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TransMeridian Exploration, Inc. IPAA OGIS Small Cap Conference February 8, 2005.

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Presentation on theme: "TransMeridian Exploration, Inc. IPAA OGIS Small Cap Conference February 8, 2005."— Presentation transcript:

1 TransMeridian Exploration, Inc. IPAA OGIS Small Cap Conference February 8, 2005

2 Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including changes from anticipated levels of sales, future national or regional economic and competitive conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing reserves and other factors disclosed in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2003 and the Company’s subsequent Quarterly Reports on Form 10-Q, especially in the risk factors sections of these SEC reports. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company does not undertake any obligation to update the forward-looking information contained in this presentation.

3 Corporate Profile  OTC:BB TMXN  52 week high/low: $2.20 / $0.79  Shares outstanding: 80 million shares  Market cap/Enterprise value: $140 mil./$178 mil.  FMV of reserves: $295 million  Average trading volume: 197,200 per day

4 Business Strategy  Acquire and develop overlooked/underdeveloped reserves  Current focus -- Caspian Sea Region of FSU  Target medium sized fields with –  Low initial entry costs  Identified reserves  Significant upside reserve potential  Quick payback period (two to three years)  Likelihood of lower than average international findings cost

5 Why the Caspian Region?  4% - 5% of the world’s total reserves - Largely undeveloped or underdeveloped  Very favorable economics relative to global peers - Full cycle costs average less than $5.00/bbl  Favorable tax and regulatory environment  Transportation bottlenecks set to be removed - Existing and proposed pipelines continue to expand

6 Expanding Regional Pipeline System

7 First Asset: South Alibek Field  Kazakhstan government actively encouraging foreign investment – Goal of increasing production from 1 to 3 mm bopd over the next decade  Good infrastructure - all-weather roads - electric power - rail and pipeline facilities  Service company support - Improving capability of local service companies - Improving presences of Western service companies – access to Western technology and methods  Existing and proposed pipelines continue to be expanded Atyrau-Samara Pipeline CPC Pipeline Pipeline Aktobe Emba South Alibek Field Tengiz 9 BBO Kashagan 7 BBO++ Atyrau Rail line

8 South Alibek Field - Detail Map  Adjacent to the Alibekmola Field - under active development - currently producing 23,600 bopd  South Alibek is on the down-thrown side of a large North / South trending fault which separates the two fields.  License acquired by TMEI covers 14,000 acres.  Drillied five wells to date - all commercial - various stages of completion  Per Ryder Scott evaluation (Feb. ’04) - 65 million bbls “proved” - 193 million bbls “proved” and “probable”

9 Proved Area Reinterpretation of seismic improved mapping of the SA Field and increased areal extent of field in 2004, Proved – 1,600 acres + Probable – 6,500 acres + Possible – 13,000 acres Completed wells Currently completing Proved Area 2005 planned wells KT2 Top Depth Structure Map Alibekmola Field South Alibek Field Currently completing Probable Area Approx. Possible Area

10 Multiple Reservoirs – Good Seals South Alibek and Alibekmola Fields

11 Combination Porosity and Fractures  Post depositional faulting - deeper oil water contact in South Alibek Field  Limestone and dolomitic reservoirs with combination porosity and fractures  Seals provided by inter- bedded shales  Vertical and lateral migration pathways  Combined up to 500 net feet of pay SA -1 Jurassic Triassic U. Perm L. Perm shale Visean Clastics East Prospective basal conglomerates MKT Shale KT-II KT-I Kungarian Salt Zone 4 4 o dip 8-10 o dip Zone 2 Prospective Devonian Carb? Main bounding fault West South Alibek and Alibekmola Fields

12 Accomplishments  Accomplishments  Exploration contract covering 14,000 acres – recently extended through April 2007  Drilled five wells – currently in various stages of completion. Sixth well drilling -- near TD.  Completed permanent production facilities – capacity to process up to 30,000 bopd  Executed transportation agreement with KazTrans Oil – allow access to pipelines/export market

13 Near Term Objectives  Near Term Objectives  Complete/stimulate new wells - Increase production  Continue to improve pricing  Install de-mercaptane unit  Complete connection to pipeline (1.5 km)  Finalize production contract  Re-finance field development loans – lower cost

14 Other Opportunities in the Region

15 Future Projects -- Azerbaijan

16 Future Projects – Saizan Area

17 Financial Overview

18 Summary Balance Sheet (In thousands) December 31, September 30, 2004 2003 Historical Pro Forma (a) Current assets$ 2,068$ 2,087$ 26,087 Property and equipment, net 54,560 71,830 71,830 Other assets 471 279 279 $ 57,099$ 74,196$ 98,196 A/P and accrued liabilities$ 3,778$ 12,614$ 2,614 Total debt and interest 52,815 43,914 43,914 Minority interest -- 8,256 18,756 Stockholders’ equity 506 9,412 32,912 $ 57,099$ 74,196$ 98,196 (a) Reflects net proceeds from issuance of $25 million of Cumulative Convertible Preferred Stock and $10.5 million capital contribution to Caspi Neft by Bramex

19 Results of Operations (In thousands) Nine Months Ended September 30, 2004 2003 Revenue$ 3,049$ 159 Costs and expenses 5,569 3,530 Operating loss (2,520) (3,371) Other income (expense) (849) (599) Minority interest 492 -- Preferred dividends -- (20) Net loss$ (2,877)$ (3,990) Net loss per share$ (0.04)$ (0.06) Wt. average shares outstanding 78,227 62,958

20 Private Placement Closing Date: November 12, 2004 Securities:Series A Cumulative Convertible Preferred Stock Issuance Amount: $25,000,000 USD Yield:4.50% Conversion Price: $1.40 per share Warrants: 25% warrant coverage – five year term; strike price equal to $1.55 per share Registration: Form S-3 covering underlying shares filed in December 2004 Use of Proceeds:Working capital Fund development drilling program Complete treatment facilities and pipeline connection Seed capital – new projects

21 Target Well Economics Cost per well:$5.5 million Target production rate:1,000 Bopd Current price:$20.00 / bbl Expected future price:N. Sea Brent, less approx. $7.00 (trans. cost) Royalty rate:6.0% Operating costs:< $2.00 / bbl Income tax rate:35.0% (all inclusive) Cash payback :8 – 12 months Working interest50% (subject to 10% net profits interest after payout)

22 Investment Considerations  People, property and prospects  Transitioning from development stage to operating company  Value has not been reflected in stock price  Multiple new projects in region that fit business plan


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