---



Exhibit 99.1



TRANSGLOBE ENERGY CORPORATION

ANNUAL INFORMATION FORM

Year Ended December 31, 2010

****

****

March 18, 2011

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2

TABLE OF CONTENTS

|                                                                   | Page
|------------------------------------------------------------------ | ----
|                                                                   |     
|CURRENCY
      AND EXCHANGE RATES                                  | 2   
|ABBREVIATIONS                                                      | 3   
|CONVERSIONS                                                        | 3   
|FORWARD-LOOKING
      STATEMENTS                                   | 4   
|CERTAIN
      DEFINITIONS                                          | 6   
|TRANSGLOBE
      ENERGY CORPORATION                                | 9   
|GENERAL
      DEVELOPMENT OF THE BUSINESS                          | 9   
|DESCRIPTION
      OF THE BUSINESS AND PRINCIPAL PROPERTIES         | 12  
|STATEMENT
      OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION | 15  
|RESERVES
      DATA  FORECAST PRICES AND COSTS                    | 16  
|RESERVES
      DATA  CONSTANT PRICES AND COSTS                    | 21  
|DIVIDEND
      POLICY                                              | 37  
|DESCRIPTION
      OF SHARE CAPITAL                                 | 37  
|ESCROWED
      SECURITIES                                          | 38  
|DIRECTORS
      AND OFFICERS                                       | 39  
|HUMAN
      RESOURCES                                              | 41  
|INTEREST
      OF EXPERTS                                          | 41  
|INDEPENDENT
      REGISTERED CHARTERED ACCOUNTANTS                 | 41  
|LEGAL
      PROCEEDINGS AND REGULATORY ACTIONS                     | 41  
|INTERESTS
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS  | 41  
|TRANSFER
      AGENT AND REGISTRAR                                 | 42  
|MATERIAL
      CONTRACTS                                           | 42  
|AUDIT
      COMMITTEE INFORMATION                                  | 42  
|RISK
      FACTORS                                                 | 44  
|INDUSTRY
      CONDITIONS                                          | 50  
|ADDITIONAL
      INFORMATION                                       | 51  

|SCHEDULE "A" | Report on Reserves Data                                                        
|------------ | -------------------------------------------------------------------------------
|SCHEDULE "B" | Report of Management and Directors on Reserves
      Data and Other Information
|SCHEDULE "C" | Charter of Audit Committee                                                     

CURRENCY AND EXCHANGE RATES

All dollar amounts in this Annual Information Form, unless
otherwise indicated, are stated in United States currency. The Company has
adopted the U.S. dollar as the functional currency for its consolidated
financial statements. The exchange rates for the period average and end of
period for the U.S. dollar in terms of Canadian dollars as reported by the Bank
of Canada, noon buying rate, were as follows for each of the years ended
December 31, 2010, 2009 and 2008.

|               | Year
      Ended December 31, 2010 | Year
      Ended December 31, 2009 | Year
      Ended December 31, 2008
|-------------- | ---------------------------------- | ---------------------------------- | ----------------------------------
|End of Period  | Cdn$0.9946                         | Cdn$1.0466                         | Cdn$1.2246                        
|Period Average | Cdn$1.0299                         | Cdn$1.1420                         | Cdn$1.0671                        

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3

ABBREVIATIONS

|Oil and Natural Gas Liquids | Natural Gas              |       
|--------------------------- | ------------------------ | ------
|                            |                          |       
|Bbl                         | Barrel                   | Mcf   
|Bbls                        | Barrels                  | MMcf  
|Mbbls                       | thousand barrels         | Mcf/d 
|MMbbls                      | million barrels          | MMcf/d
|Mstb                        | 1,000 stock tank barrels | MMBtu 
|Bbls/d                      | barrels per day          | Bcf   
|Bopd                        | barrels of oil per day   | Tcf   
|NGLs                        | natural gas liquids      | GJ    
|STB                         | stock tank barrels       |       

|Other      |                                                                                                                                                                                                                                         
|---------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |                                                                                                                                                                                                                                         
|API        | American Petroleum Institute                                                                                                                                                                                                            
|°API       | an indication of the specific gravity of crude
      oil measured on the API gravity scale. Liquid petroleum with a specified
      gravity of 28° API or higher is generally referred to as light crude oil                            
|BOE or boe | barrel of oil equivalent of
      natural gas and crude oil on the basis of 1 BOE for 6 Mcf of natural gas
      (this conversion factor is an industry accepted norm and is not based on
      either energy content or current prices)
|boepd      | barrels of oil equivalent per day                                                                                                                                                                                                       
|km2        | square kilometres                                                                                                                                                                                                                       
|m3         | cubic metres                                                                                                                                                                                                                            
|MBOE       | 1,000 barrels of oil equivalent                                                                                                                                                                                                         
|Mstboe     | 1,000 stock tank barrels of oil equivalent                                                                                                                                                                                              
|$M         | thousands of dollars                                                                                                                                                                                                                    
|$MM        | millions of dollars                                                                                                                                                                                                                     
|WTI        | West Texas Intermediate, the
      reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of
      standard grade                                                                                                      
|psi        | pounds per square inch                                                                                                                                                                                                                  

The following table sets forth certain conversions between
Standard Imperial Units and the International System of Units (or metric
units).

CONVERSIONS

|To Convert From | To           | Multiply By
|--------------- | ------------ | -----------
|Mcf             | cubic metres | 0.28174    
|cubic metres    | cubic feet   | 35.494     
|Bbls            | cubic metres | 0.159      
|cubic metres    | Bbls oil     | 6.293      
|feet            | metres       | 0.305      
|metres          | feet         | 3.281      
|miles           | kilometres   | 1.609      
|kilometres      | miles        | 0.621      
|acres           | hectares     | 0.405      
|hectares        | acres        | 2.471      
|gigajoules      | MMBtu        | 0.950      

In this document, a boe conversion ratio of 6 Mcf : 1 Bbl has
been used. Boes may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 Mcf : 1 Bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.

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4

FORWARD-LOOKING STATEMENTS

This annual information form (the Annual Information Form)
and certain documents incorporated by reference into this Annual Information
Form may include certain statements deemed to be forward-looking statements
within the meaning of applicable Canadian and United States securities laws.
These statements relate to future events or the Company's future performance.
All statements other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always, identified by
the use of words such as "seek", "anticipate", "plan", "continue", "estimate",
"expect", "may", "will", "project", "predict", "potential", "targeting",
"intend", "could", "might", "should", "believe" and similar expressions. These
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results or events to differ materially from those anticipated
in such forward-looking statements. Actual operational and financial results may
differ materially from TransGlobe's expectations contained in the
forward-looking statements as a result of various risk factors, many of which
are beyond the control of the Company. These risk factors include, but are not
limited to:

- unforeseen changes in the rate of production from the Company's oil and
  gas fields;
- changes or disruptions in the political or fiscal regimes in the Company's
  areas of activity;
- changes in the price of crude oil and natural gas;
- adverse technical factors associated with exploration, development,
  production or transportation of the Company's crude oil and natural gas
  reserves;
- changes in Egypt or Yemen tax, energy or other laws or regulations;
- changes in significant capital expenditures;
- delays in production starting up due to an industry shortage of skilled
  manpower, equipment or materials;
- the cost of inflation;
- the performance characteristics of the Company's oil and natural gas
  properties;
- oil and natural gas production levels;
- the quantity of oil and natural gas reserves;
- capital expenditure programs;
- supply and demand for oil and natural gas and commodity prices;
- drilling plans;
- expectations regarding the Company's ability to raise capital and to
  continually add to reserves through acquisitions, exploration and development;
- treatment under governmental regulatory regimes and tax laws;
- realization of the anticipated benefits of acquisitions and dispositions;
- general economic conditions in Canada, the United States and globally;
- general economic stability of the Companys financial lenders and
  creditors;
- payment of crude oil marketing contracts and associated financial hedging
  instruments;
- industry conditions, including fluctuations in the price of oil and
  natural gas;
- governmental regulation of the oil and gas industry, including
  environmental regulation;
- fluctuation in foreign exchange or interest rates;
- risks inherent in oil and natural gas operations;
- geological, technical, drilling and processing problems;
- unanticipated operating events which can reduce production or cause
  production to be shut-in or delayed;
- failure to obtain industry partner and other third-party consents and
  approvals, when required;
- stock market volatility and market valuations;
- competition for, among other things, capital, acquisitions of reserves,
  undeveloped land and skilled personnel;
- incorrect assessments of the value of acquisitions;
- the need to obtain required approvals from regulatory authorities; and
- the other factors considered under "Risk Factors" to this Annual
  Information Form.

Statements relating to "reserves" or "resources" are deemed to
be forward-looking statements, as they involve the implied assessment, based on
certain estimates and assumptions that some or all of the resources and reserves
described can be profitably produced in the future. Readers are cautioned that
the foregoing list of factors is not exhaustive. The forward-looking statements
contained in this Annual Information Form and certain documents incorporated by
reference herein are expressly qualified by this cautionary statement.

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5

The Company believes that the expectations reflected in the
forward-looking statements contained in this Annual Information Form and certain
documents incorporated by reference herein are reasonable, but no assurance can
be given that these expectations will prove to be correct, and investors should
not attribute undue certainty to, or place undue reliance on, such
forward-looking statements. Such statements speak only as of the date of this
Annual Information Form. If circumstances or managements beliefs, expectations
or opinions should change, the Company does not intend, and does not assume any
obligation, to update these forward-looking statements, except as required by
applicable Canadian and United States securities laws. Please consult the
Company's SEDAR profile at www.sedar.com for further, more detailed information
concerning these matters.

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6

CERTAIN DEFINITIONS

In this Annual Information Form, the following words and
phrases have the following meanings, unless the context otherwise requires:

"AMEX" means the American Stock Exchange

"Block 32 Joint Venture Group" means the joint venture
group companies of TG Holdings (13.81087%) and partners Ansan Wikfs (Hadramaut)
Ltd. (45.18913%) and DNO ASA (41.00%);

"Block 72 Joint Venture Group" means the joint venture
group comprised of DNO ASA (20%), TG Holdings (20%), Ansan Wikfs (Hadramaut)
Ltd. (20%) and TOTAL E&P Yemen (40%);

"Block 75 Joint Venture Group" means a joint venture
arrangement for Block 75 in Yemen with a subsidiary of OXY (75%) and TGWYI
(25%);

"Block S-1 Joint Venture Group" means a joint venture
arrangement for Block S-1 in Yemen with a subsidiary of OXY (75%) and TGWYI
(25%);

"Brent" means the reference price paid in U.S. dollars
for a barrel of light sweet crude oil produced from the Brent field in the UK
sector of the North Sea;

"Cdn" means Canadian;

"COGE Handbook" means the Canadian Oil and Gas
Evaluation Handbook prepared jointly by the Society of Petroleum Evaluation
Engineers (Calgary chapter) and the Canadian Institute of Mining, Metallurgy
& Petroleum;

"Common Shares" means the common shares of the
Company;

"DeGolyer" means DeGolyer and MacNaughton Canada
Limited, independent petroleum consultants;

"DeGolyer Report" means the report of DeGolyer dated
February 4, 2011 evaluating the Egypt and Yemen crude oil reserves of the
Company as at December 31, 2010;

"Dry Hole" or "Dry Well" or "Non-Productive
Well" means a well found to be incapable of producing either oil or natural
gas in sufficient quantities to justify completion as an oil or natural gas
well;

"East Ghazalat" means the East Ghazalat area in
Egypt;

"East Ghazalat PSC" means the East Ghazalat production
sharing concession in Egypt;

"Exploratory Well" means a well drilled either in search
of a new, as-yet undiscovered oil or natural gas reservoir or to greatly extend
the known limits of a previously discovered reservoir;

"Egypt" means the Arab Republic of Egypt;

"GAAP" means Canadian generally accepted accounting
principles;

"Gross" or "gross" means:

| | (a) | in relation to the Company's interest in production and
      reserves, its "Company gross reserves", which are the Company's interest
      (operating and non-operating) share before deduction of royalties and
      without including any royalty interest of the Company;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                
| | (b) | in relation to wells, the total number of wells in which
      the Company has an interest; and                                                                                                                                                                                

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7

| | (c) | in relation to properties, the total area of properties
      in which the Company has an interest;
| | --- | ---------------------------------------------------------------------------------------------------

"MENA" means Middle East North African region;

"MOM" means Ministry of Oil and Minerals, Republic of
Yemen, formerly MOMR, the Ministry of Oil and Mineral Resources;

"NASDAQ" means National Association of Securities
Dealers Automated Quotations, OMX Global Select Market;

"Net" or "net" means:

| | (a) | in relation to the Company's interest in production and
      reserves, the Company's interest (operating and non-operating) share after
      deduction of royalty obligations, plus the Company's royalty interest in
      production or reserves.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                      
| | (b) | in relation to wells, the number of wells obtained by
      aggregating the Company's working interest in each of its gross wells;
      and                                                                                                         
| |     |                                                                                                                                                                                                                                                      
| | (c) | in relation to the Company's interest in a property, the
      total area in which the Company has an interest multiplied by the working
      interest owned by the Company;                                                                        

"NI 51-101" means National Instrument 51-101 of the
Canadian Securities Administrators, entitled "Standards of Disclosure for Oil
and Gas Activities";

"NI 51-102" means National Instrument 51-102 of the
Canadian Securities Administrators, entitled "Continuous Disclosure
Obligations";

"OXY" means Occidental Petroleum Corporation and its
subsidiaries;
"PSA" means production sharing agreement;

"PSC"
  means production sharing concession;

"TransGlobe" or the "Company" means TransGlobe
Energy Corporation, a corporation organized and registered under the laws of
Alberta, Canada, and as the context requires, its subsidiary companies;

"TransGlobe Egypt" means TransGlobe Petroleum Egypt
Inc., a wholly-owned subsidiary of TransGlobe;

"TG Holdings" means TG Holdings Yemen Inc., a
wholly-owned subsidiary of TransGlobe;

"TGPI" means TransGlobe Petroleum International Inc., a
wholly-owned subsidiary of TransGlobe;

"TGWGI" means TransGlobe West Gharib Inc., a
wholly-owned subsidiary of TransGlobe;

"TGWYI" means TG West Yemen Inc., a wholly-owned
subsidiary of TransGlobe;

"TGOS" means TransGlobe GOS Inc., a wholly-owned
subsidiary of TransGlobe;

"TSX" means the Toronto Stock Exchange;

"U.S."
  means the United States of America;

"West Gharib" means the West Gharib area in Egypt;

"West Gharib PSC" means the West Gharib production
sharing concession in Egypt;

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8

"Yemen" means the Republic of Yemen; and

"YOC" means Yemen Oil Company.

Certain other terms used herein but not defined herein are
defined in NI 51-101 and, unless the context otherwise requires, shall have the
same meanings herein as in NI 51-101.

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9

TRANSGLOBE ENERGY CORPORATION

General

TransGlobe Energy Corporation ("TransGlobe" or the
"Company") was incorporated on August 6, 1968 and was organized under
variations of the name "Dusty Mac" as a mineral exploration and extraction
venture under The Company Act (British Columbia). In 1992, the Company
entered into the oil and gas exploration and development field in the United
States and later in Yemen, Canada and Egypt, ceasing operations as a mining
company. The Company's U.S. oil and gas properties were sold in 2000 to fund
opportunities in Yemen and the Company's Canadian oil and gas assets and
operations were divested in early 2008 to assist with the funding of
opportunities in Egypt and Yemen. The Company changed its name to TransGlobe
Energy Corporation on April 2, 1996 and on June 9, 2004, the Company continued
from the Province of British Columbia to the Province of Alberta. In early 2008,
the Company sold its Canadian assets and operations and now conducts business
exclusively in Egypt and Yemen.

TransGlobe, through its wholly-owned subsidiaries, is primarily
engaged in the exploration for, and the development and production of, oil and
gas in Egypt and Yemen.

The Company has been listed on the TSX under the symbol "TGL"
since November 7, 1997 and on the NASDAQ under the symbol "TGA" since January
18, 2008. Prior to listing on the NASDAQ, the Company had its U.S. listing on
the AMEX since 2003.

The Company's principal office is located at 2300, 250 - 5th
Street S.W., Calgary, Alberta, T2P 0R4. The Company's registered office is
located at 1400, 350  7th Avenue S.W., Calgary, Alberta, T2P
3N9.

Intercorporate Relationships

The following table sets out the name and jurisdiction of
incorporation of the Company's subsidiaries and the Company's ownership interest
therein:

|Name of
      Subsidiary                 | Jurisdiction of Incorporation        | Ownership
|---------------------------------------- | ------------------------------------ | ---------
|TransGlobe West Gharib Inc.(1)           | Turks & Caicos Islands,
      B.W.I. | 100%     
|TransGlobe Petroleum International Inc.  | Turks & Caicos Islands, B.W.I.       | 100%     
|TG Holdings Yemen Inc.(1)                | Turks & Caicos Islands,
      B.W.I. | 100%     
|TG West Yemen Inc.(1)                    | Turks & Caicos Islands, B.W.I.       | 100%     
|TransGlobe Petroleum Egypt
      Inc.(1) | Turks & Caicos Islands,
      B.W.I. | 100%     
|TransGlobe GOS Inc.(1)                   | Turks & Caicos Islands, B.W.I.       | 100%     

|Note: |                                                                                                                                                           
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)   | These companies are 100% owned directly by TransGlobe
      Petroleum International Inc., which company is a wholly-owned subsidiary
      of the Company.

TG Holdings Yemen Inc. owns TransGlobe's interests in Yemen in
Block 32 and Block 72. TG West Yemen Inc. owns TransGlobe's interests in Block
75 and Block S-1. TransGlobe Petroleum Egypt Inc. owns TransGlobe's interest in
the Nuqra Block 1 in Egypt. TransGlobe West Gharib Inc. owns TransGlobe's
interest in the West Gharib concession in Egypt. TransGlobe GOS Inc. owns
TransGlobe's interest in the East Ghazalat concession in Egypt.

Unless the context otherwise requires, reference in this
Annual Information Form to"TransGlobe"or the Company"includes the Company and its direct and indirect wholly-owned
subsidiaries.

GENERAL DEVELOPMENT OF THE BUSINESS

TransGlobe is an independent international upstream oil and gas
company with headquarters in Calgary, Canada whose main business activities
consist of the exploration, development and production of crude oil and natural
gas liquids. The Company currently has exploration and production operations in
Egypt and Yemen.

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10

During the past three years, TransGlobe has developed its
business interests through a combination of acquisitions, divestitures,
exploration and development. During this period, TransGlobe's primary focus has
been on three concessions in Egypt (a 71.43% working interest in Nuqra Block 1,
a 100% working interest in the West Gharib Concession and a 50% working interest
in the East Ghazalat Concession), four PSAs in Yemen (a 13.81087% working
interest in Block 32, a 25% working interest in Block S-1, a 20% working
interest in Block 72 and a 25% working interest in Block 75) and in central
Alberta, Canada (which business interests were divested in April, 2008). .

2008

In 2008, the primary exploration and production focus was on
the West Gharib Concession in Egypt and Blocks S-1, 32, 72 and 75 in Yemen.

In January, 2008, the Company listed on the NASDAQ under the
symbol "TGA", which replaced the Company's previous listing on the AMEX.

Pursuant to an acquisition agreement dated January 9, 2008, the
Company completed the acquisition of GHP Exploration (West Gharib) Ltd.
("GHP"), which held a 30% interest in the West Gharib PSC. TransGlobe
acquired GHP for aggregate consideration of approximately U.S.$40.2 million plus
working capital adjustments. The acquisition closed February 5, 2008.

With the acquisition of GHP, the Company holds a 100% working
interest in the West Gharib PSC. with a working interest of 100% in the Hana
development lease and an effective working interest of 75% in the eight non-Hana
development leases.

On April 30, 2008 (pursuant to a purchase and sale agreement
dated April 16, 2008), the Company closed the sale of its Canadian assets and
operations for approximately Cdn$56.7 million, subject to normal closing
adjustments. The proceeds from the sale of the Company's Canadian properties
were used to repay debt and fund other capital expenditures.

On August 18, 2008, the Company completed the acquisition of
the remaining 25% financial interest in the West Gharib concession it did not
previously hold for consideration of US$18 million, which resulted in the
Company holding 100% of the working interest in all nine of the leases in the
West Gharib concession. The acquisition was funded from TransGlobe's credit
facility and from working capital. Depending upon the size of future reserve
additions in the East Hoshia and South Rahmi fields, TransGlobe has agreed to
pay the vendor a success fee up to US$5.0 million and US$2.0 million,
respectively.

In Egypt, the Company drilled 14 wells (12 oil wells, one water
injection well and one dry hole) and acquired 362 km2 of 3-D seismic
data on West Gharib. In November, TransGlobe discovered a new pool at Hana West
in the Hana development lease. The first well drilled into the new pool tested
at combined rates of approximately 2,820 Bopd and was placed on production at
year-end at a pump-restricted rate of approximately 660 Bopd. The Company
increased its working interest in the Nuqra #1 joint venture from 50% to 71.43%
effective June 30, 2008, at no cost.

In Yemen, the Company drilled five wells, consisting of two oil
wells and two dry holes on Block 32 and one dry hole on Block 72.

On Block 72, field acquisition of 410 km2 of 3-D
seismic and 100 km of 2-D seismic was completed at the end of March 2008. The
seismic data was processed and interpreted in the third quarter. Subsequently, a
first exploration well, Seer #1 was drilled and resulted in a dry hole.

2009

On February 25, 2009, the Company completed the issuance of
5,798,000 Common Shares pursuant to an underwritten bought deal financing for
gross proceeds of approximately Cdn$20.0 million.

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11

In Egypt, the Company drilled 13 wells (8 oil wells, 4 water
source wells and one dry hole) and expanded the waterflood projects at Hana and
Hoshia. The Hana West pool (discovered November 2008) was appraised and
developed during 2009.

In Yemen, the Company drilled two oil wells on Block 32. On
Block 75, 340 km2 of 3-D seismic was acquired and processed by year
end.

2010

In January 2010, the Company announced a farmout agreement with
Vegas Oil & Gas SA ("Vegas") to earn a 50% interest in the East
Ghazalat concession in the western desert of Egypt. The East Ghazalat Concession
is operated by Vegas, a privately owned oil and gas company.

In Egypt during 2010, the Company drilled 25 wells in West
Gharib and six wells in East Ghazalat. The West Gharib drilling resulted in 20
oil wells and five dry holes. The drilling was primarily focused on the emerging
Nukhul oil resource appraisal and development. At East Ghazalat, the Company
participated in drilling six wells, resulting in four oil wells on the Safwa
structure and two dry holes during 2010. The operator of the East Ghazalat
Concession filed a notice of commercial discovery for the Safwa wells in
December of 2010. The operator met with the Egyptian government in early 2011 to
define a development lease area for the Safwa discovery. It is expected that
production could commence as early as mid-2011.

In West Yemen during 2010, the Company participated in five
wells in Block S1 resulting in five oil wells. In East Yemen during 2010, the
Company participated in three wells in Block 32 resulting in two oil wells and
one dry hole.

Recent Developments

On February 1, 2011, the Company completed the issuance of
5,000,000 Common Shares pursuant to an underwritten bought-deal financing for
gross proceeds of approximately Cdn$75.0 million.

In Egypt, six additional wells were drilled on the West Gharib
prospect since 2010, resulting in six oil wells and one dry hole was drilled on
East Ghazalat. Development/appraisal drilling continues at West Gharib with two
drilling rigs. In addition, drilling commenced on a two well exploration program
on the Nuqra exploration concession in upper Egypt.

In Yemen, four wells were drilled subsequent to year-end
resulting in one discovery and one dry hole on Block 72 and two oil wells on
Block S-1.

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12

DESCRIPTION OF THE BUSINESS AND PRINCIPAL PROPERTIES

TransGlobe is engaged in the exploration for and the
development and production of crude oil and natural gas in Egypt and Yemen. The
Company also regularly reviews potential acquisitions and new international
exploration blocks to supplement its exploration and development activities.

TransGlobe's major operations and principal activities are in
the oil and gas exploration and production business. The Company has had
operations in Egypt, Yemen and Canada during the past six, 13 and 11 years
respectively. In Egypt, the Company has an interest in three PSCs: West Gharib,
East Ghazalat and Nuqra Block 1. In Yemen, the Company has interests in four
PSAs: Block 32, Block 72, Block 75 and Block S-1. The Company sold its Canadian
assets located in the Province of Alberta on April 30, 2008.



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13

Summary of International Land Holdings

|                             | Egypt              | YEMEN       
|---------------------------- | ------------------ | ------------
|Block                        | East               | West Gharib 
|                             | Ghazalat           |             
|Basin                        | Western Desert     | Gulf of Suez
|Year acquired                | 2010               | 2007        
|Status                       | Exploration        | Development 
|Operator                     | Vegas              | TransGlobe  
|TransGlobe WI (%)            | 50%                | 100%        
|Block Area (Km2)             | 645                | 141         
|Block Area (acres)           | 159,300            | 34,856      
|Expiry date                  | June 2012          | 2019-2026   
|Extensions: 
    Exploration | 2nd                | N/A         
|                             | Extension24 months |             
|Development                  | 20 yr + 5 yr       | + 5 yr      

* TransGlobe pays 88.57% of costs to first oil production.
TransGlobe recovers carried costs from partners share of production.

Summary of International PSA/PSC
Terms

All of the Company's international blocks are PSAs or PSCs
between the host government and the contractor (joint venture partners). The
government and the contractors take their share of production based on the terms
and conditions of the respective contracts. The contractors' share of all taxes
and royalties are paid out of the governments' share of production.

The PSAs/PSCs provide for the government to receive a
percentage gross royalty on the gross production. The remaining oil production,
after deducting the gross royalty, if any, is split between cost sharing oil and
production sharing oil. Cost sharing oil is up to a maximum percentage as
defined in the specific PSA/PSC. Cost oil is assigned to recover approved
operating and capital costs spent on the specific project. Each PSA/PSC is
treated individually in respect of cost recovery and production sharing
purposes. The remaining production sharing oil (total production, less gross
royalty, less cost oil) is shared between the government and the contractor as
defined in the specific PSAs/PSCs.

The following table summarizes the Company's international
PSA/PSC terms for the first tranche(s) of production for each block. All the
contracts have different terms for production levels above the first tranche,
which are unique to each contract. The government's share of production
increases and the contractor's share of production decreases as the production
volumes go to the next production tranche.

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14

Contract Terms  Egypt (PSCs) and Yemen
(PSAs)

|                                           | Egypt    | Yemen            
|------------------------------------------ | -------- | -----------------
|Block                                      | East     | West             
|                                           | Ghazalat | Gharib           
|                                           |          |                  
|Production     
      Tranche      (MBopd) | 0-5      | 0-5 / 5-10       
|                                           |          |                  
|Gross royalty %                            | 0%       | 0%               
|                                           |          |                  
|Max. cost oil %                            | 25%      | 30%              
|                                           |          |                  
|Excess cost oil                            | 0%       | 30%              
|                                           |          |                  
|Depreciation per quarter:                  |          |                  
|Operating                                  | 100%     | 100%             
|                                           |          |                  
|Capital                                    | 5%       | 6.25%            
|                                           |          |                  
|Production     Sharing Oil:                |          |                  
|Contractor                                 | 20%      | 30% / 27.5%      
|Government                                 | 80%      | 70%
      / 72.5%

|* | Block 32 terms will revert to original PSA terms if
      production exceeds 25,000 Bopd or Proved reserves exceed 30 million
      barrels. Reserves may be audited every two years by an independent
      evaluator at the request of the Government of Yemen. At November 2010
      Proved reserves were less than 30 million barrels. The next potential
      reserve audit is November 2012.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operations Review (2010)

In 2010, the Company increased total production by 11% to 9,960
Bopd (2009  8,980 Bopd). Production from Egypt averaged 7,259 Bopd to
TransGlobe during 2010 (2009  5,828 Bopd). Production from Yemen averaged 2,701
Bopd to TransGlobe during 2010 (2009  3,152 Bopd).

2011 Outlook

Production is expected to average between 13,000 and 13,500
Bopd, a 33% increase over the 2010 average production;

- Exploration and development spending is budgeted to be $90 million, a 34%
  increase from 2010 (allocated 85% to Egypt, 13% to Yemen and 2% Corporate)
  funded from funds flow from operations and cash on hand; and
- Using the mid-point of production expectations and an average oil price
  assumption for the year of $75.00/Bbl for Dated Brent oil, funds flow from
  operations is expected to be $101 million.

---

15

STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS
INFORMATION

The report on reserves data in Form 51-101F2 and the report of
management and directors on reserves data and other information in Form 51-101F3
are attached as Schedules "A" and "B", respectively, to this Annual Information
Form, which forms are incorporated herein by reference.

The statement of reserves data and other oil and gas
information set forth below (the "DeGolyer Report") is dated February 4,
2011, with the effective date being December 31, 2010.

Disclosure of Reserves Data

All of the Company's reserves herein reported were evaluated by
independent evaluators in accordance with NI 51-101 for the year ended December
31, 2010. In 2010, DeGolyer and MacNaughton Canada Limited ("DeGolyer"),
independent petroleum engineering consultants based in Calgary, Alberta and part
of the DeGolyer and MacNaughton Worldwide Petroleum Consulting group
headquartered in Dallas, Texas, were retained by the Company's Reserves
Committee to independently evaluate 100% of TransGlobe's reserves as at December
31, 2010.

The reserves data set forth below (the "Reserves Data")
was prepared by DeGolyer with an effective date of December 31, 2010. The
Reserves Data summarizes the oil, liquids and natural gas reserves of the
Company and the net present values of future net revenue for these reserves
using constant prices and costs and forecast prices and costs. The Company
reports in U.S. currency and therefore the reports have been converted to U.S.
dollars at the prevailing conversion rate at December 31 of the respective
years.

The Reserves Data conforms with the requirements of NI 51-101.
Additional information not required by NI 51-101 has been presented to provide
continuity and additional information which the Company believes is important to
the readers of this information.

Disclosure provided herein in respect of BOEs may be
misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1
Bbl is based on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead.

All evaluations and reviews of future net cash flow are
stated prior to any provision for interest costs or general and administrative
costs and after the deduction of estimated future capital expenditures for wells
to which reserves have been assigned. It should not be assumed that the
estimated future net cash flow shown below is representative of the fair market
value of the Company's properties. There is no assurance that such price and
cost assumptions will be attained and variances could be material. The recovery
and reserve estimates of crude oil, NGLs and natural gas reserves provided
herein are estimates only and there is no guarantee that the estimated reserves
will be recovered. Actual crude oil, NGLs and natural gas reserves may be
greater than or less than the estimates provided herein.

---

16

RESERVES DATA  FORECAST PRICES AND COSTS

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|TOTAL COMPANY                  
|AS OF DECEMBER 31, 2010        
|(FORECAST PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    9,523
    
    
    5,297
    
    
    4,571
    
    
    2,602
    
    
    14,094
    
    
    7,899Non-Producing
    
    1,933
    
    
    992
    
    
    1,240
    
    
    630
    
    
    3,173
    
    
    1,623Undeveloped
    
    1,798
    
    
    925
    
    
    1,390
    
    
    806
    
    
    3,188
    
    
    1,730Total Proved
    
    13,254
    
    
    7,214
    
    
    7,201
    
    
    4,038
    
    
    20,455
    
    
    11,251Probable
    
    4,892
    
    
    2,398
    
    
    5,093
    
    
    2,721
    
    
    9,984
    
    
    5,120Proved+Probable
    
    18,146
    
    
    9,612
    
    
    12,294
    
    
    6,759
    
    
    30,440
    
    
    16,371Possible
    
    5,163
    
    
    2,425
    
    
    6,269
    
    
    3,244
    
    
    11,432
    
    
    5,669Proved+Probable+ Possible
    
    23,309
    
    
    12,037
    
    
    18,563
    
    
    10,003
    
    
    41,872
    
    
    22,040


|Notes: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(1)    | Gross reserves are the Company's working interest share
      before the deduction of royalties.                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2)    | Net reserves are the Company's working interest share
      after the deduction of royalties. Net reserves in Egypt and Yemen include
      our share of future cost recovery and production sharing oil after the
      Government's royalty interest but before reserves relating to income taxes
      payable. Under this method, a portion of the reported reserves will
      increase as oil prices decrease (and vice versa) as the barrels necessary
      to achieve cost recovery change with prevailing oil prices.

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|EGYPT                          
|AS OF DECEMBER 31, 2010        
|(FORECAST PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    6,064
    
    
    3,434
    
    
    4,571
    
    
    2,602
    
    
    10,635
    
    
    6,036Non-Producing
    
    1,933
    
    
    992
    
    
    1,240
    
    
    630
    
    
    3,173
    
    
    1,623Undeveloped
    
    -
    
    
    34(3)
    
    
    1,390
    
    
    806
    
    
    1,390
    
    
    840Total Proved
    
    7,998
    
    
    4,460
    
    
    7,201
    
    
    4,038
    
    
    15,199
    
    
    8,498Probable
    
    3,585
    
    
    1,737
    
    
    5,093
    
    
    2,721
    
    
    8,678
    
    
    4,458Proved+Probable
    
    11,583
    
    
    6,197
    
    
    12,294
    
    
    6,759
    
    
    23,877
    
    
    12,956Possible
    
    4,365
    
    
    2,012
    
    
    6,269
    
    
    3,244
    
    
    10,634
    
    
    5,256Proved+Probable+ Possible
    
    15,948
    
    
    8,209
    
    
    18,563
    
    
    10,003
    
    
    34,511
    
    
    18,212


Notes:

|(1) | Gross reserves are the Company's working interest share
      before the deduction of royalties.                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Net reserves are the Company's working interest share
      after the deduction of royalties. Net reserves in Egypt include our share
      of future cost recovery and production sharing oil after the Government's
      royalty interest but before reserves relating to income taxes payable.
      Under this method, a portion of the reported reserves will increase as oil
      prices decrease (and vice versa) as the barrels necessary to achieve cost
      recovery change with prevailing oil prices.
|(3) | There were no reported Gross Proved Undeveloped Light
      & Medium Crude Oil reserves in Egypt but Net reserves are reported due
      to improved royalty splits in the Total Proved reserve case compared to
      the Proved Developed case. The Net reserves are the result of slightly
      lower royalty rates resulting in a slightly higher Company
  share.                                                                                                                                              

---

17

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|YEMEN                          
|AS OF DECEMBER 31, 2010        
|(FORECAST PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,459
    
    
    1,863
    
    
    3,459
    
    
    1,863Non-Producing
    
    -
    
    
    -
    
    
    -
    
    
    -Undeveloped
    
    1,798
    
    
    890
    
    
    1,798
    
    
    890Total Proved
    
    5,257
    
    
    2,753
    
    
    5,257
    
    
    2,753Probable
    
    1,306
    
    
    662
    
    
    1,306
    
    
    662Proved+Probable
    
    6,563
    
    
    3,415
    
    
    6,563
    
    
    3,415Possible
    
    797
    
    
    413
    
    
    797
    
    
    413Proved+Probable+Possible
    
    7,360
    
    
    3,828
    
    
    7,360
    
    
    3,828


Notes:

|(1) | Gross reserves are the Company's working interest share
      before the deduction of royalties.                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Net reserves are the Company's working interest share
      after the deduction of royalties. Net reserves in Yemen include our share
      of future cost recovery and production sharing oil after the Government's
      royalty interest but before reserves relating to income taxes payable.
      Under this method, a portion of the reported reserves will increase as oil
      prices decrease (and vice versa) as the barrels necessary to achieve cost
      recovery change with prevailing oil prices.

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|TOTAL COMPANY                            
|AS OF DECEMBER 31, 2010                  
|(FORECAST PRICES & COSTS)                

The estimated future net revenues presented do not represent
fair market value. The estimated future net revenues presented below are
calculated using the respective Consultant price forecasts and inflation rates
as summarized in Part 3  Pricing Assumptions.

|                              |  | Before Income
      Tax(1) |  |  | After Income
      Tax(1) | 
|----------------------------- |  | -------------------------- |  |  | ------------------------- | 
|US$                           |  | Discounted at %/yr         |  |  | Discounted at %/yr        | 
|$M                            |  | 0%                         |  |  | 5%                        | 
|Proved                        |  |                            |  |  |                           | 
|Producing                     |  | 344,514                    |  |  | 299,257                   | 
|Non-Producing                 |  | 75,397                     |  |  | 57,746                    | 
|Undeveloped                   |  | 60,664                     |  |  | 49,466                    | 
|Total Proved                  |  | 480,575                    |  |  | 406,469                   | 
|Probable                      |  | 191,009                    |  |  | 151,993                   | 
|Total Proved+Probable         |  | 671,584                    |  |  | 558,462                   | 
|Possible                      |  | 244,824                    |  |  | 172,301                   | 
|                              |  |                            |  |  |                           | 
|TotalProved+Probable+Possible |  | 916,408                    |  |  | 730,763                   | 

Note:

|(1) | In Egypt and Yemen, under the terms of the Production
      Sharing Agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen Future Net Revenues are after
      Egypt and Yemen income tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

18

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|EGYPT                                    
|AS OF DECEMBER 31, 2010                  
|(FORECAST PRICES AND COSTS)              

|                               |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|------------------------------ |  | -------------------- |  |  | ------------------- | 
|US$                            |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$M                             |  | 0%                   |  |  | 5%                  | 
|Proved                         |  |                      |  |  |                     | 
|Producing                      |  | 282,090              |  |  | 242,945             | 
|Non-Producing                  |  | 75,397               |  |  | 57,746              | 
|Undeveloped                    |  | 22,984               |  |  | 19,569              | 
|Total Proved                   |  | 380,471              |  |  | 320,260             | 
|Probable                       |  | 163,742              |  |  | 131,110             | 
|Total Proved+Probable          |  | 544,213              |  |  | 451,370             | 
|Possible                       |  | 227,024              |  |  | 158,534             | 
|                               |  |                      |  |  |                     | 
|Total Proved+Probable+Possible |  | 771,237              |  |  | 609,904             | 

Note:

|(1) | In Egypt, under the terms of the Production Sharing
      Agreements, income tax is current and assessed on all production sharing
      oil; therefore all Egypt Future Net Revenues are after Egypt income
      tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|YEMEN                                    
|AS OF DECEMBER 31, 2010                  
|(FORECAST PRICES AND COSTS)              

|                              |  | Before Income
      Tax(1) |  |  | After Income
      Tax(1) | 
|----------------------------- |  | -------------------------- |  |  | ------------------------- | 
|US$                           |  | Discounted at %/yr         |  |  | Discounted at %/yr        | 
|$M                            |  | 0%                         |  |  | 5%                        | 
|Proved                        |  |                            |  |  |                           | 
|Producing                     |  | 62,424                     |  |  | 56,312                    | 
|Non-Producing                 |  | -                          |  |  | -                         | 
|Undeveloped                   |  | 37,681                     |  |  | 29,897                    | 
|Total Proved                  |  | 100,105                    |  |  | 86,209                    | 
|Probable                      |  | 27,266                     |  |  | 20,883                    | 
|Total Proved+Probable         |  | 127,371                    |  |  | 107,092                   | 
|Possible                      |  | 17,800                     |  |  | 13,767                    | 
|                              |  |                            |  |  |                           | 
|TotalProved+Probable+Possible |  | 145,171                    |  |  | 120,859                   | 

Note:

|(1) | In Yemen, under the terms of the Production Sharing
      Agreements, income tax is current and assessed on all production sharing
      oil; therefore all Yemen Future Net Revenues are after Yemen income
      tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

19

|TOTAL FUTURE NET REVENUES  
|---------------------------
|(UNDISCOUNTED)             
|AS AT DECEMBER 31, 2010    
|(FORECAST PRICES AND COSTS)

|                                        |  |           |  |  |           |  |  |           |  |  |             |  |  | Well        |  |  | Future Net |  |  |        |  |  | Future Net | 
|--------------------------------------- |  | --------- |  |  | --------- |  |  | --------- |  |  | ----------- |  |  | ----------- |  |  | ---------- |  |  | ------ |  |  | ---------- | 
|                                        |  |           |  |  |           |  |  |           |  |  |             |  |  | Abandonment |  |  | Revenue    |  |  |        |  |  | Revenue    | 
|                                        |  |           |  |  |           |  |  |           |  |  |             |  |  | and         |  |  | Before     |  |  |        |  |  | After      | 
|                                        |  |           |  |  |           |  |  | Operating |  |  | Development |  |  | Reclamation |  |  | Income     |  |  | Income |  |  | Income     | 
|                                        |  | Revenue   |  |  | Royalties |  |  | Costs     |  |  | Costs       |  |  | Costs(2)    |  |  | Taxes      |  |  | Taxes  |  |  | Taxes      | 
|Reserves
      Category                 |  | (US$M)    |  |  | (US$M)    |  |  | (US$M)    |  |  | (US$M)      |  |  | (US$M)      |  |  | (US$M)     |  |  | (US$M) |  |  | (US$M)     | 
|Proved Reserves                         |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                                |  | 1,304,048 |  |  | 575,181   |  |  | 329,247   |  |  | 19,149      |  |  | -           |  |  | 380,471    |  |  | -      |  |  | 380,471    | 
|Yemen(1)                                |  | 501,215   |  |  | 237,564   |  |  | 160,725   |  |  | 2,822       |  |  | -           |  |  | 100,105    |  |  | -      |  |  | 100,105    | 
|Total Company                           |  | 1,805,263 |  |  | 812,745   |  |  | 489,973   |  |  | 21,971      |  |  | -           |  |  | 480,575    |  |  | -      |  |  | 480,575    | 
|Proved+Probable
      Reserves          |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                                |  | 2,066,554 |  |  | 946,033   |  |  | 512,415   |  |  | 63,893      |  |  | -           |  |  | 544,213    |  |  | -      |  |  | 544,213    | 
|Yemen(1)                                |  | 631,358   |  |  | 301,293   |  |  | 197,339   |  |  | 5,355       |  |  | -           |  |  | 127,371    |  |  | -      |  |  | 127,371    | 
|Total Company                           |  | 2,697,913 |  |  | 1,247,326 |  |  | 709,754   |  |  | 69,248      |  |  | -           |  |  | 671,584    |  |  | -      |  |  | 671,584    | 
|Proved+Probable Possible
      Reserves |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                                |  | 3,037,992 |  |  | 1,436,124 |  |  | 719,719   |  |  | 110,912     |  |  | -           |  |  | 771,237    |  |  | -      |  |  | 771,237    | 
|Yemen(1)                                |  | 708,330   |  |  | 338,412   |  |  | 213,990   |  |  | 10,756      |  |  | -           |  |  | 145,171    |  |  | -      |  |  | 145,171    | 
|Total Company                           |  | 3,746,322 |  |  | 1,774,536 |  |  | 933,710   |  |  | 121,668     |  |  | -           |  |  | 916,408    |  |  | -      |  |  | 916,408    | 

Notes:

|(1) | In Egypt and Yemen, under the terms of the Production
      Sharing Agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen Future Net Revenues are after
      Egypt and Yemen income tax. Income taxes payable in Egypt and Yemen have
      been recorded as a Operating Costs for reporting purposes.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Please see "Additional Information Concerning
      Abandonment and Reclamation Costs" in Part 6 of this
  report.                                                                                                                                                                                                                                                 

---

20

|TOTAL FUTURE NET REVENUES  
|---------------------------
|BY PRODUCTION GROUP        
|AS AT DECEMBER 31, 2010    
|(FORECAST PRICES AND COSTS)

|                               |  |                                           |  |  | Egypt           |  |  |                |  |  | Yemen           |  |  |                |  |  | Total           |  |  | Total       | 
|------------------------------ |  | ----------------------------------------- |  |  | --------------- |  |  | -------------- |  |  | --------------- |  |  | -------------- |  |  | --------------- |  |  | ----------- | 
|                               |  |                                           |  |  | Future net      |  |  | Egypt          |  |  | Future net      |  |  | Yemen          |  |  | Future net      |  |  | Unit Value  | 
|                               |  |                                           |  |  | Revenue Before  |  |  | Unit Value     |  |  | Revenue         |  |  | Unit Value     |  |  | Revenue         |  |  | Before Tax  | 
|                               |  |                                           |  |  | Taxes(1)        |  |  | Before Tax     |  |  | Before Taxes(1) |  |  | Before Tax     |  |  | Before Taxes(1) |  |  | (discounted | 
|                               |  |                                           |  |  | (discounted at  |  |  | (discounted at |  |  | (discounted at  |  |  | (discounted at |  |  | (discounted at  |  |  | at          | 
|Reserves                       |  | Product                                   |  |  | 10%/year)       |  |  | 10%/year)      |  |  | 10%/year)       |  |  | 10%/year)      |  |  | 10%/year)       |  |  | 10%/year)   | 
|Category                       |  | Group                                     |  |  | (US$M)          |  |  | ($/Bbl)        |  |  | (US$M)          |  |  | ($/Bbl)        |  |  | (US$M)          |  |  | ($/Bbl)     | 
|Total Proved                   |  | Light and 
    Medium Oil Heavy Oil       |  |  | 159,369 117,726 |  |  | 35.73 29.15    |  |  | 75,425 -        |  |  | 27.40 -        |  |  | 234,794 117,726 |  |  | 32.55 29.15 | 
|Proved+Probable                |  | Light
      and 
    Medium Oil Heavy Oil |  |  | 196,305 187,212 |  |  | 31.68 27.70    |  |  | 91,930 -        |  |  | 26.92 -        |  |  | 288,235 187,212 |  |  | 29.99 27.70 | 
|Proved+Probable 
    +Possible |  | Light and 
    Medium Oil Heavy Oil       |  |  | 242,131 259,914 |  |  | 29.50 25.98    |  |  | 102,796 -       |  |  | 26.85 -        |  |  | 344,927 259,914 |  |  | 28.65 25.98 | 

Note:

|(1) | In Egypt and Yemen, under the terms of the Production
      Sharing Agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen Future Net Revenues are after
      Egypt and Yemen income tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

21

|RESERVES DATA  CONSTANT PRICES AND COSTS
|-----------------------------------------
|                                         
|SUMMARY OF OIL AND GAS RESERVES          
|TOTAL COMPANY                            
|AS OF DECEMBER 31, 2010                  
|(CONSTANT PRICES AND COSTS)              

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    9,523
    
    
    5,497
    
    
    4,568
    
    
    2,715
    
    
    14,091
    
    
    8,212Non-Producing
    
    1,933
    
    
    982
    
    
    1,240
    
    
    625
    
    
    3,173
    
    
    1,607Undeveloped
    
    1,798
    
    
    953
    
    
    1,390
    
    
    841
    
    
    3,188
    
    
    1,794Total Proved
    
    13,254
    
    
    7,432
    
    
    7,198
    
    
    4,181
    
    
    20,452
    
    
    11,613Probable
    
    4,865
    
    
    2,502
    
    
    5,096
    
    
    2,818
    
    
    9,961
    
    
    5,320Proved+Probable
    
    18,119
    
    
    9,934
    
    
    12,294
    
    
    6,999
    
    
    30,413
    
    
    16,933Possible
    
    5,163
    
    
    2,520
    
    
    6,269
    
    
    3,357
    
    
    11,432
    
    
    5,877Proved+Probable+ Possible
    
    23,282
    
    
    12,454
    
    
    18,563
    
    
    10,356
    
    
    41,845
    
    
    22,810


Notes:

|(1) | Gross reserves are the Company's working interest share
      before the deduction of royalties.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Net reserves are the Company's working interest share
      after the deduction of royalties. Net reserves in Egypt and Yemen include
      our share of future cost recovery and production sharing oil after the
      Government's royalty interest but before reserves relating to income taxes
      payable. Under this method, a portion of the reported reserves will
      increase as oil prices decrease (and vice versa) as the barrels necessary
      to achieve cost recovery change with prevailing oil
  prices.

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|EGYPT                          
|AS OF DECEMBER 31, 2010        
|(CONSTANT PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    6,064
    
    
    3,586
    
    
    4,568
    
    
    2,715
    
    
    10,632
    
    
    6,301Non-Producing
    
    1,934
    
    
    982
    
    
    1,240
    
    
    625
    
    
    3,174
    
    
    1,607Undeveloped
    
    -
    
    
    42
    (3)
    
    1,390
    
    
    841
    
    
    1,390
    
    
    883Total Proved
    
    7,998
    
    
    4,610
    
    
    7,198
    
    
    4,181
    
    
    15,196
    
    
    8,791Probable
    
    3,585
    
    
    1,841
    
    
    5,096
    
    
    2,818
    
    
    8,681
    
    
    4,659Proved+Probable
    
    11,583
    
    
    6,451
    
    
    12,294
    
    
    6,999
    
    
    23,877
    
    
    13,450Possible
    
    4,365
    
    
    2,096
    
    
    6,269
    
    
    3,357
    
    
    10,634
    
    
    5,453Proved+Probable+ Possible
    
    15,948
    
    
    8,547
    
    
    18,563
    
    
    10,356
    
    
    34,511
    
    
    18,903


Notes:

|(1) | Gross reserves are the Company's working interest share
      before the deduction of royalties.                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Net reserves are the Company's working interest share
      after the deduction of royalties. Net reserves in Egypt include our share
      of future cost recovery and production sharing oil after the Government's
      royalty interest but before reserves relating to income taxes payable.
      Under this method, a portion of the reported reserves will increase as oil
      prices decrease (and vice versa) as the barrels necessary to achieve cost
      recovery change with prevailing oil prices.
|(3) | There were no reported Gross Proved Undeveloped Light
      & Medium Crude Oil reserves in Egypt but Net reserves are reported due
      to improved royalty splits in the Total Proved reserve case compared to
      the Proved Developed case. The Net reserves are the result of slightly
      lower royalty rates resulting in a slightly higher Company
  share.                                                                                                                                              

---

22

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|YEMEN                          
|AS OF DECEMBER 31, 2010        
|(CONSTANT PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,459
    
    
    1,911
    
    
    3,459
    
    
    1,911Non-Producing
    
    -
    
    
    -
    
    
    -
    
    
    -Undeveloped
    
    1,798
    
    
    911
    
    
    1,798
    
    
    911Total Proved
    
    5,257
    
    
    2,822
    
    
    5,257
    
    
    2,822Probable
    
    1,279
    
    
    661
    
    
    1,279
    
    
    661Proved+Probable
    
    6,536
    
    
    3,483
    
    
    6,536
    
    
    3,483Possible
    
    797
    
    
    424
    
    
    797
    
    
    424Proved+Probable+ Possible
    
    7,333
    
    
    3,907
    
    
    7,333
    
    
    3,907


Notes:

|(1) | Gross reserves are the Company's working interest share
      before the deduction of royalties.                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Net reserves are the Company's working interest share
      after the deduction of royalties. Net reserves in Yemen include our share
      of future cost recovery and production sharing oil after the Government's
      royalty interest but before reserves relating to income taxes payable.
      Under this method, a portion of the reported reserves will increase as oil
      prices decrease (and vice versa) as the barrels necessary to achieve cost
      recovery change with prevailing oil prices.

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|TOTAL COMPANY                            
|AS OF DECEMBER 31, 2010                  
|(CONSTANT PRICES AND COSTS)              

The estimated future net revenues presented do not represent
fair market value. The estimated future net revenues presented below are
calculated using the average price received on December 31, 2010. The prices
were held constant and costs were not inflated for the life of the reserves as
summarized in Part 3  Pricing Assumptions.

|                                 |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|-------------------------------- |  | -------------------- |  |  | ------------------- | 
|US$                              |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$M                               |  | 0%                   |  |  | 5%                  | 
|Proved                           |  |                      |  |  |                     | 
|Producing                        |  | 286,859              |  |  | 251,168             | 
|Non-Producing                    |  | 53,987               |  |  | 43,031              | 
|Undeveloped                      |  | 47,095               |  |  | 38,573              | 
|Total Proved                     |  | 387,941              |  |  | 332,772             | 
|Probable                         |  | 153,093              |  |  | 121,857             | 
|Proved+Probable                  |  | 541,034              |  |  | 454,629             | 
|Possible                         |  | 183,719              |  |  | 132,643             | 
|                                 |  |                      |  |  |                     | 
|Proved+Probable +
      Possible |  | 724,753              |  |  | 587,272             | 

Note:

|(1) | In Egypt and Yemen, under the terms of the Production
      Sharing Agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen Future Net Revenues are after
      Egypt and Yemen income tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

23

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|EGYPT                                    
|AS OF DECEMBER 31, 2010                  
|(CONSTANT PRICES AND COSTS)              

|                              |  | Before Income
      Tax(1) |  |  | After Income
      Tax(1) | 
|----------------------------- |  | -------------------------- |  |  | ------------------------- | 
|US$                           |  | Discounted at %/yr         |  |  | Discounted at %/yr        | 
|$M                            |  | 0%                         |  |  | 5%                        | 
|Proved                        |  |                            |  |  |                           | 
|Producing                     |  | 238,555                    |  |  | 207,034                   | 
|Non-Producing                 |  | 53,987                     |  |  | 43,032                    | 
|Undeveloped                   |  | 18,000                     |  |  | 15,103                    | 
|Total Proved                  |  | 310,542                    |  |  | 265,169                   | 
|Probable                      |  | 131,544                    |  |  | 105,026                   | 
|Total Proved+Probable         |  | 442,086                    |  |  | 370,195                   | 
|Possible                      |  | 170,075                    |  |  | 122,092                   | 
|                              |  |                            |  |  |                           | 
|TotalProved+Probable+Possible |  | 612,161                    |  |  | 492,287                   | 

Note:

|(1) | In Egypt, under the terms of the Production Sharing
      Agreements, income tax is current and assessed on all production sharing
      oil; therefore all Egypt Future Net Revenues are after Egypt income
      tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|YEMEN                                    
|AS OF DECEMBER 31, 2010                  
|(CONSTANT PRICES AND COSTS)              

|                              |  | Before Income
      Tax(1) |  |  | After Income
      Tax(1) | 
|----------------------------- |  | -------------------------- |  |  | ------------------------- | 
|US$                           |  | Discounted at %/yr         |  |  | Discounted at %/yr        | 
|$M                            |  | 0%                         |  |  | 5%                        | 
|Proved                        |  |                            |  |  |                           | 
|Producing                     |  | 48,304                     |  |  | 44,133                    | 
|Non-Producing                 |  | -                          |  |  | -                         | 
|Undeveloped                   |  | 29,095                     |  |  | 23,470                    | 
|Total Proved                  |  | 77,399                     |  |  | 67,603                    | 
|Probable                      |  | 21,549                     |  |  | 16,830                    | 
|Total Proved+Probable         |  | 98,948                     |  |  | 84,433                    | 
|Possible                      |  | 13,644                     |  |  | 10,553                    | 
|                              |  |                            |  |  |                           | 
|TotalProved+Probable+Possible |  | **112,592**                |  |  | 94,986                    | 

Note:

|(1) | In Yemen, under the terms of the Production Sharing
      Agreements, income tax is current and assessed on all production sharing
      oil; therefore all Yemen Future Net Revenues are after Yemen income
      tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

24

|TOTAL FUTURE NET REVENUES  
|---------------------------
|(UNDISCOUNTED)             
|AS AT DECEMBER 31, 2010    
|(CONSTANT PRICES AND COSTS)

|                                 |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  | Future  |  |  |        |  |  | Future  | 
|-------------------------------- |  | --------- |  |  | --------- |  |  | --------- |  |  | ----------- |  |  | ----------- |  |  | ------- |  |  | ------ |  |  | ------- | 
|                                 |  |           |  |  |           |  |  |           |  |  |             |  |  | Well        |  |  | Net     |  |  |        |  |  | Net     | 
|                                 |  |           |  |  |           |  |  |           |  |  |             |  |  | Abandonment |  |  | Revenue |  |  |        |  |  | Revenue | 
|                                 |  |           |  |  |           |  |  |           |  |  |             |  |  | and         |  |  | Before  |  |  |        |  |  | After   | 
|                                 |  |           |  |  |           |  |  | Operating |  |  | Development |  |  | Reclamation |  |  | Income  |  |  | Income |  |  | Income  | 
|                                 |  | Revenue   |  |  | Royalties |  |  | Costs     |  |  | Costs       |  |  | Costs(2)    |  |  | Taxes   |  |  | Taxes  |  |  | Taxes   | 
|Reserves
      Category          |  | (US$M)    |  |  | (US$M)    |  |  | (US$M)    |  |  | (US$M)      |  |  | (US$M)      |  |  | (US$M)  |  |  | (US$M) |  |  | (US$M)  | 
|Proved Reserves                  |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |         |  |  |        |  |  |         | 
|Egypt(1)                         |  | 1,058,030 |  |  | 446,131   |  |  | 282,236   |  |  | 19,120      |  |  | -           |  |  | 310,542 |  |  | -      |  |  | 310,542 | 
|Yemen(1)                         |  | 408,857   |  |  | 189,377   |  |  | 139,259   |  |  | 2,822       |  |  | -           |  |  | 77,399  |  |  | -      |  |  | 77,399  | 
|Total Company                    |  | 1,466,887 |  |  | 635,508   |  |  | 421,496   |  |  | 21,942      |  |  | -           |  |  | 387,941 |  |  | -      |  |  | 387,941 | 
|Proved+ProbableReserves          |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |         |  |  |        |  |  |         | 
|Egypt(1)                         |  | 1,677,787 |  |  | 733,626   |  |  | 438,257   |  |  | 63,820      |  |  | -           |  |  | 442,086 |  |  | -      |  |  | 442,086 | 
|Yemen(1)                         |  | 508,387   |  |  | 237,451   |  |  | 166,632   |  |  | 5,355       |  |  | -           |  |  | 98,948  |  |  | -      |  |  | 98,948  | 
|Total Company                    |  | 2,186,174 |  |  | 971,076   |  |  | 604,889   |  |  | 69,176      |  |  | -           |  |  | 541,034 |  |  | -      |  |  | 541,034 | 
|Proved+Probable+PossibleReserves |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |         |  |  |        |  |  |         | 
|Egypt(1)                         |  | 2,430,260 |  |  | 1,101,664 |  |  | 607,015   |  |  | 109,420     |  |  | -           |  |  | 612,161 |  |  | -      |  |  | 612,161 | 
|Yemen(1)                         |  | 570,410   |  |  | 266,466   |  |  | 180,597   |  |  | 10,756      |  |  | -           |  |  | 112,592 |  |  | -      |  |  | 112,592 | 
|Total Company                    |  | 3,000,670 |  |  | 1,368,130 |  |  | 787,612   |  |  | 120,177     |  |  | -           |  |  | 724,753 |  |  | -      |  |  | 724,753 | 

Notes:

|(1) | In Egypt and Yemen, under the terms of the Production
      Sharing Agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen Future Net Revenues are after
      Egypt and Yemen income tax. Income taxes payable in Egypt and Yemen have
      been recorded as Operating Costs for reporting purposes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Please see "Additional Information Concerning Abandonment
      and Reclamation Costs" in Part 6 of this
report.                                                                                                                                                                                                                                                 

---

25

|TOTAL FUTURE NET REVENUES  
|---------------------------
|BY PRODUCTION GROUP        
|AS AT DECEMBER 31, 2010    
|(CONSTANT PRICES AND COSTS)

|                          |  |                                           |  |  | Egypt           |  |  |                |  |  | Yemen           |  |  |                |  |  | Total           |  |  | Total       | 
|------------------------- |  | ----------------------------------------- |  |  | --------------- |  |  | -------------- |  |  | --------------- |  |  | -------------- |  |  | --------------- |  |  | ----------- | 
|                          |  |                                           |  |  | Future net      |  |  | Egypt          |  |  | Future net      |  |  | Yemen          |  |  | Future net      |  |  | Unit Value  | 
|                          |  |                                           |  |  | Revenue Before  |  |  | Unit Value     |  |  | Revenue         |  |  | Unit Value     |  |  | Revenue         |  |  | Before Tax  | 
|                          |  |                                           |  |  | Taxes(1)        |  |  | Before Tax     |  |  | Before Taxes(1) |  |  | Before Tax     |  |  | Before Taxes(1) |  |  | (discounted | 
|                          |  |                                           |  |  | (discounted at  |  |  | (discounted at |  |  | (discounted at  |  |  | (discounted at |  |  | (discounted at  |  |  | at          | 
|Reserves                  |  | Product                                   |  |  | 10%/year)       |  |  | 10%/year)      |  |  | 10%/year)       |  |  | 10%/year)      |  |  | 10%/year)       |  |  | 10%/year)   | 
|Category                  |  | Group                                     |  |  | (US$M)          |  |  | ($/Bbl)        |  |  | (US$M)          |  |  | ($/Bbl)        |  |  | (US$M)          |  |  | ($/Bbl)     | 
|Total Proved              |  | Light and 
    Medium Oil Heavy Oil       |  |  | 134,937 96,649  |  |  | 29.27 23.12    |  |  | 59,765 -        |  |  | 21.18 -        |  |  | 194,702 96,649  |  |  | 26.20 23.12 | 
|Proved+Probable           |  | Light
      and 
    Medium Oil Heavy Oil |  |  | 164,666 151,718 |  |  | 25.53 21.68    |  |  | 73,245 -        |  |  | 21.03 -        |  |  | 237,911 151,718 |  |  | 23.95 21.68 | 
|Proved+Probable +Possible |  | Light and 
    Medium Oil Heavy Oil       |  |  | 200,819 208,409 |  |  | 23.50 20.12    |  |  | 81,554 -        |  |  | 20.87 -        |  |  | 282,373 208,409 |  |  | 22.67 20.12 | 

Notes:

|(1) | In Egypt and Yemen, under the terms of the Production
      Sharing Agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen Future Net Revenues are after
      Egypt and Yemen income tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

26

Notes to Reserves Data Tables:

|1. | Columns may not add due to rounding.                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|2. | The crude oil, natural gas liquids and natural gas
      reserve estimates presented in the Reserves Data are based on the
      definitions and guidelines contained in the COGE Handbook. A summary of
      those definitions is set forth below.                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | "Development costs" means costs incurred to obtain
      access to reserves and to provide facilities for extracting, treating,
      gathering and storing the oil and gas from reserves. More specifically,
      development costs, including applicable operating costs of support
      equipment and facilities and other costs of development activities, are
      costs incurred to:
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                              
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                          

---

27

Reserve Categories

Reserves are estimated remaining
quantities of oil and natural gas and related substances anticipated to be
recoverable from known accumulations, from a given date forward, based on

- analysis of drilling, geological, geophysical and
  engineering data;
- the use of established technology; and
- specified economic conditions which are generally
  accepted as being reasonable.

Reserves are classified according to
the degree of certainty associated with the estimates.

| | (a) | Proved reservesare those reserves that can be
      estimated with a high degree of certainty to be recoverable. It is likely
      that the actual remaining quantities recovered will exceed the estimated
      proved reserves.                                                                                                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                            
| | (b) | Probable reservesare those additional reserves
      that are less certain to be recovered than proved reserves. It is equally
      likely that the actual remaining quantities recovered will be greater or
      less than the sum of the estimated proved plus probable
reserves.                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                            
| | (c) | Possible reservesare those additional reserves
      that are even less certain to be recovered than probable reserves. It is
      unlikely that the actual remaining quantities recovered will be greater
      than the sum of the estimated proved plus probable plus possible
      reserves.                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Other criteria that must also be met for the
      categorization of reserves are provided in the COGE Handbook.                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                            
| |     | Each of the reserve categories (proved, probable and
      possible) may be divided into developed and undeveloped
  categories:                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                            
| | (d) | Developed reservesare those reserves that are
      expected to be recovered from existing wells and installed facilities or,
      if facilities have not been installed, that would involve a low
      expenditure (for example, when compared to the cost of drilling a well) to
      put the reserves on production. The developed category may be subdivided
      into producing and non-producing.

| | (i)  | Developed producing reservesare those reserves
      that are expected to be recovered from completion intervals open at the
      time of the estimate. These reserves may be currently producing or, if
      shut in, they must have previously been on production, and the date of
      resumption of production must be known with reasonable
certainty.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                               
| | (ii) | Developed non-producing reservesare those
      reserves that either have not been on production, or have previously been
      on production, but are shut in, and the date of resumption of production
      is unknown.                                                                                                                                    

| | (e) | Undeveloped reservesare those reserves expected
      to be recovered from known accumulations where a significant expenditure
      (for example, when compared to the cost of drilling a well) is required to
      render them capable of production. They must fully meet the requirements
      of the reserves classification (proved, probable, possible) to which they
      are assigned.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

28

In multi-well pools it may be
appropriate to allocate total pool reserves between the developed and
undeveloped categories or to subdivide the developed reserves for the pool
between developed producing and developed non-producing. This allocation should
be based on the estimator's assessment as to the reserves that will be recovered
from specific wells, facilities and completion intervals in the pool and their
respective development and production status.

Levels of Certainty for Reported
Reserves

The qualitative certainty levels
referred to in the definitions above are applicable to individual reserve
entities (which refers to the lowest level at which reserves calculations are
performed) and to reported reserves (which refers to the highest level sum of
individual entity estimates for which reserves are presented). Reported reserves
should target the following levels of certainty under a specific set of economic
conditions:

| | (i)   | at least a 90 percent probability that the quantities
      actually recovered will equal or exceed the estimated proved reserves;
      and                                                                                                                                                                                                                                                                                                                                                                                                           
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (ii)  | at least a 50 percent probability that the quantities
      actually recovered will equal or exceed the sum of the estimated proved
      plus probable reserves; and                                                                                                                                                                                                                                                                                                                                                                                  
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (iii) | at least a 10 percent probability that the quantities
      actually recovered will equal or exceed the sum of the estimated proved
      plus probable plus possible reserves.                                                                                                                                                                                                                                                                                                                                                                        
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | A qualitative measure of the certainty levels pertaining
      to estimates prepared for the various reserves categories is desirable to
      provide a clearer understanding of the associated risks and uncertainties.
      However, the majority of reserves estimates will be prepared using
      deterministic methods that do not provide a mathematically derived
      quantitative measure of probability. In principle, there should be no
      difference between estimates prepared using probabilistic or deterministic
      methods.
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |       | Additional clarification of certainty levels associated
      with reserves estimates and the effect of aggregation is provided in the
      COGE Handbook.                                                                                                                                                                                                                                                                                                                                                                                            

PRICING ASSUMPTIONS

|1. | Constant Prices and Costs                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                               
|   | In Egypt, a constant price of $69.50/Bbl was utilized in
      the constant price case. The constant price case for 2010 is based on the
      average of the reference price received on the first day of each month
      during 2010 adjusted for respective differentials.
|   |                                                                                                                                                                                                                                                                               
|   | In Yemen, a constant price of $77.81/Bbl was utilized in
      the constant price case. The constant price case for 2010 is based on the
      average of the reference price received on the first day of each month
      during 2010 adjusted for respective differentials.
|   |                                                                                                                                                                                                                                                                               
|2. | Forecast Prices and Costs                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                               
|   | The forecast cost and price assumptions assume changes in
      wellhead selling prices and take into account inflation with respect to
      future operating and capital costs.                                                                                             

---

29

For the Reserves, crude oil and natural
gas benchmark reference pricing, as at December 31, 2010, inflation and exchange
rates utilized by DeGolyer in the Reserves Data, which were DeGolyer's then
current forecasts at the date of the Reserves Data, were as follows:

WTI Cushing
    
    BrentOklahoma
    
    Reference Price
    
    Inflation
    
    Exchange RateYear
    
    (US$Bbl)
    
    (US$/Bbl)
    
    Rates(1)% Year
    
    (Cdn$/US$)Forecast2011
    
    88.00
    
    93.00
    
    0.0
    
    0.982012
    
    90.78
    
    91.78
    
    2.0
    
    0.982013
    
    93.64
    
    92.64
    
    2.0
    
    0.982014
    
    96.57
    
    94.57
    
    2.0
    
    0.982015
    
    99.58
    
    97.58
    
    2.0
    
    0.982016
    
    101.58
    
    99.58
    
    2.0
    
    0.98Thereafter
    
    +2.0%/year
    
    +2.0%/year
    
    +2.0%/year
    
  +0%/year


Notes:

| | (1) | Inflation rates for forecasting expenditure prices and
      costs.
| | --- | -------------------------------------------------------------------

The weighted average historical price
in US$ realized by the Company in Egypt, for the year ended December 31, 2010
for crude oil was $71.80 /Bbl.

The weighted average historical price
in US$ realized by the Company in Yemen, for the year ended December 31, 2010
for crude oil was $79.79 /Bbl.

|RECONCILIATION OF CHANGES IN RESERVES
|-------------------------------------
|                                     
|RECONCILIATION OF GROSS RESERVES     
|BY PRINCIPAL PRODUCT TYPE            
|COMPANY                              
|AS AT DECEMBER 31, 2010              
|(FORECAST PRICES AND COSTS)          

|                    |  | LIGHT & MEDIUM OIL |   |  | HEAVY OIL |  
|------------------- |  | ------------------ | - |  | --------- | -
|                    |  | Gross              |   |  | Gross     |  
|                    |  | Proved             |   |  | Probable  |  
|FACTORS             |  | (MBbl)             |   |  | (MBbl)    |  
|December 31, 2009   |  | 14,998             |   |  | 2,990     |  
|Extensions          |  | -                  |   |  | 300       |  
|Improved recovery   |  | -                  |   |  | -         |  
|Technical Revisions |  | 386                |   |  | (647      | )
|Discoveries         |  | 669                |   |  | 2,240     |  
|Acquisitions        |  | -                  |   |  | -         |  
|Dispositions        |  | -                  |   |  | -         |  
|Economic Factors    |  | 29                 |   |  | 8         |  
|Production          |  | (2,828             | ) |  | -         |  
|December 31, 2010   |  | 13,254             |   |  | 4,892     |  

---

30

|RECONCILIATION OF GROSS RESERVES
|--------------------------------
|BY PRINCIPAL PRODUCT TYPE       
|EGYPT                           
|AS AT DECEMBER 31, 2010         
|(FORECAST PRICES AND COSTS)     

|                    |  | LIGHT & MEDIUM OIL |   |  | HEAVY OIL |  
|------------------- |  | ------------------ | - |  | --------- | -
|                    |  | Gross              |   |  | Gross     |  
|                    |  | Proved             |   |  | Probable  |  
|FACTORS             |  | (MBbl)             |   |  | (MBbl)    |  
|December 31, 2009   |  | 8,806              |   |  | 1,752     |  
|Extensions          |  | -                  |   |  | 300       |  
|Improved recovery   |  | -                  |   |  | -         |  
|Technical Revisions |  | 287                |   |  | (661      | )
|Discoveries         |  | 669                |   |  | 2,188     |  
|Acquisitions        |  | -                  |   |  | -         |  
|Dispositions        |  | -                  |   |  | -         |  
|Economic Factors    |  | 29                 |   |  | 8         |  
|Production          |  | (1,794             | ) |  | -         |  
|December 31, 2010   |  | 7,998              |   |  | 3,585     |  

|RECONCILIATION OF GROSS RESERVES
|--------------------------------
|BY PRINCIPAL PRODUCT TYPE       
|YEMEN                           
|AS AT DECEMBER 31, 2010         
|(FORECAST PRICES AND COSTS)     

LIGHT & MEDIUM OILGross
    
    
    Gross
    
    
    Gross ProvedProved
    
    
    Probable
    
    
    Plus ProbableFACTORS
    
    (MBbl)
    
    
    (MBbl)
    
    
    (MBbl)December 31, 2009
    
    6,191
    
    
    1,239
    
    
    7,430Extensions
    
    -
    
    
    -
    
    
    -Improved recovery
    
    -
    
    
    -
    
    
    -Technical Revisions
    
    99
    
    
    15
    
    
    114Discoveries
    
    -
    
    
    53
    
    
    53Acquisitions
    
    -
    
    
    -
    
    
    -Dispositions
    
    -
    
    
    -
    
    
    -Economic Factors
    
    -
    
    
    -
    
    
    -Production
    
    (1,033
    )
    
    -
    
    
    (1,033
    )December 31, 2010
    
    5,257
    
    
    1,306
    
    
    6,563


---

31

ADDITIONAL INFORMATION RELATING TO RESERVES
DATA

Undeveloped Reserves

The following tables set forth the gross proved undeveloped
reserves and the gross probable undeveloped reserves, each by product type,
attributed to the Company in the most recent three financial years and, in the
aggregate, before that time, as applicable.

Proved Undeveloped Reserves

|        |  | Light and Medium Oil |  | Heavy Oil             
|------- |  | -------------------- |  | ----------------------
|Year    |  | (MBbl)               |  | (MBbl)                
|        |  | First Attributed     |  | Cumulative at Year End
|        |  |                      |  |                       
|2008(1) |  | 942                  |  | 2,556                 
|2009(2) |  | 1,088                |  | 3,157                 
|2010(3) |  | -                    |  | 1,798                 

Notes:

|(1) | In 2008, the proved undeveloped light oil was assigned to
      Yemen with two horizontal development wells at An Nagyah, two at Osaylan
      two vertical development wells at Tasour and a vertical development and
      well recompletion at Godah. No new proved undeveloped heavy oil reserves
      were assigned in Egypt.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In 2009, Proved Undeveloped medium oil was assigned to
      Egypt with two vertical development wells at Hana and light oil at Yemen
      with two additional horizontal development wells at An Nagyah.                                                                                                                         
|(3) | In 2010, Proved Undeveloped heavy oil was assigned to
      Egypt with twelve vertical development wells at Arta. No new proved
      undeveloped reserves were assigned in Yemen.                                                                                                                                                 

Probable Undeveloped Reserves

|        |  | Light and Medium Oil |  | Heavy Oil             
|------- |  | -------------------- |  | ----------------------
|Year    |  | (MBbl)               |  | (MBbl)                
|        |  | First Attributed     |  | Cumulative at Year End
|        |  |                      |  |                       
|2008(1) |  | 195                  |  | 329                   
|2009(2) |  | 390                  |  | 944                   
|2010(3) |  | 2,342                |  | 2,625                 

Notes:

|(1) | In 2008, the probable undeveloped light oil was assigned
      to Yemen for a horizontal development well at Osaylan and a vertical
      development location at Godah. The heavy oil reserves were assigned to
      Egypt with two development wells at Hana West and incremental waterflood
      reserves assigned to the Hana pool. All development activities are
      anticipated to take place during 2009 except the Osaylan well in
    2010.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In 2009, Probable Undeveloped medium oil was assigned to
      Egypt for a vertical development well at Hana West. The heavy oil reserves
      were also assigned to Egypt with one vertical development well at each of
      Hoshia and North Hoshia. All development activities are anticipated to
      take place during 2010                                                                                                                      
|(3) | In 2010, Probable Undeveloped light and medium oil was
      assigned to Egypt for fourteen vertical development wells at East Ghazalat
      and one vertical development well at Hana West. The heavy oil reserves
      were also assigned to Egypt with sixteen vertical development wells at
      Arta and four vertical development wells at Hoshia. All development
      activities are anticipated to take place during
2010                   

---

32

|Future Development Costs
|------------------------
|                        
|FUTURE DEVELOPMENT COSTS
|TOTAL COMPANY           
|AS AT DECEMBER 31, 2010 

(US$ M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2011
    
    20,592
    
    
    66,2762012
    
    1,275
    
    
    2,6522013
    
    104
    
    
    1042014
    
    -
    
    
    -2015
    
    -
    
    
    216Remaining
    
    -
    
    
    -Total Undiscounted
    
    21,971
    
    
    69,248


|FUTURE DEVELOPMENT COSTS
|------------------------
|EGYPT                   
|AS AT DECEMBER 31, 2010 

(US$ M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2011
    
    17,770
    
    
    60,9202012
    
    1,275
    
    
    2,6522013
    
    104
    
    
    1042014
    
    -
    
    
    -2015
    
    -
    
    
    216Remaining
    
    -
    
    
    -Total Undiscounted
    
    19,149
    
    
    63,893


|FUTURE DEVELOPMENT COSTS
|------------------------
|YEMEN                   
|AS AT DECEMBER 31, 2010 

(US$ M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2011
    
    2,822
    
    
    5,3552012
    
    -
    
    
    -2013
    
    -
    
    
    -2014
    
    -
    
    
    -2015
    
    -
    
    
    -Total Undiscounted
    
    2,822
    
    
    5,355


The Company expects to fund the future development costs noted
above primarily through the use of working capital, cash flow, debt and equity
financing as required.

---

33

OTHER OIL AND GAS INFORMATION

Oil and Gas Wells

The following table sets forth the number and status of wells
in which the Company has a working interest as at December 31, 2010. All of the
Company's wells are located onshore.

|      |  | Oil Wells |  |  | Natural Gas Wells | 
|----- |  | --------- |  |  | ----------------- | 
|      |  | Producing |  |  | Non-Producing     | 
|      |  | Gross     |  |  | Net               | 
|      |  |           |  |  |                   | 
|Egypt |  | 45        |  |  | 45.0              | 
|Yemen |  | 34        |  |  | 6.3               | 
|Total |  | 79        |  |  | 51.3              | 

Properties with No Attributed Reserves

The following table sets out the Company's developed and
undeveloped land holdings as at December 31, 2010.

|      |  | Developed Acres |  |  | Undeveloped Acres |  |  | Total Acres | 
|----- |  | --------------- |  |  | ----------------- |  |  | ----------- | 
|      |  | Gross           |  |  | Net               |  |  | Gross       | 
|      |  |                 |  |  |                   |  |  |             | 
|Egypt |  | 7,455           |  |  | 7,135             |  |  | 3,836,701   | 
|Yemen |  | 36,050          |  |  | 7,099             |  |  | 1,107,454   | 
|Total |  | 43,505          |  |  | 14,234            |  |  | 4,944,155   | 

In the West Gharib PSC in Egypt, pursuant to a one-year
extension to the West Hoshia development lease, the Company has provided a $1.0
million production guarantee to drill one exploration well prior to October 14,
2011. All other work commitments have been fulfilled. A total of approximately
8,000 acres in West Gharib will potentially expire during 2011.

In Nuqra Block 1 in Egypt, the Company has entered the second
exploration extension period, effective July 18, 2009. The second exploration
period has a three-year term (expiry date of July 17, 2012) with a commitment to
spend $5.0 million and drill two exploration wells. The Company has met the
second extension financial commitment of $5.0 million in the prior periods.

In the East Ghazalat Concession in the Western Desert of Egypt,
the Company entered into a farm-out agreement and paid 100% of three exploration
wells to earn a 50% working interest in the concession. All financial and work
commitments have been met.

The Company does not have any work commitments associated with
its undeveloped lands in Yemen Blocks 32 and S-1.

In Yemen Block 72, the Company entered the 2nd three
year exploration Phase on January 12, 2009. The Company has a commitment to
drill one exploration well by January 11, 2012 for $2.0 million ($0.1 million
net). The commitment was fully satisfied subsequent to December 31, 2010.

In Yemen Block 75, the contractor (Block 75 Joint Venture
Group) has a remaining commitment of $3 million gross ($0.8 million net) for the
first exploration work-period (36 months) commencing March 8, 2008 representing
one exploration well. Subsequent to December 31, 2010, the Company received an
extension on the first exploration period to September 9, 2011.

---

34

Forward Contracts

The Company's contracts to sell crude oil or natural gas are at
prevailing market pricing, except for the following financial derivative
contracts respecting crude oil:

|                                    |  |                  |  |                 |  | Dated Brent Pricing
|----------------------------------- |  | ---------------- |  | --------------- |  | -------------------
|                                    |  |                  |  |                 |  | Put  Call         
|Period                              |  | Volume           |  | Type            |  | (U.S. Dollars)     
|January 1, 2011  December 31, 2011 |  | 40,000 Bbl/month |  | Financial Floor |  | $65.00             
|April 1, 2011  December 31, 2011   |  | 20,000 Bbl/month |  | Financial Floor |  | $75.00             

The total volumes hedged per year are listed below:

Volume
    
    2011Annual (Bbls)
    
    660,000Daily Average (Bopd)
    
    1,808


Additional Information Concerning Abandonment and
Reclamation Costs

In both Egypt and Yemen, estimated future abandonment and
reclamations costs related to properties evaluated have not been taken into
account by DeGolyer. Under the terms of the production sharing agreements,
ownership in the facilities and wells is transferred to the respective
Governments of Egypt and Yemen through cost recovery. Therefore the future
abandonment and reclamation costs have been assessed a zero value.

Tax Horizon

In 2010, the Company did not pay any income taxes in Canada and
does not anticipate any taxes payable in the future.

Capital Expenditures

The following table summarizes the capital expenditures (net of
incentives and net of certain proceeds and including capitalized general and
administrative expenses) related to the Company's activities for the year ended
December 31, 2010 (excluding Canadian Expenditures):

Egypt
    
    
    Yemen
    
    
    Total(US$M)Property acquisition costsProved
      properties
    
    -
    
    
    -
    
    
    -Undeveloped properties
    
    -
    
    
    -
    
    
    -Exploration costs
    
    28,406
    
    
    2,419
    
    
    30,825Development costs
    
    27,517
    
    
    4,897
    
    
    32,414Corporate and other
    
    2,512
    
    
    368
    
    
    2,880Corporate acquisitionTotal
    
    58,435
    
    
    7,684
    
    
    66,119


---

35

Exploration and Development Activities

The following tables set forth the gross and net exploratory
and development wells which the Company drilled during the year ended December
31, 2010:

|Egypt:               |  |             |  |  | Gross       |  |  |       |  |  |             |  |  | Net         |  |  |       | 
|-------------------- |  | ----------- |  |  | ----------- |  |  | ----- |  |  | ----------- |  |  | ----------- |  |  | ----- | 
|                     |  | Exploration |  |  | Development |  |  | Total |  |  | Exploration |  |  | Development |  |  | Total | 
|Natural Gas          |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Crude Oil            |  | 11          |  |  | 13          |  |  | 24    |  |  | 10.5        |  |  | 11.5        |  |  | 22.0  | 
|Service              |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Dry and Abandoned(1) |  | 7           |  |  | -           |  |  | 7     |  |  | 6.0         |  |  | -           |  |  | 6.0   | 
|Total                |  | 18          |  |  | 13          |  |  | 31    |  |  | 16.5        |  |  | 11.5        |  |  | 28.0  | 

|                     |  |             |  |  | Gross       |  |  |       |  |  |             |  |  | Net         |  |  |       | 
|-------------------- |  | ----------- |  |  | ----------- |  |  | ----- |  |  | ----------- |  |  | ----------- |  |  | ----- | 
|Yemen:               |  | Exploration |  |  | Development |  |  | Total |  |  | Exploration |  |  | Development |  |  | Total | 
|Natural Gas          |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Crude Oil            |  | 1           |  |  | 6           |  |  | 7     |  |  | 0.25        |  |  | 1.28        |  |  | 1.53  | 
|Service              |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Dry and Abandoned(1) |  | 1           |  |  | -           |  |  | 1     |  |  | 0.14        |  |  | -           |  |  | 0.14  | 
|Total                |  | 2           |  |  | 6           |  |  | 8     |  |  | 0.39        |  |  | 1.28        |  |  | 1.67  | 

Note:

|(1) | "Dry and abandoned well" means a well which is not a
      productive well or a service well. A productive well is a well that is
      capable of producing oil and gas in commercial quantities or in quantities
      considered by the operator to be sufficient to justify the costs required
      to complete, equip and produce the well. A service well means a well such
      as a water or gas-injection, water-source or water-disposal well. Such
      wells do not have marketable reserves of crude oil or natural gas
      attributed to them but are essential to the production of the crude oil
      and natural gas reserves.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Current exploration and development activities are focused on
the Arta and East Arta areas in Egypt. Other key areas in Egypt for 2011 include
development and further exploration of the East Ghazalat concession and
optimization of the waterfloods in the Hana, Hana West and Hoshia fields of West
Gharib. In Yemen, development drilling is planned at An Nagyah in Block S-1 with
exploration planned on Blocks 72 and 75.

Production Estimates

The following table sets out the volume of the Company's daily
production (working interest before royalties) estimated for the year ending
December 31, 2011 which is reflected in the estimate of future net revenue
disclosed in the prior reserves summary tables.

|                           |  |             |  |  |             |  |  | Egypt         |  |  | Yemen      |  |  | Yemen      |  |  |          | 
|-------------------------- |  | ----------- |  |  | ----------- |  |  | ------------- |  |  | ---------- |  |  | ---------- |  |  | -------- | 
|                           |  | Egypt       |  |  | Egypt       |  |  | East Ghazalat |  |  | Block S-1  |  |  | Block 32   |  |  | Total    | 
|                           |  | West Gharib |  |  | West Gharib |  |  | Light and     |  |  | Light and  |  |  | Light and  |  |  | Company  | 
|                           |  | Medium Oil  |  |  | Heavy Oil   |  |  | Medium Oil    |  |  | Medium Oil |  |  | Medium Oil |  |  | Bbls     | 
|                           |  | Gross       |  |  | Gross       |  |  | Gross         |  |  | Gross      |  |  | Gross      |  |  | Gross    | 
|                           |  | (Bbls/d)    |  |  | (Bbls/d)    |  |  | (Bbls/d)      |  |  | (Bbls/d)   |  |  | (Bbls/d)   |  |  | (Bbls/d) | 
|Proved Producing           |  | 3,792       |  |  | 3,351       |  |  | -             |  |  | 2,173      |  |  | 523        |  |  | 9,839    | 
|Proved Developed           |  | 929         |  |  | 193         |  |  | 299           |  |  | -          |  |  | -          |  |  | 1,421    | 
|Non-Producing              |  |             |  |  |             |  |  |               |  |  |            |  |  |            |  |  |          | 
|Proved Undeveloped         |  | -           |  |  | 1,104       |  |  | -             |  |  | 573        |  |  | -          |  |  | 1,677    | 
|Total Proved               |  | 4,721       |  |  | 4,648       |  |  | 299           |  |  | 2,745      |  |  | 523        |  |  | 12,936   | 
|Total Probable             |  | 674         |  |  | 2,107       |  |  | 82            |  |  | 219        |  |  | 63         |  |  | 3,145    | 
|                           |  |             |  |  |             |  |  |               |  |  |            |  |  |            |  |  |          | 
|Total Proved Plus Probable |  | 5,395       |  |  | 6,755       |  |  | 381           |  |  | 2,964      |  |  | 586        |  |  | 16,081   | 

---

36

Production History

The following table summarizes certain information in respect
of sales volumes, product prices received and operating expenses made by the
Company (and its subsidiaries) for the periods indicated below:

2010Quarter EndedMar.
      31
    
    
    Jun.
      30
    
    
    Sep.
      30
    
    
    Dec.
      31Average Daily Sales VolumesEgypt(1)Heavy Crude Oil (Bbls/d)
    
    1,689
    
    
    1,702
    
    
    2,592
    
    
    3,100Light and Medium Crude Oil (Bbls/d)
      Yemen
    
    5,159
    
    
    4,929
    
    
    5,009
    
    
    4,841Light and Medium Crude Oil
      (Bbls/d)
    
    2,846
    
    
    2,575
    
    
    2,537
    
    
    2,848Combined (Bbls/d)
    
    9,694
    
    
    9,206
    
    
    10,138
    
    
    10,789Average Price ReceivedEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    68.20
    
    
    71.42
    
    
    69.43
    
    
    77.41Light and Medium Crude Oil
      (US$/Bbl) Yemen
    
    68.20
    
    
    71.42
    
    
    69.43
    
    
    77.41Light and Medium Crude Oil (US$/Bbl)
    
    76.60
    
    
    78.72
    
    
    76.76
    
    
    86.58Combined (US$/Bbl)
    
    70.66
    
    
    73.46
    
    
    71.27
    
    
    79.83Royalties and TaxesEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    36.11
    
    
    39.02
    
    
    37.82
    
    
    44.87Light and Medium Crude Oil (US$/Bbl)
    
    36.11
    
    
    39.02
    
    
    37.82
    
    
    44.87YemenLight and Medium Crude Oil (US$/Bbl)
    
    41.43
    
    
    49.40
    
    
    46.40
    
    
    51.33Combined (US$/Bbl)
    
    37.67
    
    
    41.92
    
    
    39.96
    
    
    46.58Operating ExpensesEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    4.69
    
    
    12.37
    
    
    7.12
    
    
    8.96Light and Medium Crude Oil (US$/Bbl)
      Yemen
    
    6.31
    
    
    4.31
    
    
    5.67
    
    
    4.74Light and Medium Crude Oil
      (US$/Bbl)
    
    8.37
    
    
    10.25
    
    
    10.26
    
    
    13.14Combined (US$/Bbl)
    
    6.63
    
    
    7.46
    
    
    7.19
    
    
    8.17Netback ReceivedEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    27.40
    
    
    20.03
    
    
    24.49
    
    
    23.58Light and Medium Crude Oil
      (US$/Bbl) Yemen
    
    25.77
    
    
    28.09
    
    
    25.93
    
    
    27.81Light and Medium Crude Oil (US$/Bbl)
    
    26.80
    
    
    19.07
    
    
    20.11
    
    
    22.10Combined (US$/Bbl)
    
    26.36
    
    
    24.08
    
    
    24.12
    
    
    25.09


Note:

|(1) | The Hana and Hana West reserves at West Gharib were
      re-classified as Light and Medium Crude Oil in 2010 (previously Heavy
      Crude Oil). Under the terms of the current marketing contract, all
      production from West Gharib is sold as a blended crude oil. Royalties and
      taxes are calculated on a concession basis without distinction between
      Heavy Crude Oil and, Medium and Light Crude
Oil.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

37

The following table indicates the Company's average daily
volumes from its important fields for the year ended December 31, 2010:

Light andMedium Crude
    
    
    BblsHeavy Crude Oil
    
    
    (Bbls/d)
    
    
    (Bbls/d)EgyptHana
    
    -
    
    
    2,165
    
    
    2,165Hana West
    
    -
    
    
    2,760
    
    
    2,760Hoshia
    
    1,033
    
    
    -
    
    
    1,033Arta
    
    1,208
    
    
    -
    
    
    1,208Other Egypt
    
    93
    
    
    -
    
    
    93YemenBlock S-1
    
    -
    
    
    2,084
    
    
    2,084Block 32
    
    -
    
    
    617
    
    
    617Total
    
    2,334
    
    
    7,626
    
    
    9,960


DIVIDEND POLICY

The Company has not paid any dividends to date on its Common
Shares. The Board of Directors of the Company will determine the timing, payment
and amount of dividends, if any, that may be paid by the Company from time to
time based upon, among other things, the cash flow, results of operations and
financial condition of the Company, the need for funds to finance ongoing
operations and other business considerations as the board of directors considers
relevant.

DESCRIPTION OF SHARE CAPITAL

TransGlobe is authorized to issue an unlimited number of Common
Shares. As at March 18, 2011, there were 72,899,071
Common Shares issued and outstanding. In addition, as at such date, there were
an aggregate of 7,289,907 Common Shares
reserved for issuance upon the exercise of the Company's options.

The following is a summary of the rights, privileges,
restrictions and conditions attaching to the Common Shares. Documents affecting
the rights of securityholders, including the Company's articles, have been filed
in accordance with NI 51-102 and are available on the Company's SEDAR profile at
www.sedar.com.

Common Shares

Each Common Share entitles its holder to receive notice of and
to attend all meetings of the shareholders of the Company and to one vote at
such meetings. The holders of Common Shares are, at the discretion of the Board
of Directors of the Company and subject to applicable legal restrictions,
entitled to receive any dividends declared by the Board of Directors on the
Common Shares, subject to prior satisfaction of all preferential rights
attributed to shares of any class ranking in priority to the Common Shares. The
holders of Common Shares are entitled to share equally in any distribution of
the assets of the Company upon the liquidation, dissolution, bankruptcy or
winding-up of the Company or other distribution of its assets among its
shareholders for the purpose of winding up its affairs.

Rights Plan

On March 13, 2008, the Company replaced its previous
shareholder protection rights plan agreement, which had expired, with a new
shareholder protection rights plan agreement (the "Rights Plan") with
Computershare Trust Company of Canada ("Computershare"), as rights agent,
which was approved by TransGlobe's shareholders on May 7, 2008 at the 2008
annual general and special meeting of shareholders. The Rights Plan generally
provides that following any person or entity acquiring 20% or more of the issued
and outstanding common shares (except pursuant to certain permitted or excepted
transactions) and upon the occurrence of certain other events, each holder of
common shares, other than such person or entity, shall be entitled to acquire
common shares at a discounted price. The Rights Plan is similar to other
shareholder or unitholder rights plans adopted in the energy sector. On July 19,
2008, Olympia Trust Company

---

38

superseded Computershare as the rights agent under the Rights
Plan. Copies of the Rights Plan may be obtained on request without charge from
the Corporate Secretary of the Company, Suite 2300, 250  5th Street S.W.,
Calgary, Alberta T2P 0R4, Telephone: (430) 264-9888. In addition, copies of the
Rights Plan, as filed with the securities commission or similar authorities in
Canada on May 9, 2008, may be obtained from the Company's SEDAR profile at
www.sedar.com.

Market for Securities

TransGlobe's Common Shares are listed and posted on the TSX and
the NASDAQ under the trading symbols "TGL" and "TGA" respectively.

The following table sets out the price range and trading
volumes on the TSX for the indicated periods:

(Canadian dollars, except volumes)
    High
    
    Low
    
    Volume2010January
    4.03
    
    3.52
    
    1,196,192February
    4.24
    
    3.78
    
    1,275,439March
    5.92
    
    3.96
    
    5,366,978April
    7.68
    
    5.85
    
    8,564,559May
    7.90
    
    5.76
    
    4,891,050June
    8.40
    
    7.24
    
    2,775,955July
    7.95
    
    6.74
    
    1,654,169August
    8.09
    
    7.59
    
    5,418,540September
    9.99
    
    7.49
    
    4,279,010October
    11.27
    
    9.49
    
    4,581,004November
    17.49
    
    10.80
    
    8,628,598December
    20.35
    
    13.69
    
    15,155,723


The following table sets out the price range and trading
volumes on the NASDAQ for the indicated periods:

(U.S. dollars, except volumes)
    High
    
    Low
    
    Volume2010January
    3.89
    
    3.33
    
    1,538,391February
    4.08
    
    3.52
    
    1,690,254March
    5.83
    
    3.85
    
    4,570,987April
    7.58
    
    5.81
    
    7,866,656May
    7.59
    
    6.16
    
    5,616,777June
    8.28
    
    6.87
    
    5,514,557July
    7.73
    
    6.80
    
    2,593,142August
    7.87
    
    7.12
    
    2,392,832September
    9.70
    
    7.15
    
    4,661,381October
    11.05
    
    9.32
    
    4,632,456November
    17.40
    
    10.64
    
    13,057,406December
    20.26
    
    13.68
    
    20,354,475


ESCROWED SECURITIES

As at the date hereof, none of the Company's securities are
subject to escrow.

---

39

DIRECTORS AND OFFICERS

The name and place of residence of each director and officer,
the offices held by each in the Company, the principal occupation of each
director and officer, the period served as director or officer and the number of
securities of the Company owned by such individuals as at March 18, 2011 is as
follows:

|                                                |  |                                                                      |  | Year Became |  | Number of Common    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------------------------------------------- |  | -------------------------------------------------------------------- |  | ----------- |  | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Place of                               |  |                                                                      |  | Director or |  | Shares Beneficially |  | Principal Occupation and Positions                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Residence                                       |  | Position Held                                                        |  | Officer     |  | Owned or Controlled |  | for
      the Past Five Years                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Robert A. Halpin(1)(3)(4)Alberta, Canada        |  | Chairman of the Board and
      Director                             |  | 1997        |  | 657,000(5)(0.90%)   |  | Retired Petroleum Engineer, formerly Vice President,
      International Exploration of Petro-Canada with 50 years' experience in the
      petroleum industry.                                                                                                                                                                                                                                                                                                                 
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Ross G. Clarkson Alberta, Canada                |  | President, Chief Executive
      Officer and Director                |  | 1995        |  | 1,902,154(6)(2.61%) |  | President and Chief Executive Officer of the Company
      since December 4, 1996, with over 30 years' oil and gas industry
      experience as a senior geological advisor.                                                                                                                                                                                                                                                                                                    
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Lloyd W. Herrick Alberta, Canada                |  | Vice-President, Chief
      Operating Officer and Director           |  | 1999        |  | 574,121(7)(0.79%)   |  | Vice-President and Chief Operating Officer of the Company
      since April 28, 1999, with over 30 years' experience in both domestic and
      international oil and gas exploration and development.                                                                                                                                                                                                                                                                          
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Erwin L. Noyes(2)(3)(4)British Columbia, Canada |  | Director                                                             |  | 1995        |  | 76,847(8)(0.11%)    |  | Retired since July 31, 2000; formerly Vice-President,
      International Operations of the Company and has over 40 years' experience
      in the oil and gas industry.                                                                                                                                                                                                                                                                                                        
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Geoffrey C. Chase(1)(3)(4)Alberta, Canada       |  | Director                                                             |  | 2000        |  | 62,500(9)(0.09%)    |  | Retired Senior Vice-President, Business Development with
      Ranger Oil Limited, with over 35 years' experience in the oil and gas
      industry.                                                                                                                                                                                                                                                                                                                            
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Fred J. Dyment(1)(2)(3)Alberta, Canada          |  | Director                                                             |  | 2004        |  | 54,333(10)(0.07%)   |  | Chartered accountant with over 30 years' experience in
      the oil and gas industry. Previously President and Chief Executive
      Officer, Maxx Petroleum Company (2000  2001). Prior thereto Controller,
      Vice- President, Finance and President and Chief Executive Officer of
      Ranger Oil Limited from 1978  2000.                                                                                                                                           
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Gary S. Guidry(1)(2)(4)Alberta, Canada          |  | Director                                                             |  | 2009        |  | 40,000(11)(0.05%)   |  | Petroleum engineer with over 30 years' experience in the
      oil and gas industry. President and CEO of Orion Oil and Gas Corp.
      Previously CEO of Tanganyika Oil Company Ltd; Prior thereto President and
      CEO of Calpine Natural Gas Trust, Senior Vice President and subsequently
      President of Alberta Energy Company International, and President and
      General Manager of Canadian Occidental Petroleum's (now Nexen Inc.)
      Nigerian operations.
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|David C. Ferguson Alberta, Canada               |  | Vice-President, Finance,
      Chief Financial Officer and Secretary |  | 2001        |  | 252,800(12)(0.35%)  |  | Chartered accountant with over 25 years' experience in
      the oil and gas industry. Previously Chief Financial Officer with
      Northstar Drilling Systems Inc. and Chief Financial Officer and a director
      of Myriad Energy Corporation.                                                                                                                                                                                                                             
|                                                |  |                                                                      |  |             |  |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Albert Gress Alberta, Canada                    |  | Vice President, Business
      Development                           |  | 2011        |  | 2,000(13)           |  | Certified Public Accountant with over 15 years
      experience in the international petroleum industry. Prior to joining
      TransGlobe as Country Manager in 2007, led operations in Egypt for
      Madrid-based CEPSA and for Devon Energy and worked as a business
      development advisor for CEPSA in Madrid.                                                                                                                                                       

Notes:

|(1) | Members of the Company's Audit Committee.                          
|--- | -------------------------------------------------------------------
|(2) | Members of the Company's Compensation
Committee.                   
|(3) | Members of the Company's Governance and Nominating
      Committee.
|(4) | Members of the Company's Reserves
  Committee.                     

---

40

|(5)  | Mr. Halpin also holds incentive stock options to purchase
      118,900 Common Shares consisting of: options to purchase 18,900 Common
      Shares at C$4.27 per share expiring June 8, 2012, to purchase 21,000
      Common Shares at C$4.93 per share expiring May 13, 2013, to purchase
      58,000 Common Shares at C$2.78 per share expiring November 13, 2013 and to
      purchase 21,000 Common Shares at C$7.36 per share expiring May 14,
      2015.                                                                                            
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(6)  | Mr. Clarkson also holds incentive stock options to
      purchase 767,800 Common Shares consisting of: options to purchase 136,000
      Common Shares at C$4.27 per share expiring June 8, 2012, to purchase
      136,000 Common Shares at C$4.93 per share expiring May 13, 2013, to
      purchase 228,800 Common Shares at C$2.78 per share expiring November 13,
      2013, to purchase 120,000 Common Shares at C$3.40 per share expiring
      August 21, 2014 and to purchase 147,000 Common Shares at C$7.36 per share
      expiring May 14, 2015.
|(7)  | Mr. Herrick also holds incentive stock options to
      purchase 517,000 Common Shares consisting of: options to purchase 120,000
      Common Shares at C$4.93 per share expiring May 13, 2013, to purchase
      195,000 Common Shares at C$2.78 per share expiring November 13, 2013, to
      purchase 100,000 Common Shares at C$3.40 per share expiring August 21,
      2014 and to purchase 102,000 Common Shares at C$7.36 per share expiring
      May 14, 2015.                                                                                    
|(8)  | Mr. Noyes also holds incentive stock options to purchase
      85,800 Common Shares consisting of: options to purchase 6,000 Common
      Shares at C$4.93 per share expiring May 13, 2013, to purchase 24,800
      Common Shares at C$2.78 per share expiring November 13, 2013, to purchase
      40,000 Common Shares at C$3.40 per share expiring August 21, 2014 and to
      purchase 15,000 Common Shares at C$7.36 per share expiring May 14,
      2015.                                                                                            
|(9)  | Mr. Chase also holds incentive stock options to purchase
      138,900 Common Shares consisting of: options to purchase 16,500 Common
      Shares at C$4.27 per share expiring June 8, 2012, to purchase 18,000
      Common Shares at C$4.93 per share expiring May 13, 2013, to purchase
      59,400 Common Shares at C$2.78 per share expiring November 13, 2013, to
      purchase 30,000 Common Shares at C$3.40 per share expiring August 21, 2014
      and to purchase 15,000 Common Shares at C$7.36 per share expiring May 14,
      2015.        
|(10) | Mr. Dyment also holds incentive stock options to purchase
      86,767 Common Shares consisting of: options to purchase 20,100 Common
      Shares at C$4.93 per share expiring May 13, 2013, to purchase 22,000
      Common Shares at C$2.78 per share expiring November 13, 2013, to purchase
      26,667 Common Shares at C$3.40 per share expiring August 21, 2014 and to
      purchase 18,000 Common Shares at C$7.36 per share expiring May 14,
      2015.                                                                                          
|(11) | Mr. Guidry also holds stock options to purchase 95,000
      Common Shares consisting of: options to purchase 80,000 Common Shares at
      C$3.77 per share expiring October 5, 2014 and to purchase 15,000 Common
      Shares at C$7.36 per share expiring May 14, 2015.                                                                                                                                                                                                                                                                                   
|(12) | Mr. Ferguson also holds incentive stock options to
      purchase 372,400 Common Shares consisting of: options to purchase 100,800
      Common Shares at C$4.93 per share expiring May 13, 2013, to purchase
      106,600 Common Shares at C$2.78 per share expiring November 13, 2013, to
      purchase 90,000 Common Shares at C$3.40 per share expiring August 21, 2014
      and to purchase 75,000 Common Shares at C$7.36 per share expiring May 14,
      2015.                                                                                     
|(13) | Mr. Gress also holds incentive stock options to purchase
      145,200 Common Shares consisting of: options to purchase 20,000 Common
      Shares at US$5.27 per share expiring November 20, 2012, to purchase 26,700
      Common Shares at US$4.91 per share expiring May 13, 2013, to purchase
      47,500 Common Shares at US$2.29 per share expiring November 13, 2013, to
      purchase 51,000 Common Shares at US$7.16 expiring May 14,
  2015.                                                                                                     

Cease-Trade Orders, Bankruptcies, Penalties or
Sanctions

No director or executive officer is as at the date hereof, or
has been, within 10 years of the date hereof, a director or executive officer of
any company, including TransGlobe, which while that person was acting in that
capacity:

| | (a) | was the subject of a cease-trade or similar order or an
      order that denied the relevant company access to any exemption under
      securities legislation, for a period of more than 30 consecutive
    days;                                                                                                                                                                                      
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (b) | was subject to an event that resulted, after the director
      or executive officer ceased to be a director or executive officer, in the
      company being the subject of a cease trade or similar order, or an order
      that denied the relevant company access to any exemption under securities
      legislation, for a period of more than 30 consecutive days;                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (c) | or within a year of that person ceasing to act in that
      capacity, became bankrupt, made a proposal under any legislation relating
      to bankruptcy or insolvency or was subject to or instituted any
      proceedings, arrangement or comprise with creditors, or had a receiver,
      receiver manager or trustee appointed to hold its assets; or                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                          
| | (d) | has, within the 10 years before the date of this Annual
      Information Form, become bankrupt, made a proposal under any legislation
      relating to bankruptcy or insolvency, or become subject to or
      instituted any proceeding, arrangement or
compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold the assets of the director, officer or shareholder.

---

41

In addition, no director has had any penalties or sanctions
imposed against him or entered into any settlement agreement in respect of any
penalties or sanctions imposed by a court relating to securities legislation or
by a securities regulatory authority, including a settlement agreement with a
securities regulatory authority, or any other penalties or sanctions imposed by
a court or regulatory body.

Conflicts of Interest

Directors and officers of the Company may, from time to time,
be involved with the business and operations of other oil and gas issuers, in
which case a conflict may arise. See "Risk Factors".

HUMAN RESOURCES

The Company currently employs 62 full-time employees and 9
full-time and 5 part-time consultants. The Company intends to add additional
professional and administrative staff as the needs arise.

INTEREST OF EXPERTS

There is no person or company whose profession or business
gives authority to a statement made by such person or company and who is named
as having prepared or certified a statement, report or valuation described or
included in a filing, or referred to in a filing, made under National Instrument
51-102 by the Company during, or related to, the Company's most recently
completed financial year other than DeGolyer, the Company's independent
engineering evaluator. As at the date hereof, to the knowledge of management of
the Company, none of the aforementioned persons or companies, or principals
thereof, had any registered or beneficial interests, direct or indirect, in any
securities or other property of the Company or of its associates or affiliates
either at the time they prepared the statement, report or valuation prepared by
it, at any time thereafter or to be received by them.

INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

Deloitte & Touche LLP is independent in accordance with the
Rules of Professional Conduct of the Institute of Chartered Accountants of
Alberta.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

There are no outstanding legal proceedings material to the
Company to which the Company is a party or in respect of which any of its
respective properties are subject, nor are there any such proceedings known to
be contemplated. In addition, there were no penalties or sanctions imposed
against the Company by a court relating to securities legislation or by a
securities regulatory authority during the 2010 financial year, no other
penalties or sanctions imposed by a court or regulatory body against the Company
that would likely be considered important to a reasonable investor in making an
investment decision, and no settlement agreements entered into by the Company
with a court relating to securities legislation or with a securities regulatory
authority during the 2010 financial year.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS

Other than as set forth herein, there were no material
interests, direct or indirect, of any directors or executive officers of the
Company, any shareholder who beneficially owns more than 10% of the outstanding
Common Shares or who exercises control or direction over more than 10% of the
outstanding Common Shares, or any known associate or affiliate of such persons,
in any transaction within the three most recently completed financial years or
during the current financial year that has materially affected or will
materially affect the Company.

To the best of the Company's knowledge and based on existing
information, as at the date hereof, there are no persons who own, controlled or
directed, of record or beneficially, directly or indirectly, more than 10% of
the outstanding Common Shares.

---

42

TRANSFER AGENT AND REGISTRAR

Olympia Trust Company, at its principal offices in Calgary,
Alberta and Toronto, Ontario is the transfer agent and registrar of the Common
Shares of the Company.

MATERIAL CONTRACTS

Other than discussed herein, there are no material contracts,
other than the contracts entered into in the ordinary course of business, that
are material to the Company that were entered into within the most recently
completed financial year, or before the most recently completed financial year
but are still in effect other than a credit agreement dated July 22, 2010
between a subsidiary of the Company and a syndicate of three banks in respect of
a US$100.0 million borrowing base. The loan facilities bear interest at the
LIBOR rate plus an applicable margin, which ranges from 3.75% to 4.75% dependent
on the utilizations outstanding, and are secured by a pledge over certain bank
accounts of certain of the Company's subsidiaries, a pledge over the shares of
certain of the Company's subsidiaries, a fixed and floating charge over certain
assets of such subsidiaries and parent and subsidiary corporate guarantees. A
copy of the Company's borrowing base agreement is filed on SEDAR at www.sedar.com.

AUDIT COMMITTEE INFORMATION

Composition of the Audit Committee

The audit committee of the Company (the "Audit
Committee") is comprised of Messrs. Fred Dyment, Geoffrey Chase, Robert
Halpin and Gary Guidry. The following chart sets out the assessment of each
Audit Committee member's independence, financial literacy and relevant
educational background and experience supporting such financial literacy.

|                                  |  |             |  | Financially |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--------------------------------- |  | ----------- |  | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Place of Residence       |  | Independent |  | Literate    |  | Relevant Education and Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Fred J. Dyment Alberta, Canada    |  | Yes         |  | Yes         |  | Mr. Dyment received a Chartered Accountant designation
      from the Province of Ontario in 1972 and is a member of the Alberta
      Institute of Chartered Accountants. He has over 30 years of executive
      financial management experience at several mid-size public corporations,
      many of which had international operations, where he served as President,
      CEO, CFO and director. Currently, Mr. Dyment is a member of the Board of
      Directors of several other public companies.
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Geoffrey C. Chase Alberta, Canada |  | Yes         |  | Yes         |  | Mr. Chase received a B.Sc. in Applied Science from
      Queen's University, Ontario and is a P.Eng. in the Province of Alberta. He
      has over 35 years of international executive management experience with a
      major and with a mid-size public petroleum corporation. His activities
      have involved various aspects of financial planning, budgeting and
      operations.                                                                                                                  
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Robert A. Halpin Alberta, Canada  |  | Yes         |  | Yes         |  | Mr. Halpin received a B.Sc. from Queen's University,
      Ontario in 1957 and is a P.Eng in the Province of Alberta. He has over 50
      years of international executive management and director experience at
      several major and independent international corporations where he has been
      involved in various aspects of financial planning, budgeting and
      operations.                                                                                                                  
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Gary S. Guidry Alberta, Canada    |  | Yes         |  | Yes         |  | Mr. Guidry received a Bachelor of Science in Petroleum
      Engineering from Texas A&M University in Texas, U.S.A. in 1980 and is
      a P.Eng. in the Province of Alberta. He has 30 years of international
      experience, including executive management experience where he has been
      involved in various aspects of financial planning, budgeting and
      operations.                                                                                                                        

Pre-Approval of Policies and Procedures

All non-audit services with our auditors, Deloitte & Touche
LLP, require pre-approval by the Audit Committee.

---

43

Audit Committee Charter

The full text of the Company's audit committee charter is
included in Schedule "C" to this Annual Information Form.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate fees for professional services billed to Deloitte
& Touche LLP for fiscal years ended December 31, 2010 and December 31, 2009
were as follows (all fees are in Canadian dollars):

Fiscal Year Ended December 31, 2010
    Fiscal Year Ended December 31, 2009Audit Fees
    $362,706
    $415,555Audit Related Fees
    $186,650
    $279,306Tax Fees
    $16,402
    $38,734All Other Fees
    $NIL
    $35,429TOTAL
    $565,758
    $769,024


The nature of the services provided by Deloitte & Touche
LLP under each of the categories indicated in the table is described below.

Audit FeesAudit fees were for professional
services rendered by Deloitte & Touche LLP for the audit of the Companys
annual financial statements.

Audit Related FeesAudit related fees were for
professional services rendered by Deloitte & Touche LLP for assurance and
related services that are reasonably related to the audit of the Companys
annual financial statements (not included in audit fees), as well as for the
review of the Companys interim quarterly financial statements and services
provided in connection with statutory and regulatory filings or engagements.

During the fiscal year ended December 31, 2010, Audit Related
Fees also included fees for professional services rendered by Deloitte &
Touche LLP in connection with the review of the Companys International
Financial Reporting Standards (IFRS) accounting policies and the opening
January 1, 2010 consolidated balance sheet prepared under IFRS.

Tax FeesTax fees were for tax compliance,
including the review of tax returns, tax advice and tax planning and advisory
services relating to common forms of domestic and international taxation (i.e.
income tax, capital tax, goods and services tax and payroll tax).

All Other FeesDuring the fiscal year ended
December 31, 2010, no other fees were incurred other than those described above.
During the fiscal year ended December 31, 2009, other fees were for an annual
subscription service to Petroview, a software program for oil and gas
reconnaissance.

---

44

RISK FACTORS

General Conditions Relating to Oil and Gas Exploration and
Production Operations

The Company's operations are subject to all the risks normally
incident to the exploration for and production of oil and natural gas including
geological risks, operating risks, political risks, development risks, marketing
risks, and logistical risks of operating in Egypt and Yemen.

Political Risks Relating to Egypt and Yemen

Beyond the risks inherent in the oil and gas industry, the
Company is subject to additional risks resulting from doing business in Egypt
and Yemen. While the Company has attempted to reduce many of these risks through
agreements with the Governments of Egypt, Yemen and others, no assurance can be
given that such risks have been mitigated. These risks can involve matters
arising out of the evolving laws and policies of Egypt and Yemen, political
turmoil and unrest, the impositions of special taxes or similar charges, oil
export or pipeline restrictions, foreign exchange fluctuations and currency
controls, the unenforceability of contractual rights or the taking of property
without fair compensation, restrictions on the use of expatriates in the
operations and other matters.

There can be no assurance that the agreements entered into with
the Government of Egypt and the Government of Yemen and others are enforceable
or binding in accordance with TransGlobe's understanding of their terms or that
if breached, the Company would be able to find a remedy. The Company bears the
risk that a change of government could occur and a new government may void the
agreements, laws and regulations that the Company is relying on. Operations in
Egypt and Yemen are subject to risks due to the harsh climate, difficult
topography and the potential for social, political, economic, legal and
financial instability.

Risks of Foreign Operations

All of the Company's current production is located in Egypt and
Yemen. As such, the Company is subject to political, economic, and other
uncertainties, including, but not limited to, expropriation of property without
fair compensation, changes in energy policies or the personnel administering
them, nationalization, currency fluctuations and devaluations, exchange controls
and royalty and tax increases and other risks arising out of foreign
governmental sovereignty over the areas in which the Company's operations are
conducted, as well as risks of loss due to civil strife, acts of war, terrorist
activities and insurrections. The Company's operations may also be adversely
affected by laws and policies of Canada, Egypt and Yemen affecting foreign
trade, taxation and investment. In the event of a dispute arising in connection
with the Company's operations in Egypt and Yemen, the Company may be subject to
the exclusive jurisdiction of foreign courts or may not be successful in
subjecting foreign persons to the jurisdictions of the courts of Canada or
enforcing Canadian judgments in such other jurisdictions. The Company may also
be hindered or prevented from enforcing its rights with respect to a
governmental instrumentality because of the doctrine of sovereign immunity.
Accordingly, the Company's exploration, development and production activities in
Egypt and Yemen could be substantially affected by factors beyond the Company's
control, any of which could have a material adverse effect on the Company.

The Company's operations may be adversely affected by changes
in government policies and legislation or social instability and other factors
which are not within the control of TransGlobe including, among other things, a
change in oil or natural gas pricing policy, the actions of national labour
unions, the risks of war, terrorism, abduction, expropriation and
nationalization, renegotiation or nullification of existing concessions and
contracts, changes in taxation policies, economic sanctions and the imposition
of specific drilling obligations and the development and abandonment of
fields.

If the Company's operations are disrupted and/or the economic
integrity of its projects are threatened for unexpected reasons, its business
may be harmed. These unexpected events may be due to technical difficulties,
operational difficulties which impact the production, transport or sale of the
Company's products, security risks related to guerrilla activities, geographic
and weather conditions, political changes, business reasons or otherwise.
Prolonged problems may threaten the commercial viability of its operations.

---

45

Industry Risks

The Company is subject to normal industry risks due to the
relatively small size of the Company, its level of cash flow, and the nature of
the Company's involvement in the exploration for, and the acquisition,
development and production of, oil and natural gas. Exploration for oil and
natural gas involves many risks, which even a combination of experience,
knowledge and careful evaluation may not be able to overcome. There is no
assurance that further commercial quantities of oil and natural gas will be
discovered by the Company.

The Company's operations are subject to the risks normally
incident to the operation and development of oil and natural gas properties and
the drilling of oil and natural gas wells, including encountering unexpected
formations or pressures, premature decline of reservoirs, invasion of water into
producing formations, blow-outs, cratering, fires and oil spills, all of which
could result in personal injuries, loss of life and damage to the property of
the Company and others. Although the Company maintains insurance, in amounts and
coverages which it considers adequate and in accordance with customary industry
practice, the Company is not fully insured against all of these risks, nor are
all such risks insurable, and, as a result, liability of the Company arising
from these risks could have a material adverse effect upon its financial
condition.

The operations and earnings of the Company may be affected from
time to time in varying degrees by political developments and laws and
regulations, such as forced divestiture of assets, restrictions on production,
imports and exports; price controls, tax increases, royalty increases and
retroactive tax claims, expropriations of property; and cancellation of contract
rights. Both the likelihood of such occurrences and their overall effect upon
the Company can vary greatly and are not predictable.

The marketability and price of oil and natural gas which may be
acquired or discovered by the Company may be affected by numerous factors beyond
the control of the Company. The Company may be affected by the differential
between the price paid by refiners for light, quality oil and various grades of
oil produced by the Company. The Company is subject to market fluctuations in
the prices of oil and natural gas, deliverability uncertainties related to the
proximity of its reserves to pipeline and processing facilities and extensive
government regulation relating to prices, taxes, royalties, land tenure,
allowable production, the export of oil and natural gas and many other aspects
of the oil and natural gas business. The Company's operations will be further
affected by the remoteness of, and restrictions on access to, certain properties
as well as climatic conditions. The Company is also subject to compliance with
local laws and regulations controlling the discharge of materials into the
environment or otherwise relating to the protection of the environment. The
Company is not aware of present material liability related to environmental
matters. However, it may, in the future, be subject to liability for
environmental offences of which it is presently unaware.

Exploration and Development

The Company's participation in Blocks 32, 72, 75 and S-1 in
Yemen, as well as the Nuqra Block 1, East Ghazalat and West Gharib PSCs in Egypt
represent major undertakings. The exploration programs in Yemen and Egypt are
high-risk ventures with uncertain prospects for ongoing success.

The operations and earnings of the Company and its subsidiaries
are also affected by local, regional and global events or conditions that affect
supply and demand for oil and natural gas. These events or conditions are
generally not predictable and include, among other things, the development of
new supply sources; supply disruptions; weather; international political events;
technological advances; and the competitiveness of alternative energy sources or
product substitutes.

Competition

The Company encounters strong competition from other
independent operators and from major oil companies in acquiring properties
suitable for development, in contracting for drilling equipment, production
equipment and in securing trained personnel. Many of these competitors have
financial resources and staffs substantially larger than those available to the
Company. The availability of a ready market for oil and gas discovered by the
Company depends on numerous factors beyond its control, including the extent of
production and imports of oil and gas, the demand for its products, the
proximity and capacity of natural gas pipelines and the effect of provincial,
state or federal regulations.

---

46

Interests in Properties

The Company participates in Egypt and Yemen with industry
partners with access to greater resources from which to meet their joint venture
capital commitments. Should the Company be unable to meet its commitments, the
joint venture partners may assume some or all of the Company's deficiency and
thereby assume a pro-rata portion of the Company's interest in production from
the joint venture lands. The Company is not a majority interest owner in all of
its properties and does not have sole control over the future course of
development in those properties in which it holds less than 100% interest.

Government Regulation

In the areas where the Company conducts activities, there are
statutory laws and regulations governing the activities of oil and gas
companies. These laws and regulations allow administrative agencies to govern
the activities of oil companies in the development, production and sale of both
oil and gas. Changes in these laws and regulations may substantially increase or
decrease the costs of conducting any exploration or development project. The
Company believes that its operations comply with all applicable legislation and
regulations and that the existence of such regulations has no more restrictive
effect on the Company's method of operations than on similar companies in the
industry.

Political Risks Relating to Egypt and Yemen

Beyond the risks inherent in the oil and gas industry, the
Company is subject to additional risks resulting from doing business in Egypt
and Yemen. While the Company has attempted to reduce many of these risks through
agreements with the Governments of Egypt, Yemen and others, no assurance can be
given that such risks have been mitigated. These risks can involve matters
arising out of the evolving laws and policies of Egypt and Yemen, political
turmoil and unrest, the impositions of special taxes or similar charges, oil
export or pipeline restrictions, foreign exchange fluctuations and currency
controls, the unenforceability of contractual rights or the taking of property
without fair compensation, restrictions on the use of expatriates in the
operations and other matters.

There can be no assurance that the agreements entered into with
the Government of Egypt and the Government of Yemen and others are enforceable
or binding in accordance with TransGlobe's understanding of their terms or that
if breached, the Company would be able to find a remedy. The Company bears the
risk that a change of government could occur and a new government may void the
agreements, laws and regulations that the Company is relying on. Operations in
Egypt and Yemen are subject to risks due to the harsh climate, difficult
topography and the potential for social, political, economic, legal and
financial instability.

Reliance Upon Officers

The Company is largely dependent upon the personal efforts and
abilities of its corporate officers. The loss or unavailability to the Company
of these individuals may have a material adverse effect upon the Company's
business, especially in Egypt and Yemen.

Multi-jurisdictional Legal Risks

The Company is incorporated under the laws of the Province of
Alberta, Canada, and all of the Company's directors and all of its officers are
residents of Canada. Consequently, it may be difficult for United States
investors to effect service of process within the United States upon the Company
or upon those directors or officers, who are not residents of the United States,
or to realize in the United States upon judgements of United States courts
predicated upon civil liabilities under the Securities Exchange Act of
1934, as amended (United States). Furthermore, it may be difficult for investors
to enforce judgements of the U.S. courts based on civil liability provisions of
the U.S. federal securities laws in a Canadian court against the Company or any
of the Company's non-U.S. resident executive officers or directors. There is
substantial doubt whether an original lawsuit could be brought successfully in
Canada against any of such persons or the Company predicated solely upon such
civil liabilities.

---

47

Reserve Information

The reserve and recovery information contained in the DeGolyer
Report are only estimates and the actual production and ultimate reserves from
the Company's properties may be greater or less than the estimates prepared in
such report. The DeGolyer Report has been prepared using certain commodity price
assumptions which are described in the notes to the reserve tables. If lower
prices for crude oil, natural gas liquids and natural gas are realized by the
Company and substituted for the price assumptions utilized in the report, the
present value of estimated future net cash flows for the Company's reserves
would be reduced and the reduction could be significant, particularly based on
the constant price case assumptions. Exploration for oil and natural gas
involves many risks, which even a combination of experience and careful
evaluation may not be able to overcome. There is no assurance that further
commercial quantities of oil and natural gas will be discovered by the
Company.

Additional Financing Requirements

The future development of the Company's oil and natural gas
properties may require additional financing and there are no assurances that
such financing will be available or, if available, will be available upon
acceptable terms.

Canadian Tax Considerations

As the Company is engaged in the oil and natural gas business,
its operations are subject to certain unique provisions of the Income Tax
Act (Canada) and applicable provincial income tax legislation relating to
characterization of costs incurred in their businesses which effects whether
such costs are deductible and, if deductible, the rate at which they may be
deducted for the purposes of calculating taxable income. The Company has
reviewed its historical income tax returns with respect to the characterization
of the costs incurred in the oil and natural gas business as well as other
matters generally applicable to all corporations including the ability to offset
future income against prior year losses. The Company has filed or will file all
required income tax returns and believes that it is in full compliance with the
provisions of the Income Tax Act (Canada) and applicable provincial
income tax legislation, but such returns are subject to reassessment. In the
event of a successful reassessment of the Company it may be subject to a higher
than expected past or future income tax liability as well as potentially
interest and penalties and such amount could be material.

Exchange Rate Risks

The Canadian to US dollar exchange rate has fluctuated over
time. The Company's exposure to currency exchange rate risks is primarily
limited to Canadian general and administrative expenses which are paid for in
Canadian dollars.

Capital Markets

As a result of global economic volatility, the Company, along
with all other oil and gas entities, may have restricted access to capital and
increased borrowing costs. The lending capacity of all financial institutions
has diminished and risk premiums have increased independent of the Company's
business and asset base. As future capital expenditures will be financed out of
cash generated from operations, borrowings and possible future equity sales, the
Company's ability to do so is dependent on, among other factors, the overall
state of capital markets and investor appetite for investments in the energy
industry and the Company's securities in particular.

To the extent that external sources of capital become limited
or unavailable or available on onerous terms, the Company's ability to make
capital investments and maintain existing assets may be impaired, and its
assets, liabilities, business, financial condition and results of operations may
be materially and adversely affected as a result.

Based on current funds available and expected cash from
operations, the Company believes it has sufficient funds available to fund its
projected capital expenditures, However if cash flow from operations is lower
than expected or capital costs for these projects exceed current estimates, or
if the Company incurs major unanticipated expenses related to development or
maintenance of its existing properties, it may be required to seek additional
capital to maintain its capital expenditures at planned levels. Failure to
obtain any financing necessary for the Company's capital expenditure plans may
result in a delay in development or production on the Company's properties.

---

48

Financing Risk

The Company currently has a US$100.0 million Borrowing Based
Facility. Currently, US$60 million is drawn on this credit facility which is
syndicated with three banks. A redetermination of the Borrowing Base is made on
a semi-annual basis at which time the banks determine the level of the facility
that they are willing to extend to the Company based on the Companys proved and
probable reserves, oil prices, applicable discount rate and other factors. In
the event that the facilitys borrowing base is reduced below the amount drawn
the difference will be repayable at that date. A reduction in the Borrowing Base
could affect the Company's ability to fund ongoing operations.

The Company is required to comply with covenants under the
credit facility. In the event that the Company does not comply with covenants
under the credit facility, the Company's access to capital could be restricted
or repayment could be required. The Company routinely reviews the covenants
based on actual and forecast results and has the ability to make changes to its
development plans to comply with covenants under the credit facility.

Third-Party Credit Risk

The Company is and may in the future be exposed to third-party
credit risk through its contractual arrangements with its current or future
joint venture partners, marketers of its petroleum and natural gas production
and other parties, including the governments of Egypt and Yemen. Significant
changes in the oil and natural gas industry, including fluctuations in commodity
prices and economic conditions, environmental regulations, government policy,
royalty rates and other geopolitical factors, could adversely affect the
Company's ability to realize the full value of its accounts receivable. The
Company currently has, and historically has had, a significant account
receivable outstanding from the government of Egypt. While the government of
Egypt does make regular payments on these amounts owing, the timing of these
payments has historically been longer than normal industry standard. While the
Company has no reason to believe that it will not collect this account
receivable in full, there can be no assurance that this will occur. In the event
the government of Egypt fails to meet its obligations, or other third-party
creditors fail to meet their obligations to the Company, such failures could
individually or in the aggregate have a material adverse effect on the Company,
its cash flow from operations and its ability to conduct its ongoing capital
expenditure program.

Dividends

The Company does not anticipate paying any dividends on its
outstanding shares in the foreseeable future.

Conflicts of Interest

The directors of the Company may be engaged and may continue to
be engaged in the search for oil and gas interests on their own behalf and on
behalf of other companies, and situations may arise where the directors may be
in direct competition with the Company. Conflicts of interest, if any, which
arise will be subject to and governed by procedures prescribed by the
corporation's governing corporate law statute which require a director of a
corporation who is a party to, or is a director or an officer of, or has some
material interest in any person who is a party to, a material contract or
proposed material contract with the Company, disclose his or her interest and,
in the case of directors, to refrain from voting on any matter in respect of
such contract unless otherwise permitted under such legislation.

Reliance on Key Personnel

Holders of Common Shares of the Company must rely upon the
experience and expertise of the management of the Company. The continued success
of the Company is largely dependent on the performance of its key employees.
Failure to retain or to attract and retain additional key employees with
necessary skills could have a materially adverse impact upon the Company's
growth and profitability.

Dilutive Effect of Financings and Acquisitions

TransGlobe may make future acquisitions or enter into financing
or other transactions involving the issuance of securities of TransGlobe which
may be dilutive.

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49

Foreign Subsidiaries

The Company currently conducts all of its operations through
its subsidiaries and foreign branches. Therefore, to the extent of these
holdings, the Company will be dependent on the cash flows of these subsidiaries
to meet its obligations. The ability of its subsidiaries to make payments to the
Company may be constrained by among other things: the level of taxation,
particularly corporate profits and withholding taxes, in the jurisdiction in
which it operates; and the introduction of exchange controls or repatriation
restrictions or the availability of hard currency to be repatriated.

Legal Systems

There can be no assurance that joint ventures, licenses,
license applications or other legal arrangements will not be adversely affected
by changes in governments, the actions of government authorities or others, or
the effectiveness and enforcement of such arrangements.

Marketability of Production

The marketability of the Company's production depends in part
upon a variety of factors, some of which are beyond the Company's control. Some
of these factors include the Company's ability to transport its crude oil to
market, access processing facilities and refining capacity and obtain required
regulatory approvals. Other factors include the nature of the crude oil the
Company produces, the availability, proximity and capacity of production
gathering systems and pipelines, state control and regulation of crude oil and
natural gas production, transportation and export and government intervention in
the internal energy demand and supply balance. If marketability factors change,
the impact on the Company's ability to generate revenues and operate profitably
could be substantial.

Title to Properties

Although title reviews will be done according to industry
standards prior to the purchase of most oil and natural gas producing properties
or the commencement of drilling wells, such reviews do not guarantee or certify
that an unforeseen defect in the chain of title will not arise to defeat the
claim of the Company which could result in a reduction of the revenue received
by the Company.

Environmental Regulation and Risks

National and local environmental laws and regulations in Egypt
and Yemen affect the operations of the Company. These laws and regulations set
various standards regulating certain aspects of health and environmental
quality, provide for penalties and other liabilities for the violation of such
standards and establish in certain circumstances obligations to remediate
current and former facilities and locations where operations are or were
conducted. In addition, special provisions may be appropriate or required in
environmentally sensitive areas of operation. There can be no assurance that the
Company will not incur substantial financial obligations in connection with
environmental compliance.

Significant liability could be imposed on the Company for
damages, clean-up costs or penalties in the event of certain discharges into the
environment, environmental damage caused by previous owners of properties
purchased by the Company or non-compliance with environmental laws or
regulations. Such liability could have a material adverse effect on the Company.
Moreover, the Company cannot predict what environmental legislation or
regulations will be enacted in the future or how existing or future laws or
regulations will be administered or enforced. Compliance with more stringent
laws or regulations, or more vigorous enforcement policies of any regulatory
authority, could in the future require material expenditures by the Company for
the installation and operation of systems and equipment for remedial measures,
any or all of which may have a material adverse effect on the Company.

Natural Disasters and Weather-Related Risks

TransGlobe is subject to operating hazards normally associated
with the exploration and production of oil and gas, including blowouts,
explosions, oil spills, pollution, earthquakes, labour disruptions and fires.
The occurrence of any such operating hazards could result in substantial losses
to the Company due to injury or loss of life and damage to or destruction of oil
and gas wells, formations, production facilities or other properties.

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50

INDUSTRY CONDITIONS

Government Regulation Generally

The oil and gas industry is subject to extensive controls and
regulations governing its operations (including land tenure, exploration,
development, production, refining, transportation and marketing) imposed by
legislation enacted by the various levels of government in Canada, Egypt and
Yemen with respect to pricing and taxation of oil and natural gas by agreements
among the governments of Canada, Egypt and Yemen, all of which should be
carefully considered by investors in the oil and gas industry. It is not
expected that any of these controls or regulations will affect the Company's
operations in a manner materially different than they would affect other oil and
gas companies of similar size. All current legislation is a matter of public
record and the Company is unable to predict what additional legislation or
amendments may be enacted. Outlined below are some of the principal aspects of
legislation, regulations and agreements governing the oil and gas industry.

Pricing and Marketing  Oil and Natural Gas

In Egypt, producers of oil negotiate sales contracts directly
with oil purchasers, with the result that the market determines the price of
oil. The price depends in part on oil quality, prices of competing fuels,
distance to market, the value of refined products and the supply/demand balance.
Egypt is not currently a member of the Organization of Petroleum Exporting
Countries ("OPEC").

In Yemen, producers of oil negotiate sales contracts directly
with oil purchasers, with the result that the market determines the price of
oil. The price depends in part on oil quality, prices of competing fuels,
distance to market, the value of refined products and the supply/demand balance.
Yemen is not currently a member of OPEC.

Pipeline Capacity

Both in Egypt and Yemen, export oil pipelines are owned by the
respective government through cost recovery. Access to the export pipelines is
negotiated with the government. Sufficient export capacity currently exists,
however, industry and market conditions may affect export capacity in the
future.

Royalties and Incentives

In Egypt, the respective PSCs determine the production sharing
splits for the oil produced within the respective areas. The Company's share of
royalties and taxes are paid out of the government's share of production sharing
oil.

In Yemen, the respective PSAs determine the production sharing
splits for the oil produced within the respective areas. The Company's share of
royalties and taxes are paid out of the government's share of production sharing
oil.

Environmental Regulation

The oil and natural gas industry is currently subject to
environmental regulations pursuant to a variety of local laws and regulations.
Such legislation provides for restrictions and prohibitions on the release or
emission of various substances produced in association with certain oil and gas
industry operations. In addition, such legislation requires that well and
facility sites be abandoned and reclaimed to the satisfaction of authorities.
Compliance with such legislation can require significant expenditures and a
breach of such requirements may result in suspension or revocation of necessary
licenses and authorizations, civil liability for pollution damage and the
imposition of material fines and penalties.

Trends

Certain trends that have been developing in the oil and gas
industry during the past several years appear to be shaping the near future of
the business.

One of the trends is the volatility of commodity prices.
Following TransGlobe's divestment of all of its Canadian assets in April 2008,
the Company's production consists entirely of crude oil. Crude oil prices are
influenced by the world economy and OPEC's ability to adjust supply to world demand.
During the latter part of 2008 and the first quarter of 2009, crude oil prices
declined to multi-year lows due to the world economic crisis and the resulting
reduction in demand for the commodity. With reduced volatility in the world
financial markets, crude oil prices have strengthened throughout the balance of
2009 and 2010. Oil prices have risen significantly in early 2011 due to
political unrest in the MENA region.

---

51

The impact on the oil and gas industry from commodity price
volatility is significant. During periods of high prices, producers generate
sufficient cash flows to conduct active exploration programs without external
capital. Increased commodity prices frequently translate into very busy periods
for service suppliers triggering premium costs for their services. Purchasing
land and properties similarly increase in price during these periods. During low
commodity price periods, acquisition costs drop, as do internally generated
funds to spend on exploration and development activities. With decreased demand,
the prices charged by the various service suppliers also decline.

ADDITIONAL INFORMATION

Additional information, including directors' and officers'
remuneration and indebtedness, principal holders of the Company's securities and
options to purchase securities, if applicable, is contained in the Company's
Information Circular for the most recent annual meeting of shareholders that
involved the election of directors. Additional financial information is provided
for in the Company's financial statements and the management's discussion and
analysis for the year ended December 31, 2010. These documents, along with other
documents affecting the rights of securityholders and other information relating
to the Company, may be found on SEDAR at www.sedar.com.

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|52                     
|-----------------------
|                       
|SCHEDULE"A"            
|FORM 51-101F2          
|REPORT ON RESERVES DATA

To the board of directors of TransGlobe Energy Corporation (the
"Company"):

|1. | We have evaluated the Company's reserves data as at
      December 31, 2010. The reserves data are estimates of proved reserves and
      probable reserves and related future net revenues at December 31, 2010,
      estimated using forecast prices and costs.                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | The reserves data are the responsibility of the Company's
      management. Our responsibility is to express an opinion on the reserves
      data based on our evaluation.                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | We carried out our evaluation in accordance with
      standards set out in the Canadian Oil and Gas Evaluation Handbook (the
      "COGE Handbook") prepared jointly by the Society of Petroleum Evaluation
      Engineers (Calgary Chapter) and the Canadian Institute of Mining,
      Metallurgy & Petroleum (Petroleum Society).                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | Those standards require that we plan and perform an
      evaluation to obtain reasonable assurance as to whether the reserves data
      are free of material misstatement. An evaluation also includes assessing
      whether the reserves data are in accordance with principles and
      definitions presented in the COGE Handbook.                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | The following table sets forth the estimated future net
      revenue (before deduction of income taxes) attributed to proved plus
      probable reserves, estimated using forecast prices and costs and
      calculated using a discount rate of 10 percent, included in the reserves
      data of the Company evaluated by us for the year ended December 31, 2010
      and identifies the respective portions thereof that we have audited,
      evaluated and reviewed and reported on to the Company's
  management.

|                      |  |                                |  |             |  |         | Net Present Value of Future Net
      Revenue  |           | 
|--------------------- |  | ------------------------------ |  | ----------- |  | ------- | ---------------------------------------------- | --------- | 
|Independent Qualified |  | Description and                |  |             |  |         | (before income taxes, 10% discount
      rate) |           | 
|Reserves Evaluator or |  | Preparation Date of            |  | Location of |  |         |                                                |           | 
|Auditor               |  | Evaluation Report              |  | Reserves    |  | Audited |                                                | Evaluated | 
|                      |  |                                |  |             |  | U.S. M$ |                                                | U.S. M$   | 
|                      |  |                                |  |             |  |         |                                                |           | 
|DeGolyer and          |  | Appraisal
      Report as of   |  | Egypt       |  | -       |                                                | 383,517   | 
|MacNaughton Canada    |  | December 31,
      2010 on     |  | Yemen       |  | -       |                                                | 91,930    | 
|Limited               |  | Certain
      Properties owned |  | Total       |  | -       |                                                | 475,447   | 
|                      |  | by TransGlobe
      Energy     |  |             |  |         |                                                |           | 
|                      |  | Corporation in
      Egypt and |  |             |  |         |                                                |           | 
|                      |  | Yemen dated
      February 4,  |  |             |  |         |                                                |           | 
|                      |  | 2011                           |  |             |  |         |                                                |           | 

|5.                                                                                                                                                  | In our opinion, the reserves data respectively evaluated
      by us have, in all material respects, been determined and are in
      accordance with the COGE Handbook. We express no opinion on the reserves
      data that we reviewed but did not audit or evaluate.
|--------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                    |                                                                                                                                                                                                                                                                          
|6.                                                                                                                                                  | We have no responsibility to update our reports referred
      to in paragraph 4 for events and circumstances occurring after their
      respective preparation dates.                                                                                                  
|                                                                                                                                                    |                                                                                                                                                                                                                                                                          
|Because the reserves data are based on judgements
      regarding future events, actual results will vary and the variations may
      be material.

Executed as to our report referred to above:

DeGolyer and MacNaughton Canada Limited, Calgary, Alberta,
dated February 4, 2011.

| | DEGOLYER and MACNAUGHTON
      CANADA
| | -------------------------------------
| | LIMITED                              
| |                                      
| | Per:                                 
| |                                      

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|53                                    
|--------------------------------------
|                                      
|                                      
|SCHEDULE"B"                           
|                                      
|FORM 51-101F3                         
|REPORT OF MANAGEMENT AND DIRECTORS    
|ON RESERVES DATA AND OTHER INFORMATION

Management of TransGlobe Energy Corporation (the "Company") are
responsible for the preparation and disclosure of information with respect to
the Company's oil and gas activities in accordance with securities regulatory
requirements. This information includes reserves data, which are estimates of,
proved reserves and probable reserves and related future net revenues as at
December 31, 2010, estimated using forecast prices and costs.

Independent qualified reserves evaluators have evaluated the
Company's reserves data. The report of the independent qualified reserves
evaluator will be filed with securities regulatory authorities concurrently with
this report.

The Reserves Committee of the board of directors of the Company
has

| | (a) | reviewed the Company's procedures for providing
      information to the independent qualified reserves evaluators;                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                             
| | (b) | met with the independent qualified reserves evaluators to
      determine whether any restrictions affected the ability of each such
      independent qualified reserves evaluator to report without reservation;
      and
| |     |                                                                                                                                                                                                                             
| | (c) | reviewed the reserves data with management and the
      independent qualified reserves evaluator.                                                                                                                          

The Reserves Committee of the board of directors has reviewed
the Company's procedures for assembling and reporting other information
associated with oil and gas activities and has reviewed that information with
management. The board of directors has, on the recommendation of the Reserves
Committee, approved

| | (d) | the content and filing with securities regulatory
      authorities of the reserves data and other oil and gas
  information;          
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                        
| | (e) | the filing of the Form 51-101F2 which is the report of
      the independent qualified reserves evaluator on the reserves data;
    and
| |     |                                                                                                                                        
| | (f) | the content and filing of this
report.                                                                                                 

Because the reserves data are based on judgments regarding
future events, actual results will vary and the variations may be material.

|Per: | (signed) "Ross Clarkson"                        |  | Per: | (signed) "Geoffrey Chase"                   
|---- | ----------------------------------------------- |  | ---- | --------------------------------------------
|     | Ross Clarkson                                   |  |      | Geoffrey Chase                              
|     | President, Chief Executive Officer and Director |  |      | Director and Chair of the Reserves Committee
|     |                                                 |  |      |                                             
|     |                                                 |  |      |                                             
|Per: | (signed) "Lloyd Herrick"                        |  | Per: | (signed) "Robert Halpin"                    
|     | Lloyd Herrick                                   |  |      | Robert Halpin                               
|     | Vice-President, Chief Operating Officer and     |  |      | Director and Chairman of the Board          
|     | Director                                        |  |      |                                             

March 18, 2011

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SCHEDULE"C"

CHARTER OF AUDIT COMMITTEE

Our Audit Committee Charter outlines the specific roles and
duties of the Committees members.

GENERAL FUNCTIONS, AUTHORITY, AND ROLE

The Audit Committee is a committee of the Board of Directors
appointed to assist the Board in monitoring (1) the integrity of the financial
statements of the Company, (2) compliance by the Company with legal and
regulatory requirements related to financial reporting, (3) qualifications,
independence and performance of the Company's independent auditors, and (4)
performance of the Companys accounting, internal controls and financial
reporting process.

The Audit Committee has the power to conduct or authorize
investigations into any matters within its scope of responsibilities, with full
access to all books, records, facilities and personnel of the Company, its
auditors and its legal advisors. In connection with such investigations or
otherwise in the course of fulfilling its responsibilities under this charter,
the Audit Committee has the authority to independently retain special legal,
accounting, or other consultants to advise it, and may request any officer or
employee of the Company, its independent legal counsel or independent auditor to
attend a meeting of the Audit Committee or to meet with any members of, or
consultants to, the Audit Committee. In its capacity as a committee of the Board
of Directors, the Audit Committee has the power to determine the amount of
Company funds that are appropriate for payment of (1) compensation to the
Companys independent auditor engaged for the purpose of preparing audit reports
and performing other audit and non-audit services, (2) independent counsel and
other advisers as it determines necessary to carry out its duties and (3)
ordinary administrative expenses as it determines necessary to carry out its
duties. The Audit Committee also has the power to create specific subcommittees
with all of the investigative powers described above.

The Company's independent auditor is ultimately accountable to
the Board of Directors and to the Audit Committee; and the Board of Directors
and Audit Committee, as representatives of the Company's shareholders, have the
ultimate authority and responsibility to retain and evaluate the independent
auditor, to nominate annually the independent auditor to be proposed for
shareholder approval and to determine appropriate compensation for the
independent auditor. In the course of fulfilling its specific responsibilities
hereunder, the Audit Committee must maintain free and open communication between
the Company's independent auditors, Board of Directors and Company management.
The responsibilities of a member of the Audit Committee are in addition to such
member's duties as a member of the Board of Directors.

While the Audit Committee has the responsibilities and powers
set forth in this charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete, accurate, and in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations, to
resolve disagreements, if any, between management and the independent auditor
(other than disagreements regarding financial reporting), or to assure
compliance with laws and regulations or the Company's own policies.

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C-2

MEMBERSHIP

The membership of the Audit Committee will be as follows:

- The Committee will consist of a minimum of three members of the Board of
  Directors, appointed annually, each of whom is affirmatively confirmed by the
  Board of Directors as having satisfied the independence standards specified in
  all applicable rules of the Canadian provincial securities commissions, the
  U.S. Securities and Exchange Commission (the SEC) and any securities
  exchange on which the Companys shares are traded, with such affirmation
  disclosed in the Companys Management Proxy Circular.
- The Committee will also consist of all members that meet the definition of
  Financially Literate as defined in Multilateral Instrument 52-110 Part
  1(1.5) and are able to read and understand fundamental financial statements,
  including the Companys balance sheet, income statement and cash flow
  statement.
- The Committee will not have participated in the preparation of the
  financial statements of the Company or its subsidiaries at any time during the
  past three years.
- The Board will elect, by a majority vote, one member as chairperson.
- A member of the Audit Committee may not, other than in his or her capacity
  as a member of the Audit Committee, the Board of Directors, or any other Board
  committee, accept any consulting, advisory, or other compensatory fee from the
  Company, and may not be an affiliated person of the Company or any subsidiary
  thereof.

RESPONSIBILITIES

The responsibilities of the Audit Committee shall be as
follows:

Frequency of Meetings

- Meet on at least a quarterly basis, either in person or by telephone.
- Meet with the independent auditor on at least a quarterly basis, either in
  person or by telephone.

Reporting Responsibilities

- Provide to the Board of Directors proper Committee minutes.
- Report Committee actions to the Board of Directors with such
  recommendations as the Committee may deem appropriate.

Charter Review

- Annually review and reassess the adequacy of this Charter and recommend
  any proposed changes to the Board of Directors for approval.

Advice of Counsel

- The Committee shall receive and review any reports from counsel to the
  Company concerning evidence of any material violation of law by the Company.

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C-3

Whistleblower Mechanisms

- Adopt and review annually a mechanism through which employees and others
  can directly and anonymously contact the Audit Committee with concerns about
  accounting, internal accounting controls and auditing matters. The mechanism
  must include procedures for receiving, responding to, and keeping of records
  of, any such expressions of concern.

Independent Auditor

| |  | Nominate annually the independent auditor to be proposed
      for shareholder approval.                                                                                                                                                                                                  
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                           
| |  | Approve the compensation of the independent auditor, and
      evaluate the performance of the independent auditor.                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                           
| |  | Establish policies and procedures for the engagement of
      the independent auditor to provide non-audit services.                                                                                                                                                                      
| |  |                                                                                                                                                                                                                                                                                           
| |  | Ensure that the independent auditor is not engaged for
      any activities not allowed by any of the Canadian provincial securities
      commissions, the SEC or any securities exchange on which the Companys
      shares are traded.                                                
| |  |                                                                                                                                                                                                                                                                                           
| |  | Ensure that the independent auditor is not engaged for
      any of the following nine types of non-audit services contemporaneous with
      the audit:                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                           
| |  | Ensure that the independent auditor is
      compliant with the SEC, any security exchange on which the Companys
      shares are traded and the Institute of Chartered Accountants of Alberta
      (Rules of Professional Conduct) regarding Audit Partner Rotation
      requirements.

Hiring Practices

- Ensure that no senior officer or employee who is, or in the past full year
  has been, affiliated with or employed by a present or former auditor of the
  Company or an affiliate, is hired by the Company until at least one full year
  after the end of either the affiliation or the auditing relationship.

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C-4

Independence Test

| |  | Take reasonable steps to confirm the independence of the
      independent auditor, which shall include:
| |  | --------------------------------------------------------------------------------------------------------
| |  |                                                                                                         
| |  |                                                                                                         
| |  |                                                                                                         
| |  |                                                                                                         

Audit Committee Meetings

- The Audit Committee may request the presence of the independent auditor at
  any Audit Committee meeting.
- At the request of the independent auditor, convene a meeting of the Audit
  Committee to consider matters the auditor believes should be brought to the
  attention of the directors or shareholders.
- Keep minutes of its meetings and report to the Board for approval of any
  actions taken or recommendations made.

Restrictions

- Ensure no restrictions are placed by management on the scope of the
  auditors review and examination of the Companys accounts.
- Ensure that no Officer or Director attempts to fraudulently influence,
  coerce, manipulate or mislead any accountant engaged in auditing of the
  Companys financial statements.

AUDIT AND REVIEW PROCESS AND RESULTS

Scope

- Consider, in consultation with the independent auditor, the audit scope
  and plan of the independent auditor.

Review Process and Results

| |  | Consider and review with the independent auditor the
      matters required to be discussed by Statement on Auditing Standards No.
      61, as the same may be modified or supplemented from time to
  time.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                              
| |  | Review and discuss with management and the independent
      auditor at the completion of the annual examination:                                                                                            
| |  |                                                                                                                                                                                                              
| |  |                                                                                                                                                                                                              
| |  |                                                                                                                                                                                                              

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C-5

| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | the independent auditor's audit of the financial
      statements and its report thereon;                                                                      
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | any significant changes required in the independent
      auditor's audit plan;                                                                                
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | any non-GAAP related financial information;                                                                                                                    
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | any serious difficulties or disputes with management
      encountered during the course of the audit; and                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | other matters related to the conduct of the audit, which
      are to be communicated to the Audit Committee under generally accepted
      auditing standards.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                
| |  | Review and discuss with management and the independent
      auditor annual and interim financial statements (including related notes
      and MD&A) at the completion of any review engagement or other
      examination and prior to public disclosure, and resolve to recommend
      approval of said documents to the Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                
| |  | Review and discuss with management and the independent
      auditor the adequacy of the Company's internal control over financial
      reporting that management and the Board of Directors have established and
      the effectiveness of those systems, including, but not limited to, review
      and discussion of (1) managements report on its assessment of the
      effectiveness of internal control over financial reporting as of the end
      of each fiscal year and the independent auditors report on managements
      assessment and the effectiveness of internal control over financial
      reporting, (2) inquiry of management and the independent auditor about
      significant financial risks, exposures, deficiencies or material
      weaknesses identified and the steps management has taken to minimize such
      risks, exposures, deficiencies and material weaknesses to the Company and
      (3) any changes in internal control over financial reporting that have
      materially affected or are reasonably likely to materially affect the
      Companys internal control over financial reporting and are required to be
      disclosed, as well as any other changes in internal control over financial
      reporting that were considered for disclosure in the Companys periodic
      filings with the SEC.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                
| |  | Meet separately with the independent auditor, management
      and the CFO as necessary or appropriate to discuss any matters that the
      Audit Committee or any of these groups believe should be discussed
      privately with the Audit Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                
| |  | Review and discuss with management and the independent
      auditor the accounting policies which may be viewed as critical, including
      all alternative treatments for financial information within generally
      accepted accounting principles that have been discussed with management,
      and review and discuss any significant changes in the accounting policies
      of the Company and industry accounting and regulatory financial reporting
      proposals that may have a significant impact on the Company's financial
      reports.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                
| |  | Review with management and the independent auditor the
      effect of regulatory and accounting initiatives as well as off-balance
      sheet structures, if any, on the Company's financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                
| |  | Review with management and the independent auditor any
      correspondence with regulators or governmental agencies and any employee
      complaints or published reports which raise material issues regarding the
      Company's financial statements or accounting policies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                
| |  | Review with the Company's General Counsel legal matters
      that may have a material impact on the financial statements, the Company's
      financial compliance policies and any material reports or inquiries
      received from regulators or governmental agencies related to financial
      matters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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C-6

SECURITIES REGULATORY FILINGS

- Review, prior to filing with regulatory bodies, annual and periodic
  filings with the Canadian provincial securities commissions and the SEC and
  other published documents containing the Company's financial statements.

RISK ASSESSMENT

- Review the Companys policies with respect to risk assessment and risk
  management including, without limitation, environmental risk, insurance
  coverage and the risk of fraud. The Committee also shall discuss the Companys
  major risk exposures and the steps management has taken to monitor and control
  them.

AMENDMENTS TO AUDIT COMMITTEE CHARTER

- Annually review this Charter and propose amendments to be ratified by a
  simple majority of the Board of Directors.

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