20FR12G

As filed with the Securities and Exchange Commission on August 14, 2006

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

x REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended             

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

For the transition period from              to             

Commission file number             

TRANSATLANTIC PETROLEUM CORP.

(Exact name of registrant as specified in its charter)

Alberta, Canada

(Jurisdiction of incorporation or organization)

Suite 1840, 444 – 5^th Ave., SW, Calgary, Alberta T2P 2T8

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act. None

Securities registered pursuant to Section 12(g) of the Act:

Title of Class:

Common Stock Without Par Value

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report – 37,659,189 as of December 31, 2005.

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ¨  Yes    x  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    ¨  Yes    ¨  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ¨  Yes    x  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨    Accelerated Filer  ¨    Non-accelerated Filer  x

Indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  x    Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    ¨  No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    ¨  Yes    ¨  No

TABLE OF CONTENTS

Part I.
Item 1.	Identity of Directors, Senior Management and Advisers	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	9
Item 4A.	Unresolved Staff Comments	25
Item 5.	Operating and Financial Review and Prospects	25
Item 6.	Directors, Senior Management and Employees	33
Item 7.	Major Shareholders and Related Party Transactions	38
Item 8.	Financial Information	39
Item 9.	The Offer and Listing	39
Item 10.	Additional Information	41
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 12.	Description of Securities Other than Equity Securities	52
Part II.
Item 13.	Defaults, Dividend Arrearages and Delinquencies	53
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	53
Item 15.	Controls and Procedures	53
Item 16.	[Reserved]	53
Item 16(A).	Audit Committee Financial Expert	53
Item 16(B).	Code of Ethics	53
Item 16(C).	Principal Accountant Fees and Services	53
Item 16(D).	Exemption from the Listing Standards for Audit Committees	53
Item 16(E).	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	53
Part III.
Item 17.	Financial Statements	53
Item 18.	Financial Statements	55
Item 19.	Exhibits	55

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PART I.

Item 1. Identity of Directors, Senior Management and Advisors

A.	Directors and Senior Management
	Name	Business Address	Functions
	Michael D. Winn	Suite 1840, 444 – 5th Ave., SW Calgary, Alberta T2P 2T8	Director
	Brian B. Bayley	Suite 1840, 444 – 5th Ave., SW Calgary, Alberta T2P 2T8	Director
	Alan C. Moon	Suite 1840, 444 – 5th Ave., SW Calgary, Alberta T2P 2T8	Director
	Scott C. Larsen	5910 N. Central Expressway, Suite 1755 Dallas, Texas 75206	President, Chief Executive Officer and Director
	Christopher H. Lloyd	5910 N. Central Expressway, Suite 1755 Dallas, Texas 75206	Chief Financial Officer
B.	Advisers
	Name	Business Address	Position
	Macleod Dixon LLP	3700 Cantera Tower 400 Third Avenue SW Calgary, Alberta T2P 4H2	Canadian legal counsel
	Jenkens & Gilchrist	1445 Ross Ave., Suite 3700 Dallas, Texas 75202	United States legal counsel
C.	Auditors
	Name	Business Address	Professional Body Membership
	KPMG LLP	Suite 2500, Bow Valley Square II 205 – 5th Ave., SW Calgary, Alberta T2P 4B9	Institute of Chartered Accountants of Alberta and the Canadian Institute of Chartered Accountants

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

A. Selected Financial Data

The selected consolidated financial data presented in the table below for the five fiscal years ended December 31, 2005 is derived from our consolidated financial statements and is denominated in U.S. dollars. Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in Canada. This data includes our accounts and our wholly-owned subsidiaries’ accounts. The following selected financial data is qualified by reference to, and should be read in conjunction with, our consolidated financial statements and related notes. We follow the full cost method of accounting for oil and gas operations.

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The selected financial data for the years ended December 31, 2005, 2004 and 2003 was derived from our financial statements, which have been audited by KPMG LLP, Chartered Accountants, as indicated in their audit report which is included elsewhere in this registration statement. The selected financial data for the years ended December 31, 2002 and 2001 was derived from our audited financial statements, which are not included in this registration statement. The selected financial data for the quarters ended March 31, 2006 and 2005 was derived from our interim financial statements, which are unaudited.

We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Our present policy is to retain future earnings for use in our operations and the expansion of our business.

Selected Financial Data Presented According to Canadian GAAP

(In thousands of U.S. dollars, except per share data)

	Quarter Ended March 31, (unaudited)			Year Ended December 31,
	2006		2005	2005		2004		2003		2002	2001
Revenue	556		282	1,409		5,108		8,494		36,531	26,791
Net income (loss)	1,128		105	(3,773	)	(5,193	)	(584	)	5,957	(5,860	)
Net income (loss) per share basic and diluted	(0.03	)	0.00	(0.11	)	(0.17	)	(0.02	)	0.25	(0.30	)
Cash dividends per share	—		—	—		—		—		—	—
Weighted average shares (000’s)	37,663		32,146	33,023		30,908		23,831		23,803	18,430
Ending shares outstanding (000’s)	37,672		32,072	37,659		31,852		23,831		23,830	23,725
Total assets	17,207		15,907	18,927		16,048		12,391		14,504	7,301
Long term liabilities	570		159	556		155		132		—	—
Shareholders’ equity	14,822		14,864	15,936		14,713		11,672		12,099	6,126
Capital expenditures (net)	381		372	4,839		1,551		1,245		107	1,338

Selected Financial Data Presented According to U.S. GAAP

(In thousands of U.S. dollars, except per share data)

	Year Ended December 31,
	2005		2004		2003
Revenue	1,409		5,108		8,494
Net income (loss)	(3,722	)	(5,289	)	(726	)
Net income (loss) per share basic and diluted	(0.11	)	(0.17	)	(0.03	)
Cash dividends per share	—		—		—
Weighted average shares (000’s)	33,023		30,908		23,831
Ending shares outstanding (000’s)	37,659		31,852		23,831
Total assets	18,868		15,791		—
Long term liabilities	556		155		—
Shareholders	15,749		14,475		—
Capital expenditures (net)	4,839		1,551		—

B. Capitalization and Indebtedness

The following table sets forth our capitalization and indebtedness as at June 15, 2006 and is qualified by reference to, and should be read in conjunction with, our consolidated financial statements and related notes.

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Capitalization and Indebtedness

(In thousands of U.S. dollars)

(unaudited)

	June 15, 2006
Indebtedness
Accounts payable and accrued liabilities	1,158
Settlement provision	961
Asset retirement obligations	582
Total Indebtedness	2,701
Shareholders’ equity
Share capital	20,644
Warrants	760
Contributed surplus	4,488
Deficit	(11,878)
Net shareholders’ equity	14,014

C. Reasons for the Offer and Use of Proceeds

Not Applicable

D. Risk Factors

This section describes some of the risks and uncertainties faced by us. The factors below should be considered in connection with any forward looking statements in this registration statement. The risk factors described below are considered to be the significant or material ones, but they are not the only risks faced by us.

Competition. The oil and gas industry is highly competitive. We experience competition in all aspects of our business, including searching for, developing and acquiring reserves, obtaining pipeline and processing capacity, leases, licenses and concessions, and obtaining the equipment and labor needed to conduct operations and market crude oil and natural gas. Our competitors include multinational energy companies, other independent crude oil and natural gas concerns and individual producers and operators. Many competitors have financial and other resources substantially greater than those available to us and, accordingly, may be better positioned to acquire and exploit prospects, hire personnel and market production. In addition, many of our larger competitors may be better able to respond to factors such as changes in worldwide crude oil and natural gas prices, levels of production, the cost and availability of alternative fuels or the application of government regulations. We expect a high degree of competition to continue.

Government Regulation and Environmental Matters. We are subject to various

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federal and state laws and regulations, including environmental laws and regulations in each jurisdiction in which we operate. We believe that we are in substantial compliance with such laws and regulations; however, such laws and regulations may change in the future in a manner that will increase the burden and cost of compliance. In addition, we could incur significant liability for damages, clean up costs and penalties in the event of certain discharges into the environment. Certain laws and governmental regulations may impose liability on us for personal injuries, clean-up costs, environmental damages and property damages, as well as administrative, civil and criminal penalties. Although we believe that cost of compliance with environmental regulations will not have a material adverse effect on our operations or earnings, risks of substantial costs and liabilities are inherent in oil and gas operations, and there can be no assurance that significant costs and liabilities, including criminal penalties, will not be incurred. Moreover, it is possible that other developments, such as stricter environmental laws and regulations, and claims for damages for injuries to property or persons resulting from our operations could result in substantial costs and liabilities. Some of the regulations that apply to us in the United States, where we have field operations, include the Resource Conservation and Recovery Act and comparable state statutes, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act, the Occupational Safety and Health Act and comparable state statutes, the Oil Pollution Act 1990, the Water Pollution Control Act of 1972, the Safe Drinking Water Act and the Toxic Substances Control Act. We are unable to estimate the costs to be incurred for compliance with environmental laws over the next twelve months, however, management believes all such costs will be those ordinarily and customarily incurred in the development and production of oil and gas and that no unusual costs will be encountered.

Exploration and Production Regulations. Our operations in the United States are subject to various types of regulation at the federal, state and local levels. Such regulations include requiring permits for the drilling of wells, maintaining bonding requirements in order to drill or operate wells and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, the plugging and abandoning of wells and the disposal of fluids used or obtained in connection with operations. Our operations are also subject to various conservation regulations. These include the regulation of the size of drilling and spacing units and the density of wells that may be drilled and the unitization or pooling of oil and gas properties. In addition, certain state conservation laws may establish maximum rates of production from oil and gas wells, generally prohibit the venting or flaring of gas and impose certain requirements regarding the ratability of production. The effect of these regulations is to limit the amount of oil and gas which can be produced from wells in which we hold interest and may limit the number of wells or the locations at which wells can be drilled. The extent of any impact on our operations of such restrictions cannot be predicted.

International Operations. We are actively pursuing oil and gas opportunities in several foreign countries. International crude oil and natural gas exploration, development and production activities are subject to political and economic uncertainties (including but not limited to changes, sometimes frequent or material, in governmental energy policies or the personnel administering them), expropriation of property, cancellation or modification of contract rights, foreign exchange restrictions, currency fluctuations, royalty and tax increases, limits on allowable levels of production and other risks arising out of foreign governmental sovereignty over the areas in which our operations will be conducted, as well as risks of loss due to civil

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strife, terrorism, acts of war and insurrection. These risks may be higher in developing countries in which we may conduct such activities. Our international operations may also be adversely affected by laws and policies of Canada or the United States affecting foreign trade, taxation and investment. Consequently, our international exploration, development and production activities may be substantially affected by factors beyond our control, any of which could materially adversely affect our financial position or results of operations. Furthermore, in the event of a dispute arising from international operations, we may be subject to the exclusive jurisdiction of courts outside the United States or Canada or may not be successful in subjecting persons to the jurisdictions of the courts in the United States or Canada, which could adversely affect the outcome of such dispute.

Dependence on Key Personnel. We depend to a large extent on the services of Scott C. Larsen, our President and Chief Executive Officer, Dr. David Campbell, our International Exploration Manager and Dr. Weldon Beauchamp, our Consulting Geophysicist/Geologist. The loss of the services of any of these individuals could have a potential adverse effect on our operations. We have entered into an employment agreement with Mr. Larsen and a long-term consulting agreement with Dr. Campbell, and we maintain key man insurance on Mr. Larsen. We are negotiating a long-term consulting arrangement with Dr. Beauchamp.

Ability to Attract Competent Personnel. Recent commodity price increases have driven a substantial increase in oil and gas exploration activities worldwide, with a concurrent rise in demand for competent oil and gas professionals. We are a small company and must compete with larger, better capitalized companies for competent personnel.

Concentration of Producing Properties. Our crude oil and natural gas production is presently concentrated in two properties in the United States: the Bayou Couba property and the South Gillock property. We will be vulnerable to a disproportionate impact of delays or interruptions of production until we develop a more diversified production base. Once we have more producing properties, a disruption in one property will have less of an impact on our overall production. In addition, we are not the operator of the Bayou Couba property. As such, our plans, commitments and obligations are dependent on the operator’s plans and on how well the operator executes such plans.

Insurance and Uninsured Risk. Our business is subject to a number of risks and hazards, including the risk of fire, explosions, equipment failure, abnormally pressured formations, environmental hazards, industrial accidents, changes in the regulatory environment, labor disputes, the occurrence of any of which could result in substantial losses to us due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigation and penalties and suspension of operations. Our insurance will not cover all the potential risks associated with an oil and gas company’s operations. We may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not be available or may not be adequate to cover any resulting liability. There are risks against which we cannot insure or against which we may elect not to insure. We, and the operators of our properties, maintain insurance in accordance with customary industry practices and in amounts that we believe to be reasonable. The occurrence of a significant event that is not fully insured could have a material adverse effect on our results of operation and our financial condition.

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Commodity Price Fluctuations. Our revenues and profitability are substantially dependent upon prevailing prices for crude oil, natural gas and natural gas liquids. For much of the past decade, the markets for crude oil and natural gas have been extremely volatile. These markets are expected to continue to be volatile in the foreseeable future. In general, future prices of crude oil, natural gas and natural gas liquids are dependent upon numerous external factors such as various economic, political and regulatory developments and competition from other sources of energy. The unsettled nature of the energy market and the unpredictability of worldwide political developments, including, for example, the Iraq war and the actions of the Organization of Petroleum Exporting Countries members, make it particularly difficult to estimate future prices of crude oil, natural gas and natural gas liquids.

Exploration Risks. Our results of operations are heavily dependent on how successful we are in the exploration for crude oil and natural gas. Exploration activities involve substantially more risk than development or exploitation activities. Exploratory drilling is a speculative activity. The use of three-dimensional seismic data and other advanced technologies may increase the probability of success of exploratory wells, and reduce the average finding costs through the elimination of prospects that might otherwise be drilled solely on the basis of two-dimensional seismic data and other traditional methods. Even when fully utilized and properly interpreted, three-dimensional seismic data and visualization techniques only assist geoscientists in identifying subsurface structures and hydrocarbon indicators and do not conclusively allow the interpreter to know if hydrocarbons will in fact be present, or present in economic quantities, in such structures. Failure of our exploration activities would have a material adverse effect on our results of operations and financial condition.

Operating Risks. The oil and gas industry involves a variety of operating risks, including the risk of fire, explosion, blowout, pipe failure, casing collapse, stuck tools, abnormally pressured formations and environmental hazards such as oil spills, gas leaks, pipeline ruptures and discharges of toxic gases, the occurrence of any of which could result in substantial losses to us due to injury and loss of life, loss of or damage to well bores and/or drilling or production equipment, costs of overcoming downhole problems, severe damage to and destruction of property, natural resources and equipment, pollution and other environmental damage, clean-up responsibilities, regulatory investigation and penalties and suspension of operations. Gathering systems and processing facilities are subject to many of the same hazards and any significant problems related to those facilities could adversely affect our ability to market our production. Moreover, offshore operations are subject to a variety of operating risks peculiar to the marine environment, such as hurricanes or other adverse weather conditions. The occurrence of a significant event not fully insured or indemnified against could materially and adversely affect our financial condition and results of operations.

Shortage of Supplies and Equipment. Our ability to conduct operations in a timely and cost effective manner is subject to the availability of crude oil and natural gas field supplies, rigs, equipment and service crews. There presently exists a general tightening of supplies, equipment and personnel available to conduct operations in a timely manner. We anticipate this shortage of certain types of supplies and equipment will result in delays in our operations as well as in higher operating and capital costs.

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Drilling and Workover Plans Subject to Change. This registration statement includes descriptions of our future drilling and workover plans with respect to our prospects. A prospect is a property on which our geoscientists have identified what they believe, based on available seismic and geological information, to be indications of hydrocarbons. Our prospects are in various stages of review. Whether or not we ultimately drill a prospect may depend on the following factors: receipt of additional seismic data or reprocessing of existing data; material changes in crude oil or natural gas prices; the costs and availability of drilling equipment; success or failure of wells drilled in similar formations or which would use the same production facilities; availability and cost of capital; changes in the estimates of costs to drill or complete wells; our ability to attract other industry partners to acquire a portion of the working interest to reduce exposure to costs and drilling risks; decisions of our joint working interest owners and operators; and restrictions imposed by governmental agencies. Additionally, due to the significant amount of work done by prior operators on many of the existing wellbores in our older prospects, such as the South Gillock property, we may be subject to unanticipated delays and expenses during the course of any planned workover programs. We will continue to gather data about our prospects, and it is possible that additional information may cause us to alter our drilling and workover schedule or determine that a prospect should not be pursued at all.

Capital Requirements. We will be required to make substantial capital expenditures to develop reserves and to discover new crude oil and natural gas reserves. If our cash and cashflow from operating activities is insufficient to fund such additional expenditures, we may be required to sell equity, issue debt, sell properties or offer interests in the properties to be earned by another party or parties carrying out further exploration or development thereof. There can be no assurance that capital will be available to us from any source or that, if available, it will be at prices or on terms acceptable to us. Should sufficient capital not be available, the development and exploration of our properties could be delayed and, accordingly, the implementation of our business strategy would be adversely affected. If we are unable to meet our share of costs incurred under agreements to which we are a party, our interest in the properties subject to such agreements may be reduced.

Replacement of Reserves. Producing oil and natural gas reservoirs generally are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Our future success depends upon our ability to find, develop and/or acquire crude oil and natural gas reserves at prices that permit profitable operations. Except to the extent that we conduct successful development, exploitation or exploration activities or acquire properties containing proved reserves, our proved reserves will decline.

Estimates of Reserves and Related Data. Numerous uncertainties are inherent in estimating quantities of proved and other reserves of oil and gas and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the producer. The reserve data presented in this registration statement represents only estimates based on available geological, geophysical, production and engineering data, the extent, quality and reliability of which vary. Oil and gas reserve engineering is a subjective process of estimating accumulations of oil and gas that cannot be measured in an exact manner, and estimates of other engineers might differ materially from those shown.

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Additional Capital Contributions and the Exercise of Existing Stock Options and Share Purchase Warrants Could Result in Dilution to Existing Shareholders. We do not know if we will be able to generate material revenue from oil and gas operations. Historically, the primary source of funds available to us has been through the sale of our equity securities. Any future additional equity financing could cause dilution to current stockholders. As of June 30, 2006 we had 3,257,250 share purchase warrants outstanding at an average exercise price of $1.04 per share. We have granted to some or all of our key employees, directors and consultants options to purchase common shares as non-cash incentives. As of June 30, 2006 we had 2,685,000 share purchase options outstanding at an average exercise price of $0.76 per share. If all of the share purchase warrants and share purchase options were exercised, the number of common shares issued and outstanding would increase from 37,936,939 (as of June 30, 2006) to 43,879,189. This represents an increase of 15.6% in the number of shares issued and outstanding and would result in significant dilution to current shareholders.

Limited and Volatile Trading Volume. Although our shares trade on the Toronto Stock Exchange, the volume of trading has been limited and volatile in the past and is likely to continue to be so in the future, making it difficult for investors to readily sell their shares in the open market. Without a liquid market for the our shares, investors may be unable to sell their shares at favorable times and prices and may be required to hold their shares in declining markets or to sell them at unfavorable prices. Our shares do not trade on an established market in the United States and we cannot make any assurances that our shares will ever trade in such a market, or if they do so trade, that a United States market for our shares will be sustained.

Volatility of Share Price. The market price of many resource companies, particularly resource exploration companies like us, have experienced wide fluctuations in price, resulting in substantial losses to investors who have sold their shares at a low price point. These fluctuations are based only in part on the level of progress of exploration, and can reflect general economic and market trends, world events or investor sentiment, and may sometimes bear no apparent relation to any objective factors or criteria. From January 1, 2006 through June 30, 2006, our price per share has fluctuated between a low of $0.82 and a high of $1.35. Significant fluctuation in our share price is likely to continue, and could potentially increase, in the future.

Dividend Policy. No dividends on our common shares have been paid to date. We currently plan to retain all future earnings and other cash resources, if any, for the future operation and development of our business. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition, and current and anticipated cash needs.

Future Sales of Common Shares by Existing Shareholders. Sales of a large number of our common shares in the public markets, or the potential for such sales, could decrease the trading price of the common shares and could impair our ability to raise capital through future sales of common shares.

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Difficulty for U.S. Investors to Effect Service of Process. We are incorporated under the laws of the Province of Alberta, Canada. Consequently, it will be difficult for United States investors to effect service of process in the United States upon our directors or officers, or to realize in the United States upon judgments of United States’ courts predicated upon civil liabilities under the Exchange Act. Half of our directors are residents of Canada, and a significant portion of our assets are located outside of the United States. A judgment of a United States court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely upon such civil liabilities.

Conflicts of Interest. There may be potential conflicts of interest for certain of our officers and directors who are or may become engaged from time to time in the crude oil and natural gas business on their own behalf or on behalf of other companies with which they may serve in the capacity as directors or officers. Certain of our independent directors are officers and/or directors of other publicly traded crude oil and natural gas exploration and production companies.

Title to Properties. Title to oil and gas properties is subject to royalty, overriding royalty, carried, net profits, working and other similar interests and contractual arrangements customary in the industry, to liens for current taxes not yet due and to other encumbrances. As is customary in the industry in the case of undeveloped properties, only cursory investigation of record title is made at the time of acquisition. Drilling title opinions are usually prepared before commencement of drilling operations. Although the Company has no basis to believe that such will occur, there can be no assurance that our title to oil and gas properties may not be challenged through legal proceedings.

Item 4. Information on the Company

A. History and Development of the Company

Incorporation, Amalgamation and Name Change. Our predecessor corporation, Profco Resources Ltd. (“Profco”), was incorporated under the laws of British Columbia on October 1, 1985 and continued under the Business Corporations Act (Alberta) on June 10, 1997. We filed articles of amalgamation on January 1, 1999 under the Business Corporations Act (Alberta) in order to amalgamate with GHP Exploration Corporation, a corporation continued under the laws of Alberta from the Territory of Yukon. By articles of amendment effective December 2, 1998, Profco changed its name to TransAtlantic Petroleum Corp.

Contact Information. Our head office is located at Suite 1840, 444 — 5th Ave. SW., Calgary, Alberta, T2P 2T8. Our registered office is located at 3700, 400-3rd Ave. SW, Calgary, Alberta T2P 4H2. The telephone number at our head office is (403) 262-8556. Certain of our activities are conducted out of the office of our wholly owned subsidiary, TransAtlantic Petroleum (USA) Corp., located at Suite 1755, 5910 N. Central Expressway, Dallas, Texas, 75206. Our internet address is www.tapcor.com. Our contact person is Scott C. Larsen, President and Chief Executive Officer.

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Development of Our Business. We are in the business of exploring, developing and producing crude oil and natural gas properties. Until 2003, we concentrated our efforts on properties located onshore and offshore Africa. In 1993, we acquired a 30% interest in Oil Mining License 109 (“OML 109”), a 215,000 acre concession located offshore Nigeria. We successfully drilled a discovery well in 1994 and an appraisal well in 1995 in the Ejulebe field on OML 109, and contracted with a service provider to develop the field. Production began in September 1998, and the Ejulebe field has produced approximately 11 million bbls. of crude oil as of December 2005 (an estimated greater than 50% recovery of oil in place).

Following our participation in OML 109, we drilled several unsuccessful exploration wells offshore Benin and onshore Tunisia. We then attempted to exploit two onshore Egyptian oil and gas exploration blocks. In 2001, we sold our Egyptian properties, reduced our staff and consolidated all of our day-to-day operations. We focused on monetizing our interest in OML 109.

In June 2005, we sold the wholly-owned subsidiary in which we held our 30% interest in OML 109 to a third party. As a result of the transaction, in addition to cash consideration totaling $780,000 ($540,000 paid at closing and the balance after two new wells are drilled), we are entitled to net profits of up to a maximum of $16 million based on the success of future exploration and development on OML 109 by the new service contractor. As part of the transaction, $2.5 million from an abandonment fund was released to us and a portion of this amount ($1.76 million) was deposited into an escrow fund to address any potential liabilities and claims resulting from our operations in Nigeria over the past 10 years. The balance from the abandonment fund (approximately $730,000) was returned to us. The escrow fund now contains slightly less than $1 million. The new service contractor is committed to drilling two new wells on OML 109.

In 2005, we began to execute on a new strategy designed to (1) pursue prospects for crude oil and natural gas exploration and development in foreign countries which are under-explored and offer attractive fiscal terms, and (2) establish a base of low-risk production onshore United States.

Pursuing International Exploration and Development. In April 2005, we entered into an exclusive option with a Turkish company, Polmak Sondaj Sanayii A.S, to acquire a 50% interest in five exploration licenses that cover approximately 500,000 acres in southeastern Turkey. We reprocessed two-dimensional seismic data over these five prospects and analyzed other available data to evaluate their potential. Based on our evaluation of the prospect, we declined to exercise the option and abandoned the prospect.

In June 2005, we were awarded a reconnaissance license covering 3.4 million acres over the Guercif and Beni Znassen areas, onshore Morocco. The reconnaissance license provided exclusive rights for one year. We have now extended the reconnaissance license until December 2006. We have the right to convert portions of the reconnaissance license into exploration

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permit. We have reprocessed existing seismic data over the area, flown an aeromagnetic survey and conducted other studies to help define prospective areas. Stratic Energy Corporation participates with us in the reconnaissance license as a 40% partner.

In September 2005, we were awarded licenses covering six blocks in the U.K North Sea 23rd Seaward Licensing Round. The acreage is in an under-explored area of the North Sea, between the larger producing areas of the Southern Gas Basin and Central North Sea. The blocks were awarded to us under the “Promote License” initiative. We have a two-year period within which to conduct technical studies and acquire and reprocess seismic data on the licensed area. We can perpetuate the license by committing, prior to the end of the second year, to drill an exploratory well before the fourth anniversary of license.

In February 2006, we were awarded three production licenses in Romania: Izvoru Field, Vanatori Field and Marsa Field. The three licenses were among 24 licenses offered by the Romanian government in the 7th Licensing Round. The licenses were awarded to us based upon our commitment to certain work programs on each of the respective fields over the next 3 years. We will be the operator and 100% working interest owner of the fields. We expect final government approval of our work program by the end of 2006.

In May 2006, we were awarded the Tselfat permit covering 225,000 acres in northern Morocco. The Tselfat permit provides several opportunities including redevelopment of the existing fields, extensions of known productive horizons, and exploration of higher impact targets at depth. During the exploration phase of the permit, we will operate and bear 100% of the costs to earn a 75% ownership interest. We will carry the national oil company of Morocco, National des Hydrocarbures et des Mines (“ONHYM”), for 25% of the costs during the exploration phase, and then we and ONHYM will each pay our share of costs in the development phase.

In June 2006, we were awarded three blocks in southeastern Turkey. Two of the blocks applied for are adjacent to the producing Molla/Yasince oil fields. Detailed fieldwork and geochemical analyses will be required to confirm prospectivity on the third block, with the possibility of later seismic acquisition to define a drilling location, as there is no seismic data available on this block.

Establishing Production Onshore United States. In March 2003, we acquired a 10% interest in the Bayou Couba property, a salt dome located in Louisiana, and financed the drilling of four successful wells on the property. Since that time we have continued to participate in a number of wells in the Bayou Couba property.

In 2003, we began to acquire acreage positions in various prospects located in Oklahoma. We have taken leases on two prospects in Dewey County and McClain County, Oklahoma. We retain a 50% interest in both prospects and expect to drill one well in 2006.

In April 2005, we acquired the South Gillock property covering over 6,000 acres in Galveston County, Texas. The field has produced over 65 million barrels of oil to date. We believe there are remaining natural gas reserves in the gas cap of the

11

South Gillock property to be exploited. In July 2005, we began a workover program to rehabilitate production from existing wells; this program proved moderately unsuccessful. We expect to drill one well on the South Gillock property in 2006.

In January 2006, we acquired the Jarvis Dome property located in Anderson County, Texas. We believe there are crude oil and natural gas reserves in production zones bypassed by earlier drilling. We are currently completing a sidetrack of an existing well drilled into the Pecan Gap formation and expect to drill another well on the Jarvis Dome property in 2006.

Principal Capital Expenditures and Divestitures. The following table sets forth our principal capital expenditures and divestitures during Fiscal 2003, 2004 and 2005:

Principal Capital Expenditures and Divestitures

(In thousands of U.S. dollars)

Expenditure Type	2005		2004			2003
Property acquisition		3,892		—			—
Drilling (leasing, exploration and development)		947		1,694			1,409
Facilities and equipment		—		12			—
Divestiture of property and equipment		—		(155	)		(164	)
Total Capital Expenditures and Divestitures	$	4,839	$	1,551		$	1,245

B. Business Overview

Nature of Our Operations. Our principal business is acquiring, exploring and developing crude oil and natural gas properties. In the United States, we are currently acquiring, exploring or developing crude oil and natural gas properties located in Texas, Louisiana and Oklahoma. Internationally, we are acquiring, exploring or developing crude oil and natural gas properties in Morocco, Romania, Turkey and the North Sea. Additionally, we hold a net profits interest in a Nigerian offshore crude oil property. We intend to continue to pursue the acquisition of crude oil and natural gas properties and pursue strategic opportunities to buy or sell assets or otherwise contract with other companies in our industry.

Our success will depend on whether we are able to locate and successfully negotiate for crude oil and natural gas opportunities in countries which meet our criteria and then successfully develop and produce crude oil and natural gas in those countries. Our success will also depend on how well our prospects in the United States perform. All of our production is currently from properties located in the United States.

We plan to grow our operations by seeking opportunities in the 10 to 100 million Boe range in foreign countries where, because of attractive fiscal terms, that size discovery can have a significant impact on our financial condition and results of operations. In the United States, we

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will continue to acquire properties where we can exploit lower-risk missed pay, increased density and behind casing reserves by using modern technologies: three dimensional seismic data, cased hole logging, under balanced drilling, horizontal drilling and fracture stimulation.

Principal Markets. As at December 31, 2005, we operate in one reportable segment, the exploration for and the development and production of crude oil and natural gas. Identifiable assets, revenues and net loss in each of its geographic areas are as follows:

2005 (Thousands of U.S. Dollars)	Identifiable assets (liabilities)			Revenues		Loss
United States	$	11,094		$	1,398	$	2,922
Morocco		644			9		67
Corporate assets		7,189			945		784
	$	18,927		$	2,352	$	3,773
2004
United States	$	3,880		$	797	$	2,288
Canada		(134	)		389		2,367
Nigeria		198			4,364		538
Corporate assets		12,106			—		—
	$	16,048		$	5,549	$	5,193
2003
United States	$	4,203		$	1,037	$	787
Canada		1,044			247		(123	)
Nigeria		52			7,744		(81	)
Corporate assets		7,092			—		—
	$	12,391		$	9,028	$	584

Seasonality. Seasonality has no material effect on our financial condition or results of operations. However, our crude oil and natural gas exploration and development activities may be timed to meet seasonal conditions.

Marketing Channels. Crude oil production from South Gillock and Bayou Couba properties is sold under market sensitive or spot price contracts. Natural gas production is sold to purchasers under varying percentage-of-proceeds and percentage-of-index contracts or by direct marketing to end users or aggregators. By the terms of the percentage-of-proceeds contracts, we receive a percentage of the resale price paid to the purchaser for sales of residue gas and natural gas liquids recovered after gathering and processing the natural gas. The residue gas and natural gas liquids sold by these purchasers are sold primarily based on spot market prices. The revenue from the sale of natural gas liquids is included in natural gas sales.

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Material Effects of Governmental Regulations. Government regulations have a material effect on us to the extent that they require us to conduct field operations and hydrocarbon extraction activities according to prescribed environmentally-safe, sensitive regulations. Also, government regulations may restrict the commencement or re-commencement of field activities in certain properties in which we hold an interest for the purpose of exploration. Examples of types of governmental laws and regulations that may have a material effect on our business include:

• requirements to acquire permits before commencing drilling operations;

• requirements to restrict the substances that can be released into the environment in connection with drilling and production activities;

• limitations on, or prohibitions to, drilling in protected areas such as wildlife preserves; and

• requirements to mitigate and remediate the effects caused by drilling and production operations.

C. Organizational Structure

We conduct the majority of our business through subsidiaries incorporated outside of Canada. The following table presents the name, the percentage of voting securities owned and the jurisdiction of incorporation of our principal subsidiaries:

Subsidiary	Percent Owned	Jurisdiction of Incorporation
TransAtlantic Petroleum (USA) Corp.	100	Colorado
TransAtlantic Worldwide Ltd.	100	Bahamas

We own, directly or indirectly, 100% of four other subsidiary corporations, which on a consolidated basis constitute less than 10% of our assets and operating revenues.

D. Property, Plant and Equipment

Morocco. In May 2006, we were awarded the Tselfat exploration permit (the “Tselfat Permit”) covering 225,000 acres in northern Morocco. Tselfat Permit has two existing fields, Haricha and Tselfat, and one partial field, Bou Draa. The Haricha Field was discovered in the early 1950’s on a large surface anticline with hydrocarbon seeps. The field was developed with 30 wells drilled to a depth of less than 2,000 meters and produced approximately 3.5 million barrels of oil and 9.5 bcf of gas from porous Jurassic age sandstones. The field is a complex structural trap formed by a thrust fault that has not been fully exploited. Based on available two-dimensional seismic data, potential exists for a deeper sub-thrust play below the known productive horizon. The Tselfat field was discovered in 1918 by wells drilled on a surface anticline with hydrocarbon seeps. More than 90 shallow wells were drilled and produced less than 0.50 million barrels of oil recorded production from Jurassic carbonate reservoirs. The Bou Draa field was discovered in 1934 by wells drilled on hydrocarbon seeps. Over 140 shallow wells were drilled in a six square kilometer area and produced less than 1 million barrels recorded production of light oil from fractured carbonates and sandstones. Approximately 15%

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of these wells are located on our portion of the Bou Draa field. It is believed that hydrocarbon reserves can be recovered using horizontal drilling techniques, artificial stimulation and reservoir pressure maintenance. Potential exists in subthrust reservoirs in Jurassic age sandstones. We will commence a review of all the existing well data on the Tselfat Permit, reprocess much of the 2D seismic and initiate a field program. In addition, the Company will shoot a 3D survey over the Bou Draa and Haricha fields that will be followed by an exploratory well to test the previously untested Jurassic formations in the sub-thrust.

In June 2005, we were awarded a one-year reconnaissance license covering approximately 3.4 million acres in northeastern Morocco (the “Guercif-Beni Znassen License”). We operate and hold a 60% interest in the Guecif-Beni Znassen License, and Stratic Energy Corporation, with headquarters in Calgary, is a 40% partner in the project. The Guercif-Beni Znassen License provides us with exclusive rights over the area and is renewable for a second year or portion thereof. The Guercif-Beni Znassen License areas contain large structures and all the elements for oil and gas reserves: source rock, reservoir rock and traps. The initial year’s work program involves the reprocessing of 4,300 kilometers of two-dimensional seismic data and an aeromagnetic/aerogravity survey over the block. The work commitment is estimated to cost $1 million. We extended the reconnaissance license through December 2006.

Licensing Regime. The licensing process in Morocco for oil and gas concessions occurs in three stages: Reconnaissance License, Exploration Permit and then Exploitation Concession. Under a Reconnaissance License, the government grants exploration rights over an area for a one year term to conduct seismic and other exploratory activities (but not drilling). The size of the area may be very large and generally is unexplored or under-explored. The Reconnaissance License may be extended for up to one additional year. Interests under a Reconnaissance License are not transferable. The recipient of a Reconnaissance License commits to a work program and posts a bank guarantee in the amount of the estimated cost for the program. At the end of the term of the Reconnaissance License, the license holder must designate one or more areas for conversion to an Exploration Permit or relinquish all rights.

An Exploration Permit, which is codified in a Petroleum Agreement, is for a term of up to eight years and covers an area not to exceed 2,000 square kilometers. Under an Exploration Permit, exploration and appraisal studies and operations are undertaken in order to establish the existence of oil and gas in commercially exploitable quantities. This generally entails the drilling of exploration wells to establish the presence of oil and/or gas and such additional appraisal wells as may be necessary to determine the limits and the productive capacity of a hydrocarbon deposit to determine whether or not to go forward to develop and produce the prospect. The eight-year term under an Exploration Permit is divided into three separate time frames of two to three years each. A distinct work program is negotiated for each separate term, and the licensee then must post a bank guarantee to cover the cost of the agreed upon minimum work program for that term. The area of the exploration permit is reduced with each extension (area released is subject to negotiation). The ownership interests under an Exploration Permit are 75% to us and 25% to ONHYM, the Moroccan government agency that oversees the petroleum activities in Morocco. Interests under an Exploration Permit are transferable. However, 100% of the costs of all activities under an Exploration Permit are borne by us. We cannot hold rights, directly or indirectly, to more than 10,000 square kilometers under exploration permits.

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An Exploitation Concession is applied for upon the discovery of a commercially exploitable field. The area of the Exploration Concession corresponds to the area of the producing field. However, any number of Exploitation Concessions may be carved out of an Exploration Permit. The maximum duration of the Exploitation Concession is 25 years. Once an Exploitation Concession becomes effective, then the costs incurred for the development of the field are to be funded by the parties in proportion to their respective ownership interests (in this case, 75% by us and 25% by ONHYM). The oil company serves as operator. The oil company and ONHYM enter into an Association Contract to govern operations on the Exploration Concession. Interests under an Exploitation Concession are transferable.

Romania. In February 2006, we were awarded three production licenses onshore by the Romanian government in the 7^th Licensing Round. The three oil and gas fields, Izvoru Field, Vanatori Field and Marsa Field, each cover about 1,200 acres. They were discovered by the former national oil company, Petrom, and are all located within 60 miles of Bucharest, Romania. The licenses were awarded to us based upon our commitment to certain work programs on each of the respective fields over the next three years. We will be the operator and 100% working interest owner of the fields. All three fields previously produced oil, gas or both but were not fully developed. Discovered in 1968, the Izvoru Field produced 1.35 million barrels of oil from 26 wells. Completion difficulties and sand production resulted in limited flow rates and recoveries and led to premature field abandonment in 1998. Izvoru is a stratigraphic play and produces from Sarmatian (Tertiary age) shallow marine sandstones. Additionally, there is deeper potential in Cretaceous Albian age limestones which are productive in adjacent fields and were penetrated by four wells in the Izvoru field but not developed. The initial work program will be to re-start production. We plan to re-enter up to nine wells and shoot a 25 square kilometer three-dimensional seismic survey and drill a new well thereafter. The other two fields, Vanatori and Marsa, were both discovered in the 1970’s. Five wells were drilled in the Vanatori Field, two of which produced a total of 1.3 Bcf over six years from the Sarmatian formation. There is also deeper Cretaceous potential in the field. The Vanatori Field was prematurely abandoned due to sand production and water invasion. We plan to shoot a two-dimensional seismic survey and, provided this confirms the prospect, drill a new well. In the Marsa Field, five wells were drilled of which three were productive. Between 1974 and 1983, these wells produced a cumulative 0.3 Bcf from the Meotian (Tertiary age) reservoir. We will shoot a two-dimensional seismic survey over the field and, provided this confirms the prospect, drill a new well. Romania has a developed infrastructure for oil and gas and all production is sold at or near world market prices. There is ready availability of drilling rigs and a technically competent workforce.

Licensing Regime. The National Agency for Mineral Resources (“NAMR”) was set up in 1993 to administer the petroleum industry and represent the state in dealings with oil companies. When licenses are to be made available, NAMR publishes a list of available blocks for concession in the Official Gazette. Foreign and Romanian companies must register their interest by a specified date and must submit applications by an application deadline. Applicants are required to prove their financial capacity, technical expertise and other requirements as stipulated in the tender call. The licensing rounds are competitive and the winning bid is based

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on a scoring system. NAMR negotiates the terms of agreements granting the licenses with the winning licensee and the license agreement is then submitted to the government for its approval. The date of government approval is the effective date of the license. Blocks which fail to attract a prescribed level of bids are re-offered in a subsequent licensing round. NAMR may issue a prospecting permit or a petroleum concession. A prospecting permit is for the conduct of geological mapping, magnetometry, gravimetry, seismology, geochemistry, remote sensing and drilling of wildcat wells in order to determine the general geological conditions favouring petroleum accumulations. A petroleum concession provides exclusive rights to conduct petroleum exploration and production under a petroleum agreement.

UK North Sea. In September 2005, we were awarded two 23^rd Round Promote Licenses, P.1325 and P.1326, covering a total of six offshore blocks (covering 1200 sq. km) in the Auk Basin 150 kilometers east of the Scottish mainland. These blocks are in shallow water and contain a sub-salt Permian gas prospect at moderate depth with significant reserve potential. The prospect is defined by well and seismic control. The official award of these licenses to us occurred in December 2005. Over the next two years, we will purchase and reprocess available seismic data and conduct other geological and geophysical studies to evaluate the licenses. We plan to invite participation in the prospect by other companies and will likely farmout working interests in the prospect. Any company farming into the licenses would need to demonstrate its qualifications as an operator to the Department of Trade and Industry (the “DTI”) by showing it has sufficient technical, environmental and financial capacity to execute an offshore work program. Once a commitment to drill a well on the license has been made, the term of the license can be extended into years 3 and 4.

Licensing Regime. In 2003 in order to counteract the decrease in exploration expenditures, the DTI undertook substantial reforms of its licensing system and introduced the concept of the “Promote License.” Promote Licenses are specifically designed to attract smaller exploration companies to the UK North Sea. Smaller companies are seen as offering more innovative exploration ideas relevant to a maturing basin. The general concept of the Promote License is that the licensee will be given two years after award to attract the technical, environmental and financial capacity to complete a firm agreed work program. This means that sometime in the third or fourth year of the license, a well must be drilled. The rental costs for a Promote License are one tenth that of a traditional license for the first two years. Accordingly, a license will expire after two years if the licensee has not made a firm commitment to the DTI to complete a work program that includes the drilling of a well. At the same time, the licensee must also satisfy the DTI of its technical, environmental and financial capacity to carry out the work program. In effect, under a Promote License, the DTI defers its normal financial, technical and environmental requirements for the initial two years of the license.

Turkey. In June 2006, we were awarded three blocks in southeastern Turkey. Two of the blocks applied for are adjacent to the producing Molla/Yasince oil fields. Our focus is on a deeper under-explored Palaeozoic play in the area. Palaeozoic reservoirs are present at various depths over most of the region. The presence of suitably timed structural traps and sealing lithologies are the main controls on this play. The third block is closer to the Iraq border near the town of Cizre. Surface oil seeps indicate the existence of an active petroleum system in this area. We are focused on deeper sub-thrust plays in this area similar to those found in the major

17

Iraqi and Iranian Zagros fields further south. The presence of a suitably timed structural trap and sealing lithologies are the main controls on this play. Detailed fieldwork and geochemical analyses will be required to confirm prospectivity with the possibility of later seismic acquisition to define a drilling location as there is no seismic data available on this block.

Licensing Regime. The licensing process in Turkey for oil and gas concessions occurs in three stages: Permit, License and Lease. Under a Permit, the government grants the non-exclusive right to conduct a geological investigation over an area. The size of the area and the term of the Permit are subject to the discretion of the General Directorate of Petroleum Affairs (“GDPA”), the agency responsible for the regulation of oil and gas activities under the Ministry of Energy and Natural Resources. A License grants exclusive rights over an area for the exploration for petroleum. A License has a term of four years and requires drilling activities in the third year, but this obligation may be deferred into a future year by posting a guaranty. The License may be extended for up to two two-year extensions. No single company may own more than eight licenses within a district. The national oil company, TPAO, has the first right to acquire licenses in preference to private companies. Rentals are due annually based on the hectares under license. Once a discovery is made, the license holder applies to convert the area, not to exceed 25,000 hectares, to a Lease. Under a Lease, the lessee may produce oil and gas. The term of a lease is 20 years. Annual rentals are due based on the hectares under lease.

Nigeria. We originally acquired our interest in the OML 109 offshore Nigerian concession in 1992. OML 109 is an oil mining license located approximately 15 kilometers offshore in water depths between 15 and 60 metres. We drilled the discovery well and the first appraisal well in the Ejulebe Field on OML 109 in 1994 and 1995. We then entered into a risk service contract with a third party, who drilled development wells, installed a production platform and pipeline and put the Ejulebe field into production in 1998. The Ejulebe field has produced about 11 million barrels, or about 50%, of the estimated 22 million barrels in place through 2005.

In June 2005, we sold our 30% interest in OML 109. As part of the transaction, we will receive deferred payments of up to a maximum of $16 million based on the success of the future exploration and development on the concession. We agreed to pay a bonus equivalent to 3.87% of the deferred payments, if and when received, up to a maximum of $600,000, to Scott C. Larsen, our President, for his efforts in completing this transaction.

As part of this complex multi-party transaction, a new service contractor replaced our former service contractor on OML 109 and committed to drill at least two new wells in adjacent fault blocks near the currently producing Ejulebe Field. An affiliate of the new service contractor purchased the existing Ejulebe production platform and facilities and relieved us of all

18

abandonment liabilities. If the drilling is successful, it is anticipated these new wells will be put into immediate production through the existing Ejulebe facilities. Drilling has commenced and is in progress.

Nigerian Tax Claims. In conjunction with the sale of our Nigerian assets, we deposited $1.76 million into an escrow fund to address any Nigerian tax liabilities and claims relating to our operations in Nigeria for the years 1998 to 2005. At the time of the sale, the previously recorded reserve of $855,000 was increased to $1.76 million (the amount deposited into escrow), and the charge for the increase to the reserve was included in earnings. In the third quarter 2005, agreement was reached and tax returns filed with respect to years 1998 through 2001, and $226,000 was withdrawn from the escrow account to pay all remaining Nigerian tax liabilities for that period. In the first quarter 2006, Nigerian tax returns for years 2002, 2003 and 2004 were filed and an additional $550,000 was withdrawn from the escrow to pay the estimated tax due for those years. As of June 2006, there remains slightly less than $1 million in the escrow account. The tax returns for years 2002 through 2004 still must undergo review by the Nigerian Federal Inland Revenue Service, and we remain responsible for taxes up to the sale date in June 2005. We believe the escrow fund provides adequate provision for the liabilities related to our Nigerian activities.

South Gillock. In April 2005, we acquired the South Gillock and State Kohfeldt Units covering over 6,000 acres in Galveston County, Texas. The field began producing in the 1940’s, and the two units combined have produced over 65 million barrels of oil from the Big Gas Sand of the Frio formation. We believe there are remaining gas reserves in the gas cap of the South Gillock Unit, and its acquisition was premised on this concept. Since this acquisition, we have engaged in a workover program entering existing wells. This has increased production from 60 Boe/d at the time of the acquisition to about 119 Boe/d in June 2006. There are 61 wells on the units, of which three are producing and the remainder are temporarily abandoned. Subject to the timing of rig availability, in 2006 we will drill one new well to test the Big Gas Sand as well as deeper Frio formations below the Big Gas Sand. We are operator and own 100% of the working interest with a net revenue interest of 77%. The initial acquisition of the South Gillock and State Kohfeldt Units covered only the unitized Big Gas Sand formation. In November 2005, we completed a transaction for the shallow and deep leasehold rights from BP America Production Company. We have a two-year option on deep rights covering 2,731 acres over the northern portion of the South Gillock Unit and a 3 year term assignment over the same 2,731 acres for the shallow rights.

Bayou Couba. We acquired a 10% working interest in the Bayou Couba prospect in March 2003. We paid $200,000 for the interests in two leases covering 3,049 acres and advanced ANEC $1.8 million for ANEC’s initial drilling program as a $2 million production payment, which was repaid in October 2003. We also have the right to acquire a 10% interest in any property ANEC acquires in the 23.5 square mile area covered by a 3D seismic survey, including any property interests acquired through ANEC’s agreement with ExxonMobil Corp. The term of our agreement with ANEC is co-extensive with the Development Agreement that ANEC has with ExxonMobil Corp., which currently expires in November 2007. In March 2006, we announced plans to sell our 10% interest in the Bayou Couba prospect in Louisiana and the ANEC convertible debentures we hold to ANEC for $3.8 million, subject to ANEC securing financing; however, the transaction failed to close.

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Jarvis Dome. In January 2006, we acquired the Jarvis Dome prospect located in Anderson County, Texas, which included two wells and leases covering 170 acres. A leasing program is underway to acquire an additional 1,000 acres. We own 100% of the working interest in the prospect subject to a 20% back-in after payout in favor of the seller. The initial work program on Jarvis Dome has involved working over one of the existing wells and sidetracking the other existing well. We also plan to drill either one new vertical well on the prospect to test the Woodbine formation or one horizontal well to test the Pecan Gap formation. Completion of the sidetrack is still pending, and the workover was completed in July 2006, and the Woodbine test is anticipated to occur later this year.

Other. We have positions in two prospects in Dewey and McClain Counties, Oklahoma. In both prospects, we have a 50% partner in our leasehold position. A well on the McClain County prospect will test the Springer formation and is scheduled to be drilled in the third quarter 2006. We will have a twenty percent working interst in this well. Also in 2005, we participated for a 20% interest in two wells on a prospect in Panola County, Texas, but both wells were non-commercial.

Property and Equipment

(In thousands of U.S. dollars)

2005	Cost		Accumulated depreciation and depletion		Net book value
Crude oil and natural gas properties
United States	$	11,308	$	5,521	$	5,787
Furniture, fixtures and other assets		238		212		26
Balance, December 31, 2005	$	11,546	$	5,733	$	5,813
2004
Crude oil and natural gas properties
United States	$	4,890	$	4,199	$	691
Nigeria		14,436		14,436		—
Furniture, fixtures and other assets		381		368		14
Balance, December 31, 2004	$	19,707	$	19,003	$	704

Property acquisitions:

In April 2005, we completed the purchase of the South Gillock property located in Texas. We paid $3.0 million cash and issued 500,000 shares and 500,000 warrants exercisable at $1.00 per share on or before April 15, 2007 for the property. The fair value of the warrants was determined using a Black-Scholes pricing model. A purchase equation is provided below:

Consideration:
Cash	$	3,000,000
Common shares		350,000
Warrants		125,434
Acquisition costs		66,630
	$	3,542,064
Assets acquired:
Property and equipment	$	3,892,064
Asset retirement obligations		(350,000	)
	$	3,542,064

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Sale of subsidiary:

Effective June 2005, we sold our Bahamian subsidiary which owned 30% interest in certain properties offshore Nigeria. In consideration, we received $540,000 prior to disposal costs of $220,000 (including legal, consulting and other deal-related costs), a future contingent cash payment (after two new wells have been drilled) of $240,000, and contingent compensation of up to a maximum of $16 million. A bonus equivalent to 3.87% will be paid to Scott C. Larsen, our President, if and when this contingent compensation is received by us. No amount of contingent consideration has been recognized in our financial statements. We paid Mr. Larsen a bonus of $100,000 upon finalization of this transaction (included in general and administrative expense). Of the $2.5 million reserved at December 31, 2004 as an abandonment fund, $1.76 million was placed in escrow to address any Nigerian tax claims relating to our prior operations in Nigeria, with the balance of approximately $730,000 being released from the abandonment fund.

Estimated Reserves of Crude Oil and Natural Gas. As a Canadian issuer, we are required under Canadian law to comply with National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities” (NI 51-101) implemented by the members of the Canadian Securities Administrators in all of our reserves related disclosures. Under NI 51-101, proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. Reported proved reserves should target, under a specific set of economic conditions, at least a 90% probability that the quantities of oil and natural gas actually recovered will equal or exceed the estimated proved reserves.

In the United States, registrants, including foreign private issuers like us, are required to disclose proved reserves using the standards contained in Rule 4-10(a) of the United States Securities and Exchange Commission’s (“SEC”) Regulation S-X. Proved reserves estimated and reported below pursuant to NI 51-101 also meet the definition of estimated proved reserves required to be disclosed under Rule 4-10(a) of Regulation S-X.

The crude oil and natural gas industry commonly applies a conversion factor to production and estimated proved reserve volumes of natural gas in order to determine an “all commodity equivalency” referred to as barrels of oil equivalent (“boe”). The conversion factor we have applied in this registration statement is the current convention used by many oil and gas companies, where six thousand cubic feet (“mcf”) of natural gas is equal to one barrel (“bbl”) of

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oil. The boe conversion ratio we use is based on an energy equivalency conversion method primarily applicable at the burner tip. It may not represent a value equivalency at the wellhead and may be misleading, particularly if used in isolation.

The reserve data set out in the summary table below is based on Netherland, Sewell & Associates, Inc.’s independent engineering evaluation of the estimated proved crude oil and natural gas reserves pertaining to our properties as of December 31, 2005.

OIL AND GAS RESERVES

BASED ON CONSTANT PRICES AND COSTS⁽⁹⁾

	Light and Medium Oil		Natural Gas
	Gross(1) (MBBL)	Net(1) (MBBL)	Gross(1) (MMCF)	Net(1) (MMCF)
Proved Developed Producing(2)(6)
United States	39.3	31.1	1094.7	847.9
Total	39.3	31.1	1094.7	847.9
Proved Developed Non-Producing(2)(7)
United States	23.6	17.0	139.6	107.9
Total	23.6	17.0	139.6	107.9
Proved Undeveloped(2)(8)
United States	—	—	505.3	391.3
Total	—	—	505.3	391.3
Total Proved(2)
United States	62.9	48.0	1739.7	1347.1
Total	62.9	48.0	1739.7	1347.1

NET PRESENT VALUES OF FUTURE NET REVENUE

BASED ON CONSTANT PRICES AND COSTS⁽⁹⁾

	Before Deducting Income Taxes Discounted At		After Deducting Income Taxes Discounted At
	0% (M$)	10% (M$)	0% (M$)	10% (M$)
Proved Developed Producing(2)(6)
United States	6450.4	5259.0	6450.4	5259.0
Total	6450.4	5259.0	6450.4	5259.0
Proved Developed Non-Producing(2)(7)
United States	1209.2	1052.3	1209.2	1052.3
Total	1209.2	1052.3	1209.2	1052.3
Proved Undeveloped(2)(8)
United States	2142.7	1601.5	2142.7	1601.5
Total	2142.7	1601.5	2142.7	1601.5
Total Proved(2)
United States	9802.3	7912.8	9802.3	7912.8
Total	9802.3	7912.8	9802.3	7912.8

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TOTAL FUTURE NET REVENUE

(UNDISCOUNTED)

BASED ON CONSTANT PRICES AND COSTS⁽⁹⁾

	Revenue (M$)	Royalties (M$)	Operating Costs (M$)	Development Costs (M$)	Abandonmt and Reclamation Costs (M$)10	Future Net Revenue Before Income Taxes (M$)	Income Taxes (M$)	Future Net Revenue After Income Taxes (M$)
Total Proved(2)
United States	18186.0	4144.6	3697.0	542.1	—	9802.3	0	9802.3
Total	18186.0	4144.6	3697.0	542.1	—	9802.3	0	9802.3

RECONCILIATION OF COMPANY NET

RESERVES BY PRINCIPAL PRODUCT TYPE

BASED ON CONSTANT PRICES AND COSTS ⁽⁹⁾

The following table sets forth a reconciliation of the changes in our light and medium crude oil, and associated and non-associated gas (combined) reserves as at December 31, 2004 against such reserves as at December 31, 2005 based on the price and cost assumptions set forth in note 9:

	Light and Medium Oil						Associated and Non-Associated Gas
	Net Proved (bbl)		Net Probable (bbl)		Net Proved Plus Probable (bbl)		Net Proved (mcf)		Net Probable (mcf)		Net Proved Plus Probable (mcf)
United States
At December 31, 2004	34,164		10,338		44,502		22,360		4,688		27,048
Sales/Production net of LOE, Taxes & Capital	(15,419	)	(4,494	)	(19,913	)	(6,547	)	(1,596	)	(8,143	)
Changes in Pricing & LOE Costs	1,181		7,699		8,880		(416	)	7,902		7,486
Extensions and Discoveries	4,883				4,883		1,429				1,429
Acquisition of Reserves	27,800		23,600		51,400		1,733,500				1,733,500
Revisions of Volumes	7,678		5,498		13,176		1,701		2,692		4,393
Accretion of Discount	2,580		(6,766	)	(4,186	)	(12,328	)	(11,431	)	(23,759	)
At December 31, 2005	62,867		35,875		98,742		1,739,669		2,255		1,741,954

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The following table sets forth changes between future net revenue estimates attributable to our net proved reserves as at December 31, 2005 against such reserves as at December 31, 2004.

RECONCILIATION OF CHANGES IN NET PRESENT VALUES

OF FUTURE NET REVENUE DISCOUNTED AT 10%

BASED ON CONSTANT PRICES AND COSTS ⁽⁹⁾

	2005 ($)
United States
Estimated Future Net Revenue at December 31, 2004	521,000
Sales/Production net of LOE, Taxes & Capital	(308,400	)
Changes in Capital	1,200
Changes in Pricing & LOE Costs	124,200
Extensions and Discoveries	354,700
Acquisition of Reserves	7,183,300
Revisions of Volumes	29,100
Accretion of Discount	7,700
Estimated Future Net Revenue at December 31, 2005	7,912,800

Notes:

(1) “Gross Reserves” are our working interest (operating or non-operating) share before deducting of royalties and without including our royalty interests. “Net Reserves” are our working interest (operating or non-operating) share after deduction of royalty obligations, plus our royalty interests in reserves.

(2) “Proved” reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

(3) “Probable” reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

(4) “Possible” reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

(5) “Developed” reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

(6) “Developed Producing” reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

(7) “Developed Non-Producing” reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

(8) “Undeveloped” reserves are those reserves expected to be recovered from know accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned.

(9) The product prices used in the constant price and cost evaluations in the Netherland Sewell Report were as follows: At December 31, 2005 for the United States $57.75 per barrel and $10.08 per MMBTU, both prices being adjusted for energy content, processing fees and a regional price differential. Lease and well operating costs were based on the actual costs provided by the operator.

(10) With respect to its South Gillock prospect, as 100% operator we are responsible for all future abandonment and reclamation costs. We have taken the total number of wells in which we own in the prospect (59) and, using the third party estimated costs, have estimated the undiscounted cost (net of salvage value) to be $629,000 and the cost discounted at 10% to be $350,000. We plan to begin plugging and abandoning certain wells at South Gillock beginning in 2007 and estimate plugging nine wells in both 2007 and 2008 at a total cost of $186,000. With respect to our Bayou Couba prospect, as non-operator, we have adopted the methodology and timing of the future abandonment and reclamation costs as set by the operator. We have taken the total number of wells in which we own an interest in the prospect (61) and using the operator’s estimated costs have estimated the undiscounted cost (net of salvage value) to be $328,000 and the cost discounted at 10% to be $163,000. The operator does not plan to commence abandonment for several years because of the potential for re-entry of the existing wells. No wells are planned to be plugged and abandoned at Bayou Couba in the next three years. Note that in computing the future net revenue for the proved reserves set out above, the discounted abandonment estimate has not been deducted.

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The following table sets forth the number of wells in which we held a working interest as of December 31, 2005:

	Oil		Natural Gas
	Gross(1)	Net(1)	Gross(1)	Net(1)
Louisiana (onshore)
Producing	15	1.5	13	1.3
Non-producing(2)	33	3.3	—	—
Texas (onshore)
Producing	1	1	2	2
Non-producing(2)	56	56	—	—

(1) “Gross Wells” are the wells in which we hold a working interest (operating or non-operating). “Net Wells” are the Gross Wells multiplied by our working interest percentage (operating or non-operating).

(2) All non-producing wells are presented as oil wells.

The following table sets out our undeveloped land position effective December 31, 2005:

	Undeveloped
	Gross(1)	Net(2)
United States	5,141	3,936
Total	5,141	3,936

(1) “Gross” means the total number of acres in which we have a working interest.

(2) “Net” means the sum of the products obtained by multiplying the number of gross acres by our percentage working interest therein.

Item 4A. Unresolved Staff Comments

Not applicable

Item 5. Operating and Financial Review and Prospects

In 2005, we began to execute on a new strategy designed to (1) pursue prospects for crude oil and natural gas exploration and development in foreign countries which are under-explored and offer attractive fiscal terms, and (2) establish a base of low-risk production onshore United States.

During 2005 and 2006, we successfully initiated operations in Morocco, Romania, Turkey and the UK North Sea. In each country, we are looking to combine higher risk/higher reward exploration prospects with near term production opportunities. In the U.S., we acquired a mature field in South Texas consistent with our focus on exploitation prospects and several other low risk prospects.

In June 2005, we sold our interests in Nigeria keeping a $16 million net profits interest. We raised $4 million in additional capital in October 2005 ($0.85 per unit consisting of one common share and one half of one common share purchase warrant with a whole warrant exercise price of $1.05 per share). We ended 2005 with a strong working capital position, which included cash and short term investments of $9 million.

Given the capital-intensive nature of oil and gas exploration as well as the uncertainty of economic success from our existing projects, we anticipate significant capital will likely be required to fund our existing and any additional projects.

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A. Operating Results

The following discussion for the three fiscal years ended December 31, 2005 and the comparative quarters ended March 31, 2006 and 2005 should be read in conjunction with our consolidated financial statements and notes thereto.

Summary. Consolidated revenues for the year ended December 31, 2005 of $2.4 million, represented a decrease of $3.1 million, or 59%, from the $5.5 million reported for 2004. The decrease in revenue is primarily due to our cessation of production of crude oil in Nigeria. The consolidated net loss for 2005 was $3.8 million or $0.11 loss per share (basic), compared to consolidated net loss of $5.2 million or $0.17 loss per share (basic) for 2004. Consolidated revenues for the year ended December 31, 2004 were $5.5 million, which represented a decrease of $3.5 million, or 39%, from the $9.0 million reported for 2003. The decrease in revenue is primarily due to decrease in production of crude oil in Nigeria. The consolidated net loss for 2003 was $584,000 or $0.02 loss per share (basic). Consolidated revenues for the quarter ended March 31, 2006 of $556,000, represented an increase of $274,000, or 97%, from the $282,000 reported for the same quarter 2005. The increase in revenue is primarily due to sales from South Gillock, which was acquired in April 2005. The consolidated net loss for the quarter ended March 31, 2006 was $1.1 million or $0.03 loss per share (basic), compared to consolidated net loss of $105,000 or $nil per share (basic) for the same quarter last year. The workover program at South Gillock and our international exploration efforts constituted the majority of the loss.

Cash used in operations in 2005 was $2.8 million compared to a use of $426,000 in 2004 and cash provided of $805,000 in 2003. We had 37,659,189 common shares outstanding at year end 2005, compared to 31,852,241 at year end 2004 and 23,830,882 at year end 2003 (post consolidation). Cash used in operations during the first quarter 2006 was $863,000 compared to cash provided of $71,000 in the first quarter 2005. We had 37,671,689 common shares outstanding at March 31, 2006, compared with 32,572,241 outstanding at March 31, 2005.

Revenue. We recognized net crude oil and natural gas sales of $1.4 million for 2005, representing 30,962 equivalent barrels ($45.22 per equivalent barrel) from field production in the U.S. This revenue represented a 76% increase from 2004 sales of $796,000 from production in the U.S. as a result of the South Gillock property acquisition and higher commodity prices.

We recognized crude oil and natural gas sales of $796,000 for 2004, representing 21,600 barrels ($36.83 per equivalent barrel) from Bayou Couba field production in the U.S., which represented a 6% decrease from 2003 sales of $843,000 as a result of normal production declines. Sales of crude oil in Nigeria for 2003 were $7.7 million, representing 268,000 barrels ($28.05 per equivalent barrel). From Nigeria, payments of $306,000 were received from our services contractor during 2004 and continued at a rate of approximately $25,000 per month through March 2005. Gross sales of crude oil in Nigeria for 2004 were $4.9 million, representing 240,118 barrels ($33.84 per equivalent barrel).

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In 2003, we participated in the Bayou Couba prospect through a production payment which accounted for a net profits income of $297,000 in 2003. The production payment was repaid in October 2003. There were 13 gross (1.8 net) wells productive at Bayou Couba and 4 wells productive at South Gillock during 2005. There were 11 gross (1.2 net) wells productive at Bayou Couba during 2004.

Interest income increased in 2005 as a result of increased cash on hand and our participation in certain investments during the year. Interest income increased in 2004 as a result of increased cash on hand resulting primarily from the common share offering during the year.

We recognized net crude oil and natural gas sales of $556,000 for the first quarter 2006, representing 11,373 equivalent barrels ($48.82 per equivalent barrel) from field production in the United States. This U.S. revenue represented a 169% increase from first quarter 2005 sales of $207,000 as a result of the South Gillock acquisition and higher commodity prices.

Operating Costs. Lease operating expenses for 2005 decreased 56% to $1.9 million due to the cessation of activities in Nigeria. This decrease was partially offset by increased lease operating expenses at South Gillock. Service fees and other production costs related to Nigeria were $4.1 million for 2004, a decrease of $2.4 million over the comparable period in 2003, primarily because the service fee is only charged when crude is sold, and there were no sales in the second half of 2004.

In June 2005, we were awarded a reconnaissance license covering approximately 3.4 million acres in northeastern Morocco. We have a 60% interest in the license. In conjunction with the award, we agreed to a work program involving the reprocessing of seismic data and other technical work. The work commitment during the one year tem of the license was estimated to cost us a total $600,000. During 2005, we spent approximately $200,000 of the forecasted total.

Depreciation, depletion and accretion (“DD&A”) related to U.S. production decreased 16% to $606,000 for 2005 and represented a DD&A rate per net equivalent barrel of $19.86, largely as a result of a larger reserve base and the impact of the South Gillock acquisition as well as an impairment of $1.2 million recorded in 2004 relating to a ceiling test associated with our U.S. cost center. DD&A related to U.S. production increased 128% to $702,538 for 2004 and represented a DD&A rate per net equivalent barrel of $32.50 as a result of a smaller reserve base and the impact of significant dry hole drilling costs ($1.2 million) incurred in 2004.

DD&A related to Nigeria property and equipment decreased to nil in 2004 since all capitalized costs related to Nigeria were fully depleted at December 31, 2003. With no reserves attributed to Nigeria at December 31, 2004, net property costs related to Nigeria were reduced to zero through depletion.

General and administrative costs of $2.3 million in 2005 increased 34% compared to 2004, primarily resulting from increased staff and consultants related to the support of the South Gillock purchase and expanded business development activities. Other costs included a foreign exchange loss of $29,000 and a write down of our investment in American Natural Energy

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Corporation common stock of $112,000. During the year, we incurred $410,000 of stock-based compensation expense related to an option grant to employees and directors. Finally, we paid $440,000 in costs related to international business development activities which include legal, technical and other professional fees incurred in conjunction the evaluation of our various foreign initiatives and the setup of branch offices in each of the five foreign countries in which we have operations.

General and administrative costs of $1.2 million in 2004 decreased 3% ($38,000) compared to 2003, primarily as a result of reductions in overhead expenses in 2004. Other costs in 2004 included: a $2.1 million write down of our investment in ANEC debentures; a $600,000 increase to our reserve for Nigerian tax liabilities; a foreign currency translation gain of $108,000 on related party investments denominated in Canadian dollars, and a gain of $45,000 on the sale of the Pan Global Energy shares.

Inflation has not had a material impact on our results of operations and is not expected to have a material impact on our results of operations in the future.

DD&A related to U.S. production increased 51% to $265,000 for the first quarter 2006 and represented a DD&A rate per net equivalent barrel of $17.59 as a result of the impact of the South Gillock acquisition in April 2005.

Lease operating expenses increased 310% to $533,000 from $130,000 due to the South Gillock operations and workover program in South Texas. Included in this amount is $338,000 of workover costs at South Gillock that will not be incurred in subsequent periods. General and administrative costs of $602,000 in the first quarter 2006 increased 53% compared to the same quarter of 2005, primarily resulting from increased staff and consultants related to the support of the South Gillock purchase and expanded business development activities. Interest income increased in the first quarter 2006 as a result of increased cash on hand and our participation in certain investments.

Capital Expenditures. In January 2006, we acquired the Jarvis Dome prospect in Anderson County, Texas and capitalized approximately $300,000 in costs associated with this project. In addition, we capitalized approximately $68,000 of costs at South Gillock.

In April 2005, we completed the purchase of the South Gillock property located in Galveston County, Texas. We paid $3.0 million cash and issued 500,000 shares and 500,000 warrants exercisable at $1.00 per share on or before April 15, 2007.

B. Liquidity and Capital Resources

Liquidity. We had cash and short-term investments of $9.1 million and working capital of $7.5 million, at December 31, 2005, $11.4 million and $10.8 million, at December 31, 2004 and $5.7 million and $5.3 million, at December 31, 2003, respectively.

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We have significant commitments for international projects during the next three years. In Turkey, we have work commitments totaling $800,000 for the period 2006 through 2008. We will spend approximately $500,000 to acquire and reprocess seismic data and conduct technical studies in the North Sea during 2006 and 2007. In conjunction with the three production licenses awarded to us in Romania, we anticipate expenditures during 2006 through 2008 of $1,500,000 for seismic and $7,300,000 for drilling and workovers, provided that we have success in the prospects.

In Morocco, we expect to spend approximately $520,000 in 2006 in the Guercif-Beni Znassen area. Furthermore, we plan to shoot a three-dimensional seismic survey and drill one deep exploratory well in the area covered by the Tselfat exploration permit during the period 2006 though 2008 for an anticipated amount of $3,000,000. The work program commitments in Morocco are fully collateralized by certificates of deposit in the amount of $3,600,000. The certificates of deposit may be drawn down to fund expenditures as the work programs progress. We anticipate reducing the deposits to $3,300,000 in August 2006.

In conjunction with the sale of our Nigerian subsidiaries effective June 2005, we deposited $1.76 million into an escrow fund to address any Nigerian tax liabilities and claims relating to our operations in Nigeria from 1998 to 2005. At the time of the sale, the previously recorded reserve of $855,000 was increased to $1.76 million (the amount deposited into escrow), and the charge for the increase to the reserve was included in earnings. In the third quarter 2005, we filed Nigerian tax returns with respect to years 1998 through 2001, and $226,000 was withdrawn from the escrow account to pay all remaining Nigerian tax liabilities for that period. In the first quarter 2006, we filed Nigerian tax returns with respect to years 2002 through 2004, and an additional $550,000 was withdrawn from the escrow to pay the estimated tax due for those years. The tax returns for years 2002 through 2004 still must undergo review by the Nigerian Federal Inland Revenue Service, and we remain responsible for taxes up to the sale date in June 2005. As of June 2006, $961,000 remains in the escrow fund, and we believe this provides adequate provision for the tax liabilities related to our Nigerian activities.

In September 2005, we completed the purchase of 2,237,136 shares of American Natural Energy Corporation (“ANEC”) pursuant to ANEC’s private placement of securities. ANEC is the operator of the Bayou Couba property in which we hold a 10% interest. The purchase price was $268,000, or $0.12 per share. We carry these shares at their anticipated net realizable value of $0.07 per share, as we do not anticipate selling these shares in the short term.

In October 2003, we acquired $3.0 million of convertible debentures issued by ANEC. The convertible debentures pay 8% interest, were for a two-year term maturing September 30, 2005 and are secured by all of the assets of ANEC. In June 2005, the convertible debenture holders approved extending the maturity of the debentures to September 20, 2006 and changing the conversion price from $0.43 per share to $0.15 per share. We have reserved against the original $3.0 million investment in order to present it at its estimated net realizable value. Based upon an analysis of ANEC’s financial position, we determined it appropriate to reserve $2.1 million against this investment as at December 31, 2004 and such reserve continued at December 31, 2005. The investment is accounted for using the cost method.

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In March 2006, we announced a non-binding letter of intent with ANEC to sell our interests in the Bayou Couba property as well as the ANEC 8% Convertible Secured Debentures in the principal amount of $3.0 million (carried at $900,000) held by us. The letter of intent stipulated that ANEC would pay us a total of $3.8 million cash for both the Bayou Couba property and the Debentures. The agreement was subject to ANEC securing financing, definitive terms and final approval by the boards of directors of both companies. The transaction did not close.

In November 2005, we completed a private placement whereby we issued 5,000,000 Units at $0.85 per Unit for gross proceeds of $4.25 million. Each Unit consisted of one common share and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share at a price of $1.05 through November 6, 2007. If the volume weighted average closing price of our common shares exceeds $1.40 per share for 20 consecutive trading days, we will be entitled to accelerate expiration of the warrants (thereby requiring the warrant holder to exercise the warrant within 30 days of being notified of the accelerated expiration). The proceeds are being used for ongoing international and U.S. exploration and development activities.

Pursuant to a private placement which closed in February 2004, we sold 7.635 million Units at $1.00 per Unit. Each Unit consisted of one post-consolidation common share of common stock and one warrant entitling the warrant holder to purchase one common share at $1.50 per share, which expired on January 6, 2006.

As of March 31, 2006, we had cash and short-term investments of $8.0 million and working capital of $7.0 million, compared to $9.1 million and $7.5 million, respectively, at December 31, 2005.

The timing and continued maintenance of cash flow from our projects is dependent on finding and developing additional oil and gas reserves, oil and gas prices and the availability of additional capital to continue project development.

Capital Resources. Given the capital-intensive nature of oil and gas exploration as well as the uncertainty of economic success from our existing projects, additional capital will likely be required to fund existing and additional projects. We will continue to pursue the divestiture of our interests in Bayou Couba and further anticipate raising funds in the capital markets.

C. Research and Development, Patents and Licenses, etc.

We have no material research and development programs or policies.

D. Trend Information

There are a number of trends in the crude oil and natural gas industry that are shaping the

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near future of the business. Crude oil prices are dependent upon the world economy and the global supply-demand balance. Demand for crude oil continues to grow, particularly in developing countries. The current environment of geopolitical unrest has increased prices well above those supported by current supply-demand balances based on perceived risk. While pricing in the future may more accurately reflect supply-demand fundamentals, it would appear that the current tight supply environment is highly sensitive to political and terrorist risks as evidenced by the risk premium in the current price structure. The magnitude of this risk premium changes over time. Natural gas prices have been somewhat volatile over the past year, particularly due to shut-ins and damages to production facilities in the Gulf of Mexico as a result of adverse weather conditions. With the supply and demand balance for natural gas being tight, the market has experienced volatility in pricing due to a number of factors, including weather, drilling activity, declines, storage levels, fuel switching and demand. In addition, in the next few years liquid natural gas terminals are anticipated to add natural gas supplies to the United States, resulting in a moderation of natural gas prices. It appears that prices of crude oil and natural gas no longer rise and fall in tandem. Any substantial disruptive event could cause crude oil or natural gas prices to spike. Similarly, resolution of certain geopolitical tensions, such as the crisis with Iran concerning the development of nuclear weapons capability, could cause such prices to moderate.

E. Off-Balance Sheet Arrangements

As at June 30, 2006, we had no off-balance sheet arrangements.

F. Tabular Disclosure of Contractual Obligations

As at December 31, 2005, we had the following contractual and commercial commitments:

As part of our June 2005 award of a reconnaissance license in Morocco, we committed to a work program that will involve the reprocessing of seismic data and other technical work over the property. Our portion of the work commitment for the first year cost $600,000. The exclusive license was for a term of one year. We have extended the license for an additional six months based upon an additional work program to cost $120,000. At the end of the reconnaissance license, we have the right to convert portions of the area to an exploration permit.

We posted a $591,000 certificate of deposit pursuant to a guarantee of the work program, and it is included in restricted cash at December 31, 2005. We have entered into an operating lease in respect of its office premises. The minimum payments under this lease commitment, including estimated operating costs are as follows:

(in thousands)
2006	$	85
2007	$	87
2008	$	44
Total	$	216

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G. Safe Harbor

Certain statements in this registration statement, including those appearing under this Item 5, constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, Section 27A of the United States Securities Act of 1933, as amended and within the meaning of applicable Canadian securities legislation. Additionally, forward looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future, by us on our behalf. Such statements are generally identifiable by the terminology used such as “plans”, “expects, “estimates”, “budgets”, “intends”, anticipates”, “believes”, “projects”, “indicates”, “targets”, “objective”, “could”, “may” or other similar words.

By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Such factors include, among others: market prices for natural gas, natural gas liquids and oil products; the ability to produce and transport natural gas, natural gas liquids and oil; the results of exploration and development drilling and related activities; economic conditions in the countries and provinces in which we carry on business, especially economic slowdown; actions by governmental authorities including increases in taxes, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflict; the negotiation and closing of material contracts; and the other factors discussed in Item 3 Key Information - “Risk Factors”, and in other documents that we file with the United States Securities and Exchange Commission and with Canadian securities regulatory authorities. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors; our course of action would depend upon our assessment of the future considering all information then available. In that regard, any statements as to future natural gas, or oil production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding for our capital program; drilling of new wells; demand for natural gas and oil products; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future production rates; ultimate recoverability of reserves; dates by which transactions are expected to close; cash flows; uses of cash flows; collectibility of receivables; availability of trade credit; expected operating costs; and changes in any of the foregoing are forward-looking statements, and there can be no assurance that the expectations conveyed by such forward-looking statements will, in fact, be realized.

Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.

Readers should not place undue reliance on any forward-looking statement and should

32

recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results , may emerge from time to time. We do not intend to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Item 6. Directors, Senior Management and Employees

A. Directors and Senior Management

Name	Position Held	Age
Michael D. Winn	Director	44
Brian B. Bayley	Director	53
Alan C. Moon	Director	60
Scott C. Larsen	President and Chief Executive Officer, Director	54
Christopher H. Lloyd	Chief Financial Officer	34
Dr. David Campbell	International Exploration Manager	54
Dr. Weldon Beauchamp	Consulting Geophysicist/Geologist	47
Jeffrey S. Mecom	Corporate Secretary	40
Hilda Kouvelis	Controller	43

Michael D. Winn has served as a director since 2004. He is currently President of Terrasearch Inc. a consulting company that provides analysis on mining and energy companies. Prior to forming his own company in 1997, Mr. Winn spent four years as an analyst for a Southern California based brokerage firm where he was responsible for the evaluation of emerging oil and gas and mining companies. Mr. Winn has worked in the oil and gas industry since 1983 and the mining industry since 1992, and is also a director of several companies that are involved in mineral exploration in Canada, Latin America, Europe and Africa. Mr. Winn has completed graduate course work in accounting and finance and received a B.S. degree in geology from the University of Southern California. Mr. Winn is currently a director of the following public companies:

Company	Exchange
Alexco Resource Corp	TSX
Eurasian Minerals Inc.	TSX Venture Exchange
General Minerals Corp.	TSX
Lake Shore Gold Corp.	TSX Venture Exchange
Mena Resources Inc.	TSX Venture Exchange
Quest Capital Corp.	TSX
Sanu Resources Ltd.	TSX Venture Exchange

Brian B. Bayley has served as a director since 2001. Mr. Bayley is currently the Chief Executive Officer and President of Quest Capital Corp, a publicly traded merchant banking

33

organization that focuses on providing financial services, specifically bridge loans, to small and mid-cap companies in North America. He was also the co-founder of Quest Ventures Ltd., a privately held merchant bank based in Vancouver which also specialized in bridge loans. Prior to Quest Ventures, Mr. Bayley was President and CEO of Quest Oil & Gas, which was sold to Enermark Income Fund in 1997. Mr. Bayley is currently a director of the following public companies:

Company	Exchange
American Natural Energy Corp.	TSX Venture Exchange
Arapaho Capital Corp.	TSX Venture Exchange
Cypress Hills Resource Corp.	TSX Venture Exchange
Esperanza Silver Corp.	TSX Venture Exchange
Eurasian Minerals Inc.	TSX Venture Exchange
Greystar Resources Ltd.	TSX
Groundstar Resources Limited	TSX Venture Exchange
Hatton Capital Corp.	TSX Venture Exchange
Kirkland Lake Gold Inc.	TSX
LARA Exploration Ltd.	TSX Venture Exchange
Midway Gold Corp.	TSX Venture Exchange
Navan Capital Corp.	TSX Venture Exchange
PetroFalcon Corp.	TSX
Quest Capital Corp.	TSX
Sanu Resources Ltd.	TSX Venture Exchange
Torque Energy Inc.	TSX Venture Exchange

Alan C. Moon has served as a director since 2004. Mr. Moon is currently President of Crescent Enterprises Inc., a private Calgary-based consulting firm. Prior to forming this company in 1997, Mr. Moon was President and COO of TransAlta Energy Corporation. The company was an international independent electric power generation and distribution company with approximately $1 billion in assets and operated in Ontario, New Zealand, Australia, South America, and the United States. Mr. Moon is currently a director of the following public companies:

Company	Exchange
Avenir Diversified Income Trust	TSX
Superior Diamonds Inc.	TSX Venture Exchange
Calpine Power Income Fund	TSX
Lake Shore Gold Corp.	TSX Venture Exchange
Maxy Gold Corp.	TSX Venture Exchange
Enervest Diversified Income Trust	TSX

Scott C. Larsen has served as our President and Chief Executive Officer since March 2004. He was appointed director in 2005. He previously served as our Vice President - Operations since July 2002 and has been involved in our international activities since their inception in 1994. An attorney by training with over 25 years experience in the oil and gas

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industry, Mr. Larsen previously served as general counsel for a Texas independent exploration company, spent several years as a partner in a business litigation law firm in Dallas, Texas and served as general counsel for a venture capital and management company. He received a B.A. degree in biology from Rutgers College and a J.D. degree from Rutgers School of Law.

Christopher H. Lloyd has served as our Chief Financial Officer since October 2004. Before joining us, Mr. Lloyd was a Director in the Business Restructuring and Management Consulting practice of PriceWaterhouseCoopers in Dallas, Texas. Mr. Lloyd previously served as a Director of Business Development for Panda Energy International, Inc., an international oil and gas and power generation company. Prior to that he worked in the oil and gas audit practice of Ernst and Young LLP. He received an M.B.A. degree in finance from the University of Texas at Austin and a B.B.A degree in accounting from the University of Oklahoma. Mr. Lloyd is a licensed Certified Public Accountant.

Dr. David Campbell currently serves as our International Exploration Manager. He received a B.Sc. degree in geology from St Andrews University and a Ph.D. degree in geology at Glasgow University. After university he joined Esso Expro UK as a seismic interpreter and later spent the majority of his professional career with ARCO both in the UK and overseas. He was North Sea Chief Geophysicist for ARCO British Limited, Geophysical Research Manager for ARCO Exploration and Production Technology Company, and Middle East Exploration Manager for ARCO International Oil and Gas Company. Following his retirement from ARCO, Dr Campbell became an officer or a director in a number of energy-related companies, including Balli Resources Limited, Balli Naft CFZ and VND Energy Limited.

Dr. Weldon Beauchamp currently serves as our Consulting Geophysicist/Geologist. He received a B.A. degree in geology from New England College, New Hampshire, and an M.S. degree in geology from Oklahoma State University and a Ph.D. in geophysics from Cornell University. He worked for Sun Exploration and Production Company in the mid-continent region, prior to joining Sun International Exploration and Production Company in Dallas, Texas and London, England. He served as a new venture exploration geologist in the North Sea, Africa, and the Middle East regions. Upon leaving Sun, he completed his doctoral work, which focused on the tectonic evolution of the Atlas Mountains in North Africa. Dr. Beauchamp then joined ARCO in Plano, Texas where he worked as a geophysicist in New Ventures - Middle East. Since leaving ARCO, he has consulted for Triton Energy in Equatorial Guinea, for Hunt Oil in offshore Togo as well as for TransAtlantic in Nigeria and Morocco.

Jeffrey S. Mecom has served as our Corporate Secretary since May 2006. He also serves as Vice President - Legal of our TransAtlantic Petroleum (USA) Corp. subsidiary. Prior to joining us, Mr. Mecom served as Vice President, Legal and Corporate Secretary with Aleris International, Inc., an NYSE-listed international metals recycling and processing company, where he was employed from 1995 until 2005. He received his B.A. degree in economics from the University of Texas at Austin and his J.D. degree from the University of Texas School of Law.

Hilda D. Kouvelis has served as our Controller since May 2006. Ms. Kouvelis has more than 20 years of industry experience, including 18 years with FINA, Inc., where she held various positions in finance and accounting, including Controller and Treasurer. Ms Kouvelis served as

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Financial Controller for international operations at the headquarters of PetroFina, S.A. in Brussels, Belgium from 1998 through 2000. She holds an M.B.A. degree in corporate finance and investment analysis from the University of Dallas and a B.B.A. degree in accounting from Angelo State University. Ms. Kouvelis is a licensed Certified Public Accountant.

None of our directors, officers or employees has any family relationship with one another. To the best of our knowledge, there are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.

B. Compensation

The following table sets forth all annual and long-term compensation for services in all capacities in Fiscal 2005 for our directors, chief executive officer and chief financial officer.

								Options Granted
	Salary		Bonus		Other Annual Compensation			Number	Exercise Price		Expiry Date
Scott C. Larsen President, Chief Executive Officer and Director	$	216,000	$	50,000	$	100,000	(1)	100,000	$	0.90	October 11, 2010
Christopher H. Lloyd Chief Financial Officer	$	144,000	$	30,000	$	15,000	(2)	125,000 35,000	$ $	0.71 0.90	May 6, 2010 October 11, 2010
Michael D. Winn Director		-0-		-0-	$	59,840	(3)	100,000	$	0.90	October 11, 2010
Brian B. Bayley Director		-0-		-0-	$	12,000	(3)	25,000	$	0.90	October 11, 2010
Alan C. Moon Director		-0-		-0-	$	12,000	(3)	25,000	$	0.90	October 11, 2010

(1) Mr. Larsen was paid a one-time bonus of $100,000 upon the successful sale of our Nigerian interests in June 2005 which represented the culmination of nearly 3 years of work to sell the Nigerian interests. In addition, we agreed to pay Mr. Larsen a bonus payment equal to 3.87% of the amount received by us from a net profits agreement with the purchaser of the Nigerian asset, if and when any such net profits are actually received, up to a total bonus payment of $600,000.

(2) Mr. Lloyd was paid a referral fee of $15,000 by Quest Capital Corp. with respect to a syndicated loan opportunity he presented to Quest in March 2005; the Company participated in the syndication and the loan has now been repaid.

(3) Represents director fees paid in accordance with resolutions passed by our Compensation Committee.

The following table sets forth details of all stock options exercised in Fiscal 2005 by each of our directors, chief executive officer and chief financial officer.

	Options Exercised	Exercise Price		Market Price		Aggregate Value Realized
Scott C. Larsen President, Chief Executive Officer and Director	120,000	$	0.75	$	0.85	$	12,000

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C. Board Practices

Term of Office. At the end of Fiscal 2005, we had four directors. The terms of all four expire at the annual meeting of shareholders:

Name	Term Expires	Held Office Since
Michael D. Winn	May 2007	May 2004
Brian B. Bayley	May 2007	May 2001
Alan C. Moon	May 2007	May 2004
Scott C. Larsen	May 2007	May 2005

Our board of directors currently has three committees: the Audit Committee, the Compensation Committee and the Corporate Governance Committee. Our three independent directors, Michael D. Winn, Brian B. Bayley and Alan C. Moon, comprise the Audit Committee, the Compensation Committee and the Corporate Governance Committee.

Audit Committee. The Audit Committee reviews the effectiveness of our financial reporting, management information and internal control systems, and the effectiveness of our independent auditors. It monitors financial reports, the conduct and results of the annual independent audit, finance and accounting policies and other financial matters. The Audit Committee also reviews and approves our interim consolidated financial statements and year end financial statements. The Audit Committee has been designated by the Board to serve as the Reserves Committee and reviews the reserve reports and conducts inquiries with the reserve engineers as it deems appropriate. To maintain the effectiveness and integrity of our financial controls, the Audit Committee monitors internal control and management information systems.

Compensation Committee. The Compensation Committee establishes and reviews our compensation policies. The Compensation Committee also reviews our senior management’s performance. The Compensation Committee makes recommendations to the full Board for approval of granting stock options under our Amended Stock Option Plan and with respect to salaries and bonuses for executive officers. Our compensation philosophy is aimed at attracting and retaining quality and experienced personnel, which is critical to our success. Employee compensation, including executive officer compensation, is comprised of three elements: base salary, short-term incentive compensation (being cash bonuses) and long-term incentive compensation (being stock options). Since our focus has been in international oil and gas exploration, consideration is given to the factors such as time overseas, the risk inherent in certain international operations and the greater degree of time and effort international transactions may require. The Compensation Committee views the totality of our performance in its evaluation of compensation for executive officers.

D. Employees

As of December 31, 2005, our TransAtlantic Petroleum (USA) Corp. subsidiary employed five people full time in our Dallas, Texas office. The persons employed are the

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President and Chief Executive Officer, the Chief Financial Officer, and 3 persons in accounting, engineering and administration. None of our employees are related. None of our employees are members of a collective bargaining unit. In addition to the foregoing, we also received technical services from a number of exploration, geophysical, geological, engineering, accounting and legal consultants in Fiscal 2005.

E. Share Ownership.

None of our officers or directors owns more than one percent of our issued and outstanding common shares. For a description of our Amended and Restated Stock Option Plan (2006), please see Part II, Item 10.C – Material Contracts and Agreements.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

To the best of our knowledge, no person beneficially owns, directly or indirectly, or exercises control or direction over shares constituting more than five percent of the voting rights of our shares, other than as set forth below:

Shareholder	Number of Shares	Percentage
Resource Capital Investment Corp.	4,421,500	11.7%

Our major shareholders do not have different voting rights than any other shareholders. As of June 30, 2006, our shareholders list showed 37,936,939 common shares outstanding with 221 registered shareholders in Canada holding 31,174,270 common shares. We are not controlled, directly or indirectly, by any corporation, foreign government or other person.

B. Related Party Transactions

Except as follows, none of our officers, directors or persons owning at least five percent of our outstanding securities, or affiliate thereof, has or has had any material interest, directly or indirectly, in any transaction involving us since January 1, 2003, or in any proposed transaction involving us.

We participated in four loan syndications through Quest Capital Corp. in 2003, 2004 and 2005. All are secured, short term investments. Brian B. Bayley, one of our directors, is President, CEO and a director of Quest Capital Corp. Michael D. Winn, another of our directors, is also a director of Quest Capital Corp. Both Mr. Bayley and Mr. Winn abstained from decisions relating to the loan syndications.

One of our directors, Brian B. Bayley, was also a director on the board of ANEC when we purchased an interest in the Bayou Couba property from ANEC and funded a $1.8 million production payment in March 2003. Mr. Bayley was also on the board of ANEC when we purchased $3 million of convertible debentures issued by ANEC. Mr. Bayley abstained from voting on both transactions. John Fleming, one of our former directors, became a director of ANEC following the purchase of the convertible debentures by us in October 2003 and continued as a director of ANEC until he passed away in March 2004. During the first quarter 2006, we received net payments (oil and gas sales plus debenture interest less drilling advances and lease operating expenses) of $69,000 (1Q2005 – $145,000) from ANEC. These transactions have been recorded at the exchange amount agreed to between the related parties. At March 31, 2006, one of our directors was also a director of ANEC.

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Scott C. Larsen, our chief executive officer, was paid a one-time bonus of $100,000 upon the successful sale of our Nigerian interests in June 2005 which represented the culmination of nearly 3 years of work to sell the Nigerian interests. In addition, we agreed to pay Mr. Larsen a bonus payment equal to 3.87% of the amount received by us from a net profits agreement with the purchaser of the Nigerian asset, if and when any such net profits are actually received, up to a total bonus payment of $600,000.

Christopher H. Lloyd, our chief financial officer, was paid a referral fee of $15,000 by Quest Capital Corp. with respect to a syndicated loan opportunity he presented to Quest in March 2005; the Company participated in the syndication and the loan has now been repaid.

C. Interests of Experts and Counsel

Not applicable.

Item 8. Financial Information

A. Consolidated Statements and Other Financial Information

Financial statements are provided under Part III, Item 17.

Legal or Arbitration Proceedings. As of the date of this registration statement, we are, to the best of our knowledge, not subject to any material active or pending legal proceedings or claims against us or any of our properties. However, from time to time, we may be subject to claims and litigation generally associated with any business venture. Additionally, our operations are subject to risks of accident and injury, possible violations of environmental and other regulations, and claims associated with the risks of exploration operations some of which cannot be covered by insurance or other risk reduction strategies.

Dividend Policy. We have not paid any cash dividends on our common stock and have no present intention of paying dividends. Our current policy is to retain earnings, if any, for use in operations and in business development.

B. Significant Changes

None

Item 9. The Offer and Listing

A. Offer and Listing Details

Not Applicable

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B. Plan of Distribution

Not Applicable

C. Markets

Our shares of common stock are traded in Canada on the Toronto Stock Exchange (“TSX”) under the symbol “TNP.U.” As of June 30, 2006, we had 37,936,939 shares of common stock outstanding. Our shares of common stock are issued in registered form and the number of shares of common stock reported to be held by record holders in Canada and the United States is taken from the records of Computershare Trust Company of Canada, the registrar and transfer agent for our shares of common stock. For U.S. reporting purposes, we are a foreign private issuer. We currently have no established market for trading our shares in the United States. The high and low prices for our common stock from January 1, 2001 through December 31, 2005 on the TSX are as follows:

	High		Low
January 1, 2001 through December 31, 2001	$	0.02	$	0.175
January 1, 2002 through December 31, 2002	$	0.03	$	0.185
January 1, 2003 through December 31, 2003	$	0.33	$	0.12
January 1, 2004 through December 31, 2004	$	1.20	$	0.19
January 1, 2005 through December 31, 2005	$	1.02	$	0.59

The high and low prices for our common stock for each quarter from January 1, 2004 through June 30, 2006 on the TSX are as follows:

	High		Low
January 1, 2004 through March 31, 2004	$	1.12	$	0.19
April 1, 2004 through June 30, 2004	$	1.20	$	0.73
July 1, 2004 through September 30, 2004	$	1.00	$	0.66
October 1, 2004 through December 31, 2004	$	0.90	$	0.58
January 1, 2005 through March 31, 2005	$	0.90	$	0.65
April 1, 2005 through June 30, 2005	$	0.85	$	0.67
July 1, 2005 through September 30, 2005	$	0.96	$	0.59
October 1, 2005 through December 31, 2005	$	1.02	$	0.73
January 1, 2006 through March 31, 2006	$	1.30	$	0.82
April 1, 2006 through June 30, 2006	$	1.35	$	1.09

The high and low prices for our common stock for the most recent six months on the TSX are as follows:

	High		Low
January 1, 2006 through January 31, 2006	$	1.10	$	0.82
February 1, 2006 through February 28, 2006	$	1.09	$	1.00
March 1, 2006 through March 31, 2006	$	1.30	$	1.00
April 1, 2006 through April 30, 2006	$	1.30	$	1.09
May 1, 2006 through May 31, 2006	$	1.35	$	1.16
June 1, 2006 through June 30, 2006	$	1.29	$	1.10

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Warrants. In November 2005, pursuant to a financing, we issued 5,000,000 Units at a price of $0.85 per Unit. Each Unit consists of one common share and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share at a price of $1.05 per share until November 2007; provided however, if the volume weighted average closing price of our common shares exceeds $1.40 per share for 20 consecutive trading days, we are entitled to accelerate expiration of the warrants (thereby requiring the warrant holder to exercise the warrant within 30 days of being notified of the accelerated expiration). In connection with issuance of the Units, we also issued 375,000 broker warrants to the underwriters exercisable on the same terms as the warrants forming part of the financing Units.

In April 2005, we issued 500,000 share purchase warrants as part of the consideration for our purchase of the South Gillock property. Each warrant entitles the holder to acquire one common share at a price of $1.00 per share until April 2007.

D. Selling Shareholders

Not Applicable

E. Dilution

Not Applicable

F. Expenses of the Issue

Not Applicable

Item 10. Additional Information

A. Share Capital

Our authorized share capital consists of an unlimited number of common shares without par value. All issued shares are fully paid and non-assessable. As of December 31, 2005 and June 30, 2006 we had 37,659,189 and 37,936,939, respectively, shares issued and outstanding. As of June 30, 2006, we have outstanding an aggregate of 2,685,000 options to purchase shares pursuant to our Amended and Restated Stock Option Plan (2006). We also have outstanding 3,257,250 share purchase warrants related to a private placement which closed in November 2005 and the South Gillock property purchase which closed in April 2005. Each April 2005 warrant entitles the holder to acquire one common share at a price of $1.00 through April 15, 2007. Each November 2005 warrant entitles the holder to acquire one common share at a price of $1.05 through November 6, 2007. If the volume weighted average closing price of our common shares exceeds $1.40 per share for 20 consecutive trading days, we are entitled to accelerate expiration of the November 2005 warrants, thereby requiring the warrant holder to exercise the warrant within 30 days of being notified of the accelerated expiration.

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B. Articles of Incorporation and Bylaws

The Business Corporations Act (Alberta) requires any one of our directors or officers who is a party to a material contract or a material transaction, whether made or proposed, with us or who is a director or officer of or has a material interest in any person who is a party to a material contract or a material transaction, whether made or proposed, with us to disclose in writing to us or request to have entered in the minutes of the meeting of directors or committees of directors the nature and extent of his or her interest, and shall, except in limited circumstances (including votes in respect of contracts relating primarily to a director’s remuneration or for a director’s indemnity or insurance), refrain from voting in respect of the material contract or material transaction. Neither the Act, our articles nor our bylaws require an independent quorum to enable the directors to vote compensation to themselves or any of their members.

The board of directors has an unlimited power to borrow, issue debt obligations and to charge our assets, provided only that such power is exercised honestly and in good faith with a view to our best interests and that in exercising such power, the directors exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. There is no mandatory retirement age for our directors, and the directors are not required to own any of our shares in order to qualify as a director.

We have only one class of common shares, without any special rights or restrictions. Holders of common shares are entitled to receive notice of and attend all meetings of our shareholders and are entitled to one vote for each common share held on all votes taken at such meetings. There are no cumulative voting rights, in consequence of which a simple majority of votes at the annual meeting can elect all of our directors. Each common share carries with it the right to share equally with every other common share in such dividends as the directors may in their discretion declare. The dividend entitlement of a shareholder of record is fixed at the time of any such declaration by the board of directors. Pursuant to our by-laws, any dividend which is unclaimed after a period of six years from the date on which such dividend is declared to be payable will be forfeited and revert to us. Each common share also carries with it the right to share equally with every other common share in any distribution of any of our remaining property, after payment to creditors, on any winding up, liquidation or dissolution. There are no sinking fund provisions. All common shares must be fully paid for prior to issue and are thereafter subject to no further capital calls by us. There exists no discriminatory provision affecting any existing or prospective holder of common shares as a result of such shareholder owning a substantial number of shares.

Under the Business Corporations Act (Alberta), the amendment of certain rights attaching to the common shares requires the shareholders to pass a special resolution approved by not less than two-thirds of the votes cast by the holders of such shares voting at a special meeting of such holders. The Act requires notice of a special meeting to state the nature of the proposed business in sufficient detail to permit a shareholder to form a reasoned judgment and to include the text of any special resolution to be submitted at the meeting. Pursuant to our bylaws, a quorum for a

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meeting of the holders of common shares occurs when there are at least two persons present in person, each being a shareholder or a duly appointed proxy or representative for an absent shareholder, and representing in the aggregate not less than 10% of the outstanding common shares. In circumstances where the rights of common shares may be amended to add, change or remove any provisions restricting or constraining the issue, transfer or ownership of common shares, holders of common shares have the right under the Business Corporations Act (Alberta) to dissent from such amendment and require us to pay them the then fair value of the common shares.

There are two types of shareholder meetings: annual meetings and special meetings. Pursuant to the Business Corporations Act (Alberta), an annual shareholder meeting shall be held not later than 15 months after the holding of the last preceding annual meeting. The Board may call a special meeting of shareholders at any time. Notice of any shareholder meeting must be accompanied by an information circular describing the proposed business to be dealt with and making disclosures as prescribed by the Securities Act (Alberta). A shareholder or shareholders having in the aggregate 5% of our issued shares may requisition our directors to call a meeting for the purposes stated in the requisition. Except in certain circumstances, the Board is required to call such meeting within 21 days after receiving such requisition and if they do not, the shareholders who requisitioned the meeting may call the meeting. Admission to shareholder meetings is open to registered shareholders and their duly appointed proxies and our directors and auditors. Others may be admitted on the invitation of the chairman of the meeting or with the consent of the meeting.

Neither our articles nor our bylaws contain any limitations on the rights of non-resident or foreign shareholders to hold or exercise rights on our shares and there is no limitation under the Business Corporation Act (Alberta) on the right of a non-resident to hold shares in a corporation incorporated under such Act.

There are no provisions in our articles or bylaws that would have an effect of delaying, deferring or preventing a change in control and that would operate only with respect to a merger, acquisition or corporate restructuring involving us or any of our subsidiaries.

There is no provision in our articles setting a threshold or requiring or governing disclosure of shareholder ownership above any level. Securities Acts, regulations and the policies and rules thereunder in the Provinces of Alberta, British Columbia and Ontario, where we are a reporting issuer, require any person holding or having control of more than 10% of our issued shares to file insider returns disclosing such share holdings.

C. Material Contracts and Agreements

Employment Agreements. We entered into an employment agreement with Mr. Larsen, our President and Chief Executive Officer, effective July 1, 2005. The agreement expires upon the death, disability, resignation or other termination of employment of Mr. Larsen. This agreement provides for an annual base salary to Mr. Larsen as approved by our Board, initially at the rate of $240,000 per year. The agreement also provides for Mr. Larsen’s participation in our Amended and Restated Stock Option Plan (2006) and other benefits made available to our executives resident in the U.S.

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If the employment agreement is terminated (1) by us at any time without cause (as defined in the agreement) or (2) by Mr. Larsen within sixty days of an event that constitutes “constructive dismissal” (as defined in the agreement), then we will pay Mr. Larsen a lump sum amount equal to Mr. Larsen’s annual salary plus $15,000 (the “termination amount”). If a “change in control” (as defined in the agreement) results in either (1) the termination of Mr. Larsen’s employment without cause within thirty days prior to or within one year after the change in control, or (2) a constructive dismissal within one year of the change in control, we will pay Mr. Larsen a lump sum amount equal to the termination amount. Under the agreement, Mr. Larsen agreed to certain confidentiality and non-solicitation obligations, and in order to receive the termination amount set forth in the agreement, Mr. Larsen must first sign a release in the form set forth in the agreement.

We entered into a substantially similar employment agreement with Mr. Lloyd, our Chief Financial Officer. His agreement provides for an annual base salary of $144,000 and is dated effective May 1, 2005. Mr. Lloyd’s termination amount is equal to one-half of his annual salary plus $7,500.

Participating Interest Agreement. We entered into an agreement with Mr. Larsen under which we granted Mr. Larsen a participating interest in any compensation we receive pursuant to the agreement we entered into with Tetrarch Limited in June 2005 concerning the sale of our Nigerian assets (the “TWL Compensation Agreement”). Under the participating interest agreement, Mr. Larsen will receive 3.87% of any TWL Compensation (as defined in the TWL Compensation Agreement) we receive, provided that in no event will Mr. Larsen receive more than $599,850 of the TWL Compensation.

Amended and Restated Stock Option Plan (2006). Our only equity compensation plan is the Amended and Restated Stock Option Plan (2006) (the “Option Plan”), which has been approved and adopted by our shareholders. Pursuant to the Option Plan, we may grant stock options to our directors, officers, employees and consultants or to directors, officers, employees or consultants of our subsidiaries. The stock options enable such persons to purchase our common shares at the exercise price fixed by our Board at the time the option is granted. Our Board determines the number of common shares purchasable pursuant to each option and such exercise price within the guidelines established by the Option Plan. These guidelines allow the Board to authorize the issuance of options with a term not to exceed 10 years and to set other conditions to the exercise of options, including any vesting provisions. All options presently issued have terms of five years and all are fully vested. Consistent with the rules of the Toronto Stock Exchange, our Option Plan requires that the exercise price of the options at the time of grant may not be lower than the market price of our common shares, which is the closing price of our common shares on the Toronto Stock Exchange on the trading day immediately prior to the date the stock option is granted.

The option agreements must provide that the option can only be exercised by the optionee and only for so long as the optionee shall continue in the capacity outlined above or within a specified period after ceasing to continue in such capacity. The options are exercisable by the

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optionee giving us notice and payment of the exercise price for the number of common shares to be acquired. Under the Option Plan, our Board is empowered to grant stock options to insiders without further shareholder approval. The aggregate maximum number of common shares which may be reserved for issuance to any one person at any time under the Option Plan is five percent of the number of common shares that are outstanding immediately prior to the reservation in question, excluding common shares issued pursuant to our share compensation arrangements over the preceding one-year period (the “Outstanding Issue”). The aggregate number of common shares which may be issued to any one our insiders within a one year period cannot exceed 5% of the Outstanding Issue. In addition, (a) the maximum aggregate number of common shares which can be reserved for issuance to insiders is limited to 10% of the Outstanding Issue and (b) the maximum aggregate number of common shares which can be issued to insiders, within a one year period, is limited to 10% of the Outstanding Issue.

Stock options granted under the Option Plan are not assignable. We do not provide financial assistance to facilitate the purchase of common shares on exercise of stock options. The Option Plan is a fixed maximum percentage plan pursuant to which the maximum number of our common shares which can be reserved for issuance pursuant to stock options is equal to 10% of the number of issued and outstanding common shares on the date of grant of any stock option. Since the Option Plan is a fixed percentage plan rather than a fixed number plan, the Option Plan allows the reloading of common shares authorized for issuance upon the exercise or cancellation of stock options granted under the Option Plan up to the 10% maximum percentage amount. Because our Option Plan is a fixed maximum percentage plan, it must be approved every three years by both our Board and our shareholders. In addition, any change to the maximum percentage of our common shares authorized under the Option Plan must be approved by both our Board and our shareholders. The Option Plan sets forth the types of amendments that can be made by our Board without shareholder approval, which include altering the terms and conditions of vesting applicable to any stock options; extending the term of stock options held by a person other than any of our insiders; accelerating the expiry date in respect of stock options; and adding a cashless exercise feature, payable in cash or common shares..

Warrants. In November 2005 we closed a $4.25 million bought deal underwritten private placement financing. Pursuant to the financing, we issued 5,000,000 Units at a price of $0.85 per Unit. Each Unit consists of one common share and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share at a price of $1.05 per share until November 6, 2007, provided however, if the volume weighted average closing price of our common shares exceeds $1.40 per share for 20 consecutive trading days, we are entitled to accelerate expiration of the warrants (thereby requiring the warrant holder to exercise the warrant within 30 days of being notified of the accelerated expiration). In connection with issuance of the Units, we also issued 375,000 broker warrants to the underwriters exercisable on the same terms as the warrants forming part of the financing Units.

In April 2005, we issued 500,000 share purchase warrants as part of the consideration for our purchase of the South Gillock property. Each warrant entitles the holder to acquire one common share at a price of $1.00 per share until April 15, 2007.

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D. Exchange Controls

There are no governmental laws, decrees, or regulations in Canada that restrict the export or import of capital or that affect the remittance of dividends, interest, or other payments to nonresident holders of our common stock. However, any such remittance to a non-corporate resident of the United States may be subject to a 15% withholding tax pursuant to Article XI of the reciprocal tax treaty between Canada and the United States.

Except as provided in the Investment Canada Act (the “Act”), enacted on June 20, 1985, as amended, as further amended by the North American Free Trade Agreement (NAFTA) Implementation Act (Canada) and the World Trade Organization (WTO) Agreement Implementation Act, there are no limitations under the laws of Canada, the Province of Alberta or in the charter or any other of our constituent documents on the right of non-Canadians to hold and/or vote our common stock.

E. Taxation

The following paragraphs set forth certain United States and Canadian federal income tax considerations in connection with the payment of dividends on and purchase or sale of our shares of common stock. The tax considerations are stated in general terms and are not intended to be advice to any particular shareholder. Each prospective investor is urged to consult his or her own tax advisor regarding the tax consequences of his or her purchase, ownership and disposition of shares of our common stock.

The discussion set forth below is based upon the provisions of the Income Tax Act (Canada) (the “Tax Act”), the Internal Revenue Code of 1986, as amended (the “Code”) and the Convention between Canada and the United States of America with respect to Taxes on Income and on Capital (the “Convention”), as well as United States Treasury regulations and rulings and judicial decisions. Except as otherwise specifically stated, the following discussion does not take into account or anticipate any changes to such laws, whether by legislative action or judicial decision. The discussion does not take into account the provincial tax laws of Canada or the tax laws of the various state and local jurisdictions in the United States.

Canadian Federal Income Tax Considerations. The following discussion applies only to citizens and residents of the United States and United States corporations who are not resident in Canada and will not be resident in Canada and who do not use or hold nor are deemed to use or hold such shares of our common stock in carrying on a business in Canada.

The payment of cash dividends and stock dividends on the shares of our common stock will generally be subject to Canadian withholding tax. The rate of the withholding tax will be 25% or such lesser amount as may be provided by treaty between Canada and the country of residence of the recipient. Under the Convention, the withholding tax generally would be reduced to 15%.

Neither Canada nor any province thereof currently imposes any estate taxes or succession duties. Provided a holder of shares of our common stock has not, within the preceding five years,

46

owned (either alone or together with persons with whom he or she does not deal at arm’s length) 25% or more of the shares of common stock, the disposition (or deemed disposition arising on death) of such shares of common stock will not be subject to the capital gains provisions of the Tax Act.

United States Federal Income Tax Considerations. The following discussion is addressed to US holders. As used in this section, the term “US holder” means a holder of our common stock that is for United States federal income tax purposes (1) an individual citizen or resident of the United States, (2) a corporation created or organized in or under the laws of the United States, any state of the United States or the District of Columbia, (3) an estate the income of which is subject to United States federal income taxation regardless of its source, or (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (as defined in the Code) have the authority to control all substantial decisions of the trust, or a trust was in existence on August 20, 1996, and validly elected to continue to be treated as a United States person. This discussion deals only with the holders that hold their common stock as capital assets within the meaning of Section 1221 of the Code. The discussion does not address all aspects of United States federal income taxation that may be relevant to US holders in light of their particular circumstances, nor does it address the United States federal income tax consequences to US holders that are subject to special rules under the Code, including, but not limited to, (i) dealers or traders in securities, (ii) financial institutions, (iii) tax-exempt organizations or qualified retirement plans, (iv) insurance companies, (v) entities that are taxed under the Code as partnerships, pass-through entities or “Subchapter S Corporations”, (vi) persons or entities subject to the alternative minimum tax, (vii) persons holding common stock as a hedge or as part of a straddle, constructive sale, conversion transaction, or other risk management transaction, and (viii) holders who hold their common stock other than as a capital asset.

Dividends. Subject to the discussion of the “passive foreign investment company” rules below, a US holder owning shares of common stock must generally treat the gross amount of dividends paid by us to the extent of our current and accumulated earnings and profits without reduction for the amount of Canadian withholding tax, as dividend income for United States federal income tax purposes. To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a tax-free return of capital, which will reduce the holder’s adjusted tax basis in his or her common stock (but not below zero), then as capital gain. The dividends generally will not be eligible for the “dividends received” deduction allowed to United States corporations. The amount of Canadian withholding tax on dividends may be available, subject to certain limitations, as a foreign tax credit or, alternatively, as a deduction (see discussion at “Foreign Tax Credit” below). In general, dividends paid by us will be treated as income from sources outside the United States if less than 25% of our gross worldwide income for the 3-year period ending with the close of our taxable year preceding the declaration date of the dividends was effectively connected with a trade or business in the United States. If 25% or more of our worldwide gross income for the 3-year testing period is effectively connected with a trade or business in the United States, then for United States federal income tax purposes our dividends will be treated as U.S. source income in the same proportion that the U.S. trade or business income bears to our total worldwide gross income. Dividends paid by us generally will be “passive income,” or in the case of certain types of taxpayers, “financial services income” for foreign tax credit purposes.

47

If we make a dividend distribution in Canadian dollars, the U.S. dollar value of the distribution on the date of receipt is the amount includible in income. Any subsequent gain or loss in respect of the Canadian dollars received arising from exchange rate fluctuations generally will be U.S. source ordinary income or loss.

Long-term capital gain of noncorporate taxpayers generally is eligible for preferential tax rates. Additionally, for taxable years beginning after December 31, 2002 and before January 1, 2011, subject to certain exceptions, dividends received by certain noncorporate taxpayers from “qualified foreign corporations” are taxed at the same preferential rates that apply to long-term capital gain. The maximum federal tax rate on net long-term capital gains recognized by noncorporate taxpayers currently is 15%. Provided that we are not a “passive foreign investment company,” as discussed below, we currently should meet the definition of “qualified foreign corporation.” As a consequence, dividends paid to certain noncorporate taxpayers should be taxed at the preferential rates.

Sale or Exchange of Common Stock. Subject to the discussion of the “passive foreign investment company” rules below, the sale of a share of our common stock generally results in the recognition of gain or loss to the US holder in an amount equal to the difference between the amount realized and the US holder’s adjusted tax basis in such share. Gain or loss upon the sale of the share will be long-term or short-term capital gain or loss, depending on whether the share has been held for more than one year. The maximum federal tax rate on net long-term capital gains currently is 15% for noncorporate taxpayers and 35% for corporations. Capital gain that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to certain limitations. Gain recognized by a US holder on the sale or other disposition of our common stock will generally be treated as United States source income.

Foreign Tax Credit. Subject to the limitations set forth in the Code, as modified by the Convention, a US holder may elect to claim a credit against his or her U.S. federal income tax liability for Canadian income tax withheld from dividends received in respect of shares of our common stock. Holders of our common stock and prospective US holders of our common stock should be aware that dividends we pay generally will constitute “passive income” for purposes of the foreign tax credit, which could reduce the amount of foreign tax credit available to them. The rules relating to the determination of the foreign tax credit are complex. US holders of our common stock and prospective US holders of our common stock should consult their own tax advisors to determine whether and to what extent they would be entitled to such credit. Holders who itemize deductions may instead claim a deduction for Canadian income tax withheld.

Information Reporting and Backup Withholding. Information reporting requirements will generally apply to dividends on, and the proceeds of a sale or exchange of, our common stock that are paid within the United States (and, in some cases, outside the United States) to US holders and certain exempt recipients (such as corporations). Certain US holders may be subject to backup withholding at the rate of 28% on dividends paid or the proceeds of a sale or exchange of our common stock. Generally, backup withholding will apply to a US holder only when the US holder fails to furnish us with or to certify to us the US holder’s proper United States tax

48

identification number or we are informed by the Internal Revenue Service of the United States that the US holder has failed to report payments of interest and dividends properly. US holders should consult their own tax advisors regarding the qualification for exemption from backup withholding and information reporting and the procedure for obtaining any applicable exemption.

Passive Foreign Investment Company Considerations. Special rules apply to US holders that hold stock in a “passive foreign investment company” (“PFIC”). A non-U.S. corporation generally will be a PFIC for any taxable year in which either (i) 75% or more of its gross income is passive income or (ii) 50% or more of the gross value of its assets consists of assets, determined on the basis of a quarterly average, that produce, or that are held for the production of, passive income. For this purpose, passive income generally includes, among other things, interest, dividends, rents, royalties and gains from certain commodities transactions.

We believe that we should not be classified as a PFIC for the current taxable year or prior taxable years, and we do not anticipate being a PFIC with respect to future taxable years. However, there can be no assurance that we will not be considered a PFIC for any taxable year, because (1) the application of the PFIC rules to our circumstances is unclear and (2) status under the PFIC rules is based in part on factors not entirely within our control (such as market capitalization). Furthermore, there can be no assurance that the Internal Revenue Service will not challenge our determination concerning our PFIC status. Therefore, US holders and prospective US holders are urged to consult with their own tax advisors with respect to the application of the PFIC rules to them.

If, contrary to our expectations, we were to be classified as a PFIC for any taxable year, a US holder may be subject to an increased tax liability (including an interest charge) upon the receipt of certain distributions from us or upon the sale, exchange or other disposition of our common stock, unless such US holder timely makes one of two elections. First, if, for any taxable year that we are treated as a PFIC, a US holder makes a timely election to treat us as a qualified electing fund (“QEF”) with respect to such Holder’s interest in common stock, the electing US holder would be required to include annually in gross income (1) such Holder’s pro rata share of our ordinary earnings, and (2) such Holder’s pro rata share of any of our net capital gain, regardless of whether such income or gain is actually distributed. In general, a US holder may make a QEF election for any taxable year at any time on or before the due date (including extensions) for filing such Holder’s United States federal income tax return for such taxable year. However, Treasury regulations provide that a US holder may be entitled to make a retroactive QEF election for a taxable year after the election’s due date if certain conditions are satisfied. In the event of a determination by us or the Internal Revenue Service that we are a PFIC, we intend to comply with all record-keeping, reporting and other requirements so that US holders, at their option, may maintain a QEF election with respect to us. However, if meeting those record-keeping and reporting requirements becomes onerous, we may decide, in our sole discretion, that such compliance is impractical, and will notify US holders accordingly.

As an alternative to the QEF election, US holders may elect to mark their common stock to its market value (a “mark-to-market election”). If a valid mark-to-market election is made, the electing US holder generally will recognize ordinary income for the taxable year an amount

49

equal to the excess, if any, of the fair market value of their common stock as of the close of such taxable year over the US holder’s adjusted tax basis in the common stock. In addition, the US holder generally is allowed a deduction for the lesser of (1) the excess, if any, of the US holder’s adjusted tax basis in the common stock over the fair market value of the common stock as of the close of the taxable year, or (2) the excess, if any of (A) the mark-to-market gains for the common stock included in gross income by the US holder for prior taxable years, over (B) the mark-to-market losses for common stock that were allowed as deductions for prior tax years.

If we were determined to be a PFIC in any year, a US holder who beneficially owned shares of our common stock during that year would be required to file an annual return on Internal Revenue Service Form 8621 with the Internal Revenue Service that described any distributions received from us and any gain realized by that US holder on the disposition of their shares of our common stock.

The PFIC rules are complex. Accordingly, US holders and prospective US holders of our common stock are strongly urged to consult their own tax advisors concerning the impact of these rules, including the making of QEF or mark-to-market elections, on their investment or prospective investment in our common stock.

F. Dividends and Paying Agents

We have not paid any dividends since our inception and have no plans to pay dividends.

G. Statement of Experts

Our consolidated financial statements as of December 31, 2005 and 2004, and for each of the years in the three year period ended December 31, 2005, have been included herein and in the registration statement, in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

Netherland, Sewell & Associates, Inc. have consented to the inclusion in this registration statement of its independent engineering report of our proved reserves as at December 31, 2005.

H. Documents on Display

We have filed this Registration Statement on Form 20-F with the SEC, under the Securities and Exchange Act of 1934, as amended, with respect to our common stock. You may read and copy all or any portion of this registration statement or other information in the SEC’s public reference room at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549. You can also request copies of these documents upon payment of a duplicating fee, by writing the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC maintains a web site (http://www.sec.gov) that contains all of our filings with the SEC. The documents concerning us may also be viewed at our offices in Dallas, Texas during normal business hours.

I. Subsidiary Information

Not applicable.

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Item 11. Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of loss that may impact our financial position, results of operations, or cash flows due to adverse changes in financial market prices, including interest rate risk, foreign currency exchange rate risk, commodity price risk, and other relevant market or price risks. We do not have activities related to derivative financial instruments or derivative commodity instruments. We do hold a portfolio of equity securities resulting from previous business transactions. These securities are susceptible to equity market risk.

The oil and gas industry is exposed to a variety of risks including the uncertainty of finding and recovering new economic reserves, the performance of hydrocarbon reservoirs, securing markets for production, commodity prices, interest rate fluctuations, potential damage to or malfunction of equipment and changes to income tax, royalty, environmental or other governmental regulations. We mitigate these risks to the extent we are able by:

• utilizing competent, professional consultants as support teams to company employees;

• performing careful and thorough geophysical, geological and engineering analyses of each prospect;

• maintaining adequate levels of property liability and other business insurance;

• limiting our prospect operations to the extent appropriate.

Market risk is the possibility that a change in the prices for natural gas, natural gas liquids, condensate and oil, foreign currency exchange rates, or interest rates will cause the value of a financial instrument to decrease or become more costly to settle. We are exposed to commodity price risks, credit risk and foreign currency exchange rates.

Commodities Price Risk. Our financial condition, results of operations and capital resources are highly dependent upon the prevailing market prices of oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond our control. Factors influencing oil and natural gas prices include the level of global demand for crude oil, the foreign supply of oil and natural gas, the establishment of and compliance with production quotas by oil exporting countries, weather conditions which determine the demand for natural gas, the price and availability of alternative fuels and overall economic conditions. It is impossible to predict future oil and natural gas prices with any degree of certainty. Sustained weakness in oil and natural gas prices may adversely affect our financial condition and results of operations, and may also reduce the amount of oil and natural gas reserves that we can produce economically. Any reduction in our oil and natural gas reserves, including reductions due to price fluctuations, can have an adverse affect on our ability to obtain capital for our development activities. Similarly, any improvements in oil and natural gas prices can have a favorable impact on our financial condition, results of operations and capital resources. Based on year-end 2005 production levers, if 2005 average natural gas prices were to change by $0.50 per mcf, the impact on our earnings and cash flow would have been approximately $40,000; if the 2005 average oil prices were to change by $1.00 per bbl, the impact on our earnings and cash flow would have been approximately $18,000.

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Credit Risk. In addition to market risk, our financial instruments involve, to varying degrees, risk associated with trade credit and risk associated with operatorship of certain properties as well as credit risk related to our customers and trade payables. All of our accounts receivable are with customers or partners and are subject to normal industry credit risk. We do not require collateral or other security to support financial instruments nor do we provide collateral or security to counterparties. Currently, we do not expect non-performance by any counterparty.

Foreign Exchange Risk. Although our functional and reporting currencies are U.S. Dollars, we hold a portion of our cash and short term investments in Canadian Dollar denominated accounts. Therefore, whenever we fund subsidiary company operations, foreign exchange gains or losses are incurred (upon conversion from Canadian to U.S. Dollars). If the average currency exchange rate for 2005 between Canadian and U.S. Dollars were to change by ten percent, the net impact on our earnings and cash flow would have been approximately $19,590 (all exchange costs are paid at the time of exchange).

Interest Rate Risk. Interest rate risk exists principally with respect to our cash invested in short term investments that bears interest at floating rates. At December 31, 2005, we had approximately $2.5 million invested in money market funds which bear interest at floating rates. If average interest rates for 2005 were to change by one full percentage point, the net impact on our earnings and cash flow for 2005 would have been approximately $86,000.

The following table presents our approximate sensitivities to various market risks:

	Estimated 2005 impact on:
Sensitivities	Earnings		Cash Flow
Natural gas - US$0.50/mcf change	$	39,791	$	39,791
Crude oil - $1.00/bbl change	$	17,698	$	17,698
Foreign exchange — 10% change in the F/X Canadian to U.S. $	$	19,590	$	19,590
Interest rate - 1% change (money markets only)	$	86,085	$	86,085

Item 12. Description of Securities Other than Equity Securities

Not applicable.

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PART II.

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15. Controls and Procedures

Not applicable.

Item 16. [Reserved]

Item 16(A). Audit Committee Financial Expert

Not applicable.

Item 16(B). Code of Ethics

Not applicable.

Item 16(C). Principal Accountant Fees and Services

Not applicable.

Item 16(D). Exemption from the Listing Standards for Audit Committees

Not applicable.

Item 16(E). Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

PART III.

Item 17. Financial Statements

Independent Auditors’ Report	F-1
Consolidated Balance Sheets as at December 31, 2005 and December 31, 2004	F-2
Consolidated Statements of Operations and Deficit for the Years Ended December 31, 2005, December 31, 2004 and December 31, 2003	F-3
Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, December 31, 2004 and December 31, 2003	F-4

53

Notes to Consolidated Financial Statements	F-5
Consolidated Balance Sheets as at March 31, 2006 and March 31, 2005 (Unaudited)	F-24
Consolidated Statements of Operations and Deficit for the Three Months Ended March 31, 2006 and March 31, 2005 (Unaudited)	F-25
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and March 31, 2005 (Unaudited)	F-26
Notes to Consolidated Financial Statements (Unaudited)	F-27

54

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE DIRECTORS OF TRANSATLANTIC PETROLEUM CORP.

We have audited the consolidated balance sheets of TransAtlantic Petroleum Corp. as at December 31, 2005 and 2004 and the consolidated statements of operations and deficit and cash flows for the three years ended December 31, 2005, 2004 and 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our audit opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2005 and 2004 and the consolidated statements of operations and deficit and cash flows for the three years ended December 31, 2005, 2004 and 2003 in accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 13 to the consolidated financial statements.

Chartered Accountants

Calgary, Canada

March 21, 2006, except for Note 13, which is as of August 11, 2006.

F-1

TRANSATLANTIC PETROLEUM CORP.

Consolidated Balance Sheets

December 31, 2005 and 2004

(Thousands of U.S. Dollars)

	2005			2004
Assets
Current assets
Cash and cash equivalents	$	7,567		$	9,650
Short-term investment (note 9)		1,500			1,761
Accounts receivable		780			482
Marketable securities (note 2(a))		92			43
Other current assets		8			42
		9,947			11,978
Restricted cash (note 1)		2,110			2,466
Property and equipment (note 3)		5,813			704
Investments (note 2(b))		1,057			900
	$	18,927		$	16,048
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	924		$	325
Settlement provision (note 10)		1,511			855
		2,435			1,180
Asset retirement obligations (note 4)		556			155
Shareholders’ equity
Share capital (note 5)		20,476			16,518
Warrants (note 5)		3,502			2,670
Contributed surplus (note 5)		1,508			1,302
Deficit		(9,550	)		(5,777	)
		15,936			14,713
Commitments (notes 11 and 12)
Subsequent event (note 12)
	$	18,927		$	16,048

See accompanying notes to consolidated financial statements.

F-2

TRANSATLANTIC PETROLEUM CORP.

Consolidated Statements of Operations and Deficit

Years ended December 31, 2005, 2004 and 2003

(Thousands of U.S. Dollars, except for per share amounts)

	2005			2004			2003
Revenues
Oil and gas sales, net of royalties	$	1,409		$	5,108		$	8,494
Interest income		943			441			534
		2,352			5,549			9,028
Expenses
Lease operating and other production costs		1,918			4,396			7,034
Business development activities (note 3(d))		440			—			—
Depreciation, depletion and accretion		606			718			872
Write down of property and equipment (note 3)		—			1,235			360
General and administrative		2,295			1,823			1,346
Write down of investment (note 2(b))		112			2,100			—
Settlement provision (note 10)		905			600			—
Gain on sale of subsidiary (note 3(b))		(180	)		—			—
Foreign exchange (gain) loss		29			(130	)		—
		6,125			10,742			9,612
Net loss for the year		3,773			5,193			584
Deficit, beginning of year		5,777			584			18,403
Reduction of share capital (note 4)		—			—			(18,403	)
Deficit, end of year		9,550			5,777			584
Loss per share - basic and diluted (note 5)	$	0.11		$	0.17		$	0.02

See accompanying notes to consolidated financial statements.

F-3

TRANSATLANTIC PETROLEUM CORP.

Consolidated Statements of Cash Flows

Years ended December 31, 2005, 2004 and 2003

(Thousands of U.S. Dollars)

	2005			2004			2003
Cash provided by (used in)
Operating activates
Net loss for the year	$	(3,773	)	$	(5,193	)	$	(584	)
Items not involving cash
Gain on sale of subsidiary (note 3(b))		(180	)		—			—
Depreciation, depletion and accretion		606			718			872
Stock-based compensation		410			714			157
Write down of property and equipment		—			1,235			360
Write down of investment		112			2,100			—
Changes in non-cash working capital		1,022			(529	)		254
		(1,803	)		(955	)		1,059
Investing activities
Property and equipment		(4,839	)		(1,706	)		(1,536	)
Proceeds from sale of property and equipment		—			155			164
Proceeds from sale of subsidiary		180			—			—
Restricted cash		356			(32	)		(42	)
Marketable securities		(268	)		—			—
Investments		104			—			(3,000	)
		(4,467	)		(1,583	)		(4,414	)
Financing activities
Issuance of common shares, net		4,187			7,519			—
Repayments of indebtedness		—			—			(2,146	)
		4,187			7,519			(2,146	)
Change in cash and cash equivalents		(2,083	)		4,981			(5,501	)
Cash and cash equivalents, beginning of year		9,650			4,669			10,170
Cash and cash equivalents, end of year	$	7,567		$	9,650		$	4,669
Supplemental cash flow information:
Interest received	$	943		$	411		$	534

See accompanying notes to consolidated financial statements.

F-4

TRANSATLANTIC PETROLEUM CORP.

Notes to Consolidated Financial Statements

Years ended December 31, 2005, 2004 and 2003

(U.S. Dollars)

1. Significant accounting policies

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada which, in the case of TransAtlantic Petroleum Corp. (the “Company”), differ in certain respects from those in the United States. These differences are described in Note 13—“Reconciliation to Accounting Principles Generally Accepted in the United States”. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ from those estimates and assumptions; however, management believes that such differences would not be material.

(a) Property and equipment

The Company uses the full cost method to account for its oil and gas activities. Under this method, oil and gas assets are evaluated at least annually to determine that the costs are recoverable and do not exceed the fair value of the properties. The costs are assessed to be recoverable if the sum of the undiscounted cash flows expected from the production of proved reserves and the lower of cost and market of unproved properties exceed the carrying value of the oil and gas assets. If the carrying value of the oil and gas assets is not assessed to be recoverable, an impairment loss is recognized to the extent that the carrying value exceeds the sum of the discounted cash flows expected from the production of proved and probable reserves and the lower of cost and market of unproved properties. The cash flows are estimated using the future product prices and costs and are discounted using a risk-free rate.

Under the full cost method of accounting, the Company capitalizes all acquisition, exploration and development costs incurred for the purpose of finding oil and gas reserves in cost centers on a country-by-country basis. Costs associated with production and general corporate activities are expensed in the period incurred. Proceeds from the sale of oil and gas properties are applied against capitalized costs, and gains or losses are not recognized unless the sale would alter the depletion rate by more than 20%.

The Company computes the provision for depreciation and depletion of oil and gas properties using the unit-of-production method based upon production and estimates of gross proved reserve quantities as determined by independent reservoir engineers. Unevaluated property costs are excluded from the amortization base until the properties associated with these costs are evaluated and determined to be productive or become impaired.

F-5

1. Significant accounting policies (continued)

(a) Property and equipment (continued)

Depreciation of furniture, fixtures and computer equipment and software is provided for on the straight-line basis at rates between three and seven years designed to amortize the cost of the assets over their estimated useful lives.

(b) Asset retirement obligation

The Company records a liability for the fair value of legal obligations associated with the retirement of long-lived tangible assets in the period in which they are incurred, normally when the asset is purchased or developed. On recognition of the liability there is a corresponding increase in the carrying amount of the related asset known as the asset retirement cost, which is depleted on a unit-of production basis over the life of the reserves. The liability is adjusted each reporting period to reflect the passage of time, with the accretion charged to earnings, and for revisions to the estimated future cash flows. Actual costs incurred upon settlement of the obligations are charged against the liability and any remaining difference is recognized as a gain or loss to earnings in the period in which the settlement occurs.

(c) Revenue recognition

Revenue from the sale of product is recognized upon delivery to the purchaser when title passes.

(d) Foreign currency translation

The Company translates foreign currency denominated transactions and the financial statements of integrated foreign operations using the temporal method. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date for monetary items and at exchange rates in effect at the transaction dates for non-monetary items. Income and expenses are translated at the average exchange rates in effect during the applicable period. Exchange gains or losses are included in operations in the period incurred.

(e) Stock-based compensation

The Company uses the fair value method when stock options are granted to employees and directors under the fixed share option plan. Under this method, compensation expense is measured at the grant date and recognized as a charge to earnings over the vesting period with a corresponding credit to contributed surplus. Upon exercise of the stock options, consideration paid together with the amount previously recognized in contributed surplus is recorded as an increase to share capital. The fair value of the options is determined using the Black-Scholes option pricing model.

F-6

1. Significant accounting policies (continued)

(f) Income taxes

The Company uses the liability method of accounting for future income taxes. Under the liability method, future income tax assets and liabilities are determined based on “temporary differences” (differences between the accounting basis and the tax basis of the assets and liabilities), and are measured using the currently enacted, or substantively enacted, tax rates and laws expected to apply when these differences reverse. A valuation allowance is recorded against any future income tax assets if it is more likely than not that the asset will not be realized.

(g) Per share information

Basic per share amounts are calculated using the weighted average common shares outstanding during the year. The Company uses the treasury stock method to determine the dilutive effect of stock options and other dilutive instruments. Under the treasury stock method, only “in the money” dilutive instruments impact the diluted calculations in computing diluted earnings per share. Diluted calculations reflect the weighted average incremental common shares that would reflect the weighted average incremental common shares that would be issued upon exercise of dilutive options assuming the proceeds would be used to repurchase shares at average market prices for the period.

(h) Cash and cash equivalents

Cash and cash equivalents include term deposits and investments with original maturities of three months or less.

(i) Restricted cash

Restricted cash represents cash placed in escrow accounts or in certificates of deposit that is pledged for the satisfaction of liabilities or performance guarantees. At December 31, 2005, restricted cash includes: $1.5 million in respect of the settlement of Nigerian liabilities (see note 10) and $591,000 for a guarantee of the Morocco work program (See note 11).

(j) Marketable securities and investments

Marketable securities are stated at the lower of cost or market on a portfolio basis. Investments in companies over which the Company can exercise significant influence are accounted for using the equity method. Other long-term investments are carried at the lower of cost or estimated net realizable value.

F-7

2. Investments

(a) Marketable securities

Pursuant to certain short-term investments made in prior periods, the Company received, in addition to interest, shares in other publicly traded companies. The Company also received shares on the settlement of a claim with a joint venture partner. Pursuant to this settlement, the Company recorded a gain of $65,000 upon receipt of the shares. At December 31, 2005, the Company’s total cost of marketable securities was $92,000 (2004 - $62,000) and had a total quoted market value of $239,000 (2004 - $43,000).

The following table summarizes the marketable securities held at December 31, 2005 and 2004:

Security (all Common)	Number Of Shares December 31,		Cost Basis December 31,				Market Value December 31,
	2005	2004	2005		2004		2005		2004
American Natural Energy Corp. (b)	—	176,128	$	—	$	35,221	$	—	$	21,135
Transco Resources	100,000	100,000		27,000		27,000		111,000		21,602
Tuscany Energy	325,000	—		65,000		—		128,375		—
			$	92,000	$	62,221	$	239,375	$	42,737

(b) Investments

On September 1, 2005, the Company completed the purchase of 2,237,136 shares of American Natural Energy Corporation (“ANEC”) pursuant to ANEC’s private placement dated August 16, 2005. The purchase price was U.S. $268,000 or U.S. $0.12 per share. These shares are carried at their anticipated net realizable value of $0.07 per share (the year-end closing price) as the Company does not anticipate selling these shares in the short term.

In October 2003, the Company acquired $3.0 million of convertible debentures issued by ANEC. The convertible debentures issued by ANEC pay 8% interest, were for a two-year term maturing September 30, 2005 and are secured by all of the assets of ANEC. On June 23, 2005, the debenture holders approved extending the maturity of the debentures to September 20, 2006 and changing the conversion price from $0.43 per share to $0.15 per share. The original $3.0 million investment has been reserved against in order to be presented at its estimated net realizable value. Based upon an analysis of ANEC’s financial position, the Company determined it appropriate to reserve $2.1 million against this investment as at December 31, 2004 and such reserve continued at December 31, 2005. The investment is accounted for using the cost method.

F-8

3. Property and equipment

(Thousands of U.S. Dollars)

2005	Cost		Accumulated depreciation and depletion		Net book value
Crude oil and natural gas properties
United States	$	11,308	$	5,521	$	5,787
Furniture, fixtures and other assets		238		212		26
Balance, December 31, 2005	$	11,546	$	5,733	$	5,813
2004
Crude oil and natural gas properties
United States	$	4,890	$	4,199	$	691
Nigeria		14,436		14,436		—
Furniture, fixtures and other assets		381		368		14
Balance, December 31, 2004	$	19,707	$	19,003	$	704

(a) Property acquisitions:

On April 15, 2005, the Company completed the purchase of an oil and gas property located in Texas. The Company paid $3.0 million cash and issued 500,000 shares and 500,000 warrants exercisable at $1.00 per share on or before March 31, 2007 for the property. The fair value of the warrants was determined using a Black-Scholes pricing model. A purchase equation is provided below:

Consideration:
Cash	$	3,000,000
Common shares		350,000
Warrants		125,434
Acquisition costs		66,630
	$	3,542,064
Assets acquired:
Property and equipment	$	3,892,064
Asset retirement obligations		(350,000	)
	$	3,542,064

F-9

3. Property and equipment (continued)

(b) Sale of subsidiary:

Effective June 20, 2005, the Company sold its Bahamian subsidiary which owned 30% interest in certain properties, offshore Nigeria. In consideration, TransAtlantic received $540,000 prior to disposal costs of $220,000 (including legal, consulting and other deal-related costs) a future contingent cash payment (after two wells have been drilled) of $240,000 and contingent compensation of up to a maximum of $16 million. A bonus equivalent to 3.87% will be paid to the President, if and when this contingent compensation is received by the Company. No amount of contingent consideration has been recognized in these financial statements. The Company paid the President a bonus of $100,000 upon finalization of this agreement (included in general and administrative expense). Of the $2.5 million reserved at December 31, 2004 as an abandonment fund, $1.76 million remained in escrow to address any Nigerian claims relating to the Company’s prior operations in Nigeria, with the balance of approximately $730,000 being released from escrow.

(c) Ceiling test:

Based upon a ceiling test at December 31, 2004, the Company recorded an impairment of $1.2 million related to its United States cost center. This impairment was largely due to dry hole costs incurred at Bayou Couba during the year costing approximately $1.2 million. The Company recorded an impairment of $360,000 related to its United States cost center based upon a ceiling test at December 31, 2003. At December 31, 2005, $491,000 (2004 - $141,000) of asset retirement costs are included in property and equipment. No overhead costs were capitalized and future development costs of $553,000 (2004 and 2003 – nil) were included in the computations of depreciation and depletion for the year. Unproved property costs of $362,000 (2004 and 2003 – nil) were excluded from depletion and depreciation.

F-10

3. Property and equipment (continued)

The following table summarizes the pricing used in the December 31, 2005 ceiling test:

Period ending December 31,	Oil Price ($/BBL)		Gas Price ($/MMBTU)
2006	$	61.37	$	8.81
2007		62.52		8.42
2008		61.67		7.65
2009		60.52		7.37
Thereafter		60.28		7.35

(d) Business development activities:

Throughout 2005, the Company continued significant business development activities in foreign countries including consulting, legal, accounting, travel and other costs necessary to further the Company’s identification and development of business opportunities.

4. Asset retirement obligations

As part of its development of oil and gas opportunities, the Company incurs asset retirement obligations (“ARO”) on its properties. The Company’s ARO results from its responsibility to abandon and reclaim its net share of all working interest properties. At December 31, 2005 the net present value of the Company’s total ARO is estimated to be $556,000 (2004 - $155,000), with the undiscounted value being $958,000 (2004 - $310,000). Payments to settle the obligations are expected to occur continuously over the next 15 years, with the majority of obligations being expected to begin in year six. A discount rate of 10% was used to calculate the present value of the ARO.

	2005		2004
Beginning balance	$	155	$	132
Liabilities incurred		350		9
Accretion expense		51		14
Ending balance	$	556	$	155

F-11

5. Share capital

The following information presented for shares and options issued and outstanding have been adjusted to give effect in the periods presented to the share consolidation (five common shares for one common share) effective in January 2004.

(a) Authorized

Unlimited number of common shares, without par value

(b) Issued

Common shares:

(In thousands)	Number of Shares		Amount
Balance, December 31, 2002	23,831			30,502
Reduction in stated capital – accumulated deficit	—			(18,403	)
Balance, December 31, 2003	23,831		$	12,099
Private placement of common stock	7,635			4,795
Share issue costs	338			(420	)
Stock options exercised	48			44
Balance, December 31, 2004	31,852			16,518
Private placement of common stock	5,000			3,487
Share issue costs	—			(267	)
Stock options exercised	370			389
Issued in conjunction with acquisition (note 3)	500			350
Unconverted shares forfeited	(63	)		—
Balance, December 31, 2005	37,659		$	20,476
Warrants:
(In thousands)	Number of Shares		Amount
Balance, December 31, 2002	—			—
Balance, December 31, 2003	—			—
Issued pursuant to private placement	7,635		$	2,840
Issue costs	—			(170	)
Balance, December 31, 2004	7,635			2,670
Issued in conjunction with acquisition (note 3)	500			133
Issued pursuant to private placement	2,500			762
Issue costs	375			(63	)
Balance, December 31, 2005	11,010		$	3,502

F-12

5. Share capital (continued)

(c) January 2004 private placement

The Company issued 7.635 million Units at $1.00 per Unit. Each Unit consisted of one common share and one warrant entitling the warrant holder to purchase one share of common stock at $1.50 per share on or before January 6, 2006 (the warrants expired unexercised).

The gross proceeds of $7,635,000 were allocated to common shares in the amount of $4,795,000 and to warrants in the amount of $2,840,000. The Company paid a finder’s fee of 337,500 Units which had an estimated fair value of $457,500. In addition to the finder’s fee, $133,000 of legal and filing fees were incurred related to the private placement.

(d) November 2005 private placement

The Company issued 5,000,000 Units at $0.85 per Unit for gross proceeds of $4.25 million. Each Unit consisted of one common share and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share at a price of $1.05 through November 6^th 2007. If the volume weighted average closing price of the Company’s common shares exceeds $1.40 per share for 20 consecutive trading days, the Company will be entitled to accelerate expiration of the warrants (thereby requiring the warrant holder to exercise the warrant within 30 days of being notified of the accelerated expiration).

In connection with issuance of the Units, the Company paid the Underwriters a commission of $330,000 and issued to the Underwriters 375,000 broker warrants with an estimated fair value of $83,000 exercisable on the same terms as the purchase warrants.

(e) Option Grant

On May 6, 2005, the Company granted an employee 125,000 stock purchase options. On October 11, 2005, the Company granted to various employees and directors a total of 595,000 stock purchase options. All of the options were granted pursuant to the Company’s Stock Option Plan with the following terms: i) immediate vesting; ii) five year term; iii) exercisable at $0.71 and $0.90 per share, respectively. Based upon these terms, a Black Scholes pricing model derives a fair value for the grants of approximately $410,000 recognized as stock-based compensation expense.

(f) Reduction of stated capital

At the 2003 Annual and Special Shareholders Meeting on June 2, 2003, the shareholders of the Company adopted a special resolution to reduce the stated capital of the common shares by $18.4 million and, as a result, the deficit of the Company was reduced by the same amount.

F-13

5. Share capital (continued)

The estimated fair value of share options issued during the periods was determined using the Black-Scholes option-pricing model with the following assumptions:

Option Value Inputs	2005		2004		2003
Risk free interest rate	5.3	%	5.3	%	2.6	%
Expected option life	5 Years		5 Years		5 Years
Volatility in the price of the Company’s shares	80.0	%	81.0	%	84.0	%
Dividend yield	0.0	%	0.0	%	0.0	%

(g) Per share amounts

A total of 219,195 shares were added to the weighted average number of common shares outstanding during the year ended December 31, 2005 (2004 – 475,538; 2003 – 502,008) for the dilutive effect of employee stock options. No adjustments were required to reported earnings in computing diluted per share amounts. A total of 1,240,000 (2004 – 763,000; 2003 – 282,000) options were excluded from the diluted calculations as the Company had a net loss which causes them to be anti-dilutive. Basic per common share amounts were calculated using a weighted average number of common shares outstanding for 2005 of 33,023,412 (2004 – 30,908,065; 2003 – 23,802,595).

(h) Contributed Surplus

(In thousands)	2005			2004
Beginning balance	$	1,302		$	157
Increase from stock option grants		410			714
Transfer to share capital on option exercise		(204	)		(26	)
Share and warrant issue costs		—			457
Ending balance	$	1,508		$	1,302

F-14

5. Share capital (continued)

(i) Stock option plan

The Company has a Stock Option Plan under which 2,762,000 common shares were reserved for issuance as at December 31, 2005. All options presently issued under the Plan have a five-year expiry. Details of the Company’s plan as at December 31, 2005 and 2004 are presented below.

	2005				2004
(Shares in thousands)	Number of options		Weighted average exercise price		Number of options		Weighted average exercise price
Outstanding at beginning of year	2,543		$	0.70	1,525		$	0.62
Granted	720			0.87	1,285			0.83
Expired	(353	)		0.83	(219	)		0.88
Exercised	(370	)		0.50	(48	)		0.35
Outstanding at end of year	2,540		$	0.76	2,543		$	0.70
Exercisable at end of year	2,540		$	0.76	2,543		$	0.70

The following table summarizes information about stock options as at December 31, 2005 (Shares in thousands):

Options Outstanding					Options Exercisable
Range of Prices			Number Outstanding	Weighted- average remaining contractual Life	Weighted- average exercise price		Number Exercisable	Weighted - average exercise price
Low	High
				(years)
$0.35	$	0.35	380	0.87	$	0.35	380	$	0.35
0.70		1.00	2,160	3.82		0.83	2,160		0.83
$0.35	$	1.00	2,540	3.38	$	0.76	2,540	$	0.76

F-15

6. Income taxes

The income tax provision differs from the amount that would be obtained by applying the Canadian basic federal and provincial income tax rate to net loss for the year as follows:

(Thousands of U.S. Dollars)	2005			2004			2003
Statutory tax rate		37.62	%		38.62	%		40.6	%
Expected income tax reduction	$	(1,419	)	$	(2,006	)	$	(237	)
Increase (decrease) resulting from
Stock-based compensation		154			276			64
Change in enacted tax rates		—			588			158
Change in valuation allowance		1,265			1,142			15
	$	—		$	—		$	—

The components of the net future income tax asset at December 31, 2005 and 2004 is as follows:

(Thousands of U.S. Dollars)	2005			2004
Future income tax assets
Property and equipment	$	46		$	655
Operating loss carry-forwards		7,679			4,954
Capital loss carry-forwards		576			—
Share issue costs		208			444
Investments		396			—
Valuation allowance		(8,905	)		(6,053	)
Net future income tax asset	$	—		$	—

The Company and its wholly owned subsidiaries have accumulated losses or resource related deductions available for income tax purposes in Canada and the United States. No recognition has been given in these consolidated financial statements to the future benefits that may result from the utilization of these losses for income tax purposes. The Company has non-capital tax losses in Canada of approximately $1.9 million which expire commencing in 2006 and non-capital tax losses in the United States of approximately $18.1 million which expire commencing in 2008. The Company has capital tax losses in Canada of approximately $3.4 million which have no expiry date.

F-16

7. Segment information

As at December 31, 2005, the Company and its subsidiaries operate in one reportable segment, the exploration for and the development and production of crude oil and natural gas. Identifiable assets, revenues and net loss in each of its geographic areas are as follows:

2005 (Thousands of U.S. Dollars)	Identifiable assets (liabilities)			Revenues		loss
United States	$	11,094		$	1,398	$	2,922
Morocco		644			9		67
Corporate assets		7,189			945		784
	$	18,927		$	2,352	$	3,773
2004
United States	$	3,880		$	797	$	2,288
Canada		(134	)		389		2,367
Nigeria		198			4,364		538
Corporate assets		12,106			—		—
	$	16,048		$	5,549	$	5,193
2003
Nigeria	$	52		$	7,744	$	(81	)
United States		4,203			1,037		787
Canada		1,044			247		(123	)
Corporate assets		7,092			—		—
	$	12,391		$	9,028	$	584

8. Financial instruments

The fair value of the Company’s financial instruments at December 31, 2005 of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued liabilities approximate their fair values.

9. Related party transactions

(a) In 2005, the Company made investments (in unrelated parties) in loan syndications through a Canadian merchant bank in the amount of $1.5 million (2004 - $3.2 million). As of December 31, 2005, the Company has accrued $395,000 in interest from this investment (2004 - $149,000). All principal and interest on this investment was paid to the Company in March, 2006. During 2003, the Company paid an affiliate of a director of the Company a total of $90,000 (2002 – $82,500) to provide head office services and financial and administrative consulting services.

F-17

During February 2003, the Company made short-term, secured, interest-bearing investments aggregating $2.1 million in three loan syndications made by a Canadian merchant banking corporation. At December 31, 2003, $0.8 million remained invested. Interest income attributable to these investments was $249,000 for 2003. The Company also was issued common shares in two companies pursuant to these investments, which are reflected in marketable securities at December 31, 2003. The Company and the Canadian merchant-banking corporation have two directors in common.

(b) At December 31, 2005, a director of the Company was also a director of ANEC (see notes 2 and 3). During 2005 and 2004, the Company received or made the following payments to (from) ANEC:

(in thousands)	2005			2004			2003
Receipts from ANEC:
Proceeds from oil & gas sales	$	702		$	796		$	635
Redemption of production payment		—			—			1,673
Interest on debentures		240			240			47
Payments to ANEC:
Drilling advances		(423	)		(1,418	)		(425	)
Joint lease operations expenses		(356	)		(207	)		(269	)
Purchase of production payment		—			—			(1,800	)
Purchase of debenture		—			—			(3,000	)
	$	163		$	(589	)	$	(3,139	)

These transactions have been recorded at the exchange amount being the amount agreed to between the related parties. (see note 3(b)).

10. Settlement provision

In conjunction with the sale of the Company’s Nigerian subsidiaries effective June 20, 2005, the Company deposited $1.76 million into an escrow fund to address any Nigerian liabilities and claims relating to the Company’s operations in Nigeria over the past 10 years. The Company has reached agreement with respect to years 1998 through 2001 in the amount of $226,000 (plus associated settlement expenses of approximately $25,000) which was paid out of the escrow account during 2005. Years 2002 through the date of sale in June 2005 remain to be resolved. Management believes the escrow fund provides adequate provision for the liabilities related to the Company’s Nigerian activities during these periods. At the time of the sale, the reserve of $855,000 was increased to $1.76 million (the amount deposited into escrow), and the charge for the increase to the reserve was included in earnings. At December 31, 2005, the remaining restricted cash fully provides for the settlement provision (see note 12).

F-18

11. Commitments

As part of the Company’s June 2005 award of a reconnaissance license in Morocco, the Company committed to a work program that will involve the reprocessing of seismic and other technical work over the property. The Company’s portion of the work commitment is estimated to cost $0.6 million and is required to be completed by June 2007. The exclusive license is for a term of one year. The Company has the right to extend the license for an additional year or, based upon the work program, to convert it to a three year petroleum agreement.

The Company posted a $591,000 certificate of deposit pursuant to a guarantee of the work program and is included in restricted cash at December 31, 2005.

The Company has entered into an operating lease in respect of its office premises. The minimum payments under this lease commitment, including estimated operating costs are as follows:

(in thousands)
2006	$	85
2007	$	87
2008	$	44
Total	$	216

12. Subsequent events

(a) On February 16, 2006, the Company announced that it had been awarded three production licenses in Romania. The Company expects to spend less than $1.0 million in 2006 on technical analysis and environmental impact studies.

(b) On March 1, 2006, tax returns were filed with the Nigerian taxing authorities with respect to years 2001 through 2004 in the amount of $482,000 (plus associated expenses of $68,000). Accordingly, a total of $550,000 was paid out of the escrow account to reflect this settlement.

(c) On March 10, 2006, the Company announced a non-binding letter of intent with ANEC to sell the Company’s interests in the Bayou Couba properties as well as the ANEC 8% Convertible Secured Debentures in the principal amount of $3.0 million (carried at $900,000) held by TransAtlantic. The letter of intent stipulates that ANEC will pay TransAtlantic a total of $3.8 million cash for both the Bayou Couba properties and the Debentures. The agreement is subject to ANEC securing financing, definitive terms and final approval by the boards of directors of both companies.

F-19

13. Reconciliation to Accounting Principles Generally Accepted in the United States

The Company’s consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). The Company’s accounting policies do not differ materially from accounting principles generally accepted in the United States (“U.S. GAAP”) except for the following:

(a) Comprehensive Income

Comprehensive income is recognized and measured under U.S. GAAP pursuant to SFAS No. 130, “Reporting Comprehensive Income”. Under U.S. GAAP, comprehensive income is defined as all changes in equity other than those resulting from investments by owners and distributions to owners. Comprehensive income is comprised of two components, net income (loss) and other comprehensive income. Other comprehensive income includes the unrealized holding gains and losses on the available-for-sale securities.

(b) Marketable Securities

Under accounting principles generally accepted in Canada, marketable securities are stated at the lower of cost or market. Under U.S. GAAP, investments classified as available for sale securities are recorded at market value and the unrealized gains and losses are recorded as comprehensive income and accumulated other comprehensive income within the shareholder’s equity section of the balance sheet unless impairments are considered other than temporary.

(c) Oil and Gas Properties

Under Canadian GAAP the ceiling test is performed by comparing the carrying value of the cost centre based on the sum of the undiscounted cash flows expected from the cost centre’s use and eventual disposition. If the carrying value is unrecoverable, the cost centre is written down to its fair value using the expected present value approach of proved plus probable reserves using future prices. Under U.S. GAAP, companies using the full cost method of accounting for oil and gas producing activities perform a ceiling test on each cost centre using discounted estimated future net revenue from proved oil and gas reserves using a discount factor of 10 percent. Prices used in the U.S. GAAP ceiling tests performed for this reconciliation were those in effect at the applicable year-end. There was no material difference arising out of the differences in prices. At December 31, 2003 and 2004, the Company recognized a U.S. GAAP ceiling test write down of $502 thousand before and after tax and $1,481 thousand before and after tax respectively. Depletion expense for the years ended December 31, 2004 and 2005 for U.S. GAAP is reduced by $131 thousand before and after tax and $51 thousand before and after tax respectively.

(d) Deficit Elimination

As a result of the reorganization of the capital structure which occurred in 2003, the deficit of TransAtlantic Petroleum Corp. of $18,403 thousand was eliminated. Elimination of the deficit would not be permitted under U.S. GAAP.

(e) Stock based compensation

Under Canadian GAAP, the Company follows the fair value method of accounting for stock based compensation. Effective January 1, 2003, the Company also adopted SFAS No. 123, “Accounting for stock-based compensation” under the prospective transition methodology described in SFAS No. 148. Accordingly, there is no difference between Canadian GAAP and U.S. GAAP in relation to accounting for stock-based compensation.

(f) Recently Issued United States Accounting Standards

Inventory Costs: The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) 151, Inventory Costs. This statement amends accounting Research Bulletin (ARB) 43 to clarify that abnormal amounts of idle facility expense, freight, handling costs and wasted material (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overhead to inventory based on the normal capacity of the production facilities. The provisions of this statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this statement will not have any material impact on results of our operations or financial position.

Share-based Payments: The FASB issued SFAS 123(R), Share-Based Payments, which replaces SFAS 123, Accounting for Stock-Based Compensation, and supersedes APB Opinion 25, Accounting for Stock Issued to Employees. It requires compensation costs related to share-based payment transactions to be recognized as an expense at fair value with remeasurement to fair value each period. The compensation expense is recognized over the period that an employee provides service in exchange for the award with forfeitures estimated at each period end. This Statement is effective for interim or annual reporting periods beginning after December 15, 2005. Application is to be on a modified retrospective or modified-prospective basis of transition for new or modified awards and to unvested awards. Restatement of prior periods under the modified-retrospective approach is optional. The Company is currently assessing the impact of these new requirements on the Consolidated Financial Statements.

F-20

Exchanges of Nonmonetary Assets: The FASB issued SFAS 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion 29, Accounting for Nonmonetary Transactions. This amendment eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Under Statement 153, if a nonmonetary exchange of similar productive assets meets a commercial-substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss. This statement is effective for nonmonetary transactions in fiscal periods that begin after June 15, 2005. The adoption of this statement will not have any material impact on our Consolidated Financial Statements.

Accounting for Changes and Error Corrections: The FASB issued SFAS 154, Accounting Changes and Error Corrections, which replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements and changes the requirements for the accounting and reporting of a change in accounting principles. The Statement applies to all voluntary changes in accounting principles as well as changes required by an accounting pronouncement unless the pronouncement includes specific transition provisions. The Statement requires the retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. Application is on a prospective basis and is effective for changes in accounting principles made in fiscal years beginning after December 15, 2005. The change, which harmonizes United States GAAP with Canadian GAAP, will affect the reporting of future changes in accounting principles under United States GAAP.

Purchase and Sales of Inventory with the Same Counterparty: The EITF issued EITF Abstract 04-13, Accounting for Purchases and Sales of Inventory with the Same Counterparty. The Abstract provides accounting guidance where an entity may sell inventory to another entity in the same line of business from which it also purchases inventory. It prescribes under what circumstances these exchanges with the same counterparty would be viewed as a single nonmonetary transaction and whether they would be accounted for at fair value or carrying value. The Abstract is applicable to transactions completed in reporting periods beginning after March 15, 2006, whether pursuant to arrangements that were in place at the date of initial application of the Abstract or arrangements executed subsequent to that date. The Company does not expect there to be any material impact on the Consolidated Financial Statements upon adoption of the Abstract.

The effects of the differences between Canadian GAAP and U.S. GAAP on the consolidated statement of operations and deficit would be as follows:

	Years ended December 31,
(Thousands of U.S. dollars other then share and per share amounts)	2005			2004			2003
Net loss under Canadian GAAP	$	3,773		$	5,193		$	584
Additional write-down of property and equipment (c)		—			246			142
Depletion and depreciation (c)		(51	)		(131	)		—
Unrealized gain (loss) on marketable securities (b)		—			(19	)		—
Net loss under U.S. GAAP		3,722			5,289			726
Unrealized (loss) gain on marketable securities (b)		(147	)		19			(259	)
Comprehensive net loss under U.S. GAAP	$	3,575		$	5,270		$	467
Basic and diluted net loss under U.S. GAAP	$	0.11		$	0.17		$	0.03
Shares used in the computation of basic and diluted net loss per share		33,023,412			30,908,065			23,830,882

F-21

After differences discussed above have been adjusted for, the condensed balance sheets under Canadian and U.S. GAAP would be:

	December 31, 2005						December 31, 2004
(Thousands of U.S. dollars)	Canadian GAAP			U.S. GAAP			Canadian GAAP			U.S. GAAP
Current assets (b)	$	9,947		$	10,094		$	11,978		$	11,978
Restricted cash		2,110			2,110			2,466			2,466
Property and equipment (c)		5,813			5,607			704			447
Long-term investments		1,057			1,057			900			900
		18,927			18,868			16,048			15,791
Current liabilities		2,435			2,435			1,180			1,180
Asset retirement obligations		556			556			155			155
Share capital (d)		20,476			38,879			16,518			34,921
Warrants		3,502			3,502			2,670			2,670
Contributed surplus		1,508			1,508			1,302			1,302
Deficit (b)(c)(d)		(9,550	)		(28,140	)		(5,777	)		(24,418	)
Accumulated other comprehensive
Income (Loss) (c)		—			128			—			(19	)
		18,927			18,868			16,048			15,791

After differences discussed above have been adjusted for, the condensed statements of Deficit and Accumulated Other Comprehensive Income (Loss) under Canadian and U.S. GAAP would be:

	December 31, 2005					December 31, 2004
(Thousands of U.S. dollars)	Canadian GAAP		U.S. GAAP			Canadian GAAP		U.S. GAAP
Deficit, beginning of year	$	5,777	$	24,418		$	584	$	19,129
Net loss		3,773		3,722			5,193		5,289
Deficit, end of year		9,550		28,140			5,777		24,418
Accumulated, other comprehensive
Income (Loss), beginning of year		—		(19	)		—		259
Unrealized gain (loss) on marketable securities		—		147			—		(278	)
Accumulated other comprehensive
Income (Loss), end of year		—		128			—		(19	)

F-22

Interim Consolidated Financial Statements of

TRANSATLANTIC PETROLEUM CORP.

Three Months Ended March 31, 2006 and 2005

UNAUDITED

F-23

TRANSATLANTIC PETROLEUM CORP.

Interim Consolidated Balance Sheets

(Thousands of U.S. Dollars)

	March 31, 2006			Dec. 31, 2005
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	8,048		$	7,567
Short-term investment		—			1,500
Accounts receivable		371			780
Marketable securities (note 2(a))		92			92
Other current assets		136			8
		8,647			9,947
Restricted cash (note 1)		1,560			2,110
Property and equipment (note 3)		5,943			5,813
Investments (note 2(b))		1,057			1,057
	$	17,207		$	18,927
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	854		$	924
Settlement provision (note 9)		961			1,511
		1,815			2,435
Asset retirement obligations (note 4)		570			556
Shareholders’ equity
Share capital (note 5)		20,490			20,476
Warrants (note 5)		819			3,502
Contributed surplus (note 5)		4,191			1,508
Deficit		(10,678	)		(9,550	)
		14,822			15,936
Contingency (note 9)
Commitment (note 10)
	$	17,207		$	18,927

See accompanying notes to consolidated financial statements.

Approved by the Board of Directors:

“Brian Bayley”	Director
“Michael Winn”	Director

F-24

Transatlantic Petroleum Corp.

Interim Consolidated Statements of Operations and Deficit

(Unaudited)

(Thousands of U.S. Dollars, except for per share amounts)

	Three months ended March 31,
	2006			2005
Revenues
Oil and gas sales, net of royalties	$	556		$	282
Expenses
Lease operating expenses and other production costs		533			130
Depreciation, depletion and accretion		265			176
General and administrative		602			394
Oil and gas exploration activities		512			—
Foreign exchange gain		(3	)		(133	)
Other income		—			(54	)
Interest income		(225	)		(126	)
		1,684			387
Net loss for the period		1,128			105
Deficit, beginning of period		9,550			5,777
Deficit, end of period	$	10,678		$	5,882
Loss per share - basic and diluted (note 5)	$	0.03		$	—

See accompanying notes to consolidated financial statements.

F-25

Transatlantic Petroleum Corp.

Interim Consolidated Statements of Cash Flows

(Unaudited)

(Thousands of U.S. Dollars)

	Three months ended March 31,
	2006			2005
Cash provided by (used in)
Operating activities
Net loss for the period	$	(1,128	)	$	(105	)
Items not involving cash
Depreciation, depletion and accretion		265			176
Changes in non-cash working capital		761			(261	)
		(102	)		(190	)
Investing activities
Exploration and acquisition of property and equipment, net		(381	)		(372	)
Investment in loan syndications		1,500			(1,500	)
Restricted cash		(550	)		(15	)
		569			(1,887	)
Financing activities
Warrant exercises		14			—
Change in cash and cash equivalents		481			(2,077	)
Cash and cash equivalents, beginning of period		7,567			9,650
Cash and cash equivalents, end of period	$	8,048		$	7,573

See accompanying notes to consolidated financial statements.

F-26

TRANSATLANTIC PETROLEUM CORP.

Notes to Consolidated Financial Statements - Unaudited

Three months ended March 31, 2006 and 2005

(U.S. Dollars)

1. Significant accounting policies

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada and include the accounts of TransAtlantic Petroleum Corp. (the “Company”) and its wholly owned subsidiaries. The interim consolidated financial statements of the Company have been prepared by management following the same accounting policies and methods of computation as the consolidated financial statements for the fiscal year ended December 31, 2005. Readers are referred to the significant accounting policies as outlined in the Notes to the financial statements for the year ended December 31, 2005. These interim financial statements should be read in conjunction with the financial statements for the year ended December 31, 2005. These interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim period presented.

The preparation of financial statements in conformity with generally accepted accounting principles in Canada requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ from those estimates and assumptions; however, management believes that such differences would not be material.

(a) Restricted cash

Restricted cash represents cash placed in escrow accounts or in certificates of deposit that is pledged for the satisfaction of liabilities or performance guarantees. At March 31, 2006, restricted cash includes: $969,000 in respect of the settlement of Nigerian liabilities (see note 9) and $591,000 for a guarantee of the Morocco work program (see note 10).

F-27

2. Investments

(a) Marketable securities

Pursuant to certain short-term investments made in prior periods, the Company received, in addition to interest, shares in another publicly traded company. The Company also received shares on the settlement of a claim with a joint venture partner.

The following table summarizes the marketable securities held at March 31, 2006 and 2005:

Security (all Common)	Number Of Shares March 31,		Cost Basis March 31,				Market Value March 31,
	2006	2005	2006		2005		2006		2005
Transco Resources	100,000	100,000		27,000		27,000		90,000		106,000
Tuscany Energy	325,000	—		65,000		—		103,000		—
			$	92,000	$	27,000	$	193,000	$	106,000

(b) Investments

On September 1, 2005, the Company completed the purchase of 2,237,136 shares of American Natural Energy Corporation (“ANEC”) pursuant to ANEC’s private placement dated August 16, 2005. The purchase price was U.S. $268,000 or U.S. $0.12 per share. These shares were written down to their anticipated net realizable value of $0.07 per share as of December 31, 2005 and are carried at that value as of March 31, 2006. The Company does not anticipate selling these shares in the short term.

In October 2003, the Company acquired $3.0 million of convertible debentures issued by ANEC. The convertible debentures issued by ANEC pay 8% interest, were for a two-year term maturing September 30, 2005 and are secured by all of the assets of ANEC. On June 23, 2005, the debenture holders approved extending the maturity of the debentures to September 20, 2006 and changing the conversion price from $0.43 per share to $0.15 per share. The original $3.0 million investment has been reserved against in order to be presented at its estimated net realizable value. Based upon an analysis of ANEC’s financial position, the Company reserved $2.1 million against this investment as at December 31, 2004 and such reserve continued at March 31, 2006. The investment is accounted for using the cost method.

F-28

3. Property and equipment

2006	Cost		Accumulated depreciation and depletion		Net book value
Crude oil and natural gas properties
United States	$	11,688	$	5,771	$	5,917
Furniture, fixtures and other assets		238		212		26
Balance, March 31, 2006	$	11,926	$	5,983	$	5,943
2005
Crude oil and natural gas properties
United States	$	11,308	$	5,521	$	5,787
Furniture, fixtures and other assets		238		212		26
Balance, December 31, 2005	$	11,546	$	5,733	$	5,813

(a) At March 31, 2006, $490,000 (2005 - $141,000) of asset retirement costs are included in property and equipment. No overhead costs were capitalized and future development costs of $553,000 (2005 - nil) are included in the computations of depreciation and depletion for the three months ended March 31, 2006 or 2005. Unproved property costs of $362,000 (2005 - nil) were excluded from the depletion and depreciation calculation.

4. Asset retirement obligations

As part of its development of oil and gas opportunities, the Company incurs asset retirement obligations (“ARO”) on its properties. The Company’s ARO results from its responsibility to abandon and reclaim its net share of all working interest properties. At March 31, 2006 the net present value of the Company’s total ARO is estimated to be $570,000 (2005 - $159,000), with the undiscounted value being $932,000 (2004 - $328,000). Payments to settle the obligations are expected to occur continuously over the next 15 years, with the majority of obligations expected to commence in year five. A discount rate of 10% was used to calculate the present value of the ARO.

	Three Months ended March 31, 2006		Year ended December 31, 2005
Beginning balance	$	556	$	155
Liabilities incurred		—		350
Accretion expense		14		51
Ending balance	$	570	$	556

5. Share capital

(a) Authorized

Unlimited number of common shares, without par value

F-29

(b) Issued

Common shares:

(In thousands)	Number of Shares		Amount
Balance, December 31, 2004	31,852		$	16,518
Private placement of common stock	5,000			3,487
Share issue costs	—			(268	)
Stock options exercised	370			389
Issued in conjunction with acquisition	500			350
Share forfeiture – unconverted shares	(63	)		—
Balance, December 31, 2005	37,659			20,476
Warrants exercised	13			14
Balance, March 31, 2006	37,672		$	20,490
Warrants:
(In thousands)	Number of Shares		Amount
Balance, December 31, 2004	7,972		$	2,670
Issued in conjunction with acquisition	500			133
Issued pursuant to private placement	2,500			762
Issue costs	375			(63	)
Balance, December 31, 2005	11,347			3,502
Warrant expiration	(7,972	)		(2,670	)
Warrants exercised	(13	)		(13	)
Balance, March 31, 2006	3,362		$	819

(c) November 2005 private placement

The Company issued 5,000,000 Units at $0.85 per Unit for gross proceeds of $4.25 million. Each Unit consisted of one common share and one half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share at a price of $1.05 through November 6^th 2007. If the volume weighted average closing price of the Company’s common shares exceeds $1.40 per share for 20 consecutive trading days, the Company will be entitled to accelerate expiration of the warrants (thereby requiring the warrant holder to exercise the warrant within 30 days of being notified of the accelerated expiration).

In connection with issuance of the Units, the Company paid the Underwriters a commission of $330,000 and issued to the Underwriters 375,000 broker warrants with an estimated fair value of $83,000 exercisable on the same terms as the purchase warrants.

(d) Per share amounts

Basic per common share amounts were calculated using a weighted average number of common shares outstanding for the three months ended March 31, 2005 of 37,663,355 (2005 – 32,146,637). No adjustments were required to reported earnings or number of shares in computing diluted per share amounts as the net loss would make these shares anti-dilutive.

F-30

(e) Stock option plan

The Company has a Stock Option Plan under which 2,762,000 million common shares were reserved for issuance and 2,515,000 million share purchase options at a weighted average strike price of $0.76 per share were issued and outstanding at March 31, 2006. All options presently issued under the Plan have a five-year expiry.

(f) Contributed surplus

(thousands of dollars)	Three months ended March 31, 2006		Year ended December 31, 2005
Beginning balance	$	1,508	$	1,302
Increase from stock option grants		—		410
Transfer to share capital on option exercise		—		(204	)
Transfer from share capital on warrant exercise		14		—
Transfer from warrants on warrant expiration		2,669
Ending balance	$	4,191	$	1,508

F-31

6. Segment information

As of March 31, 2006, the Company and its subsidiaries operate in one reportable industry segment, the exploration for and the development and production of crude oil and natural gas. Identifiable assets, revenues and net loss in each of its geographic areas are as follows:

March 31, 2006 (Thousands of U.S. Dollars)	Identifiable assets (liabilities)		Revenues		Net loss
United States	$	16,519	$	556	$	942
Morocco		688		—		186
	$	17,207	$	556	$	1,128
December 31, 2005
United States	$	11,094	$	1,398	$	2,922
Morocco		644		9		67
Corporate Assets		7,189		945		784
	$	18,927	$	2,352	$	3,773

7. Financial instruments

The fair value of the Company’s financial instruments at March 31, 2006 of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximate their fair values.

8. Related party transactions

During the first quarter 2006, the Company received net payments (oil and gas sales plus debenture interest less drilling advances and lease operating expenses) of $69,000 (2005 – $145,000) from ANEC. These transactions have been recorded at the exchange amount being the amount agreed to between the related parties. At March 31, 2006, a director of the Company was also a director of ANEC (see note 2).

F-32

9. Settlement provision

In conjunction with the sale of the Company’s Nigerian subsidiaries effective June 20, 2005, the Company deposited $1.76 million into an escrow fund to address any Nigerian liabilities and claims relating to the Company’s operations in Nigeria over the past 10 years. With respect to years 1998 through 2004, the amount of $776,000 was paid out of the escrow account in the third quarter 2005 and first quarter 2006 for taxes related to those years. Year 2005 through the date of sale remains to be addressed. Management believes the escrow fund provides adequate provision for the liabilities related to the Company’s Nigerian activities.

10. Commitment

As part of the Company’s June 2005 award of a reconnaissance license in Morocco, the Company committed to a work program that will involve the reprocessing of seismic and other technical work over the property. The Company’s portion of the work commitment is estimated to cost $0.7 million and is required to be completed by December 2006. The Company has the right, based upon the work program, to convert the reconnaissance license to a three year petroleum agreement.

The Company posted a $591,000 certificate of deposit pursuant to a guarantee of the work program and is included in restricted cash at March 31, 2006.

F-33

Item 18. Financial Statements

Not Applicable.

Item 19. Exhibits

See Exhibit Index.

55

Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

TransAtlantic Petroleum Corp.
By:	/s/ Christopher H. Lloyd
	Christopher H. Lloyd
	Chief Financial Officer

Date: August 14, 2006

56

INDEX TO EXHIBITS

Exhibit Numbers	EXHIBITS
1.1	Certificate and Articles of Continuance dated June 10, 1997
1.2	Certificate and Articles of Amendment dated December 12, 1998
1.3	Certificate and Articles of Amalgamation dated January 1, 1999
1.4	By-law No. 1 dated June 2, 1997
4.1	Executive Employment Agreement dated effective July 1, 2005 by and between TransAtlantic Petroleum Corp. and Scott C. Larsen
4.2	Executive Employment Agreement dated effective May 1, 2005 by and between TransAtlantic Petroleum Corp. and Christopher H. Lloyd
4.3	Participating Interest Agreement dated effective July 11, 2005 by and among TransAtlantic Worldwide Ltd., TransAtlantic Petroleum Corp. and Scott C. Larsen
4.4	Amended and Restated Stock Option Plan (2006)
4.5	Warrant Indenture dated November 17, 2005 by and between TransAtlantic Petroleum Corp. and Computershare Trust Company of Canada
15.1	Consent of KPMG LLC

57

EX-1.1

Exhibit 1.1

CORPORATE ACCESS NUMBER

Alberta 20741756            

GOVERNMENT OF ALBERTA

BUSINESS CORPORATIONS ACT

CERTIFICATE

OF

CONTINUANCE

PROFCO RESOURCES LTD.

CONTINUED FROM BRITISH COLUMBIA TO ALBERTA ON JUNE 10, 1997.

FORM 11

BUSINESS CORPORATIONS ACT

(SECTIONS 181. 261 and 262)

Alberta

REGISTRIES ARTICLES OF CONTINUANCE

1.      NAME OF CORPORATION.	2.      CORPORATE ACCESS NUMBER.
PROFCO RESOURCES LTD.	20741 756

3. THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS AUTHORIZED TO ISSUE.

THE CORPORATION IS AUTHORIZED TO ISSUE AN UNLIMITED NUMBER OF ONE CLASS OF SHARES DESIGNATED AS COMMON SHARES.

4. RESTRICTIONS IF ANY ON SHARE TRANSFERS.

NONE.

5. NUMBER (OR MINIMIUM OR MAXIMUM NUMBER) OF DIRECTORS.

A MINIMUM OF 3 AND A MAXIMUM OF 9, THE NUMBER WITHIN SUCH RANGE TO BE FDCED OR CHANGED BY RESOLUTION OF THE SHAREHOLDERS OR THE DIRECTORS OF THE CORPORATION.

6. RESTRICTIONS IF ANY ON BUSINESSES THE CORPORATION MAY CARRY ON.

NONE.

7. IF CHANGE OF NAME EFFECTED, PREVIOUS NAME.

N/A

8. DETAILS OF INCORPORATION.

INCORPORATED UNDER THE COMPANY ACT (BRITISH COLUMBIA) ON OCTOBER 1, 1985 UNDER THE NAME “PROFCO RESOURCES LTD.”

9. OTHER PROVISIONS IF ANY.

THE SCHEDULE ‘I’ IS INCORPORATED INTO AND FORMS PART OF THIS FORM.

7.      DATE	SIGNATURE
June 4th, 1997	RICHARD K. JAGGARD	CORPORATE SECRETARY

FOR DEPARTMENTAL USE ONLY FILED                

SCHEDULE “I”

TO THE ARTICLES OF CONTINUANCE

OF PROFCO RESOURCES LTD.

1. Without limiting the borrowing powers of the Corporation as set forth in the Business Corporations Act (Alberta), the directors of the Corporation may from time to time, without authorization of the shareholders,

(a) borrow money on the credit of the Corporation;

(b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantees of the Corporation, whether secured or unsecured;

(c) subject to the Business Corporations Act (Alberta), give a guarantee on behalf of the Corporation to secure performance of an obligation of any person; and

(d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any obligation of the Corporation.

Nothing in this clause limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation.

2. Subject to the Business Corporations Act (Alberta), the directors may, between annual general meetings of shareholders, appoint one or more additional directors of the Corporation to serve until the next annual general meeting of shareholders.

FILED          

JUN 10 1997

    BRITISH

COLUMBIA

May 2, 1997

DuMoulin Black

10th Floor, 595 Howe Street

Vancouver BC V6C 2T5

Dear W. David Black:

Re: PROFCO RESOURCES LTD. Number 298500

I hereby authorize the continuation of the above company to the jurisdiction of the Alberta Business Corporations Act.

My consent is valid for six months, ending November 2, 1997.

Yours truly,

John S. Powel

Registrar of Companies

Enquiries:	Dianne  Mullin:  (604)356-8624
	Barb Morrison:  (604) 356-8625
	Fax:  (604) 356-6422

Ministry of Finance and Corporate Relations Corporate and Personal Property Registries Mailing Address:   PO Box 9431 Stn Prov Govt Victoria BC V8W 9V3 Location:   Second Floor 940 Blanshard Street Victora

EX-1.2

Exhibit 1.2

CORPORATE ACCESS NUMBER: 207417569

Alberta

BUSINESS CORPORATIONS ACT

CERTIFICATE

OF

AMENDMENT

PROFCO RESOURCES LTD.

CHANGED ITS NAME TO TRANSATLANTIC PETROLEUM CORP. ON

1998/12/02.

ALBERTA CONSUMER AND CORPORATE AFFAIRS

BUSINESS CORPORATIONS ACT

(SECTION 27 OR 171)

ARTICLES OF AMENDMENT

FORM 4

1.	NAME OF CORPORATION	2.	CORPORATE ACCESS NUMBER:
	PROFCO RESOURCES LTD.		207417569
3.	THE ARTICLES OF THE ABOVE-NAMED CORPORATION ARE AMENDED AS FOLLOWS:
	Pursuant to Section 1671(a) of the Business Corporations Act (Alberta), Item 1 of the Articles of the Corporation be and is hereby amended to read:

1. Name of Corporation

TRANSATLANTIC PETROLEUM CORP.”

DATED this 2nd. day of December, 1998.

SIGNATURE: R. JAGGARD

Position Held: Vice President, Finance

EX-1.3

Exhibit 1.3

CORPORATE ACCESS NUMBER: 208127522

ALBERTA

BUSINESS CORPORATIONS ACT

CERTIFICATE

OF

AMALGAMATION

TRANSATLANTIC PETROLEUM CORP.

IS THE RESULT OF AN AMALGAMATION FILED ON 1999/01/01.

ALBERTA CONSUMER AND CORPORATE AFFAIRS

BUSINESS CORPORATIONS ACT

(SECTION 179)

ARTICLES OF AMALGAMATION

FORM 9

1.	NAME OF AMALGAMATED CORPORATION
	Transatlantic Petroleum Corp.
2.	CORPORATE ACCESS NO.
	208127522
3.	THE CLASSES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS AUTHORIZED TO ISSUE
	The Corporation is authorized to issue an unlimited number of one class of shares designated as common shares.
4.	RESTRICTIONS IF ANY ON SHARE TRANSFERS
	None.
5.	NUMBER (OR MINIMUM AND MAXIMUM NUMBER) OF DIRECTORS
	A minimum of 3 and a maximum of 9.
6.	RESTRICTIONS IF ANY ON BUSINESSES THE CORPORATION MAY CARRY ON
	None.
7.	OTHER PROVISIONS IF ANY
	The attached Schedule A is incorporated into and forms a part of this Form 9.
8.	NAME OF AMALGAMATING CORPORATIONS
	Transatlantic Petroleum Corp.
	GHP Exploration Corporation
9.	CORPORATE ACCESS NO.
	207417569
	208118257

DATED this 31st day of December, 1998.

Signature: John Andriuk

Position Held: Director   

SCHEDULE A

TO TIIE ARTICLES OF AMALGAMATION OF

TRANSATLANTIC PETROLEUM CORP.

(“the Corporation”)

I. Without limiting the borrowing powers of the Corporation as set forth in the Business Corporations Act (Alberta), the directors may from time to time, without the authorization of the shareholders,

(a) borrow money on the credit of the Corporation;

(b) issue, reissue, sell or pledge bonds, debentures, notes or other evidences of indebtedness or guarantees of the Corporation, whether secured or unsecured;

(c) subject to the Business Corporations Act (Alberta), give a guarantee on behalf of the Corporation to secure performance of an obligation of any person; and

(d) mortgage, hypothecate. pledge or otherwise create a security interest in all or any property of the Corporation, owned or subsequently acquired, to secure any obligation of the Corporation.

Nothing in this clause limits or restricts the borrowing of money by the Corporation on bills of exchange or promissory notes made, drawn, accepted or endorsed by or on behalf of the Corporation.

2. Subject to the Business Corporations Act (Alberta), the board of directors may, between annual general meetings of shareholders, appoint one or more additional directors of the Corporation to serve until the next annual general meeting of shareholders.

3. The number of directors of the Corporation shall be fixed or changed by resolution of the shareholders or the directors provided that the number of directors may not be less than the minimum number nor more than the maximum number of directors set out in the articles.

EX-1.4

Exhibit 1.4

BY-LAW NO. 1

A By-Law relating generally to the transaction of the business and affairs of PROFCO RESOURCES LTD. now known as TRANSATLANTIC PETROLEUM CORP.

CONTENTS

SECTION	SUBJECT
One	Interpretation
Two	Business of the Corporation
Three	Directors
Four	Committees
Five	Protection of Directors and Officers
Six	Shares
Seven	Dividends
Eight	Meetings of Shareholders
Nine	Notices
Ten	Effective Date and Repeal

IT IS HEREBY ENACTED as By-law No. 1 of PROFCO RESOURCES LTD. (hereinafter called the “Corporation”) as follows:

SECTION ONE

INTERPRETATION

1.01 Definitions

In the by-laws of the Corporation, unless the context otherwise requires:

“Act” means the Business Corporations Act of Alberta, and any statute that may be substituted therefore, as from time to time amended;

“appoint” includes “elect” and vice versa;

“articles” means the articles attached to the Certificate of Continuance of the Corporation as from time to time amended or restated;

“board” means the board of directors of the Corporation;

“by-laws” means this by-law and all other by-laws of the Corporation from time to time in force and effect;

“meeting of shareholders” means any meeting of shareholders, including any meeting of one or more classes or series of shareholders;

“recorded address” means, in the case of a shareholder, his address as recorded in the securities register; in the case of joint shareholders, the address appearing in the securities register in respect of such joint holding or the first address so appearing if there are more than one; and, in the case of a director, officer, auditor or member of a committee of the board, his latest address as recorded in the records of the Corporation;

“signing officer” means, in relation to any instrument, any person authorized to sign the same on behalf of the Corporation by Section 2.03 or by a resolution passed pursuant thereto.

Save as aforesaid, words and expressions defined in the Act have the same meanings when used herein: and words importing the singular number include the plural and vice versa; words importing gender include the masculine, feminine and neuter genders; and words importing persons include individuals, bodies corporate, partnerships, trusts and unincorporated organizations.

1.02 Conflict with the Act, the Articles or any Unanimous Shareholder Agreement

To the extent of any conflict between the provisions of the by-laws and the provisions of the Act, the articles or any unanimous shareholder agreement relating to the Corporation, the provisions of the Act, the articles or the unanimous shareholder agreement shall govern.

1.03 Headings and Sections

The headings used throughout the by-laws are inserted for convenience of reference only and are not to be used as an aid in the interpretation of the by-laws. “Section” followed by a number means or refers to the specified section of this by-law.

1.04 Invalidity of any Provision of By-laws

The invalidity or unenforceability of any provision of the by-laws shall not affect the validity or enforceability of the remaining provisions of the by-laws.

SECTION TWO

BUSINESS OF THE CORPORATION

2.01 Corporate Seal

The corporate seal of the Corporation, if any, shall be in such form as the board may from time to time by resolution approve.

2.02 Financial Year

The financial year of the Corporation shall end on such date in each year as the board may from time to time by resolution determine.

2.03 Execution of Instruments

Deeds, transfers, assignments, contracts, obligations, certificates and other instruments may be signed on behalf of the Corporation by two persons, one of whom holds the office of chairman of the board, president, vice-president or director and the other of whom holds one of the said offices or the office of secretary, treasurer, assistant secretary or assistant treasurer or any other office created by by-law or by resolution of the board; provided that if the Corporation only has one director, that director alone may sign any instruments on behalf of the Corporation. In addition, the board may from time to time direct the manner in which and the person or persons by whom any instrument or instruments may or shall be signed. Any signing officer may affix the corporate seal to any instrument requiring the same.

2.04 Banking Arrangements

The banking business of the Corporation including, without limitation, the borrowing of money and the giving of security therefore, shall be transacted with such banks, trust companies or other bodies corporate or other persons as may from time to time be authorized by the board. Such banking business or any part thereof shall be transacted under such agreements, instructions and delegations of powers as the board may from time to time prescribe or authorize.

2.05 Voting Rights in Other Bodies Corporate

The signing officers may execute and deliver proxies and arrange for the issuance of voting certificates or other evidence of the right to exercise the voting rights attaching to any securities held by the Corporation. Such instruments, certificates or other evidence shall be in favour of such person or persons as may be determined by the

persons executing such proxies or arranging for the issuance of voting certificates or such other evidence of the right to exercise such voting rights. In addition, the board or, failing the board, the signing officers may from time to time direct the manner in which and the person or persons by whom any particular voting rights or class of voting rights may or shall be exercised.

2.06 Insider Trading Reports and Other Filings

Any one officer or director of the Corporation may execute and file on behalf of the Corporation insider trading reports and other flings of any nature whatsoever required under applicable corporate or securities laws.

2.07 Divisions

The board may from time to time cause the business and operations of the Corporation or any part thereof to be divided into one or more divisions upon such basis, including without limitation, types of business or operations, geographical territories, product lines or goods or services, as the board may consider appropriate in each case. From time to time the board may authorize upon such basis as may be considered appropriate in each case:

(a) the designation of any such division by, and the carrying on of the business and operations of any such division under, a name other than the name of the Corporation; provided that the Corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the Corporation; and

(b) the appointment of officers for any such division and the determination of their powers and duties, provided that any such officers shall not, as such, be officers of the Corporation.

SECTION THREE

DIRECTORS

3.01 Number of Directors

If the articles provide for a maximum number and a minimum number of directors, unless otherwise provided in the articles, the number of directors of the Corporation shall be determined from time to time by ordinary resolution of the shareholders or, in the absence of such resolution, by resolution of the directors.

3.02 Calling and Notice of Meetings

Meetings of the board shall be called and held at such time and at such place as the board, the chairman of the board, the president or any two directors may determine, and the secretary or any other officer shall give notice of meetings when directed or authorized by such persons. Notice of each meeting of the board shall be given to each director not less than forty-eight hours before the time when the meeting is to be held, provided that, if a quorum of directors is present, the board may without notice hold a meeting immediately following an annual meeting of shareholders. Notice of a meeting of the board may be given verbally, in writing or by telephone, telegraph, facsimile transmission or any other means of communication. A notice of a meeting of directors need not specify the purpose of or the business to be transacted at the meeting, except where required by the Act. Notwithstanding the foregoing, the board may from time to time fix a day or days in any month or months for regular meetings of the board at a place and hour to be named, in which case, provided that a copy of any such resolution is sent to each director forthwith after being passed and forthwith after each director’s appointment, no other notice shall be required for any such regular meeting except where the Act requires specification of the purpose or the business to be transacted thereat.

3.03 Place of Meetings

Meetings of the board may be held at any place in or outside Alberta. A director who attends a meeting of directors, in person or by telephone, is deemed to have consented to the location of the meeting except when he attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully held.

3.04 Meetings by Telephone

With the consent of the chairman of the meeting or a majority of the directors present at the meeting, a director may participate in a meeting of the board or of a committee of the board by means of telephone or other communication facilities that permit all persons participating in the meeting to hear each other. A director participating in such a meeting in such manner shall be considered present at the meeting and at the place of the meeting.

3.05 Quorum

The quorum for the transaction of business at any meeting of the board shall consist of two directors or such greater or lesser number of directors as the board may from time to time determine, provided that, if the board consists of only one director, the quorum for the transaction of business at any meeting of the board shall consist of one director.

3.06 Chairman

The chairman of any meeting of the board shall he the director present and

willing to so act at the meeting who is the first mentioned of the following officers as have been appointed: chairman of the board, president or a vice-president (in order of seniority). If no such officer is present and willing to act, the directors present shall choose one of their number to be chairman.

3.07 Action by the Board

At all meetings of the board every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes the chairman of the meeting shall be entitled to a second or casting vote. The powers of the board may be exercised by resolution passed at a meeting at which a quorum is present or by resolution in writing signed by all the directors who would be entitled to vote on that resolution at a meeting of the board. Resolutions in writing may be signed in counterparts.

3.08 Adjourned Meeting

Any meeting of directors may he adjourned from time to time by the chairman of the meeting, with the consent of the meeting, to a fixed time and place. The adjourned meeting shall be duly constituted if a quorum is present and if it is held in accordance with the terms of the adjournment. If there is no quorum present at the adjourned meeting, the original meeting shall be deemed to have terminated forthwith after its adjournment.

3.09 Remuneration and Expenses

The directors shall be paid such remuneration for their services as the board may from time to time determine. The directors shall also be entitled to be reimbursed for reasonable traveling and other expenses properly incurred by them in attending meetings of the board or any committee thereof. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity and receiving remuneration therefore.

3.10 Officers

The board from time to time may appoint one or more officers of the Corporation and, without prejudice to rights under any employment contract, may remove any officer of the Corporation. The powers and duties of each officer of the Corporation shall be those determined from time to time by the board and, in the absence of such determination, shall be those usually incidental to the office held.

3.11 Agents and Attorneys

The board shall have the power from time to time to appoint agents or attorneys for the Corporation in or outside Canada with such powers of management or otherwise (including the power to sub-delegate) as may be thought fit.

SECTION FOUR

COMMITTEES

4.01 Transaction of Business

The powers of any committee of directors may be exercised by a meeting at which a quorum is present or by resolution in writing signed by all the members of such committee who would have been entitled to vote on that resolution at a meeting of the committee. At all meetings of committees every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes the chairman of the meeting shall be entitled to a second or casting vote. Resolutions in writing may be signed in counterparts.

4.02 Procedure

Unless otherwise determined by the board, a quorum for meetings of any committee shall be a majority of its members, each committee shall have the power to appoint its chairman and the rules for calling, holding, conducting and adjourning meetings of the committee shall be the same as those governing the board. Each member of a committee shall serve during the pleasure of the board of directors and, in any event, only so long as he shall be a director. The directors may fill vacancies in a committee by appointment from among their members. Provided that a quorum is maintained, the committee may continue to exercise its powers notwithstanding any vacancy among its members.

SECTION FIVE

PROTECTION OF DIRECTORS AND OFFICERS

5.01 Limitation of Liability

No director or officer for the time being of the Corporation shall be liable for the acts, receipts, neglects or defaults of any other director or officer or employee, or for joining in any receipt or act for conformity, or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by the Corporation or for or on behalf of the Corporation or for the insufficiency or deficiency of any security in or upon which any of the moneys of or belonging to the Corporation shall be placed or invested, or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any person, from or corporation including any person, from or corporation with whom or with which any moneys, securities or effects shall be lodged or deposited. or for any loss, conversion, misapplication or misappropriation of or any damage resulting from any dealings with any moneys, securities or other assets of or belonging to the Corporation or for any other loss, damage or misfortune whatsoever which may happen in the execution of the duties

of his respective office or trust or in relation thereto unless the same shall happen by or through his failure to exercise the powers and to discharge the duties of his office honestly, in good faith and with a view to the best interests of the Corporation and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

5.02 Indemnity

The Corporation shall, to the maximum extent permitted under the Act, indemnify a director or officer, a former director or officer, and a person who acts or acted at the Corporation’s request as a director or officer of a body corporate of which the Corporation is or was a shareholder or creditor, and his heirs and legal representatives, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal or administrative action or proceeding to which he is made a party by reason of being or having been a director or officer of the Corporation or such body corporate, including (without limitation) any such action by or on behalf of the Corporation or such body corporate to procure a judgment in its favour, and the Corporation shall use its reasonable best efforts to obtain any approval or approvals necessary for such indemnification.

SECTION SIX

SHARES

6.01 Non-Recognition of Trusts

Subject to the provisions of the Act, the Corporation may treat as the absolute owner of any share the person in whose name the share is registered in the securities register as if that person had full legal capacity and authority to exercise all rights of ownership, irrespective of any indication to the contrary through knowledge or notice or description in the Corporation’s records or on the share certificate.

6.02 Joint Shareholders

If two or more persons are registered as joint holders of any share:

(a) the Corporation shall record only one address on its books for such joint holders;

(b) the address of such joint holders for all purposes with respect to the Corporation shall be their recorded address; and

(c) any one of such persons may give effectual receipts for the certificate issued in respect thereof or for any dividend, bonus, return of capital or other money payable or warrant issuable in respect of such share.

6.03 Lien for Indebtedness

If the articles provide that the Corporation has a lien on any shares registered in the name of a shareholder or his legal representative for a debt of that shareholder to the Corporation, such lien may be enforced, subject to the articles and to any unanimous shareholder agreement, by the sale of the shares thereby affected or by any other action, suit, remedy or proceeding authorized or permitted by law or by equity and, pending such enforcement, the Corporation may refuse to register a transfer of the whole or any part of such shares.

SECTION SEVEN

DIVIDENDS

7.01 Dividend Cheques

A dividend payable in cash shall be paid by cheque of the Corporation or of any dividend paying agent appointed by the board, to the order of each registered holder of shares of the class or series in respect of which it has been declared and mailed by prepaid ordinary mail to such registered holder at his recorded address, unless such holder otherwise directs and the Corporation agrees to follow such direction. In the case of joint holders the cheque shall, unless such joint holders otherwise direct and the Corporation agrees to follow such direction, be made payable to the order of all of such joint holders and mailed to them at their recorded address. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold.

7.02 Non-receipt of Cheques

In the event of non-receipt of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time prescribe, whether generally or in any particular case.

7.03 Unclaimed Dividends

Any dividend unclaimed after a period of six years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation.

SECTION EIGHT

MEETINGS OF SHAREHOLDERS

8.01 Chairman, Secretary and Scrutineers

The chairman of any meeting of shareholders, who need not be a shareholder of the Corporation, shall be the first mentioned of the following officers as has been appointed and is present and is willing to so act at the meeting: chairman of the board, president or a vice-president (in order of seniority). If no such officer is present and willing to act as chairman within fifteen minutes from the time fixed for holding the meeting, the persons present and entitled to vote shall choose one of their number to be chairman. The chairman shall conduct the proceedings at the meeting in all respects and his decision in any matter or thing, including, but without in any way limiting the generality of the foregoing, any question regarding the validity or invalidity of any instruments of proxy and any question as to the admission or rejection of a vote, shall be conclusive and binding upon the shareholders. The secretary of any meeting of shareholders shall be the secretary of the Corporation, provided that, if the Corporation does not have a secretary or if the secretary of the Corporation is absent, the chairman shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. The board may from time to time appoint in advance of any meeting of shareholders one or more persons to act as scrutineers at such meeting and, in the absence of such appointment, the chairman may appoint one or more persons to act as scrutineers at any meeting of shareholders. Scrutineers so appointed may, but need not be, shareholders, directors, officers or employees of the Corporation.

8.02 Persons Entitled to be Present

The only persons entitled to be present at a meeting of shareholders shall be:

(a) those entitled to vote at such meeting;

(b) the directors and auditors of the Corporation;

(c) others who, although not entitled to vote, are entitled or required under any provision of the Act, the articles or the by-laws to be present at the meeting;

(d) legal counsel to the Corporation when invited by the Corporation to attend the meeting; and

(e) any other person on the invitation of the chairman or with the consent of the meeting.

8.03 Quorum

A quorum for the transaction of business at any meeting of shareholders shall be at least two persons present in person, each being a shareholder entitled to vote thereat or a duly appointed proxy or representative for an absent shareholder so entitled, and representing in the aggregate not less than 10% of the outstanding shares of the Corporation carrying voting rights at the meeting, provided that, if there should be only one shareholder of the Corporation entitled to vote at any meeting of shareholders, the quorum for the transaction of business at a meeting of shareholders shall consist of the one shareholder.

8.04 Representatives

The authority of an individual to represent a body corporate or association at a meeting of shareholders of the Corporation shall be established by depositing with the Corporation a certified copy of the resolution of the directors or governing body of the body corporate or association, as the case may be, granting such authority, or in such other manner as may be satisfactory to the chairman of the meeting.

8.05 Action by Shareholders

The shareholders shall act by ordinary resolution unless otherwise required by the Act, articles, by-laws or any unanimous shareholders agreement. In case of an equality of votes either upon a show of hands or upon a poll, the chairman of the meeting shall be entitled to a second or casting vote.

8.06 Show of Hands

Upon a show of hands every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands shall have been taken upon a question, unless a ballot thereon is required or demanded, a declaration by the chairman of the meeting that the vote upon the question has been carried or carried by a particular majority or not carried and an entry to that effect in the minutes of the meeting shall be prima facie evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against any resolution or other proceeding in respect of the said question, and the result of the vote so taken shall be the decision of the shareholders upon the said question.

8.07 Ballots

A ballot required or demanded shall be taken in such manner as the chairman shall direct. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot. If a ballot is taken each person present shall be entitled, in respect of the shares which he is entitled to vote at the meeting upon the question, to that number of votes provided by the Act or the articles, and the result of the ballot so taken shall be the decision of the shareholders upon the said question.

8.08 Meetings by Telephone

With the consent of the chairman of the meeting or the consent (as evidenced by a resolution) of the persons present and entitled to vote at the meeting, a shareholder or any other person entitled to attend a meeting of shareholders may participate in the meeting by means of telephone or other communication facilities that permit all persons participating in the meeting to hear each other, and a person participating in such a meeting by those means shall be considered present at the meeting and at the place of the meeting.

SECTION NINE

NOTICES

9.01 Omissions and Errors

The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of the board or the non-receipt of any notice by any such person or any error in any notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise founded thereon.

9.02 Persons Entitled by Death or Operation of Law

Every person who, by operation of law, transfer, death of a shareholder or any other means whatsoever shall become entitled to any share, shall be bound by every notice in respect of such share which shall have been duly given to the shareholder from whom he derives his title to such share prior to his name and address being entered on the securities register (whether such notice was given before or after the happening of the event upon which he became so entitled) and prior to his furnishing to the Corporation the proof of authority or evidence of his entitlement prescribed by the Act.

SECTION TEN

EFFECTIVE DATE AND REPEAL

10.01   Effective Date

This by-law shall come into force upon the date of continuance of the Corporation under the Act.

10.02   Repeal

All previous by-laws (including without limitation the Articles of the Corporation under the Company Act of British Columbia) of the Corporation are repealed as of the coming into force of this by-law. Such repeal shall not affect the previous operation of any by-law so repealed or affect the validity of any act done or right, privilege, obligation or liability acquired or incurred under, or the validity of any contract or agreement made pursuant to, or the validity of any articles (as defined in the Act) or predecessor charter documents of the Corporation obtained pursuant to, any such by-law prior to its repeal. All officers and persons acting under any such by-law so repealed shall continue to act as if appointed under the provisions of this by-law and all resolutions of the shareholders, the board or a committee of the board with continuing effect passed under any repealed by-law shall continue to be good and valid except to the extent inconsistent with this by-law and until amended or repealed.

MADE by the board the 23rd day of May, 1997.

/s/ John J. Fleming

Chairman of the Board

CONFIRMED by the shareholders in accordance with the Act the 2^nd day of June, 1997.

/s/ John J. Fleming

Chairman of the Board

EX-4.1

Exhibit 4.1

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT made effective as of the 1st day of July 2005.

BETWEEN:

TRANSATLANTIC PETROLEUM CORP., a corporation incorporated under the laws of the Province of Alberta, Canada with registered offices in the City of Calgary, in the Province of Alberta (the “Corporation”)

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SCOTT C. LARSEN, an individual resident in the City of Dallas, in the State of Texas, U.S.A. (the “Executive”)

WHEREAS the Executive is the President and Chief Executive Officer of the Corporation and has duties and responsibilities in respect of a number of subsidiaries, affiliates and associates of the Corporation;

AND WHEREAS the Corporation and the Executive wish to clarify the terms of the Executive’s employment with the Corporation;

NOW THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants herein contained, the parties agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement, unless there is something in the context or subject matter inconsistent therewith, the following defined terms shall have the meanings hereinafter set forth:

(a) “Annual Salary” shall have the meaning set out in Section 3.1.

(b) “Affiliate”, “Associate” and “Subsidiary” shall have the meanings set out in the Business Corporations Act (Alberta).

(c) “Board of Directors” shall mean the Board of Directors of the Corporation.

(d) “Cause” shall be deemed to exist if:

(i) the Corporation determines in good faith and following a reasonable investigation that the Executive has committed fraud, theft or embezzlement from the Corporation;

(ii) the Executive pleads guilty or nolo contendere to or is convicted of any felony or other crime involving moral turpitude, fraud, theft or embezzlement;

(iii) the Executive substantially fails to perform his duties according to the terms of his employment (other than any such failure resulting from the Executive’s Disability) after the Corporation has given the Executive written notice of setting forth the nature of the failure to perform the duties and a reasonable opportunity to correct it;

(iv) a breach of any provision in Article 5 (provided that the Corporation acts in good faith in determining that such a breach constitutes Cause) or a material breach of any other provision of this Agreement; or

(v) the Executive has engaged in on-the-job conduct that materially violates the Corporation’s Code of Conduct or other Corporation policies, as determined in the Corporation’s sole discretion.

The Executive’s resignation in advance of an anticipated termination for Cause shall constitute a termination for Cause.

(e) “Change of Control” shall mean the occurrence of any of:

(i) the purchase or acquisition of Common Shares of the Corporation and/or securities convertible into Common Shares of the Corporation or carrying the right to acquire Common Shares of the Corporation (“Convertible Securities”) as a result of which a Person, group of Persons or Persons acting jointly or in concert, or any Affiliates or Associates of any such Person, group of Persons or any of such Persons acting jointly or in concert (collectively the “Holders”) beneficially own or exercise control or direction over Common Shares and/or Convertible Securities of the Corporation such that, assuming the conversion of the Convertible Securities beneficially owned by the Holders thereof, the Holders would have the right to cast more than 50% of the votes attached to all Common Shares of the Corporation; provided that, the acquisition of Common Shares or Convertible Securities of the Corporation pursuant to the issuance of securities from the Corporation which results in a Holder beneficially owning or exercising control or direction over 50% of the votes attached to all Common Shares of the Corporation (assuming conversion of the Convertible Securities beneficially owned by Holders thereof) which is approved by the Board of Directors of the Corporation prior to the issuance of securities shall not constitute a “Change of Control”; or

(ii) approval by the shareholders of:

(A) an amalgamation, arrangement, merger or other consolidation or combination of the Corporation with another entity as a result of which the Persons who are shareholders of the Corporation immediately prior to the transaction will not, immediately after the transaction, own securities

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of the successor or continuing entity which would entitle them to cast more than 50% of the votes attaching to all of the voting securities of the successor or continuing entity,

(B) a liquidation, dissolution or winding-up of the Corporation,

(C) the sale, lease or other disposition of all or substantially all of the assets of the Corporation,

(D) the election at a meeting of the Corporation’s shareholders of a number of directors, who were not included in the slate for election as directors approved by the prior Board of Directors, and would represent a majority of the Board of Directors, or

(E) the appointment of a number of directors which would represent a majority of the Board of Directors and which were nominated by any holder of voting shares of the Corporation or by any group of holders of voting shares of the Corporation acting jointly or in concert and not approved by the Corporation’s prior Board of Directors.

(f) “Confidential Information” shall mean the following information, whether or not originated by the Executive that relates to the business or affairs of the Corporation, its Subsidiaries, Affiliates and Associates:

(i) “Material Information” meaning any information relating to the business, operations, capital and affairs of the Corporation that when released would have, or would reasonably be expected to have, a significant effect on the market price or value of any of the Corporation’s securities (or the securities of other companies with whom the Corporation may be conducting confidential negotiations). Material information consists of both material facts and material changes relating to the Corporation’s business, operations, capital and affairs and includes developments in the Corporation’s business, operations, capital and affairs;

(ii) “Business Opportunities” meaning all business ideas, prospects, proposals or other opportunities pertaining to the lease, acquisition, exploration, production, gathering or marketing of hydrocarbons and related products and the exploration potential of geographical areas on which hydrocarbon exploration prospects are located, which are developed by the Corporation during the term hereof, or originated by any third party and brought to the attention of the Corporation during the term hereof, together with information relating thereto (including, without limitation, geological and seismic data and interpretations thereof, whether in the form of maps, charts, logs, seismographs, calculations, summaries, memoranda, opinions or other written or charted means);

(iii) “Proprietary Information” meaning any and all records, notes, memoranda, data, ideas, patterns, processes, methods, techniques, systems, formulas, patents, models, samples, specimens, devices, programs, computer software, writings, research, personnel information, plans, customer lists, pricing materials and policies, purchasing methods and policies, or any other

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information of whatever nature in the possession or control of the Corporation which has not been published or disclosed to the general public, or which gives to Employer an opportunity to obtain an advantage over competitors who do not know of or currently use such confidential information.

(g) “Constructive Dismissal” shall mean the occurrence of a material diminution in title and/or duties, responsibilities or authority or the implementation of a requirement that Executive relocate from his present city of residence provided that, such term shall not include:

(i) a change consistent with the Corporation splitting a position into one or more positions in conjunction with a corporate reorganization based on the demands of such position so long as there is no reduction in the Annual Salary or other remuneration or responsibilities taken as a whole;

(ii) a change in the Executive’s position, duties or title with a Subsidiary, Affiliate or Associate of the Corporation; or

(iii) the occurrence of any of the aforesaid events with the consent of the Executive or termination of the employment of the Executive for Just Cause, Death or Disability; or

(iv) having the positions of CEO and President held by two different individuals so long as Executive occupies one or the other position.

(h) “Date of Termination” shall mean the date of cessation of the Executive’s employment with the Corporation, regardless of the reason for cessation of employment.

(i) “Disability” shall mean the Executive’s substantial inability, due to a physical or mental impairment, to perform the essential functions of the employment position that the Executive holds with the Corporation, with or without reasonable accommodation, for a period of six (6) cumulative months out of any 18-month period.

(j) “Effective Date” shall mean the effective date of a Change of Control.

(k) “Person” means any individual, Corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock Corporation, trust, plan, unincorporated organization or government or any agency or political subdivisions thereof.

(l) “Stock Options” means options to purchase shares of the Corporation, as may be granted to the Executive from time to time under the Stock Option Plan or otherwise.

(m) “Stock Option Plan” means the Corporation’s Stock Option Plan (1995) as amended from time to time.

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ARTICLE 2

EMPLOYMENT

2.1 Engagement

The Corporation shall continue to employ the Executive as the President and Chief Executive Officer of the Corporation and the Executive agrees to continue to be employed in such employment in accordance with the terms and conditions of this Agreement.

2.2 Performance

The Executive shall devote substantially his full time, energy, skill and best efforts to the performance of his duties hereunder, in a manner which will faithfully and diligently further the business and interests of the Corporation, its Subsidiaries, Affiliates and Associates. The Executive at all times shall comply with all applicable laws, and shall comply with all policies and instructions of the Corporation in effect from time to time unless any such policies are in direct conflict with the terms of this Agreement, in which case, the terms of this Agreement shall govern to the extent of the conflict.

2.3 Activities

The Executive agrees that prior to accepting any directorship, advisory role or other similar role with another corporation (except a Subsidiary, Affiliate or Associate of the Corporation), the Executive shall obtain the written consent of the Corporation. However, nothing contained in this Agreement shall prohibit the Executive from being involved as an investor or shareholder in securities issued by corporations that do not compete directly or indirectly with the business of the Employer or where such investment constitutes not more than 5% of the outstanding securities of a business or corporation whose shares are traded on a national security exchange, so long as the Executive has no participation in the management of such business or company.

2.4 Term

This Agreement and the Executive’s employment shall continue until terminated in accordance with Article 4.

ARTICLE 3

REMUNERATION AND BENEFITS

3.1 Annual Salary

As consideration for the services provided herein, the Corporation shall pay to the Executive an annual salary of US$240,000.00, paid in equal monthly installments, less applicable withholdings and deductions. The Annual Salary may be reviewed and increased at the discretion of the Board of Directors. The Annual Salary may be paid by one or more of the Corporation’s Subsidiaries and, with the consent of the Corporation, the Executive may direct that all or a portion thereof be paid to a member of the Executive’s immediate family or an entity controlled by the Executive or the Executive’s immediate family as designated by the Executive, less applicable withholdings and deductions.

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3.2 Bonus

The Executive shall be eligible to receive other incentive compensation as may be determined by and at the discretion of the Board of Directors from time to time (“Bonus”).

3.3 Stock Option Plan

The Executive will be eligible to participate in the Stock Option Plan at the discretion of the Board of Directors. All issuances of Stock Options will be subject to the terms of the Stock Option Plan and shall be made in accordance with applicable securities legislation.

3.4 Benefits

The Executive shall be eligible to participate in all benefits that the Corporation provides for its Executives resident in the U.S.A. (“Benefits”), unless such Benefits are relinquished by the Executive. The Corporation shall provide benefits in accordance with the formal plan documents or policies, and any issues with respect to entitlement or payment of benefits shall be governed by the terms of such documents or policies establishing the benefit in issue.

3.5 Expenses

The Corporation shall reimburse the Executive for all reasonable travelling and other expenses actually and properly incurred by him in connection with his duties hereunder. For all such expenses, the Executive shall furnish the Corporation with statements, receipts or other documentation as may be reasonably required by the Corporation.

3.6 Vacation

The Executive shall be entitled to four (4) weeks paid annual vacation.

ARTICLE 4

TERMINATION OF EMPLOYMENT

4.1 Death

The Executive’s employment and this Agreement shall be deemed terminated on the death of the Executive, at which time the Executive’s personal representatives shall be entitled to receive the amount of unpaid Annual Salary to and including the date of death, any Bonus declared but not yet paid, plus all outstanding expense reimbursements (in each case less applicable withholdings and deductions).

4.2 Disability

The Executive shall cooperate in all respects with the Corporation if a question arises as to whether the Executive has a Disability. The Executive shall, as reasonably requested by the Corporation, submit to an examination by a medical doctor or other health care specialist mutually selected by the Corporation and the Executive. If the Corporation and the Executive are unable to agree on whether a Disability exists, the determination of the specialist selected pursuant hereto shall be determinative.

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In the event of a Disability of the Executive, the Executive’s employment with the Corporation shall be deemed to be frustrated and, unless the Board of Directors determines otherwise, shall automatically terminate. If the Executive’s employment is terminated by reason of Disability, then the Corporation shall pay the Executive the amount of unpaid Annual Salary to and including the Date of Termination, any declared but unpaid Bonus, and all outstanding expense reimbursements (in each case, less applicable withholdings and deductions).

4.3 Resignation

The Executive may at any time provide written notice to the Corporation terminating this Agreement and the Executive’s employment, effective at the end of ninety (90) calendar days from the date of such notice. The Executive shall complete all responsibilities under this Agreement to the end of such period provided, however, that the Corporation may, without reducing the Executive’s compensation during such period, excuse Executive from any or all duties during such period.

4.4 Termination by the Corporation for Cause

The Corporation may, at any time, immediately terminate the Executive’s employment for Cause, by giving written notice setting forth the nature of the Cause. If the Executive’s employment is terminated by the Corporation for Cause, the Corporation shall pay to the Executive the amount of unpaid Annual Salary to and including the Date of Termination, any declared but unpaid Bonus, plus all outstanding expense reimbursements (in each case less applicable withholdings and deductions).

4.5 Termination by the Corporation Without Cause or Termination by the Executive for Constructive Dismissal

The Corporation may, in its absolute discretion, immediately terminate the Executive’s employment at any time without Cause for any reason. At any time within sixty (60) days following an event that constitutes a Constructive Dismissal hereunder, the Executive may terminate his employment with the Corporation upon thirty (30) days written notice.

If the Executive’s employment is terminated either by the Corporation without Cause or by the Executive by reason of Constructive Dismissal, then the Corporation shall pay to the Executive the amount of unpaid Annual Salary to and including the Date of Termination, any Bonus that has been declared but not yet paid and all outstanding expense reimbursements (in each case less applicable withholdings and deductions).

In addition, within ten (10) business days of receipt of an executed release in the form of the Release attached as Schedule ”A” to this Agreement, the Corporation shall pay to the Executive the following, in each case less applicable withholdings and deductions (collectively, the “Termination Amount”):

(A) a severance payment in the amount of the Executive’s Annual Salary, and

(B) the sum of US$15,000, representing compensation for the loss of Benefits.

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4.6 Change of Control

In the event a Change of Control of the Corporation results in:

(a) the Corporation terminating the employment of the Executive within thirty (30) days prior to or within one year after the Effective Date; or

(b) a Constructive Dismissal within one (1) year after the Effective Date, and the Executive elects to terminate employment with the Corporation;

the Corporation shall pay to the Executive, within ten (10) business days of receipt of an executed release in the form of the Release attached as Schedule “A” to this Agreement, the Termination Amount as described in Section 4.5.

If the Corporation does not terminate the Executive’s employment in accordance with 4.6(a) or the Executive elects not to exercise the option to terminate the Executive’s employment pursuant to Section 4.6(b), the Executive’s employment shall continue in accordance with the terms of this Agreement, or on such other terms as mutually agreed by the Corporation and the Executive.

4.7 Payment of Termination Amount

The Termination Amounts payable to the Executive pursuant to Sections 4.5 or 4.6 shall not be reduced in any respect in the event that the Executive shall secure or shall not reasonably pursue alternative employment following the termination of the Executive’s employment. Notwithstanding any provision hereof to the contrary, no Termination Amount will be paid to Executive to the extent that such payment would cause, or contribute to an excess parachute payment under Section 280G of the Internal Revenue Code of 1986, as amended.

4.8 Options to Purchase Common Shares

In the event of termination of the Executive’s employment, for any reason, any Stock Options must be exercised in accordance with and shall expire in accordance with the Stock Option Plan.

4.9 Return of Property

On the Date of Termination, the Executive shall promptly surrender to the Corporation all information in whatever form (including all Confidential Information) and any other documents, materials, data, property, information and equipment belonging to the Corporation or relating to the Corporation’s business in his possession, custody or control, and the Executive shall not thereafter retain or deliver to any other Person any of the foregoing or any summary or memorandum thereof.

ARTICLE 5

NON-SOLICITATION AND CONFIDENTIALITY

5.1 Non-Solicitation

During the Executive’s employment with the Corporation and for a period of six (6) months after the Date of Termination (the “Restricted Period”), the Executive shall not, without the prior written consent of the Corporation (i) directly or (ii) knowingly and indirectly:

(a) solicit or contract with any employee of the Corporation or any of its Subsidiaries, Affiliates or Associates;

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(b) commence an offer of any nature or kind whatsoever for any securities or property or assets of the Corporation or any of its Subsidiaries, Affiliates or Associates, including without limitation a tender or exchange offer;

(c) solicit proxies from holders of securities of the Corporation or form, join or in any way participate with a “control person” (as such term is defined under the Securities Act (Alberta)) with respect to the equity of the Corporation or any of its Subsidiaries or Associates;

(d) engage in any discussions or negotiations, conclude any understandings or enter into any agreement, or otherwise act in concert, with any third party to propose or effect any takeover bid, amalgamation, merger, arrangement or other business combination with respect to the Corporation or any of its Subsidiaries or Associates or substantially all of the assets of the Corporation or any of its Subsidiaries or Associates or to propose or effect any acquisition or purchase of any assets of the Corporation or any of its Subsidiaries or Associates;

(e) institute any shareholder proposal in respect of the Corporation or otherwise attempt to influence or control the conduct of the security holders of the Corporation; or

(f) take any action in furtherance of any of the foregoing,

whether for or on his behalf or for any entity in which he shall have a direct or indirect interest (or any Subsidiary, Affiliate or Associate of any such entity) whether as a proprietor, partner, co-venturer, financier, investor or stockholder, director, officer, employer, servant, agent, representative or otherwise.

5.2 Confidentiality

(a) Other than in the normal course of the fulfilling Executive’s duties to and positions with the Corporation, its Subsidiaries, Affiliates and Associates during the Restricted Period:

(i) The Executive shall receive and hold all Confidential Information absolutely secret, undisclosed, in trust and in confidence, and shall comply with the Corporation’s policies and guidelines and use his best efforts for the protection of Confidential Information.

(ii) The Executive shall not reveal or disclose to any Person outside the Corporation or use for his own benefit, whether by private communication or by public address or publication or otherwise, any Confidential Information without the Corporation’s specific written authorization or except as required by a mandatory provision of applicable law, provided however, that prior to any unauthorized use or disclosure of Confidential Information that is required by law, the Executive shall give the Corporation reasonable prior notice of any disclosure of Confidential Information required by law and shall permit and cooperate with any effort by the Corporation to obtain a protective order or similar protection for the Corporation. The Executive shall take such action as is reasonably necessary to ensure that no family member of the Executive or other Person affiliated with Executive discloses or permits the disclosure of any Confidential Information.

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(b) All originals, copies and other forms of Confidential Information, however and whenever produced, shall be the sole property of the Corporation, not to be removed from the premises or custody of the Corporation, except in the normal course of business.

(c) This Agreement and all information and documents concerning the substance and terms of this Agreement shall be Confidential Information and shall be maintained in confidence and shall not be disclosed to any other Person except in compliance with the Corporation’s disclosure policies or without the Corporation’s specific written authorization or as required by law.

5.3 Acknowledgement

The Executive acknowledges and agrees that:

(a) he will receive or will become eligible to receive substantial benefits and compensation as a result of his employment by the Corporation and its Subsidiaries under this Agreement, which benefits and compensation are offered to him only because and on condition of his willingness to commit his best efforts and loyalty to the Corporation, including abiding by the terms and restrictions in this Article 5;

(b) as a result of the acquisition of Confidential Information, the Executive will occupy a position of trust and confidence with the Corporation and its Subsidiaries, Affiliates and Associates;

(c) the Business Opportunities constitute the exclusive property of the Corporation;

(d) the Executive’s position of trust and knowledge of Confidential Information would enable the Executive to put the Corporation at a significant competitive disadvantage if the Executive breaches the restrictions in this Article 5;

(e) irreparable damage would result to the Corporation if the provisions of this Article 5 hereof are not specifically enforced, and the Executive waives all defences to the strict enforcement thereof by the Corporation;

(f) the Corporation shall be entitled to any appropriate legal, equitable, or other remedy, including injunctive relief, in respect of any failure or continuing failure on his part to comply with Article 5:

(g) any breach of this Article 5 shall constitute grounds for termination of the Executive’s employment for Just Cause.

5.4 Survival

Notwithstanding the termination of this Agreement and the Executive’s employment, the provisions of this Article 5 shall survive such termination.

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ARTICLE 6

GENERAL

6.1 Enurement

This Agreement shall enure to the benefit of and be binding upon the Corporation, its successors and permitted assigns, and the Executive and his personal representatives.

6.2 Notices

All notices authorized or required to be given pursuant to this Agreement shall be given to the parties hereto at the following addresses or such other addresses as they may specify by written notice:

Corporation:	444 5th Avenue S.W., Suite 1840, Calgary, Alberta T2P 2T8 and
	5910 N. Central Expressway, Suite 1755, Dallas Texas 75206
Executive:	6229 Orchid Lane, Dallas, Texas 75230

All notices shall be in writing and may be delivered by hand, mailed by registered or first class mail or sent by telecommunication. Notices shall be deemed to have been given and received:

(a) if delivered, on the day on which it was delivered,

(b) if mailed, three business days following the date of mailing, or

(c) if sent by telecommunication, on the first business day following the day it was dispatched.

6.3 Governing Law

This Agreement shall be governed by and construed in accordance with the laws in force in the State of Texas, USA.

6.4 Entire Agreement

This Agreement shall constitute the entire Agreement between the Executive and the Corporation in respect of the matters set forth herein. Except as otherwise specified herein or in writing by the Corporation after the date hereof, to the extent of any conflict or inconsistency between the terms of this Agreement and any other Agreement or document between the Executive and the Corporation or otherwise related to the Executive’s employment with the Corporation, this Agreement shall govern to the extent of such inconsistency or conflict.

6.5 Severability

The provisions of this Agreement shall be deemed severable. If any provision of this Agreement shall be held unenforceable by any court of competent jurisdiction, such provision shall be modified to the extent necessary to be enforceable, and the remaining provisions shall remain in full force and effect.

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6.6 Amendments and Waivers

All modifications, amendments and supplements to this Agreement must be made in writing and signed by both parties. No waiver by any party hereto of any provision hereof or of any breach of this Agreement shall be effective or binding unless such waiver is in writing, and any such waiver shall not limit or affect such party’s rights with respect to any future breach.

6.7 Counterparts

This Agreement may be signed in two (2) counterparts, each of which shall be deemed an original and both of which shall together constitute the same instrument.

6.8 Legal Advice

The Executive acknowledges having had the opportunity to seek independent legal advice in connection with negotiation and execution of this Agreement.

IN WITNESS WHEREOF, this Agreement has been executed by the Executive and the Corporation as of and from the 1st day of July, 2005.

TransAtlantic Petroleum Corp.
Per:
Name:	Michael Winn
Title:	Chairman

SIGNED, SEALED AND DELIVERED in the presence of	)     )     )     )
	)
Witness	)	Scott C. Larsen

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RELEASE

RELEASE

In consideration of payment of the amount of US$                    , less deductions as required by law, and other good and valuable consideration, the receipt of which is hereby acknowledged, I, Scott C. Larsen, do for myself and my heirs, executors, administrators, personal representatives and assigns (collectively referred to as “I”) forever release, remise and discharge TransAtlantic Petroleum Corp., its associates, affiliates, subsidiaries, partners, successors, predecessor companies (collectively the “Corporation”), and the Corporation’s officers, directors, shareholders, employees, agents, insurers and assigns (together with the Corporation, the “Released Parties”) from any and all actions, causes of actions, contracts (whether express or implied), claims and demands for damages, suits, debts, sums of money, indemnity, expenses, interest, costs and claims of any and every kind and nature whatsoever, at law or in equity, which I ever had or now have, or which I or my heirs, successors or personal representatives may hereafter have, by reason of or existing out of any causes whatsoever existing up to and inclusive of the date of this Release, including but without limiting the generality of the foregoing:

(a) my employment with the Corporation;

(b) the Executive Employment Agreement dated effective July 1, 2005 and any other written or oral agreement between any member of the Corporation (collectively the “Employment Agreement”);

(c) the expiration or termination of the Employment Agreement and my ceasing to be employed by the Corporation, including, but not limited to, claims for compensation, commissions, bonuses, stock options, other wages and benefits, breach of contract, wrongful termination, impairment of economic opportunity, intentional infliction of emotional distress, claims based on personal injury, work-related accident, any breach of implied or express covenant of good faith and fair dealing, violation of public policy, or any other contract, tort or personal injury claim;

(d) any claims which I may have arising under or relating to any U.S. or Canadian federal, state, provincial or local statute, regulation or ordinance relating to employment, employment discrimination or retaliation, including the following U.S. statutes: Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000 et seq.; The Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981; The Civil Rights Act of 1991, as amended, 42 U.S.C. § 1981a; The Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq.; Americans With Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; Fair Labor Standards Act, as amended, 29 U.S.C. § 201, et seq.; Equal Pay Act, as amended, 29 U.S.C. § 201 et seq.; National Labor Relations Act, as amended, 29 U.S.C. § 151 et seq.; Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq., Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1000 et seq.; Family and Medical Leave Act, as amended, 29 U.S.C. § 2601, et seq.; The Texas Commission on Human Rights Act, as amended, Tex. Lab. Code § 21.001, et seq.;

(e) any claims which I may have arising under or relating to Canadian employment standards legislation or human rights legislation;

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(f) any U.S. or Canadian federal, state, provincial, local, or other statute, law or rule, regulation, executive order or guideline, or principle of constitutional or common law, including, but not limited to, those laws specifically described above.

(g) any and all claims for damages, salary, wages, termination pay, severance pay, vacation pay, bonuses, expenses, allowances, any stock options or rights to purchase shares granted by the Corporation incentive payments, insurance or any other benefits (or loss thereof) arising out of my employment with the Corporation; and

(h) all such further costs, expenses or damages which may properly be alleged to arise in respect of the cessation of my employment with the Corporation.

Notwithstanding anything contained herein, this Release shall not extend to or affect, or constitute a release of any right that I may have in respect of:

(i) any corporate indemnity existing by statute, contract or pursuant to any of the constating documents of the Corporation provided in my favour in respect of my having acted at any time as an officer of the Corporation;

(j) my entitlement to any insurance maintained for the benefit or protection of the directors and/or officers of the Corporation, including without limitation, any directors’ and officers’ liability insurance; or

(k) all rights and benefits under that certain Participating Interest Agreement dated July 11, 2005 between TransAtlantic Worldwide, Ltd., Scott C. Larsen and the Corporation.

NO ADMISSION

I acknowledge that payment of the consideration set out above does not constitute any admission of liability by or on behalf of the Released Parties.

INDEMNITY FOR TAXES

I confirm and warrant that I will save, hold harmless and indemnify the Corporation from and against all claims, taxes or penalties and demands which may be made by the Minister of National Revenue requiring the Corporation to pay income tax under the Income Tax Act (Canada), and/or by the U.S. Internal Revenue Service and/or State taxing authorities requiring the Corporation to pay or withhold income tax under U.S. or State tax laws, in respect of income tax payable in excess of the income tax previously withheld and with respect to any other income tax which may, in the future, be found to be payable or to be withheld by the Corporation on my behalf.

BENEFITS AND INSURANCE CLAIMS

I acknowledge and understand that the Corporation will discontinue all of my employment benefits effective [date]. I further acknowledge and agree that I have no further claim against the Corporation for benefits or damages arising from the cessation of benefits and that I have been provided with information concerning:

(a) any available right to continue any such benefits, at my own expense under the U.S. COBRA law; and

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(b) any available right to convert my life insurance coverage to an individual policy of life insurance at my own expense.

I fully accept sole responsibility to replace those benefits that I wish to continue and to exercise conversion privileges where applicable with respect to benefits. In the event that I become disabled, I covenant not to sue the Corporation for insurance or other benefits, or for loss of benefits. I hereby release the Released Parties from any further obligations or liabilities arising from my employment benefits.

NON-DISCLOSURE

I agree that I will not divulge or disclose, directly or indirectly, the contents of this Release or the terms of settlement relating to my ceasing to be employed with the Corporation to any person, including but without limiting the generality of the foregoing, to employees or former employees of the Corporation, except my legal and financial advisors and my immediate family, on the condition that they maintain the confidentiality thereof, except as may be required by law.

CONFIDENTIALITY and NON–SOLICITATION

I acknowledge and agree that I continue to be bound by Clause 5 of the Employment Agreement, a copy of which is attached.

FURTHER CLAIMS

I agree that I will not make claim or take proceedings against any other person or entity that might claim contribution or indemnity under the provisions of any statute or otherwise against the Corporation or any individual or entity discharged through this Release.

EFFECT OF RELEASE

I understand and agree that by signing this Agreement, I - on behalf of myself, my family, assigns, representatives, agents, estate, heirs, beneficiaries, executors, administrators, successors, and/or attorneys, if any - agree to give up any right or entitlement I may have under U.S. or Canadian federal, state, provincial or local law against the Released Parties, concerning any events related to my employment or termination, or the Corporation’s failure to continue my employment. This Agreement extinguishes any potential employment discrimination claims I may have relating to my employment with the Corporation and the Corporation’s termination of my employment existing on the date I sign this Agreement.

I further represent and warrant that I have not assigned to any third party any claim involving the Released Parties or authorized any third party to assert on my behalf any claim against the Released Parties. If a third party asserts a claim against the Released Parties on my behalf or includes me as a class member in any class action involving any claim, I agree to not accept any benefits or damages relating or arising out of such claim.

COOPERATION

For a reasonable period after my termination, I agree to make myself available and to reasonably cooperate with the Corporation in any future claims or lawsuits involving the Released Parties where I have knowledge of the underlying facts or to affect the completion of my outstanding employment duties

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or the transfer of such duties. The Corporation agrees to reimburse me for time I spend at the Corporation’s request at a rate per hour equivalent to what I earned with the Corporation immediately before my notice of termination. Any obligations performed to affect the completion or transfer of my duties shall be performed as an independent contractor, not as an employee. I will not be reimbursed if I am a named party in any claim or lawsuit. In addition, I agree not to voluntarily aid, assist or cooperate with any claimant or plaintiff or their attorneys or agents in any claim or lawsuit commenced against the Released Parties.

Nothing in this Agreement should be construed to prevent me from initiating or participating in any U.S. or Canadian federal, state, provincial or local agency administrative proceeding or from testifying at an administrative hearing, deposition, or in court in response to a lawful subpoena.

UNDERSTANDING

I acknowledge that this Release may be enforced in any court, federal, state, provincial, or local, and before any administrative agency or body, federal, state, provincial, or local. I hereby declare that I have had the opportunity to seek independent legal advice with respect to the matters addressed in this Release and the terms of settlement which have been agreed to by the Corporation and me, and I fully understand this Release and the terms of settlement. I hereby voluntarily accept the terms for the purpose of making full and final compromise, adjustment and settlement of all claims as aforesaid.

COMPLETE AGREEMENT

I understand and agree that this Release contains the entire agreement between the Released Parties and me regarding the aforesaid matters and that the terms of this Release are contractual and not a mere recital.

REVIEW PERIOD, EXECUTION, AND REVOCATION

I understand that I can have 21 calendar days from my receipt of this Agreement to consider whether to accept its terms. I agree that changes to this Agreement, whether material or immaterial, do not restart the running of the 21-day period. After signing the Agreement, I will have seven (7) calendar days to consider whether to revoke it. The Agreement will not be effective until seven (7) calendar days after I sign the Agreement without revoking it.

If I choose to revoke the Agreement, please notify in writing:                                                                                                           .

EFFECTIVE PERIOD

This Agreement is null and void if: (i) I fail to execute and return it within 21 days of receipt; or (ii) I sign it within 21 days, but revoke my execution within seven (7) calendar days after signing it.

DATED at                     ,              effective the          day of             , 200    .

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EX-4.2

Exhibit 4.2

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT made effective as of the 1st day of May 2005.

BETWEEN:

TRANSATLANTIC PETROLEUM CORP., a corporation incorporated under the laws of the Province of Alberta, Canada with registered offices in the City of Calgary, in the Province of Alberta (the “Corporation”)

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CHRIS H. LLOYD, an individual resident in the City of Dallas, in the State of Texas, U.S.A. (the “Executive”)

WHEREAS the Executive is the Chief Financial Officer of the Corporation and has duties and responsibilities in respect of a number of subsidiaries, affiliates and associates of the Corporation;

AND WHEREAS the Corporation and the Executive wish to clarify the terms of the Executive’s employment with the Corporation;

NOW THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants herein contained, the parties agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement, unless there is something in the context or subject matter inconsistent therewith, the following defined terms shall have the meanings hereinafter set forth:

(a) “Annual Salary” shall have the meaning set out in Section 3.1.

(b) “Affiliate”, “Associate” and “Subsidiary” shall have the meanings set out in the Business Corporations Act (Alberta).

(c) “Board of Directors” shall mean the Board of Directors of the Corporation.

(d) “Cause” shall be deemed to exist if:

(i) the Corporation determines in good faith and following a reasonable investigation that the Executive has committed fraud, theft or embezzlement from the Corporation;

(ii) the Executive pleads guilty or nolo contendere to or is convicted of any felony or other crime involving moral turpitude, fraud, theft or embezzlement;

(iii) the Executive substantially fails to perform his duties according to the terms of his employment (other than any such failure resulting from the Executive’s Disability) after the Corporation has given the Executive written notice of setting forth the nature of the failure to perform the duties and a reasonable opportunity to correct it;

(iv) a breach of any provision in Article 5 (provided that the Corporation acts in good faith in determining that such a breach constitutes Cause) or a material breach of any other provision of this Agreement; or

(v) the Executive has engaged in on-the-job conduct that materially violates the Corporation’s Code of Conduct or other policies of the Corporation or its Subsidiaries as determined in the Corporation’s sole discretion.

The Executive’s resignation in advance of an anticipated termination for Cause shall constitute a termination for Cause.

(e) “Change of Control” shall mean the occurrence of any of:

(i) the purchase or acquisition of Common Shares of the Corporation and/or securities convertible into Common Shares of the Corporation or carrying the right to acquire Common Shares of the Corporation (“Convertible Securities”) as a result of which a Person, group of Persons or Persons acting jointly or in concert, or any Affiliates or Associates of any such Person, group of Persons or any of such Persons acting jointly or in concert (collectively the “Holders”) beneficially own or exercise control or direction over Common Shares and/or Convertible Securities of the Corporation such that, assuming the conversion of the Convertible Securities beneficially owned by the Holders thereof, the Holders would have the right to cast more than 50% of the votes attached to all Common Shares of the Corporation; provided that, the acquisition of Common Shares or Convertible Securities of the Corporation pursuant to the issuance of securities from the Corporation which results in a Holder beneficially owning or exercising control or direction over 50% of the votes attached to all Common Shares of the Corporation (assuming conversion of the Convertible Securities beneficially owned by Holders thereof) which is approved by the Board of Directors of the Corporation prior to the issuance of securities shall not constitute a “Change of Control”; or

(ii) approval by the shareholders of:

(A) an amalgamation, arrangement, merger or other consolidation or combination of the Corporation with another entity as a result of which the Persons who are shareholders of the Corporation immediately prior to the transaction will not, immediately after the transaction, own securities

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of the successor or continuing entity which would entitle them to cast more than 50% of the votes attaching to all of the voting securities of the successor or continuing entity,

(B) a liquidation, dissolution or winding-up of the Corporation,

(C) the sale, lease or other disposition of all or substantially all of the assets of the Corporation,

(D) the election at a meeting of the Corporation’s shareholders of a number of directors, who were not included in the slate for election as directors approved by the prior Board of Directors, and would represent a majority of the Board of Directors, or

(E) the appointment of a number of directors which would represent a majority of the Board of Directors and which were nominated by any holder of voting shares of the Corporation or by any group of holders of voting shares of the Corporation acting jointly or in concert and not approved by the Corporation’s prior Board of Directors.

(f) “Confidential Information” shall mean the following information, whether or not originated by the Executive that relates to the business or affairs of the Corporation, its Subsidiaries, Affiliates and Associates:

(i) “Material Information” meaning any information relating to the business, operations, capital and affairs of the Corporation that when released would have, or would reasonably be expected to have, a significant effect on the market price or value of any of the Corporation’s securities (or the securities of other companies with whom the Corporation may be conducting confidential negotiations). Material information consists of both material facts and material changes relating to the Corporation’s business, operations, capital and affairs and includes developments in the Corporation’s business, operations, capital and affairs;

(ii) “Business Opportunities” meaning all business ideas, prospects, proposals or other opportunities pertaining to the lease, acquisition, exploration, production, gathering or marketing of hydrocarbons and related products and the exploration potential of geographical areas on which hydrocarbon exploration prospects are located, which are developed by the Corporation during the term hereof, or originated by any third party and brought to the attention of the Corporation during the term hereof, together with information relating thereto (including, without limitation, geological and seismic data and interpretations thereof, whether in the form of maps, charts, logs, seismographs, calculations, summaries, memoranda, opinions or other written or charted means);

(iii) “Proprietary Information” meaning any and all records, notes, memoranda, data, ideas, patterns, processes, methods, techniques, systems, formulas, patents, models, samples, specimens, devices, programs, computer software, writings, research, personnel information, plans, customer lists, pricing materials and policies, purchasing methods and policies, or any other

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information of whatever nature in the possession or control of the Corporation which has not been published or disclosed to the general public, or which gives to Employer an opportunity to obtain an advantage over competitors who do not know of or currently use such confidential information.

(g) “Constructive Dismissal” shall mean the occurrence of a material diminution in title and/or duties, responsibilities or authority or the implementation of a requirement that Executive relocate from his present city of residence provided that, such term shall not include:

(i) a change consistent with the Corporation splitting a position into one or more positions in conjunction with a corporate reorganization based on the demands of such position so long as there is no reduction in the Annual Salary or other remuneration or responsibilities taken as a whole;

(ii) a change in the Executive’s position, duties or title with a Subsidiary, Affiliate or Associate of the Corporation; or

(iii) the occurrence of any of the aforesaid events with the consent of the Executive or termination of the employment of the Executive for Just Cause, Death or Disability.

(h) “Date of Termination” shall mean the date of cessation of the Executive’s employment with the Corporation, regardless of the reason for cessation of employment.

(i) “Disability” shall mean the Executive’s substantial inability, due to a physical or mental impairment, to perform the essential functions of the employment position that the Executive holds with the Corporation, with or without reasonable accommodation, for a period of four (4) cumulative months out of any 12-month period.

(j) “Effective Date” shall mean the effective date of a Change of Control.

(k) “Person” means any individual, Corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock Corporation, trust, plan, unincorporated organization or government or any agency or political subdivisions thereof.

(l) “Stock Options” means options to purchase shares of the Corporation, as may be granted to the Executive from time to time under the Stock Option Plan or otherwise.

(m) “Stock Option Plan” means the Corporation’s Stock Option Plan (1995) as amended from time to time.

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ARTICLE 2

EMPLOYMENT

2.1 Engagement

The Corporation shall continue to employ the Executive as the Chief Financial Officer of the Corporation and the Executive agrees to continue to be employed in such employment in accordance with the terms and conditions of this Agreement.

2.2 Performance

The Executive shall devote substantially his full time, energy, skill and best efforts to the performance of his duties hereunder, in a manner which will faithfully and diligently further the business and interests of the Corporation, its Subsidiaries, Affiliates and Associates. The Executive at all times shall comply with all applicable laws, and shall comply with all policies and instructions of the Corporation and its Subsidiaries in effect from time to time unless any such policies are in direct conflict with the terms of this Agreement, in which case, the terms of this Agreement shall govern to the extent of the conflict.

2.3 Activities

The Executive agrees that prior to accepting any directorship, advisory role or other similar role with another corporation (except a Subsidiary, Affiliate or Associate of the Corporation), the Executive shall obtain the written consent of the Corporation. However, nothing contained in this Agreement shall prohibit the Executive from being involved as an investor or shareholder in securities issued by corporations that do not compete directly or indirectly with the business of the Employer or where such investment constitutes not more than 5% of the outstanding securities of a business or corporation whose shares are traded on a national security exchange, so long as the Executive has no participation in the management of such business or company. The Executive and the Corporation agree that Executive occupied a position of director with the following companies at the inception of the Agreement and may continue to maintain such positions during the term of this Agreement: [Insert names of companies].

2.4 Term

This Agreement and the Executive’s employment shall continue until terminated in accordance with Article 4.

ARTICLE 3

REMUNERATION AND BENEFITS

3.1 Annual Salary

As consideration for the services provided herein, the Corporation shall pay to the Executive an annual salary of US$144,000.00, paid in equal monthly instalments, less applicable withholdings and deductions. The Annual Salary may be reviewed and increased at the discretion of the Board of Directors. The Annual Salary may be paid by one or more of the Corporation’s Subsidiaries.

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3.2 Bonus

The Executive shall be eligible to receive other incentive compensation as may be determined by and at the discretion of the Board of Directors from time to time (“Bonus”).

3.3 Stock Option Plan

The Executive will be eligible to participate in the Stock Option Plan at the discretion of the Board of Directors. All issuances of Stock Options will be subject to the terms of the Stock Option Plan and shall be made in accordance with applicable securities legislation.

3.4 Benefits

The Executive shall be eligible to participate in all benefits that the Corporation provides for its Executives resident in the U.S.A. (“Benefits”), unless such Benefits are relinquished by the Executive. The Corporation shall provide benefits in accordance with the formal plan documents or policies, and any issues with respect to entitlement or payment of benefits shall be governed by the terms of such documents or policies establishing the benefit in issue.

3.5 Expenses

The Corporation shall reimburse the Executive for all reasonable travelling and other expenses actually and properly incurred by him in connection with his duties hereunder. For all such expenses, the Executive shall furnish the Corporation with statements, receipts or other documentation as may be reasonably required by the Corporation.

3.6 Vacation

The Executive shall be entitled to two (2) weeks paid annual vacation provided that after 2 years of service, the amount of paid annual vacation shall increase from two (2) weeks to three (3) weeks.

ARTICLE 4

TERMINATION OF EMPLOYMENT

4.1 Death

The Executive’s employment and this Agreement shall be deemed terminated on the death of the Executive, at which time the Executive’s personal representatives shall be entitled to receive the amount of unpaid Annual Salary to and including the date of death, any Bonus declared but not yet paid, plus all outstanding expense reimbursements (in each case less applicable withholdings and deductions).

4.2 Disability

The Executive shall cooperate in all respects with the Corporation if a question arises as to whether the Executive has a Disability. The Executive shall, as reasonably requested by the Corporation, submit to an examination by a medical doctor or other health care specialist mutually selected by the Corporation and the Executive. If the Corporation and the Executive are unable to agree on whether a Disability exists, the determination of the specialist selected pursuant hereto shall be determinative.

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In the event of a Disability of the Executive, the Executive’s employment with the Corporation shall be deemed to be frustrated and, unless the Board of Directors determines otherwise, shall automatically terminate. If the Executive’s employment is terminated by reason of Disability, then the Corporation shall pay the Executive the amount of unpaid Annual Salary to and including the Date of Termination, any declared but unpaid Bonus, and all outstanding expense reimbursements (in each case, less applicable withholdings and deductions).

4.3 Resignation

The Executive may at any time provide written notice to the Corporation terminating this Agreement and the Executive’s employment, effective at the end of ninety (90) calendar days from the date of such notice. The Executive shall complete all responsibilities under this Agreement to the end of such period provided, however, that the Corporation may, without reducing the Executive’s compensation during such period, excuse Executive from any or all duties during such period.

4.4 Termination by the Corporation for Cause

The Corporation may, at any time, immediately terminate the Executive’s employment for Cause, by giving written notice setting forth the nature of the Cause. If the Executive’s employment is terminated by the Corporation for Cause, the Corporation shall pay to the Executive the amount of unpaid Annual Salary to and including the Date of Termination, any declared but unpaid Bonus, plus all outstanding expense reimbursements (in each case less applicable withholdings and deductions).

4.5 Termination by the Corporation Without Cause or Termination by the Executive for Constructive Dismissal

The Corporation may, in its absolute discretion, immediately terminate the Executive’s employment at any time without Cause for any reason. At any time within sixty (60) days following an event that constitutes a Constructive Dismissal hereunder, the Executive may terminate his employment with the Corporation upon thirty (30) days written notice.

If the Executive’s employment is terminated either by the Corporation without Cause or by the Executive by reason of Constructive Dismissal, then the Corporation shall pay to the Executive the amount of unpaid Annual Salary to and including the Date of Termination, any Bonus that has been declared but not yet paid and all outstanding expense reimbursements (in each case less applicable withholdings and deductions).

In addition, within ten (10) business days of receipt of an executed release in the form of the Release attached as Schedule ”A” to this Agreement, the Corporation shall pay to the Executive the following, in each case less applicable withholdings and deductions (collectively, the “Termination Amount”):

(A) a severance payment in the amount equal to 50% of the Executive’s Annual Salary, and

(B) the sum of US$7,500, representing compensation for the loss of Benefits.

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4.6 Change of Control

In the event a Change of Control of the Corporation results in:

(a) the Corporation terminating the employment of the Executive within thirty (30) days prior to or within six (6) months after the Effective Date; or

(b) a Constructive Dismissal within six (6) months after the Effective Date, and the Executive elects to terminate employment with the Corporation;

the Corporation shall pay to the Executive, within ten (10) business days of receipt of an executed release in the form of the Release attached as Schedule “A” to this Agreement, the Termination Amount as described in Section 4.5.

If the Corporation does not terminate the Executive’s employment in accordance with 4.6(a) or the Executive elects not to exercise the option to terminate the Executive’s employment pursuant to Section 4.6(b), the Executive’s employment shall continue in accordance with the terms of this Agreement, or on such other terms as mutually agreed by the Corporation and the Executive.

4.7 Payment of Termination Amount

The Termination Amounts payable to the Executive pursuant to Sections 4.5 or 4.6 shall not be reduced in any respect in the event that the Executive shall secure or shall not reasonably pursue alternative employment following the termination of the Executive’s employment. Notwithstanding any provision hereof to the contrary, no Termination Amount will be paid to Executive to the extent that such payment would cause, or contribute to an excess parachute payment under Section 280G of the Internal Revenue Code of 1986, as amended.

4.8 Options to Purchase Common Shares

In the event of termination of the Executive’s employment, for any reason, any Stock Options must be exercised in accordance with and shall expire in accordance with the Stock Option Plan.

4.9 Return of Property

On the Date of Termination, the Executive shall promptly surrender to the Corporation all information in whatever form (including all Confidential Information) and any other documents, materials, data, property, information and equipment belonging to the Corporation or relating to the Corporation’s business in his possession, custody or control, and the Executive shall not thereafter retain or deliver to any other Person any of the foregoing or any summary or memorandum thereof.

ARTICLE 5

NON-SOLICITATION AND CONFIDENTIALITY

5.1 Non-Solicitation

During the Executive’s employment with the Corporation and for a period of six (6) months after the Date of Termination (the “Restricted Period”), the Executive shall not, without the prior written consent of the Corporation (i) directly or (ii) knowingly and indirectly:

(a) solicit or contract with any employee of the Corporation or any of its Subsidiaries, Affiliates or Associates;

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(b) commence an offer of any nature or kind whatsoever for any securities or property or assets of the Corporation or any of its Subsidiaries, Affiliates or Associates, including without limitation a tender or exchange offer;

(c) solicit proxies from holders of securities of the Corporation or form, join or in any way participate with a “control person” (as such term is defined under the Securities Act (Alberta)) with respect to the equity of the Corporation or any of its Subsidiaries or Associates;

(d) engage in any discussions or negotiations, conclude any understandings or enter into any agreement, or otherwise act in concert, with any third party to propose or effect any takeover bid, amalgamation, merger, arrangement or other business combination with respect to the Corporation or any of its Subsidiaries or Associates or substantially all of the assets of the Corporation or any of its Subsidiaries or Associates or to propose or effect any acquisition or purchase of any assets of the Corporation or any of its Subsidiaries or Associates;

(e) institute any shareholder proposal in respect of the Corporation or otherwise attempt to influence or control the conduct of the security holders of the Corporation; or

(f) take any action in furtherance of any of the foregoing,

whether for or on his behalf or for any entity in which he shall have a direct or indirect interest (or any Subsidiary, Affiliate or Associate of any such entity) whether as a proprietor, partner, co-venturer, financier, investor or stockholder, director, officer, employer, servant, agent, representative or otherwise.

5.2 Confidentiality

(a) Other than in the normal course of the fulfilling Executive’s duties to and positions with the Corporation, its Subsidiaries, Affiliates and Associates during the Restricted Period:

(i) The Executive shall receive and hold all Confidential Information absolutely secret, undisclosed, in trust and in confidence, and shall comply with the Corporation’s policies and guidelines and use his best efforts for the protection of Confidential Information.

(ii) The Executive shall not reveal or disclose to any Person outside the Corporation or use for his own benefit, whether by private communication or by public address or publication or otherwise, any Confidential Information without the Corporation’s specific written authorization or except as required by a mandatory provision of applicable law, provided however, that prior to any unauthorized use or disclosure of Confidential Information that is required by law, the Executive shall give the Corporation reasonable prior notice of any disclosure of Confidential Information required by law and shall permit and cooperate with any effort by the Corporation to obtain a protective order or similar protection for the Corporation. The Executive shall take such action as is reasonably necessary to ensure that no family member of the Executive or other Person affiliated with Executive discloses or permits the disclosure of any Confidential Information.

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(b) All originals, copies and other forms of Confidential Information, however and whenever produced, shall be the sole property of the Corporation, not to be removed from the premises or custody of the Corporation, except in the normal course of business.

(c) This Agreement and all information and documents concerning the substance and terms of this Agreement shall be Confidential Information and shall be maintained in confidence and shall not be disclosed to any other Person except in compliance with the Corporation’s disclosure policies or without the Corporation’s specific written authorization or as required by law.

5.3 Acknowledgement

The Executive acknowledges and agrees that:

(a) he will receive or will become eligible to receive substantial benefits and compensation as a result of his employment by the Corporation and its Subsidiaries under this Agreement, which benefits and compensation are offered to him only because and on condition of his willingness to commit his best efforts and loyalty to the Corporation, including abiding by the terms and restrictions in this Article 5;

(b) as a result of the acquisition of Confidential Information, the Executive will occupy a position of trust and confidence with the Corporation and its Subsidiaries, Affiliates and Associates;

(c) the Business Opportunities constitute the exclusive property of the Corporation;

(d) the Executive’s position of trust and knowledge of Confidential Information would enable the Executive to put the Corporation at a significant competitive disadvantage if the Executive breaches the restrictions in this Article 5;

(e) irreparable damage would result to the Corporation if the provisions of this Article 5 hereof are not specifically enforced, and the Executive waives all defences to the strict enforcement thereof by the Corporation;

(f) the Corporation shall be entitled to any appropriate legal, equitable, or other remedy, including injunctive relief, in respect of any failure or continuing failure on his part to comply with Article 5:

(g) any breach of this Article 5 shall constitute grounds for termination of the Executive’s employment for Just Cause.

5.4 Survival

Notwithstanding the termination of this Agreement and the Executive’s employment, the provisions of this Article 5 shall survive such termination.

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ARTICLE 6

GENERAL

6.1 Enurement

This Agreement shall enure to the benefit of and be binding upon the Corporation, its successors and permitted assigns, and the Executive and his personal representatives.

6.2 Notices

All notices authorized or required to be given pursuant to this Agreement shall be given to the parties hereto at the following addresses or such other addresses as they may specify by written notice:

Corporation:	444 5th Avenue S.W., Suite 1840, Calgary, Alberta T2P 2T8 and
	5910 N. Central Expressway, Suite 1755, Dallas Texas 75206
Executive:	7002 Merrilee, Dallas, Texas 75214

All notices shall be in writing and may be delivered by hand, mailed by registered or first class mail or sent by telecommunication. Notices shall be deemed to have been given and received:

(a) if delivered, on the day on which it was delivered,

(b) if mailed, three business days following the date of mailing, or

(c) if sent by telecommunication, on the first business day following the day it was dispatched.

6.3 Governing Law

This Agreement shall be governed by and construed in accordance with the laws in force in the State of Texas, USA.

6.4 Entire Agreement

This Agreement shall constitute the entire Agreement between the Executive and the Corporation in respect of the matters set forth herein. Except as otherwise specified herein or in writing by the Corporation after the date hereof, to the extent of any conflict or inconsistency between the terms of this Agreement and any other Agreement or document between the Executive and the Corporation or otherwise related to the Executive’s employment with the Corporation, this Agreement shall govern to the extent of such inconsistency or conflict.

6.5 Severability

The provisions of this Agreement shall be deemed severable. If any provision of this Agreement shall be held unenforceable by any court of competent jurisdiction, such provision shall be modified to the extent necessary to be enforceable, and the remaining provisions shall remain in full force and effect.

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6.6 Amendments and Waivers

All modifications, amendments and supplements to this Agreement must be made in writing and signed by both parties. No waiver by any party hereto of any provision hereof or of any breach of this Agreement shall be effective or binding unless such waiver is in writing, and any such waiver shall not limit or affect such party’s rights with respect to any future breach.

6.7 Counterparts

This Agreement may be signed in two (2) counterparts, each of which shall be deemed an original and both of which shall together constitute the same instrument.

6.8 Legal Advice

The Executive acknowledges having had the opportunity to seek independent legal advice in connection with negotiation and execution of this Agreement.

IN WITNESS WHEREOF, this Agreement has been executed by the Executive and the Corporation as of and from the 1st day of May, 2005.

TransAtlantic Petroleum Corp.
Per:
Name:	Scott C. Larsen
Title:	President

SIGNED, SEALED AND DELIVERED in the presence of	)     )     )     )
	)
Witness	)	Chris H. Lloyd

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RELEASE

RELEASE

In consideration of payment of the amount of US$                    , less deductions as required by law, and other good and valuable consideration, the receipt of which is hereby acknowledged, I, Chris H. Lloyd, do for myself and my heirs, executors, administrators, personal representatives and assigns (collectively referred to as “I”) forever release, remise and discharge TransAtlantic Petroleum Corp., its associates, affiliates, subsidiaries, partners, successors, predecessor companies (collectively the “Corporation”), and the Corporation’s officers, directors, shareholders, employees, agents, insurers and assigns (together with the Corporation, the “Released Parties”) from any and all actions, causes of actions, contracts (whether express or implied), claims and demands for damages, suits, debts, sums of money, indemnity, expenses, interest, costs and claims of any and every kind and nature whatsoever, at law or in equity, which I ever had or now have, or which I or my heirs, successors or personal representatives may hereafter have, by reason of or existing out of any causes whatsoever existing up to and inclusive of the date of this Release, including but without limiting the generality of the foregoing:

(a) my employment with the Corporation;

(b) the Executive Employment Agreement dated effective May 1, 2005 and any other written or oral agreement between any member of the Corporation (collectively the “Employment Agreement”);

(c) the expiration or termination of the Employment Agreement and my ceasing to be employed by the Corporation, including, but not limited to, claims for compensation, commissions, bonuses, stock options, other wages and benefits, breach of contract, wrongful termination, impairment of economic opportunity, intentional infliction of emotional distress, claims based on personal injury, work-related accident, any breach of implied or express covenant of good faith and fair dealing, violation of public policy, or any other contract, tort or personal injury claim;

(d) any claims which I may have arising under or relating to any U.S. or Canadian federal, state, provincial or local statute, regulation or ordinance relating to employment, employment discrimination or retaliation, including the following U.S. statutes: Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000 et seq.; The Civil Rights Act of 1866, as amended, 42 U.S.C. § 1981; The Civil Rights Act of 1991, as amended, 42 U.S.C. § 1981a; The Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 621 et seq.; Americans With Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; Fair Labor Standards Act, as amended, 29 U.S.C. § 201, et seq.; Equal Pay Act, as amended, 29 U.S.C. § 201 et seq.; National Labor Relations Act, as amended, 29 U.S.C. § 151 et seq.; Worker Adjustment and Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq., Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1000 et seq.; Family and Medical Leave Act, as amended, 29 U.S.C. § 2601, et seq.; The Texas Commission on Human Rights Act, as amended, Tex. Lab. Code § 21.001, et seq.;

(e) any claims which I may have arising under or relating to Canadian employment standards legislation or human rights legislation;

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(f) any U.S. or Canadian federal, state, provincial, local, or other statute, law or rule, regulation, executive order or guideline, or principle of constitutional or common law, including, but not limited to, those laws specifically described above.

(g) any and all claims for damages, salary, wages, termination pay, severance pay, vacation pay, bonuses, expenses, allowances, any stock options or rights to purchase shares granted by the Corporation incentive payments, insurance or any other benefits (or loss thereof) arising out of my employment with the Corporation; and

(h) all such further costs, expenses or damages which may properly be alleged to arise in respect of the cessation of my employment with the Corporation.

Notwithstanding anything contained herein, this Release shall not extend to or affect, or constitute a release of any right that I may have in respect of:

(i) any corporate indemnity existing by statute, contract or pursuant to any of the constating documents of the Corporation provided in my favour in respect of my having acted at any time as an officer of the Corporation; or

(j) my entitlement to any insurance maintained for the benefit or protection of the directors and/or officers of the Corporation, including without limitation, any directors’ and officers’ liability insurance.

NO ADMISSION

I acknowledge that payment of the consideration set out above does not constitute any admission of liability by or on behalf of the Released Parties.

INDEMNITY FOR TAXES

I confirm and warrant that I will save, hold harmless and indemnify the Corporation from and against all claims, taxes or penalties and demands which may be made by the Minister of National Revenue requiring the Corporation to pay income tax under the Income Tax Act (Canada), and/or by the U.S. Internal Revenue Service and/or State taxing authorities requiring the Corporation to pay or withhold income tax under U.S. or State tax laws, in respect of income tax payable in excess of the income tax previously withheld and with respect to any other income tax which may, in the future, be found to be payable or to be withheld by the Corporation on my behalf.

BENEFITS AND INSURANCE CLAIMS

I acknowledge and understand that the Corporation will discontinue all of my employment benefits effective [date]. I further acknowledge and agree that I have no further claim against the Corporation for benefits or damages arising from the cessation of benefits and that I have been provided with information concerning:

(a) any available right to continue any such benefits, at my own expense under the U.S. COBRA law; and

(b) any available right to convert my life insurance coverage to an individual policy of life insurance at my own expense.

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I fully accept sole responsibility to replace those benefits that I wish to continue and to exercise conversion privileges where applicable with respect to benefits. In the event that I become disabled, I covenant not to sue the Corporation for insurance or other benefits, or for loss of benefits. I hereby release the Released Parties from any further obligations or liabilities arising from my employment benefits.

NON-DISCLOSURE

I agree that I will not divulge or disclose, directly or indirectly, the contents of this Release or the terms of settlement relating to my ceasing to be employed with the Corporation to any person, including but without limiting the generality of the foregoing, to employees or former employees of the Corporation, except my legal and financial advisors and my immediate family, on the condition that they maintain the confidentiality thereof, except as may be required by law.

CONFIDENTIALITY and NON–SOLICITATION

I acknowledge and agree that I continue to be bound by Clause 5 of the Employment Agreement, a copy of which is attached.

FURTHER CLAIMS

I agree that I will not make claim or take proceedings against any other person or entity that might claim contribution or indemnity under the provisions of any statute or otherwise against the Corporation or any individual or entity discharged through this Release.

EFFECT OF RELEASE

I understand and agree that by signing this Agreement, I - on behalf of myself, my family, assigns, representatives, agents, estate, heirs, beneficiaries, executors, administrators, successors, and/or attorneys, if any - agree to give up any right or entitlement I may have under U.S. or Canadian federal, state, provincial or local law against the Released Parties, concerning any events related to my employment or termination, or the Corporation’s failure to continue my employment. This Agreement extinguishes any potential employment discrimination claims I may have relating to my employment with the Corporation and the Corporation’s termination of my employment existing on the date I sign this Agreement.

I further represent and warrant that I have not assigned to any third party any claim involving the Released Parties or authorized any third party to assert on my behalf any claim against the Released Parties. If a third party asserts a claim against the Released Parties on my behalf or includes me as a class member in any class action involving any claim, I agree to not accept any benefits or damages relating or arising out of such claim.

COOPERATION

For a reasonable period after my termination, I agree to make myself available and to reasonably cooperate with the Corporation in any future claims or lawsuits involving the Released Parties where I have knowledge of the underlying facts or to affect the completion of my outstanding employment duties or the transfer of such duties. The Corporation agrees to reimburse me for time I spend at the Corporation’s request at a rate per hour equivalent to what I earned with the Corporation immediately before my notice of termination. Any obligations performed to affect the completion or transfer of my

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duties shall be performed as an independent contractor, not as an employee. I will not be reimbursed if I am a named party in any claim or lawsuit. In addition, I agree not to voluntarily aid, assist or cooperate with any claimant or plaintiff or their attorneys or agents in any claim or lawsuit commenced against the Released Parties.

Nothing in this Agreement should be construed to prevent me from initiating or participating in any U.S. or Canadian federal, state, provincial or local agency administrative proceeding or from testifying at an administrative hearing, deposition, or in court in response to a lawful subpoena.

UNDERSTANDING

I acknowledge that this Release may be enforced in any court, federal, state, provincial, or local, and before any administrative agency or body, federal, state, provincial, or local. I hereby declare that I have had the opportunity to seek independent legal advice with respect to the matters addressed in this Release and the terms of settlement which have been agreed to by the Corporation and me, and I fully understand this Release and the terms of settlement. I hereby voluntarily accept the terms for the purpose of making full and final compromise, adjustment and settlement of all claims as aforesaid.

COMPLETE AGREEMENT

I understand and agree that this Release contains the entire agreement between the Released Parties and me regarding the aforesaid matters and that the terms of this Release are contractual and not a mere recital.

REVIEW PERIOD, EXECUTION, AND REVOCATION

I understand that I can have 21 calendar days from my receipt of this Agreement to consider whether to accept its terms. I agree that changes to this Agreement, whether material or immaterial, do not restart the running of the 21-day period. After signing the Agreement, I will have seven (7) calendar days to consider whether to revoke it. The Agreement will not be effective until seven (7) calendar days after I sign the Agreement without revoking it.

If I choose to revoke the Agreement, please notify in writing:                                                                                                               .

EFFECTIVE PERIOD

This Agreement is null and void if: (i) I fail to execute and return it within 21 days of receipt; or (ii) I sign it within 21 days, but revoke my execution within seven (7) calendar days after signing it.

DATED at                     ,              effective the              day of             , 200    .

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EX-4.3

Exhibit 4.3

PARTICIPATING INTEREST AGREEMENT

THIS PARTICIPATING INTEREST AGREEMENT (this “Agreement”) made as of July 11, 2005 (the “Effective Date”)

BETWEEN

TRANSATLANTIC WORLDWIDE LTD., a Bahamian corporation (the “Grantor”)

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SCOTT C. LARSEN, an individual residing in Dallas, Texas (the “Grantee”)

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TRANSATLANTIC PETROLEUM CORP., an Alberta corporation (the “Guarantor”)

WHEREAS the Grantor has entered into the TWL Compensation Agreement (the “TWL Compensation Agreement”) dated June 20, 2005 with Tetrarch Limited (“Tetrarch”) (a copy of which is attached hereto as Exhibit A and incorporated herein by reference for all purposes) pursuant to which Tetrarch has agreed to compensate the Grantor for a certain service agreement which Tetrarch was successful in entering into;

AND WHEREAS the Grantor wishes to compensate the Grantee for his efforts in securing the compensation arrangements with Tetrarch by granting the Grantee an interest in any monies which may be received by the Grantor pursuant to the TWL Compensation Agreement;

AND WHEREAS the parties hereto have provided hereinafter the terms and conditions on which such interest is to be received by the Grantee;

AND WHEREAS Guarantor has agreed to join in this Participating Interest Agreement for the sole purpose of guaranteeing the performance of Grantor hereunder;

NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto agree as follows:

1. Participating Interest. The Grantor hereby reserves in favour of the Grantee an interest in any TWL Compensation (as that term is defined in the TWL Compensation Agreement) actually received by the Grantor (the “Participating Interest”) which Participating Interest shall be equal to 3.87% of any TWL Compensation received by the Grantor from time to time, subject to the following terms and conditions:

(a) The Participating Interest shall be free and clear of all liens, claims or encumbrances.

(b) Each payment with respect to the Participating Interest shall be made within thirty (30) days of actual receipt by the Grantor of any payment

from Tetrarch pursuant to the TWL Compensation Agreement. For greater certainty, the Grantor’s obligation to pay the Participating Interest to the Grantee only arises if, as and when payment(s) are received by the Grantor pursuant to the TWL Compensation Agreement.

(c) Subject to Paragraph 2 below, the Participating Interest shall remain in force and effect until the Grantee shall have received the sum of U.S.$599,850 (the “Maximum Interest”) from the Grantor pursuant to the terms of this Agreement.

(e) The Grantee shall have no right to assign, sell, transfer or convey, however accomplished (whether directly or indirectly), the Participating Interest granted under this Agreement without the prior written consent of the Grantor.

2. Reduction of Maximum Interest. The Grantee acknowledges and agrees that the Grantor has entered into a Security and Pledge Agreement with Summit Oil Limited dated June 20, 2005 (the “Summit Pledge Agreement”) pursuant to which the Grantor has pledged all of its interest in and rights to receive payments under the TWL Compensation Agreement. The Grantee further agrees that in the event that any portion of the TWL Compensation is paid by Tetrarch to Summit Oil Limited in accordance with the terms of the Summit Pledge Agreement and such payment results in a reduction of the Maximum Sum (as that term is defined in the TWL Compensation Agreement) payable to the Grantor, the Maximum Interest of the Grantee under this Agreement shall be reduced by the same percentage as the Maximum Sum is reduced under the TWL Compensation Agreement.

3. No Warranties. This Agreement is made without warranty of any kind or nature.

4. Taxes. The Grantee agrees that he will be liable for all taxes in respect of amounts received by the Grantee attributable to the Participating Interest. The Grantee further acknowledges and agrees that the Grantor shall have the right to deduct from any payment required to be made to the Grantee pursuant to this Agreement and withhold any and all amounts that the Corporation is obliged to withhold and remit to the relevant taxing authority.

5. Agreement to Provide Information. Under the terms of the TWL Compensation Agreement, Tetrarch is obligated to provide to the Grantor, a Quarterly Statement (as that term is defined in the TWL Compensation Agreement). While this Agreement is in force and effect, the Grantor hereby agrees to provide a copy of the Quarterly Statement to the Grantee no later than thirty (30) days from the date the Grantor receives each such Quarterly Statement.

6. GOVERNING LAW. THE VALIDITY, EFFECT AND CONSTRUCTION OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCLUDING ITS CONFLICT OF LAWS PRINCIPLES.

7. Notice. All notices and other communications required or permitted under this Agreement (except for Quarterly Statements provided for under Paragraph 5 above which may be sent by regular mail) shall be in writing and any communication or delivery hereunder shall

be deemed to have been duly given and received when actually delivered to the address set forth below for the party to be notified, or when a legible facsimile copy is received by the party’s facsimile equipment at the number shown below:

If to the Grantor:	c/o TransAtlantic Petroleum (USA) Corp.
	5910 N. Central Expressway, Suite 1755
	Dallas, TX 75206
	FAX: 214-220-4327
With a copy to:	Such other persons as the Grantor may designate in writing.
If to the Grantee:	Scott C. Larsen
	6229 Orchid Lane
	Dallas, Texas 75230
	FAX: 214-363-3868

A party may, by written notice so delivered to the other, change the address or facsimile number to which delivery shall thereafter be made.

8. No Waiver. The failure of any party to insist upon strict performance of a covenant hereunder or of any obligation hereunder, irrespective of the length of time for which such failure continues, shall not be a waiver of such party’s right to demand strict compliance in the future. No consent or waiver, express or implied, to or of any breach or default in the performance of any obligation hereunder shall constitute a consent or waiver to or of any other breach or default in the performance of the same or any other obligation hereunder.

9. Arbitration. Any dispute arising out of or relating to this Agreement, including any question regarding its existence, validity or termination, shall be shall be resolved by binding arbitration administered by the American Arbitration Association (AAA). Confirmation and judgment upon the award rendered by the arbitrator(s) may be entered by any state or federal court having jurisdiction thereof. The place of arbitration shall be Dallas, Texas and all proceedings shall be conducted in the English language. A dispute shall be deemed to have arisen when any party gives notice to the other party to that effect.

10. Amendments. This Agreement may not be amended nor any rights hereunder waived except by an instrument in writing signed by the party to be charged with such amendment or waiver and delivered by such party to the party claiming the benefit of such amendment or waiver.

11. Headings. The headings of the paragraphs of this Agreement are for guidance and convenience of reference only and shall not limit or otherwise affect any of the terms or provisions of this Agreement.

12. Counterparts. This Agreement may be executed by Grantor and Grantee in counterparts, each of which shall be deemed an original instrument but all of which together shall constitute but one and the same instrument.

13. Entire Agreement. This Agreement (including the exhibits hereto) constitutes the entire understanding between the parties with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter.

14. Parties in Interest. This Agreement and all its terms, provisions, conditions, covenants and warranties shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any other person or entity any benefits, rights or remedies.

15. Guarantee. For good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, Guarantor unconditionall and irrevocably guarantees to Grantee the due and punctual performance of Grantor’s obligations under this Agreement

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the Effective Date.

TransAtlantic Worldwide Ltd.
By:
Name:	Chris H. Lloyd
Title:	Chief Financial Officer

Witness	Scott C. Larsen
Name of Witness
Address of Witness

TransAtlantic Petroleum Corp.
By:
Name:	Michael Winn
Title:	Chairman

STATE OF TEXAS	§
	§
COUNTY OF DALLAS	§

The foregoing instrument was acknowledged before me on                                 , 2006 by                                                              , of TransAtlantic Worldwide Ltd., a Bahamian corporation, on behalf of said corporation.

	Notary Public in and for
	the State of Texas
My Commission Expires:
	Printed Name of Notary

STATE OF CALIFORNIA	§
	§
COUNTY OF	§

The foregoing instrument was acknowledged before me on                                     , 2006 by Michael Winn, of TransAtlantic Petroleum Corp., an Alberta corporation, on behalf of said corporation.

	Notary Public in and for
	the State of California
My Commission Expires:
	Printed Name of Notary

EX-4.4

Exhibit 4.4

TRANSATLANTIC PETROLEUM CORP.

Amended and Restated Stock Option Plan (2006) ¹

The following sets forth the terms and conditions of the Amended and Restated Stock Option Plan (the “Plan”) adopted by the Board of Directors of TransAtlantic Petroleum Corp. (the “Corporation”) and approved by the shareholders of the Corporation which shall govern the issuance of stock options (the “Stock Options”) to employees, directors and officers of, and persons and companies who provide services to the Corporation and subsidiaries of the Corporation:

1. Purpose

The principal purposes of the Plan are:

(a) to promote a proprietary interest in the Corporation among its employees, officers and directors and persons and companies providing services to the Corporation;

(b) to retain and attract the qualified personnel and service support the Corporation requires;

(c) to provide an incentive element in compensation; and

(d) to promote the profitability of Corporation.

2. Reservation of Shares

Subject to Section 11 of this Plan, the maximum number of common shares of the Corporation (the “Common Shares”) issuable pursuant to Stock Options outstanding under the Plan, and under any other security based compensation arrangements the Corporation may have from time to time, for Eligible Optionees (as hereinafter defined) shall not exceed 10% of the aggregate number of issued and outstanding Common Shares, on a non-diluted basis, at the time of grant. If the Corporation’s Common Shares are listed on the Toronto Stock Exchange (the “TSX”), any amendment to the fixed maximum percentage of Common Shares reserved for issuance pursuant to the exercise of stock options shall be approved by the TSX and the shareholders of the Corporation. For greater certainty, the reloading of the Common Shares authorized for issuance after the exercise of a Stock Option under the Plan does not require TSX or shareholder approval.

3. Eligibility

Stock Options shall be granted only to persons, firms or companies (“Eligible Optionees”) who are:

(a) bona fide employees (full-time or part-time), officers or directors of the Corporation or of a subsidiary of the Corporation; or

(b) consultants who are engaged to provide services to the Corporation or a subsidiary of the Corporation under a written contract and spend or will spend a significant amount of time and attention on the affairs and business of the Corporation or its subsidiaries.

¹ The Amended and Restated Stock Option Plan (2006) replaced the Stock Option Plan (1995) effective May     , 2006 and reflects the adoption of a "rolling" plan rather than a plan with a fixed maximum number of common shares reserved for issuance pursuant to stock options. The amendment was approved by the Toronto Stock Exchange on     , 2006.

4. Granting of Stock Options

The Board of Directors of the Corporation may from time to time grant Stock Options to Eligible Optionees. At the time a Stock Option is granted, the Board of Directors shall determine the number of Common Shares of the Corporation purchasable under the Stock Option, the date when the Stock Option is to become effective and, subject to the other provisions of this Plan, all other terms and conditions of the Stock Option. An Eligible Optionee may hold more than one Stock Option at any time, provided, however, the Stock Options granted, together with all of the Corporation’s other previously established or proposed security based compensation arrangements, may not result at any time in:

(a) the aggregate number of Common Shares reserved for issuance to any one person exceeding 5% of the outstanding issue;

(b) the issuance to any one insider of the Corporation and such insider’s associates (as defined in the Securities Act (Ontario)), within any one year period of an aggregate number of Common Shares exceeding 5% of the outstanding issue;

(c) the aggregate number of Common Shares reserved for issuance to insiders exceeding 10% of the outstanding issue; or

(d) [the issuance to insiders, within a one year period, of an aggregate number of Common Shares exceeding 10% of the outstanding issue].

The terms “insider” and “security based compensation arrangement” shall have the meaning given in the TSX policies relating to security based compensation arrangements and the term “outstanding issue” means the number of Common Shares issued and outstanding, on a non-diluted basis, immediately prior to a particular share issuance, excluding Common Shares issued pursuant to security based compensation arrangements of the Corporation over the preceding one year period.

5. Exercise Price

The exercise price of each Stock Option shall be determined in the discretion of the Board of Directors of the Corporation at the time of the granting of the Stock Option, provided that the exercise price shall not be lower than the “Market Price. “Market Price” shall mean the closing price of the Common Shares on the TSX on the trading day immediately prior to the date the Stock Option is granted, or, if there is no reported trade of the Common Shares on the TSX on such date, the arithmetic average of the closing bid and the closing ask for the Common Shares on the TSX on such date; provided that in the event the Common Shares are not listed on the TSX but are listed on another stock exchange or stock exchanges, the foregoing references to the TSX shall be deemed to be references to such other stock exchange or if more than one, to such one as shall be designated by the Board of Directors of the Corporation and in the event the Common Shares are not listed on any exchange, the Market Price shall be such price as is determined by the Board of Directors, in good faith.

6. Term and Exercise Periods

Subject to Section 7 hereof, all Stock Options shall be for a term and exercisable from time to time as determined in the discretion of the Board of Directors of the Corporation at the time of the granting of the Stock Options, provided that (i) no Stock Option shall have a term exceeding ten (10) years, and (ii) where a Stock Option has been granted for a specific service, such Stock Option may be exercisable only after the completion of that service. Without limiting the generality of the foregoing or the discretion of the Board of Directors and subject to Section 7 hereof, the Board of Directors may, by way of example,

determine that a Stock Option is exercisable only during the term of employment of the Eligible Optionee receiving it or during such term and for a limited period of time after termination of employment, that a Stock Option can be exercisable for a period of time or for its remaining term after the death or incapacity of an Eligible Optionee, that only a portion of a Stock Option is exercisable in a specified period, that the unexercised portion of a Stock Option is “cumulative” so that any portion of a Stock Option exercisable (but not exercised) in a specified period may be exercised in subsequent periods until the Stock Option terminates, or that a Stock Option may provide for early exercise and/or termination or other adjustment in the event of a death of a person and in other circumstances, such as if the Corporation shall resolve to sell all or substantially all of its assets, to liquidate or dissolve, or to merge, amalgamate, consolidate or be absorbed with or into any other corporation, if a take over bid is made for the Common Shares or if any change of control of the Corporation occurs.

7. Expiry in Certain Circumstances

In the case of a Stock Option granted to an officer or director of the Corporation in their capacity as such, if such Eligible Optionee ceases to be an officer or director of the Corporation prior to the expiry of the term of the Stock Option (other than in the event of the death or incapacity of the Eligible Optionee), such Stock Option may only be exercised, as to those Common Shares in respect of which the Stock Option has not been exercised, at any time up to and including the earlier of (i) a date three (3) months after the date the Eligible Optionee ceases to be an officer or director of the Corporation; or (ii) the expiry of the term of the Stock Option. Where a Stock Option has been granted to an Eligible Optionee, in the event of the death or incapacity of the Eligible Optionee on or prior to the expiry of the term of the Stock Option, the Stock Option may only be exercised, as to those Common Shares in respect of which the Stock Option has not been exercised, by the legal personal representatives of the Eligible Optionee at any time up to and including the earlier of (i) a date twelve (12) months following the date of the death or incapacity of the Eligible Optionee; or (ii) the expiry of the term of the Stock Option.

8. Non-Assignability

Stock Options shall not be assignable or transferable by an Eligible Optionee except for a limited right of assignment to allow the exercise of Stock Options by an Eligible Optionee’s legal representative in the event of death or incapacity.

9. Payment of Exercise Price

All Common Shares issued pursuant to the exercise of a Stock Option shall be paid for in full at the time of exercise of the Stock Option and prior to the issue of the Common Shares. All Common Shares issued in accordance with the foregoing shall be issued as fully paid and non-assessable Common Shares.

10. Non-Exercise

If any Stock Option granted pursuant to the Plan is not exercised for any reason whatsoever, the Common Shares reserved for issuance pursuant to such Stock Option shall revert to the Plan and shall be available for other Stock Options, however, at no time shall there be outstanding Stock Options exceeding in the aggregate the number of Common Shares authorized for issuance pursuant to Stock Options under this Plan.

11. Adjustment in Certain Circumstances

In the event:

(a) of any change in the Common Shares through subdivision, consolidation, reclassification, amalgamation, merger or otherwise; or

(b) of any stock dividend to holders of Common Shares (other than such stock dividends issued at the option of shareholders of the Corporation in lieu of substantially equivalent cash dividends); or

(c) that any rights are granted to all or substantially all of the holders of Common Shares to purchase Common Shares at prices substantially below fair market value; or

(d) that as a result of any recapitalization, merger, consolidation or otherwise the Common Shares are converted into or exchangeable for any other shares;

then in any such case the Board of Directors of the Corporation may make such adjustment in the Plan and in the Stock Options granted under the Plan as the Board of Directors of the Corporation may in its sole discretion deem appropriate to prevent substantial dilution or enlargement of the rights granted to, or available for, holders of Stock Options, and such adjustments may be included in the Stock Options.

12. Expenses

All expenses in connection with the Plan shall be borne by the Corporation.

13. Compliance with Laws

The Corporation shall not be obligated to issue any shares upon exercise of Stock Options if the issue would violate any law or regulation or any rule of any governmental authority or stock exchange. The Corporation shall not be required to issue, register or qualify for resale any shares issuable upon exercise of Stock Options pursuant to the provisions of a prospectus or similar document, provided that the Corporation shall notify the TSX and any other appropriate regulatory bodies in Canada of the existence of the Plan and the issuance and exercise of Stock Options.

14. Form of Stock Option Agreement

All Stock Options shall be issued by the Corporation in a form which meets the general requirements and conditions set forth in this Plan.

15. Amendments and Termination of Plan

The Corporation shall retain the right to amend from time to time or to terminate the terms and conditions of the Plan or Stock Options granted thereunder by resolution of the Board of Directors of the Corporation. Any amendments shall be subject to the prior consent of any applicable regulatory bodies, including the TSX. Any amendments to the Plan or Stock Options shall take effect only with respect to Stock Options issued thereafter, provided that they may apply to any unexercised Stock Options previously issued with the mutual consent of the Corporation and the Eligible Optionees holding such Stock Options. In addition to any other amendments which the TSX may permit without shareholder approval, the Board of Directors shall have the power and authority to approve amendments relating to the Plan or to Stock Options, without further approval of the shareholders, to the extent that such amendments relate to:

(a) altering the terms and conditions of vesting applicable to any Stock Options;

(b) extending the term of Stock Options held by a person other than an insider of the Corporation, including in the circumstances set forth in Section 7, provided that the term does not extend beyond ten years from the date of grant;

(c) accelerating the expiry date in respect of Stock Options;

(d) adding a cashless exercise feature, payable in cash or Common Shares;

(e) determining the adjustment provisions pursuant to Section 11 hereof;

(f) amending the definitions contained within the Plan; or

(g) amending or modifying the mechanics of exercise of the Stock Options.

16. Administration

The Plan shall be administered by the Board of Directors. The Board of Directors shall have full and final discretion to interpret the provisions of the Plan and to prescribe, amend, rescind and waive rules and regulations to govern the administration and operation of the Plan. All decisions and interpretations made by the Board of Directors shall be binding and conclusive upon the Corporation and on all persons eligible to participate in the Plan, subject to shareholder approval if required by theTSX.

17. Delegation of Administration of the Plan

Subject to the Business Corporations Act (Alberta) or any other legislation governing the Corporation, the Board of Directors may delegate to one or more directors of the Corporation, on such terms as it considers appropriate, all or any part of the powers, duties and functions relating to the granting of Stock Options and the administration of the Plan.

18. Applicable Law

This Plan shall be governed by and construed in accordance with the laws in force in the Province of Alberta.

19. Predecessor Plan

Options outstanding under the predecessor stock option plan of the Corporation will remain in effect and be exercisable in accordance with their terms and will be deemed to be issued under the terms of this Plan.

EX-4.5

Exhibit 4.5

TRANSATLANTIC PETROLEUM CORP.

and

COMPUTERSHARE TRUST COMPANY OF CANADA

WARRANT INDENTURE

November 17, 2005

TABLE OF CONTENTS

		Page
ARTICLE 1 Interpretation		1
1.1	Definitions	1
1.2	Gender and Number	5
1.3	Interpretation not Affected by Headings, etc.	5
1.4	Day not a Business Day	5
1.5	Time of the Essence	5
1.6	Applicable Law	5
1.7	Language	6
1.8	Severability	6
1.9	Conflicts	6
ARTICLE 2 Issue of Warrants		6
2.1	Issue of Warrants	6
2.2	Form and Terms of Warrants	6
2.3	Warrantholder not a Shareholder	7
2.4	Warrants to Rank pari passu	7
2.5	Signing of Warrant Certificates	7
2.6	Certification by the Trustee	7
2.7	Issue in Substitution for Warrant Certificates Lost, etc.	8
2.8	Exchange of Warrant Certificates	8
2.9	Transfer of Warrants	9
2.10	Canadian Legends	10
2.11	U.S. Legends	10
2.12	Charges for Exchange and Transfer	12
2.13	Registration of Warrants	12
2.14	Transferee Entitled to Registration	12
2.15	Registers Open for Inspection	12
2.16	Ownership of Warrants	13
ARTICLE 3 Exercise of Warrants		13
3.1	Method of Exercise of Warrants	13
3.2	Effect of Exercise of Warrants	14
3.3	Partial Exercise of Warrants; Fractions	15
3.4	Acceleration of Expiry Date	15
3.5	Expiration of Warrants	16
3.6	Cancellation of Surrendered Warrants	16
3.7	Accounting and Recording	16
3.8	Common Share Certificates	16
3.9	Prohibition on Exercise by U.S. Persons; Exception	17
ARTICLE 4 Adjustment of Number of Common Shares		18
4.1	Adjustment of Number of Common Shares	18
4.2	Entitlement to Shares on Exercise of Warrant	22
4.3	No Adjustment for Stock Options or Warrants	22
4.4	Determination by Corporation’s Auditors	22
4.5	Proceedings Prior to any Action Requiring Adjustment	23

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TABLE OF CONTENTS

(continued)

		Page
4.6	Certificate of Adjustment	23
4.7	Notice of Special Matters	23
4.8	No Action after Notice	23
4.9	Protection of Trustee	24
4.10	Other Adjustments	24
ARTICLE 5 Rights and Covenants of The Corporation		24
5.1	Optional Purchases by the Corporation	24
5.2	General Covenants	25
5.3	Trustee’s Remuneration and Expenses	26
5.4	Performance of Covenants by Trustee	26
ARTICLE 6 Enforcement		26
6.1	Suits by Warrantholders	26
6.2	Suits by the Corporation	28
6.3	Limitation of Liability	28
6.4	Waiver of Default	28
ARTICLE 7 Meetings Of Warrantholders		28
7.1	Right to Convene Meetings	28
7.2	Notice	29
7.3	Chairman	29
7.4	Quorum	29
7.5	Power to Adjourn	30
7.6	Show of Hands	30
7.7	Poll and Voting	30
7.8	Regulations	30
7.9	Corporation and Trustee May be Represented	31
7.10	Powers Exercisable by Extraordinary Resolution	31
7.11	Meaning of Extraordinary Resolution	32
7.12	Powers Cumulative	33
7.13	Minutes	33
7.14	Instruments in Writing	33
7.15	Binding Effect of Resolutions	34
7.16	Holdings by Corporation Disregarded	34
ARTICLE 8 Supplemental Indentures		34
8.1	Provision for Supplemental Indentures for Certain Purposes	34
8.2	Successor Corporations	35
ARTICLE 9 Concerning The Trustee		35
9.1	Trust Indenture Legislation	35
9.2	Rights and Duties of Trustee	36
9.3	Evidence, Experts and Advisers	36
9.4	Documents, Monies, etc. Held by Trustee	37
9.5	Actions by Trustee to Protect Interest	37

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TABLE OF CONTENTS

(continued)

		Page
9.6	Trustee Not Required to Give Security	37
9.7	Protection of Trustee	37
9.8	Replacement of Trustee; Successor by Merger	38
9.9	Conflict of Interest	39
9.10	Acceptance of Trust	39
9.11	Trustee Not to be Appointed Receiver	39
9.12	Knowledge of Trustee	40
9.13	Indemnification of Trustee	40
9.14	Trustee Not Required to Give Notice of Default	40
ARTICLE 10 General		41
10.1	Notice to the Corporation and the Trustee	41
10.2	Notice to Warrantholders	42
10.3	Evidence of Ownership	42
10.4	Counterparts	43
10.5	Satisfaction and Discharge of Indenture	43
10.6	Provisions of Indenture and Warrants for the Sole Benefit of Parties and Warrantholders	43
10.7	Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided	43
10.8	Successors	44

-iii-

This Warrant Indenture

is made as of November 17, 2005

Between

TRANSATLANTIC PETROLEUM CORP., a corporation incorporated under the laws of the Province of Alberta, having an office in Calgary, Alberta (the Corporation)

and

COMPUTERSHARE TRUST COMPANY OF CANADA, a trust company existing under the laws of Canada and authorized to carry on business in Alberta (the Trustee)

Recitals

A. The Corporation is proposing to issue up to 2,500,000 Warrants in the manner herein set forth;

B. Each Warrant shall, subject to adjustment, entitle the holder thereof to acquire one Common Share at the price and upon the terms and conditions herein set forth; and

C. All acts and deeds necessary have been done and performed to create the Warrants, when issued as provided in this Indenture, as legal, valid and binding upon the Corporation with the benefits and subject to the terms of this Indenture;

The foregoing statements of fact and recitals are made by the Corporation and not the Trustee.

The parties agree as follows.

ARTICLE 1

Interpretation

1.1 Definitions

In this Indenture, including the recitals and schedules hereto and in all indentures supplemental hereto:

“1933 Act” means the United States Securities Act of 1933, as amended;

“Accredited Investor” means an accredited investor as defined in Rule 501(a) of Regulation D;

“Adjustment Period” means the period from and including the Effective Date up to and including the Time of Expiry;

“affiliates” has the meaning given thereto in the Securities Act (Alberta);

“Authorized Investments” means short term interest bearing or discount debt obligations issued or guaranteed by the Government of Canada or a province of Canada or a Canadian chartered bank (which may include an affiliate or related party of the Trustee) provided that each such obligation is rated at least R1 (middle) by DBRS Inc. or an equivalent rating by Canadian Bond Rating Service.

“Business Day” means a day which is not Saturday or Sunday or a legal holiday in the City of Calgary or a day on which the Trustee is closed for business;

“Change of Control” means, with respect to the Corporation, the occurrence of any of the following events: (i) a tender offer shall be made and consummated for the ownership of 20% or more of the outstanding voting securities of the Corporation; (ii) the Corporation shall be merged or consolidated with another corporation (or other person) and as a result of such merger or consolidation less than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the former shareholders of the Corporation, other than affiliates of any party to such merger or consolidation as the same shall have existing immediately prior to such merger or consolidation; or (iii) the Corporation shall sell substantially all of its assets to another corporation (or other person) which is not a wholly owned Subsidiary;

“Common Shares” means fully paid and non-assessable Common Shares of the Corporation as presently constituted;

“Corporate Transaction” means a transaction resulting in a Change of Control;

“Corporation” means TransAtlantic Petroleum Corp.;

“Corporation’s Auditors” means the firm of chartered accountants that is duly appointed as auditors of the Corporation;

“Counsel” means a barrister or solicitor or a firm of barristers and solicitors retained by the Trustee or retained by the Corporation and acceptable to the Trustee;

“Current Market Price” of the Common Shares at any date means the weighted average of the trading prices per share for such shares for any 10 consecutive Trading Days (as selected by the directors of the Corporation) during the period commencing not more than 30 Trading Days before such date on the Toronto Stock Exchange or, if on such date the Common Shares are not listed on the Toronto Stock Exchange, on such stock exchange upon which such shares are listed and as selected by the directors, or, if such shares are not listed on any stock exchange then on such over-the-counter market as may be selected for such purpose by the directors, or, if the Common Shares are not listed on any stock exchange or traded through an over-the-counter market, the Current Market Price is to be determined in good faith by the directors of the Corporation;

“director” means a director of the Corporation for the time being and, unless otherwise specified herein, reference to action by the directors means action by the directors of the Corporation as a board or, whenever duly empowered, action by any committee of such board;

- 2 -

“Dividends Paid in the Ordinary Course” means cash dividends or distributions declared payable on the Common Shares in any fiscal year of the Corporation to the extent that such cash dividends or distributions do not exceed, in the aggregate, 50% of the consolidated net income of the Corporation before extraordinary items for the period of 12 consecutive months ended immediately prior to the first day of such fiscal year (such consolidated net income and extraordinary items to be shown in the audited consolidated financial statements of the Corporation for such period of 12 consecutive months or if there are no audited consolidated financial statements for such period, computed in accordance with generally accepted accounting principles, consistent with those applied in the preparation of the most recent audited consolidated financial statements of the Corporation);

“Effective Date” means the date of this Indenture;

“Exercise Date” means, with respect to any Warrant, the date on which the Warrant Certificate representing such Warrant is surrendered for exercise in accordance with the provisions of Article 3;

“Exercise Price” with respect to the exercise of any Warrant means $1.05 in lawful money of the United States per Common Share, unless such price shall have been adjusted in accordance with the provisions of Article 4, in which case it shall mean the adjusted price in effect at such time;

“Expiry Date” means November 17, 2007, subject to adjustment in accordance with Section 3.4, in which case it shall mean the accelerated expiry date.

“Issue Date” means, in respect of each Warrant, the date upon which the Warrant is issued by the Corporation so that it is considered outstanding for the purposes of this Indenture;

“person” means an individual, body corporate, partnership, trust, trustee, executor, administrator, legal representative or any unincorporated organization;

“Regulation D” means Regulation D under the 1933 Act;

“Regulation S” means Regulation S under the 1933 Act;

“Shareholder” means a holder of record of one or more Common Shares;

“Subsidiary of the Corporation” or “Subsidiary” means any corporation or other person (other than an individual) of which more than 50% of the outstanding voting securities are owned, directly or indirectly, by or for the Corporation, provided that the ownership of such securities confers the right to elect at least a majority of the board of directors (or persons in a similar position of fiduciary responsibility) of such corporation or other person (other than an individual) and includes any entity in like relation to a Subsidiary;

- 3 -

“this Warrant Indenture, this Indenture, herein, hereby” and similar expressions mean and refer to this Indenture and any indenture, deed or instrument supplemental hereto; and the expressions “Article, Section subsection” and “paragraph” followed by a number mean and refer to the specified article, section, subsection or paragraph of this Indenture;

“Time of Expiry” means 5:30 p.m., Calgary time, on the Expiry Date;

“Trading Day” means, with respect to a stock exchange, a day on which such exchange is open for the transaction of business and with respect to the over-the-counter market means a day on which the Toronto Stock Exchange is open for the transaction of business;

“Trustee” or “Warrant Trustee” means Computershare Trust Company of Canada or its successors from time to time in the trust hereby created;

“United States” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia;

“Units” means the units of the Corporation, each consisting of one Common Share and one-half of one Warrant, offered pursuant to the Underwriting Agreement dated November 17, 2005 between the Corporation and Canaccord Capital Corporation and Quest Securities Corporation.

“U.S. Person” has the meaning set forth in Regulation S and includes, with certain exceptions, (i) any natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. Person; (iv) any trust of which any trustee is a U.S. Person; (v) any agency or branch of a foreign entity located in the United States; (vi) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and (viii) any partnership or corporation if (A) organized or incorporated under the laws of any jurisdiction other than the United States and (B) formed by a U.S. Person principally for the propose of investing in securities not registered under the 1933 Act, unless it is organized or incorporated, and owned, by Accredited Investors who are not natural persons, estates or trusts;

“Warrant Agency” means either of the principal office of the Trustee in the City of Calgary and the principal office of the Trustee in the City of Toronto or such other place as may be designated in accordance with subsection 3.1(c);

“Warrant Certificate” means a certificate issued on or after the Effective Date to evidence Warrants;

- 4 -

“Warrantholder”, or “holder” without reference to Common Shares, means the person who is the registered owner of Warrants as shown on the register maintained at the Warrant Agency by the Trustee in accordance with this Indenture;

“Warrantholders’ Request” means an instrument signed in one or more counterparts by Warrantholders entitled to acquire in the aggregate not less than 10% of the aggregate number of Common Shares which could be acquired pursuant to all Warrants then unexercised and outstanding, requesting the Trustee to take some action or proceeding specified therein;

“Warrants” means the Warrants issued and certified hereunder and for the time being outstanding entitling the holder to acquire Common Shares; and

“written order of the Corporation, written request of the Corporation, written consent of the Corporation, written notice of the Corporation” and “certificate of the Corporation” mean, respectively, a written order, request, consent, notice and certificate signed in the name of the Corporation by any director or officer of the Corporation, and may consist of one or more instruments so executed.

1.2 Gender and Number

Unless herein otherwise expressly provided or unless the context otherwise requires, words importing the singular include the plural and vice versa and words importing gender include all genders.

1.3 Interpretation not Affected by Headings, etc.

The division of this Indenture into Articles and Sections, the provision of a table of contents and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Indenture.

1.4 Day not a Business Day

In the event that any day on or before which action is required to be taken hereunder is not a Business Day, then such action shall be required to be taken at or before the requisite time on the next succeeding day that is a Business Day.

1.5 Time of the Essence

Time shall be of the essence of this Indenture.

1.6 Applicable Law

This Indenture and the Warrant Certificates shall be construed in accordance with the laws of the Province of Alberta and shall be treated in all respects as Alberta contracts.

- 5 -

1.7 Language

The parties hereto confirm their express wish that this Indenture and all documents and agreements directly or indirectly relating thereto be drawn up in the English language. Notwithstanding such express wish, the parties agree that any such document or agreement, or any part thereof or of this Indenture, may be drawn up in the French language.

Les parties reconnaissent leur volonté expresse que le présent acte de fiducie ainsi que tous les documents et contrats s’y rattachant directement ou directement soient rédigés en anglais. Nonobstant cette volonté expresse, les parties conviennent que tout document ou contrat, ou toute partie de ces derniers ou du présent acte de fiducie, puissent etre rédigés en francais.

1.8 Severability

In the event that any provision under this Indenture is determined to be invalid or unenforceable in any respect, such determination will not affect the provision in any other respect or any other provision under this Indenture, all of which will remain in full force and effect.

1.9 Conflicts

In the event there is any conflict between this Indenture and any Warrant Certificate, the provisions under this Indenture will govern and prevail.

ARTICLE 2

Issue of Warrants

2.1 Issue of Warrants

Up to 2,500,000 Warrants are hereby created and authorized to be issued in accordance with the terms hereof. Each Warrant entitles the holder thereof, upon exercise, together with the payment of the Exercise Price, to acquire one Common Share, subject to adjustment in accordance with Article 4, at any time after the Issue Date and ending at the Time of Expiry.

2.2 Form and Terms of Warrants

(a) The Warrant Certificates (including all replacements issued in accordance with this Indenture) shall be substantially in the form set out in Schedule A hereto, shall be dated as of the date of this Indenture (regardless of the Issue Date), shall bear such legends and distinguishing letters and numbers as the Corporation may, with the approval of the Trustee, prescribe, and shall be issuable in any denomination excluding fractions.

(b) The Warrant Certificates may be engraved, printed, lithographed or partly in one form and partly in another as the Corporation with the approval of the Trustee may determine. No change in the Warrant Certificate shall be required by reason of any adjustment made pursuant to Article 4 in the number or class of Common Shares or other securities to which a holder is entitled pursuant to the exercise of the Warrants.

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(c) No fractional Warrants shall be issued or otherwise provided for hereunder.

(d) The number of Common Shares which may be purchased pursuant to the exercise of Warrants and the Exercise Price payable therefor shall be adjusted in the events and in the manner specified in Article 4.

(e) The expiry date for the exercise of the Warrants may be adjusted in the event and in the manner specified in Section 3.4.

(f) Each Warrant shall entitle the holder thereof to such other rights and privileges as are set forth in this Indenture.

2.3 Warrantholder not a Shareholder

Nothing in this Indenture or in the holding of a Warrant or Warrant Certificate or otherwise, shall, in itself, confer or be construed as conferring upon a Warrantholder as such any right or interest whatsoever as a Shareholder or as any other shareholder of the Corporation, including, but not limited to, the right to vote at, to receive notice of, or to attend, meetings of Shareholders or any other proceedings of the Corporation, or the right to receive dividends and other distributions except as may be provided in this Indenture or the Warrant Certificates.

2.4 Warrants to Rank pari passu

All Warrants shall rank pari passu, whatever may be the actual Issue Date thereof.

2.5 Signing of Warrant Certificates

The Warrant Certificates shall be signed by any one director or officer of the Corporation. The signature of any such director or officer may be mechanically reproduced in facsimile and Warrant Certificates bearing such facsimile signature shall be binding upon the Corporation as if it had been manually signed by such director or officer. Notwithstanding that any of the persons whose manual or facsimile signature appears on any Warrant Certificate as a director or officer may no longer be appointed or hold office at the date of such Warrant Certificate or at the date of certification or delivery thereof, any Warrant Certificate signed as aforesaid shall, subject to Section 2.6, be valid and binding upon the Corporation and the holder thereof shall be entitled to the benefits of this Indenture.

2.6 Certification by the Trustee

(a) No Warrant Certificate shall be issued or, if issued, shall be valid for any purpose or entitle the holder to the benefit hereof until it has been certified by manual signature by or on behalf of the Trustee and such certification by the Trustee upon any Warrant Certificate shall be conclusive evidence as against the Corporation that the Warrant Certificate so certified has been duly issued hereunder and that the holder is entitled to the benefits hereof.

(b) Warrant Certificates shall be certified by, or on behalf of, the Trustee upon the written order of the Corporation and delivered by the Trustee to the Corporation in accordance with the written direction of the Corporation. The certification of

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the Trustee on Warrant Certificates issued hereunder shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or the Warrant Certificates (except the due certification thereof) and the Trustee shall in no respect be liable or answerable for the use made of the Warrant Certificate or any of them or of the consideration therefor except as otherwise specified herein. The countersignature of the Trustee will, however, be a representation and warranty of the Trustee that the Warrant Certificate has been duly countersigned by or on behalf of the Trustee pursuant to the provisions of this Indenture.

2.7 Issue in Substitution for Warrant Certificates Lost, etc.

(a) In the event that any Warrant Certificate shall become mutilated or be lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and thereupon the Trustee shall certify and deliver, a new Warrant Certificate of like tenor as the one mutilated, lost, destroyed or stolen in exchange for and in place of and upon cancellation of such mutilated Warrant Certificate, or in lieu of and in substitution for such lost, destroyed or stolen Warrant Certificate, and the substituted Warrant Certificate shall be in a form approved by the Trustee and the Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms with all other Warrants issued or to be issued hereunder.

(b) The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.7 shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to the Corporation and to the Trustee such evidence of ownership and of the loss, destruction or theft of the Warrant Certificate so lost destroyed or stolen as shall be satisfactory to the Corporation and to the Trustee each in their sole discretion, and such applicant also be required to furnish an indemnity or security in amount and form satisfactory to the Corporation and the Trustee each in their discretion and shall pay the reasonable charges of the Corporation and the Trustee in connection therewith.

2.8 Exchange of Warrant Certificates

(a) Warrant Certificates representing Warrants to acquire any specified number of Common Shares may, upon compliance with the reasonable requirements of the Trustee, be exchanged for another Warrant Certificate or Warrant Certificates entitling the holder thereto to acquire in the aggregate the same number of Common Shares as may be acquired under the Warrant Certificate or Warrant Certificates so exchanged. Upon compliance with the reasonable requirements of the Trustee and the terms and conditions hereof, the Corporation will sign, and the Trustee will countersign, all Warrant Certificates necessary to carry out these exchanges.

(b) Warrant Certificates may be exchanged only at a Warrant Agency or at any other place that is designated by the Corporation with the approval of the Trustee. Any Warrant Certificate tendered for exchange shall be cancelled by the Trustee.

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2.9 Transfer of Warrants

(a) Subject to subsection 2.9(b) below and such reasonable requirements as the Trustee may prescribe and all applicable securities legislation and requirements of regulatory authorities, the Warrants may be transferred on the register kept at the Warrant Agency by the Warrantholder (or its legal representatives or its attorney duly appointed by an instrument in writing in form and manner of execution satisfactory to the Trustee) only upon the surrendering of the relevant Warrant Certificate with the transfer form forming part thereof duly completed and signed. After receiving the surrendered Warrant Certificate(s) and upon the person surrendering the same meeting the requirements set forth above, the Trustee shall issue to the transferee a Warrant Certificate representing the Warrants transferred.

(b) No transfer of a Warrant shall be valid (i) unless made in accordance with the provisions hereof, (ii) until, upon compliance with such reasonable requirements as the Trustee may prescribe, such transfer is recorded on the register maintained by the Trustee pursuant to subsection (a) of this Section 2.9, (iii) unless such registration shall be noted on the Warrant Certificate by the Trustee, and (iv) until all governmental or other charges arising by reason of such transfer have been paid.

(c) The Warrants may not be offered, sold or transferred in the United States or to or for the account or benefit of a U.S. Person unless an exemption from registration under the 1933 Act and applicable state securities laws is available and the Warrantholder has presented to the Corporation evidence of the availability of the exemption satisfactory to the Corporation.

(d) Warrants bearing the legend set forth in Section 2.11 may not be transferred except pursuant to registration or compliance with exemptions therefrom under the 1933 Act and all applicable state securities laws, and the Trustee agrees not to register any transfer of the Warrants so legended unless, in addition to the other requirements set forth herein:

(i) the Warrantholder has executed and delivered to the Trustee a declaration in the form attached as Schedule B hereto (or as the Corporation may otherwise prescribe) to the effect that the transfer is being made pursuant to Rule 904 of Regulation S under the 1933 Act, and in such case the Warrant Certificate issued to the transferee shall not include the legend set forth in Section 2.10 unless the Corporation has, prior to the issuance thereof, informed the Trustee that it has ceased to be a “foreign issuer” as defined in Rule 902 under the 1933 Act; or

(ii) the Warrantholder has delivered to the Trustee and the Corporation an opinion of counsel to the effect that the transfer is in compliance with the requirements of the 1933 Act and all applicable state securities laws, and the Corporation has confirmed in writing to the Trustee that such opinion is satisfactory to the Corporation, and in such case the Warrant Certificate issued to the transferee shall include the legend set forth in Section 2.11 unless such opinion states that the legend is no longer required; or

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(iii) the Corporation has confirmed in writing to the Trustee that it has received other evidence satisfactory to it that the transfer is in compliance with the requirements of the 1933 Act and all applicable state securities laws, and has instructed the Trustee regarding the inclusion or omission of the legend set forth in Section 2.11 on the Warrant Certificate issued to the transferee.

2.10 Canadian Legends

Each Warrant Certificate and all certificates representing Common Shares issued upon the exercise of such Warrants in accordance with Article 3 hereof (and each Warrant Certificate or Common Share certificate issued in exchange therefor or in substitution on transfer thereof) prior to March 18, 2006 shall be overprinted with the following legend:

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE MARCH 18, 2006.

In addition, each certificate representing Common Shares to be overprinted with the foregoing legend must also be overprinted with the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.

2.11 U.S. Legends

The Trustee acknowledges that the Warrants and the Common Shares issuable upon the exercise of such Warrants have not been and will not be registered under the 1933 Act or applicable state securities laws. Each Warrant Certificate originally issued to a U.S. Person or a person in the United States or transferred to a U.S. Person or a person in the United States and all certificates representing Common Shares issued upon the exercise of any Warrants pursuant to box B or box C of the exercise form attached to the Warrant Certificate (and each Warrant Certificate or Common Share certificate issued in exchange therefor or in substitution on transfer thereof) shall be overprinted with the following legend:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY

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PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, OR (C) IN ACCORDANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND, IN THE CASE OF PARAGRAPH (C) OR (D), THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT. PROVIDED THAT THE CORPORATION IS A “FOREIGN ISSUER” WITHIN THE MEANING OF REGULATION S AT THE TIME OF SALE AND THESE SECURITIES ARE BEING SOLD IN COMPLIANCE WITH RULE 904 OF REGULATION S, A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM COMPUTERSHARE TRUST COMPANY OF CANADA, AS REGISTRAR AND TRANSFER AGENT, UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO COMPUTERSHARE TRUST COMPANY OF CANADA AND THE CORPORATION, TO THE EFFECT THAT SUCH SALE IS BEING MADE IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT;

In addition, each certificate representing Common Shares to be overprinted with the foregoing legend must also be overprinted with the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.

provided, that the legend may be removed from the Warrants in the circumstances described in subsection 2.9(d); and

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provided, that if, at any time the Corporation is a foreign issuer as defined in Regulation S, the underlying Common Shares are being sold in compliance with the requirements of Rule 904 of Regulation S and in compliance with local laws and regulations, the legend may be removed by providing a declaration to the registrar and transfer agent for the underlying Common Shares in the form attached as Schedule B hereto (or as the Corporation may prescribe from time to time); and

provided, further, that if any of the underlying Common Shares are being sold pursuant to Rule 144 of the 1933 Act, the legend may be removed by delivery to the registrar and transfer agent for the underlying Common Shares of an opinion of counsel, of recognized standing in form and substance satisfactory to the Corporation, to the effect that such legend is no longer required under applicable requirements of the 1933 Act or state securities laws.

2.12 Charges for Exchange and Transfer

Except as otherwise herein provided, the Trustee may charge to the holder requesting an exchange or transfer a reasonable sum for each new Warrant Certificate issued in exchange for Warrant Certificate(s), and payment of such charges and reimbursement of the Trustee or the Corporation for any and all stamp taxes or governmental or other charges required to be paid shall be made by such holder as a condition precedent to such exchange.

2.13 Registration of Warrants

The Trustee shall keep at the Warrant Agency: (i) a register of Warrantholders in which shall be entered in alphabetical order the names and addresses of the holders of Warrants and particulars of the Warrants held by them and (ii) a register of transfers in which all transfers of Warrants and the date and other particulars of each transfer shall be entered. Branch registers shall also be kept at such other place or places, if any, as the Corporation, with the approval of the Trustee, may designate. Such registers will at all reasonable times be open for inspection by the Corporation and/or any Warrantholder.

2.14 Transferee Entitled to Registration

The transferee of a Warrant shall, after the transfer form attached to the Warrant Certificate is duly completed and the Warrant Certificate and form of transfer are lodged with the Trustee, and upon compliance with all other conditions in that regard required by this Indenture and by all applicable securities legislation and requirements of regulatory authorities, be entitled to have his name entered on the register as the owner of such Warrant free from all equities or rights of set-off or counterclaim between the Corporation and his transferor or any previous Warrantholder of such Warrant, save in respect of equities of which the Corporation or the transferee is required to take notice by statute or by order of a court of competent jurisdiction.

2.15 Registers Open for Inspection

The registers hereinbefore referred to shall be open at the office of the Trustee during normal business hours on each Business Day and upon reasonable written notice for inspection by the Corporation, the Trustee or any Warrantholder. The Trustee shall, from time to time when requested to do so by the Corporation, furnish the Corporation with a list of the names and

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addresses of Warrantholders entered in the register kept by the Trustee showing the number of Warrants and the number of Common Shares which may then be acquired upon the exercise of the Warrants held by each such Warrantholder.

2.16 Ownership of Warrants

(a) The Corporation and the Trustee may deem and treat the registered Warrantholder of any Warrant Certificate as the absolute owner of the Warrant represented thereby for all purposes, and the Corporation and the Trustee shall not be affected by any notice or knowledge to the contrary, except where the Corporation or the Trustee is required to take notice by statute or by order of a court of competent jurisdiction. For greater certainty, subject to applicable law, neither the Corporation nor the Trustee will be bound to take notice of or see to the execution of any trust, whether express, implied or constructive, in respect of any Warrant, and may transfer any Warrant on the direction of the person registered as Warrantholder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.

(b) Subject to the provisions of this Indenture and applicable law, each Warrantholder shall be entitled to the rights and privileges attaching to the Warrants held thereby. The exercise of the Warrants in accordance with the terms hereof and the receipt by any such Warrantholder of Common Shares pursuant thereto shall be a good discharge to the Corporation and the Trustee with respect to such Warrants and neither the Corporation nor the Trustee shall be bound to inquire into the title of any such holder.

ARTICLE 3

Exercise of Warrants

3.1 Method of Exercise of Warrants

(a) Subject to Section 3.9, the holder of any Warrant may exercise the right evidenced thereby conferred on such holder to acquire Common Shares by surrendering, prior to the Time of Expiry, to the Trustee at a Warrant Agency:

(i) the Warrant Certificate representing such Warrant, with a duly completed and executed exercise form in the form attached to the Warrant Certificate; and

(ii) a certified cheque or bank draft payable to or to the order of the Corporation (or payment in such other form as the Trustee may accept), in the amount of the aggregate Exercise Price of such Warrants being exercised.

A Warrant Certificate with the duly completed and executed exercise form referred to in this subsection 3.1(a) shall be deemed to be surrendered only upon personal delivery thereof or, if sent by mail or other means of transmission, upon actual receipt thereof at, in each case, a Warrant Agency or such other place or

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places that may be designated by the Corporation with the approval of the Trustee, provided that such Warrant Certificate is accompanied by the requisite payment of the aggregate Exercise Price for the Warrants represented thereby that are being exercised.

(b) Any exercise form referred to in subsection 3.1(a) shall be signed by the Warrantholder or his executors, administrators or other legal representatives or his attorney duly appointed (such persons being obligated to provide the Trustee at the Warrant Agency with proof satisfactory to the Trustee of his or her authority to act on behalf of the Warrantholder) and shall specify:

(i) the number of Common Shares which the holder wishes to acquire (being not more than those which the holder is entitled to acquire pursuant to the Warrant Certificate(s) surrendered);

(ii) the person or persons in whose name or names such Common Shares are to be issued, and if such persons are individuals, the relevant social insurance numbers;

(iii) the address or addresses of such person or persons;

(iv) the number of Common Shares to be issued to each such person if more than one is so specified; and

(v) that the Warrantholder represents, warrants and certifies as set forth in one of box A, box B or box C of the exercise form.

If any of the Common Shares subscribed for are to be issued to a person or persons other than the Warrantholder, the Warrantholder shall pay to the Corporation or the Trustee on behalf of the Corporation, all applicable transfer or similar taxes and the Corporation shall not be required to issue or deliver certificates evidencing Common Shares unless or until such Warrantholder shall have paid to the Corporation, or the Trustee on behalf of the Corporation, the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid or that none is due.

(c) In connection with the exchange of Warrant Certificates and exercise of Warrants and compliance with such other terms and conditions hereof as may be required, the Corporation has appointed the principal office of the Trustee in each of Calgary and Toronto as an agency at which Warrant Certificates may be surrendered for exchange or at which Warrants may be exercised and the Trustee has accepted such appointment. The Corporation shall give notice to the Trustee of any change of the Warrant Agency.

3.2 Effect of Exercise of Warrants

(a) Upon compliance by the holder of any Warrant Certificate with the provisions of Section 3.1, and subject to Section 3.3, the Common Shares subscribed for shall

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be deemed to have been issued as fully paid and non-assessable and the person or persons to whom such Common Shares are to be issued shall be deemed to have become the holder or holders of record of such Common Shares on the Exercise Date unless the transfer registers of the Corporation shall be closed on such date, in which case the Common Shares subscribed for shall be deemed to have been issued and such person or persons deemed to have become the holder or holders of record of such Common Shares, on the date on which such transfer registers are reopened.

(b) Within five Business Days after the Exercise Date of a Warrant as set forth above, the Corporation shall cause to be mailed to the person or persons in whose name or names the Common Shares so subscribed for have been issued, as specified in the exercise form completed in connection with the exercise of the Warrants, at the address specified in such exercise form or, if so specified in such exercise form, cause to be delivered to such person or persons at the Warrant Agency where the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for.

3.3 Partial Exercise of Warrants; Fractions

(a) The holder of any Warrants may acquire a number of Common Shares less than the number which the holder is entitled to acquire pursuant to the surrendered Warrant Certificate(s). In the event of any exercise of a number of Warrants less than the number which the holder is entitled to exercise, the holder of the Warrants upon exercise thereof shall, in addition, be entitled to receive, without charge therefor, a new Warrant Certificate(s) in respect of the balance of the Warrants which such holder was entitled to exercise pursuant to the surrendered Warrant Certificate(s) and which were not then exercised.

(b) Notwithstanding anything herein contained including any adjustment provided for in Article 4, the Corporation shall not be required, upon the exercise of any Warrants, to issue fractions of Common Shares or to distribute certificates which evidence fractional Common Shares. In lieu of fractional Common Shares, the Corporation shall pay to the holder who would otherwise be entitled to receive fractional Common Shares upon an exercise of Warrants, within 10 Business Days after the date upon which the fractional Common Shares would have been issued, an amount in lawful money of Canada equal to the Current Market Price of the Common Shares as of the Exercise Date multiplied by an amount equal to the fractional interest of Common Shares such holder would otherwise be entitled to receive upon such exercise, provided that the Corporation shall not be required to make any payment, calculated as aforesaid, that is less than $10.00. The price to be paid shall be provided by the Corporation in writing to the Trustee upon request.

3.4 Acceleration of Expiry Date

(a) In the event the volume weighted average closing price of the Corporation’s Common Shares on the Toronto Stock Exchange is US$1.40 per share or more for

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a period of 20 consecutive Trading Days at any time during the last 20 months of the original term of the Warrants, the board of directors of the Corporation may elect, by providing a written notice of the Corporation to the Warrantholders at their last known addresses on the records of the Corporation, to accelerate the expiry date for the exercise of all unexercised Warrants.

(b) The Warrants will expire and cease to be exerciseable at the Time of Expiry on the date which is 30 calendar days after the date of mailing or other transmission of such notice by the Corporation to the Warrantholders in accordance with Section 10.2, provided that such notice is sent at least four months following the Issue Date.

(c) For certainty, Warrantholders exercising unexercised Warrants pursuant to this Section 3.4 must do so in compliance with Section 3.1 and the provisions of Section 3 apply mutatis mutandis.

3.5 Expiration of Warrants

Immediately after the Time of Expiry, all rights under any Warrant in respect of which the right of acquisition herein and therein provided for shall not have been exercised shall cease and terminate and such Warrant shall be void and of no further force or effect.

3.6 Cancellation of Surrendered Warrants

All Warrant Certificates surrendered to the Trustee pursuant to Sections 2.7, 2.8, 2.9, 3.1, 3.3 and 5.1 shall be cancelled by the Trustee and, after the expiry of any period of retention prescribed by law, destroyed by the Trustee and, upon written request by the Corporation, the Trustee shall furnish to the Corporation a destruction certificate identifying the Warrant Certificates so destroyed, the number of Warrants evidenced thereby and the number of Common Shares which could have been purchased pursuant thereto.

3.7 Accounting and Recording

(a) The Trustee shall as soon as reasonably practicable account to the Corporation with respect to Warrants exercised. Any monies, securities or other instruments, from time to time received by the Trustee shall be received in trust for and shall be segregated and kept apart by the Trustee in trust for the Corporation.

(b) The Trustee shall record the particulars of Warrants exercised which shall include the names and addresses of the persons who become holders of Common Shares on exercise and the Exercise Date. Within five Business Days of each Exercise Date, the Trustee shall provide such particulars in writing to the Corporation.

3.8 Common Share Certificates

At the instruction of the Corporation, Common Shares issued in connection with the exercise of the Warrants may bear such legends as may be required by applicable securities regulatory requirements, authorities or stock exchanges, including, without limitation, the Toronto Stock Exchange.

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3.9 Prohibition on Exercise by U.S. Persons; Exception

(a) Warrants may not be exercised in the United States or by or on behalf of a U.S. Person unless the offer of Common Shares pursuant to the Warrants is registered under the 1933 Act or an exemption is available from the registration requirements of the 1933 Act and applicable state securities laws;

(b) Any holder which exercises a Warrant shall provide to the Corporation and the Trustee, and the Corporation and the Trustee shall be entitled to act and rely thereon, either:

(i) a written certification that such holder (i) at the time of exercise of the Warrant is not in the United States; (ii) is not a U.S. Person and is not exercising the Warrant, on behalf of a U.S. Person; and (iii) did not execute or deliver the exercise form for the Warrant in the United States;

(ii) a written certification that such holder (i) originally purchased the Warrant on its own behalf or on behalf of a beneficial purchaser (a “Beneficial Purchaser”), directly from the Corporation pursuant to the Corporation’s offering of Units at a time when the holder was and any Beneficial Purchaser was an accredited investor, as defined in Rule 501(a) under the 1933 Act (“Accredited Investor”); (ii) is exercising the Warrant solely for its own account or for the account of the Beneficial Purchaser, if any, and not on behalf of any other person; and (iii) is, and the Beneficial Purchaser, if any, is, an Accredited Investor on the date of exercise of the Warrant; or

(iii) a written opinion of counsel of recognized standing in form and substance satisfactory to the Corporation to the effect that an exemption from the registration requirements of the 1933 Act and applicable state securities laws is available for the issuance of the Common Shares issuable on exercise of the Warrants.

(c) No certificates representing Common Shares will be registered or delivered to an address in the United States unless the holder of Warrants complies with the requirements set forth in subsection 3.9(b)(ii) or subsection 3.9(b)(iii) and, in the case of subsection 3.9(b)(iii), the Corporation has confirmed in writing to the Trustee that the opinion of counsel is satisfactory to the Corporation.

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ARTICLE 4

Adjustment of Number of Common Shares

4.1 Adjustment of Number of Common Shares

The acquisition rights as they relate to Common Shares, attaching to the Warrants in effect at any date, and the Exercise Price in respect thereof, shall be subject to adjustment from time to time as follows:

(a) If and whenever at any time during the Adjustment Period, the Corporation shall:

(i) subdivide, redivide or change outstanding Common Shares into a greater number of shares,

(ii) reduce, combine or consolidate the outstanding Common Shares into a smaller number of shares, or

(iii) issue Common Shares or securities exchangeable for or convertible into Common Shares at no additional cost to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend or other distribution (other than the issue of Common Shares to holders of Common Shares pursuant to their exercise of options to receive dividends in the form of Common Shares in lieu of Dividends Paid in the Ordinary Course on the Common Shares),

(any of such events in these clauses (i), (ii) and (iii) being called a “Common Share Reorganization”), then effective immediately after the record date at which the holders of Common Shares are determined for the purposes of the Common Share Reorganization, the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such record date before giving effect to such Common Share Reorganization and the denominator of which shall be the number of Common Shares outstanding after giving effect to such Common Share Reorganization (including, in the case where securities exchangeable for or convertible into Common Shares at no additional cost are distributed, the number of Common Shares that would have been outstanding had such securities been exchanged for or converted into Common Shares on such record date). Upon any adjustment to the Exercise Price pursuant to subsection 4.1(a), the number of Common Shares subject to the right of purchase under each Warrant shall be contemporaneously adjusted by multiplying the number of Common Shares which theretofore may have been purchased under such Warrant by a fraction of which the numerator shall be the respective Exercise Price in effect immediately prior to such adjustment and the denominator shall be the respective Exercise Price resulting from such adjustment.

(b) If and whenever at any time during the Adjustment Period, the Corporation shall fix a record date for the issuance of rights, options or warrants to all or

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substantially all the holders of its outstanding Common Shares entitling them, for a period expiring not more than 45 days after such record date, to subscribe for or purchase Common Shares (or securities convertible or exchangeable into Common Shares) at a price per share (or having a conversion or exchange price per share) less than 95% of the Current Market Price of a Common Share on such record date, the Exercise Price shall be adjusted immediately after such record date so that it shall equal the amount determined by multiplying the Exercise Price in effect on such record date by a fraction of which the numerator shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible or exchangeable securities so offered) by such Current Market Price, and of which the denominator shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase or into which the convertible or exchangeable securities so offered are convertible or exchangeable; any Common Shares owned by or held for the account of the Corporation or any Subsidiary shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or to the Exercise Price which would then be in effect based upon the number of Common Shares (or securities convertible or exchangeable into Common Shares) actually issued upon the exercise of such rights, options or warrants, as the case may be.

(c) If and whenever at any time during the Adjustment Period, the Corporation shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Common Shares of (i) securities of any class, whether of the Corporation or any other person (other than Common Shares and other than securities distributed to holders of Common Shares pursuant to their exercise of options to receive dividends in the form of such securities in lieu of Dividends Paid in the Ordinary Course on the Common Shares), (ii) rights, options or warrants (excluding those referred to in subsection 4.1(b)), (iii) evidences of its indebtedness or (iv) assets (excluding Dividends Paid in the Ordinary Course) then, in each such case, the Exercise Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Exercise Price in effect on such record date by a fraction, of which the numerator shall be the total number of Common Shares outstanding on such record date multiplied by the Current Market Price of a Common Share on such record date, less the aggregate fair market value (as determined by the directors, which determination shall be conclusive) of such securities shares, rights, options, warrants, evidences of indebtedness or assets so distributed, and of which the denominator shall be the total number of Common Shares outstanding on such record date multiplied by such Current Market Price; any Common Shares owned by or held for the account of the Corporation or any Subsidiary shall be deemed

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not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that such distribution is not so made, the Exercise Price shall be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or to the Exercise Price which would then be in effect based upon such shares or rights, options or warrants or evidences of indebtedness or assets actually is distributed, as the case may be; in clause (iv) of this subsection 4.1(c) the term Dividends Paid in the Ordinary Course shall include the value of any securities or other property or assets distributed in lieu of cash Dividends Paid in the Ordinary Course at the option of Shareholders.

(d) If and whenever at any time during the Adjustment Period, there is a reclassification of the Common Shares or a capital reorganization of the Corporation (other than as described in subsection 4.1(a)) or a consolidation, amalgamation, arrangement or merger of the Corporation with or into any other body corporate, trust, partnership or other entity, or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity or a liquidation, dissolution or winding up of the Corporation (any of such events being hereinafter called a “Capital Reorganization”), any Warrantholder who has not exercised its right of acquisition prior to the effective date of such Capital Reorganization, upon the exercise of such right thereafter, shall be entitled to receive and shall accept, in lieu of the number of Common Shares then sought to be acquired by it, the number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such Capital Reorganization, or to which such sale or conveyance may be made, as the case may be, that such Warrantholder would have been entitled to receive on such Capital Reorganization, if, on the record date or the effective date thereof, as the case may be, the Warrantholder had been the registered holder of the number of Common Shares sought to be acquired by it and to which it was entitled to acquire upon exercise of the Warrants. If determined appropriate by the Trustee to give effect to or to evidence the provisions of this subsection 4.1(d), the Corporation, its successor, or such purchasing body corporate, partnership, trust or other entity, as the case may be, shall, prior to or contemporaneously with any such Capital Reorganization, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Warrantholders to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to which a Warrantholder is entitled on exercise of its acquisition rights thereafter. Any indenture entered into between the Corporation and the Trustee pursuant to the provisions of this subsection 4.1(d) shall be a supplemental indenture entered into pursuant to the provisions of Article 8. Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing body corporate, partnership, trust or other entity and the Trustee shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section 4.1 and which shall apply to successive Capital Reorganizations.

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(e) Notwithstanding any other provision of this Indenture, in the event of a Corporate Transaction, each Warrant will terminate immediately prior to the specified effective date of the Corporate Transaction, unless the Warrant is assumed by the successor corporation (or person) or its parent corporation (or person) in connection with the Corporate Transaction. Upon approval of a Corporate Transaction by the directors of the Corporation, the Corporation will give notice to each Warrantholder which will set forth terms that permit a Warrantholder to exercise its Warrants on a basis that provides the Warrantholder with the ability to participate in the Corporate Transaction or, failing completion of the Corporate Transaction, to retain all rights under the Warrants in accordance with the terms of this Indenture. A copy of such notice shall be sent to the Warrant Trustee.

(f) In any case in which this Section 4.1 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the holder of any Warrant exercised after such record date and before the occurrence of such event the additional Common Shares or other securities or property issuable upon such exercise by reason of the adjustment required by such event; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder’s right to receive such additional Common Shares or other securities or property upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares or other securities or property declared in favour of holders of record of Common Shares or such other securities or property on and after the relevant date of exercise or such later date as such holder would, but for the provisions of this subsection 4.1(f), have become the holder of record of such additional Common Shares or other securities or property pursuant to subsection 4.1(b).

(g) In any case in which subsections 4.1(a), 4.1(b) or 4.1(c) require that an adjustment be made to the Exercise Price, no such adjustment shall be made if, subject to the prior approval of the Toronto Stock Exchange (or other stock exchange or trading system on which the Common Shares or Warrants are listed for trading), the holders of the outstanding Warrants receive the Common Shares or securities exchangeable for or convertible into Common Shares referred to in subsection 4.1(a), the rights, options or warrants referred to in subsection 4.1(b) or the securities, rights, options, warrants, evidences of indebtedness or assets referred to in subsection 4.1(c), as the case may be, in such kind and number as they would have received if they had been holders of Common Shares on the applicable record date or effective date, as the case may be, by virtue of their outstanding Warrant having then been exercised into Common Shares at the Exercise Price in effect on the applicable record or effective date, as the case may be.

(h) The adjustments provided for in this Section 4.1 are cumulative and shall, in the case of adjustments to the Exercise Price, be computed to the nearest whole cent

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and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this Section 4.1, provided that, notwithstanding any other provision of this Section, no adjustment of the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Exercise Price then in effect; provided, however, that any adjustments which by reason of this subsection 4.1(h) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.

(i) After any adjustment pursuant to this Section 4.1, the term Common Shares where used in this Indenture shall be interpreted to mean securities of any class or classes which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, the Warrantholder is entitled to receive upon the exercise of his Warrant and the number of Common Shares indicated by any exercise made pursuant to a Warrant shall be interpreted to mean the number of Common Shares or other property or securities a Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a Warrant.

4.2 Entitlement to Shares on Exercise of Warrant

All shares of any class or other securities or property which a Warrantholder is at the time in question entitled to receive on the exercise of its Warrant, whether or not as a result of adjustments made pursuant to this Article 4, shall, for the purposes of the interpretation of this Indenture, be deemed to be shares which such Warrantholder is entitled to acquire pursuant to such Warrant.

4.3 No Adjustment for Stock Options or Warrants

Anything in this Article 4 to the contrary notwithstanding, no adjustment shall be made in the acquisition rights attached to the Warrants if the issue of Common Shares is being made pursuant to this Indenture, pursuant to any stock option, stock purchase, stock appreciation rights or other employee compensation plan in force from time to time for directors, officers, employees or consultants of the Corporation or any of its Subsidiaries, as the case may be, or pursuant to any warrant outstanding immediately prior to the Effective Date.

4.4 Determination by Corporation’s Auditors

In the event of any question arising with respect to the adjustments provided for in this Article 4, such question shall be conclusively determined by the Corporation’s Auditors or if they are unable or unwilling to act, by such other firm of independent chartered accountants as may be selected by the Corporation. Such Auditors or accountants shall have access to all necessary records of the Corporation, and such determination shall be binding upon the Corporation, the Trustee, all Warrantholders and all other persons interested therein (absent manifest error).

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4.5 Proceedings Prior to any Action Requiring Adjustment

As a condition precedent to the taking of any action which would require an adjustment in any of the acquisition rights pursuant to any of the Warrants, including the number of Common Shares which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of Counsel, be necessary in order that the Corporation has unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the Common Shares or other securities or property which the holders of such Warrants are entitled to receive on the full exercise thereof in accordance with the provisions hereof.

4.6 Certificate of Adjustment

The Corporation shall from time to time immediately after the occurrence of any event which requires an adjustment or readjustment as provided in Article 4, deliver a certificate of the Corporation to the Trustee specifying the nature of the event requiring the same and the amount of the adjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate and the amount of the adjustment shall be supported by a certificate of the Corporation’s Auditors verifying such calculation. When so verified, the Trustee shall forthwith give notice, supplied by the Corporation and at the Corporation’s expense, to the Warrantholders specifying the event requiring such adjustment or readjustment and the results thereof including the resulting Exercise Price; provided that, if the Corporation has given notice under Section 4.7 covering all the relevant facts in respect of such event, no such notice need be given under this Section 4.6.

4.7 Notice of Special Matters

The Corporation covenants with the Trustee that, so long as any Warrant remains outstanding, it will give notice to the Trustee and to the Warrantholders of its intention to fix the record date for any event referred to in subsections 4.1(a), (b), (c) or (d) or the proposed effective date for a Corporate Transaction which may give rise to an adjustment of the Exercise Price. Such notice shall specify the particulars of such event and the record date for such event, provided that the Corporation shall only be required to specify in the notice such particulars of the event as shall have been fixed and determined on the date on which the notice is given. The notice shall be given in each case not less than 10 Business Days prior to such applicable record date.

4.8 No Action after Notice

The Corporation covenants with the Trustee that it will not close its transfer books or take any other corporate action which might deprive the holder of a Warrant of the opportunity to exercise its right of acquisition pursuant thereto during the period of 10 Business Days after the giving of the certificate or notices set forth in Sections 4.6 and 4.7 or, in the case of a Corporation Transaction.

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4.9 Protection of Trustee

Except as provided in Section 9.2, the Trustee:

(a) shall be entitled to act and rely on any adjustment calculation of the directors or the Corporation’s Auditors;

(b) shall not at any time be under any duty or responsibility to any Warrantholder to determine whether any facts exist which may require any adjustment contemplated by Section 4.1, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed in making the same;

(c) shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Shares or of any shares or other securities or property which may at any time be issued or delivered upon the exercise of the rights attaching to any Warrant;

(d) shall not be responsible for any failure of the Corporation to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article; and

(e) shall not incur any liability or responsibility whatsoever or be in any way responsible for the consequences of any breach on the part of the Corporation of any of the representations, warranties or covenants herein contained.

4.10 Other Adjustments

In case the Corporation after the date hereof shall take any action affecting the Common Shares, other than an action described in Article 4 which in the opinion of the directors would have a material adverse affect on the rights of Warrantholders, the Exercise Price and/or the number and/or kind of Common Shares purchasable upon exercise, there shall be an adjustment in such manner, if any, and at such time, by action by the directors subject to the prior consent of the Toronto Stock Exchange, if applicable. Failure of the taking of action by the directors so as to provide for an adjustment prior to the effective date of any action by the Corporation affecting the Common Shares shall be conclusive evidence that the directors have determined that it is equitable to make no adjustment in the circumstances.

ARTICLE 5

Rights and Covenants of The Corporation

5.1 Optional Purchases by the Corporation

The Corporation may from time to time purchase by private contract, in the open market, on any stock exchange or otherwise any of the Warrants. Any such purchase shall be made at the lowest price or prices at which, in the opinion of the directors, such Warrants are then obtainable, plus reasonable costs of purchase, and may be made in such manner, from such persons and on such

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other terms as the Corporation, in its sole discretion, may determine subject to compliance with all applicable laws. Any Warrant Certificates representing the Warrants purchased pursuant to this Section 5.1 shall forthwith be delivered to and cancelled by the Trustee. No Warrants shall be issued in replacement thereof.

5.2 General Covenants

The Corporation covenants with the Trustee that so long as any Warrants remain outstanding:

(a) the Warrants, when issued and countersigned as provided in this Indenture, will be valid and enforceable against it in accordance with and subject to the provisions of this Indenture;

(b) it will reserve and keep available a sufficient number of Common Shares for the purpose of enabling it to satisfy its obligations to issue Common Shares upon the exercise of the Warrants;

(c) it will cause the Common Shares and the certificates representing the Common Shares from time to time acquired pursuant to the exercise of the Warrants to be duly issued and delivered in accordance with the Warrant Certificates and the terms hereof;

(d) all Common Shares which shall be issued upon exercise of the right to acquire provided for herein and in the Warrant Certificates shall be fully paid and non-assessable;

(e) the Corporation will do, or cause to be done, all things necessary to preserve and keep in full force and effect its corporate existence, provided however that (subject to Article 4 and Section 8.2) nothing will prevent the amalgamation, consolidation, merger or sale of, or other business combination involving the Corporation;

(f) it will use its best efforts to ensure that the Warrants and all Common Shares outstanding or issuable from time to time continue to be or are listed and posted for trading on the Toronto Stock Exchange (or such other Canadian stock exchange acceptable to the Corporation);

(g) it will perform and carry out all of the acts or things to be done by it as provided in this Indenture;

(h) it will not close its transfer registers or take any other action which might deprive the Warrantholders of the opportunity of exercising their right of purchase pursuant to the Warrants held by such persons during the period of fourteen days after giving of the notice required by Section 4.7; and

(i) that it will execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all other acts, deeds and assurances in law as the Trustee may reasonably require for the better accomplishing and effecting the intentions and provisions of this Indenture.

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5.3 Trustee’s Remuneration and Expenses

The Corporation covenants that it will pay to the Trustee from time to time reasonable remuneration for its services hereunder and will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in the administration or execution of the trusts hereby created (including the reasonable compensation and the disbursements of its Counsel and all other advisers and assistants not regularly in its employ) both before any default hereunder and thereafter until all duties of the Trustee hereunder shall be finally and fully performed, except any such expense, disbursement or advance as may arise out of or result from the Trustee’s negligence, willful misconduct or bad faith.

5.4 Performance of Covenants by Trustee

If the Corporation shall fail to perform any of its covenants contained in this Warrant Indenture, the Trustee may notify the Warrantholders of such failure on the part of the Corporation or may itself perform any of the covenants capable of being performed by it but, subject to Section 9.2, shall be under no obligation to perform such covenants or to notify the Warrantholders of such performance by it. All sums expended or advanced by the Trustee in so doing shall be repayable as provided in Section 5.3. No such performance, expenditure or advance by the Trustee shall relieve the Corporation of any default hereunder or of its continuing obligations under the covenants herein contained.

ARTICLE 6

Enforcement

6.1 Suits by Warrantholders

(a) No Warrantholder has the right to institute any action or proceeding or to exercise any other remedy authorized hereunder for the purpose of enforcing any right on behalf of the Warrantholders or for the execution of any trust or power hereunder or for the appointment of a liquidator or receiver or receiver and manager or for a receiving order under the Bankruptcy and Insolvency Act (Canada) or to have the Corporation wound up or to file or prove a claim in any liquidation or bankruptcy proceedings, unless the Warrant Trustee has received a Warrantholders’ Request directing it to take the requested action and has been provided with sufficient funds or other security and/or such indemnity satisfactory to the Warrant Trustee in respect of the costs, expenses and liabilities that may be incurred by it in so proceeding and the Warrant Trustee has failed to act within a reasonable time thereafter. If the Warrant Trustee has so failed to act, but not otherwise, any Warrantholder acting on behalf of all Warrantholders will be entitled to take any of the proceedings that the Warrant Trustee might have taken hereunder. No Warrantholder has any right in any manner whatsoever to effect, disturb or prejudice the rights hereby created by its action or to enforce any right hereunder or under any Warrant, except subject to the conditions and in the manner herein provided. Any money received as a result of a proceeding taken by any Warrantholder hereunder must be forthwith paid to the Warrant Trustee.

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(b) All rights of action under this Indenture may be enforced by the Warrant Trustee without the possession of any of the Warrants or the production thereof on any trial or other proceedings relative thereto.

(c) The Warrant Trustee shall be entitled and empowered, either in its own name or as Warrant Trustee of an express trust, or as attorney-in-fact for the Warrantholders, or in any one or more of such capacities, to file such proof of debt, amendment of proof of debt, claim, petition or other document as may be necessary or advisable in order to have the claim of the Warrant Trustee and the Warrantholders allowed in any insolvency, bankruptcy, liquidation or other judicial proceedings relative to the Corporation or its creditors or relative to or affecting its property. The Warrant Trustee is hereby irrevocably appointed (and the successive respective Warrantholders by taking and holding the same shall be conclusively deemed to have so appointed the Warrant Trustee) the true and lawful attorney-in-fact of the respective Warrantholders or on behalf of the Warrantholders as a class, subject to deduction from any such claims of the amounts of any claims filed by any of the Warrantholders themselves if and to the extent permitted hereunder, for any proof of debt, amendment of proof of debt, claim, petition or other document in any such proceedings and to receive payment of any sums becoming distributable on account thereof, and to execute any such other papers and documents and to do and perform any and all such acts and things for and on behalf of the Warrantholders, as may be necessary or advisable in the opinion of the Warrant Trustee, in order to have the respective claims of the Warrant Trustee and of the Warrantholders against the Corporation or its property allowed in any such proceeding, and to receive payment of or on account of such claims; provided, however, that nothing contained in this Indenture shall be deemed to give the Warrant Trustee, unless so authorized by extraordinary resolution (as provided in Section 7.11), any right to accept or consent to any plan of reorganization or otherwise by action of any character in such proceeding to waive or change in any way any right of any Warrantholder.

(d) The Warrant Trustee shall also have the power, but not the obligation, at any time and from time to time to institute and to maintain such suits and proceedings as it may be advised shall be necessary or advisable to preserve and protect its interests and the interests of the Warrantholders.

(e) Any such suit or proceeding instituted by the Warrant Trustee may be brought in the name of the Warrant Trustee as Warrant Trustee of an express trust, and any recovery of judgment shall be for the rateable benefit of the Warrantholders subject to provisions of this Indenture. In any proceeding brought by the Warrant Trustee (and also any proceeding in which a declaratory judgment of a court may be sought as to the interpretation or construction of any provision of this Indenture, to which the Warrant Trustee shall be a party), the Warrant Trustee shall be held to represent all the Warrantholders, and it shall not be necessary to make any Warrantholders parties to any such proceeding.

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6.2 Suits by the Corporation

The Corporation shall have the right to enforce full payment of the Exercise Price for all Common Shares issued by the Corporation to a Warrantholder hereunder and shall be entitled to demand such payment from the Warrantholder or alternatively to instruct the Trustee to cancel the share certificates and amend the securities register accordingly.

6.3 Limitation of Liability

The obligations of the Corporation hereunder are not binding upon, nor shall resort hereunder be had to, the private property of any of the past, present or future directors or Shareholders of the Corporation or any successor to the Corporation or any of the past, present or future officers, employees or agents of the Corporation or any successor to the Corporation, but only the property of the Corporation or any successor to the Corporation shall be bound in respect hereof.

6.4 Waiver of Default

Upon the happening of any default hereunder:

(a) the holders of not less than 51% of the Warrants then outstanding shall have power (in addition to the powers exercisable by extraordinary resolution as provided in Section 7.10) by requisition in writing to instruct the Trustee to waive any default hereunder and the Trustee shall thereupon waive the default upon such terms and conditions as shall be prescribed in such requisition; or

(b) the Trustee shall have power to waive any default hereunder upon such terms and conditions as the Trustee may deem advisable, if, in the Trustee’s opinion, the same shall have been cured or adequate provision made therefor;

provided that no delay or omission of the Trustee or of the Warrantholders to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein and provided further that no act or omission either of the Trustee or of the Warrantholders in the premises shall extend to or be taken in any manner whatsoever to affect any subsequent default hereunder of the rights resulting therefrom.

ARTICLE 7

Meetings Of Warrantholders

7.1 Right to Convene Meetings

The Trustee may at any time and from time to time, and shall on receipt of a written request of the Corporation or of a Warrantholders’ Request and upon receiving sufficient funds to cover any costs and expenses and/or being indemnified to its reasonable satisfaction by the Corporation or by the Warrantholders signing such Warrantholders’ Request against the cost which may be incurred in connection with the calling and holding of such meeting, convene a meeting of the Warrantholders. In the event of the Trustee failing to so convene a meeting within 15 days after receipt of such written request of the Corporation or such Warrantholders’ Request and sufficient

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funds and/or indemnity given as aforesaid, the Corporation or such Warrantholders, as the case may be, may convene such meeting. Every such meeting shall be held in the City of Calgary, the City of Toronto or at such other place as may be approved or determined by the Trustee.

7.2 Notice

At least 21 day’s prior notice of any meeting of Warrantholders shall be given to the Warrantholders in the manner provided for in Section 10.2 and a copy of such notice shall be sent to the Trustee (unless the meeting has been called by the Trustee) and to the Corporation (unless the meeting has been called by the Corporation) in the manner provided for in Section 10.1. Such notice shall state the time when and the place where the meeting is to be held, shall state briefly the general nature of the business to be transacted thereat and shall contain such information as is reasonably necessary to enable the Warrantholders to make a reasoned decision on the matter, but it shall not be necessary for any such notice to set out the terms of any resolution to be proposed or any of the provisions of this Article 7. The notice convening any such meeting may be signed by an appropriate officer of the Trustee or the Corporation or by the Warrantholder or Warrantholders convening the meeting.

7.3 Chairman

An individual (who need not be a Warrantholder) designated in writing by the Trustee shall be chairman of the meeting and if no individual is so designated, or if the individual so designated is not present within 15 minutes from the time fixed for the holding of the meeting, the Warrantholders present in person or by proxy shall choose an individual present to be chairman.

7.4 Quorum

Subject to the provisions of Section 7.11, at any meeting of the Warrantholders a quorum shall consist of Warrantholders present in person or by proxy and entitled to purchase at least 10% of the aggregate number of Common Shares which could be acquired pursuant to all the then outstanding Warrants, provided that at least two persons entitled to vote thereat are personally present. If a quorum of the Warrantholders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if summoned by the Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a Business Day, in which case it shall be adjourned to the next following Business Day) at the same time and place and no notice of the adjournment need be given. Any business may be brought before or dealt with at an adjourned meeting which might have been dealt with at the original meeting in accordance with the notice calling the same. No business shall be transacted at any meeting unless a quorum be present at the commencement of business. At the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not be entitled to acquire at least 10% of the aggregate number of Common Shares which may be acquired pursuant to all then outstanding Warrants.

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7.5 Power to Adjourn

The chairman of any meeting at which a quorum of the Warrantholders is present may, with the consent of the meeting, adjourn any such meeting, and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe.

7.6 Show of Hands

Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands except that votes on an extraordinary resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.

7.7 Poll and Voting

On every extraordinary resolution, and on any other question submitted to a meeting and after a vote by show of hands, when demanded by the chairman or by one or more of the Warrantholders acting in person or by proxy, a poll shall be taken in such manner as the chairman shall direct. Questions other than those required to be determined by extraordinary resolution shall be decided by a majority of the votes cast on the poll.

On a show of hands, every person who is present and entitled to vote, whether as a Warrantholder or as proxy for one or more absent Warrantholders, or both, shall have one vote. On a poll, each Warrantholder present in person or represented by a proxy duly appointed by instrument in writing shall be entitled to one vote in respect of each whole Common Share which he is entitled to acquire pursuant to the Warrant or Warrants then held or represented by him. A proxy need not be a Warrantholder. The chairman of any meeting shall be entitled, both on a show of hands and on a poll, to vote in respect of the Warrants, if any, held or represented by him.

7.8 Regulations

Subject to compliance with the provisions of this Indenture, the Trustee, or the Corporation with the approval of the Trustee, may from time to time make and from time to time make and vary such regulations as it shall think fit for:

(a) the setting of the record date for a meeting for the purpose of determining Warrantholders entitled to receive notice of and to vote at the meeting;

(b) for Warrantholders to appoint a proxy or proxies to represent them and vote for them at any such meeting (and any adjournment thereof) and the manner in which same is to be executed, and for the production of the authority of any persons signing on behalf of the Warrantholder appointing them;

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(c) the deposit of instruments appointing proxies at such place and time as the Trustee, the Corporation or the Warrantholders convening the meeting, as the case may be, may in the notice convening the meeting direct;

(d) the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of such instruments appointing proxies to be mailed or sent by facsimile before the meeting to the Corporation or to the Trustee at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting;

(e) the form of the instrument of proxy or the manner in which it must be executed; and

(f) generally for the calling of meetings of Warrantholders and the conduct of business thereat.

Any regulations so made shall be binding and effective and the votes given in accordance therewith shall be valid and shall be counted. Save as such regulations may provide, the only persons who shall be recognized at any meeting as a Warrantholder, or be entitled to vote or be present at the meeting in respect thereof (subject to Section 7.9), shall be Warrantholders, their authorized representatives or attorneys and legal counsel, or proxies of Warrantholders.

7.9 Corporation and Trustee May be Represented

The Corporation and the Trustee, by their respective directors, officers and employees, and the Counsel for the Corporation and for the Trustee may attend any meeting of the Warrantholders, but shall have no vote thereat, whether in respect of any Warrants held by them or otherwise.

7.10 Powers Exercisable by Extraordinary Resolution

In addition to all other powers conferred upon them by any other provisions of this Indenture or by law, the Warrantholders shall, subject to the provisions of Section 7.11, have the power, exercisable from time to time by extraordinary resolution:

(a) to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrantholders or, subject to the consent of the Trustee, the Trustee in its capacity as trustee hereunder or on behalf of the Warrantholders against the Corporation whether such rights arise under this Indenture or the Warrant Certificates or otherwise;

(b) to amend, alter or repeal any extraordinary resolution previously passed or sanctioned by the Warrantholders;

(c) to direct or to authorize the Trustee to enforce any of the covenants on the part of the Corporation contained in this Indenture or the Warrant Certificates or to enforce any of the rights of the Warrantholders in any manner specified in such extraordinary resolution or to refrain from enforcing any such covenant or right;

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(d) to waive, and to direct the Trustee to waive, any default on the part of the Corporation in complying with any provisions of this Indenture or the Warrant Certificates either unconditionally or upon any conditions specified in such extraordinary resolution;

(e) to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Indenture or the Warrant Certificates or to enforce any of the rights of the Warrantholders;

(f) to direct any Warrantholder who, as such, has brought any suit, action or proceeding to stay or to discontinue or otherwise to deal with the same upon payment of the costs, charges and expenses reasonably and properly incurred by such Warrantholder in connection therewith;

(g) to assent to any change in or omission from the provisions contained in the Warrant Certificates and this Indenture or any ancillary or supplemental instrument which may be agreed to by the Corporation, and to authorize the Trustee to concur in and execute any ancillary or supplemental indenture embodying the change or omission;

(h) with the consent of the Corporation, to remove the Trustee or its successor in office and to appoint a new trustee or trustees to take the place of the Trustee so removed; and

(i) to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of shares or other securities of the Corporation.

7.11 Meaning of Extraordinary Resolution

(a) The expression extraordinary resolution when used in this Indenture means, subject as hereinafter provided in this Section 7.11 and in Section 7.14, a resolution proposed at a meeting of Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article 7 at which there are present in person or by proxy Warrantholders entitled to acquire at least 25% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants and passed by the affirmative votes of Warrantholders entitled to acquire not less than 66 ²/3% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants represented at the meeting and voted on the poll upon such resolution.

(b) If, at the meeting at which an extraordinary resolution is to be considered, Warrantholders entitled to acquire at least 25% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy within 30 minutes after the time appointed for the meeting, then the meeting, if convened by Warrantholders or on a Warrantholders’ Request, shall be dissolved; but in any other case it shall stand

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adjourned to such day, being not less than 15 or more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than five days’ prior notice shall be given of the time and place of such adjourned meeting in the manner provided for in Section 10.2. Such notice shall state that at the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars. At the adjourned meeting, the Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in subsection 7.11(a) shall be an extraordinary resolution within the meaning of this Indenture notwithstanding that Warrantholders entitled to acquire at least 25% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting.

(c) Votes on an extraordinary resolution shall always be given on a poll and no demand for a poll on an extraordinary resolution shall be necessary.

7.12 Powers Cumulative

Any one or more of the powers or any combination of the powers in this Indenture stated to be exercisable by the Warrantholders by extraordinary resolution or otherwise may be exercised from time to time and the exercise of any one or more of such powers or any combination of powers from time to time shall not be deemed to exhaust the right of the Warrantholders to exercise such power or powers or combination of powers then or thereafter from time to time.

7.13 Minutes

Minutes of all resolutions and proceedings at every meeting of Warrantholders shall be made and duly entered in books to be provided from time to time for that purpose by the Corporation, and any such minutes as aforesaid, if signed by the chairman or the secretary of the meeting at which such resolutions were passed or proceedings had shall be prima facie evidence of the matters therein stated and, until the contrary if proved, every such meeting in respect of the proceedings of which minutes shall have been made shall be deemed to have been duly convened and held, and all resolutions passed thereat or proceedings taken shall be deemed to have been duly passed and taken.

7.14 Instruments in Writing

All actions which may be taken and all powers that may be exercised by the Warrantholders at a meeting held as provided in this Article 7 may also be taken and exercised by Warrantholders entitled to acquire at least 66 ²/3% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants by an instrument in writing signed in one or more counterparts by such Warrantholders in person or by attorney duly appointed in writing, and the expression extraordinary resolution when used in this Indenture shall include an instrument so signed.

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7.15 Binding Effect of Resolutions

Every resolution and every extraordinary resolution passed in accordance with the provisions of this Article 7 at a meeting of Warrantholders shall be binding upon all the Warrantholders, whether present at or absent from such meeting, and every instrument in writing signed by Warrantholders in accordance with Section 7.14 shall be binding upon all the Warrantholders, whether signatories thereto or not, and each and every Warrantholder and the Trustee (subject to the provisions for indemnity herein contained) shall be bound to give effect accordingly to every such resolution and instrument in writing.

7.16 Holdings by Corporation Disregarded

In determining whether Warrantholders holding Warrant Certificates evidencing the entitlement to acquire the required number of Common Shares are present at a meeting of Warrantholders for the purpose of determining a quorum or have concurred in any consent, waiver, extraordinary resolution, Warrantholders’ Request or other action under this Indenture, Warrants owned legally or beneficially by the Corporation or any Subsidiary of the Corporation shall be disregarded in accordance with the provisions of Section 10.7.

ARTICLE 8

Supplemental Indentures

8.1 Provision for Supplemental Indentures for Certain Purposes

From time to time the Corporation (when authorized by action of the directors) and the Trustee may, subject to the provisions hereof, and they shall, when so directed in accordance with the provisions hereof, execute and deliver by their proper directors or officers, indentures or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:

(a) setting forth any adjustments resulting from the application of the provisions of Article 4;

(b) adding to the provisions hereof such additional covenants and enforcement provisions as, in the opinion of Counsel, are necessary or advisable in the premises, provided that the same are not in the opinion of the Trustee relying on the advice of Counsel, prejudicial to the interests of the Warrantholders;

(c) giving effect to any extraordinary resolution passed as provided in Article 7;

(d) making such provisions not inconsistent with this Indenture as may be necessary or desirable with respect to matters or questions arising hereunder or for the purpose of obtaining or maintaining a listing or quotation of the Warrants on any stock exchange, provided that such provisions are not, in the opinion of the Trustee relying on the advice of Counsel, prejudicial to the interests of the Warrantholders;

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(e) modifying any of the provisions of this Indenture, including relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Trustee relying on the advice of Counsel, such modification or relief in no way prejudices any of the rights of the Warrantholders or of the Trustee, and provided further that the Trustee may in its sole discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate protection to the Trustee when the same shall become operative; and

(f) for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective or inconsistent provisions, errors, mistakes or omissions herein, provided that in the opinion of the Trustee relying on the advice of Counsel the rights of the Trustee and of the Warrantholders are in no way prejudiced thereby.

Notwithstanding anything to the contrary in this Indenture, no supplement or amendment to this Indenture or to the provisions of the Warrants may be made without the prior consent of the Toronto Stock Exchange (or such other stock exchange on which the Common Shares may be listed for trading), if required.

8.2 Successor Corporations

In the case of the consolidation, amalgamation, merger or transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another person, trust, corporation, partnership or similar entity (successor entity), the successor entity resulting from such consolidation, amalgamation, merger or transfer (if not the Corporation) shall expressly assume, by supplemental indenture satisfactory in form to the Trustee and executed and delivered to the Trustee, the due and punctual performance and observance of each and every covenant and condition of this Indenture to be performed and observed by the Corporation unless all of the Warrants have terminated in accordance with Section 4.1(e).

ARTICLE 9

Concerning The Trustee

9.1 Trust Indenture Legislation

(a) If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a mandatory requirement of any legislation applicable to this Indenture, such mandatory requirement shall prevail.

(b) The Corporation and the Trustee agree that each will, at all times in relation to this Indenture and any action to be taken hereunder, observe and comply with and be entitled to the benefits of all legislation applicable to this Indenture.

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9.2 Rights and Duties of Trustee

(a) In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Trustee shall exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances. The Trustee shall be liable only for its own negligent action, its own negligent failure to act, or its own willful misconduct or bad faith or the breach of its standard of care.

(b) The obligation of the Trustee to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Trustee or the Warrantholders hereunder shall be conditional upon the Warrantholders furnishing, when required by notice by the Trustee, sufficient funds to commence or to continue such act, action or proceeding and an indemnity reasonably satisfactory to the Trustee to protect and to hold harmless the Trustee against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the Trustee to expend or to risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified as aforesaid.

(c) The Trustee may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Warrantholders, at whose instance it is acting, to deposit with the Trustee the Warrants held by them, for which Warrants the Trustee shall issue receipts.

9.3 Evidence, Experts and Advisers

(a) In addition to the reports, certificates, opinions and other evidence required by this Indenture, the Corporation shall furnish to the Trustee such additional evidence of compliance with any provision hereof, and in such form, as may be prescribed by any legislation applicable to this Indenture or as the Trustee may reasonably require by written notice to the Corporation.

(b) In the exercise of its rights and duties hereunder, the Trustee may, if it is acting in good faith, rely as to the truth of the statements and the accuracy of the opinions expressed in statutory declarations, opinions, reports, written requests, consents, or orders of the Corporation, certificates of the Corporation or other evidence furnished to the Trustee pursuant to a request of the Trustee, provided that such evidence complies with all legislation applicable to this Indenture and that the Trustee complies with such legislation and that the Trustee examines the same and determines that such evidence complies with the applicable requirements of this Indenture.

(c) Whenever it is provided in this Indenture or under any legislation applicable to this Indenture that the Corporation shall deposit with the Trustee resolutions, certificates, reports, opinions, requests, orders or other documents, it is intended that the trust, accuracy and good faith on the effective date thereof and the facts

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and opinions stated in all such documents so deposited shall, in each and every such case, be conditions precedent to the right of the Corporation to have the Trustee take the action to be based thereon.

(d) Proof of the execution of an instrument in writing, including a Warrantholders’ Request, by any Warrantholder may be made by the certificate of a notary public or other officer with similar powers, that the person signing such instrument acknowledged to it the execution thereof, or by an affidavit of a witness to such execution or in any other manner which the Trustee may consider adequate.

(e) The Trustee may employ or retain at the Corporation’s expense such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of determining and discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any misconduct or negligence on the part of any such experts or advisers who have been appointed with due care by the Trustee.

9.4 Documents, Monies, etc. Held by Trustee

Unless herein otherwise expressly provided, any of the funds held by the Trustee may be deposited in a trust account in the name of the Trustee (which may be held with the Trustee or an affiliate or related party of the Trustee) which account shall be non-interest bearing. Upon the written order of the Corporation, the Trustee shall invest in its name such funds in Authorized Investments in accordance with such direction. Any direction by the Corporation to the Trustee as to the investment of the funds shall be in writing and shall be provided to the Trustee no later than 9:00 a.m. on the day on which the investment is to be made. Any such direction received by the Trustee after 9:00 a.m. or received on a non-Business Day, shall be deemed to have been given prior to 9:00 a.m. the next Business Day. Unless the Corporation shall be in default hereunder, all interest or other income received by the Trustee in respect of such deposits and investments shall belong to the Corporation.

9.5 Actions by Trustee to Protect Interest

The Trustee shall have power to institute and to maintain such actions and proceedings as it may consider necessary or expedient to preserve, protect or enforce its interests and the interests of the Warrantholders.

9.6 Trustee Not Required to Give Security

The Trustee shall not be required to give any bond or security in respect of the execution of the trusts and powers of this Indenture or otherwise in respect of the premises.

9.7 Protection of Trustee

By way of supplement to the provisions of any law for the time being relating to trustees it is expressly declared and agreed as follows:

(a) the Trustee shall not be liable for or by reason of any statements of fact or recitals in this Indenture or in the Warrant Certificates (except the representation contained in Section 9.9 or in the certificate of the Trustee on the Warrant Certificates) or be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation;

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(b) nothing herein contained shall impose any obligation on the Trustee to see to or to require evidence of the registration or filing (or renewal thereof) of this Indenture or any instrument ancillary or supplemental hereto;

(c) the Trustee shall not be bound to give notice to any person or persons of the execution hereof; and

(d) the Trustee shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the part of the Corporation to any of the covenants herein contained or of any acts of any directors, officers, employees, agents or servants of the Corporation.

9.8 Replacement of Trustee; Successor by Merger

(a) The Trustee may resign its trust and be discharged from all further duties and liabilities hereunder, subject to this Section 9.8, by giving to the Corporation not less than 90 days’ prior notice in writing or such shorter prior notice as the Corporation may accept as sufficient. The Warrantholders by extraordinary resolution shall have power at any time to remove the existing Trustee and to appoint a new Trustee. In the event of the Trustee resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new trustee unless a new trustee has already been appointed by the Warrantholders; failing such appointment by the Corporation, the retiring Trustee, at the Corporation’s expense, or any Warrantholder may apply to a justice of the Court of Queen’s Bench of the Province of Alberta on such notice as such justice may direct, for the appointment of a new trustee; but any new trustee so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Warrantholders. Any new trustee appointed under any provision of this Section 9.8 shall be a corporation authorized to carry on the business of a trust company in the Province of Alberta and, if required by any legislation applicable to this Indenture for any other provinces, in such other provinces. On any such appointment the new trustee shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Trustee hereunder and there shall be immediately executed, at the expense of the Corporation, all such conveyances or other instruments as may, in the reasonable opinion of counsel, be necessary or advisable to vest the new trustee with such powers, rights, duties and responsibilities, provided that the predecessor Trustee shall have no obligation to execute any such conveyances or instruments until such time as it has received payment of all outstanding remuneration and expenses payable by the Corporation to such Trustee under this Indenture.

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(b) Upon the appointment of a successor trustee, the Corporation shall promptly notify the Warrantholders thereof in the manner provided for in Section 10.2 hereof.

(c) Any corporation into or with which the Trustee may be merged or consolidated or amalgamated, or any corporation resulting therefrom to which the Trustee shall be a party, or any corporation succeeding to the trust business of the Trustee shall be the successor to the Trustee hereunder without any further act on its part or any of the parties hereto, provided that such corporation would be eligible for appointment as a successor trustee under subsection 9.8(a).

(d) Any Warrant Certificates certified but not delivered by a predecessor trustee may be certified by the successor trustee in the name of the predecessor or successor trustee.

9.9 Conflict of Interest

(a) The Trustee represents to the Corporation that at the time of execution and delivery hereof no material conflict of interest exists between its role as a trustee hereunder and its role in any other capacity and agrees that in the event of a material conflict of interest arising hereafter it will, within 90 days after ascertaining that it has such material conflict of interest, either eliminate the same or assign its trust hereunder to a successor trustee approved by the Corporation and meeting the requirements set forth in subsection 9.8(a). Notwithstanding the foregoing provisions of this subsection 9.9(a), if any such material conflict of interest exists or hereafter shall exist, the validity and enforceability of this Indenture and the Warrant Certificates shall not be affected in any manner whatsoever by reason thereof.

(b) Subject to subsection 9.9(a), the Trustee, in its personal or any other capacity, may buy, lend upon and deal in securities of the Corporation and generally may contract and enter into financial transactions with the Corporation or any Subsidiary of the Corporation without being liable to account for any profit made thereby.

9.10 Acceptance of Trust

The Trustee hereby accepts the trusts in this Indenture declared and provided for and agrees to perform the same upon the terms and conditions herein set forth.

9.11 Trustee Not to be Appointed Receiver

The Trustee and any person related to the Trustee shall not be appointed a receiver, a receiver and manager or liquidator of all or any part of the assets or undertaking of the Corporation.

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9.12 Knowledge of Trustee

The Trustee shall not be required to take notice or be deemed to have notice, whether constructive or actual, of any matter hereunder, unless the Trustee shall have received from the Corporation or a Warrantholder a notice stating the matter in respect of which the Trustee should have notice.

9.13 Indemnification of Trustee

In addition to and without limiting any other protection of the Trustee hereunder or otherwise by law, the Corporation shall be liable for and indemnify and save harmless the Trustee and its officers, directors, agents, employees and shareholders from and against any and all losses, costs, charges, expenses, damages and liabilities whatsoever arising in connection with this Indenture, including, without limitation, those arising out of or related to actions taken or omitted to be taken by the Trustee contemplated hereby, legal fees and disbursements on a solicitor and client basis, and costs and expenses incurred in connection with the enforcement of this indemnity, which the Trustee may suffer or incur, whether at law or in equity, in any way caused by or arising, directly or indirectly, in respect of any act, deed, matter or thing whatsoever made, done, acquiesced in or omitted in or about or in relation to the execution of its duties as Trustee and including and deed, matter or thing in relation to the execution of its duties as Trustee and including any deed, matter or thing in relation to the registration, perfection, release or discharge of security. The foregoing provisions of this section do not apply to the extent that in any circumstances there has been a failure by the Trustee or its employees or agents to act honestly and in good faith or where the Trustee or its employees or agents have acted with negligence, gross negligence or in willful disregard to the Trustee’s obligations hereunder or breached the standard of care set out in Section 9.2(a). It is understood and agreed that this indemnification shall survive the termination of this Indenture or the resignation of the Trustee.

9.14 Trustee Not Required to Give Notice of Default

The Trustee shall not be bound to give any notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall have been required so to do under the terms hereof; nor shall the Trustee be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default desired to be brought to the attention of the Trustee and in the absence of any such notice the Trustee may for all purposes of this Indenture conclusively assume that no default has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. Any such notice shall in no way limit any discretion herein given to the Trustee to determine whether or not the Trustee shall take action with respect to any default.

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ARTICLE 10

General

10.1 Notice to the Corporation and the Trustee

(a) Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation or the Trustee shall be deemed to be validly given if delivered or if sent by registered letter, postage prepaid or by facsimile:

If to the Corporation:

TransAtlantic Petroleum Corp.

Suite 1840, 444 - 5^th Ave. S.W.

Calgary, AB T2P 2T8

Attention: Secretary

Fax: (403) 262-1349

If to the Trustee:

Computershare Trust Company of Canada

Suite 600, 530 - 8^th Ave. S.W.

Calgary, AB T2P 3S8

Fax: (403) 267-6879

and any such notice delivered in accordance with the foregoing shall be deemed to have been received on the date of delivery or facsimile if delivered or faxed (with receipt confirmed) by 4:30 p.m. (local time) on a Business Day, or otherwise on the next Business Day or, if mailed, on the 5th Business Day following the date of the postmark on such notice.

(b) The Corporation or the Trustee, as the case may be, may from time to time notify the other in the manner provided in subsection 10.1(a) of a change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Corporation or the Trustee, as the case may be, for all purposes of this Indenture.

(c) If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Trustee or to the Corporation hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to which it is addressed or, if it is delivered to such party at the appropriate address provided in subsection 10.1(a), by facsimile or other means of prepaid, transmitted and recorded communication.

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10.2 Notice to Warrantholders

(a) Any notice to the Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or if sent by ordinary post addressed to such holders at their post office addresses appearing on the register of Warrantholders maintained under this Indenture. Any such notice delivered in accordance with the foregoing is deemed to have been effectively given (and received by the Warrantholders) on the date of delivery (with receipt confirmed) if such date is a Business Day or, if mailed, five Business Days following actual posting of the notice.

(b) If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrantholders hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered personally to such Warrantholders or if delivered to the address for such Warrantholders contained in the register of Warrants maintained by the Trustee, by other means of prepaid transmitted and recorded communication. Accidental error or omission in giving notice or accidental failure to mail notice to any holder will not invalidate any action or proceeding founded thereon.

(c) In addition to the other requirements for notice under this Section, where a Warrantholder meeting is being convened, the Trustee or Corporation may require publication of such notice in such municipalities and filing with securities regulatory authorities, as necessary to comply with applicable legal, regulatory or stock exchange requirements.

10.3 Evidence of Ownership

(a) Upon receipt of a certificate of any bank, trust company or other depositary satisfactory to the Trustee stating that the Warrants specified therein have been deposited by a named person with such bank, trust company or other depositary and will remain so deposited until the expiry of the period specified therein and the acknowledgement by the named person of such certificate, the Corporation and the Trustee may treat the person so named as the owner, and such certificate as sufficient evidence of the ownership by such person of such Warrant during such period, for the purpose of any requisition, direction, consent, instrument or other document to be made, signed or given by the holder of the Warrant so deposited.

(b) The Corporation and the Trustee may accept as sufficient evidence of the fact and date of the signing of any requisition, direction, consent, instrument or other document by any person (i) the signature of any officer of any bank, trust company, or other depositary satisfactory to the Trustee as witness of such execution, (ii) the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded at the place where such certificate is made that the person signing acknowledged to him the execution thereof, or (iii) a satisfactory declaration of a witness of such execution.

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10.4 Counterparts

This Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument and notwithstanding their date of execution they shall be deemed to be dated as of the date hereof.

10.5 Satisfaction and Discharge of Indenture

Upon the earlier of:

(a) the date by which there shall have been delivered to the Trustee for exercise or destruction all Warrant Certificates theretofore certified hereunder; or

(b) 30 days after the Time of Expiry;

this Indenture shall cease to be of further effect and the Trustee, on demand of and at the cost and expense of the Corporation and upon delivery to the Trustee of a certificate of the Corporation stating that all conditions precedent to the satisfaction and discharge of this Indenture have been complied with, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. Notwithstanding the foregoing, the indemnities provided to the Trustee by the Corporation hereunder shall remain in full force and effect and survive the termination of this Indenture.

10.6 Provisions of Indenture and Warrants for the Sole Benefit of Parties and Warrantholders

Nothing in this Indenture or in the Warrant Certificates, expressed or implied, shall give or be construed to give to any person other than the parties hereto and the Warrantholders, as the case may be, any legal or equitable right, remedy or claim under this Indenture, or under any covenant or provision herein or therein contained, all such covenants and provisions being for the sole benefit of the parties hereto and the Warrantholders.

10.7 Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided

For the purpose of disregarding any Warrants owned legally or beneficially by the Corporation or any Subsidiary of the Corporation in Section 7.16, the Corporation shall provide to the Trustee from time to time and immediately upon request, a certificate of the Corporation setting forth as at the date of such certificate:

(a) the names (other than the name of the Corporation) of the registered holders of Warrants which, to the knowledge of the Corporation, are owned by or held for the account of the Corporation or any Subsidiary of the Corporation; and

(b) the number of Warrants owned legally or beneficially by the Corporation or any Subsidiary of the Corporation,

and the Trustee, in making the computations in Section 7.16, shall be entitled to rely on such certificate without any additional evidence.

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10.8 Successors

All provisions of this Indenture for the benefit of the Corporation and the Trustee bind and enure to the benefit of their respective successors and assigns.

Executed and delivered as of the 17th day of November, 2005.

TRANSATLANTIC PETROLEUM CORP.

Per:

Per:

COMPUTERSHARE TRUST COMPANY OF CANADA

Per:

Per:

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SCHEDULE A to the Warrant Indenture made as of November 17, 2005 between TRANSATLANTIC PETROLEUM CORP. and COMPUTERSHARE TRUST COMPANY OF CANADA as Trustee

[see attached]

SCHEDULE B to the Warrant Indenture made as of November 17, 2005 between TRANSATLANTIC PETROLEUM CORP. and COMPUTERSHARE TRUST COMPANY OF CANADA as Trustee

FORM OF DECLARATION FOR REMOVAL OF LEGEND

TO: Computershare Trust Company of Canada

as registrar and transfer agent for the common shares of

TransAtlantic Petroleum Corp. (the “Corporation”) and warrant trustee for the warrants of the Corporation

The undersigned (A) acknowledges that the sale of the common shares/warrants (circle one) represented by certificate number              of TransAtlantic Petroleum Corp. to which this declaration relates is being made in reliance on Rule 904 of Regulation S under the United States Securities Act of 1933, as amended (the “1933 Act”) and (B) certifies that (1) the undersigned is not an affiliate (as defined in Rule 405 under the 1933 Act), (2) the offer of such securities was not made to a person in the United States and either (a) at the time the buy order was originated, the buyer was outside the United States, or the seller and any person acting on its behalf reasonably believed that the buyer was outside the United States, or (b) the transaction was executed on or through the facilities of the Toronto Stock Exchange and neither the seller nor any person acting on its behalf knows that the transaction has been prearranged with a buyer in the United States, (3) neither the seller nor any person acting on its behalf engaged in any directed selling efforts in connection with the offer and sale of such securities, (4) the sale is bona fide and not for the purpose of “washing off” the resale restrictions imposed because the securities are “restricted securities” (as such term is defined in Rule 144(a)(3) under the 1933 Act), (5) the seller does not intend to replace such securities with fungible unrestricted securities; (6) the contemplated sale is not a transaction, or part of a series of transactions which, although in technical compliance with Regulation S, is part of a plan or scheme to evade the registration provisions of the 1933 Act. Terms used herein have the meanings given to them by Regulation S under the 1933 Act; and (7) in the case of an affiliate of the Corporation, no selling concession, fee or other remuneration is paid in connection with such offer or sale other than the usual and customary broker’s commission that would be received by a person executing such transaction as agent.

By		Dated:
Signature:
Name:
	(please print)

Affirmation by Seller’s Broker-Dealer

We have read the foregoing representations of our customer,                                      (the “Seller”) dated                             , with regard to the sale, for such Seller’s account, of the common shares/warrants (circle one) represented by certificate number                      of the Corporation described therein, and we hereby affirm that, to the best of our knowledge and belief, the facts set forth therein are full, true and correct.

Name of Firm
By:
	Authorized Officer
Date:

EX-15.1

Exhibit 15.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

TransAtlantic Petroleum Corp.

We consent to the use of our report, dated March 21, 2006 except for note 13 which is as of August 11, 2006, included in this Form 20-F.

/s/ KPMG LLP

Calgary, Canada

August 14, 2006