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TRANSGLOBE ENERGY CORPORATION

ANNUAL INFORMATION FORM

Year Ended December 31, 2011

****

****

March 15, 2012

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TABLE OF CONTENTS

|                                                                                         | Page
|---------------------------------------------------------------------------------------- | ----
|                                                                                         |     
|CURRENCY
      AND EXCHANGE RATES                                                        | 2   
|ABBREVIATIONS                                                                            | 3   
|CONVERSIONS                                                                              | 3   
|FORWARD-LOOKING
      STATEMENTS                                                         | 4   
|CERTAIN
      DEFINITIONS                                                                | 7   
|TRANSGLOBE
      ENERGY CORPORATION                                                      | 10  
|GENERAL
      DEVELOPMENT OF THE BUSINESS                                                | 11  
|DESCRIPTION
      OF THE BUSINESS AND PRINCIPAL PROPERTIES                               | 13  
|STATEMENT
      OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION                       | 15  
|DIVIDEND
      POLICY                                                                    | 35  
|DESCRIPTION
      OF CAPITAL STRUCTURE                                                   | 35  
|MARKET
      FOR SECURITIES                                                              | 40  
|PRIOR
      SALES                                                                        | 41  
|ESCROWED
      SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER | 41  
|DIRECTORS
      AND OFFICERS                                                             | 41  
|INTEREST
      OF EXPERTS                                                                | 43  
|LEGAL
      PROCEEDINGS AND REGULATORY ACTIONS                                           | 44  
|INTERESTS
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS                        | 44  
|TRANSFER
      AGENT AND REGISTRAR                                                       | 44  
|MATERIAL
      CONTRACTS                                                                 | 44  
|AUDIT
      COMMITTEE INFORMATION                                                        | 44  
|RISK
      FACTORS                                                                       | 46  
|ADDITIONAL
      INFORMATION                                                             | 58  

|SCHEDULE "A" | Report on Reserves Data by
      Independent Qualified Reserves Evaluator or Auditor
|------------ | ------------------------------------------------------------------------------------
|SCHEDULE "B" | Report of Management and Directors on Oil and
      Gas Disclosure                  
|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 ("U.S.") currency. The
Company has adopted the U.S. dollar as the functional currency for its
consolidated financial statements. The exchange rates for the average of the
daily noon buying rates during the period and the end of period noon buying rate
for the U.S. dollar in terms of Canadian dollars as reported by the Bank of
Canada were as follows for each of the years ended December 31, 2011, 2010 and
2009.

|               | Year
      Ended December 31, 2011 | Year
      Ended December 31, 2010 | Year
      Ended December 31, 2009
|-------------- | ---------------------------------- | ---------------------------------- | ----------------------------------
|End of Period  | Cdn$1.0162                         | Cdn$0.9931                         | Cdn$1.0456                        
|Period Average | Cdn$0.9891                         | Cdn$1.0299                         | Cdn$1.1420                        

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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 or bopd                | barrels of oil per day                                                                                                             | Tcf   
|NGLs                        | natural gas liquids                                                                                                                | GJ    
|STB                         | stock tank barrels                                                                                                                 |       
|                            |                                                                                                                                    |       
|Other                       |                                                                                                                                    |       
|                            |                                                                                                                                    |       
|km2                         | square kilometres                                                                                                                 
|m3                          | cubic metres                                                                                                                      
|$M                          | thousands of dollars                                                                                                              
|$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                                                                                                            

CONVERSIONS

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

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

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4

FORWARD-LOOKING STATEMENTS

This annual information form (the "Annual Information
Form") may include certain statements deemed to be "forward-looking
statements" within the meaning of applicable Canadian and United States
securities laws. These statements relate to future events or the Company's
future performance. All statements other than statements of historical fact are
forward-looking statements. Forward-looking statements are often, but not
always, identified by the use of words such as "seek", "may", "will", "should",
"expect", "plan", "anticipate", "continue", "believe", "estimate", "predict",
"project", "potential", "targeting", "intend", "could", "might", "continue",
"should" or the negative of these terms or other comparable terminology. These
statements are only predictions. In addition, this Annual Information Form may
contain forward-looking statements attributed to third-party industry sources.
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. The Company believes the
expectations reflected in those forward-looking statements are reasonable but no
assurance can be given that these expectations will prove to be correct and such
forward-looking statements included in this Annual Information Form should not
be unduly relied upon.

Undue reliance should not be placed on these forward-looking
statements, as there can be no assurance that the plans, intentions or
expectations upon which they are based will occur. By its nature,
forward-looking information involves numerous assumptions, known and unknown
risks and uncertainties, both general and specific, that contribute to the
possibility that the predictions, forecasts, projections and other
forward-looking statements will not occur and may cause actual results or events
to differ materially from those anticipated in such forward-looking statements.
Forward-looking statements in this Annual Information Form include, but are not
limited to, statements with respect to:

- the performance characteristics of the Company's oil properties;
- oil production levels;
- the quantity of oil reserves;
- capital expenditure programs;
- supply and demand for oil 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;
- tax horizon;
- adverse technical factors associated with exploration, development,
  production or transportation of crude oil reserves; and
- changes or disruptions in the political or fiscal regimes in the Company's
  areas of activity.

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

Although the forward-looking statements contained in this
Annual Information Form are based upon assumptions which management of the
Company believes to be reasonable, the Company cannot assure investors that
actual results will be consistent with these forward-looking statements. With
respect to forward-looking statements contained in this Annual Information Form,
the Company has made assumptions regarding: current commodity prices and royalty
regimes; availability of skilled labour; timing and amount of capital
expenditures; future exchange rates; the price of oil; the impact of increasing
competition; conditions in general economic and financial markets; availability
of drilling and related equipment; effects of regulation by governmental
agencies; royalty rates; future operating costs; and other matters.

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5

Actual operational and financial results may differ materially
from TransGlobe's expectations contained in the forward-looking statements as a
result of various risk factors, many of which are beyond the control of the
Company. These risk factors include, but are not limited to:

- unforeseen changes in the rate of production from the Company's oil
  fields;
- changes or disruptions in the political or fiscal regimes in the Company's
  areas of activity;
- changes in the price of crude oil;
- adverse technical factors associated with exploration, development,
  production or transportation of the Company's crude oil reserves;
- changes in Egypt or Yemen tax, energy or other laws or regulations;
- geopolitical risks associated with the Company's operations in Egypt and
  Yemen
- 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 properties;
- oil production levels;
- the quantity of oil reserves;
- capital expenditure programs;
- supply and demand for oil and commodity prices;
- drilling plans;
- expectations regarding the Company's ability to raise capital and to
  continually add to reserves through acquisitions, exploration and development;
- treatment under governmental regulatory regimes and tax laws;
- realization of the anticipated benefits of acquisitions and dispositions;
- general economic conditions in Canada, the United States, Egypt, Yemen 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;
- 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" in this Annual
  Information Form.

Forward-looking statements and other information contained
herein concerning the oil and natural gas industry in the countries in which it
operates and the Company's general expectations concerning this industry are
based on estimates prepared by management of the Company using data from
publicly available industry sources as well as from resource reports, market
research and industry analysis and on assumptions based on data and knowledge of
this industry which the Company believes to be reasonable. However, this data is
inherently imprecise, although generally indicative of relative market
positions, market shares and performance characteristics. While the Company is
not aware of any material misstatements regarding any industry data presented
herein, the oil and natural gas industry involves numerous risks and
uncertainties and is subject to change based on various factors.

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6

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

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7

CERTAIN DEFINITIONS

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

"ABCA" means the Business Corporations Act,
R.S.A. 2000, c. B 9, as amended, including the regulations promulgated
thereunder;

"AMEX" means the American Stock Exchange;

"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;

"Business Day" means a day, other than a Saturday or
Sunday, or a statutory holiday, on which major Canadian chartered banks are open
for business in Calgary, Alberta;

"Cdn" means Canadian;

"Change of Control" has the meaning attributed thereto
under "Description of Capital Structure - Debentures - Repurchase upon a
Change of Control";

"Change of Control Purchase Date" means the date
specified for purchase in a Debenture Offer;

"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 (Petroleum Society), as amended from time to time;

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

"Conversion Date" means the date on which a Debenture is
surrendered for conversion when the register of the Debenture Trustee is open
and in accordance with the provisions of the Indenture;

"Conversion Price" means Cdn$15.10 per Common Share,
subject to adjustment in accordance with the Indenture;

"CSA 51-324" means the Staff Notice 51-324 - Glossary to
NI 51-101 Standards of Disclosure For Oil And Gas Activities of the
Canadian Securities Administrators;

"Current Market Price" means, on any day, the volume
weighted average trading price of the Common Shares on the TSX (or such other
recognized stock exchange) for the 20 consecutive trading days ending on the
fifth trading day preceding such date;

"Debenture Offer" has the meaning attributed thereto
under "Description of Capital Structure - Debentures - Repurchase Upon a
Change of Control";

"Debenture Trustee" means Olympia Trust Company;

"Debentures" means the Cdn$97,750,000 aggregate
principal amount of 6.00% convertible unsecured subordinated debentures due on
the Maturity Date;

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

"DeGolyer Report" means the report of DeGolyer dated
January 10, 2012 evaluating the Egypt and Yemen crude oil reserves of the
Company as at December 31, 2011;

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8

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

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

"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;

"Event of Default" has the meaning attributed thereto
under "Description of Capital Structure - Debentures - Events of
Default";

"GAAP" means Canadian generally accepted accounting
principles;

"Gross" or "gross" means:

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

"IFRS" means International Financial Reporting standards
as issued by the International Accounting Standards Board;

"Indenture" means the indenture dated February 22, 2012
between the Company and the Debenture Trustee under which the Debentures were
issued;

"Interest Obligation" means the Company's obligation to
pay interest on the Debentures in accordance with the Indenture;

"Interest Payment Date" means the date interest is paid
on the Debentures, being March 31 and September 30 in each year commencing on
September 30, 2012;

"Maturity Date" means March 31, 2017;

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

"Net" or "net" means:

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

"NI 51-101" means National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities;

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

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9

"Offer Price" has the meaning attributed thereto under
"Description of Capital Structure - Debentures - Repurchase Upon a Change of
Control";

"OXY" means Occidental Petroleum Corporation and its
subsidiaries;

"PSA" means production sharing agreement;

"PSC" means production sharing concession;

"Redemption Date" means the date set for the redemption
of the Debentures;

"SEDAR" means the System for Electronic Document
Analysis and Retrieval;

"Senior Indebtedness" has the meaning attributed thereto
under "Description of Capital Structure - Debentures - Subordination";

"shareholders" means the holders from time to time of
Common Shares;

"Tax Act" means the Income Tax Act (Canada),
R.S.C. 1985, c. 1 (5th Supp.), as amended, including the regulations promulgated
thereunder, each as amended from time to time;

"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;

"TSX" means the Toronto Stock Exchange;

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

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

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

"Yemen" means the Republic of Yemen.

Certain other terms used herein but not defined herein are
defined in NI 51-101 and/or CSA 51-324, unless the context otherwise requires,
shall have the same meanings herein as in NI 51-101 and/or CSA 51-324.

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10

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 pursuant to the
ABCA. In early 2008, the Company sold its Canadian assets and operations and now
conducts business exclusively in Egypt and Yemen.

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

The Common Shares have 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 Debentures have been listed on the TSX under
the symbol "TGL.DB" since February 22, 2012.

The Company's principal office is located at 2300, 250 - 5th
Street S.W., Calgary, Alberta, T2P 0R4. The Company's registered office is
located at 2400, 525  8th Avenue S.W., Calgary, Alberta, T2P 1G1.

Intercorporate Relationships

The following table sets out the name and jurisdiction of
incorporation of the Company's direct and indirect wholly-owned subsidiaries and
the Company's ownership interest therein:

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

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

TG Holdings Yemen Inc. owns TransGlobe's interests in Block 32
and Block 72 in Yemen. TG West Yemen Inc. owns TransGlobe's interests in Block
75 and Block S1 in Yemen. TransGlobe Petroleum Egypt Inc. owns TransGlobe's
interest in the Nuqra Block 1 in Egypt. TransGlobe West Gharib Inc. owns
TransGlobe's interest in the West Gharib concession in Egypt. TransGlobe GOS
Inc. owns TransGlobe's interest in the East Ghazalat concession in Egypt.
TransGlobe West Bakr Inc. owns TransGlobe's interest in the West Bakr concession
in Egypt. TransGlobe South Alamein Inc. will hold TransGlobe's interest in the
South Alamein concession following Government approval and closing of the
acquisition.

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.

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11

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.

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 five concessions in Egypt (a 71.43% working interest in Nuqra Block 1, a
100% working interest in the West Gharib Concession, a 100% working interest in
West Bakr Concession, a 50% working interest in the East Ghazalat Concession and
a 50% working interest in the South Alamein Concession) and four PSAs in Yemen
(a 13.81087% working interest in Block 32, a 25% working interest in Block S-1,
a 20% working interest in Block 72 and a 25% working interest in Block 75).

2009

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

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

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

2010

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

In Egypt during 2010, the Company drilled 25 wells in West
Gharib and six wells in East Ghazalat. The West Gharib drilling resulted in 20
oil wells and five dry holes. The drilling was primarily focused on the emerging
Nukhul oil resource appraisal and development. At East Ghazalat, the Company
participated in drilling six wells, resulting in four oil wells on the Safwa
structure and two dry holes during 2010. The operator of the East Ghazalat
Concession filed a notice of commercial discovery for the Safwa wells in
December of 2010.

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

2011

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

In Egypt during 2011, the Company drilled 44 wells in West
Gharib, two wells in Nuqra and one well in East Ghazalat. The West Gharib
drilling resulted in 36 oil wells, five service wells and three dry holes. The
drilling was primarily focused on the Upper and Lower Nukhul oil appraisal and
development in the Arta/East Arta leases. At East Ghazalat, the Company
participated in drilling one exploration dry hole during 2011. The operator of
the East Ghazalat Concession filed a development plan for the Safwa discovery
(drilled in 2010) and received approval of the Safwa development lease in July
2011. The operator put forward a 2012 budget and work program targeting Safwa
first production in the second quarter of 2012. At Nuqra, the Company drilled
two exploration dry holes in early 2011.

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12

On March 28, 2011, the Company announced the signing of a sale
and purchase agreement with The Egyptian Petroleum Development Co. Ltd. (of
Japan) ("EPEDECO") to acquire their 100% working interest in the West
Bakr Concession in the Eastern Desert of Egypt. On December 29, 2011, the Company
completed the strategic acquisition of the West Bakr Concession from EPEDECO for
$60 million plus or minus adjustments, effective July 1, 2010. The West Bakr
adjusted purchase price at closing net of working capital acquired was $39.5
million. The Company acquired approximately 4,350 bopd of oil production and
reserves of 7.4 million bbls on a proved basis or 11.6 million bbls on a proved
plus probable basis effective December 29, 2011 on a working interest before
deduction of royalties basis.

In June of 2011, the Company entered into a purchase and sale
agreement to acquire the 50% operated working interest of Cepsa Egypt SA B.V.
("Cepsa"), a wholly-owned subsidiary of Compania Espanola De Petroleos,
S.A. (of Spain) in the South Alamein exploration concession in the Western
Desert for $3.0 million plus an inventory adjustment, which is expected to close
in 2012 following approval from the Egyptian Government. The Company plans to
submit a revised budget and development plan for the Boraq discovery to the
Egyptian Government for approval following the closing of the transaction. The
concession includes an oil discovery well, Boraq-2X, which tested a combined
1,700 Bopd of 38° to 40° API oil from two Cretaceous zones. Initial work by
TransGlobe will focus on appraisal and development of the Boraq2X discovery
which includes drilling at least two appraisal wells and readying the Boraq2X
well for production. The Boraq-2X discovery is close to existing infrastructure
which should reduce development time and capital.

In Yemen during 2011, the Company participated in drilling one
oil discovery and one dry hole in Block 72 and one oil well in Block S-1. The
planned drilling program for West Yemen (Block S-1 and Block 75) was suspended
in early 2011 due to security and logistics concerns in the area, which had
deteriorated as a result of ongoing the political unrest in Yemen. The West
Yemen export pipeline was sabotaged several times during the year. Block S-1
production (approximately 2,250 bopd to the Company) was shut in for
approximately 7 months of 2011 due to the pipeline attacks and has remained shut
in since October 8, 2011.

Recent Developments

In Egypt, seven additional oil wells were drilled on the West
Gharib concession in 2012. Development/appraisal drilling continues at West
Gharib with two drilling rigs.

On February 22, 2012, the Company completed a short form
prospectus financing pursuant to which Cdn$85.0 million aggregate principal
amount of 6.00% convertible unsecured subordinated debentures were issued (the
"Debenture Offering"). A syndicate of underwriters co-led by Scotia
Capital Inc. and Macquarie Capital Markets Canada Ltd., and including Canaccord
Genuity Corp., RBC Dominion Securities Inc., Dundee Securities Ltd., FirstEnergy
Capital Corp. and GMP Securities L.P. (collectively, the "Underwriters")
acted as underwriters for the Debenture Offering. Pursuant to the Debenture
Offering, the Underwriters were also granted an over-allotment option,
exercisable, in whole or in part, at any time up until 30 days after completion
of the Debenture Offering, to purchase up to an additional Cdn$12.75 million
aggregate principal amount of 6.00% convertible unsecured subordinated
debentures due on the Maturity Date, to cover over-allotments. The
over-allotment option was exercised by the Underwriters in full and on February
29, 2012 the Company issued Cdn$12.75 million aggregate principal amount of
6.00% convertible unsecured subordinated debentures. TransGlobe intends to use
the net proceeds of the Debenture Offering to pursue new business development
opportunities including adding new acreage through farm-in arrangements, bid
rounds or acquisitions. For a summary of the terms of the Debentures, see
"Description of Capital Structure  Debentures".

Significant Acquisitions

TransGlobe did not complete any significant acquisitions during
its most recently completed financial year for which disclosure is required
under Part 8 of NI 51-102.

---

13

DESCRIPTION OF THE BUSINESS AND PRINCIPAL PROPERTIES

General

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 seven, 14 and 12 years
respectively. In Egypt, the Company has an interest in five PSCs: West Gharib,
West Bakr, East Ghazalat, Nuqra Block 1 and South Alamein (pending government
approvals and closing). In Yemen, the Company has interests in four PSAs: Block
32, Block 72, Block 75 and Block S-1. The Company sold its Canadian assets
located in the Province of Alberta on April 30, 2008.



Summary of International Land Holdings

International Land (Egypt and Yemen) - Summary of PSAs

EGYPTBlock
    East Ghazalat
    West Gharib
    West Bakr
    Nuqra #1
    South Alamein**Basin
    Western Desert
    Gulf of Suez
    Gulf of Suez
    Nuqra
    Western DesertYear acquired
    2010
    2007
    2011
    2004
    2012 (pending)Status
    Exploration
    Development
    Development
    Exploration
    ExplorationOperator
    Vegas
    TransGlobe
    TransGlobe
    TransGlobe
    TransGlobeTransGlobe WI (%)
    50%
    100%
    100%
    71.43%*
    50%Block Area (acres)
    159,300
    34,856
    11,600
    3,650,000
    558,120Expiry date
    June 2012
    2019-2026
    April 2020
    July 2012
    April 2012ExtensionsExploration
    2ndExtension
      24 months
    N/A
    N/A
    N/A
    2ndExtension
      24 monthsDevelopment
    20 yr
    +5 yr
    +5 yr
    20 yr
    20 yr


|*  | TransGlobe pays 88.57% of costs to first oil production.
      TransGlobe recovers carried costs from partners share of
    production.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------
|** | Pending Government approvals.                                                                                                           

---

14

YEMENBlock
    32
    72
    S-1
    75Basin
    Masila
    Masila
    Marib
    MaribYear acquired
    1997
    2004/2005
    1998
    2007Status
    Development
    Exploration
    Development
    ExplorationOperator
    DNO
    Total
    OXY
    OXYTransGlobe WI (%)
    13.81087%
    20%
    25%
    25%Block Area (acres)
    146,070
    450,234
    284,700
    262,500Expiry date
    Nov 2020
    Sept 2012
    Oct 2023
    Sept 2011ExtensionsExploration
    N/A
    N/A
    N/A
    2ndPhase, 36
      monthsDevelopment
    5 yr
    20 yr + 5 yr
    5 yr
    20 yr + 5 yr


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

Egypt (PSCs)

|                           |               |             |           |               | South   
|-------------------------- | ------------- | ----------- | --------- | ------------- | --------
|Block                      | East Ghazalat | West Gharib | West Bakr | Nuqra #1      | Alamein*
|Production Tranche (Mbopd) | 0-5           | 0-5 / 5-10  | 0-50      | 0-25          | 0-5     
|Gross royalty %            | 0%            | 0%          | 0%        | 0%            | 0%      
|Max. cost oil %            | 25%           | 30%         | 30%       | 40%           | 30%     
|Excess cost oil            | 0%            | 30%         | 0%        | Prod. Sharing | 0%      
|Depreciation per quarter:  |               |             |           |               |         
|Operating                  | 100%          | 100%        | 100%      | 100%          | 100%    
|Capital                    | 5%            | 6.25%       | 5%        | 6.25%         | 5%      
|Production Sharing Oil:    |               |             |           |               |         
|Contractor                 | 20%           | 30% / 27.5% | 15%       | 30%           | 14%     
|Government                 | 80%           | 70% / 72.5% | 85%       | 70%           | 86%     

* South Alamein is pending government approval.

---

15

Yemen (PSAs)

|Block                      | 32(1)(original) | 72            | S-1           | 75           
|-------------------------- | --------------- | ------------- | ------------- | -------------
|Production Tranche (Mbopd) | 0-25            | 0-25          | 0-25          | 0-25         
|Gross royalty %            | 3% / (10%)      | 3%            | 3%            | 3%           
|Max. cost oil %            | 60% / (25%)     | 50%           | 50%           | 50%          
|Excess cost oil            | Prod. Sharing   | Prod. Sharing | Prod. Sharing | Prod. Sharing
|Depreciation per quarter:  |                 |               |               |              
|Operating                  | 100%            | 100%          | 100%          | 100%         
|Capital                    | 12.5%           | 12.5%         | 12.5%         | 12.5%        
|Production Sharing Oil:    |                 |               |               |              
|Contractor                 | 33.25% / (23%)  | 32.4%         | 34.2%         | 34.2%        
|Government                 | 66.75% / (77%)  | 67.6%         | 65.8%         | 65.8%        

Note:

|(1) | Block 32 terms will revert to original PSA terms if
      production exceeds 25,000 Bopd or proved reserves exceed 30 million
      barrels. Reserves may be audited every two years by an independent
      evaluator at the request of the Government of Yemen. At December 31, 2011
      proved reserves were less than 30 million barrels. The next potential
      reserve audit is November 2012.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operations Review (2011)

In 2011, the Company increased total production by 22% to
12,132 Bopd (2010  9,960 Bopd). Production from Egypt averaged 10,671 Bopd to
TransGlobe during 2011 (2010  7,259 Bopd). Production from Yemen averaged 1,461
Bopd to TransGlobe during 2011 (2010  2,701 Bopd).

2012 Outlook Highlights

- Production is expected to average between 16,000 and 20,000 Bopd, a 32% to
  65% increase over the 2011 average production;
- Exploration and development spending is budgeted to be between $70.0
  million and $90.0 million (firm and contingent) excluding acquisitions, a
  potential 28% increase from 2011 which is expected to be funded from funds
  flow from operations and cash on hand; and
- Funds flow from operations is estimated at $133.0 million up 11% from 2011,
  using the mid-point of production guidance and an average oil price assumption
  for the year of $90/Bbl for Dated Brent oil.

Human Resources

The Company currently employs 78 full-time employees and 3full-time and 4 part-time consultants. The Company intends to add additional
professional and administrative staff as the needs arise.

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 10,
2012, with the effective date being December 31, 2011.

---

16

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, 2011. In 2011, 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, 2011.

The reserves data set forth below (the "Reserves Data")
was prepared by DeGolyer with an effective date of December 31, 2011. 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 forecast prices and costs and constant 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.

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

In general, estimates of economically recoverable crude oil and
natural gas reserves and the future net cash flows there from are based upon a
number of variable factors and assumptions, such as historical production from
the properties, production rates, ultimate reserve recovery, timing and amount
of capital expenditures, marketability of crude oil and natural gas, royalty
rates, the assumed effects of regulation by governmental agencies and future
operating costs, all of which may vary materially from actual results. For those
reasons, among others, estimates of the economically recoverable crude oil and
natural gas reserves attributable to any particular group of properties,
classification of such reserves based on risk of recovery and estimates of
future net revenues associated with reserves may vary and such variations may be
material. The actual production, revenues, taxes and development and operating
expenditures with respect to the reserves associated with the Company's
properties may vary from the information presented herein and such variations
could be material. In addition, there is no assurance that the forecast price
and cost assumptions contained in the DeGolyer Report will be attained and
variances could be material.

Possible reserves are those additional reserves that are less
certain to be recovered than probable resources. There is a 10% probability that
the quantities actually received will equal or exceed the sum of proved plus
probable plus possible reserves.

---

17

Reserves Data  Forecast Prices and Costs

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|TOTAL COMPANY                  
|AS OF DECEMBER 31, 2011        
|(FORECAST PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,635
    
    
    2,036
    
    
    16,079
    
    
    7,180
    
    
    19,714
    
    
    9,216Non-Producing
    
    4,731
    
    
    2,594
    
    
    1,764
    
    
    979
    
    
    6,495
    
    
    3,573Undeveloped
    
    364
    
    
    200
    
    
    1,575
    
    
    708
    
    
    1,939
    
    
    908Total Proved
    
    8,730
    
    
    4,830
    
    
    19,418
    
    
    8,867
    
    
    28,148
    
    
    13,697Probable
    
    5,812
    
    
    2,728
    
    
    10,250
    
    
    4,257
    
    
    16,062
    
    
    6,985Proved+Probable
    
    14,542
    
    
    7,558
    
    
    29,668
    
    
    13,124
    
    
    44,210
    
    
    20,682Possible
    
    4,288
    
    
    1,884
    
    
    11,304
    
    
    4,576
    
    
    15,592
    
    
    6,460Proved+Probable+ Possible
    
    18,830
    
    
    9,442
    
    
    40,972
    
    
    17,700
    
    
    59,802
    
    
    27,142


|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
      the Company's 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, 2011        
|(FORECAST PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,267
    
    
    1,792
    
    
    16,079
    
    
    7,180
    
    
    19,346
    
    
    8,972Non-Producing
    
    1,623
    
    
    891
    
    
    1,764
    
    
    979
    
    
    3,387
    
    
    1,870Undeveloped
    
    -
    
    
    -
    
    
    1,575
    
    
    708
    
    
    1,575
    
    
    708Total Proved
    
    4,890
    
    
    2,683
    
    
    19,418
    
    
    8,867
    
    
    24,308
    
    
    11,550Probable
    
    3,873
    
    
    1,905
    
    
    10,250
    
    
    4,257
    
    
    14,123
    
    
    6,162Proved+Probable
    
    8,763
    
    
    4,588
    
    
    29,668
    
    
    13,124
    
    
    38,431
    
    
    17,712Possible
    
    3,168
    
    
    1,405
    
    
    11,304
    
    
    4,576
    
    
    14,472
    
    
    5,981Proved+Probable+ Possible
    
    11,931
    
    
    5,993
    
    
    40,972
    
    
    17,700
    
    
    52,903
    
    
    23,693


|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 the
      Company's 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.

---

18

|SUMMARY OF OIL AND GAS RESERVES
|-------------------------------
|YEMEN                          
|AS OF DECEMBER 31, 2011        
|(FORECAST PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    368
    
    
    244
    
    
    368
    
    
    244Non-Producing
    
    3,108
    
    
    1,703
    
    
    3,108
    
    
    1,703Undeveloped
    
    364
    
    
    200
    
    
    364
    
    
    200Total Proved
    
    3,840
    
    
    2,147
    
    
    3,840
    
    
    2,147Probable
    
    1,939
    
    
    824
    
    
    1,939
    
    
    824Proved+Probable
    
    5,779
    
    
    2,971
    
    
    5,779
    
    
    2,971Possible
    
    1,120
    
    
    478
    
    
    1,120
    
    
    478Proved+Probable+ Possible
    
    6,899
    
    
    3,449
    
    
    6,899
    
    
    3,449


|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 Yemen include the
      Company's 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, 2011                  
|(FORECAST PRICES & COSTS)                

The estimated future net revenues presented in the tables below
do not represent fair market value. The estimated future net revenues presented
below are calculated using the price forecasts and inflation rates set forth
below under "Pricing Assumptions".

|                                      |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|------------------------------------- |  | -------------------- |  |  | ------------------- | 
|US$                                   |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$MM                                   |  | 0%                   |  |  | 5%                  | 
|Proved                                |  |                      |  |  |                     | 
|Producing                             |  | 449.6                |  |  | 396.1               | 
|Non-Producing                         |  | 136.9                |  |  | 115.2               | 
|Undeveloped                           |  | 30.8                 |  |  | 24.8                | 
|Total Proved                          |  | 617.3                |  |  | 536.1               | 
|Probable                              |  | 314.0                |  |  | 241.7               | 
|Total Proved+Probable                 |  | 931.4                |  |  | 777.8               | 
|Possible                              |  | 288.4                |  |  | 208.5               | 
|                                      |  |                      |  |  |                     | 
|Total Proved+Probable
      +Possible |  | 1,219.7              |  |  | 986.2               | 

|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.

---

19

|NET PRESENT VALUES OF FUTURE NET REVENUES
|-----------------------------------------
|EGYPT                                    
|AS OF DECEMBER 31, 2011                  
|(FORECAST PRICES AND COSTS)              

|                                      |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|------------------------------------- |  | -------------------- |  |  | ------------------- | 
|US$                                   |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$MM                                   |  | 0%                   |  |  | 5%                  | 
|Proved                                |  |                      |  |  |                     | 
|Producing                             |  | 442.7                |  |  | 389.5               | 
|Non-Producing                         |  | 78.5                 |  |  | 63.2                | 
|Undeveloped                           |  | 22.6                 |  |  | 18.4                | 
|Total Proved                          |  | 543.7                |  |  | 471.2               | 
|Probable                              |  | 258.0                |  |  | 202.7               | 
|Total Proved+Probable                 |  | 801.8                |  |  | 673.8               | 
|Possible                              |  | 260.7                |  |  | 188.3               | 
|                                      |  |                      |  |  |                     | 
|Total Proved+Probable
      +Possible |  | 1,062.5              |  |  | 862.1               | 

|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, 2011                  
|(FORECAST PRICES AND COSTS)              

|                                      |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|------------------------------------- |  | -------------------- |  |  | ------------------- | 
|US$                                   |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$MM                                   |  | 0%                   |  |  | 5%                  | 
|Proved                                |  |                      |  |  |                     | 
|Producing                             |  | 6.9                  |  |  | 6.6                 | 
|Non-Producing                         |  | 58.4                 |  |  | 51.9                | 
|Undeveloped                           |  | 8.2                  |  |  | 6.4                 | 
|Total Proved                          |  | 73.6                 |  |  | 64.9                | 
|Probable                              |  | 56.0                 |  |  | 39.0                | 
|Total Proved+Probable                 |  | 129.6                |  |  | 103.9               | 
|Possible                              |  | 27.7                 |  |  | 20.2                | 
|Total
      Proved+Probable +Possible |  | 157.3                |  |  | 124.1               | 

|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.

---

20

|TOTAL FUTURE NET REVENUES  
|---------------------------
|(UNDISCOUNTED)             
|AS AT DECEMBER 31, 2011    
|(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$MM) |  |  | (US$MM)   |  |  | (US$MM)   |  |  | (US$MM)     |  |  | (US$MM)     |  |  | (US$MM)    |  |  | (US$MM) |  |  | (US$MM)    | 
|                        |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Proved Reserves         |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Egypt(1)                |  | 2,253.0 |  |  | 1,165.2   |  |  | 530.2     |  |  | 1 3.8       |  |  | -           |  |  | 543.7      |  |  | -       |  |  | 543.7      | 
|Yemen(1)                |  | 407.1   |  |  | 178.7     |  |  | 152.7     |  |  | 2.0         |  |  | -           |  |  | 73.6       |  |  | -       |  |  | 73.6       | 
|Total Company           |  | 2,660.1 |  |  | 1,344.0   |  |  | 683.0     |  |  | 15.8        |  |  | -           |  |  | 617.3      |  |  | -       |  |  | 617.3      | 
|Proved+Probable         |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Reserves                |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Egypt(1)                |  | 3,598.0 |  |  | 1,911.4   |  |  | 833.0     |  |  | 5 1.8       |  |  | -           |  |  | 801.8      |  |  | -       |  |  | 801.8      | 
|Yemen(1)                |  | 623.2   |  |  | 303.4     |  |  | 187.1     |  |  | 3.1         |  |  | -           |  |  | 129.6      |  |  | -       |  |  | 129.6      | 
|Total Company           |  | 4,221.2 |  |  | 2,214.8   |  |  | 1,020.0   |  |  | 55.0        |  |  | -           |  |  | 931.4      |  |  | -       |  |  | 931.4      | 
|Proved+Probable         |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Possible Reserves       |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Egypt(1)                |  | 4,995.4 |  |  | 2,719.0   |  |  | 1,135.7   |  |  | 7 8.3       |  |  | -           |  |  | 1,062.5    |  |  | -       |  |  | 1,062.5    | 
|Yemen(1)                |  | 745.8   |  |  | 373.8     |  |  | 209.2     |  |  | 5.5         |  |  | -           |  |  | 157.3      |  |  | -       |  |  | 157.3      | 
|Total Company           |  | 5,741.2 |  |  | 3,092.8   |  |  | 1,344.9   |  |  | 83.8        |  |  | -           |  |  | 1,219.7    |  |  | -       |  |  | 1,219.7    | 

|Notes: |                                                                                                                                                                                                                                                                                                                                                                    
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)    | In Egypt and Yemen, under the terms of the production
      sharing agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen future net revenues are after
      Egypt and Yemen income tax. Income taxes payable in Egypt and Yemen have
      been recorded as a Operating Costs for reporting purposes.
|(2)    | Please see "Additional Information
      Concerning Abandonment and Reclamation Costs" below.                                                                                                                                                                                                                                                                      

|TOTAL FUTURE NET REVENUES  
|---------------------------
|BY PRODUCTION GROUP        
|AS OF DECEMBER 31, 2011    
|(FORECAST PRICES AND COSTS)

Egypt
    
    
    
    
    
    Yemen
    
    
    
    
    
    Total
    
    
    TotalFuture net
    
    
    Egypt
    
    
    Future net
    
    
    Yemen
    
    
    Future net
    
    
    Unit ValueRevenue Before
    
    
    Unit Value
    
    
    Revenue
    
    
    Unit Value
    
    
    Revenue
    
    
    Before TaxTaxes(1)
    
    
    Before Tax
    
    
    Before Taxes(1)
    
    
    Before Tax
    
    
    Before Taxes(1)
    
    
    (discounted(discounted at
    
    
    (discounted at
    
    
    (discounted at
    
    
    (discounted at
    
    
    (discounted at
    
    
    atReserves
    
    Product
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)Category
    
    Group
    
    
    (US$MM)
    
    
    ($/Bbl)
    
    
    (US$MM)
    
    
    ($/Bbl)
    
    
    (US$MM)
    
    
    ($/Bbl)Total Proved
    
    Light and Medium
      Oil
    
    
    89.9
    
    
    33.51
    
    
    57.8
    
    
    26.93
    
    
    147.7
    
    
    30.58Heavy Oil
    
    
    327.0
    
    
    36.88
    
    
    -
    
    
    -
    
    
    327.0
    
    
    36.88Proved+Probable
    
    Light and Medium
      Oil
    
    
    134.4
    
    
    29.30
    
    
    86.4
    
    
    29.08
    
    
    220.8
    
    
    29.21Heavy Oil
    
    
    446.6
    
    
    34.03
    
    
    -
    
    
    -
    
    
    446.6
    
    
    34.03Proved+Probable +Possible
    
    Light and Medium
      Oil
    
    
    168.7
    
    
    28.15
    
    
    101.7
    
    
    29.50
    
    
    270.5
    
    
    28.65Heavy Oil
    
    
    554.3
    
    
    31.32
    
    
    -
    
    
    -
    
    
    554.3
    
    
    31.32


|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, 2011        
|(CONSTANT PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,635
    
    
    2,000
    
    
    16,119
    
    
    7,035
    
    
    19,754
    
    
    9,035Non-Producing
    
    4,740
    
    
    2,467
    
    
    1,764
    
    
    961
    
    
    6,504
    
    
    3,428Undeveloped
    
    364
    
    
    186
    
    
    1,575
    
    
    711
    
    
    1,939
    
    
    897Total Proved
    
    8,739
    
    
    4,653
    
    
    19,458
    
    
    8,707
    
    
    28,197
    
    
    13,360Probable
    
    5,806
    
    
    2,668
    
    
    10,271
    
    
    4,145
    
    
    16,077
    
    
    6,813Proved+Probable
    
    14,545
    
    
    7,321
    
    
    29,729
    
    
    12,852
    
    
    44,274
    
    
    20,173Possible
    
    4,289
    
    
    1,873
    
    
    11,274
    
    
    4,454
    
    
    15,563
    
    
    6,327Proved+Probable+ Possible
    
    18,834
    
    
    9,194
    
    
    41,003
    
    
    17,306
    
    
    59,837
    
    
    26,500


|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
      the Company's 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, 2011        
|(CONSTANT PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Heavy Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    3,267
    
    
    1,762
    
    
    16,119
    
    
    7,035
    
    
    19,386
    
    
    8,797Non-Producing
    
    1,628
    
    
    858
    
    
    1,764
    
    
    961
    
    
    3,392
    
    
    1,819Undeveloped
    
    -
    
    
    -
    
    
    1,575
    
    
    711
    
    
    1,575
    
    
    711Total Proved
    
    4,895
    
    
    2,620
    
    
    19,458
    
    
    8,707
    
    
    24,353
    
    
    11,327Probable
    
    3,871
    
    
    1,783
    
    
    10,271
    
    
    4,145
    
    
    14,142
    
    
    5,928Proved+Probable
    
    8,766
    
    
    4,403
    
    
    29,729
    
    
    12,852
    
    
    38,495
    
    
    17,255Possible
    
    3,169
    
    
    1,337
    
    
    11,274
    
    
    4,454
    
    
    14,443
    
    
    5,791Proved+Probable+ Possible
    
    11,935
    
    
    5,740
    
    
    41,003
    
    
    17,306
    
    
    52,938
    
    
    23,046


|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 the
      Company's 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, 2011        
|(CONSTANT PRICES AND COSTS)    

Light & MediumCrude Oil
    
    
    Total BblsGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)By Category
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)
    
    
    (Mbbls)ProvedProducing
    
    368
    
    
    238
    
    
    368
    
    
    238Non-Producing
    
    3,112
    
    
    1,609
    
    
    3,112
    
    
    1,609Undeveloped
    
    3 64
    
    
    186
    
    
    3 64
    
    
    186Total Proved
    
    3,844
    
    
    2,033
    
    
    3,844
    
    
    2,033Probable
    
    1,935
    
    
    885
    
    
    1,935
    
    
    885Proved+Probable
    
    5,779
    
    
    2,918
    
    
    5,779
    
    
    2,918Possible
    
    1,120
    
    
    536
    
    
    1,120
    
    
    536Proved+Probable+ Possible
    
    6,899
    
    
    3,454
    
    
    6,899
    
    
    3,454


|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 the
      Company's 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, 2011                  
|(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, 2011 and December
31, 2010 as applicable. The prices were held constant and costs were not
inflated for the life of the reserves as summarized below under "Pricing
Assumptions."

|                          |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|------------------------- |  | -------------------- |  |  | ------------------- | 
|US$                       |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$MM                       |  | 0%                   |  |  | 5%                  | 
|Proved                    |  |                      |  |  |                     | 
|Producing                 |  | 467.9                |  |  | 413.2               | 
|Non-Producing             |  | 148.0                |  |  | 123.7               | 
|Undeveloped               |  | 36.1                 |  |  | 29.4                | 
|Total Proved              |  | 652.0                |  |  | 566.3               | 
|Probable                  |  | 315.7                |  |  | 244.9               | 
|Proved+Probable           |  | 967.7                |  |  | 811.3               | 
|Possible                  |  | 291.4                |  |  | 213.0               | 
|Proved+Probable+ Possible |  | 1,259.2              |  |  | 1,024.3             | 

|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, 2011                  
|(CONSTANT PRICES AND COSTS)              

|                                      |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|------------------------------------- |  | -------------------- |  |  | ------------------- | 
|US$                                   |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$MM                                   |  | 0%                   |  |  | 5%                  | 
|Proved                                |  |                      |  |  |                     | 
|Producing                             |  | 460.0                |  |  | 405.8               | 
|Non-Producing                         |  | 83.1                 |  |  | 66.9                | 
|Undeveloped                           |  | 25.7                 |  |  | 21.1                | 
|Total Proved                          |  | 568.8                |  |  | 493.7               | 
|Probable                              |  | 263.3                |  |  | 208.1               | 
|Total Proved+Probable                 |  | 832.1                |  |  | 701.9               | 
|Possible                              |  | 262.9                |  |  | 191.9               | 
|                                      |  |                      |  |  |                     | 
|Total Proved+Probable
      +Possible |  | 1,095.0              |  |  | 893.7               | 

|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, 2011                  
|(CONSTANT PRICES AND COSTS)              

|                                      |  | Before Income Tax(1) |  |  | After Income Tax(1) | 
|------------------------------------- |  | -------------------- |  |  | ------------------- | 
|US$                                   |  | Discounted at %/yr   |  |  | Discounted at %/yr  | 
|$MM                                   |  | 0%                   |  |  | 5%                  | 
|Proved                                |  |                      |  |  |                     | 
|Producing                             |  | 7.9                  |  |  | 7.4                 | 
|Non-Producing                         |  | 64.9                 |  |  | 56.9                | 
|Undeveloped                           |  | 10.4                 |  |  | 8.3                 | 
|Total Proved                          |  | 83.2                 |  |  | 72.6                | 
|Probable                              |  | 52.4                 |  |  | 36.8                | 
|Total Proved+Probable                 |  | 135.6                |  |  | 109.4               | 
|Possible                              |  | 28.5                 |  |  | 21.2                | 
|Total
      Proved+Probable +Possible |  | 164.1                |  |  | 130.5               | 

|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 OF DECEMBER 31, 2011    
|(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      | 
|                         |  | (US$MM) |  |  | (US$MM)   |  |  | (US$MM)   |  |  | (US$MM)     |  |  | (US$MM)     |  |  | (US$MM)    |  |  | (US$MM) |  |  | (US$MM)    | 
|                         |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Proved Reserves          |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Egypt(1)                 |  | 2,325.7 |  |  | 1,226.2   |  |  | 517.0     |  |  | 13.7        |  |  | -           |  |  | 568.8      |  |  | -       |  |  | 568.8      | 
|Yemen(1)                 |  | 420.5   |  |  | 198.1     |  |  | 137.2     |  |  | 2.0         |  |  | -           |  |  | 83.2       |  |  | -       |  |  | 83.2       | 
|Total Company            |  | 2,746.2 |  |  | 1,424.3   |  |  | 654.2     |  |  | 15.7        |  |  | -           |  |  | 652.0      |  |  | -       |  |  | 652.0      | 
|Proved+Probable Reserves |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Egypt(1)                 |  | 3,695.3 |  |  | 2,011.9   |  |  | 799.9     |  |  | 51.3        |  |  | -           |  |  | 832.1      |  |  | -       |  |  | 832.1      | 
|Yemen(1)                 |  | 632.2   |  |  | 312.9     |  |  | 180.5     |  |  | 3.1         |  |  | -           |  |  | 135.6      |  |  | -       |  |  | 135.6      | 
|Total Company            |  | 4,327.4 |  |  | 2,324.8   |  |  | 980.4     |  |  | 54.5        |  |  | -           |  |  | 967.7      |  |  | -       |  |  | 967.7      | 
|Proved+Probable+Possible |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Reserves                 |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Egypt(1)                 |  | 5,076.1 |  |  | 2,829.5   |  |  | 1,074.6   |  |  | 77.0        |  |  | -           |  |  | 1,095.0    |  |  | -       |  |  | 1,095.0    | 
|Yemen(1)                 |  | 754.7   |  |  | 376.9     |  |  | 208.2     |  |  | 5.5         |  |  | -           |  |  | 164.1      |  |  | -       |  |  | 164.1      | 
|Total Company            |  | 5,830.9 |  |  | 3,206.4   |  |  | 1,282.9   |  |  | 82.5        |  |  | -           |  |  | 1,259.2    |  |  | -       |  |  | 1,259.2    | 

|Notes: |                                                                                                                                                                                                                                                                                                                                                                  
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)    | In Egypt and Yemen, under the terms of the production
      sharing agreements, income tax is current and assessed on all production
      sharing oil; therefore all Egypt and Yemen future net revenues are after
      Egypt and Yemen income tax. Income taxes payable in Egypt and Yemen have
      been recorded as operating costs for reporting purposes.
|(2)    | Please see "Additional Information Concerning
      Abandonment and Reclamation Costs" below.                                                                                                                                                                                                                                                                    

|TOTAL FUTURE NET REVENUES  
|---------------------------
|BY PRODUCTION GROUP        
|AS OF DECEMBER 31, 2011    
|(CONSTANT PRICES AND COSTS)

Egypt
    
    
    
    
    
    Yemen
    
    
    
    
    
    Total
    
    
    TotalFuture net
    
    
    Egypt
    
    
    Future net
    
    
    Yemen
    
    
    Future net
    
    
    Unit ValueRevenue Before
    
    
    Unit Value
    
    
    Revenue
    
    
    Unit Value
    
    
    Revenue
    
    
    Before TaxTaxes(1)
    
    
    Before Tax
    
    
    Before Taxes(1)
    
    
    Before Tax
    
    
    Before Taxes(1)
    
    
    (discounted(discounted at
    
    
    (discounted at
    
    
    (discounted at
    
    
    (discounted at
    
    
    (discounted at
    
    
    atReserves
    
    Product
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)
    
    
    10%/year)Category
    
    Group
    
    
    (US$MM)
    
    
    ($/Bbl)
    
    
    (US$MM)
    
    
    ($/Bbl)
    
    
    (US$MM)
    
    
    ($/Bbl)Total Proved
    
    Light and Medium
      Oil
    
    
    94.8
    
    
    36.18
    
    
    64.3
    
    
    31.61
    
    
    159.1
    
    
    34.18Heavy Oil
    
    
    342.7
    
    
    39.36
    
    
    -
    
    
    -
    
    
    342.7
    
    
    39.36Proved+Probable
    
    Light and Medium
      Oil
    
    
    140.3
    
    
    31.86
    
    
    91.3
    
    
    31.30
    
    
    231.6
    
    
    31.64Heavy Oil
    
    
    466.5
    
    
    36.30
    
    
    -
    
    
    -
    
    
    466.5
    
    
    36.30Proved+Probable +Possible
    
    Light and Medium
      Oil
    
    
    175.1
    
    
    30.50
    
    
    107.6
    
    
    31.16
    
    
    282.7
    
    
    30.75Heavy Oil
    
    
    577.8
    
    
    33.39
    
    
    -
    
    
    -
    
    
    577.8
    
    
    33.39


|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.

---

25

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)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 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                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

26

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | specified economic conditions which are generally
      accepted as being reasonable and shall be disclosed.                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                            
| | 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.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                            
| | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Developed producing reservesare those reserves
      that are expected to be recovered from completion intervals open at the
      time of the estimate. These reserves may be currently producing or, if
      shut in, they must have previously been on production, and the date of
      resumption of production must be known with reasonable certainty.                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                            
| | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Developed non-producing reservesare those
      reserves that either have not been on production, or have previously been
      on production, but are shut in, and the date of resumption of production
      is unknown.                                                                                                                                                                                 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                            
| | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 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.         
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                            
| | 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)                                                                                                                                                                                                                                                                                                                                                                                                        

---

27

| | (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

Forecast Prices and Costs

The forecast cost and price assumptions assume changes in
wellhead selling prices and take into account inflation with respect to future
operating and capital costs.

For the Reserves, crude oil benchmark reference pricing, as at
December 31, 2011, 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:

BrentWTI Cushing
    Reference
    Inflation
    ExchangeOklahoma
    Price
    Rates(1)%
    RateYear
    (US$Bbl)
    (US$/Bbl)
    Year
    (Cdn$/US$)Forecast2012
    99.00
    106.00
    0.0
    0.982013
    99.96
    104.67
    2.0
    0.982014
    103.00
    105.42
    2.0
    0.982015
    106.12
    106.25
    2.0
    0.982016
    108.24
    106.08
    2.0
    0.982017
    110.41
    108.20
    2.0
    0.98Thereafter
    +2.0%/year
    +2.0%/year
    +2.0%/year
    +0%/year


Notes:

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

The weighted average historical price in US$ realized by the
Company in Egypt, for the year ended December 31, 2011 for crude oil was
$100.61/Bbl.

The weighted average historical price in US$ realized by the
Company in Yemen, for the year ended December 31, 2011 for crude oil was
$108.60/Bbl.

Constant Prices and Costs

In Egypt, a constant price of $97.86/Bbl was utilized in the
constant price case. The constant price case for 2011 is based on the average of
the reference price received on the first day of each month during 2011 adjusted
for respective differentials.

In Yemen, a constant price of $109.71/Bbl was utilized in the
constant price case. The constant price case for 2011 is based on the average of
the reference price received on the first day of each month during 2011 adjusted
for respective differentials.

---

28

Reconciliation of Changes in Reserves

|RECONCILIATION OF GROSS RESERVES
|--------------------------------
|BY PRINCIPAL PRODUCT TYPE       
|COMPANY                         
|AS OF DECEMBER 31, 2011         
|(FORECAST PRICES AND COSTS)     

|                    |  | LIGHT & MEDIUM OIL |   |  | HEAVY OIL | 
|------------------- |  | ------------------ | - |  | --------- | 
|                    |  | Gross              |   |  | Gross     | 
|                    |  | Proved             |   |  | Probable  | 
|FACTORS             |  | (MBbl)             |   |  | (MBbl)    | 
|December 31, 2010   |  | 13,254             |   |  | 4,892     | 
|Extensions          |  | 256                |   |  | 314       | 
|Improved recovery   |  | -                  |   |  | -         | 
|Technical Revisions |  | (2,893             | ) |  | 604       | 
|Discoveries         |  | -                  |   |  | -         | 
|Acquisitions        |  | -                  |   |  | -         | 
|Dispositions        |  | -                  |   |  | -         | 
|Economic Factors    |  | 2                  |   |  | 3         | 
|Production          |  | (1,889             | ) |  | -         | 
|December 31, 2011   |  | 8,730              |   |  | 5,812     | 

|RECONCILIATION OF GROSS RESERVES
|--------------------------------
|BY PRINCIPAL PRODUCT TYPE       
|EGYPT                           
|AS OF DECEMBER 31, 2011         
|(FORECAST PRICES AND COSTS)     

|                    |  | LIGHT & MEDIUM OIL |   |  | HEAVY OIL |  
|------------------- |  | ------------------ | - |  | --------- | -
|                    |  | Gross              |   |  | Gross     |  
|                    |  | Proved             |   |  | Probable  |  
|FACTORS             |  | (MBbl)             |   |  | (MBbl)    |  
|December 31, 2010   |  | 7,998              |   |  | 3,585     |  
|Extensions          |  | 256                |   |  | 314       |  
|Improved recovery   |  | -                  |   |  | -         |  
|Technical Revisions |  | (1,996             | ) |  | (21       | )
|Discoveries         |  | -                  |   |  | -         |  
|Acquisitions        |  | -                  |   |  | -         |  
|Dispositions        |  | -                  |   |  | -         |  
|Economic Factors    |  | 5                  |   |  | (5        | )
|Production          |  | (1,372             | ) |  | -         |  
|December 31, 2011   |  | 4,890              |   |  | 3,874     |  

---

29

|RECONCILIATION OF GROSS RESERVES
|--------------------------------
|BY PRINCIPAL PRODUCT TYPE       
|YEMEN                           
|AS OF DECEMBER 31, 2011         
|(FORECAST PRICES AND COSTS)     

LIGHT & MEDIUM OILGross
    
    
    Gross
    
    
    Gross ProvedProved
    
    
    Probable
    
    
    Plus ProbableFACTORS
    
    (MBbl)
    
    
    (MBbl)
    
    
    (MBbl)December 31, 2010
    
    5,257
    
    
    1,306
    
    
    6,563Extensions
    
    -
    
    
    -
    
    
    -Improved recovery
    
    -
    
    
    -
    
    
    -Technical Revisions
    
    (886
    )
    
    632
    
    
    (253
    )Discoveries
    
    -
    
    
    -
    
    
    -Acquisitions
    
    -
    
    
    -
    
    
    -Dispositions
    
    -
    
    
    -
    
    
    -Economic Factors
    
    -
    
    
    -
    
    
    -Production
    
    (531
    )
    
    0
    
    
    (531
    )December 31, 2011
    
    3,840
    
    
    1,939
    
    
    5,779


Additional Information Relating to Reserves Data

Undeveloped Reserves

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

Proved Undeveloped Reserves

|        | Light and Medium Oil | Heavy Oil             
|------- | -------------------- | ----------------------
|Year    | (MBbl)               | (MBbl)                
|        | First Attributed     | Cumulative at Year End
|        |                      |                       
|2009(1) | 1,088                | 3,157                 
|2010(2) | -                    | 1,798                 
|2011(3) | -                    | 364                   

|Notes:
|------
|(1)   
|(2)   
|(3)   

Probable Undeveloped Reserves

|        | Light and Medium Oil | Heavy Oil             
|------- | -------------------- | ----------------------
|Year    | (MBbl)               | (MBbl)                
|        | First Attributed     | Cumulative at Year End
|        |                      |                       
|2009(1) | 390                  | 944                   
|2010(2) | 2,342                | 2,625                 
|2011(3) | -                    | 2,300                 

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

---

30

|(2) | In 2010, probable undeveloped light and medium oil was
      assigned to Egypt for fourteen vertical development wells at East Ghazalat
      and one vertical development well at Hana West. The heavy oil reserves
      were also assigned to Egypt with sixteen vertical development wells at
      Arta and four vertical development wells at Hoshia. All development
      activities were anticipated to take place during 2011.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | In 2011, probable undeveloped heavy oil was assigned to
      Egypt with seven vertical development wells at Arta and six vertical
      development wells at West Bakr. All Arta development activities are
      anticipated to take place during 2012 while at West Bakr, two wells are
      expected in 2012 and four in 2013.                                                                                                     

Future Development Costs

|FUTURE DEVELOPMENT COSTS
|------------------------
|TOTAL COMPANY           
|AS OF DECEMBER 31, 2011 

(US$M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2012
    
    13,960
    
    
    34,4492013
    
    1,275
    
    
    19,5842014
    
    -
    
    
    -2015
    
    -
    
    
    852016
    
    -
    
    
    303Remaining
    
    571
    
    
    571Total Undiscounted
    
    15,806
    
    
    54,992


|FUTURE DEVELOPMENT COSTS
|------------------------
|EGYPT                   
|AS OF DECEMBER 31, 2011 

(US$M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2012
    
    11,920
    
    
    31,3002013
    
    1,275
    
    
    19,5842014
    
    -
    
    
    -2015
    
    -
    
    
    852016
    
    -
    
    
    303Remaining
    
    571
    
    
    571Total Undiscounted
    
    13,766
    
    
    51,843


|FUTURE DEVELOPMENT COSTS
|------------------------
|YEMEN                   
|AS OF DECEMBER 31, 2011 

(US$M)
    
    Forecast Prices and CostsProved PlusProved
    
    
    ProbableYear
    
    Reserves
    
    
    Reserves2012
    
    2,040
    
    
    3,1492013
    
    -
    
    
    -2014
    
    -
    
    
    -2015
    
    -
    
    
    -2016
    
    -
    
    
    -Total Undiscounted
    
    2,040
    
    
    3,149


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

---

31

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, 2011. All of the
Company's wells are located onshore.

Oil Wells
    
    
    Natural Gas WellsProducing
    
    
    Non-Producing
    
    
    Producing
    
    
    Non-ProducingGross
    
    
    Net
    
    
    Gross
    
    
    Net
    
    
    Gross
    
    
    Net
    
    
    Gross
    
    
    NetEgypt
    
    86
    
    
    86.0
    
    
    77
    
    
    75.0
    
    
    -
    
    
    -
    
    
    -
    
    
    -Yemen
    
    20
    
    
    2.8
    
    
    28
    
    
    6.6
    
    
    -
    
    
    -
    
    
    5
    
    
    1.3Total
    
    106
    
    
    88.8
    
    
    105
    
    
    81.6
    
    
    -
    
    
    -
    
    
    5
    
    
    1.3


Properties with No Attributed Reserves

The following table sets out the Company's developed and
undeveloped land holdings as at December 31, 2011.

Developed Acres
    
    
    Undeveloped Acres
    
    
    Total AcresGross
    
    
    Net
    
    
    Gross
    
    
    Net
    
    
    Gross
    
    
    NetEgypt
    
    11,265
    
    
    10,945
    
    
    3,838,539
    
    
    2,716,404
    
    
    3,849,804
    
    
    2,727,349Yemen
    
    36,050
    
    
    7,099
    
    
    1,107,454
    
    
    239,922
    
    
    1,143,504
    
    
    247,020Total
    
    47,315
    
    
    18,044
    
    
    4,945,993
    
    
    2,956,326
    
    
    4,993,308
    
    
    2,974,370


In the West Gharib concession in Egypt, all work commitments
have been fulfilled. A total of approximately 5,000 acres in West Gharib will
potentially expire during 2012.

The West Bakr concession in Egypt was purchased on December 29,
2011. All work commitments have been fulfilled and there are no potential land
expires.

In Nuqra Block 1 in Egypt, the Company has entered the second
exploration extension period, effective July 18, 2009. The second exploration
period has a three-year term and an expiry date of July 17, 2012. All work
commitments have been met and there are no plans for any further work. The
entire 3,650,000 gross acre (2,607,195 net acres) lease will likely expire
during 2012.

The East Ghazalat Concession in the Western Desert of Egypt is
in the first two-year extension period which expires in June 2012. An additional
two-year extension is available following a relinquishment of 25% of the
original concession area with all work commitments having been met. A total of
approximately 53,100 gross acres (26,550 net acres) will potentially be
relinquished in 2012.

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 government has approved an extension of
the second exploration period to September 11, 2012. All work commitments of the
second exploration period have been completed.

In Yemen Block 75, the contractor has a remaining commitment of
$3 million gross ($0.8 million net) for the first exploration work-period (36
months) commencing March 8, 2008 representing one exploration well. Due to
political unrest and security issues, the operator declared Force Majeure on
March 23, 2011. The Yemen Oil ministry is currently in discussions with the
Operator, to replace the notice of Force Majeure with an extension to the first
exploration period.

---

32

Forward Contracts

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

|                                |                  |                 | Dated Brent Pricing
|------------------------------- | ---------------- | --------------- | -------------------
|                                |                  |                 | Put  Call         
|Period                          | Volume           | Type            | (U.S. Dollars)     
|January 1, 2012  June 30, 2012 | 20,000 Bbl/month | Financial Floor | $80.00             

The total volumes hedged per year are listed below:

Volume
    2012(Jan.  June)Annual (Bbls)
    120,000Daily Average (Bopd)
    659


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 2011, 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, 2011 (excluding Canadian expenditures):

Egypt
    
    
    Yemen
    
    
    Total(US$M)Property acquisition costsProved
      properties
    
    39,497
    
    
    -
    
    
    39,497Undeveloped properties
    
    -
    
    
    -
    
    
    -Exploration costs
    
    5,279
    
    
    1,712
    
    
    6,991Development costs
    
    57,483
    
    
    3,783
    
    
    61,266Corporate and other
    
    415
    
    
    -
    
    
    415Total
    
    102,674
    
    
    5,495
    
    
    108,169


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33

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, 2011:

|Egypt:               |  | Gross       |  |  | Net         | 
|-------------------- |  | ----------- |  |  | ----------- | 
|                     |  | Exploration |  |  | Development | 
|Natural Gas          |  | -           |  |  | -           | 
|Crude Oil            |  | 7           |  |  | 29          | 
|Service              |  | -           |  |  | 5           | 
|Dry and Abandoned(1) |  | 6           |  |  | -           | 
|Total                |  | 13          |  |  | 34          | 

|                     |  | Gross       |  |  | Net         | 
|-------------------- |  | ----------- |  |  | ----------- | 
|Yemen:               |  | Exploration |  |  | Development | 
|Natural Gas          |  | -           |  |  | -           | 
|Crude Oil            |  | 1           |  |  | 2           | 
|Service              |  | -           |  |  | -           | 
|Dry and Abandoned(1) |  | 1           |  |  | -           | 
|Total                |  | 2           |  |  | 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 Arta and East Arta areas of the West Gharib concession in Egypt. Other key
areas in Egypt for 2012 include development and further exploration of the East
Ghazalat concession, West Bakr concession, and optimization of the waterfloods
in the Arta/East Arta, Hana, Hana West and Hoshia fields of West Gharib. In
Yemen, development drilling is planned in Block S-1 with exploration planned on
Blocks 72 and 75.

Production Estimates

The following table sets out the volume of the Company's daily
production (working interest before royalties) estimated for the year ending
December 31, 2012 which is reflected in the estimate of future net revenue
disclosed in the prior reserves summary tables.

|                           |  | Egypt       |  |  | Egypt       |  |  | Egypt     |  |  | Egypt         |  |  | Yemen       |  |  | Total    | 
|-------------------------- |  | ----------- |  |  | ----------- |  |  | --------- |  |  | ------------- |  |  | ----------- |  |  | -------- | 
|                           |  | West Gharib |  |  | West Gharib |  |  | West Bakr |  |  | East Ghazalat |  |  | Block S1&32 |  |  | Company  | 
|                           |  | Medium Oil  |  |  | Heavy Oil   |  |  | Heavy Oil |  |  | Light and     |  |  | Light and   |  |  | Bbls     | 
|                           |  |             |  |  |             |  |  |           |  |  | Medium Oil    |  |  | Medium Oil  |  |  |          | 
|                           |  | Gross       |  |  | Gross       |  |  | Gross     |  |  | Gross         |  |  | Gross       |  |  | Gross    | 
|                           |  | (Bbls/d)    |  |  | (Bbls/d)    |  |  | (Bbls/d)  |  |  | (Bbls/d)      |  |  | (Bbls/d)    |  |  | (Bbls/d) | 
|Proved Producing           |  | 2,288       |  |  | 7,131       |  |  | 3,676     |  |  | -             |  |  | 364         |  |  | 13,459   | 
|Proved Developed           |  | 57          |  |  | 780         |  |  | -         |  |  | 223           |  |  | 1,600       |  |  | 2,660    | 
|Non-Producing              |  |             |  |  |             |  |  |           |  |  |               |  |  |             |  |  |          | 
|Proved Undeveloped         |  | -           |  |  | 487         |  |  | 219       |  |  | -             |  |  | 80          |  |  | 786      | 
|Total Proved               |  | 2,345       |  |  | 8,398       |  |  | 3,895     |  |  | 223           |  |  | 2,044       |  |  | 16,905   | 
|Total Probable             |  | 250         |  |  | 2,129       |  |  | 423       |  |  | 145           |  |  | 94          |  |  | 3,040    | 
|Total Proved Plus Probable |  | 2,595       |  |  | 10,527      |  |  | 4,318     |  |  | 368           |  |  | 2,138       |  |  | 19,945   | 

---

34

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:

2011Quarter EndedMar.
      31
    
    
    Jun.
      30
    
    
    Sep.
      30
    
    
    Dec.
      31Average Daily Sales VolumesEgypt(1)Heavy Crude Oil (Bbls/d)
    
    4,449
    
    
    7,321
    
    
    7,041
    
    
    8,839Light and Medium Crude Oil (Bbls/d)
    
    4,289
    
    
    4,035
    
    
    4,097
    
    
    2,579YemenLight and Medium Crude Oil (Bbls/d)
    
    2,480
    
    
    470
    
    
    2,268
    
    
    636Combined (Bbls/d)
    
    11,218
    
    
    11,826
    
    
    13,406
    
    
    12,054Average Price ReceivedEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    95.34
    
    
    105.16
    
    
    102.25
    
    
    99.12Light and Medium Crude Oil (US$/Bbl)
    
    95.34
    
    
    105.16
    
    
    102.25
    
    
    99.12YemenLight and Medium Crude Oil (US$/Bbl)
    
    103.14
    
    
    115.57
    
    
    112.55
    
    
    110.42Combined (US$/Bbl)
    
    97.06
    
    
    105.57
    
    
    104.00
    
    
    98.49Royalties and TaxesEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    59.41
    
    
    65.29
    
    
    63.26
    
    
    60.59Light and Medium Crude Oil (US$/Bbl)
    
    59.41
    
    
    65.29
    
    
    63.26
    
    
    60.59YemenLight and Medium Crude Oil (US$/Bbl)
    
    66.03
    
    
    65.44
    
    
    57.54
    
    
    65.83Combined (US$/Bbl)
    
    60.87
    
    
    65.30
    
    
    62.30
    
    
    60.86Operating ExpensesEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    6.76
    
    
    7.30
    
    
    6.89
    
    
    7.12Light and Medium Crude Oil (US$/Bbl)
    
    6.76
    
    
    7.30
    
    
    6.89
    
    
    7.12YemenLight and Medium Crude Oil (US$/Bbl)
    
    9.99
    
    
    36.19
    
    
    12.93
    
    
    47.53Combined (US$/Bbl)
    
    7.48
    
    
    8.45
    
    
    7.92
    
    
    9.25Netback ReceivedEgypt(1)Heavy Crude Oil (US$/Bbl)
    
    29.17
    
    
    32.57
    
    
    32.10
    
    
    31.26Light and Medium Crude Oil (US$/Bbl)
    
    29.17
    
    
    32.57
    
    
    32.10
    
    
    31.26YemenLight and Medium Crude Oil (US$/Bbl)
    
    27.12
    
    
    13.94
    
    
    42.08
    
    
    (2.94
    )Combined (US$/Bbl)
    
    28.71
    
    
    31.82
    
    
    33.78
    
    
    29.01


|Note: |                                                                                                                                                                                                                                                                           
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)   | Under the terms of the current marketing contract, all
      production from West Gharib is sold as a blended crude oil. Royalties and
      taxes are calculated on a concession basis without distinction between
      Heavy Crude Oil and, Medium and Light Crude Oil.

---

35

The following table indicates the Company's average daily
volumes from its important fields for the year ended December 31, 2011:

Light andHeavy Crude
    
    
    MediumOil
    
    
    Crude
    
    
    Total(Bbls/d)
    
    
    (Bbls/d)
    
    
    (Bbls/d)EgyptWest Bakr
    
    35
    
    
    -
    
    
    35Hana
    
    -
    
    
    1,365
    
    
    1,365Hana West
    
    -
    
    
    2,382
    
    
    2,382Hoshia
    
    746
    
    
    -
    
    
    746Arta/East Arta
    
    6,064
    
    
    -
    
    
    6,064Other Egypt
    
    79
    
    
    -
    
    
    79YemenBlock S-1
    
    -
    
    
    986
    
    
    986Block 32
    
    -
    
    
    475
    
    
    475Total
    
    6,924
    
    
    5,208
    
    
    12,132


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 CAPITAL STRUCTURE

Common Shares

TransGlobe is authorized to issue an unlimited number of Common
Shares without nominal or par value. As at March 14, 2012, there were 73,077,638
Common Shares issued and outstanding.

Each Common Share entitles its holder to: (i) vote at any
meeting of shareholders of the Company; (ii) to receive any dividend declared by
the Company; and (iii) to receive the remaining property of the Company upon
dissolution.

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.

Rights Plan

On March 15, 2011, the Company replaced its previous
shareholder protection rights plan agreement, which had expired, with an amended
and restated shareholder protection rights plan agreement (the "Rights
Plan") with Olympia Trust Company, as rights agent, which was approved by
TransGlobe's shareholders on May 11, 2011 at the 2011 annual general and special
meeting of shareholders. The Rights Plan generally provides that following any
person or entity acquiring 20% or more of the issued and outstanding Common
Shares (except pursuant to certain permitted or excepted transactions) and upon
the occurrence of certain other events, each holder of Common Shares, other than
such person or entity, shall be entitled to acquire Common Shares at a
discounted price. The Rights Plan is similar to other shareholder rights plans
adopted in the energy sector. A copy of the Rights Plan may be obtained on
request without charge from the Corporate Secretary of the Company, Suite 2300,
250  5th Street S.W., Calgary, Alberta T2P 0R4, Telephone: (430) 264-9888. In
addition, a copy of the Rights Plan, as filed with the securities commission or
similar authorities in Canada on May 18, 2011, may be obtained from the
Company's SEDAR profile at www.sedar.com.

---

36

Debentures

On February 22, 2012 and February 29, 2012, the Company issued
Cdn$97.75 million aggregate principal amount of 6.00% convertible unsecured
subordinated debentures at a price of $1,000 per Debenture. The Debentures were
issued under the Indenture. The following description of the Debentures is a
summary of their material attributes and characteristics and is subject to the
detailed provisions of the Indenture and is qualified in its entirety by
reference to the Indenture. The following summary uses words and terms which are
defined in the Indenture. For full particulars, reference is made to the
Indenture, which is available for inspection at the offices of the Company and
was filed on SEDAR on February 22, 2012 at www.sedar.com. Particular provisions
of the Indenture, which are referred to in this Annual Information Form, are
incorporated by reference as a part of the statements made, and the statements
are qualified in their entirety by the reference.

General

The Debentures are limited to an aggregate principal amount of
Cdn$97.75 million; however, the Company may, from time to time, without the
consent of the holders of any outstanding Debentures, issue additional
debentures. The Debentures have a maturity date of March 31, 2017 and on that
date, the holders shall be entitled to receive the principal amount of the
Debentures at par together with all accrued and unpaid interest thereon.

The Debentures bear interest from the date of issue at 6.00%
per annum, which is payable semi-annually on March 31 and September 30 in each
year, commencing on September 30, 2012, computed on the basis of a 365-day year.
The first payment will represent accrued interest for the period from February
22, 2012 up to, but excluding, September 30, 2012.

Unless an Event of Default has occurred and is continuing, the
Company may elect, from time to time, subject to applicable regulatory approval,
to satisfy its obligation to pay all or any portion of the Interest Obligation
on an Interest Payment Date by delivering sufficient Common Shares to the
Debenture Trustee for sale, to satisfy the Interest Obligation, or portion
thereof, as applicable, on the Interest Payment Date, in which event holders of
the Debentures will be entitled to receive a cash payment equal to the interest
payable from the proceeds of the sale of such Common Shares. See "Debentures
 Interest Payment Election" below.

Principal on the Debentures is payable in lawful money of
Canada or, at the Company's option and subject to applicable regulatory approval
and provided no Event of Default has occurred and is continuing, by delivery of
Common Shares to satisfy, in whole or in part, the Company's obligation to repay
principal under the Debentures, as further described under "Debentures 
Payment upon Redemption or Maturity" and "Debentures  Redemption and
Purchase".

The Debentures are the Company's direct obligations and are not
secured by any mortgage, pledge, hypothec or other charge and are subordinated
to the Senior Indebtedness, as described under "Debentures 
Subordination". The Indenture does not restrict the Company or its
Subsidiaries from incurring additional indebtedness for borrowed money or from
mortgaging, pledging or charging its assets to secure any indebtedness.

Conversion Privilege

Each Debenture is convertible at the option of the holder
thereof into fully paid and non-assessable Common Shares at any time prior to
5:00 p.m. (Calgary time) on the earliest of: (i) the Business Day immediately
preceding the Maturity Date; and (ii) the last Business Day immediately
preceding the Redemption Date, in each case, at the Conversion Price,
representing a conversion rate of approximately 66.2252 Common Shares per
Cdn$1,000 principal amount of Debentures, subject to adjustment in accordance
with the Indenture. Interest will be paid on conversion from the last Interest
Payment Date up to, but not including, the Conversion Date.

Holders converting their Debentures will become holders of
record of Common Shares on the date of conversion provided that, if a Debenture
is surrendered for conversion on a day on which the register of Common Shares is
closed, the person entitled to receive Common Shares shall become the holder of
record of such Common Shares as at the date on which such register is next
reopened. Notwithstanding the foregoing, no Debentures may be converted on an
Interest Payment Date or during the five business days preceding an Interest
Payment Date in each year as the registers of the Debenture Trustee will be
closed during such periods.

---

37

Subject to the provisions thereof, the Indenture provides for
the adjustment of the Conversion Price in certain events. In the event of
certain transactions involving the Company, the Indenture provides for
adjustments to the Conversion Price and provides that the Company is required to
give notice to the holders of Debentures at least 30 days prior to the effective
date of such transaction stating the consideration into which the Debentures
will be convertible after the effective date of such transaction.

No fractional Common Shares will be issued upon conversion of
the Debentures; in lieu thereof, the Company will satisfy such fractional
interests by a cash payment equal to the fraction of the Common Share multiplied
by the Current Market Price of the Common Shares.

Redemption and Purchase

The Debentures may not be redeemed by the Company before March
31, 2015 (except in certain limited circumstances following a Change of
Control). See "Debentures  Repurchase upon a Change of Control" below.
On or after March 31, 2015 and prior the Maturity Date, the Debentures may be
redeemed by the Company in whole or in part from time to time at the Company's
option on not more than 60 days' and not less than 30 days' prior written notice
at a redemption price equal to the principal amount plus accrued and unpaid
interest thereon, if any, up to but excluding the Redemption Date, provided that
the Current Market Price of the Common Shares on the date on which notice of
redemption is given is not less than 125% of the Conversion Price.

In the case of redemption of less than all of the Debentures,
the Debentures to be redeemed will be selected by the Debenture Trustee on a pro
rata basis or in such other manner as the Debenture Trustee deems equitable,
subject to regulatory approvals.

The Company has the right to purchase Debentures for
cancellation in the market, by tender or by private contract, at any time,
subject to regulatory requirements.

Payment upon Redemption or Maturity

On any Redemption Date or on the Maturity Date, as applicable,
the Company will repay the indebtedness represented by the Debentures by paying
to the Debenture Trustee in lawful money of Canada an amount equal to the
principal amount of the outstanding Debentures, together with accrued and unpaid
interest thereon, if any, up to but excluding the date set for redemption. On
any Redemption Date or on the Maturity Date, as applicable, the Company may, at
its option, on not more than 60 days' and not less than 30 days' prior notice
and subject to any required regulatory approvals, provided that no Event of
Default has occurred and is continuing, elect to satisfy its obligation to
repay, in whole or in part, the principal amount of the Debentures which are to
be redeemed or which have matured, and any accrued and unpaid interest thereon,
by issuing and delivering Common Shares to the holders of the Debentures.
Payment for such Debentures subject to the election would be satisfied by
delivering that number of Common Shares obtained by dividing the principal
amount of the Debentures subject to the election which are to be redeemed or
have matured, and any accrued and unpaid interest thereon, by 95% of the Current
Market Price of the Common Shares on the Redemption Date or Maturity Date, as
applicable. In the event a holder of Debentures exercises its conversion rights
following delivery of a notice of redemption by the Company, such holder shall
be entitled to receive the applicable number of Common Shares to be received on
conversion on the Business Day immediately preceding the Redemption Date.

Rank

The Debentures are direct, unsecured obligations of the Company
and are fully subordinated to all Senior Indebtedness, as more particularly
described below under "Subordination". The Debentures rank pari
passu with one another and rank pari passu with all other existing
and future unsecured subordinated indebtedness of the Company to the extent
subordinated on the same terms. The Indenture does not restrict the ability of
the Company or its subsidiaries from incurring additional indebtedness,
including Senior Indebtedness, or from mortgaging, pledging or charging their
respective properties to secure any indebtedness or liabilities, including
Senior Indebtedness.

---

38

Subordination

The payment of the principal and premium, if any, of, and
interest on, the Debentures is subordinated and postponed, and subject in right
of payment in the circumstances more particularly as set forth in the Indenture,
to the full and final payment of all Senior Indebtedness of the Company.
"Senior Indebtedness" of the Company is defined in the Indenture and
includes all obligations, liabilities and indebtedness of the Company and its
Subsidiaries which would, in accordance with International Financial Reporting
Standards, be classified upon a consolidated balance sheet of the Company as
liabilities of the Company or its Subsidiaries and, whether or not so
classified, shall include certain items as described in the Indenture. "Senior
Indebtedness" shall not include any indebtedness that would otherwise be Senior
Indebtedness if it is expressly stated to be subordinate to or rank pari passu
with the Debentures.

The Indenture provides that in the event of any insolvency or
bankruptcy proceedings, or any receivership, liquidation, reorganization or
other similar proceedings relative to the Company, or to its property or assets,
or in the event of any proceedings for voluntary liquidation, dissolution or
other winding-up of the Company, whether or not involving insolvency or
bankruptcy, or any marshalling of the assets and liabilities of the Company,
then holders of Senior Indebtedness will receive payment in full before the
holders of Debentures will be entitled to receive any payment or distribution of
any kind or character, whether in cash, property or securities, which may be
payable or deliverable in any such event in respect of any of the Debentures or
any unpaid interest accrued thereon. The Indenture also provides that the
Company will not make any payment, and the holders of the Debentures will not be
entitled to demand, institute proceedings for the collection of, or receive any
payment or benefit (including, without any limitation, by set-off, combination
of accounts or otherwise in any manner whatsoever) on account of indebtedness
represented by the Debentures: (a) in a manner inconsistent with the terms (as
they exist on the date of issue) of the Debentures; or (b) at any time when a
default or an event of default has occurred under the Senior Indebtedness
permitting (either at that time or upon notice, lapse of time or satisfaction of
other conditions precedent) the holder thereof to demand payment or accelerate
the maturity thereof, unless the Senior Indebtedness has been repaid in full.

Repurchase upon a Change of Control

Within 30 days following the occurrence of a Change of Control,
the Company will be required to make a cash offer to purchase all of the
Debentures (the "Debenture Offer") at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon (the "Offer
Price"). A Change of Control will be deemed to occur upon: (i) an
acquisition by a person or group of persons acting jointly or in concert (within
the meaning of Multilateral Instrument 62-104  Take-Over Bids and Issuer
Bids ("MI 62-104") and in Ontario, the Securities Act
(Ontario) and Ontario Securities Commission Rule 62-504  Take-Over Bids and
Issuer Bids) of ownership of, or voting control or direction over, more than
50% of the issued and outstanding Common Shares; or (ii) the sale or other
transfer of all or substantially all of the Company's consolidated assets,
excluding a sale, merger, reorganization or similar transaction if the previous
holders of the Common Shares immediately prior to such transaction hold at least
50% of the voting control or direction in such merged, reorganized, arranged,
combined or other continuing entity (and in the case of a sale of all or
substantially all of the assets, in the entity which has acquired such assets)
(each a "Change of Control").

If Debentures representing 90% or more of the aggregate
principal amount of the Debentures outstanding on the date of the giving of
notice of the Change of Control are tendered for purchase following a Change of
Control (other than Debentures held at such date by or on behalf of the Company,
associates or affiliates of the Company or any one acting jointly or in concert
with the Company), the Company has the right to redeem all remaining Debentures
in cash on the purchase date at the Offer Price.

Cash Change of Control

In addition to the requirement for the Company to make a
Debenture Offer in the event of a Change of Control, if a Change of Control
occurs on or before the Maturity Date in which 10% or more of the consideration
for the Common Shares in the transaction or transactions constituting a Change
of Control consists of: (i) cash (other than cash payments for fractional Common
Shares and cash payments made in respect of dissenters' appraisal rights); (ii)
equity securities (including trust units, limited partnership units or other
participating securities of a trust, limited partnership or similar entity) that
are not traded or intended to be traded immediately following such transactions
on a recognized stock exchange; or (iii) other property that is not traded or
intended to be traded immediately following such transactions on a recognized
stock exchange, then subject to regulatory approvals, during the period
beginning ten trading days before the anticipated date on which the Change of Control becomes
effective and ending 30 days after the Debenture Offer is delivered, holders of
Debentures will be entitled to convert their Debentures, subject to certain
limitations, and receive, subject to and upon completion of the Change of
Control, in addition to the number of Common Shares they would otherwise be
entitled to receive as set out under "Debentures  Conversion Privilege"
above, an additional number of Common Shares per Cdn$1,000 principal amount of
Debentures as set out in the Indenture (in each case, a "Make-Whole
Premium"), subject to regulatory approvals.

---

39

The number of additional Common Shares per Cdn$1,000 principal
amount of Debentures constituting the relevant Make-Whole Premium is determined
by reference to the table contained in the Indenture and is based on the date on
which the Change of Control becomes effective (the "Effective Date") and
the Offer Price paid per Common Share in the transaction constituting the Change
of Control. If holders of Common Shares receive (or are entitled and able in all
circumstances to receive), only cash in the transaction, the Offer Price will be
the cash amount paid per Common Share. Otherwise, the Offer Price will be equal
to the Current Market Price of the Common Shares on the day immediately
preceding the Effective Date of such transaction.

Interest Payment Election

Unless an Event of Default has occurred and is continuing, the
Company may elect, from time to time, subject to applicable regulatory approval,
to satisfy its obligation to pay all or any portion of the Interest Obligation
on an Interest Payment Date by delivering sufficient Common Shares to the
Debenture Trustee for sale, to satisfy the Interest Obligation, or portion
thereof, as applicable, on the Interest Payment Date, in which event holders of
the Debentures will be entitled to receive a cash payment equal to the Interest
Obligation or portion thereof, as applicable, from the proceeds of the sale of
such Common Shares.

Modification

The rights of the holders of Debentures may be modified in
accordance with the terms of the Indenture. For that purpose, among others, the
Indenture contains certain provisions which make binding on all holders of
outstanding Debentures, resolutions passed at meetings of the holders of
outstanding Debentures by votes cast thereat by holders of not less than 662/3%
of the principal amount of the then-outstanding Debentures present at the
meeting or represented by proxy, or rendered by instruments in writing signed by
the holders of not less than 662/3% of the principal amount of the
then-outstanding Debentures. Under the Indenture, certain amendments of a
technical nature or which are not prejudicial to the rights of the holders of
the Debentures may be made to the Indenture without the consent of the holders
of the Debentures.

Events of Default

The Indenture provides that an Event of Default in respect of
the Debentures will occur if certain events described in the Indenture occur,
including if any one or more of the following described events has occurred and
continuing: (i) failure for 30 days to pay interest on the Debentures when due;
(ii) failure to pay principal or premium, if any (whether by payment in cash or
delivery of Common Shares), on the Debentures when due, whether at maturity,
upon redemption, on a Change of Control, by declaration or otherwise; (iii)
default in the delivery, when due, of any Common Shares or other consideration,
including any Make-Whole Premium, payable upon conversion with respect to the
Debentures, which default continues for 15 days; (iv) default in the observance
or performance of any covenant or condition of the Indenture and the failure to
cure (or obtain a waiver for) such default for a period of 30 days after notice
in writing has been given by the Debenture Trustee or from holders of not less
than 25% of the aggregate principal amount of the Debentures specifying such
default and requiring the Company to rectify or obtain a waiver for same; (v)
certain events of bankruptcy, insolvency or reorganization of the Company under
bankruptcy or insolvency laws; and (vi) if an event of default occurs or exists
under any agreement evidencing indebtedness for borrowed money (other than
non-recourse debt) of the Company or any Subsidiary and as a result of such
event of default (a) indebtedness for borrowed money thereunder in excess of
Cdn$20,000,000 (or the equivalent amount in any other currency) has become due
and payable before the date it would otherwise have been due and payable, and
(b) the holders of such indebtedness are entitled to commence, and have
commenced, the enforcement of security they hold for such indebtedness (if any)
or the exercise of any other creditors' remedies to collect such indebtedness.

---

40

If an Event of Default has occurred and is continuing, the
Debenture Trustee may, in its discretion, and will, upon the request of holders
of not less than 25% in principal amount of the then outstanding Debentures
declare the principal of (and premium, if any) and interest on all outstanding
Debentures to be immediately due and payable. In certain cases, the holders of
more than 50% of the principal amount of the Debentures then outstanding may, on
behalf of the holders of all Debentures, waive any Event of Default and/or
cancel any such declaration upon such terms and conditions as such holders shall
prescribe.

Governing Laws

The Indenture and the Debentures are governed by, and construed
in accordance with, the laws of the Province of Alberta and the federal laws of
Canada applicable therein.

MARKET FOR SECURITIES

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

Common Shares

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

|(Canadian dollars, except volumes) | Price Range |          
|---------------------------------- | ----------- | ---------
|                                   | High        | Low      
|                                   | ($/share)   | ($/share)
|2011                               |             |          
|February                           | 15.88       | 12.20    
|March                              | 14.95       | 12.53    
|April                              | 15.19       | 12.95    
|May                                | 15.14       | 11.94    
|June                               | 15.15       | 10.03    
|July                               | 12.50       | 10.20    
|August                             | 10.33       | 7.60     
|September                          | 10.29       | 8.32     
|October                            | 10.85       | 7.50     
|November                           | 10.50       | 7.60     
|December                           | 8.67        | 7.04     
|                                   |             |          
|2012                               |             |          
|January                            | 10.04       | 8.20     
|February                           | 10.64       | 9.76     
|March (1 to 13)                    | 12.15       | 10.90    

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

|(U.S. dollars, except volumes) | Price Range |          
|------------------------------ | ----------- | ---------
|                               | High        | Low      
|                               | ($/share)   | ($/share)
|2011                           |             |          
|February                       | 15.94       | 12.13    
|March                          | 15.42       | 12.65    
|April                          | 15.82       | 13.37    
|May                            | 15.62       | 12.30    
|June                           | 15.55       | 10.17    
|July                           | 13.00       | 10.65    
|August                         | 11.18       | 7.70     
|September                      | 10.50       | 7.95     
|October                        | 10.93       | 7.06     
|November                       | 10.37       | 7.31     
|December                       | 8.53        | 6.75     

---

41

|(U.S. dollars, except volumes) | Price Range |          
|------------------------------ | ----------- | ---------
|                               | High        | Low      
|                               | ($/share)   | ($/share)
|                               |             |          
|2012                           |             |          
|January                        | 9.97        | 8.10     
|February                       | 10.66       | 9.70     
|March (1 to 13)                | 12.18       | 10.83    

Debentures

The Debentures were listed on the TSX on February 22, 2012. For
the period from February 22, 2012 to March 13, 2012, the high and low closing
prices and the total trading volume on the TSX for the indicated period were
Cdn$108.00, Cdn$101.72 and 21,225,000 respectively.

PRIOR SALES

During the year ended December 31, 2011, the Company granted an
aggregate of 1,134,200 stock options to acquire an aggregate of 1,134,200 Common
Shares with a weighted average exercise price of Cdn$12.65.

ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL
RESTRICTIONS ON TRANSFER

As at the date hereof, none of the Company's securities are
subject to escrow or subject to contractual restrictions on transfer.

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 14, 2012 is as
follows:

|                                                   |                                                            | Year Became |                                                                                                                                                                                                                                                                                                                                            
|-------------------------------------------------- | ---------------------------------------------------------- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Place of                                  |                                                            | Director or | Principal Occupation and Positions                                                                                                                                                                                                                                                                                                         
|Residence                                          | Position Held                                              | Officer     | for
      the Past Five Years                                                                                                                                                                                                                                                                                                              
|                                                   |                                                            |             |                                                                                                                                                                                                                                                                                                                                            
|Robert A. Halpin(3)(4)Alberta, Canada              | Chairman of the Board and
      Director                   | 1997        | 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        | 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        | 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)British
      Columbia, Canada | Director                                                   | 1995        | 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)(4)Alberta, Canada             | Director                                                   | 2000        | Retired Senior
      Vice-President, Business Development with Ranger Oil Limited, with
      over 35 years' experience in the oil and gas industry.                                                                                                                                                                                       
|                                                   |                                                            |             |                                                                                                                                                                                                                                                                                                                                            
|Fred J. Dyment(1)(2)Alberta, Canada                | Director                                                   | 2004        | Chartered accountant
      with over 30 years' experience in the oil and gas industry. Previously
      President and Chief Executive Officer, Maxx Petroleum Company (2000 
      2001). Prior thereto Controller, Vice- President, Finance and
      President and Chief Executive Officer of Ranger Oil Limited from 1978
       2000.

---

42

|                                         |                                                                      | Year Became |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|---------------------------------------- | -------------------------------------------------------------------- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Place of                        |                                                                      | Director or | Principal Occupation and
      Positions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Residence                                | Position Held                                                        | Officer     | for the Past Five Years                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                         |                                                                      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Gary S. Guidry(2)(4)Alberta, Canada      | Director                                                             | 2009        | Petroleum
      engineer with over 30 years' experience in the oil and gas industry.
      President and CEO of Griffiths Energy International Inc Previously
      President and CEO of Orion Oil and Gas Corp Prior thereto CEO of
      Tanganyika Oil Company Ltd; Prior thereto President and CEO of Calpine
      Natural Gas Trust, Senior Vice President and subsequently President of
      Alberta Energy Company International, and President and General
      Manager of Canadian Occidental Petroleum's (now Nexen Inc.) Nigerian
      operations.
|                                         |                                                                      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Robert G. Jennings (1)(3)Alberta, Canada | Director                                                             | 2011        | Retired as
      CEO of Jennings Capital Inc. in 2011. Prior thereto Vice President,
      Corporate Finance for Alberta with McLeod Young Weir, the Carson
      Jennings & Associates, Senior Vice President and Director of
      Corporate and Government Finance for Western Canada with Midland
      Walwyn Capital Inc.                                                                                                                                                                                                                                  
|                                         |                                                                      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|David C. Ferguson Alberta, Canada        | Vice-President, Finance,
      Chief Financial Officer and Secretary | 2001        | Chartered
      accountant with over 30 years' experience in the oil and gas industry.
      Previously Chief Financial Officer with Northstar Drilling Systems
      Inc. and Chief Financial Officer and a director of Myriad Energy
      Corporation.                                                                                                                                                                                                                                                                                                        
|                                         |                                                                      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Albert E. Gress Alberta, Canada          | Vice President, Business
      Development                           | 2011        | Certified
      Public Accountant with over 15 years experience in the international
      petroleum industry. Prior to joining TransGlobe as Country Manager of
      Egypt in 2007, led operations in Egypt for Madrid- based CEPSA and for
      Devon Energy and worked as a business development advisor for CEPSA in
      Madrid.                                                                                                                                                                                                                        

Notes:

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

As at March 14, 2012, the directors and officers of TransGlobe,
as a group, beneficially owned or controlled or directed, directly or
indirectly, 3,543,555 Common Shares or approximately 5% of the issued and
outstanding Common Shares.

Cease-Trade Orders

No current director or executive officer of the Company has,
within the last ten years prior to the date of this Annual Information Form,
been a director, chief executive officer or chief financial officer of any
issuer (including the Company) that:

| | (a) | while the person was acting in the capacity as director,
      chief executive officer or chief financial officer, was the subject of a
      cease trade or similar order or an order that denied the company access to
      any exemption under securities legislation, that was in effect for a
      period of more than thirty (30) consecutive days; or                                                                                                                                                                                                                                         
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (b) | was subject to an order that resulted, after the
      director, executive officer ceased to be a director, chief executive
      officer or chief financial officer of an issuer, in the issuer being the
      subject of a cease trade or similar order or an order that denied the
      relevant issuer access to any exemption under securities legislation, for
      a period of more than thirty (30) consecutive days, which resulted from an
      event that occurred while that person was acting as a director, chief
      executive officer or chief financial officer of the
  issuer.

Bankruptcies

No current director or executive officer or securityholder
holding a sufficient number of securities of the Company to affect materially
the control of the Company has, within the last ten years prior to the date of
this document, been a director or executive officer of any company (including
the Company) that, while such person was acting in that capacity, 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 for compromise with creditors or had a receiver, receiver manager or
trustee appointed to hold its assets.

---

43

In addition, no current director or executive officer or
securityholder holding a sufficient number of securities of the Company to
affect materially the control of the Company has, within the last ten years
prior to the date of this document, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or become subject to or
instituted any proceedings, arrangement or compromise with creditors, or had a
receiver, receiver manager or trustee appointed to hold the assets of the
director, officer or securityholder.

Penalties or Sanctions

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

Conflicts of Interest

Directors and officers of the Company may, from time to time,
be involved with the business and operations of other oil and gas issuers, in
which case a conflict may arise. Conflicts of interest, if any, which arise will
be subject to and governed by procedures prescribed by the ABCA, which require a
director or officer of a corporation who is a party to, or is a director or an
officer of, or has a 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 the ABCA. See
"Risk Factors".

INTEREST OF EXPERTS

Names of Experts

Other than as described below, there is no person or
corporation who is named as having prepared or certified a statement, report or
valuation described and included in the filing, or referred to in a filing, made
under NI 51-102 by the Company during, or relating to the Company's most
recently completed financial year whose profession or business gives authority
to the statement, report or valuation made by the person, or Company, other than
DeGolyer, the Company's independent engineering evaluator, and Deloitte &
Touche LLP, the Company's independent auditor.

Interests of Experts

There were no registered or beneficial interests, direct or
indirect, in any securities or other property of the Company or of one of its
associates or affiliates: (i) held by DeGolyer or by the "designated
professionals" (as defined in Form 51-102F2 to NI 51-102) of DeGolyer, when
DeGolyer prepared the report, valuation, statement or opinion referred to herein
as having been prepared by DeGolyer; (ii) received by DeGolyer or by the
"designated professionals" of DeGolyer, after the time specified above; or (iii)
to be received by DeGolyer or by the "designated professionals" of DeGolyer;
except in each case for the ownership of Common Shares, which in respect of
DeGolyer and DeGolyer's "designated professionals", as a group, has at all
relevant times represented less than one percent of the outstanding Common
Shares. In addition, DeGolyer, and no director, officer or employee of DeGolyer,
is or is expected to be elected, appointed or employed as a director, officer or
employee of the Company or of any associate or affiliate of the Company.

Deloitte & Touche LLP is independent within the meaning of
the Rules of Professional Conduct of the Institute of Chartered Accountants of
Alberta.

---

44

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 2011 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 2011 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.

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 and the transfer agent and registrar and the Debenture Trustee of the
Debentures.

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 and that were entered into within the most recently
completed financial year, or before the most recently completed financial year
but are still in effect other than: (i) the Indenture, which is filed on SEDAR
at www.sedar.com; and (ii) the credit agreement dated July 22, 2010 between a
subsidiary of the Company and a syndicate of three financial institutions in
respect of a $100.0 million borrowing base credit facilities. The credit
facilities bear interest at the LIBOR rate plus an applicable margin, which
ranges from 3.75% to 4.75% dependent on the utilizations outstanding, and are
secured by a pledge over certain bank accounts of certain of the Company's
subsidiaries, a pledge over the shares of certain of the Company's subsidiaries,
a fixed and floating charge over certain assets of the Company and parent and
subsidiary corporate guarantees. A copy of the Company's credit agreement is
filed on SEDAR at www.sedar.com.

AUDIT COMMITTEE INFORMATION

Composition of the Audit Committee

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

---

45

|                                   |             | Financially |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---------------------------------- | ----------- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Place of
      Residence  | Independent | Literate    | Relevant Education and Experience                                                                                                                                                                                                                                                                                                                                                                                                   
|                                   |             |             |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|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 G. Jennings Alberta, Canada | Yes         | Yes         | Mr. Jennings received a
      Certified Financial Analyst designation from the University of
      Virginia in 1974 and maintains the designation with the Chartered
      Financial Analyst Institute. He has over 40 years investment
      banking and executive management experience in both the national
      and international marketplace. Currently Mr. Jennings is on the board
      of another publicly traded company.

As at December 31, 2011, the members of our Audit Committee
were Fred J. Dyment, Geoffrey C. Chase, Robert G. Halpin and Gary S. Guidry. On
March 6, 2012 all board committees were reviewed and re-organized and effective
that date, Mr. Halpin and Mr. Guidry stepped down from the Audit Committee.

Pre-Approval of Policies and Procedures

All non-audit services with our auditor, 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.

Principal Accountant Fees and Services

The aggregate fees for professional services billed to
TransGlobe by Deloitte & Touche LLP during the fiscal years ended December
31, 2011 and December 31, 2010 were as follows (all fees are in Canadian
dollars):

|                   |   | Fiscal Year Ended |  |   | Fiscal Year Ended | 
|------------------ | - | ----------------- |  | - | ----------------- | 
|                   |   | December 31, 2011 |  |   | December 31, 2010 | 
|Audit Fees         | $ | 447,743           |  | $ | 416,766           | 
|Audit Related Fees | $ | 123,731           |  | $ | 132,590           | 
|Tax Fees           | $ | 4,770             |  | $ | 16,402            | 
|All Other Fees     | $ | NIL               |  | $ | NIL               | 
|TOTAL              | $ | 576,244           |  | $ | 565,758           | 

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

Audit Fees Audit fees were for professional
services rendered by Deloitte & Touche LLP for the audit of the Companys
annual financial statements, as well as for the review of the Company's interim
quarterly financial statements and services provided in connection with
statutory and regulatory filings or engagements.

---

46

Audit Related FeesAudit related fees were
for professional services rendered by Deloitte & Touche LLP for assurance
and related services that are reasonably related to the audit of the Companys
annual financial statements (not included in audit fees).

During the fiscal years ended December 31, 2011 and 2010, Audit
Related Fees also included fees for professional services rendered by Deloitte
& Touche LLP in connection with the review of the Companys International
Financial Reporting Standards ("IFRS") accounting policies and the
opening January 1, 2010 consolidated balance sheet prepared under IFRS.

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

All Other FeesDuring the fiscal years ended
December 31, 2011 and 2010, no other fees were incurred other than those
described above.

RISK FACTORS

The Company is engaged in the exploration, development,
production and acquisition of crude oil and natural gas. These activities
involve a number of risks and uncertainties inherent in the industry, some of
which are summarized below. If any of the risks described below materializes,
the Company's business, financial condition, operating results or prospects
could be materially and adversely affected. The following are material risks
identified by the Company; however, risks that are at this time unknown to
management of the Company or that the Company currently deems immaterial may
develop and may have a material adverse effect upon its business, financial
condition, operating results and prospects.

Risks relating to the Company's business

The Company is exposed to 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 crude oil production and other parties,
including the governments of Egypt and Yemen. Significant changes in the crude
oil 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 has in the past made regular
payments on these amounts owing, the timing of these payments has historically
been longer than normal industry standard. There can be no assurance that future
payments will occur. In the event the government of Egypt fails to meet its
obligations, or other third-party creditors fail to meet their obligations to
the Company, such failures could individually or in the aggregate have a
material adverse effect on the Company, its cash flow from operations and its
ability to conduct its ongoing capital expenditure program.

The sale of the Company's crude oil production depends in
part on gathering, transportation and processing facilities. Any limitation in
the availability of, or the Company's access to, those facilities would
interfere with its ability to market the crude oil that the Company produces and
could adversely impact the Company's drilling program, cash flows and results of
operations.

The Company delivers crude oil through gathering, processing
and pipeline systems that the Company does not own. The amount of crude oil that
the Company can produce and sell is subject to the accessibility, availability,
proximity and capacity of these gathering, processing and pipeline systems. The
lack of availability of capacity in any of the gathering, processing and
pipeline systems, and in particular the processing facilities, could result in
the Company's inability to realize the full economic potential of its production
or in a reduction of the price offered for its production. Any significant
change in market factors or other conditions affecting these infrastructure
systems and facilities, as well as any delays in constructing new infrastructure systems and
facilities could harm the Company's business and, in turn, its financial
condition, results of operations and cash flows.

---

47

Doing business in Egypt and Yemen subjects the Company to
significant political risks that may adversely affect its operations

Beyond the risks inherent in the petroleum industry, the
Company is subject to additional political risks resulting from doing business
in Egypt and Yemen. In recent months, there has been significant civil unrest
and widespread protests and demonstrations throughout the Middle East, including
in Egypt and Yemen.

In mid-February 2011, after widespread protests, demonstrations
and civil unrest, Hosni Mubarak was forced to resign as the President of Egypt
on February 11, 2011. He relinquished the administration of power first to his
Vice President and then to a transitional government led by the Egyptian
militarys Supreme Council of the Armed Forces (the "SCAF"), which then
appointed a civilian prime minister and cabinet to run the Egyptian government.
A public referendum in Egypt produced a temporary constitutional framework that
empowers the SCAF to govern Egypt in the interim, with the goal of transferring
power to a civilian government and drafting a new constitution in 2012. In
November 2011, widespread protests and demonstrations aimed at the Egyptian
military reignited civil unrest. In December 2011 and January 2012,
parliamentary elections resulted in 498 members being elected to the People's
Assembly.. A presidential election is scheduled for May 23 and 24, 2012 (with a
run-off on June 16 and 17, 2012, if necessary).

In Yemen, civil unrest led to the resignation of that country's
President, Ali Abdullah Saleh, in late-November 2011. On February 21, 2012,
presidential elections were held electing then Vice President Abd Rabboh Mansour
Hadi the President of Yemen who is tasked with securing political stability in
Yemen, including implementing a power-sharing deal with political opponents of
the Saleh regime under an agreement negotiated to remove Mr. Saleh after 33
years in power. There is no guarantee that the new leadership in Egypt and Yemen
will be able to secure political stability in their respective countries.

The new governments in Egypt and Yemen could adopt new policies
that might result in substantially hostile attitudes towards foreign investments
such as the Company's. In an extreme case, these new governments could result in
forced renegotiation of the Company's existing contracts, termination of
contract rights and expropriation of its assets or resource nationalization.
Loss of property (damage to, or destruction of, the Company's wells, production
facilities or other operating assets) and/or interruption of its business plans
(including lack of availability of drilling rigs, oilfield equipment or services
if third party providers decide to exit the region or inability of the Company's
service equipment providers to deliver necessary items for the Company to
continue operations) as a direct or indirect result of political protests,
demonstrations or civil unrest in Egypt or Yemen could have a material adverse
impact on the Company's results of operations and financial condition. In
addition, the Company cannot provide assurance that future political
developments in Egypt or Yemen, including changes in government, changes in laws
or regulations, export restrictions or further civil unrest or other
disturbances, would not have an adverse impact on ongoing operations, the
Company's ability to comply with its current contractual obligations, or on the
terms or enforceability of its production sharing and concession agreements or
other contracts with governmental entities.

The Company operates only in Egypt and Yemen

The Company's business focuses on the petroleum industry in a
limited number of properties, namely in Egypt and Yemen. Larger companies have
the ability to manage their risk by diversification. However, the Company lacks
diversification, in terms of both the nature and geographic scope of its
business. As a result, factors affecting the industry or the regions in which it
operates will likely impact the Company more acutely than if the Company's
business was more diversified.

Unless the Company replaces its crude oil reserves, its
reserves and production will decline, which would adversely affect the Company's
cash flow and results of operations.

Unless the Company conducts successful development and
exploration activities or acquire properties containing proved reserves, its
proved reserves will decline as those reserves are produced. Producing crude oil
reservoirs generally are characterized by declining production rates that vary
depending upon reservoir characteristics and other factors. The Company's future crude oil reserves and production, and
therefore its cash flow and results of operations, are highly dependent on the
Company's success in efficiently developing and exploiting its current reserves
and economically finding or acquiring additional recoverable reserves. The
Company may not be able to develop, exploit, find or acquire sufficient
additional reserves to replace its current and future production.

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48

The governments of Egypt and Yemen may not honour their
agreements with the Company

There can be no assurance that the agreements entered into with
the governments of Egypt and Yemen and others are enforceable or binding in
accordance with the Company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.

The Company's exploration and development programs may
not be successful

The Company's participation in Blocks 32, 72, 75 and S-1 in
Yemen, as well as the Nuqra Block 1, East Ghazalat, West Gharib and West Bakr
production sharing contracts in Egypt represent major undertakings. The
exploration programs in Yemen and Egypt are high-risk ventures with uncertain
prospects for ongoing success. Existing and new wells that the Company drill may
not be productive, or the Company may not recover all or any portion of its
investment in such wells. No known technologies allow the Company to know
conclusively prior to drilling a well that crude oil is present or may be
produced economically. Drilling often involves unprofitable results, not only
from dry holes but also from wells that are productive but do not produce
sufficient net reserves to return a profit at then realized prices after
deducting drilling, operating and other costs. The cost of drilling, completing
and operating a well is often uncertain, and cost factors can adversely affect
the economics of a project. Furthermore, the Company's drilling operations may
be curtailed, delayed or cancelled as a result of numerous factors, including:

- unexpected drilling conditions;
- pressure or lost circulation in formations;
- equipment failure or accidents;
- fracture stimulation accidents or failures;
- adverse weather conditions;
- compliance with environmental and other governmental or contractual
  requirements; and
- increases in the cost of, or shortages or delays in the availability of,
  electricity, supplies, materials, drilling or workover rigs, equipment and
  services.

The Company's financing arrangements could negatively
impact its business

The Company currently has a $100 million credit facility.
Currently, $60 million is drawn on this credit facility which is syndicated with
three financial institutions. A redetermination of the borrowing base of the
credit facility is made on a semi-annual basis at which time the lenders
determine the level of the facility that they are willing to extend to the
Company based on the Companys proved and probable reserves, oil prices,
applicable discount rate and other factors. In the event that the facilitys
borrowing base is reduced below the amount drawn, the difference will be
repayable at that date. A reduction in the borrowing base could affect the
Company's ability to fund ongoing operations.

The Company is required to comply with covenants under the
credit facility. In the event that the Company does not comply with covenants
under the credit facility, the Company's access to capital could be restricted
or repayment could be required.

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49

The Company's ability to obtain cash from its foreign
subsidiaries may be restricted

The Company currently conducts all of its operations through
its foreign 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; the introduction of exchange controls or repatriation
restrictions or the availability of hard currency to be repatriated; and
contractual restrictions with third parties.

The Company may be unable to obtain necessary future
financing

As a result of global economic volatility, the Company, along
with all other oil and gas entities, may have restricted access to capital and
increased borrowing costs. The lending capacity of all financial institutions
has diminished and risk premiums have increased independent of the Company's
business and asset base. As future capital expenditures will be financed out of
cash generated from operations, borrowings and possible future equity sales, the
Company's ability to do so is dependent on, among other factors, the overall
state of capital markets, the Companys credit rating, interest rates, tax
burden due to new tax laws 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.

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. In addition, the future development
of the Company's petroleum 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. 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.

Changes in governments or actions by governmental
authorities could have an adverse impact on the Company's joint ventures,
licenses or other legal arrangements

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.

The market price of the Common Shares and Debentures may
be volatile

The market price of the Common Shares and Debentures
(collectively, the "Listed Securities") may be volatile. The volatility
may affect the ability of holders of Listed Securities to sell the Listed
Securities at an advantageous price. Market price fluctuations in the Listed
Securities may be due to the Company's operating results failing to meet the
expectations of securities analysts or investors in any quarter, downward
revision in securities analysts' estimates, governmental regulatory action,
adverse change in general market conditions or economic trends, acquisitions,
dispositions or other material public announcements by the Company or its
competitors, along with a variety of additional factors, including, without
limitation, those set forth under "Forward-Looking Statements". In
addition, the market price for securities in the stock markets can experience
significant price and trading fluctuations. These fluctuations can result in
volatility in the market prices of securities that is often unrelated or
disproportionate to changes in operating performance. These broad market
fluctuations may adversely affect the market prices of the Listed
Securities.

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50

The Company's foreign operations are subject to exchange
controls

Exchange controls may prevent the Company from transferring
funds abroad. For example, certain governments have imposed a number of monetary
and currency exchange control measures that include restrictions on the free
disposition of funds deposited with banks and tight restrictions on transferring
funds abroad, with certain exceptions for transfers related to foreign trade and
other authorized transactions approved by the country's central bank. These
central banks may require prior authorization and may or may not grant such
authorization for the Company's foreign subsidiaries to make dividend payments
to it and there may be a tax imposed with respect to the expatriation of the
proceeds from the Company's foreign subsidiaries.

The Company could experience periods of higher costs if
commodity prices rise and these increases could reduce its profitability, cash
flow and ability to complete development activities as planned

Historically, the Company's capital and operating costs have
risen during periods of increasing commodity prices. These cost increases result
from a variety of factors beyond the Company's control, such as: increases in
the cost of electricity, steel and other raw materials that the Company and its
vendors rely upon; increased demand for labour, services and materials as
drilling activity increases; and increased taxes. Increased levels of drilling
activity in the petroleum industry in recent periods has led to increased costs
of certain drilling equipment, materials and supplies. Such costs may rise
faster than increases in the Company's revenue, thereby negatively affecting its
profitability, cash flow and ability to complete development activities as
scheduled and on budget.

The Company is subject to, and could be adversely
affected by, the risks normally incident to petroleum exploration and production
operations, and the Company is not fully insured against all these risks

The Company's operations are subject to all the risks normally
incident to the exploration for and production of petroleum including geological
risks, operating risks, political risks, development risks, marketing risks and
logistical risks of operating in Egypt and Yemen. The risks normally incident to
the operation and development of petroleum properties and the drilling of wells
include 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. The Company is also
subject to risks associated with deliverability uncertainties related to the
proximity of its reserves to pipeline and processing facilities, extensive
government regulation relating to prices, taxes, royalties, land tenure,
allowable production, the export of its production and many other aspects of the
petroleum business. 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 marketability and price of oil may be affected by
numerous factors beyond the Company's control

The marketability and price of crude oil which may be acquired
or discovered by the Company may be affected by numerous factors beyond the
control of the Company. Historically, crude oil prices have been volatile, and
the Company expects this price volatility to continue in the future. Crude oil
prices may fluctuate widely in response to relatively minor changes in the
supply of and demand for crude oil, market uncertainty and a variety of
additional factors that are beyond the Company's control, such as:

- the differential between the price paid by refiners for light, quality oil
  and various grades of oil produced by the Company;
- the level of consumer demand for oil and natural gas;
- the domestic and foreign supply of oil and natural gas;
- commodity processing, gathering and transportation availability, and the
  availability of refining capacity;
- the price and level of imports of foreign oil and natural gas;
- the ability of the members of the Organization of Petroleum Exporting
  Countries to agree to and maintain oil price and production controls;
- domestic and foreign governmental regulations and taxation;
- the price and availability of alternative fuel sources;
- weather conditions, accidents;

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51

- political conditions or hostilities in oil and natural gas producing
  regions, including the Middle East, Africa and South America;
- technological advances affecting energy consumption and energy supply;
- the availability of pipeline capacities and infrastructure;
- the availability of crude oil transportation and refining capacity;
- variations between product prices at sales points and applicable index
  prices; and
- worldwide economic conditions.

The Company makes price assumptions that are used for planning
purposes, and a significant portion of its cash outlays, including rent,
salaries and non-cancellable capital commitments, are largely fixed in nature.
Accordingly, if oil or natural gas prices are below the expectations on which
these commitments were based, the Company's financial results are likely to be
adversely and disproportionately affected because these cash outlays are often
fixed in the short term and cannot be quickly reduced to respond to
unanticipated decreases in oil and natural gas prices.

Significant or extended price declines could also adversely
affect the amount of crude oil that the Company can produce economically. A
reduction in production could result in a shortfall in expected cash flows and
require the Company to reduce capital spending or borrow funds to cover any such
shortfall. This could raise delays or part payment in some of the Company's
projects and limit its access to sources of capital. Significant or extended
price declines could also result in a reduction in the carrying value of
goodwill. Any of these factors could negatively affect the Company's ability to
replace production and its future growth rate.

The Company has entered into derivative contracts to hedge
price risk associated with a portion of its crude oil production. Because the
Company's derivative contracts do not apply to all of its crude oil production,
they provide only partial price protection against declines in crude oil prices.

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. The Company's operations will be further affected by the
remoteness of, and restrictions on access to, certain properties as well as
climatic conditions. In addition, there is no assurance that further commercial
quantities of crude oil will be discovered by the Company.

In addition to political risks, the Company is subject to
other risks inherent to doing business exclusively in foreign jurisdictions

All of the Company's current production is located in Egypt and
Yemen. As such, and in addition to the specific political risks mentioned above,
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, a
change in oil or natural gas pricing policy, the actions of national labour
unions, nationalization, currency fluctuations and devaluations, renegotiation
or nullification of existing concessions and contracts, exchange controls and
royalty and tax increases and retroactive tax claims, investment restrictions,
import and export regulations 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, economic sanctions, the imposition of specific
drilling obligations and the development and abandonment of fields.

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

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52

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 technical difficulties,
operational difficulties which impact the production, transport or sale of the
Company's products, security risks related to terrorist activities and
insurrections, difficult geographic and weather conditions, unforeseen business
reasons or otherwise. Prolonged problems may threaten the commercial viability
of its operations.

The Company's commodity price risk management and trading
activities may prevent it from benefiting fully from price increases and may
expose the Company to further risks.

To the extent that the Company engages in price risk management
activities to protect itself from commodity price declines, it may also be
prevented from realizing the full benefits of price increases above the levels
of the derivative instruments used to manage price risk. In addition, the
Company's hedging arrangements may expose it to the risk of financial loss in
certain circumstances, including instances in which:

- the Company's production falls short of the hedged volumes;
- there is a widening of price-basis differentials between delivery points
  for the Company's production and the delivery point assumed in the hedge
  arrangement;
- the counterparties to the Company's hedging or other price risk management
  contracts fail to perform under those arrangements; or
- a sudden unexpected event materially impacts oil and natural gas prices.

The Company's licences may expire and are subject to
minimum work commitments

The properties in Egypt and Yemen in which the Company holds a
participating interest, directly or indirectly, are held by production sharing
concessions and agreements that impose minimum work and expenditure obligations
within specified time frames. The failure to meet such minimum work and
expenditure obligations within the specified time frames may result in the
termination of such production sharing concessions and agreements. There can be
no assurance that the minimum work and expenditure obligations will be met by
the Company and its participating interest partners. The termination of such
production sharing concessions and agreements may have a material adverse effect
on the Company's business, financial conditions, results of operations and
production.

Local oil and gas industry conditions and not as
developed as the North American industry

The oil and gas industry in Egypt and Yemen is not as efficient
or developed as the oil and gas industry in North America. As a result, the
Company's exploration and development activities may take longer to complete and
may be more expensive than similar operations in North America. The availability
of technical expertise, specific equipment and supplies may be more limited than
in North America. The Company expects that such factors will subject its
operations to economic and operating risks that may not be experienced in North
American operations

The Company operates in a highly competitive industry

The Company is subject to 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, crude oil, which even a combination of experience, knowledge and
careful evaluation may not be able to overcome.

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, which can be particularly important in the areas in which it operates.
Those companies may be able to pay more for productive crude oil properties and
exploratory prospects and to evaluate, bid for and purchase a greater number of
properties and prospects than the Company's financial or personnel resources
permit. In addition, those companies may be able to offer better compensation
packages to attract and retain qualified personnel than the Company is able to
offer. The cost to attract and retain qualified personnel has increased over the
past few years due to competition and may increase substantially in the future.
The Company's ability to acquire additional prospects and to find and develop
reserves in the future will depend on its ability to evaluate and select
suitable properties and to consummate transactions in a highly competitive environment.
There is also substantial competition for capital available for investment in
the oil and natural gas industry. The Company may not be able to compete
successfully in the future in acquiring prospective reserves, developing
reserves, marketing hydrocarbons, attracting and retaining quality personnel and
raising additional capital. The Company's failure to acquire properties, market
its production and secure trained personnel and adequately compensate personnel
could have a material adverse effect on the Company's production, revenues and
results of operations.

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53

The Company may be unable to meet all of its joint
venture commitments and it does not control all of the properties in which it
has an interest

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 and
does not operate 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. For all the properties that are operated by others, the Company
is dependent on their decision-making with respect to day-to-day operations over
which the Company may have limited control. The success and timing of the
drilling and development activities on properties operated by others depend upon
a number of factors largely outside of the Companys control, including the
timing and amount of capital expenditures, prioritization of projects, the
operators expertise and financial resources, the inclusion of other
participants, the use of technology and the rate of production of reserves, if
any. This limited ability to exercise influence over the operations of some of
the Company's concessions may cause a material adverse effect on its results of
operations and financial condition.

The Company is subject to significant governmental laws
and regulations in each jurisdiction in which it operates and changes to such
laws and regulations could negatively impact its results of operations and
production

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 result in forced
divestitures of assets; restrictions on production, imports and exports; price
controls; tax increases; royalty increases and retroactive tax claims;
expropriation of property; and cancellation of contract rights. Both the
likelihood of such occurrences and their overall effect upon the Company can
vary greatly, are not predictable and may substantially increase or decrease the
costs of conducting any exploration or development project. Compliance costs can
be significant. Failure to comply with these laws may result in the suspension
or termination of operations and subject the Company to liability and
administrative, civil and criminal remedies.

The Company's business could be adversely affected by the
loss of one or more key officers or employees

The Company is largely dependent upon the personal efforts and
abilities of its key corporate officers and employees. Failure to retain or to
attract and retain additional key officers and employees with necessary skills
could have a materially adverse impact upon the Company's growth and
profitability. 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.

You should not unduly rely on reserve information because
reserve information represents estimates

The reserve and recovery information contained in this Annual
Information Form 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 the applicable reports. Such information has been prepared using
certain commodity price assumptions. If lower prices for crude oil are realized
by the Company and substituted for the price assumptions utilized in preparing
the reserves data, 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. Estimates of
economically recoverable oil and natural gas reserves and of future cash flows
depend upon a number of variable factors and assumptions, including:

- historical production from the area compared with production from other
  producing areas;
- the assumed effects of regulations by governmental agencies;

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54

- the quality, quantity and interpretation of available relevant data;
- assumptions concerning future commodity prices; and
- assumptions concerning future operating costs; severance, ad valorem and
  excise taxes; development costs; and workover and remedial costs.

Because all reserve estimates are to some degree subjective,
each of the following items, or other items not identified below, may differ
materially from those assumed in estimating reserves:

- the quantities of oil and natural gas that are ultimately recovered;
- the production and operating costs incurred;
- the amount and timing of future development expenditures; and
- future commodity prices.

Furthermore, different reserve engineers may make different
estimates of reserves and cash flows based on the same data. The Company's
actual production, revenues and expenditures with respect to reserves will
likely be different from estimates and the differences may be material.

The Company may be subject to a higher than expected past
or future income tax liability in the event that it is subject to a successful
reassessment by Canadian tax authorities

As the Company is engaged in the petroleum industry, 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 its business 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 its 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, but
such returns are subject to reassessment. In the event of a successful
reassessment of the Company it may be subject to a higher than expected past or
future income tax liability as well as potentially interest and penalties and
such amount could be material.

The Company may be adversely affected by foreign currency
fluctuations

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. The Company prepares its financial statements in US dollars
and, as a result, the Companys statement of comprehensive income, statement of
cash flows and statement of financial position are impacted by changes in
exchange rates between Canadian and US dollars.

Conflicts of interest could adversely affect the
Company's business

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.

Defects in title to the Company's properties could
adversely affect the Company

There may be valid challenges to the title to the oil and
natural gas producing properties the Company controls that, if successful, could
impair its activities on them and result in a reduction of the revenue received
by the Company. The title reviews that the Company commissions prior to the
purchase of most oil and natural gas producing properties or the commencement of
drilling wells, do not guarantee or certify that an unforeseen defect in the
chain of title will not arise to defeat the claim of the Company.

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55

The Company is subject to extensive environmental
regulations and compliance with such regulations could be costly and negatively
impact its business

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 safety 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. While the Company maintains
liability insurance, including insurance for certain environmental claims, the
insurance is subject to coverage limits and certain of the Company's policies
exclude coverage for damages resulting from environmental contamination. The
Company cannot assure you that insurance will continue to be available to it on
commercially reasonable terms, that the possible types of liabilities that may
be incurred by the Company will be covered by its insurance, or that the dollar
amount of such liabilities will not exceed the Company's policy limits. Even a
partially uninsured claim, if successful and of sufficient magnitude, could have
a material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company will not incur
substantial financial obligations in connection with environmental compliance.

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

Failure to comply with those laws and regulations may result in
the assessment of administrative, civil and criminal penalties, imposition of
site clean up and site restoration, costs and liens, and in some cases, issuance
of orders or injunctions limiting or requiring discontinuance of certain
operations.

Natural disasters or other disruptions common in the
Company's industry may adversely affect it

The Company is subject to operating hazards normally associated
with the exploration and production of crude oil, 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
crude oil wells, formations, production facilities or other properties.

The Company may issue additional securities

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

The Company may fail to realize the anticipated benefits
of acquisitions and dispositions

The Company considers acquisitions and dispositions of
businesses and assets in the ordinary course of business. Achieving the benefits
of acquisitions depends in part on successfully consolidating functions and
integrating operations and procedures in a timely and efficient manner as well
as the Company's ability to realize the anticipated growth opportunities and
synergies from combining the acquired businesses and operations with those of
the Company. The integration of acquired businesses may require substantial
management effort, time and resources and may divert management's focus from
other strategic opportunities and operational matters. Management continually
assesses the value and contribution of services provided and assets required to
provide such services. In this regard, non core assets may be periodically
disposed of, so that the Company can focus its efforts and resources more
efficiently. Depending on the state of the market for such non core assets,
certain non core assets of the Company, if disposed of, could be expected to
realize less than their carrying value on the financial statements of the
Company.

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56

The Company's insurance may not be sufficient to cover
the full extent of liabilities

The Company's involvement in the exploration for and
development of oil and natural gas properties may result in the Company becoming
subject to liability for pollution, blow outs, leaks of sour natural gas,
property damage, personal injury or other hazards. Although the Company
maintains insurance in accordance with industry standards to address certain of
these risks, such insurance has limitations on liability and may not be
sufficient to cover the full extent of such liabilities. In addition, certain
risks are not, in all circumstances, insurable or, in certain circumstances, the
Company may elect not to obtain insurance to deal with specific risks due to the
high premiums associated with such insurance or other reasons. The payment of
any uninsured liabilities would reduce the funds available to the Company. The
occurrence of a significant event that the Company is not fully insured against,
or the insolvency of the insurer of such event, may have a material adverse
effect on the Company's business, financial condition, results of operations and
prospects.

You may be unable to bring actions or enforce judgments
against the Company or any of its officers and directors in Canada or to serve
process on any of them in countries other than Canada, including the United
States

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 U.S. investors, and
other investors from outside of Canada, to effect service of process upon the
Company or upon those directors or officers, or to realize judgments of
non-Canadian courts, including judgments of U.S. courts predicated upon civil
liabilities under applicable U.S. laws. Furthermore, it may be difficult for
U.S. and other non-Canadian investors to enforce judgments of U.S. and other
non-Canadian courts based on civil liability provisions of the U.S. federal or
other non-Canadian securities laws in a Canadian court against the Company or
any of the Company's 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.

Risks relating to the Debentures

The Debentures are subordinate to Senior Indebtedness of
the Company

The Debentures are subordinate to Senior Indebtedness of the
Company. The Debentures are also effectively subordinate to claims of creditors
of the Company's Subsidiaries, except to the extent that the Company is a
creditor of such Subsidiaries ranking at least pari passu with such creditors.
In the event of the Company's insolvency, bankruptcy, liquidation,
reorganization, dissolution or winding up, its assets would be made available to
satisfy the obligations of the creditors of such Senior Indebtedness before
being available to pay the Company's obligations to the holders of the
Debentures. Accordingly, all or a substantial portion of the Company's assets
could be unavailable to satisfy the claims of the holders of the Debentures.

The Company's ability to meet its debt-service requirements
will depend on its ability to generate cash in the future, which depends on many
factors, including the Company's financial performance, debt-service
obligations, working capital and future capital-expenditure requirements. In
addition, the Company's ability to borrow funds in the future and to make
payments on outstanding debt will depend on the satisfaction of covenants in
then existing credit agreements and other agreements. A failure to comply with
any covenants or obligations under the Company's consolidated indebtedness could
result in a default, which, if not cured or waived, could result in the
acceleration of the relevant indebtedness. If such indebtedness were to be
accelerated, there can be no assurance that the Company's assets would be
sufficient to repay such indebtedness in full. There can also be no assurance
that the Company will generate cash flow in amounts sufficient to pay
outstanding indebtedness or to fund any other liquidity needs.

The Company may not be able be able to pay the principal
amount of the Debentures in cash

The Company may not be able to refinance the principal amount
of the Debentures in order to repay the principal outstanding or may not have
generated enough cash from operations to meet this obligation. The Company may,
at its option, on not more than 60 days' and not less than 30 days' prior notice
and subject to any required regulatory approvals, unless an Event of Default has
occurred and is continuing, elect to satisfy its obligation to repay, in whole
or in part, the principal amount of the Debentures which are to be redeemed or
which have matured, and any accrued and unpaid interest thereon, by issuing and delivering Common Shares to
the holders of the Debentures. There is no guarantee that the Company will be
able to repay the outstanding principal amount in cash upon maturity of the
Debentures.

---

57

Prevailing Yields on Similar Debentures may affect the
market value of the Debentures

Prevailing yields on similar Debentures will affect the market
value of the Debentures. Assuming all other factors remain unchanged, the market
value of the Debentures will decline as prevailing yields for similar Debentures
rise, and will increase as prevailing yields for similar Debentures decline.

The Company may not be able to purchase for cash all
outstanding Debentures upon the occurrence of a Change of Control

The Company is required to offer to purchase for cash all
outstanding Debentures upon the occurrence of a Change of Control. However, it
is possible that following a Change of Control, the Company will not have
sufficient funds at that time to make the required purchase of outstanding
Debentures or that restrictions contained in other indebtedness will restrict
those purchases. See "Description of Capital Structure - Debentures 
Repurchase Upon a Change of Control". In addition, the Company's ability to
purchase the Debentures in such an event may be limited by law, by the
Indenture, by the terms of other present or future agreements relating to
indebtedness, and agreements that the Company may enter into in the future which
may replace, supplement or amend the Company's future debt. The Company's future
credit agreements or other agreements may contain provisions that could prohibit
the purchase of the Debentures by the Company. The Company's failure to purchase
the Debentures would constitute an Event of Default under the Indenture, which
might constitute a default under the terms of the Company's other indebtedness
at that time.

If a holder of Debentures converts its Debentures in connection
with a Change of Control, the Company may, in certain circumstances, be required
to increase the conversion rate, as described under "Description of Capital
Structure Debentures  Cash Change of Control". While the increased
conversion rate is designed, inter alia, to compensate a holder of Debentures
for the lost option time value of its Debentures as a result of a Change of
Control in certain circumstances, the increased conversion rate amount is only
an approximation of such lost value and may not adequately compensate the holder
for such loss. In addition, in some circumstances as described under
"Description of Capital Structure - Debentures  Cash Change of Control",
no adjustment will be made.

The Indenture does not contain any provisions
specifically intended to protect holders of the Debentures in the event of a
future leveraged transaction involving the Company or any of its
Subsidiaries

The Indenture does not restrict the Company or any of its
Subsidiaries from incurring additional indebtedness or from mortgaging, pledging
or charging its assets to secure any indebtedness. The Indenture does not
contain any provisions specifically intended to protect holders of the
Debentures in the event of a future leveraged transaction involving the Company
or any of its Subsidiaries.

The Debentures may be redeemed prior to the Maturity Date

The Debentures may be redeemed, at the option of the Company,
on or after March 31, 2015 and prior to the Maturity Date at any time and from
time to time, at the redemption prices set forth in the Indenture, together with
any accrued and unpaid interest. See "Description of Capital Structure -
Debentures  Redemption and Purchase". Holders of Debentures should assume
that this redemption option will be exercised if the Company is able to
refinance at a lower interest rate or it is otherwise in the interest of the
Company to redeem the Debentures.

The issuance of Common Shares upon conversion, redemption
or maturity of the Debentures may be dilutive

The Company expects to issue Common Shares upon conversion,
redemption or maturity of the Debentures. Additionally, the Company may issue
Common Shares in connection with the payment of interest on the Debentures.
Accordingly, holders of Common Shares may suffer dilution.

---

58

The Debentures are convertible in certain transactions

In the event of certain transactions, pursuant to the terms of
the Indenture, each Debenture will become convertible into securities, cash or
property receivable by a holder of Common Shares in such transactions. This
change could substantially reduce or eliminate any potential future value of the
conversion privilege associated with the Debentures. For example, if the Company
were acquired in a cash merger, each Debenture would become convertible solely
into cash and would no longer be convertible into securities whose value would
vary depending on future prospects and other factors. See "Description of
Capital Structure - Debentures  Conversion Privilege".

Payments to holder of Debentures will depend on the
Company's financial health and creditworthiness

The likelihood that purchasers of the Debentures will receive
payments owing to them under the terms of the Debentures will depend on the
Company's financial health and creditworthiness at the time of such payments.

Holders of Debentures may be subject to withholding tax

Effective January 1, 2008, the Tax Act was amended to generally
eliminate withholding tax on interest paid or credited to non-residents of
Canada with whom the payor deals at arm's length. However, Canadian withholding
tax continues to apply to payments of "participating debt interest". For
purposes of the Tax Act, participating debt interest is generally interest that
is paid on an obligation where all or any portion of such interest is contingent
or dependent on the use of or production from property in Canada or is computed
by reference to revenue, profit, cash flow, commodity price or any similar
criterion.

Under the Tax Act, when a debenture or other debt obligation
issued by a person resident in Canada is assigned or otherwise transferred by a
non-resident person to a person resident in Canada (which would include a
conversion of the obligation or payment on maturity), the amount, if any, by
which the price for which the obligation was assigned or transferred exceeds the
price for which the obligation was issued is deemed to be a payment of interest
on that obligation made by the person resident in Canada to the non-resident (an
"excess"). The deeming rule does not apply in respect of certain
"excluded obligations", although it is not clear whether a particular
convertible debenture would qualify as an "excluded obligation". If a
convertible debenture is not an "excluded obligation", issues that arise are
whether any excess would be considered to exist, whether any such excess which
is deemed to be interest is "participating debt interest", and if the excess is
participating debt interest, whether that results in all interest on the
obligation being considered to be participating debt interest.

The Canada Revenue Agency ("CRA") has stated that no
excess, and therefore no participating debt interest, would in general arise on
the conversion of a "traditional convertible debenture" and therefore, there
would be no withholding tax in such circumstances (provided that the payor and
payee deal at arm's length for purposes of the Tax Act). The CRA has published
guidance on what it believes to be a "traditional convertible debenture" for
these purposes. The Debentures should generally meet the criteria set forth in
CRA's published guidance; however, there can be no assurance that amounts paid
or payable by the Company to a Holder of Debentures on account of interest or
any "excess" amount will not be subject to Canadian withholding tax at 25%
(subject to any reduction in accordance with a relevant tax treaty).

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, 2011. 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.

---

|SCHEDULE"A"                                                 
|------------------------------------------------------------
|FORM 51-101F2                                               
|REPORT ON RESERVES DATA                                     
|BY INDEPENDENT QUALIFIED RESERVES EVALUATOR OR
      AUDITOR

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, 2011. The reserves data are estimates of proved reserves and
      probable reserves and related future net revenues at December 31, 2011,
      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, 2011
      and identifies the respective portions thereof that we have audited,
      evaluated and reviewed and reported on to the Company's
  management.

|Independent Qualified | Description and          |             | Net Present Value of Future Net
      Revenue
|--------------------- | ------------------------ | ----------- | ---------------------------------------------
|Reserves Evaluator or | Preparation Date of      | Location of | (before income taxes, 10% discount rate)     
|Auditor               | Evaluation Report        | Reserves    | Audited                                      
|                      |                          |             | U.S. M$                                      
|                      |                          |             |                                              
|DeGolyer and          | Appraisal Report as of   | Egypt       | -                                            
|MacNaughton Canada    | December 31, 2011 on     | Yemen       | -                                            
|Limited               | Certain Properties owned | Total       | -                                            
|                      | by TransGlobe Energy     |             |                                              
|                      | Corporation in Egypt and |             |                                              
|                      | Yemen dated January 10,  |             |                                              
|                      | 2012                     |             |                                              

|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, consistently applied. 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.                                                                                                                                                  

Executed as to our report referred to above:

DeGolyer and MacNaughton Canada Limited, Calgary, Alberta,
dated January 10, 2012.

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

---

SCHEDULE"B"

FORM 51-101F3REPORT OF MANAGEMENT AND DIRECTORS
ON OIL AND GAS DISCLOSURE

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, 2011, estimated using forecast prices and costs.

An independent qualified reserves evaluator has 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 evaluator;                                                                                                         
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                            
| | (b) | met with the independent qualified reserves evaluator 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 Form 51-101F1 containing the reserves data and other oil
      and gas information;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                           
| | (e) | the filing of Form 51-101F2 which is the report of the
      independent qualified reserves evaluator on the reserves data;
  and                         
| |     |                                                                                                                                                           
| | (f) | the content and filing of this
report.                                                                                                                    

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

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

March 15, 2012

---

SCHEDULE"C"

CHARTER OF AUDIT COMMITTEE

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

GENERAL FUNCTIONS, AUTHORITY, AND ROLE

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

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

---

2

- The Committee will also consist of all members that meet the definition of
  Financially Literate as defined in Multilateral Instrument 52-110 Part
  1(1.5) and are able to read and understand fundamental financial statements,
  including the Companys balance sheet, income statement and cash flow
  statement. The Committee shall have at least one member that qualifies as a
  financial expert as defined by the SEC.
- The Committee will not have participated in the preparation of the
  financial statements of the Company or its subsidiaries at any time during the
  past three years.
- The Board will elect, by a majority vote, one member as chairperson.
- A member of the Audit Committee may not, other than in his or her capacity
  as a member of the Audit Committee, the Board of Directors, or any other Board
  committee, accept any consulting, advisory, or other compensatory fee from the
  Company, and may not be an affiliated person of the Company or any subsidiary
  thereof.

RESPONSIBILITIES

The responsibilities of the Audit Committee shall be as
follows:

Frequency of Meetings

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

Reporting Responsibilities

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

Charter Review

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

Advice of Counsel

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

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

- Recommend to the Board the annual nomination of the independent auditor to
  be proposed for shareholder approval.
- Approve the compensation of the independent auditor and evaluate the
  performance of the independent auditor.

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3

| |  | Establish policies and procedures for the engagement of
      the independent auditor to provide non-audit services.                                                                                                                      
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                           
| |  | Ensure that the independent auditor is not engaged for
      any activities not allowed by any of the Canadian provincial securities
      commissions, the SEC or any securities exchange on which the Companys
      shares are traded.
| |  |                                                                                                                                                                                                                                           
| |  | Ensure that the independent auditor is not engaged for
      any of the following nine types of non-audit services contemporaneous with
      the audit:                                                                                  
| |  |                                                                                                                                                                                                                                           
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         
| |  | o                                                                                                                                                                                                                                         

- Ensure that the independent auditor is compliant with the SEC, any
  security exchange on which the Companys shares are traded and the Institute
  of Chartered Accountants of Alberta (Rules of Professional Conduct) regarding
  Audit Partner Rotation requirements.

Hiring Practices

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

Independence Test

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

Audit Committee Meetings

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

---

4

Restrictions

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

AUDIT AND REVIEW PROCESS AND RESULTS

Scope

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

Review Process and Results

| |  | Consider and review with the independent auditor the
      matters required to be discussed by Statement on Auditing Standards No.
      61, as the same may be modified or supplemented from time to
  time.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Review and discuss with management and the independent
      auditor at the completion of the annual examination:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | o                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Review and discuss with management and the independent
      auditor annual and interim financial statements (including related notes
      and MD&A) at the completion of any review engagement or other
      examination and prior to public disclosure, and resolve to recommend
      approval of said documents to the Board of Directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Review and discuss with management and the independent
      auditor the adequacy of the Company's internal control over financial
      reporting that management and the Board of Directors have established and
      the effectiveness of those systems, including, but not limited to, review
      and discussion of (1) managements report on its assessment of the
      effectiveness of internal control over financial reporting as of the end
      of each fiscal year and the independent auditors report on managements
      assessment and the effectiveness of internal control over financial
      reporting, (2) inquiry of management and the independent auditor about
      significant financial risks, exposures, deficiencies or material
      weaknesses identified and the steps management has taken to minimize such
      risks, exposures, deficiencies and material weaknesses to the Company and
      (3) any changes in internal control over financial reporting that have
      materially affected or are reasonably likely to materially affect the
      Companys internal control over financial reporting and are required to be
      disclosed, as well as any other changes in internal control over financial
      reporting that were considered for disclosure in the Companys periodic
      filings with the SEC.
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| |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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5

- 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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