MANAGEMENT'S DISCUSSION AND ANALYSIS

November 10, 2015

The following discussion and analysis is management's opinion of TransGlobe's historical financial and operating results and should be read in conjunction with the unaudited Condensed Consolidated Interim Financial Statements for the Company for the three and nine months ended September 30, 2015 and 2014 and the audited Consolidated Financial Statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2014 included in the Company’s annual report. The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board in the currency of the United States (except where otherwise noted). Additional information relating to the Company, including the Company’s Annual Information Form, is on SEDAR at www.sedar.com. The Company’s annual report on Form 40-F may be found on EDGAR at www.sec.gov.

READER ADVISORIES

Forward Looking Statements

Certain statements or information contained herein may constitute forward-looking statements or information under applicable securities laws, including, but not limited to, management’s assessment of future plans and operations, the anticipated amount and timing of future dividend payments, the sustainability of future dividend payments, anticipated increases or decreases to the Company's reserves and production, collection of accounts receivable from the Egyptian Government, drilling plans and the timing thereof, commodity price risk management strategies, adapting to the current political situations in Egypt and Yemen, reserve estimates, management’s expectation for results of operations for 2015, including expected 2015 average production, funds flow from operations, the capital program for exploration and development, the timing and method of financing thereof, method of funding drilling commitments, and commodity prices and expected volatility thereof. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

Forward-looking statements or information relate to the Company’s future events or performance. All statements other than statements of historical fact may be forward-looking statements or information. Such statements or information are often but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, and similar expressions.

Forward-looking statements or information necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, economic and political instability, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Events or circumstances may cause actual results to differ materially from those predicted, as a result of the risk factors set out and other known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company.

In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information in order to provide shareholders with a more complete perspective on the Company's future operations. Such statements and information may prove to be incorrect and readers are cautioned that such statements and information may not be appropriate for other purposes. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market and receive payment for its oil and natural gas products.

Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), EDGAR website (www.sec.gov) and at the Company's website (www.trans-globe.com). Furthermore, the forward-looking statements or information contained herein are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

The reader is further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Q3-2015 1

DIVIDENDS

During the nine months ended September 30, 2015, TransGlobe paid cash dividends as follows:

Ex-dividend date	Record Date	Payment Date	Per Share Amount
March 12, 2015	March 16, 2015	March 31, 2015		$0.05
June 11, 2015	June 15, 2015	June 30, 2015		$0.05
September 11, 2015	September 15, 2015	September 30, 2015		$0.05

The actual amount of future quarterly dividends will be proposed by management and subject to the approval and discretion of the Board. The Board reviews proposed dividend payments in conjunction with their review of quarterly financial and operating results. Future dividend levels will be dependent upon economic factors including commodity prices, capital expenditure programs and production volumes, and will be evaluated regularly to ensure that dividend payments do not compromise the strong financial position or the growth of the Company.

MANAGEMENT STRATEGY AND OUTLOOK

The Q4-2015 outlook provides information as to management’s expectation for results of operations for Q4-2015. Readers are cautioned that the Q4-2015 outlook may not be appropriate for other purposes. The Company’s expected results are sensitive to commodity prices and fluctuations in the business environment, including disruptions caused by the ongoing political changes and civil unrest occurring in the jurisdictions that the Company operates in, and may vary accordingly. This outlook contains forward-looking statements that should be read in conjunction with the Company’s disclosure under “Forward-Looking Statements”, outlined on the first page of this MD&A.

Q4-2015 Outlook

It is expected that Q4-2015 production will average approximately 13,800 Bopd.  The Company now markets its own crude, therefore future funds flow will be dependent upon the timing of crude oil tanker liftings and the market price of crude in the period in which it is sold. Because these factors are difficult to accurately predict, the Company has not provided funds flow guidance for 2015. Funds flow and crude oil inventory levels are expected to fluctuate significantly from quarter to quarter due to the timing of liftings.

TransGlobe lifted 511,648 barrels of Ras Gharib blend on September 21, 2015 which were marketed and sold during the third quarter. The lifting was comprised of West Gharib entitlement oil and did not include any West Bakr entitlement oil. As at the end of the third quarter, TransGlobe held 136,235 barrels of West Gharib and 214,634 barrels of West Bakr entitlement oil as inventory which is expected to be lifted and sold in the fourth quarter.

To the end of Q3-2015 the Company had spent $40.0 million on capital expenditures (inclusive of capitalized overhead). The focus for the fourth quarter of 2015 will be on finalizing the exploration prospect inventory from the recently acquired seismic in the Eastern Desert region of Egypt and interpretation of the recently completed 400 km² 3-D seismic program on the South Ghazalat concession in the Western Desert. No wells were drilled during the third quarter and there are currently no plans for any further drilling activities for the remainder of the year. It is anticipated that the Company will fund its 2015 capital budget from funds flow from operations and working capital.

ADDITIONAL MEASURES

Funds Flow from Operations

This document contains the term “funds flow from operations”, which should not be considered an alternative to or more meaningful than “cash flow from operating activities” as determined in accordance with IFRS. Funds flow from operations is a measure that represents cash generated from operating activities before changes in non-cash working capital. Management considers this a key measure as it demonstrates TransGlobe’s ability to generate the cash necessary to fund future growth through capital investment. Funds flow from operations may not be comparable to similar measures used by other companies.

2 Q3-2015

Reconciliation of Funds Flow from Operations
	Three Months Ended September 30				Nine Months Ended September 30
($000s)	2015		2014		2015		2014
Cash flow from operating activities	28,741		(3,123	)	71,112		33,555
Changes in non-cash working capital	(30,238	)	32,008		(68,906	)	71,002
Funds flow from operations*	(1,497	)	28,885		2,206		104,557

* Funds flow from operations does not include interest or financing costs. Interest expense is included in financing costs on the Condensed Consolidated Interim Statements of Earnings and Comprehensive Income. Cash interest paid is reported as a financing activity on the Condensed Consolidated Interim Statements of Cash Flows.

Debt-to-funds flow ratio

Debt-to-funds flow is a measure that is used to set the amount of capital in proportion to risk. The Company’s debt-to-funds flow ratio is computed as long-term debt, including the current portion, plus convertible debentures over funds flow from operations for the trailing twelve months. Debt-to-funds flow may not be comparable to similar measures used by other companies.

Netback

Netback is a measure that represents sales net of royalties (all government interests, net of income taxes), operating expenses and current taxes. Management believes that netback is a useful supplemental measure to analyze operating performance and provide an indication of the results generated by the Company’s principal business activities prior to the consideration of other income and expenses. Netback may not be comparable to similar measures used by other companies.

TRANSGLOBE’S BUSINESS

TransGlobe is a Canadian-based, publicly-traded oil exploration and production company whose activities are concentrated in the Arab Republic of Egypt (“Egypt”), with additional legacy non-operated assets in the Republic of Yemen (“Yemen”), the latter of which were disposed of subsequent to the end of the third quarter.

Q3-2015 3

SELECTED QUARTERLY FINANCIAL INFORMATION

	2015						2014						2013
(000s, except per share, price and volume amounts)	Q-3		Q-2		Q-1		Q-4		Q-3		Q-2	Q-1	Q-4
Average production volumes (Bopd)	14,683		15,064		14,886		15,172		15,109		16,112	18,067	18,519
Inventory volumes (Bbl)	350,869		253,325		179,730		—		13,025		4,500	49,103	37,326
Average sales volumes (Bopd)	13,620		14,251		12,876		15,139		15,132		16,485	17,932	18,213
Average price ($/Bbl)	39.35		48.31		46.82		66.41		88.59		96.14	94.89	96.10
Oil sales	49,307		62,647		54,251		92,488		123,317		144,208	153,140	161,035
Oil sales, net of royalties	24,700		33,960		29,573		52,340		67,848		76,040	78,366	81,196
Cash flow from operating activities	28,741		24,323		18,048		113,422		(3,123	)	33,467	3,211	109,226
Funds flow from operations*	(1,497	)	6,991		(3,288	)	15,932		28,885		43,185	32,487	36,743
Funds flow from operations per share
- Basic	(0.02	)	0.09		(0.04	)	0.21		0.38		0.58	0.44	0.49
- Diluted	(0.02	)	0.09		(0.04	)	0.19		0.35		0.57	0.43	0.49
Net earnings (loss)	(46,568	)	(12,580	)	(11,197	)	(50,571	)	19,162		26,199	16,692	6,893
Net earnings (loss) - diluted	(54,159	)	(12,580	)	(13,577	)	(63,384	)	14,934		26,199	16,692	6,893
Net earnings per share
- Basic	(0.64	)	(0.17	)	(0.15	)	(0.67	)	0.26		0.35	0.22	0.09
- Diluted	(0.68	)	(0.17	)	(0.17	)	(0.77	)	0.18		0.35	0.22	0.09
Dividends paid	3,594		3,703		3,763		3,762		3,761		11,229	—	—
Dividends paid per share	0.05		0.05		0.05		0.05		0.05		0.15	—	—
Total assets	501,808		599,744		614,345		654,058		720,306		705,859	692,341	675,800
Cash and cash equivalents	126,874		122,961		126,101		140,390		77,939		110,057	107,607	122,092
Convertible debentures	65,682		74,421		65,511		69,093		83,229		88,814	87,765	87,539
* Funds flow from operations is a measure that represents cash generated from operating activities before changes in non-cash working capital and may not be comparable to measures used by other companies.

During the third quarter of 2015, TransGlobe:

• Maintained a strong financial position, reporting positive working capital of $166.2 million (including cash and cash equivalents of $126.9 million) at September 30, 2015;

• Bought back 833,802 common shares through a normal course issuer bid and paid a quarterly dividend of $3.6 million ($0.05/share);

• Reported a net loss of $46.6 million, which includes a $63.1 million non-cash impairment loss on the Company's petroleum properties and goodwill, along with an associated deferred tax recovery of $24.4 million;

• Experienced an decrease in oil sales compared to Q2-2015 primarily as a result of a 19% decrease in realized oil prices along with a slight reduction in sales volumes during the third quarter; and

• Recorded negative funds flow from operations of $1.5 million. The Company now directly sells the majority of its entitlement oil production in Egypt, and the timing of cargo liftings has a direct impact to funds flow in any given period. As at the end of the third quarter, TransGlobe held 136,235 barrels of West Gharib and 214,634 barrels of West Bakr entitlement oil as inventory. Had all entitlement oil produced during the quarter been sold at Q3-2015 realized pricing, funds flow for the quarter would have been approximately $1.7 million.

4 Q3-2015

2015 TO 2014 NET EARNINGS VARIANCES

	$000s		$ Per Share Diluted		% Variance
Q3-2014 net earnings	19,162		0.25
Cash items
Volume variance	(4,383	)	(0.11	)	(24	)
Price variance	(69,627	)	(0.88	)	(363	)
Royalties	30,862		0.39		161
Expenses:
Production and operating	1,865		0.02		10
Selling costs	(660	)	(0.01	)	(3	)
Cash general and administrative	2,752		0.03		14
Exploration	39		—		—
Current income taxes	8,207		0.10		43
Realized foreign exchange gain (loss)	471		0.01		2
Interest on long-term debt	338		—		2
Other income	92		—		—
Total cash items variance	(30,044	)	(0.45	)	(158	)
Non-cash items
Unrealized foreign exchange gain	912		0.01		5
Depletion, depreciation and amortization	(1,773	)	(0.02	)	(9	)
Unrealized gain (loss) on financial instruments	2,400		0.03		13
Impairment loss	(63,101	)	(0.79	)	(329	)
Stock-based compensation	1,331		0.02		7
Deferred income taxes	24,322		0.31		127
Deferred lease inducement	140		—		1
Amortization of deferred financing costs	83		—		—
Total non-cash items variance	(35,686	)	(0.44	)	(185	)
Q3-2015 net earnings	(46,568	)	(0.64	)	(343	)
Other items affecting diluted earnings per share
Convertible debentures			(0.04	)	—
Q3-2015 net earnings per share - diluted			(0.68	)	(343	)

TransGlobe recorded a net loss of $46.6 million in Q3-2015 compared to earnings of $19.2 million in Q3-2014. The negative cash earnings impact of significantly lower oil prices and reduced sales volumes totaled $74.0 million in aggregate compared to Q3-2014, which was partially offset by decreased royalties and current income taxes of $39.1 million. Reduced production and operating expenses of $1.9 million related primarily to decreases in activity levels, and cash general and administrative expenses decreased $2.8 million principally due to a reduction in payroll and insurance costs, along with the weakening of the Canadian dollar. The largest non-cash negative earnings variance item from Q3-2015 to Q3-2014 relates to the impairment loss of $63.1 million on the Company's petroleum properties and goodwill. The impairment loss caused a significant reduction in the accounting basis of the Company's petroleum properties, which resulted in a deferred tax recovery of $24.4 million in Q3-2015.

BUSINESS ENVIRONMENT

The Company’s financial results can be significantly influenced by fluctuations in commodity prices, including price differentials. The following table shows select market benchmark prices and foreign exchange rates:

	2015			2014
	Q-3	Q-2	Q-1	Q-4	Q-3
Dated Brent average oil price ($/Bbl)	50.25	61.69	53.92	76.40	101.82
U.S./Canadian Dollar average exchange rate	1.309	1.230	1.241	1.136	1.089

The price of Dated Brent oil averaged 19% lower in Q3-2015 compared with Q2-2015. All of the Company’s production is priced based on Dated Brent and shared with the Egyptian government through PSCs. When the price of oil increases, it takes fewer barrels to recover costs (cost recovery barrels) which are assigned 100% to the Company. The contracts provide for cost recovery per quarter up to a maximum percentage of total revenue. Timing differences often exist between the Company's recognition of costs and their recovery as the Company accounts for costs on an accrual basis, whereas cost recovery is determined on a cash basis. If the eligible cost recovery is less than the maximum defined cost recovery, the difference is defined as "excess". In Egypt, depending on the PSC, the Contractor's share of excess ranges between 0% and 30%. If the eligible cost recovery exceeds the maximum allowed percentage, the unclaimed cost recovery is carried forward to the next quarter. Typically maximum cost recovery or cost oil ranges from 25% to 30% in Egypt. The balance of the production after maximum cost recovery is shared with the government (production sharing oil). In Egypt, depending on the contract, the government receives 70% to 86% of the production sharing oil or profit oil. Production sharing splits are set in each contract for the life of the contract. Typically the government’s share of production sharing oil increases when production exceeds pre-set production levels in the respective contracts. During times of increased oil prices, the Company receives less cost oil and may receive more production sharing oil. During times of lower oil prices, the Company receives more cost oil and may

Q3-2015 5

receive less profit oil. For reporting purposes, the Company records the government’s share of production as royalties and taxes (all taxes are paid out of the government’s share of production) which will increase during times of rising oil prices and will decrease in times of declining oil prices.

Egypt has been experiencing significant political changes over the past four and a half years. While this has had an impact on the efficient operations of the government in general, business processes and the Company’s operations have generally proceeded as normal. While exploration and development activities have generally been uninterrupted, the Company experienced delays in the collection of accounts receivable from the Egyptian government. The Company collected a substantial amount on overdue receivables in 2014 ($233.5 million), which reduced the accounts receivable balance to $117.6 million as at December 31, 2014. The trend of accounts receivable reductions has continued throughout 2015, in which the Company collected $88.1 million from EGPC, reducing the balance owing from EGPC to $29.9 million. As at September 30, 2015, total accounts receivable was $48.4 million, of which $17.7 million related to TransGlobe's September 21 cargo lifting, which was sold to a third party buyer. Payment for the September cargo lifting was received in full on October 21, 2015. The Company's credit risk has been reduced significantly due to the continued collections from EGPC combined with the 30-day collection cycle that the Company now enjoys as a result of direct marketing.

OPERATING RESULTS AND NETBACK

Daily Volumes, Working Interest before Royalties (Bopd)

Production Volumes

	Three Months Ended September 30		Nine Months Ended September 30
	2015	2014	2015	2014
Egypt	14,683	14,898	14,817	16,038
Yemen	—	211	60	379
Total Company	14,683	15,109	14,877	16,417

Sales Volumes (excludes volumes held as inventory)

	Three Months Ended September 30		Nine Months Ended September 30
	2015	2014	2015	2014
Egypt	13,620	14,898	13,529	16,038
Yemen	—	234	56	467
Total Company	13,620	15,132	13,585	16,505

Netback

Accounting netback
	Nine Months Ended September 30
	2015				2014
(000s, except per Bbl amounts)(1)	$		$/Bbl		$	$/Bbl
Egypt	20,499		5.56		111,917	25.56
Yemen	(3,821	)	(249.93	)	742	5.83
Consolidated	16,678		4.50		112,659	25.00
1. The Company achieved the netbacks above on sold barrels of oil in the nine months ended September 30, 2015 and September 30, 2014 (these figures do not include TransGlobe entitlement barrels held as inventory at September 30, 2015).

	Three months ended September 30
	2015			2014
(000s, except per Bbl amounts)(1)	$		$/Bbl	$		$/Bbl
Egypt	2,000		1.59	35,120		25.63
Yemen	(883	)	—	(267	)	(12.41	)
Consolidated	1,117		0.89	34,853		25.04
1. The Company achieved the netbacks above on sold barrels of oil in the three months ended September 30, 2015 and September 30, 2014 (these figures include TransGlobe entitlement barrels produced in prior periods and sold in the current quarter, and do not include TransGlobe entitlement barrels held as inventory at September 30, 2015).

6 Q3-2015

Notional netback
	Nine Months Ended September 30
	2015				2014
(000s, except per Bbl amounts)(1)	$		$/Bbl		$	$/Bbl
Egypt	32,454		8.02		111,917	25.56
Yemen	(3,821	)	(249.93	)	742	5.83
Consolidated	28,633		7.06		112,659	25.00
1. It is estimated that the Company would have achieved the netbacks noted above if the Company’s sales volumes had been equivalent to production volumes, and if all sales had taken place at the average realized selling price for the period.

	Three months ended September 30
	2015			2014
(000s, except per Bbl amounts)(1)	$		$/Bbl	$		$/Bbl
Egypt	5,121		3.79	35,120		25.63
Yemen	(883	)	—	(267	)	(12.41	)
Consolidated	4,238		3.14	34,853		25.04
1. It is estimated that the Company would have achieved the netbacks noted above if the Company’s sales volumes had been equivalent to production volumes, and if all sales had taken place at the average realized selling price for the period.

Egypt - accounting netback
	Nine Months Ended September 30
	2015		2014
(000s, except per Bbl amounts)	$	$/Bbl	$	$/Bbl
Oil sales	165,595	44.84	407,066	92.97
Royalties	78,341	21.21	195,496	44.65
Current taxes	20,923	5.66	51,749	11.82
Production and operating expenses	41,275	11.18	47,904	10.94
Selling costs	4,557	1.23	—	—
Netback	20,499	5.56	111,917	25.56

	Three months ended September 30
	2015		2014
(000s, except per Bbl amounts)	$	$/Bbl	$	$/Bbl
Oil sales	49,307	39.35	121,102	88.36
Royalties	24,607	19.64	55,774	40.69
Current taxes	6,543	5.22	14,596	10.65
Production and operating expenses	15,497	12.37	15,612	11.39
Selling costs	660	0.53	—	—
Netback	2,000	1.59	35,120	25.63

The netback per Bbl in Egypt decreased 94% and 78%, respectively, in the three and nine months ended September 30, 2015 compared with the same periods of 2014. The decreased netbacks were principally the result of a reduction in realized oil prices of 55% and 52%, respectively, in the three and nine months ended September 30, 2015 compared with the same periods of 2014.

Production and operating expenses decreased by $0.1 million from Q3-2014 to Q3-2015, however, the per Bbl cost was driven upward as a result of a 9% and 16% decrease in sales volumes, respectively, in the three and nine months ended September 30, 2015. Also contributing to the reduction in netback per Bbl were selling costs (mainly transportation and marketing fees) incurred on the direct sale of the Company's crude oil. TransGlobe completed three direct sales of crude oil to third party buyers during the nine months ended September 30, 2015 (one lifting per quarter). The Q1-2015 lifting was sold CIF (cost, insurance and freight) destination, resulting in significantly higher selling costs in the first quarter, whereas the Q2-2015 and Q3-2015 liftings were sold FOB shipping point.

The Company completed its third direct crude sale to a third party buyer during the third quarter of 2015, which consisted entirely of West Gharib crude. As at September 30, 2015, the Company held 214,634 barrels of West Bakr crude and 136,235 barrels of West Gharib crude as product inventory. If TransGlobe had sold all entitlement crude produced at average realized pricing for the first nine months of 2015, the total netback for Egypt would have been approximately $32.5 million ($8.02 per Bbl) for the nine months ended September 30, 2015.

Royalties and taxes as a percentage of revenue were 63% and 60%, respectively, for the three and nine months ended September 30, 2015 compared with 58% and 61%, respectively, for the same periods of 2014. If all crude oil had been sold in the period in which it was produced for the first nine months of 2015, royalties and taxes as a percentage of revenue would have been 59% and 55%, respectively, for the three and nine months ended September 30, 2015. When oil prices fall it takes more barrels to recover costs, thereby reducing (or eliminating) excess cost oil barrels, the majority of which are allocated to the government.

The average selling price during the three months ended September 30, 2015 was $39.35/Bbl, which was $10.90/Bbl lower than the average Dated Brent oil price of $50.25/Bbl for the period (Q3-2014 $101.82/Bbl). The difference is due to a gravity/quality adjustment and is also impacted by the timing of the direct sale, specifically the Q3-2015 lifting which was sold based on the September average Dated Brent price of $47.62/Bbl.

Q3-2015 7

Egypt - notional netback
	Nine Months Ended September 30
	2015		2014
(000s, except per Bbl amounts)(1)	$	$/Bbl	$	$/Bbl
Oil sales	181,380	44.84	407,066	92.97
Royalties	78,341	19.37	195,496	44.65
Current taxes	20,923	5.17	51,749	11.82
Production and operating expenses	44,687	11.05	47,904	10.94
Selling costs	4,975	1.23	—	—
Netback	32,454	8.02	111,917	25.56
1. It is estimated that the Company would have achieved the netbacks noted above if the Company’s sales volumes had been equivalent to production volumes, and if all sales had taken place at the average realized selling price for the period.

	Three months ended September 30
	2015		2014
(000s, except per Bbl amounts)(1)	$	$/Bbl	$	$/Bbl
Oil sales	53,155	39.35	121,102	88.36
Royalties	24,607	18.22	55,774	40.69
Current taxes	6,543	4.84	14,596	10.65
Production and operating expenses	16,168	11.97	15,612	11.39
Selling costs	716	0.53	—	—
Netback	5,121	3.79	35,120	25.63
1. It is estimated that the Company would have achieved the netbacks noted above if the Company’s sales volumes had been equivalent to production volumes, and if all sales had taken place at the average realized selling price for the period.

Yemen

In January 2015, the Company provided notice of its relinquishment of its interests in Block 32 and Block 72 in Yemen due to project economics and security issues. The relinquishment of Blocks 32 and 72 were effective March 31, 2015 and February 28, 2015, respectively.

Although TransGlobe’s Yemen properties contributed minimal sales volumes during the first nine months of the year, the Company continued to incur the majority of the operating costs associated with the blocks. These factors resulted in a negative netback per Bbl of $249.93 in Yemen for the nine months ended September 30, 2015. There were no sales in Yemen for the three months ended September 30, 2015.

Subsequent to the end of the quarter the Company disposed of its last remaining interests (25% interest in Blocks S-1 and 75) in Yemen.

GENERAL AND ADMINISTRATIVE EXPENSES (“G&A”)

	Nine Months Ended September 30
	2015				2014
(000s, except per Bbl amounts)	$		$/Bbl		$		$/Bbl
G&A (gross)	19,550		5.27		22,577		5.01
Stock-based compensation	2,822		0.76		4,308		0.96
Capitalized G&A and overhead recoveries	(4,943	)	(1.33	)	(5,318	)	(1.18	)
G&A (net)	17,429		4.70		21,567		4.79

	Three Months Ended September 30
	2015				2014
(000s, except per Bbl amounts)	$		$/Bbl		$		$/Bbl
G&A (gross)	4,707		3.76		7,869		5.65
Stock-based compensation	249		0.20		1,580		1.13
Capitalized G&A and overhead recoveries	(1,464	)	(1.17	)	(1,734	)	(1.25	)
G&A (net)	3,492		2.79		7,715		5.53

G&A expenses (net) for the three and nine months ended September 30, 2015 decreased 55% and 19%, respectively, in Q3-2015 compared with Q3-2014 (50% and 2% decrease, respectively, on a per bbl basis). G&A (gross) has decreased during the three and nine months ended September 30, 2015 principally due to a reduction in payroll and insurance costs, along with foreign exchange rate fluctuations. If all crude oil was sold in the same period it was produced for the first three quarters of the year, G&A (gross) per bbl would have been $3.48 and $4.81, respectively, for the three and nine months ended September 30, 2015, representing a 40% and 13% decrease, respectively, as compared to the same periods in 2014.

Stock-based compensation has decreased in both the three and nine month periods ended September 30, 2015 compared to the same periods in 2014 mostly as a result of a 49% decrease in the Company's stock price and a 6% reduction in the number of outstanding stock options as at September 30, 2015 compared to September 30, 2014.

8 Q3-2015

FINANCE COSTS

Finance costs for the three and nine months ended September 30, 2015 were $1.6 million and $4.8 million, respectively (2014 - $2.0 million and $5.7 million, respectively). Interest expense on the convertible debentures for the three and nine-month periods ended September 30, 2015 were $1.2 million and $3.5 million, respectively (2014 - $1.4 million and $4.0 million, respectively). The decrease in this portion of the interest expense is due to foreign exchange fluctuations, as the interest on the convertible debentures is paid in Canadian dollars. The remaining decrease in interest expense is due to a reduction in funds available under the Borrowing Base Facility in 2015 as compared to 2014.

	Three Months Ended September 30				Nine Months Ended September 30
(000s)	2015		2014		2015		2014
Interest expense	$	1,353	$	1,691	$	4,146	$	4,886
Amortization of deferred financing costs	199		282		661		837
Finance costs	$	1,552	$	1,973	$	4,807	$	5,723

The Company had no long-term debt outstanding under the Borrowing Base Facility as at September 30, 2015 (September 30, 2014 - $nil). As at September 30, 2015, the borrowing capacity under the Borrowing Base Facility was $39.3 million. The Borrowing Base Facility bears interest at LIBOR plus an applicable margin that varies from 5.0% to 5.5% depending on the amount drawn under the facility, and the term of the facility extends to December 31, 2017.

In February 2012, the Company sold, on a bought-deal basis, C$97.8 million ($97.9 million) aggregate principal amount of convertible unsecured subordinated debentures with a maturity date of March 31, 2017. The debentures are convertible at any time and from time to time into common shares of the Company at a price of C$13.80 per common share. The debentures are not redeemable by the Company on or before March 31, 2015 other than in limited circumstances in connection with a change of control of TransGlobe. After March 31, 2015 and prior to March 31, 2017, the debentures may be redeemed by the Company at a redemption price equal to the principal amount plus accrued and unpaid interest, provided that the weighted-average trading price of the common shares for the 20 consecutive trading days ending five trading days prior to the date on which notice of redemption is provided is not less than 125 percent of the conversion price (or C$17.25 per common share). The conversion price of the convertible debentures will adjust for any amounts paid out as dividends on the common shares of the Company, provided that the dividend payment causes the conversion price to change by 1% or more. Interest of 6% is payable semi-annually in arrears on March 31 and September 30. At maturity or redemption, the Company has the option to settle all or any portion of principal obligations by delivering to the debenture holders sufficient common shares to satisfy these obligations.

DEPLETION AND DEPRECIATION (“DD&A”)

	Nine Months Ended September 30
	2015		2014
(000s, except per Bbl amounts)	$	$/Bbl	$	$/Bbl
Egypt	37,041	10.03	35,401	8.09
Yemen	—	—	1,321	10.36
Corporate	319	—	342	—
	37,360	10.07	37,064	8.23

	Three Months Ended September 30
	2015		2014
(000s, except per Bbl amounts)	$	$/Bbl	$	$/Bbl
Egypt	13,337	10.64	11,371	8.30
Yemen	—	—	171	7.94
Corporate	102	—	124	—
	13,439	10.73	11,666	8.38

In Egypt, DD&A increased 28% and 24% on a per Bbl basis in the three and nine months ended September 30, 2015 compared to 2014. This increase is mostly due to a lower reserve base over which to deplete costs in Egypt.

In Yemen, no DD&A expense was recorded in the three and nine months ended September 30, 2015 due to the fact that the Company wrote its Yemen assets down to nil on the 2014 year-end Consolidated Balance Sheet. In January 2015, the Company relinquished its interests in Block 32 (13.81% working interest) and Block 72 (20% working interest) in Yemen (effective March 31, 2015 and February 28, 2015, respectively) due to ongoing political and tribal turmoil in the vicinity of the blocks. Subsequent to the end of the third quarter the Company disposed of its interests in Block S-1 and Block 75. The Company now has no remaining interests in Yemen.

IMPAIRMENT LOSSES

The Company recorded an impairment loss of $54.9 million on its petroleum properties during the third quarter of 2015. The impairment loss was split between the West Gharib concession ($28.6 million), the West Bakr concession ($23.1 million) and the East Ghazalat concession ($3.2 million). The respective impairment losses were recorded to reduce the carrying value of the assets to their recoverable amounts, which were generally estimated as the net present value of proved plus probable reserves, discounted at 15%. The recoverable amounts of the assets declined from prior year due to the continued decline in oil prices throughout 2015.

Q3-2015 9

The Company also recorded an $8.2 million impairment loss on its goodwill during the third quarter. This impairment loss reduces the carrying value of goodwill to zero. The after-tax cash flows used to determine the recoverable amount of the cash-generating unit to which goodwill was assigned were discounted using an estimated weighted average cost of capital of 15%.

CAPITAL EXPENDITURES

	Nine Months Ended September 30
($000s)	2015	2014
Egypt	39,880	55,851
Yemen	—	1,384
Corporate	145	632
Total	40,025	57,867

In Egypt, total capital expenditures in the first nine months of 2015 were $39.9 million (2014 - $55.9 million). During the first half of the year, the Company drilled five wells in Egypt (three at NWG, one at West Bakr and one at West Gharib). All drilling activity took place in the first quarter of the year. No wells were drilled during the third quarter and the Company has no plans for any further drilling activities for the remainder of the year. Year-to-date, the Company has spent $13.6 million on seismic acquisition, processing and interpretation, all of which has been capitalized as exploration and evaluation assets. The largest contributor to seismic costs during the year has been the South Ghazalat 3-D acquisition, which was under budget at $11.9 million. The Company has expended $2.3 million on facilities construction and improvements, and has capitalized $4.9 million of G&A costs related to capital projects.

The Company paid a signing bonus in the amount of $2.0 million upon ratification of the NW Sitra concession agreement, which has been capitalized as an intangible exploration and evaluation asset.

OUTSTANDING SHARE DATA

As at September 30, 2015, the Company had 72,205,369 common shares issued and outstanding and 5,731,400 stock options issued and outstanding, which are exercisable in accordance with their terms into a maximum of 5,731,400 common shares of the Company.

NORMAL COURSE ISSUER BID

On March 25, 2015, the Toronto Stock Exchange ("TSX") accepted the Company's notice of intention to make a Normal Course Issuer Bid ("NCIB") for its common shares. Under the NCIB, the Company may acquire up to 6,207,585 common shares, which is equal to 10% of the public float. The NCIB commenced on March 31, 2015, and will terminate on March 30, 2016 or such earlier date on which TransGlobe completes its purchases of common shares under the NCIB or terminates the NCIB at its option. The maximum number of common shares that may be acquired by the Company during the same trading day is 89,289, which is equal to 25% of the Company's average daily trading volume of 357,159 for the previous six completed calendar months, subject to the Company's ability to make one block purchase of common shares per calendar week that exceeds such limit. All shares acquired will be cancelled.

During the three months ended September 30, 2015, the Company repurchased and cancelled 833,802 common shares. During the nine months ended September 30, 2015, the Company repurchased and cancelled a total of 3,103,792 common shares.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity describes a company’s ability to access cash. Companies operating in the upstream oil and gas industry require sufficient cash in order to fund capital programs necessary to maintain and increase production and reserves, to acquire strategic oil and gas assets and to repay debt. TransGlobe’s capital programs are funded by its existing working capital and cash provided from operating activities. The Company remains in a strong financial position due to prudent capital resource management. TransGlobe's management will continue to steward capital programs, focus on cost reductions and maintain a strong balance sheet through 2015 and beyond.

Q3-2015 10

The table below illustrates TransGlobe’s sources and uses of cash during the periods ended September 30, 2015 and 2014:

Sources and Uses of Cash
	Nine Months Ended September 30
($000s)	2015		2014
Cash sourced
Funds flow from operations1	2,206		104,557
Exercise of stock options	208		2,479
	2,414		107,036
Cash used
Capital expenditures	40,025		57,867
Dividends paid	11,060		14,990
Transfer to restricted cash	2		2
Purchase of common shares	12,221		—
Finance costs	5,438		6,011
Other	1,581		983
	70,327		79,853
	(67,913	)	27,183
Changes in non-cash working capital	54,397		(71,336	)
Increase (decrease) in cash and cash equivalents	(13,516	)	(44,153	)
Cash and cash equivalents – beginning of period	140,390		122,092
Cash and cash equivalents – end of period	126,874		77,939

¹ Funds flow from operations is a measure that represents cash generated from operating activities before changes in non-cash working capital.

Working capital is the amount by which current assets exceed current liabilities. At September 30, 2015, the Company had working capital of $166.2 million (December 31, 2014 - $229.7 million). The decrease to working capital in Q3-2015 is principally due to reduced oil prices. The Company has collected $88.1 million from EGPC during the first nine months of 2015, reducing the EGPC accounts receivable balance to $29.9 million as at September 30, 2015. TransGlobe expects that EGPC will continue to make regular payments on its outstanding debt, and that the EGPC receivable balance will be eliminated in the first half of 2016. During 2015, the Company sold its Eastern Desert entitlement oil directly to third party international buyers. The Company's third cargo lifting of the year was completed on September 21, and proceeds from the lifting were received on October 21. The reduction of the EGPC receivable balance, combined with the 30-day cash collection cycle that TransGlobe has experienced in 2015, has improved TransGlobe's credit risk profile.

To date, the Company has experienced no difficulties with transferring funds abroad.

At September 30, 2015, TransGlobe had $39.3 million available under a Borrowing Base Facility of which no amounts were drawn, however, the Company was utilizing $38.4 million in the form of letters of credit primarily to support its work commitments under the Egyptian PSCs signed in 2013.

COMMITMENTS AND CONTINGENCIES

As part of its normal business, the Company entered into arrangements and incurred obligations that will impact the Company’s future operations and liquidity. The principal commitments of the Company are as follows:

($000s)			Payment Due by Period1,2
	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	Yes-Liability	20,901	20,901	—	—	—
liabilities
Convertible debentures	Yes-Liability	65,682	—	65,682	—	—
Office, equipment and drilling rig leases	No	4,892	797	2,327	1,572	196
Minimum work commitments3	No	27,548	750	26,798	—	—
Total		119,023	22,448	94,807	1,572	196

¹  Payments exclude ongoing operating costs, finance costs and payments made to settle derivatives.

²  Payments denominated in foreign currencies have been translated at September 30, 2015 exchange rates.

³  Minimum work commitments include contracts awarded for capital projects and those commitments related to exploration and drilling obligations.

Q3-2015 11

The Company is subject to certain office and equipment leases.

Pursuant to the PSC for North West Gharib in Egypt, the Company had a minimum financial commitment of $35.0 million ($9.5 million remaining) and a work commitment for 30 wells and 200 square kilometers of 3-D seismic during the initial-three year exploration period, which commenced on November 7, 2013. As at September 30, 2015, the Company had expended $25.5 million towards meeting that commitment.

Pursuant to the PSC for South East Gharib in Egypt, the Company had a minimum financial commitment of $7.5 million ($2.3 million remaining)and a work commitment for two wells, 200 square kilometers of 3-D seismic and 300 kilometers of 2-D seismic during the initial three-year exploration period, which commenced on November 7, 2013. As at September 30, 2015, the Company had expended $5.2 million towards meeting that commitment.

Pursuant to the PSC for South West Gharib in Egypt, the Company had a minimum financial commitment of $10.0 million ($5.1 million remaining)and a work commitment for four wells and 200 square kilometers of 3-D seismic during the initial three-year exploration period, which commenced on November 7, 2013. As at September 30, 2015, the Company had expended $4.9 million towards meeting that commitment.

Pursuant to the PSC for South Ghazalat in Egypt, the Company had a minimum financial commitment of $8.0 million and a work commitment for two wells and 400 square kilometers of 3-D seismic during the initial three-year exploration period, which commenced on November 7, 2013. As at September 30, 2015, the Company had met its financial commitment.

Pursuant to the PSC for North West Sitra in Egypt, the Company had a minimum financial commitment of $10.0 million ($9.9 million remaining) and a work commitment for two wells and 300 square kilometers of 3-D seismic during the initial three and a half year exploration period, which commencedon January 8, 2015. As at September 30, 2015, the Company had expended $0.1 million towards meeting that commitment.

In the normal course of its operations, the Company may be subject to litigations and claims. Although it is not possible to estimate the extent of potential costs, if any, management believes that the ultimate resolution of such contingencies would not have a material adverse impact on the results of operations, financial position or liquidity of the Company.

The Company is not aware of any material provisions or other contingent liabilities as at September 30, 2015.

DERIVATIVE COMMODITY CONTRACTS

The Company’s operational results and financial condition are dependent on the commodity prices received for its oil production. TransGlobe uses hedging arrangements from time to time as part of its risk management strategy to manage commodity price fluctuations and stabilize cash flows for future exploration and development programs.

In Q1-2015, the Company purchased a financial floor derivative commodity contract at a cost of $0.7 million to protect the pricing received on its first direct crude sale to a third party buyer. The cost of this contract has been presented as a realized loss on derivative commodity contracts in this interim report. No derivative commodity contracts were purchased during Q3-2015. As there were no outstanding derivative commodity contracts at September 30, 2015 or December 31, 2014, no assets or liabilities have been recognized on the Consolidated Balance Sheets for the respective periods.

The use of derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors.

EVENTS AFTER THE REPORTING PERIOD

On October 13, 2015 the Company completed a share purchase agreement whereby a wholly-owned subsidiary of TransGlobe disposed of 100% of the common shares of TransGlobe GOS Inc., which holds a 50% non-operated working interest in the East Ghazalat concession. Total consideration received for TransGlobe GOS Inc. was $3.5 million, which has been satisfied by cash consideration of $1.0 million and the issuance of a $2.5 million note. The note bears interest at 10% per annum, payable on a semi-annual basis, and the principal is payable to TransGlobe on or before the second anniversary of the completion date. The cash consideration of $1.0 million was received immediately upon completion of the transaction.

On October 29, 2015 the Company completed a share purchase agreement whereby a wholly-owned subsidiary of TransGlobe disposed of 100% of the common shares of TG West Yemen Inc., which holds a 25% non-operated working interest in the Block S-1 and Block 75 concessions in Yemen. The Company received nominal cash consideration upon closing of the transaction.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

TransGlobe's management designed and implemented internal controls over financial reporting, as defined under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, of the Canadian Securities Administrators and as defined in Rule 13a-15 under the US Securities Exchange Act of 1934. Internal controls over financial reporting is a process designed under the supervision of the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS, focusing in particular on controls over information contained in the annual and interim financial statements. Due to its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements on a timely basis. A system of internal controls over financial reporting, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the internal controls over financial reporting are met. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

No changes were made to the Company’s internal control over financial reporting during the period ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the internal controls over financial reporting.

12 Q3-2015