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TRANSGLOBE ENERGY CORPORATION

ANNUAL INFORMATION FORM

Year Ended December 31, 2007









March 24, 2008

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TABLE OF CONTENTS

|                                                                   | Page
|------------------------------------------------------------------ | ----
|                                                                   |     
|CURRENCY
      AND EXCHANGE RATES                                  | 2   
|ABBREVIATIONS                                                      | 3   
|CONVERSIONS                                                        | 3   
|FORWARD-LOOKING
      STATEMENTS                                   | 4   
|CERTAIN
      DEFINITIONS                                          | 5   
|TRANSGLOBE
      ENERGY CORPORATION                                | 8   
|GENERAL
      DEVELOPMENT OF THE BUSINESS                          | 8   
|DESCRIPTION
      OF THE BUSINESS AND PRINCIPAL PROPERTIES         | 11  
|OPERATIONS
      REVIEW - INTERNATIONAL                            | 11  
|OPERATIONS
      REVIEW - CANADA                                   | 17  
|STATEMENT
      OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION | 18  
|DIVIDEND
      POLICY                                              | 43  
|DESCRIPTION
      OF SHARE CAPITAL                                 | 43  
|MARKET
      FOR SECURITIES                                        | 44  
|ESCROWED
      SECURITIES                                          | 45  
|DIRECTORS
      AND OFFICERS                                       | 45  
|HUMAN
      RESOURCES                                              | 47  
|INTEREST
      OF EXPERTS                                          | 47  
|INDEPENDENT
      REGISTERED CHARTERED ACCOUNTANTS                 | 48  
|LEGAL
      PROCEEDINGS AND REGULATORY ACTIONS                     | 48  
|INTERESTS
      OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS  | 48  
|TRANSFER
      AGENT AND REGISTRAR                                 | 48  
|MATERIAL
      CONTRACTS                                           | 48  
|AUDIT
      COMMITTEE INFORMATION                                  | 48  
|RISK
      FACTORS                                                 | 50  
|INDUSTRY
      CONDITIONS                                          | 53  
|ADDITIONAL
      INFORMATION                                       | 58  

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

CURRENCY AND EXCHANGE RATES

All dollar amounts in this Annual Information Form, unless
otherwise indicated, are stated in United States currency. The Company has
adopted the U.S. dollar as the functional currency for its consolidated
financial statements. The exchange rates for the period average and end of
period for the U.S. dollar in terms of Canadian dollars as reported by the Bank
of Canada were as follows for each of the years ended December 31, 2007, 2006
and 2005.

|               | Year
      Ended December 31, 2007 |  | Year
      Ended December 31, 2006 |  | Year
      Ended December 31, 2005
|-------------- | ---------------------------------- |  | ---------------------------------- |  | ----------------------------------
|               |                                    |  |                                    |  |                                   
|End of Period  | Cdn$0.9913                         |  | Cdn$1.1654                         |  | Cdn$1.1630                        
|               |                                    |  |                                    |  |                                   
|Period Average | Cdn$1.0740                         |  | Cdn$1.1343                         |  | Cdn$1.2114                        

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3

ABBREVIATIONS

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

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

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

CONVERSIONS

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

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

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4

FORWARD-LOOKING STATEMENTS

Certain statements contained in this annual information form
(the "Annual Information Form") and in certain documents incorporated by
reference into this Annual Information Form, constitute forward-looking
statements. These statements relate to future events or the Company's future
performance. All statements other than statements of historical fact may be
forward-looking statements. Forward-looking statements are often, but not
always, identified by the use of words such as "seek", "anticipate", "plan",
"continue", "estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should", "believe" and
similar expressions. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events to
differ materially from those anticipated in such forward-looking statements.
Actual operational and financial results may differ materially from TransGlobe's
expectations contained in the forward-looking statements as a result of various
factors, many of which are beyond the control of the Company. These factors
include, but are not limited to, unforeseen changes in the rate of production
from TransGlobe's oil and gas fields, changes in the price of crude oil and
natural gas, adverse technical factors associated with exploration, development,
production or transportation of TransGlobe's crude oil and natural gas reserves,
changes or disruptions in the political or fiscal regimes in TransGlobe's areas
of activity, changes in Canadian, Egyptian or Yemen tax, energy or other laws or
regulations, changes in significant capital expenditures, delays in production
starting up due to an industry shortage of skilled manpower, equipment or
materials, and the cost of inflation.

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

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

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

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

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

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5

CERTAIN DEFINITIONS

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

"AMEX" means the American Stock Exchange;

"Block 32 Joint Venture Group" means TG Holdings Yemen
Inc. (a wholly-owned subsidiary of TransGlobe Energy Corporation) with a
13.81087% working interest and partners Ansan Wikfs (Hadramaut) Ltd. and DNO ASA
holding the balance;

"Block 72 Partnership" means the joint venture group
comprised of DNO ASA (34%), TG Holdings Yemen Inc. (33%) and Ansan Wikfs
(Hadramaut) Ltd. (33%);

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

"Block 75 Joint Venture Group" means a joint venture
arrangement for Block 75 in Yemen with a subsidiary of OXY;

"Block S-1 Joint Venture Group" means a joint venture
arrangement for Block S-1 in Yemen with a subsidiary of OXY;

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

"Cdn" means Canadian;

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

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

"CPF" means central production facility;

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

"DeGolyer Report" means the report of DeGolyer dated
February 6, 2008 evaluating the Egypt, Yemen crude oil and Canadian crude oil,
natural gas liquids and natural gas reserves of the Company as at December 31,
2007;

"Dublin" means Dublin International Petroleum (Egypt)
Limited, a wholly-owned subsidiary of TransGlobe;

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

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

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

"Egypt" means the Arab Republic of Egypt;

"GAAP" means Canadian generally accepted accounting
principles;

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

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6

"Gross" or "gross" means:

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

"MENA" means Middle East North African region;

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

"NASDAQ" means National Association of Securities
Dealers Automated Quotations;

"NEB" means National Energy Board of Canada;

"Net" or "net" means:

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

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

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

"OXY"means Occidental Petroleum Corporation and its
subsidiaries;

"PSC" means production sharing agreement;

"PSC" means production sharing concession;

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

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

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

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

"TSX" means the Toronto Stock Exchange;

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

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7

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

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

"Yemen" means the Republic of Yemen; and

"YOC" means Yemen Oil Company.

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

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8

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 and Canada, ceasing operations as a mining company. The Company's U.S. oil
and gas properties were sold in 2000 to fund opportunities in Yemen. The Company
changed its name to TransGlobe Energy Corporation on April 2, 1996 and on June
9, 2004, the Company continued from the Province of British Columbia to the
Province of Alberta.

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

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

The Company's principal office is located at 2500, 605  5th
Avenue S.W., Calgary, Alberta, T2P 3H5. The Company's registered office is
located at 1400, 350  7th Avenue S.W., Calgary, Alberta, T2P
3N9.

Intercorporate Relationships

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

|Name of
      Subsidiary                                |  | Jurisdiction of Incorporation         |  | Ownership
|------------------------------------------------------- |  | ------------------------------------- |  | ---------
|1377116 Alberta Ltd.                                    |  | Alberta, Canada                       |  | 100%     
|Dublin International Petroleum (Egypt)
      Limited(1) |  | Bermuda                               |  | 100%     
|Drucker Petroleum Inc.(1)                               |  | British Virgin
      Islands          |  | 100%     
|GHP Exploration (West Gharib) Ltd.(1)                   |  | Barbados                              |  | 100%     
|TransGlobe Oil & Gas Corporation                        |  | Washington
      State, United States |  | 100%     
|TransGlobe Petroleum International Inc.                 |  | Turks & Caicos Islands,
      B.W.I.  |  | 100%     
|TG Holdings Yemen Inc.(1)                               |  | Turks &
      Caicos Islands, B.W.I.  |  | 100%     
|TransGlobe Petroleum Egypt Inc.(1)                      |  | Turks & Caicos Islands,
      B.W.I.  |  | 100%     

Note:

|(1) | TransGlobe is the indirect holder of Dublin
      International, Drucker, GHP, TG Holdings and TransGlobe Egypt, which
      companies are 100% owned directly by TGPI. TGPI is a wholly owned
      subsidiary of the Company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

TransGlobe Egypt holds TransGlobe's interest in Nuqra Block 1,
Egypt. Dublin International, Drucker and GHP hold TransGlobe's interest in the
West Gharib PSC in the Arab Republic of Egypt. TG Holdings holds TransGlobe's
interests in Yemen in Block 32, Block 72, Block 75, Block 84 and Block S-1.

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

GENERAL DEVELOPMENT OF THE BUSINESS

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

During the past three years, TransGlobe has developed its
business interests through a combination of acquisitions and exploration and
development. During this period, TransGlobe's primary focus has been on two
concessions in Egypt (a

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9

50% working interest in Nuqra Block 1 and 100% working interest
in the West Gharib Concession), five PSCs in Yemen (a 13.81087% working interest
in Block 32, a 25% working interest in Block S-1, a 33% working interest in
Block 72, a 33% working interest in Block 84 and a 25% working interest in Block
75) and in central Alberta, Canada.

2005

In 2005, the Company's primary exploration and production focus
was on Blocks S-1, 32 and 72 in Yemen; Nuqra Block 1 in Egypt and central
Alberta in Canada. On Block S-1, the Company participated in reprocessing the An
Naeem 3-D seismic, the development of the An Nagyah light oil pool and the
drilling of eight wells (5 An Nagyah oil wells and 3 exploration dry holes). The
pipeline connecting the An Nagyah field with the Jannah Hunt-operated Halewah
production facility and export pipeline was completed in July 2005. The pipeline
has an ultimate capacity of 80,000 bopd so that future discoveries can be placed
on stream quickly. The central production facility was expanded to 10,000 bopd
in 2005. On Block 32, the Company participated in the acquisition of 2-D
seismic, the drilling of seven wells (2 oil producers, 2 water injection wells,
1 cased oil well and 2 dry holes) and upgrades to the Tasour CPF. On Block 72,
the Company participated in the acquisition of 255 km of 2-D seismic. In Egypt,
on Nuqra Block 1, the Company conducted geological field studies, reprocessed
3,190 km of existing 2-D seismic data and prepared a new 800 km 2-D seismic
acquisition program for 2006. In western Canada, the Company drilled 31 wells,
resulting in 21 gas wells, 7 oil wells and 3 dry wells.

2006

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

2007

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

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

On September 25, 2007 the Company completed the acquisition of
two companies with interests in West Gharib, Egypt and thereby acquired working
interests in eight development leases (plus one development lease pending) and
24 producing wells in the West Gharib PSC area in Egypt. The Company completed
the acquisition of Dublin International and Drucker from Tanganyika Oil
(Bermuda) I Ltd. for U.S.$59.0 million plus working capital adjustments
effective as at July 1, 2007. Dublin International and Drucker together hold a
70% working interest in the West Gharib PSC. The Company assumed operatorship of
the West Gharib PSC following the closing of the transaction. The West Gharib
PSC is comprised of nine development leases (including the East Hoshia
development lease which was approved on January 31, 2008). Eight of the nine
development leases (excluding the Hana development lease) are encumbered with a
25% financial interest through an investment agreement between Dublin and a
private company. The 25% financial interest is non-voting but otherwise the
private company is a 25% participating interest partner.

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10

Subsequent to the year end, on February 5, 2008 the Company
completed the acquisition of GHP, which holds a 30% interest in the West Gharib
PSC. TransGlobe acquired GHP for aggregate consideration of approximately
U.S.$40.2 million plus working capital adjustments.

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

The West Gharib PSC is located onshore in the western Gulf of
Suez rift basin of Egypt. Major oil and gas discoveries have been made in this
basin with approximately 8 billion barrels of oil and 5 trillion cubic feet of
gas having been discovered to date. The 8 approved West Gharib development
leases encompass 178 km2 and are valid for 20 years (expiring between
2019 and 2026). Modern 3D seismic coverage exists over a majority of the leases.
Gross oil production from the West Gharib PSC was approximately 3,000 bopd
(2,550 bopd net) with the acquisition of GHP's 30% interest on February 5, 2008.
There are seven fields on the lands, which are producing from 26 wells. The oil
produced ranges from 16 degrees API to 26 degrees API and is currently trucked
to a terminal.

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

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

On October 25, 2007, the Alberta government released the New
Royalty Framework ("NRF") pertaining to royalties on oil and gas resources
including oil sands, conventional oil and gas and coalbed methane. The NRF is
scheduled to take effect on January 1, 2009. The NRF was the Alberta
government's response to the recommendations put forth by the Alberta Royalty
Review Panel. Given the methodology used in the proposed royalty regime, the
effect on TransGlobe's cash flow will be affected by depths and productivity of
wells. The actual effect of the Alberta royalty rate changes on TransGlobe will
be determined based on, among other things, the actual legislation enacted, the
production rates, commodity prices, foreign exchange rates, production mix,
service costs and the percentage of production from Alberta after January 1,
2009.

Anticipated Changes in the Business

As of December 18, 2007, the Company announced that it would
seek a buyer for its Canadian assets and anticipates a sale of the Canadian
assets by April of 2008 subject to satisfactory terms being achieved. Apart from
the sale of its Canadian assets, the Company does not anticipate any material
changes in its business during the balance of the 2008 financial year.

Significant Acquisitions and Significant Dispositions

On September 25, 2007 the Company completed the acquisition of
two companies with interests in West Gharib, Egypt and thereby acquired working
interests in eight development leases (plus one development lease pending) and
24 producing wells in the West Gharib PSC area in Egypt. The Company completed
the acquisition of Dublin International and Drucker from Tanganyika Oil
(Bermuda) I Ltd. for U.S.$59.0 million plus working capital adjustments
effective as at July 1, 2007.

The West Gharib PSC is comprised of nine development leases
(including the East Hoshia development lease which was approved on January 31,
2008). Eight of the nine development leases (excluding the Hana development
lease) are encumbered with a 25% financial interest through an investment
agreement between Dublin International and a private company. The 25% financial
interest is non-voting but otherwise the private company is a 25% participating
interest partner. A business acquisition report in respect of this acquisition
was filed on SEDAR on December 10, 2007.

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11

Recent Developments

Subsequent to the year end, on February 5, 2008 the Company
completed the acquisition of GHP, which holds a 30% interest in the West Gharib
PSC. Upon closing the acquisition, TransGlobe now holds a 100% interest in West
Gharib Concession. TransGlobe acquired GHP for aggregate consideration of
approximately U.S.$40.2 million plus working capital adjustments. TransGlobe
intends to file a business acquisition report on SEDAR in respect of this
acquisition.

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

DESCRIPTION OF THE BUSINESS AND PRINCIPAL PROPERTIES

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

TransGlobe's major operations and principal activities are in
the oil and gas exploration and production business. The Company has operated in
Egypt, Yemen and Canada during the past four, 11 and nine years, respectively.
In Egypt, the Company has an interest in the Nuqra Block 1 and the West Gharib
PSC. In Yemen, the Company has interests in five PSCs: Block 32, Block 72, Block
75, Block 84 and Block S-1. In Canada, all of the Company's interests are
located in the Province of Alberta, primarily in central Alberta.



OPERATIONS REVIEW - INTERNATIONAL

TransGlobe's first international property was acquired in Yemen
in January 1997, through a farm-out and joint venture agreement on Block 32 in
Yemen. During the past 11 years, TransGlobe has grown its land holdings in the
MENA region to 6.8 million acres (3.1 million net) in Egypt and Yemen.

Through TGPI (a wholly owned subsidiary) the Company owns
interests in seven PSCs in the MENA region, being two in Egypt and five in
Yemen.

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12

The following table summarizes the Company's current
international land holdings:

Summary of International Land Holdings (Egypt and Yemen)

Egypt
      YemenBlock
      West Gharib
      Nuqra #1
      32
      72
      84
      S-1
      75Basin
      Gulf of Suez
      Nuqra
      Masila
      Masila
      Masila
      Marib
      MaribYear acquired
      2007
      2004
      1997
      2004/2005
      2006/2007(3)
      1998
      2007Status
      Development
      Exploration
      Development
      Exploration
      Exploration
      Development
      ExplorationOperator
      TransGlobe
      TransGlobe
      DNO ASA
      DNO ASA
      DNO ASA
      OXY
      OXYTransGlobe WI (%)
      100%(1)
      50%(2)
      13.81087%
      33%
      33%
      25%
      25%Block Area (km2)
      214
      22,500
      591
      1,822
      731
      1,152
      1,050Block Area (acres)
      52,900
      5,500,000
      146,070
      450,234
      183,000
      284,700
      262,500Expiry date(s)
      2019-26
      July 2009
      2020
      Jan. 2009
      N/A
      2023
      N/AExtensions:Exploration
      N/A
      2ndExtension 
        36 months
      N/A
      2ndPhase 
        36 months
      1stPhase 
        42 months
      N/A
      2ndPhase 
        36 months


Notes:

|(1) | Effective February 5, 2008, the Company owns 100% of the
      West Gharib concession, consisting of nine development leases. The Company
      owns 100% of the Hana development lease and has a working interest of 75%
      in the balance of the development leases.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | TransGlobe pays 60% of costs to first oil production and
      recovers carried costs from partners' share of production.                                                                                                                                                
|(3) | PSC awaiting final government approval and ratification.
      First exploration term commences on the ratification
  date.                                                                                                                                              

Egypt

The Company is operator of two PSCs in Egypt. The Company's
first project in Egypt, Nuqra Block 1, is a large exploration concession located
in Upper Egypt. The recently acquired West Gharib property is a development
concession located in the prolific Gulf of Suez basin.

2007 Highlights - Egypt

- West Gharib acquisition (Dublin International & Drucker) in September
  2007
- Operator with 70% interest in West Gharib Concession
- 1,600 bopd production net to TransGlobe
- Drilled four wells (two at Nuqra and two at West Gharib)
- Additional 30% interest acquired in West Gharib (February 2008)
- Additional 900 bopd production acquired (February 2008)

2007 Activities and Results

During 2007, the Company significantly expanded operations in
Egypt with the acquisition of the West Gharib PSC on September 25, 2007 and
drilled the first two exploration wells on Nuqra Block 1 in Upper Egypt.

The following summary of the Company's activities in Egypt in
2007:

---

13

- On September 25, 2007, TGPI acquired all of the shares of Dublin
  International and Drucker for U.S.$59.0 million, plus working capital
  adjustments, as at July 1, 2007. Dublin and Drucker together hold a 70%
  working interest in the West Gharib PSC. TransGlobe has assumed operatorship
  of the West Gharib properties. The West Gharib PSC is located onshore in the
  western Gulf of Suez rift basin of Egypt. To date, eight billion barrels of
  oil and five trillion cubic feet of gas have been discovered in this prolific
  basin. The eight approved West Gharib development leases encompass 178
  km2(approximately 44,059 acres) and are valid for 20 years
  (expiring between 2019 and 2026). One additional development lease at East
  Hoshia was subsequently approved by the Minister of Oil in early 2008. Eight
  of the nine development leases (excluding the Hana development lease) are
  encumbered with a 25% financial interest through an investment agreement
  between Dublin International and a private company. The 25% financial interest
  is non-voting but otherwise the private company is treated as a 25%
  participating interest partner.
- On February 5, 2008, TGPI acquired all of the shares of GHP for U.S. $40.2
  million, plus working capital adjustments with an effective date of September
  30, 2007. GHP holds a 30% working interest in the West Gharib PSC. Following
  the acquisition of GHP, TransGlobe holds a 100% working interest in the West
  Gharib PSC, with a working interest of 100% in the Hana development lease and
  an effective working interest of 75% in the eight non-Hana development leases.
- The Company consolidated the TransGlobe Egypt and Dublin International
  Cairo offices and hired a new Country Manager for Egypt.
- The Company expanded the Calgary head office technical team to focus on the
  West Gharib PSC.
- Two wells were drilled on West Gharib during the fourth quarter of 2007,
  resulting in a potential multi- zone oil well in the Hana field and an
  exploration dry hole on the Hoshia lease. A new development oil well was
  drilled in the Hana field subsequent to year end. The two new wells at Hana
  were placed on production in late February, increasing production by
  approximately 500 bopd to TransGlobe.
- Two exploration wells were drilled on the Nuqra Block 1 in Upper Egypt,
  resulting in two dry holes. The successful identification of a 460-meter
  (1,500-foot) interval of mature source rocks in the shallower Cretaceous
  section of the Narmer #1 exploration well and the discovery of oil on a
  non-owned block by a third party in the Cretaceous section of Al Baraka #1 on
  the west side of the Nile river has encouraged the Company to continue with
  additional exploration drilling on the Nuqra Block.

2007 Drilling Activities

Working Interest
    Gross wells
    Oil
    DryWest Gharib
    70%(1)
    2
    1
    1Nuqra Block
      1
    50%
    2
    -
    2Total
    
    4
    1
    3


Note:

|(1) | Effective February 5, 2008, the Company owns 100% of the
      West Gharib PSC, consisting of nine development leases. The Company owns
      100% of the Hana development lease and has an effective working interest
      of 75% in the balance of the development leases.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2007 Production

Production from the West Gharib PSC averaged 2,932 bopd (1,594
bopd net to TransGlobe) during the fourth quarter of 2007, consistent with the
expected 1,600 bopd at the time of the initial purchase of Dublin International
and Drucker. Production from the West Gharib PSC averaged 2,895 bopd (1,636 bopd
net to TransGlobe) in January 2008 and approximately 3,000 bopd (2,550 bopd net
to TransGlobe) in February 2008 (with the GHP 30% interest being acquired on
February 5, 2008).

---

14

With the addition of the new wells at Hana, it is expected that
production from West Gharib will average approximately 3,400 bopd (2,900 bopd
net to TransGlobe) during March. This represents a 16% production increase in
total field production from West Gharib since the acquisition of the West Gharib
assets in September 2007.

Quarterly West Gharib Production (bopd)

|                                             | 2007  
|-------------------------------------------- | ------
|                                             | Q-3(1)
|Gross field production rate                  | 218   
|TransGlobe working interest                  | 118   
|TransGlobe net (after royalties and other)   | 73    
|TransGlobe net (after royalties and tax) (2) | 51    

Notes:

|(1) | Production presented represents six days' production
      averaged over the quarter.                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Under the terms of the West Gharib PSC, royalties, other
      and taxes are paid out of the government's share of production sharing
      oil.

2008 Outlook

The Company has budgeted $33.5 million for Egypt in 2008, with
$24.3 million (73%) allocated to development and $9.2 million (27%) allocated to
exploration. With the addition of the West Gharib PSC in 2007, the primary focus
in Egypt will shift to the appraisal and development of West Gharib in 2008 and
2009.

On West Gharib, the Company has budgeted for 15 to 18 wells, a
new 300+ km2 3-D seismic acquisition program, facility upgrades and
potential pressure maintanence/waterflood projects. TransGlobe has two drilling
rigs under long-term contracts for the West Gharib properties. The larger 1,500
hp rig has the depth capacity to drill all of the exploration and development
prospects. TransGlobe plans to utilize this rig to drill continuously at a pace
of eight to 12 wells per year, depending upon the depths drilled. The second,
smaller drilling rig is capable of drilling shallow wells (up to 4,000 feet) and
can be utilized when appropriate. The smaller rig is currently working for
another party on a farm-out basis and will be available as required in 2008. The
Company has added a third drilling rig to accelerate the exploration and
development program for the West Gharib area. Assuming the third rig commences
operations in July 2008, a total of 15 to 18 wells could be drilled in 2008 on
the West Gharib leases. The Hana and Hoshia fields have been identified as
potential candidates for pressure maintenance or water floods to enhance
recoveries. The Company expects to finalize reservoir simulations studies and
initiate secondary recoverypilot projects at Hana and Hoshia in 2008.
Depending upon the results, the respective pilot projects could be expanded into
full field developments in 2009.

On the Nuqra Block 1, existing seismic data was re-mapped and
several Cretaceous targets were identified for a future drilling program. One
exploration well has been budgeted for 2008, on a contingency basis. Currently,
the Company is discussing rig sharing possibilities with adjacent operators to
facilitate a potential 2008 drilling program.

2008 Capital Program

2008 Capital Budget
      $ Millions
    Wells Exploration
    Wells Development
    SeismicWest Gharib PSC
    $ 29.3
    2
    16
    300+ km2new 3-DNuqra Block 1
    $ 4.2
    1
    -Total
    $ 33.5
    3
    16
    300+ km2new 3-D


Yemen

The Company holds interests in five non-operated PSCs in Yemen.
Blocks 32 and S-1 are development agreements, and Blocks 72, 75 and 84 are
exploration agreements.

---

15

Highlights - Yemen

- Drilled 13 wells (10 oil, 3 dry)
- Development of the Godah Oil pool  Block 32
- Expanded Central Production Facility at An Nagyah  Block S-1
- Commenced large 3-D seismic program  Block 72
- Progressed potential gas development  Block S-1
- Signed PSCs for Blocks 75 and 84

2007 Activities and Results

During 2007, the Company participated in 13 wells, a new 3-D
seismic acquisition program and facility expansions at An Nagyah, Tasour PF and
Godah. The following is a summary of the Company's activities in Yemen in 2007:

- On Block 32, the operator drilled four oil wells, two exploratory dry holes
  and completed the expansion of facilities at the Tasour and Godah CPF.
- On Block S-1, the operator drilled six oil wells, re-entered one gas well
  and completed the An Nagyah CPF expansion. In addition, the operator proposed
  to MOM that natural gas from An Naeem be injected into the western portion of
  the An Nagyah pool. The planned gas injection will provide additional pressure
  support in the western portion of the field to improve production performance
  and increase recoverable reserves. Subject to MOM approval, gas injection
  could commence in 2008 when a 25-km pipeline from An Naeem to the An Nagyah
  CPF is completed.
- On Block 72, the operator drilled one (0.33 net) exploration well (dry) and
  commenced a 410 km23-D seismic acquisition program, which will be
  completed in early 2008.
- On the new exploration Blocks 75 and 84, the respective PSCs were signed
  and submitted to MOM and the Government of Yemen for approval and
  ratification. The Block 75 PSC was approved on March 8, 2008. It is expected
  that the Block 84 PSCs will also be approved during 2008.

2007 Drilling Activities

Working Interest
    Gross wells
    Oil
    DryBlock 32
    13.8
    6
    4
    2Block S-1
    25.0
    6
    6
    -Block 72
    33.0
    1
    -
    1Total
    
    13
    10
    3


2007 Production

Production from Block 32 averaged 8,700 bopd (1,202 bopd net to
TransGlobe) during the year. The Godah field contributed 2,034 bopd (gross),
with the balance coming from the Tasour field (6,666 bopd gross). Block 32
production averaged approximately 7,475 bopd (1,032 bopd net to TransGlobe) in
January and February of 2008. A six-inch gas pipeline connecting the Godah
production facility to the Tasour CPF was constructed to supply associated gas
production from the Godah pool to the Tasour CPF for fuel gas. It is expected
that up to 60% of diesel being consumed for power generation can be replaced
with natural gas, resulting in lower operating costs. The fuel-gas project is
expected to be operational in the second quarter of 2008.

2007Block 32 Production
        by Quarter (bopd)
      Q-1
      Q-2
      Q-3
      Q-4Gross field production rate
      9,842
      8,488
      8,913
      7,582TransGlobe working interest
      1,359
      1,172
      1,231
      1,047TransGlobe net (after royalties and other)
      983
      900
      845
      620TransGlobe net (after
        royalties, other and tax)(1)
      867
      819
      722
      478


---

16

Note:

|(1) | Under the terms of the Block 32 PSC, royalties, other and
      taxes are paid out of the government's share of production sharing
    oil.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

Production from Block S-1 averaged 10,497 bopd (2,624 bopd net
to TransGlobe) during 2007. The new expanded CPF at An Nagyah became fully
operational in the fourth quarter and is now capable of processing 20,000 bopd
of oil production and associated gas production. The average production during
January and February was 11,117 bopd (2,779 bopd net to TransGlobe).

2007Block S-1 Production
        by Quarter (bopd)
      Q-1
      Q-2
      Q-3
      Q-4Gross field production rate
      10,132
      11,167
      9,924
      10,768TransGlobe working interest
      2,533
      2,792
      2,481
      2,692TransGlobe net (after royalties and other)
      1,471
      1,577
      1,418
      1,469TransGlobe net (after
        royalties, other and tax)
      1,198
      1,264
      1,162
      1,153


Note:

|(1) | Under the terms of the Block S-1 PSC, royalties, other
      and taxes are paid out of the government's share of production sharing
      oil.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

2008 Outlook

The Company has budgeted $23.8 million for Yemen in 2008, with
$8.4 million (35%) allocated to development and $15.4 million (65%) allocated to
exploration. With the completion of the An Nagyah and Godah facility expansions
in 2007, the primary focus will shift to exploration in 2008 and 2009. On Block
72, the 410 km23-D seismic acquisition will be processed and mapped
by mid-2008, with exploration drilling to commence in the second half of 2008.
With the recent (March 8, 2008) approval of the Block 75 PSC, it is expected
that 400 km2 of 3-D seismic will be shot by the Company on Block
75/S-1. Subject to government approval of the Block 84 PSC, an additional 400+
km2 of 3-D seismic will be acquired during 2008, with an expected
increase in exploration drilling in 2009.

In addition to the planned capital program, the Block S-1 Joint
Venture Group is also considering possibilities for a gas sales agreement
utilizing known deposits of gas on Block S-1. An approved gas development plan
is required prior to TransGlobe being able to recognize any reserves associated
with the An Naeem discovery or proceed with development of this discovery.

2008 Capital Program

Firm & Contingent
    2008 Budget $ Millions
    Wells Exploration
    Wells Development
    SeismicBlock 32
    $ 3.8
    3
    3Block S-1
    $ 8.7
    -
    3
    200+ Km2new 3-DBlock 72
    $ 5.7
    2
    -
    410 Km2new 3-D commenced Q4,07Block 75
    $ 1.8
    -
    -
    200+ Km2new 3-DBlock 84
    $ 3.8
    -
    -
    400+ Km2new 3-DTotal
    $23.8
    5
    6
    1,200+ Km2new 3-D


Summary of International PSC Terms

All of the Company's international blocks are 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 PSCs provide for the government to receive a percentage
gross royalty on the gross production. The remaining oil production, after
deducting the gross royalty, is split between cost sharing oil and production
sharing oil. Cost sharing oil is up to a maximum percentage as defined in the
specific PSC. Cost oil is assigned to recover approved operating and capital
costs spent on the specific project. Each PSC is treated individually in respect
of cost recovery and

---

17

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 PSCs.

The following table summarizes the Company's international PSC
terms for the first tranche of production for each block. All the PSCs have
different terms for production levels above the first tranche, which are unique
to each PSC. 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.

PSC Terms  Egypt and Yemen (Oil Production: First
Production Tranche)

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


Note:

|(1) | Block 32 terms will revert to original PSC terms if
      production exceeds 25 Mbopd or proved reserves exceed 30 million barrels.
      Reserves are audited every two years by an independent evaluator. At
      November 2006, proved reserves were less than 30 MMbbl. The next reserve
      audit is November 2008.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OPERATIONS REVIEW - CANADA

Divestitures

In December 2007, the Company announced the strategic decision
to sell the Canadian division to fund and focus on growth opportunities in the
MENA region. Early in 2008, the Company retained Tristone Capital Inc. as
financial advisor to assist in the divestment of the Canadian properties. In the
current divestiture schedule, bids were due by March 13, 2008, with an
anticipated closing date of late April/early May, subject to an acceptable price
being achieved.

Highlights

- Drilled 18 wells (15 gas, 3 dry)
- Increased production to 1,500 boepd

2007 Activities and Results

The Company drilled 15 gas wells in the Nevis, Thorsby and
Morningside areas in central Alberta. The Company's production averaged 1,394
boepd during 2007. The Company's average production during January and February
was approximately 1,492 boepd.

---

18

2007 Canadian Production by Quarter (boepd)

Q-1
    Q-2
    Q-3
    Q-4TransGlobe working interest
    1,283
    1,389
    1,397
    1,504TransGlobe net
      (after royalties)
    1,148
    1,144
    1,175
    1,250


STATEMENT OF RESERVES DATA AND OTHER OIL AND GAS INFORMATION

The report of management and the directors on oil and gas
disclosure in Form 51-101F2 and the report on reserves data 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 "Statement") is dated February 6, 2008,
with the effective date of the Statement being December 31, 2007.

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, 2007. In 2007, 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, 2007.

The reserves data set forth below (the "Reserves Data") was
prepared by DeGolyer with an effective date of December 31, 2007. The Reserves
Data summarizes the oil, liquids and natural gas reserves of the Company and the
net present values of future net revenue for these reserves using constant
prices and costs and forecast prices and costs. The Company reports in U.S.
currency and therefore the reports have been converted to U.S. dollars at the
prevailing conversion rate at December 31 of the respective years.

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

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

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

---

19

Reserves Data (Forecast Prices and Costs)

SUMMARY OF OIL AND GAS RESERVES TOTAL
COMPANYAS OF DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ---------------- |  |  | ------ |  |  | -------- |  |  | ------- |  |  | -------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      Boes | 
|                     |  | Gross(1)             |  |  | Net(2)          |  |  | Gross(1)          |  |  | Net(2)                    |  |  | Gross(1)         |  |  | Net(2) |  |  | Gross(1) |  |  | Net(2)  |  |  | Gross(1) | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)           |  |  | (MMcf) |  |  | (Mbbls)  |  |  | (Mbbls) |  |  | (MBoe)   | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Producing            |  | 4,467                |  |  | 2,373           |  |  | 2,145             |  |  | 1,199                     |  |  | 7,454            |  |  | 6,153  |  |  | 166      |  |  | 120     |  |  | 8,020    | 
|Non-Producing        |  | 302                  |  |  | 188             |  |  | 141               |  |  | 77                        |  |  | 1,996            |  |  | 1,726  |  |  | 41       |  |  | 28      |  |  | 817      | 
|Undeveloped          |  | 2,294                |  |  | 1,244           |  |  | 509               |  |  | 291                       |  |  | 1,257            |  |  | 1,039  |  |  | 17       |  |  | 11      |  |  | 3,029    | 
|Total Proved         |  | 7,063                |  |  | 3,805           |  |  | 2,795             |  |  | 1,566                     |  |  | 10,707           |  |  | 8,918  |  |  | 224      |  |  | 160     |  |  | 11,866   | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Probable             |  | 1,066                |  |  | 602             |  |  | 2,311             |  |  | 1,249                     |  |  | 5,759            |  |  | 4,784  |  |  | 186      |  |  | 128     |  |  | 4,523    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Proved Plus Probable |  | 8,129                |  |  | 4,407           |  |  | 5,106             |  |  | 2,816                     |  |  | 16,467           |  |  | 13,703 |  |  | 410      |  |  | 288     |  |  | 16,389   | 

Notes:

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

SUMMARY OF OIL AND GAS RESERVES EGYPTAS OF
DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |         |  |  |         |  |  |         | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ---------------- |  |  | ------ |  |  | ------- |  |  | ------- |  |  | ------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      Boes | 
|                     |  | Gross(1              |  |  | Net(2           |  |  | Gross(1           |  |  | Net(2                     |  |  | Gross(1          |  |  | Net(2  |  |  | Gross(1 |  |  | Net(2   |  |  | Gross(1 | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)           |  |  | (MMcf) |  |  | (Mbbls) |  |  | (Mbbls) |  |  | (MBoe)  | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |         |  |  |         |  |  |         | 
|Producing            |  | -                    |  |  | -               |  |  | 2,145             |  |  | 1,199                     |  |  | -                |  |  | -      |  |  | -       |  |  | -       |  |  | 2,145   | 
|Non-Producing        |  | -                    |  |  | -               |  |  | 141               |  |  | 77                        |  |  | -                |  |  | -      |  |  | -       |  |  | -       |  |  | 141     | 
|Undeveloped          |  | -                    |  |  | -               |  |  | 509               |  |  | 291                       |  |  | -                |  |  | -      |  |  | -       |  |  | -       |  |  | 509     | 
|Total Proved         |  | -                    |  |  | -               |  |  | 2,795             |  |  | 1,566                     |  |  | -                |  |  | -      |  |  | -       |  |  | -       |  |  | 2,795   | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |         |  |  |         |  |  |         | 
|Probable             |  | -                    |  |  | -               |  |  | 2,311             |  |  | 1,249                     |  |  | -                |  |  | -      |  |  | -       |  |  | -       |  |  | 2,311   | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |         |  |  |         |  |  |         | 
|Proved Plus Probable |  | -                    |  |  | -               |  |  | 5,106             |  |  | 2,816                     |  |  | -                |  |  | -      |  |  | -       |  |  | -       |  |  | 5,106   | 

Notes:

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

---

20

SUMMARY OF OIL AND GAS RESERVES YEMENAS OF
DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ---------------- |  |  | ------ |  |  | -------- |  |  | ------- |  |  | -------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      Boes | 
|                     |  | Gross(1}             |  |  | Net(2}          |  |  | Gross(1}          |  |  | Net(2}                    |  |  | Gross(1}         |  |  | Net(2} |  |  | Gross(1} |  |  | Net(2}  |  |  | Gross(1} | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)           |  |  | (MMcf) |  |  | (Mbbls)  |  |  | (Mbbls) |  |  | (MBoe)   | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Producing            |  |                      |  |  |                 |  |  | -                 |  |  | -                         |  |  | -                |  |  | -      |  |  | -        |  |  | -       |  |  |          | 
|                     |  | 4,236                |  |  | 2,171           |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  | 4,236    | 
|Non-Producing        |  |                      |  |  |                 |  |  | -                 |  |  | -                         |  |  | -                |  |  | -      |  |  | -        |  |  | -       |  |  |          | 
|                     |  | 219                  |  |  | 114             |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  | 219      | 
|Undeveloped          |  | 2,112                |  |  | 1,078           |  |  | -                 |  |  | -                         |  |  | -                |  |  | -      |  |  | -        |  |  | -       |  |  | 2,112    | 
|Total Proved         |  |                      |  |  |                 |  |  | -                 |  |  | -                         |  |  | -                |  |  | -      |  |  | -        |  |  | -       |  |  |          | 
|                     |  | 6,567                |  |  | 3,362           |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  | 6,567    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Probable             |  | 903                  |  |  | 457             |  |  | -                 |  |  | -                         |  |  | -                |  |  | -      |  |  | -        |  |  | -       |  |  | 903      | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Proved Plus Probable |  | 7,470                |  |  | 3,819           |  |  | -                 |  |  | -                         |  |  | -                |  |  | -      |  |  | -        |  |  | -       |  |  | 7,470    | 

Notes:

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

SUMMARY OF OIL AND GAS RESERVES CANADAAS OF
DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ---------------- |  |  | ------ |  |  | -------- |  |  | ------- |  |  | -------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      Boes | 
|                     |  | Gross(1)             |  |  | Net(2)          |  |  | Gross(1)          |  |  | Net(2)                    |  |  | Gross(1)         |  |  | Net(2) |  |  | Gross(1) |  |  | Net(2)  |  |  | Gross(1) | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)           |  |  | (MMcf) |  |  | (Mbbls)  |  |  | (Mbbls) |  |  | (MBoe)   | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Producing            |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 231                  |  |  | 203             |  |  | -                 |  |  | -                         |  |  | 7,454            |  |  | 6,153  |  |  | 166      |  |  | 120     |  |  | 1,639    | 
|Non-Producing        |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 83                   |  |  | 74              |  |  | -                 |  |  | -                         |  |  | 1,996            |  |  | 1,726  |  |  | 41       |  |  | 28      |  |  | 457      | 
|Undeveloped          |  | 182                  |  |  | 166             |  |  | -                 |  |  |                           |  |  | 1,257            |  |  | 1,039  |  |  | 17       |  |  | 11      |  |  | 409      | 
|Total Proved         |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 495                  |  |  | 443             |  |  | -                 |  |  | -                         |  |  | 10,707           |  |  | 8,918  |  |  | 224      |  |  | 160     |  |  | 2,504    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Probable             |  | 163                  |  |  | 145             |  |  | -                 |  |  | -                         |  |  | 5,759            |  |  | 4,784  |  |  | 186      |  |  | 128     |  |  | 1,309    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                  |  |  |        |  |  |          |  |  |         |  |  |          | 
|Proved Plus Probable |  | 659                  |  |  | 588             |  |  | -                 |  |  | -                         |  |  | 16,467           |  |  | 13,703 |  |  | 410      |  |  | 288     |  |  | 3,813    | 

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.   

---

21

NET PRESENT VALUES OF FUTURE NET REVENUES TOTAL COMPANYAS OF DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

The estimated future net revenues presented do not represent
fair market value. The estimated future net revenues presented below are
calculated using the respective Consultant price forecasts and inflation rates
as summarized in the Notes to Reserves Data Tables (Note 3).

|                           |  | Before Income Tax(1)(2)  |  |  | After Income Tax(1)(2)   | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|                           |  |                          |  |  |                          | 
|Proved                     |  |                          |  |  |                          | 
|                           |  |                          |  |  |                          | 
|Developed producing        |  | 177.6                    |  |  | 158.3                    | 
|Developed non-producing    |  | 19.3                     |  |  | 15.4                     | 
|Undeveloped                |  | 50.1                     |  |  | 38.0                     | 
|Total Proved               |  | 246.9                    |  |  | 211.7                    | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 96.0                     |  |  | 72.8                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 343.0                    |  |  | 284.5                    | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to U.S. dollars at the December
      31, 2007 exchange rates of 1.00 US$/Cdn$.                                                                                                                                            

NET PRESENT VALUES OF FUTURE NET REVENUES EGYPTAS OF DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

|                           |  | Before Income Tax(1)     |  |  | After Income Tax(1)      | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|                           |  |                          |  |  |                          | 
|Proved                     |  |                          |  |  |                          | 
|                           |  |                          |  |  |                          | 
|Developed producing        |  | 43.8                     |  |  | 38.5                     | 
|Developed non-producing    |  | 2.2                      |  |  | 1.8                      | 
|Undeveloped                |  | 7.5                      |  |  | 6.3                      | 
|Total Proved               |  | 53.5                     |  |  | 46.6                     | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 37.9                     |  |  | 29.7                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 91.4                     |  |  | 76.3                     | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

22

NET PRESENT VALUES OF FUTURE NET REVENUES YEMENAS OF DECEMBER 31, 2007(FORECAST PRICES AND COSTS)

|                           |  | Before Income Tax(1)     |  |  | After Income Tax(1)      | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|                           |  |                          |  |  |                          | 
|Proved                     |  |                          |  |  |                          | 
|                           |  |                          |  |  |                          | 
|Developed producing        |  | 84.8                     |  |  | 76.2                     | 
|Developed non-producing    |  | 4.1                      |  |  | 3.7                      | 
|Undeveloped                |  | 36.5                     |  |  | 27.6                     | 
|Total Proved               |  | 125.4                    |  |  | 107.4                    | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 17.4                     |  |  | 13.4                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 142.8                    |  |  | 120.8                    | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NET PRESENT VALUES OF FUTURE NET REVENUES CANADAAS OF DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

|                           |  | Before Income Tax(1)     |  |  | After Income Tax(1)      | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|Proved                     |  |                          |  |  |                          | 
|Developed producing        |  | 49.0                     |  |  | 43.6                     | 
|Developed non-producing    |  | 13.0                     |  |  | 10.0                     | 
|Undeveloped                |  | 6.0                      |  |  | 4.0                      | 
|Total Proved               |  | 68.0                     |  |  | 57.7                     | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 40.8                     |  |  | 29.7                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 108.7                    |  |  | 87.4                     | 

Note:

|(1) | Canadian values converted to U.S. dollars at the December
      31, 2007 exchange rates of 1.00 US$/Cdn$.
|--- | ---------------------------------------------------------------------------------------------------------

---

23

TOTAL FUTURE NET REVENUES (UNDISCOUNTED) AS AT
DECEMBER 31, 2007 
  (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       |  |  | 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)             |  | 172     |  |  | 76        |  |  | 39        |  |  | 4           |  |  | 1           |  |  | 54         |  |  | -       |  |  | 54         | 
|Yemen(1)             |  | 551     |  |  | 269       |  |  | 150       |  |  | 7           |  |  | -           |  |  | 125        |  |  | -       |  |  | 125        | 
|Canada(2)            |  | 144     |  |  | 22        |  |  | 40        |  |  | 11          |  |  | 3           |  |  | 68         |  |  | 4       |  |  | 64         | 
|Total Company        |  | 868     |  |  | 367       |  |  | 228       |  |  | 22          |  |  | 4           |  |  | 247        |  |  | 4       |  |  | 243        | 
|                     |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Proved Plus Probable |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Reserves             |  |         |  |  |           |  |  |           |  |  |             |  |  |             |  |  |            |  |  |         |  |  |            | 
|Egypt(1)             |  | 315     |  |  | 141       |  |  | 72        |  |  | 10          |  |  | 1           |  |  | 91         |  |  | -       |  |  | 91         | 
|Yemen(1)             |  | 626     |  |  | 306       |  |  | 169       |  |  | 8           |  |  | -           |  |  | 143        |  |  | -       |  |  | 143        | 
|Canada(2)            |  | 221     |  |  | 35        |  |  | 60        |  |  | 13          |  |  | 4           |  |  | 109        |  |  | 15      |  |  | 94         | 
|Total Company        |  | 1162    |  |  | 482       |  |  | 301       |  |  | 31          |  |  | 5           |  |  | 343        |  |  | 15      |  |  | 328        | 

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 Royalty for reporting purposes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to U.S. dollars at the December
      31, 2007 exchange rates of 1.00 US$/Cdn$.                                                                                                                                                                                                                                                  

---

24

TOTAL FUTURE NET REVENUES BY PRODUCTION GROUPAS AT DECEMBER 31, 2007 (FORECAST PRICES AND COSTS)

|             |  |             |  | Egypt          |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|------------ |  | ----------- |  | -------------- |  | -------------- |  | --------------- |  | -------------- |  | --------------- | - | -------------- | - | --------------- |  | -------------- | 
|             |  |             |  | Future net     |  | Egypt          |  | Yemen           |  | Yemen          |  | Canada          |   | Canada         |   | Total           |  | Total          | 
|             |  |             |  | Revenue        |  | Unit Value     |  | Future net      |  | Unit Value     |  | Future net      |   | Unit Value     |   | Future net      |  | Unit Value     | 
|             |  |             |  | Before         |  | Before Tax     |  | Revenue         |  | Before Tax     |  | Revenue         |   | Before Tax     |   | Revenue         |  | Before Tax     | 
|             |  |             |  | Taxes(1)       |  | (discounted at |  | Before Taxes(1) |  | (discounted at |  | Before Taxes(2} |   | (discounted at |   | Before Taxes(1) |  | (discounted at | 
|             |  |             |  | (discounted at |  | 10%/year)      |  | (discounted at  |  | 10%/year)      |  | (discounted at  |   | 10%/year)      |   | (discounted at  |  | 10%/year)      | 
|Reserves     |  | Product     |  | 10%/year       |  | ($/Mcf)        |  | 10%/year)       |  | ($/Mcf)        |  | 10%/year)       |   | ($/Mcf)        |   | 10%/year)       |  | ($/Mcf)        | 
|Category     |  | Group       |  | (US$MM)        |  | ($/Bbl)        |  | (US$MM)         |  | ($/Bbl)        |  | (US$MM)         |   | ($/Bbl)        |   | (US$MM)         |  | ($/Bbl)        | 
|Proved       |  | Light and   |  | -              |  |                |  | 69.0            |  | 31.78          |  | 6.6             |   | 32.51          |   | 75.6            |  | 31.84          | 
|Producing    |  | Medium Oil  |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Heavy Oil   |  | 34.3           |  | 28.61          |  | -               |  | -              |  | -               |   | -              |   | 34.3            |  | 28.61          | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 24.4            |   | 3.97           |   | 24.4            |  | 3.97           | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 8.3             |   | 69.17          |   | 8.3             |  | 69.17          | 
|             |  | Liquids     |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|Proved Non-  |  | Light and   |  | -              |  | -              |  | 3.2             |  | 28.07          |  | 1.0             |   | 13.51          |   | 4.2             |  | 22.34          | 
|Producing    |  | Medium Oil  |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Heavy Oil   |  | 1.5            |  | 19.48          |  | -               |  | -              |  | -               |   | -              |   | 1.5             |  | 19.48          | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 5.2             |   | 3.01           |   | 5.2             |  | 3.01           | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 1.9             |   | 67.86          |   | 1.9             |  | 67.86          | 
|             |  | Liquids     |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|Proved       |  | Light and   |  | -              |  | -              |  | 21.3            |  | 19.76          |  | (2.2            | ) | (13.25         | ) | 19.1            |  | 15.35          | 
|Undeveloped  |  | Medium Oil  |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Heavy Oil   |  | 5.3            |  | 18.21          |  | -               |  | -              |  | -               |   | -              |   | 5.3             |  | 18.21          | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 4.0             |   | 3.85           |   | 4.0             |  | 3.85           | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 0.6             |   | 54.55          |   | 0.6             |  | 54.55          | 
|             |  | Liquids     |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|Total Proved |  | Light and   |  | -              |  | -              |  | 93.5            |  | 27.81          |  | 5.4             |   | 12.19          |   | 98.9            |  | 25.99          | 
|             |  | Medium Oil  |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Heavy Oil   |  | 41.1           |  | 26.25          |  | -               |  | -              |  | -               |   | -              |   | 41.1            |  | 26.25          | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 33.6            |   | 3.77           |   | 33.6            |  | 3.77           | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 10.8            |   | 67.50          |   | 10.8            |  | 67.50          | 
|             |  | Liquids     |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|Probable     |  | Light and   |  | -              |  | -              |  | 10.6            |  | 23.19          |  | 3.1             |   | 21.38          |   | 13.7            |  | 22.76          | 
|             |  | Medium Oil  |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Heavy Oil   |  | 24.0           |  | 19.22          |  | -               |  | -              |  | -               |   | -              |   | 24.0            |  | 19.22          | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 14.1            |   | 2.95           |   | 14.1            |  | 2.95           | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 5.8             |   | 45.31          |   | 5.8             |  | 45.31          | 
|             |  | Liquids     |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|Proved Plus  |  | Light and   |  | -              |  | -              |  | 104.1           |  | 27.26          |  | 8.5             |   | 14.46          |   | 112.6           |  | 25.55          | 
|Probable     |  | Medium Oil  |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Heavy Oil   |  | 65.1           |  | 23.12          |  | -               |  | -              |  | -               |   | -              |   | 65.1            |  | 23.12          | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 47.7            |   | 3.48           |   | 47.7            |  | 3.48           | 
|             |  |             |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 
|             |  | Natural Gas |  | -              |  | -              |  | -               |  | -              |  | 16.6            |   | 57.64          |   | 16.6            |  | 57.64          | 
|             |  | Liquids     |  |                |  |                |  |                 |  |                |  |                 |   |                |   |                 |  |                | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to U.S. dollars at the December
      31, 2007 exchange rates of 1.00 US$/Cdn$.                                                                                                                                            

---

25

Reserves Data (Constant Prices and Costs)

SUMMARY OF OIL AND GAS RESERVES TOTAL COMPANYAS OF DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ----------------- |  |  | ------ |  |  | -------- |  |  | ------- |  |  | -------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      boe's | 
|                     |  | Gross(1)             |  |  | Net(2)          |  |  | Gross(1)          |  |  | Net(2)                    |  |  | Gross(1)          |  |  | Net(2) |  |  | Gross(1) |  |  | Net(2)  |  |  | Gross(1) | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)            |  |  | (MMcf) |  |  | (Mbbls)  |  |  | (Mbbls) |  |  | (MBoe)   | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Producing            |  | 4,472                |  |  | 2,312           |  |  | 2,145             |  |  | 1,173                     |  |  | 7,549             |  |  | 6,239  |  |  | 167      |  |  | 121     |  |  | 8,042    | 
|Non-Producing        |  | 305                  |  |  | 187             |  |  | 141               |  |  | 75                        |  |  | 2,027             |  |  | 1,752  |  |  | 41       |  |  | 29      |  |  | 825      | 
|Undeveloped          |  | 2,301                |  |  | 1,207           |  |  | 509               |  |  | 284                       |  |  | 1,279             |  |  | 1,057  |  |  | 17       |  |  | 12      |  |  | 3,040    | 
|Total Proved         |  | 7,078                |  |  | 3,705           |  |  | 2,795             |  |  | 1,532                     |  |  | 10,855            |  |  | 9,048  |  |  | 225      |  |  | 161     |  |  | 11,907   | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Probable             |  | 1,076                |  |  | 598             |  |  | 2,311             |  |  | 1,222                     |  |  | 5,825             |  |  | 4,846  |  |  | 187      |  |  | 129     |  |  | 4,545    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Proved Plus Probable |  | 8,153                |  |  | 4,304           |  |  | 5,106             |  |  | 2,754                     |  |  | 16,681            |  |  | 13,894 |  |  | 412      |  |  | 290     |  |  | 16,452   | 

Notes:

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

SUMMARY OF OIL AND GAS RESERVES EGYPTAS OF
DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ----------------- |  |  | ------ |  |  | -------- |  |  | ------- |  |  | -------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      boe's | 
|                     |  | Gross(1)             |  |  | Net(2)          |  |  | Gross(1)          |  |  | Net(2)                    |  |  | Gross(1)          |  |  | Net(2) |  |  | Gross(1) |  |  | Net(2)  |  |  | Gross(1) | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)            |  |  | (MMcf) |  |  | (Mbbls)  |  |  | (Mbbls) |  |  | (MBoe)   | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Producing            |  | -                    |  |  | -               |  |  | 2,145             |  |  | 1,173                     |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 2,145    | 
|Non-Producing        |  | -                    |  |  | -               |  |  | 141               |  |  | 75                        |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 141      | 
|Undeveloped          |  | -                    |  |  | -               |  |  | 509               |  |  | 284                       |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 509      | 
|Total Proved         |  | -                    |  |  | -               |  |  | 2,795             |  |  | 1,532                     |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 2,795    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Probable             |  | -                    |  |  | -               |  |  | 2,311             |  |  | 1,222                     |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 2,311    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Proved Plus Probable |  | -                    |  |  | -               |  |  | 5,106             |  |  | 2,754                     |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 5,106    | 

Notes:

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

---

26

SUMMARY OF OIL AND GAS RESERVES YEMENAS OF
DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ----------------- |  |  | ------ |  |  | -------- |  |  | ------- |  |  | -------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      boe's | 
|                     |  | Gross(1)             |  |  | Net(2)          |  |  | Gross(1)          |  |  | Net(2)                    |  |  | Gross(1)          |  |  | Net(2) |  |  | Gross(1) |  |  | Net(2)  |  |  | Gross(1) | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)            |  |  | (MMcf) |  |  | (Mbbls)  |  |  | (Mbbls) |  |  | (MBoe)   | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Producing            |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 4,236                |  |  | 2,104           |  |  | -                 |  |  | -                         |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 4,236    | 
|Non-Producing        |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 219                  |  |  | 110             |  |  | -                 |  |  | -                         |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 219      | 
|Undeveloped          |  | 2,112                |  |  | 1,034           |  |  | -                 |  |  | -                         |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 2,112    | 
|Total Proved         |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 6,567                |  |  | 3,248           |  |  | -                 |  |  | -                         |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 6,567    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Probable             |  | 903                  |  |  | 444             |  |  | -                 |  |  | -                         |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 903      | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Proved Plus Probable |  | 7,470                |  |  | 3,693           |  |  | -                 |  |  | -                         |  |  | -                 |  |  | -      |  |  | -        |  |  | -       |  |  | 7,470    | 

Notes:

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

SUMMARY OF OIL AND GAS RESERVES CANADAAS OF
DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|                     |  | Light & Medium Crude |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|-------------------- |  | -------------------- |  |  | --------------- |  |  | ----------------- |  |  | ------------------------- |  |  | ----------------- |  |  | ------ |  |  | -------- |  |  | ------- |  |  | -------- | 
|                     |  | Oil                  |  |  | Heavy
      Oil |  |  | Natural
      Gas |  |  | Natural
      Gas Liquids |  |  | Total
      boe's | 
|                     |  | Gross(1)             |  |  | Net(2)          |  |  | Gross(1)          |  |  | Net(2)                    |  |  | Gross(1)          |  |  | Net(2) |  |  | Gross(1) |  |  | Net(2)  |  |  | Gross(1) | 
|By Category          |  | (Mbbls)              |  |  | (Mbbls)         |  |  | (Mbbls)           |  |  | (Mbbls)                   |  |  | (MMcf)            |  |  | (MMcf) |  |  | (Mbbls)  |  |  | (Mbbls) |  |  | (MBoe)   | 
|Proved               |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Producing            |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 236                  |  |  | 207             |  |  | -                 |  |  | -                         |  |  | 7,549             |  |  | 6,239  |  |  | 167      |  |  | 121     |  |  | 1,661    | 
|Non-Producing        |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 86                   |  |  | 77              |  |  | -                 |  |  | -                         |  |  | 2,027             |  |  | 1,752  |  |  | 41       |  |  | 29      |  |  | 465      | 
|Undeveloped          |  | 189                  |  |  | 173             |  |  | -                 |  |  | -                         |  |  | 1,279             |  |  | 1,057  |  |  | 17       |  |  | 12      |  |  | 419      | 
|Total Proved         |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|                     |  | 510                  |  |  | 457             |  |  | -                 |  |  | -                         |  |  | 10,855            |  |  | 9,048  |  |  | 225      |  |  | 161     |  |  | 2,545    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Probable             |  | 173                  |  |  | 154             |  |  | -                 |  |  | -                         |  |  | 5,825             |  |  | 4,846  |  |  | 187      |  |  | 129     |  |  | 1,331    | 
|                     |  |                      |  |  |                 |  |  |                   |  |  |                           |  |  |                   |  |  |        |  |  |          |  |  |         |  |  |          | 
|Proved Plus Probable |  | 683                  |  |  | 611             |  |  |                   |  |  | -                         |  |  | 16,681            |  |  | 13,894 |  |  | 412      |  |  | 290     |  |  | 3,876    | 

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.   

---

27

NET PRESENT VALUES OF FUTURE NET REVENUES TOTAL COMPANYAS OF DECEMBER 31, 2007 (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, 2007. The prices
were held constant and costs were not inflated for the life of the reserves as
summarized in the Notes to Reserves Data Tables (Note 4).

|                           |  | Before Income Tax(1)(2)  |  |  | After Income Tax(1)(2)   | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|                           |  |                          |  |  |                          | 
|Proved                     |  |                          |  |  |                          | 
|                           |  |                          |  |  |                          | 
|Developed producing        |  | 197.5                    |  |  | 174.8                    | 
|Developed non-producing    |  | 21.8                     |  |  | 17.3                     | 
|Undeveloped                |  | 60.3                     |  |  | 45.4                     | 
|Total Proved               |  | 279.6                    |  |  | 237.5                    | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 112.1                    |  |  | 84.3                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 391.7                    |  |  | 321.7                    | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to US dollars at the December
      31, 2007 exchange rates of 1.0 US$/Cdn$.                                                                                                                                               

NET PRESENT VALUES OF FUTURE NET REVENUES EGYPTAS OF DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|                           |  | Before Income Tax(1)     |  |  | After Income Tax(1)      | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|                           |  |                          |  |  |                          | 
|Proved                     |  |                          |  |  |                          | 
|                           |  |                          |  |  |                          | 
|Developed producing        |  | 49.1                     |  |  | 42.9                     | 
|Developed non-producing    |  | 2.6                      |  |  | 2.1                      | 
|Undeveloped                |  | 8.9                      |  |  | 7.4                      | 
|Total Proved               |  | 60.6                     |  |  | 52.5                     | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 43.9                     |  |  | 34.4                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 104.4                    |  |  | 86.9                     | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

28

NET PRESENT VALUES OF FUTURE NET REVENUES YEMENAS OF DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|                           |  | Before Income Tax(1)     |  |  | After Income Tax(1)      | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|                           |  |                          |  |  |                          | 
|Proved                     |  |                          |  |  |                          | 
|                           |  |                          |  |  |                          | 
|Developed producing        |  | 96.0                     |  |  | 85.6                     | 
|Developed non-producing    |  | 4.6                      |  |  | 4.1                      | 
|Undeveloped                |  | 44.0                     |  |  | 32.8                     | 
|Total Proved               |  | 144.6                    |  |  | 122.5                    | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 22.2                     |  |  | 17.1                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 166.8                    |  |  | 139.6                    | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NET PRESENT VALUES OF FUTURE NET REVENUES CANADAAS OF DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|                           |  | Before Income Tax(1)     |  |  | After Income Tax(1)      | 
|-------------------------- |  | ------------------------ |  |  | ------------------------ | 
|US$                        |  | Discounted
      at %/yr |  |  | Discounted
      at %/yr | 
|$MM                        |  | 0%                       |  |  | 5%                       | 
|Proved                     |  |                          |  |  |                          | 
|Developed producing        |  | 52.3                     |  |  | 46.3                     | 
|Developed non-producing    |  | 14.6                     |  |  | 11.1                     | 
|Undeveloped                |  | 7.5                      |  |  | 5.2                      | 
|Total Proved               |  | 74.4                     |  |  | 62.6                     | 
|                           |  |                          |  |  |                          | 
|Probable                   |  | 46.0                     |  |  | 32.7                     | 
|                           |  |                          |  |  |                          | 
|Total Proved Plus Probable |  | 120.5                    |  |  | 95.3                     | 

Note:

|(1) | Canadian values converted to US dollars at the December
      31, 2007 exchange rates of 1.0 US$/Cdn$.
|--- | ------------------------------------------------------------------------------------------------------

---

29

TOTAL FUTURE NET REVENUES (UNDISCOUNTED) AS AT
DECEMBER 31, 2007 
  (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       |  | 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)             |  | 195     |  | 88        |  | 42        |  | 4           |  | 1           |  | 61         |  | -       |  | 61         | 
|Yemen(1)             |  | 609     |  | 308       |  | 149       |  | 7           |  | -           |  | 145        |  | -       |  | 145        | 
|Canada(2)            |  | 149     |  | 23        |  | 38        |  | 11          |  | 3           |  | 74         |  | 6       |  | 69         | 
|Total Company        |  | 952     |  | 418       |  | 229       |  | 21          |  | 4           |  | 280        |  | 6       |  | 274        | 
|                     |  |         |  |           |  |           |  |             |  |             |  |            |  |         |  |            | 
|Proved Plus Probable |  |         |  |           |  |           |  |             |  |             |  |            |  |         |  |            | 
|Reserves             |  |         |  |           |  |           |  |             |  |             |  |            |  |         |  |            | 
|Egypt(1)             |  | 355     |  | 164       |  | 77        |  | 10          |  | 1           |  | 104        |  | -       |  | 104        | 
|Yemen(1)             |  | 692     |  | 350       |  | 167       |  | 8           |  | -           |  | 167        |  | -       |  | 167        | 
|Canada(2)            |  | 229     |  | 36        |  | 56        |  | 13          |  | 3           |  | 120        |  | 17      |  | 103        | 
|Total Company        |  | 1,276   |  | 550       |  | 300       |  | 30          |  | 4           |  | 392        |  | 17      |  | 374        | 

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 Royalty for reporting purposes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to US dollars at the December
      31, 2007 exchange rates of 1.0 US$/Cdn$.                                                                                                                                                                                                                                                     

---

30

TOTAL FUTURE NET REVENUES BY PRODUCTION GROUPAS AT DECEMBER 31, 2007 (CONSTANT PRICES AND COSTS)

|             |  |             |  | Egypt        |  |              |  | Yemen        |  | Yemen       |  | Canada       |  |              |  | Total        |  |              | 
|------------ |  | ----------- |  | ------------ |  | ------------ |  | ------------ |  | ----------- |  | ------------ |  | ------------ |  | ------------ |  | ------------ | 
|             |  |             |  | Future net   |  | Egypt        |  | Future net   |  | Unit Value  |  | Future net   |  | Canada       |  | Future net   |  | Total        | 
|             |  |             |  | Revenue      |  | Unit Value   |  | Revenue      |  | Before Tax  |  | Revenue      |  | Unit Value   |  | Revenue      |  | Unit Value   | 
|             |  |             |  | Before       |  | Before Tax   |  | Before       |  | (discounted |  | Before       |  | Before Tax   |  | Before       |  | Before Tax   | 
|             |  |             |  | Taxes(1)     |  | (discounted  |  | Taxes(1)     |  | at          |  | Taxes(2)     |  | (discounted  |  | Taxes(1)     |  | (discounted  | 
|             |  |             |  | (discounted  |  | at 10%/year) |  | (discounted  |  | 10%/year)   |  | (discounted  |  | at 10%/year) |  | (discounted  |  | at 10%/year) | 
|Reserves     |  | Product     |  | at 10%/year) |  | ($/Mcf)      |  | at 10%/year) |  | ($/Mcf)     |  | at 10%/year) |  | ($/Mcf)      |  | at 10%/year) |  | ($/Mcf)      | 
|Category     |  | Group       |  | (US$MM)      |  | ($/Bbl)      |  | (US$MM)      |  | ($/Bbl)     |  | (US$MM)      |  | ($/Bbl)      |  | (US$MM)      |  | ($/Bbl)      | 
|Proved       |  | Light and   |  | -            |  |              |  | 77.0         |  | 36.60       |  | 7.2          |  | 34.78        |  | 84.2         |  | 36.43        | 
|Producing    |  | Medium Oil  |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Heavy Oil   |  | 38.1         |  | 32.48        |  | -            |  | -           |  | -            |  | -            |  | 38.1         |  | 32.48        | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 25.9         |  | 4.15         |  | 25.9         |  | 4.15         | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 8.4          |  | 69.42        |  | 8.4          |  | 69.42        | 
|             |  | Liquids     |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|Proved Non-  |  | Light and   |  | -            |  | -            |  | 3.7          |  | 33.64       |  | 1.2          |  | 15.58        |  | 4.9          |  | 26.20        | 
|Producing    |  | Medium Oil  |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Heavy Oil   |  | 1.8          |  | 24.00        |  | -            |  | -           |  | -            |  | -            |  | 1.8          |  | 24.00        | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 5.6          |  | 3.20         |  | 5.6          |  | 3.20         | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 2.0          |  | 68.97        |  | 2.0          |  | 68.97        | 
|             |  | Liquids     |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|Proved       |  | Light and   |  | -            |  | -            |  | 25.1         |  | 24.27       |  | (1.6)        |  | (9.25)       |  | 23.5         |  | 19.47        | 
|Undeveloped  |  | Medium Oil  |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Heavy Oil   |  | 6.2          |  | 21.83        |  | -            |  | -           |  | -            |  | -            |  | 6.2          |  | 21.83        | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 4.4          |  | 4.16         |  | 4.4          |  | 4.16         | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 0.6          |  | 50.00        |  | 0.6          |  | 50.00        | 
|             |  | Liquids     |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|Total Proved |  | Light and   |  | -            |  | -            |  | 105.8        |  | 32.57       |  | 6.8          |  | 14.88        |  | 112.6        |  | 30.39        | 
|             |  | Medium Oil  |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Heavy Oil   |  | 46.1         |  | 30.09        |  | -            |  | -           |  | -            |  | -            |  | 46.1         |  | 30.09        | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 35.9         |  | 3.97         |  | 35.9         |  | 3.97         | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 11.0         |  | 67.90        |  | 11.0         |  | 67.90        | 
|             |  | Liquids     |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|Probable     |  | Light and   |  | -            |  | -            |  | 13.5         |  | 30.41       |  | 3.5          |  | 22.73        |  | 17.0         |  | 28.43        | 
|             |  | Medium Oil  |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Heavy Oil   |  | 27.8         |  | 22.75        |  | -            |  | -           |  | -            |  | -            |  | 27.8         |  | 22.75        | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 15.4         |  | 3.18         |  | 15.4         |  | 3.18         | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 5.8          |  | 44.96        |  | 5.8          |  | 44.96        | 
|             |  | Liquids     |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|Proved Plus  |  | Light and   |  | -            |  | -            |  | 119.3        |  | 32.30       |  | 10.3         |  | 16.86        |  | 129.6        |  | 30.11        | 
|Probable     |  | Medium Oil  |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Heavy Oil   |  | 73.9         |  | 26.83        |  | -            |  | -           |  | -            |  | -            |  | 73.9         |  | 26.83        | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 51.3         |  | 3.69         |  | 51.3         |  | 3.69         | 
|             |  |             |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 
|             |  | Natural Gas |  | -            |  | -            |  | -            |  | -           |  | 16.8         |  | 57.73        |  | 16.8         |  | 57.73        | 
|             |  | Liquids     |  |              |  |              |  |              |  |             |  |              |  |              |  |              |  |              | 

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.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Canadian values converted to US dollars at the December
      31, 2007 exchange rates of 1.0 US $'s/Cdn $'s.                                                                                                                                         

---

31

Notes to Reserves Data Tables:

|1. | Columns may not add due to rounding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | The crude oil, natural gas liquids and natural gas
      reserve estimates presented in the DeGolyer Reports 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:
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (h)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | 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                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

32

| | • | specified economic conditions which are generally accepted
      as being reasonable.
| | - | -------------------------------------------------------------------------------------

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

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

---

33

| | (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.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

A qualitative measure of the certainty
levels pertaining to estimates prepared for the various reserves categories is
desirable to provide a clearer understanding of the associated risks and
uncertainties. However, the majority of reserves estimates will be prepared
using deterministic methods that do not provide a mathematically derived
quantitative measure of probability. In principle, there should be no difference
between estimates prepared using probabilistic or deterministic methods.

Additional clarification of certainty
levels associated with reserves estimates and the effect of aggregation is
provided in the COGE Handbook.

|3. | Forecast Prices and Costs                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                    
|   | The forecast cost and price assumptions assume changes in
      wellhead selling prices and take into account inflation with respect to
      future operating and capital costs.                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                    
|   | For the Reserves, crude oil and natural gas benchmark
      reference pricing, as at December 31, 2007, inflation and exchange rates
      utilized by DeGolyer in the DeGolyer Report, which were DeGolyer's then
      current forecasts at the date of the DeGolyer Report, were as
    follows:

|           |  | Crude Oil   |  |               |  |                  |  |                     |  |            |  |          |  |          | 
|---------- |  | ----------- |  | ------------- |  | ---------------- |  | ------------------- |  | ---------- |  | -------- |  | -------- | 
|           |  | WTI Cushing |  | Edmonton Par  |  | Natural Gas AECO |  | Natural Gas Liquids |  | Inflation  |  | Exchange | 
|           |  | Oklahoma    |  | Price 40° API |  | Spot Gas Price   |  | FOB Edmonton        |  | Rates(1)   |  | Rate(2)  | 
|Year       |  | (US$/Bbl)   |  | (Cdn$/Bbl)    |  | (Cdn$/Mcf)       |  |                     |  | (Cdn$/Bbl) |  |          |  | % Year   | 
|           |  |             |  |               |  |                  |  | Condensate          |  | Butane     |  | Propane  |  |          | 
|Forecast   |  |             |  |               |  |                  |  |                     |  |            |  |          |  |          | 
|2008       |  | 90.00       |  | 89.50         |  | 6.69             |  | 91.29               |  | 71.60      |  | 55.49    |  | 3.0      | 
|2009       |  | 86.52       |  | 86.01         |  | 7.29             |  | 87.73               |  | 64.50      |  | 53.32    |  | 3.0      | 
|2010       |  | 84.87       |  | 84.34         |  | 7.18             |  | 86.03               |  | 63.26      |  | 52.29    |  | 3.0      | 
|2011       |  | 83.32       |  | 82.78         |  | 7.13             |  | 84.44               |  | 62.09      |  | 51.32    |  | 2.0      | 
|2012       |  | 82.78       |  | 82.23         |  | 7.19             |  | 83.87               |  | 61.67      |  | 50.98    |  | 2.0      | 
|2013       |  | 82.19       |  | 81.62         |  | 7.21             |  | 83.26               |  | 61.22      |  | 50.61    |  | 2.0      | 
|Thereafter |  | +2%/year    |  | +2%/year      |  | +2.0%/yr         |  | +2%/year            |  | +2%/year   |  | +2%/year |  | +2%/year | 

Notes:

|(1) | Inflation rates for forecasting expenditure prices and
      costs.                
|--- | -----------------------------------------------------------------------------------
|    |                                                                                    
|(2) | Exchange rates used to generate the benchmark reference
      prices in this table.

|   | The weighted average historical price in US$ realized by
      the Company in Egypt, for the year ended December 31, 2007 for crude oil
      was $68.13/Bbl (for the period September 25, 2007 to December 31,
      2007).              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                           
|   | The weighted average historical price in US$ realized by
      the Company in Yemen, for the year ended December 31, 2007 for crude oil
      was $72.64/Bbl.                                                                             
|   |                                                                                                                                                                                                                                           
|   | The weighted average historical prices in Cdn$ realized
      by the Company in Canada, for the year ended December 31, 2007, were
      $6.64/Mcf for natural gas, $66.82/Bbl for crude oil and $56.49/Bbl for
      natural gas liquids.
|   |                                                                                                                                                                                                                                           
|4. | Constant Prices and Costs                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                           
|   | In Egypt, a constant price of $69.60/Bbl (December 31,
      2007 actual prices) was utilized in the constant price case.                                                                                                                 
|   |                                                                                                                                                                                                                                           
|   | In Yemen, a constant price of $92.62/Bbl (December 31,
      2007 actual prices) was utilized in the constant price
  case.                                                                                                               

---

34

|   | In Canada, constant prices of $79.41/Bbl of oil and
      $7.97/Mcf of natural gas (December 31, 2007 actual prices converted to US$
      at the December 31, 2007 currency rate of 1.0 US$/Cdn$, adjusted for
      quality and energy content), were utilized in the constant price
    case.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                 
|5. | Future Development Costs                                                                                                                                                                                                                                                                        

FUTURE DEVELOPMENT COSTS TOTAL COMPANY(1)AS AT DECEMBER 31, 2007

(US$ MM)
      
      Forecast
        Prices and CostsProved PlusProved
      
      
      ProbableYear
      
      Reserves
      
      
      Reserves2008
      
      20.1
      
      
      26.12009
      
      1.3
      
      
      4.32010
      
      -
      
      
      -2011
      
      0.0
      
      
      0.02012
      
      0.2
      
      
      0.2Total Undiscounted
      
      21.8
      
      
      31.1


Note:

|(1) | Cdn$'s converted at the December 31, 2007 year end rate
      of 1.00 US$/Cdn$.
|--- | -------------------------------------------------------------------------------

FUTURE DEVELOPMENT COSTS EGYPTAS AT DECEMBER
31, 2007

(US$ MM)
      
      Forecast
        Prices and CostsProved PlusProved
      
      
      ProbableYear
      
      Reserves
      
      
      Reserves2008
      
      3.7
      
      
      8.42009
      
      -
      
      
      1.22010
      
      -
      
      
      -2011
      
      -
      
      
      -2012
      
      -
      
      
      0.0Total Undiscounted
      
      3.7
      
      
      9.6


FUTURE DEVELOPMENT COSTS YEMENAS AT DECEMBER
31, 2007

(US$ MM)
      
      Forecast
        Prices and CostsProved PlusProved
      
      
      ProbableYear
      
      Reserves
      
      
      Reserves2008
      
      7.1
      
      
      8.32009
      
      -
      
      
      -2010
      
      -
      
      
      -2011
      
      -
      
      
      -2012
      
      -
      
      
      -Total Undiscounted
      
      7.1
      
      
      8.3


---

35

FUTURE DEVELOPMENT COSTS CANADA(1)AS AT DECEMBER 31, 2007

(US$ MM)
      
      Forecast
        Prices and CostsProved PlusProved
      
      
      ProbableYear
      
      Reserves
      
      
      Reserves2008
      
      9.3
      
      
      9.42009
      
      1.3
      
      
      3.12010
      
      -
      
      
      -2011
      
      0.0
      
      
      0.02012
      
      0.2
      
      
      0.2Total Undiscounted
      
      10.9
      
      
      13.2


Note:

|(1) | Cdn$ converted at the December 31, 2007 year-end rate of
      1.00 US$/Cdn$.                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                       
|    | The Company expects to fund the future development costs
      noted above through the use of working capital, cash flow, debt and equity
      financing as required.

|6. | In Egypt, estimated future abandonment and reclamation
      costs related to a property have been taken into account by DeGolyer in
      determining reserves that should be attributed to a property and in
      determining the aggregate future net revenue therefrom, there was deducted
      the reasonable estimated future well abandonment costs. No allowance was
      made, however, for reclamation of wellsites or the abandonment and
      reclamation of any facilities.  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In Yemen, estimated future abandonment and reclamations
      costs related to properties evaluated have not been taken into account by
      DeGolyer in determining the aggregate future net revenue therefrom. Under
      the terms of the production sharing agreements, ownership in the
      facilities and wells is transferred to the Government of Yemen through
      cost recovery. Therefore the future abandonment and reclamation costs have
      been assessed a zero value.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In Canada, estimated future abandonment and reclamation
      costs related to a property have been taken into account by DeGolyer in
      determining reserves that should be attributed to a property and in
      determining the aggregate future net revenue therefrom, there was deducted
      the reasonable estimated future well abandonment costs. No allowance was
      made, however, for reclamation of wellsites or the abandonment and
      reclamation of any facilities. 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|7. | The forecast price and cost assumptions assume the
      continuance of current laws and regulations.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|8. | The extent and character of all factual data supplied to
      DeGolyer was accepted by DeGolyer as represented. No field inspections
      were conducted by DeGolyer.                                                                                                                                                                                                                                                                                                                       

---

36

Reconciliations of Changes in Reserves

RECONCILIATION OF GROSS RESERVES 
  BY PRINCIPAL PRODUCT TYPECOMPANYAS AT DECEMBER 31, 2007 
  (FORECAST PRICES AND COSTS)

|                    |                          |   |                 |   |                      |   |                           |   |          |  |          |   | ASSOCIATED & NON- |   |          |   |          |   |        |  
|------------------- | ------------------------ | - | --------------- | - | -------------------- | - | ------------------------- | - | -------- |  | -------- | - | ----------------- | - | -------- | - | -------- | - | ------ | -
|                    | LIGHT
      & MEDIUM OIL |   | HEAVY
      OIL |   | ASSOCIATED
      GAS |   | NATURAL
      GAS LIQUIDS |  
|                    |                          |   |                 |   | Gross                |   |                           |   |          |  | Gross    |   |                   |   |          |   | Gross    |   |        |  
|                    |                          |   |                 |   | Proved               |   |                           |   |          |  | Proved   |   |                   |   |          |   | Proved   |   |        |  
|                    | Gross                    |   | Gross           |   | Plus                 |   | Gross                     |   | Gross    |  | Plus     |   | Gross             |   | Gross    |   | Plus     |   | Gross  |  
|                    | Proved                   |   | Probable        |   | Probable             |   | Proved                    |   | Probable |  | Probable |   | Proved            |   | Probable |   | Probable |   | Proved |  
|FACTORS             | (MBbl)                   |   | (MBbl)          |   | (MBbl)               |   | (MBbl)                    |   | (MBbl)   |  | (MBbl)   |   | (MMcf)            |   | (MMcf)   |   | (MMcf)   |   | (MBbl) |  
|December 31, 2006   | 7,445                    |   | 1,107           |   | 8,552                |   | -                         |   | -        |  | -        |   | 10,005            |   | 6,090    |   | 16,095   |   | 227    |  
|Extensions          | 134                      |   | 36              |   | 170                  |   | -                         |   | -        |  | -        |   | 2,946             |   | 555      |   | 3,501    |   | 30     |  
|Improved recovery   | -                        |   | -               |   | -                    |   | -                         |   | -        |  | -        |   | -                 |   | -        |   | -        |   | -      |  
|Technical Revisions | 957                      |   | (77             | ) | 880                  |   | -                         |   | -        |  | -        |   | (58               | ) | (886     | ) | (944     | ) | 37     |  
|Discoveries         | -                        |   | -               |   | -                    |   | -                         |   | -        |  | -        |   | -                 |   | -        |   | -        |   | -      |  
|Acquisitions        | -                        |   | -               |   | -                    |   | 2,952                     |   | 2,311    |  | 5,263    |   | -                 |   | -        |   | -        |   | -      |  
|Dispositions        | -                        |   | -               |   | -                    |   | -                         |   | -        |  | -        |   | -                 |   | -        |   | -        |   | -      |  
|Economic Factors    | -                        |   | -               |   | -                    |   | -                         |   | -        |  | -        |   | -                 |   | -        |   | -        |   | -      |  
|Production          | (1,473                   | ) | -               |   | (1,473               | ) | (158                      | ) | -        |  | (158     | ) | (2,185            | ) | -        |   | (2,185   | ) | (71    | )
|December 31, 2007   | 7,063                    |   | 1,066           |   | 8,129                |   | 2,795                     |   | 2,311    |  | 5,106    |   | 10,708            |   | 5,759    |   | 16,467   |   | 224    |  

RECONCILIATION OF GROSS RESERVES 
  BY PRINCIPAL PRODUCT TYPEEGYPTAS AT DECEMBER 31, 2007 
  (FORECAST PRICES AND COSTS)

|                    |                          |  |                 |  |                      |  |                           |   |          |  |          |   | ASSOCIATED & NON- |  |          |  |          |  |        | 
|------------------- | ------------------------ |  | --------------- |  | -------------------- |  | ------------------------- | - | -------- |  | -------- | - | ----------------- |  | -------- |  | -------- |  | ------ | 
|                    | LIGHT
      & MEDIUM OIL |  | HEAVY
      OIL |  | ASSOCIATED
      GAS |  | NATURAL
      GAS LIQUIDS |  
|                    |                          |  |                 |  | Gross                |  |                           |   |          |  | Gross    |   |                   |  |          |  | Gross    |  |        | 
|                    |                          |  |                 |  | Proved               |  |                           |   |          |  | Proved   |   |                   |  |          |  | Proved   |  |        | 
|                    | Gross                    |  | Gross           |  | Plus                 |  | Gross                     |   | Gross    |  | Plus     |   | Gross             |  | Gross    |  | Plus     |  | Gross  | 
|                    | Proved                   |  | Probable        |  | Probable             |  | Proved                    |   | Probable |  | Probable |   | Proved            |  | Probable |  | Probable |  | Proved | 
|FACTORS             | (MBbl)                   |  | (MBbl)          |  | (MBbl)               |  | (MBbl)                    |   | (MBbl)   |  | (MBbl)   |   | (MMcf)            |  | (MMcf)   |  | (MMcf)   |  | (MBbl) | 
|December 31, 2006   | -                        |  | -               |  | -                    |  | -                         |   | -        |  | -        |   | -                 |  | -        |  | -        |  | -      | 
|Extensions          | -                        |  | -               |  | -                    |  | -                         |   | -        |  | -        |   | -                 |  | -        |  | -        |  | -      | 
|Improved recovery   | -                        |  | -               |  | -                    |  | -                         |   | -        |  | -        |   | -                 |  | -        |  | -        |  | -      | 
|Technical Revisions | -                        |  | -               |  | -                    |  | -                         |   | -        |  | -        |   | -                 |  | -        |  | -        |  | -      | 
|Discoveries         | -                        |  | -               |  | -                    |  | -                         |   | -        |  | -        |   | -                 |  | -        |  | -        |  | -      | 
|Acquisitions        | -                        |  | -               |  | -                    |  | 2,952                     |   | 2,311    |  | 5,263    |   | -                 |  | -        |  | -        |  | -      | 
|Dispositions        | -                        |  | -               |  | -                    |  | -                         |   | -        |  | -        |   | -                 |  | -        |  | -        |  | -      | 
|Economic Factors    | -                        |  | -               |  | -                    |  | -                         |   | -        |  | -        |   | -                 |  | -        |  | -        |  | -      | 
|Production          | -                        |  | -               |  | -                    |  | (158                      | ) | -        |  | (158     | ) | -                 |  | -        |  | -        |  | -      | 
|December 31, 2007   | -                        |  | -               |  | -                    |  | 2,795                     |   | 2,311    |  | 5,106    |   | -                 |  | -        |  | -        |  | -      | 

---

37

RECONCILIATION OF GROSS RESERVES 
  BY PRINCIPAL PRODUCT TYPEYEMENAS AT DECEMBER 31, 2007 
  (FORECAST PRICES AND COSTS)

|                    |                          |   |                 |   |                      |   |                           |  |          |  |          |  | ASSOCIATED & NON- |  |          |  |          |  |        | 
|------------------- | ------------------------ | - | --------------- | - | -------------------- | - | ------------------------- |  | -------- |  | -------- |  | ----------------- |  | -------- |  | -------- |  | ------ | 
|                    | LIGHT
      & MEDIUM OIL |   | HEAVY
      OIL |   | ASSOCIATED
      GAS |   | NATURAL
      GAS LIQUIDS | 
|                    |                          |   |                 |   | Gross                |   |                           |  |          |  | Gross    |  |                   |  |          |  | Gross    |  |        | 
|                    |                          |   |                 |   | Proved               |   |                           |  |          |  | Proved   |  |                   |  |          |  | Proved   |  |        | 
|                    | Gross                    |   | Gross           |   | Plus                 |   | Gross                     |  | Gross    |  | Plus     |  | Gross             |  | Gross    |  | Plus     |  | Gross  | 
|                    | Proved                   |   | Probable        |   | Probable             |   | Proved                    |  | Probable |  | Probable |  | Proved            |  | Probable |  | Probable |  | Proved | 
|FACTORS             | (MBbl)                   |   | (MBbl)          |   | (MBbl)               |   | (MBbl)                    |  | (MBbl)   |  | (MBbl)   |  | (MMcf)            |  | (MMcf)   |  | (MMcf)   |  | (MBbl) | 
|December 31, 2006   | 7,048                    |   | 951             |   | 7,999                |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Extensions          | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Improved recovery   | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Technical Revisions | 915                      |   | (48             | ) | 867                  |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Discoveries         | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Acquisitions        | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Dispositions        | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Economic Factors    | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|Production          | (1,396                   | ) | -               |   | (1,396               | ) | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 
|December 31, 2007   | 6,567                    |   | 903             |   | 7,470                |   | -                         |  | -        |  | -        |  | -                 |  | -        |  | -        |  | -      | 

RECONCILIATION OF GROSS RESERVES 
  BY PRINCIPAL PRODUCT TYPECANADAAS AT DECEMBER 31, 2007 
  (FORECAST PRICES AND COST)

|                    |                          |   |                 |   |                      |   |                           |  |          |  |          |  | ASSOCIATED & NON- |   |          |   |          |   |        |  
|------------------- | ------------------------ | - | --------------- | - | -------------------- | - | ------------------------- |  | -------- |  | -------- |  | ----------------- | - | -------- | - | -------- | - | ------ | -
|                    | LIGHT
      & MEDIUM OIL |   | HEAVY
      OIL |   | ASSOCIATED
      GAS |   | NATURAL
      GAS LIQUIDS | 
|                    |                          |   |                 |   | Gross                |   |                           |  |          |  | Gross    |  |                   |   |          |   | Gross    |   |        |  
|                    |                          |   |                 |   | Proved               |   |                           |  |          |  | Proved   |  |                   |   |          |   | Proved   |   |        |  
|                    | Gross                    |   | Gross           |   | Plus                 |   | Gross                     |  | Gross    |  | Plus     |  | Gross             |   | Gross    |   | Plus     |   | Gross  |  
|                    | Proved                   |   | Probable        |   | Probable             |   | Proved                    |  | Probable |  | Probable |  | Proved            |   | Probable |   | Probable |   | Proved |  
|FACTORS             | (MBbl)                   |   | (MBbl)          |   | (MBbl)               |   | (MBbl)                    |  | (MBbl)   |  | (MBbl)   |  | (MMcf)            |   | (MMcf)   |   | (MMcf)   |   | (MBbl) |  
|December 31, 2006   | 397                      |   | 156             |   | 553                  |   | -                         |  | -        |  | -        |  | 10,005            |   | 6,090    |   | 16,095   |   | 227    |  
|Extensions          | 134                      |   | 36              |   | 170                  |   | -                         |  | -        |  | -        |  | 2,946             |   | 555      |   | 3,501    |   | 30     |  
|Improved recovery   | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |   | -        |   | -        |   | -      |  
|Technical Revisions | 41                       |   | (28             | ) | 13                   |   | -                         |  | -        |  | -        |  | (58               | ) | (886     | ) | (944     | ) | 37     |  
|Discoveries         | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |   | -        |   | -        |   | -      |  
|Acquisitions        | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |   | -        |   | -        |   | -      |  
|Dispositions        | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |   | -        |   | -        |   | -      |  
|Economic Factors    | -                        |   | -               |   | -                    |   | -                         |  | -        |  | -        |  | -                 |   | -        |   | -        |   | -      |  
|Production          | (77                      | ) | -               |   | (77                  | ) | -                         |  | -        |  | -        |  | (2,185            | ) | -        |   | (2,185   | ) | (71    | )
|December 31, 2007   | 495                      |   | 164             |   | 659                  |   | -                         |  | -        |  | -        |  | 10,708            |   | 5,759    |   | 16,467   |   | 224    |  

Additional Information Relating to Reserves Data

Undeveloped Reserves

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

Proved Undeveloped Reserves

|        |  | Light and Medium Oil |  | Heavy Oil      |  | Natural Gas |  | Natural Gas Liquids | 
|------- |  | -------------------- |  | -------------- |  | ----------- |  | ------------------- | 
|Year    |  | (MBbl)               |  | (MBbl)         |  | (MMcf)      |  | (MBbl)              | 
|        |  | First                |  | Cumulative at  |  | First       |  | Cumulative at       | 
|        |  | Attributed           |  | Year
      End |  | Attributed  |  | Year
      End      | 
|        |  |                      |  |                |  |             |  |                     | 
|2005(1) |  | 1,655                |  | 1,655          |  | -           |  | -                   | 
|2006(2) |  | 917                  |  | 2,293          |  | -           |  | -                   | 
|2007(3) |  | 1,400                |  | 2,294          |  | 509         |  | 509                 | 

---

38

Notes:

|(1) | In 2005, 91% of the Proved Undeveloped light oil was
      assigned to Yemen with five horizontal development wells planned in the An
      Nagyah field (three wells in Lam A and two wells in Lam B), the balance
      was assigned to un-drilled Wabamum oil spacing units at Nevis in Canada.
      All the Proved Undeveloped gas and liquids reserves were assigned to
      Canada. The majority of the gas was assigned to Horseshoe Canyon coal bed
      methane wells in the Nevis and Morningside areas, assuming 160
      acres/well.                                                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(2) | In 2006, 99% of the Proved Undeveloped light oil was
      assigned to Yemen with two horizontal development wells planned in the An
      Nagyah field along with gas cycling for liquids recovery at An Nagyah,
      liquids recovery from the An Naeem gas pool and a re-entry well at
      Osaylan. The remainder was for a Wabamun oil development well at Nevis.
      All the Proved Undeveloped gas and liquid reserves were assigned to Canada
      at Morningside for Horseshoe Canyon coal bed methane development and at
      Nevis for Wabamun solution gas.                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(3) | In 2007, 88% of the Proved Undeveloped light oil was
      assigned to Yemen with three horizontal development wells at An Nagyah.
      The remaining light oil reserves are in Canada at Nevis with five
      horizontal Wabamun oil wells. The heavy oil reserves were assigned to
      Egypt with one development well at Fadl, two at Hana and two at South
      Rahmi. Natural gas was assigned in Canada for four Horseshoe Canyon CBM
      wells at Nevis, seven Horseshoe Canyon CBM wells at Thorsby and associated
      gas from the five Nevis Wabamun horizontal oil wells. Natural gas liquids
      were also assigned to the five horizontals. All development activities are
      anticipated to take place during 2008.

Probable Undeveloped Reserves

|        |  | Light and Medium Oil |  | Heavy Oil      |  | Natural Gas |  | Natural Gas Liquids | 
|------- |  | -------------------- |  | -------------- |  | ----------- |  | ------------------- | 
|Year    |  | (MBbl)               |  | (MBbl)         |  | (MMcf)      |  | (MBbl)              | 
|        |  | First                |  | Cumulative at  |  | First       |  | Cumulative at       | 
|        |  | Attributed           |  | Year
      End |  | Attributed  |  | Year
      End      | 
|        |  |                      |  |                |  |             |  |                     | 
|2005(1) |  | 365                  |  | 365            |  | -           |  | -                   | 
|2006(2) |  | 591                  |  | 991            |  | -           |  | -                   | 
|2007(3) |  | 188                  |  | 456            |  | 1,471       |  | 1,471               | 

Notes:

|(1) | In 2005, 97% of Probable Undeveloped light oil reserves
      were assigned to Yemen consisting of one vertical well at Tasour and a
      probable component assigned to the five horizontal (Proved Undeveloped)
      wells planned for An Nagyah. All the Probable Undeveloped gas and liquids
      reserves were assigned to Canada and primarily relate to additional
      performance from planned coal bed methane wells (Proved Undeveloped) in
      the Nevis and Morningside areas.                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(2) | In 2006, 96% of Probable Undeveloped light oil reserves
      were assigned to Yemen consisting of one vertical well at Tasour, one
      vertical well at Godah and probable components assigned to the proved
      undeveloped projects including two horizontal An Nagyah wells, gas cycling
      for liquids recovery at An Nagyah, liquids recovery from the An Naeem gas
      pool and the re- entry well at Osaylan. The remainder is assigned to two
      Wabamun oil wells at Nevis. All the Probable Undeveloped gas and liquids
      reserves were assigned to Canada, specifically, two Wabamun gas wells at
      Nevis.                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(3) | In 2007, 76% of the Probable Undeveloped light oil was
      assigned to Yemen for a development well at Godah. The remainder was
      assigned in Canada for the five Nevis horizontal Wabamun oil wells. The
      heavy oil reserves were assigned to Egypt with one development well at
      Arta, two at Fadl, four at Hana and seven at South Rahmi. Natural gas was
      assigned in Canada for one Horseshoe Canyon CBM wells at Morningside, two
      Horseshoe Canyon CBM wells at Thorsby and associated gas from the five
      Nevis Wabamun horizontal oil wells. Natural gas liquids were also assigned
      to the five horizontals. All development activities are anticipated to
      take place during 2008.

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, 2007. All of the
Company's wells are located onshore.

---

39

|                |  | Oil
      Wells |  |  | Natural
      Gas Wells | 
|--------------- |  | --------------- |  |  | ----------------------- | 
|                |  | Producing       |  |  | Non-Producing           | 
|                |  | Gross           |  |  | Net                     | 
|                |  |                 |  |  |                         | 
|Egypt           |  | 26              |  |  | 14.0                    | 
|Yemen           |  | 39              |  |  | 7.7                     | 
|Canada, Alberta |  | 11              |  |  | 7.7                     | 
|Total           |  | 76              |  |  | 29.4                    | 

Properties with No Attributed Reserves

The following table sets out the Company's developed and
undeveloped land holdings as at December 31, 2007.

|                |  | Developed
      Acres |  |  | Undeveloped
      Acres |  |  | Total
      Acres | 
|--------------- |  | --------------------- |  |  | ----------------------- |  |  | ----------------- | 
|                |  | Gross                 |  |  | Net                     |  |  | Gross             | 
|                |  |                       |  |  |                         |  |  |                   | 
|Egypt           |  | 3,680                 |  |  | 1,856                   |  |  | 5,540,379         | 
|Yemen(1)        |  | 35,200                |  |  | 6,918                   |  |  | 1,291,304         | 
|Canada, Alberta |  | 29,096                |  |  | 18,708                  |  |  | 65,798            | 
|Total           |  | 67,976                |  |  | 27,482                  |  |  | 6,897,481         | 

Note:

|(1) | Yemen undeveloped land includes 183,000 gross (60,390
      net) acres on Blocks 84 that still requires final government approval and
      ratification, which approval is expected in 2008.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Of the Company's undeveloped land, the rights to explore,
develop and exploit 8,079 gross (6867 net) acres may expire in Canada by
December 31, 2008.

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

In Yemen Block 72, the Company has a work commitment of $4
million gross ($1.32 million net) in Phase 1 (expiry extended to January 2009).
Seismic acquisition is ongoing with drilling expected in mid-2008. In Yemen
Block 75, the contractor (Block 75 Joint Venture Group) has a commitment of $7
million gross ($1.75 million net) for the signature bonus and first exploration
period work period (36 months) commencing March 8, 2008. Pursuant to the bid
awarded for Yemen Block 84, the contractor has a minimum commitment of $20.1
million gross ($6.63 million net) for the signature bonus and first exploration
work period (42 months). The commitment will commence when the PSC has been
approved and ratified by the government of Yemen, anticipated to occur in
2008.

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

In the West Gharib PSC in Egypt, the Company has a commitment
to drill three exploration wells by May 31, 2009 on the East Hoshia development
lease, which is secured by a $4 million production guarantee.

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
|-------------------------- |  | ----------------- |  | ---------------- |  | -------------------
|Period                     |  | Volume            |  | Type             |  | Put  Call         
|Sep 1, 2007  Aug 31, 2008 |  | 15,000 Bbls/month |  | Financial Collar |  | $60.00 - $78.55/Bbl
|Jan 1, 2008  Dec 31, 2008 |  | 12,000 Bbls/month |  | Financial Collar |  | $60.00 - $81.20/Bbl
|Jan 1, 2009  Dec 31, 2009 |  | 12,000 Bbls/month |  | Financial Collar |  | $60.00 - $82.10/Bbl

---

40

|                           |  |                   |  |                  |  | Dated Brent Pricing
|-------------------------- |  | ----------------- |  | ---------------- |  | -------------------
|Period                     |  | Volume            |  | Type             |  | Put  Call         
|Nov 1, 2007  Mar 31, 2008 |  | 5,000 Bbls/month  |  | Financial Collar |  | $65.00 - $89.35/Bbl
|Sep 1, 2008  Jan 31, 2009 |  | 11,000 Bbls/month |  | Financial Collar |  | $60.00 - $88.80/Bbl
|Feb 1, 2009  Dec 31, 2009 |  | 6,000 Bbls/month  |  | Financial Collar |  | $60.00 - $86.10/Bbl
|Jan 1, 2010  Aug 31, 2010 |  | 12,000 Bbls/month |  | Financial Collar |  | $60.00 - $84.25/Bbl

The total volumes hedged per year are listed below:

|Volume               |  | 2008    |  | 2009    |  | 2010  
|-------------------- |  | ------- |  | ------- |  | ------
|Annual (Bbls)        |  | 323,000 |  | 221,000 |  | 96,000
|Daily Average (bopd) |  | 885     |  | 605     |  | 263   

Additional Information Concerning Abandonment and
Reclamation Costs

In Egypt, future well abandonment costs net of salvage were
included in the DeGolyer reserves evaluation presented herein. Cost in U.S.
dollars to abandon approximately 46 gross (24.0 net) wells totalled $906,000
undiscounted, or $252,000 discounted at 10%, are included in the estimate of
future net revenue from total proved plus probable reserves. Approximately
$29,000 thousand undiscounted, or $21,000 thousand discounted at 10%, are
scheduled during the next three years (2008-2010).

In Yemen, estimated future abandonment costs 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
Government of Yemen through cost recovery. Therefore the future abandonment and
reclamation costs have been assessed a zero value.

In Canada, future well abandonment costs net of salvage were
  included in the DeGolyer reserves evaluation presented herein. Cost in US$ to
  abandon approximately 143 gross (92.5 net) wells totalled $3,959,000 undiscounted,
  or $1,698,000 discounted at 10%, are included in the estimate of future net
  revenue from total proved plus probable reserves. Approximately $787,000 undiscounted,
  or $591,000 discounted at 10%, are scheduled during the next three years (2008-2010).

Tax Horizon

In 2007, the Company did not pay any income taxes in Canada.

TransGlobe does not expect to pay income taxes in Canada in the
near future, assuming the Company incurs further Canadian exploration expense
and Canadian development expense and utilizes such tax pools and tax losses
available to be carried forward of Cdn$54 million available to shelter future
taxable income.

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, 2007:

Canada
      Yemen
      Egypt
      Total($ thousands)Property acquisition costsProved
      properties
      600
      0
      -
      600Undeveloped properties
      1,577
      (240)
      -
      1,337Exploration costs
      1,217
      2,787
      4,200
      8,204Development costs
      7,371
      12,639
      2,704
      22,714Corporate and other
      909
      3,251
      -
      4,160Corporate acquisition
      -
      -
      59,136
      59,136Total
      11,674
      18,437
      66,040
      96,151


---

41

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, 2008 which is reflected in the estimate of future net revenue
disclosed in the prior reserves summary tables.

|                  |  | Yemen      |  |  | Yemen      |  |  |                 |  |  |            |  |  |             |  |  |             |  |  |            | 
|----------------- |  | ---------- |  |  | ---------- |  |  | --------------- |  |  | ---------- |  |  | ----------- |  |  | ----------- |  |  | ---------- | 
|                  |  | Block 32   |  |  | Block S-1  |  |  | Egypt           |  |  | Canada     |  |  |             |  |  | Canada(1)   |  |  | Total      | 
|                  |  | Light and  |  |  | Light and  |  |  | West Gharib     |  |  | Light and  |  |  | Canada(1)   |  |  | Natural Gas |  |  | Company(1) | 
|                  |  | Medium Oil |  |  | Medium Oil |  |  | Heavy
      Oil |  |  | Medium Oil |  |  | Natural Gas |  |  | Liquids     |  |  | BOE        | 
|                  |  | Gross      |  |  | Gross      |  |  | Gross           |  |  | Gross      |  |  | Gross       |  |  | Gross       |  |  | Gross      | 
|                  |  | (Bbls/d)   |  |  | (Bbls/d)   |  |  | (Bbls/d)        |  |  | (Bbls/d)   |  |  | (Mcf/d)     |  |  | (Bbls/d)    |  |  | (BOE/d)    | 
|Proved Producing  |  | 872        |  |  | 2,426      |  |  | 1,493           |  |  | 172        |  |  | 6,391       |  |  | 125         |  |  | 6,153      | 
|Proved Developed  |  |            |  |  |            |  |  |                 |  |  |            |  |  |             |  |  |             |  |  |            | 
|Non-Producing     |  | 48         |  |  | 84         |  |  | 61              |  |  | 8          |  |  | 798         |  |  | 15          |  |  | 349        | 
|Proved            |  |            |  |  |            |  |  |                 |  |  |            |  |  |             |  |  |             |  |  |            | 
|Undeveloped       |  | 0          |  |  | 154        |  |  | 252             |  |  | 27         |  |  | 249         |  |  | 2           |  |  | 477        | 
|Total Proved      |  | 920        |  |  | 2,665      |  |  | 1,806           |  |  | 206        |  |  | 7,437       |  |  | 143         |  |  | 6,979      | 
|Total Probable    |  | 131        |  |  | 38         |  |  | 733             |  |  | 15         |  |  | 462         |  |  | 10          |  |  | 1,004      | 
|Total Proved Plus |  |            |  |  |            |  |  |                 |  |  |            |  |  |             |  |  |             |  |  |            | 
|Probable          |  | 1,051      |  |  | 2,702      |  |  | 2,539           |  |  | 221        |  |  | 7,899       |  |  | 153         |  |  | 7,983      | 

Note:

|(1) | Production numbers for 2008 include Canadian production
      for the full year 2008. The Companys outlook for 2008 assumes the
      Canadian production is divested April 1, 2008.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Exploration and Development Activities

The following tables set forth the gross and net exploratory
and development wells which TransGlobe drilled during the year ended December
31, 2007:

|Egypt:               |  |             |  |  | Gross       |  |  |       |  |  |             |  |  | Net         |  |  |       | 
|-------------------- |  | ----------- |  |  | ----------- |  |  | ----- |  |  | ----------- |  |  | ----------- |  |  | ----- | 
|                     |  | Exploration |  |  | Development |  |  | Total |  |  | Exploration |  |  | Development |  |  | Total | 
|Natural Gas          |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Crude Oil            |  | -           |  |  | 1           |  |  | 1     |  |  | -           |  |  | 0.7         |  |  | 0.7   | 
|Service              |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Dry and Abandoned(1) |  | 3           |  |  | -           |  |  | 3     |  |  | 1.5         |  |  | -           |  |  | 1.5   | 
|Total                |  | 3           |  |  | 1           |  |  | 4     |  |  | 1.5         |  |  | 0.7         |  |  | 2.2   | 
|                     |  |             |  |  |             |  |  |       |  |  |             |  |  |             |  |  |       | 
|                     |  |             |  |  |             |  |  |       |  |  |             |  |  |             |  |  |       | 
|Yemen:               |  |             |  |  | Gross       |  |  |       |  |  |             |  |  | Net         |  |  |       | 
|                     |  | Exploration |  |  | Development |  |  | Total |  |  | Exploration |  |  | Development |  |  | Total | 
|Natural Gas          |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Crude Oil            |  | -           |  |  | 10          |  |  | 10    |  |  | -           |  |  | 2.1         |  |  | 2.1   | 
|Service              |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Dry and Abandoned(1) |  | 3           |  |  | -           |  |  | 3     |  |  | 0.6         |  |  | -           |  |  | 0.6   | 
|Total                |  | 3           |  |  | 10          |  |  | 13    |  |  | 0.6         |  |  | 2.1         |  |  | 2.7   | 
|                     |  |             |  |  |             |  |  |       |  |  |             |  |  |             |  |  |       | 
|                     |  |             |  |  |             |  |  |       |  |  |             |  |  |             |  |  |       | 
|Canada:              |  |             |  |  | Gross       |  |  |       |  |  |             |  |  | Net         |  |  |       | 
|                     |  | Exploration |  |  | Development |  |  | Total |  |  | Exploration |  |  | Development |  |  | Total | 
|Natural Gas          |  | 1           |  |  | 14          |  |  | 15    |  |  | 0.5         |  |  | 4.9         |  |  | 5.4   | 
|Crude Oil            |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Service              |  | -           |  |  | -           |  |  | -     |  |  | -           |  |  | -           |  |  | -     | 
|Dry and Abandoned(1) |  | 1           |  |  | 2           |  |  | 3     |  |  | 0.7         |  |  | 1.5         |  |  | 2.2   | 
|Total                |  | 2           |  |  | 16          |  |  | 18    |  |  | 1.2         |  |  | 6.4         |  |  | 7.6   | 

---

42

Note:

|(1) | "Dry 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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | For the Company's 2008 planned exploration and
      development activities, see "Principal
Properties".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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:

|                                    |  | 2007                | 
|----------------------------------- |  | ------------------- | 
|                                    |  | Quarter
      Ended | 
|                                    |  | Mar.
      31       | 
|Average Daily Sales Volumes         |  |                     | 
|Egypt                               |  |                     | 
|Heavy Crude Oil (Bbls/d)            |  | -                   | 
|Yemen                               |  |                     | 
|Light and Medium Crude Oil (Bbls/d) |  | 3,892               | 
|Canada                              |  |                     | 
|Light and Medium Crude Oil (Bbls/d) |  | 229                 | 
|Gas (Mcf/d)                         |  | 6,177               | 
|NGL (Bbls/d)                        |  | 191                 | 
|Combined(BOE/d)                     |  | 5,341               | 
|                                    |  |                     | 
|Average Price Received              |  |                     | 
|Egypt                               |  |                     | 
|Heavy Crude Oil ($/Bbl)             |  | -                   | 
|Yemen                               |  |                     | 
|Light and Medium Crude Oil ($/Bbl)  |  | 57.14               | 
|Canada                              |  |                     | 
|Light and Medium Crude Oil ($/Bbl)  |  | 52.36               | 
|Gas ($/Mcf)                         |  | 6.73                | 
|NGL ($/Bbl)                         |  | 47.26               | 
|Combined($/BOE)                     |  | 53.58               | 
|                                    |  |                     | 
|Royalties                           |  |                     | 
|Egypt                               |  |                     | 
|Heavy Crude Oil ($/Bbl)             |  | -                   | 
|Yemen                               |  |                     | 
|Light and Medium Crude Oil ($/Bbl)  |  | 26.88               | 
|Canada                              |  |                     | 
|Light and Medium Crude Oil ($/Bbl)  |  | 7.96                | 
|Gas ($/Mcf)                         |  | 1.35                | 
|NGL ($/Bbl)                         |  | 10.21               | 
|Combined($/BOE)                     |  | 21.85               | 
|                                    |  |                     | 
|Operating Expenses                  |  |                     | 
|Egypt                               |  |                     | 
|Heavy Crude Oil ($/Bbls)            |  | -                   | 
|Yemen                               |  |                     | 
|Light and Medium Crude Oil ($/Bbls) |  | 3.89                | 
|Canada                              |  |                     | 
|Light and Medium Crude Oil ($/Bbl)  |  | 14.72               | 
|Gas ($/Mcf)                         |  | 1.33                | 
|NGL ($/Bbls)                        |  | -                   | 
|Combined($/BOE)                     |  | 5.01                | 
|                                    |  |                     | 
|Netback Received                    |  |                     | 
|Egypt                               |  |                     | 
|Heavy Crude Oil ($/Bbl)             |  | -                   | 
|Yemen                               |  |                     | 
|Light and Medium Crude Oil ($/Bbl)  |  | 26.37               | 

---

43

|                                   |  | 2007                | 
|---------------------------------- |  | ------------------- | 
|                                   |  | Quarter
      Ended | 
|                                   |  | Mar.
      31       | 
|Canada                             |  |                     | 
|Light and Medium Crude Oil ($/Bbl) |  | 29.68               | 
|Gas ($/Mcf)                        |  | 4.05                | 
|NGL ($/Bbl)                        |  | 37.05               | 
|Combined($/Boe)                    |  | 26.72               | 

The following table indicates the Company's average daily sales
volumes from its important fields for the year ended December 31, 2007:

Light andMedium Crude
    
    
    Gas
    
    
    NGLs
    
    
    boeHeavy Crude Oil
    
    
    (Bbls/d)
    
    
    (Mcf/d)
    
    
    (Bbls/d)
    
    
    (boe/d)Egypt(1)
    
    432
    
    
    
    
    
    -
    
    
    -
    
    
    432YemenBlock 32
    
    
    
    
    1,202
    
    
    -
    
    
    -
    
    
    1,202Block S-1
    
    
    
    
    2,624
    
    
    -
    
    
    -
    
    
    2,624Canada
    
    
    
    
    211
    
    
    6,193
    
    
    191
    
    
    1,434Total
    
    
    
    
    4,469
    
    
    6,193
    
    
    191
    
    
    5,692


Note:

|(1) | Operating results for Egypt are for the period September
      25, 2007 to December 31, 2007. In that period, production averaged 1,607
      bopd for a yearly average of 432 bopd.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

DIVIDEND POLICY

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

DESCRIPTION OF SHARE CAPITAL

TransGlobe is authorized to issue an unlimited number of Common
Shares and an unlimited number of preferred shares. As at March 19, 2008, there
were 59,766,539 Common Shares issued and outstanding. In addition, as at such
date, there were an aggregate of 5,976,654 Common Shares reserved for issuance
upon the exercise of the Company's options.

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

Common Shares

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

---

44

Preferred Shares

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

Rights Plan

On April 16, 2003, the Company entered into a shareholder
protection rights plan agreement (the "Rights Plan") with Computershare Trust
Company of Canada, as rights agent, which was approved by TransGlobe's
shareholders on May 29, 2003 at the 2003 annual general and special meeting of
shareholders. The Rights Plan generally provides that upon any person or entity
acquiring 20% or more of the issued and outstanding Common Shares (except
pursuant to certain permitted or excepted transactions) and upon the occurrence
of certain other events, each holder of Common Shares, other than such person or
entity, shall be entitled to acquire Common Shares at a discounted price. The
Rights Plan is similar to other shareholder or unitholder rights plans adopted
in the energy sector. The Rights Plan expires in April, 2008 and the Company
expects to propose ratification of a new rights plan on the same basic terms as
the Rights Plan at its 2008 annual shareholders meeting.

MARKET FOR SECURITIES

TransGlobe's Common Shares are listed and posted on the TSX and
the NASDAQ under the trading symbols "TGL" and "TGA", respectively (prior to
January 16, 2008 the Common Shares traded in the United States on the AMEX).

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

(Canadian dollars, except volumes)
    High
    
    Low
    
    Volume2007January
    $6.09
    
    $5.24
    
    643,500February
    $6.06
    
    $5.07
    
    755,400March
    $5.38
    
    $3.50
    
    666,300April
    $5.09
    
    $4.30
    
    683,900May
    $4.88
    
    $4.10
    
    627,500June
    $4.91
    
    $4.12
    
    1,419,100July
    $5.68
    
    $4.50
    
    1,322,100August
    $5.14
    
    $3.69
    
    905,200September
    $5.34
    
    $4.20
    
    593,800October
    $5.74
    
    $4.73
    
    1,482,000November
    $5.51
    
    $4.63
    
    1,429,500December
    $5.60
    
    $4.78
    
    1,502,700


---

45

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

(U.S. dollars, except volumes)
    High
    
    Low
    
    Volume2007January
    5.17
    
    4.57
    
    3,506,100February
    5.15
    
    4.30
    
    4,559,000March
    4.61
    
    3.65
    
    4,403,500April
    4.60
    
    3.80
    
    3,376,500May
    4.46
    
    3.79
    
    3,679,500June
    4.60
    
    3.89
    
    4,386,400July
    5.45
    
    4.40
    
    8,164,900August
    4.83
    
    3.45
    
    7,441,900September
    5.29
    
    3.97
    
    4,349,800October
    5.90
    
    4.77
    
    6,643,500November
    6.10
    
    5.08
    
    4,813,900December
    5.75
    
    4.78
    
    3,444,300


ESCROWED SECURITIES

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

DIRECTORS AND OFFICERS

The name and place of residence of each director and officer,
the offices held by each in the Company, the principal occupation of each
director and officer, the period served as director or officer and the number of
securities of the Company owned by such individuals as at March 19, 2008 is as
follows:

Number ofCommon SharesYear Became
    
    BeneficiallyName and Place of
    
    
    
    Director or
    
    Owned or
    
    Principal Occupation and PositionsResidence
    
    Position Held
    
    Officer
    
    Controlled
    
    for
      the Past Five YearsRobert A. Halpin(1)(2)(4)Alberta, Canada
    
    Chairman of the Board and
      Director
    
    1997
    
    634,000 (5)(1.06%)
    
    Retired Petroleum Engineer,
      formerly Vice President, International Exploration of Petro- Canada with
      50 years' experience in the petroleum industry.Ross G. Clarkson Alberta, Canada
    
    President, Chief Executive
      Officer and Director
    
    1995
    
    2,320,972 (6)(3.88%)
    
    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
    
    745,900 (7)(1.25%)
    
    Vice-President and Chief
      Operating Officer of the Company since April 28, 1999, with over 30 years'
      experience in both domestic and international oil and gas exploration and
      development.Erwin L. Noyes(2)(3)(4)British Columbia, Canada
    
    Director
    
    1995
    
    268,347(8)(0.45%)
    
    Retired since July 31, 2000;
      formerly Vice- President, International Operations of the Company, with
      over 40 years' experience in the oil and gas industry.


---

46

Number ofCommon SharesYear Became
    
    BeneficiallyName and Place of
    
    
    
    Director or
    
    Owned or
    
    Principal Occupation and PositionsResidence
    
    Position Held
    
    Officer
    
    Controlled
    
    for
      the Past Five YearsGeoffrey C. Chase(1)(3)(4)Alberta, Canada
    
    Director
    
    2000
    
    86,500(9)(0.15%)
    
    Retired Senior Vice-President,
      Business Development, with Ranger Oil, with over 35 years' experience in
      the oil and gas industry.Fred J. Dyment(1)(2)(3)Alberta, Canada
    
    Director
    
    2004
    
    50,000(10)(0.08%)
    
    Chartered accountant with over
      30 years' experience in the oil and gas industry. Previously President and
      Chief Executive Officer, Maxx Petroleum Company (2000- 2001). Prior
      thereto Controller, Vice- President, Finance and then President and Chief
      Executive Officer of Ranger Oil Limited from 1978-2000.David C. Ferguson Alberta, Canada
    
    Vice-President, Finance,
      Chief Financial Officer and Secretary
    
    2001
    
    350,000(11)(0.59%)
    
    Chartered accountant with over
      25 years' experience in the oil and gas industry. Previously Chief
      Financial Officer with Northstar Drilling Systems Inc. (1999-2000), Chief
      Financial Officer and a director of Myriad Energy Corporation (1998-1999).Edward Bell(12)(13)
      Alberta, Canada
    
    Vice-President, Exploration
    
    2004
    
    36,000(12)(0.06%)
    
    Professional geoscientist with
      36 years of experience in the petroleum industry. Prior positions with
      Nexen as General Manager, Business Development and Occidental Petroleum as
      Technical Advisor.


Notes:

|(1)  | Members of the Company's Audit Committee.                                                                                                                                                                                                                                                                                                                                        
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Members of the Company's Compensation
Committee.                                                                                                                                                                                                                                                                                                                                 
|(3)  | Members of the Company's Governance and Nominating
      Committee.                                                                                                                                                                                                                                                                                                              
|(4)  | Members of the Company's Reserves Committee.                                                                                                                                                                                                                                                                                                                                     
|(5)  | Mr. Halpin also holds incentive stock options to purchase
      152,900 Common Shares consisting of: options to purchase 80,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010 and to
      purchase 18,900 Common Shares at Cdn, $4.27 expiring June 8,
  2012.      
|(6)  | Mr. Clarkson also holds incentive stock options to
      purchase 322,000 Common Shares consisting of: options to purchase 120,000
      Common Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase
      66,000 Common Shares at Cdn$6.03 per share expiring December 5, 2010 and
      to purchase 136,000 Common Shares at Cdn, $4.27 expiring June 8,
    2012.
|(7)  | Mr. Herrick also holds incentive stock options to
      purchase 270,000 Common Shares consisting of: options to purchase 100,000
      Common Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase
      66,000 Common Shares at Cdn$6.03 per share expiring December 5, 2010 and
      to purchase 104,000 Common Shares at Cdn, $4.27 expiring June 8,
    2012. 
|(8)  | Mr. Noyes also holds incentive stock options to purchase
      130,500 Common Shares consisting of: options to purchase 60,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010 and to
      purchase 16,500 Common Shares at Cdn, $4.27 expiring June 8,
  2012.       
|(9)  | Mr. Chase also holds incentive stock options to purchase
      130,500 Common Shares consisting of: options to purchase 60,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010 and to
      purchase 16,500 Common Shares at Cdn, $4.27 expiring June 8,
  2012.       
|(10) | Mr. Dyment holds incentive stock options to purchase
      111,000 Common Shares consisting of: options to purchase 40,000 Common
      Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase 54,000
      Common Shares at Cdn$6.03 per share expiring December 5, 2010 and to
      purchase 18,000 Common Shares at Cdn, $4.27 expiring June 8,
  2012.           
|(11) | Mr. Ferguson also holds incentive stock options to
      purchase 219,000 Common Shares consisting of: options to purchase 90,000
      Common Shares at Cdn$3.26 per share expiring March 15, 2009, to purchase
      66,000 Common Shares at Cdn$6.03 per share expiring December 5, 2010 and
      to purchase 63,000 Common Shares at Cdn, $4.27 expiring June 8,
    2012.  
|(12) | Mr. Bell also holds incentive stock options to purchase
      246,000 Common Shares consisting of: options to purchase 150,000 Common
      Shares at Cdn$3.40 per share expiring January 12, 2009, to purchase 30,000
      Common Shares at                                                                                                                                    

---

47

|     | Cdn$7.74 per share expiring March 17, 2010, to purchase
      66,000 Common Shares at Cdn$6.03 per share expiring December 5, 2010 and
      to purchase 60,000 Common Shares at Cdn, $4.27 expiring June 8,
    2012.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(13) | Mr. Bell's employment with the Company terminated in
      March, 2008.                                                                                                                                               

Cease-Trade Orders, Bankruptcies, Penalties or Sanctions

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

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

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

Conflicts of Interest

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

HUMAN RESOURCES

The Company currently employs 33 full-time employees and 10
part-time consultants. The Company intends to add additional professional and
administrative staff as the needs arise.

INTEREST OF EXPERTS

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

---

48

INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

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

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

There are no outstanding legal proceedings material to the
Company to which the Company is a party or in respect of which any of its
respective properties are subject, nor are there any such proceedings known to
be contemplated. In addition, there were no penalties or sanctions imposed
against the Company by a court relating to securities legislation or by a
securities regulatory authority during the 2007 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 2007 financial year.

INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

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

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

MATERIAL CONTRACTS

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

AUDIT COMMITTEE INFORMATION

Composition of the Audit Committee

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

|                                  |  |             |  | Financially |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------------------------------- |  | ----------- |  | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and
      Place of Residence |  | Independent |  | Literate    |  | Relevant Education and Experience                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Fred J. Dyment Alberta, Canada    |  | Yes         |  | Yes         |  | Mr. Dyment
      received a Chartered Accountant designation from the Province of Ontario
      in 1972 and is a member of the Alberta Institute of Chartered Accountants.
      He has over 30 years of financial, business, executive, international
      management experience at several mid-size public corporations where he
      served as President, CEO, CFO and director. Currently, Mr. Dyment sits as
      a director on several other public companies.
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|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 business,
      executive and                                                                                                                                                                                                                                                                           

---

49

|                                  |  |             |  | Financially |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|--------------------------------- |  | ----------- |  | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and
      Place of Residence |  | Independent |  | Literate    |  | Relevant Education and Experience                                                                                                                                                                                                                                                                                                                                                                 
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|                                  |  |             |  |             |  | international
      management experience with a major and later a mid-size public petroleum
      corporation. His activities have involved various aspects of financial
      planning, budgeting and operations.                                                                                                                                                                               
|                                  |  |             |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|Robert A. Halpin Alberta, Canada  |  | Yes         |  | Yes         |  | Mr. Halpin
      received a B.Sc. from Queen's University, Ontario in 1957 and is a P.Eng.
      in the Province of Alberta. He has 50 years of business, executive,
      international management and director experience at several major and
      independent international corporations where he has been involved in
      various aspects of financial planning, budgeting and operations.

Pre-Approval of Policies and Procedures

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

Audit Committee Charter

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

Audit Service Fees

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

|                     |  | Fiscal Year |  |                   |  |                                                                                                
|-------------------- |  | ----------- |  | ----------------- |  | -----------------------------------------------------------------------------------------------
|                     |  | Ended       |  | Aggregate         |  |                                                                                                
|Type of Fees         |  | December 31 |  | Fees
      Billed |  | Nature of Services Performed                                                                   
|                     |  |             |  |                   |  |                                                                                                
|                     |  |             |  |                   |  |                                                                                                
|Audit Fees           |  | 2007        |  | Cdn$327,062       |  | 2007 corporate
      year-end and SOX testing                                                  
|                     |  | 2006        |  | Cdn$177,844       |  | 2006 corporate year-end audit and
      SOX audit planning                                     
|                     |  |             |  |                   |  |                                                                                                
|Audit  Related Fees |  | 2007        |  | Cdn$Nil           |  | 2007 quarterly reviews                                                                         
|                     |  | 2006        |  | Cdn$30,330        |  | 2006 Quarterly
      reviews and review of SEC letter                                          
|                     |  |             |  |                   |  |                                                                                                
|Tax Fees             |  | 2007        |  | Cdn$12,869        |  | 2007 corporate
      tax returns and tax compliance                                            
|                     |  | 2006        |  | Cdn$5,937         |  | 2006 corporate tax returns and
      tax compliance                                            
|                     |  |             |  |                   |  |                                                                                                
|All Other Fees       |  | 2007        |  | Cdn$204,197       |  | Due diligence assistance in
      respect of acquisition                                       
|                     |  | 2006        |  | Cdn$38,877        |  | Annual
      subscription to Petroview, a software program for oil and gas
      reconnaissance

---

50

RISK FACTORS

General Conditions Relating to Oil and Gas Exploration and
Production Operations

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

Industry Risks

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

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

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

The marketability and price of oil and natural gas which may be
acquired or discovered by the Company may be affected by numerous factors beyond
the control of the Company. The Company may be affected by the differential
between the price paid by refiners for light, quality oil and various grades of
oil produced by the Company. The Company is subject to market fluctuations in
the prices of oil and natural gas, deliverability uncertainties related to the
proximity of its reserves to pipeline and processing facilities and extensive
government regulation relating to prices, taxes, royalties, land tenure,
allowable production, the export of oil and natural gas and many other aspects
of the oil and natural gas business. The Company's operations will be further
affected by the remoteness of, and restrictions on access to, certain properties
as well as climatic conditions. The Company is also subject to compliance with
federal, state and local laws and regulations controlling the discharge of
materials into the environment or otherwise relating to the protection of the
environment. The Company is not aware of present material liability related to
environmental matters. However, it may, in the future, be subject to liability
for environmental offences of which it is presently unaware. Additionally, the
potential impact on the Company's operations and business of the Kyoto Protocol
(the "Kyoto Protocol") which has now been ratified by Canada, with respect to
instituting reductions of greenhouse gases, is difficult to quantify at this
time as specific measures for meeting Canada's commitments have not been
developed.

Exploration and Development

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

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

---

51

international political events; technological advances; and the
competitiveness of alternative energy sources or product substitutes.

Competition

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

Title to Properties

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

Interests in Properties

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

Government Regulation

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

Political Risks Relating to Yemen and Egypt

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

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

---

52

Reliance Upon Officers

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

Multi-jurisdictional Legal Risks

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

Reserve Information

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

Additional Financing Requirements

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

Canadian Tax Considerations

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

Kyoto Protocol

In December 2002, the Government of Canada ratified and signed
the Kyoto Protocol (see "Industry Conditions  Environmental Regulation"). As a
result of the ratification of the Kyoto Protocol and the adoption of legislation
or other regulatory initiatives designed to implement its objectives by the
federal or provincial governments, reductions in greenhouse gases from crude oil
and natural gas producers may be required which could result in, among other
things, increased operating and capital expenditures for producers (including
the Company) which may make certain

---

53

production of crude oil and natural gas by those producers
uneconomic, resulting in reductions in such production. Until such legislation
or other regulatory initiatives are finalized, the impact of the Kyoto Protocol
and any such legislation adopted as a result of its ratification remains
uncertain. The direct or indirect costs of such legislation or regulatory
initiatives may adversely affect the business of the Company.

Exchange Rate Risks

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

Dividends

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

Conflicts of Interest

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

Reliance on Key Personnel

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

Dilutive Effect of Financings and Acquisitions

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

INDUSTRY CONDITIONS

Government Regulation Generally

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

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54

Pricing and Marketing  Oil and Natural Gas

In Canada, the producers of oil are entitled to negotiate sales
contracts directly with oil purchasers, with the result that the market
determines the price of oil. Oil prices are primarily based on worldwide supply
and demand. The specific price depends in part on oil quality, prices of
competing fuels, distance to market, the value of refined products, the
supply/demand balance and other contractual terms. Oil exporters are also
entitled to enter into export contracts with terms not exceeding one year in the
case of light crude oil and two years in the case of heavy crude oil, provided
that an order approving such export has been obtained from the National Energy
Board of Canada (the "NEB"). Any oil export to be made pursuant to a contract of
longer duration (to a maximum of 25 years) requires an exporter to obtain an
export license from the NEB and the issuance of such license requires the
approval of the Governor in Council.

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

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

Pricing and Marketing - Natural Gas

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

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

Pipeline Capacity

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

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

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

The North American Free Trade Agreement

The North American Free Trade Agreement ("NAFTA") among the
governments of Canada, United States of America and Mexico became effective on
January 1, 1994. NAFTA carries forward most of the material energy terms
contained in the Canada-U.S. Free Trade Agreement. In the context of energy
resources, Canada continues to remain free to determine whether exports of
energy resources to the United States or Mexico will be allowed, provided that
any export

---

55

restrictions do not: (i) reduce the proportion of energy
resources exported relative to domestic use (based upon the proportion
prevailing in the most recent 36 month period), (ii) impose an export price
higher than the domestic price subject to an exception with respect to certain
measures which only restrict the volume of exports, and (iii) disrupt normal
channels of supply. All three countries are prohibited from imposing minimum or
maximum export or import price requirements, provided, in the case of
export-price requirements, prohibition in any circumstances in which any other
form of quantitative restriction is prohibited, and in the case of import-price
requirements, such requirements do not apply with respect to enforcement of
countervailing and anti-dumping orders and undertakings.

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

Royalties and Incentives

Egypt

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

Yemen

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

Canada

In addition to federal regulation in Canada, each province has
legislation and regulations that govern land tenure, royalties, production
rates, environmental protection and other matters. The royalty regime is a
significant factor in the profitability of crude oil, natural gas liquids,
sulphur and natural gas production. Royalties payable on production from lands
other than Crown lands are determined by negotiations between the mineral owner
and the lessee, although production from such lands is subject to certain
provincial taxes and royalties. Crown royalties are determined by government
regulation and are generally calculated as a percentage of the value of the
gross production. The rate of royalties payable generally depends in part on
prescribed reference prices, well productivity, geographical location, field
discovery date, method of recovery and the type or quality of the petroleum
product produced. Other royalties and royalty-like interests are from time to
time carved out of the working interest owner's interest through non-public
transactions. These are often referred to as overriding royalties, gross
overriding royalties, net profits interests or net carried interests.

From time to time the governments of the western Canadian
provinces create incentive programs for exploration and development. Such
programs often provide for royalty rate reductions, royalty holidays and tax
credits, and are generally introduced when commodity prices are low. The
programs are designed to encourage exploration and development activity by
improving earnings and cash flow within the industry. Royalty holidays and
reductions would reduce the amount of Crown royalties paid by oil and gas
producers to the provincial governments and would increase the net income and
funds from operations of such producers. However, the trend in recent years has
been for provincial governments to allow such incentive programs to expire
without renewal, and consequently few such incentive programs are currently
operative.

The Canadian federal corporate income tax rate levied on
taxable income is 22.1% effective January 1, 2007 for active business income
including resource income. With the elimination of the corporate surtax
effective January 1, 2008 and other rate reductions introduced in the 2006
Federal Budget, the federal corporate income tax rate will decrease to 19% in
three steps: 20.5% on January 1, 2008, 20% on January 1, 2009 and 19% on January
1, 2010.

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56

Alberta

In Alberta, companies are granted the right to explore, produce
and develop petroleum and natural gas resources in exchange for royalties, bonus
bid payments and rents. Currently, the amount of royalties that are payable is
influenced by the oil production, density of the oil, and the vintage of the
oil. Originally, the vintage classified oil in "new oil" and "old oil" depending
on when the oil pools were discovered. If discovered prior to March 31, 1974, it
is considered "old oil", if discovered after March 31, 1974 and before September
1, 1992, it is considered "new oil". The Alberta government introduced in 1992 a
Third-Tier Royalty with a base rate of 10% and a rate cap of 25% for oil pools
discovered after September 1, 1992. The new oil royalty reserved to the Crown
has a base rate of 10% and a rate cap of 30%. The old oil royalty reserved to
the Crown has a base rate of 10% and a rate cap of 35%.

The royalty reserved to the Crown in respect of natural gas
production, subject to various incentives, is between 15% and 30%, in the case
of new natural gas, and between 15% and 35%, in the case of old natural gas,
depending upon a prescribed or corporate average reference price. Natural gas
produced from qualifying intervals in eligible gas wells spudded or deepened to
a depth below 2,500 metres is also subject to a royalty exemption, the amount of
which depends on the depth of the well.

Oil sands projects are subject to a specific regulation made
effective July 1, 1997, and expiring June 30, 2007, which, among other things,
determines the Crown's share of crude and processed oil sands products.

Regulations made pursuant to the Mines and Minerals Act
(Alberta) provided various incentives for exploring and developing oil reserves
in Alberta. However, the Alberta Government announced in August of 2006 that
four royalty programs were to be amended, a new program was to be introduced and
the Alberta Royalty Tax Credit Program ("ARTC") was to be eliminated, effective
January 1, 2007. The programs affected by this announcement are: (i) Deep Gas
Royalty Holiday; (ii) Low Productivity Well Royalty Reduction; (iii) Reactivated
Well Royalty Exemption; and (iv) Horizontal Re-Entry Royalty Reduction. The
program being introduced is the Innovative Energy Technologies Program (the
"IETP"), which is intended to promote the producers' investment in research,
technology and innovation for the purposes of improving environmental
performance while creating commercial value. The IETP provides royalty
reductions which are presumed to reduce financial risk. Alberta Energy will be
the one to decide which projects qualify and the level of support that will be
provided. The deadline for the IETP's third round of applications is May 31,
2007.

On October 25, 2007, the Alberta government released the New
Royalty Framework ("NRF") pertaining to royalties on oil and gas resources
including oil sands, conventional oil and gas and coalbed methane. The NRF is
scheduled to take effect on January 1, 2009. The NRF was the Alberta
government's response to the recommendations put forth by the Alberta Royalty
Review Panel. Given the methodology used in the proposed royalty regime, the
effect on TransGlobe's cash flow will be affected by depths and productivity of
wells. The actual effect of the Alberta royalty rate changes on TransGlobe will
be determined based on, among other things, the actual legislation enacted, the
production rates, commodity prices, foreign exchange rates, production mix,
service costs and the percentage of production from Alberta after January 1,
2009.

Land Tenure

Crude oil and natural gas located in the western Canadian
provinces is owned predominantly by the respective provincial governments.
Provincial governments grant rights to explore for and produce oil and natural
gas pursuant to leases, licenses and permits for varying terms from two years
and on conditions set forth in provincial legislation including requirements to
perform specific work or make payments. Oil and natural gas located in such
provinces can also be privately owned and rights to explore for and produce such
oil and natural gas are granted by lease on such terms and conditions as may be
negotiated.

Environmental Regulation

The oil and natural gas industry is currently subject to
environmental regulations pursuant to a variety of provincial and federal
legislation. Such legislation provides for restrictions and prohibitions on the
release or emission of various substances produced in association with certain
oil and gas industry operations. In addition, such legislation requires that
well and facility sites be abandoned and reclaimed to the satisfaction of
provincial authorities. Compliance with

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57

such legislation can require significant expenditures and a
breach of such requirements may result in suspension or revocation of necessary
licenses and authorizations, civil liability for pollution damage and the
imposition of material fines and penalties.

Environmental legislation in the Province of Alberta has been
consolidated into the Environmental Protection and Enhancement Act (Alberta)
(the "APEA"), which came into force on September 1, 1993 and the Oil and Gas
Conservation Act (Alberta) (the "OGCA"). The APEA and OGCA impose stricter
environmental standards, require more stringent compliance, reporting and
monitoring obligations and significantly increase penalties. The Company is
committed to meeting its responsibilities to protect the environment wherever it
operates and anticipates making increased expenditures of both a capital and an
expense nature as a result of the increasingly stringent laws relating to the
protection of the environment and will be taking such steps as required to
ensure compliance with the APEA and similar legislation in other jurisdictions
in which it operates. The Company believes that it is in material compliance
with applicable environmental laws and regulations. The Company also believes
that it is reasonably likely that the trend towards stricter standards in
environmental legislation and regulation will continue.

In December, 2002, the Government of Canada ratified the Kyoto
Protocol. The Kyoto Protocol calls for Canada to reduce its greenhouse gas
emissions to 6% below 1990 "business-as-usual" levels between 2008 and 2012.
Given revised estimates of Canada's normal emissions levels, this target
translates into an approximately 40% gross reduction in Canada's current
emissions. It remains uncertain whether the Kyoto Protocol target of 6% below
1990 emission levels will be enforced in Canada. The Federal Government has
introduced legislation aimed at reducing greenhouse gas emissions using a
"intensity based" approach, the specifics of which have yet to be determined.
Bill C-288, which is intended to ensure that Canada meets its global climate
change obligations under the Kyoto Protocol, was passed by the House of Commons
on February 14, 2007. As details of the implementation of this legislation have
not yet been announced, the effect of our operations cannot be determined at
this time.

The Government of Canada has put forward a Climate Change Plan
for Canada which suggests further legislation will set greenhouse gases emission
reduction requirements for various industrial activities, including oil and gas
exploration and production. Future federal legislation may require reductions of
emissions or emissions intensity produced by our operations and facilities.

Provincial legislation currently requires energy industries to
follow a mandatory emissions reporting scheme, in advance of further regulations
targeting emissions output and improving energy efficiency standards of our
operations. The direct or indirect costs of these enactments and proposals may
adversely affect our business.

Trends

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

One of the trends is the volatility of commodity prices.
Natural gas is a commodity influenced by factors within North America. A tight
supply-demand balance for natural gas causes significant elasticity in pricing,
whereas higher than average storage levels tend to depress natural gas pricing.
Drilling activity, weather, fuel switching and demand for electrical generation
are all factors that affect the supply-demand balance. Changes to any of these
or other factors create price volatility.

Crude oil is influenced by the world economy and OPEC's ability
to adjust supply to world demand. Crude oil prices are at historical highs due
to political events causing disruptions in the supply and concerns over
potential supply due to high world demand.

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

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58

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, 2007. 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

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

|1. | We have evaluated the Company's reserves data as at
      December 31, 2007. The reserves data are estimates of proved reserves and
      probable reserves and related future net revenues at December 31, 2007,
      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, 2007,
      and identifies the respective portions thereof that we have audited,
      evaluated and reviewed and reported on to the Company's board of
      directors.

|                      |  |                          |  | Location of |  | Net Present Value of Future Net Revenue 
|--------------------- |  | ------------------------ |  | ----------- |  | ----------------------------------------
|                      |  |                          |  | Reserves    |  | (before income taxes, 10% discount rate)
|                      |  |                          |  | (County or  |  |                                         
|Independent Qualified |  | Description and          |  | Foreign     |  |                                         
|Reserves Evaluator or |  | Preparation Date of      |  | Geographic  |  |                                         
|Auditor               |  | Evaluation Report        |  | Area)       |  | Audited                                 
|                      |  |                          |  |             |  | U.S. M$                                 
|                      |  |                          |  |             |  |                                         
|DeGolyer and          |  | Appraisal Report as of   |  | Canada      |  |                                         
|MacNaughton Canada    |  | December 31, 2006 on     |  | Egypt       |  |                                         
|Limited               |  | Certain Properties owned |  |             |  |                                         
|                      |  | by TransGlobe Energy     |  | Yemen       |  |                                         
|                      |  | Corporation dated        |  | Total       |  |                                         
|                      |  | February 16, 2007        |  |             |  |                                         

|5. | In our opinion, the reserves data respectively evaluated
      by us have, in all material respects, been determined and are in
      accordance with the COGE Handbook. We express no opinion on the reserves
      data that we reviewed but did not audit or evaluate.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                          
|6. | We have no responsibility to update our reports referred
      to in paragraph 4 for events and circumstances occurring after their
      respective preparation dates.                                                                                                  
|   |                                                                                                                                                                                                                                                                          
|7. | Because the reserves data are based on judgements
      regarding future events, actual results will vary and the variations may
      be material                                                                                                                       

Executed as to our report referred to above:

DeGolyer and MacNaughton Canada Limited, Calgary, Alberta,
dated February 6, 2008.

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

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SCHEDULE "B"

FORM 51-101F3REPORT 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, 2007, estimated using forecast prices and costs.

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

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

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

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

| | (d) | the content and filing with securities regulatory
      authorities of the reserves data and other oil and gas
  information;
| | --- | -----------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                              
| | (e) | the filing of the 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 24, 2008

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SCHEDULE "C"

CHARTER OF AUDIT COMMITTEE

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

GENERAL FUNCTIONS, AUTHORITY, AND ROLE

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

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

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

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

MEMBERSHIP

The membership of the Audit Committee will be as follows:

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

---

C-2

- The Board will elect, by a majority vote, one member as chairperson.

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

RESPONSIBILITIES

The responsibilities of the Audit Committee shall be as
follows:

Frequency of Meetings

Meet on at least a quarterly basis, either in person or
telephonically.

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

Reporting Responsibilities

Provide to the Board of Directors proper Committee minutes.

Report Committee actions to the Board of Directors with such
recommendations, as the Committee may deem appropriate.

Charter Review

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

Advise of Counsel

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

Whistleblower Mechanisms

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

Independent Auditor

Nominate annually the independent auditor to be proposed for
shareholder approval.

Approve the compensation of the independent auditor, and
evaluate the performance of the independent auditor.

Establish policies and procedures for the engagement of the
independent auditor to provide non-audit services.

Insure that the independent auditor is not engaged for any
activities not allowed by any of the Canadian provincial securities commissions,
the SEC or any securities exchange on which the Company's shares are traded.

---

C-3

Insure that the independent auditor is not engaged for any of
the following nine types of non-audit services contemporaneous with the audit:

- Bookkeeping or other services related to accounting records or financial
  statements of the Company;
- Financial information systems design and implementation;
- Appraisal or valuation services, fairness opinions, or
  contributions-in-kind reports;
- Actuarial services;
- Internal audit outsourcing services;
- Any management or human resources function;
- Broker, dealer, investment advisor, or investment banking services;
- Legal services; and
- Expert services related to the auditing service.

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

Hiring Practices

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

Independence Test

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

- insuring receipt from the independent auditor of a formal written
  statement delineating all relationships between the independent auditor and
  the Company, consistent with the Independence Standards Board Standard No. 1
  and related Canadian regulatory body standards;
- considering and discussing with the independent auditor any relationships
  or services, including non- audit services, that may impact the objectivity
  and independence of the independent auditor; and
- as necessary, taking, or recommending that the Board of Directors take,
  appropriate action to oversee the independence of the independent auditor.

Audit Committee Meetings

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

At the request of the independent auditor, convene a meeting of
the Audit Committee to consider matters the auditor believes should be brought
to the attention of the directors or shareholders.

Keep minutes of its meetings and report to the Board for
approval of any actions taken or recommendations made.

Restrictions

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

Insure that no Officer or Director attempts to fraudulently
influence, coerce, manipulate or mislead any accountant engaged in auditing of
the Company's financial statements.

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C-4

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:

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

Review, discuss with management and the independent auditor and
approve annual and interim quarterly financial statements (including related
notes and MD&A) at the completion of any review engagement or other
examination and prior to public disclosure. The designated financial expert of
the Audit Committee may represent the entire Audit Committee for purposes of
this review.

Review and discuss with management and the independent auditor
the adequacy of the Company's internal control over financial reporting that
management and the Board of Directors have established and the effectiveness of
those systems, including, but not limited to, review and discussion of (1)
management's report on its assessment of the effectiveness of internal control
over financial reporting as of the end of each fiscal year and the independent
auditor's report on management's assessment and the effectiveness of internal
control over financial reporting, (2) inquiry of management and the independent
auditor about significant financial risks, exposures, deficiencies or material
weaknesses identified and the steps management has taken to minimize such risks,
exposures, deficiencies and material weaknesses to the Company and (3) any
changes in internal control over financial reporting that have materially
affected or are reasonably likely to materially affect the Company's internal
control over financial reporting and are required to be disclosed, as well as
any other changes in internal control over financial reporting that were
considered for disclosure in the Company's periodic filings with the SEC.

Meet separately with the independent auditor, management and
the CFO as necessary or appropriate to discuss any matters that the Audit
Committee or any of these groups believe should be discussed privately with the
Audit Committee.

Review and discuss with management and the independent auditor
the accounting policies which may be viewed as critical, including all
alternative treatments for financial information within generally accepted
accounting principles that have been discussed with management, and review and
discuss any significant changes in the accounting policies of the Company and
industry accounting and regulatory financial reporting proposals that may have a
significant impact on the Company's financial reports.

Review with management and the independent auditor the effect
of regulatory and accounting initiatives as well as off-balance sheet
structures, if any, on the Company's financial statements.

Review with management and the independent auditor any
correspondence with regulators or governmental agencies and any employee
complaints or published reports which raise material issues regarding the
Company's financial statements or accounting policies.

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C-5

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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