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Release

TransGlobe Energy Corporation First Interim Report for the Three Months Ended March 31, 2004

CALGARY, ALBERTA--(CCNMatthews - Apr 29, 2004) - TransGlobe 
Energy Corporation ("TransGlobe" or the "Company") is pleased to 
announce its financial and operating results for the three month 
period ended March 31, 2004. All dollar values are expressed in 
United States dollars unless otherwise stated. Conversion of 
natural gas to oil is made on the basis of 6,000 cubic feet of 
natural gas being equivalent to one barrel of oil. 

HIGHLIGHTS 

- Production of 2,760 Boepd in Q1-2004 

- Cash flow of $3.88 million in Q1-2004 

- An Nagyah pool extended by An Nagyah # 5, Block S-1 

- Block S-1 early production facilities installed Q-1 

- Trucking oil from An Nagyah #4 and An Nagyah #5 


/T/

FINANCIAL AND OPERATING UPDATE
(Expressed in thousands of U.S. Dollars, except per share and
 volume amounts)

                                        Three Months Ended March 31
                                      -----------------------------
Financial                                2004        2003    Change
-------------------------------------------------------------------
Oil and gas sales, net of royalties     5,868       4,375        34%
Operating expense                       1,127         776        45%
General and administrative expense        429         274        57%
Depletion and depreciation              1,614       1,466        10%
Income taxes                              559         429        30%
Cash flow from operations               3,887       2,891        34%
 Basic and diluted per share             0.07        0.06
Net income                              2,163       1,425        52%
 Basic and diluted per share             0.04        0.03
Capital expenditures                    2,060       3,271       (37)%
Working capital                         4,449       4,367         2%
Common shares outstanding
 Basic (weighted average)              54,049      51,515         5%
 Diluted (weighted average)            56,089      52,539         7%

Production
-------------------------------------------------------------------
Oil and liquids (Bpd)                   2,425       2,356         3%
 Average price ($ per barrel)           31.39       29.73         6%
Gas (Mcfpd)                             2,008         966       108%
 Average price ($ per Mcf)               5.27        5.56        (5)%
Total (Boed) (6 : 1)                    2,760       2,517        10%
Operating expense ($ per Boe)            4.49        3.44        31%

/T/

EXPLORATION UPDATE 

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

In late 2003, the Block 32 Joint Venture Group approved a 100 
square kilometer 3-D seismic acquisition survey over the greater 
Tasour area to refine future drilling locations. Field 
acquisition of data commenced in the 1st quarter and is expected 
to finish by early May. It is anticipated that the 3-D seismic 
data will be processed and interpreted by late June 2004.  
Further development/appraisal drilling of three to four wells in 
the western and potential eastern extension is planned for the 
second half of 2004.  Also, one infill well (Tasour #12) is 
planned for the central Tasour pool, with drilling expected to 
commence in mid May 2004. 

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

During the quarter, the first development/appraisal well of the 
2004 program (An Nagyah #5) commenced drilling on the western 
area of the An Nagyah field on March 8, 2004. An Nagyah #5 was 
drilled to a total depth of 1,300 meters and completed as an 
Upper Lam 'A' oil producer. The well flow tested at a rate of 
1,150 Bopd of 45 degree API oil. The second development/appraisal 
well (An Nagyah #6), positioned between An Nagyah #2 and An 
Nagyah # 4, commenced drilling on April 7, 2004. An Nagyah #6 was 
drilled to a total depth of 1,207 meters and completed as an 
Upper Lam 'A' oil producer. The well flow tested at a rate of 
1,140 Bopd of 42 degree API oil. The well is being equipped for 
early production via trucking which is expected to commence in 
early May. The drilling rig is being moved to the An Nagyah #7 
location to further appraise the western extension of the field. 
It is expected the An Nagyah #7 will commence drilling in early 
May. Following An Nagyah #7, it is expected the drilling rig will 
be move to Harmel #2 to appraise the shallow depth, medium 
gravity oil discovered in Harmel #1. Additional development wells 
in the An Nagyah pool are expected to be drilled in the third and 
fourth quarters of 2004 and into 2005. 

The early production (trucking) facilities at the An Nagyah field 
were installed during the first quarter 2004 and field production 
operations commenced on An Nagyah #4 on March 28, 2004. With the 
addition of An Nagyah #5 in April, production has been increased 
to approximately 2,000 Bopd. With the addition of An Nagyah #6 in 
May it is anticipated that production will increase to 2,500 Bopd 
(approximately 625 Bopd to TransGlobe) as the trucking operation 
is expanded. The oil production is currently being trucked 18 
miles to the Jannah Hunt facility where it is blended with the 
Marib light crude and transported by pipeline to the Ras Isa 
loading terminal on the Red Sea. 

The construction of a central production facility ("CPF") at An 
Nagyah and a 28 kilometer (18 mile) pipeline to the Jannah Hunt 
Halewah export pipeline is planned during 2004, with an 
anticipated completion by early 2005. The pipeline design was 
increased from an 8 inch to a 10 inch pipeline to allow future 
discoveries to be placed on stream quickly (ultimate capacity of 
80,000 Bopd). The CPF is designed for an initial capacity of 
10,000 Bopd (2,500 Bopd to TransGlobe), with expansion 
capabilities. The detailed engineering bids were received and the 
contract is expected to be awarded by late April/early May. Bid 
requests for long lead time major equipment have been issued and 
will be awarded during the 2nd Quarter of 2004. 

Canada 

During the 1st quarter the Company participated in drilling 1 
(0.18 net) gas well at Nevis, which is expected to be completed 
and tied in during the 2nd quarter. TransGlobe plans to drill 
thirteen additional wells during 2004. The wells will be drilled 
after spring breakup (April/May), during the summer months when 
it is expected that drilling equipment and services will be 
available at better prices. Traditionally, the winter months 
(December through March) are the busiest and most expensive time 
to conduct drilling operations. Drilling commenced at Morningside 
on April 26 and it is expected that drilling will commence at 
Nevis and Lone Pine as two additional rigs are mobilized in early 
May. All of the prospects are natural gas focused and are located 
in Central Alberta, which generally affords year round access. 

Production averaged 470 Boepd during the 1st quarter of 2003. An 
additional 470 Boepd of production at Nevis, Twining and 
Morningside is awaiting installation of pipelines and facilities. 
Permits and approvals have been obtained for the majority of the 
projects and field work is expected to commence in May/June. It 
is anticipated that these projects could be on production 
June/July of 2004. 

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

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


/T/

SELECTED QUARTERLY FINANCIAL INFORMATION

(US$000's, except        Mar. 31  Dec. 31  Sept. 30  June 30  Mar. 31
 per share amounts)         2004     2003      2003     2003     2003
---------------------------------------------------------------------
Oil and gas sales,
 net of royalties          5,868    4,488     4,159    4,139    4,375

Cash flow from
 operations                3,887    1,894     2,193    2,369    2,891
Cash flow from
 operations per share
 - Basic and Diluted        0.07     0.04      0.04     0.05     0.06

Net income                 2,163    3,414       291      776    1,425
Net income per share
 - Basic and Diluted        0.04     0.06      0.01     0.01     0.03

Total assets              35,753   35,601    29,212   28,024   26,523
---------------------------------------------------------------------

/T/

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

RESULTS OF OPERATIONS 

Net income for the three months ended March 31, 2004 was 
$2,163,000 ($0.04 per share, basic and diluted) compared to a net 
income of $1,425,000 ($0.03 per share, basic and diluted) in the 
comparable period 2003. Cash flow from operations for the three 
months ended March 31, 2004 was $3,887,000 ($0.07 per share, 
basic and diluted) compared to $2,891,000 ($0.06 per share, basic 
and diluted) in the comparable period in 2003. 

Net income and cash flow from operations increased 52% and 34% 
respectively. The following is a brief summary of the primary 
changes that occurred during Q1-2004 that will be discussed in 
more detail throughout this MD&A: 

- 10% higher production volumes 

- 5% higher commodity prices 

- Royalty costs decreased in Q1-2004 compared to Q1-2003 as a 
result of cost oil reallocation on  Block 32, Yemen in Q1-2003 of 
approximately $902,000. 


/T/

OPERATING RESULTS

Daily Production, Working Interest before royalties

                                           Mar. 31,  Mar. 31,      %
                                              2004      2003  Change
--------------------------------------------------------------------
Yemen    - Oil                      Bopd     2,290     2,307      (1)
Canada   - Oil and liquids          Bopd       135        49     176
         - Gas                     Mcfpd     2,008       966     108
--------------------------------------------------------------------
Barrels of oil equivalent (6 : 1)  Boepd     2,760     2,517      10
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

The Company has set an average production target of 3,400 Boepd 
for 2004 representing a 30% increase over 2003. 


/T/

Consolidated Net Operating Results
                                           Consolidated
                               -------------------------------------
                                  Mar. 31, 2004        Mar. 31, 2003
(US$000's, except              -------------------------------------
 per Boe amounts)                  $      $/Boe         $      $/Boe
--------------------------------------------------------------------
Oil and gas sales              7,897      31.44     6,817      30.08
Royalties                      2,029       8.08     2,442      10.77
Operating expenses             1,127       4.49       776       3.42
--------------------------------------------------------------------
Net operating income(1)        4,741      18.87     3,599      15.89
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) Net operating income amounts do not reflect Yemen income tax
    expense which is paid through oil allocations with Ministry
    of Oil and Minerals (MOM) in the Republic of Yemen
    (Q1-2004 - $559,000 $2.23/Boe; Q1-2003 - $429,000, $1.89/Boe).

Segmented Net Operating Results

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

Republic of Yemen

                                  Mar. 31, 2004        Mar. 31, 2003
(US$000's, except              -------------------------------------
 per Boe amounts)                  $      $/Boe         $      $/Boe
--------------------------------------------------------------------
Oil sales                      6,577      31.56     6,174      29.74
Royalties                      1,811       8.69     2,344      11.29
Operating expenses               862       4.14       638       3.07
--------------------------------------------------------------------
Net operating income(1)        3,904      18.73     3,192      15.38
--------------------------------------------------------------------
--------------------------------------------------------------------

(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 (Q1-2004 - $559,000, $2.68/Boe; Q1-2003 -
    $429,000, $2.07/Boe.)

Net operating income in Yemen increased 22% in the first three months
of 2004 compared to the same period of 2003 primarily as a result of
the following:

- Oil prices increased 6%

- Royalty costs decreased 23% as a result of the following:

  1. In Q1-2003, TransGlobe had a cost oil reallocation between the
     Block 32 Joint Venture Group that increased its royalty costs by
     $902,000 ($4.34/Boe).

  2. Royalty costs are higher in Q1-2004 on a Boe basis (after
     adjusting for cost oil reallocation) as a result of higher
     commodity prices and lower cost oil (increased production
     sharing oil).

- Operating expenses increased 35% on a Boe basis as a result of an
  increase in the cost of the Transportation and Facilities Usage
  Contract with the MOM which allowed for a $0.40 increase in the
  export pipeline tariff following recovery of all historical costs.
  Increases in workover expenses on the wells and additional fluid
  handling expenses also contributed.

/T/

The Block 32 Production Sharing agreement allows for the recovery 
of operating costs and capital costs from oil production. 
Operating costs are recovered in the quarter expended. The 
capital costs are amortized over two years with 50% recovered in 
the quarter expended and the remaining 50% recovered in the first 
quarter of the following calendar year. The Company will receive 
a larger share of production in the first quarter of each year as 
50% of the previous year's historical costs are recovered. The 
amount of oil required to recover capital and operating costs 
will vary depending upon the prevailing oil prices. The Company 
received 65% of its working interest share of production (after 
royalty and tax) in the first quarter of 2004. The Company 
expects to receive between 40% to 48% of its working interest 
share of production in the balance of the year depending upon 
production volumes, oil prices, operating costs and eligible 
capital expenditures. 


/T/

Canada
                                  Mar. 31, 2004        Mar. 31, 2003
(US$000's, except              -------------------------------------
 per Boe amounts)                  $      $/Boe         $      $/Boe
--------------------------------------------------------------------
Oil sales                        188      31.16        84      29.76
Gas sales (6 : 1)                963      31.62       484      33.36
NGL sales                        161      25.75        44      26.58
Other sales                        8          -        31          -
--------------------------------------------------------------------
                               1,320      30.86       643      33.88
Royalties                        218       5.11        98       5.14
Operating expense                265       6.18       138       7.25
--------------------------------------------------------------------
Net operating income             837      19.57       407      21.49
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

Net operating income in Canada increased 106% in the first three 
months of 2004 compared to the same period of 2003 primarily as a 
result of the following: 

- Production volumes increased 125% as a direct result of the 
2003 drilling program. 

- Gas prices decreased 5% to average $5.27 per Mcf in Q1-2004 
compared to $5.56 per Mcf in Q1-2003 while oil prices increased 
5% and natural gas liquids prices decreased 3% compared to 
Q1-2003. 

- Royalty costs increased 122% mainly as a result of increased 
production volumes. 

- Operating expenses decreased 15% ($1.07) on a Boe basis mainly 
as a result of increased volumes reducing the effect of fixed 
operating costs associated with low volumes. The strengthening of 
the Canadian dollar increased the operating costs in Canada by 
$0.79 per Boe through currency conversion in comparison to 
Q1-2003. 


/T/

GENERAL AND ADMINISTRATIVE EXPENSES

                                  Mar. 31, 2004        Mar. 31, 2003
(US$000's, except              -------------------------------------
 per Boe amounts)                  $      $/Boe         $      $/Boe
--------------------------------------------------------------------
G&A (gross)                      608       2.42       372       1.64
Capitalized G&A                 (164)     (0.65)      (93)     (0.41)
Overhead recoveries              (15)     (0.06)       (5)     (0.02)
--------------------------------------------------------------------
G&A (net)                        429       1.71       274       1.21
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

General and administrative expenses increased 57% and increased 
41% on a Boe basis in the first three months of 2004 compared to 
the same period of 2003 as a result of the following: 

- Effective January 1, 2004 the Company adopted the 
recommendations of CICA section 3870, "Stock-based Compensation 
and Other Stock-based Payments", retroactively without 
restatement of prior periods. The recommendations require the 
Company to record a compensation expense over the vesting period 
based on the fair value of options granted to employees and 
directors since January 1, 2002. Stock compensation expense is 
included in general and administrative expenses. Non-cash stock 
compensation expense amounted to $110,000 for the period 
($0.44/Boe). 

- Other increases were experienced in costs associated with 
public company administration and listing expenses. 

- The strengthening of the Canadian dollar against the United 
States dollar increased G&A costs by $0.20 per Boe through 
currency conversion. 

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


/T/

DEPLETION AND DEPRECIATION EXPENSE

                                  Mar. 31, 2004        Mar. 31, 2003
(US$000's, except              -------------------------------------
 per Boe amounts)                  $      $/Boe         $      $/Boe
--------------------------------------------------------------------
Republic of Yemen              1,138       5.46     1,353       6.52
Canada                           476      11.14       113       5.95
--------------------------------------------------------------------
                               1,614       6.43     1,466       6.47
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

In Yemen unproven properties in the amount of $9,449,000 were 
excluded from costs subject to depletion and depreciation. This 
represents a portion of the costs incurred in Block S-1. These 
costs will be included in the depletable base as Block S-1 is 
developed or as impairment is determined. 

In Yemen, depletion and depreciation on a Boe basis decreased 16% 
to $5.46 per Boe in Q1-2004 from $6.52 in Q1-2003 primarily as a 
result of the following: 

- Increase in the Yemen Proved reserves resulted in a lower 
depletion rate. 

In Canada, depletion and depreciation on a Boe basis increased 
87% to $11.14 per Boe in Q1-2004 from $5.95 in Q1-2003 primarily 
as a result of the following: 

- An impairment charge was recognized on costs associated with 
non-Yemen foreign assets in the amount of $205,000 ($4.78/Boe). 

- The strengthening of the Canadian dollar against the United 
States dollar increased the Canadian depletion and depreciation 
by $0.53 per Boe through currency conversion. 

INCOME TAXES 

Current income tax expense in Q1-2004 of $559,000 (Q1-2003 - 
$429,000) represents income taxes incurred and paid under the 
laws of the Republic of Yemen pursuant to the PSA on Block 32. 
The increase is a result of increased oil prices and an increase 
in the Yemen government's share as a result of recovery of all 
historical costs. The Yemen government's share of production 
sharing oil includes royalties and income taxes. 

The Company has unrecognized future tax benefits in Canada in the 
amount of $1,642,000 which may be recognized in the future with 
continued drilling successes in Canada. 


/T/

CAPITAL EXPENDITURES/DISPOSITIONS

Capital Expenditures
(US$000's)                        Mar. 31, 2004        Mar. 31, 2003
--------------------------------------------------------------------
Republic of Yemen                       $ 1,260              $ 2,969
Canada                                      800                  302
--------------------------------------------------------------------
Total capital expenditures              $ 2,060              $ 3,271
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

Capital expenditures in Q1-2004 include Yemen, Block 32 - 
$195,000, Block S-1 $1,057,000 and Canada - $800,000 which are 
primarily comprised of the following: 

Block 32 

- 3-D seismic program and Tasour facility upgrades. 

Block S-1 

- Drilling and completion of An Nagyah #5, An Nagyah Early 
Production Facilities and costs associated with commercial 
development of An Nagyah. 

Canada 

- Costs mainly related to completing and tie ins associated with 
the 2003 drilling program and initial preparation for the 2004 
drilling program to commence in Q2-2004. 

- Oil and gas lease acquisitions associated with the 2004 
exploration and development program. 

OUTSTANDING SHARE DATA 

Common Shares issued and outstanding as at April 28, 2004 are 
54,096,439. 

LIQUIDITY AND CAPITAL RESOURCES 

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

At March 31, 2004 the Company had working capital of $4,449,000, 
zero debt and a revolving credit facility of Cdn$2,500,000 and an 
acquisition/development credit facility of Cdn$2,000,000. The 
Company expects to expand its available credit facilities during 
the second quarter of 2004. 

The Company expects to fund the balance of its 2004 exploration 
and development program (budgeted at $20 million firm and 
contingent) through the use of working capital, cash flow, debt 
and equity financing as required. The use of our credit 
facilities during 2004 is expected to remain within conservative 
guidelines of a debt to cash flow ratio of less than 1 : 1. 

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/

                                                  Twelve Months
                                            ------------------------
                               Nine Months
(US$000's)                            2004     2005     2006    2007
--------------------------------------------------------------------

Office and equipment leases          $ 106    $ 141    $ 142    $ 47
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

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

In December 2003, the Company issued flow through shares with 
terms providing that the Company renounce Canadian tax deductions 
in the amount of Cdn$3,000,000 to subscribers with the entire 
amount to be expended by the Company by December 31, 2004. 


/T/

Consolidated Statements of Income and Deficit

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


                                         Three Months Ended March 31
                                                2004            2003
--------------------------------------------------------------------
                                                     (Restated Notes
                                                             2 and 3)
REVENUE
 Oil and gas sales, net of royalties       $   5,868      $    4,375
 Other income                                      3               1
--------------------------------------------------------------------
                                               5,871           4,376
--------------------------------------------------------------------

EXPENSES
 Operating                                     1,127             776
 General and administrative                      429             274
 Foreign exchange (gain) loss                    (21)              6
 Depletion, depreciation and accretion         1,614           1,466
--------------------------------------------------------------------
                                               3,149           2,522
--------------------------------------------------------------------
Income before income taxes                     2,722           1,854
Income taxes - current                           559             429
--------------------------------------------------------------------
NET INCOME                                     2,163           1,425
Deficit, beginning of period                  (6,393)        (12,298)
Retroactive application of changes
 in accounting policies (Notes 2 and 3)         (211)             72
--------------------------------------------------------------------
Deficit, beginning of period, as restated     (6,604)         12,226
--------------------------------------------------------------------
DEFICIT, END OF PERIOD                     $  (4,441)     $  (10,801)
--------------------------------------------------------------------
--------------------------------------------------------------------
Net income per basic and diluted
 share (Note 5)                            $    0.04      $     0.03
--------------------------------------------------------------------
--------------------------------------------------------------------


Consolidated Balance Sheets

(Expressed in thousands of U.S. Dollars)

                                            March 31,    December 31,
                                                2004            2003
--------------------------------------------------------------------
                                          (Unaudited)      (Restated
                                                       Notes 2 and 3)
ASSETS
Current
 Cash and cash equivalents                  $  4,852        $  4,452
 Accounts receivable                           1,713           2,383
 Prepaid expenses                                129             161
--------------------------------------------------------------------
                                               6,694           6,996
Property and equipment
 Republic of Yemen                            18,685          18,563
 Canada                                        8,802           8,470
--------------------------------------------------------------------
                                              27,487          27,033
Future income tax asset                        1,572           1,572
--------------------------------------------------------------------
                                            $ 35,753        $ 35,601
--------------------------------------------------------------------
--------------------------------------------------------------------

LIABILITIES
Current
 Accounts payable and accrued liabilities   $  2,245        $  4,459
Asset retirement obligations (Note 3)            475             467
--------------------------------------------------------------------
                                               2,720           4,926
--------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital (Note 4)                        37,081          36,996
Contributed surplus (Note 2)                     393               -
Deficit (Note 2)                              (4,441)         (6,321)
--------------------------------------------------------------------
                                              33,033          30,675
--------------------------------------------------------------------
                                            $ 35,753        $ 35,601
--------------------------------------------------------------------
--------------------------------------------------------------------


Consolidated Statements of Cash Flows

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

                                         Three Months Ended March 31
                                                2004            2003
--------------------------------------------------------------------

CASH FLOWS RELATED TO THE
 FOLLOWING ACTIVITIES:
OPERATING
 Net income                                  $ 2,163         $ 1,425
 Adjustments for
  Depletion, depreciation and accretion        1,614           1,466
  Stock-based compensation (Note 2)              110               -
--------------------------------------------------------------------
 Cash flow from operations                     3,887           2,891
 Changes in non-cash working capital          (1,509)          2,188
--------------------------------------------------------------------
                                               2,378           5,079
--------------------------------------------------------------------
FINANCING
 Issue of share capital                           85              38
 Repurchase of share capital                       -             (41)
--------------------------------------------------------------------
                                                  85              (3)
--------------------------------------------------------------------
INVESTING
 Exploration and development expenditures
  Republic of Yemen                           (1,260)         (2,969)
  Canada                                        (800)           (302)
 Changes in non-cash working capital              (3)             80
--------------------------------------------------------------------
                                              (2,063)         (3,191)
--------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS        400           1,885
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                           4,452           2,595
--------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD     $ 4,852         $ 4,480
--------------------------------------------------------------------
--------------------------------------------------------------------
Supplemental Disclosure of Cash Flows
 Cash interest paid                          $     -         $     -
 Cash taxes paid - Yemen                     $   559         $   429
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

Notes to the Consolidated Financial Statements 

(Unaudited - Expressed in thousands of 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, 2004 and 2003 have been prepared by 
management in accordance with accounting principles generally 
accepted in Canada on the same basis as the audited consolidated 
financial statements as at and for the year ended December 31, 
2003, except as outlined in Note 2. These interim consolidated 
financial statements should be read in conjunction with the 
consolidated financial statements and the notes thereto in 
TransGlobe's annual report for the year ended December 31, 2003. 

2. Changes in Accounting Policies 

(a) Asset Retirement Obligations 

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

(b) Stock-based Compensation 

Effective January 1, 2004 the Company adopted the recommendations 
of CICA section 3870, "Stock-based Compensation and Other 
Stock-based Payments", retroactively without restatement of prior 
periods. The recommendations require the Company to record a 
compensation expense over the vesting period based on the fair 
value of options granted to employees and directors on or after 
January 1, 2002. Stock-based compensation expense is included in 
general and administrative expenses. This change resulted in an 
increase to opening deficit of $283,000, an increase to opening 
contributed surplus of $283,000 and an expense in the quarter of 
$110,000. 

(c) Property and Equipment - Oil and Gas 

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

(d) Impairment of Long-lived Assets 

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

3. Asset Retirement Obligations 

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


/T/

Consolidated Balance Sheet - as at December 31, 2003

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

Consolidated Statement of Income and Deficit -
Three months ended March 31, 2003

(000's)                            As Reported   Change  As Restated
--------------------------------------------------------------------
Depletion, depreciation and
 accretion                            $  1,466    $   -     $  1,466
Net income                               1,425        -        1,425
--------------------------------------------------------------------

/T/

At March 31, 2004, the estimated total undiscounted amount 
required to settle the asset retirement obligations was 
$1,027,000. 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%. 


/T/

Changes to asset retirement obligations were as follows:

                                                        Three months
                                                      ended March 31,
(000's)                                                         2004
--------------------------------------------------------------------
Asset retirement obligations, December 31, 2003                $ 467
Liabilities incurred during period                                 -
Liabilities settled during period                                  -
Accretion                                                          8
--------------------------------------------------------------------
Asset retirement obligations, March 31, 2004                   $ 475
--------------------------------------------------------------------

4. Share capital

The Company is authorized to issue 500,000,000 common shares
with no par value.

Continuity of common shares (000's)                     2004
--------------------------------------------------------------------
--------------------------------------------------------------------
                                               Shares         Amount
--------------------------------------------------------------------
Balance, December 31, 2003                     53,743       $ 36,996
Share options exercised                           348             85
--------------------------------------------------------------------
Balance, March 31, 2004                        54,091       $ 37,081
--------------------------------------------------------------------
--------------------------------------------------------------------

Continuity of stock options (000's)                             2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Balance, December 31, 2003                                     2,759
Granted                                                        1,020
Exercised                                                       (348)
--------------------------------------------------------------------
Balance, March 31, 2004                                        3,431
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

Stock-based Compensation 

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 and the assumptions used in their 
determination are as noted below: 


/T/

                                                        Three months
                                                               ended
                                                      March 31, 2004
--------------------------------------------------------------------
Weighted average fair market value per option (Cdn$)           $1.81
Risk-free interest rate (percent)                               5.40
Expected life (years)                                           4.00
Volatility (percent)                                           69.33
Expected annual dividend per share                              0.00
--------------------------------------------------------------------

/T/

5. Per share amounts 

The weighted average number of common shares and diluted common 
shares outstanding during the three months ended March 31, 2004 
was 54,049,000 (2003 - 51,515,000) and 56,089,000 (2003 - 
52,539,000), respectively. 


/T/

6. Segmented information

                                         Three Months Ended March 31
(000's)                                          2004           2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Oil and gas sales, net of royalties
 Republic of Yemen                            $ 4,766        $ 3,830
 Canada                                         1,102            545
--------------------------------------------------------------------
                                                5,868          4,375
Operating expenses
 Republic of Yemen                                862            638
 Canada                                           265            138
--------------------------------------------------------------------
                                                1,127            776
Depletion, depreciation and accretion
 Republic of Yemen                              1,138          1,353
 Canada                                           476            113
--------------------------------------------------------------------
                                                1,614          1,466
--------------------------------------------------------------------
Segmented operations                            3,127          2,133
Other income                                        3              1
General and administrative                        429            274
Foreign exchange (gain) loss                      (21)             6
Income taxes                                      559            429
--------------------------------------------------------------------
Net income                                    $ 2,163        $ 1,425
--------------------------------------------------------------------
--------------------------------------------------------------------

/T/

This release includes certain statements that may be deemed to be 
"forward-looking statements" within the meaning of the US 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 Ross Clarkson

Ross G. Clarkson,
President & C.E.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

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