SEC Exhibit

(Unaudited - Expressed in thousands of U.S. Dollars, except per share amounts)



		Three months ended March 31
	Notes	2016			2015
REVENUE
Oil sales, net of royalties	4	$	17,427		$	29,573
Finance revenue	5	237			143
		17,664			29,716

EXPENSES
Production and operating		13,121			15,465
Selling costs	6	828			3,091
General and administrative		3,523			7,918
Foreign exchange (gain) loss		5,391			(5,057		)
Finance costs	5	1,429			1,675
Exploration		—			21
Depletion, depreciation and amortization		10,016			11,524
Realized derivative loss on commodity contracts		258			688
Unrealized (gain) loss on financial instruments	12	(1,631		)	2,399
		32,935			37,724

Earnings (loss) before income taxes		(15,271		)	(8,008		)

Income tax expense (recovery) – current		3,175			6,875
– deferred		(2,197		)	(3,686		)
		978			3,189
NET EARNINGS (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD		$	(16,249	)	$	(11,197	)

Earnings (loss) per share	16
Basic		$	(0.23	)	$	(0.15	)
Diluted		$	(0.23	)	$	(0.17	)

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



		As at		As at
	Notes	March 31, 2016		December 31, 2015
ASSETS
Current
Cash and cash equivalents	7	$	122,031	$	126,910
Accounts receivable		22,402		22,929
Prepaids and other		2,466		3,206
Product inventory	8	12,760		17,287
		159,659		170,332
Non-Current
Restricted cash		861		860
Deferred financing costs	11	566		724
Intangible exploration and evaluation assets	9	123,649		122,020
Property and equipment
Petroleum properties	10	151,933		156,597
Other assets	10	4,956		4,967
		$	441,624	$	455,500

LIABILITIES
Current
Accounts payable and accrued liabilities		$	17,995	$	16,497
Convertible debentures	12	66,506		—
		84,501		16,497
Non-Current
Convertible debentures	12	—		63,848
Deferred taxes		813		3,009
Other long-term liabilities		449		462
		85,763		83,816

SHAREHOLDERS’ EQUITY
Share capital	14	152,084		152,084
Contributed surplus		21,824		21,398
Retained earnings		181,953		198,202
		355,861		371,684
		$	441,624	$	455,500

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



		Three months ended March 31
	Notes	2016			2015

Share Capital
Balance, beginning of period	14	$	152,084		$	164,006
Stock options exercised	14	—			208
Transfer from contributed surplus on exercise of options	14	—			91
Balance, end of period		$	152,084		$	164,305

Contributed Surplus
Balance, beginning of period		$	21,398		$	19,427
Share-based compensation expense	15	426			768
Transfer to share capital on exercise of options		—			(91		)
Balance, end of period		$	21,824		$	20,104

Retained Earnings
Balance, beginning of period		$	198,202		$	316,667
Net earnings (loss) and comprehensive income (loss)		(16,249		)	(11,197		)
Dividends paid		—			(3,763		)
Balance, end of period		$	181,953		$	301,707

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



		Three months ended March 31
	Notes	2016			2015
CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:

OPERATING
Net earnings (loss) for the period		$	(16,249	)	$	(11,197	)
Adjustments for:
Depletion, depreciation and amortization		10,016			11,524
Deferred lease inducement		(27		)	101
Stock-based compensation		422			953
Finance costs	5	1,429			1,675
Income tax expense		978			3,189
Unrealized (gain) loss on financial instruments	12	(1,631		)	2,399
Unrealized (gain) loss on foreign currency translation		5,407			(5,057		)
Income taxes paid		(3,175		)	(6,875		)
Changes in non-cash working capital	17	4,256			21,336
Net cash generated by (used in) operating activities		1,426			18,048

INVESTING
Additions to intangible exploration and evaluation assets	9	(1,629		)	(6,482		)
Additions to petroleum properties	10	(2,313		)	(7,367		)
Additions to other assets	10	(323		)	(252		)
Changes in restricted cash		(1		)	(1		)
Changes in non-cash working capital	17	1,214			(10,848		)
Net cash generated by (used in) investing activities		(3,052		)	(24,950		)

FINANCING
Issue of common shares for cash	14	—			208
Interest paid		(2,347		)	(2,578		)
Dividends paid		—			(3,763		)
Increase (decrease) in other long-term liabilities		—			(126		)
Net cash generated by (used in) financing activities		(2,347		)	(6,259		)
Currency translation differences relating to cash and cash equivalents		(906		)	(1,128		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(4,879		)	(14,289		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		126,910			140,390
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	122,031		$	126,101

TransGlobe Energy Corporation is a publicly listed company incorporated in Alberta, Canada and its shares are listed on the Toronto Stock Exchange (“TSX”) and NASDAQ Exchange (“NASDAQ”). The address of its registered office is 2300, 250 – 5th Street SW, Calgary, Alberta, Canada, T2P 0R4. TransGlobe Energy Corporation together with its subsidiaries (“TransGlobe” or the “Company”) is engaged primarily in oil exploration, development and production and the acquisition of properties.

These Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board effective as of March 31, 2016. These Condensed Consolidated Interim Financial Statements do not contain all the disclosures required for full annual financial statements and should be read in conjunction with the December 31, 2015 Consolidated Financial Statements.

The Company prepared these Condensed Consolidated Interim Financial Statements on a going concern basis, which contemplates the realization of assets and liabilities in the normal course of business as they become due. Accordingly, these Condensed Consolidated Interim Financial Statements have been prepared on a historical cost basis, except for cash and cash equivalents and convertible debentures that have been measured at fair value.

In these Condensed Consolidated Interim Financial Statements, unless otherwise indicated, all dollar amounts are presented and expressed in United States (U.S.) dollars, which is the Company’s functional currency. All references to $ are to United States dollars and references to C$ are to Canadian dollars and all values are rounded to the nearest thousand except when otherwise indicated.

The Company has classified its cash and cash equivalents as assets at fair value through profit or loss and its convertible debentures as financial liabilities at fair value through profit or loss, which are both measured at fair value with changes being recognized through earnings. Accounts receivable and restricted cash are classified as loans and receivables; accounts payable and accrued liabilities, and long-term debt are classified as other liabilities, all of which are measured initially at fair value, then at amortized cost after initial recognition.

The carrying values and fair values of financial assets and liabilities are summarized as follows:



	March 31, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
Classification (000s)	Value		Value		Value		Value
Financial assets at fair value through profit or loss	$	122,031	$	122,031	$	126,910	$	126,910
Loans and receivables	23,263		23,263		23,789		23,789
Financial liabilities at fair value through profit or loss	66,506		66,506		63,848		63,848
Other liabilities	17,995		17,995		16,497		16,497

Assets and liabilities at March 31, 2016 that are measured at fair value are classified into levels reflecting the method used to make the measurements. Fair values of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Assets and liabilities in Level 2 include valuations using inputs other than quoted prices for which all significant inputs are observable, either directly or indirectly. Level 3 valuations are based on inputs that are unobservable and significant to the overall fair value measurement.

The Company’s cash and cash equivalents and convertible debentures are assessed on the fair value hierarchy described above. TransGlobe’s cash and convertible debentures are classified as Level 1. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy level. There were no transfers between levels in the fair value hierarchy in the period.

Credit risk is the risk of loss if the counter-parties do not fulfill their contractual obligations. The Company’s exposure to credit risk primarily relates to accounts receivable, the majority of which are in respect of oil operations. The Company extends unsecured credit to the Egyptian General Petroleum Corporation ("EGPC") and therefore the collection of amounts from EGPC may be affected by changes in economic or other conditions. The Company has not experienced any material credit losses in the collection of accounts receivable to date.

Trade and other receivables are analyzed in the table below. The majority of these receivables are due from the EGPC. The political transition and resultant economic malaise in the country that began in 2011 resulted in irregular collection of accounts receivable from EGPC and generally a larger receivable balance, which increased TransGlobe's credit risk. Despite these factors, the Company expects to collect in full all receivables outstanding from EGPC.

In January 2015, TransGlobe began direct sales of Eastern Desert entitlement production to international buyers. The Company completed three separate direct crude shipments to third party buyers in 2015, and one shipment in the first quarter of 2016. Buyers are required to post irrevocable letters of credit to support the sales prior to the cargo liftings. TransGlobe's credit risk has been reduced substantially as a result of the direct sale of its crude oil to third parties.

Selling costs include transportation and marketing costs associated with the direct sale of the Company's Egyptian crude oil production to third party buyers. The Company completed one direct crude sale to a third party buyer during the first quarter of 2016, and three direct crude sales to a third party buyer during the year ended December 31, 2015.

10. PROPERTY AND EQUIPMENT



	Petroleum		Other
(000s)	Properties		Assets		Total
Balance at December 31, 2015	$	545,551	$	13,957	$	559,508
Additions	2,313		323		2,636
Balance at March 31, 2016	$	547,864	$	14,280	$	562,144

Accumulated depletion, depreciation, amortization and impairment losses at December 31, 2015	$	388,954	$	8,990	$	397,944
Depletion, depreciation and amortization for the period	6,977		334		7,311
Balance at March 31, 2016	$	395,931	$	9,324	$	405,255

The Company’s interest-bearing loans and borrowings are measured at amortized cost. As at March 31, 2016, the only significant interest-bearing loans and borrowings related to the Borrowing Base Facility, under which the Company has borrowing capacity of $37.2 million. The Borrowing Base Facility has a term that extends to December 31, 2017, and is secured by a pledge over certain bank accounts, a pledge over the Company’s subsidiaries and a fixed and floating charge over certain assets. The credit facility bears interest at the LIBOR rate plus an applicable margin, which ranges from 5.0% to 5.5% and is dependent on the amount drawn. The Company incurs standby interest charges on amounts available but not drawn under the Borrowing Base Facility, which significantly impacts the effective interest rate in periods when there are small or no borrowings under the facility. The amount of the Borrowing Base may fluctuate over time and is determined principally by the net present value of the Company’s Proved and Probable reserves over the term of the Borrowing Base Facility, up to a pre-defined commitment amount which is subject to pre-determined semi-annual reductions in accordance with the terms of the Borrowing Base Facility. Accordingly, for each balance sheet date, the timing of repayment is estimated based on the most recent redetermination of the Borrowing Base and repayment schedules may change in future periods.

Deferred financing costs related to the Borrowing Base Facility have been presented as an asset on the Company's Condensed Consolidated Interim Balance Sheets as at March 31, 2016 and December 31, 2015 since there were no amounts drawn on the Borrowing Base Facility as at these dates. Deferred financing costs are amortized based on the borrowing capacity available in the Borrowing Base Facility.

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$13.63 per common share. The debentures were not redeemable by the Company on or before March 31, 2015 other than in limited circumstances described below or 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$17.04 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. 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.

The convertible debentures are classified as financial instruments at fair value through profit or loss, and as such are measured at fair value with changes in fair value included in earnings. Fair value is determined based on market price quotes from the exchange on which the convertible debentures are traded as at the period end date. As at March 31, 2016 the convertible debentures were trading at a price of C$88.25 for a

Pursuant to the PSC for North West Gharib in Egypt, the Company has a minimum financial commitment of $35.0 million ($8.2 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 March 31, 2016, the Company had expended $26.8 million towards meeting that commitment. The Company has received a six month extension to the initial exploration period, which now extends to May 7, 2017.

Pursuant to the PSC for South East Gharib in Egypt, the Company has a minimum financial commitment of $7.5 million ($2.0 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 March 31, 2016, the Company had expended $5.5 million towards meeting that commitment.

Pursuant to the PSC for South West Gharib in Egypt, the Company has a minimum financial commitment of $10.0 million ($4.8 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 March 31, 2016, the Company had expended $5.2 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 March 31, 2016, the Company had met its financial commitment.

Pursuant to the PSC for North West Sitra in Egypt, the Company has a minimum financial commitment of $10.0 million ($9.8 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 commenced on January 8, 2015. As at March 31, 2016, the Company had expended $0.2 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.



	Three months ended			Year ended
	March 31, 2016			December 31, 2015
000’s	Shares	Amount		Shares		Amount
Balance, beginning of period	72,206	$	152,084	75,240		$	164,006
Purchase of common shares	—	—		(3,104	)	(12,221		)
Stock options exercised	—	—		70		208
Share-based compensation on exercise	—	—		—		91
Balance, end of period	72,206	$	152,084	72,206		$	152,084

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. The NCIB, which commenced on March 31, 2015 and terminated on March 30, 2016, provided the Company the right to acquire up to 6,207,585 common shares, which was equal to 10% of the public float.

During the quarter ended March 31, 2016, TransGlobe did not repurchase any common shares. In 2015, the Company repurchased and cancelled 3,103,792 common shares. The cost of shares repurchased (including transaction costs) was applied directly against share capital in the periods in which the respective repurchase transactions were settled.

The Company operates a stock option plan (the “Plan”) to provide equity-settled share-based remuneration to directors, officers and employees. The number of common shares that may be issued pursuant to the exercise of options awarded under the Plan and all other Security Based Compensation Arrangements of the Company is 10% of the common shares outstanding from time to time. All incentive stock options granted under the Plan have a per-share exercise price equal to the weighted average trading price of the common shares for the five trading days prior to the date of grant. Each tranche of an award with different vesting dates is considered a separate grant for the calculation of fair value and the resulting fair value is amortized over the vesting period of the respective tranches.

The following table summarizes information about the stock options outstanding and exercisable at the dates indicated:



	Three months ended			Year ended
	March 31, 2016			December 31, 2015
			Weighted-			Weighted-
	Number		Average	Number		Average
	of		Exercise	of		Exercise
(000s except per share amounts)	Options		Price (C$)	Options		Price (C$)
Options outstanding, beginning of period	5,348		9.05	6,027		9.58
Granted	1,470		2.19	1,024		4.99
Exercised	—		—	(70	)	3.64
Forfeited	(54	)	11.84	(896	)	9.73
Expired	(100	)	13.19	(737	)	8.35
Options outstanding, end of period	6,664		7.42	5,348		9.05
Options exercisable, end of period	3,456		10.38	3,075		10.75

Compensation expense of $0.4 million was recorded in general and administrative expenses in the Condensed Consolidated Interim Statements of Earnings (Loss) and Comprehensive Income (Loss) and Changes in Shareholders’ Equity during the period ended March 31, 2016 (2015 - $0.8 million) in respect of equity-settled share-based payment transactions. The fair value of all common stock options granted is estimated on the date of grant using the lattice-based trinomial option pricing model.

All options granted vest annually over a three-year period and expire five years after the grant date. During the period ended March 31, 2016, no stock options were exercised (2015 – 70,000). The fair value related to stock options exercised in the first quarter of 2015 was $0.1 million at time of grant and was transferred from contributed surplus to share capital. As at March 31, 2016 and December 31, 2015, the entire balance in contributed surplus was related to previously recognized share-based compensation expense on equity-settled stock options.

In May 2014, the Company implemented a restricted share unit ("RSU") plan, a performance share unit ("PSU") plan and a deferred share unit ("DSU") plan. RSUs may be issued to directors, officers and employees of the Company, and each RSU entitles the holder to a cash payment equal to the fair market value of a TransGlobe common share on the vesting date of the RSU. All RSUs granted vest annually over a three-year period, and all must be settled within 30 days of their respective vesting dates.

PSUs are similar to RSUs, except that the number of PSUs that ultimately vest is dependent on achieving certain performance targets and objectives as set by the board of directors. Depending on performance, vested PSUs can range between 50% and 150% of the original PSU grant. All PSUs granted vest on the third anniversary of their grant date, and all must be settled within 60 days of their vesting dates.

An immaterial compensation expense recovery was recorded in general and administrative expenses in the Condensed Consolidated Interim Statement of Earnings (Loss) and Comprehensive Income (Loss) and Changes in Shareholders' Equity during the three month period ended March 31, 2016 (2015 - expense of $0.2 million) in respect of share units granted under the three plans described above. The expense related to the share units granted under these plans is measured at fair value using the lattice-based trinomial pricing model and is recognized over the vesting period, with a corresponding liability recognized on the Condensed Consolidated Interim Balance Sheet. Until the liability is ultimately settled, it is re-measured at each reporting date with changes to fair value recognized in earnings.

In calculating the earnings per share, basic and diluted, the following weighted-average shares were used:



	Three months ended March 31
(000s)	2016	2015
Weighted-average number of shares outstanding	72,206	75,263
Dilutive effect of convertible debentures	—	6,879
Weighted-average number of diluted shares outstanding	72,206	82,142

In determining diluted earnings per share, the Company assumes that the proceeds received from the exercise of “in-the-money” stock options are used to repurchase common shares at the average market price. In calculating the weighted-average number of diluted common shares outstanding for the period ended March 31, 2016, the Company excluded all 6,664,353 stock options (2015 – 5,426,300) as their exercise price was greater than the average common share market price in the period.

The convertible debentures are dilutive in any period in which earnings per share is reduced (or loss per share is increased) by the effect of adjusting net earnings or loss for the impact of the convertible debentures, and adjusting the weighted-average number of shares outstanding for the potential shares issuable on conversion of the convertible debentures.

Changes in non-cash working capital consisted of the following:



	Three months ended March 31
(000s)	2016		2015
Operating Activities
(Increase) decrease in current assets
Accounts receivable	$	527	$	26,147
Prepaids and other	541		3,590
Product inventory¹	1,823		(1,836		)
Increase (decrease) in current liabilities
Accounts payable and accrued liabilities	1,365		(6,565		)
	$	4,256	$	21,336
Note:
¹ The change in non-cash working capital associated with product inventory represents the change in operating costs capitalized as product inventory in the respective periods.



“Ross G. Clarkson”	“Fred J. Dyment”

Ross G. Clarkson	Fred J. Dyment
President and CEO	Director
Director



(000s)
Trade receivables at March 31, 2016
Neither impaired nor past due	$	145
Impaired	—
Not impaired and past due in the following period
Within 30 days	—
31-60 days	—
61-90 days	—
Over 90 days	22,257



Net Book Value
At December 31, 2015	$	156,597	$	4,967	$	161,564
At March 31, 2016	$	151,933	$	4,956	$	156,889



	Restricted		Performance		Deferred
	Share		Share		Share
(000s)	Units		Units		Units
Units outstanding, beginning of period	545		710		270
Exercised	(28	)	—		—
Forfeited	(40	)	(8	)	—
Units outstanding, end of period	477		702		270



Investing Activities
Increase (decrease) in current liabilities
Accounts payable and accrued liabilities	$	1,214	$	(10,848	)
	$	1,214	$	(10,848	)



Q1-2016		1



2		Q1-2016



Q1-2016		3



4		Q1-2016