Transglobe Energy Expands 2006 Capital Budget

TransGlobe Energy announces an expanded 2006 capital budget and operational update.


TransGlobe has increased the 2006 capital budget to US$54 million, up from the initial budget of US$45 million. The increases are:

- A 610 square kilometer 3-D seismic program in the southern area of Block S-1, Republic of Yemen. This is expected to start recording in July 2006 with completion in Q-2 2007.

- Completion of work on the Block S-1 Central Production Facility ("CPF") to expand the capacity from the current 11,500 Bopd to 15,000 Bopd, with increased gas injection.

- Installation of an early production system at the Godah discovery on Block 32. Republic of Yemen. This will allow production of 2,000 to 4,000 Bopd (275 to 550 Bopd to TransGlobe) commencing in Q-4 2006. In addition, a 14 mile (23 km) 10 inch pipeline will be constructed to connect the Godah field to the Tasour CPF. A facility expansion of the Tasour CPF will be carried out to allow development of the Godah field in mid 2007.

The expanded 2006 budget is anticipated to be funded entirely from cash flow and working capital. In addition the Company has recently expanded its credit facility to US $25 million (undrawn).


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

The An Nagyah #22 lower Lam B appraisal well has reached a total depth of 2,171 meters and been suspended as a potential Lam B oil producer or water injection well, having encountered both oil and water bearing sands in the horizontal section. The rig is scheduled to move to Wadi Bayhan to drill an exploration well on the western side of the block. The Wadi Bayhan location is an Alif and Lam prospect with an underlying Basement structure. The well is planned to be drilled into the Basement structure and therefore will test three independent targets. It is expected that up to ten wells will be drilled on Block S-1 during 2006. In addition, the partners have approved a new 610 km2 3-D seismic acquisition program on the south/east part of the Block. It is expected the seismic program will commence in July.

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

The partnership has approved the development of the recently discovered Godah field. The operator plans to install a temporary early production system and to commence production during the fourth quarter of 2006 at initial rates of 2,000 to 4,000 Bopd (275 to 550 Bopd to TransGlobe). In addition the partnership has approved the construction of the permanent facilities required to develop the Godah field. The development consists of a 14 mile (23 km) 10 inch pipeline to the Tasour CPF and expansion of the Tasour CPF to process the Godah oil. The pipeline and expanded Tasour facilities could be operational by mid 2007.

A two well drilling program is scheduled to commence in late June. The first well will be Tasour #22, a Qishn/Sarr test, offsetting the Tasour #21 Qishn oil well which was drilled in April, 2006. The second well will be the Godah #3 appraisal well targeting the Qishn formation. In addition, an exploration well is planned to be drilled at Tasour #23 in August. Tasour #23 is targeting a fractured basement prospect south of the Tasour field.

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

The 255 km of new 2-D seismic data acquired at the end of 2005 is being processed, along with 500 km of existing 2-D seismic data. Interpretation and mapping is expected to be completed during the summer of 2006. A two well exploration program is scheduled to commence drilling in the fourth quarter of 2006.

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

The 800 km of 2-D seismic data acquired during the first quarter of 2006 is being processed. It is expected that the new data will be available for interpretation and mapping by the end June. TransGlobe is preparing for a two well exploration drilling program to commence in late 2006. Production casing, wellheads and other long lead items have been ordered with deliveries scheduled for early in the fourth quarter. It is expected that the availability of a suitable drilling rig will determine when drilling commences.

The Company has exceeded the Period One work commitments of $2.0 million and elected to proceed with the next three year exploration period starting on July 18, 2006. There is a mandatory relinquishment of 25% of the Block at the end of Period One which will reduce the concession to approximately 5.5 million acres.


Subsequent to spring breakup, the Company has drilled four wells resulting in two gas and two potential oil wells. The wells were drilled in the Nevis, Morningside and Twining areas. Currently the Company is drilling wells at Nevis and Thorsby. It is expected that an additional three to four wells will be drilled by the end of the quarter, primarily in the Nevis area. In addition, the Company has filed applications to drill four coalbed methane ("CBM") wells per section in the Nevis area. It is expected that the Nevis CBM drilling program (10-12 wells) will commence in the third quarter.


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