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TransGlobe Provides Q3 2011 Update, Egypt

Source: www.gulfoilandgas.com 9/14/2011, Location: Africa

TransGlobe Energy Corporation is pleased to provide a mid-quarter production and operations update for the third quarter of 2011 and notice of participation in the Peters & Co. 2011 Oil & Gas Conference as well as the FirstEnergy/Societe Generale Global Energy Conference.

HIGHLIGHTS

- West Gharib Q3 average production to-date of 11,200 Bopd;
- Continued success in an expanding Nukhul development at West Gharib;
- Three drilling rigs currently working on West Gharib leases in Egypt: (Two rigs focused on the Arta/East Arta Nukhul project; and One rig focused on the southern leases at Hana/Hoshia/West Hoshia).
- Initiated a secondary recovery waterflood on the Arta/East Arta Lower Nukhul pool in early July;
- East Ghazalat Safwa Field development plan approved in July, first production is targeted for December 2011;
- Expanded the Company's opportunity base in the Western Desert by acquiring a 50% interest and operatorship of the South Alamein Concession for $3.0 million.

West Gharib, Arab Republic of Egypt (100% working interest, TransGlobe operated) Operations and Exploration.

During the third quarter, the Company has drilled thirteen wells resulting in twelve oil wells and one dry hole to date. The primary focus of the 2011 drilling program has been the development/appraisal of the Arta/East Arta and North Hoshia Nukhul pools where two drilling rigs have been drilling. Eight of the thirteen wells drilled in the third quarter were targeting the Upper Nukhul formation resulting in 7 Upper Nukhul oil wells in the Arta/East Arta pools and 1 potential Upper Nukhul oil well in North Hoshia. Two drilling rigs are scheduled to remain in the Arta/East Arta area focused on the Nukhul formation for the balance of 2011.

Four wells were drilled by the third rig resulting in 3 oil wells and 1 dry hole in the Hoshia/West Hoshia area. The rig is currently scheduled to drill wells in the Hoshia and West Hoshia area into the fourth quarter.

West Gharib production averaged 11,685 Bopd in July and 10,868 Bopd in August. By mid-July the increased trucked volumes at West Gharib were exceeding the process capacity to receive oil and water at the GPC operated Ras Gharib terminal. The Company has initiated a number of projects in the field to reduce the amount of water that is currently trucked with the oil to GPC. The Company is also working with EGPC and GPC to look at short term debottlenecking activities to increase system capacity. It is expected that the production constraint will be progressively removed over the next 30 to 60 days. It is estimated that approximately 700 Bopd of oil sales has been curtailed since mid-July. The Company initiated water injection into the Arta/East Arta lower Nukhul pool on July 4 and continues to ramp up injection.

West Bakr, Arab Republic of Egypt (SUBJECT TO CLOSING, 100% working interest, TransGlobe operated)

On March 28, 2011, the Company announced it had entered into a Sale and Purchase Agreement ("SPA") to acquire all the Egyptian assets of The Egyptian Petroleum Development Co. Ltd. (of Japan) ("EPEDECO") for $60 million plus or minus adjustments, effective July 1, 2010 subject to approval from the Egyptian Government. EPEDECO holds a 100% working interest in the West Bakr Production Sharing Concession ("PSC").

The West Bakr PSC is located onshore in the western Gulf of Suez rift basin of Egypt adjacent to TransGlobe's West Gharib Concession and is producing approximately 4,000 Bopd gross (before the production sharing split with the Government of Egypt). The Company has identified a number of optimization/development projects and drilling opportunities that could increase production and recoverable reserves.

The produced oil ranges from 17° to 20° API and is pipeline connected to the Ras Gharib terminal on the coast, which is the same export terminal to which West Gharib production is currently trucked. The West Bakr blend has historically received Brent minus 25% pricing. TransGlobe has completed due diligence and submitted the deed of assignment for Government approval. TransGlobe expects to close the acquisition shortly after receiving the necessary Government approvals.

East Ghazalat Block, Arab Republic of Egypt (50% working interest) Operations and Exploration

On July 12, 2011 the Safwa development lease was approved by the Government. The Safwa development lease has a 20-year term (expires July 11, 2031) and covers approximately 11,040 acres or 15 development blocks. The Safwa development lease is subject to a 4-year review (July 11, 2015) to determine which development blocks are producing or contributing to production. The non-producing (non-contributing) blocks will be relinquished following the review. The Safwa Development lease could be extended an additional 5 years (July 11, 2036). The East Ghazalat exploration concession is in the first two-year extension period (expires June 2012). An additional two-year extension is available following a relinquishment of 25% of the original concession area. All work commitments have been met.

The operator has proposed an initial development budget of $2.6 million ($1.3 million to TransGlobe) to complete and equip the existing four wells for production. Processing facilities will be rented for the initial production phase until facility design and construction has been completed. Facility design work is expected to commence following the next drilling phase in 2012. The operator is targeting first production to commence in December 2011. It is expected that the wells will initially be capable of producing 400-600 Bopd per well from the Bahariya formation, which could contribute an additional 800 to 1,200 Bopd of light (34° API) sweet crude to the Company by year-end. Production will initially be trucked to a sales pipeline approximately 95 kilometers north and west of the Safwa field.

South Alamein, Arab Republic of Egypt (SUBJECT TO CLOSING - 50% working interest, TransGlobe operated)

On June 29, 2011 the Company announced it had entered into a Sale and Purchase Agreement ("SPA") to acquire Cepsa Egypt's 50% operated working interest in South Alamein for $3.0 million plus an inventory adjustment, effective on and subject to approval from the Egyptian Government. El Paso South Alamein ("El Paso SA"), a subsidiary of Houston-based El Paso Corporation, holds the remaining 50% interest in the South Alamein Production Sharing Contract ("PSC"). Ancillary to this transaction is an agreement between TransGlobe and El Paso SA on a go-forward appraisal program in exchange for El Paso SA waiving its preferential right under its joint operating agreement with Cepsa Egypt. TransGlobe will assume operatorship of the South Alamein Concession upon closing of this transaction.

The South Alamein Concession is located onshore in the Western Desert of Egypt and includes portions of the prolific Alamein and Tiba basins. The current size of this exploration concession is 2,258 square kilometers (558,120 acres). The concession includes an oil discovery well, Boraq-2X, which tested a combined 1,700 Bopd of 38° to 40° API oil from two Cretaceous zones. Initial work by TransGlobe will focus on appraisal and development the Boraq–2X discovery which includes drilling at least two appraisal wells and readying the Boraq–2X well for production. The Boraq-2X discovery is close to existing infrastructure which should reduce development time and capital.

The Company plans to submit a revised budget and development plan for the Boraq discovery to the Egyptian Government for approval, following closing of the transaction. The South Alamein PSC is in the first, three-year extension period which expires on April 5, 2012. A further two-year extension (April 5, 2014) is available following a 30% relinquishment of the original concession area. An extensive 3-D seismic acquisition program was executed over the entire South Alamein Concession area. This has resulted in several well-defined prospects throughout the area and will provide TransGlobe with numerous exploration drilling opportunities. TransGlobe expects to carry out an exploration drilling program after the Boraq field is brought into production. TransGlobe expects to close the acquisition after receiving the necessary Egyptian Government approvals.

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