Bruce Falkenstein, Vice President of Exploration and Geology, commented, "The drilling results validate our original well prognosis and give us confidence that the well location is near the crest of the structure, as we predicted. The two major productive formations in the area, the KT-1 and KT-2, are world-class carbonate reservoirs with a combined gross thickness of almost 5,000 feet. Our original prognosis was based on extensive 2D seismic data and log information from 30 wells previously drilled by state entities to delineate the South Alibek and adjacent Alibekmola fields. The Alibekmola Field is also in the early stages of development, operated by a joint venture of Western and Kazakhstan interests."
Lorrie T. Olivier, Chairman & CEO of the Company, added, "We are pleased to have this first major drilling milestone of the South Alibek #1 behind us. We have experienced slower drilling progress than we expected, primarily because of severe winter weather, which carried temperatures of 30-40 degrees below zero. After we set intermediate casing, our drilling rate should improve significantly, with a smaller diameter hole and the worst of the winter behind us. We are currently forecasting a completion date of April 15, 2003. During testing of the #1 well, we will move the rig to begin drilling the South Alibek #2 well."
Transmeridian's primary focus is on the Caspian Sea region. The South Alibek Field in Kazakhstan was initially assigned over 17 million barrels of net proved reserves by the independent reserve engineering firm of Ryder Scott Company, based on the #29 well. The ultimate proved reserves of the field are expected to be significantly greater than this initial estimate. The Company has designed an initial seven well drilling program to identify the productive limits of the field, with plans to put all wells on an extended testing program for early production.
The South Alibek Field is in an area of established infrastructure, consisting of roads, electric generation capacity, and water. This improves our development logistics and lowers our costs compared to drilling in a more remote location. We have been developing production and crude oil transportation facilities on a parallel track with our drilling program to assure the earliest possible commercial sales of production.
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