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TransGlobe Energy Corporation

Renewal Annual Information FormYear Ended December 31, 2004





March 24, 2005

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TABLE OF CONTENTS

|                                                                   | Page
|------------------------------------------------------------------ | ----
|                                                                   |     
|ABBREVIATIONS                                                      | 2   
|CONVERSIONS                                                        | 2   
|FORWARD LOOKING STATEMENTS                                         | 2   
|CURRENCY AND EXCHANGE RATES                                        | 3   
|CERTAIN DEFINITIONS                                                | 4   
|TRANSGLOBE ENERGY CORPORATION                                      | 6   
|GENERAL DEVELOPMENT OF THE BUSINESS                                | 7   
|DESCRIPTION OF THE BUSINESS AND PRINCIPAL
      PROPERTIES         | 8   
|STATEMENT OF RESERVES DATA AND OTHER OIL
      AND GAS INFORMATION | 16  
|DIVIDEND POLICY                                                    | 38  
|DESCRIPTION OF SHARE CAPITAL                                       | 38  
|MARKET FOR SECURITIES                                              | 39  
|ESCROWED SECURITIES                                                | 39  
|DIRECTORS AND OFFICERS                                             | 40  
|HUMAN RESOURCES                                                    | 41  
|INTEREST OF EXPERTS                                                | 41  
|LEGAL PROCEEDINGS                                                  | 42  
|INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL
      TRANSACTIONS  | 42  
|AUDITORS, TRANSFER AGENT AND REGISTRAR                             | 42  
|MATERIAL CONTRACTS                                                 | 42  
|AUDIT COMMITTEE INFORMATION                                        | 42  
|RISK FACTORS                                                       | 43  
|INDUSTRY CONDITIONS                                                | 47  
|ADDITIONAL INFORMATION                                             | 49  

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

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2

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                         | standard tank barrels    |       

Other

|AECO       | EnCana Corp.'s natural gas
        storage facility located at Suffield, Alberta.                                                                                                                                                             
|---------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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                      
|ARTC       | Alberta Royalty Tax Credit                                                                                                                                                                                                                    
|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)
|m3         | cubic meters                                                                                                                                                                                                                                  
|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 meters | 28.174     
|cubic meters    | cubic feet   | 35.494     
|bbls            | cubic meters | 0.159      
|cubic meters    | bbls oil     | 6.293      
|feet            | meters       | 0.305      
|meters          | feet         | 3.281      
|miles           | kilometers   | 1.609      
|kilometers      | miles        | 0.621      
|acres           | hectares     | 0.405      
|hectares        | acres        | 2.471      
|gigajoules      | Mmbtu        | 0.950      

A boe conversion ratio of 6 Mcf = 1 bbl has been used. Boe's
  may be misleading, particularly if used in isolation. A boe conversion ratio
  of 6 Mcf to 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.

FORWARD LOOKING STATEMENTS

Certain statements contained in this annual information form
  (the "Annual Information Form") and in certain documents incorporated by reference
  into this Annual Information Form, constitute forward-looking statements. These
  statements relate to future events or the Company's future performance. All
  statements other than statements

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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 factors, many of which are beyond the control of the Company. These
  factors include, but are not limited to, unforeseen changes in the rate of production
  from TransGlobe's oil and gas fields, changes in the price of crude oil and
  natural gas, adverse technical factors associated with exploration, development,
  production or transportation of TransGlobe's crude oil and natural gas reserves,
  changes or disruptions in the political or fiscal regimes in TransGlobe's areas
  of activity, changes in Canadian, Egyptian, Yemen or American 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, and the cost of inflation.

In particular, this Annual Information Form and the documents
  incorporated by reference herein contain forward-looking statements pertaining
  to the following:

|• | the quantity of reserves;                                                                                     
|- | --------------------------------------------------------------------------------------------------------------
|• | oil and natural gas production levels;                                                                        
|• | capital expenditure programs;                                                                                 
|• | projections of market prices and costs;                                                                       
|• | supply and demand for oil and natural gas;                                                                    
|• | expectations regarding the Company's ability to
      raise capital and to continually add to reserves through
|• | acquisitions and development; and                                                                             
|• | treatment under government regulatory and taxation
      regimes.                                             

The Company's actual results could differ materially from
  those anticipated in these forward-looking statements as a result of the risk
  factors set forth below and elsewhere in this Annual Information Form:

|• | volatility in market prices for oil and natural
      gas;                                                            
|- | ----------------------------------------------------------------------------------------------------------------------
|• | liabilities and risks inherent in oil and natural
      gas operations                                                
|• | uncertainties associated with estimating reserves;                                                                    
|• | competition for, among other things, capital, acquisitions
      of reserves, undeveloped lands and skilled personnel;
|• | incorrect assessments of the value of acquisition;
      and                                                          
|• | geological, technical, drilling and processing problems.                                                              

The Company believes that the expectations reflected in those
  forward looking statements are reasonable but no assurance can be given that
  these expectations will prove to be correct and such forward-looking statements
  included in, or incorporated by reference into, this Annual Information Form
  should not be unduly relied upon. These statements speak only as of the date
  of this Annual Information Form, as the case may be. The Company does not intend,
  and does not assume any obligation, to update these forward-looking statements.

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 US dollar as the functional currency for its consolidated financial statements.
  The exchange rates for the period average and end of period for the US dollar
  in terms of Canadian dollars as reported by the Bank of Canada were as follows
  for each of the years ended December 31, 2004, 2003 and 2002.

|               | Year Ended December 31, 2004 |  | Year Ended December 31, 2003 |  | Year Ended December 31, 2002
|-------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|End of Period  | Cdn$1.2020                   |  | Cdn$1.2965                   |  | Cdn$1.5776                  
|Period Average | Cdn$1.3015                   |  | Cdn$1.4009                   |  | Cdn$1.5704                  

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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;

"Brent" means the reference price paid in US 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;

"CPF" means Central Production Facility;

"DeGolyer" means DeGolyer and MacNaughton Canada Limited,
  independent petroleum consultants, which firm acquired OSAL effective April
  15, 2004;

"DeGolyer Report" means the report of DeGolyer dated
  March 16, 2005 evaluating the Canadian crude oil, natural gas liquids and natural
  gas reserves of the Company as at December 31, 2004;

"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;

"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;

"Fekete" means Fekete Associates Inc., independent
  petroleum engineers;

"Fekete Report" means the report of Fekete dated January
  20, 2004 evaluating the Yemen crude oil, natural gas and natural gas reserves
  of the Company as at December 31, 2003;

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

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

"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 royalties obligations, plus the Company's royalty interest
        in production or reserves.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|(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 Standards
  of Disclosure for Oil and Gas Activities;

"NI 51-102" means National Instrument 51-102 Continuous
  Disclosure Obligations;

"OSAL" means Outtrim Szabo Associates Ltd., independent
  petroleum consultants, which firm was subsequently acquired by DeGolyer and
  MacNaughton Canada Limited effective April 15, 2004;

"OTC BB" means the Over the Counter Bulletin Board
  operated by the National Association of Securities Dealers Inc.;

"PSA" means Production Sharing Agreement;

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

"TSX" means the Toronto Stock Exchange;

"U.S." means United States;

"Vintage" means Vintage Petroleum, Inc. and its subsidiaries;
  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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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
  the Republic of Yemen and Canada, ceasing operations as a mining company. The
  U.S. oil and gas properties were sold in 2000 to fund opportunities in 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.

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

The Company's principal office is located at 2500, 605 –
  5th Avenue S.W., Calgary, Alberta, T2P 3H5. 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 Oil & Gas Corporation        |  | Washington State, United States |  | 100%     
|TransGlobe Petroleum International Inc. |  | Turks & Caicos Islands, B.W.I.  |  | 100%     
|TG Holdings Yemen Inc.(1)               |  | Turks & Caicos Islands, B.W.I.  |  | 100%     
|TransGlobe Petroleum Egypt Inc.(1)      |  | Turks & Caicos Islands, B.W.I.  |  | 100%     

Note:

|(1) | TransGlobe is the indirect holder of TG Holdings
        Yemen Inc. and TransGlobe Petroleum Egypt Inc., which are 100% owned directly
        by TransGlobe Petroleum International Inc.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

TG Holdings Yemen Inc. owns TransGlobe's interests in the
  Republic of Yemen in Block 32, in Block S-1 and in Block 72 (awarded in a bid
  round, pending ratification of Yemen Parliament). TransGlobe Petroleum Egypt
  Inc. owns TransGlobe's interest in the Nuqra Area Block 1, Arab Republic of
  Egypt.

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

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GENERAL DEVELOPMENT OF THE BUSINESS

TransGlobe is an independent, Canadian-based, international
  upstream oil and gas company whose main business activities include exploration,
  development and production of crude oil, natural gas liquids and natural gas.
  The Company has exploration and production operations in Canada and in the Republic
  of Yemen and an exploration project in the Arab Republic of Egypt.

During the past three years, TransGlobe has developed its
  business interests through a combination of exploration and development and
  to a lesser extent, acquisitions and dispositions, primarily focusing on two
  production sharing agreements in Yemen (a 13.81% working interest in Block 32
  and a 25% working interest in Block S-1) and in central Alberta, Canada.

In 2002, the Company's primary focus continued to be on the
  Republic of Yemen. On Block 32, the Company participated in three wells and
  additional 2-D seismic acquisition. On March 28, 2002, the Company elected to
  enter into the second exploration phase (21⁄2 years) on Block S-1 and participated
  in drilling three wells (one drilling over year end), leading to the An Nagyah
  light oil discovery. A small three well drilling program was also conducted
  in Canada.

In 2003, the Company's primary focus was on Block S-1 in the
  Republic of Yemen and an expanded exploration drilling program in Canada. On
  Block S-1, the An Nagyah light oil discovery was appraised with two wells which
  led to the Declaration of Commerciality and the filing of a Development Plan
  on October 14, 2003. On October 15, 2003, MOM approved the Development Plan
  and a 20 year Development Area of approximately 285,000 acres for Block S-1.
  On Block 32, also in Yemen, the Company participated in five wells, resulting
  in four oil wells for an 80% success ratio. In Canada, the Company drilled nine
  wells, resulting in six gas wells, two oil wells and one cased potential gas
  well for an 88% success ratio.

In November 2003, the Company listed on the American Stock
  Exchange ("AMEX") under the symbol TGA, which replaced the Company's previous
  listing on the NASDAQ bulletin board under the symbol TGLEF. The Company has
  been listed on the TSX under the symbol TGL since November 7, 1997. In December
  2003, the Company completed a private placement financing consisting of 1,363,637
  common shares issued on a "flow-through" basis within the meaning of the Income
  Tax Act (Canada) ("Flow-Through Shares") at a price of Cdn $2.20 per
  Flow-Through Share, for gross proceeds of approximately Cdn $3,000,000.

In 2004, the primary exploration and production focus was
  on Blocks S-1 and 32 in Yemen and central Alberta in Canada. On Block S-1, the
  An Nagyah light oil development is underway with an active development and appraisal
  drilling program resulting in eight new producing oil wells. The Company has
  also participated in one appraisal oil well (Harmel #2) and one exploration
  dry hole at Al Hareth on Block S-1. Commensurate with the early production facilities,
  the Company is participating in the construction of a central production facility
  and pipeline for the An Nagyah pool development on Block S-1 which is on schedule
  with a planned start up in June 2005. The An Nagyah field production is anticipated
  to increase to over 10,000 bopd (2,500 bopd to TransGlobe) when the facilities
  and pipeline are operational. On Block 32, the Company participated in the acquisition
  of 3-D seismic and the drilling of three producing oil wells in the Tasour field.
  In western Canada, the Company has drilled 15 wells, resulting in 10 gas wells,
  two oil wells and three dry wells.

In addition to the 2004 exploration and production activities,
  the Company participated in the Yemen International Bid Round for Exploration
  and Production of Hydrocarbons with the successful award of Block 72. The Block
  72 production sharing contract has been approved by the Cabinet and is currently
  before the Yemen Parliament for final approval. Following parliamentary approval
  the Block 72 partnership plans to acquire 3-D seismic to identify drilling locations.
  Drilling is anticipated to commence in late 2005 or early 2006.

In July 2004, the Company announced the addition of an exploration
  concession in the Arab Republic of Egypt, representing a new country of operation
  for the Company. The Company has entered into a farm-out agreement to incur
  US $6.0 million of expenditures in the stage 1 and stage 2 work programs
  over the next five years to acquire a 50% working interest in the Nuqra Block
  1, located in the Upper Nile region of Egypt. The Company is the operator of
  the Nuqra Block.

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In November 2004, the Company obtained, from Standard Bank
  London Limited as agent and bank, certain syndicated credit facilities of up
  to an aggregate amount of U.S. $7.0 million (the "New Credit Facility")
  to TransGlobe Petroleum International Inc., as borrower. The New Credit Facility
  was guaranteed by each of TransGlobe, TG Holdings Yemen Inc. and TransGlobe
  Petroleum Egypt Inc.

On November 24, 2004, the Company completed a public offering
  by way of short form prospectus of 2,530,000 common shares ("Common Shares")
  at a price of Cdn$4.35 per Common Share for gross proceeds of approximately
  Cdn$11,000,000. On December 7, 2004, in connection with the financing, the
  Company announced that the underwriters exercised their over-allotment option
  to acquire an additional 379,500 Common Shares at Cdn$4.35 per share, resulting
  in additional gross proceeds of approximately Cdn$1,650,825.

Anticipated Changes in the Business

As at the date hereof, the Company does not anticipate any
  material change in its business during the balance of the 2005 financial year.

Significant Acquisitions and Significant Dispositions

The Company did not complete any significant dispositions
  or significant acquisitions for which disclosure is required under Part 8 of
  NI 51-102 within or since the completion of the most recently completed financial
  year.

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 primarily in the Republic of Yemen,
  in the Arab Republic of Egypt and in central Alberta, Canada. The Company also
  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 operated
  in the Republic of Yemen and Canada during the past three years. In the Republic
  of Yemen, the Company has interests in three production sharing agreements:
  in Block 32, in Block S-1 and in Block 72 (awarded in a bid round, pending ratification
  of Yemen Parliament). In 2004 the Company expanded into the Arab Republic of
  Egypt with the acquisition of an interest in the Nuqra Block 1 property. In
  Canada, all of the Company's interests are located in the Province of Alberta,
  primarily in central Alberta.

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Republic of Yemen properties:




Block 32, Republic of Yemen

Background

TransGlobe entered into its first international project in
  January 1997 through a farmout agreement and joint venture on Block 32. The
  Company has since participated in acquisition of seismic data, drilling of twenty
  wells and construction of production facilities. The Tasour field commenced
  production on November 3, 2000. The joint venture currently consists of TG Holdings
  Yemen Inc. (a wholly-owned subsidiary of TransGlobe Energy Corporation) with
  a 13.81087% working interest and partners Ansan Wikfs Hadramaut Ltd. and DNO
  ASA holding the balance ("the Block 32 Joint Venture Group"). DNO ASA (an independent
  Norwegian oil company) is the operator of the Block. The Yemen Oil Company ("YOC"
  - a Yemen government oil company) has a 5% interest in the Block 32 Joint Venture
  Group's production sharing oil.

The Block 32 development area covers 591 square kilometers
  (146,070 acres). The development area encompasses all of the Tasour structure
  and several additional prospects. The approved development/production period
  extends until the year 2020, with an optional five-year extension to 2025.

2004 Exploration/Development

During 2004, the Block 32 Joint Venture work program consisted
  of the acquisition of a 100 square kilometer 3-D seismic program over the greater
  Tasour area, and the drilling of three development wells in the western extension
  of the Tasour field. The well results are summarized in the table below.

2004 Drilling Results

|           |                | Initial Production Test |                
|---------- | -------------- | ----------------------- | ---------------
|Well       | Date Completed | (bopd – gross)          | Formation      
|Tasour #12 | June 2004      | 6,100                   | Qishn sandstone
|Tasour #13 | September 2004 | 2,240                   | Qishn sandstone
|Tasour #14 | October 2004   | 2,820                   | Qishn sandstone

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Production

The Tasour field continues to be a stellar performer, averaging
  17,760 bopd (2,453 bopd to TransGlobe) during 2004. During 2004, the primary
  focus on Block 32 was the development of the western extension of the Tasour
  field, with additional work to increase water disposal capacity. As is typical
  of all the Qishn fields in the prolific Masila basin, the economic success of
  the project is dependent upon handling increased water production in a cost
  effective manner. The strong natural water drive provides an exceptional primary
  recovery (over 50% of the original oil in place). All the Qishn wells in Tasour
  and in the Masila basin are pumped utilizing very large electric (up to 1,000
  hp) submersible pumps. The power in the Tasour field is generated by diesel
  powered generators, making diesel costs one of the largest components of operating
  costs. In late 2004, the Joint Venture group approved the purchase of a diesel
  topping plant which is expected to be operational during the third quarter of
  2005. The diesel topping plant will produce diesel fuel from a portion of the
  Tasour crude oil. This is expected to stabilize diesel costs and maintain low
  operating costs which should extend the life of the field.

2005 Outlook

The main Tasour field is now largely developed. Therefore
  the primary focus for 2005 will be exploration for new reserves. The Block 32
  Joint Venture group initially approved a 6 well drilling program for 2005 and
  recently discussed expanding the 2005 program to 8 wells by utilizing a second
  drilling rig. A new 70 km 2-D seismic program is planned for early 2005 to define
  several interesting exploration leads located north and west of the Tasour area.

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

Two development wells are planned for the main Tasour field
  and a deep exploration well is planned to test formations below the producing
  Tasour Qishn formation on a prospect defined on the 3-D seismic survey. In addition
  several new Qishn prospects have been identified and one or two are expected
  to be drilled in 2005.

Block 72, Republic Of Yemen

Background

In June 2004, the Ministry of Oil and Minerals ("MOM") selected
  the joint venture group comprised of DNO ASA (34%), TG Holdings Yemen Inc. (33%)
  and Ansan Wikfs (Hadramaut) Limited (33%) ("Block 72 Partnership") as the successful
  bidder for Block 72 in the International Bid Round for Exploration and Production
  of Hydrocarbons. TG Holdings Yemen Inc. is a wholly owned subsidiary of TransGlobe.
  Block 72 encompasses 1,822 square kilometers (approximately 450,234 acres) and
  is located in the western Masila Basin adjacent to the Canadian Nexen Masila
  Block. The bid consists of an exploration work program and a signature bonus
  of $1.05 million ($350,000 to TransGlobe). The work program is split
  into two, thirty month exploration periods and entails seismic acquisition and
  two wells in each period.

2005 Outlook

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

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11

Block S-1, Republic of Yemen

Background

TransGlobe entered into its second international exploration
  venture in 1997 by signing a Production Sharing Agreement ("PSA") for the Damis
  S-1 Block ("Block S-1") with the MOM. TG Holdings Yemen Inc. (a wholly owned
  subsidiary of TransGlobe Energy Corporation) entered into a joint venture arrangement
  for Block S-1 with a subsidiary of Vintage Petroleum Inc., a U.S. independent
  exploration and production company ("Block S-1 Joint Venture Group"). During
  2000 Vintage earned a 75% working interest in Block S-1 by funding 100% of the
  work commitments for the first exploration period of the Block S-1 PSA and by
  spending a minimum of $20 million. TransGlobe has retained a 25% working
  interest in Block S-1. Vintage is the operator of Block S-1. The YOC has a 17.5%
  interest in the Block S-1 Joint Venture Group's share of production sharing
  oil.

Block S-1 originally encompassed an area of 4,484 square kilometers
  (approximately 1.1 million acres). Upon declaring commerciality in October 2003,
  a final relinquishment reduced the Block to a Development Area of 1,152 square
  kilometers (284,700 acres). The Development Area is now valid until October
  2023 with an additional five year extension available.

To year end 2004, the Company has participated in two 3-D
  seismic surveys, drilling of 19 wells and the construction of early production
  facilities, resulting in the commencement of production in late March 2004.

2004 Exploration/Development

During 2004 the primary focus of the Joint Venture Group was
  the delineation and development of the An Nagyah Lam A oil pool. Eight oil wells
  were drilled in the An Nagyah Lam A pool (now producing), one appraisal well
  was drilled at Harmel #2 and one exploration well was drilled at Al Hareth #1
  (dry).

2004 Drilling Results

|                 |                | Initial Production Test |                  
|---------------- | -------------- | ----------------------- | -----------------
|Well             | Date Completed | (bopd – gross)          | Formation        
|An Nagyah #5     | March 2004     | 1,150                   | Lam A            
|An Nagyah #6     | April 2004     | 1,142                   | Lam A            
|An Nagyah #7     | May 2004       | 360                     | Lam A            
|An Nagyah #8     | July 2004      | 607                     | Lam A            
|An Nagyah #9     | August 2004    | 530                     | Lam A            
|An Nagyah #10    | September 2004 | 1,547                   | Lam A            
|An Nagyah #11 Hz | October 2004   | 3,100                   | Lam A            
|An Nagyah #12 Hz | November 2004  | 4,801                   | Lam A            
|Harmel #2        | June 2004      | Cased oil, testing 2005 | Azal, Sarr, Qishn
|Al Hareth #1     | August 2004    | Dry                     | Alif Prospect    

The 2004 drilling program focused on the appraisal and development
  of the An Nagyah Lam A light oil pool resulting in eight successful producing
  oil wells during the year. The initial wells were drilled vertically to delineate
  the pool as mapped on 3-D seismic, with An Nagyah #7 and An Nagyah #8 defining
  the western and eastern edges of the field respectively. One of the more significant
  wells drilled during the year was An Nagyah #11, drilled horizontally to improve
  well productivity and pool drainage. An Nagyah #11 was a relatively short horizontal
  of approximately 150 meters. The 3,100 bopd tested from An Nagyah #11 supported
  a second horizontal well at An Nagyah #12 with a larger horizontal section of
  approximately 860 meters. The An Nagyah #12 well flow tested 4,801 bopd while
  significantly constrained by the 2 7/8 inch tubing in the well. The An Nagyah
  #12 well confirmed that horizontal drilling is the preferred method to develop
  the Lam formation.

A workover rig was mobilized in the fourth quarter. The An
  Nagyah #2 well was successfully re-completed as a producing Lam A oil well.
  The workover rig also re-completed the An Nagyah #3 well as a Lam A gas injector.
  Natural gas from the An Nagyah pool is injected into An Nagyah #3 to conserve
  the gas and to maintain reservoir pressure thereby enhancing oil recovery.

---

12

Harmel #2 was drilled in June 2004 to appraise the shallow
  oil reservoirs found in the discovery well, Harmel #1. The Harmel #2 well is
  located 1.2 kilometers from the Harmel #1 discovery well. Full diameter cores
  were cut over three separate oil zones. The analysis of the cores suggested
  that the well productivity could be improved by acidizing the oil zones. The
  Harmel #2 well was completed and acidized in November of 2004.

The only exploration well drilled in 2004, Al Hareth #1, was
  drilled to a total depth of 1,400 meters (4,239 feet) and was abandoned. The
  primary target, the Alif reservoir sandstone was encountered, however the open
  hole well logs did not indicate commercial hydrocarbons were present.

Production

Early production (trucking) facilities were installed at An
  Nagyah during the first quarter of 2004 with an initial capacity of 2,500 bopd
  (625 bopd to TransGlobe). The oil production is currently being trucked 18 miles
  to the Jannah Hunt facility where it enters the pipeline to the Ras Isa loading
  terminal on the Red Sea. Trucking operations will be phased out following the
  construction of a CPF at An Nagyah and a 28 kilometer (18 mile) pipeline to
  the Jannah Hunt export pipeline.

After commencing production the trucking facilities were steadily
  expanded to the current capacity of approximately 7,600 bopd (1,900 bopd to
  TransGlobe). After drilling An Nagyah #12 the field productive well capacity
  is in excess of 12,000 bopd.

The pipeline and facility construction for the An Nagyah field
  is on schedule with a planned start up in June 2005. The An Nagyah field production
  is anticipated to increase to over 10,000 bopd (2,500 bopd to TransGlobe) when
  the facilities and pipeline are operational. The CPF is designed for an initial
  capacity of 10,000 to 12,000 bopd (2,500 to 3,000 bopd to TransGlobe), with
  expansion capabilities. The 10 inch pipeline has an ultimate design capacity
  of 80,000 bopd to provide expansion capabilities for future developments.

2005 Outlook

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

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

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

In March 2005 An Nagyah #15 commenced drilling. The An Nagyah
  #15 well is planned as an 800 meter horizontal well in the northwest area of
  the An Nagyah field, adjacent to An Nagyah #12. Following An Nagyah #15, it
  is expected that the drilling rig will move to the Markhah exploration prospect
  (approximately 40 kilometers south east of An Nagyah).

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

In addition to An Nagyah Lam A development wells (horizontal),
  it is expected that a Lam B horizontal well will be drilled to develop the Lam
  B oil pool tested in the An Nagyah #3 and An Nagyah #14 wells, along with several

---

13

additional exploration wells. The 3-D seismic survey shot
  in 1999 in the An Naeem area is being reprocessed to further refine additional
  exploration targets for the 2005/2006 drilling program.

The Harmel #1 and #2 wells are currently being equipped with
  pumps and production testing equipment which are expected to be operational
  by the end of the March 2005. It is expected that both Harmel wells will be
  production tested for three to six months. Production and test data obtained
  from the Harmel #1 and #2 wells will help to determine the commerciality of
  the medium gravity oil (22 degree API). The Harmel structure identified on 3-D
  seismic could require 80 to 90 shallow wells (700 to 800 meters in depth) to
  be fully developed.

Nuqra Block 1, Arab Republic of Egypt




Background

In July 2004, TransGlobe Petroleum Egypt Inc. ("TransGlobe
  Egypt"), a wholly owned subsidiary of TransGlobe, entered into a Farmout Agreement
  with Quadra Egypt Limited ("QEL"), a subsidiary of Quadra Resources Corp. headquartered
  in Calgary, and Rampex Petroleum International ("Rampex") headquartered in Cairo,
  Egypt. This agreement provides TransGlobe Egypt the opportunity to participate
  and earn a 50% working interest in the Nuqra Concession.

Under the terms of this agreement TransGlobe Egypt will earn
  50% of the Nuqra Concession by paying 100% of the initial $6.0 million of
  qualifying expenditures in the Stage 1 and the Stage 2 work programs. QEL will
  hold a 30% working interest in the Concession and Rampex will hold a 20% working
  interest. After the initial earning, costs will be shared 60% TransGlobe Egypt,
  40% QEL and Rampex will be carried until first production. The cost of the Rampex
  carry will be recovered by TransGlobe Egypt and QEL from 100% of the Rampex
  cost oil and 50% of the Rampex production sharing oil. TransGlobe Egypt is the
  Operator of the Nuqra Block.

The Nuqra Concession Agreement Stage 1 work program requires
  expenditure of $2.0 million to reprocess existing seismic and to shoot new
  seismic within the first two years. Upon expiry of the Stage 1 term, there is
  an option to proceed to the Stage 2 work program. Stage 2 requires completion
  of a two well drilling program, with a minimum expenditure of $4.0 million
  over a period of three years. Upon expiry of the Stage 2 term there is an option
  to proceed to the Stage 3 work program. Stage 3 requires completion of a two
  well drilling program, with a minimum

---

14

expenditure of $5.0 million over a final three year term.
  Exploitation of discovered commercial fields will continue under a Development
  Lease for a further 20 years. The Concession fiscal terms allow for the recovery
  of costs from 40% of production. The remaining balance of 60% of production
  is then shared on a 70:30 basis between the government and the contractor respectively.
  Production sharing above 25,000 bopd is shared on an 80:20 basis.

The Nuqra Concession is located in Upper Egypt near of the
  city of Luxor on the east bank of the Nile River. The concession encompasses
  over two-thirds of the Kom Ombo Basin, a rift basin analogous to the Gulf of
  Suez Basin in Egypt, the Marib Basin in the Republic of Yemen, and the Muglad
  Basin in Sudan, all of which contain major reserves. The Nuqra Concession contains
  more than 30,000 square kilometers or 7,500,000 acres of exploration lands with
  13 seismically defined leads identified from over 4,000 km of existing 2-D seismic.
  Seismic and well data have confirmed the existence of Jurassic and Cretaceous
  sediments and the presence of a petroleum system which could potentially hold
  significant oil reserves.

2004 Activities

In October 2004 Mr. Mitchell Wren joined the Company as General
  Manager of TransGlobe Petroleum Egypt Inc. in Cairo. TransGlobe Petroleum Egypt
  Inc. was assigned a 50% interest in the project and approved as operator by
  the Egyptian Government in October 2004. An office has been established in Cairo
  and work has commenced on geological field studies, re-processing of existing
  2-D seismic and field acquisition bid parameters for the acquisition of additional
  2-D seismic data.

2005 Outlook

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

Canada




---

15

Background

TransGlobe acquired its Canadian operations in April 1999.
  TransGlobe operates most of the wells which are almost entirely in the southern/central
  part of the Province of Alberta. Until 2003, investment in Canadian operations
  was limited to development and exploitation of producing areas with minimal
  investment in land or exploration opportunities. In 2003 and 2004 Canadian operations
  were successfully expanded providing increased cash flow and asset value. Canadian
  operations will continue to be expanded to capitalize on the North American
  gas market.

2004 Exploration/Development

For the year 2004, the Company drilled 15 wells (11.2 net)
  resulting in 10 gas wells, 2 oil wells and 3 dry holes for an 80% success rate.
  The wells were all drilled in central Alberta focusing in the core areas of
  Nevis (5 gas, 1 oil) and Twining (2 gas). The balance of the wells were drilled
  at Morningside (oil), Gadsby (gas), Three Hills Creek (gas), Thorsby (gas),
  with dry holes at Lone Pine Creek and Cynthia. Seven of the 2004 wells were
  placed on production by year end contributing approximately 350 boepd in December.
  Subsequent to year end, two (0.9 net) additional wells (50 boepd) were tied
  in and placed on production. Negotiations are currently underway to tie in two
  (1.5 net) additional wells in 2005 which should contribute an additional 70
  boepd. One Nevis well will undergo additional testing and evaluation prior to
  initiating tie in negotiations.

Production

Production in the fourth quarter averaged 900 boepd but was
  constrained due to natural gas compression capacity limitations at third party
  operated facilities in the Nevis and Twining areas. It is anticipated that additional
  compression will be installed by mid 2005.

2005 Outlook

The Canadian 2005 drilling program is expected to commence
  in April or May after spring break-up to take advantage of lower equipment and
  service prices during the summer months. The Company plans to drill 10 to 15
  wells in Canada during 2005. The majority of the wells will be drilled in the
  Nevis area, targeting natural gas.

---

16

STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

The report of management and the directors on oil and gas
  disclosure in Form 51-101F3 and the report on reserves data in Form 51-101F2
  are attached as Schedules "B" and "A", 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 "Statement") is dated March 16th, 2005. The
  effective date of the Statement is December 31, 2004 and the preparation date
  of the Statement is March 16th, 2005.

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 years ended December
  31, 2004 and December 31, 2003. In 2004, DeGolyer and MacNaughton Canada Limited
  ("DeGolyer") of Calgary, Alberta, independent petroleum engineering consultants
  based in Calgary and part of the DeGolyer and MacNaughton Worldwide Petroleum
  Consulting group headquartered in Dallas, Texas, were retained by the Company's
  Reserve Committee, to independently evaluate 100% of TransGlobe's reserves as
  at December 31, 2004.

Prior thereto, Outtrim Szabo Associates Ltd. ("OSAL") of Calgary,
  Alberta (now DeGolyer and MacNaughton Canada Limited), independent petroleum
  engineering consultants, had historically evaluated the Company's Canadian reserves
  including December 31, 2003 and Fekete Associates Inc. ("Fekete") of Calgary,
  Alberta, independent petroleum engineering consultants, had historically evaluated
  the Company's reserves in Yemen including December 31, 2003. On selected tables,
  reserves for the year ended December 31, 2003 have been presented for comparative
  purposes to assist the reader.

The reserves data set forth below (the "Reserves Data") was
  prepared by DeGolyer with an effective date of December 31, 2004. 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 US currency
  and therefore the reports have been converted to US $'s 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.

---

17

Reserves Data (Constant Prices and Costs)

SUMMARY OF OIL AND GAS RESERVES 
  TOTAL COMPANYAS AT DECEMBER 31, 2004
  (CONSTANT PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |             |  |                     |  |             |  |           |  |         |  |           | 
|-------------------- |  | -------------------- |  | ----------- |  | ------------------- |  | ----------- |  | --------- |  | ------- |  | --------- | 
|                     |  | Oil                  |  | Natural Gas |  | Natural Gas Liquids |  | Total boe's | 
|                     |  | Gross (1)            |  | Net (2)     |  | Gross (1)           |  | Net (2)     |  | Gross (1) |  | Net (2) |  | Gross (1) | 
|By Category          |  | (Mbbls)              |  | (Mbbls)     |  | (MMcf)              |  | (MMcf)      |  | (Mbbls)   |  | (Mbbls) |  | (MBoe)    | 
|Proved               |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Producing            |  | 2,822                |  | 1,879       |  | 6,679               |  | 5,378       |  | 139       |  | 98      |  | 4,074     | 
|Non-Producing        |  | 134                  |  | 77          |  | 1,231               |  | 887         |  | 105       |  | 73      |  | 444       | 
|Undeveloped          |  | 1,555                |  | 911         |  | 2,949               |  | 2,275       |  | 100       |  | 72      |  | 2,146     | 
|Total Proved         |  | 4,511                |  | 2,867       |  | 10,859              |  | 8,540       |  | 344       |  | 243     |  | 6,664     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Probable             |  | 2,823                |  | 1,514       |  | 4,890               |  | 3,718       |  | 124       |  | 86      |  | 3,763     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Proved Plus Probable |  | 7,334                |  | 4,381       |  | 15,749              |  | 12,258      |  | 468       |  | 329     |  | 10,427    | 

SUMMARY OF OIL AND GAS RESERVES 
  YEMENAS AT DECEMBER 31, 2004
  (CONSTANT PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |             |  |                     |  |             |  |          |  |         |  |           | 
|-------------------- |  | -------------------- |  | ----------- |  | ------------------- |  | ----------- |  | -------- |  | ------- |  | --------- | 
|                     |  | Oil                  |  | Natural Gas |  | Natural Gas Liquids |  | Total boe's | 
|                     |  | Gross (1)            |  | Net (2)     |  | Gross(1)            |  | Net(2)      |  | Gross(1) |  | Net(2)  |  | Gross (1) | 
|By Category          |  | (Mbbls)              |  | (Mbbls)     |  | (MMcf)              |  | (MMcf)      |  | (Mbbls)  |  | (Mbbls) |  | (MBoe)    | 
|Proved               |  |                      |  |             |  |                     |  |             |  |          |  |         |  |           | 
|Producing            |  | 2,749                |  | 1,813       |  | -                   |  | -           |  | -        |  | -       |  | 2,749     | 
|Non-Producing        |  | 118                  |  | 64          |  | -                   |  | -           |  | -        |  | -       |  | 118       | 
|Undeveloped          |  | 1,554                |  | 911         |  | -                   |  | -           |  | -        |  | -       |  | 1,554     | 
|Total Proved         |  | 4,421                |  | 2,788       |  | -                   |  | -           |  | -        |  | -       |  | 4,421     | 
|                     |  |                      |  |             |  |                     |  |             |  |          |  |         |  |           | 
|Probable             |  | 2,796                |  | 1,489       |  | -                   |  | -           |  | -        |  | -       |  | 2,796     | 
|                     |  |                      |  |             |  |                     |  |             |  |          |  |         |  |           | 
|Proved Plus Probable |  | 7,217                |  | 4,277       |  | -                   |  | -           |  | -        |  | -       |  | 7,217     | 

---

18

SUMMARY OF OIL AND GAS RESERVES 
  CANADAAS AT DECEMBER 31, 2004
  (CONSTANT PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |             |  |                     |  |             |  |           |  |         |  |           | 
|-------------------- |  | -------------------- |  | ----------- |  | ------------------- |  | ----------- |  | --------- |  | ------- |  | --------- | 
|                     |  | Oil                  |  | Natural Gas |  | Natural Gas Liquids |  | Total boe's | 
|                     |  | Gross (1)            |  | Net (2)     |  | Gross (1)           |  | Net (2)     |  | Gross (1) |  | Net (2) |  | Gross (1) | 
|By Category          |  | (Mbbls)              |  | (Mbbls)     |  | (MMcf)              |  | (MMcf)      |  | (Mbbls)   |  | (Mbbls) |  | (MBoe)    | 
|Proved               |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Producing            |  | 73                   |  | 66          |  | 6,679               |  | 5,378       |  | 139       |  | 98      |  | 1,326     | 
|Non-Producing        |  | 16                   |  | 13          |  | 1,231               |  | 887         |  | 105       |  | 73      |  | 325       | 
|Undeveloped          |  | -                    |  | -           |  | 2,949               |  | 2,275       |  | 100       |  | 72      |  | 592       | 
|Total Proved         |  | 89                   |  | 79          |  | 10,859              |  | 8,540       |  | 344       |  | 243     |  | 2,243     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Probable             |  | 28                   |  | 25          |  | 4,890               |  | 3,718       |  | 124       |  | 86      |  | 967       | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Proved Plus Probable |  | 117                  |  | 104         |  | 15,749              |  | 12,258      |  | 468       |  | 329     |  | 3,210     | 

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.

---

19

Estimated Future Net Revenues

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 during the final month of the respective reporting
  periods. The prices were held constant and costs were not inflated for the life
  of the reserves, as summarized in the Notes to Reserves Data Tables (Note 4).

NET PRESENT VALUES OF FUTURE NET REVENUES 
  TOTAL COMPANYAS AT DECEMBER 31, 2004 
  (CONSTANT PRICES AND COSTS)

|                           | Before Income Tax(1)(2) |  | After Income Tax(1)(2) | 
|-------------------------- | ----------------------- |  | ---------------------- | 
|US$'s                      | Discounted at %/yr      |  | Discounted at %/yr     | 
|$MM                        | 0%                      |  | 5%                     | 
|                           |                         |  |                        | 
|Proved                     |                         |  |                        | 
|                           |                         |  |                        | 
|Developed producing        | 73.4                    |  | 63.4                   | 
|Developed non-producing    | 7.4                     |  | 8.7                    | 
|Undeveloped                | 21.3                    |  | 16.9                   | 
|Total Proved               | 102.1                   |  | 89.0                   | 
|Probable                   | 51.5                    |  | 40.5                   | 
|                           |                         |  |                        | 
|Total Proved Plus Probable | 153.5                   |  | 129.5                  | 

NET PRESENT VALUES OF FUTURE NET REVENUES

YEMENAS AT DECEMBER 31, 2004
  (CONSTANT PRICES AND COSTS)

|                           | Before Income Tax(1) |  | After Income Tax(1) | 
|-------------------------- | -------------------- |  | ------------------- | 
|US$'s                      | Discounted at %/yr   |  | Discounted at %/yr  | 
|$MM                        | 0%                   |  | 5%                  | 
|                           |                      |  |                     | 
|Proved                     |                      |  |                     | 
|                           |                      |  |                     | 
|Developed producing        | 40.3                 |  | 37.6                | 
|Developed non-producing    | 1.4                  |  | 1.4                 | 
|Undeveloped                | 7.6                  |  | 6.3                 | 
|Total Proved               | 49.2                 |  | 45.3                | 
|Probable                   | 29.1                 |  | 24.5                | 
|                           |                      |  |                     | 
|Total Proved Plus Probable | 78.5                 |  | 69.8                | 

---

20

NET PRESENT VALUES OF FUTURE NET REVENUES 
  CANADAAS AT DECEMBER 31, 2004
  (CONSTANT PRICES AND COSTS)

|                           | Before Income Tax(2) |  | After Income Tax(2) | 
|-------------------------- | -------------------- |  | ------------------- | 
|US$'s                      | Discounted at %/yr   |  | Discounted at %/yr  | 
|$MM                        | 0%                   |  | 5%                  | 
|                           |                      |  |                     | 
|Proved                     |                      |  |                     | 
|                           |                      |  |                     | 
|Developed producing        | 33.1                 |  | 25.8                | 
|Developed non-producing    | 6.0                  |  | 7.3                 | 
|Undeveloped                | 13.7                 |  | 10.7                | 
|Total Proved               | 52.8                 |  | 43.7                | 
|Probable                   | 22.3                 |  | 16.0                | 
|                           |                      |  |                     | 
|Total Proved Plus Probable | 75.0                 |  | 59.7                | 

Notes:

|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                      
|(2) | Canadian values converted to US dollars at the December
        31, 2004 exchange rates of 1.2020 US $'s/Cdn $'s and include the
        Alberta Royalty Tax Credit (ARTC) in the Before and After Income Tax values.

|US$'s                   | NET PRESENT VALUE OF ALBERTA ROYALTY TAX
      CREDITS 
      CANADAAS AT DECEMBER 31, 2004 
      (CONSTANT PRICES AND COSTS) Future Cash Flow as of December
      31, 2004
|----------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|$M                      | Discounted at %/yr                                                                                                                                                           
|Reserve Category        | 0%                                                                                                                                                                           
|                        |                                                                                                                                                                              
|Proved Developed        |                                                                                                                                                                              
|Producing               | 1,273                                                                                                                                                                        
|Non-Producing           | 476                                                                                                                                                                          
|Proved Undeveloped      | 428                                                                                                                                                                          
|Total Proved            | 2,177                                                                                                                                                                        
|                        |                                                                                                                                                                              
|Probable                | 647                                                                                                                                                                          
|                        |                                                                                                                                                                              
|Total Proved + Probable | 2,824                                                                                                                                                                        

---

21

TOTAL FUTURE NET REVENUES
  (UNDISCOUNTED) 
  AS AT DECEMBER 31, 2004
  (CONSTANT PRICES AND COSTS)

|                              |  |         |  |           |  |           |  |             |  |             |  | Future Net |  |        |  | Future Net
|----------------------------- |  | ------- |  | --------- |  | --------- |  | ----------- |  | ----------- |  | ---------- |  | ------ |  | ----------
|                              |  |         |  |           |  |           |  |             |  |             |  | Revenue    |  |        |  | Revenue   
|                              |  |         |  |           |  |           |  |             |  | Well        |  | Before     |  |        |  | After     
|                              |  |         |  |           |  | Operating |  | Development |  | Abandonment |  | Income     |  | Income |  | Income    
|                              |  | Revenue |  | Royalties |  | Costs     |  | Costs       |  | Costs       |  | Taxes      |  | Taxes  |  | Taxes     
|Reserves Category             |  | ($MM)   |  | ($MM)     |  | ($MM)     |  | ($MM)       |  | ($MM)       |  | ($MM)      |  | ($MM)  |  | ($MM)     
|                              |  |         |  |           |  |           |  |             |  |             |  |            |  |        |  |           
|Proved Reserves               |  |         |  |           |  |           |  |             |  |             |  |            |  |        |  |           
|Yemen(1)                      |  | 175.0   |  | 64.6      |  | 24.9      |  | 11.4        |  | -           |  | 74.1       |  | 24.8   |  | 49.4      
|Canada(2)                     |  | 82.8    |  | 14.9      |  | 12.7      |  | 1.9         |  | 0.6         |  | 52.8       |  | 8.8    |  | 44.0      
|Total Company                 |  | 257.8   |  | 79.5      |  | 37.5      |  | 13.4        |  | 0.6         |  | 126.9      |  | 33.5   |  | 93.4      
|                              |  |         |  |           |  |           |  |             |  |             |  |            |  |        |  |           
|Proved Plus Probable Reserves |  |         |  |           |  |           |  |             |  |             |  |            |  |        |  |           
|Yemen(1)                      |  | 284.9   |  | 116.0     |  | 37.0      |  | 12.5        |  | -           |  | 119.3      |  | 40.9   |  | 78.5      
|Canada(2)                     |  | 118.1   |  | 22.0      |  | 18.1      |  | 2.3         |  | 0.6         |  | 75.1       |  | 15.8   |  | 59.2      
|Total Company                 |  | 403.0   |  | 138.1     |  | 55.1      |  | 14.8        |  | 0.6         |  | 194.4      |  | 56.7   |  | 137.7     

Notes:

|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to US dollars at the December
        31, 2004 exchange rates of 1.202 US $'s/Cdn $'s and include the
        Alberta Royalty Tax Credit (ARTC) in the Before and After Income Tax values. 

FUTURE NET REVENUE 
  BY PRODUCTION GROUP 
  AS AT DECEMBER 31, 2004 
  (CONSTANT PRICES AND COSTS)

|                                |  |                                                                                 |  | Yemen              |  | Canada             |  |                    
|------------------------------- |  | ------------------------------------------------------------------------------- |  | ------------------ |  | ------------------ |  | -------------------
|                                |  |                                                                                 |  | Future net Revenue |  | Future net Revenue |  | Total Company      
|                                |  |                                                                                 |  | Before Income      |  | Before Income      |  | Future net Revenue 
|                                |  |                                                                                 |  | Taxes (1)          |  | Taxes (2)          |  | Before Income Taxes
|                                |  |                                                                                 |  | (discounted at     |  | (discounted at     |  | (discounted at     
|                                |  |                                                                                 |  | 10%/year)          |  | 10%/year)          |  | 10%/year)          
|Reserves Category               |  | Product Group                                                                   |  | (US$MM)            |  | (US$MM)            |  | (US$MM)            
|                                |  |                                                                                 |  |                    |  |                    |  |                    
|Proved Reserves                 |  | Light and Medium Crude Oil (including solution gas and other
      by-products) |  | 41.6               |  | 9.0                |  | 50.7               
|                                |  | Natural Gas (including by-products but excluding solution gas)                  |  | -                  |  | 26.5               |  | 26.5               
|                                |  |                                                                                 |  |                    |  |                    |  |                    
|Proved Plus Probable   Reserves |  | Light and Medium Crude Oil (including solution gas and other
      by-products) |  | 62.5               |  | 11.6               |  | 74.1               
|                                |  | Natural Gas (including by-products but excluding solution
      gas)            |  | -                  |  | 35.9               |  | 35.9               

Notes:

|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                      
|(2) | Canadian values converted to US dollars at the December
        31, 2004 exchange rates of 1.2020 US $'s/Cdn $'s and do notinclude the Alberta Royalty Tax Credit (ARTC) in the Before Income
        Tax values.    

---

22

Reserves Data (Forecast Prices and Costs)

SUMMARY OF OIL AND GAS RESERVES 
  TOTAL COMPANYAS OF DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |             |  |                     |  |             |  |           |  |         |  |           | 
|-------------------- |  | -------------------- |  | ----------- |  | ------------------- |  | ----------- |  | --------- |  | ------- |  | --------- | 
|                     |  | Oil                  |  | Natural Gas |  | Natural Gas Liquids |  | Total boe's | 
|                     |  | Gross (1)            |  | Net(2)      |  | Gross (1)           |  | Net(2)      |  | Gross (1) |  | Net(2)  |  | Gross (1) | 
|By Category          |  | (Mbbls)              |  | (Mbbls)     |  | (MMcf)              |  | (MMcf)      |  | (Mbbls)   |  | (Mbbls) |  | (MBoe)    | 
|Proved               |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Producing            |  | 2,822                |  | 1,882       |  | 6,679               |  | 5,372       |  | 139       |  | 99      |  | 4,074     | 
|Non-Producing        |  | 134                  |  | 76          |  | 1,232               |  | 883         |  | 105       |  | 73      |  | 444       | 
|Undeveloped          |  | 1,555                |  | 1,004       |  | 2,949               |  | 2,270       |  | 100       |  | 73      |  | 2,147     | 
|Total Proved         |  | 4,511                |  | 2,962       |  | 10,860              |  | 8,525       |  | 344       |  | 245     |  | 6,665     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Probable             |  | 2,823                |  | 1,582       |  | 4,892               |  | 3,713       |  | 124       |  | 86      |  | 3,762     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Proved Plus Probable |  | 7,334                |  | 4,545       |  | 15,752              |  | 12,238      |  | 468       |  | 331     |  | 10,427    | 

SUMMARY OF OIL AND GAS RESERVES 
  YEMENAS OF DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |             |  |                     |  |             |  |           |  |         |  |           | 
|-------------------- |  | -------------------- |  | ----------- |  | ------------------- |  | ----------- |  | --------- |  | ------- |  | --------- | 
|                     |  | Oil                  |  | Natural Gas |  | Natural Gas Liquids |  | Total boe's | 
|                     |  | Gross (1)            |  | Net(2)      |  | Gross (1)           |  | Net(2)      |  | Gross (1) |  | Net(2)  |  | Gross (1) | 
|By Category          |  | (Mbbls)              |  | (Mbbls)     |  | (MMcf)              |  | (MMcf)      |  | (Mbbls)   |  | (Mbbls) |  | (MBoe)    | 
|Proved               |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Producing            |  | 2,748                |  | 1,816       |  | -                   |  | -           |  | -         |  | -       |  | 2,748     | 
|Non-Producing        |  | 119                  |  | 63          |  | -                   |  | -           |  | -         |  | -       |  | 119       | 
|Undeveloped          |  | 1,554                |  | 1,004       |  | -                   |  | -           |  | -         |  | -       |  | 1,554     | 
|Total Proved         |  | 4,421                |  | 2,884       |  | -                   |  | -           |  | -         |  | -       |  | 4,421     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Probable             |  | 2,796                |  | 1,557       |  | -                   |  | -           |  | -         |  | -       |  | 2,796     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Proved Plus Probable |  | 7,217                |  | 4,441       |  | -                   |  | -           |  | -         |  | -       |  | 7,217     | 

---

23

SUMMARY OF OIL AND GAS RESERVES 
  CANADAAS OF DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |             |  |                     |  |             |  |           |  |         |  |           | 
|-------------------- |  | -------------------- |  | ----------- |  | ------------------- |  | ----------- |  | --------- |  | ------- |  | --------- | 
|                     |  | Oil                  |  | Natural Gas |  | Natural Gas Liquids |  | Total boe's | 
|                     |  | Gross (1)            |  | Net(2)      |  | Gross (1)           |  | Net(2)      |  | Gross (1) |  | Net(2)  |  | Gross (1) | 
|By Category          |  | (Mbbls)              |  | (Mbbls)     |  | (MMcf)              |  | (MMcf)      |  | (Mbbls)   |  | (Mbbls) |  | (MBoe)    | 
|Proved               |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Producing            |  | 74                   |  | 66          |  | 6,679               |  | 5,372       |  | 139       |  | 99      |  | 1,326     | 
|Non-Producing        |  | 15                   |  | 13          |  | 1,232               |  | 883         |  | 105       |  | 73      |  | 325       | 
|Undeveloped          |  | -                    |  | -           |  | 2,949               |  | 2,270       |  | 100       |  | 73      |  | 592       | 
|Total Proved         |  | 89                   |  | 79          |  | 10,860              |  | 8,525       |  | 344       |  | 245     |  | 2,243     | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Probable             |  | 28                   |  | 25          |  | 4,892               |  | 3,713       |  | 124       |  | 86      |  | 967       | 
|                     |  |                      |  |             |  |                     |  |             |  |           |  |         |  |           | 
|Proved Plus Probable |  | 117                  |  | 104         |  | 15,752              |  | 12,238      |  | 468       |  | 331     |  | 3,210     | 

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 COMPANYAS OF DECEMBER 31, 2004
  (FORECAST 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 respective Consultant price forecasts and inflation rates as summarized
  in the Notes to Reserves Data Tables (Note 3).

|                           | Before Income Tax(1)(2) |  | After Income Tax(1)(2) | 
|-------------------------- | ----------------------- |  | ---------------------- | 
|US$'s                      | Discounted at %/yr      |  | Discounted at %/yr     | 
|$MM                        | 0%                      |  | 5%                     | 
|                           |                         |  |                        | 
|Proved                     |                         |  |                        | 
|                           |                         |  |                        | 
|Developed producing        | 63.5                    |  | 55.7                   | 
|Developed non-producing    | 6.1                     |  | 7.5                    | 
|Undeveloped                | 17.3                    |  | 13.8                   | 
|Total Proved               | 86.9                    |  | 76.9                   | 
|Probable                   | 40.5                    |  | 32.2                   | 
|                           |                         |  |                        | 
|Total Proved Plus Probable | 127.4                   |  | 109.1                  | 

---

24

NET PRESENT VALUES OF FUTURE NET REVENUES 
  YEMENAS OF DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                           | Before Income Tax(1) |  | After Income Tax(1) | 
|-------------------------- | -------------------- |  | ------------------- | 
|US$'s                      | Discounted at %/yr   |  | Discounted at %/yr  | 
|$MM                        | 0%                   |  | 5%                  | 
|                           |                      |  |                     | 
|Proved                     |                      |  |                     | 
|                           |                      |  |                     | 
|Developed producing        | 35.5                 |  | 33.6                | 
|Developed non-producing    | 1.3                  |  | 1.2                 | 
|Undeveloped                | 6.7                  |  | 5.5                 | 
|Total Proved               | 43.5                 |  | 40.3                | 
|Probable                   | 22.2                 |  | 19.1                | 
|                           |                      |  |                     | 
|Total Proved Plus Probable | 65.7                 |  | 59.4                | 

NET PRESENT VALUES OF FUTURE NET REVENUES 
  CANADAAS OF DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                           | Before Income Tax(2) |  | After Income Tax(2) | 
|-------------------------- | -------------------- |  | ------------------- | 
|US$'s                      | Discounted at %/yr   |  | Discounted at %/yr  | 
|$MM                        | 0%                   |  | 5%                  | 
|                           |                      |  |                     | 
|Proved                     |                      |  |                     | 
|                           |                      |  |                     | 
|Developed producing        | 28.0                 |  | 22.0                | 
|Developed non-producing    | 4.9                  |  | 6.2                 | 
|Undeveloped                | 10.6                 |  | 8.3                 | 
|Total Proved               | 43.4                 |  | 36.6                | 
|Probable                   | 18.3                 |  | 13.1                | 
|                           |                      |  |                     | 
|Total Proved Plus Probable | 61.7                 |  | 49.7                | 

Notes:

|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to US dollars at the December
        31, 2004 exchange rates of 1.2020 US $'s/Cdn $'s and include the
        Alberta Royalty Tax Credit (ARTC) in the Before and After Income Tax values.

---

25

|US$'s                   | NET PRESENT VALUE OF ALBERTA ROYALTY TAX
      CREDITS 
      CANADAAS AT DECEMBER 31, 2004
      (FORECAST PRICE CASE) Future Cash Flow as of December 31, 2004 | 
|----------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|$M                      | Discounted at %/yr                                                                                                                                               | 
|Reserve Category        | 0%                                                                                                                                                               | 
|                        |                                                                                                                                                                  | 
|Proved Developed        |                                                                                                                                                                  | 
|Producing               | 1,091                                                                                                                                                            | 
|Non-Producing           | 411                                                                                                                                                              | 
|Proved Undeveloped      | 358                                                                                                                                                              | 
|Total Proved            | 1,860                                                                                                                                                            | 
|                        |                                                                                                                                                                  | 
|Probable                | 553                                                                                                                                                              | 
|                        |                                                                                                                                                                  | 
|Total Proved + Probable | 2,413                                                                                                                                                            | 

TOTAL FUTURE NET REVENUES 
  (UNDISCOUNTED) 
  AS AT DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                     |  |         |  |           |  |           |  |             |  |             |  | Future  |  |         |  | Future 
|-------------------- |  | ------- |  | --------- |  | --------- |  | ----------- |  | ----------- |  | ------- |  | ------- |  | -------
|                     |  |         |  |           |  |           |  |             |  |             |  | Net     |  |         |  | Net    
|                     |  |         |  |           |  |           |  |             |  |             |  | Revenue |  |         |  | Revenue
|                     |  |         |  |           |  |           |  |             |  | Well        |  | Before  |  |         |  | After  
|                     |  |         |  |           |  | Operating |  | Development |  | Abandonment |  | Income  |  | Income  |  | Income 
|                     |  | Revenue |  | Royalties |  | Costs     |  | Costs       |  | Costs       |  | Taxes   |  | Taxes   |  | Taxes  
|Reserves Category    |  | (US$MM) |  | (US$MM)   |  | (US$MM)   |  | (US$MM)     |  | (US$MM)     |  | (US$MM) |  | (US$MM) |  | (US$MM)
|                     |  |         |  |           |  |           |  |             |  |             |  |         |  |         |  |        
|Proved Reserves      |  |         |  |           |  |           |  |             |  |             |  |         |  |         |  |        
|Yemen(1)             |  | 158.1   |  | 55.1      |  | 25.9      |  | 11.5        |  | -           |  | 65.5    |  | 22.0    |  | 43.5   
|Canada(2)            |  | 72.2    |  | 12.4      |  | 13.8      |  | 1.9         |  | 0.7         |  | 43.4    |  | 5.8     |  | 37.6   
|Total Company        |  | 230.3   |  | 67.5      |  | 39.7      |  | 13.4        |  | 0.7         |  | 108.9   |  | 27.9    |  | 81.1   
|                     |  |         |  |           |  |           |  |             |  |             |  |         |  |         |  |        
|Proved Plus Probable |  |         |  |           |  |           |  |             |  |             |  |         |  |         |  |        
|Reserves             |  |         |  |           |  |           |  |             |  |             |  |         |  |         |  |        
|Yemen(1)             |  | 246.0   |  | 94.1      |  | 39.4      |  | 12.6        |  | -           |  | 99.9    |  | 34.2    |  | 65.7   
|Canada(2)            |  | 103.4   |  | 18.4      |  | 20.2      |  | 2.3         |  | 0.7         |  | 61.7    |  | 11.5    |  | 50.2   
|Total Company        |  | 349.4   |  | 112.5     |  | 59.6      |  | 14.9        |  | 0.7         |  | 161.6   |  | 45.7    |  | 115.9  

Notes:

|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to US dollars at the December
        31, 2004 exchange rates of 1.2020 US $'s/Cdn $'s and include the
        Alberta Royalty Tax Credit (ARTC) in the Before and After Income Tax values.

---

26

TOTAL FUTURE NET REVENUES 
  BY PRODUCTION GROUPAS AT DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                              |  |                                                                                 |  | Yemen              |  | Canada             |  | Total Company      | 
|----------------------------- |  | ------------------------------------------------------------------------------- |  | ------------------ |  | ------------------ |  | ------------------ | 
|                              |  |                                                                                 |  | Future net Revenue |  | Future net Revenue |  | Future net Revenue | 
|                              |  |                                                                                 |  | Before Income      |  | Before Income      |  | Before Income      | 
|                              |  |                                                                                 |  | Taxes(1)           |  | Taxes(2)           |  | Taxes(1)           | 
|                              |  |                                                                                 |  | (discounted at     |  | (discounted at     |  | (discounted at     | 
|                              |  |                                                                                 |  | 15%/year)          |  | 15%/year)          |  | 15%/year)          | 
|Reserves Category             |  | Product Group                                                                   |  | (US$MM)            |  | (US$MM)            |  | (US$MM)            | 
|                              |  |                                                                                 |  |                    |  |                    |  |                    | 
|Proved Reserves               |  | Light and Medium Crude Oil (including solution gas and other
      by-products) |  | 34.9               |  | 6.0                |  | 40.9               | 
|                              |  | Natural Gas (including by-products but excluding solution
      gas)            |  |                    |  | 20.5               |  | 20.5               | 
|                              |  |                                                                                 |  |                    |  |                    |  |                    | 
|Proved Plus Probable Reserves |  | Light and Medium Crude Oil (including solution gas and other
      by-products) |  | 49.4               |  | 7.5                |  | 57.0               | 
|                              |  | Natural Gas (including by-products but excluding solution
      gas)            |  |                    |  | 27.2               |  | 27.2               | 

Notes:

|(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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to US dollars at the December
        31, 2004 exchange rates of 1.2020 US $'s/Cdn $'s and do notinclude the Alberta Royalty Tax Credit (ARTC) in the Before Income
        Tax values.    

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 DeGolyer and Fekete Reports
        are based on the definitions and guidelines contained in the COGE Handbook.
        A summary of those definitions are 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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | "Exploration costs" means costs
        incurred in identifying areas that may warrant examination and in examining
        specific areas that are considered to have prospects that may contain
        oil and gas reserves, including costs of drilling exploratory wells and
        exploratory type stratigraphic test wells. Exploration costs may be incurred
        both before acquiring the related property and after acquiring the property.
        Exploration

---

27

|    | costs, which include applicable operating
        costs of support equipment and facilities and other costs of exploration
        activities, are:                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | (d)                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | (e)                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                      
|(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.                                                                                                                  
|   
|    | Other criteria that must also be met for
        the categorization of reserves are provided in the COGE Handbook.                                                                                                                                                                                                                                                                                                   
|   
|    | Each of the reserve categories (proved
        and probable) may be divided into developed and undeveloped categories:                                                                                                                                                                                                                                                                                               
|   
|(c) | 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)                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(d) | 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                                                                                                                                                                                   

---

28

|   | them capable of production. They must
        fully meet the requirements of the reserves classification (proved, probable)
        to which they are assigned.                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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:                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 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.                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. | 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.                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | For the Reserves, crude oil and natural
        gas benchmark reference pricing, as at December 31, 2004, inflation and
        exchange rates utilized by DeGolyer in the DeGolyer Report, which were
        DeGolyer's then current forecasts at the date of the DeGolyer Report,
        were as follows:                                                                                                                                                                                                                                                        

|           |  | Crude Oil   |  |               |  |                     |  |                     |  |           |  |            |  |         
|---------- |  | ----------- |  | ------------- |  | ------------------- |  | ------------------- |  | --------- |  | ---------- |  | --------
|           |  | WTI Cushing |  | Edmonton Par  |  | Natural Gas AECO    |  | Natural Gas Liquids |  | Inflation |  | Exchange  
|           |  | Oklahoma    |  | Price 40° API |  | Spot Gas Price      |  | FOB Edmonton        |  | Rates(1)  |  | Rate(2)   
|Year       |  | (US$/bbl)   |  | (Cdn$/bbl)    |  | (Cdn$/Mcf)          |  | (Cdn$/bbl)          |  | % Year    |  | (Cdn$/US$)
|           |  |             |  |               |  |                     |  | Condensate          |  | Butane    |  | Propane    |  |         
|Forecast   |  |             |  |               |  |                     |  |                     |  |           |  |            |  |         
|2005       |  | 45.00       |  | 54.00         |  | 6.87                |  | 55.08               |  | 39.42     |  | 34.56      |  | 0       
|2006       |  | 40.80       |  | 48.78         |  | 6.67                |  | 49.76               |  | 35.61     |  | 31.22      |  | 2.0     
|2007       |  | 36.41       |  | 43.34         |  | 6.45                |  | 44.20               |  | 30.33     |  | 27.73      |  | 2.0     
|2008       |  | 34.49       |  | 40.93         |  | 5.87                |  | 41.75               |  | 28.65     |  | 26.19      |  | 2.0     
|2009       |  | 32.47       |  | 38.40         |  | 5.51                |  | 39.17               |  | 26.88     |  | 24.58      |  | 2.0     
|2010       |  | 33.12       |  | 39.17         |  | 5.42                |  | 39.96               |  | 27.42     |  | 25.07      |  | 2.0     
|Thereafter |  | +2%/year    |  | +2%/year      |  | +1.1%/yr to 12      |  | +2%/year            |  | +2%/year  |  | +2%/year   |  | +2%/year
|           |  |             |  |               |  | +1.5%/yr to 16      |  |                     |  |           |  |            |  |         
|           |  |             |  |               |  | +2.0%/yr thereafter |  |                     |  |           |  |            |  |         

| | Notes:
| | ------
| |       
| | (1)   
| | (2)   

---

29

|   | The weighted average historical price in US $'s
        realized by the Company in Yemen, for the year ended December 31, 2004
        for crude oil was $36.33/bbl.                                                                                       
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The weighted average historical prices in Cdn $'s
        realized by the Company in Canada, for the year ended December 31, 2004,
        were $6.75/mcf for natural gas, $49.89/bbl for crude oil and $40.83/bbl
        for natural gas liquids.        
|  
|4. | Constant Prices and Costs                                                                                                                                                                                                                                  
|  
|   | In Yemen, a constant price of $39.58/bbl (December
        2004 actual prices) was utilized in the constant price case.                                                                                                                                    
|  
|   | In Canada, constant prices of $37.05/bbl of
        oil and $5.93/Mcf of natural gas (December 2004 actual prices converted
        to US $'s at the December 31, 2004 currency rate of 1.2020 US$/Cdn$),
        were utilized in the constant price case.
|  
|5. | Future Development Costs                                                                                                                                                                                                                                   

FUTURE DEVELOPMENT COSTS 
  TOTAL COMPANY(1)AS AT DECEMBER 31, 2004

| | (US$ millions)          | Constant Prices and Costs |  | Forecast Prices and Costs
| | ----------------------- | ------------------------- |  | -------------------------
| |                         |                           |  | Proved Plus              
| |                         | Proved                    |  | Probable                 
| | Year                    | Reserves                  |  | Reserves                 
| | 2005                    | 11.9                      |  | 13.0                     
| | 2006                    | 0.8                       |  | 0.8                      
| | 2007                    | 0.2                       |  | 0.1                      
| | 2008                    | 0.1                       |  | 0.1                      
| |                         |                           |  |                          
| | Total Undiscounted      | 13.4                      |  | 14.8                     
| |                         |                           |  |                          
| | Total Discounted at 10% | 12.4                      |  | 13.7                     

| | Note:
| | -----
| |      
| | (1)  

FUTURE DEVELOPMENT 
  COSTS YEMENAS AT DECEMBER 31, 2004

| | (US$ millions)          | Constant Prices and Costs |  | Forecast Prices and Costs
| | ----------------------- | ------------------------- |  | -------------------------
| |                         |                           |  | Proved Plus              
| |                         | Proved                    |  | Probable                 
| | Year                    | Reserves                  |  | Reserves                 
| | 2005                    | 10.0                      |  | 11.0                     
| | 2006                    | 0.8                       |  | 0.8                      
| | 2007                    | 0.1                       |  | 0.1                      
| | 2008                    | 0.1                       |  | 0.1                      
| |                         |                           |  |                          
| | Total Undiscounted      | 11.4                      |  | 12.5                     
| |                         |                           |  |                          
| | Total Discounted at 10% | 10.6                      |  | 11.6                     

---

30

FUTURE DEVELOPMENT COSTS 
  CANADA(1)AS AT DECEMBER 31, 2004

| | (US$ millions)          | Constant Prices and Costs |  | Forecast Prices and Costs
| | ----------------------- | ------------------------- |  | -------------------------
| |                         |                           |  | Proved Plus              
| |                         | Proved                    |  | Probable                 
| | Year                    | Reserves                  |  | Reserves                 
| | 2005                    | 1.8                       |  | 2.1                      
| | 2006                    | 0.1                       |  | 0.1                      
| | 2007                    | 0                         |  | 0                        
| | 2008                    | 0                         |  | 0                        
| |                         |                           |  |                          
| | Total Undiscounted      | 1.9                       |  | 2.3                      
| |                         |                           |  |                          
| | Total Discounted at 10% | 1.8                       |  | 2.1                      

| | Note:
| | -----
| |      
| | (1)  

|   | The Company expects to fund the future development
        costs noted above through the use of working capital, cash flow, debt
        and equity financing as required.                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|6. | The Alberta royalty tax credit ("ARTC") is included
        in the cumulative cash flow amounts. ARTC is based on the program announced
        November 1989 by the Alberta government with modifications effective January
        1, 1995. The estimated Net Present Value of the Alberta Royalty Tax Credit
        for both the Constant Price and Forecast Price cases, is presented as
        a separate table for the respective price cases.                                                    
|  
|7. | In Yemen, estimated future abandonment and reclamations
        costs related to properties evaluated have not been taken into account
        by DeGolyer in determining the aggregate future net revenue therefrom.
        Under the terms of the production sharing agreements, ownership in the
        facilities and wells is transferred to the Government of Yemen through
        cost recovery. Therefore the future abandonment and reclamation costs
        have been assessed a zero value.
|  
|   | In Canada, estimated future abandonment and reclamation
        costs related to a property have been taken into account by DeGolyer in
        determining reserves that should be attributed to a property and in determining
        the aggregate future net revenue therefrom, there was deducted the reasonable
        estimated future well abandonment costs. No allowance was made, however,
        for reclamation of wellsites or the abandonment and reclamation of any
        facilities. 
|  
|8. | Both the constant and forecast price and cost assumptions
        assume the continuance of current laws and regulations.                                                                                                                                                                                                                                                                                                                                                                                 
|  
|9. | The extent and character of all factual data supplied
        to DeGolyer was accepted by DeGolyer as represented. No field inspections
        were conducted by DeGolyer.                                                                                                                                                                                                                                                                                                                               

---

31

Reconciliations of Changes in Reserves and Future Net Revenue

RECONCILIATION OF NET RESERVES
  (AFTER ROYALTIES/BEFORE TAXES)
  BY PRINCIPAL PRODUCT TYPECOMPANY 
  AS AT DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                    |                    |   |                |   |                     |   | ASSOCIATED & NON- |   |          |   |          |   |        |  
|------------------- | ------------------ | - | -------------- | - | ------------------- | - | ----------------- | - | -------- | - | -------- | - | ------ | -
|                    | LIGHT & MEDIUM OIL |   | ASSOCIATED GAS |   | NATURAL GAS LIQUIDS |  
|                    |                    |   |                |   | Net                 |   |                   |   |          |   | Net      |   |        |  
|                    |                    |   |                |   | Proved              |   |                   |   |          |   | Proved   |   |        |  
|                    | Net                |   | Net            |   | Plus                |   | Net               |   | Net      |   | Plus     |   | Net    |  
|                    | Proved             |   | Probable       |   | Probable            |   | Proved            |   | Probable |   | Probable |   | Proved |  
|FACTORS             | (MBbl)             |   | (MBbl)         |   | (MBbl)              |   | (MMcf)            |   | (MMcf)   |   | (MMcf)   |   | (MBbl) |  
|December 31, 2003   | 1,549              |   | 1,588          |   | 3,137               |   | 5,498             |   | 3,893    |   | 9,391    |   | 158    |  
|Extensions          |                    |   |                |   |                     |   |                   |   |          |   |          |   |        |  
|Improved recovery   |                    |   |                |   |                     |   |                   |   |          |   |          |   |        |  
|Technical Revisions | 100                |   | 624            |   | 724                 |   | (106              | ) | (2,160   | ) | (2,266   | ) | 34     |  
|Discoveries         | 2,027              |   | (630           | ) | 1,397               |   | 3,980             |   | 1,976    |   | 5,956    |   | 80     |  
|Acquisitions        |                    |   |                |   |                     |   |                   |   |          |   |          |   |        |  
|Dispositions        |                    |   |                |   |                     |   |                   |   |          |   |          |   |        |  
|Economic Factors    | (1                 | ) | -              |   | (1                  | ) | 12                |   | 5        |   | 17       |   | (1     | )
|Production          | (713               | ) | -              |   | (713                | ) | (859              | ) | -        |   | (859     | ) | (26    | )
|December 31, 2004   | 2,962              |   | 1,582          |   | 4,545               |   | 8,525             |   | 3,713    |   | 12,239   |   | 245    |  

RECONCILIATION OF NET RESERVES
  (AFTER ROYALTIES/BEFORE TAXES) 
  BY PRINCIPAL PRODUCT TYPEYEMENAS AT DECEMBER 31, 2004
  (FORECAST PRICES AND COSTS)

|                    |                    |   |                |   |                     |   | ASSOCIATED & NON- |  |          |  |          |  |       
|------------------- | ------------------ | - | -------------- | - | ------------------- | - | ----------------- |  | -------- |  | -------- |  | ------
|                    | LIGHT & MEDIUM OIL |   | ASSOCIATED GAS |   | NATURAL GAS LIQUIDS
|                    |                    |   |                |   | Net                 |   |                   |  |          |  | Net      |  |       
|                    |                    |   |                |   | Proved              |   |                   |  |          |  | Proved   |  |       
|                    | Net                |   | Net            |   | Plus                |   | Net               |  | Net      |  | Plus     |  | Net   
|                    | Proved             |   | Probable       |   | Probable            |   | Proved            |  | Probable |  | Probable |  | Proved
|FACTORS             | (MBbl)             |   | (MBbl)         |   | (MBbl)              |   | (MMcf)            |  | (MMcf)   |  | (MMcf)   |  | (MBbl)
|December 31, 2003   | 1,476              |   | 1,576          |   | 3,052               |   | -                 |  | -        |  | -        |  | -     
|Extensions          |                    |   |                |   |                     |   |                   |  |          |  |          |  |       
|Improved recovery   |                    |   |                |   |                     |   |                   |  |          |  |          |  |       
|Technical Revisions | 82                 |   | 617            |   | 699                 |   |                   |  |          |  |          |  |       
|Discoveries         | 2,011              |   | (636           | ) | 1,375               |   |                   |  |          |  |          |  |       
|Acquisitions        |                    |   |                |   |                     |   |                   |  |          |  |          |  |       
|Dispositions        |                    |   |                |   |                     |   |                   |  |          |  |          |  |       
|Economic Factors    |                    |   |                |   |                     |   |                   |  |          |  |          |  |       
|Production          | (685               | ) | -              |   | (685                | ) |                   |  |          |  |          |  |       
|December 31, 2004   | 2,884              |   | 1,557          |   | 4,441               |   | -                 |  | -        |  | -        |  | -     

---

32

RECONCILIATION OF NET RESERVES 
  (AFTER ROYALTIES/BEFORE TAXES) 
  BY PRINCIPAL PRODUCT TYPECANADAAS AT DECEMBER 31, 2004
  (FORECAST PRICES AND COST)

|                    |                    |   |                |  |                     |   | ASSOCIATED & NON- |   |          |   |          |   |        |  
|------------------- | ------------------ | - | -------------- |  | ------------------- | - | ----------------- | - | -------- | - | -------- | - | ------ | -
|                    | LIGHT & MEDIUM OIL |   | ASSOCIATED GAS |  | NATURAL GAS LIQUIDS |  
|                    |                    |   |                |  | Net                 |   |                   |   |          |   | Net      |   |        |  
|                    |                    |   |                |  | Proved              |   |                   |   |          |   | Proved   |   |        |  
|                    | Net                |   | Net            |  | Plus                |   | Net               |   | Net      |   | Plus     |   | Net    |  
|                    | Proved             |   | Probable       |  | Probable            |   | Proved            |   | Probable |   | Probable |   | Proved |  
|FACTORS             | (MBbl)             |   | (MBbl)         |  | (MBbl)              |   | (MMcf)            |   | (MMcf)   |   | (MMcf)   |   | (MBbl) |  
|January 1, 2004     | 74                 |   | 12             |  | 85                  |   | 5,498             |   | 3,893    |   | 9,391    |   | 158    |  
|Extensions          |                    |   |                |  |                     |   |                   |   |          |   |          |   |        |  
|Improved recovery   |                    |   |                |  |                     |   |                   |   |          |   |          |   |        |  
|Technical Revisions | 18                 |   | 7              |  | 25                  |   | (106              | ) | (2,160   | ) | (2,266   | ) | 34     |  
|Discoveries         | 16                 |   | 7              |  | 23                  |   | 3,980             |   | 1,976    |   | 5,956    |   | 80     |  
|Acquisitions        |                    |   |                |  |                     |   |                   |   |          |   |          |   |        |  
|Dispositions        |                    |   |                |  |                     |   |                   |   |          |   |          |   |        |  
|Economic Factors    |                    |   |                |  |                     |   | 12                |   | 5        |   | 17       |   | (1     | )
|Production          | (28                | ) | -              |  | (28                 | ) | (859              | ) | -        |   | (859     | ) | (26    | )
|December 31, 2004   | 79                 |   | 25             |  | 104                 |   | 8,525             |   | 3,713    |   | 12,239   |   | 245    |  

RECONCILIATION OF CHANGES
  IN NET PRESENT VALUES OF FUTURE NET REVENUEDISCOUNTED AT 10% PER YEAR PROVED RESERVES
  (CONSTANT PRICES AND COSTS)

|                                                                                           | Canada(1) |   | Yemen   |   | Total (1) |  
|------------------------------------------------------------------------------------------ | --------- | - | ------- | - | --------- | -
|                                                                                           | 2004      |   | 2004    |   | 2004      |  
|US$'s                                                                                      | ($M)      |   | ($M)    |   | ($M)      |  
|Estimated Future Net Revenue at beginning of year                                          | 18,701    |   | 15,683  |   | 34,384    |  
|Sales and transfers of oil and gas produced, net of production
      costs and royalties   | (5,049    | ) | (14,248 | ) | (19,297   | )
|Net change in prices, production costs and royalties related
      to future production    | 4,837     |   | 15,538  |   | 20,375    |  
|Changes in previously estimated development costs incurred
      during the period         | 672       |   | 12,511  |   | 13,183    |  
|Changes in estimated future development costs                                              | (771      | ) | (13,373 | ) | (14,144   | )
|Extensions and improved recovery                                                           | -         |   | -       |   | -         |  
|Discoveries                                                                                | 14,812    |   | 30,025  |   | 44,837    |  
|Acquisitions of reserves                                                                   | -         |   | -       |   | -         |  
|Dispositions of reserves                                                                   | -         |   | -       |   | -         |  
|Net change resulting from revisions in quantity estimates                                  | 811       |   | 2,124   |   | 2,935     |  
|Accretion of discount                                                                      | 2,362     |   | 1,192   |   | 3,554     |  
|Net change in income taxes                                                                 | (3,647    | ) | (2,510  | ) | (6,157    | )
|Other (value of production in disposed and acquired properties,
      changes in timing of |           |   |         |   |           |  
|future production)                                                                         | (1,520    | ) | (5,299  | ) | (6,819    | )
|                                                                                           |           |   |         |   |           |  
|Estimated Future Net Revenue at end of year                                                | 31,207    |   | 41,644  |   | 72,851    |  

Note:

|(1) | In Canada values were converted to US currency using
        the following currency exchange rates: December 31, 2003 at 1.2965 $US/$Cdn,
        December 31, 2004 at 1.2020 $US/$Cdn. Sale and transfers of oil
        and gas produced, net of production costs and royalties at Booked values
        for the year end at the 2004 year average exchange rate of 1.3013 $US/$Cdn
        for all other changes. The estimated Future Net Revenues include ARTC.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Additional Information Relating to Reserves Data

Undeveloped Reserves

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

---

33

Proved Undeveloped Reserves

| |         |  | Light and Medium Oil |  | Natural Gas   |  | Natural Gas Liquids
| | ------- |  | -------------------- |  | ------------- |  | -------------------
| | Year    |  | (MBbl)               |  | (MMcf)        |  | (MBbl)             
| |         |  | First                |  | Cumulative at |  | First              
| |         |  | Attributed           |  | Year End      |  | Attributed         
| |         |  |                      |  |               |  |                    
| | 2003(1) |  | —                    |  | —             |  | 1,422              
| | 2004(2) |  | 1,554                |  | 1,554         |  | 1,758              

| | Notes:
| | ------
| |       
| | (1)   
| |       
| | (2)   
| |       
| |       

| |         |  | Light and Medium Oil |  | Natural Gas       |  | Natural Gas Liquids
| | ------- |  | -------------------- |  | ----------------- |  | -------------------
| | Year    |  | (MBbl)               |  | (MMcf)            |  | (MBbl)             
| |         |  | First                |  | Cumulative        |  | First              
| |         |  | Attributed           |  | at
      Year End |  | Attributed         
| |         |  |                      |  |                   |  |                    
| |         |  |                      |  |                   |  |                    
| | 2000    |  | —                    |  | —                 |  | 271                
| | 2001    |  | —                    |  | —                 |  | —                  
| | 2002    |  | —                    |  | —                 |  | —                  
| | 2003(1) |  | 2,342                |  | 2,342             |  | 1,328              
| | 2004(2) |  | 1,111                |  | 1,111             |  | 256                

| | Notes:
| | ------
| |       
| | (1)   
| |       
| |       
| | (2)   

---

34

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, 2004. All of
  the Company's wells are located onshore.

|                | Oil Wells |  | Natural Gas Wells
|--------------- | --------- |  | -----------------
|                | Producing |  | Non-Producing    
|                | Gross     |  | Net              
|                |           |  |                  
|Yemen           | 20        |  | 3.9              
|Canada, Alberta | 9         |  | 4.7              
|Total           | 29        |  | 8.6              

Properties with no Attributable Reserves

The following table sets out the Company's developed and undeveloped
  land holdings as at December 31, 2004.

|                | Developed Acres |  | Undeveloped Acres |  | Total Acres
|--------------- | --------------- |  | ----------------- |  | -----------
|                | Gross           |  | Net               |  | Gross      
|                |                 |  |                   |  |            
|Yemen           | 16,740          |  | 3,404             |  | 414,030    
|Canada, Alberta | 18,661          |  | 12,404            |  | 33,321     
|Egypt           | 0               |  | 0                 |  | 7,500,000  
|Total           | 35,401          |  | 15,808            |  | 7,947,351  

Of the Company's undeveloped land, the rights to explore,
  develop and exploit 640 net acres may expire in Canada by December 31, 2005.
  The Company does not have any work commitments associated with its undeveloped
  lands in Yemen or Canada. In Egypt, the Company has work commitments of $2MM
  in Phase 1 (2 years expiring July 16, 2006) and $4MM in Phase 2 (3 years
  expiring July 16, 2009).

In Yemen, the Block 72 undeveloped land of 450,234 gross acres
  (150,028 net acres) is not included in the Company's land holdings as at December
  31, 2004. The Block 72 PSA was awarded in the 2004 International Bid Round,
  signed by Cabinet and is before the Yemen Parliament for final approval.

---

35

Forward Contracts

The Company's contracts to sell crude oil or natural gas are
  at prevailing market pricing, except as follows:

|• | In March 2005, the Company
        entered into a fixed price contract to sell 2,000 gigajoules (GJ) per
        day (approximately 2,000 Mcfpd) of natural gas in Canada for the month
        of April and from June 1 to October 31, 2005 at Cdn$6.95/GJ.                                     
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                  
|• | In June 2004, the Company
        entered into a one year fixed price contract to sell 10,000 barrels of
        oil per month in Block 32 commencing July 1, 2004 at $33.90 per barrel
        for dated Brent plus or minus the Yemen Government's official selling
        price differential.

Additional Information Concerning Abandonment and Reclamation
  Costs

In Canada, future well abandonment costs net of salvage were
  included in the DeGolyer reserves evaluation presented herein. Cost in US $'s
  to abandon approximately 46 (32.0 net) wells totalled $619 thousand undiscounted,
  or $330 thousand discounted at 10%, are included in the estimate of future
  net revenue from total proved plus probable reserves using constant pricing
  and cost. Approximately $231 thousand undiscounted, or $191 thousand
  discounted at 10%, are scheduled during the next 3 years (2005-2007).

Tax Horizon

In 2004, the Company did not pay any income taxes in Canada,
  except for a large corporation tax of $11,000.

Transglobe does not expect to pay income taxes in the near
  future assuming the Company incurs further Canadian exploration expense and
  Canadian development expense and utilizes such tax pools and carry forward tax
  pools of $26,299,000 available to protect future revenue.

Capital Expenditures

The following table summarizes 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, 2004:

|                           | Yemen  |  | Canada |  | Egypt |  | Total 
|-------------------------- | ------ |  | ------ |  | ----- |  | ------
|($ thousands)              |        |  |        |  |       |  |       
|Property acquisition costs |        |  |        |  |       |  |       
|Proved properties          | -      |  | -      |  | -     |  | -     
|Undeveloped properties     | -      |  | 1,469  |  | -     |  | 1,469 
|Exploration costs          | 2,115  |  | 4,790  |  | 540   |  | 7,445 
|Development costs          | 12,473 |  | 3,711  |  | -     |  | 16,184
|Corporate and other        | 687    |  | 130    |  | 452   |  | 1,269 
|Total                      | 15,275 |  | 10,100 |  | 992   |  | 26,367

---

36

Production Estimates

The following table sets out the volume of the Company's daily
  production (working interest before royalties) estimated for the year ended
  December 31, 2005 which is reflected in the estimate of future net revenue disclosed
  in the Forecast Prices and Costs and Constant Prices and Costs tables contained
  under " - Disclosure of Reserves Data".

|                           | Yemen          |  | Yemen          |  |                |  |               |  |                |  |              
|-------------------------- | -------------- |  | -------------- |  | -------------- |  | ------------- |  | -------------- |  | -------------
|                           | Block 32       |  | Block S-1      |  | Canada         |  |               |  | Canada         |  | Total        
|                           | Light and      |  | Light and      |  | Light and      |  | Canada        |  | Natural Gas    |  | Company      
|                           | Medium Oil     |  | Medium Oil     |  | Medium Oil     |  | Natural Gas   |  | Liquids        |  | BOE          
|                           | Gross (bbls/d) |  | Gross (bbls/d) |  | Gross (bbls/d) |  | Gross (Mcf/d) |  | Gross (bbls/d) |  | Gross (BOE/d)
|Proved Producing           | 1,726          |  | 1,658          |  | 82             |  | 3,249         |  | 79             |  | 4,086        
|Proved Developed           |                |  |                |  |                |  |               |  |                |  |              
|Non-Producing              | 255            |  | 0              |  | 0              |  | 2,088         |  | 71             |  | 674          
|Proved Undeveloped         | 30             |  | 107            |  | 0              |  | 263           |  | 0              |  | 181          
|Total Proved               | 2,011          |  | 1,764          |  | 82             |  | 5,600         |  | 151            |  | 4,941        
|Total Probable             | 137            |  | 208            |  | 3              |  | 1,307         |  | 32             |  | 598          
|Total Proved Plus Probable | 2,148          |  | 1,973          |  | 85             |  | 6,907         |  | 183            |  | 5,539        

Exploration and Development Activities

The following tables set forth the gross and net exploratory
  and development wells which TransGlobe drilled during the year ended December
  31, 2004:

|Yemen:               | Gross       |  | Net        
|-------------------- | ----------- |  | -----------
|                     | Exploration |  | Development
|Natural Gas          | -           |  | -          
|Crude Oil            | -           |  | 12         
|Dry and Abandoned(1) | 1           |  | -          
|Total                | 1           |  | 12         
|                     |             |  |            
|                     |             |  |            
|Canada:              | Gross       |  | Net        
|                     | Exploration |  | Development
|Natural Gas          | 4           |  | 6          
|Crude Oil            | 2           |  | -          
|Dry and Abandoned(1) | 3           |  | -          
|Total                | 9           |  | 6          

Note:

|(1) | "Dry well" means a well which is not a productive
        well or a service well. A productive well is a well which 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

37

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:

|                                    | 2004         
|----------------------------------- | -------------
|                                    | Quarter Ended
|                                    | Mar. 31      
|Average Daily Sales Volumes         |              
|Yemen                               |              
|Light and Medium Crude Oil (bbls/d) | 2,290        
|Canada                              |              
|Light and Medium Crude Oil (bbls/d) | 66           
|Gas (Mcf/d)                         | 2,008        
|NGL (bbls/d)                        | 69           
|Combined(BOE/d)                     | 2,760        
|                                    |              
|Average Price Received              |              
|Yemen                               |              
|Light and Medium Crude Oil ($/bbl)  | 31.56        
|Canada                              |              
|Light and Medium Crude Oil ($/bbl)  | 31.16        
|Gas ($/Mcf)                         | 5.27         
|NGL ($/bbl)                         | 25.75        
|Combined($/BOE)                     | 31.44        
|                                    |              
|Royalties                           |              
|Yemen                               |              
|Light and Medium Crude Oil ($/bbl)  | 8.69         
|Canada                              |              
|Light and Medium Crude Oil ($/bbl)  | 2.97         
|Gas ($/Mcf)                         | 0.96         
|NGL ($/bbl)                         | 3.86         
|Combined($/BOE)                     | 8.08         
|                                    |              
|Operating Expenses                  |              
|Yemen                               |              
|Light and Medium Crude Oil ($/bbls) | 4.14         
|Canada                              |              
|Light and Medium Crude Oil ($/bbls) | 8.97         
|Gas ($/Mcf)                         | 1.15         
|NGL ($/bbls)                        | -            
|Combined($/BOE)                     | 4.49         
|                                    |              
|Netback Received                    |              
|Yemen                               |              
|Light and Medium Crude Oil ($/bbl)  | 18.73        
|Canada                              |              
|Light and Medium Crude Oil ($/bbl)  | 19.22        
|Gas ($/Mcf)                         | 3.16         
|NGL ($/bbl)                         | 21.89        
|Combined($/boe)                     | 18.87        

The following table indicates the Company's average daily
  sales volumes from its important fields for the year ended December 31, 2004.

|          | Light and Medium Crude |  | Gas     |  | NGL's    |  | boe    
|--------- | ---------------------- |  | ------- |  | -------- |  | -------
|          | (bbls/d)               |  | (Mcf/d) |  | (bbls/d) |  | (boe/d)
|          |                        |  |         |  |          |  |        
|Yemen     |                        |  |         |  |          |  |        
|Block 32  | 2,453                  |  | -       |  | -        |  | 2,453  
|Block S-1 | 666                    |  | -       |  | -        |  | 666    
|Canada    | 86                     |  | 2,987   |  | 93       |  | 677    
|          |                        |  |         |  |          |  |        
|Total     | 3,205                  |  | 2,987   |  | 93       |  | 3,796  

---

38

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

We are authorized to issue an unlimited number of Common Shares
  and an unlimited number of preferred shares

("Preferred Shares"). As at March 16, 2005, there were
  57,200,939 Common Shares only. In addition, as at such date, there were an aggregate
  of 5,720,094 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 each class of shares of the Company. 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.

Preferred Shares

In addition to the Common Shares, the Articles of Arrangement
  of the Company authorize the issuance of an unlimited number of Preferred Shares,
  issuable in series. Subject to the provisions of the Alberta Business Corporations
  Act, the Board is authorized to fix, before the issue thereof, the designation,
  rights, privileges, restrictions and condition attaching thereto.

Rights Plan

On April 16, 2003, the Company entered into a shareholder
  protection rights plan agreement (the "Rights Plan") with Computershare Trust
  Company of Canada, as rights agent, which was approved by TransGlobe's shareholders
  on May 29, 2003 at the 2003 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.

---

39

MARKET FOR SECURITIES

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

The following table sets out the monthly high and low closing
  prices and the total monthly trading volumes on the TSX for the indicated periods:

|(Cdn dollars, except volumes) | High |  | Low  |  | Volume   
|----------------------------- | ---- |  | ---- |  | ---------
|2004                          |      |  |      |  |          
|January                       | 4.05 |  | 2.85 |  | 3,168,600
|February                      | 3.43 |  | 2.40 |  | 2,262,800
|March                         | 3.93 |  | 2.95 |  | 1,283,600
|April                         | 3.93 |  | 3.12 |  | 1,148,400
|May                           | 3.50 |  | 2.79 |  | 622,500  
|June                          | 3.79 |  | 2.70 |  | 1,169,800
|July                          | 3.77 |  | 3.04 |  | 1,026,200
|August                        | 3.35 |  | 3.00 |  | 564,900  
|September                     | 4.34 |  | 2.62 |  | 1,927,300
|October                       | 5.53 |  | 4.07 |  | 2,867,800
|November                      | 7.39 |  | 4.20 |  | 3,921,800
|December                      | 6.52 |  | 4.90 |  | 1,535,200

The following table sets out the monthly high and low closing
  prices and the total monthly trading volumes on the AMEX for the indicated periods:

|(U.S. dollars, except volumes) | High |  | Low  |  | Volume    
|------------------------------ | ---- |  | ---- |  | ----------
|2004                           |      |  |      |  |           
|January                        | 3.14 |  | 2.15 |  | 10,046,000
|February                       | 2.60 |  | 1.83 |  | 7,563,000 
|March                          | 2.92 |  | 2.19 |  | 6,424,300 
|April                          | 2.99 |  | 2.31 |  | 6,870,000 
|May                            | 2.59 |  | 1.98 |  | 3,166,600 
|June                           | 2.84 |  | 2.10 |  | 3,246,400 
|July                           | 2.86 |  | 2.26 |  | 4,127,300 
|August                         | 2.54 |  | 2.28 |  | 1,819,000 
|September                      | 3.40 |  | 2.11 |  | 6,500,000 
|October                        | 4.47 |  | 3.20 |  | 9,724,400 
|November                       | 5.94 |  | 3.56 |  | 8,252,700 
|December                       | 5.52 |  | 4.08 |  | 7,331,500 

ESCROWED SECURITIES

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

---

40

DIRECTORS AND OFFICERS

The names, municipalities of residence, the offices held by
  each in the Company, and the principal occupation of the directors and officers,
  the period served as director and the number of securities of the Company owned
  by such individuals (on each case, as at March 15, 2005) is as follows:

|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                                |  | Number of |  | 
|-------------------------------------- | -------------------------------------------------------------------------------------- | ----------- | ------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- |  | 
|                                       |                                                                                        |             | Common              |                                                                                                                                                                                                                                                                                                                                               
|                                       |                                                                                        |             | Shares              |                                                                                                                                                                                                                                                                                                                                               
|                                       |                                                                                        | Year Became | Beneficially        |                                                                                                                                                                                                                                                                                                                                               
|Name and Municipality                  |                                                                                        | Director or | Owned or            | Principal Occupation and Positions                                                                                                                                                                                                                                                                                                            
|of Residence                           | Position Held                                                                          | Officer     | Controlled          | for the Past Five Years                                                                                                                                                                                                                                                                                                                       
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|Robert A. Halpin(1)(2)(4) Calgary, AB  | Chairman of the  
      Board and Director                                             | 1997        | 527,585(5) (0.9%)   | Retired Petroleum Engineer,
        President and owner, Halpin Energy Resources Ltd., which provides consulting
        services on international energy projects.                                                                                                                                                                           
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|Ross G. Clarkson
      Calgary, AB     | President, Chief  
      Executive Officer  
      and Director                        | 1995        | 1,974,272(6) (3.5%) | President and Chief Executive
        Officer of the Company since December 4, 1996, with over 29 years' oil
        and gas industry experience as a senior geological advisor.                                                                                                                                                              
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|Lloyd W. Herrick(4) Calgary, AB        | Vice-President,  
      Chief Operating  
      Officer and Director                   | 1999        | 536,000(7) (0.9%)   | Vice-President and Chief
        Operating officer of the Company since April 28, 1999, with over 29 years'
        experience in both domestic and international oil and gas exploration
        and development.                                                                                                                            
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|Erwin L. Noyes(2)(3)(4) Saanichton, BC | Director                                                                               | 1995        | 188,247(8) (0.3%)   | Retired since July 31, 2000;
        formerly Vice- President, International Operations of the Company, with
        over 30 years' experience in the oil and gas industry.                                                                                                                                                                   
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|Geoffrey C. Chase(1)(3)(4) Calgary, AB | Director                                                                               | 2000        | 45,000(9) (0.1%)    | Retired Senior Vice-President,
        Business Development, with Ranger Oil, with over 35 years' experience
        in the oil and gas industry.                                                                                                                                                                                             
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|Fred J. Dyment(1)(2)(3) Calgary, AB    | Director                                                                               | 2004        | _ (10)              | 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 then President and Chief
        Executive Officer of Ranger Oil Limited from 1978-2000.
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|David C. Ferguson
      Calgary, AB    | Vice-President,  
      Finance, Chief  
      Financial Officer  
      and Secretary | 2001        | 110,000(11) (0.2%)  | Chartered accountant with
        over 22 years' experience in the oil and gas industry. Previously Chief
        Financial Officer with Northstar Drilling Systems Inc. (1999-2000), Chief
        Financial Officer and a director of Myriad Energy Corporation (1998-1999).                                                                
|                                       |                                                                                        |             |                     |                                                                                                                                                                                                                                                                                                                                               
|Edward Bell
      Calgary, AB          | Vice-President, Exploration                                                            | 2004        | 136,000(12) (0.2%)  | Professional Geoscientist
        with 36 years of experience in the petroleum industry. Prior positions
        with Nexen as General Manager Business Development and Occidental Petroleum
        as Technical Advisor.                                                                                                                    

---

41

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.                                                                                                                                                                                                                                                                                          
|(5)  | Mr. Halpin also holds incentive stock options to
        purchase 120,000 Common Shares at Cdn$0.50 per share expiring April
        16, 2007 and to purchase 80,000 Common Shares at Cdn$3.26 per share
        expiring March 15, 2009.                                                                                             
|(6)  | Mr. Clarkson also holds incentive stock options
        to purchase 154,500 Common Shares at Cdn$0.73 per share expiring August
        11, 2005, to purchase 250,000 Common Shares at Cdn$0.50 per share
        expiring April 16, 2007 and to purchase 120,000 Common Shares at Cdn$3.26
        per share expiring March 15, 2009.
|(7)  | Mr. Herrick also holds incentive stock options to
        purchase 135,000 Common Shares at Cdn$0.73 per share expiring August
        11, 2005, to purchase 250,000 Common Shares at Cdn$0.50 per share
        expiring April 16, 2007 and to purchase 100,000 Common Shares at Cdn$3.26
        per share expiring March 15, 2009. 
|(8)  | Mr. Noyes also holds incentive stock options to
        purchase 150,000 Common Shares at Cdn$0.73 per share expiring August
        11, 2005, to purchase 120,000 Common Shares at Cdn$0.50 per share
        expiring April 16, 2007 and to purchase 60,000 Common Shares at Cdn$3.26
        per share expiring March 15, 2009.    
|(9)  | Mr. Chase also holds incentive stock options to
        purchase 140,000 Common Shares at Cdn$0.73 per share expiring August
        11, 2005, to purchase 120,000 Common Shares at Cdn$0.50 per share
        expiring April 16, 2007 and to purchase 60,000 Common Shares at Cdn$3.26
        per share expiring March 15, 2009.    
|(10) | Mr. Dyment holds incentive stock options to purchase
        180,000 Common Shares at Cdn$3.26 per share expiring March 15, 2009.                                                                                                                                                                                                     
|(11) | Mr. Ferguson also holds incentive stock options
        to purchase 200,000 Common Shares at Cdn$0.55 per share expiring June
        1, 2006, to purchase 200,000 Common Shares at Cdn$0.50 per share expiring
        April 16, 2007 and to purchase 90,000 Common Shares at Cdn$3.26 per
        share expiring March 15, 2009.    
|(12) | Mr. Bell also holds incentive stock options to purchase
        150,000 Common Shares at Cdn$3.40 per share expiring January 12, 2009.                                                                                                                                                                                                

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

No director or officer of the Company, or a shareholder holding
  a sufficient number of securities of the Company to affect materially the control
  of the Company is, or within the last ten years has been, a director, officer
  or promoter of any reporting issuer that, while such person was acting in that
  capacity, was the subject of a cease trade or similar order or an order that
  denied us access to any statutory exemption for a period of more than 30 consecutive
  days or, within a year of such person ceasing to act in that capacity or within
  the 10 years prior to the date hereof, become bankrupt, made a proposal under
  any legislation relating to bankruptcy or insolvency or was subject to or instituted
  any proceedings, arrangement or compromise with creditors or had a receiver,
  receiver manager or trustee appointed to hold the assets of that person.

No director or officer of the Company, or a shareholder holding
  a sufficient number of securities of the Company to affect materially the control
  of the Company, has been subject to any penalties or sanctions under securities
  legislation or by a securities regulatory authority or has entered into a settlement
  agreement with a securities regulatory authority or any other penalties or sanctions
  imposed by a court or regulatory body that would likely be considered important
  to a reasonable investor in making an investment decision.

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 13 full-time employees and 4
  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 and MacNaughton Canada Limited, the Company's
  independent engineering evaluator and Deloitte & Touche LLP, the Company's
  auditors. As at the date hereof, none of the aforementioned persons or companies,
  or principals thereof, had any registered or beneficial

---

42

interests, direct or indirect, in any securities or other
  property of the Corporation or of our 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.

In addition, none of the aforementioned persons or companies,
  nor any director, officer or employee of any of the aforementioned persons or
  companies, is or is expected to be elected, appointed or employed as a director,
  officer or employee of the Company or any associates or affiliates of the Company.

LEGAL PROCEEDINGS

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.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

There were no material interests, direct or indirect, of directors
  and senior officers of the Company, any shareholder who beneficially owns more
  than 10% of the outstanding Common Shares, or any known associate or affiliate
  of such persons, in any transactions since the beginning of the Company's last
  completed financial year or in any proposed transaction which has materially
  affected or will materially affect the Company.

AUDITORS, TRANSFER AGENT AND REGISTRAR

The auditors of the Company are Deloitte & Touche LLP,
  Chartered Accountants, Suite 3000, 700 – 2nd Street SW, Calgary, Alberta
  T2P 0S7.

Computershare Trust Company of Canada, at its principal office
  in Calgary, Alberta is the transfer agent and registrar of the Common Shares
  of the Company.

MATERIAL CONTRACTS

Except for contracts entered into by the Corporation in the
  ordinary course of business or otherwise disclosed herein, the Corporation has
  no contracts which can reasonably be regarded as material.

AUDIT COMMITTEE INFORMATION

Composition of the Audit Committee

The audit committee of the Company (the "Audit Committee")
  is comprised of Messrs. Robert Halpin, Geoffrey Chase and Fred Dyment. 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.

|Name and Municipality of           |  |             |  | Financially |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|---------------------------------- |  | ----------- |  | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Residence                          |  | Independent |  | Literate    |  | Relevant Education
      and Experience                                                                                                                                                                                                                                                                                                                                                                          
|                                   |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                  
|Robert A. Halpin
      Calgary, AB |  | 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 45 years of business, executive, international 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.

---

43

|Geoffrey C. Chase  
      Calgary, AB |  | 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 business, executive and
        international management experience with a major and later a mid-size
        public petroleum corporation. His activities have involved various aspects
        of financial planning, budgeting and operations.                                                               
|------------------------------------- |  | --- |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                      |  |     |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Fred J. Dyment  
      Calgary, AB    |  | 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 financial, business, executive, international management experience
        at several mid-size public corporations where he served as President,
        CEO, CFO and director. Currently, Mr. Dyment sits as a director on several
        other public companies.

Pre-Approval of Policies and Procedures

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

Audit Committee Charter

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

Audit Service Fees

The following table sets forth the audit service fees paid
  by us to Deloitte & Touche LLP for the periods indicated:

|                     |  | Fiscal Year |  |             |  |                                                          
|-------------------- |  | ----------- |  | ----------- |  | ---------------------------------------------------------
|                     |  | Ended       |  | Aggregate   |  |                                                          
|Type of Fees         |  | December 31 |  | Fees Billed |  | Nature of Services
      Performed                       
|                     |  |             |  |             |  |                                                          
|                     |  |             |  |             |  |                                                          
|Audit Fees           |  | 2004        |  | Cdn$73,435  |  | 2004 corporate year-end audit                            
|                     |  | 2003        |  | Cdn$42,665  |  | 2003 corporate year-end audit                            
|                     |  |             |  |             |  |                                                          
|Audit – Related Fees |  | 2004        |  | Cdn$19,080  |  | 2004 Quarterly reviews, S-8 consent letters and review of
|                     |  |             |  |             |  | Alberta Security Commission letter                       
|                     |  | 2003        |  | Cdn$15,370  |  | 2003 Quarterly reviews                                   
|                     |  |             |  |             |  |                                                          
|Tax Fees             |  | 2004        |  | Cdn$10,282  |  | 2004 corporate tax returns and tax compliance            
|                     |  | 2003        |  | Cdn$ 9,500  |  | 2003 corporate tax returns and tax compliance            
|                     |  |             |  |             |  |                                                          
|All other fees       |  | 2004        |  | Cdn$30,210  |  | Prospectus                                               
|                     |  | 2003        |  | Cdn$ nil    |  |                                                          

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 Canada, Yemen and Egypt.

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

---

44

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, 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 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 federal,
  state and 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. Additionally, the potential impact
  on the Company's operations and business of the Kyoto Protocol which has now
  been ratified by Canada, with respect to instituting reductions of greenhouse
  gases is difficult to quantify at this time as specific measures for meeting
  Canada's commitments have not been developed.

Exploration and Development

The Company's participation in Block 32, Block 72 and Block
  S-1 in Yemen and the Nuqra Block 1 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 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.

---

45

Title to Properties

The Company's interests in the Canadian producing properties
  and non-producing properties are in the form of direct or indirect interests
  in leases. Such properties are subject to customary royalty interests generally
  contracted for in connection with the acquisition of properties, liens incident
  to operating agreements, liens for current taxes and other burdens and mineral
  encumbrances and restrictions. The Company believes that none of these burdens
  materially interferes with the use of such properties in the operation of the
  Company's business.

Interests in Properties

The Company participates, in Canada, 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.

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 have no more restrictive effect on
  the Company's method of operations than on similar companies in the industry.

Political Risks Relating to Yemen and Egypt

Beyond the risks inherent in the oil and gas industry, the
  Company is subject to additional risks resulting from doing business in Yemen
  and Egypt. While the Company has attempted to reduce many of these risks through
  agreements with the Governments of Yemen, Egypt 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 Yemen or Egypt, the imposition
  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 Yemen and the Government of Egypt 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 Yemen and Egypt 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 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

---

46

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.

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 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 strengthened during
  2004 and may fluctuate over time. As product prices are generally US dollar
  based, the Company's exposure to currency exchange rate risks are primarily
  limited to Canadian capital expenditures, Canadian operating costs and the majority
  of the Company's general and administrative expenses which are paid for in Canadian
  dollars.

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.

---

47

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 dependant 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.

INDUSTRY CONDITIONS

The oil and gas industry is subject to extensive controls
  and regulations imposed by the various levels of government in Canada, Egypt
  and Yemen. Outlined below are some of the more significant aspects of the legislation,
  regulations and agreements governing the oil and gas industry in the jurisdictions
  in which the Company operates. All current legislation is a matter of public
  record and the Company is unable to predict what additional legislation or amendments
  may be enacted.

Government Regulation Generally

The oil and natural gas industry in each of Canada, Egypt
  and Yemen is subject to extensive controls and regulations imposed by various
  levels of government. It is not expected that any of these controls or regulations
  will affect the operations of TransGlobe in a manner materially different than
  they would affect other oil and gas companies of similar size.

Pricing and Marketing - Oil

In Canada, 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. Oil
  exports may be made pursuant to export contracts with terms not exceeding 1
  year in the case of light crude, and not exceeding 2 years in the case of heavy
  crude, provided that an order approving any such export has been obtained from
  the National Energy Board ("NEB"). Any oil export to be made pursuant to a contract
  of longer duration (to a maximum of 25 years) requires an exporter to obtain
  an export licence from the NEB and the issue of such a licence requires the
  approval of the Governor in Council.

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.

Pricing and Marketing - Natural Gas

In Canada, the price of natural gas sold in interprovincial
  and international trade is determined by negotiation between buyers and sellers.
  Natural gas exported from Canada is subject to regulation by the NEB and the
  Government of Canada. Exporters are free to negotiate prices and other terms
  with purchasers, provided that the export contracts must continue to meet certain
  criteria prescribed by the NEB and the Government of Canada. Natural gas exports
  for a term of less than 2 years or for a term of 2 to 20 years (in quantities
  of not more than 30,000m3/day), must be made pursuant to an NEB order. Any natural
  gas export to be made pursuant to a contract of longer duration (to a maximum
  of 25 years) or a larger quantity requires an exporter to obtain an export licence
  from the NEB and the issue of such a licence requires the approval of the Governor
  in Council.

The Company's principal oil and gas operations in Canada are
  located in the Province of Alberta. The government of Alberta regulates the
  volume of natural gas, which may be removed from the province for consumption
  elsewhere based on such factors as reserve availability, transportation arrangement
  and market considerations.

---

48

Pipeline Capacity

In Canada, although pipeline expansions are ongoing, the lack
  of firm pipeline capacity continues to affect the oil and natural gas industry
  and limit the ability to produce and to market natural gas production. The pro
  rating of capacity on the interprovincial pipeline systems also continues to
  affect the ability to export oil.

In Yemen, export oil pipelines are owned by the government
  of Yemen 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.

The North American Free Trade Agreement

On January 1, 1994, the North American Free Trade Agreement
  ("NAFTA") among the governments of Canada, the U.S. and Mexico became effective.
  NAFTA carries forward most of the material energy terms contained in the Canada-U.S.
  Free Trade Agreement. In the context of energy resources, Canada continues to
  remain free to determine whether exports to the U.S. or Mexico will be allowed
  provided that any export restrictions do not: (i) reduce the proportion of energy
  resource exported relative to domestic use (based upon the proportion prevailing
  in the most recent 36 month period), (ii) impose an export price higher than
  the domestic price, and (iii) disrupt normal channels of supply. All three countries
  are prohibited from imposing minimum export or import price requirements.

NAFTA contemplates the reduction of Mexican restrictive trade
  practices in the energy sector and prohibits discriminatory border restrictions
  and export taxes. The agreement also contemplates clearer disciplines on regulators
  to ensure fair implementation of any regulatory changes and to minimize disruption
  of contractual arrangements, which is important for Canadian natural gas exports.

Royalties and Incentives

In addition to Canadian federal regulation, each province
  has legislation and regulations which govern land tenure, royalties, production
  rates, environmental protection and other matters. The royalty regime is a significant
  factor in the profitability of oil and natural gas production. Royalties payable
  on production from lands other than Crown lands are determined by negotiations
  between the mineral owner and the lessee. Crown royalties are determined by
  government regulation and are generally calculated as a percentage of the value
  of the gross production, and the rate of royalties payable generally depends
  in part on prescribed reference prices, well productivity, geographical location,
  field discovery date and the type or quality of the petroleum product produced.

From time to time the governments of Canada and the province
  of Alberta have established incentive programs which have included royalty rate
  reductions, royalty holidays and tax credits for the purpose of encouraging
  natural gas exploration or enhanced planning projects.

In Alberta, the royalty reserved to the Crown is subject to
  various incentives, and varies between 15% and 30% in the case of new gas and
  between 15% and 35% in the case of old gas, depending upon the posted reference
  price each month. Royalties on propane, butane and ethane are constant at 30%.
  While royalties on pentane and pentanes plus are variable. Alberta Crown royalties
  on oil production are calculated on a sliding scale basis.

In Alberta, natural gas produced from qualifying intervals
  in eligible gas wells spudded or deepened to a depth below 8,200 feet is subject
  to a royalty exemption, with the amount of the exemption varying with depth
  of the well. Oil produced from qualifying new pools is eligible for a third
  tier oil royalty rate. In addition, there is a royalty reduction for approved
  horizontal well re-entries.

In Alberta, a producer of oil or natural gas is entitled to
  a credit against the royalties payable to the Crown by virtue of the Alberta
  royalty tax credit program. The Alberta royalty tax credit program is based
  on a price sensitive formula, and the Alberta royalty tax credit rate currently
  varies between 75% at prices of oil below $15.89 per bbl and 25% at prices
  above $33.37 per bbl. The Alberta royalty tax credit rate is applied to
  a maximum of $2,000,000 of Alberta Crown royalties payable for each producer
  or associated group of producers. Crown royalties on production from producing
  properties acquired from corporations claiming maximum entitlement to Alberta
  royalty tax credit will generally not be eligible for Alberta royalty tax credit.
  The rate is established quarterly based on the average "par price", as determined
  by Alberta Resource Development for the previous quarterly period.

---

49

In Yemen and Egypt, the respective Production Sharing Agreements
  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 in Canada, Egypt and Yemen
  is currently subject to environmental regulation pursuant to existing federal,
  provincial and state legislation. Environmental legislation provides for restrictions
  and prohibitions on releases or emissions of various substances produced or
  utilized in association with certain oil and gas industry operations. In addition,
  legislation in Canada requires that well and facility sites be abandoned and
  reclaimed to the satisfaction of provincial authorities. A breach of such legislation
  may result in the imposition of fines and penalties.

The Company is committed to meeting its responsibilities to
  protect the environment wherever it operates and anticipates making increased,
  although not material, expenditures of both a capital and expense nature as
  a result of the increasingly stringent laws relating to the protection of the
  environment. The Company believes that it is in material compliance with environmental
  laws and regulations applicable as at the date hereof.

Kyoto Protocol

In December of 2002, Canada became a signatory to the Kyoto
  Protocol. The implementation of this plan has not been fully defined by the
  Federal Government. Until an implementation plan is developed, it is impossible
  to assess the impact on specific industries and individual businesses within
  an industry. It is generally believed that the oil and gas industry, as a major
  producer of carbon dioxide (as a necessary by-product and emission of hydrocarbon
  production), will bear a disproportionately large share of the anticipated cost
  of implementation.

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 our financial statements and the management's discussion and analysis
  for the year ended December 31, 2004. Documents affecting the rights of securityholders,
  along with other information relating to the Company, may be found on SEDAR
  at www.sedar.com.

---

SCHEDULE "A"

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, 2004. The reserves data consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|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, 2004,
        and identifies the respective portions thereof that we have audited, evaluated
        and reviewed and reported on to the Company's board of directors.

|                                |  | Description    |  | Location of |  | Net Present Value of Future Net Revenue 
|------------------------------- |  | -------------- |  | ----------- |  | ----------------------------------------
|                                |  | and            |  | Reserves    |  | (before income taxes, 10% discount rate)
|                                |  | Preparation    |  | (County or  |  | (in millions of U.S. dollars)           
|Independent Qualified           |  | Date of        |  | Foreign     |  |                                         
|Reserves Evaluator or           |  | Evaluation     |  | Geographic  |  |                                         
|Auditor                         |  | Report         |  | Area)       |  | Audited                                 
|                                |  |                |  |             |  | U.S. M$                                 
|                                |  |                |  |             |  |                                         
|DeGolyer and MacNaughton Canada |  | Appraisal      |  | Canada      |  | -                                       
|Limited                         |  | Report as of   |  |             |  |                                         
|                                |  | December 31,   |  | Yemen       |  | -                                       
|                                |  | 2004 on        |  | Total       |  | -                                       
|                                |  | Certain        |  |             |  |                                         
|                                |  | Properties     |  |             |  |                                         
|                                |  | owned by       |  |             |  |                                         
|                                |  | Transglobe     |  |             |  |                                         
|                                |  | Energy         |  |             |  |                                         
|                                |  | Corporation in |  |             |  |                                         
|                                |  | Canada and     |  |             |  |                                         
|                                |  | Yemen dated    |  |             |  |                                         
|                                |  | March 16,      |  |             |  |                                         
|                                |  | 2005           |  |             |  |                                         

|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.                                                                                                    

---

A-2

|7. | 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 March 16, 2005

| | DEGOLYER and MACNAUGHTON CANADA LIMITED
| | ---------------------------------------
| |                                        
| |                                        
| | (signed)
        "Colin P. Outtrim"    
| | Colin P. Outtrim, P. Eng.              



---

SCHEDULE "B"

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 consist of the
  following:

|(a) | (i) | proved and proved plus probable oil and
        gas reserves estimated as at December 31, 2004 using forecast prices and
        costs; and
|--- | --- | -------------------------------------------------------------------------------------------------------------------------------------------
|    |     |                                                                                                                                            
|    | (i) | the related estimated future net revenue;
        and                                                                                      
|    |     |                                                                                                                                            
|(b) | (i) | proved oil and gas reserves estimated
        as at December 31, 2004 using constant prices and costs; and                                 
|    |     |                                                                                                                                            
|    | (i) | the related estimated future net revenue.                                                                                                  

Independent qualified reserves evaluators have evaluated the
  Company's reserves data. The reports of the independent qualified reserves evaluators
  are summarized in this Annual Information Form.

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 each
        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

|(a) | the content and filing with securities regulatory
        authorities of the reserves data and other oil and gas information;
|--- | -----------------------------------------------------------------------------------------------------------------------------
|   
|(b) | the filing of the report of the independent qualified
        reserves evaluator on the reserves data; and                   
|   
|(c) | 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.

|(signed) "Ross Clarkson"                             | (signed) "Geoffrey Chase"                   
|---------------------------------------------------- | --------------------------------------------
|Ross Clarkson                                        | Geoffrey Chase                              
|President, Chief Executive Officer and Director      | Director and Chair of the Reserves Committee
|                                                     |                                             
|(signed) "Lloyd Herrick"                             |                                             
|Lloyd Herrick                                        |                                             
|Vice-President, Chief Operating Officer and Director |                                             
|                                                     |                                             
|                                                     |                                             
|March 16, 2005                                       |                                             

---

SCHEDULE "C"

AUDIT COMMITTEE CHARTER

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 internal controls and financial reporting process. The Audit Committee's
  annual report is included in the annual management information circular.

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. The Audit Committee also has the power to create specific
  sub-committees 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 evaluate the independent auditor,
  and 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.

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 as independent by the Board of Directors,
        with such affirmation disclosed in the Company's annual circular.                                                                            
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|  |                                                                                                                                                                                                                                                                                                                                                                
|• | 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:

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Frequency of Meetings

|• | Meet quarterly or as often
        as may be deemed necessary or appropriate in its judgment, either in person
        or telephonically.
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|  |                                                                                                                                          
|• | Meet with the independent auditor
        at least quarterly, either in person or telephonically.                                        

Reporting Responsibilities

|• | Provide to the Board of Directors
        proper Committee minutes.                                                                
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|  |                                                                                                                                    
|• | Report Committee actions to
        the Board of Directors with such recommendations as the Committee may deem
        appropriate.
|  |                                                                                                                                    
|• | Provide a report for the Company's
        Annual Information Circular.                                                            

Charter Evaluation

|• | Annually review and reassess the adequacy
        of this Charter and recommend any proposed changes to the Board of
        Directors for approval.
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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 and auditing
        matters. The  mechanism must include procedures for responding to,
        and keeping of records of, any such expressions of  concern.
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Independent Auditor

|• | Nominate annually
        the independent auditor to be proposed for shareholder approval.                                                                                                                                                      
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|  |                                                                                                                                                                                                                                                 
|• | 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.                                                                                                                  
|  |                                                                                                                                                                                                                                                 
|• | Insure 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.
|  |                                                                                                                                                                                                                                                 
|• | Insure that the
        auditors are not engaged for any of the following nine types of non-audit
        services contemporaneous with the audit:                                                                                              
|  |                                                                                                                                                                                                                                                 
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               
|  | o                                                                                                                                                                                                                                               

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C-3

Hiring Practices

|• | Insure that no senior officer
        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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Independence Test

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

Audit Committee Meetings

|• | The Audit Committee may request the presence
        of the independent auditor at any Audit Committee meeting.                                                                                                  
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|  |                                                                                                                                                                                                                  
|• | 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

|• | Insure no restrictions are
        placed by management on the scope of the auditors' review and examination
        of the Company's accounts.                                               
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|  |                                                                                                                                                                                               
|• | Insure 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.
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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.
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|  |                                                                                                                                                                                                            
|• | Review and discuss with management and the independent
      auditor at the completion of the annual examination:                                                                                          
|  |                                                                                                                                                                                                            
|  | o                                                                                                                                                                                                          
|  | o                                                                                                                                                                                                          

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| | o | the independent auditor's
        audit of the financial statements and its report thereon;                                                                        
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| |   |                                                                                                                                                                    
| | o | any significant changes
        required in the independent auditor's audit plan;                                                                                  
| |   |                                                                                                                                                                    
| | o | any non-GAAP related financial
        information;                                                                                                                
| |   |                                                                                                                                                                    
| | o | any serious difficulties
        or disputes with management encountered during the course of the audit;
        and                                               
| |   |                                                                                                                                                                    
| | o | other matters related to
        the conduct of the audit, which are to be communicated to the Audit Committee
        under generally accepted auditing standards.

|• | Review, discuss with management and approve
        annual and interim quarterly financial statements prior to public disclosure.                                                                                                                                                                                                                                                                                                                                                                                                                                            
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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|• | Review and discuss with management and
        the independent auditor the adequacy of the Company's internal controls
        that management and the Board of Directors have established and the effectiveness
        of those systems, and inquire of management and the independent auditor
        about significant financial risks or exposures and the steps management
        has taken to minimize such risks to the Company.                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|• | Meet separately with the independent
        auditor and management, 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.                                                                                                                                                                                                                                                       

SECURITIES REGULATORY FILINGS

|• | Review filings with the
        Canadian provincial securities commissions and the SEC and other published
        documents containing the Company's financial statements.                                                                                                                                                                                                                                  
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|  |                                                                                                                                                                                                                                                                                                                                                                                                              
|• | Review, with management
        and the independent auditor, prior to filing with regulatory bodies, the
        interim quarterly financial reports (including related notes and MD&A)
        at the completion of any review engagement or other examination. The designated
        financial expert of the Audit Committee may represent the entire Audit
        Committee for purposes of this review.

RISK ASSESSMENT

|• | Meet periodically with management to
        review the Company's major financial risk exposures and the steps 
        management has taken to monitor and control such exposures.
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C-5

|• | Assess risk areas and policies to manage
        risk including, without limitation, environmental risk,  insurance
        coverage and other areas as determined by the Board of Directors from
        time to time.
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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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