|                                         |
|-----------------------------------------|
|                                         |  |
| Signed by:                              |   |
|                                    |   |
| “Ross G. Clarkson”          | “Randy C. Neely” |
|                                    |   |
| Ross G. Clarkson                        | Randy C. Neely |
| President & Chief Executive Officer | Vice President, Finance & Chief Financial Officer |
|                                    |   |
| March 3, 2014                      |   |

----

----

----

|                                                         |
|---------------------------------------------------------|
|                                                         |  |  |  |  |  |  |  |  |  |  |
|                                                    |   | Notes |   | 2013 |  |   | 2012 |  |
| REVENUE                                                 |   |   |   |   |   |   |
| Oil sales, net of royalties                             |   | 6 |   | $ | 315,316 |  |   | $ | 317,666 |  |
| Derivative gain (loss) on commodity contracts           |   |  |   | — |  |   | (125 | ) |
| Finance revenue                                         |   | 7 |   | 362 |  |   | 452 |  |
|                                                    |   |   |   | 315,678 |  |   | 317,993 |  |
|                                                    |   |   |   |   |   |   |
| EXPENSES                                                |   |   |   |   |   |   |
| Production and operating                                |   |  |   | 65,791 |  |   | 52,367 |  |
| General and administrative                              |   |  |   | 27,569 |  |   | 28,206 |  |
| Foreign exchange (gain) loss                            |   |  |   | (5,042 | ) |   | (105 | ) |
| Finance costs                                           |   | 7 |   | 9,130 |  |   | 13,901 |  |
| Exploration                                             |   |  |   | 136 |  |   | 368 |  |
| Depletion, depreciation and amortization                |   | 13 |   | 49,414 |  |   | 46,946 |  |
| Unrealized (gain) loss on financial instruments         |   | 17 |   | (5,254 | ) |   | 425 |  |
| Impairment loss                                         |   | 12, 13 |   | 30,071 |  |   | 76 |  |
|                                                    |   |   |   | 171,815 |  |   | 142,184 |  |
|                                                    |   |   |   |   |   |   |
| Earnings before income taxes                            |   |  |   | 143,863 |  |   | 175,809 |  |
|                                                    |   |   |   |   |   |   |
| Income tax expense (recovery) – current           |   | 11 |   | 88,851 |  |   | 88,603 |  |
| – deferred                                        |   | 11 |   | (3,500 | ) |   | (528 | ) |
|                                                    |   |   |   | 85,351 |  |   | 88,075 |  |
| NET EARNINGS AND COMPREHENSIVE INCOME FOR THE YEAR |   |   |   | $ | 58,512 |  |   | $ | 87,734 |  |
|                                                    |   |   |   |   |   |   |
| Earnings per share                                      |   | 21 |   |   |   |   |
| Basic                                                   |   |   |   | $ | 0.79 |  |   | $ | 1.20 |  |
| Diluted                                                 |   |   |   | $ | 0.65 |  |   | $ | 1.16 |  |

----

|                                              |
|----------------------------------------------|
|                                              |  |  |  |  |  |  |  |  |  |  |
|                                         |   |   |   | As at |  |   | As at |  |
|                                         |   | Notes |   | December 31, 2013 |  |   | December 31, 2012 |  |
| ASSETS                                       |   |   |   |   |   |   |
| Current                                      |   |   |   |   |  |   |   |  |
| Cash and cash equivalents                    |   | 8 |   | $ | 122,092 |  |   | $ | 82,974 |  |
| Accounts receivable                          |   | 9 |   | 148,284 |  |   | 221,017 |  |
| Prepaids and other                           |   |  |   | 8,460 |  |   | 6,813 |  |
| Product inventory                            |   |  |   | 1,525 |  |   | — |  |
|                                         |   |   |   | 280,361 |  |   | 310,804 |  |
| Non-Current                                  |   |   |   |   |   |   |  |
| Restricted cash                              |   | 10 |   | 1,546 |  |   | 782 |  |
| Deferred financing costs                     |   | 16 |   | 2,678 |  |   | — |  |
| Intangible exploration and evaluation assets |   | 12 |   | 89,991 |  |   | 48,414 |  |
| Property and equipment                       |   |  |   |  |  |   |  |  |
| Petroleum properties                         |   | 13 |   | 288,756 |  |   | 280,895 |  |
| Other assets                                 |   | 13 |   | 4,288 |  |   | 4,350 |  |
| Goodwill                                     |   | 14 |   | 8,180 |  |   | 8,180 |  |
|                                         |   |     |   | $ | 675,800 |  |   | $ | 653,425 |  |
|                                         |   |   |   |   |   |   |
| LIABILITIES                                  |   |   |   |   |   |   |  |
| Current                                      |   |   |   |   |   |   |  |
| Accounts payable and accrued liabilities     |   | 15 |   | $ | 38,392 |  |   | $ | 48,587 |  |
|                                         |   |   |   | 38,392 |  |   | 48,587 |  |
| Non-Current                                  |   |   |   |   |   |   |  |
| Long-term debt                               |   | 16 |   | — |  |   | 16,885 |  |
| Convertible debentures                       |   | 17 |   | 87,539 |  |   | 98,742 |  |
| Deferred taxes                               |   | 11 |   | 48,863 |  |   | 52,363 |  |
| Other long-term liabilities                  |   |  |   | 816 |  |   | 988 |  |
|                                         |   |   |   | 175,610 |  |   | 217,565 |  |
|                                         |   |   |   |   |   |   |
| SHAREHOLDERS’ EQUITY                   |   |   |   |   |   |   |  |
| Share capital                                |   | 19 |   | 160,561 |  |   | 158,721 |  |
| Contributed surplus                          |   |   |   | 15,692 |  |   | 11,714 |  |
| Retained earnings                            |   |   |   | 323,937 |  |   | 265,425 |  |
|                                         |   |   |   | 500,190 |  |   | 435,860 |  |
|                                         |   |   |   | $ | 675,800 |  |   | $ | 653,425 |  |

|                                |
|--------------------------------|
|                                |  |
| “Ross G. Clarkson” | “Fred J. Dyment” |
|                           |   |
| Ross G. Clarkson               | Fred J. Dyment |
| President and CEO,             | Director |
| Director                       |   |

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |  |  |  |
|                                                     |   | Notes |   | 2013 |  |   | 2012 |  |
|                                                     |   |   |   |   |   |   |
| Share Capital                                            |   |   |   |   |   |   |
| Balance, beginning of year                               |   | 19 |   | $ | 158,721 |  |   | $ | 154,263 |  |
| Stock options exercised                                  |   | 19 |   | 372 |  |   | 3,333 |  |
| Transfer from contributed surplus on exercise of options |   | 19 |   | 1,468 |  |   | 1,125 |  |
| Balance, end of year                                     |   |   |   | $ | 160,561 |  |   | $ | 158,721 |  |
|                                                     |   |   |   |   |   |   |
| Contributed Surplus                                      |   |   |   |   |   |   |
| Balance, beginning of year                               |   |  |   | $ | 11,714 |  |   | $ | 8,538 |  |
| Share-based compensation expense                         |   | 20 |   | 5,446 |  |   | 4,301 |  |
| Transfer to share capital on exercise of options         |   |  |   | (1,468 | ) |   | (1,125 | ) |
| Balance, end of year                                     |   |                         |   | $ | 15,692 |  |   | $ | 11,714 |  |
|                                                     |   |   |   |   |   |   |
| Retained Earnings                                        |   |   |   |   |   |   |
| Balance, beginning of year                               |   |   |   | $ | 265,425 |  |   | $ | 177,691 |  |
| Net earnings and total comprehensive income              |   |   |   | 58,512 |  |   | 87,734 |  |
| Balance, end of year                                     |   |   |   | $ | 323,937 |  |   | $ | 265,425 |  |

----

|                                                                        |
|------------------------------------------------------------------------|
|                                                                        |  |  |  |  |  |  |  |  |  |  |
|                                                                   |   |   |   | Year Ended |  |   | Year Ended |  |
|                                                                   |   | Notes |   | December 31, 2013 |  |   | December 31, 2012 |  |
| CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:                   |   |   |   |   |   |   |
|                                                                   |   |   |   |   |   |   |
| OPERATING                                                              |   |   |   |   |   |   |
| Net earnings for the year                                              |   |                   |   | $ | 58,512 |  |   | $ | 87,734 |  |
| Adjustments for:                                                       |   |  |   |  |   |  |
| Depletion, depreciation and amortization                               |   | 13 |   | 49,414 |  |   | 46,946 |  |
| Deferred lease inducement                                              |   |  |   | 449 |  |   | 458 |  |
| Impairment of exploration and evaluation costs                         |   | 12 |   | 30,071 |  |   | 76 |  |
| Stock-based compensation                                               |   | 20 |   | 5,264 |  |   | 4,502 |  |
| Finance costs                                                          |   | 7 |   | 9,130 |  |   | 13,901 |  |
| Income tax expense                                                     |   |  |   | 85,351 |  |   | 88,075 |  |
| Unrealized (gain) loss on commodity contracts                          |   |  |   | — |  |   | 125 |  |
| Unrealized (gain) loss on financial instruments                        |   |  |   | (5,254 | ) |   | 425 |  |
| Unrealized (gain) loss on foreign currency translation                 |   |  |   | (4,968 | ) |   | (141 | ) |
| Income taxes paid                                                      |   |  |   | (88,851 | ) |   | (88,603 | ) |
| Changes in non-cash working capital                                    |   | 25 |   | 60,390 |  |   | (59,506 | ) |
| Net cash generated by (used in) operating activities                   |   |   |   | 199,508 |  |   | 93,992 |  |
|                                                                   |   |   |   |   |   |   |
| INVESTING                                                              |   |   |   |   |   |   |
| Additions to intangible exploration and evaluation assets              |   | 12 |   | (61,501 | ) |   | (5,384 | ) |
| Additions to petroleum properties                                      |   | 13 |   | (66,703 | ) |   | (45,386 | ) |
| Additions to other assets                                              |   | 13 |   | (966 | ) |   | (881 | ) |
| Business acquisitions                                                  |   | 4 |   | — |  |   | (27,259 | ) |
| Changes in restricted cash                                             |   |  |   | (764 | ) |   | 1,445 |  |
| Changes in non-cash working capital                                    |   | 25 |   | (2,021 | ) |   | (25,311 | ) |
| Net cash generated by (used in) investing activities                   |   |   |   | (131,955 | ) |   | (102,776 | ) |
|                                                                   |   |   |   |   |   |   |
| FINANCING                                                              |   |   |   |   |   |   |
| Issue of common shares for cash                                        |   | 19 |   | 1,301 |  |   | 3,333 |  |
| Deferred financing costs                                               |   |  |   | (2,221 | ) |   | (440 | ) |
| Interest paid                                                          |   |  |   | (7,277 | ) |   | (6,737 | ) |
| Increase in long-term debt                                             |   |  |   | 23,550 |  |   | — |  |
| Issue of convertible debentures                                        |   | 17 |   | — |  |   | 97,851 |  |
| Issue costs for convertible debentures                                 |   | 17 |   | — |  |   | (4,630 | ) |
| Repayments of long-term debt                                           |   |  |   | (42,000 | ) |   | (41,550 | ) |
| Increase (decrease) in other long-term liabilities                     |   |  |   | (561 | ) |   | (592 | ) |
| Net cash generated by (used in) financing activities                   |   |   |   | (27,208 | ) |   | 47,235 |  |
| Currency translation differences relating to cash and cash equivalents |   |   |   | (1,227 | ) |   | 639 |  |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS              |   |   |   | 39,118 |  |   | 39,090 |  |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                           |   |   |   | 82,974 |  |   | 43,884 |  |
| CASH AND CASH EQUIVALENTS, END OF YEAR                                 |   |   |   | $ | 122,092 |  |   | $ | 82,974 |  |

----

----

|         |                                                                                                                                                                                                                                                                                                        |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Reserves - Assumptions that are valid at the time of reserve estimation may change significantly when new information becomes available.  Changes in forward price estimates, production costs or recovery rates may change the economic status of reserves and may result in reserves being restated. |

|         |                                                                                                                                                                                                                                              |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Oil prices - The cash flow model uses forward oil price estimates.  Commodity prices have fluctuated significantly in recent years, and the forward price estimates used in the cash flow model may not align with actual future oil prices. |

|         |                                                                                                                                                                                                                                                                        |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Discount rate - The discount rate used to determine the net present value of future cash flows is based on the Company's estimated weighted average cost of capital.  Changes in the economic environment could change the Company's weighted average cost of capital. |

|                                                                                                      |
|------------------------------------------------------------------------------------------------------|
|                                                                                                      |  |  |  |  |
|                                                                                                 |   | Egypt |   | Yemen |
| Year                                                                                                 |   | Oil $/Bbl |   | Oil $/Bbl |
| 2014                                                                                                 |   | 92.05 |   | 103.38 |
| 2015                                                                                                 |   | 87.59 |   | 99.34 |
| 2016                                                                                                 |   | 87.03 |   | 99.58 |
| 2017                                                                                                 |   | 86.88 |   | 99.84 |
| 2018                                                                                                 |   | 87.07 |   | 99.76 |
| 2019                                                                                                 |   | 87.09 |   | 99.96 |
| Thereafter*                                                                                          |   | 2.0% |   | 2.0% |
| *  Percentage change represents the increase in each year after 2019 to the end of the reserve life. |

----

----

----

----

|         |                                                       |
|---------|-------------------------------------------------------|
| • | the fair value of the consideration transferred; plus |

|         |                                                                              |
|---------|------------------------------------------------------------------------------|
| • | the recognized amount of any non-controlling interests in the acquiree; plus |

|         |                                                                                                                               |
|---------|-------------------------------------------------------------------------------------------------------------------------------|
| • | if the business combination has been achieved in stages, the fair value of the existing equity interest in the acquiree; less |

|         |                                                                                                               |
|---------|---------------------------------------------------------------------------------------------------------------|
| • | the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed. |

----

----

|                                                                             |
|-----------------------------------------------------------------------------|
|                                                                             |  |  |  |
| Fair value of net assets acquired (000s)                                    |   |
| Property and equipment – intangible exploration and evaluation assets | $ | 4,235 |  |
| Property and equipment – other assets                                 | 279 |  |
| Working capital                                                             | 30 |  |
| Total cost of acquisition                                                   | $ | 4,544 |  |

----

|                                                                             |
|-----------------------------------------------------------------------------|
|                                                                             |  |  |  |
| Fair value of net assets acquired (000s)                                    |   |
| Property and equipment – intangible exploration and evaluation assets | $ | 21,984 |  |
| Property and equipment – other assets                                 | 807 |  |
| Working capital (including cash - $215)                                     | 139 |  |
| Total cost of acquisition                                                   | $ | 22,930 |  |

|                                                            |
|------------------------------------------------------------|
|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                       |   | December 31, 2013 |   | December 31, 2012 |
|                                                       |   | Carrying |  |   | Fair |  |   | Carrying |  |   | Fair |  |
| Classification (000s)                                      |   | Value |  |   | Value |  |   | Value |  |   | Value |  |
| Financial assets at fair value through profit or loss |   | $ | 122,092 |  |   | $ | 122,092 |  |   | $ | 82,974 |  |   | $ | 82,974 |  |
| Loans and receivables                                      |   | 149,830 |  |   | 149,830 |  |   | 221,799 |  |   | 221,799 |  |
| Financial liabilities at fair value through profit or loss |   | 87,539 |  |   | 87,539 |  |   | 98,742 |  |   | 98,742 |  |
| Other liabilities                                          |   | 38,392 |  |   | 38,392 |  |   | 65,472 |  |   | 67,037 |  |

----

|                                                   |
|---------------------------------------------------|
|                                                   |  |  |  |
| (000s)                                            |   |
| Trade receivables at December 31, 2013            |   |
| Neither impaired nor past due                     | $ | 49,051 |  |
| Impaired                                          | — |  |
| Not impaired and past due in the following period |  |  |
| Within 30 days                                    | 25,242 |  |
| 31-60 days                                        | 26,090 |  |
| 61-90 days                                        | 25,004 |  |
| Over 90 days                                      | 22,897 |  |

----

|                                                                                                                                                                                 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (000s)                                                                                                                                                                          |   |   |   | Payment Due by Period 1 2 |
|                                                                                                                                                                            |   | Recognized |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                            |   | in Financial |   | Contractual |  |   | Less than |  |   |   |  |   |   |  |   | More than |  |
|                                                                                                                                                                            |   | Statements |   | Cash Flows |  |   | 1 year |  |   | 1-3 years |  |   | 4-5 years |  |   | 5 years |  |
| Accounts payable and accrued liabilities                                                                                                                                        |   | Yes - Liability |   | $ | 38,392 |  |   | $ | 38,392 |  |   | $ | — |  |   | $ | — |  |   | $ | — |  |
| Convertible debentures                                                                                                                                                          |   | Yes - Liability |   | 87,539 |  |   | — |  |   | — |  |   | 87,539 |  |   | — |  |
| Office and equipment leases 3                                                                                                                                                   |   | No |   | 15,296 |  |   | 8,986 |  |   | 3,030 |  |   | 2,006 |  |   | 1,274 |  |
| Minimum work commitments 4                                                                                                                                                      |   | No |   | 61,250 |  |   | 750 |  |   | 60,500 |  |   | — |  |   | — |  |
| Total                                                                                                                                                                           |   |   |   | $ | 202,477 |  |   | $ | 48,128 |  |   | $ | 63,530 |  |   | $ | 89,545 |  |   | $ | 1,274 |  |
| 1  Payments exclude on going operating costs, finance costs and payments required to settle derivatives.                                                              |
| 2  Payments denominated in foreign currencies have been translated at December 31, 2013 exchange rates.                                                                    |
| 3  Office and equipment leases includes all drilling rig contracts.                                                                                                   |
| 4   Minimum work commitments include contracts awarded for capital projects and those commitments related to exploration and drilling obligations (see Note 18). |

|                                                                                      |
|--------------------------------------------------------------------------------------|
|                                                                                      |  |  |  |  |  |  |  |  |
| (000s)                                                                               |   | 2013 |  |   | 2012 |  |
| Shareholders’ equity                                                           |   | $ | 500,190 |  |   | $ | 435,860 |  |
| Long-term debt, including the current portion (net of unamortized transaction costs) |   | — |  |   | 16,885 |  |
| Convertible debentures                                                               |   | 87,539 |  |   | 98,742 |  |
| Cash and cash equivalents                                                            |   | (122,092 | ) |   | (82,974 | ) |
| Total capital                                                                        |   | $ | 465,637 |  |   | $ | 468,513 |  |

----

|                                                                                      |
|--------------------------------------------------------------------------------------|
|                                                                                      |  |  |  |  |  |  |  |  |
| (000s)                                                                               |   | 2013 |  |   | 2012 |  |
| Long-term debt, including the current portion (net of unamortized transaction costs) |   | $ | — |  |   | $ | 16,885 |  |
| Convertible debentures                                                               |   | 87,539 |  |   | 98,742 |  |
| Total debt                                                                           |   | 87,539 |  |   | 115,627 |  |
|                                                                                 |   |   |   |   |
| Cash flow from operating activities                                                  |   | 199,508 |  |   | 93,992 |  |
| Changes in non-cash working capital                                                  |   | (60,390 | ) |   | 59,506 |  |
| Funds flow from operations                                                           |   | $ | 139,118 |  |   | $ | 153,498 |  |
| Ratio                                                                                |   | 0.6 |  |   | 0.8 |  |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Consolidated Financial Indebtedness to net cash generated by (used in) operating activities will not exceed 3.0 to 1.0.  For the purposes of this calculation, Consolidated Financial Indebtedness is defined as the aggregate of all financial indebtedness of the Company, including any outstanding letters of credit or bank guarantees (which are calculated net of any cash in the Company's bank accounts), and excluding any financial indebtedness under the convertible debentures and any other subordinated financial indebtedness approved by the Facility Agent. |

|         |                                                                                         |
|---------|-----------------------------------------------------------------------------------------|
| • | Current ratio (current assets to current liabilities) will not be less than 1.0 to 1.0. |

|                             |
|-----------------------------|
|                             |  |  |  |  |  |  |  |  |
| (000s)                      |   | 2013 |  |   | 2012 |  |
| Oil sales                   |   | $ | 635,496 |  |   | $ | 633,992 |  |
| Less: Royalties             |   | 320,180 |  |   | 316,326 |  |
| Oil sales, net of royalties |   | $ | 315,316 |  |   | $ | 317,666 |  |

|                                          |
|------------------------------------------|
|                                          |  |  |  |  |  |  |  |  |
| (000s)                                   |   | 2013 |  |   | 2012 |  |
| Interest expense                         |   | $ | 8,021 |  |   | $ | 8,006 |  |
| Issue costs for convertible debentures   |   | — |  |   | 4,630 |  |
| Amortization of deferred financing costs |   | 1,109 |  |   | 1,265 |  |
| Finance costs                            |   | $ | 9,130 |  |   | $ | 13,901 |  |

|                  |
|------------------|
|                  |  |  |  |  |  |  |  |  |
| (000s)           |   | December 31, 2013 |  |   | December 31, 2012 |  |
| Cash             |   | $ | 82,051 |  |   | $ | 32,822 |  |
| Cash equivalents |   | 40,041 |  |   | 50,152 |  |
|             |   | $ | 122,092 |  |   | $ | 82,974 |  |

----

|                                                                                |
|--------------------------------------------------------------------------------|
|                                                                                |  |  |  |  |  |  |  |  |
| (000s)                                                                         |   | 2013 |  |   | 2012 |  |
| Balance, beginning of year                                                     |   | $ | 52,363 |  |   | $ | 52,891 |  |
| Expenses related to the origination and reversal of temporary differences for: |   |  |   |  |
| Property and equipment                                                         |   | (8,803 | ) |   | (221 | ) |
| Non-capital losses carried forward                                             |   | (3,371 | ) |   | (4,330 | ) |
| Long-term liabilities                                                          |   | 1,214 |  |   | (123 | ) |
| Transactions costs                                                             |   | 279 |  |   | (951 | ) |
| Share issue expenses                                                           |   | 300 |  |   | 254 |  |
| Changes in unrecognized tax benefits                                           |   | 6,881 |  |   | 4,843 |  |
| Balance, end of year                                                           |   | $ | 48,863 |  |   | $ | 52,363 |  |

|                                                                                       |
|---------------------------------------------------------------------------------------|
|                                                                                       |  |  |  |  |  |  |  |  |
| (000s)                                                                                |   | 2013 |  |   | 2012 |  |
| Income taxes calculated at the Canadian statutory rate                                |   | $ | 35,966 |  |   | $ | 43,952 |  |
| Increases (decreases) in income taxes resulting from:                                 |   |  |   |  |
| Non-deductible expenses                                                               |   | 5,224 |  |   | 3,551 |  |
| Changes in unrecognized tax benefits                                                  |   | 6,881 |  |   | 4,843 |  |
| Effect of tax rates in foreign jurisdictions1                                         |   | 36,749 |  |   | 35,787 |  |
| Changes in tax rates and other                                                        |   | 531 |  |   | (58 | ) |
| Income tax expense                                                                    |   | $ | 85,351 |  |   | $ | 88,075 |  |
| 1 The statutory tax rates in Egypt and Yemen are 40.55% and 35.0%, respectively. |

|                                  |
|----------------------------------|
|                                  |  |  |  |
| (000s)                           |   |
| Balance at December 31, 2011     | $ | 17,453 |  |
| Additions                        | 5,384 |  |
| Acquisitions                     | 26,219 |  |
| Transfer to petroleum properties | (566 | ) |
| Impairment loss                  | (76 | ) |
| Balance at December 31, 2012     | 48,414 |  |
| Additions                        | 61,501 |  |
| Transfer to petroleum properties | (10 | ) |
| Impairment loss                  | (19,914 | ) |
| Balance at December 31, 2013     | $ | 89,991 |  |

----

|                                                                                                                                  |
|----------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                             |   | Petroleum |  |   | Other |  |   |   |
| (000s)                                                                                                                           |   | Properties |  |   | Assets |  |   | Total |  |
| Balance at December 31, 2011                                                                                                     |   | $ | 341,620 |  |   | $ | 7,888 |  |   | $ | 349,508 |  |
| Additions                                                                                                                        |   | 45,386 |  |   | 881 |  |   | 46,267 |  |
| Acquisitions                                                                                                                     |   | — |  |   | 1,086 |  |   | 1,086 |  |
| Transfer from exploration and evaluation assets                                                                                  |   | 566 |  |   | — |  |   | 566 |  |
| Balance at December 31, 2012                                                                                                     |   | 387,572 |  |   | 9,855 |  |   | 397,427 |  |
| Additions                                                                                                                        |   | 66,703 |  |   | 966 |  |   | 67,669 |  |
| Transfer from exploration and evaluation assets                                                                                  |   | 10 |  |   | — |  |   | 10 |  |
| Impairment loss                                                                                                                  |   | (10,157 | ) |   | — |  |   | (10,157 | ) |
| Balance at December 31, 2013                                                                                                     |   | $ | 444,128 |  |   | $ | 10,821 |  |   | $ | 454,949 |  |
|                                                                                                                             |   |   |   |   |   |   |
| Accumulated depletion, depreciation, amortization and impairment       losses at December 31, 2011 |   | $ | 61,096 |  |   | $ | 4,140 |  |   | $ | 65,236 |  |
| Depletion, depreciation and amortization for the year                                                                            |   | 45,581 |  |   | 1,365 |  |   | 46,946 |  |
| Accumulated depletion, depreciation, amortization and impairment       losses at December 31, 2012 |   | 106,677 |  |   | 5,505 |  |   | 112,182 |  |
| Depletion, depreciation and amortization for the year                                                                            |   | 48,695 |  |   | 1,028 |  |   | 49,723 |  |
| Balance at December 31, 2013                                                                                                     |   | $ | 155,372 |  |   | $ | 6,533 |  |   | $ | 161,905 |  |

|                      |
|----------------------|
|                      |  |  |  |  |  |  |  |  |  |  |  |  |
| Net Book Value       |   |   |   |   |   |   |  |
| At December 31, 2012 |   | $ | 280,895 |  |   | $ | 4,350 |  |   | $ | 285,245 |  |
| At December 31, 2013 |   | $ | 288,756 |  |   | $ | 4,288 |  |   | $ | 293,044 |  |

|                                   |
|-----------------------------------|
|                                   |  |  |  |  |  |  |  |  |
| (000s)                            |   | December 31, 2013 |  |   | December 31, 2012 |  |
| Bank debt                         |   | $ | — |  |   | $ | 18,450 |  |
| Deferred financing costs          |   | (2,678 | ) |   | (1,565 | ) |
|                              |   | (2,678 | ) |   | 16,885 |  |
| Current portion of long-term debt |   | — |  |   | — |  |
|                              |   | $ | (2,678 | ) |   | $ | 16,885 |  |

----

|                              |
|------------------------------|
|                              |  |  |  |
| (000s)                       |   |
| Balance at December 31, 2011 | $ | — |  |
| Issuance                     | 97,851 |  |
| Fair value adjustment        | 425 |  |
| Foreign exchange adjustment  | 466 |  |
| Balance at December 31, 2012 | 98,742 |  |
| Fair value adjustment        | (5,254 | ) |
| Foreign exchange adjustment  | (5,949 | ) |
| Balance at December 31, 2013 | $ | 87,539 |  |

----

|                                      |
|--------------------------------------|
|                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                 |   | December 31, 2013 |   |   | December 31, 2012 |   |
| 000’s                          |   | Shares |  |   | Amount |  |   | Shares |  |   | Amount |  |
| Balance, beginning of year           |   | 73,794 |  |   | $ | 158,721 |  |   | 73,055 |  |   | $ | 154,263 |  |
| Stock options exercised              |   | 806 |  |   | 372 |  |   | 739 |  |   | 3,333 |  |
| Share-based compensation on exercise |   | — |  |   | 1,468 |  |   | — |  |   | 1,125 |  |
| Balance, end of year                 |   | 74,600 |  |   | $ | 160,561 |  |   | 73,794 |  |   | $ | 158,721 |  |

|                                        |
|----------------------------------------|
|                                        |  |  |  |  |  |  |  |  |  |  |  |  |
|                                   |   | 2013 |   |   | 2012 |   |
|                                   |   |   |   | Weighted- |  |   |   |   | Weighted- |  |
|                                   |   | Number |  |   | Average |  |   | Number |  |   | Average |  |
|                                   |   | of |  |   | Exercise |  |   | of |  |   | Exercise |  |
| (000s except per share amounts)        |   | Options |  |   | Price (C$) |  |   | Options |  |   | Price (C$) |  |
| Options outstanding, beginning of year |   | 5,110 |  |   | 8.19 |  |   | 4,760 |  |   | 6.81 |  |
| Granted                                |   | 2,175 |  |   | 9.17 |  |   | 1,327 |  |   | 11.43 |  |
| Exercised                              |   | (806 | ) |   | 3.50 |  |   | (739 | ) |   | 4.49 |  |
| Cancelled / Forfeited                  |   | (608 | ) |   | 5.59 |  |   | (238 | ) |   | 9.82 |  |
| Options outstanding, end of year       |   | 5,871 |  |   | 9.51 |  |   | 5,110 |  |   | 8.19 |  |
| Options exercisable, end of year       |   | 2,621 |  |   | 8.80 |  |   | 2,713 |  |   | 5.69 |  |

|             |
|-------------|
|             |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|        |   | Options Outstanding |   | Options Exercisable |
|        |   |   |   | Weighted- |  |   |   |   |   |   | Weighted- |  |   |   |
|        |   | Number |  |   | Average |  |   | Weighted- |  |   | Number |  |   | Average |  |   | Weighted- |  |
| Exercise    |   | Outstanding at |  |   | Remaining |  |   | Average |  |   | Exercisable at |  |   | Remaining |  |   | Average |  |
| Prices      |   | December 31, 2013 |  |   | Contractual |  |   | Exercise Price |  |   | December 31, 2013 |  |   | Contractual |  |   | Exercise |  |
| (C$)        |   | (000s) |  |   | Life (Years) |  |   | (C$) |  |   | (000s) |  |   | Life (Years) |  |   | Price (C$) |  |
| 3.40-4.00   |   | 517 |  |   | 0.7 |  |   | 3.53 |  |   | 517 |  |   | 0.7 |  |   | 3.53 |  |
| 4.01-6.00   |   | 99 |  |   | 1.2 |  |   | 5.45 |  |   | 99 |  |   | 1.2 |  |   | 5.45 |  |
| 6.01-8.00   |   | 672 |  |   | 1.4 |  |   | 7.44 |  |   | 672 |  |   | 1.4 |  |   | 7.44 |  |
| 8.01-10.00  |   | 2,548 |  |   | 3.9 |  |   | 9.13 |  |   | 319 |  |   | 2.2 |  |   | 8.73 |  |
| 10.01-12.00 |   | 1,090 |  |   | 3.4 |  |   | 11.61 |  |   | 369 |  |   | 3.4 |  |   | 11.60 |  |
| 12.01-15.12 |   | 945 |  |   | 2.4 |  |   | 13.29 |  |   | 645 |  |   | 2.4 |  |   | 13.38 |  |
|        |   | 5,871 |  |   | 3.0 |  |   | 9.51 |  |   | 2,621 |  |   | 1.9 |  |   | 8.80 |  |

----

|                                                                 |
|-----------------------------------------------------------------|
|                                                                 |  |  |  |  |  |  |
|                                                            |   | 2013 |  |   | 2012 |  |
| Weighted average fair market value per option (C$)              |   | 2.87 |  |   | 3.98 |  |
| Risk free interest rate (%)                                     |   | 1.16 | % |   | 1.33 | % |
| Expected volatility (based on actual historical volatility) (%) |   | 46.41 | % |   | 53.09 | % |
| Dividend per share                                              |   | — |  |   | — |  |
| Expected forfeiture rate (non-executive employees) (%)          |   | 8.14 | % |   | 8.48 | % |
| Suboptimal exercise factor                                      |   | 1.25 |  |   | 1.25 |  |

|                                      |
|--------------------------------------|
|                                      |  |  |  |  |  |  |  |  |  |  |  |  |
|                                 |   | 2013 |   |   | 2012 |   |
|                                 |   |   |   | Weighted- |  |   |   |   | Weighted- |  |
|                                 |   | Number |  |   | Average |  |   | Number |  |   | Average |  |
|                                 |   | of |  |   | Exercise |  |   | Of |  |   | Exercise |  |
| (000s, except per share amounts)     |   | Units |  |   | Price (C$) |  |   | Units |  |   | Price (C$) |  |
| Units outstanding, beginning of year |   | 153 |  |   | 7.80 |  |   | 105 |  |   | 6.04 |  |
| Granted                              |   | — |  |   | — |  |   | 48 |  |   | 11.65 |  |
| Exercised                            |   | — |  |   | — |  |   | — |  |   | — |  |
| Cancelled / Forfeited                |   | (83 | ) |   | 9.64 |  |   | — |  |   | — |  |
| Units outstanding, end of year       |   | 70 |  |   | 5.62 |  |   | 153 |  |   | 7.80 |  |
| Units exercisable, end of year       |   | 70 |  |   | 5.62 |  |   | 70 |  |   | 6.04 |  |

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |
| (000s)                                    |   | 2013 |  |   | 2012 |  |
| Net earnings                              |   | 58,512 |  |   | 87,734 |  |
| Dilutive effect of convertible debentures |   | (5,476 | ) |   | — |  |
| Diluted net earnings                      |   | 53,036 |  |   | 87,734 |  |

|                                                       |
|-------------------------------------------------------|
|                                                       |  |  |  |  |  |  |
| (000s)                                                |   | 2013 |  |   | 2012 |  |
| Weighted-average number of shares outstanding         |   | 73,962 |  |   | 73,380 |  |
| Dilutive effect of stock options                      |   | 1,536 |  |   | 2,143 |  |
| Dilutive effect of convertible debentures             |   | 6,474 |  |   | — |  |
| Weighted-average number of diluted shares outstanding |   | 81,972 |  |   | 75,523 |  |

----

|                                         |
|-----------------------------------------|
|                                         |  |  |  |  |  |  |
|                                    |   |   |   | Ownership Interest |   | Ownership Interest |
|                                    |   | Country of |   | 2013 |   | 2012 |
|                                    |   | Incorporation |   | (%) |   | (%) |
| TransGlobe Petroleum International Inc. |   | Turks & Caicos |   | 100 |   | 100 |
| TG Holdings Yemen Inc.                  |   | Turks & Caicos |   | 100 |   | 100 |
| TG West Yemen Inc.                      |   | Turks & Caicos |   | 100 |   | 100 |
| TransGlobe West Bakr Inc.               |   | Turks & Caicos |   | 100 |   | 100 |
| TransGlobe West Gharib Inc.             |   | Turks & Caicos |   | 100 |   | 100 |
| TransGlobe GOS Inc.                     |   | Turks & Caicos |   | 100 |   | 100 |
| TG Holdings Egypt Inc.                  |   | Turks & Caicos |   | 100 |   | 100 |
| TG South Alamein Inc.                   |   | Turks & Caicos |   | 100 |   | 100 |
| TG South Mariut Inc.                    |   | Turks & Caicos |   | 100 |   | 100 |
| TG South Alamein II Inc.                |   | Turks & Caicos |   | 100 |   | 100 |
| TG NW Gharib Inc.                       |   | Turks & Caicos |   | 100 |   | — |
| TG SW Gharib Inc.                       |   | Turks & Caicos |   | 100 |   | — |
| TG SE Gharib Inc.                       |   | Turks & Caicos |   | 100 |   | — |
| TG S Ghazalat Inc.                      |   | Turks & Caicos |   | 100 |   | — |

|                                              |
|----------------------------------------------|
|                                              |  |  |  |  |  |  |  |  |
| (000s)                                       |   | 2013 |  |   | 2012 |  |
| Salaries, incentives and short-term benefits |   | $ | 2,547 |  |   | $ | 3,487 |  |
| Share-based compensation                     |   | 3,029 |  |   | 2,276 |  |
|                                         |   | $ | 5,576 |  |   | $ | 5,763 |  |

----

|                                                 |
|-------------------------------------------------|
|                                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                            |   |    Egypt |   |     Yemen |   |       Total |
| (000s)                                          |   | 2013 |  |   | 2012 |  |   | 2013 |  |   | 2012 |  |   | 2013 |  |   | 2012 |  |
| Revenue                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil sales, net of royalties                     |   | $ | 306,579 |  |   | $ | 296,885 |  |   | $ | 8,737 |  |   | $ | 20,781 |  |   | $ | 315,316 |  |   | $ | 317,666 |  |
| Other income                                    |   | 153 |  |   | 45 |  |   | 3 |  |   | 25 |  |   | 156 |  |   | 70 |  |
| Total segmented revenue                         |   | 306,732 |  |   | 296,930 |  |   | 8,740 |  |   | 20,806 |  |   | 315,472 |  |   | 317,736 |  |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Segmented expenses                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Production and operating                        |   | 58,215 |  |   | 43,247 |  |   | 7,576 |  |   | 9,120 |  |   | 65,791 |  |   | 52,367 |  |
| Depletion, depreciation and amortization        |   | 47,659 |  |   | 44,442 |  |   | 1,347 |  |   | 2,095 |  |   | 49,006 |  |   | 46,537 |  |
| Income taxes - current                          |   | 87,583 |  |   | 84,935 |  |   | 1,268 |  |   | 3,668 |  |   | 88,851 |  |   | 88,603 |  |
| Income taxes - deferred                         |   | (1,192 | ) |   | (1,029 | ) |   | (2,308 | ) |   | 501 |  |   | (3,500 | ) |   | (528 | ) |
| Impairment loss                                 |   | 30,071 |  |   | 76 |  |   | — |  |   | — |  |   | 30,071 |  |   | 76 |  |
| Total segmented expenses                        |   | 222,336 |  |   | 171,671 |  |   | 7,883 |  |   | 15,384 |  |   | 230,219 |  |   | 187,055 |  |
| Segmented earnings                              |   | $ | 84,396 |  |   | $ | 125,259 |  |   | $ | 857 |  |   | $ | 5,422 |  |   | 85,253 |  |   | 130,681 |  |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-segmented expenses (income)                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative loss (gain) on commodity contracts   |   |   |   |   |   |   |   |   |   | — |  |   | 125 |  |
| Exploration                                     |   |   |   |   |   |   |   |   |   | 136 |  |   | 368 |  |
| General and administrative                      |   |   |   |   |   |   |   |   |   | 27,569 |  |   | 28,206 |  |
| Foreign exchange (gain) loss                    |   |   |   |   |   |   |   |   |   | (5,042 | ) |   | (105 | ) |
| Depreciation and amortization                   |   |   |   |   |   |   |   |   |   | 408 |  |   | 409 |  |
| Unrealized (gain) loss on financial instruments |   |   |   |   |   |   |   |   |   | (5,254 | ) |   | 425 |  |
| Finance revenue                                 |   |   |   |   |   |   |   |   |   | (206 | ) |   | (382 | ) |
| Finance costs                                   |   |   |   |   |   |   |   |   |   | 9,130 |  |   | 13,901 |  |
| Total non-segmented expenses                    |   |   |   |   |   |   |   |   |   | 26,741 |  |   | 42,947 |  |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net earnings for the year                       |   |   |   |   |   |   |   |   |   | $ | 58,512 |  |   | $ | 87,734 |  |
|                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Exploration and development                     |   | $ | 125,004 |  |   | $ | 50,220 |  |   | $ | 3,740 |  |   | $ | 1,239 |  |   | $ | 128,744 |  |   | $ | 51,459 |  |
| Corporate acquisitions                          |   |  |  |   |  |  |   |  |  |   |  |  |   | — |  |   | 27,259 |  |
| Corporate                                       |   |  |   |  |   |  |   |  |   | 426 |  |   | 192 |  |
| Total capital expenditures                      |   |   |   |   |   |   |   |   |   | $ | 129,170 |  |   | $ | 78,910 |  |

----

|                                              |
|----------------------------------------------|
|                                              |  |  |  |  |  |  |  |  |  |  |  |  |
| December 31, 2013                       |   |   |   |   |   |   |
| (000s)                                       |   | Egypt |  |   | Yemen |  |   | Total |  |
| Assets                                       |   |   |   |   |   |   |
| Intangible exploration and evaluation assets |   | $ | 72,295 |  |   | $ | 17,696 |  |   | $ | 89,991 |  |
| Property and equipment                       |   |  |   |  |   |  |
| Petroleum properties                         |   | 255,082 |  |   | 33,674 |  |   | 288,756 |  |
| Other assets                                 |   | 2,359 |  |   | — |  |   | 2,359 |  |
| Goodwill                                     |   | 8,180 |  |   | — |  |   | 8,180 |  |
| Other                                        |   | 182,155 |  |   | 3,484 |  |   | 185,639 |  |
| Segmented assets                             |   | 520,071 |  |   | 54,854 |  |   | 574,925 |  |
| Non-segmented assets                         |   |   |   |   |   | 100,875 |  |
| Total assets                                 |   |   |   |   |   | $ | 675,800 |  |
|                                         |   |   |   |   |   |   |
| Liabilities                                  |   |   |   |   |   |   |
| Accounts payable and accrued liabilities     |   | $ | 28,269 |  |   | $ | 2,939 |  |   | $ | 31,208 |  |
| Deferred taxes                               |   | 40,891 |  |   | 7,972 |  |   | 48,863 |  |
| Segmented liabilities                        |   | 69,160 |  |   | 10,911 |  |   | 80,071 |  |
| Non-segmented liabilities                    |   |   |   |   |   | 95,539 |  |
| Total liabilities                            |   |   |   |   |   | $ | 175,610 |  |

|                                              |
|----------------------------------------------|
|                                              |  |  |  |  |  |  |  |  |  |  |  |  |
| December 31, 2012                       |   |   |   |   |   |   |
| (000s)                                       |   | Egypt |  |   | Yemen |  |   | Total |  |
| Assets                                       |   |   |   |   |   |   |
| Intangible exploration and evaluation assets |   | $ | 33,321 |  |   | $ | 15,093 |  |   | $ | 48,414 |  |
| Property and equipment                       |   |  |   |  |   |  |
| Petroleum properties                         |   | 246,702 |  |   | 34,193 |  |   | 280,895 |  |
| Other assets                                 |   | 2,439 |  |   | — |  |   | 2,439 |  |
| Goodwill                                     |   | 8,180 |  |   | — |  |   | 8,180 |  |
| Other                                        |   | 282,627 |  |   | 5,106 |  |   | 287,733 |  |
| Segmented assets                             |   | 573,269 |  |   | 54,392 |  |   | 627,661 |  |
| Non-segmented assets                         |   |   |   |   |   | 25,764 |  |
| Total assets                                 |   |   |   |   |   | $ | 653,425 |  |
|                                         |   |   |   |   |   |   |
| Liabilities                                  |   |   |   |   |   |   |
| Accounts payable and accrued liabilities     |   | $ | 41,406 |  |   | $ | 1,321 |  |   | $ | 42,727 |  |
| Deferred taxes                               |   | 42,082 |  |   | 10,281 |  |   | 52,363 |  |
| Segmented liabilities                        |   | 83,488 |  |   | 11,602 |  |   | 95,090 |  |
| Non-segmented liabilities                    |   |   |   |   |   | 122,475 |  |
| Total liabilities                            |   |   |   |   |   | $ | 217,565 |  |

----

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |  |
| (000s)                                     |   | 2013 |  |   | 2012 |  |
| Operating Activities                       |   |   |   |   |
| (Increase) decrease in current assets      |   |   |   |   |
| Accounts receivable                        |   | $ | 72,733 |  |   | $ | (58,792 | ) |
| Prepaids and other                         |   | (675 | ) |   | (2,207 | ) |
| Product inventory                          |   | (1,216 | ) |   | — |  |
| Increase (decrease) in current liabilities |   |  |   |  |
| Accounts payable and accrued liabilities   |   | (10,452 | ) |   | 1,493 |  |
|                                       |   | $ | 60,390 |  |   | $ | (59,506 | ) |

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |  |
| (000s)                                     |   | 2013 |  |   | 2012 |  |
| Investing Activities                       |   |   |   |   |
| (Increase) decrease in current assets      |   |   |   |   |
| Prepaids and other                         |   | $ | (785 | ) |   | $ | 2,806 |  |
| Increase (decrease) in current liabilities |   |  |   |  |
| Accounts payable and accrued liabilities   |   | (1,236 | ) |   | (28,117 | ) |
|                                       |   | $ | (2,021 | ) |   | $ | (25,311 | ) |

|                                                                                                                                                                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                           |  |  |  |  |  |  |  |  |
| Joint arrangement                                                                                                                                                                                                                                                         |   | Classification |   | Place of business |   | Applicable PSC |   | Working interest1 |
| Dara Petroleum Company                                                                                                                                                                                                                                                    |   | Joint operation |   | Egypt |   | West Gharib |   | 100% |
| West Bakr Petroleum Company                                                                                                                                                                                                                                               |   | Joint operation |   | Egypt |   | West Bakr |   | 100% |
| Petro Safwa Petroleum Company                                                                                                                                                                                                                                             |   | Joint operation |   | Egypt |   | East Ghazalat |   | 50% |
| Block S-1 PSA Joint Operation                                                                                                                                                                                                                                             |   | Joint operation |   | Yemen |   | Block S-1 |   | 25% |
| Block 32 PSA Joint Operation                                                                                                                                                                                                                                              |   | Joint operation |   | Yemen |   | Block 32 |   | 13.81087% |
| 1 Working interest represents the Company's proportionate share of assets purchased and costs incurred.  It also represents the Company's entitlement to the Contractor's share of oil produced and royalties and taxes paid in accordance with the respective PSCs. |