Depletion, depreciation and amortization for the period includes amounts capitalized to product inventory for barrels produced but not sold in the period.

At September 30, 2021 indicators of impairment reversal were present on the Company’s PNG assets in the West Gharib, West Bakr, North West Gharib and Canada cash-generating units (“CGU”) due to an increase and stabilization in forecasted commodity prices. As a result of the indicators of impairment reversal, the Company performed impairment reversal calculations at September 30, 2021 on the identified CGUs based on fair value less costs to sell (fair value hierarchy Level 3), using estimated

after-tax

cash discounted cash flows on proved plus probable reserves. The Company used a discount rate of 15% for Egypt and 10% for Canada and the following commodity price estimates:



TRANSGLOBE ENERGY CORPORATION		TSX & AIM: TGL NASDAQ: TGA


	Egypt 1						Canada 1
	Brent Crude Oil		WTI Oil		AECO Gas		Edmonton Pentane		Edmonton Butane		Edmonton Propane		Spec Ethane		Exchange Rate
Year	$/Bbl		$/Bbl		$C/Mcf		$C/Bbl		$C/Bbl		$C/Bbl		$C/Bbl		USD/CAD
2021		70.30		67.33		3.52		96.20		78.47		65.84		13.69		0.790
2022		75.00		72.00		3.75		91.19		59.87		47.04		12.16		0.795
2023		72.51		69.01		3.20		85.01		48.38		32.26		10.26		0.800
2024		71.24		67.24		2.99		82.78		46.96		31.31		9.56		0.800
2025		72.66		68.58		3.05		84.42		47.90		31.94		9.77		0.800
2026		74.12		69.96		3.12		86.12		48.86		32.57		9.98		0.800
2027		75.59		71.35		3.17		87.84		49.84		33.23		10.18		0.800
2028		77.11		72.78		3.24		89.60		50.83		33.89		10.41		0.800
2029		78.66		74.24		3.31		91.39		51.85		34.57		10.63		0.800
2030		80.22		75.72		3.37		93.22		52.89		35.26		10.86		0.800
Thereafter 2		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		0.800

GLJ Petroleum Consultants Ltd. (“GLJ”) price forecasts, effective October 1, 2021.

Percentage change represents the increase in each year after 2030 to the end of the reserves life.

Based on the results of the impairment reversal calculations completed, recoverable amounts were determined to be greater than the carrying values of the CGUs tested resulting in $31.5 million of impairment reversal being

recorded:


CGU	2021 1			2020
West Gharib		(20,527	)		24,769
West Bakr		(4,615	)		6,610
North West Gharib		(3,028	)		4,596
Canada		(3,351	)		4,061

Total		(31,521	)		40,036

The impairment reversal for all CGUs was limited to total accumulated impairments less subsequent depletion.

At December 31, 2021, there were no impairment indicators present on the Company’s D&P assets.

The collapse in commodity prices during the first quarter of 2020 and the resulting impact to the Company resulted in an increase in the market capitalization deficit from December 31, 2019 which led the Company to conclude there were indicators of impairment present on its petroleum and natural gas (“PNG”) assets as at March 31, 2020.

Impairment tests were carried out at March 31, 2020 on all of its cash-generating units (“CGU”) and were based on fair value less costs to sell calculations (fair value hierarchy Level 3), using estimated after-tax cash discounted cash flows on proved plus probable reserves. The Company used discount rates based on a calculated cost of capital of 15% in Egypt and 11% in Canada along with the following commodity price estimates:


	Egypt 1						Canada 1
	Brent Crude Oil		WTI Oil		AECO Gas		Edmonton Pentane		Edmonton Butane		Edmonton Propane		Spec Ethane		Exchange Rate
Year	$/Bbl		$/Bbl		$C/Mcf		$C/Bbl		$C/Bbl		$C/Bbl		$C/Bbl		USD/CAD
2020		34.00		30.00		1.95		37.47		21.23		9.61		5.99		0.720
2021		45.50		41.00		2.25		52.05		33.08		19.18		7.01		0.730
2022		52.50		47.50		2.35		61.56		39.52		25.41		7.36		0.735
2023		57.50		52.50		2.45		68.92		45.57		28.89		7.71		0.740
2024		62.50		57.50		2.55		75.84		50.99		32.32		8.05		0.745
2025		62.95		58.95		2.65		77.27		52.02		32.97		8.39		0.750
2026		64.13		60.13		2.70		78.84		53.14		33.68		8.57		0.750
2027		65.33		61.33		2.76		80.44		54.27		34.40		8.76		0.750
2028		66.56		62.56		2.81		82.08		55.44		35.14		8.94		0.750
2029		67.81		63.81		2.87		83.75		56.62		35.89		9.13		0.750
Thereafter 2		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		+2.0%/yr		0.750

GLJ Petroleum Consultants Ltd. (“GLJ”) price forecasts, effective April 1, 202

Percentage change represents the increase in each year after 2029 to the end of the reserves life.

The 2020 impairment losses were recorded in Q1-2020 to reduce the carrying value of these PNG assets to their recoverable amounts, which was

$23.8

million in West Gharib, $55.0 million in West Bakr, $nil in North West Gharib and

$60.0

million in Canada as at March 31, 2020. There were no further impairment losses recorded in the fiscal year ending December 31, 2020.

The following table discloses the carrying amount and depreciation charge for

right-of-use

assets by the class of underlying asset as at and for the year ended December 31, 2021:


($000s)	PNG Assets			Other Assets			Total
Net book value at January 1, 2020		374			1,285			1,659
Increase in right-of-use assets		1650			49			1,699
Depreciation for the year		(581	)		(937	)		(1,518	)

Net book value at December 31, 2020		1,443			397			1,840
Increase in right-of-use assets		-			536			536
Depreciation for the year		(1,067	)		(687	)		(1,754	)

Net book value at December 31, 2021		376			246			622