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TRANSGLOBE ENERGY CORPORATION

ANNUAL INFORMATION FORM

Year Ended December 31, 2008

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****

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March 13, 2009

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TABLE OF CONTENTS

|                                                                   | Page
|------------------------------------------------------------------ | ----
|                                                                   |     
|CURRENCY
      AND EXCHANGE RATES                                  | 2   
|ABBREVIATIONS                                                      | 3   
|CONVERSIONS                                                        | 3   
|FORWARD-LOOKING
      STATEMENTS                                   | 4   
|CERTAIN
      DEFINITIONS                                          | 6   
|TRANSGLOBE
      ENERGY CORPORATION                                | 9   
|GENERAL
      DEVELOPMENT OF THE BUSINESS                          | 9   
|DESCRIPTION
      OF THE BUSINESS AND PRINCIPAL PROPERTIES         | 12  
|STATEMENT
      OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION | 15  
|RESERVES
      DATA - FORECAST PRICES AND COSTS                    | 16  
|RESERVES
      DATA - CONSTANT PRICES AND COSTS                    | 21  
|CONTINGENT
      RESOURCES                                         | 38  
|DIVIDEND
      POLICY                                              | 40  
|DESCRIPTION
      OF SHARE CAPITAL                                 | 40  
|ESCROWED
      SECURITIES                                          | 42  
|DIRECTORS
      AND OFFICERS                                       | 42  
|HUMAN
      RESOURCES                                              | 44  
|INTEREST
      OF EXPERTS                                          | 44  
|INDEPENDENT
      REGISTERED CHARTERED ACCOUNTANTS                 | 44  
|LEGAL
      PROCEEDINGS AND REGULATORY ACTIONS                     | 44  
|INTERESTS
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS  | 44  
|TRANSFER
      AGENT AND REGISTRAR                                 | 45  
|MATERIAL
      CONTRACTS                                           | 45  
|AUDIT
      COMMITTEE INFORMATION                                  | 45  
|RISK
      FACTORS                                                 | 46  
|INDUSTRY
      CONDITIONS                                          | 53  
|ADDITIONAL
      INFORMATION                                       | 54  

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

CURRENCY AND EXCHANGE RATES

All dollar amounts in this Annual Information Form, unless
otherwise indicated, are stated in United States currency. The Company has
adopted the U.S. dollar as the functional currency for its consolidated
financial statements. The exchange rates for the period average and end of
period for the U.S. dollar in terms of Canadian dollars as reported by the Bank
of Canada, noon buying rate, were as follows for each of the years ended
December 31, 2008, 2007 and 2006.

|               | Year
      Ended December 31, 2008 | Year
      Ended December 31, 2007 | Year
      Ended December 31, 2006
|-------------- | ---------------------------------- | ---------------------------------- | ----------------------------------
|End of Period  | Cdn$1.2246                         | Cdn$0.9913                         | Cdn$1.1654                        
|Period Average | Cdn$1.0671                         | Cdn$1.0740                         | Cdn$1.1343                        

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3

ABBREVIATIONS

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

|Other      |                                                                                                                                                                                                                                         
|---------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|           |                                                                                                                                                                                                                                         
|API        | American Petroleum Institute                                                                                                                                                                                                            
|°API       | an indication of the specific gravity of crude oil
      measured on the API gravity scale. Liquid petroleum with a specified
      gravity of 28° API or higher is generally referred to as light crude oil.                           
|BOE or boe | barrel of oil equivalent of natural gas and crude oil on
      the basis of 1 BOE for 6 Mcf of natural gas (this conversion factor is an
      industry accepted norm and is not based on either energy content or
      current prices)
|boepd      | barrels of oil equivalent per day                                                                                                                                                                                                       
|km2        | square kilometres                                                                                                                                                                                                                       
|m3         | cubic 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 | 0.28174    
|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      
|kilometres      | miles        | 0.621      
|acres           | hectares     | 0.405      
|hectares        | acres        | 2.471      
|gigajoules      | MMBtu        | 0.950      

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

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4

FORWARD-LOOKING STATEMENTS

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

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5

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

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

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6

CERTAIN DEFINITIONS

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

"AMEX" means the American Stock Exchange;

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

"Block 72 Joint Venture Group`" means the joint venture
group comprised of DNO ASA (34%), TG Holdings (33%) and Ansan Wikfs (Hadramaut)
Ltd. (33%);

"Block 84 Joint Venture Group" means the joint venture
group comprised of DNO ASA (34%), TG Holdings (33%) and Ansan Wikfs (Hadramaut)
Ltd. (33%);

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

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

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

"Cdn" means Canadian;

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

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

"Contingent Resource Report" means the report of
DeGolyer dated February 4, 2009 evaluating the Block S-1 Yemen natural gas and
natural gas liquids resources of the Company as at December 31, 2008;

"CPF" means central production facility;

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

"DeGolyer Report" means the report of DeGolyer dated
January 21, 2009 evaluating the Egypt and Yemen crude oil reserves of the
Company as at December 31, 2008;

"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;

"GAAP" means Canadian generally accepted accounting
principles;

"GHP" means GHP Exploration (West Gharib) Ltd., a
wholly-owned subsidiary of TransGlobe;

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7

"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;                                                                                                                                                                            

"MENA" means Middle East North African region;

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

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

"Net" or "net" means:

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

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

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

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

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

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

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

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

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

"TSX" means the Toronto Stock Exchange;

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

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

"West Gharib PSC" means the West Gharib production
sharing concession in Egypt; "Yemen" means the Republic of Yemen; and
"YOC" means Yemen Oil Company.

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

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TRANSGLOBE ENERGY CORPORATION

General

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

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

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

The Company's principal office is located at 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 West Gharib Inc.(1)(2)           | Turks & Caicos Islands,
      B.W.I. | 100%     
|Drucker Petroleum Inc.(1)                   | British Virgin Islands               | 100%     
|GHP Exploration (West Gharib)
      Ltd.(1) | Barbados                             | 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)   | These companies are 100% owned directly by TransGlobe
      Petroleum International Inc., which company is a wholly-owned subsidiary
      of the Company.
|(2)   | Formerly Dublin International Petroleum (Egypt)
      Limited, incorporated in Bermuda.                                                                   

TG Holdings Yemen Inc. owns TransGlobe's interests in Yemen in
Block 32, Block 72, Block 75, Block 84 and Block S-1. TransGlobe Petroleum Egypt
Inc. owns TransGlobe's interest in the Nuqra Block 1 in Egypt. TransGlobe West
Gharib Inc., Drucker Petroleum Inc. and GHP own TransGlobe's interest in the
West Gharib concession in Egypt.

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

GENERAL DEVELOPMENT OF THE BUSINESS

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

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10

During the past three years, TransGlobe has developed its
business interests through a combination of acquisitions, divestitures,
exploration and development. During this period, TransGlobe's primary focus has
been on two concessions in Egypt (a 71.43% working interest in Nuqra Block 1 and
a 100% working interest in the West Gharib Concession), five PSAs in Yemen (a
13.81087% working interest in Block 32, a 25% working interest in Block S-1, a
33% working interest in Block 72, a 25% working interest in Block 75 and a
pending 33% working interest in Block 84) and in central Alberta, Canada (which
business interests were divested in April, 2008).

2006

In 2006, the Company's primary exploration and production focus
was on Blocks S-1, 32, 72, 84 and 75 in Yemen; Nuqra Block 1 in Egypt and
central Alberta in Canada. On Block S-1, the Company participated in the
drilling of seven wells resulting in two new discoveries (oil at Osaylan #2 and
gas/condensate at Wadi Bayhan #2), one exploration dry hole (Al Qurain), two Lam
A oil producers at An Nagyah (#20 and #21), and two Lam B wells at An Nagyah
(#22 is a suspended well and #23 is a water injector). In addition, work
continued on the Block S-1 CPF expansion. On Block 32, the Company participated
in the acquisition of 275 km2 of 3-D seismic over the Godah discovery
and the eastern portion of the Block, the drilling of eight wells resulting in
two new discoveries (Godah #1 and Tasour #23 deep), three appraisal wells at
Godah (two oil wells and one water injector), three wells at Tasour (two oil
wells and one injector), upgrades to the Tasour CPF and construction/start-up of
the Godah production facility. On Block 72, the Company participated in the
processing and mapping of the 255 km of 2-D seismic (2005) and selected a
drilling location for the first exploration well (Nasim #1) to be drilled in
2007. The Company also successfully bid on Block 84 at the third international
bid round in Yemen and acquired a 33% working interest in the Block, subject to
final approval and ratification of the PSA, which is expected in 2008. In Egypt,
on Nuqra Block 1, the Company acquired 834 km of 2-D seismic data. In western
Canada, the Company drilled 26 wells, resulting in 19 gas wells, five oil wells
and twodry wells.

2007

In 2007, the primary exploration and production focus was on
the West Gharib Concession and Nuqra Block 1 in Egypt, Blocks S-1, 32, 72, 84
and 75 in Yemen; and central Alberta in Canada.

In Egypt, the Company drilled four wells, consisting of one oil
well and one dry hole on West Gharib, and two exploration dry holes on
Nuqra.

On September 25, 2007 the Company completed the acquisition of
two companies with interests in West Gharib, Egypt and thereby acquired working
interests in eight development leases (plus one development lease pending) and
24 producing wells in the West Gharib PSC area in Egypt. The West Gharib PSC is
located onshore in the western Gulf of Suez rift basin of Egypt. Major oil and
gas discoveries have been made in this basin by other operators, with
approximately 8 billion barrels of oil and 5 trillion cubic feet of gas having
been discovered to date. The eight approved West Gharib development leases
encompass 178 km2 and are valid for 20 years (expiring between 2019
and 2026). Modern 3D seismic coverage exists over a majority of the leases. The
Company completed the acquisition of Dublin International Petroleum (Egypt)
Limited ("Dublin") and Drucker Petroleum Inc. ("Drucker") from
Tanganyika Oil (Bermuda) I Ltd. for US$59.0 million plus working capital
adjustments effective as at July 1, 2007. Dublin and Drucker together hold a 70%
working interest in the West Gharib PSC. The Company assumed operatorship of the
West Gharib PSC following the closing of the transaction. The West Gharib PSC is
comprised of nine development leases (including the East Hoshia development
lease which was approved on January 31, 2008). Eight of the nine development
leases (excluding the Hana development lease) are encumbered with a 25%
financial interest through an investment agreement between Dublin and a private
company. The 25% financial interest is non-voting but otherwise the private
company is a 25% participating interest partner.

In Yemen, the Company drilled 13 wells, consisting of four oil
wells and two dry holes on Block 32; six oil wells on Block S-1 and one dry hole
on Block 72. On February 1, 2007 the Company entered into an agreement with OXY
to participate with OXY as to a 25%working interest in Block 75,
Yemen. The Block 75 PSA received final approval and ratification on March 8,
2008. In addition, the Company participated in a 3-D seismic acquisition program
on Block 72 and facility expansions on Blocks S-1 and 32.

In Alberta, Canada, the Company drilled 18 wells, resulting in
15 gas wells and three dry wells.

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11

2008

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

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

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

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

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

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

In November 2008, the Company discovered a new multi-zone pool
at Hana West. The Hana #18 discovery well tested a combined rate of 2,820 Bopd
and continues to produce at a pump-restricted rate of 660 Bopd of 27.5 API oil
from the Asl formation (A zone). A first appraisal well drilled on the new pool
discovery, Hana West #2, continues to produce 1,800 to 2,000 Bopd from the Asl B
zone with a rented jet pump. Hana West #3 is producing approximately 150 Bopd
with a progressive cavity pump. Hana West #4 is producing between 80 and 100
Bopd from two new lower Asl C pools.

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

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

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

Recent Developments

On February 10, 2009, the Company entered into an agreement
(the "Underwriting Agreement") with a syndicate of underwriters to sell,
on a bought-deal basis, 5,798,000 Common Shares of the Company at a price of
Cdn$3.45 per Common Share, to raise gross proceeds of approximately Cdn$20.0
million which financing closed on February 25, 2009. TransGlobe also granted the
underwriters an over-allotment option of up to an additional 869,700 Common
Shares at the same price up to 30 days after closing which option, as of the
date hereof, has not been exercised. The

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12

proceeds of this offering, including from any exercise of the
over-allotment option, will be used for TransGlobes oil and gas exploration,
production and development activities, primarily on its West Gharib properties
and for general corporate purposes.

DESCRIPTION OF THE BUSINESS AND PRINCIPAL PROPERTIES

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

TransGlobe's major operations and principal activities are in
the oil and gas exploration and production business. The Company has had
operations in Egypt, Yemen and Canada during the past four, 11 and nine years,
respectively. In Egypt, the Company has an interest in two PSCs: West Gharib and
Nuqra Block 1. In Yemen, the Company has interests in five PSAs: Block 32, Block
72, Block 75, Block 84 and Block S-1. The Company sold its Canadian assets
located in the Province of Alberta on April 30, 2008.



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13

Summary of International Land Holdings

Egypt
    YemenBlock
    West
      Gharib
    Nuqra #1
    32
    72
    84
    S-1
    75Basin
    Gulf
      of Suez
    Nuqra
    Masila
    Masila
    Masila
    Marib
    MaribYear acquired
    2007
    2004
    1997
    2004/2005
    2006/2007(2)
    1998
    2007Status
    Development
    Exploration
    Development
    Exploration
    Exploration
    Development
    ExplorationOperator
    TransGlobe
    TransGlobe
    DNO
      ASA
    DNO
      ASA
    DNO
      ASA
    OXY
    OXYTransGlobe WI (%)
    100%
    71.43%(1)
    13.81087%
    33%
    33%
    25%
    25%Block Area
      (km2)
    214
    22,500
    591
    1,822
    731
    1,152
    1,050Block Area (acres)
    52,900
    5,500,000
    146,070
    450,234
    183,000
    284,700
    262,500Expiry date(s)
    2019-26
    July
      2009
    2020
    Jan.
      2012
    N/A
    2023
    March 2011Extensions:Exploration
    N/A
    2ndExtension 36 months
    N/A
    N/A
    1stPhase 42 months
    N/A
    2 ndPhase 36 months


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

Summary of International PSA/PSC Terms

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

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

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

---

14

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

Egypt
    YemenBlock
    West
      Gharib
    Nuqra #1
    32(1)(original)
    72
    84
    S-1
    75First Tranche
      (MBopd)
    0 
      5
    0-25
    0-25
    0-25
    0-25
    0-12.5
    0-25Gross Royalty %
    0%
    0%
    3%/(10%)
    3%
    6.5%
    3%
    3%Max. Cost Oil %
    30%
    40%
    60%/(25%)
    50%
    35%
    50%
    50%Excess Cost Oil
    Prod. Sharing
    Prod. Sharing
    Prod. Sharing
    Prod. Sharing
    Prod. Sharing
    Prod. Sharing
    Prod. SharingDepreciation per QuarterOperating
    100%
    100%
    100%
    100%
    100%
    100%
    100%Capital
    6.25%
    6.25%
    12.5%
    12.5%
    8.33%
    12.5%
    12.5%Production Sharing Oil:Contractor
    30%
    30%
    33.25%/ (23%)
    32.4%
    23.98%
    28.88%
    34.2%Government
    70%
    70%
    66.75%/ (77%)
    67.6%
    76.02%
    71.13%
    65.8%


Note:

|(1) | Block 32 terms will revert to original PSA terms if
      production exceeds 25 MBopd or proved reserves exceed 30 million barrels.
      Reserves are audited every two years by an independent evaluator. At
      November 2008, proved reserves were less than 30 MMBbl. The next reserve
      audit is due in November 2010.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operations Review (2008)

In 2008, the Company increased total production by 30% to 7,342
Boepd (2007-6,859 Boepd).

Production from West Gharib averaged 3,405 Bopd during the
fourth quarter, 2008. The production increase is primarily due to improved pump
performance at Hana and Hoshia, and test production from the Hana West discovery
well (Hana #18) during December, 2008.

Production from Block 32, Yemen averaged 5,966 Bopd (824 Bopd
net to TransGlobe) during the fourth quarter, 2008. Production was lower during
the quarter primarily due to natural declines, scheduled shut-in production to
install new equipment at the Godah CPF, and activities required to finalize the
conversion to dual-fired (natural gas and diesel) power generation in the Tasour
field.

Production from Block S-1, Yemen averaged 10,656 Bopd (2,664
Bopd net to TransGlobe) during the fourth quarter, 2008.

2009 Outlook

- Production is expected to average between 8,500 and 9,000 Bopd, a 19%
  increase over the 2008 average production;
- Exploration and development spending is budgeted to be $35.2 million, a
  20% decrease from 2008 (allocated 60% to Egypt and 40% to Yemen) funded from
  funds flow from operations and cash on hand; and
- Using the mid-point of production expectations and an average oil price
  assumption for the year of $40.00/Bbl for Dated Brent oil, funds flow from
  operations is expected to be $24.0 million.

---

15

STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

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

The statement of reserves data and other oil and gas
information set forth below (the "DeGolyer Report") is dated January 21,
2009, with the effective date of the Statement being December 31, 2008.

Disclosure of Reserves Data

All of the Company's reserves herein reported were evaluated by
independent evaluators in accordance with NI 51-101 for the year ended December
31, 2008. In 2008, DeGolyer and MacNaughton Canada Limited ("DeGolyer"),
independent petroleum engineering consultants based in Calgary, Alberta and part
of the DeGolyer and MacNaughton Worldwide Petroleum Consulting group
headquartered in Dallas, Texas, were retained by the Company's Reserves
Committee to independently evaluate 100% of TransGlobe's reserves as at December
31, 2008.

The reserves data set forth below (the "Reserves Data")
was prepared by DeGolyer with an effective date of December 31, 2008. The
Reserves Data summarizes the oil, liquids and natural gas reserves of the
Company and the net present values of future net revenue for these reserves
using constant prices and costs and forecast prices and costs. The Company
reports in U.S. currency and therefore the reports have been converted to U.S.
dollars at the prevailing conversion rate at December 31 of the respective
years.

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

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

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

---

16

RESERVES DATA - FORECAST PRICES AND COSTS

SUMMARY OF OIL AND GAS RESERVES TOTAL
COMPANYAS OF DECEMBER 31, 2008(FORECAST PRICES AND COSTS)

Light & Medium Crude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net (2)
    
    
    Gross(1)
    
    
    Net (2)
    
    
    Gross (1)
    
    
    Net (2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    4,235
    
    
    2,281
    
    
    4,632
    
    
    2,892
    
    
    8,868
    
    
    5,173Non-Producing
    
    -
    
    
    -
    
    
    1,050
    
    
    569
    
    
    1,050
    
    
    569Undeveloped
    
    2,556
    
    
    1,416
    
    
    132
    
    
    82
    
    
    2,688
    
    
    1,498Total Proved
    
    6,791
    
    
    3,697
    
    
    5,814
    
    
    3,543
    
    
    12,605
    
    
    7,240Probable
    
    1,005
    
    
    522
    
    
    6,180
    
    
    3,065
    
    
    7,184
    
    
    3,587Proved+Probable
    
    7,796
    
    
    4,219
    
    
    11,994
    
    
    6,608
    
    
    19,790
    
    
    10,827Possible
    
    76
    
    
    40
    
    
    8,175
    
    
    4,582
    
    
    8,251
    
    
    4,622Proved+Probable+**Possible**
    
    7,872
    
    
    4,259
    
    
    20,169
    
    
    11,190
    
    
    28,041
    
    
    15,449


Notes:

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

SUMMARY OF OIL AND GAS RESERVES EGYPTAS
OF DECEMBER 31, 2008(FORECAST PRICES AND COSTS)

Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    4,632
    
    
    2,892
    
    
    4,632
    
    
    2,892Non-Producing
    
    1,050
    
    
    569
    
    
    1,050
    
    
    569Undeveloped
    
    132
    
    
    82
    
    
    132
    
    
    82Total Proved
    
    5,814
    
    
    3,543
    
    
    5,814
    
    
    3,543Probable
    
    6,180
    
    
    3,065
    
    
    6,180
    
    
    3,065Proved+Probable
    
    11,994
    
    
    6,608
    
    
    11,994
    
    
    6,608Possible
    
    8,175
    
    
    4,582
    
    
    8,175
    
    
    4,582Proved+Probable+ Possible
    
    20,169
    
    
    11,190
    
    
    20,169
    
    
    11,190


Notes:

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

---

|17                             
|-------------------------------
|                               
|                               
|SUMMARY OF OIL AND GAS RESERVES
|YEMEN                          
|AS OF DECEMBER 31, 2008        
|(FORECAST PRICES AND COSTS)    

Light & Medium Crude Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    4,235
    
    
    2,281
    
    
    4,235
    
    
    2,281Non-Producing
    
    -
    
    
    -
    
    
    -
    
    
    -Undeveloped
    
    2,556
    
    
    1,416
    
    
    2,556
    
    
    1,416Total Proved
    
    6,791
    
    
    3,697
    
    
    6,791
    
    
    3,697Probable
    
    1,005
    
    
    522
    
    
    1,005
    
    
    522Proved+Probable
    
    7,796
    
    
    4,219
    
    
    7,796
    
    
    4,219Possible
    
    76
    
    
    40
    
    
    76
    
    
    40Proved+Probable+
      **Possible**
    
    7,872
    
    
    4,259
    
    
    7,872
    
    
    4,259


Notes:

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

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|TOTAL COMPANY                            
|AS OF DECEMBER 31, 2008                  
|(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 Part 3  Pricing Assumptions.

|                       |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|---------------------- |  | -------------------- |  |  | ------------------- | 
|US$                    |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$M                     |  | 0%                   |  |  | 5%                  | 
|Proved                 |  |                      |  |  |                     | 
|Producing              |  | 168,037              |  |  | 146,451             | 
|Non-Producing          |  | 15,874               |  |  | 14,238              | 
|Undeveloped            |  | 45,123               |  |  | 33,823              | 
|Total Proved           |  | 229,034              |  |  | 194,512             | 
|Probable               |  | 121,534              |  |  | 100,526             | 
|Total Proved+Probable  |  | 350,568              |  |  | 295,038             | 
|Possible               |  | 148,208              |  |  | 111,895             | 
|Total Proved+Probable+ |  |                      |  |  |                     | 
|Possible               |  | 498,776              |  |  | 406,933             | 

Note:

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

---

|18                                       
|-----------------------------------------
|                                         
|                                         
|NET PRESENT VALUES OF FUTURE NET REVENUES
|EGYPT                                    
|AS OF DECEMBER 31, 2008                  
|(FORECAST PRICES AND COSTS)              

|                       |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|---------------------- |  | -------------------- |  |  | ------------------- | 
|US$                    |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$M                     |  | 0%                   |  |  | 5%                  | 
|Proved                 |  |                      |  |  |                     | 
|Producing              |  | 101,722              |  |  | 88,798              | 
|Non-Producing          |  | 15,874               |  |  | 14,238              | 
|Undeveloped            |  | 1,985                |  |  | 1,512               | 
|Total Proved           |  | 119,581              |  |  | 104,548             | 
|Probable               |  | 99,979               |  |  | 84,139              | 
|Total Proved+Probable  |  | 219,560              |  |  | 188,687             | 
|Possible               |  | 146,303              |  |  | 110,253             | 
|Total Proved+Probable+ |  |                      |  |  |                     | 
|Possible               |  | 365,863              |  |  | 298,940             | 

Note:

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

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|YEMEN                                    
|AS OF DECEMBER 31, 2008                  
|(FORECAST PRICES AND COSTS)              

|                       |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|---------------------- |  | -------------------- |  |  | ------------------- | 
|US$                    |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$M                     |  | 0%                   |  |  | 5%                  | 
|Proved                 |  |                      |  |  |                     | 
|Producing              |  | 66,315               |  |  | 57,653              | 
|Non-Producing          |  | -                    |  |  | -                   | 
|Undeveloped            |  | 43,138               |  |  | 32,311              | 
|Total Proved           |  | 109,453              |  |  | 89,964              | 
|Probable               |  | 21,555               |  |  | 16,387              | 
|Total Proved+Probable  |  | 131,008              |  |  | 106,351             | 
|Possible               |  | 1,905                |  |  | 1,642               | 
|Total Proved+Probable+ |  |                      |  |  |                     | 
|Possible               |  | 132,913              |  |  | 107,993             | 

Note:

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

---

|19                         
|---------------------------
|                           
|                           
|TOTAL FUTURE NET REVENUES  
|(UNDISCOUNTED)             
|AS AT DECEMBER 31, 2008    
|(FORECAST PRICES AND COSTS)

|                        |  |           |  |  |           |  |  |           |  |  |             |  |  | Well        |  |  | Future Net |  |  |        |  |  | Future Net | 
|----------------------- |  | --------- |  |  | --------- |  |  | --------- |  |  | ----------- |  |  | ----------- |  |  | ---------- |  |  | ------ |  |  | ---------- | 
|                        |  |           |  |  |           |  |  |           |  |  |             |  |  | Abandonment |  |  | Revenue    |  |  |        |  |  | Revenue    | 
|                        |  |           |  |  |           |  |  |           |  |  |             |  |  | and         |  |  | Before     |  |  |        |  |  | After      | 
|                        |  |           |  |  |           |  |  | Operating |  |  | Development |  |  | Reclamation |  |  | Income     |  |  | Income |  |  | Income     | 
|                        |  | Revenue   |  |  | Royalties |  |  | Costs     |  |  | Costs       |  |  | Costs(2)    |  |  | Taxes      |  |  | Taxes  |  |  | Taxes      | 
|Reserves
      Category |  | (US$M)    |  |  | (US$M)    |  |  | (US$M)    |  |  | (US$M)      |  |  | (US$M)      |  |  | (US$M)     |  |  | (US$M) |  |  | (US$M)     | 
|                        |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Proved Reserves         |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                |  | 351,757   |  |  | 139,997   |  |  | 88,855    |  |  | 3,322       |  |  | -           |  |  | 119,581    |  |  | -      |  |  | 119,581    | 
|Yemen(1)                |  | 547,190   |  |  | 248,469   |  |  | 177,212   |  |  | 12,057      |  |  | -           |  |  | 109,453    |  |  | -      |  |  | 109,453    | 
|Total Company           |  | 898,947   |  |  | 388,466   |  |  | 266,067   |  |  | 15,379      |  |  | -           |  |  | 229,034    |  |  | -      |  |  | 229,034    | 
|Proved+Probable         |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Reserves                |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                |  | 735,667   |  |  | 332,012   |  |  | 175,187   |  |  | 8,909       |  |  | -           |  |  | 219,560    |  |  | -      |  |  | 219,560    | 
|Yemen(1)                |  | 636,051   |  |  | 291,504   |  |  | 199,857   |  |  | 13,681      |  |  | -           |  |  | 131,008    |  |  | -      |  |  | 131,008    | 
|Total Company           |  | 1,371,718 |  |  | 623,516   |  |  | 375,044   |  |  | 22,590      |  |  | -           |  |  | 350,568    |  |  | -      |  |  | 350,568    | 
|Proved+Probable+        |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Possible Reserves       |  |           |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                |  | 1,348,410 |  |  | 597,589   |  |  | 358,444   |  |  | 26,514      |  |  | -           |  |  | 365,863    |  |  | -      |  |  | 365,863    | 
|Yemen(1)                |  | 641,619   |  |  | 294,078   |  |  | 200,947   |  |  | 13,681      |  |  | -           |  |  | 132,913    |  |  | -      |  |  | 132,913    | 
|Total Company           |  | 1,990,029 |  |  | 891,667   |  |  | 559,391   |  |  | 40,195      |  |  | -           |  |  | 498,776    |  |  | -      |  |  | 498,776    | 

Note:

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

---

|20                         
|---------------------------
|                           
|                           
|TOTAL FUTURE NET REVENUES  
|BY PRODUCTION GROUP        
|AS AT DECEMBER 31, 2008    
|(FORECAST PRICES AND COSTS)

|                 |  |                 |  |  | Egypt           |  |  |                |  |  | Yemen           |  |  |                |  |  | Total           |  |  |                | 
|---------------- |  | --------------- |  |  | --------------- |  |  | -------------- |  |  | --------------- |  |  | -------------- |  |  | --------------- |  |  | -------------- | 
|                 |  |                 |  |  | Future net      |  |  | Egypt          |  |  | Future net      |  |  | Yemen          |  |  | Future net      |  |  | Total          | 
|                 |  |                 |  |  | Revenue         |  |  | Unit Value     |  |  | Revenue         |  |  | Unit Value     |  |  | Revenue         |  |  | Unit Value     | 
|                 |  |                 |  |  | Before Taxes(1) |  |  | Before Tax     |  |  | Before Taxes(1) |  |  | Before Tax     |  |  | Before Taxes(1) |  |  | Before Tax     | 
|                 |  |                 |  |  | (discounted at  |  |  | (discounted at |  |  | (discounted at  |  |  | (discounted at |  |  | (discounted at  |  |  | (discounted at | 
|Reserves         |  | Product         |  |  | 10%/year)       |  |  | 10%/year)      |  |  | 10%/year)       |  |  | 10%/year)      |  |  | 10%/year)       |  |  | 10%/year)      | 
|Category         |  | Group           |  |  | (US$M)          |  |  | ($/Bbl)        |  |  | (US$M)          |  |  | ($/Bbl)        |  |  | (US$M)          |  |  | ($/Bbl)        | 
|Proved Producing |  | Light and       |  |  | -               |  |  | -              |  |  | 50,717          |  |  | 22.23          |  |  | 50,717          |  |  | 22.23          | 
|                 |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy Oil       |  |  | 78,608          |  |  | 27.18          |  |  | -               |  |  | -              |  |  | 78,608          |  |  | 27.18          | 
|Proved Non-      |  | Light and       |  |  | -               |  |  | -              |  |  | -               |  |  | -              |  |  | -               |  |  | -              | 
|Producing        |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy
      Oil |  |  | 12,887          |  |  | 22.66          |  |  | -               |  |  | -              |  |  | 12,887          |  |  | 22.66          | 
|Proved           |  | Light and       |  |  | -               |  |  | -              |  |  | 24,680          |  |  | 17.43          |  |  | 24,680          |  |  | 17.43          | 
|Undeveloped      |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy Oil       |  |  | 1,144           |  |  | 13.87          |  |  | -               |  |  | -              |  |  | 1,144           |  |  | 13.87          | 
|Total Proved     |  | Light and       |  |  | -               |  |  | -              |  |  | 75,397          |  |  | 20.39          |  |  | 75,397          |  |  | 20.39          | 
|                 |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy
      Oil |  |  | 92,639          |  |  | 26.15          |  |  | -               |  |  | -              |  |  | 92,639          |  |  | 26.15          | 
|Probable         |  | Light and       |  |  | -               |  |  | -              |  |  | 12,766          |  |  | 24.46          |  |  | 12,766          |  |  | 24.46          | 
|                 |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy Oil       |  |  | 72,315          |  |  | 23.60          |  |  | -               |  |  | -              |  |  | 72,315          |  |  | 23.60          | 
|Proved+Probable  |  | Light and       |  |  | -               |  |  | -              |  |  | 88,163          |  |  | 20.90          |  |  | 88,163          |  |  | 20.90          | 
|                 |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy
      Oil |  |  | 164,954         |  |  | 24.96          |  |  | -               |  |  | -              |  |  | 164,954         |  |  | 24.96          | 
|Possible         |  | Light and       |  |  | -               |  |  | -              |  |  | 1,425           |  |  | 35.20          |  |  | 1,425           |  |  | 35.20          | 
|                 |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy Oil       |  |  | 84,356          |  |  | 18.41          |  |  | -               |  |  | -              |  |  | 84,356          |  |  | 18.41          | 
|Proved+Probable  |  | Light and       |  |  | -               |  |  | -              |  |  | 89,588          |  |  | 21.03          |  |  | 89,588          |  |  | 21.03          | 
|+Possible        |  | Medium Oil      |  |  |                 |  |  |                |  |  |                 |  |  |                |  |  |                 |  |  |                | 
|                 |  | Heavy
      Oil |  |  | 249,310         |  |  | 22.28          |  |  | -               |  |  | -              |  |  | 249,310         |  |  | 22.28          | 

Note:

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

---

|21                                       
|-----------------------------------------
|                                         
|                                         
|                                         
|RESERVES DATA - CONSTANT PRICES AND COSTS
|                                         
|SUMMARY OF OIL AND GAS RESERVES          
|TOTAL COMPANY                            
|AS OF DECEMBER 31, 2008                  
|(CONSTANT PRICES AND COSTS)              

Light & Medium CrudeOil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net (2)
    
    
    Gross (1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,702
    
    
    2,228
    
    
    4,452
    
    
    2,908
    
    
    8,154
    
    
    5,136Non-Producing
    
    -
    
    
    -
    
    
    1,009
    
    
    659
    
    
    1,009
    
    
    659Undeveloped
    
    2,032
    
    
    1,261
    
    
    136
    
    
    89
    
    
    2,168
    
    
    1,350Total Proved
    
    5,734
    
    
    3,489
    
    
    5,597
    
    
    3,656
    
    
    11,331
    
    
    7,145Probable
    
    1,028
    
    
    649
    
    
    6,116
    
    
    3,917
    
    
    7,143
    
    
    4,566Proved+Probable
    
    6,762
    
    
    4,138
    
    
    11,713
    
    
    7,573
    
    
    18,474
    
    
    11,711Possible
    
    175
    
    
    122
    
    
    8,134
    
    
    5,260
    
    
    8,309
    
    
    5,382Proved+Probable+
      **Possible**
    
    6,937
    
    
    4,260
    
    
    19,847
    
    
    12,833
    
    
    26,783
    
    
    17,093


Notes:

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

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|EGYPT                          
|AS OF DECEMBER 31, 2008        
|(CONSTANT PRICES AND COSTS)    

Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net (2)
    
    
    Gross (1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    4,452
    
    
    2,908
    
    
    4,452
    
    
    2,908Non-Producing
    
    1,009
    
    
    659
    
    
    1,009
    
    
    659Undeveloped
    
    136
    
    
    89
    
    
    136
    
    
    89Total Proved
    
    5,597
    
    
    3,656
    
    
    5,597
    
    
    3,656Probable
    
    6,116
    
    
    3,917
    
    
    6,116
    
    
    3,917Proved+Probable
    
    11,713
    
    
    7,573
    
    
    11,713
    
    
    7,573Possible
    
    8,134
    
    
    5,260
    
    
    8,134
    
    
    5,260Proved+Probable+
      **Possible**
    
    19,847
    
    
    12,833
    
    
    19,847
    
    
    12,833


Notes:

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

---

|22                             
|-------------------------------
|                               
|                               
|SUMMARY OF OIL AND GAS RESERVES
|YEMEN                          
|AS OF DECEMBER 31, 2008        
|(CONSTANT PRICES AND COSTS)    

Light & Medium
      CrudeOil
    
    
    Total BblsGross(1)
    
    
    Net (2)
    
    
    Gross (1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,702
    
    
    2,228
    
    
    3,702
    
    
    2,228Non-Producing
    
    -
    
    
    -
    
    
    -
    
    
    -Undeveloped
    
    2,032
    
    
    1,261
    
    
    2,032
    
    
    1,261Total Proved
    
    5,734
    
    
    3,489
    
    
    5,734
    
    
    3,489Probable
    
    1,028
    
    
    649
    
    
    1,028
    
    
    649Proved+Probable
    
    6,762
    
    
    4,138
    
    
    6,762
    
    
    4,138Possible
    
    175
    
    
    122
    
    
    175
    
    
    122Proved+Probable+ **Possible**
    
    6,937
    
    
    4,260
    
    
    6,937
    
    
    4,260


Notes:

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

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|TOTAL COMPANY                            
|AS OF DECEMBER 31, 2008                  
|(CONSTANT PRICES AND COSTS)              

The estimated future net revenues presented do not represent
fair market value. The estimated future net revenues presented below are
calculated using the average price received on December 31, 2008. The prices
were held constant and costs were not inflated for the life of the reserves as
summarized in Part 3  Pricing Assumptions.

|                       |  | Before Income Tax(1) |   |  | After Income Tax(1) |  
|---------------------- |  | -------------------- | - |  | ------------------- | -
|US$                    |  | Discounted at %/yr   |   |  | Discounted at %/yr  |  
|$M                     |  | 0%                   |   |  | 5%                  |  
|Proved                 |  |                      |   |  |                     |  
|Producing              |  | 72,023               |   |  | 65,570              |  
|Non-Producing          |  | 6,026                |   |  | 5,538               |  
|Undeveloped            |  | (2,957               | ) |  | (4,167              | )
|Total Proved           |  | 75,092               |   |  | 66,941              |  
|Probable               |  | 54,207               |   |  | 47,243              |  
|Total Proved+Probable  |  | 129,299              |   |  | 114,184             |  
|Possible               |  | 8,147                |   |  | 8,112               |  
|Total Proved+Probable+ |  |                      |   |  |                     |  
|Possible               |  | 137,446              |   |  | 122,296             |  

Note:

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

---

|23                                       
|-----------------------------------------
|                                         
|                                         
|NET PRESENT VALUES OF FUTURE NET REVENUES
|EGYPT                                    
|AS OF DECEMBER 31, 2008                  
|(CONSTANT PRICES AND COSTS)              

|                       |  | Before Income Tax(1) |   |  | After Income Tax(1) |  
|---------------------- |  | -------------------- | - |  | ------------------- | -
|US$                    |  | Discounted at %/yr   |   |  | Discounted at %/yr  |  
|$M                     |  | 0%                   |   |  | 5%                  |  
|Proved                 |  |                      |   |  |                     |  
|Producing              |  | 33,432               |   |  | 30,328              |  
|Non-Producing          |  | 6,026                |   |  | 5,538               |  
|Undeveloped            |  | (261                 | ) |  | (361                | )
|Total Proved           |  | 39,197               |   |  | 35,505              |  
|Probable               |  | 45,631               |   |  | 40,253              |  
|Total Proved+Probable  |  | 84,828               |   |  | 75,758              |  
|Possible               |  | 7,440                |   |  | 7,466               |  
|Total Proved+Probable+ |  |                      |   |  |                     |  
|Possible               |  | 92,268               |   |  | 83,224              |  

Note:

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

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|YEMEN                                    
|AS OF DECEMBER 31, 2008                  
|(CONSTANT PRICES AND COSTS)              

|                       |  | Before Income Tax(1) |   |  | After Income Tax(1) |  
|---------------------- |  | -------------------- | - |  | ------------------- | -
|US$                    |  | Discounted at %/yr   |   |  | Discounted at %/yr  |  
|$M                     |  | 0%                   |   |  | 5%                  |  
|Proved                 |  |                      |   |  |                     |  
|Producing              |  | 38,591               |   |  | 35,242              |  
|Non-Producing          |  | -                    |   |  | -                   |  
|Undeveloped            |  | (2,696               | ) |  | (3,806              | )
|Total Proved           |  | 35,895               |   |  | 31,436              |  
|Probable               |  | 8,576                |   |  | 6,990               |  
|Total Proved+Probable  |  | 44,471               |   |  | 38,426              |  
|Possible               |  | 707                  |   |  | 646                 |  
|Total Proved+Probable+ |  |                      |   |  |                     |  
|Possible               |  | 45,178               |   |  | 39,072              |  

Note:

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

---

|24                         
|---------------------------
|                           
|                           
|TOTAL FUTURE NET REVENUES  
|(UNDISCOUNTED)             
|AS AT DECEMBER 31, 2008    
|(CONSTANT PRICES AND COSTS)

|                        |  |         |  |  |           |  |  |           |  |  |             |  |  | Well        |  |  | Future Net |  |  |        |  |  | Future Net | 
|----------------------- |  | ------- |  |  | --------- |  |  | --------- |  |  | ----------- |  |  | ----------- |  |  | ---------- |  |  | ------ |  |  | ---------- | 
|                        |  |         |  |  |           |  |  |           |  |  |             |  |  | Abandonment |  |  | Revenue    |  |  |        |  |  | Revenue    | 
|                        |  |         |  |  |           |  |  |           |  |  |             |  |  | and         |  |  | Before     |  |  |        |  |  | After      | 
|                        |  |         |  |  |           |  |  | Operating |  |  | Development |  |  | Reclamation |  |  | Income     |  |  | Income |  |  | Income     | 
|                        |  | Revenue |  |  | Royalties |  |  | Costs     |  |  | Costs       |  |  | Costs(2)    |  |  | Taxes      |  |  | Taxes  |  |  | Taxes      | 
|Reserves
      Category |  | (US$M)  |  |  | (US$M)    |  |  | (US$M)    |  |  | (US$M)      |  |  | (US$M)      |  |  | (US$M)     |  |  | (US$M) |  |  | (US$M)     | 
|                        |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Proved Reserves         |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                |  | 143,480 |  |  | 49,749    |  |  | 51,339    |  |  | 3,195       |  |  | -           |  |  | 39,197     |  |  | -      |  |  | 39,197     | 
|Yemen(1)                |  | 220,948 |  |  | 86,569    |  |  | 86,504    |  |  | 11,979      |  |  | -           |  |  | 35,895     |  |  | -      |  |  | 35,895     | 
|Total Company           |  | 364,428 |  |  | 136,318   |  |  | 137,843   |  |  | 15,174      |  |  | -           |  |  | 75,092     |  |  | -      |  |  | 75,092     | 
|Proved+Probable         |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Reserves                |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                |  | 300,262 |  |  | 106,113   |  |  | 100,476   |  |  | 8,845       |  |  | -           |  |  | 84,828     |  |  | -      |  |  | 84,828     | 
|Yemen(1)                |  | 260,328 |  |  | 101,093   |  |  | 101,191   |  |  | 13,573      |  |  | -           |  |  | 44,471     |  |  | -      |  |  | 44,471     | 
|Total Company           |  | 560,590 |  |  | 207,206   |  |  | 201,667   |  |  | 22,418      |  |  | -           |  |  | 129,299    |  |  | -      |  |  | 129,299    | 
|Proved+Probable+        |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Possible Reserves       |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |        |  |  |            | 
|Egypt(1)                |  | 508,792 |  |  | 179,815   |  |  | 211,864   |  |  | 24,845      |  |  | -           |  |  | 92,268     |  |  | -      |  |  | 92,268     | 
|Yemen(1)                |  | 266,957 |  |  | 103,114   |  |  | 105,092   |  |  | 13,573      |  |  | -           |  |  | 45,178     |  |  | -      |  |  | 45,178     | 
|Total Company           |  | 775,749 |  |  | 282,929   |  |  | 316,956   |  |  | 38,418      |  |  | -           |  |  | 137,446    |  |  | -      |  |  | 137,446    | 

Note:

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

---

|25                         
|---------------------------
|                           
|                           
|TOTAL FUTURE NET REVENUES  
|BY PRODUCTION GROUP        
|AS AT DECEMBER 31, 2008    
|(CONSTANT PRICES AND COSTS)

|                 |  |                 |  |  | Egypt           |   |  |                |   |  | Yemen           |   |  |                |   |  | Total           |   |  |                |  
|---------------- |  | --------------- |  |  | --------------- | - |  | -------------- | - |  | --------------- | - |  | -------------- | - |  | --------------- | - |  | -------------- | -
|                 |  |                 |  |  | Future net      |   |  | Egypt          |   |  | Future net      |   |  | Yemen          |   |  | Future net      |   |  | Total          |  
|                 |  |                 |  |  | Revenue         |   |  | Unit Value     |   |  | Revenue         |   |  | Unit Value     |   |  | Revenue         |   |  | Unit Value     |  
|                 |  |                 |  |  | Before Taxes(1) |   |  | Before Tax     |   |  | Before Taxes(1) |   |  | Before Tax     |   |  | Before Taxes(1) |   |  | Before Tax     |  
|                 |  |                 |  |  | (discounted at  |   |  | (discounted at |   |  | (discounted at  |   |  | (discounted at |   |  | (discounted at  |   |  | (discounted at |  
|Reserves         |  | Product         |  |  | 10%/year)       |   |  | 10%/year)      |   |  | 10%/year)       |   |  | 10%/year)      |   |  | 10%/year)       |   |  | 10%/year)      |  
|Category         |  | Group           |  |  | (US$M)          |   |  | ($/Bbl)        |   |  | (US$M)          |   |  | ($/Bbl)        |   |  | (US$M)          |   |  | ($/Bbl)        |  
|Proved Producing |  | Light and       |  |  | -               |   |  | -              |   |  | 32,353          |   |  | 14.52          |   |  | 32,353          |   |  | 14.52          |  
|                 |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy Oil       |  |  | 27,686          |   |  | 9.52           |   |  | -               |   |  | -              |   |  | 27,686          |   |  | 9.52           |  
|Proved Non-      |  | Light and       |  |  | -               |   |  | -              |   |  | -               |   |  | -              |   |  | -               |   |  | -              |  
|Producing        |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy
      Oil |  |  | 5,095           |   |  | 7.73           |   |  | -               |   |  | -              |   |  | 5,095           |   |  | 7.73           |  
|Proved           |  | Light and       |  |  | -               |   |  | -              |   |  | (4,605          | ) |  | (3.65          | ) |  | (4,605          | ) |  | (3.65          | )
|Undeveloped      |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy Oil       |  |  | (438            | ) |  | (4.90          | ) |  | -               |   |  | -              |   |  | (438            | ) |  | (4.90          | )
|Total Proved     |  | Light and       |  |  | -               |   |  | -              |   |  | 27,748          |   |  | 7.95           |   |  | 27,748          |   |  | 7.95           |  
|                 |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy
      Oil |  |  | 32,343          |   |  | 8.85           |   |  | -               |   |  | -              |   |  | 32,343          |   |  | 8.85           |  
|Probable         |  | Light and       |  |  | -               |   |  | -              |   |  | 5,769           |   |  | 8.89           |   |  | 5,769           |   |  | 8.89           |  
|                 |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy Oil       |  |  | 35,733          |   |  | 9.12           |   |  | -               |   |  | -              |   |  | 35,733          |   |  | 9.12           |  
|Proved+Probable  |  | Light and       |  |  | -               |   |  | -              |   |  | 33,517          |   |  | 8.10           |   |  | 33,517          |   |  | 8.10           |  
|                 |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy
      Oil |  |  | 68,076          |   |  | 8.99           |   |  | -               |   |  | -              |   |  | 68,076          |   |  | 8.99           |  
|Possible         |  | Light and       |  |  | -               |   |  | -              |   |  | 591             |   |  | 4.84           |   |  | 591             |   |  | 4.84           |  
|                 |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy Oil       |  |  | 7,310           |   |  | 1.39           |   |  | -               |   |  | -              |   |  | 7,310           |   |  | 1.39           |  
|Proved+Probable  |  | Light and       |  |  | -               |   |  | -              |   |  | 34,108          |   |  | 8.01           |   |  | 34,108          |   |  | 8.01           |  
|+Possible        |  | Medium Oil      |  |  |                 |   |  |                |   |  |                 |   |  |                |   |  |                 |   |  |                |  
|                 |  | Heavy
      Oil |  |  | 75,386          |   |  | 5.87           |   |  | -               |   |  | -              |   |  | 75,386          |   |  | 5.87           |  

Note:

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

---

26

Notes to Reserves Data Tables:

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

---

27

Reserve Categories

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

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

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

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

---

28

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

Levels of Certainty for Reported
Reserves

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

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

PRICING ASSUMPTIONS

|1. | Constant Prices and Costs                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                  
|   | In Egypt, a constant price of US$25.64/Bbl (December 31,
      2008 actual prices) was utilized in the constant price case.                                                      
|   |                                                                                                                                                                                  
|   | In Yemen, a constant price of US$38.39/Bbl (December 31,
      2008 actual prices) was utilized in the constant price case.                                                      
|   |                                                                                                                                                                                  
|2. | Forecast Prices and Costs                                                                                                                                                        
|   |                                                                                                                                                                                  
|   | The forecast cost and price assumptions assume changes in
      wellhead selling prices and take into account inflation with respect to
      future operating and capital costs.

---

29

For the Reserves, crude oil and natural
gas benchmark reference pricing, as at December 31, 2008, inflation and exchange
rates utilized by DeGolyer in the Reserves Data, which were DeGolyer's then
current forecasts at the date of the Reserves Data, were as follows:

WTI Cushing
    Brent ReferenceOklahoma
    Price
    Inflation Rates(1)
    Exchange RateYear
    (US$/Bbl)
    (US$/Bbl)
    %
      Year
    (Cdn$/US$)Forecast2009
    57.00
    55.50
    0.0
    0.822010
    69.53
    68.03
    3.0
    0.852011
    76.38
    74.88
    3.0
    0.902012
    86.99
    85.49
    2.5
    0.902013
    94.74
    93.24
    2.5
    0.902014
    97.11
    95.61
    2.5
    0.90Thereafter
    +2.5%/year
    +2.5%/year
    +2.5%/year
    +0%/year


Notes:

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

The weighted average historical price
in US$ realized by the Company in Egypt, for the year ended December 31, 2008
for crude oil was $77.07/Bbl.

The weighted average historical price
in US$ realized by the Company in Yemen, for the year ended December 31, 2008
for crude oil was $97.96/Bbl.

|RECONCILIATION OF CHANGES IN RESERVES
|-------------------------------------
|                                     
|RECONCILIATION OF GROSS RESERVES     
|BY PRINCIPAL PRODUCT TYPE            
|COMPANY                              
|AS AT DECEMBER 31, 2008              
|(FORECAST PRICES AND COSTS)          

|                      |  |                    |   |  |           |   |  |                |   |  |                     |   |  |          |   |  |          |   |  | ASSOCIATED & NON- |   |  |          |   |  |          |   |  |        |  
|--------------------- |  | ------------------ | - |  | --------- | - |  | -------------- | - |  | ------------------- | - |  | -------- | - |  | -------- | - |  | ----------------- | - |  | -------- | - |  | -------- | - |  | ------ | -
|                      |  | LIGHT & MEDIUM OIL |   |  | HEAVY OIL |   |  | ASSOCIATED GAS |   |  | NATURAL GAS LIQUIDS |  
|                      |  |                    |   |  |           |   |  | Gross          |   |  |                     |   |  |          |   |  | Gross    |   |  |                   |   |  |          |   |  | Gross    |   |  |        |  
|                      |  |                    |   |  |           |   |  | Proved         |   |  |                     |   |  |          |   |  | Proved   |   |  |                   |   |  |          |   |  | Proved   |   |  |        |  
|                      |  | Gross              |   |  | Gross     |   |  | Plus           |   |  | Gross               |   |  | Gross    |   |  | Plus     |   |  | Gross             |   |  | Gross    |   |  | Plus     |   |  | Gross  |  
|                      |  | Proved             |   |  | Probable  |   |  | Probable       |   |  | Proved              |   |  | Probable |   |  | Probable |   |  | Proved            |   |  | Probable |   |  | Probable |   |  | Proved |  
|FACTORS               |  | (MBbl)             |   |  | (MBbl)    |   |  | (MBbl)         |   |  | (MBbl)              |   |  | (MBbl)   |   |  | (MBbl)   |   |  | (MMcf)            |   |  | (MMcf)   |   |  | (MMcf)   |   |  | (MBbl) |  
|December 31,          |  | 7,063              |   |  | 1,066     |   |  | 8,129          |   |  | 2,795               |   |  | 2,311    |   |  | 5,106    |   |  | 10,708            |   |  | 5,759    |   |  | 16,467   |   |  | 224    |  
|2007                  |  |                    |   |  |           |   |  |                |   |  |                     |   |  |          |   |  |          |   |  |                   |   |  |          |   |  |          |   |  |        |  
|Extensions            |  | -                  |   |  | -         |   |  | -              |   |  | 787                 |   |  | 2,392    |   |  | 3,179    |   |  | -                 |   |  | -        |   |  | -        |   |  | -      |  
|Improved              |  | -                  |   |  | -         |   |  | -              |   |  | -                   |   |  | -        |   |  | -        |   |  | -                 |   |  | -        |   |  | -        |   |  | -      |  
|recovery              |  |                    |   |  |           |   |  |                |   |  |                     |   |  |          |   |  |          |   |  |                   |   |  |          |   |  |          |   |  |        |  
|Technical             |  | 1,672              |   |  | 102       |   |  | 1,774          |   |  | 1,161               |   |  | (1,584   | ) |  | (423     | ) |  | -                 |   |  | -        |   |  | -        |   |  | -      |  
|Revisions             |  |                    |   |  |           |   |  |                |   |  |                     |   |  |          |   |  |          |   |  |                   |   |  |          |   |  |          |   |  |        |  
|Discoveries           |  | -                  |   |  | -         |   |  | -              |   |  | 1,233               |   |  | 2,271    |   |  | 3,504    |   |  | -                 |   |  | -        |   |  | -        |   |  | -      |  
|Acquisitions          |  | -                  |   |  | -         |   |  | -              |   |  | 962                 |   |  | 788      |   |  | 1,750    |   |  | -                 |   |  | -        |   |  | -        |   |  | -      |  
|Dispositions(1)       |  | (495               | ) |  | (164      | ) |  | (659           | ) |  | -                   |   |  | -        |   |  | -        |   |  | (10,708           | ) |  | (5,759   | ) |  | (16,467  | ) |  | (224   | )
|Economic              |  | -                  |   |  | -         |   |  | -              |   |  | -                   |   |  | -        |   |  | -        |   |  | -                 |   |  | -        |   |  | -        |   |  | -      |  
|Factors               |  |                    |   |  |           |   |  |                |   |  |                     |   |  |          |   |  |          |   |  |                   |   |  |          |   |  |          |   |  |        |  
|Production(1)         |  | (1,448             | ) |  | -         |   |  | (1,448         | ) |  | (1,123              | ) |  | -        |   |  | (1,123   | ) |  | -                 |   |  | -        |   |  | -        |   |  | -      |  
|December 31, **2008** |  | 6,791              |   |  | 1,005     |   |  | 7,796          |   |  | 5,814               |   |  | 6,180    |   |  | 11,994   |   |  | -                 |   |  | -        |   |  | -        |   |  | -      |  

---

30

|RECONCILIATION OF GROSS RESERVES
|--------------------------------
|BY PRINCIPAL PRODUCT TYPE       
|EGYPT                           
|AS AT DECEMBER 31, 2008         
|(FORECAST PRICES AND COSTS)     

HEAVY OILGross
    
    
    Gross
    
    
    Gross ProvedProved
    
    
    Probable
    
    
    Plus ProbableFACTORS
    
    (MBbl)
    
    
    (MBbl)
    
    
    (MBbl)December 31, 2007
    
    2,795
    
    
    2,311
    
    
    5,106Extensions
    
    787
    
    
    2,392
    
    
    3,179Improved recovery
    
    -
    
    
    -
    
    
    -Technical Revisions
    
    1,161
    
    
    (1,584
    )
    
    (423
    )Discoveries
    
    1,233
    
    
    2,271
    
    
    3,504Acquisitions
    
    962
    
    
    788
    
    
    1,750Dispositions
    
    -
    
    
    -
    
    
    -Economic Factors
    
    -
    
    
    -
    
    
    -Production(1)
    
    (1,123
    )
    
    -
    
    
    (1,123
    )December 31, 2008
    
    5,814
    
    
    6,180
    
    
    11,994


|RECONCILIATION OF GROSS RESERVES
|--------------------------------
|BY PRINCIPAL PRODUCT TYPE       
|YEMEN                           
|AS AT DECEMBER 31, 2008         
|(FORECAST PRICES AND COSTS)     

LIGHT & MEDIUM OILGross
    
    
    Gross
    
    
    Gross ProvedProved
    
    
    Probable
    
    
    Plus ProbableFACTORS
    
    (MBbl)
    
    
    (MBbl)
    
    
    (MBbl)December 31, 2007
    
    6,567
    
    
    903
    
    
    7,470Extensions
    
    -
    
    
    -
    
    
    -Improved recovery
    
    -
    
    
    -
    
    
    -Technical Revisions
    
    1,672
    
    
    102
    
    
    1,774Discoveries
    
    -
    
    
    -
    
    
    -Acquisitions
    
    -
    
    
    -
    
    
    -Dispositions
    
    -
    
    
    -
    
    
    -Economic Factors
    
    -
    
    
    -
    
    
    -Production
    
    (1,448
    )
    
    -
    
    
    (1,448
    )December 31, 2008
    
    6,791
    
    
    1,005
    
    
    7,796


---

|31                              
|--------------------------------
|                                
|RECONCILIATION OF GROSS RESERVES
|BY PRINCIPAL PRODUCT TYPE       
|CANADA                          
|AS AT DECEMBER 31, 2008         
|(FORECAST PRICES AND COSTS)     

ASSOCIATED & NON-LIGHT & MEDIUM OIL
    
    
    ASSOCIATED GAS
    
    
    NATURAL GAS LIQUIDSGross
    
    
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    
    
    GrossProved
    
    
    
    
    
    
    
    
    Proved
    
    
    
    
    
    
    
    
    ProvedGross
    
    
    Gross
    
    
    Plus
    
    
    Gross
    
    
    Gross
    
    
    Plus
    
    
    Gross
    
    
    Gross
    
    
    PlusProved
    
    
    Probable
    
    
    Probable
    
    
    Proved
    
    
    Probable
    
    
    Probable
    
    
    Proved
    
    
    Probable
    
    
    ProbableFACTORS
    
    (MBbl)
    
    
    (MBbl)
    
    
    (MBbl)
    
    
    (MMcf)
    
    
    (MMcf)
    
    
    (MMcf)
    
    
    (MBbl)
    
    
    (MBbl)
    
    
    (MBbl)December
    
    495
    
    
    164
    
    
    659
    
    
    10,708
    
    
    5,759
    
    
    16,467
    
    
    224
    
    
    186
    
    
    41031, 2007Extensions
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Improved
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -recoveryTechnical
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -RevisionsDiscoveries
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Acquisitions
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -Dispositions(1)
    
    (495
    )
    
    (164
    )
    
    (659
    )
    
    (10,708
    )
    
    (5,759
    )
    
    (16,467
    )
    
    (224
    )
    
    (186
    )
    
    (410
    )Economic
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -FactorsProduction(1)
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -December **31, 2008**
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -


Notes:

|(1) | The Canadian assets were sold April 30, 2009 with an
      evaluation date of January 1, 2008. Pursuant to Canadian Generally
      Accepted Accounting Principles (GAAP), production for the period January
      1, 2008 to closing on April 30th, 2008 was booked as
      production, with the associated revenue, expenses and capital expenditures
      treated as purchase price adjustment. Therefore, Canadian production is
      shown as zero in the Reconciliations Tables above.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ADDITIONAL INFORMATION RELATING TO RESERVES
DATA

Undeveloped Reserves

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

Proved Undeveloped Reserves

|        |  | Light and Medium Oil |  |  | Heavy Oil      |  |  | Natural Gas |  |  | Natural Gas Liquids | 
|------- |  | -------------------- |  |  | -------------- |  |  | ----------- |  |  | ------------------- | 
|Year    |  | (MBbl)               |  |  | (MBbl)         |  |  | (MMcf)      |  |  | (MBbl)              | 
|        |  | First                |  |  | Cumulative at  |  |  | First       |  |  | Cumulative at       | 
|        |  | Attributed           |  |  | Year
      End |  |  | Attributed  |  |  | Year
      End      | 
|        |  |                      |  |  |                |  |  |             |  |  |                     | 
|2006(1) |  | 917                  |  |  | 2,293          |  |  | -           |  |  | -                   | 
|2007(2) |  | 1,400                |  |  | 2,294          |  |  | 509         |  |  | 509                 | 
|2008(3) |  | 942                  |  |  | 2,556          |  |  | -           |  |  | 133                 | 

Notes:

|(1) | In 2006, 99% of the proved undeveloped light oil was
      assigned to Yemen with two horizontal development wells planned in the An
      Nagyah field along with gas cycling for liquids recovery at An Nagyah,
      liquids recovery from the An Naeem gas pool and a re-entry well at
      Osaylan. The remainder was for a Wabamun oil development well at Nevis.
      All the proved undeveloped gas and liquid reserves were assigned to Canada
      at Morningside for Horseshoe Canyon coal bed methane development and at
      Nevis for Wabamun solution gas.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

32

|(2) | In 2007, 88% of the proved undeveloped light oil was
      assigned to Yemen with three horizontal development wells at An Nagyah.
      The remaining light oil reserves are in Canada at Nevis with five
      horizontal Wabamun oil wells. The heavy oil reserves were assigned to
      Egypt with one development well at Fadl, two at Hana and two at South
      Rahmi. Natural gas was assigned in Canada for four Horseshoe Canyon CBM
      wells at Nevis, seven Horseshoe Canyon CBM wells at Thorsby and associated
      gas from the five Nevis Wabamun horizontal oil wells. Natural gas liquids
      were also assigned to the five horizontals.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(3) | In 2008, the proved undeveloped light oil was assigned to
      Yemen with two horizontal development wells at An Nagyah, two at Osaylan,
      two vertical development wells at Tasour and a vertical development and
      well recompletion at Godah. No new proved undeveloped heavy oil reserves
      were assigned in Egypt. The majority of the development activities are
      anticipated to take place during 2009 with the exception of one of the
      Osaylan wells in 2010.                                                                                                                                                                      

Probable Undeveloped Reserves

|        |  | Light and Medium Oil |  |  | Heavy Oil      |  |  | Natural Gas |  |  | Natural Gas Liquids | 
|------- |  | -------------------- |  |  | -------------- |  |  | ----------- |  |  | ------------------- | 
|Year    |  | (MBbl)               |  |  | (MBbl)         |  |  | (MMcf)      |  |  | (MBbl)              | 
|        |  | First                |  |  | Cumulative at  |  |  | First       |  |  | Cumulative at       | 
|        |  | Attributed           |  |  | Year
      End |  |  | Attributed  |  |  | Year
      End      | 
|        |  |                      |  |  |                |  |  |             |  |  |                     | 
|2006(1) |  | 591                  |  |  | 991            |  |  | -           |  |  | -                   | 
|2007(2) |  | 188                  |  |  | 456            |  |  | 1,471       |  |  | 1,471               | 
|2008(3) |  | 195                  |  |  | 329            |  |  | 2,888       |  |  | 3,065               | 

Notes:

|(1) | In 2006, 96% of probable undeveloped light oil reserves
      were assigned to Yemen consisting of one vertical well at Tasour, one
      vertical well at Godah and probable components assigned to the proved
      undeveloped projects including two horizontal An Nagyah wells, gas cycling
      for liquids recovery at An Nagyah, liquids recovery from the An Naeem gas
      pool and the re- entry well at Osaylan. The remainder is assigned to two
      Wabamun oil wells at Nevis. All the probable undeveloped gas and liquids
      reserves were assigned to Canada, specifically, two Wabamun gas wells at
      Nevis.               
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2) | In 2007, 76% of the probable undeveloped light oil was
      assigned to Yemen for a development well at Godah. The remainder was
      assigned in Canada for the five Nevis horizontal Wabamun oil wells. The
      heavy oil reserves were assigned to Egypt with one development well at
      Arta, two at Fadl, four at Hana and seven at South Rahmi. Natural gas was
      assigned in Canada for one Horseshoe Canyon CBM wells at Morningside, two
      Horseshoe Canyon CBM wells at Thorsby and associated gas from the five
      Nevis Wabamun horizontal oil wells. Natural gas liquids were also assigned
      to the five horizontals.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3) | In 2008, the probable undeveloped light oil was assigned
      to Yemen for a horizontal development well at Osaylan and a vertical
      development location at Godah. The heavy oil reserves were assigned to
      Egypt with two development wells at Hana West and incremental waterflood
      reserves assigned to the Hana pool. All development activities are
      anticipated to take place during 2009 except the Osaylan well in
    2010.                                                                                                                                                                                                

Future Development Costs

|FUTURE DEVELOPMENT COSTS
|------------------------
|TOTAL COMPANY           
|AS AT DECEMBER 31, 2008 

(US$ M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2009
    
    11,874
    
    
    17,7182010
    
    3,399
    
    
    4,5322011
    
    106
    
    
    1062012
    
    -
    
    
    -2013
    
    -
    
    
    -Remaining
    
    -
    
    
    234Total Undiscounted
    
    15,379
    
    
    22,590


---

33

|FUTURE DEVELOPMENT COSTS
|------------------------
|EGYPT                   
|AS AT DECEMBER 31, 2008 

(US$ M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2009
    
    2,495
    
    
    7,7452010
    
    721
    
    
    8242011
    
    106
    
    
    1062012
    
    -
    
    
    -2013
    
    -
    
    
    -Remaining
    
    -
    
    
    234Total Undiscounted
    
    3,322
    
    
    8,909


|FUTURE DEVELOPMENT COSTS
|------------------------
|YEMEN                   
|AS AT DECEMBER 31, 2008 

(US$ M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2009
    
    9,379
    
    
    9,9732010
    
    2,678
    
    
    3,7082011
    
    -
    
    
    -2012
    
    -
    
    
    -2013
    
    -
    
    
    -Total Undiscounted
    
    12,057
    
    
    13,681


The Company expects to fund the future development costs noted
above primarily through the use of working capital and cash flow. It will be
supplemented by debt and equity financing as required. Since the majority of
funding will be internally generated, the costs of funding will not have a
material impact on disclosed reserves or future net revenue.

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, 2008. All of the
Company's wells are located onshore.

|      |  |           |  |  | Oil Wells |  |  |               |  |  |           |  |  | Natural Gas Wells |  |  |               | 
|----- |  | --------- |  |  | --------- |  |  | ------------- |  |  | --------- |  |  | ----------------- |  |  | ------------- | 
|      |  | Producing |  |  |           |  |  | Non-Producing |  |  | Producing |  |  |                   |  |  | Non-Producing | 
|      |  | Gross     |  |  | Net       |  |  | Gross         |  |  | Net       |  |  | Gross             |  |  | Net           | 
|      |  |           |  |  |           |  |  |               |  |  |           |  |  |                   |  |  |               | 
|Egypt |  | 32        |  |  | 32.0      |  |  | 17            |  |  | 17.0      |  |  | -                 |  |  | -             | 
|Yemen |  | 32        |  |  | 6.0       |  |  | 19            |  |  | 3.7       |  |  | -                 |  |  | -             | 
|Total |  | 64        |  |  | 38.0      |  |  | 36            |  |  | 20.7      |  |  | -                 |  |  | -             | 

---

34

Properties with No Attributed Reserves

The following table sets out the Company's developed and
undeveloped land holdings as at December 31, 2008.

|      |  | Developed Acres |  |  | Undeveloped Acres |  |  | Total Acres | 
|----- |  | --------------- |  |  | ----------------- |  |  | ----------- | 
|      |  | Gross           |  |  | Net               |  |  | Gross       | 
|      |  |                 |  |  |                   |  |  |             | 
|Egypt |  | 4,300           |  |  | 4,300             |  |  | 5,539,759   | 
|Yemen |  | 35,600          |  |  | 7,004             |  |  | 1,290,904   | 
|Total |  | 39,900          |  |  | 11,304            |  |  | 6,830,663   | 

Pursuant to the East Hoshia Development Lease in Egypt, the
Company has committed to drilling three exploration wells and submitted a letter
of production guarantee for US$4.0 million (US$1.4 million remaining) as
security (expiring June 1, 2009). One exploration well has been drilled.

In Nuqra Block 1 in Egypt, the Company has fulfilled the work
commitments of the first three-year exploration extension period expiring July
18, 2009. There is an option to proceed with a second three-year extension which
requires a mandatory relinquishment of 25% of the original Block and the
drilling of two wells.

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

In Yemen Block 72, the Company entered the second three-year
exploration Phase on January 12, 2009. The Company has a commitment to drill one
exploration well by January 11, 2012 for US$2.0 million (US$0.7 million
net).

In Yemen Block 75, the contractor (Block 75 Joint Venture
Group) has a commitment of US$6.0 million gross (US$1.5 million net) for the
first exploration period work period (36 months) commencing March 8, 2008
representing 3-D seismic and one exploration well.

Pursuant to the bid awarded for Yemen Block 84, the contractor
has a minimum commitment of US$20.1 million gross (US$6.6 million net) for the
signature bonus and first exploration work period (42 months). The commitment
will commence when the PSA has been approved and ratified by the government of
Yemen.

Forward Contracts

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

|                           |                   |                  | Dated Brent Pricing
|-------------------------- | ----------------- | ---------------- | -------------------
|                           |                   |                  | Put  Call         
|Period                     | Volume            | Type             | (U.S. Dollars)     
|Sep 1, 2008  Jan 31, 2009 | 11,000 Bbls/month | Financial Collar | $60.00 - $88.80/Bbl
|Jan 1, 2009  Dec 31, 2009 | 12,000 Bbls/month | Financial Collar | $60.00 - $82.10/Bbl
|Feb 1, 2009  Dec 31, 2009 | 6,000 Bbls/month  | Financial Collar | $60.00 - $86.10/Bbl
|Jan 1, 2010  Aug 31, 2010 | 12,000 Bbls/month | Financial Collar | $60.00 - $84.25/Bbl

The total volumes hedged per year are listed below:

|Volume               | 2009    | 2010   | 
|-------------------- | ------- | ------ | 
|Annual (Bbls)        | 221,000 | 96,000 | 
|Daily Average (Bopd) | 605     | 263    | 

---

35

Additional Information Concerning Abandonment and
Reclamation Costs

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

Tax Horizon

In 2008, the Company did not pay any income taxes in Canada and
does not anticipate any taxes payable in the future.

Capital Expenditures

The following table summarizes the capital expenditures (net of
incentives and net of certain proceeds and including capitalized general and
administrative expenses) related to the Company's activities for the year ended
December 31, 2008 (excluding Canadian Expenditures(1)):

Egypt
    
    
    Yemen
    
    
    Total(US$M)Property acquisition costsProved
      properties
    
    10,378
    
    
    -
    
    
    10,378Undeveloped properties
    
    8,500
    
    
    88
    
    
    8,588Exploration costs
    
    10,733
    
    
    2,561
    
    
    13,294Development costs
    
    20,047
    
    
    3,760
    
    
    23,807Corporate and other
    
    3,138
    
    
    2,403
    
    
    5,541Corporate acquisition
    
    40,468
    
    
    -
    
    
    40,468Total
    
    93,264
    
    
    8,812
    
    
    102,076


Note:

|(1) | The Canadian assets were sold April 30, 2009 with an
      evaluation date of January 1, 2008. Pursuant to Canadian Generally
      Accepted Accounting Principles (GAAP), production for the period January
      1, 2008 to closing on April 30th, 2008 was booked as
      production, with the associated revenue, expenses and capital expenditures
      treated as purchase price adjustment. Therefore, Canadian capital
      expenditures are not shown in the Capital Expenditures Tables
  above.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exploration and Development Activities

The following tables set forth the gross and net exploratory
and development wells which the Company drilled during the year ended December
31, 2008:

|Egypt:               |  | Gross       |  |  | Net         | 
|-------------------- |  | ----------- |  |  | ----------- | 
|                     |  | Exploration |  |  | Development | 
|Natural Gas          |  | -           |  |  | -           | 
|Crude Oil            |  | 2           |  |  | 10          | 
|Service              |  | -           |  |  | 1           | 
|Dry and Abandoned(1) |  | 1           |  |  | -           | 
|Total                |  | 3           |  |  | 11          | 

---

36

|Yemen:               |  | Gross       |  |  | Net         | 
|-------------------- |  | ----------- |  |  | ----------- | 
|                     |  | Exploration |  |  | Development | 
|Natural Gas          |  | -           |  |  | -           | 
|Crude Oil            |  | -           |  |  | 2           | 
|Service              |  | -           |  |  | -           | 
|Dry and Abandoned(1) |  | 3           |  |  | -           | 
|Total                |  | 3           |  |  | 2           | 

Note:

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

Current exploration and development activities are focused on
the Hana West area in Egypt. Other key areas in Egypt for 2009 include
development of waterfloods in the Hana and Hoshia pools and exploration of the
East Hoshia area. In Yemen, development drilling is planned at An Nagyah in
Block S-1 with exploration expected to occur on Blocks 72 and 75.

Production Estimates

The following table sets out the volume of the Company's daily
production (working interest before royalties) estimated for the year ending
December 31, 2009 which is reflected in the estimate of future net revenue
disclosed in the prior reserves summary tables.

|                           |  | Egypt       |  |  | Yemen                |  |  | Yemen                |  |  | Total   | 
|-------------------------- |  | ----------- |  |  | -------------------- |  |  | -------------------- |  |  | ------- | 
|                           |  | West Gharib |  |  | Block S-1            |  |  | Block 32             |  |  | Company | 
|                           |  | Heavy Oil   |  |  | Light and Medium Oil |  |  | Light and Medium Oil |  |  | Bbls    | 
|                           |  | Gross       |  |  | Gross                |  |  | Gross                |  |  | Gross   | 
|                           |  | (Bbls/d)    |  |  | (Bbls/d)             |  |  | (Bbls/d)             |  |  | (Bbls)  | 
|Proved Producing           |  | 3,806       |  |  | 2,540                |  |  | 683                  |  |  | 7,029   | 
|Proved Developed           |  |             |  |  |                      |  |  |                      |  |  |         | 
|Non-Producing              |  | 648         |  |  | -                    |  |  | -                    |  |  | 648     | 
|Proved Undeveloped         |  | 49          |  |  | 336                  |  |  | 53                   |  |  | 437     | 
|Total Proved               |  | 4,503       |  |  | 2,875                |  |  | 736                  |  |  | 8,114   | 
|Total Probable             |  | 3,368       |  |  | -                    |  |  | 119                  |  |  | 3,487   | 
|                           |  |             |  |  |                      |  |  |                      |  |  |         | 
|Total Proved Plus Probable |  | 7,870       |  |  | 2,875                |  |  | 855                  |  |  | 11,601  | 

---

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:

|                                           |  |            |  |  | 2008          |  |  |         | 
|------------------------------------------ |  | ---------- |  |  | ------------- |  |  | ------- | 
|                                           |  |            |  |  | Quarter Ended |  |  |         | 
|                                           |  | Mar. 31(1) |  |  | Jun. 30(1)    |  |  | Sep. 30 | 
|Average Daily Sales Volumes                |  |            |  |  |               |  |  |         | 
|Egypt                                      |  |            |  |  |               |  |  |         | 
|Heavy Crude Oil (Bbls/d)                   |  | 2,432      |  |  | 3,352         |  |  | 3,096   | 
|Yemen                                      |  |            |  |  |               |  |  |         | 
|Light and Medium Crude Oil (Bbls/d)        |  | 3,890      |  |  | 3,931         |  |  | 3,839   | 
|Combined(Bbls/d)                           |  | 6,322      |  |  | 7,283         |  |  | 6,935   | 
|                                           |  |            |  |  |               |  |  |         | 
|Average Price Received                     |  |            |  |  |               |  |  |         | 
|Egypt                                      |  |            |  |  |               |  |  |         | 
|Heavy Crude Oil (US$/Bbl)                  |  | 79.63      |  |  | 101.58        |  |  | 92.25   | 
|Yemen                                      |  |            |  |  |               |  |  |         | 
|Light and Medium Crude Oil
      (US$/Bbl) |  | 97.29      |  |  | 121.97        |  |  | 114.48  | 
|Combined(US$/Bbl)                          |  | 90.49      |  |  | 112.59        |  |  | 104.55  | 
|                                           |  |            |  |  |               |  |  |         | 
|Royalties                                  |  |            |  |  |               |  |  |         | 
|Egypt                                      |  |            |  |  |               |  |  |         | 
|Heavy Crude Oil (US$/Bbl)                  |  | 48.27      |  |  | 61.85         |  |  | 51.52   | 
|Yemen                                      |  |            |  |  |               |  |  |         | 
|Light and Medium Crude Oil (US$/Bbl)       |  | 54.41      |  |  | 77.67         |  |  | 71.36   | 
|Combined(US$/Bbl)                          |  | 52.05      |  |  | 70.38         |  |  | 62.50   | 
|                                           |  |            |  |  |               |  |  |         | 
|Operating Expenses                         |  |            |  |  |               |  |  |         | 
|Egypt                                      |  |            |  |  |               |  |  |         | 
|Heavy Crude Oil (US$/Bbl)                  |  | 3.21       |  |  | 4.35          |  |  | 6.72    | 
|Yemen                                      |  |            |  |  |               |  |  |         | 
|Light and Medium Crude Oil
      (US$/Bbl) |  | 9.07       |  |  | 8.77          |  |  | 8.99    | 
|Combined(US$/Bbl)                          |  | 6.82       |  |  | 6.74          |  |  | 7.97    | 
|                                           |  |            |  |  |               |  |  |         | 
|Netback Received                           |  |            |  |  |               |  |  |         | 
|Egypt                                      |  |            |  |  |               |  |  |         | 
|Heavy Crude Oil (US$/Bbl)                  |  | 28.15      |  |  | 35.38         |  |  | 34.01   | 
|Yemen                                      |  |            |  |  |               |  |  |         | 
|Light and Medium Crude Oil (US$/Bbl)       |  | 33.81      |  |  | 35.53         |  |  | 34.13   | 
|Combined(US$/Bbl)                          |  | 31.62      |  |  | 35.46         |  |  | 34.08   | 

---

38

The following table indicates the Company's average daily sales
volumes from its important fields for the year ended December 31, 2008:

Light andHeavy Crude Oil
    
    
    Medium Crude
    
    
    Total(Bbls/d)
    
    
    (Bbls/d)
    
    
    (Bbls/d)Egypt
    
    3,071
    
    
    -
    
    
    3,071YemenBlock S-1
    
    -
    
    
    2,807
    
    
    2,807Block 32
    
    -
    
    
    977
    
    
    977Total(1)3,071
    
    
    3,784
    
    
    6,855
    (1)


Note:

|(1) | The Canadian assets were sold April 30, 2008 with an
      evaluation date of January 1, 2008. Pursuant to Canadian Generally
      Accepted Accounting Principles (GAAP), production for the period January
      1, 2008 to closing on April 30, 2008 was booked as production, with the
      associated revenue, expenses and capital expenditures treated as purchase
      price adjustment. Therefore, Canada is not shown in Production Tables
      above.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CONTINGENT RESOURCES

DeGolyer was also retained by TransGlobe to complete an
independent estimate (the "Contingent Resources Report") of natural gas
and natural gas liquids ("NGL") resource potential of the An Naeem pool
in Block S-1 Yemen, effective December 31, 2008.

The contingent resources in the Contingent Resources Report are
expressed as gross and Company share contingent resources.

Gross contingent resources are defined as the total estimated
petroleum that is potentially recoverable from known accumulations after
December 31, 2008.

Company share contingent resources are defined as TransGlobes
25% working interest share of contingent resources before deduction of royalty
obligations.

Contingent resources were evaluated using deterministic
analysis of certain parameters related to the quantity of petroleum present and
recoverable in discovered accumulations. These discovered accumulations may be
developed in the future depending on economic and market conditions, additional
well data, or seismic information.

Standard deterministic methods were used in the uncertainty
analysis. A set of deterministic values representing a Low, Best, and High value
was estimated from representations of porosity, petroleum saturation, net
hydrocarbon thickness, geometric correction factor, recovery efficiency, fluid
properties, and productive area for each accumulation. These representations
were prepared based on known data, analogy, and other standard estimation
methods including experience.

The volumetric method was used to estimate the petroleum
initially in place ("**PIIP**"). Petroleum is defined as a naturally occurring
mixture consisting predominantly of hydrocarbons in the gaseous, liquid, or
solid phase. Structure maps were prepared to delineate each reservoir, and
isopach maps were constructed to estimate reservoir volume. Regional data, such
as but not limited to electrical logs, radioactivity logs, core analyses, were
used to prepare these maps as well as to estimate representative values for
porosity and water saturation.

Estimates of ultimate recovery were obtained after applying
recovery factors and liquid yield factor to PIIP. These recovery factors were
based on consideration of the type of energy inherent in the reservoirs,
analyses of the petroleum, the structural positions of the properties, and the
regional production histories.

---

39

Summary of Contingent Resources for the An Naeem Pool,
Block S-1, Yemen

Low
    Best
    HighGross Pool
      Contingent Gas Resources
    48.9
      Bcf
    105.6 Bcf
    202.3
      BcfGross Pool
      Contingent NGL Resources
    143
      Mbbls
    2,336 Mbbls
    6,245
      MbblsCompany Share
      Contingent Gas Resources
    12.2
      Bcf
    26.4 Bcf
    50.6
      BcfCompany Share
      Contingent NGL Resources
    36
      Mbbls
    584 Mbbls
    1,561
      Mbbls


Notes:

|(1) | Recovery efficiency is applied to contingent resources in
      this table.                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------
|(2) | Application of any risk factor to contingent resources
      quantities does not equate contingent resources with reserves.
|(3) | There is no certainty that it will be commercially viable
      to produce any portion of the resources evaluated.         

The Contingent Resources Report has been prepared in accordance
with NI 51-101 where the value of the properties cannot be determined on the
basis of recent financial transactions related to the property, such as
acquisition cost, but where the resources quantities and estimate of fair value
associated with the interests of the reporting issuer are based on a
professional valuator.

Pursuant to section 5.9 of NI 51-101 and Volume 1, Section 5.3
 Classification of Resources of the COGEH Handbook: "the estimate shall
consist of at least three values that reflect a range of reasonable likelihoods
(the low value being conservative, the middle value being the median and the
high value being optimistic) reflecting courses of action expected to be
followed by the Company".

Low Estimate: This is considered to be
a conservative estimate of the quantity that will actually be recovered. It is
likely that the actual remaining quantities recovered will exceed the low
estimate. If probabilistic methods are used, there should be at least a 90
percent probability (P90) that the quantities actually recovered will equal or
exceed the low estimate.

Best Estimate: This is considered to be
the best estimate of the quantity that will actually be recovered. It is equally
likely that the actual remaining quantities recovered will be greater or less
than the best estimate. If probabilistic methods are used, there should be at
least a 50 percent probability (P50) that the quantities actually recovered will
equal or exceed the best estimate.

High Estimate: This is considered to be
an optimistic estimate of the quantity that will actually be recovered. It is
unlikely that the actual remaining quantities recovered will exceed the high
estimate. If probabilistic methods are used, there should be at least a 10
percent probability (P10) that the quantities actually recovered will equal or
exceed the high estimate.

For deterministic estimates of petroleum resources, a range of
values is selected for each parameter in the volumetric calculation. This range
encompasses a conservative value, or Low case, a Best case value, and a High
case value, which represents an upside case for the accumulation. The selection
of these values is based on data available in the basin and within the
prospective assessment area. The values may be supported by statistical
distributions or may be the best judgment of the evaluator.

The contingent resources estimated in the Contingent Resources
Report are those volumes of petroleum that are potentially recoverable from
known accumulations but which are not currently considered to be commercially
recoverable because of a lack of access to a market for natural gas and because
significant infrastructure would be required before commerciality is
established.

Because of the uncertainty of commerciality, the contingent
resources estimated in the Contingent Resources Report cannot be classified as
reserves.

---

40

The contingent resources estimates in the Contingent Resources
Report are provided as a means of comparison to other contingent resources and
do not provide a means of direct comparison to reserves. The contingent
resources estimated in the Contingent Resources Report have an economic status
of "Undetermined."

Contingent resources quantities should not be confused with
those quantities that are associated with reserves due to the additional risks
involved. The quantities that might actually be recovered should they be
developed may differ significantly from the estimates presented herein. There is
no certainty that it will be commercially viable to produce any portion of the
resources evaluated.

Estimates of contingent resources should be regarded only as
estimates that may change as further production history and additional
information become available. Not only are such contingent resources estimates
based on that information which is currently available, but such estimates are
also subject to the uncertainties inherent in the application of judgmental
factors in interpreting such information.

DIVIDEND POLICY

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

DESCRIPTION OF SHARE CAPITAL

TransGlobe is authorized to issue an unlimited number of Common
Shares. As at March 13, 2009, there were 65,327,839 Common Shares issued and
outstanding. In addition, as at such date, there were an aggregate of 5,966,244
Common Shares reserved for issuance upon the exercise of the Company's options.

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

Common Shares

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

Rights Plan

On March 13, 2008, the Company 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 7, 2008 at the 2008 annual general and special meeting of
shareholders. The Rights Plan replaced the Company's previous rights plan, which
expired on its terms in April, 2008. The Rights Plan generally provides that
upon 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.

---

41

Market for Securities

TransGlobe's Common Shares are listed and posted on the TSX and
the NASDAQ under the trading symbols "TGL" and "TGA", respectively (prior to
January 18, 2008 the Common Shares traded in the United States on the AMEX under
the symbol "TGA").

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:

(Canadian dollars, except volumes)
    
    High
    
    
    Low
    
    
    Volume2008January
    
    5.50
    
    
    4.63
    
    
    1,639,900February
    
    5.54
    
    
    4.83
    
    
    911,300March
    
    5.47
    
    
    4.41
    
    
    1,749,700April
    
    5.10
    
    
    4.61
    
    
    859,000May
    
    5.17
    
    
    4.72
    
    
    1,443,800June
    
    5.60
    
    
    5.06
    
    
    1,046,300July
    
    5.00
    
    
    4.04
    
    
    983,000August
    
    4.38
    
    
    3.95
    
    
    802,900September
    
    4.00
    
    
    3.35
    
    
    1,288,600October
    
    3.30
    
    
    1.80
    
    
    1,486,900November
    
    3.11
    
    
    2.17
    
    
    1,964,600December
    
    3.07
    
    
    2.51
    
    
    1,112,900


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

(U.S. dollars, except volumes)
    
    High
    
    
    Low
    
    
    Volume2008January
    
    5.39
    
    
    4.50
    
    
    3,439,300February
    
    5.68
    
    
    4.82
    
    
    3,698,500March
    
    5.50
    
    
    4.26
    
    
    3,908,100April
    
    5.08
    
    
    4.56
    
    
    3,314,100May
    
    5.23
    
    
    4.59
    
    
    3,971,600June
    
    5.48
    
    
    4.95
    
    
    4,223,100July
    
    5.05
    
    
    3.96
    
    
    4,815,900August
    
    4.13
    
    
    3.77
    
    
    3,231,500September
    
    3.78
    
    
    2.74
    
    
    3,545,500October
    
    3.07
    
    
    1.51
    
    
    5,988,900November
    
    2.63
    
    
    1.69
    
    
    3,070,800December
    
    2.60
    
    
    1.92
    
    
    3,738,600


---

42

ESCROWED SECURITIES

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

DIRECTORS AND OFFICERS

The name and place of residence of each director and officer,
the offices held by each in the Company, the principal occupation of each
director and officer, the period served as director or officer and the number of
securities of the Company owned by such individuals as at March 13, 2009 is as
follows:

|                                                |                                                                      | Year Became | Number of Common           |                                                                                                                                                                                                                                                                                                      
|----------------------------------------------- | -------------------------------------------------------------------- | ----------- | -------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Place of                               |                                                                      | Director or | Shares Beneficially        | Principal Occupation and Positions                                                                                                                                                                                                                                                                   
|Residence                                       | Position Held                                                        | Officer     | Owned or Controlled        | for
      the Past Five Years                                                                                                                                                                                                                                                                        
|                                                |                                                                      |             |                            |                                                                                                                                                                                                                                                                                                      
|Robert A.
      Halpin(1)(2)(4)Alberta, Canada  | Chairman of the
      Board and Director                             | 1997        | 634,000
      (5)(0.97%)   | Retired Petroleum Engineer,
      formerly Vice President, International Exploration of Petro-Canada
      with 50 years' experience in the petroleum industry.                                                                                                                                      
|                                                |                                                                      |             |                            |                                                                                                                                                                                                                                                                                                      
|Ross G. Clarkson Alberta,
      Canada          | President, Chief
      Executive Officer and Director                | 1995        | 2,199,140
      (6)(3.37%) | President and Chief Executive
      Officer of the Company since December 4, 1996, with over 30 years'
      oil and gas industry experience as a senior geological advisor.                                                                                                                         
|                                                |                                                                      |             |                            |                                                                                                                                                                                                                                                                                                      
|Lloyd W. Herrick Alberta,
      Canada          | Vice-President,
      Chief Operating Officer and Director           | 1999        | 699,804
      (7)(1.07%)   | Vice-President and Chief
      Operating Officer of the Company since April 28, 1999, with over 30
      years' experience in both domestic and international oil and gas
      exploration and development.                                                                                         
|                                                |                                                                      |             |                            |                                                                                                                                                                                                                                                                                                      
|Erwin L. Noyes(2)(3)(4)British Columbia, Canada | Director                                                             | 1995        | 148,347(8)(0.23%)          | Retired since July 31, 2000;
      formerly Vice- President, International Operations of the Company
      and has over 40 years' experience in the oil and gas industry.                                                                                                                            
|                                                |                                                                      |             |                            |                                                                                                                                                                                                                                                                                                      
|Geoffrey C.
      Chase(1)(3)(4)Alberta, Canada | Director                                                             | 2000        | 77,500(9)(0.12%)           | 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)Alberta, Canada          | Director                                                             | 2004        | 50,000(10)(0.08%)          | Chartered accountant with over
      30 years' experience in the oil and gas industry. Previously
      President and Chief Executive Officer, Maxx Petroleum Company.
      Prior thereto Controller, Vice-President, Finance and President and
      Chief Executive Officer of Ranger Oil Limited.
|                                                |                                                                      |             |                            |                                                                                                                                                                                                                                                                                                      
|David C. Ferguson
      Alberta, Canada         | Vice-President,
      Finance, Chief Financial Officer and Secretary | 2001        | 350,000(11)(0.54%)         | Chartered accountant with over
      25 years' experience in the oil and gas industry. Previously Chief
      Financial Officer with Northstar Drilling Systems Inc. and Chief
      Financial Officer and a director of Myriad Energy Corporation.                                                  

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
      260,900 Common Shares consisting of: options to purchase 80,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010, to purchase
      18,900 Common Shares at Cdn$4.27 per share expiring June 8, 2012, to
      purchase 21,000 Common Shares at Cdn$4.93 per share expiring May 13, 2013
      and to purchase 87,000 Common Shares at Cdn$2.78 per share expiring
      November 13, 2013.

---

43

|(6)  | Mr. Clarkson also holds incentive stock options to
      purchase 686,800 Common Shares consisting of: options to purchase 120,000
      Common Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase
      66,000 Common Shares at Cdn$6.03 per share expiring December 5, 2010, to
      purchase 136,000 Common Shares at Cdn$4.27 per share expiring June 8,
      2012, to purchase 136,000 Common Shares at Cdn$4.93 per share expiring May
      13, 2013 and to purchase 228,800 Common Shares at Cdn$2.78 per share
      expiring November 13, 2013.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7)  | Mr. Herrick also holds incentive stock options to
      purchase 585,000 Common Shares consisting of: options to purchase 100,000
      Common Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase
      66,000 Common Shares at Cdn$6.03 per share expiring December 5, 2010, to
      purchase 104,000 Common Shares at Cdn$4.27 per share expiring June 8,
      2012, to purchase 120,000 Common Shares at Cdn$4.93 per share expiring May
      13, 2013 and to purchase 195,000 Common Shares at Cdn$2.78 per share
      expiring November 13, 2013. 
|(8)  | Mr. Noyes also holds incentive stock options to purchase
      222,900 Common Shares consisting of: options to purchase 60,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010, to purchase
      16,500 Common Shares at Cdn$4.27 per share expiring June 8, 2012, to
      purchase 18,000 Common Shares at Cdn$4.93 per share expiring May 13, 2013
      and to purchase 74,400 Common Shares at Cdn$2.78 per share expiring
      November 13, 2013.       
|(9)  | Mr. Chase also holds incentive stock options to purchase
      177,900 Common Shares consisting of: options to purchase 30,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010, to purchase
      16,500 Common Shares at Cdn$4.27 per share expiring June 8, 2012, to
      purchase 18,000 Common Shares at Cdn$4.93 per share expiring May 13, 2013
      and to purchase 59,400 Common Shares at Cdn$2.78 per share expiring
      November 13, 2013.       
|(10) | Mr. Dyment holds incentive stock options to purchase
      198,100 Common Shares consisting of: options to purchase 40,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010, to purchase
      18,000 Common Shares at Cdn$4.27 per share expiring June 8, 2012, to
      purchase 20,100 Common Shares at Cdn$4.93 per share expiring May 13, 2013
      and to purchase 66,000 Common Shares at Cdn$2.78 per share expiring
      November 13, 2013.           
|(11) | Mr. Ferguson also holds incentive stock options to
      purchase 479,700 Common Shares consisting of: options to purchase 90,000
      Common Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase
      66,000 Common Shares at Cdn$6.03 per share expiring December 5, 2010, to
      purchase 63,000 Common Shares at Cdn$4.27 per share expiring June 8, 2012,
      to purchase 100,800 Common Shares at Cdn$4.93 per share expiring May 13,
      2013 and to purchase 159,900 Common Shares at Cdn$2.78 per share expiring
      November 13, 2013.  

Cease-Trade Orders, Bankruptcies, Penalties or Sanctions

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

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

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

---

44

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 40 full-time employees and three
full-time and twopart-time consultants. The Company intends to add
additional professional and administrative staff as the needs arise.

INTEREST OF EXPERTS

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

INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

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

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

There are no outstanding legal proceedings material to the
Company to which the Company is a party or in respect of which any of its
respective properties are subject, nor are there any such proceedings known to
be contemplated. In addition, there were no penalties or sanctions imposed
against the Company by a court relating to securities legislation or by a
securities regulatory authority during the 2008 financial year, no other
penalties or sanctions imposed by a court or regulatory body against the Company
that would likely be considered important to a reasonable investor in making an
investment decision, and no settlement agreements entered into by the Company
with a court relating to securities legislation or with a securities regulatory
authority during the 2008 financial year.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

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

To the best of the Company's knowledge and based on existing
information, as at the date hereof, there are no persons who own, controlled or
directed, of record or beneficially, directly or indirectly, more than 10% of
the outstanding Common Shares other than at March 13, 2009, Montrusco Bolton
Investments Inc. of Montreal, on behalf of its clients, has direct and/or
indirect control over 8,308,650 Common Shares, representing 12.7% of all the
issued and outstanding shares of TransGlobe.

---

45

TRANSFER AGENT AND REGISTRAR

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

MATERIAL CONTRACTS

Other than discussed herein, there are no material contracts,
other than the contracts entered into in the ordinary course of business, that
are material to the Company that were entered into within the most recently
completed financial year, or before the most recently completed financial year
but are still in effect.

AUDIT COMMITTEE INFORMATION

Composition of the Audit Committee

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

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

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 Schedule "C" to this Annual Information Form.

---

46

Audit Service Fees

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

|                              |  | Fiscal Year |  |  |                |  |  |                                                                       | 
|----------------------------- |  | ----------- |  |  | -------------- |  |  | --------------------------------------------------------------------- | 
|                              |  | Ended       |  |  | Aggregate Fees |  |  |                                                                       | 
|Type of Fees                  |  | December 31 |  |  | Billed         |  |  | Nature of Services Performed                                          | 
|                              |  |             |  |  |                |  |  |                                                                       | 
|                              |  |             |  |  |                |  |  |                                                                       | 
|Audit and Interim Review Fees |  | 2008        |  |  | Cdn$566,447    |  |  | 2008 corporate year-end, 2008
      quarterly reviews and SOX testing | 
|                              |  | 2007        |  |  | Cdn$327,062    |  |  | 2007 corporate year-end, 2007 quarterly reviews
      and SOX testing | 
|                              |  |             |  |  |                |  |  |                                                                       | 
|                              |  |             |  |  |                |  |  |                                                                       | 
|Tax Fees                      |  | 2008        |  |  | Cdn$35,433     |  |  | 2008 corporate tax returns, tax
      compliance and planning         | 
|                              |  | 2007        |  |  | Cdn$12,869     |  |  | 2007 corporate tax returns and tax compliance                         | 
|                              |  |             |  |  |                |  |  |                                                                       | 
|All Other Fees                |  | 2008        |  |  | Cdn$33,964     |  |  | Software program for oil and gas reconnaissance                       | 
|                              |  | 2007        |  |  | Cdn$204,197    |  |  | Due diligence assistance in
      respect of acquisition              | 

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 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 of experience,
knowledge and careful evaluation may not be able to overcome. There is no
assurance that further commercial quantities of oil and natural gas will be
discovered by the Company.

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

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

The marketability and price of oil and natural gas which may be
acquired or discovered by the Company may be affected by numerous factors beyond
the control of the Company. The Company may be affected by the differential
between the price paid by refiners for light, quality oil and various grades of
oil produced by the Company. The Company is subject to market fluctuations in
the prices of oil and natural gas, deliverability uncertainties related to the

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47

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

Exploration and Development

The Company's participation in Blocks 32, 72, 75, 84 and S-1 in
Yemen, as well as the Nuqra Block 1 and West Gharib PSC in Egypt represent major
undertakings. The exploration programs in Yemen and Egypt are high-risk ventures
with uncertain prospects for ongoing success.

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

Competition

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

Interests in Properties

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

Government Regulation

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

Political Risks Relating to Egypt and Yemen

Beyond the risks inherent in the oil and gas industry, the
Company is subject to additional risks resulting from doing business in Egypt
and Yemen. While the Company has attempted to reduce many of these risks through
agreements with the Governments of Egypt, Yemen and others, no assurance can be
given that such risks have been mitigated. These risks can involve matters
arising out of the evolving laws and policies of Egypt and Yemen, the imposition
of special taxes or similar charges, oil export or pipeline restrictions,
foreign exchange fluctuations and currency controls,

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48

the unenforceability of contractual rights or the taking of
property without fair compensation, restrictions on the use of expatriates in
the operations and other matters.

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

Reliance Upon Officers

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

Multi-jurisdictional Legal Risks

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

Reserve Information

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

Additional Financing Requirements

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

Canadian Tax Considerations

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

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49

to reassessment. In the event of a successful reassessment of
the Company it may be subject to a higher than expected past or future income
tax liability as well as potentially interest and penalties and such amount
could be material.

Exchange Rate Risks

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

Capital Markets

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

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

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

Refinancing Risk

The Company currently has a US$60.0 million syndicated credit
facility with a syndicate of four banks of which US$58.0 million is currently
drawn. At the option of the Company, the lenders will review the credit facility
each year and determine if they will extend for another year. In the event that
the facility is not extended before September 2010, indebtedness under the
facility will be repayable at that date. There is also a risk that the credit
facility will not be renewed for the same term or on the same terms. Any of
these events could affect the Company's ability to fund ongoing operations.

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

Third-Party Credit Risk

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

---

50

Company, such failures could individually or in the aggregate
have a material adverse effect on the Company, its cash flow from operations and
its ability to conduct its ongoing capital expenditure program.

Current Global Financial Conditions

Current global financial conditions have been subject to
increased volatility and numerous financial institutions have either gone into
bankruptcy or have had to be rescued by governmental authorities. Access to
public financing has been negatively impacted by both sub-prime mortgages and
the liquidity crisis affecting the asset-backed commercial paper market. These
factors may impact the ability of TransGlobe to obtain equity or debt financing
in the future and, if obtained, on terms favourable to TransGlobe. If these
increased levels of volatility and market turmoil continue, TransGlobe's
operations could be adversely impacted and the trading price of the common
shares could be adversely affected.

Dividends

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

Conflicts of Interest

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

Reliance on Key Personnel

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

Dilutive Effect of Financings and Acquisitions

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

Foreign Subsidiaries

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

Risks of Foreign Operations

All of the Company's current production is located in Egypt and
Yemen. As such, the Company is subject to political, economic, and other
uncertainties, including, but not limited to, expropriation of property without
fair compensation, changes in energy policies or the personnel administering
them, nationalization, currency fluctuations and devaluations, exchange controls
and royalty and tax increases and other risks arising out of foreign
governmental sovereignty over the areas in which the Company's operations are
conducted, as well as risks of loss due to civil strife, acts of war, terrorist
activities and insurrections. The Company's operations may also be adversely
affected by laws and policies of Canada,

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51

Egypt and Yemen affecting foreign trade, taxation and
investment. In the event of a dispute arising in connection with the Company's
operations in Egypt and Yemen, the Company may be subject to the exclusive
jurisdiction of foreign courts or may not be successful in subjecting foreign
persons to the jurisdictions of the courts of Canada or enforcing Canadian
judgements in such other jurisdictions. The Company may also be hindered or
prevented from enforcing its rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity. Accordingly, the
Company's exploration, development and production activities in Egypt and Yemen
could be substantially affected by factors beyond the Company's control, any of
which could have a material adverse effect on the Company.

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

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

Legal Systems

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

Marketability of Production

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

Title to Properties

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

Environmental Regulation and Risks

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

Significant liability could be imposed on the Company for
damages, clean-up costs or penalties in the event of certain discharges into the
environment, environmental damage caused by previous owners of properties
purchased by the

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52

Company or non-compliance with environmental laws or
regulations. Such liability could have a material adverse effect on the Company.
Moreover, the Company cannot predict what environmental legislation or
regulations will be enacted in the future or how existing or future laws or
regulations will be administered or enforced. Compliance with more stringent
laws or regulations, or more vigorous enforcement policies of any regulatory
authority, could in the future require material expenditures by the Company for
the installation and operation of systems and equipment for remedial measures,
any or all of which may have a material adverse effect on the Company.

Natural Disasters and Weather-Related Risks

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

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53

INDUSTRY CONDITIONS

Government Regulation Generally

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

Pricing and Marketing  Oil and Natural Gas

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

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

Pipeline Capacity

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

Royalties and Incentives

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

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

Environmental Regulation

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

Trends

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

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54

One of the trends is the volatility of commodity prices.
Following TransGlobes divestment of all of its Canadian assets in April 2008,
the Companys production consists entirely of crude oil. Crude oil prices are
influenced by the world economy and OPEC's ability to adjust supply to world
demand. During the latter part of 2008 and the first quarter of 2009, crude oil
prices have been declining to multi-year lows due to the world economic crisis
and the resulting reduction in demand for the commodity.

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

ADDITIONAL INFORMATION

Additional information, including directors' and officers'
remuneration and indebtedness, principal holders of the Company's securities and
options to purchase securities, if applicable, is contained in the Company's
Information Circular for the most recent annual meeting of shareholders that
involved the election of directors. Additional financial information is provided
for in the Company's financial statements and the management's discussion and
analysis for the year ended December 31, 2008. These documents, along with other
documents affecting the rights of securityholders and other information relating
to the Company, may be found on SEDAR at www.sedar.com.

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

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

|1. | We have evaluated the Company's reserves data as at
      December 31, 2008. The reserves data are estimates of proved reserves and
      probable reserves and related future net revenues at December 31, 2008,
      estimated using forecast prices and costs.                                                                                                                                                                                                                                                                         
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|2. | The reserves data are the responsibility of the Company's
      management. Our responsibility is to express an opinion on the reserves
      data based on our evaluation.                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | We carried out our evaluation in accordance with
      standards set out in the Canadian Oil and Gas Evaluation Handbook (the
      "COGE Handbook") prepared jointly by the Society of Petroleum Evaluation
      Engineers (Calgary Chapter) and the Canadian Institute of Mining,
      Metallurgy & Petroleum (Petroleum Society).                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|3. | Those standards require that we plan and perform an
      evaluation to obtain reasonable assurance as to whether the reserves data
      are free of material misstatement. An evaluation also includes assessing
      whether the reserves data are in accordance with principles and
      definitions presented in the COGE Handbook.                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4. | The following table sets forth the estimated future net
      revenue (before deduction of income taxes) attributed to proved plus
      probable reserves, estimated using forecast prices and costs and
      calculated using a discount rate of 10 percent, included in the reserves
      data of the Company evaluated by us for the year ended December 31, 2008,
      and identifies the respective portions thereof that we have audited,
      evaluated and reviewed and reported on to the Company's board of
      directors.

|                      |                          | Location of | Net Present Value of Future Net
      Revenue 
|--------------------- | ------------------------ | ----------- | ----------------------------------------------
|                      |                          | Reserves    | (before income taxes, 10% discount
      rate)
|                      |                          | (County or  |                                               
|Independent Qualified | Description and          | Foreign     |                                               
|Reserves Evaluator or | Preparation Date of      | Geographic  |                                               
|Auditor               | Evaluation Report        | Area)       | Audited                                       
|                      |                          |             | U.S. M$                                       
|                      |                          |             |                                               
|DeGolyer and          | Appraisal Report as of   | Egypt       |                                               
|MacNaughton Canada    | December 31, 2008 on     |             |                                               
|Limited               | Certain Properties owned | Yemen       |                                               
|                      | by TransGlobe Energy     | Total       |                                               
|                      | Corporation in Egypt and |             |                                               
|                      | Yemen dated              |             |                                               
|                      | January 21, 2009         |             |                                               

|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.                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                         
|7. | Because the reserves data are based on judgements
      regarding future events, actual results will vary and the variations may
      be material. However, any variations should be consistent with the fact
      that reserves are categorized according to the probability of their
      recovery.

Executed as to our report referred to above:

DeGolyer and MacNaughton Canada Limited, Calgary, Alberta,
dated January 21, 2009.

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

---

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

Management of TransGlobe Energy Corporation (the "Company") are
responsible for the preparation and disclosure of information with respect to
the Company's oil and gas activities in accordance with securities regulatory
requirements. This information includes reserves data, which are estimates of,
proved reserves and probable reserves and related future net revenues as at
December 31, 2008, estimated using forecast prices and costs.

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

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

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

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

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

Because the reserves data are based on judgments regarding
future events, actual results will vary and the variations may be material.
However, any variations should be consistent with the fact that reserves are
categorized according to the probability of their recovery.

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

February 2, 2009

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SCHEDULE "C"

CHARTER OF AUDIT COMMITTEE

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

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

MEMBERSHIP

The membership of the Audit Committee will be as follows:

- The Committee will consist of a minimum of three members of the Board of
  Directors, appointed annually, each of whom is affirmatively confirmed by the
  Board of Directors as having satisfied the independence standards specified in
  all applicable rules of the Canadian provincial securities commissions, the
  U.S. Securities and Exchange Commission (the "SEC") and any securities
  exchange on which the Companys shares are traded, with such affirmation
  disclosed in the Companys Annual Information Circular.
- The Committee will also consist of all members that meet the definition of
  "Financially Literate" as defined in Multilateral Instrument 52-110 Part
  1(1.5) and are able to read and understand fundamental

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C-2

- The Board will elect, by a majority vote, one member as chairperson.
- A member of the Audit Committee may not, other than in his or her capacity
  as a member of the Audit Committee, the Board of Directors, or any other Board
  committee, accept any consulting, advisory, or other compensatory fee from the
  Company, and may not be an affiliated person of the Company or any subsidiary
  thereof.

RESPONSIBILITIES

The responsibilities of the Audit Committee shall be as
follows:

Frequency of Meetings

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

Reporting Responsibilities

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

Charter Review

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

Advise of Counsel

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

Whistleblower Mechanisms

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

Independent Auditor

- Nominate annually the independent auditor to be proposed for shareholder
  approval.
- Approve the compensation of the independent auditor, and evaluate the
  performance of the independent auditor.
- Establish policies and procedures for the engagement of the independent
  auditor to provide non-audit services.

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C-3

| |  | 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.                                          
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| |  | Insure that the independent auditor is not engaged for
      any of the following nine types of non-audit services contemporaneous with
      the audit:                                                                                                                            
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| |  | Insure that the independent auditor is compliant with the
      SEC, any security exchange on which the Companys shares are traded and
      the Institute of Chartered Accountants of Alberta (Rules of Professional
      Conduct) regarding Audit Partner Rotation
requirements.

Hiring Practices

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

Independence Test

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

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C-4

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

Restrictions

- Insure no restrictions are placed by management on the scope of the
  auditors review and examination of the Companys accounts.
- 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.

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:                                                                                                                                                                                                                               
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| |  | Review and discuss with management and the independent
      auditor annual and interim financial statements (including related notes
      and MD&A) at the completion of any review engagement or other
      examination and prior to public disclosure, and resolve to recommend
      approval of said documents to the Board of
Directors.

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C-5

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

SECURITIES REGULATORY FILINGS

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

RISK ASSESSMENT

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

AMENDMENTS TO AUDIT COMMITTEE
CHARTER

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

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