Transeuro Energy Corp. - Armenia

Armenia

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The license for Block 2 in Armenia expired at the end of June 2009 and the company has requested a 2 year extension as permitted under the petroleum regulations, but has requested the PSC terms be improved to justify continued investment and exploration.

Transeuro Energy has a 100% interest in Block 2, the 7,250 square kilometres surrounding the capital city of Yerevan, across from Armenia's western border with Turkey. The company holds a Production Sharing Agreement with the government that expires in June 2009. The existing Karmir and Southwest Oktemberian (SWOKT) fields are delineated by 6 to 8 old Russian wells providing log and core data. Two wells in each field have produced gas to surface that, together with the well data, strongly suggests the presence of substantial gas reserves.

Oktemberian

The gas region of Oktemberian contains the 'Karmir' and 'Karmir south' gas fields, delineated with 8 wells drilled in the 1960's with 2 wells producing dry gas to surface, but at sub-economic rates. Improved drilling practices utilizing managed pressure drilling techniques are expected to unlock the potential of the field. The first well, Karmir 1 was completed in early 2008. The well found good gas shows, but following a well control incident in deeper formations the shallow gas bearing reservoir in the Lower Sand Clay (LSC) was not tested. The well will be logged again towards the end of 2008 to assess if stimulation and testing operations are warranted.

A second well in the Oktemberian region will appraise the adjacent Karmir south prospect. Following successful indications of gas from the logs it is envisaged that hydraulic fracturing equipment will be mobilised to achieve commercial gas rates from both wells.

Shorakhpur

The second area of interest is 'Shorakhpur' some 40km to the east of Yerevan, where 2 old wells (Shorakhpur 1P and 31P) have identified oil potential in 2 horizons (middle Eocene and Paleocene) from logs and tests. The third well in the initial campaign will drill through both targets to a nominal depth of 3500m.