EXHIBIT 4.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made as of December 1, 2002.

TRANSGLOBE ENERGY CORPORATION
    of #2900 - 530  5thAvenue S.W. 
    Calgary, Alberta T2P 0L4 
    (TransGlobe or the Corporation)


AND:




RECITALS:

|A.                                                                                                                                               | David Ferguson is currently
        employed as the Chief Financial Officer, Secretary and Vice President,
        Finance of the Corporation until December 2, 2002. Mr. Ferguson has agreed
        to continue his appointment as the Chief Financial Officer, Secretary
        and Vice President, Finance of the Corporation; and               
|------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|B.                                                                                                                                               | The Board of Directors of TransGlobe (“Board”)
      has approved that appointment on the terms set out below:                                                                                                                                                                                                                                        
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|AGREEMENTS:                                                                                                                                     
|                                                                                                                                                
|For good and valuable consideration,
        the receipt and sufficiency of which each party acknowledges, the parties
        agree as follows:
|                                                                                                                                                
|1                                                                                                                                                | APPOINTMENT                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|1.1                                                                                                                                              | Beginning on December 3, 2002 TransGlobe
        will continue to employ David Ferguson as Chief Financial Officer, Secretary
        and Vice President, Finance.                                                                                                                                                                                    
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|1.2                                                                                                                                              | The appointment will continue until
        December 31, 2007 unless extended or sooner terminated as provided in
        this agreement.                                                                                                                                                                                                             
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|2                                                                                                                                                | RESPONSIBILITIES                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|2.1                                                                                                                                              | Ferguson will diligently and faithfully
        devote all of his working time and attention exclusively to the business
        of TransGlobe and to the performance of his duties and responsibilities
        to the utmost of his ability, and will at all times use his best efforts
        to promote the interests of TransGlobe.             
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|2.2                                                                                                                                              | Without first obtaining written permission
        from TransGlobe, Ferguson will not enter into the service of, be employed
        by, or otherwise engaged in any capacity by any person, firm or corporation
        other than TransGlobe.                                                                                                       
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|2.3                                                                                                                                              | Ferguson will have the authority, subject
        always to the general and specific instructions and directions of the
        President and the Board of Directors of TransGlobe, to manage the business
        of TransGlobe, except in matters required by law to be done by the President
        or the Board of Directors or the shareholders.
|                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                       
|2.4                                                                                                                                              | Ferguson will conform to all lawful
        direction of the Board and comply with the Memorandum and Articles of
        TransGlobe.                                                                                                                                                                                                                 



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|3   | FIDUCIARY DUTY                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.1 | Ferguson acknowledges that
        he has a fiduciary relationship with TransGlobe, whereby he has an absolute
        duty of trust and fidelity to TransGlobe, to act loyally and with the
        utmost good faith exclusively in the best interests of TransGlobe and
        to avoid any conflict of interest.                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.2 | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.3 | At the end of Ferguson’s
        employment with TransGlobe, he will immediately return to TransGlobe all
        documents, papers, materials and other property of or relating to the
        affairs of TransGlobe or any of its subsidiaries which may be in his possession
        or control.                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4   | REMUNERATION                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.1 | From December 1, 2002 TransGlobe
        will pay to Ferguson an annual salary of $141,600 (Cdn.) “Annual
        Base Salary” which will be paid in equal monthly instalments in
        arrears of $11,800 each. Annual Base Salary will be reviewed annually
        by the Compensation Committee for the years 2004, 2005, 2006 and 2007
        to determine if an increase in the Annual Base salary will be recommended
        to the Board.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5   | INSURANCE BENEFITS                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5.1 | TransGlobe will continue
        to enrol Ferguson in the medical and dental insurance programs presently
        in force for employees of TransGlobe.                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5.2 | The Corporation will pay all premium costs for
      the benefits described in Section 5.1.                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6   | VACATION                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6.1 | In addition to statutory
        holidays, TransGlobe will provide Ferguson with annual paid vacation of
        25 working days each year, to be taken when he deems appropriate in consideration
        of TransGlobe’s operational requirements.                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6.2 | If Ferguson does not use
        all of his vacation entitlement in a given year, he may accumulate it
        and use it in a subsequent year. If Ferguson has unused vacation entitlement
        to his credit when this Agreement is ended, he will be paid its equivalent
        cash value.                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6.3 | TransGlobe may require Ferguson to use up unused
      vacation entitlement.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7   | EXPENSES AND ALLOWANCES                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7.1 | TransGlobe will reimburse
        Ferguson for all reasonable expenses incurred by him in connection with
        TransGlobe’s business, in accordance with its applicable policies.                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7.2 | TransGlobe will, subject
        to insurability, secure and pay the premiums for a life insurance policy
        on Ferguson’s life in an amount of not less than one year’s
        salary in which the person designated by Ferguson will be the beneficiary.                                                                                                                                                                                     



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|7.3  | TransGlobe will pay Ferguson a parking
        allowance for one space in the Calgary down town area near the TransGlobe
        office location.                                                                                                                                                                                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8    | SHARE OPTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8.1  | In addition to the fixed
        compensation set out in Section 4, Ferguson is entitled to participate
        in TransGlobe’s Stock Option Plan. Ferguson currently is entitled
        to purchase 400,000 common shares of TransGlobe.                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|8.2  | TransGlobe may issue to
        Ferguson additional Share Options in accordance with the policies and
        rules of TransGlobe’s Stock Option Plan, as determined by the Compensation
        Committee of TransGlobe. All such new Share Options would be subject to
        the approval of the Board of Directors of TransGlobe and may also be subject
        to the approval of the Toronto Stock Exchange (“TSX”) in accordance
        with its policies.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|9    | BONUSES                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|9.1  | TransGlobe may pay to Ferguson
        a performance bonus in such amount as may be determined by the Compensation
        Committee of TransGlobe.                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10   | ENDING                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.1 | TransGlobe may end this
        Agreement and Ferguson’s employment at any time for just cause,
        without any notice and without any liability to TransGlobe.                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.2 | TransGlobe may end this
        Agreement and Ferguson’s employment at any time without just cause
        by giving a written notice to Ferguson. Upon giving such notice TransGlobe
        will pay to Ferguson a retiring allowance in an amount equal to 24 months
        of his then current monthly salary and benefits.                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.3 | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.4 | If Ferguson should die during
        the term of this Agreement TransGlobe will pay to his estate an amount
        equal to 6 months of his then current salary and benefits.                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.5 | Ferguson acknowledges that
        the arrangements described in this Section 10 are fair and reasonable
        and constitute TransGlobe’s sole obligation to provide notice of
        termination, severance pay or related compensation.                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.6 | Regardless of how this Agreement
        and Ferguson’s employment is ended, Section 3 will remain in effect
        after it is ended.                                                                                                                                                                                                                                                                                                                             



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|11   | NON-COMPETITION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|11.1 | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|12   | DIRECTORS LIABILITY INSURANCE/INDEMNITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|12.1 | TransGlobe will carry directors’
        and senior officers’ insurance so long as its cost is not, in the
        Board’s opinion, excessive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|12.2 | TransGlobe will indemnify
        Ferguson in respect of his actions or omissions as the Chief Financial
        Officer, Secretary and Vice President, Finance to the extent permitted
        by law.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|13   | TRANSGLOBE’S PROPERTY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|13.1 | Ferguson acknowledges that
        all items of any and every nature or kind created or used by Ferguson
        under this Agreement, or furnished by TransGlobe or any of its subsidiaries
        to Ferguson, and all equipment, credit cards, books, records, reports,
        files, manuals, literature, confidential information or other materials
        shall remain and be considered the exclusive property of TransGlobe at
        all times and shall be surrendered to TransGlobe, in good condition, promptly
        on the termination of Ferguson’s employment irrespective of the
        time, manner or cause of the termination.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|14   | ASSIGNMENT OF RIGHTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|14.1 | The rights which accrue
        to TransGlobe under this agreement shall pass to its successors or assigns.
        The rights of Ferguson under this Agreement are not assignable or transferable
        in any manner.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|15   | NOTICES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|15.1 | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|16   | GOVERNING LAW                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|16.1 | This Agreement shall be construed in accordance
      with the laws of the Province of Alberta.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|17   | INDEPENDENT LEGAL ADVICE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|17.1 | Each of TransGlobe and Ferguson
        hereby confirm and acknowledge that they have sought independent legal
        advice with respect to their respective rights and obligations arising
        from this Agreement and each such party does further confirm and acknowledge
        with the understanding that each such party is relying upon such representations
        in entering into this Agreement, that this Agreement constitutes a legal,
        binding agreement, enforceable as against each such party in accordance
        with its terms.                                                                                     



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|18   | DISPUTE RESOLUTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|18.1 | Before initiating any legal
        proceedings, the parties will attempt to resolve all disputes concerning
        the interpretation, application or enforcement of any term of this Agreement
        by mediated negotiation, and will use their best efforts to resolve any
        dispute through mediation.                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|18.2 | If a dispute between the
        parties concerning the interpretation, application or enforcement of any
        term of this Agreement is not resolved by mediation within 90 days after
        one party notifies the other in writing of an intention to mediate the
        dispute, the parties will submit the matter to binding arbitration, pursuant
        to the provisions of the Arbitration Act of Alberta, and the parties hereby
        irrevocably authorize any arbitrator who may be appointed to endeavour
        to mediate the resolution of the dispute before rendering a binding award.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|19   | ENTIRE AGREEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|19.1 | This Agreement contains
        the entire agreement between the parties with respect to Ferguson’s
        employment, and no amendment or variation of the terms of this Agreement
        will be effective or binding unless made in writing and signed by both
        of them.                                                                                                                                                                                                                                                                                                                                

TO EVIDENCE THEIR AGREEMENT the parties have executed this document on the
  dates appearing below.

TRANSGLOBE ENERGY CORPORATION

Per:(signed) R. A. Halpin
              Authorized
  Signatory

Name: Mr Robert A. Halpin

Title: Director & Chairman of the Board

Date:December4, 2002

|SIGNED AND DELIVERED on               | ) |                              
|------------------------------------- | - | -----------------------------
|November 29, 2002 in the presence of: | ) |                              
|                                      | ) |                              
|(signed) Lloyd Herrick                | ) |                              
|(Signature)                           | ) |                              
|                                      | ) |                              
|                                      | ) | (signed)
      D. C. Ferguson
|LLOYD
      HERRICK                   | ) | DAVID
      FERGUSON         
|(Print Name)                          | ) |                              
|                                      | ) |                              
|                                      | ) |                              
|Calgary, AB                           | ) |                              
|(Address)                             | ) |                              
|                                      | ) |                              
|Engineer                              | ) |                              
|(Occupation)                          | ) |                              





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