Transmeridian Reports Success with First Horizontal Lateral Well

Transmeridian Exploration Inc. on Friday said that its first horizontal lateral well, SA-5H in Kazakhstan, has been successfully drilled.

A total of 1,286 feet of deviated section was drilled, penetrating multiple productive intervals in the KT2 formation, with a horizontal section of approximately 600 feet in Object III, the most prolific productive interval in the field. The Company completed the well using a pre-perforated 4" liner with 2-7/8" production tubing. Well flow tests have been suspended due to severe winter storms, and flow tests are expected to resume once weather conditions permit. If the well performs as expected, field production rates should reach the 8,000 bopd level by April 2007, with the expected completion of up to two more lateral wells and recompletion or workover of several existing vertical wells.

"Needless to say, our production expectations are high for this well, as we are opening 600 feet of productive interval in Object III alone, which is almost 10 times more than our most prolific vertical producers in the field," said Lorrie T. Olivier, "Transmeridian's president and chief executive officer. "Regardless of the flow rates from this well, we believe we have proved the feasibility of lateral completions in the field and are now committed to revising all future and selected existing completions to include the lateral configuration."

The oil sales facilities have now been installed to begin deliveries to the nearby KazTransOil pipeline system. Agreements are in place to allow for export via the pipeline system, and pumping to the pipeline is expected to commence in the next few days. First export sales via pipeline will only take place in March, but pipeline fill will be maintained on a continuous basis, which is expected to eliminate the logistics problems experienced with the trucking/rail export system utilized in the past.

The Company anticipates issuance of a detailed production update on the performance and status of all the wells, including initial rates of well SA-5H, as well as construction works and pipeline export contracts, late next week.

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.