HOUSTON, May 12, 2005 (PRIMEZONE) -- Transmeridian Exploration, Inc. (AMEX:TMY) announced today that production in its South Alibek Field (the "Field") has been increased with the addition of well SA-14. This recently completed well flowed at an initial rate of 1,600 barrels of oil per day ("bopd") from a 15mm choke and is now stabilizing at approximately 1,300 bopd after perforation and acidizing of about 130 feet of the KT2 Formation. The combined production rate in the Field from the three wells currently on production is about 2,000 bopd. The reservoir stimulation of two additional wells, the SA-5 and SA-17, has been completed. These wells have been shut-in while awaiting the arrival of contractor equipment before they can be placed back on production, which is expected to occur by the end of May. The Company remains confident that its current pace of adding additional wells, together with its ongoing engineered workover and stimulation program, will result in field production rates of between 4,000 and 5,000 bopd once this work is completed by mid-year.
Operations Update
The Company has now drilled and completed wells at six of the 21 well locations currently identified in its proved area of the South Alibek Field. Extensive and varied completion and stimulation methods have been employed on 4 of the 6 wells to determine an optimum development and completion program. The results of these tests are beginning to be demonstrated as these wells are returned to full production status. The Company has spent more than $2 million dollars and six months on this program of work.
Well SA-14, currently producing 1,300 bopd, encountered the same major productive intervals which are currently on production from other wells in the Field. About 130 feet of the identified 240 feet of net oil pay in the KT2 formation has been opened and acid stimulated for enhance natural flow rates. An additional 380 feet of net pay was identified in the KT1 formation and will be evaluated in the future. This well is located about 2,000 feet west of SA-1 on the outer edge of the estimated proved area and is expected to support proved reserves additions for 2005. Because of our efforts to optimize the completion and stimulation program, the completion costs were significantly less than previous wells while the initial production rate is significantly higher.
Well SA-5 has been completed in the KT2 with a total of approximately 270 feet of net interval perforated and stimulated. We used acid stimulation to clean up the formation and promote the natural flow of oil to the wellbore. Contractor delays and mechanical problems encountered in this $200,000 completion program continue to delay the opening of the well for production. Contractor equipment is now on site to remedy the mechanical problems and the well is expected to return to production within the next five days. When the well is returned to service, the Company expects production to exceed the initial flow rate of 400 bopd.
Well SA-17 had 95 feet of reservoir hydraulically fractured in a two-step process, which included using approximately 75,000 lbs. of proppant, at an estimated cost of approximately $500,000. This stimulation program was designed to increase the natural fracturing that exists in the reservoir, thereby enhancing the movement of fluid in the reservoir and increasing production rates from the reservoir intervals. It is expected that production rates from this well will significantly exceed the initial flow rate of 460 bopd obtained from the well prior to the hydro-frac. Third-party contractor equipment needed to return this well to production status is scheduled to arrive in the field by the end of the month.
Well SA-2 has been completed with a total of 110 feet of net reservoir perforated and acid stimulated. The initial production rate of 500 bopd has declined to an average of about 230 bopd over the last 12 months with cumulative production of 84,000 bbls. Production from this well is being restricted by the mechanical limitations of the existing flow line system and the temporary Early Production Facilities. These restrictions should be remedied with the activation of the new Central Production Facility, which is estimated to be fully operational before the end of the third quarter.
Well SA-1 has been on production for 21 months following acid stimulation with cumulative production of 421,000 bbls. This well has experienced an abnormal decline in production rate, which the Company believes is attributable to flow restrictions from paraffin build up and flow interference from zones of differing pressures. Remedial work is planned later this year once the results from the new stimulation work on other wells are known.
The seventh well in the Field, SA-3, was spud on April 24, 2005 and is currently drilling a 121/4 inch intermediate well bore at approximately 4,000 feet, with a programmed total depth of 12,600 feet. The SA-3 site is approximately 2,200 feet southwest of SA-17 and is in a similar flank location in the field as SA-14. The success of both well SA-14 and SA-3 should allow for continued extension of the previously estimated area containing proved reserves.
About Transmeridian Exploration, Inc.
Transmeridian Exploration, Inc. 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 medium-sized fields with proved or probable reserves and significant upside reserve potential. Its first major project is the South Alibek Field in Kazakhstan and it is currently pursuing additional projects in Kazakhstan as well as Azerbaijan.
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 identified or discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2004 and the Company's other filings with the Securities and Exchange Commission. 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.
Transmeridian Exploration, Inc. discloses proved reserves that comply with the Securities and Exchange Commission's (SEC) definitions. Note that the Company's use of terms such as "probable oil resources", "probable reserves", "possible oil resources", "ultimate potential", "resources" and "recoverable reserves" include quantities of oil that are not yet classified as proved and which SEC guidelines do not allow us to include in filings with the SEC.