Transmeridian Updates Kazakhstan Well Testing Program

Transmeridian Exploration provides the following operational update for recent well testing operations in the South Alibek Field in Kazakhstan. TMXN has been conducting an extended testing program on its two most recent wells, the SA-2 and SA-4.

South Alibek #2

The SA-2 was drilled by the Company's drilling rig to a total depth of 13,800 feet. An improved mud program resulted in much better hole quality than that of the SA-1. The well also drilled through deeper reservoirs than those seen in the previous wells, with the objective to prove new reserves and establish oil water contacts. While these new reservoirs had never been tested before, the Company believed it was necessary to test them in order to properly design the field development program. Additionally, it is preferable to test and produce lower zones first, prior to completing upper targets in the wellbore. The Company perforated and tested four separate zones in this lower section over a period of approximately three months. The majority of these zones flowed oil, but the production was mixed with drilling fluids and formation water, which made it difficult to isolate and produce individual zones. The Company has decided not to pursue further completion efforts in these lower zones at this time. Cumulative test production from these zones was approximately 8,500 barrels of oil.

The Company recently perforated the primary target zones in the KTII and produced flowing oil at rates which appear to be commercial. However, the well is continuing to produce water from the lower zones due to a failed packer. A new packer is in transit which is designed to isolate the lower zones and allow for water-free oil production. The results from this operation will be released as soon as the information is available.

South Alibek #4

The SA-4 was the first well drilled under the turnkey drilling contract with Great Wall of China Drilling Company. It was also drilled to a total depth of approximately 13,800 feet. The hole quality in the SA-4 is considerably worse that the SA-2, which made completion operations much more difficult. The Company attempted completion in several zones in the KTII, but was not able to get a successful completion due to problems with the wellbore. The zones produced some oil, but commercial flow rates could not be established within the time frame for testing. The Company believes the KTII will ultimately be commercially productive in the SA-4 location, but will require a sidetrack or new wellbore to produce these reserves.

As a result of this testing, the Company made a decision to set a bridge plug on top of the KTII formation and complete the well in the KTI. The upper section of the wellbore did not suffer as much drilling damage as the lower section. The KTI is part of the proved reserves, but is not currently producing in any of the other wells in the field. As such, test information about this zone will be very important in designing the future drilling program. The Company perforated the KTI and the well appears capable of commercial rates of production from this zone. An acid treatment is currently scheduled, which will be necessary to get stabilized production rates.


All of the field operations this spring have been hampered by poor ground conditions resulting from the spring thaw and unusually high rainfall. The Company has also experienced difficulties with mechanical equipment and delays in getting needed equipment on location.

The Company's Vice President of Exploration and Geology, Bruce Falkenstein, commented, "We had hoped to have these two wells on commercial production by this point, but the information gained from this testing program has been invaluable in improving our understanding of the field. We have learned much more about the reservoir, which is a complex carbonate structure. This information will be critical in designing the full field development, a program which will entail drilling a large number of wells and will likely take several years to accomplish."

The Company has also made improvements in its drilling practices to obtain better wellbore results, which are vital to the success of completion operations and production. Based on current drilling results in the SA-5, it appears that Great Wall has overcome the hole problems experienced in the SA-4 and will deliver a much improved wellbore in the SA-5.

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