Transeuro Energy Corp. - Ukraine

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Transeuro Flares First Gas From Karlavskoye 101
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Crimean Peninsula
Transeuro is pursuing three development opportunities in the Crimean Peninsula, Ukraine. In Western Crimea the company has a 72% interest in two gas consensate fields, the large Karlavskoye and the shallow Krasnopolyanske. In Eastern Crimea, Transeuro is developing the Povorotnoye gas field.

The Karlavskoye license expires in July 2009 and Transeuro has requested the government to renew the license for a further 5 year period.

Shooting 2D seismic over the Karlavskoye field

The Oil and gas potential in the Crimea is substantial. The old Soviet industry discovered and appraised a large number of fields, although the productivity and flowrates were generally poor and below the established minimum production cutoff. Many fields were therefore marked as uneconomic and were never developed. Production methods have now been developed to produce the low porosity, fractured carbonate and clastic reservoirs generally found in the Crimea, and substantial opportunities exist to unlock production from many of the well-defined fields.

Karlavskoye Gas Condensate Field

Drilling operations on the 'Karl 101' well

The Company commenced drilling operations on the 'Karlavskoye 101' in January 2007 and operations proceeded through the year until they were suspended in early 2008 due to lack of suitable equipment. After upgrading the rig drilling resumed through the reseroivr section, but a well control incident resulted in another suspension in June 2008. Operations were due to resume in November 2008, but the withdrawal of the operating partner, RAG, reduced the funding and operations have not yet resumed. This initial well is targeting the gas condensate bearing reservoirs C12 - C16 in the upper cretaceous at depths ranging from 3000-4000m. Deeper horizons in the Lower Cretaceous at a depth of over 5000m are a secondary objective that will be appraised either by this same well or a subsequent well.

Karl 101 drilling unit is an old style Uralmesh 3D rig. Modern rigs will be imported for the development drilling programme.

Casing has been set at 2923m and a sidetrack will be performed out of the casing to redrill the reservoir section to approximately 3500m. New safety and technical equipment has been added to the rig to enhance the drilling capabilities and to safely drill into the top potential reservoir. A 2 D seismic survey has been completed to better understand the structure and to tie a number of wells into the Karl 101 location. A 3D survey is planned to assist in the full field development planning.

Krasnapolianskoye Paleocene Gas Reservoir
Two shallow wells in the Krasnapolianskoye Paleocene gas reservoir (at approximately 1000m) have already been worked over and are ready for production.

Povorotnoye Gas Field
The Povorotnoye field is 8.5 by 2.5 kilometers in size with gas bearing horizons located at a depth of approximately 3,800 metres. The field is delineated by 2D seismic and by seven appraisal wells drilled in the 1980's that confirmed gas in the Maykop M3 and M4 reservoir intervals. Two wells produced marginally economic gas rates to surface, however all the wells were abandoned and the field was not put in to production. Plans are being prepared to commence drilling the first production well on the crest of the structure and to shoot 3D seismic over the area. A second Russian Uralmash rig is being prepared on site. Following the completion of the Karl 101 well, the modern safety and technical equipment will be transferred to this new rig.

Gas Treatment Plant
Transeuro has purchased land near the Krasnapolianskoye field for a Gas Treatment Plant and connecting pipeline to tie in the fields to the existing gas mainline. Land use approvals for the plant and pipeline have been received and fully ratified; the company is now awaiting results of the Karl 101 well before finalizing the design and commencing production.