Transmeridian Reveals Initial Flow Rates from SA-2 Wel

Transmeridian Exploration announced the results of the initial flow rates from the SA-2 well. The well is currently cleaning up and producing at a rate of 600-675 barrels per day on an 11 millimeter choke. The well is producing from a small 50 foot interval in the Lower KTII section which has been washed with acid to clean up the perforations. A full acid stimulation has not been performed on the well at this time. The well will be flowed on a long term test basis for the next 60-90 days after which additional intervals will be added to place the major portion of the Upper KTII section on production as well. Because of large differential pressures, the intervals will need to be completed and produced separately under a dual completion. Ultimately, we anticipate a combined rate of 1,200 to 1,500 bopd from wells that flow from both intervals.

In the SA-5, a 60 foot section of the Lower KTII has been perforated and is being cleaned up with acid. The well is initiating natural flow to the surface and we expect the well to stabilize at production rates similar to the SA-2. This well also has a large section of the Upper KTII similar to SA-2 which we expect to dual complete after an initial period of test production from the Lower KTII. This work will be timed in sequence with the other dual completions programmed to begin in the next 60-90 days.

As previously reported, the SA-4 well suffered significant formation damage during drilling and attempts to complete in the KTII zone were not successful. We have perforated a small section of the KTI and intend to perforate additional KTI intervals during the testing phase. The KTI has not yet been produced in any of the wells in the South Alibek or Alibekmola fields, so additional testing will be necessary to determine its productive capacity.

Lorrie T. Olivier, Chairman and CEO of Transmeridian commented, "We are very excited about the initial flow rates from the SA-2, as the well continues to clean up. The improvements in drilling and completion techniques are allowing us to achieve much higher rates per foot of productive interval without extensive and costly stimulations.

"We currently have the capacity to truck and sell about 2,000 barrels per day from our temporary facilities. With the completion of the new production facilities in the next 30 days, we will add another 3,000 bopd to our shipping capacity which should be sufficient in the short-term until we are able to begin sales by pipeline in 2005. The new production facilities have also lowered our cost of operations by eliminating the need to rent additional storage facilities."