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Release

TransGlobe Energy Corporation First Interim Report for the Three Months Ended March 31, 2005

CALGARY, ALBERTA--(CCNMatthews - May 02, 2005) - TransGlobe Energy 
Corporation (TSX:TGL) (AMEX:TGA) ("TransGlobe" or the "Company") is 
pleased to announce its financial and operating results for the three 
month period ended March 31, 2005. All dollar values are expressed in 
United States dollars unless otherwise stated. Conversion of natural gas 
to oil is made on the basis of 6,000 cubic feet of natural gas being 
equivalent to one barrel of oil.

/T/

HIGHLIGHTS

- Record net income in Q1-2005 of $4,507,000 ($0.08 per share).
- Record cash flow in Q1-2005 of $9,070,000 ($0.15 per share).
- Working capital of $8,399,000 with no debt.

FINANCIAL AND OPERATING UPDATE
(Expressed in 000's, except per share, price and volume amounts)

                                         Three Months Ended March 31
                                        -----------------------------
Financial                                    2005       2004  Change
---------------------------------------------------------------------
Oil and gas sales                          18,863      7,897     139%
Oil and gas sales, net of royalties        13,544      5,868     131%
Operating expense                           2,451      1,127     117%
General and administrative expense            734        319     130%
Stock-based compensation                      351        110     219%
Depletion, depreciation and accretion
 expense                                    3,934      1,614     144%
Income taxes                                1,580        559     183%
Cash flow from operations                   9,070      3,887     133%
 Basic per share                             0.16       0.07
 Diluted per share                           0.15       0.07
Net income                                  4,507      2,163     108%
 Basic and diluted per share                 0.08       0.04
Capital expenditures                        3,641      2,060      77%
Working capital                             8,399      4,449      89%
Common shares outstanding
 Basic (weighted average)                  57,250     54,049       6%
 Diluted (weighted average)                60,040     56,089       7%

Sales Volumes
---------------------------------------------------------------------
Oil and liquids (Bopd)                      4,361      2,425      80%
 Average price ($ per barrel)               43.04      31.39      37%
Gas (Mcfpd)                                 3,748      2,008      87%
 Average price ($ per Mcf)                   5.79       5.27      10%
Total (Boed) (6:1)                          4,985      2,760      81%
Operating expense ($ per Boe)                5.46       4.49      22%

/T/

EXPLORATION UPDATE

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

Production

The Tasour field averaged 16,167 Bopd (2,233 Bopd to TransGlobe) during 
the first quarter 2005. As is typical of all the Qishn fields in the 
prolific Masila basin, the economic success of the project is dependent 
upon handling increased water production in a cost effective manner. The 
strong natural water drive provides an exceptional primary recovery 
(over 50% of the original oil in place). All the Qishn wells in Tasour 
and in the Masila basin are pumped utilizing very large electric (up to 
1,000 hp) submersible pumps. The power in the Tasour field is generated 
by diesel powered generators, making diesel costs one of the largest 
components of operating costs. In late 2004, the Joint Venture group 
approved the purchase of a diesel topping plant which is expected to be 
operational during the third quarter of 2005. The diesel topping plant 
will produce diesel fuel from a portion of the Tasour crude oil. This is 
expected to stabilize diesel costs and maintain low operating costs 
which should extend the life of the field.

/T/

Q-1 2005 Tasour Production (Bopd)
                                                                 Q-1
---------------------------------------------------------------------
Gross field production rate                                   16,167
TransGlobe working interest                                    2,233
TransGlobe net (after royalties)                               1,567
TransGlobe net (after royalties and tax)                       1,357
---------------------------------------------------------------------

/T/

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.

Operations and Exploration

The main Tasour field is now largely developed. Therefore the primary 
focus for 2005 will be exploration for new reserves. The Block 32 Joint 
Venture group initially approved a six well drilling program for 2005 
and recently discussed expanding the 2005 program to eight wells by 
utilizing a second drilling rig.

In the first quarter of 2005 the group drilled Tasour #15, #16 and #17 
on Block 32. Tasour #15 was drilled as a water injector near the central 
production facility ("CPF") and found a 2.5 meter oil column. The well 
was completed as a water injection well. Tasour #16 was suspended after 
encountering 6.0 meters of oil pay overlying 3.0 meters of water bearing 
sandstone. The dip meter indicates a structurally higher location can be 
reached by sidetracking the well to the south of the current bottom hole 
location. The Tasour #17 well was drilled approximately 2.0 kilometers 
east of Tasour #15 to test a new structure east of the Tasour field. The 
well has been plugged and suspended after encountering Qishn S-1A sand 
in a structurally low position. Although hydrocarbon shows were 
encountered, no tests were conducted as it was determined that the Qishn 
S-1A sand was water bearing. A new 70 km 2-D seismic program is 
underway, to define several interesting exploration leads located north 
and west of the Tasour area.

Two development wells are planned for the main Tasour field and a deep 
exploration well is planned to test formations below the producing 
Tasour Qishn formation on a prospect defined on the 3-D seismic survey. 
It is expected that drilling (Tasour #18) will commence at the end of 
May In addition several new Qishn prospects have been identified and one 
or two are expected to be drilled later in 2005.

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

Production

Production from Block S-1 is currently limited by trucking and gas 
re-injection capacity. The oil production is currently being trucked 18 
miles to the Jannah Hunt facility where it enters the pipeline to the 
Ras Isa loading terminal on the Red Sea. The pipeline is expected to be 
operational in June 2005. The 10 inch pipeline is designed to allow an 
ultimate capacity of 80,000 Bopd so that future discoveries can be 
placed on stream quickly. The CPF is designed for an initial capacity of 
10,000 to 12,000 Bopd (2,500 to 3,000 Bopd to TransGlobe) with expansion 
capabilities. The An Nagyah field production is anticipated to increase 
to over 10,000 Bopd (2,500 Bopd to TransGlobe) when the facilities and 
pipeline are operational.

/T/

Q-1 2005 An Nagyah Production (Bopd)
                                                                 Q-1
---------------------------------------------------------------------
Gross field production rate                                    7,332
TransGlobe working interest                                    1,833
TransGlobe net (after royalties)                               1,284
TransGlobe net (after royalties and tax)                       1,146
---------------------------------------------------------------------

/T/

Operations and Exploration

The focus in 2005 includes the evaluation/assessment of undeveloped 
discoveries (Harmel and An Naeem), new exploration on the block, and 
development drilling on An Nagyah.

Two wells were drilled in the first quarter of 2005 (An Nagyah #14 and 
Malaki #1). The An Nagyah #14 well was drilled to a total depth of 1,365 
meters and suspended in early January 2005 as a Lam B oil well. The An 
Nagyah #14 well encountered a 19 meter oil column in the Lam B (Lower 
Lam) sandstone. The well was swab tested at a rate of approximately 80 
barrels of light (40 degree API) oil per day. No water was produced 
during the test period. This discovery is located south of the An Nagyah 
field in a separate fault block. The An Nagyah #14 oil test has 
identified a new exploration fairway south of the main An Nagyah field. 
Additional work will be required to incorporate the well results and 
remap the seismic in this area to identify future drilling locations.

Malaki #1 is located approximately nine kilometers south-east of the An 
Nagyah pool. The Malaki #1 exploration well was drilled to a total depth 
of 2,315 meters. The well was plugged and abandoned after encountering 
minor hydrocarbon shows. The Lam A sandstone reservoirs were encountered 
structurally lower than the oil/water contact in the An Nagyah field and 
were water saturated.

In March/April 2005, the An Nagyah #15 well was drilled to a total depth 
of 1,979 meters and completed as an Upper Lam oil well. The An Nagyah 
#15 well was tested from a 747 meter horizontal Upper Lam sandstone 
section at a rate of 2,625 barrels of light (43 degree API) oil per day, 
84 barrels per day of water and 2.3 million cubic feet of natural gas 
per day on a 48/64 inch choke at 575 psi flowing pressure. This is the 
third horizontal well drilled in the An Nagyah field.

The An Nagyah #15 well was equipped in April for early production via 
trucking. The drilling rig has moved and commenced drilling the 
exploration prospect at Markhah #1 located approximately 50 kilometers 
east/south-east of the An Nagyah field. The Markhah #1 exploration well 
is primarily targeting the Lam formation in a separate structure at the 
eastern end of the Block.

The An Naeem gas condensate pool is being evaluated for potential make 
up gas to maintain reservoir pressure and improve oil recoveries from 
the An Nagyah pool. Produced condensate could be sold with the An Nagyah 
crude oil production. A gas cycling scheme to recover condensate from 
the An Naeem gas condensate pool is also being studied.

In addition to An Nagyah Lam A development wells (horizontal), it is 
expected that a Lam B horizontal well will be drilled to develop the Lam 
B oil pool tested in the An Nagyah #3 and An Nagyah #14 wells, along 
with several additional exploration wells. The 3-D seismic survey shot 
in 1999 in the An Naeem area is being reprocessed to further refine 
additional exploration targets for the 2005/2006 drilling program.

Production equipment was installed at Harmel #1 and Harmel #2 in March. 
The wells are currently pumping at a slower rate until the wells have 
cleaned up and inflow parameters can be determined. Harmel #1 has been 
pumping approximately 100 bpd of oil. Harmel #2 was recently placed on 
production and is recovering oil and load fluid (completion water and 
spent acid). Production and test data obtained from the Harmel #1 and #2 
wells will help to determine the commerciality of the medium gravity oil 
(22 degree API) pool. The Harmel structure encompasses fifteen square 
miles as defined by
3-D seismic and could require 80 to 90 shallow wells (600 to 800 meters 
in depth) to be fully developed.

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

The Block 72 Production Sharing Contract has been approved by the 
Cabinet and as of April 2005 it is before the Yemen Parliament for final 
approval. Following approval, the Block 72 Partnership plans to 
reprocess existing seismic and to acquire new 3-D seismic to identify 
drilling locations. Drilling is anticipated to commence in 2006. Any 
discoveries made on Block 72 would follow a similar development program 
to Block 32's whereby a separate oil processing facility and a pipeline 
would be constructed to connect to the Nexen export pipeline.

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

TransGlobe has obtained the existing 2-D seismic data on the Nuqra Block 
and is currently reprocessing the data to improve the resolution. A new 
2-D seismic acquisition program is anticipated to commence in the fourth 
quarter 2005. A field geological survey is also underway to investigate 
surface outcrops and oil seeps in the Nuqra area. The exploration of the 
Nuqra Block is being fast tracked and will probably exceed the PSA 
requirements. It is anticipated that TransGlobe will complete the 
seismic acquisition by the first quarter of 2006 and will be preparing 
for a two well drilling program in late 2006. This would complete all 
the first period and second period PSA commitments ahead of schedule.

Canada

Production

Production in the first quarter averaged 821 Boepd, down slightly from 
the fourth quarter of 2004 due to natural declines and increased 
pipeline pressures in the Nevis and Twining areas. It is anticipated 
that field booster compression will be installed at Nevis and Twining 
during the second quarter to produce against the higher pipeline 
pressure and improve well performance.

/T/

Q-1 2005 Canadian Production (Boepd)
                                                                 Q-1
---------------------------------------------------------------------
TransGlobe working interest                                      821
TransGlobe net (after royalties)                                 673
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Operations and Exploration

The Company plans to drill 10 to 15 wells in Canada during 2005. The 
majority of the wells will be drilled in the Nevis area, targeting 
natural gas.

The Canadian 2005 drilling program is expected to commence in early May, 
after spring break-up, to take advantage of lower equipment and service 
prices during the summer months. The Company is currently in the process 
of acquiring surface access and well license approvals for the first 8 
to 10 wells in the 2005 program. It is expected that the first phase (8 
to 10 wells) of the 2005 program will be drilled in May through July, 
with the remainder of the 2005 program drilled during August through 
October.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's discussion and analysis ("MD&A") should be read in 
conjunction with the unaudited interim financial statements for the 
three months ended March 31, 2005 and 2004, the audited financial 
statements and MD&A for the year ended December 31, 2004 included in the 
Company's annual report. Additional information relating to the Company, 
including the Company's Annual Information Form, is on SEDAR at 
www.sedar.com. All dollar values are expressed in U.S. dollars, unless 
otherwise stated. The calculations of barrels of oil equivalent ("Boe") 
are based on a conversion rate of six thousand cubic feet of natural gas 
to one barrel of crude oil.

This Management's Discussion and Analysis (MD&A) may include certain 
statements that may be deemed to be "forward-looking statements" within 
the meaning of the U.S. Private Securities Litigation Reform Act of 
1995. All statements in this interim report, other than statements of 
historical facts, that address future production, reserve potential, 
exploration drilling, exploitation activities and events or developments 
that the Company expects, are forward-looking statements. Although 
TransGlobe believes the expectations expressed in such forward-looking 
statements are based on reasonable assumptions, such statements are not 
guarantees of future performance and actual results or developments may 
differ materially from those in the forward-looking statements. Factors 
that could cause actual results to differ materially from those in 
forward-looking statements include, but are not limited to, oil and gas 
prices, exploitation and exploration successes, continued availability 
of capital and financing, and general economic, market or business 
conditions.

NON-GAAP MEASURES

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

Net operating income is a non-GAAP measure that represents revenue net 
of royalties and operating expenses. Management believes that net 
operating income is a useful supplemental measure to analyse operating 
performance and provide an indication of the results generated by the 
Company's principal business activities prior to the consideration of 
other income and expenses. Net operating income may not be comparable to 
similar measures used by other companies.

OUTLOOK

TransGlobe has projected a 2005 capital budget of $32 million, which 
remains unchanged.

- In Q1-2005, the Company spent $3.6 million of the capital budget.

- A significant portion of the capital budget will be spent in Q2-2005 
on the following:

-- Completing the pipeline installation, constructing the Central 
Production Facility ("CPF") and drilling at Block S-1, Yemen.

-- Drilling and facilities at Block 32, Yemen.

-- Drilling approximately 10 wells in Canada over the next three months. 
The majority of the wells will be drilled in the Nevis area, targeting 
natural gas. Successful wells will be tied-in during Q3-2005.

TransGlobe has projected average production volumes for 2005 to be 5,800 
to 6,200 Boepd which TransGlobe is on target to meet.

- Production volumes were 4,985 Boepd in Q1-2005.

- Production volumes are forecasted to remain consistent in Q2-2005 
compared to Q1-2005.

- In Q3-2005 production volumes are forecasted to increase due to 
increased gas re-injection and the pipeline being commissioned at Block 
S-1, planned development drilling on Block 32 and the tie-in of 
successful wells to be drilled in Q2-2005 in Canada.

TransGlobe has projected cash flow from operations for 2005 to be $32 
million based on an average dated Brent oil price of $38.00/Bbl and an 
average AECO gas price of C$6.00/Mcf which TransGlobe is on target to 
meet.

- Cash flow from operations in Q1-2005 was approximately $9.1 million.

- As budgeted and consistent with prior years royalties and taxes at 
Block 32,
Yemen will increase to an estimated 55% to 61% in Q2-2005 compared to 
37% in Q1-2005 resulting in a reduced cash flow from operations for the 
next quarter. The Block 32 Production Sharing Agreement ("PSA") allows 
for the recovery of capital costs over a two year period with 50% 
recovered in the quarter expended and the remaining 50% recovered in the 
first quarter of the following calendar year through reduced royalties 
and taxes paid to the government. As a result, in the first quarter of 
2005 TransGlobe received 63% of its working interest share of production 
(after royalty and taxes) which is forecasted to decrease to 39% to 45% 
(after royalties and taxes) for the balance of the year.

SELECTED QUARTERLY FINANCIAL INFORMATION

In the first quarter of each calendar year the Company's royalty and 
income tax rate decreases at Block 32, Yemen due to cost recovery. This 
results in an increase to cash flow from operations and net income for 
the first quarter of each year.

Cash flow from operations and net income increased 43% to $9,070,000 and 
487% to $4,507,000, respectively, in Q1-2005 compared to Q4-2004 mainly 
as a result of royalty and income tax costs decreasing at Block 32, 
Yemen in Q1-2005 due to the recovery of 50% of the 2004 capital costs 
from oil production as part of the Block 32 PSA.

/T/

($000's, except per
 share, price and       Mar. 31  Dec. 31  Sept. 30  June 30  Mar. 31
 volume amounts)           2005     2004      2004     2004     2004
---------------------------------------------------------------------
Average production
 volumes (Boepd)(1)       4,887    4,979     4,303    3,389    2,765
Average sales volumes
 (Boepd)(1)               4,985    5,384     3,918    3,103    2,760
Average price ($/Boe)     42.04    37.45     37.12    34.25    31.44

Oil and gas sales        18,863   18,548    13,380    9,670    7,897

Oil and gas sales,
 net of royalties        13,544   11,756     8,227    5,779    5,868

Cash flow from
 operations               9,070    6,326     4,363    2,749    3,887
Cash flow from
 operations per share
 - Basic                   0.16     0.12      0.08     0.05     0.07
 - Diluted                 0.15     0.11      0.08     0.05     0.07

Net income                4,507      768     2,541      447    2,163
Net income per share
 - Basic                   0.08     0.01      0.05     0.01     0.04
 - Diluted                 0.08     0.01      0.04     0.01     0.04

Total assets             61,232   60,522    44,478   38,798   35,753
---------------------------------------------------------------------

(1) Difference in production and sales volumes is inventory changes
    at Block S-1, Yemen

/T/

RESULTS OF OPERATIONS

Cash flow from operations for the three months ended March 31, 2005 
increased 133% to $9,070,000 ($0.16 per basic share and $0.15 per 
diluted share) compared to $3,887,000 ($0.07 per share, basic and 
diluted) in the comparable period in 2004 mainly as a result of the 
following:

- sales volumes increased 81% mainly as a result of Block S-1, Yemen 
commencing production at the end of Q1-2004 and production increases due 
to the 2004 drilling program in Canada;

- commodity prices increased 34%; and

- increased royalties, operating costs and taxes due to higher volumes 
and prices that offset the above cash increases.

Net income for the three months ended March 31, 2005 increased 108% to 
$4,507,000 ($0.08 per share, basic and diluted) compared to $2,163,000 
($0.04 per share, basic and diluted) in the comparable period 2004 
mainly as a result of the following:

- the above items affecting cash flow also increased net income, and are 
offset by:

-- increased depletion, depreciation and accretion due to higher volumes 
and capital costs;

-- increased stock-based compensation, a non-cash expense, due to stock 
option grants in late
Q1-2004; and

-- increased future income taxes due to increased net income related to 
the Canadian operations.

/T/

OPERATING RESULTS

Daily Sales Volumes, Working Interest Before Royalties

                                        March 31, March 31,        %
                                            2005      2004    Change
---------------------------------------------------------------------
Yemen    - Oil                     Bopd    4,165     2,290       82%
Canada   - Oil and liquids         Bopd      196       135       45%
         - Gas                    Mcfpd    3,748     2,008       87%
---------------------------------------------------------------------
Barrels of oil equivalent (6:1)  Boepd     4,985     2,760       81%
---------------------------------------------------------------------
---------------------------------------------------------------------

Consolidated Net Operating Results
                                              Consolidated
---------------------------------------------------------------------
                                  March 31, 2005      March 31, 2004
---------------------------------------------------------------------
($000's, except per Boe amounts)     $     $/Boe         $     $/Boe
---------------------------------------------------------------------
Oil and gas sales               18,863     42.04     7,897     31.44
Royalties                        5,319     11.85     2,029      8.08
Operating expenses               2,451      5.46     1,127      4.49
---------------------------------------------------------------------
Net operating income(1)         11,093     24.73     4,741     18.87
---------------------------------------------------------------------
(1) Net operating income amounts do not reflect Yemen income tax
    expense which is paid through oil allocations with the Ministry
    of Oil and Minerals ("MOM") in the Republic of Yemen (Q1-2005 -
    $1,373,000, $3.06/Boe; Q1-2004 - $559,000, $2.23/Boe).

/T/

Segmented Net Operating Results

In 2005 the Company had producing operations in two geographic areas, 
segmented as Republic of Yemen and Canada. Also, the Company had 
start-up operations in a third geographic segment, Arab Republic of 
Egypt. MD&A will follow under each of these segments.

/T/

Republic of Yemen
                                  March 31, 2005      March 31, 2004
---------------------------------------------------------------------
($000's, except per Boe amounts)     $     $/Boe         $     $/Boe
---------------------------------------------------------------------
Oil sales                       16,196     43.21     6,577     31.56
Royalties                        4,841     12.91     1,811      8.69
Operating expenses               2,051      5.47       862      4.14
---------------------------------------------------------------------
Net operating income(1)          9,304     24.83     3,904     18.73
---------------------------------------------------------------------
(1) Net operating income amounts do not reflect Yemen income tax
    expense which is paid through oil allocations with MOM in the
    Republic of Yemen (Q1-2005 - $1,373,000, $3.66/Boe; Q1-2004 -
    $559,000, $2.68/Boe.)

/T/

Net operating income in Yemen increased 138% in the first three months 
of 2005 compared to the same period of 2004 primarily as a result of the 
following:

- Oil sales increased 146% mainly as a result of the following:

1. Sales volumes increased 82% primarily as a result of Block S-1 
production commencing at the end of Q1-2004.

/T/

Daily Sales Volumes, Working Interest    March 31,  March 31,      %
Before Royalties                             2005       2004  Change
---------------------------------------------------------------------
                                             Bopd       Bopd
---------------------------------------------------------------------
Block 32                                    2,233      2,290      (2)
Block S-1                                   1,932          -       -
---------------------------------------------------------------------
Total                                       4,165      2,290      82
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

2. Oil prices increased 37%.

- Royalty costs increased 167%. Royalties as a percent of revenue were 
consistent in Q1-2005 at 30% compared to 28% in Q1-2004.

- Operating expenses increased 32% on a Boe basis mainly as a result of 
the following:

1. Block 32 operating expenses increased to $4.63 per barrel in Q1-2005 
compared to $4.14 per barrel in Q1-2004 primarily due to increased 
diesel costs. A plant is being constructed in 2005 to manufacture diesel 
from produced crude oil which will reduce the cost of purchased diesel. 
The plant is expected to be commissioned in the third quarter of 2005.

2. Block S-1 has significantly higher operating costs during the initial 
trucking phase, averaging $6.79 per barrel in Q1-2005. This is a 
reflection of higher costs associated with trucking and higher fixed 
costs per barrel until volumes are increased when full scale production 
commences in 2005. Average cost per barrel is expected to be 
significantly reduced after commissioning of the pipeline and with 
increased production in mid 2005.

The current Block 32 PSA allows for the recovery of operating costs and 
capital costs from oil production. Operating costs are recovered in the 
quarter expended. The capital costs are amortized over two years with 
50% recovered in the quarter expended and the remaining 50% recovered in 
the first quarter of the following calendar year. The Company will 
receive a larger share of production in the first quarter of each year 
as 50% of the previous year's historical costs are recovered. The amount 
of oil required to recover capital and operating costs will vary 
depending upon the prevailing oil prices. The Company received 63% of 
its working interest share of production (after royalty and tax) in the 
first quarter of 2005 compared to 65% in the first quarter of 2004. The 
Company expects to receive between 39% and 45% share of production 
(after royalty and tax) in the balance of the year depending upon 
production volumes, oil prices, operating costs and eligible capital 
expenditures.

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

/T/

Canada
                                  March 31, 2005      March 31, 2004
                                ----------------- -------------------
($000's, except per Boe amounts)     $     $/Boe         $     $/Boe
---------------------------------------------------------------------
Oil sales                          422     44.83       188     31.16
Gas sales (6:1)                  1,953     34.74       963     31.62
NGL sales                          274     33.53       161     25.75
Other sales                         17         -         8         -
---------------------------------------------------------------------
                                 2,666     36.13     1,320     30.86
Royalties                          478      6.47       218      5.11
Operating expenses                 400      5.42       265      6.18
---------------------------------------------------------------------
Net operating income             1,788     24.24       837     19.57
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Net operating income in Canada increased 114% in the three months ended 
March 31, 2005 compared to the same period of 2004 primarily as a result 
of the following:

- Sales increased 102% mainly as a result of the following:

1. Sales volumes increased 75% as a direct result of the 2004 drilling 
program.

2. Commodity prices increased 17% on a Boe basis. More specifically, gas 
prices increased 10% to $5.79 per Mcf in the three months ended March 
31, 2005 compared to $5.27 per Mcf in the same period of 2004 and oil 
and NGL prices increased 44% and 30%, respectively.

- Royalty costs increased 27% on a Boe basis. Royalties as a percent of 
revenue were consistent in the three months ended March 31, 2005 at 18% 
compared to 17% in the same period of 2004.

- Operating costs decreased 12% on a Boe basis mainly as a result of 
wells that were placed on production in 2004, which had a lower 
operating cost than the previous wells on production.

/T/

GENERAL AND ADMINISTRATIVE EXPENSES (G&A)

                                  March 31, 2005      March 31, 2004
                                ----------------- -------------------
($000's, except Boe amounts)         $     $/Boe         $     $/Boe
---------------------------------------------------------------------
G&A (gross)                        949      2.10       498      1.98
Capitalized G&A                   (192)    (0.42)     (164)    (0.65)
Overhead recoveries                (23)    (0.05)      (15)    (0.06)
---------------------------------------------------------------------
G&A (net)                          734      1.63       319      1.27
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

General and administrative expenses increased 130% and increased 28% on 
a Boe basis in the first three months of 2005 compared to the same 
period of 2004 as a result of the following:

- Personnel and office overhead costs increased due to additional staff. 
These costs decreased $0.51 on a Boe basis.

- Public company costs increased mainly as a result of the reporting 
deadline for filing annual public documents being moved to Q1-2005 
compared to Q2-2004 and increased reporting requirements. These costs 
increased $0.26 on a Boe basis.

- Deferred financing costs increased due to the amortization of the loan 
agreement entered into in
Q4-2004. These costs increased $0.25 on a Boe basis.

- The strengthening of the Canadian dollar against the United States 
dollar increased G&A costs by $0.09 per Boe.

STOCK-BASED COMPENSATION

Effective January 1, 2004 the Company adopted the new accounting 
standard of the Canadian Institute of Chartered Accountants ("CICA") 
section 3870, "Stock-based Compensation and Other Stock-based Payments". 
This Canadian accounting standard requires the Company to record a 
compensation expense over the vesting period based on the fair value of 
options granted to employees and directors. Non-cash stock-based 
compensation expense amounted to $351,000 in Q1-2005 compared to 
$110,000 Q1-2004. The increase is mainly due to options granted in mid 
March 2004 and subsequent grants to new employees.

Based on stock option grants to date, it is expected that the effect on 
the balance of 2005 earnings will be approximately $180,000 with no 
effect on cash flow from operations.

DEPLETION, DEPRECIATION AND ACCRETION EXPENSE (DD&A)

/T/

                                  March 31, 2005      March 31, 2004
                                ----------------- -------------------
($000's, except Boe amounts)         $     $/Boe         $     $/Boe
---------------------------------------------------------------------
Republic of Yemen                3,245     8.66      1,138      5.46
Canada                             689     9.34        476     11.14
---------------------------------------------------------------------
                                 3,934     8.77      1,614      6.43
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

In Yemen, DD&A on a Boe basis increased 59% in Q1-2005 compared to 
Q1-2004 primarily as a result of an increased asset base as all the 
remaining costs associated with the Block S-1 major development project 
were included in the depletable base. In Q1-2004, major development 
project costs of $9,449,000 were excluded from the costs subject to 
depletion and depreciation representing a portion of the costs incurred 
in Block S-1.

In Canada, an impairment charge was recognized in Q1-2004 on costs 
associated with non-Yemen foreign assets in the amount $205,000 ($4.78 
per Boe). After considering this loss, DD&A on a Boe basis increased 47% 
to $9.34 per Boe in Q1-2005 compared to $6.36 per Boe in Q1-2004 
primarily as a result of:

- Increased finding and development costs in Canada in 2004 compared to 
the previous average which increases the ratio of the depletable asset 
base to reserves.

- Strengthening of the Canadian dollar against the United States dollar 
which increased DD&A $0.48 per Boe (7%) through currency conversion.

INCOME TAXES

Current income tax expense in Q1-2005 of $1,373,000 (Q1-2004 - $559,000) 
represents income taxes incurred and paid under the laws of the Republic 
of Yemen pursuant to the PSA's on Block 32 and Block S-1. The increase 
is primarily a result of production start up on Block S-1 and increased 
oil prices.

The future income tax expense of $207,000 in Q1-2005 relates to a 
non-cash expense for taxes to be incurred in the future as Canadian tax 
pools reverse. The Company has unrecognized future tax benefits in 
Canada in the amount of $595,000 which may be recognized in the future 
with continued drilling successes in Canada.

CAPITAL EXPENDITURES/DISPOSITIONS

/T/

Capital Expenditures
($000's)                              March 31, 2005  March 31, 2004
---------------------------------------------------------------------
Republic of Yemen                            $ 2,491         $ 1,260
Canada                                           912             800
Arab Republic of Egypt                           238               -
Total capital expenditures                   $ 3,641         $ 2,060
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Capital expenditures in Q1-2005 are mainly comprised of the following:

Block 32, Yemen ($587,000)

- Tasour facility upgrades and drilling three wells at Tasour.

Block S-1, Yemen ($1,897,000)

- Drilling costs associated with An Nagyah #14, Malaki #1, and the 
preliminary drilling costs of An Nagyah #15.

- Costs associated with the commercial development of the An Nagyah 
field.

- Workover costs for the re-completion of An Nagyah #2 and #3.

- Acidization and production testing equipment costs associated with 
Harmel #1 and #2.

Other, Yemen ($7,000)

- Block 72 geological and geophysical activity.

Canada ($912,000)

- Costs associated with completions and tie-ins as part of the 2004 
exploration and development program and initial preparation for the 2005 
drilling program to commence in Q2-2005.

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

- Costs associated with leasehold improvements and office furniture for 
the new head office.

Nuqra Block 1, Egypt ($238,000)

-  Mainly costs associated with geological and geophysical activity.

OUTSTANDING SHARE DATA

Common shares issued and outstanding as at April 29, 2005 are 57,575,939.

LIQUIDITY AND CAPITAL RESOURCES

Funding for the Company's capital expenditures in the first quarter of 
2005 was provided by cash flow from operations and working capital.

At March 31, 2005, the Company had working capital of $8,399,000, zero 
debt and an unutilized loan facility of $7,000,000. Working capital 
increased $5,560,000 from December 31, 2004. Accounts receivable 
decreased due primarily to Block S-1 revenue receivables decreasing 
$1,400,000. Block S-1 had two months of production receivable at 
December 31, 2004 compared to one month of production receivable at 
March 31, 2005. Accounts payable decreased due primarily to decreased 
costs billed in late 2004 related to the An Nagyah facility and pipeline 
at Block S-1, Yemen that were paid in Q1-2005 and less capital activity 
in Canada.

The Company expects to fund the balance of its 2005 exploration and 
development program (remaining budget of $29 million firm and 
contingent) through the use of working capital, cash flow and possible 
debt. The use of our credit facilities during 2005 is expected to remain 
within conservative guidelines of a debt to cash flow ratio of less than 
0.5:1. Equity financing may be utilized in the future to accelerate 
existing projects or to finance new opportunities. Fluctuations in 
commodity prices, product demand, foreign exchange rates, interest rates 
and various other risks may impact capital resources.

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/

                                Nine            Twelve Months
                              Months    -----------------------------
($000's)                        2005     2006    2007   2008    2009
---------------------------------------------------------------------

Office and equipment leases    $ 171    $ 258   $ 233  $ 326   $ 346
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

In March 2005, the Company entered into a contract to sell 2,000 
gigajoules (GJ) per day (approximately 2,000 Mcfpd) of natural gas in 
Canada from April 1 to April 30, 2005 and from June 1 to October 31, 
2005 for Cdn$6.95/GJ.

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

Upon the determination that proved recoverable reserves are 40 million 
barrels or greater for Block S-1, Yemen, the Company will be required to 
pay a finders' fee to third parties in the amount of $281,000.

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


/T/

Consolidated Statements of Income and Retained Earnings (Deficit)

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

                                         Three Months Ended March 31
                                                   2005         2004
---------------------------------------------------------------------

REVENUE
 Oil and gas sales, net of royalties           $ 13,544     $  5,868
 Other income                                         5            3
---------------------------------------------------------------------
                                                 13,549        5,871
---------------------------------------------------------------------

EXPENSES
 Operating                                        2,451        1,127
 General and administrative                         734          319
 Stock-based compensation                           351          110
 Foreign exchange (gain) loss                        (8)         (21)
 Depletion, depreciation and accretion            3,934        1,614
---------------------------------------------------------------------
                                                  7,462        3,149
---------------------------------------------------------------------
Income before income taxes                        6,087        2,722
---------------------------------------------------------------------
Income taxes - future                               207            -
             - current                            1,373          559
---------------------------------------------------------------------
                                                  1,580          559
---------------------------------------------------------------------
NET INCOME                                        4,507        2,163
Retained Earnings (Deficit),
 beginning of period                               (685)      (6,604)
---------------------------------------------------------------------
RETAINED EARNINGS (DEFICIT), END OF PERIOD     $  3,822     $ (4,441)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income per basic and diluted share
 (Note 5)                                      $   0.08     $   0.04
---------------------------------------------------------------------
---------------------------------------------------------------------


Consolidated Balance Sheets

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

                                               March 31, December 31,
                                                   2005         2004
---------------------------------------------------------------------

ASSETS
Current
 Cash and cash equivalents                     $  7,506     $  4,988
 Accounts receivable                              5,068        6,029
 Oil inventory                                      240          389
 Prepaid expenses                                   220          274
---------------------------------------------------------------------
                                                 13,034       11,680
---------------------------------------------------------------------
Property and equipment
 Republic of Yemen                               25,343       26,054
 Canada                                          19,232       19,111
 Arab Republic of Egypt                           1,230          992
---------------------------------------------------------------------
                                                 45,805       46,157
Future income tax asset                           2,075        2,299
Deferred financing costs                            318          386
---------------------------------------------------------------------
                                               $ 61,232     $ 60,522
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES
Current
 Accounts payable and accrued liabilities      $  4,635     $  8,841

Asset retirement obligations (Note 3)               911          902
---------------------------------------------------------------------
                                                  5,546        9,743
---------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital (Note 4)                           47,568       47,296
Contributed surplus                               1,884        1,593
Cumulative translation adjustment                 2,412        2,575
Retained Earnings (Deficit)                       3,822         (685)
---------------------------------------------------------------------
                                                 55,686       50,779
---------------------------------------------------------------------
                                               $ 61,232     $ 60,522
---------------------------------------------------------------------
---------------------------------------------------------------------


Consolidated Statements of Cash Flows

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

                                         Three Months Ended March 31
                                                   2005         2004
---------------------------------------------------------------------
CASH FLOWS RELATED TO THE
 FOLLOWING ACTIVITIES:

OPERATING
 Net income                                     $ 4,507      $ 2,163
 Adjustments for:
  Depletion, depreciation and accretion           3,934        1,614
  Stock-based compensation                          351          110
  Future income taxes                               207            -
  Amortization of deferred financing charges         71            -
---------------------------------------------------------------------
 Cash flow from operations                        9,070        3,887
 Changes in non-cash working capital              2,071       (1,509)
---------------------------------------------------------------------
                                                 11,141        2,378
---------------------------------------------------------------------

FINANCING
 Issue of share capital                             212           85
 Deferred financing costs                            (2)           -
 Changes in non-cash working capital                (24)           -
---------------------------------------------------------------------
                                                    186           85
---------------------------------------------------------------------

INVESTING
 Exploration and development expenditures
  Republic of Yemen                              (2,491)      (1,260)
  Canada                                           (912)        (800)
  Arab Republic of Egypt                           (238)           -
 Changes in non-cash working capital             (5,160)          (3)
---------------------------------------------------------------------
                                                 (8,801)      (2,063)
---------------------------------------------------------------------

Effect of exchange rate changes on cash
 and cash equivalents                                (8)           -
---------------------------------------------------------------------

NET INCREASE IN CASH AND CASH EQUIVALENTS         2,518          400
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    4,988        4,452
---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD        $ 7,506      $ 4,852
---------------------------------------------------------------------
---------------------------------------------------------------------
Supplemental Disclosure of Cash Flow
 Information
 Cash interest paid                             $     -      $     -
 Cash taxes paid - Yemen                        $ 1,373      $   559
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Notes to the Consolidated Financial Statements

(Unaudited - Expressed in U.S. Dollars)

1. Basis of presentation

The interim consolidated financial statements of TransGlobe Energy 
Corporation ("TransGlobe" or the "Company") for the three month periods 
ended March 31, 2005 and 2004 have been prepared by management in 
accordance with accounting principles generally accepted in Canada on 
the same basis as the audited consolidated financial statements as at 
and for the year ended December 31, 2004, except as outlined in Note 2. 
These interim consolidated financial statements should be read in 
conjunction with the consolidated financial statements and the notes 
thereto in TransGlobe's annual report for the year ended December 31, 
2004.

2. Changes in accounting policies

Effective January 1, 2005, CICA Accounting Guideline AcG-15 
"Consolidation of Variable Interest Entities" was adopted by the 
Company. AcG-15 defines a variable interest entity ("VIE") as a legal 
entity in which either the total equity at risk is not sufficient to 
permit the entity to finance its activities without additional 
subordinated financial support provided by other parties or the equity 
owners lack a controlling financial interest. The guideline requires the 
enterprise which absorbs the majority of a VIE's expected gains or 
losses, the primary beneficiary, to consolidate the VIE.

The adoption of AcG-15 had no effect on the Company's financial position 
or results of operations.

3. Asset retirement obligations

The following table presents the reconciliation of the beginning and 
ending obligations associated with the retirement of oil and gas 
properties:

/T/

(000's)
---------------------------------------------------------------------
Asset retirement obligations, December 31, 2004                $ 902
Liabilities incurred during period                                 -
Liabilities settled during period                                  -
Accretion                                                         14
Foreign exchange gain                                             (5)
---------------------------------------------------------------------
Asset retirement obligations, March 31, 2005                   $ 911
---------------------------------------------------------------------

/T/

At March 31, 2005, the estimated total undiscounted amount required to 
settle the asset retirement obligations was $1,322,000 (2004 - 
$1,331,000). These obligations will be settled at the end of the useful 
lives of the underlying assets, which currently extend up to 10 years 
into the future. This amount has been discounted using a credit-adjusted 
risk-free interest rate of 6.5%.

4. Share capital

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

/T/

Continuity of common shares (000's)                 Shares    Amount
---------------------------------------------------------------------
Balance, December 31, 2004                          57,176  $ 47,296
Share options exercised                                400       212
Stock-based compensation related to share
 options exercised                                                60
---------------------------------------------------------------------
Balance, March 31, 2005                             57,576  $ 47,568
---------------------------------------------------------------------
---------------------------------------------------------------------

                                                            Weighted
                                                             Average
                                                    Number  Exercise
Continuity of stock options (000's)             of Options     Price
---------------------------------------------------------------------
Balance, December 31, 2004                           3,462      1.13
Granted                                                 80      6.25
Exercised                                             (400)     0.43
---------------------------------------------------------------------
Balance, March 31, 2005                              3,142      1.36
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

Stock-based compensation

Compensation expense of $351,000 has been recorded in the Consolidated 
Statements of Income and Retained Earnings (Deficit) in 2005 (2004 - 
$110,000). The fair values of all common share options granted are 
estimated on the date of grant using the Black-Scholes option-pricing 
model. The weighted average fair market value of options granted during 
the first quarter 2005 and the assumptions used in their determination 
are as noted below:

/T/

                                                  Three Months Ended
                                                      March 31, 2005
---------------------------------------------------------------------
Weighted average fair market value per option (Cdn$)            3.88
Risk-free interest rate (percent)                               3.75
Expected life (years)                                           4.00
Volatility (percent)                                           64.00
Expected annual dividend per share                                 -
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

5. Per share amounts

The weighted average number of common shares and diluted common shares 
outstanding during the three months ended March 31, 2005 was 57,250,000 
(2004 - 54,049,000) and 60,040,000 (2004 - 56,089,000), respectively.

/T/

6. Segmented information

                                         Three Months Ended March 31
(000's)                                            2005         2004
---------------------------------------------------------------------
Oil and gas sales, net of royalties
 Republic of Yemen                             $ 11,355     $  4,766
 Canada                                           2,189        1,102
---------------------------------------------------------------------
                                                 13,544        5,868
Operating expenses
 Republic of Yemen                                2,051          862
 Canada                                             400          265
---------------------------------------------------------------------
                                                  2,451        1,127
Depletion, depreciation and accretion
 Republic of Yemen                                3,245        1,138
 Canada                                             689          476
---------------------------------------------------------------------
                                                  3,934        1,614
---------------------------------------------------------------------
Segmented operations
 Republic of Yemen                                6,059        2,766
 Canada                                           1,100          361
---------------------------------------------------------------------
                                                  7,159        3,127
Other income                                          5            3
General and administrative                          734          319
Stock-based compensation                            351          110
Foreign exchange (gain) loss                         (8)         (21)
Income taxes                                      1,580          559
---------------------------------------------------------------------
Net income                                     $  4,507     $  2,163
---------------------------------------------------------------------
---------------------------------------------------------------------

/T/

7. Commitments

In March 2005, the Company entered into a contract to sell 2,000 
gigajoules (GJ) per day (approximately 2,000 Mcfpd) of natural gas in 
Canada from April 1 to April 30, 2005 and from June 1 to October 31, 
2005 for Cdn$6.95/GJ.

The above includes certain statements that may be deemed to be 
"forward-looking statements" within the meaning of the U.S. Private 
Securities Litigation Reform Act of 1995. All statements in this 
release, other than statements of historical facts, that address future 
production, reserve potential, exploration drilling, exploitation 
activities and events or developments that the Company expects are 
forward-looking statements. Although TransGlobe believes the 
expectations expressed in such forward-looking statements are based on 
reasonable assumptions, such statements are not guarantees of future 
performance and actual results or developments may differ materially 
from those in the forward-looking statements. Factors that could cause 
actual results to differ materially from those in forward-looking 
statements include oil and gas prices, exploitation and exploration 
successes, continued availability of capital and financing, and general 
economic, market or business conditions.

/T/

TRANSGLOBE ENERGY CORPORATION

s/s David Ferguson

David C. Ferguson
Vice President, Finance & C.F.O.

/T/

-30-

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

or

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

or

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

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