Transmeridian Reports on South Alibek Ops

Transmeridian Exploration Incorporated provided the following update with regard to production and operations in its South Alibek field in Western Kazakhstan:


Total production from the field is currently approximately 4,600 bopd from nine producing wells, with two wells shut-in for recompletion and two additional wells completed and requiring further evaluation.

Production during the month of November 2006 averaged approximately 3,800 bopd, and benefited from the addition of well SA-16, which produced at approximately 230 bopd during the first five days of the month, prior to acid stimulation, and at a rate of approximately 1,950 bopd after stimulation. Production from SA-16 has since stabilized at about 1,500 bopd.

December sales were a record 4,650 bopd, including amounts from storage. Production for the month of December 2006 averaged approximately 3,600 bopd, as certain wells were shut-in for several days to perform government required pressure testing. During December, two newly drilled wells, SA-13 and SA-21, were completed. Although well logs indicated hydrocarbons, neither of these wells flowed back after acid stimulation. Completion fluid is being recovered from both wells, after which the wells are expected to be placed on production.

In January 2007, well SA-K1 was completed in the KT2 formation and is currently flowing at a rate of approximately 1,100 bopd as it continues to clean up and stabilize.

Drilling Program

In late December 2006, the company commenced the lateral horizontal recompletion of SA-5H and anticipates results from the well by early February. Evaluation is ongoing to select the optimal location for the second lateral well, which is expected to commence drilling in February when the required equipment becomes available. In addition, wells SA-31 and SA-35 have now reached total vertical depth, have been logged and are awaiting completion. Both wells show good indications of hydrocarbons. Wells SA-23 and SA-27 are both drilling and are expected to reach total vertical depth during February. Lastly, the SA-K2 has been drilled to a depth of approximately 9,900 feet. Consistent with the company's strategy of drilling all South Alibek wells to the KT2 formation, this well will continue drilling to the KT2 interval once a larger rig is moved on location. The smaller rig that had spudded the well has now been released, and the company's drilling program is continuing with five rigs.

Oil Export Pipeline Access

The company has received approval from KazTransOil (KTO), the pipeline operator, to access the nearby Kenkiyak-Atyrau pipeline to transport crude oil from the field. Terms of the agreement call for the company to route its oil for processing through the demercaptan unit at the neighboring Alibekmola field before entering the pipeline. Work is in progress to lay the temporary pipeline to connect the company's central production facility to the Alibekmola facilities, and export sales through the pipeline are expected to commence in February. The company has recently purchased an existing demercaptan unit (DMU), which is currently being transported to the field and should be operational by mid-2007. Installation of the DMU will allow the company to move its crude oil directly into the regional pipeline system without having to go through the neighboring facilities.

Transmeridian Exploration Incorporated is an independent energy company established to acquire and develop oil reserves in the Caspian Sea region of the former Soviet Union. The company primarily targets fields with proved or probable reserves and significant upside reserve potential. Transmeridian Exploration currently has projects in Kazakhstan and southern Russia and is pursuing additional projects in the Caspian Sea region.