Transmeridian Exploration Updates Kazakhstan Operations

In the first quarter of 2004, the Transmeridian continued with its infield drilling operations with two new wells, the, SA-5 and the SA-17 on the South Abilek field in Kazakhstan. These two wells are being drilled on locations that currently have proved undeveloped reserves. As of May 22, 2004, the SA-5 well was at a depth of approximately 8,750 feet drilling within the KT-1 carbonates and the SA-17 well was at approximately 6,600 feet drilling the lower Permian sediments. Both wells are planned to be drilled to a total depth of approximately 13,800 feet and are targeted to encounter the same zones as the SA-2 and SA-4.

We have received initial tests of oil from approximately 90 feet of the KT-2 interval in the SA-2 well, of approximately 270 feet planned to be perforated. The preliminary indications from these tests have met our expectations, but the well has not stabilized to report an accurate initial flow rate. Both SA-2 and SA-4 had previously been partially perforated with no significant flow rates from the initial perforations. Additional perforations are in progress on the SA-4 and the completion work may be redesigned to properly induce the lower intervals to flow as has been done in SA-2. Once the lower intervals are flowing, we intend to make additional perforations to intervals which are currently productive in the SA-1.

This completion program, while very time consuming, should give the Company the technical reservoir information to support expansion of the drilling program and data to support estimates of future delivery rates.

The construction of our permanent production facility has been continuing. The tanks and pressure vessels have been pressure tested and certified for operation. We are currently storing oil in one of the tanks. The field loading facilities are approximately 85% complete. We expect the facility to become operational during the second quarter of 2004. We are reviewing the feasibility of using chemical additives to remove mercaptanes until we resolve technical issues of constructing a demercaptane unit, which would, if successful, allow us to realize higher sales price for our production.