HOUSTON, June 19, 2006 (PRIMEZONE) -- Transmeridian Exploration Incorporated (AMEX:TMY) today announced that well SA-11 has commenced production at a flowrate of approximately 1,400 bopd. Combined production from the seven wells currently producing including the SA-11 is approximately 2,600 bopd. The Company expects to commence production from well SA-12 later this month following perforation and acid stimulation using the dedicated workover rig. Completion of the SA-12, together with results from the ongoing recompletion and restimulation program, is expected to bring total field production to in excess of 3,000 bopd. The drilling rigs used on SA-11 and SA-12 have been mobilized to locations for SA-16 and SA-13, and drilling has begun. Additionally, drilling is expected to start on wells SA-21 and SA-K1, the first planned KT1 well, in the next week using two newly arrived rigs.
Drilling Program
The pace of drilling activity increased significantly in June, with the arrival of the Sun No. 5 and No. 7 drilling rigs, which were contracted in April as previously announced. These are the third and fourth drilling rigs operating in South Alibek, joining the Great Wall No. 18 and No. 24. The fifth drilling rig is expected to be mobilized to the field in mid-third quarter 2006 and will be used to drill KT2 development wells. In addition, the Company is attempting to source a sixth rig later this year, which together with the Sun No. 5 will be dedicated to drilling KT1 development wells.
SA-11 reached its total depth of 12,400 feet on April 23 after 84 days of drilling, a field record time. The well was completed as a KT2 producer by perforating and acid stimulating approximately 137 feet in the KT2. SA-11 is located approximately 1,700 feet southwest of SA-5.
SA-12 reached its total depth of 12,800 feet on May 6 after 95 days of drilling. This well is being completed as a KT2 producer by initially perforating and acid stimulating approximately 57 feet in the KT2. SA-12 is located on the western flank of the field, 1,870 feet southwest of SA-11 and approximately 2,000 feet northwest of SA-14.
SA-16 and SA-13 were spudded on May 29 and June 13, respectively, both with a programmed total depth of 12,500 feet. The SA-16 is a development location on the southwestern flank of the field, approximately 2,000 feet southwest of SA-3. The SA-13 is a development well location on the western flank of the field, approximately 1,500 feet northwest of SA-11. If successful, both wells are expected to provide additional proved reserves in the KT1 and KT2.
The drilling of the first KT1 development well, SA-K1, is planned to commence by in the next few days using the Sun No. 5 rig, with a programmed total depth of 9,800 feet. The SA-K1 is a development well located approximately 1,000 feet midway between SA-3 and SA-17.
The fourth drilling rig in the field, Sun No. 7, has been mobilized to the SA-21 development well location. The well has a programmed depth of 12,500 feet and is expected to spud within the next five days. The SA-21 is in a crestal position in the field and is located 1,500 feet south of SA-1.
Workovers
The newly contracted workover/completion rig (Sun No. 11) commenced operations in May with a recompletion of well SA-3 to reset the packer and perform a large-scale, high-concentration acid stimulation treatment. The program called for a high-pressure, high-velocity injection of 24% acid into the opened zones, but the contractor could not provide the high pressure required for the optimum acid stimulation due to a seal leak at the wellhead. We continue to work with our contractors to ensure optimal results in future wells.
The workover rig then moved to SA-11 followed by the SA-12 for the perforation and acid stimulation of these new wells in the KT2. Following SA-12, the wells next in line for acid stimulation are the SA-15, which was completed in February 2006 but has not yet been acid stimulated, and previously completed wells SA-14 and SA-17. The SA-2 is shut-in awaiting replacement of its submersible pump, while the SA-5 will undergo a test evaluation with a submersible pump. All the previously drilled wells are under a rigorous review to maximize production output.
Production Facilities and Pipeline Interconnection
Work has recommenced on the Central Production Facility (CPF). The local contractor is working with an internationally recognized engineering and project management group to expedite the completion. Additionally, a major contract has been awarded for the installation of fifteen sets of flow lines for the new well locations, which will expedite the placing on production of the wells completed later this year. A separate contract has been awarded for the fabrication of the metering and pumping facilities to make the interconnection to the KazTransOil pipeline, which is located approximately 1,500 meters from the CPF. It is intended that the CPF be operational in the fourth quarter 2006, allowing direct oil export by pipeline.
Gas Utilization Contract
The Company has entered into an agreement for the sale of produced gas from the South Alibek field. The contractor will construct and own the gas gathering and handling facilities and is required to have the facilities operational within 18 months from the receipt of certain design criteria. With the execution of this contract, the Company will meet the Kazakhstan government's requirement to submit a gas utilization plan for approval before July 1, 2006.
"We have made significant personnel and management changes at the field level and in Houston to focus our efforts on meeting previously stated production targets," stated Lorrie T. Olivier, President and Chief Executive Officer. "In addition to the appointment of a new Chief Operating Officer, we have hired experienced marketing, drilling and completions specialists and we have procured the equipment-three additional drilling rigs and a dedicated completion rig-to increase our drilling and completion rate to 4-5 wells per quarter. Finally, we have mobilized several construction teams to build gathering facilities over the field area and complete the production and pipeline delivery systems by the fourth quarter to accommodate our expected ramp up in production."
About Transmeridian Exploration Incorporated
Transmeridian Exploration Incorporated (TMEI) is an independent energy company established to acquire and develop oil reserves in the Caspian Sea region of the former Soviet Union. TMEI 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 the Caspian Sea region.
For more information please contact the following:
Transmeridian Exploration Incorporated Lorrie T. Olivier, CEO Earl W. McNiel, CFO 397 N. Sam Houston Pkwy E., Suite 300 Houston, Texas 77060 Phone: (281) 999-9091 Fax: (281) 999-9094 E-mail: tmei@tmei.com Website: www.tmei.com
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities 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 TMEI's Annual Report on Form 10-K for the year ended December 31, 2005, as amended, and other filings with the Securities and Exchange Commission. Although TMEI 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 TMEI or any other person that the objectives and plans of TMEI will be achieved.