HOUSTON, July 6, 2004 (PRIMEZONE) -- Transmeridian Exploration, Inc. (OTCBB:TMXN) today announced an operational update for recent well testing operations in the South Alibek Field. TMXN has been conducting an extended testing program on its two most recent wells, the SA-2 and SA-4.
South Alibek No. 2
The SA-2 was drilled by the Company's drilling rig to a total depth of 13,800 feet. An improved mud program resulted in much better hole quality than that of the SA-1. The well also drilled through deeper reservoirs than those seen in the previous wells, with the objective to prove new reserves and establish oil water contacts. While these new reservoirs had never been tested before, the Company believed it was necessary to test them in order to properly design the field development program. Additionally, it is preferable to test and produce lower zones first, prior to completing upper targets in the wellbore. The Company perforated and tested four separate zones in this lower section over a period of approximately three months. The majority of these zones flowed oil, but the production was mixed with drilling fluids and formation water, which made it difficult to isolate and produce individual zones. The Company has decided not to pursue further completion efforts in these lower zones at this time. Cumulative test production from these zones was approximately 8,500 barrels of oil.
The Company recently perforated the primary target zones in the KTII and produced flowing oil at rates which appear to be commercial. However, the well is continuing to produce water from the lower zones due to a failed packer. A new packer is in transit which is designed to isolate the lower zones and allow for water-free oil production. The results from this operation will be released as soon as the information is available.
South Alibek No. 4
The SA-4 was the first well drilled under the turnkey drilling contract with Great Wall of China Drilling Company. It was also drilled to a total depth of approximately 13,800 feet. The hole quality in the SA-4 is considerably worse that the SA-2, which made completion operations much more difficult. The Company attempted completion in several zones in the KTII, but was not able to get a successful completion due to problems with the wellbore. The zones produced some oil, but commercial flow rates could not be established within the time frame for testing. The Company believes the KTII will ultimately be commercially productive in the SA-4 location, but will require a sidetrack or new wellbore to produce these reserves.
As a result of this testing, the Company made a decision to set a bridge plug on top of the KTII formation and complete the well in the KTI. The upper section of the wellbore did not suffer as much drilling damage as the lower section. The KTI is part of the proved reserves, but is not currently producing in any of the other wells in the field. As such, test information about this zone will be very important in designing the future drilling program. The Company perforated the KTI and the well appears capable of commercial rates of production from this zone. An acid treatment is currently scheduled, which will be necessary to get stabilized production rates.
Summary
All of the field operations this spring have been hampered by poor ground conditions resulting from the spring thaw and unusually high rainfall. The Company has also experienced difficulties with mechanical equipment and delays in getting needed equipment on location.
The Company's Vice President of Exploration and Geology, Bruce Falkenstein, commented, "We had hoped to have these two wells on commercial production by this point, but the information gained from this testing program has been invaluable in improving our understanding of the field. We have learned much more about the reservoir, which is a complex carbonate structure. This information will be critical in designing the full field development, a program which will entail drilling a large number of wells and will likely take several years to accomplish."
The Company has also made improvements in its drilling practices to obtain better wellbore results, which are vital to the success of completion operations and production. Based on current drilling results in the SA-5, it appears that Great Wall has overcome the hole problems experienced in the SA-4 and will deliver a much improved wellbore in the SA-5.
About Transmeridian Exploration, Inc.
Transmeridian Exploration, Inc. (TMXN) is an independent energy company established to acquire and develop oil reserves in the Caspian Sea region of the former Soviet Union. TMXN primarily targets medium-sized fields with proved or probable reserves and significant upside reserve potential. Its first major project is the South Alibek Field in Kazakhstan.
For more information please contact the following:
Transmeridian Exploration, Inc or ROI Investor Relations, LLC 397 N. Sam Houston Pkwy E. Suite 300 39 Broadway, Suite 2410 Houston, TX 77060 New York, NY 10006 Lorrie T. Olivier, CEO Robert Giordano Tel: (281) 999-9091 Tel: (212) 495-0200 x15 Fax: (281) 999-9094 Fax: (212) 495-0746 E-mail: tmei@tmei.com E-mail: rgiordano@roiny.com Website: www.tmei.com
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created therein. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including but not limited to those discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Although Transmeridian Exploration, Inc. believes the assumptions underlying the forward-looking statements contained herein are reasonable, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion herein should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.