TransGlobe Energy Corporation

TransGlobe Energy Corporation

March 10, 2005 12:42 ET

TransGlobe Energy Corporation Announces 2004 Year End and Fourth Quarter Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: TRANSGLOBE ENERGY CORPORATION

TSX SYMBOL: TGL
AMEX SYMBOL: TGA

MARCH 10, 2005 - 12:42 ET

TransGlobe Energy Corporation Announces 2004 Year End
and Fourth Quarter Results

CALGARY, ALBERTA--(CCNMatthews - March 10, 2005) - TransGlobe Energy
Corporation (TSX:TGL) (AMEX:TGA) ("TransGlobe" or the "Company") is
pleased to announce its financial and operating results for the three
and twelve month periods ended December 31, 2004. All dollar values are
expressed in United States dollars unless otherwise stated. Per barrel
of oil equivalent ("Boe") amounts have been calculated using a
conversion of 6,000 cubic feet of natural gas to one barrel of oil.

FOURTH QUARTER 2004 HIGHLIGHTS:

- Record average sales volumes of 5,384 Boepd for the quarter and 3,796
Boepd for the year.

- Record cash flow of $6,326,000 and $17,325,000 for the quarter and
year, respectively.

- An Nagyah #12 horizontal well tested 4,800 Bopd.

- Bought deal financing completed, $9.8 million net.

- New bank facility completed, $7.0 million (undrawn).

- Assignment of interest and approval of TransGlobe as operator of Nuqra
Block, Egypt.



FINANCIAL AND OPERATING UPDATE
(Expressed in thousands of U.S. Dollars, except per share amounts)
---------------------------------------------------------------------
Three Months Twelve Months
Ended Dec. 31 Ended Dec. 31
Financial (000's -----------------------------------------------
US $'s, except per % %
share amounts) 2004 2003 Change 2004 2003 Change
---------------------------------------------------------------------
Oil and gas sales 18,548 7,495 147 49,495 27,336 81
Oil and gas sales
net of royalties 11,756 4,489 162 31,630 17,162 84
Operating expense 2,814 1,121 151 7,064 3,706 91
General and
administrative
expense 680 423 61 1,664 1,207 38
Stock-based
compensation 452 - 1,310 -
Depletion,
depreciation and
accretion 4,197 1,292 225 10,346 6,253 65
Income taxes 2,799 (1,489) 288 4,995 307 1527
Cash flow from
operations 6,326 1,895 234 17,325 9,347 85
Basic per share 0.12 0.04 0.32 0.18
Diluted per share 0.11 0.03 0.31 0.17
Net income 768 3,414 (77) 5,919 5,905 0
Basic per share 0.01 0.06 0.11 0.11
Diluted per share 0.01 0.06 0.10 0.11
Capital expenditures 11,075 4,011 176 26,367 14,229 85
Working capital 2,839 2,537 12
Common shares
outstanding
Basic (weighted
average) 54,388 52,071 4
Diluted (weighted
average) 56,719 53,779 5
---------------------------------------------------------------------
Reserves (MBoe)
---------------------------------------------------------------------
Total Proven (6 : 1) 6,664 3,746 78
Total Proven
+ Probable (6 : 1) 10,427 7,038 48
---------------------------------------------------------------------
Sales Volumes
---------------------------------------------------------------------
Oil and liquids
(Bpd) 4,726 2,535 86 3,298 2,435 35
Average price
(US$ per barrel) 38.01 28.83 32 36.24 28.06 29
Gas (Mcfpd) 3,942 1,704 131 2,987 1,200 149
Average price
(US$ per Mcf) 5.47 4.82 13 5.19 5.24 (1)
Total (Boepd) (6:1) 5,384 2,819 91 3,796 2,635 44
Operating expense
(US$ per Boe) 5.68 4.32 31 5.09 3.85 32
---------------------------------------------------------------------


EXPLORATION UPDATE

Block 32, Republic of Yemen (13.81087% working interest)

The Tasour #14 well was drilled and placed on production with initial
production of 2,820 barrels of oil per day (389 barrels of oil per day
to TransGlobe) and 1,330 barrels of water per day.

In January 2005 the drilling rig returned to Block 32 to drill Tasour
#15, #16 and #17. Tasour #15 was drilled as a water injector near the
central production facility and found a 2.5 meter oil column, which
indicates the Tasour field could extend eastward. The Tasour #16 well
was temporarily suspended after encountering 6.0 meters of oil pay
overlying 3.0 meters of water bearing sandstone. The dip meter indicates
a structurally higher location can be reached by sidetracking the well
to the south of the current bottom hole location. The sidetrack drilling
is planned after Tasour #17. The rig is currently drilling Tasour #17
approximately 2.0 kilometers east of Tasour #15 to test a possible
eastern extension of the Tasour field. The eastern extension was
identified on the recent 3-D seismic survey and by the Tasour #15 water
injection well.

Block S-1, Republic of Yemen (25% working interest)

During the quarter, one producing horizontal oil well (An Nagyah #12)
was drilled. One appraisal/exploratory oil well (An Nagyah #14) was
drilling over year end.

The An Nagyah #12 well was drilled to a total depth of 2,070 meters and
completed as a producing Upper Lam oil well. The An Nagyah #12 well was
tested from an 836 meter horizontal Upper Lam sandstone section at a
rate of 4,801 barrels of light (43 degree API) oil per day and 2.6
million cubic feet of natural gas per day on a 64/64 inch choke at 389
psi flowing pressure. An Nagyah #12 was the second successful horizontal
well drilled in the An Nagyah field and confirmed that horizontal
drilling is the preferred development strategy for the pool.

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

Following An Nagyah #14, the drilling rig was moved to the Malaki
exploration prospect approximately nine kilometers south east of the An
Nagyah pool. The Malaki #1 exploration well was drilled to a total depth
of 2,315 meters. The well was plugged and abandoned after encountering
minor hydrocarbon shows. The Lam 'A' sandstone reservoirs were
encountered structurally lower than the oil/water contact in the An
Nagyah field and were water saturated. The drilling rig has moved to the
next drilling location at An Nagyah #15. The An Nagyah #15 well is
planned as an 800 meter horizontal well in the northwest area of the An
Nagyah field, adjacent to An Nagyah #12.

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

Subsequent to the An Nagyah workovers, the Harmel #2 appraisal well was
completed as a multizone oil well. The Harmel #2 was drilled in June
2004 to appraise the shallow oil reservoirs found in the discovery well,
Harmel #1. The Harmel #1 and #2 wells are being equipped with pumps and
production testing equipment which are expected to be operational by the
end of the March. It is expected that both Harmel wells will be
production tested for three to six months. Production and test data
obtained from the Harmel #1 and #2 wells will help to determine the
commerciality of the medium gravity oil (22 degree API). The Harmel
structure identified on 3-D seismic could require 80 to 90 shallow wells
(700 to 800 meters in depth) to be fully developed.

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

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

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

Block 72, Republic of Yemen (33% working interest)

DNO ASA (operator at 34%), TG Holdings Yemen Inc. (33%) and Ansan Wikfs
(Hadramaut) Limited (33%) ("Block 72 Joint Venture Group") were selected
as the successful bidders for Block 72 in the Yemen International Bid
Round for Exploration and Production of Hydrocarbons. TG Holdings Yemen
Inc. is a wholly owned subsidiary of TransGlobe Energy Corporation. The
Block 72 Production Sharing Agreement has been approved by the Cabinet
and is currently before the Yemen parliament for final approval.

Block 72 encompasses 1,822 square kilometers (approximately 450,234
acres) and is located in the western Masila Basin adjacent to the
billion barrel Canadian Nexen Masila Block. The Block 72 Joint Venture
Group plans to carry out a seismic acquisition program and the drilling
of two exploration wells during the first exploration period of thirty
months. It is anticipated that 3-D seismic will be acquired during 2005,
with drilling commencing in late 2005 or early 2006. Any discoveries
made on Block 72 would follow a similar development program to Block
32's whereby a separate oil processing facility and a pipeline would be
constructed to connect to the Nexen export pipeline.

Nuqra Block 1, Arab Republic of Egypt (50% working interest, Operator)

As announced in the second quarter, TransGlobe Petroleum Egypt Inc.
("TransGlobe Egypt"), a wholly owned subsidiary of TransGlobe Energy
Corporation, entered into a Farmout Agreement with Quadra Egypt Limited
("QEL"), a subsidiary of Quadra Resources Corp. headquartered in
Calgary, and Rampex Petroleum International ("Rampex") headquartered in
Cairo, Egypt. This agreement provides TransGlobe Egypt the opportunity
to participate and earn a 50% working interest in the Nuqra Concession
by paying 100% of the initial $6.0 million of expenditures in the Stage
1 and Stage 2 work programs. TransGlobe Egypt is the operator of the
Nuqra Block.

TransGlobe Petroleum Egypt Inc. was assigned a 50% interest in the
project and approved as operator by the Egyptian Government in October
2004.

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

TransGlobe has obtained the existing seismic data on the Nuqra Block and
is currently reprocessing the data to improve the resolution. A new
seismic acquisition program is anticipated to commence in the fourth
quarter 2005. A field geological survey is also underway to investigate
surface outcrops and oil seeps in the Nuqra area. It is expected that a
two well drilling program will commence in late 2006. This would
complete all the first period and second period PSA commitments ahead of
schedule.

Canada

During the quarter, the Company drilled 3 gas wells (1.4 net) located in
central Alberta (Nevis, Three Hills Creek and Thorsby).

For the year 2004, the Company drilled 15 wells (11.2 net) resulting in
10 gas wells, 2 oil wells, 3 dry holes. The wells were all drilled in
central Alberta with the primary focus in the core areas of Nevis (5
Gas, 1 Oil) and Twining (2 Gas). Two wells were abandoned at Cynthia
after testing non-commercial gas and the remainder of the wells were
drilled at Morningside (Oil), Gadsby (Gas), Three Hills Creek (Gas),
Thorsby (Gas) and Lone Pine Creek (Dry). Seven of the 2004 wells were
placed on production by year end and contribute approximately 350 Boepd
or 39% of Canadian production. Subsequent to year end two (0.9 net)
additional wells (50 Boepd) were tied in and placed on production.
Negotiations are currently underway to tie in two (1.5 net) additional
wells in 2005 which should initially contribute an additional 70 Boepd.
The remaining Nevis well of the 2004 program will undergo additional
testing and evaluation prior to initiating tie in negotiations.

Production in the fourth quarter averaged 900 Boepd. Production was
partially curtailed due to natural gas compression capacity limitations
at third party operated facilities in the Nevis and Twining areas
(approximately 150 Boepd for the quarter). It is anticipated that
additional compression will be installed by early 2005 to increase
production.

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



OUTLOOK
2005 Production Outlook 2005 2004 % Change(a)
------------------------------------------------------------------------
Barrels of oil equivalent (6 : 1) Boepd 5,800 3,796 58
to 6,200
------------------------------------------------------------------------
(a) % growth based on mid point of guidance


2005 Cash Flow From Operations Outlook
($000's) 2005(b) 2004 % Change(b)
------------------------------------------------------------------------

Cash Flow From Operations 32,000 17,325 85%
------------------------------------------------------------------------
(b) Based on 6,000 Boepd, a dated Brent oil price of $38.00/Bbl and an
AECO gas price of Cdn$6.00/Mcf.


2005 Sensitivity ($000's) Cash Flow from Operations Increase
------------------------------------------------------------------------
$1.00 per barrel increased 815
in Dated Brent
$0.10 per Mcf increase in AECO 120
------------------------------------------------------------------------


SUMMARY OF OPERATING AND FINANCIAL RESULTS

Summary of Operating and Financial Results should be read in conjunction
with the unaudited interim financial statements for the three months and
twelve months ended December 31, 2004 and 2003 and the audited financial
statements and management's discussion and analysis for the year ended
December 31, 2004 included in the Company's annual report. All dollar
values are expressed in United States dollars unless otherwise stated.

Operating Results

Production

In the Republic of Yemen, sales volumes increased 84% in the fourth
quarter of 2004 to 4,483 Bopd from 2,443 Bopd in the fourth quarter of
2003 primarily due to Block S-1 commencing production at the end of the
first quarter of 2004. Block 32 averaged 2,631 Bopd during the fourth
quarter of 2004 compared to 2,443 Bopd during the fourth quarter of 2003
and Block S-1 averaged 1,852 Bopd in the fourth quarter of 2004.

In Canada, sales volumes from Canada averaged 900 Boepd (73% natural
gas) during the fourth quarter of 2004 compared to 376 Boepd during the
fourth quarter of 2003.

Financial

Cash flow from operations for the twelve months 2004 increased 85% to
$17,325,000 compared to $9,347,000 in 2003 primarily due to:

- Oil and gas sales, net of royalties, increasing $14,468,000 (84%) as a
direct result of sales volumes increasing 44% and commodity prices
increasing 25%;

- Operating costs increasing $3,358,000 (32% on a Boe basis) in 2004
compared to 2003 as a result of increased volumes and Block S-1 having a
higher cost per Boe during the trucking phase.

- Current income tax increasing $2,525,000 in 2004 compared to 2003 as a
result of higher volumes with Block S-1 production commencing in 2004.

Net income was unchanged in 2004 with 2003 at $5,919,000 due the above
items which were offset by the following non-cash items:

- Depletion, depreciation and accretion, a non-cash expense, increased
$4,093,000 (15% on a Boe basis) in 2004 compared to 2003.

- Future income tax recovery, a non-cash recovery, decreased $2,163,000
in 2004 compared to 2003.

- Stock compensation expense, a non-cash expense, amounted to $1,310,000
in 2004 without a corresponding amount in the same period in 2003.

Cash flow from operations is a non-GAAP measure that represents cash
generated from operating activities before changes in non-cash working
capital. Management considers cash flow from operations a key measure as
it demonstrates the Company's ability to generate the cash flow
necessary to fund future growth through capital investment. Cash flow
from operations may not be comparable to similar measures used by other
companies.

Revenue net of royalties increased 162% to $11,756,000 for the fourth
quarter 2004 compared to $4,489,000 for the same period in 2003.
Revenues net of royalties from the Republic of Yemen were $9,358,000 in
the fourth quarter 2004 compared to $3,656,000 in the same of 2003 and
from Canada were $2,398,000 in the fourth quarter of 2004 compared to
$833,000 in the same period of 2003.

In the Republic of Yemen, revenues net of royalties in the fourth
quarter 2004 increased 156% compared to the fourth quarter 2003
primarily as a result of sales volumes increasing 84% and oil prices
increased 31%. The increase in sales volumes is a result of the An
Nagyah field on Block S-1 commencing production at the end of the first
quarter of 2004.

The average oil price for the Company's production in the Republic of
Yemen for the fourth quarter 2004 was $37.97 per barrel compared to
$28.97 in the fourth quarter 2003. Oil production from the Tasour field
in the Republic of Yemen is purchased by Nexen Marketing International
Ltd. and the oil price is based on an average dated Brent price less a
quality/transportation differential between the dated Brent blend and
the Yemen Masila crude oil blend. Oil production from the An Nagyah
field in Yemen is purchased by ExxonMobil Sales & Supply Corporation and
the oil price is based on an average dated Brent price less a
quality/transportation differential between the dated Brent blend and
the Yemen Marib crude oil blend.

In Canada, revenue net of royalties in the fourth quarter increased 188%
due to a 13% increase in gas prices, a 55% increase in oil and liquids
prices and a 139% increase in production compared to the fourth quarter
2003. Gas prices averaged $5.47 per Mcf in Canada for the fourth quarter
in 2004 and $4.82 per Mcf for the same period in 2003. Oil and liquids
prices in Canada averaged $38.72 per barrel for the fourth quarter of
2004 and $24.96 per barrel for the same period 2003.

Operating costs were $2,814,000 ($5.68 per Boe) in the fourth quarter
2004 compared to $1,121,000 ($4.32 per Boe) in the fourth quarter 2003.
In Yemen, operating costs increased 37% to average $5.29 per barrel in
the fourth quarter 2004 compared to $3.87 per barrel in the fourth
quarter 2003 primarily as a result of Block S-1 commencing production in
2004 and having significantly higher operating costs during the initial
trucking phase, averaging $7.00 per barrel. This is a reflection of
higher costs associated with trucking and higher fixed costs per barrel
until volumes are increased when full scale production commences in
2005. In Canada, operating costs increased 5% to average $7.64 per Boe
in the fourth quarter of 2004 compared to $7.29 per Boe in the fourth
quarter of 2003 due primarily to higher foreign exchange rates when
converting Canadian dollars to US dollars.

General and administrative expense ("G&A") was $680,000 ($1.37 per Boe)
for the fourth quarter 2004 as compared to $423,000 ($1.63 per Boe) in
the comparable period 2003. During the twelve months 2004, general and
administrative expenses increased to $1,664,000 ($1.20 per Boe) from
$1,207,000 ($1.25 per Boe) in the comparable period in 2003.

A new Canadian accounting standard was adopted in 2004 that requires the
Company to record a compensation expense for the fair value of stock
options over the vesting period granted to employees and directors since
January 1, 2002. The non-cash stock-based compensation expense was
$452,000 ($0.91 per Boe) in the fourth quarter of 2004 and $1,310,000
($0.94 per Boe) for the twelve months 2004.

Depletion, depreciation and accretion was $4,197,000 ($8.47 per Boe) for
the fourth quarter 2004 compared to $1,292,000 ($4.98 per Boe) in the
same period 2003. Depletion, depreciation and accretion increased to
$10,346,000 ($7.45 per Boe) for the twelve months 2004 compared to
$6,253,000 ($6.50 per Boe) for the twelve months 2003, reflecting the
increase in the depletable costs in the Republic of Yemen and Canada,
and higher foreign exchange rates when converting Canadian dollars to US
dollars in Canada.

Current income tax expense in the amount of $1,925,000 in the fourth
quarter 2004 represents income taxes incurred and paid under the laws of
the Republic of Yemen pursuant to the Production Sharing Agreement's on
Block 32 and Block S-1 compared to $959,105 in the same period 2003. The
current income tax increase is due to increased production volumes on
Block S-1 due to the An Nagyah field commencing production in the first
quarter of 2005 and Block 32 of which the Yemen government's share has
increased due to recovery of all historical costs. The government's
share of production sharing oil includes royalties and income taxes. The
future income tax expense of $874,000 in the fourth quarter of 2004 is a
result of recognizing future income tax assets of $1,160,000 in the
third quarter of 2004 and $2,448,085 in 2003 which were utilized in the
fourth quarter. The recording of these future tax benefits in Canada is
a direct result of the successful drilling program carried out in 2003
and 2004 in Canada.



Finding and Development Costs
2004 2003
--------------------------------------
Proved + Proved +
(000's, except per Boe amounts) Proved Probable Proved Probable
---------------------------------------------------------------------
Total capital expenditure $ 26,367 $ 26,367 $ 14,229 $ 14,229
Net change from previous
year's future capital 8,796 597 2,159 11,303
---------------------------------------------------------------------
$ 35,163 $ 26,964 $ 16,388 $ 25,532
---------------------------------------------------------------------
Reserve additions
and revisions (MBoe) 4,332 4,804 2,360 4,872
Average cost per Boe $ 8.12 $ 5.61 $ 6.94 $ 5.24
Three year average
cost per Boe $ 7.42 $ 5.37 $ 6.40 $ 5.47
---------------------------------------------------------------------


The finding and development costs shown above have been calculated in
accordance with Canadian National Instrument 51-101, Standards of
Disclosure for Oil and Gas Activities introduced in 2003.

The aggregate of the exploration and development costs incurred in the
most recent financial year and the change during that year in estimated
future development costs generally will not reflect total finding and
development costs related to reserves additions for that year.

Liquidity and Capital Resources

Funding for the Company's capital expenditures in the fourth quarter
2004 was provided by cash flow from operations, working capital and
issuance of share capital.

At December 31, 2004 the Company had working capital of $2,839,000, zero
debt and an unutilized loan facility of $7,000,000.

The Company expects to fund its 2005 exploration and development program
(budgeted at $32 million firm and contingent) through the use of working
capital, cash flow and debt. The use of our credit facilities during
2005 is expected to remain within conservative guidelines of a debt to
cash flow ratio of less than 0.5 : 1. The Company raised $9.8 million
(net after costs) on a bought deal equity financing in November and
December 2004 to partially fund the Egyptian, Yemen and Canadian
exploration program. This amount is included in the working capital at
December 31, 2004. Equity financing may be utilized in the future to
accelerate existing projects or to finance new opportunities.
Fluctuations in commodity prices, product demand, foreign exchange
rates, interest rates and various other risks may impact capital
resources.

In December 2003, the Company issued flow through shares with terms
providing that the Company renounce Canadian tax deductions in the
amount of C$3,000,000 to subscribers with the entire amount to be
expended by the Company by December 31, 2004. The Company has fulfilled
this expenditure commitment.

Commitments and Contingencies

In June 2004, the Company entered into a one year fixed price contract
to sell 10,000 barrels of oil per month in Block 32 commencing July 1,
2004 at $33.90 per barrel for Dated Brent plus or minus the Yemen
Government's official selling price differential.

Pursuant to the Company's farm-in agreement on the Nuqra Concession in
Egypt, the Company is committed to spend $6 million over the next 5
years to earn its 50% working interest. As part of this commitment the
Company issued a $2 million letter of credit on July 8, 2004 to Ganoub
El Wadi Holding Petroleum Company which expires on February 14, 2007.
This letter of credit is secured by a guarantee granted by Export
Development Canada.

Upon the determination that proven recoverable reserves are 40 million
barrels or greater for Block S-1, Yemen, the Company will be required to
pay a finders' fee to third parties in the amount of $281,000.



Consolidated Statements of Income and Deficit
(Unaudited - Expressed in thousands of U.S. Dollars)

Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31
2004 2003 2004 2003
---------------------------------------------------------------------
(Restated) (Restated)

REVENUE
Oil and gas sales,
net of royalties $ 11,756 $ 4,489 $ 31,630 $ 17,162
Other income 4 364 13 374
---------------------------------------------------------------------
11,760 4,853 31,643 17,536
---------------------------------------------------------------------

EXPENSES
Operating 2,814 1,121 7,064 3,706
General and
administrative 680 423 1,664 1,207
Stock-based compensation 452 - 1,310 -
Foreign exchange loss 15 91 289 157
Interest 35 1 56 1
Depletion, depreciation
and accretion 4,197 1,292 10,346 6,253
---------------------------------------------------------------------
8,193 2,928 20,729 11,324
---------------------------------------------------------------------

Income before income
taxes 3,567 1,925 10,914 6,212

Income taxes
- future 874 (2,448) (285) (2,448)
- current 1,925 959 5,280 2,755
---------------------------------------------------------------------
2,799 (1,489) 4,995 307
---------------------------------------------------------------------
NET INCOME 768 3,414 5,919 5,905

Deficit, beginning
of period (1,453) (9,735) (6,393) (12,298)
Retroactive application
of changes in accounting
policies applied with
restatement - - 72 72
---------------------------------------------------------------------
Deficit, beginning of year,
as restated (6,321) (12,226)
---------------------------------------------------------------------
Retroactive application of
changes in accounting
policies applied without
restatement - - (283) -
---------------------------------------------------------------------
Deficit, end of period $ (685) $(6,321) $ (685) $ (6,321)
---------------------------------------------------------------------
---------------------------------------------------------------------

Net income per share
Basic $ 0.01 $ 0.06 $ 0.11 $ 0.11
Diluted $ 0.01 $ 0.06 $ 0.10 $ 0.11
---------------------------------------------------------------------
---------------------------------------------------------------------


Consolidated Balance Sheets
(Unaudited - Expressed in thousands of U.S. Dollars)

December 31, December 31,
2004 2003
---------------------------------------------------------------------
(Restated)
ASSETS
Current
Cash and cash equivalents $ 4,988 $ 4,452
Accounts receivable 6,029 2,383
Oil inventory 389 -
Prepaid expenses 274 161
---------------------------------------------------------------------
11,680 6,996
---------------------------------------------------------------------
Property and equipment
Republic of Yemen 26,054 18,563
Canada 19,111 8,470
Arab Republic of Egypt 992 -
---------------------------------------------------------------------
46,157 27,033
---------------------------------------------------------------------
Future income tax asset 2,299 1,572
Deferred financing costs 386 -
---------------------------------------------------------------------
$ 60,522 $ 35,601
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES
Current
Accounts payable and accrued liabilities $ 8,841 $ 4,459

Asset retirement obligations 902 467

---------------------------------------------------------------------
9,743 4,926
---------------------------------------------------------------------

SHAREHOLDERS' EQUITY
Share capital 47,296 36,996
Contributed surplus 1,593 -
Cumulative currency translation adjustment 2,575 -
Deficit (685) (6,321)
---------------------------------------------------------------------
50,779 30,675
---------------------------------------------------------------------

$ 60,522 $ 35,601
---------------------------------------------------------------------
---------------------------------------------------------------------


Consolidated Statements of Cash Flows
(Unaudited - Expressed in thousands U.S. Dollars)

Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31
2004 2003 2004 2003
---------------------------------------------------------------------
(Restated) (Restated)
CASH FLOWS RELATED TO THE
FOLLOWING ACTIVITIES:

OPERATING
Net income $ 768 $ 3,414 $ 5,919 $ 5,905
Adjustments for:
Depletion, depreciation
and accretion 4,197 1,292 10,346 6,253
Gain on sale of property
and equipment - (363) - (363)
Amortization of deferred
financing costs 35 - 35 -
Future income taxes 874 (2,448) (285) (2,448)
Stock-based compensation 452 - 1,310 -
---------------------------------------------------------------------
Cash flow from operations 6,326 1,895 17,325 9,347
Changes in non-cash
working capital (2,050) 535 (4,259) 3,117
---------------------------------------------------------------------
4,276 2,430 13,066 12,464
---------------------------------------------------------------------

FINANCING
Issue of share capital 9,919 2,074 10,006 2,270
Repurchase of
share capital - - - (41)
Deferred financing costs (421) - (421) -
Changes in non-cash
working capital 13 - 24 -
---------------------------------------------------------------------
9,511 2,074 9,609 2,229
---------------------------------------------------------------------

INVESTING
Exploration and
development expenditures
Republic of Yemen (7,900) (1,709) (15,275) (9,012)
Canada (2,893) (2,302) (10,100) (5,217)
Arab Republic of Egypt (282) - (992) -
Proceeds on disposal of
property and equipment - 442 - 442
Changes in non-cash
working capital 1,271 (415) 4,678 951
---------------------------------------------------------------------
(9,804) (3,984) (21,689) (12,836)
---------------------------------------------------------------------

Effect of exchange
rate changes on cash
and cash equivalents (450) - (450) -
---------------------------------------------------------------------

NET INCREASE IN CASH AND
CASH EQUIVALENTS 3,533 520 536 1,857

CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,455 3,932 4,452 2,595
---------------------------------------------------------------------

CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 4,988 $ 4,452 $ 4,988 $ 4,452
---------------------------------------------------------------------
---------------------------------------------------------------------


Segmented information
Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31
(000's) 2004 2003 2004 2003
---------------------------------------------------------------------
(Restated) (Restated)
Oil and gas sales,
net of royalties
Republic of Yemen $ 9,358 $ 3,656 $ 24,966 $ 14,625
Canada 2,398 833 6,664 2,537
---------------------------------------------------------------------
11,756 4,489 31,630 17,162
---------------------------------------------------------------------
Operating
Republic of Yemen 2,181 869 5,449 3,012
Canada 633 252 1,615 694
---------------------------------------------------------------------
2,814 1,121 7,064 3,706
---------------------------------------------------------------------
Depletion, depreciation
and accretion
Republic of Yemen 3,391 1,025 8,162 5,516
Canada 806 267 2,184 737
---------------------------------------------------------------------
4,197 1,292 10,346 6,253
---------------------------------------------------------------------
Segmented operations 4,745 2,076 14,220 7,203
Other income, includes
a gain on sale of
property and equipment
in the United States
of $363,000 in 2003 4 364 13 374
---------------------------------------------------------------------
4,749 2,440 14,233 7,577
General and administrative 680 423 1,664 1,207
Stock-based compensation 452 - 1,310 -
Foreign exchange loss 15 91 289 157
Interest 35 1 56 1
Income taxes 2,799 (1,489) 4,995 307
---------------------------------------------------------------------
Net income $ 768 $ 3,414 $ 5,919 $ 5,905
---------------------------------------------------------------------
---------------------------------------------------------------------


The above includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of the US Private
Securities Litigation Reform Act of 1995. All statements in this
release, other than statements of historical facts, that address future
production, reserve potential, exploration drilling, exploitation
activities and events or developments that the company expects are
forward-looking statements. Although TransGlobe believes the
expectations expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of future
performance and actual results or developments may differ materially
from those in the forward-looking statements. Factors that could cause
actual results to differ materially from those in forward-looking
statements include oil and gas prices, exploitation and exploration
successes, continued availability of capital and financing, and general
economic, market or business conditions.

TRANSGLOBE ENERGY CORPORATION

s/s Lloyd Herrick

Lloyd W. Herrick

Vice President & C.O.O.


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    TransGlobe Energy Corporation
    Ross G. Clarkson
    President & C.E.O.
    (403) 264-9888
    or
    TransGlobe Energy Corporation
    Lloyd W. Herrick
    Vice President & C.O.O.
    (403) 264-9888
    (403) 264-9898 (FAX)
    or
    TransGlobe Energy Corporation
    Suite 2500, 605 - 5th Avenue, S.W.
    Calgary, Alberta T2P 3H5
    Email: trglobe@trans-globe.com
    Website: www.trans-globe.com