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TRANSGLOBE ENERGY CORPORATION ANNOUNCES THIRD QUARTER FINANCIAL AND OPERATING RESULTS



TransGlobe Energy Corporation Announces Third Quarter Financial and Operating Results

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TransGlobe Energy Corporation
TSX:TGL
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November 9, 2011
TransGlobe Energy Corporation Announces Third Quarter Financial and Operating Results
CALGARY, ALBERTA--(Marketwire - Nov.

9, 2011) - TransGlobe Energy Corporation (TSX:TGL) (NASDAQ:TGA) ("TransGlobe" or the "Company") is pleased to announce its financial and operating results for the three and nine months ended September 30, 2011.

All dollar values are expressed in United States dollars unless otherwise stated.



HIGHLIGHTS


--  Record quarterly average production of 13,406 Bopd, up 13% from Q2-2011
    (Egypt 11,138 Bopd, Yemen 2,268 Bopd); 

--  Record quarterly funds flow of $37.5 million ($0.50/share), a 28%
    increase over Q2-2011; 

--  Record quarterly net earnings of $26.1 million ($0.35/share), a 19%
    increase over Q2-2011; 

--  Drilled 14 wells in the third quarter resulting in 11 oil wells, one
    water source well and 2 dry wells at West Gharib; 

--  Initiated a secondary recovery waterflood on the Arta/East Arta, Lower
    Nukhul pool in early July; 

--  Expanded the Companys opportunity base in the Western Desert by
    acquiring a 50% interest and operatorship of the South Alamein
    Concession for $3.0 million; 

--  East Ghazalat Safwa Field development plan approved in July, first
    production is targeted for Q2-2012.
 
A conference call to discuss TransGlobes second quarter results presented in this report will be held on Wednesday, November 9, 2011 at 9:00 a.m.

Mountain Time (11:00 a.m.

Eastern Time) and is accessible to all interested parties by dialing (416) 340-8530 or toll-free 1-877-240-9772 (see also TransGlobes news release dated November 2, 2011).

Online the webcast may be accessed at http://events.digitalmedia.telus.com/transglobe/110911/index.php

FINANCIAL AND OPERATING RESULTS

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


                          Three months ended               Nine months ended
Financial                       September 30                    September 30
               -------------------------------------------------------------
                                           %                                
                    2011       2010   Change       2011        2010 % Change
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil revenue      128,265     66,470       93    339,875     189,661       79
Oil revenue,                                                                
 net of                                                                     
 royalties and                                                              
 other            71,769     38,980       84    187,145     112,022       67
Derivative                                                                  
 gain (loss)                                                                
 on commodity                                                               
 contracts           (13)      (221)     (94)      (599)         68        -
Operating                                                                   
 expense           9,762      6,708       46     26,404      18,742       41
General and                                                                 
 administrativ                                                              
 e expense         4,688      3,439       36     13,944      10,183       37
Depletion,                                                                  
 depreciation                                                               
 and                                                                        
 amortization                                                               
expense           10,300      7,592       36     26,263      19,981       31
Income taxes      19,442     10,677       82     53,146      29,202       82
Funds flow                                                                  
 from                                                                       
 operations(i)    37,450     19,081       96     91,054      54,514       67
 Basic per                                                                  
  share             0.51       0.28                1.26        0.82         
 Diluted per                                                                
  share             0.50       0.28                1.22        0.80         
Net earnings      26,110      9,321      180     50,873      31,633       61
 Basic per                                                                  
  share             0.36       0.14                0.70        0.48         
 Diluted per                                                                
  share             0.35       0.13                0.68        0.46         
Capital                                                                     
 expenditures     20,160     19,001        6     59,544      46,266       29
Working                                                                     
 capital         164,132     47,862      243    164,132      47,862      243
Long-term                                                                   
 debt,                                                                      
 including                                                                  
 current                                                                    
 portion          57,303     49,977       15     57,303      49,977       15
Common shares                                                               
 outstanding                                                                
 Basic                                                                      
  (weighted-                                                                
  average)        72,993     66,775        9     72,358      66,085        9
 Diluted                                                                    
  (weighted-                                                                
  average)        75,371     69,182        9     74,906      68,158       10
Total assets     465,262    278,426       67    465,262     278,426       67
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(i) Funds flow from operations is a non-IFRS measure that represents cash   
 generated from operating activities before changes in non-cash working     
 capital                                                                    
                                                                            
Operating                                                                   
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average                                                                     
 production                                                                 
 volumes                                                                    
 (Bopd)           13,406     10,138       32     12,158       9,681       26
Average price                                                               
 ($ per Bbl)      104.00      71.27       46     102.40       71.76       43
Operating                                                                   
 expense ($                                                                 
 per Bbl)           7.92       7.19       10       7.96        7.09       12
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
CORPORATE SUMMARY

TransGlobe Energy Corporations ("TransGlobe" or the "Company") total production increased to a record 13,406 barrels of oil per day ("Bopd") during the quarter, resulting in record funds flow of $37.5 million ($0.50/share, diluted) and record net earnings of $26.1 million ($0.35/share, diluted).

The political environment in Egypt has stabilized and business processes and operations are returning to normal.

Yemen remains unsettled with export pipelines becoming a target for opposition tribes in the country.

Production was restored in Block S-1, Yemen on July 16th and produced until October 8th at which time it was shut-in again due to attacks on the export pipeline.



The Company continues to grow production and expand its opportunity base in Egypt.

On the West Gharib project, eleven oil wells were drilled during the quarter and an additional six oil wells were drilled during October.

The West Gharib project area is the primary producing asset in the Companys portfolio.



The pending acquisition of 4,000 Bopd in the West Bakr Concession (100% WI) announced March 25th will add a new project area adjacent to the West Gharib properties.

There are numerous development opportunities and operational synergies expected from the acquisition.

The Company completed its due diligence and submitted the deed of assignment for Government approval.

Closing is scheduled to occur shortly after receiving all Government approvals.



In the Western Desert, the East Ghazalat Safwa development was approved in July.

The commencement of first production (approximately 800 to 1,200 Bopd to TransGlobe) is expected in the second quarter of 2012.



The Company entered into an agreement to acquire a 50% interest in its first operated project in the Western Desert of Egypt in the South Alamein concession.

The acquisition includes a Cretaceous light oil discovery at Boraq 2X which will be appraised and developed in the near term.

The acquisition is subject to the normal government approvals of the acquisition and approval of the Boraq development plan.

The South Alamein concession is a large 558,000 acre exploration license which has a number of prospects identified on 3-D seismic.



Brent oil prices remained strong, averaging $113 per barrel in the third quarter which resulted in an average sales price of $104 per barrel during the quarter.

Record production combined with strong Brent oil pricing produced record funds flow of $37.5 million, to exit the quarter with positive working capital of $164 million and net long-term debt of $57.3 million.



Guidance for 2011 funds flow is expected to be approximately $120 million ($1.60 per share) based on production guidance of 12,000 to 12,300 Bopd for 2011 and Brent pricing of $110 per barrel for the balance of the year.



With the additions of West Bakr and South Alamein total Company production could reach 20,000 Bopd in 2012.

The Company has a very strong financial position and continues to pursue business development opportunities to expand its growing opportunity base.

OPERATIONS UPDATE

ARAB REPUBLIC OF EGYPT

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

Operations and Exploration

Fourteen wells were drilled during the third quarter resulting in eleven oil wells, one water source well and two dry wells.

Eight oil wells were drilled at Arta/East Arta, three oil wells and one water source well were drilled at Hoshia.

Dry holes were drilled at West Hoshia and North Hoshia.



Six additional oil wells were drilled in the Arta/East Arta pools during October.



Two drilling rigs are scheduled to remain in the Arta/East Arta area for the balance of the year.

The third rig (1,500 HP) will drill in the Arta/East Arta area until the drilling contract expires in December.



Production

Production from West Gharib averaged 11,138 Bopd to TransGlobe during the third quarter, approximately 2% (218 Bopd) lower than the previous quarter.

Production during the third quarter was curtailed by approximately 800 Bopd due to process capacity constraints at the GPC operated Ras Gharib terminal.

By mid-July the increased trucked volumes at West Gharib were exceeding the process capacity to receive oil and water at the GPC operated Ras Gharib terminal.

The Company initiated a number of projects to reduce the amount of water that is trucked with the oil to GPC and to increase tankage/processing capacity allocations at GPC.

Depending upon government approvals for processing capacity allocations, the curtailed volumes could be placed on production by year-end.



Production in October averaged 10,912 Bopd to TransGlobe with an estimated 1,000 Bopd shut-in.

In early November production has increased to the 11,500 - 11,800 Bopd range due to improved water separation in the field and the addition of new wells.

With the recently drilled wells, it is estimated that 1,000 Bopd remains shut-in.


Quarterly West Gharib Production (Bopd)                                     
                                                                            
                                               2011                     2010
----------------------------------------------------------------------------
                                        Q-3        Q-2        Q-1        Q-4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross production rate                11,138     11,356      8,738      7,941
TransGlobe working interest          11,138     11,356      8,738      7,941
TransGlobe net (after royalties)      6,137      6,235      4,820      4,634
TransGlobe net (after royalties                                             
 and tax)(i)                          4,247      4,306      3,293      3,338
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
(i) Under the terms of the West Gharib Production Sharing Concession, royalties and taxes are paid out of the Governments share of production sharing oil.

West Bakr, Arab Republic of Egypt (SUBJECT TO CLOSING 100% working interest, TransGlobe operated)

On March 28, 2011, the Company announced it had entered into a Sale and Purchase Agreement ("SPA") to acquire all the Egyptian assets of The Egyptian Petroleum Development Co.

Ltd.

(of Japan) ("EPEDECO") for $60 million plus or minus adjustments, effective July 1, 2010 subject to approval from the Egyptian Government.

EPEDECO holds a 100% working interest in the West Bakr Production Sharing Concession ("PSC").



The West Bakr PSC is located onshore in the western Gulf of Suez rift basin of Egypt adjacent to TransGlobes West Gharib Concession and is producing approximately 4,000 Bopd gross (before the production sharing split with the Government of Egypt).

The Company has identified a number of optimization/development projects and drilling opportunities that could increase production and recoverable reserves.

The produced oil ranges from 17 degrees to 20 degrees API and is pipeline connected to the Ras Gharib terminal on the coast.

The West Gharib production is currently trucked to the same terminal.

The West Bakr blend has historically received Brent minus 25% pricing.

TransGlobe has completed due diligence and submitted the deed of assignment for Government approval.

TransGlobe expects to close the acquisition shortly after receiving the necessary Government approvals.

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

Operations and Exploration

On July 12, 2011 the Safwa development lease was approved by the Government.

The Safwa development lease has a 20-year term (expires 2031) and covers approximately 11,040 acres or 15 development blocks.

The Safwa development lease is subject to a 4-year review (July 11, 2015) to determine which development blocks are producing or contributing to production.

The non-producing (non-contributing) blocks will be relinquished following the review.

The Safwa Development lease could be extended an additional 5 years (2036).

The East Ghazalat exploration concession is in the first two-year extension period (expires June, 2012).

An additional two-year extension is available following a relinquishment of 25% of the original concession area.

All work commitments have been met.

The operator has proposed an initial development budget of $2.6 million ($1.3 million to TransGlobe) to complete and equip the existing four wells for production.

Processing facilities will be rented for the initial production phase until facility design and construction has been completed.

Facility design work is expected to commence following the next drilling phase in 2012.

The operator is targeting first production to commence in second quarter of 2012.

It is expected that the wells will initially be capable of producing 400-600 Bopd per well from the Bahariya formation, which could contribute an additional 800 to 1,200 Bopd of light (34 degrees API) sweet crude to the Company.

South Alamein, Arab Republic of Egypt (SUBJECT TO CLOSING - 50% working interest, TransGlobe operated)

On June 29, 2011 the Company announced it had entered into a Sale and Purchase Agreement ("SPA") to acquire Cepsa Egypts 50% operated working interest in the South Alamein Concession for $3.0 million plus an inventory adjustment, effective on and subject to approval from the Egyptian Government.

El Paso South Alamein ("El Paso SA"), a subsidiary of Houston-based El Paso Corporation, holds the remaining 50% interest in the South Alamein Production Sharing Contract ("PSC").

Ancillary to this transaction is an agreement between TransGlobe and El Paso SA on a go-forward appraisal program in exchange for El Paso SA waiving its preferential right under its joint operating agreement with Cepsa Egypt.

TransGlobe will assume operatorship of the South Alamein Concession upon closing of this transaction.

The South Alamein Concession is located onshore in the Western Desert of Egypt and includes portions of the prolific Alamein and Tiba basins.

The current size of this exploration concession is 2,258 square kilometers (558,120 acres).

The concession includes an oil discovery well, Boraq-2X, which tested a combined 1,700 Bopd of 38 degrees to 40 degrees API oil from two Cretaceous zones.

Initial work by TransGlobe will focus on appraisal and development the Boraq-2X discovery which includes drilling at least two appraisal wells and readying the Boraq-2X well for production.

The Boraq-2X discovery is close to existing infrastructure which should reduce development time and capital.

The Company plans to submit a revised budget and development plan for the Boraq discovery to the Egyptian Government for approval, following closing of the transaction.

The South Alamein PSC is in the first, three-year extension period which expires on April 5, 2012.

A further two-year extension (April 5, 2014) is available following a 30% relinquishment of the original concession area.

An extensive 3-D seismic acquisition program was executed over the entire South Alamein Concession area.

This has resulted in several well-defined prospects throughout the area and will provide TransGlobe with numerous exploration drilling opportunities.

TransGlobe expects to carry out an exploration drilling program after the Boraq field is brought into production.

TransGlobe expects to close the acquisition after receiving the necessary Egyptian Government approvals.



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

Operations and Exploration

The 3.65 million acre Nuqra Block exploration concession is in the second and final extension period which is scheduled to expire in July 2012.

The Company has met all the work commitments of the second extension period and has no plans for further exploration at this time.



YEMEN EAST- Masila Basin

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

Operations and Exploration

No wells were drilled during the third quarter.



Production

Production from Block 32 averaged 3,144 Bopd (434 Bopd to TransGlobe) during the quarter, representing a 8% decrease from the previous quarter primarily due to natural declines.

In October, production averaged approximately 2,935 Bopd (405 Bopd to TransGlobe).

Block 32 production is exported to the Indian Ocean via the Nexen operated export pipeline which has not been impacted by recent political unrest in Yemen.

Quarterly Block 32 Production (Bopd)


                                               2011                     2010
----------------------------------------------------------------------------
                                        Q-3        Q-2        Q-1        Q-4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross production rate                 3,144      3,401      3,869      4,206
TransGlobe working interest             434        470        534        581
TransGlobe net (after royalties)        259        263        241        344
TransGlobe net (after royalties                                             
 and tax)(i)                            201        195        135        265
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
(i) Under the terms of the Block 32 PSA, royalties and taxes are paid out of the Governments share of production sharing oil.

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

Operations and Exploration

The Government has approved a six-month extension to the second exploration period and has extended the expiry date to January 11, 2012.

All work commitments of the Second exploration period have been completed.

YEMEN WEST- Marib Basin

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

Operations and Exploration

No wells were drilled during the quarter.

Production

Production averaged 7,336 Bopd (1,834 Bopd to TransGlobe) during the third quarter with the export pipeline in operation from July 15th to the end of the quarter.

Subsequent to the quarter, production averaged approximately 1,680 Bopd (420 Bopd to TransGlobe) during October which was impacted by the shut-in of the export pipeline on October 8th.

The oil export pipeline from Marib to the Ras Eisa port on the Red Sea remains shut down.

Production from TransGlobes An Nagyah field on Block S-1 is shut-in until repairs to the export pipeline can be completed.

The pipeline has been the target of a number of attacks since production resumed in mid-July (ending a four month shut-in period) and was typically repaired within 24 to 48 hours, which did not impact production.

The most recent attacks on the pipeline have not been repaired due to local tribal groups preventing access to the pipeline.

It is difficult to predict when production will resume.

TransGlobes working interest share of production was approximately 2,250 Bopd prior to being shut-in on October 8th.


Quarterly S-1 Block Production (Bopd)                                       
                                                                            
                                             2011(ii)                   2010
----------------------------------------------------------------------------
                                        Q-3        Q-2        Q-1        Q-4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross production rate                 7,336          -      7,784      9,068
TransGlobe working interest           1,834          -      1,946      2,267
TransGlobe net (after royalties)      1,097          -      1,003      1,188
TransGlobe net (after royalties                                             
 and tax)(i)                            907          -        758        895
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
(i) Under the terms of the S-1 Block PSA, royalties and taxes are paid out of the Governments share of production sharing oil.



(ii) Production shut-in from March 17 to July 15, 2011.

Subsequently shut-in on October 8, 2011.



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 was planned as part of the 2011 Block S-1/75 drilling program.

With the suspension of the Block S-1/Block 75 drilling program in the first quarter of 2011, the Operator has declared Force Majeure under the PSA due to logistics and security concerns associated with the suspended drilling program.

MANAGEMENTS DISCUSSION AND ANALYSIS

November 7, 2011

Managements discussion and analysis ("MD&A") should be read in conjunction with the unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2011 and 2010 and the audited financial statements and MD&A for the year ended December 31, 2010 included in the Companys annual report.

Additional information relating to the Company, including the Companys Annual Information Form, is on SEDAR at www.sedar.com.

The Companys annual report and Form 40-F may be found on EDGAR at www.sec.gov.

As of January 1, 2011, TransGlobe Energy Corporation adopted International Financial Reporting Standards ("IFRS"), and the following disclosure, as well as the associated Condensed Consolidated Interim Financial Statements, have been prepared in accordance with IFRS.

The Companys effective transition date is January 1, 2010, to accommodate 2010 IFRS comparative figures.

The Company has provided information throughout this document to assist users in understanding the transition from Canadian Generally Accepted Accounting Principles ("GAAP").

A summary of all of the significant changes including the various reconciliations of GAAP financial statements to those prepared under IFRS is included in Note 23 in the Companys unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2011.

Further information, including full disclosure of the accounting policies adopted on transition to IFRS along with additional reconciliations of GAAP financial statements to those prepared under IFRS, can be found in the notes to the Condensed Consolidated Interim Financial Statements for the three months ended March 31, 2011.

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 TransGlobes forward-looking statements are based on the beliefs, expectations, opinions and assumptions of the Companys 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 TransGlobes 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 TransGlobes oil and gas properties, changes in price of crude oil and natural gas, adverse technical factors associated with exploration, development, production or transportation of TransGlobes crude oil and natural gas reserves, changes or disruptions in the political or fiscal regimes in TransGlobes 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 Companys control.

TransGlobe does not assume any obligation to update forward-looking statements, other than as required by law, if circumstances or managements 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 TransGlobes public filings at www.sedar.com and www.sec.gov for further, more detailed information concerning these matters.



Non-IFRS Measures

Funds flow from operations

This document contains the term "funds flow from operations", which should not be considered an alternative to or more meaningful than "cash flow from operating activities" as determined in accordance with IFRS.

Funds flow from operations is a non-IFRS measure that represents cash generated from operating activities before changes in non-cash working capital.

Management considers this a key measure as it demonstrates TransGlobes ability to generate the cash flow necessary to fund future growth through capital investment.

Funds flow from operations may not be comparable to similar measures used by other companies.


Reconciliation of funds flow from operations                                
                                                                            
                                    Three Months Ended     Nine Months Ended
                                          September 30          September 30
----------------------------------------------------------------------------
(000s)                                 2011       2010       2011       2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash flow from operating                                                    
 activities                           3,358     13,600     59,175     38,418
Changes in non-cash working                                                 
 capital                             34,092      5,481     31,879     16,096
----------------------------------------------------------------------------
Funds flow from operations           37,450     19,081     91,054     54,514
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Debt-to-funds flow ratio

Debt-to-funds flow is a non-IFRS measure that is used to set the amount of capital in proportion to risk.

The Companys 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-IFRS 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 Companys principal business activities prior to the consideration of other income and expenses.

Netback may not be comparable to similar measures used by other companies.

TRANSGLOBES BUSINESS

TransGlobe is a Canadian-based, publicly traded, oil exploration and production company whose activities are located in two geographic areas, the Arab Republic of Egypt ("Egypt") and the Republic of Yemen ("Yemen").

Egypt and Yemen include all the Companys exploration, development and production of crude oil.



SELECTED QUARTERLY FINANCIAL INFORMATION


                                               2011                         
----------------------------------------------------------------------------
($000s, except per                                                          
 share, price and                                                           
 volume amounts)                         Q-3             Q-2             Q-1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Average sales volumes                                                       
 (Bopd)                               13,406          11,826          11,218
Average price ($/Bbl)                 104.00          105.57           97.06
Oil sales                            128,265         113,615          97,995
Oil sales, net of                                                           
 royalties and other                  71,769          62,513          52,863
Cash flow from                                                              
 operating activities                  3,358          52,604           3,213
Funds flow from                                                             
 operations(i)                        37,450          29,306          24,298
Funds flow from                                                             
 operations per share                                                       
 - Basic                                0.51            0.40            0.34
 - Diluted                              0.50            0.39            0.33
Net earnings                          26,110          21,874           2,889
Net earnings per                                                            
 share                                                                      
 - Basic                                0.36            0.30            0.04
 - Diluted                              0.35            0.29            0.04
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets                         465,262         420,956         404,184
Cash and cash                                                               
 equivalents                         105,007         122,659          86,353
Total long-term debt,                                                       
 including current                                                          
 portion                              57,303          56,998          56,731
Debt-to-funds flow                                                          
 ratio(ii)                               0.5             0.6             0.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------

2010 2009(iii) ---------------------------------------------------------------------------- ($000s, except per share, price and volume amounts) Q-4 Q-3 Q-2 Q-1 Q-4 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Average sales volumes (Bopd) 10,789 10,138 9,206 9,694 8,656 Average price ($/Bbl) 79.83 71.27 73.46 70.66 62.84 Oil sales 79,240 66,470 61,540 61,651 50,044 Oil sales, net of royalties and other 45,198 38,980 35,638 37,404 28,788 Cash flow from operating activities 16,129 13,645 13,548 11,270 12,594 Funds flow from operations(i) 18,464 19,081 16,579 18,854 9,703 Funds flow from operations per share - Basic 0.28 0.29 0.25 0.29 0.15 - Diluted 0.26 0.28 0.24 0.28 0.15 Net earnings 8,932 9,321 9,711 12,601 2,516 Net earnings per share - Basic 0.13 0.14 0.15 0.19 0.04 - Diluted 0.13 0.13 0.14 0.19 0.04 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total assets 345,625 278,426 264,490 248,837 228,882 Cash and cash equivalents 57,782 15,412 21,437 18,845 16,177 Total long-term debt, including current portion 86,420 46,045 49,977 49,888 49,799 Debt-to-funds flow ratio(ii) 1.2 0.6 0.9 0.9 1.1 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
 
(i) Funds flow from operations is a non-IFRS measure that represents cash generated from operating activities before changes in non-cash working capital.



(ii) Debt-to-funds flow ratio is a non-IFRS measure that represents total current and long-term debt over funds flow from operations for the trailing 12 months.



(iii) Financial information presented for 2009 has been prepared in accordance with GAAP.

This information has not been restated for differences between GAAP and IFRS.



During the third quarter of 2011, TransGlobe has:


--  Maintained a strong financial position, reporting a debt-to-funds flow
    ratio of 0.5 at September 30, 2011 (September 30, 2010 - 0.6); 
--  Reported a 96% increase in funds flow from operations due to a 46%
    increase in commodity prices along with a 32% increase in sales volumes
    compared to Q3-2010; 
--  Reported funds flow from operations that varies significantly from cash
    flow from operating activities.

These measures fluctuate from quarter to quarter depending on the timing of collections of accounts receivable and payment of accounts payable; and -- Reported net earnings in Q3-2011 of $26.1 million (Q3-2010 - $9.3 million).

Please refer to the 2011 Variances table for details on the variance from Q3-2010 to Q3-2011.

2011 VARIANCES $ Per Share $000s Diluted % Variance ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Q3-2010 net earnings 9,321 0.13 ---------------------------------------------------------------------------- Cash items Volume variance 31,143 0.41 334 Price variance 30,653 0.41 329 Royalties (29,007) (0.38) (311) Expenses: Operating (3,054) (0.04) (33) Realized derivative loss 35 - - Cash general and administrative (1,137) (0.03) (12) Current income taxes (10,551) (0.15) (113) Realized foreign exchange gain (86) - (1) Interest on long-term debt (197) - (2) Other income 137 - 1 ---------------------------------------------------------------------------- Total cash items variance 17,935 0.22 192 ---------------------------------------------------------------------------- Non-cash items Unrealized derivative gain 173 - 2 Unrealized foreign exchange loss (257) - (3) Depletion and depreciation (2,708) (0.03) (29) Impairment loss (68) - (1) Stock-based compensation 7 - - Deferred income taxes 1,786 0.03 20 Deferred lease inducement (119) - (1) Amortization of deferred financing costs 39 - - ---------------------------------------------------------------------------- Total non-cash items variance (1,147) - (12) ---------------------------------------------------------------------------- Q3-2011 net earnings 26,110 0.35 180 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
 
Net income increased to $26.1 million in Q3-2011 compared to $9.3 million in Q3-2010, which was mainly due to significant increases in commodity prices and production volumes.

Partially offsetting these increases were increased royalties and taxes, along with increased operating costs and depletion and depreciation expense.



BUSINESS ENVIRONMENT

The Companys 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:


                                    2011                        2010        
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                             Q-3        Q-2        Q-1        Q-4        Q-3
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Dated Brent average                                                         
 oil price ($/Bbl)        113.44     117.36     104.97      86.41      76.86
U.S./Canadian Dollar                                                        
 average exchange                                                           
 rate                      0.980      0.968      0.997      1.013      1.039
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The price of Dated Brent oil averaged 48% higher in Q3-2011 compared with Q3-2010.

All of the Companys production is priced based on Dated Brent and shared with the respective governments through Production Sharing Agreements.

When the price of oil goes up, it takes fewer barrels to recover costs (cost recovery barrels) which are assigned 100% to the Company.

The contracts provide for cost recovery per quarter up to a maximum percentage of total revenue.

Typically maximum cost recovery ranges from 25% to 60% of production depending on the country and the contract.

Generally the balance of the production is shared with the respective government (production sharing oil).

Depending on the contract, the government receives 70 to 85% of the production sharing oil.

Production sharing splits are set in each contract for the life of the contract.

Typically the governments share of production sharing oil increases when production exceeds pre-set production levels in the respective contracts.

During times of increased oil prices, the Company receives less cost oil and more production sharing oil.

For reporting purposes, the Company records the respective governments share of production as royalties and taxes (all taxes are paid out of the governments share of production).

The recent political instability in Egypt and Yemen could present challenges to the Company if the issues persist over an extended period of time.

TransGlobes management believes the Company is well positioned to adapt to the current political situations in Egypt and Yemen due to its increasing production, manageable debt levels, positive cash generation from operations and the availability of cash and cash equivalents.


OPERATING RESULTS AND NETBACK Daily Volumes, Working Interest before Royalties and Other (Bopd) Three Months Ended Nine Months Ended September 30 September 30 ---------------------------------------------------------------------------- 2011 2010 2011 2010 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Egypt - Oil sales 11,138 7,601 10,419 7,029 Yemen - Oil sales 2,268 2,537 1,739 2,652 ---------------------------------------------------------------------------- Total Company - daily sales volumes 13,406 10,138 12,158 9,681 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Netback Consolidated Nine Months Ended September 30 ---------------------------------------------------------------------------- 2011 2010 ---------------------------------------------------------------------------- (000s, except per Bbl amounts) $ $/Bbl $ $/Bbl ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Oil sales 339,875 102.40 189,661 71.76 Royalties and other 152,730 46.02 77,639 29.38 Current taxes 55,827 16.82 27,619 10.45 Operating expenses 26,404 7.96 18,742 7.09 ---------------------------------------------------------------------------- Netback 104,914 31.60 65,661 24.84 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three Months Ended September 30 ---------------------------------------------------------------------------- 2011 2010 ---------------------------------------------------------------------------- (000s, except per Bbl amounts) $ $/Bbl $ $/Bbl ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Oil sales 128,265 104.00 66,470 71.27 Royalties and other 56,496 45.81 27,490 29.47 Current taxes 20,336 16.49 9,785 10.49 Operating expenses 9,762 7.92 6,708 7.19 ---------------------------------------------------------------------------- Netback 41,671 33.78 22,487 24.12 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Egypt Nine Months Ended September 30 ---------------------------------------------------------------------------- 2011 2010 ---------------------------------------------------------------------------- (000s, except per Bbl amounts) $ $/Bbl $ $/Bbl ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Oil sales 288,426 101.40 133,676 69.66 Royalties and other 129,665 45.59 51,782 26.99 Current taxes 49,350 17.35 20,461 10.66 Operating expenses 19,930 7.01 11,800 6.15 ---------------------------------------------------------------------------- Netback 89,481 31.45 49,633 25.86 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three Months Ended September 30 ---------------------------------------------------------------------------- 2011 2010 ---------------------------------------------------------------------------- (000s, except per Bbl amounts) $ $/Bbl $ $/Bbl ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Oil sales 104,780 102.25 48,551 69.43 Royalties and other 47,044 45.91 18,999 27.17 Current taxes 17,783 17.35 7,447 10.65 Operating expenses 7,065 6.89 4,313 6.17 ---------------------------------------------------------------------------- Netback 32,888 32.10 17,792 25.44 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
 
The netback per Bbl in Egypt increased 26% and 22%, respectively, in the three and nine months ended September 30, 2011 compared with the same periods of 2010, mainly as a result of oil prices increasing by 47% and 46%, respectively, which was partially offset by higher royalty and tax rates.

The average selling price during the three months ended September 30, 2011 was $102.25/Bbl, which represents a quality adjustment of approximately 10% relative to the average Dated Brent oil price for the period of $113.44/Bbl.

This adjustment is consistent with the discount applied in the three and nine months ended September 30, 2010.



Royalties and taxes as a percentage of revenue increased to 62% in the three and nine months ended September 30, 2011, compared with 54% in the same period of 2010.

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.

Cost recovery for the purposes of calculating cost oil is based on expenses incurred and paid in the period plus capital costs which are amortized over four years.



Operating expenses on a per Bbl basis increased 12% and 14%, respectively, for the three and nine month periods ended September 30, 2011 compared with the same periods of 2010.

This is mainly due to increases in oil treatment fees, fuel costs and workovers during the three and nin



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