,954)    7,640
Net income (loss) per share
 - Basic                       0.04     (0.02)    (0.07)    (0.08)     0.14
 - Diluted                     0.04     (0.02)    (0.07)    (0.08)     0.13
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets                228,882   228,964   229,658   238,145   228,238
Cash and cash equivalents    16,177    14,804    23,952    22,041     7,634
Total long-term debt,
 including current portion   49,799    52,686    52,551    57,347    57,230
Debt-to-funds flow ratio (2)    1.1       1.3       1.2       1.1       1.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Funds flow from operations is a non-GAAP measure that represents cash
    generated from operating activities before changes in non-cash working
    capital.
(2) Debt-to-funds flow ratio is a non-GAAP measure that represents total
    current and long-term debt over funds flow from operations for the
    trailing 12 months.

/T/

During the third quarter of 2010, TransGlobe has:

- Maintained a strong financial position, reporting a debt-to-funds flow ratio of 0.7 at September 30, 2010 (September 30, 2009 - 1.3);

- Funded capital programs entirely with funds flow from operations;

- Reported a 55% increase in funds flow from operations due to a 24% increase in commodity prices along with a 14% increase in sales volumes compared to Q3-2009; and

- Reported net income in Q3-2010 of $8.8 million (Q3-2009 - $1.6 million net loss) mainly due to higher commodity prices and production volumes in the quarter compared with the same period in 2009, along with lower depletion and depreciation expense.

/T/

2010 VARIANCES

                                                 $ Per Share
                                        $000s        Diluted     % Variance
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q3-2009 net loss                       (1,618)         (0.02)
----------------------------------------------------------------------------
Cash items
Volume variance                         8,400           0.11            519
Price variance                         11,252           0.16            695
Royalties                              (9,168)         (0.13)          (567)
Expenses:
 Operating                                263              -             16
 Realized derivative loss                 442           0.01             27
 Cash general and administrative         (127)             -             (8)
 Current income taxes                  (3,624)         (0.05)          (224)
 Realized foreign exchange gain          (208)             -            (13)
Interest on long-term debt               (324)             -            (20)
Other income                               27              -              2
----------------------------------------------------------------------------
Total cash items variance               6,933           0.10            427
----------------------------------------------------------------------------
Non-cash items
Unrealized derivative gain               (815)         (0.01)           (49)
Depletion and depreciation              4,752           0.06            294
Stock-based compensation                 (236)             -            (15)
Amortization of deferred financing costs (211)             -            (13)
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Total non-cash items variance           3,490           0.05            217
----------------------------------------------------------------------------

Q3-2010 net income                      8,805           0.13            644
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

Net income increased to $8.8 million in Q3-2010 compared to a loss of $1.6 million in Q3-2009, which was mostly due to significant increases in commodity prices and production volumes along with a decrease in depletion and depreciation, which was partially offset by higher royalties and income taxes.

BUSINESS ENVIRONMENT

The Company's financial results are significantly influenced by fluctuations in commodity prices, including price differentials. The following table shows select market benchmark prices and foreign exchange rates:

/T/

                                                   2010                2009
----------------------------------------------------------------------------
                               Q-3        Q-2       Q-1       Q-4       Q-3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dated Brent average oil price
 ($/Bbl)                     76.86      78.30     76.10     74.56     68.27
U.S./Canadian Dollar average
 exchange rate               1.039      1.028     1.016     1.056     1.098
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The price of Dated Brent oil averaged 13% higher in Q3-2010 compared with Q3-2009. Global markets are currently in a period of economic recovery with improved liquidity and access to capital, in addition to strengthening oil prices. TransGlobe's management believes the Company is well positioned to take advantage of the improving economy due to its increasing production, manageable debt levels, positive cash generation from operations and the availability of cash and cash equivalents.

The Company designed its 2010 budget to be flexible, allowing spending to be adjusted as commodity prices change and forecasts are reviewed.

/T/

OPERATING RESULTS AND NETBACK

Daily Volumes, Working Interest Before Royalties and Other (Bopd)

                                     Three Months Ended   Nine Months Ended
                                           September 30        September 30
----------------------------------------------------------------------------
                                         2010      2009      2010      2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt - Oil sales                       7,601     5,747     7,029     5,833
Yemen - Oil sales                       2,537     3,117     2,652     3,257
----------------------------------------------------------------------------
Total Company - daily sales volumes    10,138     8,864     9,681     9,090
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Netback

Consolidated

                                             Nine Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                             189,661     71.76   117,754     47.45
Royalties and other                    77,639     29.38    43,737     17.62
Current taxes                          27,619     10.45    14,966      6.03
Operating expenses                     18,742      7.09    17,378      7.00
----------------------------------------------------------------------------
Netback                                65,661     24.84    41,673     16.80
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                            Three Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              66,470     71.27    46,818     57.41
Royalties and other                    27,490     29.47    18,323     22.47
Current taxes                           9,785     10.49     6,161      7.56
Operating expenses                      6,708      7.19     6,971      8.55
----------------------------------------------------------------------------
Netback                                22,487     24.12    15,363     18.83
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Egypt

                                             Nine Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                             133,676     69.66    68,265     42.87
Royalties and other                    51,782     26.99    23,969     15.05
Current taxes                          20,461     10.66     9,658      6.07
Operating expenses                     11,800      6.15     9,695      6.09
----------------------------------------------------------------------------
Netback                                49,633     25.86    24,943     15.66
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                            Three Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              48,551     69.43    27,339     51.71
Royalties and other                    18,999     27.17     9,584     18.13
Current taxes                           7,447     10.65     3,874      7.33
Operating expenses                      4,313      6.17     4,241      8.02
----------------------------------------------------------------------------
Netback                                17,792     25.44     9,640     18.23
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The netback per Bbl in Egypt increased 40% and 65% in the three and nine months ended September 30, 2010, respectively, compared with the same periods of 2009, mainly as a result of oil prices increasing by 34% and 62%, respectively, partially offset by higher royalty and tax rates. The average selling price during the three months ended September 30, 2010 was $69.43/Bbl, which represents a gravity/quality adjustment of approximately $7.43/Bbl to the average Dated Brent oil price for the period of $76.86/Bbl.

Royalties and taxes as a percentage of revenue increased to 54% in the three and nine months ended September 30, 2010, compared with 49% in the same period of 2009. Royalty and tax rates fluctuate in Egypt due to changes in the cost oil whereby the Production Sharing Contract ("PSC") allows for recovery of operating and capital costs through a reduction in government take.

Operating expenses on a per Bbl basis for the three and nine months ended September 30, 2010 decreased 23% and increased 1%, respectively, compared with the same periods of 2009. This is mainly due to a significant increase in production in Egypt during the three and nine month periods ended September 30, 2010 compared with the same periods in 2009, along with more workovers performed in the third quarter of 2009 compared to the third quarter of 2010.

/T/

Yemen

                                             Nine Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              55,985     77.33    49,489     55.66
Royalties and other                    25,857     35.71    19,768     22.23
Current taxes                           7,158      9.89     5,308      5.97
Operating expenses                      6,942      9.59     7,683      8.64
----------------------------------------------------------------------------
Netback                                16,028     22.14    16,730     18.82
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                            Three Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil sales                              17,919     76.77    19,479     67.92
Royalties and other                     8,491     36.38     8,739     30.47
Current taxes                           2,338     10.02     2,287      7.97
Operating expenses                      2,395     10.26     2,730      9.52
----------------------------------------------------------------------------
Netback                                 4,695     20.11     5,723     19.96
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Yemen, the netback per Bbl increased 1% and 18% in the three and nine months ended September 30, 2010, respectively, compared with the same periods in 2009 primarily as a result of oil prices increasing by 13% and 39%, respectively, partially offset by higher royalty and tax rates.

Royalties and taxes as a percentage of revenue increased to 60% and 59% in the three and nine months ended September 30, 2010, respectively, compared with 57% and 51%, respectively, in 2009. 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 Production Sharing Agreements ("PSAs") allow for the recovery of operating and capital costs through a reduction in Ministry of Oil and Minerals' take of oil production.

Operating expenses on a per Bbl basis for the three and nine months ended September 30, 2010 increased 8% and 11%, respectively, mostly due to lower volumes compared to the same periods in 2009.

DERIVATIVE 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. In July 2010 the Company bought out two financial collar contracts that had been set to expire on August 31, 2010. Furthermore, in the first week of October 2010 the Company purchased two new financial floor contracts, which both carry volumes of 10,000 Bbl/month, that are effective from January 1, 2011 to December 31, 2011.

The estimated fair value of unrealized commodity contracts is reported on the Consolidated Balance Sheets, 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. The realized loss on commodity contracts in the first nine months of 2010 relates mostly to the purchase of a new financial floor derivative commodity contract for $0.4 million, compared with $0.2 million in realized gains for the same period in 2009 as a result of depressed oil prices in the first nine months of last year. The mark-to-market valuation of TransGlobe's future derivative commodity contracts increased in value by $0.5 million between December 31, 2009 and September 30, 2010, moving from a $0.5 million liability at December 31, 2009 to an almost even position at September 30, 2010, thus resulting in a $0.5 million unrealized gain on future derivative commodity contracts being recorded in the period.

/T/

                                     Three Months Ended   Nine Months Ended
                                           September 30        September 30
----------------------------------------------------------------------------
($000s)                                  2010      2009      2010      2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Realized cash (loss) gain on commodity
 contracts(1)                             (35)     (477)     (452)      191
Unrealized gain (loss) on commodity
 contracts(1)(1)                         (186)      629       520    (3,720)
----------------------------------------------------------------------------
Total derivative gain (loss) on
 commodity contracts                     (221)      152        68    (3,529)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Realized cash gain (loss) represents actual cash settlements, receipts
    and premiums paid under the respective contracts. (1)(1) The unrealized
    loss on derivative commodity contracts represents the change in fair
    value of the contracts during the period.

/T/

If the Dated Brent oil price remains at the level experienced at the end of Q3-2010, the derivative asset will be realized over the next year. However, a 10% decrease in Dated Brent oil prices would result in a $0.2 million increase in the derivative commodity contract asset, thus increasing the unrealized gain by the same amount. Conversely, a 10% increase in Dated Brent oil prices would not have a material effect on the unrealized gain on commodity contracts. The following commodity contracts are outstanding immediately following September 30, 2010:

/T/

                                                                      Dated
                                                                      Brent
                                                                    Pricing
Period                                          Volume        Type      Put
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Crude Oil
                                                         Financial
July 1, 2010-December 31, 2010        10,000 Bbl/month       Floor  $ 60.00
                                                         Financial
July 1, 2010-December 31, 2010        20,000 Bbl/month       Floor  $ 65.00
                                                         Financial
January 1, 2011-December 31, 2011(1)  20,000 Bbl/month       Floor  $ 65.00
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Contract was purchased in October 2010.

/T/

Including the contracts purchased in October 2010, the total volumes hedged for the balance of 2010 and following years are:

/T/

                                                Three Months
                                                        2010           2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Bbls                                                  90,000        240,000
Bopd                                                     978            658
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

At September 30, 2010, all of the derivative commodity contracts were classified as current assets.

/T/

GENERAL AND ADMINISTRATIVE EXPENSES ("G&A")

                                             Nine Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
G&A (gross)                             9,739      3.68     8,259      3.33
Stock-based compensation                1,670      0.63     1,493      0.60
Capitalized G&A and overhead
 recoveries                            (1,991)    (0.75)   (2,247)    (0.90)
----------------------------------------------------------------------------
G&A (net)                               9,418      3.56     7,505      3.03
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                            Three Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
G&A (gross)                             3,006      3.22     2,844      3.49
Stock-based compensation                  759      0.81       523      0.64
Capitalized G&A and overhead recoveries  (766)    (0.82)     (731)    (0.90)
----------------------------------------------------------------------------
G&A (net)                               2,999      3.21     2,636      3.23
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

G&A expenses (net) increased 14% (1% decrease on a per Bbl basis) and 25% (17% on a per Bbl basis) in the three and nine months ended September 30, 2010, respectively, compared with the same periods in 2009 partly due to a strengthening Canadian dollar which accounted for approximately 41% and 51% of the increases, respectively, as the majority of TransGlobe's G&A costs are incurred in Canadian dollars. The remainder of the increase was due to increased insurance, staffing and office costs.

INTEREST ON LONG-TERM DEBT

Interest expense for the three and nine months ended September 30, 2010 increased to $1.1 million and $2.1 million, respectively (2009 - $0.6 million and $1.9 million, respectively). Interest expense includes interest on long-term debt and amortization of transaction costs associated with long-term debt. In the three and nine months ended September 30, 2010, the Company expensed $0.3 million and $0.5 million, respectively, of transaction costs (2009 - $0.1 million and $0.5 million, respectively). The Company had $50.0 million of debt outstanding at September 30, 2010 (September 30, 2009 - $53.0 million). The long-term debt that was outstanding at September 30, 2010 bore interest at LIBOR plus an applicable margin that varies from 3.75% to 4.75% depending on the amount drawn under the facility. In previous quarters long-term debt bore interest at the Eurodollar rate plus three percent under the terms of the previous credit facility that was terminated in July 2010 and replaced with a new Borrowing Base Facility.

/T/

DEPLETION AND DEPRECIATION ("DD&A")

                                             Nine Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                  18,186      9.48    33,150     20.82
Yemen                                   5,752      7.94     7,331      8.24
Corporate                                 183         -       143         -
----------------------------------------------------------------------------
                                       24,121      9.13    40,624     16.37
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                            Three Months Ended September 30
----------------------------------------------------------------------------
                                              2010                2009
----------------------------------------------------------------------------
(000s, except per Bbl amounts)              $     $/Bbl         $     $/Bbl
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                   7,468     10.68    11,747     22.22
Yemen                                   1,893      8.11     2,394      8.35
Corporate                                  79         -        51         -
----------------------------------------------------------------------------
                                        9,440     10.12    14,192     17.40
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Egypt, DD&A decreased 52% and 54% on a per Bbl basis for the three and nine month periods ended September 30, 2010, respectively, due to significant increases to Proved reserves at year-end 2009.

In Yemen, DD&A decreased 3% and 4% on a per Bbl basis for the three and nine months ended September 30, 2010, respectively, due to Proved reserve additions at year-end 2009.

In Egypt, unproven properties of $13.9 million (2009 - $9.9 million) relating to Nuqra ($8.0 million), West Gharib ($1.8 million) and East Ghazalat ($4.1 million) were excluded from the costs subject to DD&A in the quarter. In Yemen, unproven property costs of $11.0 million (2009 - $10.6 million) relating to Block 72 and Block 75 were excluded from the costs, subject to DD&A in the quarter.

/T/

CAPITAL EXPENDITURES

                                             Nine Months Ended September 30
----------------------------------------------------------------------------
($000s)                                                 2010           2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                 42,484         21,491
Yemen                                                  4,636          6,345
Corporate                                                266            169
----------------------------------------------------------------------------
Total                                                 47,386         28,005
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

In Egypt, total capital expenditures in the first nine months of 2010 were $42.5 million (2009 - $21.5 million). The Company drilled 20 wells, resulting in 16 oil wells (four at Hana, three at Arta, three at East Arta, two at North Hoshia, one at each of Hana West and Hoshia, and two at East Ghazalat), in addition to two dry holes at East Ghazalat, one at Hoshia and one at West Hoshia.

In Yemen, total capital expenditures in 2010 were $4.6 million (2009 - $6.3 million). Three oil development wells were drilled in the first nine months of 2010 at Block S-1, along with one oil development well and one dry hole at Block 32.

OUTSTANDING SHARE DATA

As at September 30, 2010, the Company had 66,917,172 common shares issued and outstanding.

The Company received regulatory approval to purchase, from time-to-time, as it considers advisable, up to 6,116,905 common shares under a Normal Course Issuer Bid which commenced September 7, 2009 and expired September 6, 2010. During the nine months ended September 30, 2010 and during the year ended December 31, 2009, the Company did not repurchase any common shares.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity describes a company's ability to access cash. Companies operating in the upstream oil and gas industry require sufficient cash in order to fund capital programs necessary to maintain and increase production and reserves, to acquire strategic oil and gas assets and to repay debt. TransGlobe's capital programs are funded principally by cash provided from operating activities. A key measure that TransGlobe uses to evaluate the Company's overall financial strength is debt-to-funds flow from operating activities (calculated on a 12-month trailing basis). TransGlobe's debt-to-funds flow from operating activities ratio, a key short-term leverage measure, remained strong at 0.7 times at September 30, 2010. This was within the Company's target range of no more than 2.0 times.

The following table illustrates TransGlobe's sources and uses of cash during the periods ended September 30, 2010 and 2009:

/T/

Sources and Uses of Cash

                                             Nine Months Ended September 30
----------------------------------------------------------------------------
($000s)                                                 2010           2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash sourced
 Funds flow from operations(1)                        55,635         35,361
 Exercise of options                                   7,406             80
 Increase in long-term debt                           55,916
 Issuance of common shares, net of share issuance
  costs                                                    -         15,109
----------------------------------------------------------------------------
                                                     118,957         50,550
Cash used
 Capital expenditures                                 47,386         28,005
 Deferred financing costs                              4,277              -
 Transfer to restricted cash                           1,890
 Repayment of long-term debt                          55,916          5,000
 Options surrendered for cash payments                     -             13
----------------------------------------------------------------------------
                                                     109,469         33,018
----------------------------------------------------------------------------
Net cash from operations                               9,488         17,532
Changes in non-cash working capital                  (10,253)       (10,362)
----------------------------------------------------------------------------
Increase in cash and cash equivalents                   (765)         7,170
Cash and cash equivalents - beginning of period       16,177          7,634
----------------------------------------------------------------------------
Cash and cash equivalents - end of period             15,412         14,804
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Funds flow from 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 was provided by funds flow from operations. The Company expects to fund its 2010 exploration and development program of $71.0 million ($24.0 million remaining) and contractual commitments through the use of working capital and cash generated by operating activities. The use of new financing during 2010 may also be utilized to finance new opportunities. Fluctuations in commodity prices, product demand, foreign exchange rates, interest rates and various other risks may impact capital resources.

Working capital is the amount by which current assets exceed current liabilities. At September 30, 2010, the Company had working capital of $47.9 million (December 31, 2009 - deficiency of $11.8 million). The working capital deficiency as at December 31, 2009 was primarily the result of the reclassification of long-term debt as a current liability. On July 22, 2010, the Company entered into a new Borrowing Base Facility. Therefore, as at September 30, 2010 the credit facility was classified as long-term which eliminated the working capital deficiency. While the reclassification of bank debt accounts for the majority of the increase in working capital, other increases to working capital in 2010 are the result of increased accounts receivable due to higher oil prices and higher sales volumes. These receivables are not considered to be impaired; however, to mitigate this risk, the Company entered into an insurance program on a portion of the receivable balance.

At June 30, 2010, TransGlobe had a $60.0 million Revolving Credit Agreement of which $50.0 million was drawn. Amounts drawn under the Revolving Credit Agreement were set to become due September 25, 2010. On July 22, 2010, the Company entered into a new five-year $100.0 million Borrowing Base Facility and paid out the original Revolving Credit Agreement. As repayments on the new Borrowing Base Facility are not expected to commence until 2012, the entire balance is presented as a long-term liability on the consolidated balance sheets. Repayments will be made on a semi-annual basis according to the scheduled reduction of the facility. As of September 30, 2010, the Company has incurred financing costs related to the new Borrowing Base Facility in the amount of $4.3 million.


/T/

                                                   September       December
($000s)                                             30, 2010       31, 2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Bank debt                                             50,000         50,000
Deferred financing costs                              (3,955)          (201)
----------------------------------------------------------------------------
                                                      46,045         49,799
----------------------------------------------------------------------------

Current portion of long-term debt (net of
 deferred financing costs)                                 -         49,799
----------------------------------------------------------------------------
Long-term debt (net of deferred financing costs)      46,045              -
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

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                 Less                      More
                in Financial Contractual     than      1-3      4-5    than
                  Statements  Cash Flows   1 year    years    years 5 years
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accounts       Yes-Liability
 payable and
 accrued
 liabilities                    $ 27,364 $ 27,364 $      - $      - $     -
Long-term debt:
 Borrowing Base
  Facility     Yes-Liability      50,000        -   29,557   20,443       -
Office and
 equipment
 leases                   No      11,051    1,567    3,034    1,916   4,534
Minimum work              
 commitments(3)           No       4,953        -    4,953        -       -
----------------------------------------------------------------------------
Total                           $ 93,368 $ 28,931 $ 37,544 $ 22,359 $ 4,534
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(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
    September 30, 2010 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 Concession agreement for Nuqra Block 1 in Egypt, the Contractor (Joint Venture Partners) has a minimum financial commitment of $5.0 million ($4.4 million to TransGlobe) and a work commitment for two exploration wells in the second exploration extension. The second, 36-month extension period commenced on July 18, 2009. The Contractor has met the second extension financial commitment of $5.0 million in the prior periods. At the request of the Government, the Company provided a $4.0 million production guarantee from the West Gharib Concession prior to entering the second extension period.

Pursuant to the PSA for Block 72 in Yemen, the Contractor (Joint Venture Partners) has a minimum financial commitment of $2.0 million ($0.1 million to TransGlobe) to drill one exploration well during the second exploration period. The second, 30-month exploration period commenced on January 12, 2009. The Contractor has entered into a farm-in agreement with TOTAL E&P Yemen which has reduced TransGlobe's interest in the concession to 20%.

Pursuant to the PSA for Block 75 in Yemen, the Contractor (Joint Venture Partners) has a remaining minimum financial commitment of $3.0 million ($0.8 million to TransGlobe) for 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 August 18, 2008 asset purchase agreement for a 25% financial interest in eight development leases on the West Gharib Concession in Egypt, the Company has committed to paying the vendor a success fee to a maximum of $7.0 million if incremental reserve thresholds are reached in the East Hoshia (up to $5.0 million) and South Rahmi (up to $2.0 million) development leases, to be evaluated annually. As at December 31, 2009, no additional fees are due in 2010.

In the normal course of its operations, the Company may be subject to litigations and claims. Although it is not possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of such contingencies would not have a material adverse impact on the results of operations, financial position or liquidity of the Company.

MANAGEMENT STRATEGY AND OUTLOOK FOR 2010

The 2010 outlook provides information as to management's expectation for results of operations for 2010. Readers are cautioned that the 2010 outlook may not be appropriate for other purposes. The Company's expected results are sensitive to fluctuations in the business environment and may vary accordingly. This outlook contains forward-looking statements that should be read in conjunction with the Company's disclosure under "Forward-Looking Statements", outlined on the first page of this MD&A.

2010 Outlook Highlights

- Production is expected to average approximately 10,000 Bopd, an 11% increase over the 2009 average production;

- Exploration and development capital budget increased during the third quarter to $71.0 million from $63.0 million (allocated 84% to Egypt, 14% to Yemen and 2% to other) funded from funds flow from operations and cash on hand; and

- Using the 10,000 Bopd production forecast and an average oil price assumption for the remainder of the year of $75.00/Bbl, funds flow from operations is expected to be $75.0 million for the year.

2010 Production Outlook

TransGlobe's production guidance for 2010 is expected to average approximately 10,000 Bopd, representing an 11% increase over the 2009 average production of 8,980 Bopd. This target includes increased production from Hana, Hana West, Hoshia, Arta and East Arta in Egypt, and production from the development drilling program on Block S-1 in Yemen. Production from Egypt is expected to average approximately 7,300 Bopd during 2010, with the balance of approximately 2,700 Bopd coming from the Yemen properties. TransGlobe's target exit rate for 2010 is 11,000 Bopd.

/T/

Production Forecast
                                2010 Guidance    2009 Actual     % Change(1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Barrels of oil per day                 10,000          8,980             11
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

2010 Funds Flow From Operations Outlook

This outlook was developed using the above production forecast and an average Dated Brent oil price of $75.00/Bbl for the remainder of the year.

/T/

2010 Funds Flow From Operations Outlook
($ million, except % change)    2010 Guidance    2009 Actual       % Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Funds flow from operations(1)            75.0           45.1             66
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Funds flow from operations is a non-GAAP measure that represents cash
    generated from operating activities before changes in non-cash working
    capital.

/T/

Due in part to higher expected prices and higher production, funds flow from operations is expected to increase by 66% in 2010. One of the key factors in the increased funds flow in 2010 is due to a better oil price differential to average Dated Brent benchmark price in Egypt. Price differentials to average Dated Brent in Egypt narrowed from 24% in 2009 to 10% in 2010. Variations in production and commodity prices during 2010 could significantly change this outlook. An increase in the Dated Brent oil price of $10.00/Bbl for the remainder of the year would increase anticipated funds flow by approximately $3.0 million to $78.0 million for the year, while a $10.00/Bbl decrease in the Dated Brent oil price would result in anticipated funds flow decreasing by approximately $3.0 million to $72.0 million for the year.

/T/

2010 Capital Budget                        Nine Months Ended
                                          September 30, 2010           2010
($ million)                                           Actual  Annual Budget
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Egypt                                                   42.5           60.0
Yemen                                                    4.6           10.0
Corporate                                                0.3            1.0
----------------------------------------------------------------------------
Total                                                   47.4           71.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

The 2010 capital program is split 64:36 between development and exploration, respectively. The Company plans to participate in 40 wells in 2010. The Company will fund its entire 2010 capital budget from funds flow and working capital. The Company designed its 2010 budget to be flexible, allowing spending to be adjusted as commodity prices change and forecasts are reviewed.

CHANGES IN ACCOUNTING POLICIES

New Accounting Policies

The Company adopted a share appreciation rights plan in March 2010. Under the share appreciation rights plan, all liabilities must be settled in cash and, consequently, are classified as liability instruments and measured at their intrinsic value less any unvested portion. Unvested share appreciation rights accrue evenly over the vesting period. The intrinsic value is determined as the difference between the market value of the Company's common shares and the exercise price of the share appreciation rights. This obligation is revalued each reporting period and the change in the obligation is recognized as stock-based compensation expense (recovery).

New Accounting Standards

a) Business Combinations

In December 2008, the CICA issued Section 1582, Business Combinations, which will replace CICA Section 1581 of the same name. Section 1582 establishes principles and requirements of the acquisition method for business combinations and related disclosures. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 2011 with earlier application permitted. The Company is currently evaluating the impact of this change on its Consolidated Financial Statements.

b) Non-Controlling Interests

In December 2008, the CICA issued Sections 1601, Consolidated Financial Statements, and 1602, Non-Controlling Interests. Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period beginning on or after January 2011 with earlier application permitted. These standards currently do not impact the Company as it has full controlling interest of all of its subsidiaries.

c) International Financial Reporting Standards ("IFRS")

On February 13, 2008 the Canadian Accounting Standards Board confirmed that effective for interim and annual financial statements related to fiscal years beginning on or after January 1, 2011, IFRS will replace Canada's current GAAP for all publicly accountable profit-oriented enterprises.

The Company commenced its IFRS transition project in 2008 and has completed the project awareness and engagement phase of the IFRS transition project. Corporate governance over the project was established and a steering committee and project team formed. The steering committee is comprised of members of management and executive and is responsible for final approval of project recommendations and deliverables to the Audit Committee and Board of Directors. Communication, training and education are an important aspect of the Company's IFRS conversion project. Internal and external training and education sessions have been carried out and will continue throughout each phase of the project.

The Company completed the diagnostic assessment phase by performing comparisons of the differences between Canadian GAAP and IFRS and has assessed the effects of adoption. The Company determined that the most significant impact of IFRS conversion is to property and equipment. IFRS does not prescribe specific oil and gas accounting guidance other than for costs associated with the exploration and evaluation phase. The Company currently follows full cost accounting as prescribed in Accounting Guideline 16, Oil and Gas Accounting - Full Cost. Conversion to IFRS will have a significant impact on how the Company accounts for costs pertaining to oil and gas activities, in particular those related to the pre-exploration and development phases. In addition, the level at which impairment tests are performed and the impairment testing methodology will differ under IFRS, although the Company does not expect to experience an impairment loss on oil and gas assets on transition to IFRS. IFRS conversion will also result in other impacts, including but not limited to the calculation of share-based payments expense and depletion expense on oil and gas assets, which may be significant in nature. The Company continues to focus on analyzing and developing implementation strategies and processes for the key IFRS transition issues identified. Where applicable, key IFRS transition alternatives are being considered and evaluated. The Company continues to perform accounting assessments on less critical IFRS transition issues and has commenced analysis of IFRS financial statement presentation and disclosure requirements. These assessments will need to be further analyzed and evaluated throughout the implementation phase of the Company's project as new transactions may have different GAAP versus IFRS treatment, and ongoing changes to IFRS may have an impact on the conversion.

In July 2009, the International Accounting Standards Board ("IASB") approved additional exemptions that will allow entities to allocate their oil and gas asset balance as determined under full cost accounting to the IFRS categories of exploration and evaluation assets and development and producing properties. Under the exemption, exploration and evaluation assets are measured at the amount determined under an entity's previous GAAP. For assets in the development or production phases, the amount is also measured at the amount determined under an entity's previous GAAP; however, such values must be allocated to the underlying IFRS transitional assets on a pro-rata basis using either reserve values or reserve volumes as of the entity's IFRS transition date. This exemption will relieve entities from significant adjustments resulting from retrospective adoption of IFRS. The Company will utilize this exemption.

Concurrently, the project team is working on the design, planning and solution development phase. In this phase, the focus is on determining the specific qualitative and quantitative impact the application of IFRS requirements has on the Company. The project team members continue to work with representatives from the various operational areas to develop recommendations including first-time adoption exemptions available upon initial transition to IFRS. The results from the consultations with the various operational areas are used to draft accounting policies. One of the sections in each of the draft accounting policies is the disclosure section which includes the financial statement disclosure as required by IFRS. The project team has analyzed first-time adoption exemptions and documented which exemptions it intends to utilize, pending approval from the steering committee. These exemptions include the oil and gas asset exemption described above, along with the cumulative translation differences exemption which allows the cumulative translation differences for all foreign operations to be deemed to be zero at the date of transition, and the share-based payments exemption which allows for IFRS requirements to apply only to those options that were unvested at the date of transition. A detailed implementation plan and timeline has been developed, which also includes the development of a training plan. Furthermore, in the last quarter of 2010 the Company will continue to work on the development of processes and systems to ensure that IFRS comparative data is captured, and to position it for reporting under IFRS in 2011.

During the third quarter of 2010 the Company completed its draft opening balance sheet under IFRS, which is as at January 1, 2010. Transition to IFRS on the opening balance sheet date does not result in a material adjustment to the Company's property and equipment. The valuation and expensing of share-based payments will be done using a tranche method under IFRS whereas under previous GAAP entire stock option issuances were valued as a whole and expensed on a straight line over the lives of the options. This results in an accelerated expensing of the share-based payments as the fair value is weighted more heavily toward the periods closer to the date of issuance of the stock options. The adjustment for the change in treatment of share-based payments results in an increase in contributed surplus with a corresponding decrease in retained earnings. Furthermore, cumulative translation adjustments have been deemed to be zero on transition, resulting in a decrease in accumulated other comprehensive income along with a corresponding increase in retained earnings. The Company also continues to work on calculating adjustments for the first three quarters of 2010. While quantification of the impact is in progress but cannot currently be estimated accurately, the Company expects depletion and depreciation expense to decrease under IFRS as compared to Canadian GAAP as a result of the depletion rate being calculated based on proved and probable reserves under IFRS compared to proved reserves only under previous GAAP. At this time, any other potential adjustments to the Company's financial position and results of operations for the first three quarters in 2010 cannot be reliably determined or estimated.

Additionally, the Company is monitoring the IASB's active projects and all changes to IFRS prior to January 1, 2011 and will be incorporated as required.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

TransGlobe's management designed and implemented internal controls over financial reporting, as defined under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, of the Canadian Securities Administrators. Internal controls over financial reporting is a process designed under the supervision of the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles, including a reconciliation to U.S. generally accepted accounting principles, focusing in particular on controls over information contained in the annual and interim financial statements. Due to its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements on a timely basis. A system of internal controls over financial reporting, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the internal controls over financial reporting are met. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

As at the date of this report, management is not aware of any change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

/T/

Consolidated Statements of Income (Loss) and Retained Earnings 

(Unaudited - Expressed in thousands of U.S. Dollars, except per share 
 amounts)


                                   Three Months Ended     Nine Months Ended
                                         September 30          September 30
                                      2010       2009        2010      2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
REVENUE
 Oil sales, net of royalties
  and other                      $  38,980  $  28,495  $  112,022 $  74,017
 Derivative gain (loss) on
  commodity contracts                 (221)       152          68    (3,529)
 Other income (loss)                    11        (16)         18        16
----------------------------------------------------------------------------
                                    38,770     28,631     112,108    70,504
----------------------------------------------------------------------------
EXPENSES
 Operating                           6,708      6,971      18,742    17,378
 General and administrative          2,999      2,636       9,418     7,505
 Foreign exchange loss (gain)          (78)      (286)        253      (940)
 Interest on long-term debt          1,111        575       2,114     1,904
 Depletion and depreciation          9,440     14,192      24,121    40,624
----------------------------------------------------------------------------
                                    20,180     24,088      54,648    66,471
----------------------------------------------------------------------------
Income before income taxes          18,590      4,543      57,460     4,033

Income taxes - current               9,785      6,161      27,619    14,966
----------------------------------------------------------------------------

NET INCOME (LOSS)                    8,805     (1,618)     29,841   (10,933)

Retained earnings, beginning
 of period                         101,049     79,115      80,013    88,430
----------------------------------------------------------------------------
RETAINED EARNINGS, END OF
 PERIOD                          $ 109,854  $  77,497  $  109,854 $  77,497
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss) per share
 Basic                           $    0.13  $   (0.02) $     0.45 $   (0.17)
 Diluted                         $    0.13  $   (0.02) $     0.44 $   (0.17)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Statements of Comprehensive Income (Loss)

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

                                   Three Months Ended     Nine Months Ended
                                         September 30          September 30
                                      2010       2009        2010      2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income (loss)                $   8,805  $  (1,618) $   29,841 $ (10,933)
Other comprehensive income               -          -           -         -
----------------------------------------------------------------------------
COMPREHENSIVE INCOME (LOSS)      $   8,805  $  (1,618) $   29,841 $ (10,933)
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Consolidated Balance Sheets

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


                                           As at                      As at
                              September 30, 2010          December 31, 2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------

ASSETS
Current
 Cash and cash equivalents  $             15,412       $             16,177
 Accounts receivable                      57,307                     35,319
 Derivative commodity
  contracts                                    6                          -
 Prepaids and other                        2,529                      1,909
----------------------------------------------------------------------------
                                          75,254                     53,405

Restricted cash                            1,890                          -
Goodwill                                   8,180                      8,180
Property and equipment                   190,561                    167,297
----------------------------------------------------------------------------
                            $            275,885       $            228,882
----------------------------------------------------------------------------
----------------------------------------------------------------------------

LIABILITIES
Current
 Accounts payable and
  accrued liabilities       $             27,364       $             14,879
 Derivative commodity
  contracts                                    -                        514
Current portion of
 long-term  debt                               -                     49,799
----------------------------------------------------------------------------
                                          27,364                     65,192

Long-term debt                            46,045                          -
----------------------------------------------------------------------------
                                          73,409                     65,192

Commitments and
 contingencies

SHAREHOLDERS' EQUITY
Share capital                             76,639                     66,106
Contributed surplus                        5,103                      6,691
Accumulated other
 comprehensive income                     10,880                     10,880
Retained earnings                        109,854                     80,013
----------------------------------------------------------------------------
                                         202,476                    163,690
----------------------------------------------------------------------------
                            $            275,885       $            228,882
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Approved on behalf of the Board:

Signed by:

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


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

                                   Three Months Ended     Nine Months Ended
                                         September 30          September 30
                                      2010       2009       2010       2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
CASH FLOWS RELATED TO THE
 FOLLOWING ACTIVITIES:

OPERATING
 Net income (loss)               $   8,805  $  (1,618) $  29,841  $ (10,933)
 Adjustments for:
  Depletion and depreciation         9,440     14,192     24,121     40,624
  Amortization of deferred
   financing costs                     345        135        523        457
  Stock-based compensation             759        523      1,670      1,493
  Unrealized (gain) loss on
   commodity contracts                 186       (629)      (520)     3,720
Changes in non-cash working
 capital                            (7,238)   (11,339)   (23,457)   (11,156)
----------------------------------------------------------------------------
                                    12,297      1,264     32,178     24,205
----------------------------------------------------------------------------

FINANCING
 Increase in long-term debt         55,916          -     55,916          -
 Repayments of long-term debt      (55,916)         -    (55,916)    (5,000)
 Options surrendered for cash
  payments                               -        (13)         -        (13)
 Issue of common shares for cash     1,662          -      7,406     16,392
 Issue costs for common shares           -        (18)         -     (1,203)
 Deferred financing costs           (3,578)         -     (4,277)         -
 Changes in non-cash working
  capital                                -          4          -       (875)
----------------------------------------------------------------------------
                                    (1,916)       (27)     3,129      9,301
----------------------------------------------------------------------------

INVESTING
 Exploration and development
  expenditures                     (19,453)   (10,599)   (47,386)   (28,005)
 Changes in restricted cash         (1,890)         -     (1,890)         -
 Changes in non-cash working
  capital                            4,937        214     13,204      1,669
----------------------------------------------------------------------------
                                   (16,406)   (10,385)   (36,072)   (26,336)
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH
 AND CASH                           (6,025)    (9,148)      (765)     7,170
 EQUIVALENTS

CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                21,437     23,952     16,177      7,634
----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END
 OF PERIOD                       $  15,412  $  14,804  $  15,412  $  14,804
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Supplemental Disclosure of Cash
 Flow Information
 Cash interest paid              $     766  $     440  $   1,591  $   1,447
 Cash taxes paid                     9,785      6,161     27,619     14,966
 Cash is comprised of cash on
  hand and balances with banks      15,412     14,804     15,412     14,804
 Cash equivalents                        -          -          -          -
----------------------------------------------------------------------------
----------------------------------------------------------------------------


SEGMENTED INFORMATION

                           Egypt             Yemen                Total
----------------------------------------------------------------------------
                                  Nine Months Ended September 30
(000s)                2010      2009     2010     2009      2010       2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue
 Oil sales, net of
  royalties and
  other           $ 81,894  $ 44,296  $30,128 $ 29,721 $ 112,022   $ 74,017
Segmented
 expenses
 Operating          11,800     9,695    6,942    7,683    18,742     17,378
 Depletion and
  depreciation      18,186    33,150    5,752    7,331    23,938     40,481
 Income taxes       20,461     9,658    7,158    5,308    27,619     14,966
----------------------------------------------------------------------------
Total segmented
 expenses           50,447    52,503   19,852   20,322    70,299     72,825
----------------------------------------------------------------------------
Segmented income
 (loss)           $ 31,447 $  (8,207) $10,276  $ 9,399    41,723      1,192
----------------------------------------------------------------------------
Non-segmented
 expenses
 Derivative loss
  (gain) on
  commodity
  contracts                                                  (68)     3,529
 General and
  administrative                                           9,418      7,505
 Interest on
  long-term debt                                           2,114      1,904
 Depreciation                                                183        143
 Foreign exchange
  loss (gain)                                                253       (940)
 Other income                                                (18)       (16)
----------------------------------------------------------------------------
Total
 non-segmented
 expenses                                                 11,882     12,125
----------------------------------------------------------------------------
Net income (loss)                                       $ 29,841 $  (10,933)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Capital
 expenditures
 Exploration and
  development     $ 42,484  $ 21,491  $ 4,636  $ 6,345  $ 47,120   $ 27,836
 Corporate                                                   266        169
----------------------------------------------------------------------------
Total capital
 expenditures                                           $ 47,386   $ 28,005
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                           Egypt              Yemen               Total
----------------------------------------------------------------------------
                                 Three Months Ended September 30
(000s)                2010      2009     2010      2009     2010       2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenue
Oil sales, net of
 royalties
 and other        $ 29,552   $17,755  $ 9,428  $ 10,740 $ 38,980   $ 28,495
Segmented
 expenses
 Operating           4,313     4,241    2,395     2,730    6,708      6,971
 Depletion and
  depreciation       7,468    11,747    1,893     2,394    9,361     14,141
 Income taxes        7,447     3,874    2,338     2,287    9,785      6,161
----------------------------------------------------------------------------
Total segmented
 expenses           19,228    19,862    6,626     7,411   25,854     27,273
----------------------------------------------------------------------------
Segmented income
 (loss)           $ 10,324   $(2,107) $ 2,802   $ 3,329 $ 13,126   $  1,222
----------------------------------------------------------------------------
Non-segmented
 expenses
 Derivative loss
  (gain) on
  commodity
  contracts                                                  221       (152)
 General and
  administrative                                           2,999      2,636
 Interest on
  long-term debt                                           1,111        575
 Depreciation                                                 79         51
 Foreign exchange
  loss (gain)                                                (78)      (286)
 Other income
  (loss)                                                     (11)        16
----------------------------------------------------------------------------
Total
 non-segmented
 expenses                                                  4,321      2,840
----------------------------------------------------------------------------
Net income (loss)                                       $  8,805   $ (1,618)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Capital
 expenditures
 Exploration and
  development     $ 16,297   $ 8,559  $ 2,964   $ 2,029 $ 19,261   $ 10,588
 Corporate                                                   192         11
----------------------------------------------------------------------------
Total capital
 expenditures                                           $ 19,453   $ 10,599
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                  Sept. 30   Dec. 31 Sept. 30   Dec. 31 Sept. 30    Dec. 31
                      2010      2009     2010      2009     2010       2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property and
 equipment        $143,376  $119,079  $46,370  $ 47,486 $189,746   $166,565
Goodwill             8,180     8,180        -         -    8,180      8,180
Other               58,982    41,347    8,314     5,877   67,296     47,224
----------------------------------------------------------------------------
Segmented assets  $210,538  $168,606  $54,684  $ 53,363  265,222    221,969
Non-segmented
 assets                                                   10,663      6,913
----------------------------------------------------------------------------
Total assets                                            $275,885   $228,882
----------------------------------------------------------------------------
----------------------------------------------------------------------------

/T/

Cautionary Statement to Investors:

This news release may include certain statements that may be deemed to be "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements relate to possible future events. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although TransGlobe's forward-looking statements are based on the beliefs, expectations, opinions and assumptions of the Company's management on the date the statements are made, such statements are inherently uncertain and provide no guarantee of future performance. Actual results may differ materially from TransGlobe's expectations as reflected in such forward-looking statements as a result of various factors, many of which are beyond the control of the Company. These factors include, but are not limited to, unforeseen changes in the rate of production from TransGlobe's oil and gas properties, changes in price of crude oil and natural gas, adverse technical factors associated with exploration, development, production or transportation of TransGlobe's crude oil and natural gas reserves, changes or disruptions in the political or fiscal regimes in TransGlobe's areas of activity, changes in tax, energy or other laws or regulations, changes in significant capital expenditures, delays or disruptions in production due to shortages of skilled manpower, equipment or materials, economic fluctuations, and other factors beyond the Company's control. TransGlobe does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations or opinions should change, other than as required by law, and investors should not attribute undue certainty to, or place undue reliance on, any forward-looking statements. Please consult TransGlobe's public filings at www.sedar.com and www.sec.gov/edgar.shtml for further, more detailed information concerning these matters.


FOR FURTHER INFORMATION PLEASE CONTACT:

TransGlobe Energy Corporation
Scott Koyich
Investor Relations
403.264.9888
investor.relations@trans-globe.com
www.trans-globe.com