Transeuro Energy: Ukraine Drilling ahead in C16

February 16, 2011
Transeuro Energy issues an update on the drilling of the Karl-101 well on the Karlavskoye gas condensate field in Ukraine. The well has drilled through the C14 and C15 intervals with continuous background gas and connection gas up to 30% by volume. Drilling has continued into the C16 where another gas kick has occurred and the mud weight has been increased to 1.63 s.g. (specific gravity). The depth as of 6am Monday was 3,496 metres. The forward plan is to drill to around 3,520 metres where logging operations will be performed.

President & CEO, David Worrall commented; 'The indications from the well, in terms of target intervals, gas shows and mud weights are in line with our expectations. With around 20m left to drill we are now preparing for logging operations to confirm the exact location of the deeper targets so we can confirm the Total Depth (TD) of the well and then run the 7 inch casing'.

Project Summary

The Karlavskoye field is proven by 9 wells that all produced gas and condensate. Third party estimates from Fekete Associates suggest nearly 0.5 Tcf (Trillion cubic feet) of gas in place with additional condensate.
The Karl-101 well was initially drilled in 2007/08 by Transeuro and data to 3500m was collected on the target reservoirs but a well control incident lead to the reservoir section being abandoned and the well was suspended in November 2008 at a depth of 2750m. Over 100 meters of net gas bearing reservoir was identified from logs and gas samples from 2800 - 3500m.
The Company is expecting to test 5 separate intervals with each targeting 5 mmcf/d (million cubic feet per day) per interval and a combined result over 20 mmcf/d and 1000 barrels per day of condensate, a total of 4500 boepd (barrels of oil equivalent per day).
The Karlavskoye Field

The Karlavskoye field is the principal Ukraine asset and is located in Western Crimea. The main reservoirs were discovered in 1966 and proven with 9 wells that all produced gas and condensate to surface from multiple horizons in the Upper Cretaceous reservoirs from 2700m - 3500m. Wells have produced at good rates from all individual horizons, with the best results already indicating a commercial field:

5.3 mmcf/d (900 boepd) from the C12 reservoir in well 8.
3.5 mmcf/d (600 boepd) from the C14 reservoir in well 12,
4.2 mmcf/d (720 boepd) from the C15 reservoir in well 14
The seismic and well data suggest the field is 10 km by 3km in size. Independent third party 'Gas In Place' has been estimated by Fekete Associates to be in the range of 160 - 854 Bcf (27-145 million boe) with a mean of 472 Bcf (80 million boe). The full reserves report is available at www.transeuroenegy.com.

Test Objectives

Given the evidence of commercial rates in the range of 3-5 mmcf/d from the old wells, Transeuro is targeting an overall cumulative test production rate of over 20 mmcf/d from the well. However, in the