S-4

As filed with the Securities and Exchange Commission on March 17, 2006

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

TRANSMERIDIAN EXPLORATION INC.

(Exact name of registrant as specified in its charter)

British Virgin Islands	1311	None
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

397 N. Sam Houston Pkwy E., Suite 300 Houston, Texas 77060 (281) 999-9091	Nicolas J. Evanoff Assistant Secretary 397 N. Sam Houston Pkwy E., Suite 300 Houston, Texas 77060 (281) 999-9091
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)	(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copy to:

James L. Rice III

Akin Gump Strauss Hauer & Feld LLP

1111 Louisiana, 44th Floor

Houston, Texas 77002-5200

(713) 220-5800

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered(1)		Proposed Maximum Offering Price Per Unit(1)		Proposed Maximum Aggregate Offering Price(1)		Amount of Registration Fee
Senior Secured Notes due 2010	$	250,000,000	100	%	$	250,000,000	$	26,750
Guarantees of Senior Secured Notes due 2010(2)		—	—			—		None	(3)

(1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(f) under the Securities Act, this amount represents the aggregate outstanding principal amount of Senior Secured Notes due 2010.

(2) Transmeridian Exploration Incorporated, the parent of Transmeridian Exploration Inc., and the subsidiaries of Transmeridian Exploration Inc. and Transmeridian Exploration Incorporated that are listed on the Table of Additional Registrant Guarantors on the following page have guaranteed the notes being registered hereby.

(3) No separate consideration will be received for the Guarantees and, therefore, no additional registration fee is required pursuant to Rule 457(n) under the Securities Act.

Each Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until such Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

TABLE OF ADDITIONAL REGISTRANT GUARANTORS

Each of the following entities, and each other subsidiary of Transmeridian Exploration Incorporated that becomes a guarantor of the notes being registered hereby, is hereby deemed to be a registrant.

Exact Name of Additional Registrant Guarantor(1)	State or other Jurisdiction of Incorporation or Organization	I.R.S. Employer Identification Number
Transmeridian Exploration Incorporated	Delaware	76-0644935
TMEI Operating, Inc.	Texas	41-2080184
Transmeridian (Kazakhstan) Incorporated	British Virgin Islands	None
Bramex Management, Inc.	British Virgin Islands	None
JSC Caspi Neft TME	Republic of Kazakhstan	None

(1) The address for each additional registrant guarantor is 397 N. Sam Houston Pkwy E., Suite 300, Houston, Texas 77060, and the telephone number for each additional registrant guarantor is (281) 999-9091. The primary Standard Industrial Classification code number for each additional registrant guarantor is 1311.

The information in this prospectus is not complete and may be changed. We may not effect the exchange offer until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell the exchange notes, and it is not soliciting an offer to buy the exchange notes, in any state or jurisdiction where the offer or sale is not permitted.

Subject To Completion, Dated March 17, 2006

PROSPECTUS

TRANSMERIDIAN EXPLORATION INC.

Offer to Exchange

up to $250,000,000 Registered Senior Secured Notes due 2010

for

Any and All Outstanding Unregistered Senior Secured Notes due 2010

We are offering to exchange, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal, all of our senior secured notes due 2010 that we have registered under the Securities Act of 1933 (the “Exchange Notes”) for all of our outstanding unregistered senior secured notes due 2010 (the “Outstanding Notes”). In this prospectus, we refer to the Exchange Notes and the Outstanding Notes collectively as the “notes.”

The Exchange Offer

• We hereby offer to exchange all Outstanding Notes that are validly tendered and not withdrawn for an equal principal amount of Exchange Notes which we have registered under the Securities Act.

• The exchange offer will expire at 5:00 p.m., New York City time, on                     , 2006, unless extended by us.

• You may withdraw tenders of your Outstanding Notes at any time before the exchange offer expires.

• The Exchange Notes are substantially identical to the Outstanding Notes, except that the transfer restrictions and registration rights relating to the Outstanding Notes will not apply to the Exchange Notes.

• We will not receive any proceeds from the exchange offer.

• No public market currently exists for the Exchange Notes. We do not intend to apply for listing of the Exchange Notes on any securities exchange or to arrange for them to be quoted on any quotation system.

• Interest on the Exchange Notes will be paid at the rate of 12% per annum, and will be payable quarterly in cash in arrears on each March 15, June 15, September 15 and December 15, beginning on                     , 2006.

The Exchange Notes and the Outstanding Notes involve risks that we describe in the “ Risk Factors” section beginning on page 9.

Each broker-dealer that receives Exchange Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The accompanying letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the consummation of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See the section of this prospectus entitled “Plan of Distribution.”

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Exchange Notes or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read this entire prospectus, the accompanying letter of transmittal and related documents, and any amendments or supplements to this prospectus, carefully before deciding whether to participate in the exchange offer.

The date of this prospectus is                     , 2006.

TABLE OF CONTENTS

About This Prospectus	i
Where You Can Find More Information	i
Cautionary Note Regarding Forward-Looking Statements	ii
The Company	1
Summary of the Exchange Offer	2
Summary of the Exchange Notes	6
Ratio of Earnings to Fixed Charges	8
Risk Factors	9
The Exchange Offer	19
Use Of Proceeds	27
Selected Financial Data	28
Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Business	37
Properties	39
Description of Notes	45
Plan Of Distribution	79
Legal Matters	80
Independent Auditors	80
Reserve Engineers	80
Index to Financial Statements	F-1

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-4 under the Securities Act of 1933 that we filed with the Securities and Exchange Commission (the “SEC”). In making your decision whether to participate in the exchange offer, you should rely only on the information contained in this prospectus and in the accompanying letter of transmittal. We have not authorized any person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should not assume that the information appearing in this prospectus is accurate as of any date other than the date on the front cover of this prospectus.

Moreover, this prospectus does not contain all of the information set forth in the registration statement and the exhibits thereto. You may refer to the registration statement and the exhibits thereto for more information. Statements made in this prospectus regarding the contents of any contract or document filed as an exhibit to the registration statement are not necessarily complete and, in each instance, reference is hereby made to the copy of such contract or document so filed. Each such statement is qualified in its entirety by such reference.

In this prospectus, unless the context otherwise requires, (i) references to “the Company,” “we,” “us” and “our” mean Transmeridian Exploration Incorporated, a Delaware corporation, and its subsidiaries, including Transmeridian Exploration Inc., the issuer of the notes, taken as a whole, (ii) references to the “parent” or “Parent” mean Transmeridian Exploration Incorporated, the parent of the issuer of the notes, and (iii) references to the “issuer” or “Issuer” mean Transmeridian Exploration Inc., the issuer of the notes.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports and other information with the SEC. Such reports and filings contain important business and financial information about us that is not included in or delivered with this prospectus.

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The SEC maintains a website that contains annual, quarterly and current reports, proxy and information statements and other information regarding registrants, like us, that file reports with the SEC electronically. The SEC’s website address is http://www.sec.gov. You may also read and copy any document we file with the SEC at the SEC’s public reference room, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference room. The information we file with the SEC and other information about us is also available on our website at http://www.tmei.com. However, the information on our website is not a part of this prospectus.

You may review these filings, at no cost, over the Internet at our website at http://www.tmei.com, or request a free copy of any of these filings by writing or calling us at the following address:

Transmeridian Exploration Incorporated

397 N. Sam Houston Pkwy E., Suite 300

Houston, Texas 77060

(281) 999-9091

Attention: Investor Relations

In order to ensure timely delivery of requested documents, any request should be made at least five business days prior to the date on which an investment decision is to be made with respect to the exchange offer and, in any event, no later than                     , 2006, which is five business days prior to the expiration time of the exchange offer.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact contained in this prospectus and the periodic reports filed by us under the Securities Exchange Act of 1934 and other written or oral statements made by us or on our behalf, are forward-looking statements. When used herein, the words “anticipates,” “expects,” “believes,” “goals,” “intends,” “plans” or “projects” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on a number of assumptions about future events and are subject to significant risks, uncertainties and other factors that may cause our actual results to differ materially from the expectations, beliefs and estimates expressed or implied in such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, no assurance can be given that these assumptions will prove correct or even approximately correct. Factors that could cause our results to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to, our assumptions about energy markets; production levels; reserve levels; operating results; competitive conditions; technology; the availability of capital resources; capital expenditure obligations; the supply and demand for oil, natural gas and other products and services; the price of oil, natural gas and other products and services; currency exchange rates; weather; inflation; the availability of goods and services; drilling risks; future processing volumes and pipeline throughput; general economic conditions, either internationally or nationally or in the jurisdictions in which we are doing business; and legislative or regulatory changes, including changes in environmental regulation, environmental risks and liability under federal, state and foreign environmental laws and regulations.

For a more detailed description of these factors, see the “Risk Factors” section set forth herein, and any additional risk factors that may be included in any prospectus supplement. We will not update these forward-looking statements unless the securities laws require us to do so.

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THE COMPANY

We are engaged in the business of developing and producing oil and natural gas. Our activities are primarily focused on the Caspian Sea region of the former Soviet Union, and our primary oil and gas property is the South Alibek Field in the Republic of Kazakhstan covered by License 1557 and the related exploration contract with the government of Kazakhstan. We conduct our operations in Kazakhstan through our wholly-owned subsidiary, JSC Caspi Neft TME, an open joint stock company organized under the laws of Kazakhstan.

Our principal executive offices are located at 397 N. Sam Houston Pkwy E., Suite 300, Houston, Texas 77060, and our telephone number at that address is (281) 999-9091.

The diagram below sets forth the issuer and the guarantors of the notes as of March 1, 2006:

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SUMMARY OF THE EXCHANGE OFFER

Pursuant to the exchange offer, you are entitled to exchange your Outstanding Notes for Exchange Notes. We summarize the terms of the exchange offer below. You should read the discussion in the section of this prospectus entitled “The Exchange Offer” beginning on page 19 for further information regarding the exchange offer and resales of the Exchange Notes.

Initial Offering of the Outstanding Notes We issued the Outstanding Notes on December 12, 2005 in connection with a private placement under Regulation D under the Securities Act to various accredited investors of “units,” each consisting of $1,000 principal amount of the Outstanding Notes and 69.054 warrants to purchase an equal number of shares of the common stock of Transmeridian Exploration Incorporated, the parent of the issuer of the Outstanding Notes. The Outstanding Notes and the warrants were immediately separable upon issuance.

Registration Rights Agreement; Purpose of the Exchange Offer In connection with the issuance of the Outstanding Notes, we entered into a registration rights agreement. In the registration rights agreement, we agreed, among other things, to use our best efforts to complete a registered exchange offer for the Outstanding Notes or cause to become effective a shelf registration statement covering resales of the Outstanding Notes.

The exchange offer is intended to satisfy your rights under the registration rights agreement. After the exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your Outstanding Notes, except under the limited circumstances described in the registration rights agreement.

The Exchange Offer We are offering to exchange the Exchange Notes which have been registered under the Securities Act for your Outstanding Notes. In order to be exchanged, Outstanding Notes must be properly tendered and accepted. All Outstanding Notes that are validly tendered and not validly withdrawn will be exchanged. We will issue the Exchange Notes promptly following our acceptance for exchange of tendered Outstanding Notes.

Resales of the Exchange Notes We believe that the Exchange Notes issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act provided that:

•    the Exchange Notes are being acquired in the ordinary course of your business;

• you have no arrangements or understanding with any person to participate in a distribution of Outstanding Notes or any Exchange Notes issued to you in the exchange offer within the meaning of the Securities Act;

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• you are not participating in, and do not intend to participate in, a distribution of the Exchange Notes within the meaning of the Securities Act; and

• you are not an affiliate of ours within the meaning of the Securities Act.

If any of these conditions are not satisfied and you transfer any Exchange Notes issued to you in the exchange offer without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from the registration and prospectus delivery requirements, you may incur liability under the Securities Act. We will not assume, nor will we indemnify you against, any such liability.

Each broker-dealer that is issued Exchange Notes in the exchange offer for its own account in exchange for Outstanding Notes that were acquired by that broker-dealer as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the Exchange Notes. A broker-dealer may use this prospectus for an offer to resell, resale or other transfer of the Exchange Notes issued to it in the exchange offer.

Expiration Time The exchange offer will expire at 5:00 p.m., New York City time, on             , 2006, unless we extend the exchange offer in our sole discretion, in which case the term “expiration time” means the latest date and time to which the exchange offer is extended.

Conditions to the Exchange Offer The exchange offer is subject to customary conditions, including that it does not violate applicable law or any applicable interpretation of the staff of the SEC.

Procedures for Tendering Outstanding Notes If you wish to tender your Outstanding Notes for exchange in the exchange offer, you must transmit to the exchange agent prior to the expiration time either:

• an original or a facsimile of a properly completed and duly executed letter of transmittal, which accompanies this prospectus, together with your Outstanding Notes and all other documentation required by the letter of transmittal, to the address provided on the cover page of the letter of transmittal; or

• if the Outstanding Notes you own are held of record by The Depository Trust Company (“DTC”) in book-entry form and you are making delivery by book-entry transfer, a computer-generated “agent’s message” transmitted by means of the Automated Tender Offer Program system (“ATOP”) of DTC in which you acknowledge and agree to be bound by the terms of the letter of transmittal and which, when received by the exchange agent, forms a part of a confirmation of book-entry transfer. As part of a

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book-entry transfer, DTC will facilitate the exchange of your Outstanding Notes and update your account to reflect the issuance of the Exchange Notes to you. ATOP allows you to electronically transmit your acceptance of the exchange offer to DTC instead of physically completing and delivering a letter of transmittal to the exchange agent.

In addition, you must deliver to the exchange agent prior to the expiration time:

• if you are effecting delivery by book-entry transfer, a timely confirmation of book-entry transfer of your Outstanding Notes into the account of the exchange agent at DTC; or

• if necessary, the documents required for compliance with the guaranteed delivery procedures.

Special Procedures for Beneficial Owners If you are the beneficial owner of book-entry interests in Outstanding Notes and your name does not appear on a security position listing of DTC as the holder of the book-entry interests, or if you are a beneficial owner of Outstanding Notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender the book-entry interest or Outstanding Notes in the exchange offer, you should contact the person in whose name your book-entry interests or Outstanding Notes are registered promptly and instruct that person to tender on your behalf.

Guaranteed Delivery Procedures Holders of Outstanding Notes who wish to tender their Outstanding Notes, but (1) the certificates for their Outstanding Notes are not immediately available, (2) who cannot deliver the certificates for their Outstanding Notes, the letter of transmittal and all other documents required by the letter of transmittal to the exchange agent prior to the expiration time or (3) who are unable to complete the procedures for delivery of their Outstanding Notes by book-entry transfer prior to the expiration time, must tender their Outstanding Notes according to the guaranteed delivery procedures described in the section of this prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures.”

Withdrawal of Tenders You may withdraw the tender of your Outstanding Notes at any time prior to 5:00 p.m., New York City time, on , 2006.

Acceptance of Outstanding Notes and Delivery of Exchange Notes We will accept for exchange any and all Outstanding Notes that are properly tendered in the exchange offer, and not withdrawn, prior to the expiration time. The Exchange Notes issued pursuant to the exchange offer will be issued promptly following our acceptance for exchange of tendered Outstanding Notes.

Exchange Agent The Bank of New York is serving as exchange agent in connection with the exchange offer. See the section of this prospectus entitled “The Exchange Offer—Exchange Agent.”

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Use of Proceeds; Fees and Expenses We will not receive any proceeds from the issuance of the Exchange Notes; we are effecting the exchange offer to satisfy our obligations under the registration rights agreement. We will pay all expenses incident to the exchange offer, other than commissions or concessions of brokers or dealers and transfer taxes under certain circumstances.

Regulatory Requirements We will conduct the exchange offer in accordance with the federal securities laws and the applicable provisions of any state securities laws.

Accounting Treatment We will not recognize any gain or loss for accounting purposes as a result of the exchange offer. The expenses of the exchange offer will be deferred and charged to expense over the term of the Exchange Notes.

Tax Considerations We believe that the exchange of Exchange Notes for Outstanding Notes will not be a taxable event for U.S. federal income tax purposes.

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SUMMARY OF THE EXCHANGE NOTES

The following is a summary of the terms of the Exchange Notes. For a more detailed description of the Exchange Notes, see the section of this prospectus entitled “Description of Notes.”

The form and terms of the Exchange Notes will be substantially identical to the form and terms of the Outstanding Notes, except that the transfer restrictions and registration rights relating to the Outstanding Notes will not apply to the Exchange Notes and the Exchange Notes will not bear legends restricting the transfer thereof. The Exchange Notes will represent the same debt as the Outstanding Notes, and the same indenture (including the first supplemental indenture thereto) that governs the Outstanding Notes will govern the Exchange Notes. Unless otherwise required by the context, we use the term “notes” in this prospectus to refer collectively to the Outstanding Notes and the Exchange Notes.

Issuer Transmeridian Exploration Inc., a British Virgin Islands company (the “issuer”) and a wholly-owned subsidiary of Transmeridian Exploration Incorporated (the “parent”).

Securities $250,000,000 aggregate principal amount of Senior Secured Notes due 2010.

Maturity December 15, 2010.

Interest; Interest Payment Dates We will pay interest on the notes at the rate of 12% per annum. The Exchange Notes will bear interest from the last interest payment date on which interest was paid on the Outstanding Notes tendered in exchange therefor. Interest on the notes will be payable quarterly in cash in arrears on each March 15, June 15, September 15 and December 15, commencing on                             , 2006.

Guarantees; Pledges The notes are guaranteed by the parent and certain of the wholly-owned subsidiaries of the parent and the issuer, including our principal operating subsidiary, JSC Caspi Neft TME. The parent’s guarantee of the notes is, in turn, secured by pledges of the outstanding capital stock of the issuer and the parent’s other wholly-owned direct subsidiary. The notes are also secured by pledges of the outstanding capital stock of two of the issuer’s wholly-owned direct subsidiaries and by a similar encumbrance on the outstanding capital stock of Caspi Neft.

Ranking The notes will rank equal in right of payment to all future senior debt of the issuer and are effectively senior to all unsecured indebtedness of the issuer to the extent of the value of the collateral securing the notes, and are senior in right of payment to any existing or future subordinated indebtedness of the issuer. The guarantees of the notes by the guarantors are effectively senior to all unsecured indebtedness of each guarantor to the extent of the value of the collateral (if any) securing the guarantee, are equal in right of payment to all existing and future senior debt of each guarantor and are senior in right of payment to any existing or future subordinated indebtedness of each guarantor.

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Optional Redemption Prior to December 15, 2008, we may redeem, on one or more occasions, with the net cash proceeds of equity offerings by the parent and/or the proceeds of asset sales permitted under the indenture, up to 35% of the notes originally issued at a redemption price of (i) 106% of the principal amount of the notes redeemed if the redemption occurs prior to June 15, 2006, or (ii) 112% of the principal amount of the notes redeemed if the redemption occurs on or after June 15, 2006 but prior to December 15, 2008, plus in each case accrued and unpaid interest to the redemption date.

On or after December 15, 2008, we may redeem all or a part of the notes at a redemption price of (i) 106% of the principal amount of the notes redeemed if the redemption occurs prior to December 15, 2009, (ii) 103% of the principal amount of the notes redeemed if the redemption occurs on or after December 15, 2009 but prior to June 15, 2010 or (iii) 100% of the principal amount of the notes redeemed if the redemption occurs on or after June 15, 2010, plus in each case accrued and unpaid interest to the redemption date.

Mandatory Redemption Within 30 days after our receipt of proceeds from a permitted asset sale, we may use such proceeds to effect a redemption of the notes as described above; any such proceeds that are not so applied will be deemed “excess proceeds” under the indenture. If at any time the aggregate amount of “excess proceeds” exceeds $2 million, we will be required to make an offer to all holders of the notes to purchase, on a pro rata basis, the maximum principal amount of the notes that may be purchased with the excess proceeds at an offer price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest to the date of purchase.

Change of Control/Material Adverse Change Upon a change of control/material adverse change event (as defined in the indenture), each holder of the notes may require us, to the extent we have not exercised our optional redemption rights described above, to repurchase some or all of the notes held by such holder at a repurchase price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest to the date of purchase.

Certain Covenants The indenture governing the notes contains a number of covenants that, among other things, limit our ability to (i) repurchase and payment of dividends on our capital stock, (ii) incur additional indebtedness, (iii) make investments, (iv) engage in transactions with affiliates, (v) sell assets and (vi) create liens on our assets.

Governing Law New York.

Trustee The Bank of New York.

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RATIO OF EARNINGS TO FIXED CHARGES

Our ratio of earnings to fixed charges for each of the years ended December 31, 2005, 2004, 2003, 2002 and 2001 is set forth below. For purposes of computing these ratios, earnings represent income from continuing operations before income taxes plus fixed charges less capitalized interest. Fixed charges represent interest expense, capitalized interest, amortization of debt issuance costs, that portion of rental expense we believe to be representative of interest and preferred stock dividends. We computed those pre-tax earnings using actual tax rates for each year.

	Years Ended December 31,
	2005	2004	2003	2002	2001
Ratio of earnings to fixed charges(a)	—	—	—	—	—

(a) For the years ended December 31, 2005, 2004, 2003, 2002 and 2001, earnings were inadequate to cover fixed charges by $21.8 million, $8.8 million, $9.7 million, $4.5 million and $2.2 million, respectively.

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RISK FACTORS

Before you decide to participate in the exchange offer, you should carefully consider the following risks. In addition, you should also read the other information contained in this prospectus and the disclosures contained in our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2005. The risks described below are not the only risks we face. Additional risks that we do not yet know of or that we currently believe are immaterial also may materially and adversely affect our business, financial condition and results of operations. If any of the events or circumstances described below actually occurs, our business, financial condition or results of operations could be materially and adversely affected. In that case, you may lose all or part of your investment in the notes.

Risks Related to the Exchange Offer

Because there is no public market for the Exchange Notes, you may not be able to sell your Exchange Notes.

The Exchange Notes will be registered under the Securities Act, but will constitute a new issue of securities with no established trading market, and there can be no assurance as to:

• the development of a trading market for the Exchange Notes;

• the liquidity of any trading market for the Exchange Notes that may develop;

• the ability of holders to sell their Exchange Notes; or

• the price at which holders would be able to sell their Exchange Notes.

Following the exchange offer, we will have no obligation to create a trading market for the Exchange Notes. In addition, we do not intend to list the Exchange Notes on any securities exchange or to arrange for them to be quoted on any quotation system.

If a trading market were to develop for the Exchange Notes, the Exchange Notes might trade at higher or lower prices than their principal amount depending on a number of factors, including prevailing interest rates, the market for similar securities, our financial performance and prospects, the financial performance and prospects of other companies in our industry, the interest in maintaining a market in the Exchange Notes on the part of securities firms and other factors.

In addition, any holder of Outstanding Notes who tenders in the exchange offer for the purpose of participating in a distribution of the Exchange Notes may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Notes unless an exemption from such requirements is available. For a description of these requirements, see the section of this prospectus entitled the “The Exchange Offer-Resale of the Exchange Notes.”

Your Outstanding Notes will not be accepted for exchange if you fail to follow the exchange offer procedures. If your Outstanding Notes are not accepted for exchange, your notes will continue to be subject to the existing transfer restrictions and you may not be able to sell your notes.

We will not accept your Outstanding Notes for exchange if you do not follow the exchange offer procedures. We will issue Exchange Notes as part of the exchange offer only after timely receipt of your Outstanding Notes, a properly completed and duly executed letter of transmittal or agent’s message and all other required documents, or if you comply with the guaranteed delivery procedures for tendering your Outstanding Notes. Therefore, if you want to tender your Outstanding Notes in the exchange offer, please allow sufficient time to ensure timely delivery.

If the exchange agent does not receive your Outstanding Notes, letter of transmittal or agent’s message and all other required documents prior to the expiration time of the exchange offer, or if you do not otherwise comply

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with the guaranteed delivery procedures for tendering your Outstanding Notes, we will not accept your Outstanding Notes for exchange. In addition, if there are defects or irregularities with respect to your tender of Outstanding Notes, we will not accept your Outstanding Notes for exchange unless we decide in our sole discretion to waive such defects or irregularities. We are under no duty to give notification of defects or irregularities with respect to tenders of Outstanding Notes for exchange.

If your Outstanding Notes are not tendered or are not accepted for exchange, they will continue to be subject to the existing transfer restrictions applicable to the Outstanding Notes and may be transferred only if registered under the Securities Act or if an exemption from the registration requirements of the Securities Act is available. As a result, you may not be able to sell your unaccepted Outstanding Notes. Please see the risk factor immediately below for a discussion of certain risks with respect to the trading market for, and market value of, untendered or unaccepted Outstanding Notes following the exchange offer.

If you do not exchange your Outstanding Notes, your Outstanding Notes will continue to be subject to the existing transfer restrictions and you may not be able to sell your notes. In addition, the market value of your Outstanding Notes may be lower than their market value prior to the exchange offer and lower than the market value of the Exchange Notes issued pursuant to the exchange offer.

We have not registered the Outstanding Notes under the Securities Act, nor do we intend to do so following the exchange offer. Outstanding Notes that are not tendered, or are tendered but not accepted, will therefore continue to be subject to the existing transfer restrictions and may be transferred only if registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. If you do not exchange your Outstanding Notes, you will lose your right to have your notes registered under the Securities Act, as we will have no obligation after the completion of the exchange offer to provide for the registration under the Securities Act of unexchanged Outstanding Notes except under the limited circumstances described in the registration rights agreement.

As a result, if you hold Outstanding Notes after the exchange offer, you may not be able to sell your Outstanding Notes. In addition, to the extent that Outstanding Notes are tendered and accepted for exchange pursuant to the exchange offer, the trading market for the Outstanding Notes that remain outstanding may be significantly more limited than any trading market that existed prior to the Exchange Offer, which may adversely affect the liquidity of the Outstanding Notes not tendered for exchange. Following the exchange offer, there can be no assurance as to:

• the existence or development of a trading market for untendered or unaccepted Outstanding Notes;

• the liquidity of any trading market that may exist or be developed for untendered or unaccepted Outstanding Notes;

• the ability of holders to sell their untendered or unaccepted Outstanding Notes; or

• the price at which holders would be able to sell their untendered or unaccepted Outstanding Notes.

Following the exchange offer, we will have no obligation to create a trading market for untendered or unaccepted Outstanding Notes. If a trading market were to develop for untendered or unaccepted Outstanding Notes, such Outstanding Notes might trade at higher or lower prices than their principal amount depending on a number of factors, including prevailing interest rates, the market for similar securities, the number of holders of Outstanding Notes remaining after completion of the exchange offer, our financial performance and prospects, the financial performance and prospects of other companies in our industry, the interest in maintaining a market in such Outstanding Notes on the part of securities firms and other factors.

Moreover, an issue of securities with a smaller outstanding market value available for trading, or “float,” may command a lower price than would a comparable issue of securities with a greater float. Therefore, the market value for Outstanding Notes that are not exchanged in the exchange offer may be adversely affected to

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the extent that the amount of Outstanding Notes exchanged pursuant to the exchange offer reduces the float. Such reduced float also may tend to make the trading price, if any, of the Outstanding Notes that are not exchanged more volatile.

Risks Related to the Notes

We may be unable to satisfy our note purchase obligations upon a change of control.

Upon the occurrence of a change of control, each holder of the notes may require us to purchase all or a portion of such holder’s notes at a purchase price equal to 101% of the aggregate principal amount of such holder’s notes, together with accrued and unpaid interest, if any, to the date of purchase. In such event, we may not have the financial resources sufficient to purchase all of the notes and our other indebtedness that might become payable upon the occurrence of a change of control. See the section of this prospectus entitled “Description of Notes—Repurchase at the Option of Holders—Change of Control/Material Adverse Change” for further discussion.

Because the issuer of the notes is a holding company, its ability to pay its debts depends upon the ability of its subsidiaries to pay it dividends and to advance it funds. In addition, the issuer’s ability to participate in any distribution of its subsidiaries’ assets is generally subject to the prior claims of the subsidiaries’ creditors.

Because the issuer of the notes, Transmeridian Exploration Inc., conducts its business exclusively through its subsidiaries, the issuer’s ability to pay its debts depends upon the earnings and cash flow of its subsidiaries and their ability to pay the issuer dividends and advance it funds. Contractual and legal restrictions applicable to the issuer’s subsidiaries could limit the issuer’s ability to obtain cash from them. In addition, the issuer’s rights to participate in any distribution of its subsidiaries’ assets upon their liquidation, reorganization or insolvency would generally be subject to the prior claims of the subsidiaries’ creditors.

In the event of a default under the indenture governing the notes, the collateral securing the notes may be insufficient to repay the notes and, moreover, the trustee will face certain risks in foreclosing on the collateral.

The issuer of the notes, Transmeridian Exploration Inc., has pledged or caused to be pledged its equity interests in certain of its direct and indirect wholly-owned subsidiaries to secure the repayment of the notes. In addition, Transmeridian Exploration Incorporated, the parent of the issuer of the notes, has pledged its stock in the issuer of the notes and the stock in its other direct subsidiary to secure its parent guarantee of the notes.

In the event of a default under the indenture governing the notes, there can be no assurance that the trustee would be able to foreclose on or dispose of any of this collateral without substantial delays and other risks or that the proceeds obtained from such foreclosure would be sufficient to pay all amounts owing to the holders of the notes. There is currently no public market for the shares of the issuer’s capital stock or the pledged stock or pledged equity interests in the subsidiaries of the parent and the issuer, and there can be no assurance that any such market will develop or, if developed, be maintained.

In addition, if the issuer or any of the guarantors of the notes becomes a debtor in a case under the U.S. Bankruptcy Code, the automatic stay imposed by the bankruptcy code would prevent the trustee from selling or otherwise disposing of the collateral without bankruptcy court authorization. In that case, foreclosure might be delayed indefinitely.

The enforceability of the guarantees securing the repayment of the notes may be limited or otherwise impaired.

The issuer’s obligations under the notes have been guaranteed on a senior unsecured basis by certain of the direct and indirect wholly-owned subsidiaries of the issuer and by the parent and its other direct subsidiary.

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Various fraudulent conveyance laws have been enacted for the protection of creditors and may be utilized by a court of competent jurisdiction to subordinate or void the guarantee issued by a guarantor of the notes. It is also possible that, under certain circumstances, a court could hold that the direct obligations of a guarantor could be superior to its obligations under its guarantee of the notes.

Under U.S. law, to the extent that a court were to find that at the time a guarantor entered into a guarantee either (x) the guarantee was incurred by the guarantor with the intent to hinder, delay or defraud any present or future creditor or that the guarantor contemplated insolvency with a design to favor one or more creditors to the exclusion in whole or in part of others or (y) the guarantor did not receive fair consideration or reasonably equivalent value for issuing the guarantee and, at the time it issued the guarantee, the guarantor (i) was insolvent or rendered insolvent by reason of the issuance of the guarantee, (ii) was engaged or about to engage in a business or transaction for which the remaining assets of the guarantor constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, the court could void or subordinate the guarantee in favor of the guarantor’s other creditors. Among other things, a legal challenge of a guarantee issued by a guarantor on fraudulent conveyance grounds may focus on the benefits, if any, realized by the guarantor as a result of the issuance of the notes by the issuer and, in such case, a court might find that the guarantors did not benefit from the incurrence of the indebtedness represented by the notes.

The measure of insolvency for purposes of determining whether a transfer is voidable as a fraudulent transfer varies depending upon the law of the jurisdiction that is being applied. Generally, however, a debtor would be considered insolvent if the sum of all its debts, including contingent liabilities, was greater than the fair market value of all its assets, or if the fair market value of the debtor’s assets was less than the amount required to repay its debts, including contingent liabilities, as they become due.

To the extent that a guarantee of the notes is voided as a fraudulent conveyance or found unenforceable for any other reason, holders of the notes would cease to have any claim with respect to that guarantor. In such event, the claims of the holders of the notes against such guarantor would be subject to the prior payment of all liabilities and preferred stock claims of such guarantor. There can be no assurance that, after providing for all such liabilities and preferred stock claims, if any, there would be sufficient assets to satisfy the claims of the holders of the notes relating to any voided portion of such guarantee.

The issuer of the notes is organized under the laws of the British Virgin Islands and our principal operating subsidiary, which is a guarantor of the notes, is organized under the laws of the Republic of Kazakhstan. Moreover, substantially all of our assets are located in Kazakhstan. Under U.S. bankruptcy law, courts typically have jurisdiction over a debtor’s property, wherever located, including property situated in other countries. There can be no assurance, however, that courts outside of the United States would recognize the U.S. bankruptcy court’s jurisdiction. Accordingly, difficulties may arise in administering a U.S. bankruptcy case involving a foreign debtor, such as the issuer of the notes, with property located outside of the United States. In addition, any orders or judgments of a bankruptcy court in the United States may not be enforceable in the British Virgin Islands against the issuer of the notes or in Kazakhstan against our principal operating subsidiary.

In addition, the rights of the trustee to enforce remedies may be significantly impaired by the provisions of applicable Kazakhstan bankruptcy, insolvency and similar laws if the benefit of such laws is sought with respect to our principal operating subsidiary. In the event that our principal operating subsidiary in Kazakhstan became insolvent or bankruptcy proceedings were instituted in Kazakhstan by or against our principal operating subsidiary, the ability to enforce the guarantee of our principal operating subsidiary may be impaired.

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Risks Related to Our Business

We have a history of losses.

We have a history of losses. We incurred net losses of $3.3 million, $5.7 million, $3.8 million and $20.5 million for the years ended December 31, 2002, 2003, 2004 and 2005, respectively. Our results of operations in the future will depend on many factors, but largely on our ability to execute our exploration and development program and successfully market our current and future production. Our failure to achieve profitability in the future could adversely affect our ability to raise additional capital and, accordingly, our ability to grow our business.

Our exploration and development activities may not result in economic quantities of oil and gas.

Our success is dependent on finding, developing and producing economic quantities of oil and gas. Our drilling operations may not be successful in finding, developing and producing economic quantities of oil and gas. In addition, we may not be able to sustain production from wells that initially produce.

The seismic data and other technologies we use do not allow us to know conclusively prior to drilling a well that oil or gas is present or may be produced economically. The cost of drilling, completing and operating a well is often uncertain, and cost factors can adversely affect the economics of a project. In addition, technological difficulties encountered in well completion or following the establishment of production may result in reduced or ceased production from a well.

Our efforts will be unprofitable if we drill dry wells or wells that are productive but do not produce enough reserves to return a profit after drilling, operating and other costs. Further, our drilling operations may be curtailed, delayed or canceled, or subject to higher costs as a result of a variety of factors, including:

• unexpected drilling conditions;

• high pressure or irregularities in geological formations;

• equipment failures or accidents;

• adverse weather conditions, such as winter snowstorms; and

• increases in the cost of, or shortages or delays in the availability of, drilling rigs, equipment and qualified personnel.

Oil and gas operations can be hazardous and may expose us to environmental liabilities.

We are subject to the operating risks normally associated with the exploration, development and production of oil and gas, including well blowouts, cratering and explosions, pipe failure, fires, geological formations with abnormal pressures, uncontrollable flows of oil, natural gas, brine or well fluids, and other environmental hazards and risks. Moreover, our drilling operations involve risks from high pressures in geological formations and from mechanical difficulties such as stuck pipe, collapsed casing and separated cable. If any of these events actually occur, we could sustain substantial losses as a result of:

• injury or loss of life;

• severe damage to or destruction of property, natural resources or equipment;

• pollution or other environmental damage;

• environmental clean-up responsibilities;

• regulatory investigations and penalties;

• delays in our operations or curtailment of our production; and

• suspension of our operations.

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Because in many cases insurance coverage for these risks is either not available or is not available at premium levels that are economically feasible and justify its purchase, we maintain very limited insurance coverage. As a result, the insurance coverage we maintain may not fully compensate us, or compensate us at all, if we incur losses as a result of these risks. Moreover, in the future we may not be able to maintain all or even part of our current insurance coverage at premium levels that justify its purchase.

In addition, as an owner and operator of oil and gas properties, we are subject to various laws and regulations relating to the discharge of materials into, and the protection of, the environment. These laws and regulations may impose liability on us for the cost of environmental cleanup resulting from our operations and could further subject us to liability for environmental damages.

The actual quantities of, and future net revenues from, our proved reserves may prove to be lower than we have estimated.

The information included herein contains estimates of our proved reserves and the estimated future net revenues from our proved reserves. These estimates are based upon various assumptions, including assumptions required by the SEC relating to oil and gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The process of estimating oil and gas reserves is complex. The process involves significant decisions and assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir. Therefore, these estimates are inherently imprecise.

We engage an independent petroleum engineering firm to review our estimates of our proved reserves. During 2005, 2004 and 2003, their review covered 100% of the reserve value. Estimates of our proved reserves are made using available geological and reservoir data, as well as production performance data. These estimates are reviewed annually and revised, either upward or downward, as warranted by additional performance data. Actual future production, oil and gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and gas reserves most likely will vary from these estimates. Such variations may be significant and could materially affect the estimated quantities of, and future net revenues from, our proved reserves. In addition, we may adjust estimates of our proved reserves to reflect production history, results of exploration and development drilling, prevailing oil and gas prices and other factors, many of which are beyond our control. Our properties may also be susceptible to hydrocarbon drainage from production by operators on adjacent properties. In addition, our reserves are contained in carbonate reservoirs, and there is a larger uncertainty inherent in carbonate reservoirs as compared to sandstone reservoirs.

At December 31, 2005, approximately 95% of our estimated proved reserves (by volume) were undeveloped. Recovery of undeveloped reserves requires significant capital expenditures and successful drilling operations. These reserve estimates include the assumption that we will make significant capital expenditures to develop the reserves. You should be aware that our estimates of such costs may not be accurate, development may not occur as scheduled and our results may not be as estimated.

You should not assume that the present values referred to in the information included herein represent the current market value of our estimated reserves. In accordance with SEC requirements, the estimates of present values are based on prices and costs as of the date of the estimates. Actual future prices and costs may be materially higher or lower than the prices and costs as of the date of the estimates. There are currently no economic markets for our natural gas production and our gas reserves have been given no value in the future net cash flow data included herein.

The timing of both production from our properties and the expenses we incur from the development and production of our properties will affect both the timing of the actual future net cash flows from our proved reserves and their present value. In addition, the 10% discount factor, which is required by the SEC to be used in calculating discounted future net cash flows for reporting purposes, is not necessarily the most accurate discount factor. The effective interest rate at various times and the risks associated with our business or the oil and gas industry in general will affect the accuracy of the 10% discount factor.

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If oil and gas prices decrease or our exploration efforts are unsuccessful, we may be required to write down the capitalized cost of individual oil and gas properties.

A writedown of the capitalized cost of individual oil and gas properties could occur when oil and gas prices are low or if we have substantial downward adjustments to our estimated proved oil and gas reserves, increases in our estimates of development costs or nonproductive exploratory drilling results. A writedown could adversely affect the trading price of our common stock.

We use the successful efforts accounting method. All property acquisition costs and costs of exploratory and development wells are capitalized when incurred, pending the determination of whether proved reserves are discovered. If proved reserves are not discovered with an exploratory well, the costs of drilling the well are expensed. All geological and geophysical costs on exploratory prospects are expensed as incurred.

The capitalized costs of our oil and gas properties, on a field-by-field basis, may exceed the estimated future net cash flows of that field. If so, we record impairment charges to reduce the capitalized costs of each such field to our estimate of the field’s fair market value. Unproved properties are evaluated at the lower of cost or fair market value. These types of charges will reduce our earnings and stockholders’ equity.

We assess our properties for impairment periodically, based on future estimates of proved and risk-adjusted probable reserves, oil and gas prices, production rates and operating, development and reclamation costs based on operating budget forecasts. Once incurred, an impairment charge cannot be reversed at a later date even if we experience increases in the price of oil or gas, or both, or increases in the amount of our estimated proved reserves.

All of our operations are conducted in areas with inherent international and governmental risks.

We are subject to risks inherent in international operations, including adverse governmental actions, political risks, expropriation of assets and the risk of civil unrest or war. Our oil and gas properties are located in Kazakhstan, which until 1990 was part of the Soviet Union. Kazakhstan retains many of the laws and customs from the former Soviet Union, but has developed and is continuing to develop its own legal, regulatory and financial systems. As the political and regulatory environment changes, we may face uncertainty about the interpretation of the agreements to which we are party and, in the event of dispute, we may have limited recourse within the legal and political system.

We have not finalized a long-term production contract with the government of Kazakhstan and our current exploration contract is scheduled to expire in 2007.

We currently produce and sell oil pursuant to an exploration contract with the government of Kazakhstan which expires in April 2007. Under our exploration contract and the Law of Petroleum, we hold the exclusive right to negotiate and execute a production contract with the Ministry of Energy and Mineral Resources (“MEMR”) in the event of a commercial discovery in the license area, and the government is required to conduct these negotiations. In December 2004, the State Committee on Reserves (“SCR”) approved commercial reserves for development and exploitation in the South Alibek Field. On this basis, the MEMR granted us the exclusive right to execute a long-term production contract in June 2005. We concluded negotiations of the final commercial and legal terms of the contract in September 2005, when the working group of the MEMR formally approved the draft production contract. The final draft was then circulated to the relevant governmental ministries and committees for their formal acceptance prior to contract execution. In the course of this process, several of these governmental bodies requested additional changes to the contract, most of which we successfully negotiated and included in the written contract.

As of March 10, 2006, approval of one remaining government ministry was still pending. Once this final approval is obtained, the production contract will be signed by the prime minister, at which time it will enter into effect. We believe that this approval will be obtained and the production contract signed during the first half of 2006. However, there can be no assurance that we will be successful in finalizing the production contract by such time or at all. If we are unable to finalize the production contract in a timely manner or at all, our business, financial condition and results of operations could be materially and adversely affected.

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Our business and results of operations depend on our ability to transport our production to viable markets and on the price at which we can sell our production.

Our future success depends on our ability to transport and market our production either within Kazakhstan or through export to other markets. Our ability to sell our production and, in turn, our revenues could be materially and adversely affected by issues which are outside our control relating to the crude oil transportation infrastructure both within and outside Kazakhstan. The exportation of oil from Kazakhstan depends on access to transportation routes, primarily pipeline systems, which can have limited available capacity and are subject to other restrictions.

We currently export our oil by rail. The rail terminal is accessed by truck from our field facilities. Our future plans include the shipment of oil by pipeline, which is the preferred and most cost effective method to sell crude oil production into the export market. We expect the implementation of our plans to result in higher realized prices for our crude oil than our current marketing arrangements, but we cannot be assured that we will be successful in implementing our plans. Unless we obtain access to pipelines to transfer our crude oil out of Kazakhstan, the prices at which we sell our crude oil may remain well below world market prices.

Oil prices are volatile. A decline in prices could adversely affect our financial position, results of operations, cash flows, access to capital and ability to grow.

Our revenues, results of operations and future growth depend primarily upon the prices we receive for the oil we sell. Historically, the markets for oil have been volatile and they are likely to continue to be volatile. Wide fluctuations in worldwide oil prices may result from relatively minor changes in the supply of and demand for oil, market uncertainty and other factors that are beyond our control, including:

• worldwide supplies of oil and gas;

• weather conditions;

• the level of consumer demand;

• the price and availability of alternative fuels;

• governmental regulations and taxes;

• the ability of the members of the Organization of Petroleum Exporting Countries to agree to, and maintain, oil price and production controls;

• political instability or armed conflict in oil-producing regions; and

• the overall economic environment.

These factors and the volatility of the energy markets make it extremely difficult to predict future oil price movements with any degree of certainty. Declines in oil prices would not only reduce our revenues, but could reduce the amount of oil that we can produce economically and, as a result, could have a material adverse effect on our business, financial condition and results of operations.

Our substantial indebtedness could adversely affect our financial condition.

We have substantial debt, namely the notes, and, in turn, substantial debt service requirements. Our ability to make payments on the notes and any future indebtedness we may incur depends on our ability to generate sufficient cash flow. We cannot assure you that:

• our business will generate sufficient cash flow from operations to service our indebtedness;

• future borrowings or proceeds from equity issuances will be available in an amount sufficient to enable us to pay our indebtedness on or before the maturity date of such indebtedness; or

• we will be able to refinance any of our indebtedness on commercially reasonable terms, if at all.

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Factors beyond our control may affect our ability to service our indebtedness. These factors include those discussed in this “Risk Factors” section.

If, in the future, we cannot generate sufficient cash flow from our operations to meet our debt service obligations, we may need to refinance our debt, obtain additional financing, issue equity or sell assets, which we may not be able to do on commercially reasonable terms, if at all, and which we may be prohibited from doing under the terms of our indebtedness. We cannot assure you that our business will generate cash flow, or that we will be able to obtain funding, sufficient to satisfy our debt service obligations. Our inability to generate cash flow or obtain funding sufficient to satisfy our debt service obligations could materially and adversely affect our financial condition.

Covenants in the indenture governing the notes impose significant restrictions on us.

The indenture governing the notes contains a number of covenants imposing significant restrictions on us. The restrictions these covenants place on us include restrictions on our repurchase of, and payment of dividends on, our capital stock and limitations on our ability to incur additional indebtedness, make investments, engage in transactions with affiliates, sell assets and create liens on our assets. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise and, in turn, may materially and adversely affect our business, financial condition and results of operations.

Significant capital expenditures are required to execute our development program.

Our development and production activities, including our exploration contract with the government of Kazakhstan, require us to make substantial capital expenditures. Historically, we have funded our capital expenditure requirements through a combination of cash flows from operations, borrowings under bank credit facilities, private placements of our common stock, preferred stock and debt securities and borrowings from our affiliates. Our cash flows from operations are subject to a number of variables, such as the level of production from our existing wells, the prices of oil, and our success in developing and producing our reserves. If our revenues were to decrease as a result of lower oil prices or decreased production, and our access to capital were limited, we may not be able to meet our capital expenditure requirements, which could, in turn, materially and adversely affect our business, financial condition and results of operations.

Competition in our industry is intense, and many of our competitors in the Kazakhstan region have greater financial and other resources than we do.

We operate in the highly competitive areas of oil exploration, development and production. We face intense competition from both major and other independent oil and natural gas companies in seeking to acquire:

• desirable producing properties or new leases for future exploration; and

• the equipment and expertise necessary to develop and operate our properties.

Many of our competitors have financial and other resources substantially greater than ours and, moreover, some of them are fully integrated oil companies with operations in the exploration, development, production, pipeline transportation, refining and marketing sectors of the oil and gas industry. These companies may be able to pay more for development prospects and productive oil and natural gas properties and may be able to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit.

In addition, our ability to develop and exploit our oil and natural gas properties and to acquire additional properties in the future will depend upon our ability to successfully conduct operations, evaluate and select suitable properties and successfully consummate transactions, and there can be no assurance that we will be able to do so.

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Compliance with governmental regulations could be costly.

Our operations are subject to various levels of government controls and regulations in the United States and in Kazakhstan, including environmental controls and regulations. It is not possible for us to separately calculate the costs of compliance with these controls and regulations, as such costs are an integral part of our operations.

In Kazakhstan, legislation affecting the oil and gas industry is under constant review for amendment or expansion. Pursuant to such legislation, various governmental departments and agencies have issued extensive rules and regulations which affect the oil and gas industry, some of which carry substantial penalties for failure to comply. These laws and regulations can have a significant impact on the oil and gas industry by increasing the cost of doing business and, consequentially, can adversely affect our results of operations. Inasmuch as new legislation affecting the industry is commonplace and existing laws and regulations are frequently amended or reinterpreted, we are unable to predict the future cost or impact of complying with such laws and regulations.

The loss of key personnel could have an adverse effect on our business.

Our success is dependent on the performance of our senior management and key technical personnel. The loss of our chief executive officer or other key employees could have a material and adverse effect on our business. We do not currently have employment or non-compete agreements in place with any of our senior management or key employees. In addition, we do not carry life insurance covering any of our senior management or key employees.

We have reported a material weakness in our internal control over financial reporting that, if not remedied, could adversely affect our ability to meet reporting obligations and provide timely and accurate financial statements.

In connection with our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005, we concluded that, as of December 31, 2005, we did not maintain effective internal control over our financial reporting due to a material weakness resulting from lack of a sufficient number of accounting staff with experience in public company SEC reporting and technical expertise to enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement in our annual or interim financial statements would not be prevented or detected. Our management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 was audited by UHY Mann Frankfort Stein & Lipp CPAs, LLP, which expressed an unqualified opinion on management’s assessment and an adverse opinion on the effectiveness of our internal control over financial reporting as of December 31, 2005.

We have taken, and are currently taking, steps to remedy this material weakness. See Item 9A, “Controls and Procedures—Corporate Disclosure Controls—Changes in Internal Controls” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. Although we believe we will address the material weakness with the remedial measures we have implemented and are currently implementing, these measures may not remedy the material weakness reported and, as a result, we may not be able to implement and maintain effective internal control over financial reporting in the future. In addition, additional deficiencies in our internal controls may be discovered in the future.

Any failure to remedy the reported material weakness or to implement new or improved controls, or difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure also could affect the ability of our management to certify that our internal controls are effective when it provides an assessment of our internal control over financial reporting, and could affect the results of our independent registered public accounting firm’s attestation report regarding our management’s assessment. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

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THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

In connection with the issuance of the Outstanding Notes, we entered into a registration rights agreement, dated as of December 12, 2005, with the initial purchasers of the Outstanding Notes. The registration rights agreement provides that we will take the following actions, at our expense, for the benefit of the holders of the Outstanding Notes:

• within 90 days after the date of the initial issuance of the Outstanding Notes, file with the SEC the exchange offer registration statement, of which this prospectus is a part, relating to the exchange offer;

• use our best efforts to cause the exchange offer registration statement to be declared effective by the SEC within 180 days after the date of the initial issuance of the Outstanding Notes (the “effectiveness deadline”);

• commence the exchange offer promptly after the exchange offer registration statement is declared effective by the SEC;

• keep the exchange offer open, and keep the exchange offer registration statement effective, for a period of not less than the minimum period required under applicable federal and state securities laws, provided, however, that in no event shall such period be less than 30 days after the date notice of the exchange offer is mailed to the holders of the Outstanding Notes; and

• consummate the exchange offer by no later than 40 days after the date on which the exchange offer registration statement is declared effective.

We have fulfilled the agreements described in the first three of the preceding bullet points and are offering eligible holders of the Outstanding Notes the opportunity to exchange their Outstanding Notes for Exchange Notes registered under the Securities Act. Holders are eligible to participate in the exchange offer if they are not prohibited by any law or policy of the SEC from participating in the exchange offer and if they make certain representations to us. The Exchange Notes will be substantially identical to the Outstanding Notes, except that the transfer restrictions and registration rights relating to the Outstanding Notes will not apply to the Exchange Notes.

We will be required to file a shelf registration statement covering resales of the Outstanding Notes if:

• because of any change in law or in applicable interpretations thereof by the staff of the SEC, we are not permitted to effect the exchange offer;

• for any reason the exchange offer is not consummated within 40 days after the effectiveness deadline;

• an initial purchaser of Outstanding Notes so requests with respect to Outstanding Notes not eligible to be exchanged for Exchange Notes in the exchange offer and held by it following the consummation of the exchange offer;

• any holder, other than an “Exchanging Dealer” (as defined in the registration rights agreement), who is not eligible to participate in the exchange offer so requests; or

• any holder, other than an “Exchanging Dealer,” that participates in the exchange offer, but does not receive freely tradable Exchange Notes on the date of the exchange, so requests.

Following the consummation of the exchange offer, holders of Outstanding Notes who were eligible to participate in the exchange offer, but who did not tender their Outstanding Notes or whose Outstanding Notes were not accepted for exchange, will not have any further registration rights and their Outstanding Notes will continue to be subject to the existing transfer restrictions and may be transferred only if registered under the Securities Act or if an exemption from the registration requirements of the Securities Act is available. For a

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discussion of certain risks with respect to the trading market for, and market value of, untendered or unaccepted Outstanding Notes, see the section of this prospectus entitled “Risk Factors—Risks Related to the Exchange Offer.”

Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes, where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See the section of this prospectus entitled “Plan of Distribution” for further discussion.

Terms of the Exchange Offer

Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept any and all Outstanding Notes validly tendered and not withdrawn prior to the expiration time of the exchange offer. We will issue $1,000 principal amount of Exchange Notes in exchange for each $1,000 principal amount of Outstanding Notes accepted in the exchange offer. Any holder may tender some or all of its Outstanding Notes pursuant to the exchange offer. However, Outstanding Notes may be tendered only in integral multiples of $1,000.

The form and terms of the Exchange Notes are the same as the form and terms of the Outstanding Notes except that:

• the Exchange Notes have been registered under the Securities Act and, thus, will not bear legends restricting the transfer thereof and will not be subject to the transfer restrictions applicable to the Outstanding Notes; and

• the holders of the Exchange Notes will not be entitled to certain rights under the registration rights agreement, including the provisions providing for the payment of additional interest in the event we fail to consummate the exchange offer within 40 days after the effectiveness deadline, all of which rights will terminate when the exchange offer is consummated.

The Exchange Notes will evidence the same debt as the Outstanding Notes and will be entitled to the benefits of the indenture governing the Outstanding Notes.

As of the date of this prospectus, $250,000,000 aggregate principal amount of the Outstanding Notes were outstanding. We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC thereunder.

We will be deemed to have accepted validly tendered Outstanding Notes when, as and if we have given oral or written notice thereof to The Bank of New York, as exchange agent. The exchange agent will act as agent for the tendering holders of the Outstanding Notes for the purpose of receiving the Exchange Notes from us.

If any tendered Outstanding Notes are not accepted for exchange because of an invalid tender, the occurrence of specified other events set forth in this prospectus or otherwise, the certificates for any unaccepted Outstanding Notes will be returned, without expense, to the tendering holder thereof promptly after the expiration time of the exchange offer.

We will pay all expenses incident to the exchange offer, other than commissions or concessions of brokers or dealers and transfer taxes under certain circumstances. See “—Fees and Expenses” below.

Each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes, where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See the section of this prospectus entitled “Plan of Distribution” for further discussion.

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Expiration Time; Extensions; Amendments

The term “expiration time” means 5:00 p.m., New York City time, on                         , 2006, unless we, in our sole discretion, extend the exchange offer, in which case the term “expiration time” will mean the latest date and time to which the exchange offer is extended. We reserve the right to extend the exchange offer at any time and from time to time prior to the expiration time by giving written notice to the exchange agent and by timely public announcement communicated, unless otherwise required by applicable law or regulation, by making a press release. During any extension of the exchange offer, all Outstanding Notes previously tendered pursuant to the exchange offer will remain subject to the exchange offer.

We reserve the right, in our sole discretion and subject to applicable law, (1) to delay accepting any Outstanding Notes, to extend the exchange offer or to terminate the exchange offer if any of the conditions set forth below under “—Conditions” have not been satisfied, or (2) to amend the terms of the exchange offer in any manner. If any such termination or amendment occurs, we will notify the exchange agent in writing and will either issue a press release or give written notice to the holders of the Outstanding Notes as promptly as practicable and, in any event, in accordance with applicable law.

Interest on the Exchange Notes

The Exchange Notes will bear interest from the last interest payment date on which interest was paid on the Outstanding Notes tendered in exchange therefor. Interest on the Exchange Notes will be payable quarterly in cash in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on                         , 2006.

Procedures for Tendering

Only a holder of Outstanding Notes may tender Outstanding Notes in the exchange offer. To tender in the exchange offer, a holder must complete, sign and date the letter of transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the letter of transmittal or transmit an agent’s message in connection with a book-entry transfer, and mail or otherwise deliver the letter of transmittal or a facsimile thereof, together with the Outstanding Notes and all other required documents, to the exchange agent prior to the expiration time. To be tendered effectively, the Outstanding Notes, the letter of transmittal or an agent’s message and all other required documents must be received by the exchange agent at the address set forth below under “Exchange Agent” prior to the expiration time. Delivery of the Outstanding Notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of the book-entry transfer must be received by the exchange agent prior to the expiration time.

The term “agent’s message” means a message, transmitted by a book-entry transfer facility to, and received by, the exchange agent forming a part of a confirmation of a book-entry, which states that the book-entry transfer facility has received an express acknowledgment from the participant in the book-entry transfer facility tendering the Outstanding Notes that the participant has received and agrees: (1) to participate in the Automated Tender Offer Program (“ATOP”) system of the Depository Trust Company (“DTC”); and (2) to be bound by the terms of the letter of transmittal. ATOP will allow a holder of the Outstanding Notes to electronically transmit its acceptance of the exchange offer to DTC instead of physically completing and delivering a letter of transmittal to the exchange agent.

To participate in the exchange offer, each holder will be required to furnish to us a written representation to the effect that:

• it is not an “affiliate” of ours within the meaning of Rule 405 under the Securities Act or, if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable;

• it has no arrangement or understanding with any person to participate in a distribution of the Outstanding Notes or the Exchange Notes within the meaning of the Securities Act;

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• it is acquiring the Exchange Notes in its ordinary course of business;

• if such holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it will deliver a prospectus in connection with any resale of such Exchange Notes; and

• if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes within the meaning of the Securities Act.

The tender by a holder and our acceptance thereof will constitute an agreement between the holder and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

The method of delivery of Outstanding Notes and the letter of transmittal or agent’s message and all other required documents to the exchange agent is at the election and sole risk of the holder. As an alternative to delivery by mail, holders may wish to consider an overnight or hand delivery service. In all cases, sufficient time should be allowed to ensure delivery to the exchange agent prior to the expiration time. No letter of transmittal or Outstanding Notes should be sent to us or DTC. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect the above transactions for them.

Any beneficial owner whose Outstanding Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender their Outstanding Notes in the exchange offer should contact the registered holder promptly and instruct the registered holder to tender on the beneficial owner’s behalf.

Any Outstanding Notes which have been tendered, but which are not accepted for exchange, will be returned to the holder thereof, without cost to the holder, promptly after the expiration time.

Signatures on a letter of transmittal or a notice of withdrawal (see “—Withdrawal of Tenders” below), as the case may be, must be guaranteed by a member of a recognized Medallion Signature Guarantee program, unless the Outstanding Notes tendered pursuant to the letter of transmittal are tendered (1) by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal or (2) for the account of a member firm of a recognized Medallion Signature Guarantee program.

If a letter of transmittal is signed by a person other than the registered holder of the Outstanding Notes, the Outstanding Notes must be endorsed or accompanied by a properly completed bond power signed by the registered holder as the registered holder’s name appears on the Outstanding Notes, with the signature thereon guaranteed by a member firm of a recognized Medallion Signature Guarantee program. If the letter of transmittal or any Outstanding Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, the person signing should so indicate when signing, and evidence satisfactory to us of such person’s authority to so act must be submitted with the letter of transmittal.

We understand that the exchange agent will make a request promptly after the date of this prospectus to establish accounts with respect to the Outstanding Notes at DTC for the purpose of facilitating the exchange offer and, subject to the establishment thereof, any financial institution that is a participant in DTC’s system may make book-entry delivery of Outstanding Notes by causing DTC to transfer the Outstanding Notes into the exchange agent’s account at DTC with respect to the Outstanding Notes in accordance with DTC’s procedures. Although delivery of the Outstanding Notes may be effected through book-entry transfer into the exchange agent’s account at DTC, unless an agent’s message is received by the exchange agent in compliance with ATOP, a letter of transmittal, properly completed and duly executed with any required signature guarantee, and all other required documents must in each case be transmitted to and received or confirmed by the exchange agent at its address set forth below prior to the expiration time or, if the guaranteed delivery procedures described below are complied with, within the time period provided under the procedures. Delivery of documents to us or DTC does not constitute delivery to the exchange agent.

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All questions as to the validity, form, eligibility, including time of receipt, acceptance of tendered Outstanding Notes and withdrawal of tendered Outstanding Notes will be determined by us in our sole discretion, which determination will be final and binding. We reserve the absolute right to reject any and all Outstanding Notes not properly tendered or any Outstanding Notes, our acceptance of which would, in the opinion of us or our counsel, be unlawful. We also reserve the right in our sole discretion to waive any defects, irregularities or conditions of tender as to particular Outstanding Notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties.

Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes must be cured within the period of time we determine. Although we intend to notify holders of defects or irregularities with respect to tenders of Outstanding Notes, we are under no duty and undertake no obligation to do so, and neither we, the exchange agent nor any other person will incur any liability for failure to give the notification. Tenders of Outstanding Notes will not be deemed to have been made until the defects or irregularities have been cured or waived. Any Outstanding Notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders, unless otherwise provided in the letter of transmittal, promptly following the expiration time.

Guaranteed Delivery Procedures

Holders who wish to tender their Outstanding Notes and (1) the certificates for their Outstanding Notes are not immediately available, (2) who cannot deliver the certificates for their Outstanding Notes, the letter of transmittal and all other required documents to the exchange agent prior to the Expiration Time or (3) who cannot complete the procedures for book-entry transfer of their Outstanding Notes prior to the expiration time, may effect a tender if:

• the tender is made through a member firm of the Medallion System;

• prior to the expiration time, the exchange agent receives from a member firm of a recognized Medallion Signature Guarantee program a properly completed and duly executed notice of guaranteed delivery by facsimile transmission, mail or hand delivery setting forth the name and address of the holder, the certificate number(s) of the Outstanding Notes (if any) and the principal amount of Outstanding Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three American Stock Exchange trading days after the expiration time, the letter of transmittal or facsimile thereof, together with the certificate(s) representing the Outstanding Notes or a confirmation of book-entry transfer of the Outstanding Notes into the exchange agent’s account at DTC, and all other documents required by the letter of transmittal, will be deposited by the member firm with the exchange agent; and

• a properly completed and duly executed letter of transmittal or facsimile thereof, as well as the certificate(s) (if any) representing all tendered Outstanding Notes in proper form for transfer or a confirmation of book-entry transfer of the Outstanding Notes into the exchange agent’s account at DTC, and all other documents required by the letter of transmittal, are received by the exchange agent within three American Stock Exchange trading days after the expiration time.

Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their Outstanding Notes according to the guaranteed delivery procedures described above.

Withdrawal of Tenders

Except as otherwise provided in this prospectus, tenders of Outstanding Notes may be withdrawn at any time prior to the expiration time.

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To withdraw a tender of Outstanding Notes in the exchange offer, a notice of withdrawal must be received by the exchange agent, by facsimile transmission, mail or hand delivery, at its address set forth below prior to the expiration time of the exchange offer. Any notice of withdrawal must:

• specify the name of the person having deposited the Outstanding Notes to be withdrawn;

• identify the Outstanding Notes to be withdrawn, including the certificate number(s) and principal amount of the Outstanding Notes, or, in the case of Outstanding Notes transferred by book-entry transfer, the name and number of the account at DTC to be credited;

• be signed by the holder in the same manner as the original signature on the letter of transmittal by which the Outstanding Notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee register the transfer of the Outstanding Notes into the name of the person withdrawing the tender; and

• specify the name in which any Outstanding Notes are to be registered, if different from that of the person who tendered the Outstanding Notes to be withdrawn.

All questions as to the validity, form and eligibility, including time of receipt, of notices of withdrawal will be determined by us. Our determination will be final and binding on all parties. Any Outstanding Notes so withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer, and no Exchange Notes will be issued with respect thereto unless the Outstanding Notes so withdrawn are validly retendered. Properly withdrawn Outstanding Notes may be retendered by following one of the procedures described above under “—Procedures for Tendering” at any time prior to the expiration time.

Conditions

Notwithstanding any other term of the exchange offer, we will not be required to accept for exchange, or issue Exchange Notes for, any Outstanding Notes, and may terminate or amend the exchange offer as provided in this prospectus before the acceptance of the Outstanding Notes, if:

• any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer which, in our sole judgment, might materially impair our ability to proceed with the exchange offer; or

• any material adverse development has occurred in any existing action or proceeding with respect to us; or

• any law, statute, rule, regulation or interpretation by the staff of the SEC is proposed, adopted or enacted, which, in our sole judgment, might materially impair our ability to proceed with the exchange offer or materially impair the contemplated benefits of the exchange offer to us; or

• any governmental approval has not been obtained, which approval we, in our sole discretion, deem necessary for the consummation of the exchange offer as contemplated by this prospectus.

If we determine in our sole discretion that any of these conditions are not satisfied, we may (1) refuse to accept any Outstanding Notes and return all tendered Outstanding Notes to the tendering holders, (2) extend the exchange offer and retain all Outstanding Notes tendered prior to the expiration time of the exchange offer, subject, however, to the right of holders to withdraw their tendered Outstanding Notes (see “—Withdrawal of Tenders” above) or (3) waive the unsatisfied conditions with respect to the exchange offer and accept all properly tendered Outstanding Notes which have not been withdrawn.

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Exchange Agent

The Bank of New York has been appointed as exchange agent for the exchange offer. Questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for a notice of guaranteed delivery should be directed to the exchange agent addressed as follows:

For Delivery by Mail/Hand Delivery/Overnight Delivery:

The Bank of New York

101 Barclay Street

Floor 21 West

New York, New York 10286

Attn: Corporate Trust Trustee Administration

Facsimile Transmission (for eligible institutions only):

To Confirm Receipt:

Delivery to an address other than the address set forth above will not constitute a valid delivery.

Fees and Expenses

We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to brokers, dealers or others soliciting acceptances of the exchange offer. We have, however, paid the exchange agent reasonable and customary fees for its services, and have and will reimburse it for its reasonable out-of-pocket expenses incurred in connection with the exchange offer.

We will also pay all expenses incident to the exchange offer, other than commissions or concessions of brokers or dealers and transfer taxes under certain circumstances. Such expenses include fees and expenses of the exchange agent, accounting and legal fees and printing costs, among others.

Accounting Treatment

The Exchange Notes will be recorded at the same carrying value as the Outstanding Notes, which is face value, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes as a result of the exchange offer. The expenses of the exchange offer will be deferred and charged to expense over the term of the Exchange Notes.

Consequences of Failure to Exchange

The Outstanding Notes that are not exchanged for Exchange Notes pursuant to the exchange offer will remain subject to the existing transfer restrictions. Accordingly, the Outstanding Notes may be resold only:

• to us upon redemption thereof or otherwise;

• so long as the Outstanding Notes are eligible for resale pursuant to Rule 144A under the Securities Act, to a person inside the United States whom the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, or pursuant to another exemption from the registration requirements of the Securities Act, which other exemption is based upon an opinion of counsel reasonably acceptable to us;

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• outside the United States to a non-U.S. person in a transaction meeting the requirements of Regulation S under the Securities Act; or

• pursuant to an effective registration statement under the Securities Act;

in each case in accordance with any applicable securities laws of any state of the United States.

Resale of the Exchange Notes

With respect to resales of Exchange Notes, based on interpretations by the staff of the SEC set forth in no-action letters issued to third parties, we believe that a holder or other person who receives Exchange Notes, other than a person that is our “affiliate” within the meaning of Rule 405 under the Securities Act, in exchange for Outstanding Notes in the ordinary course of its business and who is not participating, does not intend to participate, and has no arrangements or understanding with any person to participate, in a distribution of the Exchange Notes within the meaning of the Securities Act, will be allowed to resell the Exchange Notes to the public without further registration under the Securities Act and without delivering to the purchaser of the Exchange Notes a prospectus that satisfies the requirements of Section 10 of the Securities Act.

However, if any holder acquires Exchange Notes in the exchange offer for the purpose of distributing or participating in a distribution of the Exchange Notes within the meaning of the Securities Act, the holder cannot rely on the position of the staff of the SEC expressed in the no-action letters, and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction, unless an exemption from the registration and prospectus delivery requirements under the Securities Act is otherwise available.

If a holder who cannot rely on the SEC staff position expressed in the no-action letters transfers Exchange Notes issued to it in the exchange offer without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from the registration and prospectus delivery requirements of the Securities Act, such holder may incur liability under the Securities Act. We will not assume, nor will we indemnify a holder against, any such liability.

Further, each broker-dealer that receives Exchange Notes for its own account in exchange for Outstanding Notes, where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See the section of this prospectus entitled “Plan of Distribution” for further discussion.

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USE OF PROCEEDS

This exchange offer is intended to satisfy some of our obligations under the registration rights agreement. We will not receive any cash proceeds from the issuance of the Exchange Notes in the exchange offer. In consideration for issuing the Exchange Notes contemplated in this prospectus, we will receive Outstanding Notes in like principal amount, the form and terms of which are the same as the form and terms of the Exchange Notes, except that the Exchange Notes will not contain transfer restrictions. Outstanding Notes surrendered in exchange for Exchange Notes will be retired and cancelled and will not be reissued. Accordingly, the issuance of the Exchange Notes will not result in any change in our outstanding indebtedness.

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SELECTED FINANCIAL DATA

The following selected financial data for the years ended December 31, 2005, 2004, 2003, 2002 and 2001 is derived from our audited consolidated financial statements. The selected financial data below is only a summary and should be read together with, and is qualified in its entirety by reference to, our historical consolidated financial statements and the accompanying notes which are included elsewhere herein and the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

	Year Ended December 31,
	2005			2004			2003			2002			2001
	(Amounts in thousands, except per share amounts)
Operating Results:
Oil revenues	$	8,443		$	3,923		$	797		$	—		$	51
Loss from operations		(9,823	)		(3,305	)		(4,915	)		(2,936	)		(1,924	)
Net loss		(20,541	)		(3,848	)		(5,686	)		(3,270	)		(2,112	)
Net loss attributable to common stockholders		(21,622	)		(4,002	)		(5,706	)		(3,308	)		(2,236	)
Basic and diluted net loss per share		(0.26	)		(0.05	)		(0.09	)		(0.06	)		(0.04	)
Oil sales price		27.62			11.87			10.52			0.00			0.00
Operating cost per barrel produced		3.98			1.55			3.41			0.00			0.00
Balance Sheet Data:
Total current assets	$	74,705		$	29,205		$	2,067		$	813		$	377
Total property and equipment, net of accumulated depreciation		226,815			70,389			54,560			24,396			13,105
Total assets		313,993			99,810			57,099			26,271			13,883
Total current liabilities		33,697			25,671			31,918			6,637			2,475
Long term debt, net of current maturities		233,407			23,683			24,674			13,752			3,368
Stockholders’ equity		56,704			42,345			506			3,881			6,038
Cash Flow Data:
Net cash used in operating activities	$	(11,351	)	$	(10,105	)	$	(3,654	)	$	(2,056	)	$	(1,880	)
Net cash used in investing activities		(144,703	)		(17,647	)		(23,640	)		(10,299	)		(1,813	)
Net cash provided by financing activities		173,752			43,177			27,991			12,873			3,289

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion and analysis addresses changes in our financial position and results of operations during the three year period 2003 through 2005. There is limited or no comparability for revenue and operating expense in 2003, as sales and production did not commence until the third quarter of 2003.

Management’s primary goals for 2005 were to:

• Continue development drilling in the Field;

• Increase production from all wells in the Field;

• Improve efficiency of drilling and completion programs;

• Improve prices received for oil sales;

• Negotiate a long-term production contract; and

• Secure additional financing for Caspi Neft.

We believe that these goals were largely achieved in 2005. Our primary goals for 2006 include optimizing completions of the existing wells in the Field to maximize production from those wells, accelerating development of the Field by increasing the number of drilling rigs under operation from one to at least four, continuing to improve the price received for our oil sales, completing production and treatment facilities and connecting to the regional pipeline system.

Current Activities

Through December 31, 2005, we had drilled a total of eight wells in our South Alibek evaluation and development program. The SA-14 and the SA-3 were completed and placed into production in May and October 2005, respectively. Drilling of the eighth well in the program, the SA-15, began in late September 2005 and reached target depth in December 2005. The well was perforated in January 2006 and allowed to begin flowing naturally without stimulation. These three wells are infill development wells. With the exception of SA-4, all the wells in the Field have been producing oil on an extended production testing program. The ninth and tenth wells in the Field, the SA-11 and SA-12, were spudded on January 30 and February 1, 2006 respectively.

Our field operations and scheduled workovers were adversely affected by abnormally extreme subzero temperatures during late December and early 2006 that affected the region’s transportation, infrastructure and contractor services. The interruptions caused by these circumstances significantly affected timing of planned work and our ability to meet year-end production goals, with two of the seven producing wells temporarily shut-in. Once scheduled work is completed and these wells are placed back on production, we expect production from the existing wells producing simultaneously to be approximately 2,500-3,000 bopd.

Production from the wells is currently run through temporary production facilities, with oil storage capacity at the site of this facility as well as at the site of the central production facility. Production is currently being constrained by equipment and flowline limitations pending completion of the central facility, which has been delayed by the inability of the previous general contractor to complete the required installation. That contractor has been dismissed, and we engaged a leading international contractor in February 2006 to inspect and submit a plan to complete the facilities. We expect to have a revised plan and definitive construction schedule during the first quarter of 2006, resume construction work in the second quarter and commission the facility by the fourth quarter. We are implementing an interim solution to improve production capacity until the central facility is completed. The design and permitting work on our pipeline connection to the Alibekmola-Kenkiyak pipeline, and the associated support facilities began in 2005, and commissioning is also planned before the fourth quarter of 2006. See “Business—Properties—Transportation and Marketing” for an overview of pipeline connections and activity in the South Alibek area.

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During 2005, workover programs initiated in 2004 were completed and new programs for selected wells were initiated to prepare the wells for long-term commercial production. These programs included reservoir stimulation, installation of more efficient production tubing and packers and the testing of down-hole electric submersible pumps with the aim to increase production. To address numerous delays and inefficiences encountered in our execution of the workover program, a dedicated workover rig has been sourced for the Field that will replace the locally provided workover units used previously. This new unit is expected to significantly reduce the time required to conduct our workovers and reduce the shut-in time experienced while work is in progress. We expect the unit to begin working in the second quarter of 2006, when Field activity levels increase as a result of the accelerated drilling program.

Our drilling program is currently using two drilling rigs contracted from Great Wall Drilling Company, the second of which arrived in the Field in December 2005. We plan to accelerate the program by adding at least two additional drilling rigs during the first half of 2006, bringing the total rigs in operation in the Field to four. In addition, the Company is evaluating opportunities to further speed development by adding a fifth and possibly a sixth drilling rig later in the year.

We have significantly reduced the time required to drill to our programmed final depths through improvement in drilling practices, bit selection and drilling fluids control. SA-15 reached its total depth of 12,600 feet in 87 days and was the first of our wells that met the benchmark of 92 days established from competitor drilling data. We expect to continue to improve on the timing for drilling and completion of wells as increased equipment and new highly skilled personnel will allow for more continuity in operations.

Results of Operations

Oil Production and Revenue

For the year ended December 31, 2005, we produced 400,425 barrels (“Bbls”) of crude oil, or an average of 1,097 Bbls per day (Bopd), as compared to 313,305 Bbls, or an average of 858 Bopd, for the year ended December 31, 2004 and 117,376 Bbls, or an average of 641 Bopd for the year ended December 31, 2003. The increase in 2005 when compared to 2004, and the increase in 2004 from 2003, are primarily a result of the Field having five wells contributing to production in 2005 as compared to three wells in 2004 and only one well in 2003, and the Field being on production throughout 2004 versus only six months in 2003, as production from the Field commenced in July of 2003.

For the year ended December 31, 2005, we sold (by physical delivery to the purchaser) 324,355 Bbls of crude oil at an average price of $27.62 per Bbl, for net revenues of $8,442,787, as compared to 336,440 Bbls of crude oil at an average price of $11.87 per Bbl, for net revenues of $3,922,990, for the year ended December 31, 2004 and 77,293 Bbls at an average price of $10.52, for net revenue of $797,411 for the year ended December 31, 2003. The increase in net revenue in 2005 as compared to 2004 was primarily a result of substantially higher sales prices we received for our oil. Through a series of new sales arrangements, we realized increases over 2004 in the net price received for our crude oil to an average of approximately $20.00 per Bbl for the first half of 2005 and an average of approximately $37.00 per Bbl for the second half of 2005. The last price we received in December 2005 was $42.45 per Bbl. The increase in net revenue in 2004 as compared to 2003 is primarily due to the Field having three producing wells in 2004 as compared to only one producing well in 2003, and the Field producing for all of 2004 versus only six months of 2003. Sales from the Field commenced in the third quarter of 2003.

We recognize revenue from the sale of oil when the purchaser takes delivery of the oil. As of December 31, 2005, we had 87,296 Bbls of oil in inventory that had not yet been sold, pending commencement of oil sales arrangements with new purchasers. As of December 31, 2004, we had 16,576 Bbls in inventory for which we had received payment but had not recognized revenue because delivery had not yet been taken by the purchaser. The average sales price for this oil was $11.61 per Bbl, which was recognized as revenue in 2005 upon delivery to the purchaser.

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Our crude oil sales since June 2005 have primarily take place at a nearby rail terminal. We incurred transportation and storage costs of approximately $1.54 per Bbl to transport our oil by truck to the rail terminal, where it is stored in rented tanks until delivery to the purchasers. Our crude oil sales in the last eight months of 2004 and the first six months of 2005 occurred at the Field and were not subject to transportation costs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Transportation Expense”.

Exploration Expense

Exploration expense, which includes geological and geophysical expense and the cost of unsuccessful exploratory wells, is recorded as an expense in the period incurred under the successful efforts method of accounting. During the year ended December 31, 2005, we incurred $9,470 in exploration expense, primarily associated with geological interpretations of the Field. During 2004, we recognized exploration expense of $130,926, which included costs associated with geological interpretations of the Field and a write off of the remaining book value of non-producing lease cost of a property in South Texas. During 2003, we incurred $592,553 in exploration expense, which was primarily related to the purchase and interpretation costs of geologic data and a charge for the unsuccessful completion attempt on one of our two U. S. properties.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization (“DD&A”) of oil and gas properties is calculated under units of production method, following the successful efforts method of accounting. For the year ended December 31, 2005, DD&A of oil and gas properties was $2,442,263, or $6.10 per Bbl, as compared to $709,496, or $2.11 per Bbl for the year ended December 31, 2004 and $189,635, or $2.45 per Bbl, for the year ended December 31, 2003. The increase in 2005 from 2004 is primarily a result of the change in classification of reserves attributable to the KT1 reservoir to “proved undeveloped” from “proved developed behind pipe,” due to a change in the assumed Field development plan. The new plan assumes that separate wells will be drilled to produce reserves in the KT1 reservoir, rather than “dual-completing” wells to produce from both the KT2 and KT1 reservoirs simultaneously. As a result, beginning in the fourth quarter of 2005, reserves in the KT1 reservoir, which account for approximately 40% of our total “proved” reserves as of December 31, 2005, have been excluded from the total reserve base currently being depleted. Costs incurred are now spread over a substantially smaller quantity of oil until such time as wells are drilled to produce from the KT1 reservoir and those reserves are classified as “proved developed.” In addition, we had an average of four producing wells during 2005 versus only 1.5 producing wells in 2004. The increase in DD&A of oil and gas properties in 2004 from 2003 is primarily due to the increase in oil production between the periods.

Non-oil and gas property DD&A for 2005, 2004 and 2003 was $942,630, $79,262 and $56,077, respectively. The increase between the years is primarily due to additions of transportation and other equipment, and commencement of depreciation on our drilling rig, which we no longer plan to use for development of the Field.

Transportation Expense

During the third quarter of 2005, we began incurring transportation and storage costs relating to the transport of our oil to a nearby rail terminal for sale and export. During the second half of 2005, we incurred transportation and storage costs of $321,313, or $1.54 per Bbl. From the second quarter of 2004 through the second quarter of 2005, oil sales were made directly from the Field, with no transportation costs incurred. For the year ended December 31, 2004, transportation and storage costs were $173,847, or $2.12 per Bbl produced. For the year ended December 31, 2003, we incurred transportation and storage costs of $235,264 or $2.00 per Bbl produced. When the treating facilities and pipeline pump station discussed in “Business—Properties—Transportation and Marketing,” are operational, expected in late 2006, we plan to deliver crude oil production directly into the regional pipeline system, which should result in a significant improvement in sales pricing for our crude oil.

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Impairment Loss

In the first quarter of 2006, we reached an agreement to dispose of our drilling rig. An impairment charge writing the value of the rig down to the estimated proceeds and reclassifying the net book value of the rig to current asset held for sale was recorded as of December 31, 2005.

Operating and Administrative Expense—Kazakhstan

For the year ended December 31, 2005, operating and administrative expense in Kazakhstan was $3.9 million, as compared to $3.6 million for the year ended December 31, 2004 and $2.5 million for the year ended December 31, 2003. The increases between years are primarily a result of increased personnel costs due to increased activity in our exploration, development and production program for the Field.

General and Administrative Expense—Houston

For the year ended December 31, 2005, general and administrative expense in Houston was $6.6 million, as compared to $2.6 million for the year ended December 31, 2004 and $2.1 million for the year ended December 31, 2003. The increase in 2005 from 2004 is primarily due to costs incurred for listing on the American Stock Exchange, Sarbanes-Oxley Act compliance and addition of new corporate staff, as well as the cost of stock-based compensation related to employee stock options and restricted stock grants recognized during the year. The increase in 2004 from 2003 is primarily due to increased legal costs associated with two lawsuits ongoing during the year.

Interest Expense

Interest expense, net of the capitalized portion, for the years ended December 31, 2005, 2004 and 2003 was $10.3 million, $1.4 million and $.7 million, respectively. The increase in interest expense between years is primarily due to increased debt levels between the periods, as well as the commencement of expensing interest, as opposed to capitalizing interest, on those assets which have been placed in service and are being used for their intended purpose. In addition, $4.4 million of debt discount amortization related to short-term borrowing was recognized in 2005.

Liquidity and Capital Resources

For the years ended December 31, 2005, 2004 and 2003, our on-going capital expenditures were $20.7 million, $26.1 million and $31.2 million, respectively. Our primary sources of funding have been private placements of common and preferred stock, borrowings under our credit facilities with a Kazakhstan bank and our private placement of senior secured notes due 2010 and warrants to purchase shares of common stock (as described in more detail below and in notes 5 and 6 to the notes to consolidated financial statements). The total capitalized cost attributable to the South Alibek Field as of December 31, 2005 was $230.1 million, which includes $12.5 million of capitalized interest.

In February 2002, Caspi Neft entered into a credit facility with a Kazakhstan bank that provided for borrowings totaling $20.0 million with an interest rate of 15% and a fee of 0.5% per annum on the unutilized portion of the commitment. The original maturity date was February 2005; however, the terms were renegotiated to allow for deferral of all principal and interest payments until the earlier of (i) the closing date of the acquisition of Bramex or (ii) December 23, 2005.

In June 2003, Caspi Neft entered into a new $30.0 million credit facility with the same Kazakhstan bank. This facility provided for borrowings up to $30.0 million with an interest rate of 15% and a commitment fee of 0.5% per annum on the unutilized portion. Upon execution of the credit facility, Caspi Neft paid the bank an arrangement fee of $300,000, which was capitalized as a deferred financing cost and was being amortized over the five-year life of the facility. Originally, the amount outstanding as of May 31, 2005 was scheduled to be

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repaid over 36 equal monthly installments beginning June 2005 through the final maturity date of May 31, 2008; however, those terms were renegotiated to allow for deferral of all principal and interest payments until the earlier of (i) the closing date of the acquisition of Bramex or (ii) December 23, 2005.

Both credit facilities were repaid in full in December 2005 in connection with our acquisition of Bramex and our December 2005 private placement of senior secured notes and warrants discussed below.

In November 2004, we sold 1,785.714 shares of our Series A Preferred in a private placement at a purchase price of $14,000 per share, and issued warrants to purchase up to 4,464,286 shares of our common stock at an exercise price equal to $1.55 per share. The aggregate purchase price for the Series A Preferred and the related warrants was cash consideration of $25.0 million. Proceeds from the private placement of Series A Preferred and warrants were used for general corporate purposes, including funding our development drilling program in the South Alibek Field in Kazakhstan, and to pursue growth opportunities.

The Series A Preferred has a liquidation value of $14,000 per share and is convertible at the holders’ option into common stock at a conversion price of $1.40 per share, subject to adjustments in certain circumstances. The holders of the Series A Preferred are entitled to a quarterly dividend payable at the rate of 4.5% per annum, payable in cash. The holders of the Series A Preferred have full voting rights and powers (subject to a beneficial ownership cap as described below) equal to the voting rights and powers of the holders of our common stock, and vote together with the holders of common stock as one class. A holder of the Series A Preferred may not, unless it chooses in advance not to be governed by this limitation, convert the Series A Preferred or exercise the warrants into common stock such that the number of shares of common stock issued after the conversion would exceed, when aggregated with all other shares of our common stock owned by such holder at such time, 4.999% of our then issued and outstanding shares of common stock. So long as at least 20% of the Series A Preferred remains outstanding, we may not issue any new securities or financial instruments that rank pari passu or senior to the Series A Preferred without the approval of at least 75% of the Series A Preferred outstanding. Beginning in July 2006, the Series A Preferred will automatically convert into our common stock at the conversion price of $1.40 per share (subject to adjustments), if our common stock trades at a price greater than $4.15 per share for twenty consecutive trading days and the average daily trading volume of our common stock during such period exceeds 200,000 shares, subject to the applicable ownership limitations. In the event a holder is prohibited from converting into common stock due to the 4.999% ownership limitation, the excess portion of the Series A Preferred remains outstanding, but ceases to accrue a dividend. During 2005, 238 shares of Series A Preferred were converted into 2,380,000 shares of our common stock.

In May 2005, we borrowed an aggregate of $2,240,000 from a group of individuals pursuant to unsecured, short-term notes. The notes bore interest at 15% per annum and were repaid along with accrued interest in July and September 2005. In July 2005, we borrowed $1,000,000 from an individual pursuant to an unsecured short-term note, which bore interest at 15% per annum and was repaid with accrued interest in December 2005. In connection with these borrowings, we issued detachable warrants to purchase 420,000 shares of common stock at exercise prices ranging from $2.00 to $2.12 per share. The warrants have a three-year term.

In August 2005, we issued convertible promissory notes (the “Convertible Notes”) in the original aggregate principal amount of $22,500,000. The Convertible Notes, which bore interest at 10% per annum, were repaid in full, including accrued interest, in December 2005. We used a portion of the proceeds from our private placement of senior secured notes and warrants in December 2005 discussed below to repay the Convertible Notes.

In October 2005, one of our wholly-owned subsidiaries, Transmeridian Exploration Inc. (“TEI”), entered into a share sale and purchase agreement with Seeria Alliance Ltd. to purchase 100% of the authorized and issued shares of Bramex, the owner of 50% of Caspi Neft. In December 2005, the transaction was completed and TEI now owns, directly or indirectly, 100% of Caspi Neft. The total purchase price was $168 million, of which approximately $44 million was to repay the bank credit facilities of Caspi Neft discussed above.

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In December 2005, TEI, issued in a private placement 250,000 units (the “Units”) consisting of (i) an aggregate $250 million principal amount of its senior secured notes due 2010 (the “Notes”) and (ii) warrants to purchase in the aggregate approximately 17.3 million shares of our common stock (the “Warrants”). The Units were issued and sold for a purchase price of $1,000 per Unit. Each Unit consists of $1,000 principal amount of Notes and 69.054 Warrants to purchase an equal number of shares of our common stock. The Notes, which will mature on December 15, 2010, bear interest at the rate of 12% per annum. Interest on the Notes is payable quarterly on March 15, June 15, September 15 and December 15, beginning on March 15, 2006, and at maturity. The first year of interest payments have been escrowed and are recorded as restricted cash on the consolidated balance sheet as of December 31, 2005.

The Notes are secured by first priority pledges of all the capital stock of TEI and of all of our other material subsidiaries. In addition, the Notes are fully and unconditionally guaranteed by us and all of our other material subsidiaries other than TEI. The Notes contain provisions that limit our ability to enter into transactions with affiliates; pay dividends or make other restricted payments; incur debt; create, incur or assume liens; sell assets; and consolidate, merge or transfer all or substantially all of our assets. We are required to offer to repurchase the Notes in connection with certain specified change of control events. The Notes are subject to redemption, in whole or in part, at our option at any time on or after December 15, 2008 at redemption prices starting at 106% of the principal amount redeemed and declining to 100% by June 15, 2010. Prior to December 15, 2008, we may redeem up to 35% of the Notes with proceeds of certain equity offerings at a specified redemption price.

We used the net proceeds from the private placement of the Units of $237.4 million, after expenses, to fund the acquisition of Bramex, to retire the existing bank credit facility indebtedness of Caspi Neft, to repay the Convertible Notes and related accrued interest and to pre-fund the first year of interest payments of $30 million on the Notes. In addition, in December 2005, we entered into a purchase agreement with Kornerstone Investment Group Ltd. (“Kornerstone”) pursuant to which we acquired the 10% carried working interest in the South Alibek Field held by Kornerstone for $15.25 million in cash and one million shares of our common stock. The cash portion of the purchase price obligation was funded from the net proceeds of the placement of Units.

Management expects cash flow from operations to increase throughout 2006 and, together with the excess proceeds from the private placement of Units discussed above, to provide a portion of the funds needed to further develop the field and repay debt. Such cash flow is dependent upon many factors, such as achieving and sustaining adequate production rates, oil prices and other factors which may be beyond the our control.

The following table presents our future contractual obligations, which consist of long-term debt and lease commitments:

	2005		2006		2007		2008		Thereafter
Long-term debt(1)	$	—	$	—	$	—	$	—	$	250,000,000
Lease commitments(2)		273,324		76,126		—		—		349,540
Total contractual obligations	$	273,324	$	76,126	$	—	$	—	$	250,349,540

⁽¹⁾ See note 5 to the Notes to the Consolidated Financial Statements.

⁽²⁾ See note 8 to the Notes to the Consolidated Financial Statements.

Critical Accounting Policies and Recent Accounting Pronouncements

We have identified the policies below as critical to our business operations and the understanding of our financial statements. The impact of these policies and associated risks are discussed throughout Management’s Discussion and Analysis where such policies affect our reported and expected financial results. A complete discussion of our accounting policies is included in note 1 of the Notes to Consolidated Financial Statements.

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Principles of Consolidation

The consolidated financial statements include our accounts and our majority-owned or controlled subsidiaries and are prepared in accordance with generally accepted accounting principles in the United States. All significant intercompany transactions and balances have been eliminated in consolidation. The assets and results of operations of Caspi Neft represent substantially all of our consolidated assets and operations.

We continued to exercise significant control over Caspi Neft after Bramex exercised its option to acquire 50% of Caspi Neft in February 2004 and accordingly, believed the most meaningful accounting treatment was to fully consolidate Caspi Neft with the 50% share owned by Bramex reflected as a minority interest. To exercise its option, Bramex contributed $15.0 million in cash to Caspi Neft, the proceeds of which were used by Caspi Neft to retire debt. The difference between the $15.0 million of capital contributed to Caspi Neft and 50% of the book equity of Caspi Neft after such capital contribution represents an excess purchase price paid by Bramex of $6.0 million. This amount was included in additional paid-in capital on the accompanying 2004 consolidated balance sheet.

Oil and Gas Reserve Information

The information regarding our oil and gas reserves, the changes thereto and the estimated future net cash flows are dependent upon engineering, price and other assumptions used in preparing our annual reserve study. A qualified independent petroleum engineer was engaged to prepare the estimates of our oil and gas reserves in accordance with applicable engineering standards and in accordance with Securities and Exchange Commission guidelines. Changes in prices and cost levels, as well as the timing of future development costs, may cause actual results to vary significantly from the data presented. Our oil and gas reserve data represent estimates only and are not intended to be a forecast or fair market value of our assets.

Our oil and gas reserve data and estimated future net cash flows have been prepared assuming we execute a commercial production contract with the Kazakhstan government, which will allow production for the expected 25-year term of the contract. The estimate of the royalty used in this report is a sliding scale based on annual production over the 25-year term, based on the provisions of the final production contract that is awaiting approval from the Kazakhstan government. Based on the forecast annual production, the government royalty rate is between 2.0% to 2.2%, with the royalty rate capped at 5%. If we are not successful in obtaining final government approval of the production contract, it will materially change our oil and gas reserve data and estimated future net cash flows.

Successful Efforts Method of Accounting

We follow the successful efforts method of accounting for our investments in oil and gas properties, as more fully described in Note 1 of the Notes to Consolidated Financial Statements. This accounting method has a pervasive effect on our reported financial position and results of operations.

Capitalized Interest Costs

We capitalize interest costs on oil and gas projects under development, including the costs of unproved leasehold and property acquisition costs, wells in progress and related facilities. We also capitalized interest on our drilling rig during the time it was being prepared for its intended use. During the year ended December 31, 2005, 2004 and 2003, we capitalized $2.5 million, $4.5 million and $4.2 million, respectively, of interest costs, which reduced our reported net interest expense to $10.3 million, $1.4 million and $772,409 respectively. Since a significant portion of our financial resources has been dedicated to the exploration and development of our Kazakhstan property, since 2001, the resulting interest capitalized has been significant. This capitalized interest becomes part of the capitalized costs of our properties which will be amortized as a part of depreciation, depletion and amortization or charged to expense if the results of our drilling should prove unsuccessful.

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Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued the revised SFAS No. 123, Share-Based Payment (“SFAS No. 123(R)”). SFAS 123(R) is a revision of SFAS No. 123 and supersedes APB No. 25. SFAS 123(R) requires compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured at each reporting date through the settlement date. Compensation cost will be recognized over the period that an employee provides services in exchange for the award. We had previously adopted SFAS No. 123, and, the adoption of SFAS 123(R) on January 1, 2006 is not expected to have a material effect on our consolidated financial statements.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections. SFAS No. 154 replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Internal Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 requires retrospective application of changes in accounting principle to prior periods’ financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We adopted SFAS No. 154 on January 1, 2006. Any impact on our consolidated results of operations and earnings per share will be dependent on the amount of any accounting changes or corrections of errors whenever recognized.

Quantitative and Qualitative Disclosures About Market Risk

Oil Prices

Our future success is dependent on our being able to transport and market our production either within Kazakhstan or preferably through export to international markets. Crude oil prices are subject to significant volatility in response to changes in supply, market uncertainty and a variety of other factors beyond our control. The majority of our sales of crude oil prior to June 2005 were based on prevailing local market prices at the time of sale.

Interest Rate Risk

At December 31, 2005, we had long-term debt outstanding of $223.4 million, net of discount of $26.6 million. The debt bears interest at a fixed rate of 12% per annum and the first year’s interest payments have been escrowed.

Foreign Currency Risk

Our functional currency is the U.S. dollar. The financial statements of our foreign subsidiaries are measured in U.S. dollars. Accordingly, transaction costs for the conversion to various currencies for foreign operations are recognized in earnings at the time of each transaction.

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BUSINESS

Transmeridian Exploration Incorporated is an independent energy company engaged in the business of acquiring, developing and producing oil and natural gas. Our activities are primarily focused on the Caspian Sea region of the former Soviet Union, and our primary oil and gas property is the South Alibek Field in the Republic of Kazakhstan, covered by License 1557 and the related exploration contract with the government of Kazakhstan. We are currently pursuing additional projects in the Caspian Sea region and surrounding basins. We were founded in 2000 as a Delaware corporation.

We conduct our operations in Kazakhstan through our wholly owned subsidiary, JSC Caspi Neft TME, a joint stock company organized under the laws of Kazakhstan. In December 2005, we acquired all of the issued and outstanding shares of Bramex Management, Inc., which owns 50% of Caspi Neft. In December 2005, we acquired the 10% carried working interest in the Field held by Kornerstone Investment Group, Ltd. As a result of these transactions, our interest in both Caspi Neft and the South Alibek Field is 100%.

At December 31, 2005, our estimated total proved reserves were 72,936,622 barrels of oil. All of these reserves are attributable to the South Alibek Field. The present value of the estimated future net revenues from our proved reserves before income tax, discounted at 10% per annum, based on prices being received as of December 31, 2005 and with oil pricing assumptions held constant throughout the estimated producing life of the reserves, was $1,015,427,446. The estimates of our proved reserves and the present value of the estimated future net revenues have been prepared by Ryder Scott Company, independent petroleum engineers, in accordance with SEC guidelines.

We are in the early stages of developing the South Alibek Field. As of December 31, 2005, 3,331,580 barrels of oil, or 5% of the South Alibek Field’s estimated proved reserves, were classified as proved developed reserves. The balance of our estimated proved reserves are classified as proved undeveloped and will require the drilling of future wells to produce these reserves. We have an active development program in the South Alibek Field, including plans to drill wells that are not currently included within the boundaries of our proved reserves. See “—Properties—Proved Reserves” below and note 12 of the notes to our consolidated financial statements for further information about our estimated proved reserves.

Strategy

Our strategy is to increase our reserves, production and cash flows by (i) acquiring and developing oil and gas reserves, (ii) exploring for new reserves and (iii) optimizing production and value from our existing reserve base. We prefer to target medium-sized fields with proved or probable reserves, relatively low entry costs and significant upside reserve potential. Through the industry contacts, technical knowledge and experience of our management team, we believe we can successfully identify, obtain financing for and acquire additional properties in the Caspian Sea region and surrounding basins.

Customers

In 2005, approximately 45% of our sales were into the Kazakhstan market to two different purchasers, and 55% were export sales to two different purchasers. Until our pipeline transfer connections and handling facilities are complete, we are temporarily storing our oil at the field facilities and at rail loading terminals in the vicinity until it can be transferred to the buyers. Our oil sales revenues to date are derived solely from our operations in Kazakhstan. For each of fiscal years 2004 and 2003, we sold oil exclusively to customers located in Kazakhstan and neighboring countries. Beginning in August 2005, we began export sales in the international markets. See “—Properties—Transportation and Marketing” below for further discussion of our current transportation and marketing arrangements and future plans. See also “Risk Factors—Risks Related to Our Business—Our business and results of operations depend on our ability to transport our production to viable markets and on the price at which we can sell our production.”

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Competition

The oil and gas industry is highly competitive, and our future business plans could be jeopardized by competition from larger and better-financed companies. We compete for reserve acquisitions, exploration leases, licenses, concessions and marketing agreements against companies with financial and other resources substantially greater than ours. Many of our competitors have more established positions and stronger governmental relationships, which may make it more difficult for us to compete effectively with them. In Kazakhstan, more than 100 fields (approximately 44%) are under foreign ownership and we estimate there are 45 non-Kazakh companies operating these fields. We believe Lukoil and Chinese National Petroleum Corporation (CNPC) are the largest foreign-owned petroleum companies operating in Kazakhstan, both of which have made recent significant reserve acquisitions. A high level of interest by non-Kazakh companies also exists in the other most prospective oil and gas areas of the Caspian Sea region. See “Risk Factors—Risks Related to Our Business—Competition in our industry is intense, and many of our competitors in the Kazakhstan region have greater financial and other resources than we do.”

Government Regulation

Our operations are subject to various levels of government controls and regulations in the United States and in Kazakhstan, including environmental controls and regulations. We attempt to comply with all legal requirements in the conduct of our operations and employ business practices which we consider to be prudent under the circumstances in which we operate. It is not possible for us to separately calculate the costs of compliance with these controls and regulations, as such costs are an integral part of our operations.

In Kazakhstan, legislation affecting the oil and gas industry is under constant review for amendment or expansion. Pursuant to such legislation, various governmental departments and agencies have issued extensive rules and regulations which affect the oil and gas industry, some of which carry substantial penalties for failure to comply. These laws and regulations can have a significant impact on the oil and gas industry by increasing the cost of doing business and, consequently can adversely affect our results of operations. Inasmuch as new legislation affecting the industry is commonplace and existing laws and regulations are frequently amended or reinterpreted, we are unable to predict the future cost or impact of complying with such laws and regulations.

Offices and Employees

Our corporate headquarters are in Houston, Texas, where we lease 6,725 square feet of office space. As of March 10, 2006, we had 9 full-time employees in Houston. We also maintain two offices in Kazakhstan, the first an administrative office in Aktobe, Kazakhstan, where we lease approximately 9,020 square feet of office space and have 71 full-time employees, and the second a small administrative office in Almaty, Kazakhstan, where we have five employees. Our field operations for the South Alibek Field have approximately 72 employees.

Availability of Reports

We make available free of charge on our internet website, www.tmei.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and any amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC. We also make available free of charge on our internet website other electronic filings that we make with the SEC as well as the Forms 3, 4 and 5 filed by our directors, executive officers and significant stockholders with respect to their beneficial ownership of our common stock. These filings and reports are also available on the SEC’s website at www.sec.gov.

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PROPERTIES

Petroleum Industry in Kazakhstan

Kazakhstan was one of 15 independent republics that comprised the former Soviet Union. After gaining independence in 1991, it joined with Russia and several other former Soviet republics in the Confederation of Independent States, a union of economic and political cooperation. Kazakhstan is an area of significant investment activity for the international oil and gas industry. Based upon publicly available information, Kazakhstan’s proved reserves rank it among the top 15 countries in the world, with over 250 producing oil fields and 20 billion barrels of proved reserves. Its current production is approximately 1.3 million barrels of oil per day, of which approximately 85% is exported.

Regulation of the oil and gas industry in Kazakhstan has been codified in the Law of Petroleum, which sets out the conduct of the oil and gas industry and the roles of participants, both private and governmental. The industry is regulated in Kazakhstan by the Ministry of Energy and Mineral Resources (“MEMR”), which administers all contracts, licenses and investment programs.

The national oil company, Kazmunaigas, has been through several stages of consolidation. The Kazakhstan government has been in the process of merging the various regional governmental companies, which previously handled the extraction and transportation sectors of the industry, into one consolidated entity to eliminate redundant bureaucracy and provide for a more efficient management of the country’s natural resources. This consolidated entity maintains a direct ownership interest on behalf of the Kazakhstan government in most of the large oil field development projects in Kazakhstan as well as sole ownership and operation of many of the interconnecting oil and gas pipeline systems. However, governmental ownership or participation in exploration and development projects is not required, and the Kazakhstan government has no ownership interest in the South Alibek Field.

Acquisition of the South Alibek Field

In May 1999, we engaged Kornerstone Investment Group, Ltd. (“Kornerstone”) to identify and assist in the acquisition of oil and gas properties in Kazakhstan and elsewhere in the Caspian Sea region. Since we had not received any significant funding at that time, the consulting agreement with Kornerstone provided that Kornerstone’s compensation would be in the form of a 10% carried working interest (which we reacquired from Kornerstone in January 2006) in all properties shown to us and in which we acquired an interest. The controlling shareholder of Kornerstone is a citizen of Kazakhstan who is involved in oil and gas production and other business endeavors. This individual is also currently employed on a part-time basis as a consultant and manager of Caspi Neft.

In early 2000, Kornerstone identified an opportunity in Kazakhstan known as the South Alibek License 1557, which covered what is now known as the South Alibek Field. The adjacent Alibekmola Field had been discovered in 1980 by a regional exploration unit of the Soviet Ministry of Geology. A total of 31 wells had been drilled in the Alibekmola Field to delineate the oil bearing reservoirs and structure of the field. This delineation work continued following the breakup of the Soviet Union.

The South Alibek Field was first identified by an Alibekmola Field delineation well, known as Alibekmola 29, drilled by a geological association of the Kazakhstan government. It was determined to be in a separate fault block adjacent to the Alibekmola Field, and in 1996 produced flowing oil from several intervals in the Middle-Lower Carboniferous (KT2) reservoirs during well testing. Due to lack of funds for further drilling, the area was offered for public tender and was awarded in the tender to a subsidiary of AIL Alpha Corporation, Ltd. License 1557 was granted to the subsidiary in April 1999. In March 2000, we acquired this subsidiary. Subsequent work by us has resulted in this license area being designated as the South Alibek Field.

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License and Exploration Contract

We signed an exploration contract with the Kazakhstan government in March 2000. The contract, whose original term extended to April 2005 with two two-year extensions, required us to make total capital expenditures of approximately $18.0 million. In April 2004, we were granted the first of these two-year extensions, through April 2007. In connection with this extension, we agreed to an additional work program commitment of $30.5 million. As of December 31, 2005, we had satisfied these capital expenditure commitments. Pursuant to the exploration contract, we can produce wells under a test program, provided we make 2% royalty payments (based on production) to the Kazakhstan government. We intend to apply for the next two-year extension to continue the exploration of the license area and expand the South Alibek Field before the existing exploration contract term expires.

Production Contract

Under our exploration contract and the Law of Petroleum, we hold the exclusive right to negotiate and execute a production contract with the MEMR in the event of a commercial discovery in the license area, and the government is required to conduct these negotiations. In December 2004, the State Committee on Reserves (“SCR”) approved commercial reserves for development and exploitation in the South Alibek Field. On this basis, the MEMR granted us the exclusive right to execute a long-term production contract in June 2005. We concluded negotiations of the final commercial and legal terms of the contract in September 2005, when the working group of the MEMR formally approved the draft production contract. The final draft was then circulated to the relevant governmental ministries and committees for their formal acceptance prior to contract execution. In the course of this process, several of these governmental bodies requested additional changes to the contract, most of which we successfully negotiated and included in the written contract.

As of March 10, 2006, approval of one remaining government ministry was still pending. Once this final approval is obtained, the production contract will be signed by the prime minister, at which time it will enter into effect. We believe that this approval will be obtained and the production contract signed during the first half of 2006. The terms of the production contract establish the royalty and other payments due to the government in connection with our production of oil and gas. A bonus payment of $0.6 million will be required upon execution, based on the SCR reserves audit approving the commercial discovery, which defined the initial production area of 3,500 acres, or about 25% of the total area under license. If additional area is added on the basis of successful exploratory drilling, additional bonus payments would be assessed at a rate of 0.1% of the recoverable reserves added. The contract will also allow the government to recover approximately $4.7 million of historical exploration costs incurred before privatization out of future revenues beginning in January 2007 at a rate of approximately $50,000 per quarter.

The production contract is tax and royalty based. Under this financial arrangement, we will pay 100% of the development and operating costs and will be entitled to receive 100% of the revenues from the Field, subject to a royalty based on production from the Field and corporate income taxes. The royalty is a sliding scale based on annual production, ranging from 2% to 2.5% for production up to approximately 60,000 barrels per day. Corporate income taxes in Kazakhstan vary from 30% to 40%. Additionally, there is an excess profit tax on oil and gas production which can vary from 15% to 60% based on the ratio of net income to deductions. These taxes can significantly affect the economics of the project. The government may also require that we make available, if requested, up to 20% of our production to local refineries at domestic market prices. We would expect these prices to be lower than prices we would receive in the export market. However, our transportation costs would likely be lower as well. Most of the smaller producers in the region are not currently being required to sell into the domestic market and we do not expect this to change.

Overview of Regional Geology

The South Alibek Field is located in a fairway of large fields in northwestern Kazakhstan within the prolific Pre-Caspian Basin. Within 20 miles of the South Alibek Field are three giant producing fields with resources

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estimated between 500 million to 1 billion barrels each: the Kenkiyak and Zhanazhol Fields and the immediately adjacent Alibekmola Field. Production from the area’s carbonate reservoirs was first established in the 1950s, before the area was limited to military use and closed to oil and gas activity for 20 years. The Zhanazhol Field was the first to be discovered following the release of some of the area to exploration in the 1970s, and is now producing from the Upper-Middle Carboniferous (KT1) and Middle-Lower Carboniferous (KT2) reservoirs. The Alibekmola Field was discovered in the 1980s as additional areas were released, with production tests and reserves in both the KT1 and KT2 reservoirs. South Alibek was identified by the last well drilled during the delineation of Alibekmola following the breakup of the Soviet Union and independence of Kazakhstan. Development of these fields began after 2000.

The KT1 and KT2 reservoirs were deposited throughout the Middle and Late Carboniferous periods and into the Early Permian as a basin-wide and massive carbonate platform in the shallow waters of the ancient Uralian paleo-ocean on the southeastern boundary of the East European Plate. Regional closing of the ocean during the Permian period created a restricted sea that makes up the Pre-Caspian Basin. Prolific oil field trends are established in the southern half and northern margins of this Basin, with the South Alibek Field located on the southeastern margin of the Basin on the Zharamys Uplift. The carbonate fields lying within the Pre-Caspian Basin, including the Devonian carbonates which were deposited earlier, account for approximately 75% of Kazakhstan’s oil reserves and production. These fields are projected to ultimately contain over 40.0 billion barrels of recoverable reserves, and include two super-giant fields: Tengiz, which is estimated to have 9.0 billion barrels of recoverable reserves; and Kashagan, which is estimated to have 13.0 billion barrels of recoverable reserves.

The tectonic history specific to the Zhanazhol, Alibekmola and South Alibek Fields area was extensively studied by Soviet scientists during the last four decades of the Soviet era. The carbonates were deposited on a stable block removed from the influence of the Ural Mountain building processes to the northeast. Soviet geologists speculated the block was significantly closer to Tengiz at that time than it is today. The movement of the block to the northeast, of up to 450 miles, and the later folding and thrust faulting, began in the Middle Permian through the Late Triassic period. This faulting created the northeast-southwest trending enechalon structures that characterize these fields and provides the trap for oil and gas. The main defining thrust faults are generally oriented in a north-south direction, with a pattern of small stress transfer crossfaulting and fracturing that can enhance the fracture characteristics of the carbonate reservoirs. At present day, the platform trends southwest to northeast over an area approximately 125 miles long and 50 miles wide. It is bounded to the north by a major fault which separates this area from the Urals western fold and thrust belt.

Zhanazhol, Alibekmola and South Alibek Fields are ideally situated for favorable migration of hydrocarbons. The source for the oil and gas was provided by three source rocks, Devonian through Carboniferous in age, with the filling of the structures beginning at the end of the Permian with peaks of generation at the end of the Triassic and end of the Jurassic and with one source rock believed to be generating today.

Field Geology

The South Alibek Field is immediately adjacent to the producing Alibekmola Field. Structurally it has three-way dip closure and is bounded and separated from Alibekmola on the east by a major north-south thrust fault. The Field is up to 1,000 feet lower than the Alibekmola Field and has a lower oil-water contact established from testing of the Alibekmola 29 well. The Zhanazhol Field lies 10 miles along the regional structural trend to the south. The East Zhagabulak Field is on the northwest corner of the South Alibek license area.

The KT1 and KT2 are the primary oil bearing reservoirs in all four fields, all of which have established production in the KT2. The KT1 is produced in the Zhanazhol Field. It has been found productive by testing in the Alibekmola and East Zhagabulak Fields, but has not been developed in those fields or in South Alibek. Evaluation of field data indicates reservoir properties of the KT1 and KT2 are very similar in the Alibekmola and

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South Alibek Fields. Production from the Zhanazhol Field is estimated to be in excess of 100,000 barrels of oil per day, and from the Alibekmola Field, which is still in the early phases of development, over 30,000 barrels of oil per day.

Within the South Alibek Field, the KT1 and KT2 reservoirs are porous and fractured carbonates of shallow marine-terriginous origin. The porosity is both primary and secondary, by diagenesis to dolomite and by fracturing. Porosity averages between 9-10% for both the KT1 and KT2, and is estimated as high as 15% in the KT2 and 20% in the KT1 from core analysis of open porosity. Permeability estimates range between 5mD to 300mD. The identified net thickness of the oil bearing reservoir averages approximately 200 feet for both the KT1 and KT2. The KT2 reservoir is a series of massive stacked platform carbonates, subdivided into five stratigraphically defined zones, totalling more than 3,000 feet thick, with the top at approximately 10,500 feet in depth. The shallower KT1 is subdivided into three zones: the lowest zone is a series of massive stacked platform carbonates and the shallower zones are more characteristic of the back-stepping progradational nature of the carbonate platform The top of the KT1 reservoir is at a depth of approximately 7,000 feet, and is about 2,300 feet thick.

We have conducted an extensive evaluation of the information available for the South Alibek Field and adjacent fields, including vintage and recent logging, core, pressure and testing data, and 2D and 3D seismic data to which we have rights. Based on our evaluation, we believe that the oil-bearing reservoirs within the KT1 and KT2 may be present over a substantial part of the area covered by License 1557. We continue to update the technical appraisal of our field and collect and evaluate reservoir and fluid data from our wells. Based on available regional data, the possibility exists that the prospective Devonian carbonates may underlie the KT2 at significantly greater depths, but this possibility remains undefined due to insufficient data at the present time.

Proved Reserves

Our estimated proved oil and gas reserve quantities were prepared by Ryder Scott Company, independent petroleum engineers. There are numerous uncertainties in estimating quantities of proved reserves and projecting future rates of production and the timing of development expenditures. These uncertainties are greater for properties which are undeveloped or have a limited production history, such as the South Alibek Field. Our actual reserves, future rates of production and timing of development expenditures may vary substantially from these estimates. All of our proved reserves are in the South Alibek Field. Our net quantities of proved developed and undeveloped reserves of crude oil and standardized measure of future net cash flows are reflected in the table below. See further information about the basis of presentation of these amounts in note 12 of the notes to our consolidated financial statements.

As of December 31, 2005, we own a 100% working interest in the South Alibek Field, subject to Kazakhstan government royalties and a 3.5% net revenue interest in favor of a third party. The effect of these interest deductions is reflected in the calculation of our net proved reserves. Our proved reserves have been prepared under the assumption that we obtain a commercial production contract which will allow production for the expected 25-year term of the contract, as more fully discussed above under “Production Contract.” Based on forecast production volumes, the average royalty over the term of the production contract is expected to be 2.2% or less.

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Net Proved Crude Oil Reserves and Future Net Cash Flows

As of December 31, 2005

(Quantities in Barrels)

	Actual
Proved Developed		3,331,580
Proved Undeveloped		69,605,042
Total Proved Reserves		72,936,622
Future Net Income Before Income Taxes, Discounted @10%	$	1,015,427,446
Standardized Measure of Discounted Future Net Cash Flows	$	746,980,814

The following table shows the number of developed and undeveloped acres in the South Alibek Field as of the dates indicated:

	As of December 31,
	2005	2004	2003
Developed acres	640	232	160
Undeveloped acres	1,360	1,448	765
Total acreage	2,000	1,680	925

For information regarding our production from the South Alibek Field, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Transportation and Marketing

Oil producers in the area of the South Alibek Field utilize both the KazTrans Oil and Russian Transneft pipeline systems to export crude oil to regional hub locations such as Samara, Ukraine, the Port of Odessa on the Black Sea and European locations such as Poland, Hungry, Lithuania, Germany and Finland. Pipeline capacity in the area has significantly increased with the opening of the Caspian Pipeline Consortium (“CPC”) pipeline, which ultimately will boost regional export capacity from 250,000 barrels of oil per day to an expected 800,000 barrels of oil per day. Two Soviet-era oil pipelines in the local area of the Field, with combined capacity of 143,000 barrels of oil per day, continue to service nearby producing fields. These pipelines transport oil to the Bestamak rail terminal and the oil refinery in Orsk via Kenkiyak Field, and can be used as a transfer point for oil exchanges to Western markets. Several rail loading oil terminals are also in the area and can be used for export sales. The nearest is approximately 30 miles from the South Alibek Field at Zhem.

Two important connecting pipelines in the vicinity of the South Alibek Field became operational in 2003. The Kenkiyak-Atyrau pipeline, with an initial capacity of 120,000 barrels of oil per day, originates at the Kenkiyak Field and provides a link to the CPC pipeline for nearby producing fields, including the Zhanazhol Field. The Alibekmola-Kenkiyak pipeline provides direct pipeline access from the Alibekmola Field to the Kenkiyak-Atyrau pipeline for export to western markets via the CPC pipeline. The pump station at the Alibekmola Field is one mile from the site of our central production facilities.

We currently export the majority of our oil production to international markets by rail from the Zhem terminal. The terminal is accessed by truck from our field facilities. A portion of the oil continues to be sold in the local markets to alleviate storage constraints of the existing field facilities. Our future plans include the shipment of all our production by pipeline, which is the preferred and most cost effective method to sell oil into the export markets. Based upon our discussions with the operator of the Alibekmola-Kenkiyak pipeline, we believe we will be able to begin exporting our oil via this pipeline during 2006, subject to possible capacity limitations. To obtain access, we will be required to make certain processing and delivery investments or

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arrangements with nearby producers. In addition, CNPC is finalizing the extension of the rail line from Zhem to Zhanazhol Field, placing rail access within approximately four miles of the South Alibek Field. Construction of a rail spur from our field to the Zhanazhol Field is under consideration, which would eliminate the need to truck the oil to Zhem. See “Business—Customers.”

Drilling Rig

In December 2001, we purchased a drilling rig for our operations in the South Alibek Field for total consideration of $5.3 million, including a note payable for $3.3 million and the issuance of $2.0 million in redeemable common stock. The rig is a National 1320UE, with a 2,000 horsepower rating, a depth rating of approximately 20,000 feet and a 320-ton rating on the drawworks. At the time of purchase, the rig was in storage in South America. During 2002, we moved the rig to Kazakhstan and refurbished and modified the rig to make it suitable for use in our operations. We contracted the operation and manning of the rig to a third party. The rig has been idle since December 2004. In the first quarter of 2006, we reached an agreement to dispose of the rig. See note 3 of the Notes to Our Consolidated Financial Statements. As more fully discussed below under “—Legal Proceedings”, we settled litigation relating to the drilling rig in December 2005.

Legal Proceedings

Drilling Rig Dispute

In December 2001, we purchased a land drilling rig for total consideration of $5.3 million, including a note payable for $3.3 million and the issuance of $2.0 million in redeemable common stock. We were not informed that the rig was subject to a lien in favor a prior owner of the rig. Beginning in December 2003, the seller, us and the lienholder engaged in litigation to determine the parties’ rights and obligations with respect to the rig, the lien and payments due the seller and the lienholder. In August 2004, we and the seller of the rig entered into a settlement and release agreement, pursuant to which the remaining balance on the note of $1.6 million, plus accrued interest of $550,000 was cancelled, and we agreed to endeavor to negotiate a settlement with the lienholder pursuant to which we would assume the obligation of the seller of the rig to the lienholder. In December 2005, the parties engaged in a court-supervised mediation at which they agreed to settle all outstanding claims against one another. Pursuant to the settlement agreement, we paid approximately $1.8 million to the first lienholder to settle the remaining payment obligations to the lienholder, plus $120,000 for legal fees. See notes 5 and 8 of the notes to our consolidated financial statements.

Former Chief Financial Officer

In May 2003, Jim W. Tucker, our former chief financial officer, filed suit in state district court in Texas against us in connection with his separation from service in January 2003. The suit alleged breach of an oral employment agreement. We took a default judgment in November 2003 in the amount of $0.9 million. In February 2005, the court granted our motion to vacate the default judgment. The plaintiff subsequently passed away in July 2005. The case may still be reinstated by the deceased’s estate prior to April 2007, and would begin as if we had just been served notice. We believe we have meritorious defenses to the allegations against us and intend to vigorously contest this matter and pursue all available legal remedies; however, we believe the chances that the estate will refile the suit to be remote.

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DESCRIPTION OF NOTES

Transmeridian Exploration Inc. issued the notes under an indenture, dated as of December 12, 2005, as supplemented by the first supplemental indenture, dated as of December 22, 2005, by and among itself, Transmeridian Exploration Incorporated, as parent guarantor, the subsidiary guarantors party thereto and The Bank of New York, as trustee. The indenture and the first supplemental indenture are referred to together in this section as the “indenture.” The terms of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939.

The following description is a summary of the material provisions of the indenture. It does not restate the indenture in its entirety. We urge you to read the indenture because it, and not this description, defines your rights as a holder of the notes. You may request a copy of the indenture at our address set forth in the section of this prospectus entitled “Where You Can Find More Information.”

You can find the definitions of certain terms used in this section under “—Certain Definitions” below. In this section, references to the “Parent” refer only to Transmeridian Exploration Incorporated, the parent of the issuer of the notes, and not to any of its subsidiaries, and references to the “Issuer” refer only to Transmeridian Exploration Inc., the issuer of the notes, and not to any of its subsidiaries.

General

The notes:

• are a senior obligation of the Issuer;

• are fully and unconditionally guaranteed by the Parent (which guarantee is secured by a pledge of all of the stock of the Issuer and by a pledge of all of the stock of TMEI Operating, Inc., the Parent’s other wholly-owned direct subsidiary) and by each of the current and future Restricted Subsidiaries of the Parent (other than the Issuer);

• are secured by pledges of the stock of the Restricted Subsidiaries of the Issuer;

• are limited in aggregate principal amount to $250.0 million;

• are equal in right of payment to all existing and future Senior Debt of the Issuer;

• are effectively senior to all unsecured indebtedness of the Issuer, to the extent of the value of the collateral securing the notes;

• are senior in right of payment to any existing or future subordinated Indebtedness of the Issuer; and

• are currently eligible for trading on The PORTAL Market^®.

The Parent Guarantee

The Parent has fully and unconditionally guaranteed all obligations of the Issuer under the indenture and the notes (the “Parent Guarantee”). The Parent Guarantee

• is a senior obligation of the Parent;

• is secured by a pledge of all of the Capital Stock of the Issuer and by a pledge of all of the Capital Stock of TMEI Operating, Inc., the Parent’s other wholly-owned direct subsidiary as described under “—Security”;

• is effectively senior to all unsecured indebtedness of the Parent, to the extent of the value of the collateral securing the Parent Guarantee;

• is equal in right of payment to all existing and future Senior Debt of the Parent; and

• is senior in right of payment to any existing or future Subordinated Indebtedness of the Parent.

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The Subsidiary Guarantees

The obligations of the Issuer under the notes and the indenture have been jointly and severally guaranteed on a senior basis by all of the Issuer’s current and future Restricted Subsidiaries. The Subsidiary Guarantees of the notes:

• are senior obligations of each Subsidiary Guarantor;

• are secured by any Collateral owned by such Subsidiary Guarantor;

• are effectively senior to all unsecured indebtedness of such Subsidiary Guarantor, to the extent of the value of the collateral securing its Subsidiary Guarantee;

• are equal in right of payment to all existing and future Senior Debt of each Subsidiary Guarantor; and

• are senior in right of payment to any existing or future Subordinated Indebtedness of each Subsidiary Guarantor.

The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee have been limited as necessary to prevent that Subsidiary Guarantee from constituting a fraudulent conveyance under applicable law. See the section of this prospectus entitled “Risk Factors” for further discussion.

The indenture provides that a Subsidiary Guarantor may not consolidate with or merge with or into another Person (other than the Issuer or another Subsidiary Guarantor) unless:

(1) immediately after giving effect to that transaction, no Default exists; and

(2) the Person formed by or surviving any such consolidation or merger (if other than the Subsidiary Guarantor) assumes all the obligations of that Subsidiary Guarantor pursuant to a supplemental indenture satisfactory to the trustee.

The Subsidiary Guarantee of a Subsidiary Guarantor will be released:

(a) in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger or consolidation); or (b) in connection with any sale of all of the Capital Stock of a Subsidiary Guarantor, in either case provided that (I) the Issuer otherwise complies with the terms of the indenture with respect to such transaction and (II) upon completion of such transaction all obligations of such Subsidiary Guarantor with respect to guarantees of other Indebtedness of the Issuer and its restricted subsidiaries terminate; or

(b) if the Issuer designates any restricted subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of the indenture; or

(c) if the Issuer effects a Legal Defeasance as described under “—Legal Defeasance and Covenant Defeasance”.

Principal, Maturity and Interest

The notes are limited in aggregate principal amount to $250.0 million. The indenture does not provide for the issuance of additional notes. The Issuer issued notes in denominations of $1,000 and integral multiples of $1,000. The notes will mature on December 15, 2010.

Interest on the notes accrues at the rate of 12% per annum and is payable in cash quarterly in arrears on each March 15, June 15, September 15 and December 15, commencing March 15, 2006. The Issuer will make each interest payment to the holders of record of the notes on the March 1, June 1, September 1 and December 1 immediately preceding each interest payment date. Interest on the Exchange Notes will accrue from the last interest payment date on which interest was paid on the Outstanding Notes tendered in exchange therefor.

Interest on the notes accrues, in the case of the initial interest payment, from the Issue Date and, in the case of all subsequent interest payments, from the date interest was most recently paid. Interest is computed on the

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basis of a 360-day year consisting of twelve 30-day months. Additionally, the Issuer will pay interest on overdue principal and on overdue installments of interest at 1% over the above-stated rate, in each case, to the extent lawful. All references in this section to interest on the notes includes any such additional interest that may be payable.

Methods of Receiving Payments on the Notes

If a holder of any notes has given wire transfer instructions to the Issuer, the Issuer will make all principal, premium and interest payments on those notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York.

The Issuer will make all principal, premium and interest payments on each note in global form registered in the name of The Depository Trust Company (“DTC”) or its nominee in immediately available funds to DTC or its nominee, as the case may be, as the holder of such global note.

Paying Agent and Registrar for the Notes

The trustee is acting as Paying Agent and Registrar. The Issuer may change the Paying Agent or Registrar without prior notice to the holders of the notes, and the Issuer, the Parent or any of their Subsidiaries may act as Paying Agent and/or Registrar.

Transfer and Exchange

A holder may transfer or exchange notes in accordance with the indenture. The Registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a holder to pay any taxes and fees required by law or permitted by the indenture. The Issuer is not required to transfer or exchange any note selected for redemption. Also, the Issuer is not required to transfer or exchange any note for a period of 15 days before a selection of the notes to be redeemed.

The holder of a note will be treated as the owner of it for all purposes.

Interest Reserve Account

The Issuer maintains with the trustee a segregated account into which an amount sufficient to pay the first four quarterly interest payments on the notes was deposited on the Issue Date. The trustee will disburse such funds to pay such interest payments when due.

Security

The Issuer’s obligations under the notes are secured pursuant to the Security Documents by a perfected first priority pledge of all of the Capital Stock of the existing Restricted Subsidiaries of the Issuer, and the obligations of the Parent under the Parent Guarantee are secured pursuant to the Security Documents by a perfected first priority pledge of all of the Capital Stock of the Issuer and TMEI Operating, Inc., the Parent’s other wholly-owned direct subsidiary, in each case granted to the trustee for the benefit of the holders of the notes (together with any proceeds therefrom, collectively, the “Collateral”).

Unless an Event of Default under the indenture shall have occurred and be continuing, the Parent, the Issuer and the Subsidiary Guarantors have the right under the Security Documents to collect, invest and dispose of any income from the Collateral and exercise any voting rights with respect to the Collateral. Upon an Event of Default, these rights will cease and the trustee will be entitled to foreclose upon and sell the Collateral or any part thereof as provided in the Security Documents. There can be no assurance that the trustee will be able to sell the

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Collateral without substantial delays or that the proceeds obtained will be sufficient to pay all amounts owed to the trustee, holders of the notes and owners of Permitted Liens, if any. Subject to the provisions of the indenture and the Security Documents, the trustee in its sole discretion and without the consent of the holders of the notes, on behalf of such holders, may take all actions it deems necessary or appropriate in order to:

(a) enforce any of the terms of the Security Documents; and

(b) collect and receive any and all amounts payable in respect of the obligations of the Issuer, the Parent or the Subsidiary Guarantors under the notes, the indenture and the Security Documents.

The Security Documents provide that the Collateral will be released only:

(1) upon payment in full of all outstanding notes and all amounts due under the indenture;

(2) upon satisfaction and discharge of the indenture as set forth under “—Satisfaction and Discharge”; or

(3) upon a Legal Defeasance as set forth under “—Legal Defeasance and Covenant Defeasance.”

The Security Documents provide that the Parent and the Issuer will, and will cause each of their Restricted Subsidiaries to, do or cause to be done all acts and things which may be required, or which the trustee from time to time may reasonably request, to assure and confirm that the trustee holds, for the benefit of the holders of the notes, valid, enforceable and perfected first priority Liens (subject to Permitted Liens) upon the Collateral as contemplated by the indenture and the Security Documents.

Optional Redemption

The Issuer may redeem all or a part of the notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period (or shorter period, as applicable) beginning on the dates indicated below:

Year	Percentage
December 15, 2008	106.00%
December 15, 2009	103.00%
June 15, 2010	100.00%

In addition, prior to December 15, 2008, the Issuer may at any time on one or more occasions redeem up to 35% of the notes originally issued under the indenture at a redemption price of (i) 106.00% of the principal amount thereof if the redemption occurs prior to June 15, 2006, or (ii) 112.00% of the principal amount thereof if the redemption occurs on or after June 15, 2006 but prior to December 15, 2008, plus in each case accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that

(1) at least 65% of the notes originally issued under the indenture remains outstanding immediately after the occurrence of such redemption (excluding notes held by the Issuer and its Subsidiaries); and

(2) the redemption must occur within 90 days of the date of the closing of such Equity Offering.

Selection and Notice

If less than all of the notes are to be redeemed at any time, the trustee will select notes for redemption on a pro rata basis, by lot or by such method as the trustee shall deem fair and appropriate.

No notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each holder of the notes to be redeemed at its registered address. Notices of redemption may not be conditional.

If any note is to be redeemed in part only, the notice of redemption that relates to that note shall state the portion of the principal amount thereof to be redeemed. A new note in principal amount equal to the unredeemed

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portion of the original note will be issued in the name of the holder thereof upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on notes or portions thereof called for redemption, unless there is a default by the Issuer in the payment of the redemption price.

Payment of Additional Amounts

If any taxes, assessments or other governmental charges are imposed, or amounts representing such taxes, assessments or other charges are withheld, by any jurisdiction where the Issuer, the Parent, a Subsidiary Guarantor or a successor of the foregoing (a “Payor”) is organized or otherwise considered by a taxing authority to be a resident for tax purposes, any jurisdiction from or through which the Payor makes a payment on the notes, or, in each case, any political organization or governmental authority thereof or therein having the power to tax (the “Relevant Tax Jurisdiction”) in respect of any payments under the notes, the Payor will pay to each holder of a note, to the extent it may lawfully do so, such additional amounts (“Additional Amounts”) as may be necessary in order that the net amounts paid to such holder will be not less than the amount specified in such note to which such holder is entitled; provided, however, the Payor will not be required to make any payment of Additional Amounts for or on account of:

(a) any tax, assessment or other governmental charge which would not have been imposed but for the existence of any present or former connection between such holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such holder, if such holder is an estate, trust, partnership, limited liability company or corporation) and the Relevant Tax Jurisdiction including, without limitation, such holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein;

(b) any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or governmental charge;

(c) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure by the holder or the beneficial owner of the note to comply with a reasonable and timely request of the Payor addressed to the holder to provide information, documents or other evidence concerning the nationality, residence or identity of the holder or such beneficial owner which is required by a statute, treaty, regulation or administrative practice of the taxing jurisdiction as a precondition to exemption from all or part of such tax, assessment or other governmental charge; or

(d) any combination of the above;

nor will Additional Amounts be paid with respect to any payment of the principal of, or any premium or interest on, any note to any holder who is a fiduciary or partnership or limited liability company or other than the sole beneficial owner of such payment to the extent (but only to the extent) such payment would be required by the laws of the Relevant Tax Jurisdiction to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership, limited liability company or beneficial owner who would not have been entitled to such Additional Amounts had it been the holder of such note.

The Payor will provide the trustee with the official acknowledgment of the Relevant Tax Authority (or, if such acknowledgment is not available, a certified copy thereof) evidencing the payment of any withholding taxes by the Payor. Copies of such documentation will be made available to the holders of the notes or the paying agents, as applicable, upon request therefor.

The Parent, the Issuer and the Subsidiary Guarantors will pay any present or future stamp, court or documentary taxes, or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from the execution, delivery or registration of the notes or any other document or instrument referred to in the indenture (other than a transfer of the notes), or the receipt of any payments with respect to the notes, excluding

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any such taxes, charges or similar levies imposed by any jurisdiction outside the British Virgin Islands or any other jurisdiction in which the Issuer, the Parent or any Subsidiary Guarantor is located or conducts business or any jurisdiction in which a paying agent is located, other than those resulting from, or required to be paid in connection with, the enforcement of the indenture or any other such document or instrument following the occurrence of any Event of Default.

All references in this section to principal of, premium, if any, and interest on the notes include any Additional Amounts payable by the Payor in respect of such principal, such premium, if any, and such interest.

Repurchase at the Option of Holders

Change of Control/Material Adverse Change

If a Change of Control/MAC occurs, unless the Issuer has exercised its right to redeem the notes as provided under “—Optional Redemption,” each holder of the notes will have the right to require the Issuer to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that holder’s notes pursuant to the offer described below (the “Change of Control/MAC Offer”). In the Change of Control/MAC Offer, the Issuer will offer a Change of Control/MAC Payment in cash equal to 101% of the aggregate principal amount of the notes repurchased plus accrued and unpaid interest thereon, if any, to the date of purchase. Within 30 days following any Change of Control/MAC, unless the Issuer has issued a notice of redemption pursuant to its right to redeem the notes as provided under “—Optional Redemption,” the Issuer will deliver a notice to each holder describing the transaction or transactions that constitute the Change of Control/MAC and offering to repurchase notes on the Change of Control/MAC Payment Date specified in such notice, which date will be no earlier than 30 days nor later than 60 days from the date such notice is mailed, pursuant to the procedures required by the indenture and described in such notice. The Issuer will comply with the requirements of Rule 14e-l under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control/MAC.

On the Change of Control/MAC Payment Date, the Issuer will, to the extent lawful;

(1) accept for payment all notes or portions thereof properly tendered pursuant to the Change of Control/MAC Offer;

(2) deposit with the Paying Agent an amount equal to the Change of Control/MAC Payment in respect of all notes or portions thereof so tendered; and

(3) deliver or cause to be delivered to the trustee the notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of the notes or portions thereof being purchased by the Issuer.

The Paying Agent will promptly deliver to each holder of the notes so tendered the Change of Control/MAC Payment for such notes, and the trustee will promptly authenticate and deliver (or cause to be transferred by book entry) to each holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each such new note will be in a principal amount of $1,000 or an integral multiple thereof and any amounts less than $1,000 shall be returned to the holder in cash.

If the Change of Control/MAC Payment Date is on or after an interest payment record date and on or before the related interest payment date, any accrued and unpaid interest will be paid to the Person in whose name a note is registered at the close of business on such record date, and no other interest will be payable to holders who tender pursuant to the Change of Control/MAC Offer.

The Parent will publicly announce the results of the Change of Control/MAC Offer on or as soon as practicable after the Change of Control/MAC Payment Date.

The provisions described above that require the Issuer to make a Change of Control/MAC Offer following a Change of Control/MAC will be applicable regardless of whether or not any other provisions of the indenture are

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applicable. Except as described above with respect to a Change of Control/MAC, the indenture does not contain provisions that permit the holders of the notes to require that the Issuer repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction.

Any future credit agreements or other agreements to which the Issuer or the Parent becomes a party may contain similar restrictions and provisions. The occurrence of a Change of Control/MAC may result in a default under a bank credit facility or other Indebtedness of the Issuer and its Subsidiaries, and give the lenders thereunder the right to require the Issuer to repay obligations outstanding thereunder. The Issuer’s ability to repurchase notes following a Change of Control/MAC also may be limited by the Parent’s and the Issuer’s then existing resources.

The Issuer will not be required to make a Change of Control/MAC Offer upon a Change of Control/MAC if a third party makes the Change of Control/MAC Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the indenture applicable to a Change of Control/MAC Offer made by the Issuer and purchases all notes validly tendered and not withdrawn under such Change of Control/MAC Offer.

The definition of “Change of Control/MAC” includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the assets of the Parent or the Issuer and their respective Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of the notes to require the Issuer to repurchase such notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Parent or the Issuer and their respective Subsidiaries taken as a whole may be uncertain.

Asset Sales

(1) The Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale unless:

(a) the Parent or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (including as to the value of all non-cash consideration), of the shares or other assets subject to such Asset Sale; provided, the foregoing requirement shall not apply to any Asset Sale pursuant to any loss, destruction or damage to an asset, a condemnation, appropriation or other similar taking, including by deed in lieu of condemnation, or pursuant to the foreclosure or other enforcement of a Lien incurred not in violation of the covenant described under “—Certain Covenants—Liens;” and

(b) at least 85% of the consideration received therefrom by the Parent or such Restricted Subsidiary is in the form of cash or cash equivalents.

For the purposes of this covenant, the following are deemed to be cash or cash equivalents: (i) the assumption of all Indebtedness of the Parent or any Restricted Subsidiary (other than liabilities that are Subordinated Obligations), and the release of the Parent or such Restricted Subsidiary from all liability on such Indebtedness, in connection with such Asset Sale; and (ii) securities received by the Parent or any Restricted Subsidiary from the transferee which are promptly converted by the Parent or such Restricted Subsidiary into cash.

(2) Within 30 days after the receipt of any Net Available Proceeds from an Asset Sale, the Parent or such Restricted Subsidiary, as the case may be, may apply such Net Available Proceeds to repurchase or redeem notes in accordance with “—Optional Redemption.” Any Net Available Proceeds that are not so applied within 30 days shall be deemed to constitute “Excess Proceeds.”

(3) When the aggregate amount of Excess Proceeds exceeds $2.0 million, the Issuer or the Parent will be required to make an offer to all holders of the notes (an “Asset Sale Offer”) to purchase on a pro rata basis

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the maximum principal amount of the notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, to the date of purchase, in accordance with the procedures set forth in the indenture. To the extent that the aggregate amount of the notes electing to be purchased pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Parent and such Restricted Subsidiary may use any remaining Excess Proceeds for any purpose not prohibited by the indenture (and any such remaining Excess Proceeds held in the Asset Sale Proceeds Account shall be released therefrom as provided in the Security Documents). If the aggregate principal amount of the notes surrendered by holders thereof exceeds the amount of Excess Proceeds, the trustee shall select the notes to be purchased on a pro rata basis or such other basis as the trustee determines is appropriate. Upon completion of each such offer to purchase, the amount of Excess Proceeds shall be reset at zero.

(4) The Issuer or the Parent will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of the notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Issuer or the Parent will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the covenant described above by virtue of its compliance with such securities laws or regulations.

Certain Covenants

Restricted Payments

The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Parent’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Parent or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Parent’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Parent or to the Parent or a Restricted Subsidiary of the Parent);

(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Parent or a Restricted Subsidiary) any Equity Interests of the Parent or any Restricted Subsidiary (other than any such Equity Interests owned by the Parent or any of its Restricted Subsidiaries) except in exchange for Equity Interests (other than Disqualified Stock) of the Parent;

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness of the Parent, the Issuer or any Subsidiary Guarantor held by persons other than the Parent or a Wholly-Owned Restricted Subsidiary, except a payment of interest or principal at the Stated Maturity thereof; or

(4) make any Investment other than a Permitted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

(1) no Default shall have occurred and be continuing or would occur as a consequence thereof; and

(2) the Parent would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under “—Incurrence of Indebtedness”; and

(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Parent and Its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (2) and (3) of the next succeeding paragraph), is less than $5.0 million.

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The preceding provisions will not prohibit:

(1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the indenture; and

(2) the defeasance, redemption, repurchase or other acquisition of Subordinated Indebtedness of the Parent, the Issuer or any Subsidiary Guarantor with the Net Cash Proceeds from an incurrence of Permitted Refinancing Indebtedness.

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Parent or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this covenant shall be evidenced by an Officers’ Certificate to be delivered to the trustee. Not later than five Business Days following the date of the making any Restricted Payment (other than under clause (3) of the preceding paragraph), the Parent shall deliver to the trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this covenant, were computed, together with a copy of any fairness opinion or appraisal required by the indenture.

Incurrence of Indebtedness

The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt); provided, however, that the Parent, the Issuer or any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt), if the Fixed Charge Coverage Ratio for the Parent’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.5 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period.

So long as no Default shall have occurred and be continuing or would be caused thereby, the first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Indebtedness”):

(1) the incurrence by the Parent, the Issuer and the Subsidiary Guarantors of Indebtedness represented by the notes, the Parent Guarantee and the Subsidiary Guarantees;

(2) the incurrence by the Parent, the Issuer or any Subsidiary Guarantor of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, Indebtedness (other than intercompany Indebtedness) that was permitted by the indenture to be incurred under the first paragraph of this covenant or clause (1), (9) or this clause (2) of this paragraph;

(3) the incurrence by the Parent or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Parent and any of its Restricted Subsidiaries; provided, however, that:

(a) (i) if the Parent or the Issuer is the obligor on such Indebtedness and a Subsidiary Guarantor is not the obligee thereon, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all obligations with respect to the notes, and (ii) if a Subsidiary Guarantor is the obligor of such Indebtedness and the Parent, the Issuer or another Subsidiary Guarantor is not the obligee thereon, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all obligations of such Subsidiary Guarantor with respect to its Subsidiary Guarantee, and

(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Parent or a Restricted Subsidiary thereof and (ii) any sale or other

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transfer of any such Indebtedness to a Person that is not either the Parent or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Parent or such Restricted Subsidiary, as the case may be, that was not permitted by this clause;

(4) the accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock, provided, in each such case, that the amount thereof is included in Fixed Charges of the Parent as accrued;

(5) any obligations in respect of completion bonds, performance bonds, bid bonds, appeal bonds, surety bonds, bankers acceptances, letters of credit, insurance obligations or bonds and other similar bonds and obligations incurred by the Parent or any Restricted Subsidiary in the ordinary course of business and any guaranties or letters of credit functioning as or supporting any of the foregoing bonds or obligations;

(6) any obligation under Interest Rate Agreements, Currency Agreements and Commodity Agreements; provided, that such Interest Rate Agreements, Currency Agreements and Commodity Agreements are related to business transactions of the Parent or its Restricted Subsidiaries entered into in the ordinary course of business and are entered into for bona fide hedging purposes (and not financing or speculative purposes) of the Parent or its Restricted Subsidiaries (as determined in good faith by the Board of Directors or senior management of the Parent);

(7) any obligation arising from agreements of the Parent or a Restricted Subsidiary providing for indemnification, guarantee, adjustment of purchase price, holdback, contingency payment obligation based on the performance of the disposed asset or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, asset or Capital Stock of a Restricted Subsidiary, provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Parent and its Restricted Subsidiaries in connection with such disposition;

(8) any obligation arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of incurrence;

(9) Indebtedness of a Restricted Subsidiary incurred after the Issue Date and outstanding on the date on which such Subsidiary was acquired by the Parent (other than Indebtedness incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Parent) and excluding therefrom any of such Indebtedness that is extinguished, retired or repaid in connection with such acquisition; provided that on the date of such acquisition and after giving pro forma effect thereto, the Parent would have been able to Incur at least $1.00 of additional Indebtedness pursuant the first paragraph of this covenant; and

(10) Indebtedness outstanding on the Issue Date.

The Parent and the Issuer will not, and will not permit any Subsidiary Guarantor to, directly or indirectly, incur any Indebtedness which by its terms (or by the terms of any agreement governing such Indebtedness) is subordinated to any other Indebtedness of the Parent or the Issuer or of such Subsidiary Guarantor, as the case may be, unless made expressly subordinate to the notes, the Parent Guarantee or the Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, at least to the same extent as such Indebtedness is subordinated to such other Indebtedness of the Parent or the Issuer or of such Subsidiary Guarantor, as the case may be.

For purposes of determining compliance with this covenant:

(11) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

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(12) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness; and

(13) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

Liens

The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien on any property or asset now owned or hereafter acquired, or any income or profits therefrom or assign or convey any right to receive income therefrom, except Permitted Liens.

Dividend and Other Payment Restrictions Affecting Subsidiaries

The Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction (other than pursuant to the indenture or the Security Documents) on the ability of any Restricted Subsidiary to:

(a) pay dividends or make any other distributions on its Capital Stock to the Parent or any of the Parent’s Restricted Subsidiaries, or pay any Indebtedness owed to the Parent or any of the Parent’s Restricted Subsidiaries;

(b) make loans or advances to the Parent or any of the Parent’s Restricted Subsidiaries; or

(c) transfer any of its properties or assets to the Parent or any of the Parent’s Restricted Subsidiaries.

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

(1) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Parent or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the indenture to be incurred;

(2) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending its sale or other disposition; and

(3) with respect to clause (c) of the preceding paragraph only, any of the following encumbrances or restrictions:

(a) customary non-assignment provisions in leases, licenses and contracts entered into in the ordinary course of business;

(b) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired;

(c) encumbrances set forth in agreements governing Liens securing Indebtedness otherwise permitted to be issued pursuant to the provisions of the covenant described above under “—Liens” that limit the right of the Parent or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien;

(d) customary restrictions contained in asset sale agreements limiting the transfer of such assets pending the closing of such sale;

(e) customary restrictions on the subletting, assignment or transfer of any property or asset that is subject to a lease, farm-in agreement or farm-out agreement, license or similar contract, or the assignment or transfer of any such lease, license or other contract; and

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(f) customary restrictions on the disposition or distribution of assets or property in operating agreements, joint venture agreements, development agreements, area of mutual interest agreements and other agreements that are customary in the Oil and Gas Business and entered into in the ordinary course of business.

Merger, Consolidation or Sale of Assets

Neither the Parent nor the Issuer may: (1) consolidate or merge with or into another Person; or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to another Person, unless:

(1) either:

(a) the Parent or Issuer, as the case may be, is the surviving corporation; or

(b) the Person formed by or surviving any such consolidation or merger (if other than the Parent or the Issuer, as the case may be) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of (i) with respect to the Parent, the United States, any state thereof or the District of Columbia, or (ii) with respect to the Issuer, the British Virgin Islands;

(2) the Person formed by or surviving any such consolidation or merger (if other than the Parent or the Issuer, as the case may be) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Parent or Issuer, as the case may be, under the notes, the indenture and the Security Documents pursuant to a supplemental indenture or other agreements reasonably satisfactory to the trustee;

(3) at the time of and immediately after such transaction no Default shall have occurred and be continuing;

(4) the Parent or the Person formed by or surviving any such consolidation or merger (if other than the Parent, the Issuer or a Subsidiary Guarantor) will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the most recently ended four-quarter period, be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under “—Incurrence of Indebtedness;” and

(5) the Parent or the Issuer, as the case may be, shall have delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and any supplemental indenture related thereto comply with the indenture and all of the Security Documents and that all necessary actions have been taken to preserve the priority and perfection of the Liens created by all of the Security Documents in accordance with the indenture.

For purposes of this covenant, the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of one or more Subsidiaries of the Parent or the Issuer, which properties or assets, if held by the Parent or the Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties or assets of the Parent or Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties or assets of the Issuer.

The foregoing does not affect the Issuer’s obligation to make a Change of Control/MAC Offer.

Transactions with Affiliates

The Parent will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from,

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or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

(1) such Affiliate Transaction is on terms that are no less favorable to the Parent or the relevant Restricted Subsidiary than those that would have been obtained at the time of such transaction in arm’s-length dealings by the Parent or such Restricted Subsidiary with a Person who is not an Affiliate; and

(2) the Parent delivers to the trustee:

(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.0 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors; and

(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a written opinion that such Affiliate Transaction is fair, from a financial point of view, to the Parent and its Restricted Subsidiaries, taken as a whole, issued by an accounting, appraisal or investment banking firm of national standing that is not an Affiliate of the Parent.

The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

(1) any employment agreement or other employee compensation plan or arrangement entered into by the Issuer or any of its Restricted Subsidiaries in the ordinary course of business of the Issuer or such Restricted Subsidiary;

(2) transactions between or among (a) the Parent and one or more of its Wholly-Owned Restricted Subsidiaries or (b) two or more Wholly-Owned Restricted Subsidiaries;

(3) Restricted Payments that are permitted by the provisions of the indenture described above under “—Restricted Payments”;

(4) indemnities of officers, directors and employees of the Parent or any Restricted Subsidiary permitted by bylaw or statutory provisions;

(5) the payment of reasonable and customary regular fees consistent in all respects with past practice to directors of the Parent or any of its Restricted Subsidiaries who are not employees of the Issuer or any Subsidiary;

(6) issuances of Equity Interests (other than Disqualified Stock) of the Parent; and

(7) customary indemnification agreements or arrangements with officers, directors or employees of the Parent or its Restricted Subsidiaries permitted or required by law or statutory provisions and approved by the Board of Directors.

Additional Subsidiary Guarantees

If the Parent or any of its Restricted Subsidiaries acquires or creates another Restricted Subsidiary, then that newly acquired or created Restricted Subsidiary must become a Subsidiary Guarantor and execute a supplemental indenture satisfactory to the trustee within 10 Business Days of the date on which it was acquired or created.

Business Activities

The Parent will not, and will not permit any Restricted Subsidiary to, engage in any material respect in any business other than the Oil and Gas Business.

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Reports

Whether or not required by the SEC, so long as any notes are outstanding, the Parent will furnish to the trustee and the holders of the notes, within the time periods (including grace periods) specified in the SEC’s rules and regulations:

(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Parent were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Parent’s certified independent accountants;

(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Parent were required to file such reports; and

(3) all proxy statements and related proxy and stockholder materials.

If the Parent has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Parent and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Parent.

In addition, whether or not required by the SEC, the Parent will file a copy of all of the information and reports referred to in clause (1) and (2) above with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept or does not permit such a filing).

In addition, the Parent has agreed that, for so long as any notes remain outstanding, if at any time it is not required to file with the SEC the reports required by the preceding paragraphs, it will furnish to holders of the notes and prospective investors, upon request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Events of Default and Remedies

Each of the following is an Event of Default:

(1) default for 30 days in the payment when due of interest on the notes;

(2) default in payment when due of the principal of or premium, if any, on the notes;

(3) failure by the Parent or the Issuer to comply with the provisions described under “—Certain Covenants—Merger, Consolidation or Sale of Assets;”

(4) failure by the Parent or any of its Restricted Subsidiaries to comply for 30 days after notice with the provisions described under “—Repurchase at the Option of Holders—Change of Control/Material Adverse Change”, “—Repurchase at the Option of Holders—Asset Sales” and “—Certain Covenants” (other than “—Certain Covenants—Merger, Consolidation or Sale of Assets”);

(5) failure by the Parent or the Issuer for 60 days after notice to comply with any of its other agreements in the indenture;

(6) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Parent or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Parent or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the date of the indenture, if that default:

(a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness (a “Payment Default”); or

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(b) results in the acceleration of such Indebtedness prior to its Stated Maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $5.0 million or more;

(7) failure by the Parent or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0 million (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days;

(8) the Parent Guarantee or any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or, except as permitted by the indenture, shall cease for any reason to be in full force and effect or the Parent or any Subsidiary Guarantor, or any Person acting on behalf of the Parent or any Subsidiary Guarantor, shall deny or disaffirm its obligations under the Parent or its Subsidiary Guarantee, as the case may be;

(9) certain events of bankruptcy or insolvency with respect to the Parent, the Issuer or any of its Significant Subsidiaries or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; and

(10) any Security Document or any Lien purported to be created or granted thereby on any one or more items of Collateral is held in any judicial proceeding to be unenforceable or invalid, in whole or part, or ceases for any reason (other than pursuant to a release that is delivered or becomes effective as set forth in the indenture or any of the Security Documents) to be fully enforceable and perfected.

A default under clauses (4) or (5) above will not constitute an Event of Default unless either the trustee or holders of at least 25% in principal amount of the outstanding notes gives notice to the Issuer of the Default and such Default is not cured within the time periods specified in such clauses after receipt of such notice.

In the case of an Event of Default under clause (9) above, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately. Upon such a declaration, such principal, premium and accrued and unpaid interest will be due and payable immediately.

Holders of the notes may not enforce the indenture or the notes except as provided in the indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the notes notice of any continuing Default (except a Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest.

The holders of a majority in principal amount of the outstanding notes may waive all past Defaults (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the notes and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the notes that have become due solely by such declaration of acceleration, have been cured or waived.

The Issuer is required to deliver to the trustee annually a statement regarding compliance with the indenture. Upon becoming aware of any Default or Event of Default, the Issuer is required to deliver to the trustee a statement specifying such Default or Event of Default.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee or incorporator of the Parent, the Issuer or any Subsidiary Guarantor, and no stockholder of the Parent, as such, shall have any obligation to perform or assume any obligations of the Parent,

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the Issuer or the Subsidiary Guarantors under the notes, the indenture, the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of the notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Legal Defeasance and Covenant Defeasance

The Issuer may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Subsidiary Guarantors discharged with respect to their Subsidiary Guarantees (“Legal Defeasance”) except for:

(1) the rights of holders of outstanding notes to receive payments in respect of the principal of, premium, if any, and interest on such notes when such payments are due from the trust referred to below;

(2) the Issuer’s obligations with respect to the notes concerning issuing temporary notes, registration of the notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the trustee, and the Issuer’s obligations in connection therewith; and

(4) the Legal Defeasance provisions of the indenture.

In addition, the Issuer may, at its option and at any time, elect to terminate its obligations and the obligations of the Parent under “—Repurchase at the Option of Holders—Change of Control/Material Adverse Change” and “—Repurchase at the Option of Holders—Asset Sales” and under the covenants described under “—Certain Covenants” (other than the covenant described under “—Certain Covenants—Merger, Consolidation or Sale of Assets”), the operation of the Events of Default specified in clauses (4), (5), (6), (7) (8) or (9) (with respect only to Significant Subsidiaries) under “— Events of Default and Remedies” above and the limitations contained in clause (4) of the first paragraph under “—Certain Covenants—Merger, Consolidation or Sale of Assets” above (“Covenant Defeasance”).

The Issuer may exercise its Legal Defeasance option notwithstanding its prior exercise of the Covenant Defeasance option. If the Issuer exercises its Legal Defeasance option, payment of the notes may not be accelerated because of an Event of Default with respect thereto unless notice of such acceleration is given prior to such exercise. If the Issuer exercises its Covenant Defeasance option, payment of the notes may not be accelerated because of an Event of Default specified in clauses (4), (5), (6), (7) (8) or (9) (with respect only to Significant Subsidiaries) under “— Events of Default and Remedies” above or because of the failure of the Issuer to comply with clause (4) of the first paragraph under “—Certain Covenants—Merger, Consolidation or Sale of Assets” above, unless, in any such case, notice of such acceleration is given prior to such exercise. If the Issuer exercises its Legal Defeasance option, each Subsidiary Guarantor will be released from its obligations with respect to its Subsidiary Guarantee and the Security Documents.

In order to exercise either Legal Defeasance or Covenant Defeasance:

(1) the Issuer must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Issuer must specify whether the notes are being defeased to Stated Maturity or to a particular redemption date;

(2) in the case of Legal Defeasance, the Issuer shall have delivered to the trustee an Opinion of Counsel reasonably acceptable to the trustee confirming that (a) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in

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the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of Covenant Defeasance, the Issuer shall have delivered to the trustee an Opinion of Counsel reasonably acceptable to the trustee confirming that the holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default shall have occurred and be continuing on the date of such deposit (other than a Default resulting from the borrowing of funds to be applied to such deposit);

(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the indenture or the Security Documents) to which the Parent or any of its Restricted Subsidiaries is a party or by which the Parent or any of its Restricted Subsidiaries is bound;

(6) the Issuer must deliver to the trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the holders of the notes over the other creditors of the Issuer with the intent of defeating, hindering, delaying or defrauding creditors of the Issuer or others; and

(7) the Issuer must deliver to the trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Satisfaction and Discharge

The indenture will be discharged and will cease to be of further effect as to all notes issued thereunder, when:

(1) either

(a) all notes (except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuer) have been delivered to the trustee for cancellation, or

(b) all notes that have not been delivered to the trustee for cancellation have become due and payable by reason of the giving of a notice of redemption or otherwise or will become due and payable within one year and the Issuer or any Subsidiary Guarantor has irrevocably deposited or caused to be irrevocably deposited with the trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, non-callable U.S. government securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the notes not delivered to the trustee for cancellation for principal, premium, if any, and liquidated damages, if any, and accrued interest to the date of maturity or redemption;

(2) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer, the Parent or any Restricted Subsidiary is a party or by which the Issuer, the Parent or any Restricted Subsidiary is bound;

(3) the Parent, the Issuer or any Subsidiary Guarantor has paid or caused to be paid all other sums payable by it under the indenture; and

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(4) the Issuer has delivered an Officers’ Certificate and an Opinion of Counsel to the trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Notwithstanding the foregoing, if a holder of the notes is required under applicable law to return any payments made to it under the indenture, then the Issuer’s obligation to repay such holder the amount so returned plus interest thereon shall be reinstated until repaid in full.

Amendment, Supplement and Waiver

Subject to certain exceptions, the indenture, the notes and the Security Documents may be amended with the consent of the holders of a majority in principal amount of the notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes) and, subject to certain exceptions, any past Default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes). However, without the consent of each holder affected, such an amendment, supplement or waiver may not (with respect to any notes held by a non-consenting holder):

(1) reduce the principal amount of the notes whose holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the Stated Maturity of any note or alter the provisions with respect to the redemption or repurchase of the notes or change the time at which any note may be redeemed or repurchased as described above under “—Repurchase at the Option of Holders—Change of Control/Material Adverse Change” or “—Repurchase at the Option of Holders —Asset Sales” (whether through amendment or waiver of provisions in the covenants, definitions or otherwise);

(3) reduce the rate of or change the time for payment of interest on any note;

(4) waive a Default in the payment of principal of or premium, if any, or interest on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration);

(5) make any note payable in money other than U.S. currency;

(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of the notes to receive payments of principal of or premium, if any, or interest on the notes;

(7) modify the Parent Guarantee or any Subsidiary Guarantee in any manner adverse to holders of the notes;

(8) make any change in the ranking of the notes or the Subsidiary Guarantees in a manner adverse to the holders of the notes or the Subsidiary Guarantees;

(9) except as expressly provided in the indenture or any Security Document, release all or substantially all of the Liens on the Collateral; OR

(10) make any change in the preceding amendment, supplement and waiver provisions.

Notwithstanding the preceding, without the consent of any holder of the notes, the Parent, the Issuer, the Subsidiary Guarantors and the trustee may amend or supplement the indenture, the Security Documents or the notes:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated notes in addition to or in place of certificated notes;

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(3) to provide for the assumption of the Issuer’s obligations to holders of the notes in the case of a merger or consolidation or sale of all or substantially all of the Issuer’s properties or assets in compliance with the indenture;

(4) to add or release Subsidiary Guarantors in compliance with the indenture;

(5) to add Collateral to secure the notes or the Subsidiary Guarantees, or to release Collateral in accordance with the express terms of the indenture and the Security Documents;

(6) to make any change that would provide any additional rights or benefits to the holders of the notes or that does not adversely affect the legal rights under the indenture of any such holder in any material respect; or

(7) to comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act.

Concerning the Trustee

If the trustee becomes a creditor of the Parent, the Issuer or any Subsidiary Guarantor, the indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee is permitted to engage in other transactions; however, if it acquires any conflicting interest after a Default has occurred and is continuing it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

The holders of a majority in principal amount of the then outstanding notes have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that in case an Event of Default shall occur and be continuing, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, the trustee is under no obligation to exercise any of its rights or powers under the indenture or any of the Security Documents at the request of any holder of the notes, unless such holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.

Governing Law

The indenture, the notes, the Parent Guarantee and the Subsidiary Guarantees are governed by, and are to be construed in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within the State of New York.

Certain Definitions

Set forth below are certain defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used in this section for which no definition is provided.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,”

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as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets, including, without limitation, by means of a sale and leaseback transaction, and:

(a) any sale of a net profits or overriding royalty interest, in each case conveyed from or burdening proved developed or proved undeveloped reserves, excluding the conveyance of the Permitted Net Revenue Interest; and

(b) any sale of hydrocarbons or other mineral products as a result of the creation of Dollar-Denominated Production Payments or Volumetric Production Payments (other than Dollar-Denominated Production Payments and Volumetric Production Payments created or sold in connection with the financing of, and within 30 days after, the acquisition of the properties subject thereto);

provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Parent and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the indenture described above under “—Repurchase at the Option of Holders—Change of Control/Material Adverse Change”, and/or the provisions described above under “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sales covenant; and

(2) the issuance of Equity Interests by any of the Parent’s Restricted Subsidiaries or the sale of Equity Interests in any of its Subsidiaries,

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1) any single transaction or series of related transactions that together involves assets having a fair market value of less than $250,000;

(2) a transfer of assets between or among the Parent and its Wholly Owned Restricted Subsidiaries;

(3) an issuance of Equity Interests by a Restricted Subsidiary to the Parent or to another Restricted Subsidiary;

(4) a disposition of Cash Equivalents in the ordinary course of business;

(5) a Restricted Payment or Permitted Investment that is permitted by the covenant described above under “—Certain Covenants—Restricted Payments”;

(6) a sale of oil, gas or other hydrocarbons or other mineral products in the ordinary course of business of the Parent’s and its Restricted Subsidiaries’ oil and gas production operations;

(7) any abandonment, farm-in, farm-out, lease and sub-lease of developed and/or undeveloped properties made or entered into in the ordinary course of business, but excluding any disposition described in either clause (a) or (b) of the preceding paragraph;

(8) the provision of services and equipment for the operation and development of the Parent’s and its Restricted Subsidiaries’ oil and gas wells, in the ordinary course of the Parent’s and its Restricted Subsidiaries’ oil and gas service businesses, notwithstanding that such transactions may be recorded as asset sales in accordance with full cost accounting guidelines;

(9) the creation or perfection of a Lien (but not the sale or other disposition of any asset subject to such Lien) in accordance with the indenture;

(10) disposition of surplus or obsolete equipment in the ordinary course of business of the Parent and its Restricted Subsidiaries;

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(11) the sale or other disposition of Excluded Assets; and

(12) the issuance of Foreign Required Minority Shares.

“Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. As used in the preceding sentence, the “net rental payments” under any lease for any such period shall mean the sum of rental and other payments required to be paid with respect to such period by the lessee thereunder, excluding any amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes, assessments, water rates or similar charges. In the case of any lease that is terminable by the lessee upon payment of penalty, such net rental payment shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated.

“Beneficial Owner” has the meaning assigned to such term in Rule l3d-3 and Rule l3d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as such term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such “person” has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Cash Equivalents” means:

(1) United States dollars;

(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition;

(3) certificates of deposit with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and demand deposits, trust accounts, time deposits and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson Bank Watch Rating of “B” or better;

(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5) commercial paper having the highest rating obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Services and in each case maturing within 270 days after the date of acquisition;

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(6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition; and

(7) deposits available for withdrawal on demand with any commercial bank that is organized under the laws of any country in which the Issuer or any Restricted Subsidiary maintains its chief executive office or is engaged in the Oil and Gas Business, provided that all such deposits are made in such accounts in the ordinary course of business.

“Change of Control/MAC” means the occurrence of any of the following:

(1) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Parent or the Issuer and its Subsidiaries taken as a whole;

(2) the adoption of a plan relating to the liquidation or dissolution of the Parent or the Issuer or any Significant Subsidiary;

(3) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as such term is used in Section 13(d)(1) or 13(d)(3) of the Exchange Act), becomes the Beneficial Owner, directly or indirectly, of more than 35% of the Voting Stock (measured by voting power rather than number of shares) of the Parent or the Issuer (excluding the Parent, in the case of the Issuer);

(4) the first day on which a majority of the members of the Board of Directors of the Parent or the Issuer are not Continuing Directors;

(5) the Parent or the Issuer consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Parent or the Issuer, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Parent or the Issuer is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Parent or the Issuer outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person immediately after giving effect to such issuance; or

(6) the occurrence of a Material Adverse Change.

“Commodity Agreement” means any oil or natural gas hedging agreement and other agreement or arrangement designed to protect the Parent or a Restricted Subsidiary against fluctuations in oil or natural gas prices.

“Consolidated Cash Flow” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus:

(1) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus

(2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(3) Fixed Charges of such Person and its Restricted Subsidiaries for such period, whether paid or accrued and whether or not capitalized, to the extent that any such expense was deducted in computing such Consolidated Net Income; plus

(4) depreciation, depletion, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period), impairment and other

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non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such amounts were deducted in computing such Consolidated Net Income; minus

(5) non-cash items increasing such Consolidated Net Income for such period, other than items that were accrued in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP; minus

(6) to the extent included in determining Consolidated Net Income, the sum of

(a) the amount of deferred revenues that are amortized during the period and are attributable to reserves that are subject to Volumetric Production Payments; and

(b) amounts recorded in accordance with GAAP as repayments of principal and interest pursuant to Dollar-Denominated Production Payments.

Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation, depletion, amortization, impairment and other non-cash charges of, a Restricted Subsidiary of the Parent shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Parent only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Parent by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Subsidiary thereof;

(2) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders;

(3) the cumulative effect of a change in accounting principles shall be excluded;

(4) any write-downs or impairments of non-current assets shall be excluded;

(5) any non-cash gains or losses or changes in respect of hedge or non-hedge derivatives (including those resulting from the application of Statement of Financial Accounting Standards No. 133) shall be excluded.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Parent or the Issuer who:

(1) was a member of such Board of Directors on the Issue Date; or

(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.

“Currency Agreements” means, at any time as to the Parent and its Restricted Subsidiaries, any foreign currency exchange agreement, option or future contract or other similar agreement or arrangement designed to

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protect against or manage the Parent’s or any or any of its Restricted Subsidiaries’ exposure to fluctuations in foreign currency exchange rates.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Parent to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Parent may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under “—Certain Covenants—Restricted Payments.”

“Dollar-Denominated Production Payments” mean production payment obligations recorded as liabilities in accordance with GAAP, together with all undertakings and obligations in connection therewith.

“Equity Interests” mean Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means any issuance for cash of Equity Interests (other than Disqualified Stock) of the Parent after the Issue Date and other than any issuance of securities under or to any benefit plan of the Parent or a Restricted Subsidiary.

“Excluded Assets” means Rig 232 as described in Note 6 to the financial statements included in the Parent’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

“Fair Market Value” means, with respect to any Asset Sale or Restricted Payment or other item, the price that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction, as such price is determined in good faith by an officer of the Parent if such value is less than $2.0 million; provided, however, if the value of such Asset Sale or Restricted Payment or other item is $2.0 million or greater, such determination shall be made in good faith by the Board of Directors of the Parent; and provided further if the value of such Asset Sale or Restricted Payment or other item is $5.0 million or greater, such determination shall be made by an accounting, appraisal or investment banking firm of national standing that is not an Affiliate of the Parent.

“Fixed Charges” means, with respect to any Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts, and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments, if any, pursuant to Interest Rate Agreements; plus

(2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

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(4) the product of:

(a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Parent (other than Disqualified Stock) or to the Parent or a Restricted Subsidiary of the Parent, times

(b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

“Fixed Charge Coverage Ratio” means, with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings not constituting a permanent commitment reduction) or issues or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period;

(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded; and

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date.

“Foreign Required Minority Shares” means Capital Stock of a Foreign Restricted Subsidiary that is required by the applicable laws and regulations of such foreign jurisdiction to be owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction in order for such Foreign Restricted Subsidiary to transact business in such foreign jurisdiction.

“Foreign Restricted Subsidiary” means any Restricted Subsidiary of the Company organized under the laws of, and conducting a substantial portion of its business in, any jurisdiction other than the United States of America or any state thereof or the District of Columbia.

“GAAP” means generally accepted accounting principles in the United States of America, as in effect as of the Issue Date. All ratios and calculations under the indenture based on GAAP measures shall be computed in conformity with GAAP.

“Guarantee” means, without duplication, any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any other obligation, direct or indirect, contingent or otherwise, of such Person:

(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well,

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to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), or

(b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment therefor to protect such obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under Currency Agreements, Interest Rate Agreements and Commodity Agreements.

“holder” means a person in whose name a note is registered on the Registrar’s books.

“Indebtedness” means, with respect to any specified Person,

(a) all obligations of such Person, whether or not contingent, in respect of:

(i) borrowed money;

(ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(iii) bankers’ acceptances;

(iv) Capital Lease Obligations; and

(v) the balance deferred and unpaid of the purchase price of any property due more than six months after the date of acquisition thereof, except any such balance that constitutes a trade payable;

(b) all net obligations in respect of Currency Agreements, Interest Rate Agreements and Commodity Agreements or Dollar Denominated Production Payments;

(c) all liabilities of others of the kind described in the preceding clause (a) or (b) that such Person has Guaranteed or assumed or that are otherwise its legal responsibility (including, with respect to any Production Payment, any warranties or guaranties of production or payment by such Person with respect to such Production Payment but excluding other contractual obligations of such Person with respect to such Production Payment);

(d) Indebtedness (as otherwise defined in this definition) of another Person secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, the amount of such obligations being deemed to be the lesser of

(i) the full amount of such obligations so secured and

(ii) the Fair Market Value of such asset;

(e) Disqualified Stock of such Person or a Restricted Subsidiary in an amount equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

(f) Attributable Debt in respect of a sale and leaseback transaction; and

(g) any and all deferrals, renewals, extensions, refinancings and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clause (a), (b), (c), (d), (e), (f) or this clause (g), whether or not between or among the same parties.

Subject to clause (c) of the preceding sentence, Volumetric Production Payments shall not be deemed to be Indebtedness.

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“Interest Rate Agreements” means, with respect to the Parent and its Restricted Subsidiaries, interest rate agreements, interest rate cap agreements and interest rate collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in interest rates with respect to any floating rate Indebtedness that is permitted to be incurred under the indenture.

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Parent or any Restricted Subsidiary of the Parent sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Parent such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Parent, the Parent shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of the covenant described above under “—Certain Covenants —Restricted Payments.”

“Issue Date” means December 12, 2005, the date on which the notes were first issued under the indenture.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Material Adverse Change” means the occurrence of any of the following which is not cured within 30 days (i) a loss, revocation, or expiration of JSC Caspi Neft TME’s exploration contract or production contract (each as defined in the indenture); provided that once the production contract has become effective, Caspi Neft will no longer be obligated to maintain its exploration contract; (ii) an increase in the overall statutory tax rate in Kazakhstan to a rate greater than or equal to 50% of income before taxes, or (iii) a material adverse change in the governmental status of Kazakhstan, including a downgrade of Kazakhstan’s sovereign debt rating by either Moody’s Investors Service (or its successors) or Standard and Poors Ratings Service, Inc. (or its successors) to a rating of B1 or B+, respectively, or worse.

“Net Available Proceeds” means the aggregate cash or Cash Equivalents received by the Parent or any of its Restricted Subsidiaries as proceeds in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of, without duplication:

(1) the direct costs relating to such Asset Sale, including, without limitation, reasonable legal, accounting and investment banking fees, and sales commissions, recording fees, title transfer fees and any relocation expenses incurred as a result thereof;

(2) taxes paid or payable as a result thereof, in each case after taking into account any available tax credits or deductions and any tax sharing arrangements;

(3) amounts required to be applied to the permanent repayment of Indebtedness secured by a Lien on the asset or assets that were the subject of such Asset Sale; and

(4) any reserve established in accordance with GAAP against liabilities associated with such Asset Sale or any amount placed in escrow for adjustment in respect of the purchase price of such Asset Sale, until such time as such reserve is reversed or such escrow arrangement is terminated, in which case Net Available

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Proceeds shall be increased by the amount of the reserve so reversed or the amount returned to the Parent or its Restricted Subsidiaries from such escrow arrangement, as the case may be.

“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of reasonable attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges (other than those payable to Affiliates of the Parent) actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).

“Net Income” means, with respect to any Person, the consolidated net income (loss) of such Person and its Restricted Subsidiaries, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(1) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

(2) any extraordinary gain (but not loss), together with any related provision for taxes on such extraordinary gain (but not loss).

“Non-Recourse Debt” means Indebtedness:

(1) as to which neither the Parent nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender with respect to such Indebtedness; and

(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Parent or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity.

“Note Obligations” means the notes, Subsidiary Guarantees and all other obligations of any Obligor under the indenture or the Security Documents.

“Obligor” means each of the Parent, the Issuer, the Subsidiary Guarantors and any other Person that has granted to the trustee a Lien upon any of the Collateral as security for the Note Obligations.

“Oil and Gas Business” means:

(1) the acquisition, exploration, exploitation, development, operation or disposition of interests in, or obtaining production from, oil, natural gas or other hydrocarbon properties;

(2) the gathering, marketing, treating, processing (but not refining), storage, selling or transporting of any production from such interests or properties; or

(3) any activity that is ancillary, necessary or appropriate to facilitate, or that is incidental to, the activities described in clauses (1) and (2) of this definition.

“Permitted Investments” means:

(1) any Investment in the Parent or in a Wholly Owned Restricted Subsidiary of the Parent;

(2) any Investment in Cash Equivalents;

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(3) any Investment by the Parent or any Restricted Subsidiary of the Parent in a Person if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Parent; or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Parent or a Restricted Subsidiary of the Parent;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under “—Repurchase at the Option of Holders—Asset Sales”;

(5) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Parent;

(6) receivables owing to the Parent or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Parent or any such Restricted Subsidiary deems reasonable under the circumstances;

(7) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(8) Capital Stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Parent or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

(9) Hedging Obligations, which transactions or obligations are incurred in compliance with “—Certain Covenants— Incurrence of Indebtedness;”

(10) the entry into operating agreements, processing agreements, farm-out agreements, development agreements, area of mutual interest agreements, contracts for the sale, transportation or exchange of oil and natural gas, unitization agreements, pooling arrangements, joint bidding agreements, service contracts, or other similar and customary agreements, transactions, properties, interests or arrangements made or entered into in the ordinary course of the Oil and Gas Business, excluding, however, Investments in corporations;

(11) Investments in prepaid expenses, negotiable instruments held for collection or deposit and lease, utility and workers compensation, performance and similar deposits entered into as a result of the operations of the business in the ordinary course; and

(12) Investments in Unrestricted Subsidiaries made with proceeds of an Equity Offering.

“Permitted Liens” means, with respect to any Person:

(1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(2) Liens imposed by law, including carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings if a reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made in respect thereof;

(3) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non payment or which are being contested in good faith by appropriate proceedings provided appropriate reserves required pursuant to GAAP have been made in respect thereof;

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(4) Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness;

(5) encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or liens incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(6) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under the Indenture, secured by a Lien on the same property securing such Hedging Obligation;

(7) leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Parent or any of its Restricted Subsidiaries;

(8) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(9) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, purchase money obligations or other payments Incurred to finance the acquisition, improvement or construction of, assets or property acquired or constructed in the ordinary course of business; provided that:

(a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under the Indenture and does not exceed the cost of the assets or property so acquired or constructed; and

(b) such Liens are created within 180 days of construction or acquisition of such assets or property and do not encumber any other assets or property of the Parent or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(10) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution; provided that:

(a) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Parent in excess of those set forth by regulations promulgated by the Federal Reserve Board; and

(b) such deposit account is not intended by the Parent or any Restricted Subsidiary to provide collateral to the depository institution;

(11) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Parent and its Restricted Subsidiaries in the ordinary course of business;

(12) Liens existing on the Issue Date;

(13) Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Parent or any Restricted Subsidiary;

(14) Liens on property at the time the Parent or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Parent or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in

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contemplation of, such acquisition; provided further, however, that such Liens may not extend to any other property owned by the Parent or any Restricted Subsidiary;

(15) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Parent or a Wholly-Owned Subsidiary;

(16) Liens securing the notes, Subsidiary Guarantees and other obligations under the Indenture;

(17) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease;

(18) Liens arising under farm-out agreements, farm-in agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering or processing of Hydrocarbons, unitizations and pooling designations, declarations, orders and agreements, development agreements, operating agreements, production sales contracts, area of mutual interest agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or geophysical permits or agreements, and other agreements which are customary in the Oil and Gas Business; provided, however, in all instances that such Liens are limited to the assets that are the subject of the relevant agreement, program, order or contract;

(19) Liens on pipelines or pipeline facilities that arise by operation of law;

(20) Liens reserved in oil and gas mineral leases for bonus or rental payments and for compliance with the terms of such leases;

(21) Liens arising under the indenture in favor of the trustee for its own benefit and similar Liens in favor of other trustees, agents and representatives arising under instruments governing Indebtedness permitted to be incurred under the indenture, provided, however, that such Liens are solely for the benefit of the trustees, agents or representatives in their capacities as such and not for the benefit of the holders of such Indebtedness;

(22) set-off, chargeback and other rights of depositary and collection banks and other regulated financial institutions with respect to money or instruments of the Parent or any of its Restricted Subsidiaries on deposit with or in the possession of such institutions;

(23) Liens arising from the deposit of funds or securities in trust for the purpose of decreasing or defeasing Indebtedness so long as such deposit of funds or securities and such decreasing or defeasing of Indebtedness are permitted under the covenant described under “—Certain Covenants—Restricted Payments”; and

(24) the Permitted Net Revenue Interest.

(25) In each case set forth above, notwithstanding any stated limitation on the assets that may be subject to such Lien, a Permitted Lien on a specified asset or group or type of assets may include Liens on all improvements, additions and accessions thereto and all products and proceeds thereof (including, without limitation, dividends, distributions and increases in respect thereof).

“Permitted Net Revenue Interest” means the 3.5% net revenue interest in the South Alibek Field granted to Roskilde Enterprises, Ltd., a company organized in the Republic of Seychelles, in connection with the consummation of the Issuer’s acquisition of the Capital Stock of Bramex Management, Inc.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Parent or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Parent or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable), plus premium, if any, and accrued interest on the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith);

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(2)             (a) if the final maturity date of the Indebtedness being extended, refinanced, renewed, replaced, deferred or refunded is earlier than the final maturity date of the notes, the Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of the Indebtedness being extended, refinanced, renewed, replaced, deferred or refunded, or

(b) if the final maturity date of the Indebtedness being extended, refinanced, renewed, replaced, deferred or refunded is later than the final maturity date of the note, the Permitted Refinancing Indebtedness has a final maturity date at least 91 days later than the final maturity date of the notes;

(3) the Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity at the time such Permitted Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, deferred or refunded;

(4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes or the Parent Guarantee or a Subsidiary Guarantee, such Permitted Refinancing Indebtedness is subordinated in right of payment to, the notes or the Parent Guarantee or such Subsidiary Guarantee on terms at least as favorable, taken as a whole, to the holders of the notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(5) such Indebtedness is not incurred by a Restricted Subsidiary if the Parent is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; provided, however, that the Issuer or a Restricted Subsidiary that is also a Subsidiary Guarantor may guarantee Permitted Refinancing Indebtedness incurred by the Parent, whether or not such Restricted Subsidiary was an obligor or guarantor of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; provided further, however, that if such Permitted Refinancing Indebtedness is subordinated to the notes, such Guarantee shall be subordinated to such Restricted Subsidiary’s Subsidiary Guarantee to at least the same extent.

“Production Payment” means either a Dollar-Denominated Production Payment or a Volumetric Production Payment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referenced Person that is not an Unrestricted Subsidiary. When used with respect to the Parent, “Restricted Subsidiary” includes, without limitation, the Issuer.

“Security Documents” means any one or more security agreements, pledge agreements, collateral assignments, mortgages, share pledges, collateral agency agreements, deeds of trust or other grants or transfers for security executed and delivered by the Issuer and any other Obligor creating, or purporting to create, a Lien upon Collateral in favor of the trustee for the benefit of the holders of the notes, subject to certain payment priorities, in each case as amended, modified, renewed, restated or replaced, in whole or part, from time to time, in accordance with its terms.

“Senior Debt” means any Indebtedness of the Parent or any Subsidiary Guarantor permitted to be incurred by its under the terms of the indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the notes or the Subsidiary Guarantees, as the case may be.

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect on the Issue Date.

“Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original

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documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subordinated Indebtedness” means Indebtedness of the Parent, the Issuer or a Subsidiary Guarantor that is subordinated in right of payment to the Parent Guarantee, the notes or a Subsidiary Guarantee, as appropriate pursuant to a written agreement to that effect.

“Subsidiary” of any Person means any corporation, association, partnership, joint venture, limited liability company or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership and joint venture interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Affiliates of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary refers to a Subsidiary of the Parent.

“Subsidiary Guarantee” means a Guarantee by a Subsidiary Guarantor of the Issuer’s obligations with respect to the notes.

“Subsidiary Guarantor” means each Subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the indenture, and its respective successors and assigns.

“Unrestricted Subsidiary” means Transmeridian Caspian Petroleum LLP, a Kazakhstan limited liability partnership and wholly-owned subsidiary of the Issuer, Emba-Trans LLP, a Kazakhstan limited liability partnership and wholly-owned subsidiary of the Issuer, and any other Subsidiary of the Parent (other than the Issuer) that is designated by the Board of Directors of the Parent as an Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) is not party to any agreement, contract, arrangement or understanding with the Parent or any Restricted Subsidiary of the Parent unless the terms of any such agreement, contract, arrangement of understanding are no less favorable to the Parent or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Parent;

(3) is a Person with respect to which neither the Parent nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results, except in each case to the extent that the full amount of any such commitment is treated as an Investment in compliance “—Certain Covenants—Restricted Payments” or a Permitted Investment;

(4) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Parent and its Subsidiaries; and

(5) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Parent or any of its Restricted Subsidiaries.

The Board of Directors of the Parent may designate any Restricted Subsidiary (other than the Issuer) to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, all outstanding Investments owned by the Parent and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under the first paragraph of the covenant described above under “—Certain Covenants—Restricted Payments” as applicable. All such outstanding Investments will be valued at their fair market value at the time of such designation. That designation will only be permitted if such

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Restricted Payment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an “Unrestricted Subsidiary.”

Any designation of a Subsidiary of the Parent as an Unrestricted Subsidiary shall be evidenced to the trustee by filing with the trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation compiled with the preceding conditions and was permitted by the covenant described above under “—Certain Covenants—Restricted Payments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Issuer as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under “—Certain Covenants—Incurrence of Indebtedness,” the Parent shall be in default of such covenant.

The Board of Directors of the Parent may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Issuer of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (1) such Indebtedness is permitted under the covenant described under “—Certain Covenants— Incurrence of Indebtedness,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and (2) no Default would be in existence following such designation.

“Volumetric Production Payments” mean production payment obligations recorded as deferred revenue in accordance with GAAP, together with all undertakings and obligations in connection therewith.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled (without refund to the occurrence of any contingency) to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the sum of all such payments.

“Wholly-Owned Restricted Subsidiary” of any Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock of which (other than Foreign Required Minority Shares) shall at the time be owned by such Person and/or by one or more other Wholly-Owned Restricted Subsidiaries of such Person.

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PLAN OF DISTRIBUTION

Based on interpretations by the staff of the SEC in no-action letters issued to third parties, we believe that you may transfer the Exchange Notes issued to you pursuant to the exchange offer in exchange for your Outstanding Notes if:

• you acquire the Exchange Notes in the ordinary course of your business; and

• you are not engaged in, do not intend to engage in and have no arrangements or understanding with any person to participate in a distribution of such Exchange Notes within the meaning of the Securities Act.

You may not participate in the exchange offer if you are:

• our “affiliate” within the meaning of Rule 405 under the Securities Act; or

• a broker-dealer that acquired Outstanding Notes directly from us.

Each broker-dealer that receives Exchange Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. To date, the staff of the SEC has taken the position that broker-dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as this exchange offer, other than a resale of an unsold allotment from the original sale of the Outstanding Notes, with the prospectus contained in this registration statement. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the consummation of the exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until such date, all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The accompanying letter of transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 180 days after the consummation of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the accompanying letter of transmittal. We have agreed to pay all expenses incident to the exchange offer (including the expenses of one counsel for the holders of the notes), other than commissions or concessions of brokers or dealers and transfer taxes under certain circumstances, and will indemnify the holders of the notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

If you wish to exchange your Outstanding Notes for Exchange Notes in the exchange offer, you will be required to make representations to us as described in the section of this prospectus entitled “The Exchange

79

Offer—Procedures for Tendering.” As indicated in the accompanying letter of transmittal, you will be deemed to have made these representations by tendering your Outstanding Notes in the exchange offer. In addition, if you are a broker-dealer who receives Exchange Notes for your own account in exchange for Outstanding Notes that were acquired by you as a result of market-making activities or other trading activities, you will be required to acknowledge, in the same manner, that you will deliver a prospectus in connection with any resale by you of such Exchange Notes.

LEGAL MATTERS

Certain legal matters with respect to the Exchange Notes will be passed upon for us by Akin Gump Strauss Hauer & Feld LLP, Houston, Texas.

INDEPENDENT AUDITORS

The consolidated financial statements of Transmeridian Exploration Incorporated as of and for the year ended December 31, 2005, included in this prospectus have been audited by UHY Mann Frankfort Stein & Lipp CPAs, LLP, an independent registered public accounting firm, as stated in their report, which is included herein in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Transmeridian Exploration Incorporated, as of and for the years ended December 31, 2004 and 2003, included in this prospectus have been audited by John A. Braden & Company, P.C. and UHY Mann Frankfort Stein & Lipp CPAs, LLP, each independent registered public accounting firms, as stated in their respective reports, which are included herein in reliance upon the reports of such firms given upon their authority as experts in accounting and auditing.

RESERVE ENGINEERS

The information included in this prospectus regarding the quantities of our reserves of oil and gas and the related future cash flows is based on estimates of our reserves and the related future cash flows prepared by Ryder Scott Company, independent reserve engineers, in reliance upon their authority as experts in reserve determination.

80

INDEX TO FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firms	F-2
Consolidated Balance Sheet as of December 31, 2005 and 2004	F-4
Consolidated Statement of Operations for the Years Ended December 31, 2005, 2004 and 2003	F-5
Consolidated Statement of Stockholders’ Equity for the Years Ended December 31, 2005, 2004 and 2003	F-6
Consolidated Statement of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003	F-7
Notes to Consolidated Financial Statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Transmeridian Exploration Incorporated and Subsidiaries

Houston, Texas

We have audited the accompanying consolidated balance sheet of Transmeridian Exploration Incorporated and subsidiaries (“the Company”) as of December 31, 2005, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Transmeridian Exploration Incorporated and subsidiaries as of December 31, 2005, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO criteria”) and our report dated March 16, 2006 expressed an unqualified opinion on management’s assessment that the Company did not maintain effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria, and because of the effects of the material weakness described therein, Transmeridian Exploration Incorporated has not maintained effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

/s/ UHY MANN FRANKFORT STEIN & LIPP CPAs, LLP

Houston, Texas

March 16, 2006

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors

Transmeridian Exploration, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Transmeridian Exploration, Inc. and Subsidiaries as of December 31, 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the two year period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Transmeridian Exploration Inc. and Subsidiaries at December 31, 2004 and 2003 and the consolidated results of their operations and cash flows for each of the years in the three year period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

By:	/S/    JOHN A. BRADEN & COMPANY, P.C.
	John A. Braden & Co., P.C.

Houston, Texas

March 14, 2005

F-3

TRANSMERIDIAN EXPLORATION INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

	December 31,
	2005			2004
ASSETS
Current Assets:
Cash and cash equivalents	$	34,443,457		$	16,746,137
Restricted cash		31,960,491			—
Accounts receivable		3,623,399			3,644,891
Crude oil inventory		1,625,934			192,465
Other current assets		51,264			75,850
Asset held for sale		3,000,000			8,545,897
Total current assets		74,704,545			29,205,240
Property and Equipment:
Oil and gas properties, successful efforts method		230,139,394			71,048,574
Transportation equipment		239,821			239,821
Office and technology equipment		339,580			291,305
Total property and equipment		230,718,795			71,579,700
Less accumulated depreciation, depletion and amortization		3,903,446			1,190,791
Property and equipment, net		226,815,349			70,388,909
Other assets, net		12,473,536			216,111
	$	313,993,430		$	99,810,260
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	31,869,443		$	7,137,016
Current maturities of long-term debt		—			12,005,208
Accrued interest payable		1,583,333			6,132,477
Deferred revenue		—			192,465
Preferred dividends payable		244,003			154,110
Notes payable to related parties		—			50,000
Total current liabilities		33,696,779			25,671,276
Long-term debt, net of discount of $26,592,924 at December 31, 2005		223,407,076			23,682,999
Other long term liabilities		186,000			186,000
Minority interest		—			7,924,558
Stockholders’ Equity:
Preferred stock, $0.0006 par value per share, 5,000,000 shares authorized, 1,547.714 and 1,785.714 issued and outstanding		1			1
Common stock, $0.0006 par value per share, 200,000,000 shares authorized 87,128,021 and 79,829,062 issued and outstanding		52,277			47,897
Additional paid-in capital		94,336,744			58,361,256
Accumulated deficit		(37,685,447	)		(16,063,727	)
Total stockholders’ equity		56,703,575			42,345,427
	$	313,993,430		$	99,810,260

The accompanying notes are an integral part of these financial statements.

F-4

TRANSMERIDIAN EXPLORATION INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

	Year ended December 31,
	2005			2004			2003
Revenue from oil sales	$	8,442,787		$	3,922,990		$	797,411
Operating costs and expenses:
Exploration expense		9,470			130,926			592,553
Depreciation, depletion and amortization		3,384,893			788,758			245,712
Transportation expense		321,313			154,993			235,264
Impairment loss on drilling rig		4,022,015			—			—
Operating and administrative expense—Kazakhstan		3,896,332			3,591,529			2,503,674
General and administrative expense—Houston		6,631,490			2,562,033			2,135,237
Total operating costs and expenses		18,265,513			7,228,239			5,712,440
Operating loss		(9,822,726	)		(3,305,249	)		(4,915,029	)
Other income (expense):
Interest income		337,815			34,242			870
Interest expense, net of capitalized interest		(10,344,217	)		(1,400,227	)		(772,409	)
Total other income (expense)		(10,006,402	)		(1,365,985	)		(771,539	)
Loss before minority interest		(19,829,128	)		(4,671,234	)		(5,686,568	)
Minority interest income (expense)		(711,558	)		823,053			—
Net loss		(20,540,686	)		(3,848,181	)		(5,686,568	)
Preferred dividends		(1,081,034	)		(154,110	)		(19,736	)
Net loss attributable to common stockholders	$	(21,621,720	)	$	(4,002,291	)	$	(5,706,304	)
Basic and diluted loss per share	$	(0.26	)	$	(0.05	)	$	(0.09	)
Weighted average common shares outstanding, basic and diluted		82,004,175			78,615,433			64,573,627

The accompanying notes are an integral part of these financial statements.

F-5

TRANSMERIDIAN EXPLORATION INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

	Preferred Stock					Common Stock			Additional Paid-In Capital			Accumulated Deficit			Total
	Shares		Amount			Shares (000’s)	Amount
Balance December 31, 2002	3,000		$	2		59,147	$	35,488	$	10,201,625		$	(6,355,132	)	$	3,881,983
Conversion of preferred stock	(3,000	)		(2	)	1,546		928		56,329			—			57,255
Common stock issued for services	—			—		5,320		3,192		830,075			—			833,267
Proceeds from the sale of common stock, net of offering costs	—			—		3,333		2,000		998,000			—			1,000,000
Common stock used to retire debt	—			—		1,327		796		295,421			—			296,217
Stock-based compensation	—			—		—		—		122,800			—			122,800
Issuance of warrants in connection with services	—			—		—		—		21,000			—			21,000
Convertible preferred stock dividends	—			—		—		—		—			(19,736	)		(19,736	)
Net loss	—			—		—		—		—			(5,686,568	)		(5,686,568	)
Balance December 31, 2003	—			—		70,673		42,404		12,525,250			(12,061,436	)		506,218
Exercise of warrants	—			—		358		214		(214	)		—			—
Issuance of common stock to retire debt	—			—		800		480		703,520			—			704,000
Proceeds from the sale of common stock, net of offering costs	—			—		7,268		4,361		4,377,689			—			4,382,050
Proceeds from the sale of preferred stock, net of offering costs	1,786			1		—		—		20,762,056			—			20,762,057
Issuance of warrants in connection with sale of preferred stock sale	—			—		—		—		2,678,570			—			2,678,570
Stock-based compensation	—			—		730		438		395,851			—			396,289
Private placement termination fee	—			—		—		—		200,000			—			200,000
Elimination of minority interest	—			—		—		—		16,718,534			—			16,718,534
Convertible preferred stock dividends	—			—		—		—		—			(154,110	)		(154,110	)
Net loss	—			—		—		—		—			(3,848,181	)		(4,002,291	)
Balance December 31, 2004	1,786			1		79,829		47,897		58,361,256			(16,063,727	)		42,345,427
Exercise of warrants	—			—		1,757		1,054		2,762,112			—			2,763,166
Proceeds from the sale of common stock	—			—		882		529		1,790,252			—			1,790,781
Conversion of preferred stock	(238	)		—		2,380		1,428		(1,428	)		—			—
Issuance of warrants in connection with debt offerings	—			—		—		—		31,520,394			—			31,520,394
Stock-based compensation	—			—		1,609		966		2,089,363			—			2,090,329
Preferred stock registration costs	—			—		—		—		(2,312,500	)		—			(2,312,500	)
Exercise of stock options	—			—		671		403		127,295			—			127,698
Convertible preferred stock dividends	—			—		—		—		—			(1,081,034	)		(1,081,034	)
Net loss	—			—		—		—		—			(20,540,686	)		(20,540,686	)
Balance December 31, 2005	1,548		$	1		87,128	$	52,277	$	94,336,744		$	(37,685,447	)	$	56,703,575

The accompanying notes are an integral part of these financial statements.

F-6

TRANSMERIDIAN EXPLORATION INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year ended December 31,
	2005			2004			2003
Operating Activities:
Net loss	$	(20,540,686	)	$	(3,848,181	)	$	(5,686,568	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization		3,384,893			788,758			245,712
Amortization of debt financing costs		1,114,930			193,332			184,166
Debt discount amortization		4,633,470			—			—
Impairment charge		4,022,015			—			—
Amortization of prepaid contracts		—			61,250			411,355
Stock-based compensation expense		2,090,329			396,289			122,800
Exploration expense		—			130,926			277,012
Stock issued for services		—			—			285,299
Minority interest (income) expense		711,558			(823,053	)		—
Increase in receivables		(1,978,508	)		(3,501,756	)		(49,465	)
Decrease in prepaid expenses		24,586			18,149			89,392
Increase in crude oil inventory		(1,625,934	)		—			—
Increase in accounts payable and accrued liabilities		1,361,311			732,738			40,687
Increase (decrease) in interest payable		(4,549,144	)		(4,253,422	)		424,920
Net cash used in operating activities		(11,351,180	)		(10,104,970	)		(3,654,690	)
Investing Activities:
Capital expenditures		(20,703,352	)		(17,647,162	)		(23,574,311	)
Acquisitions		(123,999,769	)		—			—
Increase in other assets.		—			—			(65,997	)
Net cash used in investing activities		(144,703,121	)		(17,647,162	)		(23,640,308	)
Financing Activities:
Proceeds from long-term debt		250,000,000			16,891,972			28,807,214
Repayments of long-term debt		(35,350,037	)		(16,539,868	)		(1,515,509	)
Proceeds from short-term borrowings		25,740,000			—			—
Repayments of short-term borrowings		(25,740,000	)		—			—
Decrease in notes payable to related parties		(50,000	)		(198,025	)		—
Payment of deferred financing costs		(12,578,355	)		—			(300,000	)
Payment of dividends on preferred stock		(991,142	)		—			—
Proceeds from sale of stock by Caspi Neft		—			15,000,000			—
Proceeds from sale of common stock, net		1,790,781			4,582,050			1,000,000
Proceeds from sale of preferred stock		—			23,440,626			—
Proceeds from exercise of stock options		127,700			—			—
Proceeds from exercise of warrants		2,763,165			—			—
Increase in restricted cash		(31,960,491	)		—			—
Net cash provided by financing activities		173,751,621			43,176,755			27,991,705
Net increase in cash and cash equivalents		17,697,320			15,424,623			696,707
Cash and cash equivalents, beginning of year		16,746,137			1,321,514			624,807
Cash and cash equivalents, end of year	$	34,443,457		$	16,746,137		$	1,321,514

The accompanying notes are an integral part of these financial statements.

F-7

TRANSMERIDIAN EXPLORATION INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS—SUPPLEMENTAL INFORMATION

	Year ended December 31,
	2005			2004			2003
Cash paid for:
Interest	$	11,642,884		$	4,864,749		$	187,613
Interest capitalized (non-cash)		(2,497,923	)		(4,519,759	)		(4,164,694	)
Income taxes		—			—			—
Non-cash investing and financing transactions:
Issuance of warrants in connection with debt	$	31,250,394		$	—		$	—
Accrual for acquisition of carried working interest		20,250,000			—			—
Accrued and unpaid dividends on convertible preferred stock		244,003			154,110			19,736
Exchange of convertible preferred stock for common stock		1,428			—			2
Issuance of common stock for services		—			—			833,267
Issuance of common stock to retire debt		—			704,000			296,217
Settlement of drilling rig dispute		—			(2,345,188	)		—
Assumption of note payable on drilling rig		—			3,393,158			—
Issuance of warrants in connection with services		—			1,004,464			21,000
Other long term liabilities		—			—			186,000

The accompanying notes are an integral part of these financial statements

F-8

TRANSMERIDIAN EXPLORATION INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Organization and Summary of Significant Accounting Policies

Transmeridian Exploration Incorporated (the “Company”) was incorporated in the State of Delaware in April 2000. The Company is engaged in the business of acquiring, developing and producing oil and gas with its activities primarily focused on the Caspian Sea region of the former Soviet Union. The Company’s primary oil and gas property is the South Alibek Field (“South Alibek” or the “Field”) in the Republic of Kazakhstan covered by License 1557 (the “License”) and the related exploration contract with the government of Kazakhstan.

The Company’s operations in Kazakhstan are conducted through the now wholly-owned subsidiary, JSC Caspi Neft TME (“Caspi Neft”), an open joint stock company organized under the laws of Kazakhstan. In February 2004, Bramex Management, Inc. (“Bramex”) exercised its option to acquire 50% of the issued and outstanding shares of Caspi Neft. In December 2005, the Company acquired all of the issued and outstanding shares of Bramex and, thus, the Company owns 100% of Caspi Neft.

Principles of Consolidation and Reporting

The consolidated financial statements include the accounts of the Company and its majority-owned and controlled subsidiaries and are prepared in accordance with generally accepted accounting principles in the United States. All significant intercompany transactions and balances have been eliminated in consolidation. The assets and results of operations of Caspi Neft represent substantially all of the consolidated assets and operations of the Company.

The Company continued to exercise significant control over Caspi Neft after Bramex exercised its option to acquire 50% of Caspi Neft in February 2004 and accordingly, believed the most meaningful accounting treatment was to fully consolidate Caspi Neft with the 50% share owned by Bramex reflected as a minority interest. To exercise its option, Bramex contributed $15.0 million in cash to Caspi Neft, the proceeds of which were used by Caspi Neft to retire debt. The difference between the $15.0 million of capital contributed to Caspi Neft and 50% of the book equity of Caspi Neft after such capital contribution represents an excess purchase price paid by Bramex of $6.0 million. This amount was included in additional paid-in capital on the accompanying 2004 consolidated balance sheet.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on other information and assumptions that are believed to be reasonable under the circumstances. Estimates and judgments about future events and their effects cannot be perceived with certainty; accordingly, these estimates may change as additional information is obtained, as more experience is acquired, as the Company’s operating environment changes and as new events occur. While it is believed that such estimates are reasonable, actual results could differ materially from those estimates. Estimates are used for, but not limited to, determining the following: inventory valuation, recoverability of long-lived assets, useful lives and oil and gas reserves used in depreciation, depletion, and amortization, income taxes and related valuation allowances and insurance, environmental and legal accruals.

Revenue Recognition

The Company sells its production both in the export and domestic market on a contract basis. Revenue is recorded when the purchaser takes delivery of the oil. At the end of the period, oil that has been produced but not

F-9

sold is recorded as inventory at the lower of cost or market. Cost is determined on a weighted average basis based on production costs.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. Certain of the Company’s cash balances are maintained in foreign banks which are not covered by deposit insurance. The cash balances in the Company’s U.S. accounts may exceed federally insured limits. Cash that is escrowed for specific purposes such as interest payments is shown as restricted cash in the accompanying consolidated balance sheet.

Property and Equipment

The Company follows the “successful efforts” method of accounting for its costs of acquisition, exploration and development of oil and gas properties.

Oil and gas lease acquisition costs are capitalized when incurred. Unproved properties with significant acquisition costs are assessed quarterly on a property-by-property basis, and any impairment in value is recognized. Unproved properties with acquisition costs which are not individually significant are aggregated, and the portion of such costs estimated to be nonproductive, based on historical experience, is amortized over the average holding period. If the unproved properties are determined to be productive, the appropriate related costs are transferred to proved oil and gas properties. Lease rentals are expensed as incurred.

Oil and gas exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Such costs include seismic expenditures and other geological and geophysical costs. The costs of drilling exploratory wells are capitalized pending determination of whether they have discovered proved commercial reserves. If proved commercial reserves are not discovered, exploratory drilling costs are expensed. Costs to develop proved reserves are capitalized, including the costs of all development wells and related equipment used in the production of crude oil and natural gas.

Depreciation, depletion and amortization of the costs of proved oil and gas properties is computed using the unit-of-production method based upon estimated proved reserves. Estimated future restoration and abandonment costs, if any, will be recognized as incurred as the Company does not have an ownership interest in the South Alibek Field and all property reverts to the government of Kazakhstan at the end of the License period. The Company does not have any legal obligations associated with the retirement of long-lived assets.

The Company reviews its oil and gas properties for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The determination of recoverability is based on comparing the estimated undiscounted future net cash flows at a producing field level to the unamortized capitalized cost of the asset. If the future undiscounted cash flows, based on the Company’s estimates of anticipated production from proved reserves and future crude oil and natural gas prices and operating costs, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is calculated by discounting the future cash flows at an appropriate risk-adjusted discount rate.

In December 2001, the Company purchased a drilling rig that, beginning in October 2002, was used in the development of the South Alibek Field. The rig was depreciated on the straight-line method over an estimated useful life of ten years and while being used for development drilling, the depreciation of the rig and related support equipment was capitalized under the successful efforts method as part of the cost of the wells. Subsequent depreciation was expensed when the rig was stacked. In the first quarter of 2006, the Company reached an agreement to dispose of the rig. In accordance with generally accepted accounting principles, an impairment charge writing the value of the rig down to the estimated net proceeds and reclassifying the net book value of the rig to current asset held for sale was recorded in the accompanying consolidated financial statements.

F-10

Transportation equipment and office and technology equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from three to five years.

Maintenance and repairs are charged to expense as incurred. Replacements and expenditures which improve or extend the life of assets are capitalized. When assets are sold, retired or otherwise disposed of, the applicable costs and accumulated depreciation and amortization are removed from the accounts, and the resulting gain or loss is recognized.

Capitalized Interest Costs

Certain interest costs have been capitalized as part of the cost of oil and gas properties, including property acquisition costs, wells in progress and related facilities. Additionally, interest was capitalized on the drilling rig while it was being readied for its intended use. Total interest costs capitalized during the years ended December 31, 2005, 2004 and 2003 totaled $2.5 million, $4.5 million and $4.2 million, respectively.

Income Taxes

The Company accounts for income taxes using the asset and liability method. The asset and liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of (i) temporary differences between financial statement carrying amounts of assets and liabilities and the basis of these assets and liabilities for tax purposes and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when management concludes that it is more likely than not that a portion of the deferred tax assets will not be realized in a future period.

Debt Financing Costs

Debt financing costs are amortized over the term of the related financing facility.

Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed based upon the weighted average number of common shares outstanding plus the common shares which would be issuable upon the conversion or exercise of all potentially dilutive securities. Diluted net loss per share equals basic net loss per share for all periods presented because the effects of potentially dilutive securities are anti-dilutive.

Net loss attributable to common stockholders is calculated as the net loss after deductions for cumulative preferred stock dividends, whether paid or accrued.

Foreign Exchange Transactions

The Company’s functional currency is the U.S. dollar because it primarily contracts with customers, finances capital and purchases equipment and services using the U.S. dollar. Certain assets and liabilities are translated at historical exchange rates, revenues and expenses in foreign currency are translated at the average rate of exchange for the period and all translation gains or losses are reflected in the period’s results of operations.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company deposits its cash and cash equivalents in high credit quality financial institutions, however amounts on deposit do exceed the maximum amount insured by the Federal Deposit Insurance Corporation.

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Stock-Based Compensation

The Company accounts for employee stock-based compensation using the fair value method as prescribed in Statement of Financial Accounting Standards (“SFAS”) No. 123. Under this method, the Company records the fair value attributable to stock options or stock grants, based on the Black-Scholes model, and amortizes that amount to expense over the service period required to vest the options.

Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to their short-term nature. The carrying value of long-term debt approximates its fair value based on the market interest rate of the debt instrument.

Reclassifications

Prior period amounts primarily related to the Company’s drilling rig have been reclassified to conform to the current period presentation.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued the revised SFAS No. 123, Share-Based Payment (“SFAS No. 123(R)”). SFAS 123(R) is a revision of SFAS No. 123 and supersedes APB No. 25. SFAS 123(R) requires compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be remeasured at each reporting date through the settlement date. Compensation cost will be recognized over the period that an employee provides services in exchange for the award. The Company had previously adopted SFAS No. 123, and, the adoption of SFAS 123(R) on January 1, 2006 is not expected to have a material effect on the Company’s consolidated financial statements.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections. SFAS No. 154 replaces Accounting Principles Board Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Internal Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 requires retrospective application of changes in accounting principle to prior periods’ financial statements, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company adopted SFAS No. 154 on January 1, 2006. Any impact on the Company’s consolidated results of operations and earnings per share will be dependent on the amount of any accounting changes or corrections of errors whenever recognized.

Note 2—Acquisitions

In October 2005, a wholly-owned subsidiary of the Company entered into a share sale and purchase agreement with Seeria Alliance Ltd. to purchase 100% of the authorized and issued shares of Bramex, the owner of 50% of Caspi Neft. In December 2005, the transaction was completed and the subsidiary now owns, directly or indirectly, 100% of Caspi Neft. The total consideration of $168 million, of which approximately $44 million was to pay the outstanding indebtedness of Caspi Neft, was funded from the net proceeds of the private placement of units as described in note 5.

In December 2005, the Company entered into a purchase agreement with Kornerstone Investment Group Ltd. (“Kornerstone”) pursuant to which the Company acquired the 10% carried working interest in the South Alibek Field held by Kornerstone. Pursuant to the purchase agreement, the Company paid Kornerstone a

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purchase price consisting of $15.25 million in cash and one million shares of the Company’s common stock. The cash portion of the purchase price obligation was funded from the net proceeds of the private placement of units.

Note 3—Property and Equipment

Oil and Gas Properties

The License covering the South Alibek Field, was granted by the Republic of Kazakhstan on April 29, 1999 and originally covered 3,396 acres. In March 2000, the Company acquired the License from an unrelated third-party for $4.0 million. During 2001, based on its technical review and analysis of the probable productive area of the Field, the Company applied to the Kazakhstan Ministry of Energy and Mineral Resources to expand the area covered by the License. In November 2001, the Company’s application was approved and the License was expanded to cover an area of 14,111 acres.

The exploration contract associated with the License had a six-year term which expired in April 2005 and has been extended through April 2007, and may be extended by mutual agreement for an additional two years. The exploration contract required capital expenditures during the initial period of approximately $18.0 million, which has been satisfied. In connection with the recent two-year extension, the Company has committed to an additional work program of $30.5 million. During the primary and extended terms, the Company can produce from wells under a test program and pay a royalty of 2% to the government. The exploration contract also contains a provision which will allow the government to recover, from future revenues, approximately $4.9 million of exploration costs which were incurred prior to privatization. The final terms for the recovery of these costs will be contained in the production contract when executed, The Company has received approval from the government of Kazakhstan for a production contract covering a portion of the License area, and is currently awaiting final signature of the production contract from the Kazakhstan government.

Drilling Rig and Equipment

In December 2001, the Company purchased a drilling rig that was used in the development of the South Alibek Field beginning in October 2002. The rig was depreciated on the straight-line method over an estimated useful life of ten years and while being used for development drilling, the depreciation of the rig and related support equipment was capitalized under the successful efforts method as part of the cost of the wells. Subsequent depreciation was expensed when the rig was stacked. In the first quarter of 2006, the Company reached an agreement to dispose of the rig. An impairment charge writing the value of the rig down to the estimated net proceeds and reclassifying the net book value of the rig to current asset held for sale was recorded as of December 31, 2005. As more fully discussed in note 8, there was a legal dispute between the Company and the holder of an apparent first lien on the drilling rig that was settled in December 2005.

Note 4—Notes Payable to Related Parties

In a series of notes issued between June 2002 and November 2002, certain stockholders and related parties, including the Chief Executive Officer of the Company, loaned the Company $248,025. These notes had interest rates of 17% and were paid in full in September 2005.

Note 5—Debt

Short-Term Debt

In May 2005, the Company borrowed an aggregate of $2,240,000 from a group of individuals pursuant to unsecured, short-term notes. The notes bore interest at 15% per annum and were repaid along with accrued interest in July and September 2005. In July 2005, the Company borrowed $1,000,000 from an individual pursuant to an unsecured short-term note, which bore interest at 15% per annum and was repaid with accrued

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interest in December 2005. In connection with these borrowings, the Company issued detachable warrants to purchase 420,000 shares of common stock at exercise prices ranging from $2.00 to $2.12 per share. The warrants have a three-year term.

In August 2005, the Company issued convertible promissory notes (the “Convertible Notes”) in the original aggregate principal amount of $22,500,000. The Convertible Notes bore interest at 10% per annum and matured on the earlier of December 15, 2005 or the closing of certain equity financings. The Convertible Notes were repaid in full, including accrued interest, in December 2005 utilizing a portion of the proceeds from the private placement of units.

Long-Term Debt

Long-term debt consists of the following:

	December 31,
	2005		2004
Senior Secured Notes due 2010, net of discount of $26,592,924	$	223,407,076	$	—
$20 million credit facility with a Kazakhstan bank		—		3,583,863
$30 million credit facility with a Kazakhstan bank		—		29,399,585
Note payable secured by drilling rig		—		2,704,759
Total long—term debt		223,407,076		35,688,207
Less current maturities		—		12,005,208
Long-term portion	$	223,407,076	$	23,682,999

Senior Secured Notes

In December 2005, a wholly-owned subsidiary of the Company issued in a private placement an aggregate of 250,000 units (the “Units”) consisting of (1) an aggregate $250 million principal amount of the subsidiary’s senior secured notes due 2010 (the “Notes”) and (2) warrants to purchase in the aggregate approximately 17.3 million shares of the Company’s common stock (the “Warrants”). The Units were issued and sold for a purchase price of $1,000 per Unit. Each Unit consists of $1,000 principal amount of Notes and 69.054 Warrants to purchase an equal number of shares of the Company’s common stock. The Notes, which will mature on December 15, 2010, bear interest at the rate of 12% per annum. Interest on the Notes is payable quarterly on March 15, June 15, September 15 and December 15 of each year, beginning on March 15, 2006, and at maturity. The first year of interest payments have been escrowed and are recorded as restricted cash on the Company’s consolidated balance sheet as of December 31, 2005. The fair value of the warrants of approximately $26,816,000 was recorded as a discount to the face amount of the Notes and will be amortized to interest expense over the life of the Notes.

The Notes are secured by first priority pledges of all the capital stock of Transmeridian Exploration Inc., the issuing wholly-owned subsidiary, and of all of the Company’s other material subsidiaries. In addition, the Notes are fully and unconditionally guaranteed by the Company and all of the Company’s other material subsidiaries. The Notes contain provisions that limit the ability of the Company and its subsidiaries to enter into transactions with affiliates; pay dividends or make other restricted payments; incur debt; create, incur or assume liens; sell assets; and consolidate, merge or transfer all or substantially all of the Company’s assets. The Company is required to offer to repurchase the Notes in connection with certain specified change of control events. The Notes are subject to redemption, in whole or in part, at the option of the Company at any time on or after December 15, 2008 at redemption prices starting at 106% of the principal amount redeemed and declining to 100% by June 15, 2010. Prior to December 15, 2008, the Company may redeem up to 35% of the Notes with proceeds of certain equity offerings at a specified redemption price.

F-14

The Company used the proceeds from the offering of the Units of $237.4 million, after expenses, to fund the acquisition of Bramex and to retire the existing bank credit facility indebtedness of Caspi Neft, to repay $22.5 million of convertible promissory notes and to pre-fund the first year of interest payments on the Notes of $30 million.

$20 Million and $30 Million Credit Facilities

In February 2002, Caspi Neft entered into a credit facility with a Kazakhstan bank that provided for borrowings totaling $20.0 million with an interest rate of 15% and a fee of 0.5% per annum on the unutilized portion of the commitment. The original maturity date was February 2005; however, the terms were renegotiated to allow for deferral of all principal and interest payments until the earlier of (i) the closing date of the acquisition of Bramex or (ii) December 23, 2005.

In June 2003, Caspi Neft entered into a new $30.0 million credit facility with the same Kazakhstan bank. This facility provided for borrowings up to $30.0 million with an interest rate of 15% and a commitment fee of 0.5% per annum on the unutilized portion. Upon execution of the credit facility, Caspi Neft paid the bank an arrangement fee of $300,000, which was capitalized as a deferred financing cost and was being amortized over the five-year life of the facility. Originally, the amount outstanding as of May 31, 2005 was scheduled to be repaid over 36 equal monthly installments beginning June 2005 through the final maturity date of May 31, 2008; however, those terms were renegotiated to allow for deferral of all principal and interest payments until the earlier of (i) the closing date of the acquisition of Bramex or (ii) December 23, 2005.

Both credit facilities were repaid in full in December 2005 in connection with the acquisition of Bramex by a wholly-owned subsidiary of the Company and the Company’s December 2005 private placement of Units discussed above.

Note Payable Secured by Drilling Rig

In December 2001, the Company purchased a drilling rig for $5.3 million by the issuance, to the seller, of a note payable for $3.3 million and 1.0 million shares of redeemable common stock having a value at that time of $2.0 million. In July 2003, the Company was notified by the holder of an apparent first lien on the rig that the seller was in default under its note payable obligation to the lienholder. The Company was not informed of the existence of the prior lienholder by the seller of the rig. The note payable was in dispute as a result of the seller’s apparent default to the lienholder. The Company held discussions with the lienholder with the intent to resolve the seller’s default by making certain payments directly to the lienholder. The Company made installment payments to the lienholder totaling $688,400 during 2003. However, in December 2003, the Company ceased installment payments to the lienholder as it had not been able to reach a settlement agreement with both the seller and the lienholder. In August 2004, the Company settled its legal dispute with the seller. Pursuant to the terms of the settlement, the remaining balance due on the note of $1.6 million, plus accrued interest of $550,000, was cancelled, and the Company agreed to seek a settlement with the lienholder pursuant to which the Company would assume the obligation of the seller of the rig to the lienholder. Also under the terms of the settlement, the seller returned 200,000 shares to the Company, the remaining 800,000 shares were retained by the seller and such shares are no longer redeemable. In December 2005, the Company settled the remaining outstanding obligation to the lienholder for approximately $1.8 million, plus $120,000 for legal fees. This amount was held in escrow at December 31, 2005 and is recorded as restricted cash on the consolidated balance sheet as of December 31, 2005.

F-15

Future maturities of long-term debt, exclusive of discount, at December 31, 2005, are as follows:

	Amount
2006	$	—
2007		—
2008		—
2009		—
2010		250,000,000
Total long-term debt	$	250,000,000

Management believes the fair value of debt at December 31, 2005 approximates its carrying value based on the market interest rate of the debt instrument.

Note 6—Stockholders’ Equity

Series A Convertible Preferred Stock

In November 2004, the Company sold 1,785.714 shares of its Series A Cumulative Convertible Preferred Stock (the “Series A Preferred”) in a private placement at a purchase price of $14,000 per share, and issued warrants to purchase up to 4,464,286 shares of the Company’s common stock at an exercise price equal to $1.55 per share. The aggregate purchase price, net of offering costs, for the Series A Preferred and the related warrants was $22.5 million, which includes the value of warrants attributable to offering cost. The proceeds from the private placement of Series A Preferred and warrants were used for general corporate purposes, including funding the Company’s development drilling program in the South Alibek Field, and to pursue growth opportunities.

The Series A Preferred has a liquidation value of $14,000 per share and is convertible at the holders’ option into common stock at a conversion price of $1.40 per share, subject to adjustments in certain circumstances. The holders of the Series A Preferred are entitled to a quarterly dividend payable at the rate of 4.5% per annum, payable in cash. The holders of the Series A Preferred have full voting rights and powers (subject to a beneficial ownership cap as described below) equal to the voting rights and powers of the holders of the Company’s common stock, and vote together with the holders of common stock as one class. A holder of the Series A Preferred may not, unless it chooses in advance not to be governed by this limitation, convert the Series A Preferred or exercise the warrants into common stock such that the number of shares of common stock issued after the conversion would exceed, when aggregated with all other shares of common stock owned by such holder at such time, 4.999% of the then issued and outstanding shares of the Company’s common stock. So long as at least 20% of the Series A Preferred remains outstanding, the Company is not permitted to issue any new securities or financial instruments that rank pari passu or senior to the Series A Preferred without the approval of at least 75% of the Series A Preferred outstanding. In July 2006, the Series A Preferred automatically converts into the common stock of the Company at the conversion price of $1.40 per share (subject to adjustments), if the common stock trades at a price equal to or greater than $4.15 per share for twenty consecutive trading days and the average daily trading volume of the Company’s common stock during such period exceeds 200,000 shares, subject to the applicable ownership limitations. In the event a holder is prohibited from converting into common stock due to the 4.999% ownership limitation, the excess portion of the Series A Preferred remains outstanding, but ceases to accrue a dividend. During 2005, 238 shares of Series A Preferred stock were converted into 2,380,000 shares of the Company’s common stock. The Company has accrued $2.3 million for costs associated with the delayed effectiveness of the required registration statement for the conversion shares.

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Common Stock Reserved for Issuance

There are 200,000,000 common shares authorized by the Company’s Amended and Restated Certificate of Incorporation and 87,128,021, 79,829,062, and 70,673,207 common shares were issued and outstanding as of December 31, 2005, 2004 and 2003, respectively. Shares of common stock reserved for issuance are summarized as follows:

	December 31,
	2005	2004
2001 Incentive Stock Option Plan	1,365,000	2,955,000
2003 Stock Compensation Plan	1,813,021	706,673
Convertible preferred stock	15,477,140	17,857,140
Warrants to purchase common stock	26,565,285	6,138,393
Total	45,220,446	27,657,206

Warrants

In connection with certain 2005 short-term borrowings from individuals, the Company issued detachable warrants to purchase 420,000 shares of common stock at exercise prices ranging from $2.00 to $2.12 per share. The warrants have a three-year term.

In connection with the Convertible Notes issued in August 2005, the Company issued detachable warrants to purchase 4,500,000 shares of the Company’s common stock at an exercise price equal to $2.40 per share. The warrants have a five-year term, and beginning six months after the closing of the issuance of the Convertible Notes, the exercise price of the warrants is subject to adjustment for issuances of common stock at a purchase price of less than the then-effective exercise price of the warrants.

The warrants issued in December 2005 as part of the Units entitle the holder to purchase one share of the Company’s common stock at an exercise price of $4.27 per share; pursuant to the warrant agreement, the exercise price of the warrants was adjusted from the initial exercise price of $4.31 per share to $4.27 per share as a result of the issuance of 1,000,000 shares of the Company’s common stock to Kornerstone in connection with the acquisition of Kornerstone’s carried working interest in the South Alibek Field discussed in Note 2. The warrant agreement contains anti-dilution provisions and the exercise price of the warrants will be adjusted upon the conversion of any shares of the Company’s outstanding Series A Preferred. The warrants will be exercisable at any time on or after the earlier of (i) December 12, 2006 or (ii) the date a registration statement covering the issuance of the warrant shares upon exercise of the warrants and resales of the warrants and the warrant shares becomes effective, subject to the accelerated exercisability exceptions with respect to dividend declarations and certain corporate events described in the warrant agreement. The warrants will expire on December 15, 2010.

2001 Incentive Stock Option Plan

The Company has a 2001 Incentive Stock Option Plan (the “Plan”) under which options to purchase 5.0 million shares of common stock may be granted to officers, board members, key employees and consultants through December 31, 2010. Under the Plan, the exercise price of each option is equal to the fair market value of the Company’s common stock on the date of grant and all options granted have a term of five years. The vesting period is determined by the Board of Directors at the date of grant.

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No stock options were granted under the Plan prior to 2003. The following table summarizes activity under the Plan for the last three years.

	Number of Shares (In thousands)		Weighted Average Exercise Price Per Share
Outstanding at December 31, 2002	—		$	—
Granted	1,740			0.25
Exercised	—			—
Forfeited	—			—
Outstanding at December 31, 2003	1,740			0.25
Granted	555			1.50
Exercised	(650	)		0.23
Forfeited	(250	)		0.22
Outstanding at December 31, 2004	1,395			0.78
Granted	1,740			1.61
Exercised	(705	)		0.31
Forfeited	(150	)		0.12
Outstanding at December 31, 2005	2,280		$	1.53
Shares exercisable at December 31
2005	833		$	1.41
2004	790		$	0.27
2003	75		$	0.24

The aggregate fair value of options granted during 2005, 2004 and 2003 was $969,900, $355,200 and $212,700, respectively, which is being amortized to expense over the vesting period in accordance with SFAS No. 123. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk-free interest rates of 5%; expected lives between 1.5 and 2.5 years; and volatility of the price of the underlying common stock of 45-75%. Compensation expense of $400,920, $105,997 and $117,383 was recognized during the years ended December 31, 2005, 2004 and 2003, respectively.

The following table summarizes additional information about the Company’s stock options outstanding exercisable at December 31, 2005:

	Outstanding				Exercisable
Exercise Price	Number Outstanding (In thousands)	Weighted Average Remaining Life (In Years)	Weighted Average Exercise Price		Number Outstanding (In thousands)	Weighted Average Exercise Price
$0.24	100	2.36	$	0.24	100	$	0.24
$0.57	10	2.96		0.57	10		0.57
$1.50	430	3.88		1.50	143		1.50
$1.61	1,740	4.38		1.61	580		1.61
Total at December 31, 2005	2,280	4.19	$	1.53	833	$	1.41

2003 Stock Compensation Plan

In May 2003, the Company established its 2003 Stock Compensation Plan with the registration of 2.5 million shares under the plan. The plan was amended in May 2005 to increase the number of shares authorized for issuance to a total of 5,000,000 shares. Under the terms of the plan, such stock may be issued for

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restricted stock awards; payments of bonuses in stock; payments for services to consultants in the form of stock; employer contributions to a 401(k) plan; stock appreciation rights and warrants. Any shares issued in lieu of cash are recognized as expense based on the fair value of the shares on the date of grant. The fair value of restricted stock awards on the date of grant is amortized ratably over the vesting period. The following table summarizes the shares issued during the years ended December 31:

	2005		2004		2003
Number of shares issued		1,357,216		600,000		1,234,047
Fair value at date of grant	$	2,800,549	$	750,000	$	283,625

Note 7—Income Taxes

The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse. The Company has not recorded any deferred tax assets or income tax benefits from the net deferred tax assets for the years ended December 31, 2005, 2004 and 2003. The Company has placed a 100% valuation allowance against the net deferred tax asset because future realization of these assets is not assured.

Income before income taxes is composed of the following:

	Year ended December 31,
	2005			2004			2003
United States	$	(16,508,000	)	$	(3,185,000	)	$	(2,940,000	)
International		(4,033,000	)		(817,000	)		(2,767,000	)
	$	(20,541,000	)	$	(4,002,000	)	$	(5,707,000	)

A reconciliation of the federal statutory income tax (34%) amounts to the effective amounts is shown below:

	Year ended December 31,
	2005			2004			2003
Income tax benefit computed at statutory rates	$	(6,983,000	)	$	(1,361,000	)	$	(1,940,000	)
Effect of foreign tax rate differential		885,000			—			—
Return to provision adjustments		(5,510,000	)		—			—
Other		294,000			—			—
Adjustment to valuation allowance		11,314,000			1,361,000			1,940,000
	$	—		$	—		$	—

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At December 31, 2005, 2004 and 2003 the components of the Company’s deferred tax assets and liabilities were as follows:

	December 31,
	2005			2004			2003
Current deferred tax assets
Cost basis of assets held for sale	$	1,367,000		$	—		$	—
Accrual to cash adjustments in foreign subsidiary		1,239,000			—			—
Total current deferred tax assets		2,606,000			—			—
Noncurrent deferred tax assets
Domestic net operating loss carryforwards		7,999,000			5,614,000			2,100,000
Foreign net operating loss carryforwards		—			3,183,000			3,766,000
Foreign oil and gas exploration and development costs		6,542,000			—			—
Other		128,000			—			—
Total noncurrent deferred tax assets		14,669,000			8,797,000			5,866,000
Total deferred tax assets	$	17,275,000		$	8,797,000		$	5,866,000
Noncurrent deferred tax liabilities
Domestic property, plant, and equipment	$	(458,000	)	$	—		$	—
Foreign capitalized interest		—			(3,390,000	)		(1,853,000	)
Other		(95,000	)		—			—
Total noncurrent deferred tax liabilities		(553,000	)		(3,390,000	)		(1,853,000	)
Net deferred tax assets		16,722,000			5,407,000			4,013,000
Valuation allowance		(16,722,000	)		(5,407,000	)		(4,013,000	)
	$	—		$	—		$	—

As of December 31, 2005, the Company has estimated domestic net operating loss carryforwards of $24.6 million which will expire between 2020 and 2025. There are no foreign net operating loss carryforwards.

The change in valuation allowance is as follows:

	Year Ended December 31,
	2005		2004		2003
Balance at the beginning of the period	$	5,407,000	$	4,013,000	$	2,106,000
Current year addition		5,805,000		1,394,000		1,997,000
Return to provision adjustments		5,510,000		—		—
Balance at the end of the period	$	16,722,000	$	5,407,000	$	4,013,000

Note 8—Commitments and Contingencies

Drilling Rig Dispute

In December 2001, the Company purchased a land drilling rig for total consideration of $5.3 million, including a note payable for $3.3 million and the issuance of $2.0 million in redeemable common stock. The

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Company was not informed that the rig was subject to a lien in favor of a prior owner of the rig. Beginning in December 2003, the seller, the Company and the lienholder engaged in litigation to determine the parties’ rights and obligations with respect to the rig, the lien and payments due the seller and the lienholder. In August 2004, the Company and the seller of the rig entered into a settlement and release agreement, pursuant to which the remaining balance on the note of $1.6 million, plus accrued interest of $550,000 was cancelled, and the Company agreed to endeavor to negotiate a settlement with the lienholder pursuant to which the Company would assume the obligation of the seller of the rig to the lienholder. In December 2005, the parties engaged in a court-supervised mediation at which they agreed to settle all outstanding claims against one another. Pursuant to the settlement agreement, which was signed in February 2006, the Company paid approximately $1.8 million to the first lienholder to settle the remaining payment obligations to the lienholder, plus $120,000 for legal fees.

Former Chief Financial Officer

In May 2003, Jim W. Tucker, a former chief financial officer of the Company, filed suit in state district court in Texas against the Company in connection with his separation from service in January 2003. The suit alleged breach of an oral employment agreement. The Company took a default judgment in November 2003 in the amount of $0.9 million. In February 2005, the court granted our motion to vacate the default judgment. The plaintiff subsequently passed away in July 2005. The case may still be reinstated by the deceased’s estate prior to April 2007, and would begin as if the Company had just been served notice. The Company believes it has meritorious defenses to the allegations against it and intends to vigorously contest this matter and pursue all available legal remedies; however, the Company believes the chances that plaintiff’s estate will refile the suit to be remote.

International Commitments

The Company, through its subsidiary Caspi Neft, is subject to the terms of License 1557 and the related exploration contract covering 14,111 acres in the South Alibek Field in Kazakhstan. In connection with the exploration contract, the Company has committed to spend approximately $18.0 million on development of the Field through 2005. As of December 31, 2005, the cumulative capital expenditures which are creditable to our obligation under the Contract have exceeded the minimum contract commitment. In connection with the two-year extension granted on July 8, 2004, the Company committed to spend approximately $30.5 million from 2005 to 2007.

Purchase commitments are made in the ordinary course of business in connection with ongoing operations in the South Alibek Field.

Our operations are subject to various levels of government controls and regulations in the United States and in the Republic of Kazakhstan. It is not possible for us to separately calculate the costs of compliance with environmental and other governmental regulations as such costs are an integral part of our operations.

In the Republic of Kazakhstan, legislation affecting the oil and gas industry is under constant review for amendment or expansion. Pursuant to such legislation, various governmental departments and agencies have issued extensive rules and regulations which affect the oil and gas industry, some of which carry substantial penalties for failure to comply. These laws and regulations can have a significant impact on the industry by increasing the cost of doing business and, consequentially, can adversely affect our profitability. Inasmuch as new legislation affecting the industry is commonplace and existing laws and regulations are frequently amended or reinterpreted, we are unable to predict the future cost or impact of complying with such laws and regulations.

Environmental

The Company, as an owner and operator of oil and gas properties, is subject to various federal, state, local and foreign country laws and regulations relating to discharge of materials into, and protection of, the

F-21

environment. These laws and regulations may impose liability on the lessee under an oil and gas lease or concession for the cost of pollution clean-up resulting from operations and also may subject the lessee to liability for pollution damages.

Lease Commitments

The Company has operating leases for office facilities and certain equipment. Net rental expense under all operating leases and rental agreements was $570,086, $546,639 and $930,698 in 2005, 2004 and 2003, respectively. The Company leases office facilities in Houston and Kazakhstan under leases greater than one year. Future minimum lease commitments under operating leases are as follows:

	Amount
2006	$	273,324
2007		76,216
2008		—
2009		—
Thereafter		—
	$	349,540

Note 9—Business Segment Information

The Company’s business activities relate solely to oil and gas exploration, development and production. The primary emphasis since its formation in 2000 has been the development of the South Alibek Field and substantially all of the Company’s assets are located in Kazakhstan. For each of the three years ended December 31, 2005 substantially all of the Company’s results of operations consisted of revenues, operating, general and administrative, and other costs associated with its operations in Kazakhstan.

For the year ended December 31, 2005, two customers accounted for approximately 38% and 37%, respectively, of consolidated revenues. For the year ended December 31, 2004, two customers accounted for approximately 57% and 28%, respectively, of consolidated revenues. One customer accounted for 100% of consolidated revenues for the year ended December 31, 2003.

Note 10—Supplemental Financial Information

Other Assets

Other assets at December 31, 2005 and 2004, consisted of debt financing costs, net of amortization, of $12,473,536 and $216,111, respectively.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following:

	December 31,
	2005		2004
Accounts payable	$	419,456	$	152,158
Salaries and bonus		1,032,357		12,458
Preferred stock registration costs		2,035,000		—
Acquisition costs		21,450,000		—
Rig lawsuit settlement		1,960,491		446,482
Rig rentals		2,737,722		1,446,587
Oil and gas properties costs		1,826,554		3,893,727
Other		407,863		1,185,604
Total accounts payable and accrued liabilities	$	31,869,443	$	7,137,016

F-22

Note 11—Subsidiary Guarantors

In December 2005, Transmeridian Exploration Inc., a wholly-owned subsidiary of the Company (the “Issuer”), issued an aggregate of 250,000 Units, consisting of (i) an aggregate $250 million principal amount of senior its secured notes due 2010 and (ii) warrants to purchase approximately 17.3 million shares of the Company’s common stock. The Company and all material subsidiaries of the Company fully and unconditionally guaranteed the senior secured notes. Prior to the Units offering, the Company financed its operations primarily through borrowings from banks in Kazakhstan or other private sources. As previously disclosed in 2005 and prior years, substantially all of the Company’s assets are located in Kazakhstan. For each of the three years ended December 31, 2005, substantially all of the results of operations consisted of revenue, operating, general and administrative and other costs associated with the operations of its subsidiary, Caspi Neft, in Kazakhstan. Accordingly, there was no requirement for condensed consolidating financial information and the results for 2004 and 2003 are not presented herein due to lack of comparability and the information is not material for evaluation of the sufficiency of the guarantee and the omission of the information does not cause the financials to be inaccurate in reasonable detail.

The following is condensed consolidating financial information for the Company, the Issuer and the subsidiary guarantors of the senior secured notes:

Condensed Consolidating Balance Sheet

	December 31, 2005
	Parent		Issuer			Subsidiary Guarantors		Eliminations			Consolidated
Cash and cash equivalents	$	21,147,921	$	45,250,000		$	6,027	$	—		$	66,403,948
Other current assets		2,764,674		—			5,535,923		—			8,300,597
Total current assets		23,912,595		45,250,000			5,541,950		—			74,704,545
Property and equipment, net		305,657		—			226,509,692		—			226,815,349
Investment in and advances to subsidiaries		100		9,082,519			—		(9,082,619	)		—
Other assets		—		32,973,536			—		(20,500,000	)		12,473,536
Total Assets	$	24,218,352	$	87,306,055		$	232,051,642	$	(29,582,619	)	$	313,993,430
Total current liabilities	$	5,759,807	$	23,328,142		$	4,608,830	$	—		$	33,696,779
Debt		—		223,407,076			31,000,000		(31,000,000	)		223,407,076
Other long-term liabilities		—		—			186,000		—			186,000
Stockholder’s equity		18,458,545		(159,429,163	)		196,256,812		1,417,381			56,703,575
Total Liabilities	$	24,218,352	$	87,306,055		$	232,051,642	$	(29,582,619	)	$	313,993,430

Condensed Consolidating Statements of Operations

	Year Ended December 31, 2005
	Parent			Issuer			Subsidiary Guarantors			Consolidated
Revenue	$	—		$	—		$	8,442,787		$	8,442,787
Operating costs and expenses		11,099,038			—			7,166,475			18,265,513
Operating income (loss)		(11,099,038	)		—			1,276,312			(9,822,726	)
Other expense		(5,408,632	)		(2,411,623	)		(2,186,147	)		(10,006,402	)
Minority interest expense		—			—			(711,558	)		(711,558	)
Net loss		(16,507,670	)		(2,411,623	)		(1,621,393	)		(20,540,686	)
Preferred dividends		(1,081,034	)		—			—			(1,081,034	)
Net loss attributable to common stockholders	$	(17,588,704	)	$	(2,411,623	)	$	(1,621,393	)	$	(21,621,720	)

F-23

Condensed Consolidating Statements of Cash Flow

	Year Ended December 31, 2005
	Parent			Issuer		Subsidiary Guarantors			Consolidated
Net cash used in operating activities	$	(4,371,558	)	$	1,456,366	$	(8,435,988	)	$	(11,351,180	)
Net cash used in investing activities		(17,322	)		—		(144,685,799	)		(144,703,121	)
Net cash provided by financing activities		12,916,826			13,793,634		147,041,161			173,751,621
Net increase (decrease) in cash		8,527,946			15,250,000		(6,080,626	)		17,697,320
Cash and cash equivalents, beginning of the year		10,659,484			—		6,086,653			16,746,137
Cash and cash equivalents, end of the year	$	19,187,430		$	15,250,000	$	6,027		$	34,443,457

Note 12—Supplemental Oil and Gas Disclosures

Costs Incurred

Costs incurred in oil and gas property acquisition, exploration and development activities, whether expensed or capitalized, are reflected in the table below. This schedule does not include the costs of acquiring the minority interest in Caspi Neft and the carried working interest of approximately $138,314,000 or the costs of the drilling rig which was purchased and modified for use in the Company’s development activities in Kazakhstan. Costs incurred for the drilling rig were $444,000 in 2003.

	Kazakhstan		United States		Total
Year ended December 31, 2005
Acquisition costs of properties:
Proved	$	—	$	—	$	—
Unproved		—		—		—
Exploration costs		9,470		—		9,470
Development costs		24,599,684		—		24,599,684
Capitalized interest		2,497,923		—		2,497,923
Total	$	27,107,077	$	—	$	27,107,077
Year ended December 31, 2004
Acquisition costs of properties:
Proved	$	—	$	—	$	—
Unproved		—		—		—
Exploration costs		3,477,336		—		3,477,336
Development costs		18,651,179		—		18,651,179
Capitalized interest		4,519,759		—		4,519,759
Total	$	26,648,274	$	—	$	26,648,274
Year ended December 31, 2003:
Acquisition costs of properties:
Proved	$	—	$	—	$	—
Unproved		—		—		—
Exploration costs		26,292,534		118,893		26,411,427
Development costs		56,255		—		56,256
Capitalized interest		4,164,694		—		4,164,693
Total	$	30,513,483	$	118,893	$	30,632,376

F-24

Capitalized Costs

The aggregate amount of capitalized costs related to oil and gas producing activities and the aggregate amount of the related accumulated depreciation, depletion and amortization (“DD&A”), including any accumulated valuation allowances, are reflected in the table below. These capitalized costs do not include the drilling rig which was purchased and modified for use in the Company’s development activities in Kazakhstan. Capitalized costs for the drilling rig were $3.0 million, $8.5 million and $6.5 million at December 31, 2005, 2004 and 2003, respectively.

	Kazakhstan		United States		Total
As of December 31, 2005
Proved properties	$	62,876,028	$	—	$	62,876,028
Unproved properties		167,263,366		—		167,263,366
Total oil and gas properties		230,139,394		—		230,139,394
Accumulated DD&A		3,471,351		—		3,471,351
Net oil and gas properties	$	226,668,043	$	—	$	226,668,043
As of December 31, 2004
Proved properties	$	39,487,758	$	—	$	39,487,758
Unproved properties		31,560,816		—		31,560,816
Total oil and gas properties		71,048,574		—		71,048,574
Accumulated DD&A		899,131		—		899,131
Net oil and gas properties	$	70,149,443	$	—	$	70,149,443
As of December 31, 2003
Proved properties	$	16,300,263	$	—	$	16,300,263
Unproved properties		32,483,389		16,604		32,499,993
Total oil and gas properties		48,783,652		16,604		48,800,256
Accumulated DD&A		189,635		—		189,635
Net oil and gas properties	$	48,594,017	$	16,604	$	48,610,621

Oil and Gas Reserve Information (Unaudited)

Basis of Presentation

Proved oil and gas reserve quantities are based on estimates prepared by Ryder Scott Company, independent petroleum engineers. There are numerous uncertainties in estimating quantities of proved reserves and projecting future rates of production and the timing of development expenditures. These uncertainties are greater for properties which are undeveloped or have a limited production history, such as the South Alibek Field. The following reserve data represents estimates only and actual reserves may vary substantially from these estimates. All of the Company’s proved reserves were in Kazakhstan as of December 31, 2005, 2004 and 2003. The Company’s net quantities of proved developed and undeveloped reserves of crude oil and changes therein are reflected in the table below.

As of December 31, 2005, the Company owned a 100% working interest in the South Alibek Field, subject to government royalties and an additional 3.5% net revenue interest retained by a third party in connection with the Company’s buyout of its former partners to be deducted from the remaining revenue interest. The effect of this overriding revenue interest is reflected in the calculation of the Company’s net proved reserves and future net cash flows.

As of December 31, 2005, the Company is operating under an exploration contract, which was extended by the government of Kazakhstan in July 2004 for two years ending on April 2007. Final terms for the South Alibek

F-25

production contract have been agreed to and the contract is waiting on final approval from the Kazakhstan government. The Company’s oil and gas reserve data and future net cash flows have been prepared assuming a commercial production contract is obtained, beginning on January 1, 2006, which will allow production for the expected 25 year term of the production contract and utilizes all the terms and costs associated with the production contract. Net revenue interest used in the report are calculated from a sliding-scale royalty payment to the Kazakhstan government during the production contract life. Based on the forecast annual production, the government royalty rate is between 2.0% to 2.2%. Royalty rate is capped at 5%.

The proved reserves as of December 31, 2005 represent the reserves that were estimated to be recovered from eight wells (South Alibek 1, 2, 3, 4, 5, 14, 15 and 17), and a total of seventeen development offsets not yet drilled. All reserves were estimated using either historical performance or volumetric methods. All direct offset well locations in this report are proved undeveloped and are based on 80 acre drainage patterns, unless current developed completions are estimated to drain an area larger than their volumetric assignment, and in these cases the reserves of certain offset locations have been reduced. All locations have a scheduled KT1 and a KT2 reservoir completion and each of these reservoir completions includes the cost of drilling a separate wellbore. Based on the separate development program for the KT1 and KT2 reservoirs, reserves assigned to the KT1 reservoir are undeveloped whereas in previous year-end estimates these reserves were developed. The associated additional costs required for a separate KT1 reservoir development program has also been included in the reserves estimate. The total primary and secondary recovery of 30% was based on analogy data from other fields. A 15% primary recovery factor was assigned to each developed and undeveloped well in the KT1 and KT2 reservoirs. A secondary recovery factor of 15% was assigned to the KT1 reservoir and to the KT2 reservoir. Based on separate primary and secondary recoveries, reserves assigned to the secondary recoveries are undeveloped whereas in previous year-end estimates these reserves were developed. The associated additional capital and operating costs required for a separate KT1 and KT2 reservoir water flood program has also been included in the reserves estimate, requiring the drilling of 25 injector wells in the KT1 reservoir and 25 injector wells in the KT2 reservoir and related surface facilities to support these programs. As of December 31, 2005, the Company had three new wells, the SA-3, SA-14, and SA-15, which have reserves assigned as behind-pipe and are forecast to start producing in the first quarter of 2006 from the KT2 reservoir. The Ryder Scott reserve estimate as of December 31, 2005 included these three wells and SA-1, SA-2, SA-5 and SA-17 as proved developed in the KT2 reservoir. SA-1 was shut-in during a workover program. The completion in SA-5 may have been damaged during a previous work-over and an undeveloped redrill has been included in the estimates to capture the volumetric reserves assigned to this location. SA-4, which has reservoir damage that prevented placing the well on production during 2005 and sixteen additional offset locations are also proved undeveloped in the KT2 reservoir.

Estimated Quantities of Net Proved Crude Oil Reserves

(Quantities in Barrels)

	December 31,
	2005		2004		2003
Net proved crude oil reserves:
Beginning of year	26,813,736		45,744,788		17,110,741
Revisions of previous estimates	(322,972	)	(521,118	)	(5,079,386	)
Extensions, discoveries and other additions	6,096,959		6,827,529		33,830,809
Revision of net interest	41,194,007		(25,085,729	)
Production	(845,108	)	(151,734	)	(117,376	)
End of year	72,936,622		26,813,736		45,744,788
Net proved developed reserves:
Beginning of year	4,476,364		7,815,861		5,695,613
End of year	3,331,580		4,476,364		7,815,861

F-26

Standardized Measure of Discounted Future Net Cash Flows (Unaudited)

Basis of Presentation

The standardized measure data includes estimates of oil and gas reserve volumes and forecasts of future production rates over the reserve lives. Estimates of future production expenditures, including taxes and future development costs, are based on management’s best estimate of such costs assuming a continuation of current economic and operating conditions. No provision is included for depletion, depreciation and amortization of property acquisition costs or indirect costs. Income tax expense has been computed using expected future tax rates and giving effect to tax deductions and credits available, under current laws, and which relate to oil and gas producing activities. The sales prices used in the calculation are the year-end prices of crude oil, including condensate and natural gas liquids, which as of December 31, 2005, 2004 and 2003 were $40.21, $20.09 and $12.44 per barrel, respectively. The sales prices were based on the last sales price received for December 2005, 2004 and 2003, respectively. No value was assigned to natural gas reserves, as there is not currently an established market or pipeline facilities for gas sales. Changes in prices and cost levels, as well as the timing of future development costs, may cause actual results to vary significantly from the data presented. This information is not intended to represent a forecast or fair market value of the Company’s oil and gas assets, but does present a standardized disclosure of discounted future net cash flows that would result under the assumptions used. The standardized measure of discounted future net cash flows relating to proved oil and gas reserves for 2005, 2004 and 2003 were as follows:

Standardized Measure of Discounted Future Net Cash Flows

(Amounts in Thousands)

December 31, 2005:
Future cash inflows	$	3,096,160
Future production costs		(406,539	)
Future development costs		(397,879	)
Undiscounted future net cash flows before income tax		2,291,742
10% discount for estimated timing of cash flows		(1,276,314	)
Present value of future net cash flows before income tax		1,015,428
Future income tax expense, discounted at 10%		(268,447	)
Standardized measure of discounted future net cash flows	$	746,981
December 31, 2004:
Future cash inflows	$	538,688
Future production costs		(74,001	)
Future development costs		(65,260	)
Undiscounted future net cash flows before income tax		399,427
10% discount for estimated timing of cash flows		(179,431	)
Present value of future net cash flows before income tax		219,996
Future income tax expense, discounted at 10%		(43,142	)
Standardized measure of discounted future net cash flows	$	176,854
December 31, 2003:
Future cash inflows	$	569,065
Future production costs		(74,723	)
Future development costs		(76,373	)
Undiscounted future net cash flows before income tax		417,969
10% discount for estimated timing of cash flows		(176,618	)
Present value of future net cash flows before income tax		241,351
Future income tax expense, discounted at 10%		(60,908	)
Standardized measure of discounted future net cash flows	$	180,443

F-27

The following table presents a reconciliation of changes in the standardized measure of discounted future net cash flows:

Changes in the Standardized Measure of Discounted Future Net Cash Flows

(Amounts in Thousands)

	Year ended December 31,
	2005			2004			2003
Standardized Measure, beginning of year	$	176,854		$	180,443		$	143,999
Sales and transfers of oil and gas produced, net of production costs		(324	)		(152	)		(397	)
Net changes in prices, development and production costs		320,930			151,644			(107,366	)
Extensions, discoveries and improved recovery, less related costs		596,505			65,492			171,513
Purchase of minerals in place		—			—			—
Development costs incurred and changes during the period		(213,411	)		17,754			(2,887	)
Revisions of previous quantity estimates		(6,948	)		(4,458	)		(30,436	)
Increase in present value due to passage of one year		21,999			24,135			20,431
Exercise of Option by Bramex		—			(203,699	)		—
Net changes in production rates and other		225,304			(36,563	)		(13,824	)
Net change in income taxes		(373,928	)		(17,742	)		(590	)
Standardized Measure, end of year	$	746,981		$	176,854		$	180,443

Note 13—Supplemental Quarterly Information (Unaudited)

The following table reflects a summary of the unaudited interim results of operations for the quarterly periods in the years ended December 31, 2005 and 2004.

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2005
Revenue	$	1,153,739		$	2,032,310		$	3,852,122		$	1,404,616
Operating expenses		2,858,923			2,286,599			3,270,940			9,849,051
Minority interest		507,818			(355,896	)		(791,171	)		(72,309	)
Preferred dividends		277,397			280,479			279,155			244,003
Net loss attributable to common shareholders		(2,129,546	)		(1,930,106	)		(2,802,111	)		(14,759,957	)
Basic and diluted loss per share	$	(0.03	)	$	(0.02	)	$	(0.03	)	$	(0.17	)
Weighted average common shares outstanding		79,993,732			80,213,343			81,561,819			86,179,295
2004
Revenue	$	642,927		$	1,562,656		$	843,348		$	874,059
Operating expenses		1,463,781			2,235,200			1,735,301			1,793,957
Minority interest		207,379			(117,481	)		401,802			331,353
Preferred dividends		—			—			—			154,110
Net loss attributable to common shareholders		(1,028,233	)		(555,063	)		(1,293,755	)		(1,125,240	)
Basic and diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.01	)
Weighted average common shares outstanding		77,382,894			78,208,663			79,153,647			79,685,312

F-28

TRANSMERIDIAN EXPLORATION INC.

Offer to Exchange

up to $250,000,000 Registered Senior Secured Notes due 2010

for

Any and All Outstanding Unregistered Senior Secured Notes due 2010

PROSPECTUS

                    , 2006

DEALER PROSPECTUS DELIVERY OBLIGATION

UNTIL                         , 2006, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS’ OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

Pursuant to the issuer’s articles of association and subject to British Virgin Islands law, every director and officer of the issuer is entitled to be indemnified out of the assets of the issuer against all losses or liabilities which such director or officer may sustain or incur in the execution of the duties of his office or otherwise in relation thereto, and no director or officer of the issuer shall be liable for any loss, damage or misfortune which may happen to, or be incurred by, the issuer in the execution of the duties of his office or otherwise in relation thereto. However, the International Business Companies Act of the British Virgin Islands (to which the issuer is subject) precludes the directors and officers of the issuer from availing themselves of such indemnification unless they act honestly and in good faith and with a view to the best interests of the issuer and, in the case of criminal proceedings, where the director or officer (as the case may be) had no reasonable cause to believe that his conduct was unlawful.

Item 21. Exhibits and Financial Statement Schedules.

(a) Exhibits

Exhibit	Description
3.1†	Memorandum of Association and Articles of Association of Transmeridian Exploration Inc.
3.2	Amended and Restated Certificate of Incorporation of Transmeridian Exploration Incorporated (filed as Exhibit 3.1(b) to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission as of March 15, 2001 and incorporated by reference herein)
3.3	Bylaws of Transmeridian Exploration Incorporated (filed as Exhibit 3.2 to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission as of March 15, 2001 and incorporated by reference herein)
3.4	Certificate of Designations, Rights and Preferences of Series A Cumulative Convertible Preferred Stock of Transmeridian Exploration Incorporated (filed as Exhibit 4.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 12, 2004 and filed with the Commission on November 15, 2004 and incorporated by reference herein)
3.5†	Articles of Incorporation of TMEI Operating, Inc.
3.6†	Bylaws of TMEI Operating, Inc.
3.7†	Memorandum of Association and Articles of Association of Transmeridian (Kazakhstan) Incorporated
3.8†	Memorandum of Association and Articles of Association of Bramex Management, Inc.
3.9†	Charter of Subsidiary Joint-Stock Company “Caspi Neft TME”
4.1	Indenture, dated as of December 12, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated and The Bank of New York, as Trustee (filed as Exhibit 4.1 to Transmeridian Exploration Incorporated’s Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
4.2	First Supplemental Indenture, dated as of December 22, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated, Bramex Management, Inc., JSC Caspi Neft TME and The Bank of New York, as Trustee (filed as Exhibit 4.5 to the Registration Statement on Form S-3 of Transmeridian Exploration Incorporated filed with the Commission on March 13, 2006 and incorporated by reference herein)

II-1

4.3	Form of Purchase Agreement, dated as of December 12, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated and each of the purchasers party thereto (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
4.4	Form of Registration Rights Agreement, dated as of December 12, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated and each of the purchasers party thereto (filed as Exhibit 4.3 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
4.5	Form of Senior Secured Note due 2010 (included as part of Exhibit 4.1)
5.1†	Opinion of Akin Gump Strauss Hauer & Feld LLP with respect to legality of the securities
10.1	Share Sale and Purchase Agreement, dated as of October 14, 2005, by and between Transmeridian Exploration Inc. and Seeria Alliance Ltd. (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.2	Deed of Amendment, by and between Transmeridian Exploration Inc. and Seeria Alliance Ltd., dated as of December 12, 2005, relating to the Share Sale and Purchase Agreement, dated as of October 14, 2005, by and between Transmeridian Exploration Inc. and Seeria Alliance Ltd. (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.3	Escrow Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Inc. and The Bank of New York, as Escrow Agent and Trustee (filed as Exhibit 10.3 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
10.4	Pledge Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Incorporated and The Bank of New York, as Collateral Agent and Trustee (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
10.5	Pledge Agreement, dated as of December 22, 2005, by and between Transmeridian Exploration Inc. and The Bank of New York, as Collateral Agent and Trustee (filed as Exhibit 10.5 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.6	Warrant Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Incorporated and The Bank of New York, as Warrant Agent (including form of Warrant Certificate) (filed as Exhibit 4.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
10.7	Purchase Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Inc. and Kornerstone Investment Group, Ltd. (filed as Exhibit 10.7 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.8	Registration Rights Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Incorporated and Kornerstone Investment Group, Ltd. (filed as Exhibit 10.8 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)

II-2

10.9	Conditional Share Transfer Agreement, dated as of January 3, 2006, by and among Transmeridian Exploration Inc., Bramex Management, Inc. and JSC TuranAlem Securities (filed as Exhibit 10.9 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.10	Share Encumbrance and Pledge Agreement, dated as of January 3, 2006, by and among Transmeridian Exploration Inc., Bramex Management, Inc. and TuranAlem Securities JSC (filed as Exhibit 10.10 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.11	Securities Agency Agreement, dated as of January 3, 2006, by and among Transmeridian Exploration Inc., Bramex Management, Inc., JSC TuranAlem Securities and The Bank of New York (filed as Exhibit 10.11 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.12	Agreement for Brokerage Services, dated as of January 23, 2006, by and between Transmeridian Exploration Inc. and “VISOR Investment Solutions” Joint Stock Company (filed as Exhibit 10.12 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.13	Agreement for Brokerage Services, dated as of January 23, 2006, by and between Bramex Management, Inc. and “VISOR Investment Solutions” Joint Stock Company (filed as Exhibit 10.13 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.14	Form of Convertible Promissory Note and Warrant Purchase Agreement, dated as of August 30, 2005, by and among Transmeridian Exploration Incorporated and each of the investors party thereto (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.15	Form of Investor Rights Agreement, dated as of August 30, 2005, by and among Transmeridian Exploration Incorporated and each of the investors party thereto (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.16	Form of Convertible Promissory Note, dated as of August 30, 2005 (filed as Exhibit 10.3 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.17	Form of Warrant, dated as of August 30, 2005 (filed as Exhibit 4.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.18	Form of Subscription Agreement and Investment Representation, by and between Transmeridian Exploration Incorporated and each of the investors party thereto (relating to Transmeridian Exploration Incorporated’s July 2005 private placement under Regulation S of common stock)(filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated August 4, 2005 and incorporated by reference herein)
10.19	Investor Rights Agreement, dated as of November 12, 2004, by and among Transmeridian Exploration Incorporated and each of the purchasers party thereto (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 15, 2004 and incorporated by reference herein)

II-3

10.20	Preferred Stock and Warrant Purchase Agreement, dated as of November 12, 2004, by and among Transmeridian Exploration Incorporated and each of the purchasers party thereto (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 15, 2004 and incorporated by reference herein)
10.21	Form of Common Stock Purchase Warrant (filed as Exhibit 4.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 15, 2004 and incorporated by reference herein)
10.22	Amended and Restated 2003 Stock Compensation Plan of Transmeridian Exploration Incorporated (filed as Exhibit 4.1 to Post-Effective Amendment No. 2 to the Registration Statement on Form S-8 of Transmeridian Exploration Incorporated filed with the Commission on July 20, 2005 and incorporated by reference herein)
10.23	2001 Incentive Stock Option Plan of Transmeridian Exploration, Inc. (filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Transmeridian Exploration Incorporated filed with the Commission on May 28, 2003 and incorporated by reference herein)
10.24	Exploration Contract, dated as of March 7, 2000, with respect to the South Alibek Field (filed as Exhibit 10.2 to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission on May 15, 2001 and incorporated by reference herein)
10.25	License 1557 from the Government of the Republic of Kazakhstan with respect to the South Alibek Field, dated as of April 29, 1999 (filed as Exhibit 10.1 to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission on May 15, 2001 and incorporated by reference herein)
12.1†	Calculation of Ratio of Earnings to Fixed Charges
21.1†	Subsidiaries of Transmeridian Exploration Inc.
23.1†	Consent of Akin Gump Strauss Hauer & Feld LLP (included as part of Exhibit 5.1)
23.2†	Consent of UHY Mann Frankfort Stein & Lipp CPAs, LLP
23.3†	Consent of John A. Braden & Company, P.C.
23.4†	Consent of Ryder Scott Company (independent reserve engineers)
24.1†	Powers of Attorney of Directors and Officers of the registrant (included on Registration Statement Signature Page)
25.1†	Form T-1 Statement of Eligibility of The Bank of New York, as trustee
99.1†	Form of Letter of Transmittal
99.2†	Form of Notice of Guaranteed Delivery
99.3†	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4†	Form of Letter to Clients
99.5†	Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9

† Filed herewith.

(b) Financial Statement Schedules

All financial statement schedules have been omitted as they are inapplicable or because the required information has been included in the consolidated financial statements of Transmeridian Exploration Incorporated or the accompanying notes thereto.

II-4

(c) Reports, Opinions and Appraisals

None.

Item 22. Undertakings.

(a) (1) The undersigned registrant hereby undertakes:

(i) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(A) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(B) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(C) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(ii) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(iii) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(2) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(b) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on March 17, 2006.

TRANSMERIDIAN EXPLORATION INC.
By:	/s/    LORRIE T. OLIVIER
	Lorrie T. Olivier President and Authorized U.S. Representative

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Lorrie T. Olivier, Earl W. McNiel and Nicolas J. Evanoff, and each of them, his true and lawful attorney-in-fact and agent, with full powers of substitution, for him and in his name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments, to this registration statement with the Securities and Exchange Commission granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    LORRIE T. OLIVIER         Lorrie T. Olivier	President (Principal Executive Officer) and Director	March 17, 2006
/s/    EARL W. MCNIEL         Earl W. McNiel	Vice President (Principal Financial Officer and Principal Accounting Officer) and Director	March 17, 2006
/s/    JOSEPH S. THORNTON         Joseph S. Thornton	Director	March 17, 2006

S-1

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on March 17, 2006.

TRANSMERIDIAN EXPLORATION INCORPORATED
By:	/s/    LORRIE T. OLIVIER
	Lorrie T. Olivier President and Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Lorrie T. Olivier, Earl W. McNiel and Nicolas J. Evanoff, and each of them, his true and lawful attorney-in-fact and agent, with full powers of substitution, for him and in his name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments, to this registration statement with the Securities and Exchange Commission granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    LORRIE T. OLIVIER         Lorrie T. Olivier	Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)	March 17, 2006
/s/    EARL W. MCNIEL         Earl W. McNiel	Vice President and Chief Financial Officer (Principal Financial Officer)	March 17, 2006
/s/    EDWARD G. BRANTLEY         Edward G. Brantley	Vice President and Chief Accounting Officer (Principal Accounting Officer)	March 17, 2006
/s/    MARVIN R. CARTER         Marvin R. Carter	Director	March 17, 2006
/s/    JAMES H. DORMAN         James H. Dorman	Director	March 17, 2006
. Phillip J. McCauley	Director
/s/    GEORGE E. REESE         George E. Reese	Director	March 17, 2006
/s/    DR. FERNANDO J. ZÚÑIGA Y RIVERO         Dr. Fernando J. Zúñiga y Rivero	Director	March 17, 2006

S-2

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on March 17, 2006.

TMEI OPERATING, INC.
By:	/s/    LORRIE T. OLIVIER
	Lorrie T. Olivier President

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    LORRIE T. OLIVIER         Lorrie T. Olivier	President (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) and Sole Director	March 17, 2006

S-3

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on March 17, 2006.

TRANSMERIDIAN (KAZAKHSTAN) INCORPORATED
By:	/s/    LORRIE T. OLIVIER
	Lorrie T. Olivier President and Authorized U.S. Representative

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    LORRIE T. OLIVIER         Lorrie T. Olivier	President (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) and Sole Director	March 17, 2006

S-4

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on March 17, 2006.

BRAMEX MANAGEMENT, INC.
By:	/s/    LORRIE T. OLIVIER
	Lorrie T. Olivier President and Authorized U.S. Representative

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Lorrie T. Olivier, Earl W. McNiel and Nicolas J. Evanoff, and each of them, his true and lawful attorney-in-fact and agent, with full powers of substitution, for him and in his name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments, to this registration statement with the Securities and Exchange Commission granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/    LORRIE T. OLIVIER         Lorrie T. Olivier	President (Principal Executive Officer) and Director	March 17, 2006
/s/    EARL W. MCNIEL         Earl W. McNiel	Vice President (Principal Financial Officer and Principal Accounting Officer) and Director	March 17, 2006
/s/    JOSEPH S. THORNTON         Joseph S. Thornton	Vice President and Director	March 17, 2006

S-5

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on March 17, 2006.

JSC CASPI NEFT TME
By:	/s/    LORRIE T. OLIVIER
	Lorrie T. Olivier Director and Authorized U.S. Representative

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints Lorrie T. Olivier, Earl W. McNiel and Nicolas J. Evanoff, and each of them, his true and lawful attorney-in-fact and agent, with full powers of substitution, for him and in his name, place and stead, in any and all capacities, to sign and to file any and all amendments, including post-effective amendments, to this registration statement with the Securities and Exchange Commission granting to said attorney-in-fact power and authority to perform any other act on behalf of the undersigned required to be done in connection therewith.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/S/    KEVIN BURNS         Kevin Burns	Chairman of the Management Board and Chief Executive Officer (Principal Executive Officer)	March 17, 2006
/S/    RAKHMET H. KHAIRULLAYEV         Rakhmet H. Khairullayev	Deputy Chairman—Finance and Economics (Principal Financial and Accounting Officer)	March 17, 2006
/s/    LORRIE T. OLIVIER         Lorrie T. Olivier	Director	March 17, 2006
/s/    ANATOLE KUNEVICH         Anatole Kunevich	Director and Vice Chairman—Commercial Affairs	March 17, 2006
/s/    NICOLAS J. EVANOFF         Nicolas J. Evanoff	Director	March 17, 2006
/s/    JOSEPH S. THORNTON         Joseph S. Thornton	Director	March 17, 2006
/s/    MICHAEL D. HUSSER         Michael D. Husser	Director	March 17, 2006
/s/    JULIYA STANISLAVOVNA BOROVINSKAJA         Juliya Stanislavovna Borovinskaja	Director	March 17, 2006

S-6

EXHIBIT INDEX

Exhibit	Description
3.1†	Memorandum of Association and Articles of Association of Transmeridian Exploration Inc.
3.2	Amended and Restated Certificate of Incorporation of Transmeridian Exploration Incorporated (filed as Exhibit 3.1(b) to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission as of March 15, 2001 and incorporated by reference herein)
3.3	Bylaws of Transmeridian Exploration Incorporated (filed as Exhibit 3.2 to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission as of March 15, 2001 and incorporated by reference herein)
3.4	Certificate of Designations, Rights and Preferences of Series A Cumulative Convertible Preferred Stock of Transmeridian Exploration Incorporated (filed as Exhibit 4.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 12, 2004 and filed with the Commission on November 15, 2004 and incorporated by reference herein)
3.5†	Articles of Incorporation of TMEI Operating, Inc.
3.6†	Bylaws of TMEI Operating, Inc.
3.7†	Memorandum of Association and Articles of Association of Transmeridian (Kazakhstan) Incorporated
3.8†	Memorandum of Association and Articles of Association of Bramex Management, Inc.
3.9†	Charter of Subsidiary Joint-Stock Company “Caspi Neft TME”
4.1	Indenture, dated as of December 12, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated and The Bank of New York, as Trustee (filed as Exhibit 4.1 to Transmeridian Exploration Incorporated’s Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
4.2	First Supplemental Indenture, dated as of December 22, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated, Bramex Management, Inc., JSC Caspi Neft TME and The Bank of New York, as Trustee (filed as Exhibit 4.5 to the Registration Statement on Form S-3 of Transmeridian Exploration Incorporated filed with the Commission on March 13, 2006 and incorporated by reference herein)
4.3	Form of Purchase Agreement, dated as of December 12, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated and each of the purchasers party thereto (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
4.4	Form of Registration Rights Agreement, dated as of December 12, 2005, by and among Transmeridian Exploration Inc., Transmeridian Exploration Incorporated, TMEI Operating, Inc., Transmeridian (Kazakhstan) Incorporated and each of the purchasers party thereto (filed as Exhibit 4.3 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
4.5	Form of Senior Secured Note due 2010 (included as part of Exhibit 4.1)
5.1†	Opinion of Akin Gump Strauss Hauer & Feld LLP with respect to legality of the securities
10.1	Share Sale and Purchase Agreement, dated as of October 14, 2005, by and between Transmeridian Exploration Inc. and Seeria Alliance Ltd. (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)

E-1

Exhibit	Description
10.2	Deed of Amendment, by and between Transmeridian Exploration Inc. and Seeria Alliance Ltd., dated as of December 12, 2005, relating to the Share Sale and Purchase Agreement, dated as of October 14, 2005, by and between Transmeridian Exploration Inc. and Seeria Alliance Ltd. (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.3	Escrow Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Inc. and The Bank of New York, as Escrow Agent and Trustee (filed as Exhibit 10.3 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
10.4	Pledge Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Incorporated and The Bank of New York, as Collateral Agent and Trustee (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
10.5	Pledge Agreement, dated as of December 22, 2005, by and between Transmeridian Exploration Inc. and The Bank of New York, as Collateral Agent and Trustee (filed as Exhibit 10.5 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.6	Warrant Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Incorporated and The Bank of New York, as Warrant Agent (including form of Warrant Certificate) (filed as Exhibit 4.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated December 16, 2005 and incorporated by reference herein)
10.7	Purchase Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Inc. and Kornerstone Investment Group, Ltd. (filed as Exhibit 10.7 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.8	Registration Rights Agreement, dated as of December 12, 2005, by and between Transmeridian Exploration Incorporated and Kornerstone Investment Group, Ltd. (filed as Exhibit 10.8 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.9	Conditional Share Transfer Agreement, dated as of January 3, 2006, by and among Transmeridian Exploration Inc., Bramex Management, Inc. and JSC TuranAlem Securities (filed as Exhibit 10.9 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.10	Share Encumbrance and Pledge Agreement, dated as of January 3, 2006, by and among Transmeridian Exploration Inc., Bramex Management, Inc. and TuranAlem Securities JSC (filed as Exhibit 10.10 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.11	Securities Agency Agreement, dated as of January 3, 2006, by and among Transmeridian Exploration Inc., Bramex Management, Inc., JSC TuranAlem Securities and The Bank of New York (filed as Exhibit 10.11 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)

E-2

Exhibit	Description
10.12	Agreement for Brokerage Services, dated as of January 23, 2006, by and between Transmeridian Exploration Inc. and “VISOR Investment Solutions” Joint Stock Company (filed as Exhibit 10.12 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.13	Agreement for Brokerage Services, dated as of January 23, 2006, by and between Bramex Management, Inc. and “VISOR Investment Solutions” Joint Stock Company (filed as Exhibit 10.13 to Transmeridian Exploration Incorporated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 filed with the Commission on March 16, 2006 and incorporated by reference herein)
10.14	Form of Convertible Promissory Note and Warrant Purchase Agreement, dated as of August 30, 2005, by and among Transmeridian Exploration Incorporated and each of the investors party thereto (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.15	Form of Investor Rights Agreement, dated as of August 30, 2005, by and among Transmeridian Exploration Incorporated and each of the investors party thereto (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.16	Form of Convertible Promissory Note, dated as of August 30, 2005 (filed as Exhibit 10.3 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.17	Form of Warrant, dated as of August 30, 2005 (filed as Exhibit 4.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated September 6, 2005 and incorporated by reference herein)
10.18	Form of Subscription Agreement and Investment Representation, by and between Transmeridian Exploration Incorporated and each of the investors party thereto (relating to Transmeridian Exploration Incorporated’s July 2005 private placement under Regulation S of common stock) (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated August 4, 2005 and incorporated by reference herein)
10.19	Investor Rights Agreement, dated as of November 12, 2004, by and among Transmeridian Exploration Incorporated and each of the purchasers party thereto (filed as Exhibit 10.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 15, 2004 and incorporated by reference herein)
10.20	Preferred Stock and Warrant Purchase Agreement, dated as of November 12, 2004, by and among Transmeridian Exploration Incorporated and each of the purchasers party thereto (filed as Exhibit 10.1 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 15, 2004 and incorporated by reference herein)
10.21	Form of Common Stock Purchase Warrant (filed as Exhibit 4.2 to Transmeridian Exploration Incorporated’s Current Report on Form 8-K dated November 15, 2004 and incorporated by reference herein)
10.22	Amended and Restated 2003 Stock Compensation Plan of Transmeridian Exploration Incorporated (filed as Exhibit 4.1 to Post-Effective Amendment No. 2 to the Registration Statement on Form S-8 of Transmeridian Exploration Incorporated filed with the Commission on July 20, 2005 and incorporated by reference herein)
10.23	2001 Incentive Stock Option Plan of Transmeridian Exploration, Inc. (filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Transmeridian Exploration Incorporated filed with the Commission on May 28, 2003 and incorporated by reference herein)

E-3

Exhibit	Description
10.24	Exploration Contract, dated as of March 7, 2000, with respect to the South Alibek Field (filed as Exhibit 10.2 to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission on May 15, 2001 and incorporated by reference herein)
10.25	License 1557 from the Government of the Republic of Kazakhstan with respect to the South Alibek Field, dated as of April 29, 1999 (filed as Exhibit 10.1 to the Registration Statement on Form SB-2 of Transmeridian Exploration Incorporated filed with the Commission on May 15, 2001 and incorporated by reference herein)
12.1†	Calculation of Ratio of Earnings to Fixed Charges
21.1†	Subsidiaries of Transmeridian Exploration Inc.
23.1†	Consent of Akin Gump Strauss Hauer & Feld LLP (included as part of Exhibit 5.1)
23.2†	Consent of UHY Mann Frankfort Stein & Lipp CPAs, LLP
23.3†	Consent of John A. Braden & Company, P.C.
23.4†	Consent of Ryder Scott Company (independent reserve engineers)
24.1†	Powers of Attorney of Directors and Officers of the registrant (included on Registration Statement Signature Page)
25.1†	Form T-1 Statement of Eligibility of The Bank of New York, as trustee
99.1†	Form of Letter of Transmittal
99.2†	Form of Notice of Guaranteed Delivery
99.3†	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
99.4†	Form of Letter to Clients
99.5†	Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9

† Filed herewith.

E-4

EX-3.1

Exhibit 3.1

IBC No. 205858 [handwritten] [logo] CERTFIED A TRUE COPY   [Signature] Authorised Signatory Nerine Trust Company (BVI) Limited Registered Agent Date: 6 December, 2005 [handwritten]

TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT, CAP. 291

MEMORANDUM OF ASSOCIATION

AND

ARTICLES OF ASSOCIATION

OF

VICTORIA HOLSTEIN INC.

Incorporated the 13th day of November, 1996

[Integro logo]

INTEGRO TRUST (BVI) LIMITED

Tropic Isle Building, PO Box 438

Road Town, Tortola

British Virgin Islands

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TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT, CAP. 291

MEMORANDUM OF ASSOCIATION

OF

VICTORIA HOLSTEIN INC.

1. The Name of the Company is VICTORIA HOLSTEIN INC.

2. The Registered Office of the Company will be situate at Tropic Isle Building, P.O. Box 438, Road Town, Tortola, British Virgin Islands or at such other place within the British Virgin Islands as the directors may from time to time determine.

3. The Registered Agent of the Company will be Integro Trust (BVI) Limited, Tropic Isle Building, P.O. Box 438, Road Town, Tortola, British Virgin Islands or such other person or company being a person or company entitled to act as a registered agent as the directors may from time to time determine.

4. The Objects for which the Company is established are

(1) To buy, sell, underwrite, invest in, exchange or otherwise acquire, and to hold, manage, develop, deal with and turn to account any bonds, debentures, shares (whether fully paid or not), stocks, options, commodities, futures, forward contracts, notes or securities of governments, states, municipalities, public authorities or public or private limited or unlimited companies in any part of the world, precious metals, gems, works of art and other articles of value, and whether on a cash or margin basis and including short sales, and to lend money either unsecured or against the security of any of the aforementioned property.

(2) To buy, own, hold, subdivide, lease, sell, rent, prepare building sites, construct, reconstruct, alter, improve, decorate, furnish, operate, maintain, reclaim or otherwise deal with and/or develop land and buildings and otherwise deal in real estate in all its branches, to make advances upon the security of land or houses or other property or any interest therein, and whether erected or in course of erection and whether on first mortgage or charge or subject to a prior mortgage or mortgages or charge or charges, and to develop land and buildings as may seem expedient but without prejudice to the generality of the foregoing.

(3) To borrow or raise money by the issue of debentures, debenture stock (perpetual or terminable), bonds, mortgages, or any other securities founded or based upon all or any of the assets or property of the Company or without any security and upon such terms as to priority or otherwise as the Company shall think fit.

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(4) To guarantee loans and to lend money with or without guarantee or security to any persons, firms or corporations.

(5) To engage in any other business or businesses whatsoever, or in any acts or activities, which are not prohibited under any law for the time being in force in the British Virgin Islands.

(6) To do all such other things as are incidental to or the Company may think conducive to the attainment of all or any of the above objects.

And it is hereby declared that the intention is that each of the objects specified in each paragraph of this clause shall, except where otherwise expressed in such paragraph, be an independent main object and be in nowise limited or restricted by reference to or inference from the terms of any other paragraph or the name of the Company.

5. (1)       The Company has no power to :

(a) carry on business with persons resident in the British Virgin Islands;

(b) own an interest in real property situate in the British Virgin Islands, other than a lease referred to in paragraph (e) of subsection (2);

(c) carry on banking or trust business, unless it is licensed under the Banks and Trust Companies Act, 1990;

(d) carry on business as an insurance or reinsurance company, insurance agent or insurance broker, unless it is licensed under an enactment authorizing it to carry on that business;

(e) carry on the business of company management unless it is licensed under the Company Management Act, I990; or

(f) carry on the business of providing the registered office or the registered agent for companies incorporated in the British Virgin Islands.

(2) For purposes of paragraph (a) of subsection (1), the company shall not be treated as carrying on business with persons resident in the British Virgin Islands by reason only that

(a) it makes or maintains deposits with a person carrying on banking business within the British Virgin Islands;

(b) it makes or maintains professional contact with solicitors, banisters, accountants, bookkeepers, trust companies, administration companies, investment advisers or other similar persons carrying on business within the British Virgin Islands;

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(c) it prepares or maintains books and records within the British Virgin Islands;

(d) it holds, within the British Virgin Islands, meetings of its directors or members;

(e) it holds a lease of property for use as an office from which to communicate with members or where books and records of the company are prepared or maintained;

(f) it holds shares, debt obligations or other securities in a company incorporated under the International Business Companies Act or under the Companies Act;

(g) shares, debt obligations or other securities in the company are owned by any person resident in the British Virgin Islands or by any company incorporated under the International Business Companies Act or under the Companies Act.

6. The shares in the Company shall be issued in the currency of the United States of America.

7. The authorised capital of the Company is US$50,000 divided into 50,000 shares with a par value of US$1.00 each. The directors shall have the authority to determine by resolution at their discretion whether shares are to be issued as registered shares or to bearer.

8. The shares shall be divided into such number of classes and series as the directors shall by resolution from time to time determine and until so divided shall comprise one class and series.

9. The directors shall by resolution have the power to issue any class or series of shares that the Company is authorised to issue in its capital, original or increased, with or subject to any designations, powers, preferences, rights, qualifications, limitations and restrictions.

10. Shares issued as registered shares may be exchanged for shares issued to bearer, and shares issued to bearer may be exchanged for registered shares.

11. Where shares are issued to bearer, the bearer, identified for this purpose by the number of the share certificate, shall be requested to give to the Company the name and address of an agent or attorney for service of any notice, information or written statement required to be given to members, and service upon such agent or attorney shall constitute service upon the bearer of such shares. In the absence of such name and address being given it shall be sufficient for purpose of service for the Company to publish the notice, information or written statement in one or more newspapers published or circulated in the British Virgin Islands and in a newspaper in the place where the Company has its principal office.

12. The Company shall by resolution of the directors have the power to amend or modify any of the conditions contained in this Memorandum of Association and to increase or reduce the authorised capital of the Company in any way which may be permitted by law.

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WE, the undersigned Registered Agent, subscribe our name to this Memorandum of Association.

NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER

Integro Trust (BVI) Limited

Tropic Isle Building

P.O. Box 438

Road Town, Tortola

British Virgin Islands

/s/

Authorised Signatory

Registered Agent

DATED this 13th day of November 1996

WITNESS to the above signature:

/s/

J. Blackman

Road Town

Tortola

British Virgin Islands

Secretary

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TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT, CAP. 291

ARTICLES OF ASSOCIATION

OF

VICTORIA HOLSTEIN INC.

1. References in these Articles to the Act shall mean The International Business Companies Act, Cap. 291. The following Regulations shall constitute the Articles of the Company. In these Articles words and expressions defined in the Act shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice-versa, the masculine shall include the feminine and neuter and references to persons shall include corporations and all legal entities capable of having a legal existence.

SHARES

2. The authorised capital of the Company is US$50,000 divided into 50,000 shares with a par value of US$1 each, which may be issued as either registered shares or as shares issued to bearer as the directors may by resolution determine.

3. Every person whose name is entered as a member in the share register being the holder of registered shares, and every person who subscribes for shares issued to bearer, shall, without payment, be entitled to a certificate signed by two directors or two officers or by one director and one officer of the Company or under the common seal of the Company with or without the signature of any director or officer of the Company specifying the share or shares held and the par value thereof, provided that in respect of a registered share, or shares, held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all.

4. In the case of bearer shares, each certificate for shares issued to bearer shall carry an identifying number, and the Company shall maintain a register of the name and address of an agent or attorney which may be given to the Company by the bearer, identified for this purpose by such identifying number, for service of any notice, information or written statement required to be given to members.

5. If a certificate is worn out or lost it may be renewed on production of the worn-out certificate, or on satisfactory proof of its loss together with such indemnity as the directors may reasonably require. Any member receiving a share certificate shall indemnify and hold the Company and its officers harmless from any less or liability which it or they may incur by reason of wrongful or fraud license or representation made by any person by virtue of the possession of such certificate.

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SHARE CAPITAL AND VARIATION OF RIGHTS

6. Subject to the provisions of these Articles, the unissued shares of the Company (whether forming part of the original or any increased capital) and treasury shares (if any) shall be at the disposal of the directors who may, without limiting or affecting any rights previously conferred on the holders of any existing shares or class or series of shares, offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration, being not less than the par value of the shares being disposed of, and upon such terms and conditions as the company may, by resolution of the directors, determine.

7. No shares of the Company may be issued until the consideration in respect of the shares is fully paid, and when issued the share is for all purposes fully paid and nonassessable save that a share issued for a promissory note or other written obligation for payment of a debt may be issued subject to forfeiture in the manner prescribed in Regulation 22.

8. Shares of the Company shall be issued for money, services rendered, personal property (including other shares, debt obligations or other securities in the company), an estate in real property, a promissory note or other binding obligation. to contribute money or property, or any combination thereof.

9. Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any share of the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the directors may from time to time determine.

10. Subject to the provisions of the Act in this regard, shares may be issued on the terms that they are redeemable, or, at the option of the Company, are liable to be redeemed on such terms and in such manner as the directors before or at the time of the issue of the shares may determine.

11. The directors may redeem any such share at a premium.

12. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class and of any other class of shares which may be affected by such variation.

13. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms, of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

14. Except as required by law, the persons named in the share register shall be recognised by the Company as holding the equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Regulations or by law otherwise provided). any other rights in respect of any share thereof by the registered holder.

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TRANSFER OF SHARES

15. Registered shares in the Company may be transferred by a written instrument signed by the transferor and containing the name and address of the transferee or in such other manner or form and subject to such evidence as the directors shall consider appropriate. Shares issued to bearer shall be transferred by delivery of the certificate evidencing same.

16. The holder of registered shares may request that such shares be exchanged for shares issued to bearer and the directors shall cancel the certificate evidencing registered shares and the entry in the share register and instead issue a certificate evidencing shares issued to bearer with and subject to such evidence of intent as the directors may consider appropriate.

17. The holder of a certificate evidencing shares issued to bearer may request that such shares be exchanged for registered shares and the directors shall cancel the certificate evidencing shares issued to bearer and instead issue a certificate evidencing registered shares and enter the name and address of the holder thereof in the share register with and subject to such evidence of intent as the directors may consider appropriate.

18. Upon receipt of notification of any change of name and address of any agent or attorney given to the Company for the purpose of service of any notice, information or written statement required to be given to members, identified by reference to the number of the certificate to bearer, the directors shall forthwith amend the register maintained for this purpose.

TRANSMISSION OF SHARES

19. The personal representatives, guardian or trustee as the case may be of a deceased, incompetent or bankrupt sole holder of a registered share shall be the only persons recognised by the Company as having any title to the share. In the case of a share registered in the names of two or, more holders, the survivor or survivors, and the personal representative, guardian or trustee as the case may be of the deceased, incompetent or bankrupt, shall be the only persons recognised by the company as having any title to the share but they shall not be entitled to exercise any rights as a member of the Company until they have proceeded as set forth in the following two Regulations.

20. Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered as a member upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a member for all purposes shall be deemed to be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such.

21. Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as a transferee of such share or shares and such request shall likewise be treated as if it were a transfer.

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FORFEITURE OF SHARES

22. Where shares of the company are issued for a promissory note or other written binding obligation to contribute money or property and the terms of the promissory note or other written binding obligation are not met:

(i) Written notice specifying a date for payment to be made shall be served on the member who defaults in making payment pursuant to the promissory note or other written binding obligation to pay a debt;

(ii) The written notice referred to in (i) above shall name a further date not earlier than the expiration of 14 days from the date of service of the notice on or before which the payment required by the notice is to be made and shall contain a statement that in the event of nonpayment at or before the time named in the notice the shares, or any of them, in respect of which payment is not made will be liable to be forfeited;

(iii) Where notice has been issued and the requirements of the notice have not been complied with, the directors may, at any time before tender of payment, by resolution of directors forfeit and cancel the shares to which the notice relates;

and the Company shall have no obligation to refund any monies to the member whose shares have been cancelled and that member shall be discharged from any further obligation to the Company.

ACQUISITION OF OWN SHARES

23. Subject to the provisions of the Act in this regard, the directors may, on behalf of the Company, purchase, redeem or otherwise acquire any of the Company’s own shares for such consideration as they consider fit, and either cancel or hold such shares as Treasury shares. The directors may dispose of any shares held as Treasury shares on such terms and conditions as they may from time to time determine. Shares may be purchased or otherwise acquired in exchange for newly issued shares in the Company.

ALTERATION IN CAPITAL

24. Subject to the terms of any resolution passed for the purpose of increasing the authorised capital of the Company, such increased capital may be divided into shares of such respective amounts, and with such rights or privileges (if any) as may be thought expedient.

25. Any capital raised by the creation of new shares shall be considered as part of the original capital, and shall be subject to the same provisions as if it had been part of the original capital.

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26. The company may by resolution:

(a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(b) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its authorised share capital by the amount of the shares so cancelled;

(c) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association and so that subject to the provisions of Regulation 10 the resolution whereby any share is sub-divided may determine that as between the holders of the shares resulting from such sub-division one or more of the shares may have such preferred or other special rights over or may have such qualified or deferred rights or be subject to any such restrictions as compared with the other or others as the Company has power to attach to unissued or new shares;

(d) subject to any confirmation or consent required by law, reduce its authorised and issued share capital or any capital redemption reserve fund or any share premium account in any manner.

27. Where any difficulty arises in regard to any consolidation and division under this regulation the directors may settle the same as they think expedient.

MEETING OF MEMBERS

28. The directors may convene meetings of the members of the Company at such times and in such manner and places as the directors consider necessary or desirable, and they shall convene such a meeting upon the written request of members holding more than 50 per cent of the votes of the outstanding voting shares in the Company.

29. Seven days’ notice at the least specifying the place, the day and the hour of the meeting and the general nature of the business to be conducted shall be given in manner hereinafter mentioned to such persons whose names on the date the notice is given appear as members in the share register of the Company and are entitled to vote at the meeting and to the agent or attorney of record of the holders of bearer shares.

30. A meeting of the members shall be deemed to have been validly held, notwithstanding that it is held in contravention of the requirement to give notice in Regulation 29, if notice of the meeting is waived by at least 60 per cent in number of the members or holders of bearer shares having a right to attend and vote at the meeting; and for this purpose, the presence of a member at the meeting shall be deemed to constitute waiver on his part.

31. The inadvertent failure of the directors to give notice of a meeting to a member or to the agent or attorney as the case may be, or the fact that a member or such agent or attorney has not received the notice, does not invalidate the meeting.

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PROCEEDINGS AT MEETINGS OF MEMBERS

32. No business shall be transacted at any meeting unless a quorum of members is present at the time when the meeting proceeds to business. A quorum shall consist of the holder or holders present in person or by proxy of not less than one-third of the shares of each class or series of shares entitled to vote as a class or series thereon and the same proportion of the votes of the remaining shares entitled to vote thereon.

33. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved.

34. At every meeting the members present shall choose some one of their number to be the Chairman. If the members are unable to choose a Chairman for any reason, then the person representing the greatest number of voting shares present at the meeting shall preside as Chairman failing which the oldest individual person shall take the chair.

35. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

36. At any meeting a resolution put to the vote of the meeting shall. be decided on a show of hands by simple majority unless a poll is (before or on the declaration of the result of the show of hands) demanded:

(a) by the Chairman; or

(b) by any member or members present in person or by proxy.

37. Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution.

38. If a poll is duly demanded it shall be taken in such manner as the Chairman directs and the result of the poll shall be deemed to be the resolution o the meeting at which the poll was demanded. The demand for a poll may be withdrawn.

39. In the case of an equality of votes, whether on a show of hands, or on a poll, the Chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote.

VOTES OF MEMBERS

40. At any meeting of members whether on a show of hands or on a poll every holder of a voting share present in person or by proxy shall have one vote for every voting share of which he is the holder.

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41. A resolution which has been notified to all members for the time being entitled to vote and which has been approved by a majority of the votes of those members in the form of one or more documents in writing or by facsimile, telex, telegram, cable or other written electronic communication shall forthwith, without the need for any notice, become effectual as a resolution of the members.

42. If a committee be appointed for any member who is of unsound mind he may vote by his committee.

43. If two or more persons are jointly entitled to a share or shares: -

(a) each of them may be present in person or by proxy at a meeting of members and may speak as a member;

(b) if only one of them is present in person or by proxy, he may vote on behalf of all of them; and

(c) if two or more are present in person or by proxy, they must vote as one.

44. Votes may be given either personally or by proxy.

45. The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote.

46. An instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy.

47. The instrument appointing a proxy shall be in writing under the hand of the appointer unless the appointer is a corporation or other form of legal entity other than one or more individuals holding as joint owners in which case the instrument appointing a proxy shall be in writing under the hand of an individual duly authorised by such corporation or legal entity to execute the same. The Chairman of any meeting at which a vote is cast by proxy so authorised may call for a notarially certified copy of such authority which shall be produced within 7 days of being so requested or the vote or votes cast by such proxy shall be disregarded. In the case of a proxy being given by the holder of a share issued to bearer, it shall be sufficient for the appointer to identify himself by writing the identifying number of the certificate evidencing the shares issued to bearer.

CORPORATIONS OR TRUSTS ACTING BY REPRESENTATIVES AT MEETINGS

48. Any corporation or other form of corporate legal entity or any voting trust which is a member of Company may by resolution of its directors, trustees or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the members or of any class of members the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation or trust which he represents as that corporation or trust could exercise if it were an individual member of the Company.

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DIRECTORS

49. Subject to any subsequent amendment to change the number of directors, the number of the directors shall be not less than one nor more than seven.

50. The first directors shall be elected by the subscriber(s) to the Memorandum. Thereafter, additional directors may be elected either by the members or the existing directors for such term as the members or the directors may determine.

51. Each director holds office until his successor takes office or until his earlier death, resignation or removal.

52. A vacancy arising in the board of directors may be filled either by the members or by the remaining directors.

53. Until directors are appointed the subscribers to the Memorandum of Association shall have the power to act as directors.

54. A director shall not require a share qualification, but nevertheless shall be entitled to attend and speak at any meeting of the members and at any separate meeting of the holders of any class of shares in the Company.

55. A director by writing under his hand deposited at the Registered Office of the Company may from time to time appoint another director or any other person to be his alternate. Every such alternate shall be entitled to be given notice of meetings of the directors and to attend and vote as a director at any such meeting at which the director appointing him is not personally present and generally at such meeting to have and exercise all the powers, rights, duties and authorities of the director appointing him. Every such alternate shall be deemed to be an officer of the Company and shall not be deemed to be an agent of the director appointing him. If undue delay or difficulty would be occasioned by giving notice to a director of a resolution of which his approval is sought in accordance with Regulation 80 his alternate (if any) shall be entitled to signify approval of the same on behalf of that director. The remuneration of an alternate shall be payable out of the remuneration payable to the director appointing him, and shall consist of such portion of the last-mentioned remuneration as shall be agreed between such alternate and the director appointing him. A director by writing under his hand deposited at the Registered Office of the Company may at any time revoke the appointment of an alternate appointed by him. If a director shall die or cease to hold the office of director, the appointment of his alternate shall thereupon cease and terminate.

56. The directors may, by resolution, fix the emoluments of directors in respect of services rendered or to be rendered in any capacity to the Company. The directors may also be paid such travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors, or any committee of the directors or meetings of the members, or in connection with the business of the Company as shall be approved by resolution of the directors.

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57. Any director who, by request, goes or resides abroad for any purposes of the Company or who performs services which in the opinion of the Board go beyond the ordinary duties of a director, may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as shall be approved by resolution of the directors.

58. The Company may pay to a director who at the request of the Company holds any office (including a directorship) in, or renders services to any company in which the Company may be interested, such remuneration (whether by way of salary, commission, participation in profits or otherwise) in respect of such office or services as shall be approved by resolution of the directors.

59. The office of director shall be vacated if the director :

(a) is removed from office by a resolution of members or by a resolution of directors, or

(b) becomes bankrupt or makes any arrangement or composition with his creditors generally, or

(c) becomes of unsound mind, or of such infirm health as to be incapable of managing his affairs, or

(d) resigns his office by notice in writing to the Company.

60.    (a) A director may hold any other office or position of profit under the Company (except that of auditor) in conjunction with his office of director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the directors shall arrange.

(b) A director may be or become a director or other officer of, or otherwise interested in any company promoted by the Company, or in which the Company may be interested, as a member or otherwise, and no such director shall be accountable for any remuneration or other benefits received by him as director or officer or from his interest in such other company. The directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favour of any resolutions appointing them, or any of heir number, directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A director may vote in favour of the exercise of such voting rights in manner aforesaid, notwithstanding that he may be, or be about to become, a director or officer of such . other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in manner aforesaid.

(c) No director shall be disqualified by his office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any director

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shall be in any way interested be voided, nor shall any director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement, by reason of such director holding that office or of the fiduciary relationship thereby established. The nature of a director’s interest must be declared by him at the meeting of the directors at which the question of entering into the contract or arrangement is first taken into consideration, and if the director was not at the date of that meeting interested in the proposed contract or arrangement, or shall become interested in a contract or arrangement after it is made, he shall forthwith after becoming so interested advise the Company in writing of the fact and nature of his interest. A general notice to the directors by a director that he is a member of a specified firm or company, and is to be regarded as interested in any contract or transaction which may, after the date of notice, be made with such firm or company shall (if such director shall give the same at a meeting of the directors, or shall take reasonable steps to secure that the same is brought up and read at the next meeting of directors after it is given) be a sufficient declaration of interest in relation to such contract or transaction with such firm or company. A director may be counted as one of a quorum upon a motion in respect of any contract or arrangement which he shall make with the Company, or in which he is so interested as aforesaid, and may vote upon such motion.

OFFICERS

61. The directors of the Company may, by a resolution of directors, appoint officers of the Company at such times as shall be considered necessary or expedient, and such officers may consist of a President, one or more Vice-Presidents, a Secretary and a Treasurer and such other officers as may from time to time be deemed desirable. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modification in such duties as may be prescribed by the directors thereafter, but in the absence of any specific allocation of duties it shall be the responsibility of the President to manage the day to day affairs of the Company, the Vice-Presidents to act in order of seniority in the absence of the President but otherwise to perform such duties as may be delegated to them by the President, the Secretary to maintain the registers, minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the Company by applicable law, and the Treasurer to be responsible for the financial affairs of the Company.

62. Any person may hold more than one office and no officer need be a director or member of the Company. The officers shall remain in office until removed from office by the directors whether or not a successor is appointed.

63. Any officer who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it and of transacting any of the business of the officers.

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POWERS OF DIRECTORS

64. The business of the Company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company, and may exercise all such powers of the Company as are not by the Ordinance or by these Regulations required to be exercised by the members subject to any delegation of such powers as may be authorised by these Regulations and to such requirements as may be prescribed by resolution of the members. But no requirement made by resolution of the members shall prevail if it be inconsistent with these Regulations nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made.

65. The Board of Directors may entrust to and confer upon any director or officer any of the powers exercisable by it, except such powers as are exercisable under the Act by resolutions of the directors upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulation that may be imposed on it by the directors.

66. The directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Regulations) and for such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the directors may think fit and may also authorise any such attorney to delegate all or any of the powers, authorities and discretions vested in him, except that no officer of attorney of the Company may have any power of authority with respect to matters requiring a resolution of directors under the Act, nor may any officer or attorney have any power to pass or purport to pass resolutions on behalf of the Company.

67. Any director who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it at Board Meetings and of transacting any of the business of the directors.

68. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the directors shall from time to time by resolution determine.

69. The directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.

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70. The continuing directors may act notwithstanding any vacancy in their body, save that if the number of directors shall have been fixed at two or more persons and by reason of vacancies having occurred in the Board there shall be only one continuing director he shall be authorised to act alone only for the purpose of appointing another director.

PROCEEDINGS OF DIRECTORS

71. The Meetings of the Board of Directors and any Committee thereof shall be held at such place or places as the Directors shall decide except that it is prohibited for a Director to call a Meeting of the Directors which would be held in the United Kingdom or Canada or the United States of America.

72. The directors may elect a Chairman of their meetings and determine the period for which he is to hold office; but if no such Chairman is elected, or if at any meeting the Chairman is not present at the time appointed for holding the same, the directors present may choose one of their number to be Chairman of the meeting.

73. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a majority of votes; in case of an equality of votes the Chairman shall have a second or casting vote. A director may at any time summon a meeting of the directors. If the Company shall have only one director the provisions hereinafter contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters and in lieu of minutes of a meeting shall record in writing and sign a note or memorandum of all matters requiring a resolution of the directors. Such note or memorandum shall constitute sufficient evidence of such resolution for all purposes.

74. A director shall be given not less than three days notice of a meeting of the directors.

75. Notwithstanding Regulation 74 above, a meeting of directors held in contravention of that regulation shall be valid if a majority of the directors entitled to vote at the meeting have waived the notice of the meeting; and, for this purpose, the presence of a director at the meeting shall be deemed to constitute waiver on his part.

76. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting.

77. A meeting of directors is duly constituted for all purposes if at the commencement of the meeting are present in person or by alternate not less than one-third of the total number of directors with a minimum of two.

78. If within half an hour from the time appointed for the meeting a quorum is not present the meeting shall be dissolved.

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79. Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

80. A resolution which has been notified to all directors and which has been approved by a majority of the directors for the time being entitled to receive notice of a meeting of the directors or of a committee of the directors and taking the form of one or more documents in writing or by facsimile, telex, telegram, cable or other written electronic communication shall be as valid and effectual as if it had been passed at a meeting of the directors or of such committee duly convened and held, without the need for any notice.

INDEMNITY

81. Subject to the provisions of the Act and of any other statute for the time being in force every director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no director or other officer shall be liable for any loss, damage or misfortune which may happen to, or be incurred by the Company in the execution of the duties of his office, or in relation thereto.

SEAL

82. The directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument, except as provided in Regulation 3, shall be witnessed by a director or any other person so authorised from time to time by the directors. The directors may provide for a facsimile of the common seal and approve the signature of any director or authorised person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the seal had been affixed to such instrument and the same had been signed as hereinbefore described. An imprint of the common seal shall be kept at the Registered Office of the Company.

DIVIDENDS AND RESERVES

83. The directors may by resolution declare a dividend but no dividend shall be declared and paid except out of surplus and unless the directors determine that immediately after the payment of the dividend:

(a) the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and

(b) the realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital.

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84. Dividends when and if declared may be paid to one class of holder to the exclusion of the holders of other classes, or in unequal amounts to holders of the various classes of shares.

85. Dividends may be declared and paid in money, shares or other property.

86. In computing the surplus for the purpose of resolving to declare and pay a dividend, the directors may include in their computation the net unrealised appreciation of the assets of the Company.

87. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the surplus of the Company.

88. Subject to the rights of holders of shares entitled to special rights as to dividends, all dividends shall be declared and paid according to the par value of the shares in issue, excluding those shares which are held by the Company as Treasury shares at the date of declaration of the dividend.

89. The directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies, or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments as the directors may from time to time think fit.

90. If several persons are registered as joint holders of any share, any of them may give effectual receipt for any dividend or other monies payable on or in respect of the share.

91. In the case of shares issued to bearer, the directors may provide for the payment of dividend by reference to counterfoils or warrants issued with the certificate for such shares, and the production of such dividend counterfoil or warrant shall evidence entitlement to receipt of such dividend in the same way and to the same extent as production of the certificate itself. At the time of presentation of the counterfoil or warrant, the directors may issue such further counterfoils or warrants as may be required to permit receipt by the holder thereof of subsequent dividends.

92. Notice of any dividend that may have been declared shall be given to each member in manner hereinafter mentioned and all dividends unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the Company.

93. No dividend shall bear interest against the Company.

BOOKS AND RECORDS

94. The Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the Company.

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95. The Company shall keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members, and copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members.

96. The books, records and minutes required by Regulations 94 and 95 shall be kept at the Registered Office of the Company or at such other place as the directors determine, and shall be open to the inspection of the directors at all times.

97. The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the books, records and minutes of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any book, record, minute or document of the Company except as conferred by Law or authorised by resolution of the directors.

AUDIT

98. The directors may by resolution call for the accounts of the Company to be examined by the auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed.

99. The auditor may be a member of the Company but no director or officer shall be eligible during his continuance in office.

100. Every auditor of the Company shall have a right of access at all times to the books of account and vouchers of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties.

101. The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company’s audited profit and loss account and balance sheet is to be presented.

NOTICES

102. Any notice, information or written statement required to be given to members shall be served:

(a) in the case of members holding registered shares, by mail (airmail service if available) addressed to each member at the address shown in the share register; and

(b) in the case of members holding shares issued to bearer

(i) by mail (airmail service if available) addressed to the agent or attorney whose name and address has been given for service of notice by the bearer of the share (identified for this purpose by the number of the share certificate), or

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(ii) in the absence of an address for service being given, or if the notice, information or written statement cannot be served for any other reason, by publishing the notice, information or written statement in one or more newspapers published or circulated in the British Virgin Islands and in a newspaper in the place where the Company has its principal office.

103. All notices directed to be given to the members shall, with respect to any registered share to which persons are jointly entitled, be given to whichever of such persons is named first in the share register, and notice so given shall be sufficient notice to all the holders of such share.

104. Any notice, if served by post, shall be deemed to have been served within ten days of posting, and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the Post Office.

PENSION AND SUPERANNUATION FUNDS

105. The directors may establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions, allowances or emoluments to any person who are or were at any time in the employment or service of the Company or any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary, or who are or were at any time directors or officers of the Company or of any such other company as aforesaid or who hold or held any salaried employment or office in the Company or such other company, or any persons in whose welfare the Company or any such other company as aforesaid is or has been at any time interested, and to the wives, widows, families and dependents of any such person, and may make payments for or towards the insurance of any such persons as aforesaid, and may do any of the matters aforesaid either alone or in conjunction with any such other company as aforesaid. A director holding any such employment or office shall be entitled to participate in and retain for his own benefit any such donation, gratuity, pension, allowance or emolument.

WINDING UP

106. If the Company shall be wound up, the Liquidator may, in accordance with a resolution of members, divide amongst the members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the Liquidator shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

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ARBITRATION

107. Whenever any difference arises between the Company on the one hand and any of the members, their executors, administrators or assigns on the other hand touching the true intent and construction or the incidence or consequences of these presents or of the Act touching anything done or executed omitted or suffered in pursuance of the Act or touching any breach or alleged breach or otherwise relating to the premises or to these presents or to any Act affecting the Company or to any of the affairs of the Company such difference shall unless the parties agree to refer the same to a single arbitrator be referred to two arbitrators one to be chosen by each of the parties to the difference and the arbitrators shall before entering on the reference appoint an umpire.

108. If either party to the reference makes default in appointing an arbitrator either originally or by way of substitution (in the event that an appointed arbitrator shall die, be incapable of acting or refuse to act) for ten days after the other party has given him notice to appoint the same such other party may appoint an arbitrator to act in the place of the arbitrator of the defaulting party.

AMENDMENT TO ARTICLES

109. The Company may alter or modify the conditions contained in these Regulations as originally drafted or as amended from time to time by a resolution of directors.

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WE, the undersigned Registered Agent, subscribe our name to these Articles of Association.

NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER

Integro Trust (BVI) Limited

Tropic Isle Building

P.O. Box 438

Road Town, Tortola

British Virgin Islands

/s/

Authorised Signatory

Registered Agent

DATED this 13th day of November 1996

WITNESS to the above signature:

/s/

J. Blackman

Road Town

Tortola

British Virgin Islands

Secretary

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VICTORIA HOLSTEIN INC. [File Stamped Dec. 12, 1997 Registry of Companies British Virgin Islands]

IBC NO. 205858

TO THE REGISTRAR OF COMPANIES

PURSUANT TO SECTION 11(3) OF THE INTERNATIONAL BUSINESS COMPANIES ACT, CAP 291

The following is an extract of a resolution passed by the Sole Director of the Company on 26th November 1997:

That the name of the company be changed to

“TRANSMERIDIAN EXPLORATION INC.”

Presented for filing this 12th day of December, 1997.

VICTORIA HOLSTEIN INC.

/s/

For Integro Trust (BV) Limited

Registered Agent

TRANSMERIDIAN EXPLORATION INC. [File Stamped Nov. 8, 1999 Registry of Companies British Virgin Islands]

COMPANY No: 205858

To: Registrar of Companies

Section 16 (2) International Business Companies Act CAP 291

The following is an extract from a Resolution passed by the Director of the Company on 8 October 1999:

RESOLVED to amend and is hereby amended the Company’s Memorandum and Articles of Association by deleting the existing Clauses 2 and 3 in their entirety and replacing them with new Clauses 2 and 3 as follows:

1. The Registered Office of the Company will be situate at Nerine Chambers, P 0 Box 905, Columbus Centre, Pelican Drive, Road Town, Tortola, British Virgin Islands or such other place within the British Virgin Islands as the Directors may from time to time determine.

2. The Registered Agent of the Company will be Nerine Trust Company (BVI) Limited, P 0 Box 905, Columbus Centre, Pelican Drive, Road Town, Tortola, British Virgin Islands or such other person or company entitled to act as Registered Agent as the Directors may from time to time determine.

Presented for filing this 8th November, 1999

/s/

Rita Kirketerp

Authorised Signatory

Nerine Trust Company (BYI) Limited

Registered Agent

EX-3.5

Exhibit 3.5

ARTICLES OF INCORPORATION

OF

TMEI OPERATING, INC.

I, the undersigned natural person of age twenty-one (21) years or more, a citizen of the State of Texas, acting as an Incorporator of a corporation under the Texas Business Corporation Act, do hereby adopt the following Articles of Incorporation for said corporation.

ARTICLE ONE

The name of the corporation is TMEI Operating, Inc.

ARTICLE TWO

The period of its duration is perpetual.

ARTICLE THREE

The purpose for which the Corporation is organized is to transact any or all lawful business for which a corporation may be incorporated under the Texas Business Corporation Act, as now existing or hereafter amended.

ARTICLE FOUR

1. General. The Corporation shall have authority to issue two classes of shares, to be designated as “Preferred” and “Common.” The total number of shares which the Corporation is authorized to issue is 205,000,000 shares. The number of Common shares authorized is 200,000,000 and the par value of each share is $0.0006 per share. The Common shares shall have identical rights and privileges in every respect. The number of Preferred shares authorized is 5,000,000 and the par value of each such share is $0.0006 per share.

2. Preferred Stock. The Board of Directors is vested with the authority to adopt a resolution or resolutions providing for the issue of authorized but unissued shares of Preferred Stock, which shares may be issued from time to time in one or more series and in such amounts as may be determined by the Board of Directors in such resolution or resolutions. The characteristics of the Preferred Stock, including the ownership powers, voting powers, designations, preferences and relative, participating, optional or other rights, if any, of each series of Preferred Stock and the qualifications, limitations or restrictions, if any, of such preferences and/or rights (collectively, the “Series Terms”), shall be such as are stated and expressed in a resolution or resolutions providing for the creation or revision of such Series Terms (a “Preferred Stock Series Resolution”) adopted by the Board of Directors or a committee of the Board of Directors to which such responsibility is specifically and lawfully delegated. The powers of the Board with respect to the Series Terms of a particular series (any of which powers may, by a resolution of the Board of Directors, be specifically delegated to one or more of its committees, except as prohibited by law) shall include, but not be limited to, the establishment of the following relative rights and preferences:

A. The rate of dividends;

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B. The price at and the terms and conditions for which shares may be redeemed;

C. The amount payable upon shares in event of involuntary liquidation;

D. The amount payable upon shares in event of voluntary liquidation;

E. Sinking fund provisions (if any) for the redemption or purchase of shares;

F. The terms and conditions on which shares may be converted if the shares of any Series are issued with the privilege of conversion; and

G. Voting rights, including the number of votes per shares, the matter on which shares can vote, and the contingencies which make the voting rights effective.

3. Preferences, Limitations and Relative Rights.

A. General. All shares of Common Stock shall have identical rights with each other. Except as provided in this Article Four or in Preferred Stock Series Resolutions, all shares of Preferred Stock shall have preferences, limitations and relative rights identical with each other. Except as expressly provided in the Preferred Stock Series Resolutions, shares of Preferred Stock shall have only the preferences and relative rights expressly stated in this Article.

B. Dividends.

(1) The Preferred Stock at the time outstanding shall be entitled to receive, when, as, and if declared by the Board of Directors, out of any funds legally available therefor, dividends at the rate fixed by the Board of Directors.

(2) No dividends shall be declared or paid on Common Stock unless full dividends on outstanding Preferred Stock for all past dividend periods and for the current dividend periods shall have been declared and paid.

C. Liquidation Preference. In the event of dissolution, liquidation, or winding up of the Corporation (whether voluntary or involuntary), after payment or provision for payment of debts but before any distribution to the holders of the Common Stock, as provided under Texas law, the holders of each Series of Preferred Stock then outstanding shall be entitled to receive the amount fixed by the Board of Directors, plus a sum equal to all cumulated, but unpaid dividends (if any) to the date fixed for distribution. All remaining assets shall be distributed pro rata among the holders of Common Stock.

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D. Redemption.

(1) All or part of any one or more Series of Preferred Stock may be redeemed at any time or times at the option of the Corporation by a resolution of the Board of Directors, in accordance with the terms and provisions of this Article Four and those fixed by the Board of Directors. The Corporation may redeem shares of any one or more series without redeeming shares of other series, as determined by the Board of Directors. If less than all the shares of any series are to be redeemed, the shares of the series to be redeemed shall be selected ratably whether by lot or by any other equitable method determined by the Board of Directors.

(2) Redeemed shares shall be paid for in amounts and manners as fixed by the Board of Directors.

(3) Shares of Preferred Stock which are redeemed shall be canceled and shall be restored to the status of authorized but unissued shares.

E. Purchases. Except as provided in this Article, nothing shall limit the right of the Corporation to purchase any of its outstanding shares in accordance with law, by public or private transaction.

F. Voting. Except as fixed by the Board of Directors and except as otherwise expressly provided by law, all voting powers shall be in Common Stock and none in the Preferred Stock. Where Preferred Stock as a Class has voting power, all Series of Preferred Stock shall be a single class.

ARTICLE FIVE

The corporation will not commence business until it has received for the issuance of its shares consideration of the value of One Thousand Dollars ($1,000.00), consisting of money, labor done or property actually received.

ARTICLE SIX

The street address of the corporation’s initial registered office is 397 North Sam Houston Pkwy, Suite 300, Houston, TX 77060. The name of the Initial Registered Agent at that address is Mr. Jim Tucker.

ARTICLE SEVEN

The number of Directors constituting the Initial Board of Directors is one (1) and the name and address of the person who is to serve as Director until the first annual meeting of the Shareholders, or until his successor is elected and qualified is:

Lorrie T. Oliver

397 North Sam Houston Pkwy

Suite 300

Houston, TX 77060

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ARTICLE EIGHT

The name and address of the Incorporator is:

Steven B. Holmes

Carter Holmes

4311 Oak Lawn Avenue

Suite 600

Dallas, TX 75219

ARTICLE NINE

Cumulative voting by the Shareholders of the corporation at any election for Directors is expressly prohibited. The Shareholders entitled to vote for Directors in such election shall be entitled to cast one (1) vote for each Director for each share held and no more.

ARTICLE TEN

No holder of any stock of the corporation shall be entitled as a matter of right to purchase or subscribe for any part of any stock of the corporation authorized by these Articles or of any additional stock of any class to be issued by reason of any increase of the authorized stock of the corporation, or of any bonds, certificate of indebtedness, debentures, warrants, options or other securities convertible into any class of stock of the corporation, but any stock authorized by these Articles or any such additional authorized issue of any stock or securities convertible into any stock may be issued and disposed of by the Board of Directors to such persons, firms, corporations or associations for such consideration and upon such terms and in such manner as the Board of Directors may in its discretion determine without offering any part thereof on the same terms or on any terms to the Shareholders then of record or to any class of Shareholders, provided only that such issuance may not be inconsistent with any provision of law or with any of the provisions of this Article.

ARTICLE ELEVEN

The corporation shall indemnify as set forth herein, to the extent allowed by Article 2.02-1 of the Texas Business Corporation Act, any person who is or was a Director, Officer, agent or employee of the corporation, and any person who serves or served at the corporation’s request as a Director, Officer, agent, employee, partner or trustee of another corporation, partnership, joint venture, trust or other enterprise.

A. Persons. The corporation shall indemnify, to the extent provided in Paragraph (B), (D), or (F):

(1) any person who is or was a Director, Officer, agent or employee of the corporation, and

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(2) any person who serves or served at the corporation’s request as a Director, Officer, agent, employee, partner or trustee of another corporation or of a partnership, joint venture, trust or other enterprise.

B. Extent – Derivative Suits. In case of a suit by or in the right of the corporation against a person named in Paragraph (A) by reason of his holding a position named in Paragraph (A), the corporation shall indemnify him, if he satisfies the standard in Paragraph (C), for expenses (including attorney’s fees but excluding amounts paid in settlement) actually and reasonably incurred by him in connection with the defense or settlement of the suit.

C. Standard – Derivative Suit. In case of a suit by or in the right of the corporation, a person named in Paragraph (A) shall be indemnified only if:

(1) he is successful on the merits or otherwise, or

(2) he acted in good faith in the transaction which is the subject of the suit, and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation. However, he shall not be indemnified in respect of any claim, issue or matter as to which he has been adjusted liable for negligence or misconduct in the performance of his duty to the corporation unless (and only to the extent that) the court in which the suit is brought shall determine, upon application, that despite the adjudication but in view of all the circumstances, he is fairly and reasonably entitled to indemnify for such expenses as the court shall deem proper.

D. Extent – Nonderivative Suits. In case of a suit, action, or proceeding (whether civil, criminal, administrative or investigative), other than a suit by or in the right of the corporation, together hereafter referred to as “Nonderivative suit,” against a person named in Paragraph (A) by reason of his holding a position named in Paragraph (A), the corporation shall indemnify him if he satisfies the standard in Paragraph (E), for amounts actually and reasonably incurred by him in connection with the defense or settlement of the Nonderivative suit as:

(1) expenses (including attorney’s fees);

(2) amounts paid in settlement;

(3) judgments; and

(4) fines.

E. Standard – Nonderivative Suits. In case of a Nonderivative suit, a person named in Paragraph (A) shall be indemnified only if:

(1) he is successful on the merits or otherwise; or

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(2) he acted in good faith in the transaction which is the subject of the Nonderivative suit, and in a manner he reasonably believed to be in, and not opposed, to, the best interests of the corporation and, with respect to any criminal action or proceeding, he had no reason to believe his conduct was unlawful. The termination of a Nonderivative suit by judgment, order, settlement, conviction or upon plea of nolo contendre or its equivalent shall not, of itself, create a presumption that the person failed to satisfy the standard of this Paragraph (E)(2).

F. Determination That Standard Has Been Met. A determination that the standard of Paragraphs (C) or (E) has been satisfied may be made by a court, or except as stated in Paragraph (C)(2) (second sentence), the determination may be made by:

(1) a majority of the Directors of the corporation (whether or not a quorum) who were not parties to the action, suit or proceeding; or

(2) independent legal counsel (appointed by a majority of the Directors of the corporation, whether or not a quorum, or elected by the Shareholders of the corporation) in a written opinion; or

(3) the shareholders of the corporation.

G. Proration. Anyone making a determination under Paragraph (F) may determine that a person has met the standard as to some matters but not as to others, and may reasonably prorate amounts to be indemnified.

H. Advance Payment. The corporation may pay in advance any expenses (including attorney’s fees) which may become subject to indemnification under Paragraphs (A) – (G) if:

(1) the board of Directors authorizes the specific payment; and

(2) the person receiving the payment undertakes in writing to repay the corporation, unless it is ultimately determined that he is entitled to indemnification by the corporation under Paragraphs (A) – (G).

I. Nonexclusive. The indemnification provided in Paragraphs (A) – (G) shall not be exclusive of any other rights to which a person may be entitled by law, by-law, agreement, vote of Shareholders or disinterested Directors, or otherwise.

J. Continuation. The indemnification and advance payment provided in Paragraphs (A) – (H) shall continue as to a person who has ceased to hold a position named in Paragraph (A) and shall inure to his heirs, executors and administrators.

K. Insurance. The corporation may purchase and maintain insurance on behalf of any person who holds or who has held any position named in Paragraph (A),

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against any liability incurred by him in any such position, or arising out of his status as such, whether or not the corporation would have power to indemnify him against such liability under Paragraphs (A) – (H).

L. Reports. Indemnification payments, advance payments and insurance purchases and payments made under Paragraphs (A) – (K) shall be reported in writing to the Shareholders of the corporation with the next notice of annual meeting, or within six (6) months, whichever is sooner.

M. Severability. All of the provisions of this Article Eleven are separate from each other, and to the extent that a particular provision is held by a court of competent jurisdiction to be invalid for any reason, then such holding shall not affect the enforceability and binding effect of the other provisions herein not held to be invalid.

ARTICLE TWELVE

No contract or other transaction between the Corporation and any other person (as used herein the term “Person” means an individual, firm, trust, partnership, association, corporation, or other entity) shall be affected or invalidated by the fact that any director of the Corporation is interested in, or is a member, director, or an officer of, such other person, and any director may be a party to or may be interested in any contract or transaction of the Corporation or in which the Corporation is interested; and no contract, act, or transaction of the Corporation with any person shall be affected or invalidated by the fact that any director of the Corporation is a party to, or interested in, such contract, act, or transaction, or in any way connected with such person. Each and every person who may become a director of the Corporation is hereby relieved from any liability that might otherwise exist from contracting with the Corporation for the benefit of himself or any person in which he may in any way be interested; provided that the fact of such interest shall have been disclosed to, or shall be known by, the other directors or the shareholders of the Corporation, as the case may be, acting upon or with reference to such act, contract, or transaction, even though the presence at a meeting or vote or votes of such interested director might have been necessary to obligate the Corporation upon such act, contract, or transaction.

ARTICLE THIRTEEN

The Corporation shall have the authority to purchase, directly or indirectly, its own shares to the extent of the aggregate of the unrestricted capital surplus available therefor and unrestricted reduction surplus available therefor, without submitting such purchase to a vote of the shareholders of the Corporation.

ARTICLE FOURTEEN

Any action required by the Texas Business Corporation Act to be taken at any annual or special meeting of Shareholders, or any action which may be taken at any annual or special meeting of Shareholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take such action at a meeting at which the holders of all shares entitled to vote on the action were present and voted.

IN WITNESS WHEREOF, I have hereunto set my hand on August 20, 2002.

/s/ Steven B. Holmes

STEVEN B. HOLMES,

INCORPORATOR

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EX-3.6

Exhibit 3.6

BYLAWS

OF

TMEI Operating, Inc.

a Texas corporation

(the “Corporation”)

(Amended and Restated as of December 7, 2005 )

BYLAWS

OF

TMEI OPERATING, INC.

Amended and Restated as of December 7, 2005

ARTICLE I.

OFFICES

Section 1.1 Registered Office. The registered office of the Corporation within the State of Texas shall be located at either (a) the principal place of business of the Corporation in the State of Texas or (b) the office of the corporation or individual acting as the Corporation’s registered agent in Texas.

Section 1.2 Additional Offices. The Corporation may, in addition to its registered office in the State of Texas, have such other offices and places of business, both within and outside the State of Texas, as the Board of Directors of the Corporation (the “Board”) may from time to time determine or as the business and affairs of the Corporation may require.

ARTICLE II.

SHAREHOLDERS MEETINGS

Section 2.1 Annual Meetings. Unless directors are elected by written consent in lieu of an annual meeting as permitted by applicable law or an annual meeting is otherwise not required by applicable law, an annual meeting of shareholders shall be held at such place and time and on such date as shall be determined by the Board and stated in the notice of the meeting, provided that the Board in its sole discretion may determine, and such notice shall state, that the meeting shall not be held at any place, but shall instead be held solely by means of remote communication pursuant to Section 9.5(a). At each annual meeting, the shareholders shall elect directors of the Corporation and transact such other business as may properly be brought before the meeting.

Section 2.2 Special Meetings. Except as otherwise required by applicable law or provided in the Corporation’s Articles of Incorporation, as the same may be amended or restated from time to time (the “Articles of Incorporation”), special meetings of shareholders, for any purpose or purposes, may be called only by (a) the Chairman of the Board or President of the Corporation, (b) the Board, or (c) holders of shares of the Corporation representing at least 10 percent of the voting power of the outstanding shares entitled to vote at the proposed special meeting. Special meetings called by the Chairman of the Board, President or the Board shall be held at such place and time and on such date as shall be determined by the Board and stated in the notice of the meeting, provided that the Board in its discretion may determine, and such notice shall state, that the meeting shall not be held at any place, but shall instead be held solely by means of remote communication pursuant to Section 9.5(a). Special meetings called by shareholders shall be held at the Corporation’s principal place of business or such other place determined by the Board and at such time and on such date as shall be determined by such shareholders (or, in the absence of such determination, the Board) and stated in the notice of the meeting.

Section 2.3 Notices. Notice of each shareholders meeting stating the place, day and hour of the meeting and the means of any remote communications by which shareholders may be considered present and may vote at the meeting, shall be given in the manner permitted by Section 9.3 to each shareholder entitled to vote thereat by or at the direction of the President, Secretary or the officer or person or persons calling the meeting not less than 10 nor more than 60 days before the date of the meeting. If the notice is for a shareholders meeting other than an annual meeting, it shall in addition state the purpose or purposes for which the meeting is called, and the business transacted at such meeting shall be limited to the matters so stated in the notice of meeting.

Section 2.4 Quorum. Except as otherwise provided by applicable law or the Articles of Incorporation, the presence, in person or by proxy, at a shareholders meeting of the holders of shares of the Corporation representing a majority of the voting power of all outstanding shares of the Corporation entitled to vote at such meeting shall constitute a quorum for the transaction of business at such meeting. If a quorum shall not be present at any meeting of the shareholders, the shareholders represented in person or by proxy at the meeting may adjourn the meeting until such time and to such place, as may be determined by a vote of holders of a majority of the voting power of the shares represented in person or by proxy at the meeting and entitled to vote thereat, until a quorum is present. Unless the determination of shareholders entitled to vote at such meeting has been made through the closing of the share transfer records and the stated period of closing has expired, notice need not be given of any such adjourned meeting if the date, time, place, if any, thereof, and the means of remote communication, if any, by which shareholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At any such adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted at the meeting as originally noticed. The shareholders present at a duly convened meeting may conduct such business as may be properly brought before the meeting until it is adjourned, and the subsequent withdrawal from the meeting of any shareholder or the refusal of any shareholder represented in person or by proxy to vote shall not affect the presence of a quorum at the meeting. Shares of its own capital stock owned by the Corporation or by another domestic or foreign corporation or entity, if a majority of the voting stock or voting interest of the other corporation or other entity is owned or controlled by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any such other corporation or other entity to vote shares held or controlled by it in a fiduciary capacity or with respect to which it otherwise exercises voting power in a fiduciary capacity.

Section 2.5 Voting of Shares.

(a) Voting Lists. The Secretary shall prepare, or shall cause the officer or agent who has charge of the share transfer records of the Corporation to prepare, at least 10 days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order and showing the address and number of shares held by each. Such list shall be open to the examination of any shareholder,

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during usual business hours for a period of at least 10 days prior to such meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) at the principal place of business of the Corporation. Nothing contained in this Section 2.5(a) shall require the Corporation to include any electronic contact information on the list. In the event that the Corporation determines to make the list available on an electronic network, the Corporation shall take reasonable steps to ensure that the information is available only to shareholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. If a meeting of shareholders is to be held by means of remote communication as permitted by Section 9.5(a), the list shall be open to the examination of any shareholder for the duration of the meeting on a reasonably accessible electronic network, and the information required to access the list shall be provided to the shareholders with the notice of meeting. The original share transfer records shall be prima-facie evidence as to who are the shareholders entitled to examine the list required by this Section 2.5(a) or such share transfer records or to vote at any meeting of shareholders.

(b) Manner of Voting. At any shareholders meeting, any shareholder entitled to vote may vote in person or by proxy executed in writing by the shareholder. If authorized by the Board, the voting by shareholders at any meeting conducted by remote communication may be effected by a ballot submitted by electronic transmission (as defined in Section 9.3). Any electronic transmission must contain or be accompanied by information from which it can be determined that the transmission was authorized by the shareholder. The Board, in its discretion, or the chairman of the meeting of shareholders, in such person’s discretion, may require that any votes cast at such meeting shall be cast by written ballot.

(c) Proxies. Each shareholder entitled to vote at a meeting of shareholders may vote by proxy executed in writing by the shareholder, but no such proxy shall be voted or acted upon after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. An electronic transmission (as defined in Section 9.3), by the shareholder, or a photographic, photostatic, facsimile, or similar reproduction of a writing executed by the shareholder, shall be treated as an execution in writing for purposes of this Section 2.5(c). Any electronic transmission must contain or be accompanied by information from which it can be determined that the transmission was authorized by the shareholder. Proxies need not be filed with the Secretary of the Corporation until the meeting is called to order, but shall be filed with the Secretary before being voted. Unless and until voted, every proxy will be revocable, except in those cases where an irrevocable proxy permitted by statute has been given.

(d) Required Vote. Subject to the rights of the holders of one or more series of preferred shares of the Corporation (“Preferred Shares”), voting separately by class or series, to elect directors pursuant to the terms of one or more series of Preferred Shares, the election of directors shall be determined by a plurality of the votes cast by the shareholders entitled to vote thereon and represented in person or by proxy at the meeting at which a quorum is present. All other matters shall be determined by the affirmative vote of a majority of the votes that were voted for or against the matter cast by the shareholders entitled to vote thereon and represented in person or by proxy at the meeting at which a quorum is present, unless the matter is one upon which, by applicable law, the Articles of Incorporation or these Bylaws a different vote is required, in which case such provision shall govern and control the decision of such matter.

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Section 2.6 Adjournments. Any lawfully convened meeting of shareholders, annual or special, may be adjourned by the chairman of the meeting or by shareholders present and entitled to vote thereat, by a majority in voting power thereof, from time to time, to reconvene at the same or some other place. Unless the determination of shareholders entitled to vote at any meeting of shareholders has been made through the closing of the share transfer records and the stated period of closing has expired, notice need not be given of any adjourned meeting if the date, time, place, if any, thereof, and the means of remote communication, if any, by which shareholders may be deemed to be present and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the shareholders may transact any business which might have been transacted at the meeting as originally noticed.

Section 2.7 Conduct of Meetings. The chairman of each annual and special meeting of shareholders shall be the Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, the President (if he or she shall be a director) or, in the absence (or inability or refusal to act) of the President or if the President is not a director, such other person as shall be appointed by the Board or, in the absence of such appointment, a chairman chosen at the meeting. The date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at a meeting shall be announced at the meeting by the chairman of the meeting. The Board may adopt such rules and regulations for the conduct of the meeting of shareholders as it shall deem appropriate. Except to the extent inconsistent with these Bylaws or such rules and regulations as adopted by the Board, the chairman of any meeting of shareholders shall have the right and authority to convene and to adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Unless and to the extent determined by the Board or the chairman of the meeting, meetings of shareholders shall not be required to be held in accordance with the rules of parliamentary procedure. The secretary of each annual and special meeting of shareholders shall be the Secretary or, in the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary so appointed to act by the chairman of the meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

Section 2.8 Action by Consent of Shareholders in Lieu of Meeting. Any action required by law to be taken at a meeting of the shareholders, or any action which may be taken at a meeting of the shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum voting power that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation to its registered office in the State of Texas, the Corporation’s principal place of business, or the Secretary. Every written consent signed by the holders of fewer than all the shares entitled to vote with respect to the action that is the subject of the consent shall bear the date of signature of each shareholder who signs the consent. No written consent signed by the holders of fewer than all the shares

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entitled to vote with respect to the action that is the subject of the consent shall be effective to take the action that is the subject of the consent unless, within 60 days after the date of the earliest dated consent delivered to the Corporation, a written consent or consents signed by the holder or holders having not less than the minimum number of votes that would be necessary to take the action that is the subject of the consent are delivered to the Corporation by delivery to the Corporation’s registered office in the State of Texas, the Corporation’s principal place of business or the Secretary or, to the extent the Corporation has such, the Corporation’s registered agent in the State of Texas or the Corporation’s transfer agent, registrar or exchange agent. Delivery shall be by hand or certified or registered mail, return receipt requested. Any delivery to the Corporation’s principal place of business pursuant to this Section 2.8 shall be addressed to the President or Chief Executive Officer if there be one. An electronic transmission consenting to the action to be taken and transmitted by a shareholder shall be considered to be written, signed and dated for purposes hereof if such electronic transmission sets forth or is delivered with information from which the Corporation can determine that such transmission was transmitted by a shareholder and the date on which such shareholder transmitted such transmission. The date on which such electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and delivered to the Corporation by delivery to the Corporation’s registered office in the State of Texas, the Corporation’s principal place of business, or the Secretary. Notwithstanding the limitations on delivery in this Section 2.8, consents given by electronic transmission may be otherwise delivered to the Corporation’s principal place of business or to the Secretary if, to the extent and in the manner provided by resolution of the Board. Any photographic, photostatic, facsimile or similarly reliable reproduction of a consent in writing signed by a shareholder may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used if the reproduction is a complete reproduction of the entire original writing. Prompt notice of the taking of any action by shareholders without a meeting by less than unanimous written consent shall be given to those shareholders who did not consent in writing to the action.

ARTICLE III.

DIRECTORS

Section 3.1 Powers. The business and affairs of the Corporation shall be managed under the direction of the Board, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws required to be exercised or done by the shareholders. Directors need not be shareholders or residents of the State of Texas.

Section 3.2 Number; Term. The number of directors of the Corporation initially shall be one. Thereafter the number of directors, other than those who may be elected by the holders of one or more series of Preferred Shares voting separately by class or series, may be determined from time to time by the Board but no decrease in such number shall have the effect of shortening the term of any incumbent director. Except as otherwise provided in the Articles of Incorporation, the directors shall be elected at the annual meeting of shareholders to hold office until the next succeeding annual meeting of shareholders. Each director so elected shall hold office for the term for which such director is elected and until his or her successor shall have been elected and qualified, subject to such director’s earlier death, resignation, retirement, disqualification or removal.

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Section 3.3 Newly Created Directorships and Vacancies. Except as otherwise provided in the Articles of Incorporation, newly created directorships resulting from an increase in the number of directors may be filled (a) by election at an annual or special meeting of shareholders called for that purpose or (b) by the Board; provided, that, with respect to any directorship so to be filled by the Board (i) such directorship shall be for a term of office continuing only until the next election of one or more directors by the shareholders, and (ii) the Board may not fill more than two such directorships during the period between any two successive annual meetings of shareholders. Except as otherwise provided in the Articles of Incorporation, any vacancies occurring in the Board resulting from death, resignation, retirement, disqualification, removal or other cause (other than an increase in the number of directors) may be filled (a) by election by shareholders at an annual or special meeting called for that purpose or (b) by the affirmative vote of a majority of the remaining directors though less than a quorum, and a director so chosen or elected shall hold office for the unexpired term of the director’s predecessor in office and until his or her successor is elected and qualified, subject, however, to such director’s earlier death, resignation, retirement, disqualification or removal. Notwithstanding the foregoing, except as otherwise provided in the Articles of Incorporation, whenever the holders of any class or series of shares or group of classes or series of shares are entitled to elect one or more directors by the provisions of the Articles of Incorporation, any vacancies in such directorships and any newly created directorships of such class, series or group to be filled by reason of an increase in the number of such directors may be filled only by (i) the affirmative vote of (A) a majority of the directors elected by such class, series or group, then in office, or (B) the sole remaining director so elected, or (ii) the vote of the holders of the outstanding shares of such class, series or group.

Section 3.4 Removal. Except as otherwise provided in the Articles of Incorporation, at any meeting of shareholders called expressly for that purpose, any director or the entire Board may be removed, with or without cause, by a vote of the holders of a majority of the voting power of the shares then entitled to vote at an election of the director or directors who are proposed to be removed.

Section 3.5 Compensation. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, the Board shall have the authority to fix the compensation of directors. The directors may be reimbursed their expenses, if any, of attendance at each meeting of the Board and may be paid either a fixed sum for attendance at each meeting of the Board or other compensation as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of committees of the Board may be allowed like compensation and reimbursement of expenses for service on the committee.

ARTICLE IV.

BOARD MEETINGS

Section 4.1 Annual Meetings. The Board shall meet as soon as practicable after the adjournment of each annual shareholders meeting at the place of the annual

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shareholders meeting unless the Board shall fix another time and place and give notice thereof in the manner required herein for special meetings of the Board. No notice to the directors shall be necessary to legally convene this meeting, except as provided in this Section 4.1.

Section 4.2 Regular Meetings. Regular meetings of the Board may be held without notice at such times, dates and places as shall from time to time be determined by the Board.

Section 4.3 Special Meetings. Special meetings of the Board (a) may be called by the Chairman of the Board or President and (b) shall be called by the Chairman of the Board, President or Secretary on the written request of a majority of directors then in office, or the sole director, as the case may be, and shall be held at such time, date and place as may be determined by the person calling the meeting or, if called upon the request of directors or the sole director, as specified in such written request. Notice of each special meeting of the Board shall be given, as provided in Section 9.3, to each director (i) at least 24 hours before the meeting if such notice is oral notice given personally or by telephone or written notice given by hand delivery or by means of a form of electronic transmission and delivery; (ii) at least two days before the meeting if such notice is sent by a nationally recognized overnight delivery service; and (iii) at least five days before the meeting if such notice is sent through the United States mail. If the Secretary shall fail or refuse to give such notice, then the notice may be given by the officer who called the meeting or the directors who requested the meeting. Any and all business that may be transacted at a regular meeting of the Board may be transacted at a special meeting. Except as may be otherwise expressly provided by applicable law, the Articles of Incorporation, or these Bylaws, neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice or waiver of notice of such meeting. A special meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 9.4.

Section 4.4 Quorum; Required Vote. A majority of the Board, but in any event not less than one third of the Whole Board, shall constitute a quorum for the transaction of business at any meeting of the Board, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board, unless a different number or portion is required by law, the Articles of Incorporation or these Bylaws. If a quorum shall not be present at any meeting, a majority of the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. “Whole Board” shall mean the total number of directors that the Corporation would have if there were no vacancies.

Section 4.5 Consent In Lieu of Meeting. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board or any committee thereof may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board or committee, as the case may be. For purposes of this Section 4.5, an electronic transmission by a director consenting to an action to be taken and transmitted by the director is considered written and signed if the transmission sets forth or is delivered with information from which the Corporation can determine that the transmission was transmitted by the director and the date on which the director transmitted the transmission. Such signed consent shall have the same force and effect as a unanimous vote at a meeting, and shall be filed with the minutes of proceedings of the Board or committee.

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Section 4.6 Organization. The chairman of each meeting of the Board shall be the Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, the President (if he or she shall be a director) or in the absence (or inability or refusal to act) of the President or if the President is not a director, a chairman elected from the directors present. The Secretary shall act as secretary of all meetings of the Board. In the absence (or inability or refusal to act) of the Secretary, an Assistant Secretary shall perform the duties of the Secretary at such meeting. In the absence (or inability or refusal to act) of the Secretary and all Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting.

ARTICLE V.

COMMITTEES OF DIRECTORS

Section 5.1 Establishment. The Board may by resolution establish, name, fill vacancies in, change the membership of, or dissolve one or more committees, each committee to consist of one or more of the directors. Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

Section 5.2 Available Powers. Any committee established pursuant to Section 5.1 hereof, to the extent provided by resolution of the Board or in the Articles of Incorporation or the Bylaws, shall have and may exercise all of the powers and authority of the Board, subject to the limitations of applicable law.

Section 5.3 Alternate Members. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee.

Section 5.4 Procedures. Unless the Board otherwise provides, the time, date, place, if any, and notice of meetings of a committee shall be determined by such committee. At meetings of a committee, a majority of the number of members (but not including any alternate member, unless such alternate member has replaced any absent or disqualified member at the time of, or in connection with, such meeting) shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by applicable law, the Articles of Incorporation, these Bylaws or the Board. If a quorum is not present at a meeting of a committee, the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. Unless the Board otherwise provides and except as provided in these Bylaws, each committee designated by the Board may make, alter, amend and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board is authorized to conduct its business pursuant to Article III and Article IV of these Bylaws.

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ARTICLE VI.

OFFICERS

Section 6.1 Officers. The officers of the Corporation elected by the Board shall be a Chairman of the Board, a President, a Treasurer, a Secretary and such other officers (including without limitation a Chief Financial Officer, Vice Presidents, Assistant Secretaries and Assistant Treasurers) as the Board from time to time may determine. Officers elected by the Board shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this Article VI. Such officers shall also have such powers and duties as from time to time may be conferred by the Board. The Chairman of the Board or President may also appoint such other officers (including without limitation one or more Vice Presidents and Controllers) as may be necessary or desirable for the conduct of the business of the Corporation. Such other officers shall have such powers and duties and shall hold their offices for such terms as may be provided in these Bylaws or as may be prescribed by the Board or, if such officer has been appointed by the Chairman of the Board or President, as may be prescribed by the appointing officer.

(a) Chairman of the Board. The Chairman of the Board shall preside when present at all meetings of the shareholders and the Board. The Chairman of the Board shall advise and counsel the President and other officers and shall exercise such powers and perform such duties as shall be assigned to or required of the Chairman of the Board from time to time by the Board or these Bylaws. The Chairman of the Board must be a director of the Corporation.

(b) President. The President shall be the chief executive officer of the Corporation, shall have general supervision of the affairs of the Corporation and general control of all of its business subject to the ultimate authority of the Board, and shall be responsible for the execution of the policies of the Board. In the absence (or inability or refusal to act) of the Chairman of the Board, the President (if he or she shall be a director) shall preside when present at all meetings of the shareholders and the Board.

(c) Vice Presidents. In the absence (or inability or refusal to act) of the President, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board) shall perform the duties and have the powers of the President. Any one or more of the Vice Presidents may be given an additional designation of rank or function.

(d) Secretary.

(i) The Secretary shall attend all meetings of the shareholders, the Board and (as required) committees of the Board and shall record the proceedings of such meetings in books to be kept for that purpose. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board and shall perform such other duties as may be prescribed by the Board, the Chairman of the Board or the President. The Secretary shall have custody of the corporate seal of the Corporation and the Secretary, or any Assistant Secretary, shall have authority to affix the same to any instrument requiring it, and when so affixed, it may be attested by his or her signature or by the signature of such Assistant Secretary. The Board may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing thereof by his or her signature.

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(ii) The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation’s transfer agent or registrar, if one has been appointed, share transfer records, showing a record of the original issuance of shares and each transfer of those shares that have been presented to the Corporation for registration of transfer. Such records shall contain the names of past and current shareholders and their addresses, the number and classes of shares held by each and, with respect to certificated shares, the number and date of certificates issued for the same and the number and date of certificates cancelled.

(e) Assistant Secretaries. The Assistant Secretary or, if there be more than one, the Assistant Secretaries in the order determined by the Board shall, in the absence (or inability or refusal to act) of the Secretary, perform the duties and have the powers of the Secretary.

(f) Treasurer. The Treasurer shall perform all duties commonly incident to that office (including, without limitation, the care and custody of the funds and securities of the Corporation which from time to time may come into the Treasurer’s hands and the deposit of the funds of the Corporation in such banks or trust companies as the Board or the President may authorize).

(g) Assistant Treasurers. The Assistant Treasurer or, if there shall be more than one, the Assistant Treasurers in the order determined by the Board shall, in the absence (or inability or refusal to act) of the Treasurer, perform the duties and exercise the powers of the Treasurer.

Section 6.2 Term of Office; Vacancies. The elected officers of the Corporation shall be elected annually by the Board at its first meeting held after each annual meeting of shareholders. All officers elected by the Board shall hold office until the next annual meeting of the Board and until their successors are duly elected and qualified or until their earlier death, resignation, retirement, disqualification, or removal from office. Any officer may be removed, with or without cause, at any time by the Board but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights. Any officer appointed by the Chairman of the Board or President may also be removed, with or without cause, by the Chairman of the Board or President, as the case may be, unless the Board otherwise provides. Any vacancy occurring in any elected office of the Corporation may be filled by the Board. Any vacancy occurring in any office appointed by the Chairman of the Board or President may be filled by the Chairman of the Board or President, as the case may be, unless the Board then determines that such office shall thereupon be elected by the Board, in which case the Board shall elect such officer.

Section 6.3 Other Officers. The Board may delegate the power to appoint such other officers and agents, and may also remove such officers and agents or delegate the power to remove same, as it shall from time to time deem necessary or desirable.

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Section 6.4 Multiple Officeholders; Shareholder and Director Officers. Any two or more offices may be held by the same person, unless the Articles of Incorporation or these Bylaws otherwise provide. Officers need not be shareholders or residents of the State of Texas.

ARTICLE VII.

SHARE CERTIFICATES

Section 7.1 Entitlement to Certificates. The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution that some or all of any or all classes and series of its shares shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of shares represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed in accordance with Section 7.3 representing the number of shares registered in certificate form. Each certificate representing shares shall state upon the face thereof: (a) that the Corporation is organized under the laws of the State of Texas; (b) the name of the person to whom issued; (c) the number and class of shares and the designation of the series, if any, which such certificate represents; and (d) the par value of each share represented by such certificate, or a statement that the shares are without par value.

Section 7.2 Multiple Classes of Shares.

(a) In the event the Corporation is authorized to issue shares of more than one class or series, each certificate representing shares issued by the Corporation (1) shall conspicuously set forth on the face or back of the certificate a full statement of all the designations, preferences, limitations, and relative rights of the shares of each class or series to the extent they have been fixed and determined and the authority of the Board to fix and determine the relative rights and preferences of a subsequent series or (2) shall conspicuously state on the face or back of the certificate that (A) such a statement is set forth in the Articles of Incorporation on file in the office of the Secretary of State of the State of Texas and (B) the Corporation will furnish a copy of such statement to the record holder of the certificate without charge on written request to the Corporation at its principal place of business or registered office. No requirement of this Section 7.2 shall apply to shares represented by a certificate outstanding when such requirement first becomes applicable to such certificates, but such requirement shall apply to all certificates thereafter issued whether in connection with an original issue of shares, a transfer of shares or otherwise.

(b) In the event the Corporation has by its Articles of Incorporation limited or denied the preemptive right of shareholders to acquire unissued or treasury shares of the Corporation, each certificate representing shares issued by the Corporation (1) shall conspicuously set forth on the face or back of the certificate a full statement of the limitation or denial of preemptive rights contained in the Articles of Incorporation or (2) shall conspicuously state on the face or back of the certificate that (A) such a statement is set forth in the Articles of Incorporation on file in the office of the Secretary of State of the State of Texas and (B) the Corporation will furnish a copy of such statement to the record holder of the certificate without charge on request to the Corporation at its principal place of business or registered office.

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(c) In the event any restriction on the transfer, or registration of the transfer, of shares of the Corporation shall be imposed or agreed to by the Corporation, as permitted by law, each certificate representing shares so restricted (1) shall conspicuously set forth a full or summary statement of the restriction on the face of the certificate, or (2) shall set forth such statement on the back of the certificate and conspicuously refer to the same on the face of the certificate, or (3) shall conspicuously state on the face or back of the certificate that such a restriction exists pursuant to a specified document and (A) that the Corporation will furnish to the record holder of the certificate without charge upon written request to the Corporation at its principal place of business or registered office a copy of the specified document, or (B) if such document is one required or permitted to be and has been filed under the TBCA with the Secretary of State of Texas, that such specified document is on file in the office of the Secretary of State of Texas and contains a full statement of such restriction.

Section 7.3 Signatures. Each certificate representing shares of the Corporation shall be signed by or in the name of the Corporation by the Chairman of the Board, the President or a Vice President of the Corporation. Any signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar on the date of issue.

Section 7.4 Issuance and Payment. The Board may authorize shares to be issued for consideration consisting of any tangible or intangible benefit to the Corporation or other property of any kind or nature, including, cash, promissory notes, services performed, contracts for services to be performed, other securities of the Corporation, or securities of any other corporation, domestic or foreign, or other entity. Shares may not be issued until the full amount of the consideration has been paid or delivered as required in connection with the authorization of the shares. When such consideration shall have been paid or delivered the shares will be deemed to have been issued and the subscriber or shareholder entitled to receive such issue will be a shareholder with respect to such shares, and the shares will be considered fully paid and non-assessable.

Section 7.5 Lost Certificates. The Corporation may issue a new certificate of shares or uncertificated shares in place of any certificate theretofore issued by it alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of shares to be lost, stolen or destroyed. When authorizing such issue, the Corporation may require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

Section 7.6 Transfer of Shares. Shares of the Corporation shall be transferable in the manner prescribed by applicable law and in these Bylaws. Transfers of shares shall be made on the share transfer records of the Corporation only by the person named as the holder thereof on the share transfer records of the Corporation or by such person’s duly constituted attorney or legal representative and in the case of shares represented by a certificate, upon the surrender of the certificate therefor, which shall be canceled before a new certificate

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shall be issued. No transfer of shares shall be valid as against the Corporation for any purpose until it shall have been entered in the share transfer records of the Corporation by an entry showing from and to whom transferred.

Section 7.7 Registered Shareholders. Except as otherwise required by applicable law, the Corporation shall be entitled to regard the person in whose name any shares of the Corporation are registered in the share transfer records of the Corporation at any particular time as the owner of those shares at that time for purposes of voting those shares, receiving distributions thereon or notices in respect thereof, transferring those shares, entering into agreements with respect to those shares or giving proxies with respect to those shares, and neither the Corporation nor any of its officers, directors, employees or agents shall be liable for regarding that person as the owner of those shares at that time for those purposes.

ARTICLE VIII.

INDEMNIFICATION

Section 8.1 Right to Indemnification. Each person who was or is a party or is threatened to be made a party to, or testifies or otherwise participates in, any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding, or any inquiry or investigation that could lead to such an action, suit, or proceeding (any of the foregoing hereinafter called a “proceeding”), whether or not by or in the right of the Corporation, because such person is or was a director, officer, employee or agent of the Corporation or, while a director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, proprietorship, trust, employee benefit plan, other enterprise or other entity (hereinafter a “Covered Person”) shall be indemnified by the Corporation to the fullest extent authorized or permitted by applicable law, as the same exists or may hereafter be changed, against all judgments, penalties (including excise and similar taxes), fines, settlements and reasonable expenses (including attorneys’ fees and court costs) actually incurred by such person in connection with such proceeding and such right to indemnification shall continue as to a person who has ceased to be a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall indemnify a Covered Person in connection with a proceeding (or part thereof) initiated by such Covered Person only if such proceeding (or part thereof) was authorized by the Board. It is expressly acknowledged that the indemnification provided in this Article VIII could involve indemnification for negligence or under theories of strict liability.

Section 8.2 Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 8.1, a Covered Person shall also have the right to be paid or reimbursed by the Corporation the reasonable expenses (including, without limitation, court costs and attorneys’ fees) incurred in defending, testifying or otherwise participating in any such proceeding, in advance of the final disposition of the proceeding (hereinafter an “advancement of expenses”) and without any determination as to the person’s ultimate entitlement to indemnification; provided, however, that if the Texas Business Corporation Act (the “TBCA”)

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requires, an advancement of expenses incurred by a Covered Person in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of a written affirmation by such person of such person’s good faith belief that he or she has met the standard of conduct necessary for indemnification under the TBCA and a written undertaking (hereinafter an “undertaking”), by or on behalf of such person, to repay all amounts so advanced if it shall be ultimately determined by final judicial decision from which there is no further right to appeal (hereinafter, a “final adjudication”) that the Covered Person has not met that standard or that indemnification of the Covered Person against expenses incurred by such person in connection with that proceeding is prohibited by the TBCA.

Section 8.3 Right of Indemnitee to Bring Suit. If a claim under Section 8.1 or Section 8.2 is not paid in full by the Corporation within 60 days after a written claim therefor has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the Covered Person may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Covered Person shall also be entitled to be paid the expense of prosecuting or defending such suit. In (a) any suit brought by the Covered Person to enforce a right to indemnification hereunder (but not in a suit brought by a Covered Person to enforce a right to an advancement of expenses) it shall be a defense that, and (b) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Covered Person has not met any applicable standard for indemnification set forth in the TBCA. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, special legal counsel, or its shareholders) to have made a determination prior to the commencement of such suit that indemnification of the Covered Person is proper in the circumstances because the Covered Person has met the applicable standard of conduct set forth in the TBCA, nor an actual determination by the Corporation (including a determination by its directors who are not parties to such action, a committee of such directors, special legal counsel, or its shareholders) that the Covered Person has not met such applicable standard of conduct, shall create a presumption that the Covered Person has not met the applicable standard of conduct or, in the case of such a suit brought by the Covered Person, shall be a defense to such suit. In any suit brought by the Covered Person to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Covered Person is not entitled to be indemnified, or to such advancement of expenses, under this Article VIII or otherwise shall be on the Corporation.

Section 8.4 Indemnification of Other Persons. This Article VIII shall not limit the right of the Corporation to the extent and in the manner authorized or permitted by law to indemnify and to advance expenses to persons other than Covered Persons. Without limiting the foregoing, the Corporation may, to the extent authorized from time to time by the Board, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation and to any person who is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, proprietorship, trust,

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employee benefit plan, or other enterprise against any liability asserted against such person and incurred by such person in such a capacity or arising out of his or her status as such a person to the same extent that it may indemnify and advance expenses to Covered Persons under this Article VIII and to any such further extent as may be authorized or permitted by law.

Section 8.5 Non-Exclusivity of Rights. The rights provided to a Covered Person pursuant to this Article VIII shall not be exclusive of any other right which any Covered Person may have or hereafter acquire under any law (common or statutory), provision of the Articles of Incorporation or these Bylaws, agreement, vote of shareholders or disinterested directors, or otherwise.

Section 8.6 Insurance and Other Arrangements. The Corporation may, to the extent permitted by law, purchase and maintain insurance, create a trust fund, establish any form of self-insurance, secure its indemnity obligation by grant of a security interest or other lien on assets of the Corporation, establish a letter of credit guaranty or security arrangement, or establish and maintain any other arrangement (any of the foregoing hereinafter called an “arrangement”) on behalf of any person who is or was serving as a director, officer, employee, or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, proprietorship, trust, employee benefit plan, other enterprise or other entity against any liability asserted against such person and incurred by such person in such a capacity or arising out of his or her status as such a person, whether or not the Corporation would have the power to indemnify such person against such liability. If the insurance or other arrangement is with a person or entity that is not regularly engaged in the business of providing insurance coverage, the insurance or arrangement may provide for payment of a liability with respect to which the Company would not have the power to indemnify the person only if including coverage for the additional liability has been approved by the shareholders.

Section 8.7 Shareholder Notification. To the extent required by law, any indemnification of or advancement of expenses to a director or former director or to any person who, while a director of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, proprietorship, trust, employee benefit plan, other enterprise or other entity, in accordance with this Article VIII shall be reported in writing to the shareholders with or before the notice or waiver of notice of the next shareholders’ meeting or with or before the next submission to shareholders of a consent to action without a meeting and, in any case, within the 12-month period immediately following the date of the indemnification or advance.

Section 8.8 Amendments. Any repeal or amendment of this Article VIII by the Board or the shareholders of the Corporation or by changes in applicable law, or the adoption of any other provision of these Bylaws inconsistent with this Article VIII, will, to the extent permitted by applicable law, be prospective only (except to the extent such amendment or change in applicable law permits the Corporation to provide broader indemnification rights on a retroactive basis than permitted prior thereto), and will not in any way diminish or adversely affect any right or protection existing hereunder in respect of any act or omission occurring prior to such repeal or amendment or adoption of such inconsistent provision.

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Section 8.9 Certain Definitions. For purposes of this Article VIII, (a) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan, (b) the Corporation shall be deemed to have requested a director or officer of the Corporation to serve as a trustee, employee, agent or similar functionary of an employee benefit plan whenever the performance by such person of his or her duties to the Corporation also imposes duties on or otherwise involves services by such person to the plan or participants or beneficiaries of the plan, and (c) any action taken or omitted by a such a person with respect to an employee benefit plan in the performance of such person’s duties for a purpose reasonably believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is “not opposed to the best interests” of the Corporation for purposes of Art. 2.02-1 of the TBCA.

Section 8.10 Contract Rights. The rights provided to Covered Persons pursuant to this Article VIII shall be contract rights and such rights shall continue as to a Covered Person who has ceased to be a director, officer, agent or employee and shall inure to the benefit of the Covered Person’s heirs, executors and administrators.

Section 8.11 Severability. If any provision or provisions of this Article VIII shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article VIII shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article VIII (including, without limitation, each such portion of this Article VIII containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

ARTICLE IX.

MISCELLANEOUS

Section 9.1 Place of Meetings. If the place of any meeting of shareholders, the Board or committee of the Board for which notice is required under these Bylaws is not designated in the notice of such meeting, such meeting shall be held at the principal business office of the Corporation; provided, however, if the Board has, in its sole discretion, determined that a meeting shall not be held at any place, but instead shall be held by means of remote communication pursuant to Section 9.5 hereof, then such meeting shall not be held at any place.

Section 9.2 Closing Share Transfer Records and Fixing Record Dates.

(a) In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, or in order to make a determination of shareholders for any other proper purpose (other than determining shareholders entitled to consent to action by shareholders proposed to be taken without a meeting of shareholders), the Board may (i) fix, in advance, a record date for any such determination of shareholders, which

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will not be more than 60 days, and in the case of a meeting of shareholders not less than 10 days, prior to the date on which the particular action requiring such determination of shareholders is to be taken or (ii) close the share transfer records for a stated period of not more than 60 days, which period in the case of determining shareholders entitled to notice of or to vote at a meeting of shareholders shall include at least the 10 days immediately preceding the meeting. In the absence of any action by the Board, the date on which a notice of meeting is mailed, or the date the Board adopts the resolution declaring such distribution or share dividend, as the case may be, will be the record date. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section 9.2, such determination will be valid for any adjournment of said meeting except where such determination has been made through the closing of share transfer books and the stated period of closing has expired.

(b) In order that the Corporation may determine the shareholders entitled to consent to corporate action in writing without a meeting, the Board may (unless a record date shall have previously been fixed or determined pursuant to this Section 9.2(b)) fix a record date, which record date shall not precede, and shall not be more than 10 days after, the date upon which the resolution fixing the record date is adopted by the Board. If no record date has been fixed by the Board, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board is otherwise required, will be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation as and in the manner provided by Section 2.8. If no record date has been fixed by the Board and prior action by the Board is required, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting will be at the close of business on the day on which the Board adopts the resolution taking such prior action.

Section 9.3 Means of Giving Notice.

(a) Notice to Directors. Whenever under applicable law, the Articles of Incorporation or these Bylaws notice is required to be given to any director, such notice shall be given either (i) in writing and sent by hand delivery, through the United States mail, or by a nationally recognized overnight delivery service for next day delivery, (ii) by means of a form of electronic transmission consented to by the director, to the extent permitted by, and subject to the conditions set forth in, Article 2.37C of the TBCA, or (iii) by oral notice given personally or by telephone. A notice to a director shall be deemed given as follows: (i) if given by hand delivery, orally, or by telephone, when actually received by the director, (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation, (iii) if sent for next day delivery by a nationally recognized overnight delivery service, when deposited with such service, with fees thereon prepaid, addressed to the director at the director’s address appearing on the records of the Corporation, (iv) if sent by facsimile transmission, when transmitted to a facsimile number provided by the director for the purpose of receiving notice, (v) if sent by electronic mail, when transmitted to an electronic mail address provided by the director for the purpose of receiving notice, (vi) if by posting on an electronic network, when posted on the electronic network and a message is sent to the director at the address provided by the director for the purpose of alerting the director of a posting or (vii) when communicated to the director by any other form of electronic transmission consented to by the director. A director

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may revoke the director’s consent to notices being given by means of electronic transmission by delivering written notice of such revocation to the Corporation. A director’s consent to notices being given to the director by means of electronic transmission will be deemed revoked if the Corporation is unable to deliver by electronic transmission two consecutive notices and the Secretary or other person responsible for delivering the notice on behalf of the Corporation knows that the delivery of these two electronic transmissions was unsuccessful. The inadvertent failure to treat the unsuccessful transmissions as a revocation of the director’s consent does not invalidate a meeting or other action. An affidavit of the Secretary or such other agent of the Corporation that notice has been given by electronic transmission is, in the absence of fraud, prima facie evidence that notice was given.

(b) Notice to Shareholders. Whenever under applicable law, the Articles of Incorporation or these Bylaws notice is required to be given to any shareholder, such notice may be given (i) in writing and either delivered personally by hand or sent through the United States mail, or (ii) by means of a form of electronic transmission consented to by the shareholder, to the extent permitted by, and subject to the conditions set forth in Article 2.25-1 of the TBCA. A notice to a shareholder shall be deemed given as follows: (i) if given personally by hand delivery, when actually received by the shareholder, (ii) if sent through the United States mail, when deposited in the United States mail, with postage and fees thereon prepaid, addressed to the shareholder at the shareholder’s address appearing on the share transfer records of the Corporation, and (iii) if given by a form of electronic transmission consented to by the shareholder to whom the notice is given and otherwise meeting the requirements set forth above, (A) if by facsimile transmission, when transmitted to a facsimile number provided by the shareholder for the purpose of receiving notice, (B) if by electronic mail, when transmitted to an electronic mail address provided by the shareholder for the purpose of receiving notice, (C) if by a posting on an electronic network, when posted on the electronic network and a message is sent to the shareholder at the address provided by the shareholder for the purpose of alerting the shareholder of a posting and (D) when communicated to the shareholder by any other form of electronic transmission consented to by the shareholder. A shareholder may revoke such shareholder’s consent to notices being given to the shareholder by means of electronic transmission by delivering written notice of such revocation to the Corporation. A shareholder’s consent to notices being given by means of electronic transmission will be deemed revoked if the Corporation is unable to deliver by electronic transmission two consecutive notices, and the Secretary, any Assistant Secretary, the transfer agent of the Corporation, or another person responsible for delivering notice on behalf of the Corporation knows that delivery of these two electronic transmissions was unsuccessful. The inadvertent failure to treat the unsuccessful transmissions as a revocation of a shareholder’s consent does not invalidate a meeting or other action.

(c) Electronic Transmission. “Electronic transmission” means a form of communication that: (a) does not directly involve the physical transmission of paper; (b) creates a record that may be retained, retrieved, and reviewed by the recipient; and (c) may be directly reproduced in paper form by the recipient through an automated process.

Section 9.4 Waiver of Notice. Whenever any notice is required to be given under applicable law, the Articles of Incorporation or these Bylaws, a written waiver of such notice signed by the person or persons entitled to said notice, or a waiver by electronic

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transmission by the person entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. The business to be transacted at a regular or special meeting of shareholders, directors or members of a committee of directors or the purpose of a meeting is not required to be specified in a written waiver of notice or a waiver by electronic transmission. All such waivers shall be kept with the books of the Corporation. Attendance at a meeting shall constitute a waiver of notice of such meeting, except where a person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened.

Section 9.5 Meeting Attendance via Remote Communication Equipment.

(a) Shareholder Meetings.

(i) Subject to Sections 2.3 and 9.5(a)(ii), shareholders may participate in and hold meetings of shareholders by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

(ii) If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, shareholders not physically present at a meeting of shareholders may, by means of remote communication:

(A) participate in a meeting of shareholders; and

(B) be deemed present in person and vote at a meeting of shareholders, whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (x) the Corporation shall implement reasonable measures to verify that each person considered present and permitted to vote at the meeting by means of remote communication is a shareholder, (y) the Corporation shall implement reasonable measures to provide such shareholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders, including an opportunity to read or hear the proceedings of a meeting substantially concurrently with the proceedings, and (z) the Corporation maintains a record of any shareholder vote or other action taken at the meeting by means of remote communication.

(b) Board Meetings. Unless otherwise restricted by applicable law, the Articles of Incorporation or these Bylaws, members of the Board or any committee thereof may participate in a meeting of the Board or any committee thereof by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting was not lawfully called or convened.

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Section 9.6 Dividends. The Board may declare, and the Corporation may pay, dividends and distributions (payable in cash, property or shares of the Corporation, or any combination thereof) on the Corporation’s outstanding shares of capital stock, subject to applicable law and the Articles of Incorporation.

Section 9.7 Reserves. The Board may set apart out of the funds of the Corporation available for dividends or distributions a reserve or reserves for any proper purpose or purposes and may increase, decrease or abolish any such reserve.

Section 9.8 Contracts and Negotiable Instruments. Except as otherwise provided by applicable law, the Articles of Incorporation or these Bylaws, any contract, bond, deed, lease, mortgage or other instrument may be executed and delivered in the name and on behalf of the Corporation by such officer or officers or other employee or employees of the Corporation as the Board may from time to time authorize. Such authority may be general or confined to specific instances as the Board may determine. The Chairman of the Board, the President or any Vice President may execute and deliver any contract, bond, deed, lease, mortgage or other instrument in the name and on behalf of the Corporation. Subject to any restrictions imposed by the Board, the Chairman of the Board, President or any Vice President may delegate powers to execute and deliver any contract, bond, deed, lease, mortgage or other instrument in the name and on behalf of the Corporation to other officers or employees of the Corporation under such person’s supervision and authority, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

Section 9.9 Fiscal Year. The fiscal year of the Corporation shall be fixed by the Board.

Section 9.10 Seal. The seal of the Corporation shall be in such form as shall from time to time be adopted by the Board. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.

Section 9.11 Books and Records. The Corporation shall keep books and records of account and minutes of the proceedings of its shareholders, Board, and committees of the Board and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, share transfer records consisting of a record of the original issuance of shares by the Corporation and a record of each transfer of shares that have been presented to the Corporation for registration of transfer.

Section 9.12 Resignation. Any director, committee member or officer may resign by giving notice thereof in writing or by electronic transmission to the Chairman of the Board, the President or the Secretary. The resignation shall take effect at the time specified therein, or at the time of receipt of such notice if no time is specified or the specified time is earlier than the time of such receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

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Section 9.13 Surety Bonds. Such officers, employees and agents of the Corporation (if any) as the Chairman of the Board, President or the Board may direct, from time to time, shall be bonded for the faithful performance of their duties and for the restoration to the Corporation, in case of their death, resignation, retirement, disqualification or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation, in such amounts and by such surety companies as the Chairman of the Board, President or the Board may determine. The premiums on such bonds shall be paid by the Corporation and the bonds so furnished shall be maintained in the custody of the Secretary.

Section 9.14 Securities of Other Corporations. Powers of attorney, proxies, waivers of notice of meeting, consents in writing and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman of the Board, President or any Vice President. Any such officer, may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation or other entity in which the Corporation may own securities, or to consent in writing, in the name of the Corporation as such holder, to any action by such corporation or other entity, and at any such meeting or with respect to any such consent shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed. The Board may from time to time confer like powers upon any other person or persons.

Section 9.15 Amendments. The Board may amend or repeal these Bylaws, or adopt new Bylaws except to the extent (i) such power shall be reserved exclusively to the shareholders in whole or part by the Articles of Incorporation or the TBCA or (ii) the shareholders in amending, repealing or adopting a particular Bylaw shall have expressly provided in such Bylaw or in this Section 9.15 that the Board may not amend or repeal that Bylaw. Unless the Articles of Incorporation or a Bylaw adopted by the shareholders shall provide otherwise as to all or some portion of the Bylaws, the shareholders may amend, repeal, or adopt Bylaws even though the Bylaws may also be amended, repealed, or adopted by the Board.

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EX-3.7

Exhibit 3.7

NERINE

TRUST COMPANY (BVI)

LIMITED

Company Number 375818

TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT

(CAP 291)

MEMORANDUM AND ARTICLES OF ASSOCIATION

OF

TRANSMERIDIAN (KAZAKHSTAN) INCORPORATED

Incorporated the 16th March, 2000

[SEAL]

Nerine Chambers                Columbus Centre                Road Town                Tortola                British Virgin Islands

BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT,

(CAP. 291)

MEMORANDUM OF ASSOCIATION

OF

TRANSMERIDIAN (KAZAKHSTAN) INCORPORATED

1. The Name of the Company is TRANSMERIDIAN (KAZAKHSTAN) INCORPORATED

2. The Registered Office of the Company will be Nerine Chambers, 5 Columbus Centre, Road Town, Tortola, British Virgin Islands or such other place within the British Virgin Islands as the directors may from time to time determine.

3. The Registered Agent of the Company will be Nerine Trust Company (BVI) Limited, Nerine Chambers, P.O. Box 905, Road Town, Tortola, British Virgin Islands or such other person or company being a person or company entitled to act as a Registered Agent as the directors may from time to time determine.

4. The objects for which the Company is established are:

(a) To carry on the business of an investment company and for that purpose to acquire (by original subscription, contract, tender, purchase or exchange underwriting) and to hold, in the name of the company or of any nominee, share stocks, debentures, debenture stocks, bonds, notes, obligations or securities, and to subscribe for the same subject to such terms and conditions (if any) as may be thought fit.

(b) To exercise and enforce all rights and powers conferred by or incident to the ownership of any such share stock obligations or other securities including without prejudice to the generality of the foregoing all such powers of veto or control as may be conferred by virtue of the holding by the Company of some special proportion of the issued or nominal amount thereof and to provide managerial and other executive supervisory and consultancy services for or in relation to any company in which the Company is interested upon such terms as may be thought fit.

(c) To buy, own, hold, subdivide, lease, sell, rent, prepare building sites, construct, reconstruct, alter, improve, decorate, furnish, operate, maintain, reclaim or otherwise deal with and/or develop land and buildings and otherwise deal in real estate in all its branches, to make advances upon the security of land or houses or other property or any interest therein, and whether erected or in course of erection and whether on first mortgage or charge or subject to a prior mortgage or

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mortgages or charge or charges, and to develop land and buildings as may seem expedient but without prejudice to the generality of the foregoing.

(d) To carry on the business of traders and merchants of any kind, nature or description, and the sale or rendering of related products and services, and the employment of the necessary personnel therefor.

(e) Without prejudice to the generality of the foregoing paragraphs: to purchase, sell, exchange, lease, manage, hold, trade, invest in all kinds of movable or immovable property, merchandise, commodities, effects, products, services of any kind, nature or description, to carry out any type of commercial or financial operation, to receive and/or pay royalties, commissions and other income or outgoings of any kind, to purchase, construct, charter, own, operate, manage, administer transport vessels of any kind and their appurtenances and related services and agencies; to sell or render related services and employ the necessary personnel therefor.

(f) To buy, sell, underwrite, invest in, exchange or otherwise acquire, and to hold, manage, develop, deal with and turn to account any bonds, debentures, shares (whether fully paid or not), stock options, commodities, futures, forward contracts, notes or securities of governments, states, municipalities, public authorities or public or private limited or unlimited companies in any part of the world, precious metals, gems, works of art and other articles of value and whether on a cash or margin basis and including short sales, and to lend money against the security of any of the aforementioned property.

(g) To borrow or raise money by the issue of debentures, debenture stock (perpetual or terminable), bonds, mortgages, or any other securities founded or based upon all or any of the assets or property of the Company or without any such security and upon such terms as to priority or otherwise as the Company shall think fit.

(h) To engage in any other business or businesses whatsoever, or in any act or activity, which are not prohibited under any law for the time being in force in the British Virgin Islands.

(i) To do all such other things as are incidental to, or the Company may think conducive to, the attainment of all or any of the above objects.

And it is hereby declared that the intention is that each of the objects specified in each paragraph of this clause shall, except where otherwise expressed in such paragraph, be an independent main object and be in no ways limited or restricted by reference to or inference from the terms of any other paragraph or the name of the company.

5. The Company has no power to:

(a) carry on business with persons resident in the British Virgin Islands;

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(b) own an interest in real property situate in the British Virgin Islands, other than a lease of property for use as an office from which to communicate with members or where books and records of the Company are prepared or maintained;

(c) carry on banking or trust business, unless it is licensed under the Banks and Trust Companies Act, 1990;

(d) carry on business as an insurance or reinsurance company, insurance agent or insurance broker, unless it is licensed under an enactment authorizing it to carry on that business;

(e) carry on the business of company management unless it is licensed under the Company Management Act, 1990, (which Act governs company management activities carried out in or from within the Virgin Islands only);

(f) carry on the business of providing the Registered Office or the Registered Agent for companies incorporated in the British Virgin Islands.

6. The shares in the Company shall be issued in the currency of the United States of America.

7. The authorised capital of the Company is US$ 50,000.00 divided into 50,000 shares with a par value of US$ 1.00 each. The directors are duly empowered to issue shares as registered shares or to the bearer as they may at their discretion determine by resolution.

8. The shares shall be divided into such number of classes and series as the directors shall by resolution from time to time determine and until so divided shall comprise one class and series.

9. The directors shall by resolution have the power to issue any class or series of shares that the Company is authorised to issue in its capital, original or increased, with or subject to any designations, powers, preferences, rights, qualifications, limitations and restrictions.

10. Shares issued as registered shares may be exchanged for shares issued to bearer, and shares issued to bearer may be exchanged for registered shares.

11. Where shares are issued to bearer, the bearer, identified for this purpose by the number of the share certificate, shall be requested to give to the Company the name and address of an agent or attorney for service of any notice, information or written statement required to be given to members, and service upon such agent or attorney shall constitute service upon the bearer of such shares. In the absence of such name and address being given, it shall be sufficient for the purpose of service for the Company to publish the notice, information or written statement in a newspaper circulated in the British Virgin Islands and in a newspaper in the place where the Company has its principal office.

12. The Company may by resolution of its members or of its directors, amend or modify any of the conditions contained in the Memorandum of Association and increase or reduce the authorised capital of the Company in any way which may be permitted by law.

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We, Nerine Trust Company (BVI) Limited, Nerine Chambers, Road Town, Tortola, British Virgin Islands for the purpose of incorporating an International Business Company under the laws of the British Virgin Islands hereby subscribe our name to this Memorandum of Association.

NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER

NERINE TRUST COMPANY (BVI) LIMITED Nerine Chambers Road Town, Tortola British Virgin Islands
	/s/ M.C. Unwin
	M.C. Unwin
DATED this 16th March, 2000
WITNESS to the above signature:	/s/ Rita Kirketerp
	Rita Kirketerp
	Nerine Chambers Road Town, Tortola British Virgin Islands

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BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT,

(CAP. 291)

ARTICLES OF ASSOCIATION

OF

TRANSMERIDIAN (KAZAKHSTAN) INCORPORATED

1. References in these Regulations to the Act shall mean The International Business Companies Act, (Cap. 291). The following Regulations shall constitute the Regulations of the Company. In these Articles, words and expressions defined in the Act shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice versa, the masculine shall include the feminine and neuter, and references to persons shall include corporations and all legal entities capable of having a legal existence.

SHARES

2. The authorised capital of the Company is US$50,000.00 divided into 50,000 shares with a par value of US$ 1.00 each. The directors are duly empowered to issue shares as registered shares or to the bearer as they may at their discretion determine by resolution.

3. Every person whose name is entered as a member in the share register being the holder of registered shares, and every person who subscribes for shares issued to bearer, shall be entitled to a certificate signed by the director(s) or officer(s) so authorised and under the common seal of the Company, specifying the shares or shares held and the par value thereof, provided that in respect of a registered share, or shares, held jointly by several persons, the Company shall not be bound to issue more that one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all.

4. In the case of bearer shares, each certificate for shares issued to bearer shall carry an identifying number, and the Company shall maintain a register of the name and address of an agent or attorney which may be given to the Company by the bearer, identified for this purpose by such identifying number, for service of any notice, information or written statement required to be given to members.

5. If a certificate is worn out or lost, it may be renewed on production of the worn-out certificate, or on satisfactory proof of its loss together with such indemnity as the directors may reasonably require. Any member receiving a share certificate shall indemnify and hold the Company and its officers harmless from any loss or liability which it or they may incur by reason of wrongful or fraudulent use of representation made by any person by virtue of the possession of such certificate.

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SHARE CAPITAL AND VARIATION OF RIGHTS

6. Subject to the provisions of these Articles, the unissued shares of the Company (whether forming part of the original or any increased capital) shall be at the disposal of the directors who may offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration, being not less than the par value of the shares being disposed of, and upon such terms and conditions as the directors may determine.

7. Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any share in the Company may be issued with such preferred, deferred or other special rights, or such restrictions, whether in regard to dividend, voting, return of capital or otherwise, as the directors may from time to time determine.

8. Subject to the provisions of the Act in this regard, shares may be issued on the terms that they are redeemable, or, at the option of the Company, liable to be redeemed on such terms and in such manner as the directors before or at the time of the issue of the shares may determine.

9. The directors may redeem any such share at a premium.

10. If at any time the share capital is divided into different classes of shares the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing of the holders of not less than fifty-one percent of the issued shares of that class and of the holders of not less than fifty-one percent of the issued shares of any other class of shares which may be affected by such variation.

11. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

12. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except only as by these Regulations or by law otherwise provided) any other rights in respect of any share except an absolute right to the entirety thereof by the registered holder.

TRANSFER OF SHARES

13. Registered shares in the Company may be transferred by a written instrument signed by the transferor and containing the name and address of the transferee or in such other manner or from and subject to such evidence as the directors shall consider appropriate. Shares issued to bearer shall be transferred by delivery of the certificate evidencing same.

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14. The holder of registered shares may request that such shares be exchanged for shares issued to bearer and the directors shall cancel the certificates evidencing registered shares and the entry in the share register and instead issue a certificate evidencing shares issued to bearer with and subject to such evidence of intent as the directors may consider appropriate.

15. The holder of a certificate evidencing shares issued to bearer may request that such shares be exchanged for registered shares and the directors shall cancel the certificate evidencing shares issued to bearer and instead issue a certificate evidencing registered shares and enter the name and address of the holder thereof in the share register with and subject to such evidence of intent as the directors may consider appropriate.

16. Upon receipt of notification of any change of name and address of any agent or attorney given to the Company for the purpose of service of any notice, information or written statement required to be given to members, identified by reference to the number of the certificate to bearer, the directors shall forthwith amend the register maintained for this purpose.

17. The personal representative, guardian or trustee as the case may be of a deceased, incompetent or bankrupt sole holder of a registered share shall be the only person(s) recognised by the Company as having any title to the share, but they shall not be entitled to exercise any rights as a member of the Company until they have proceeded as set forth in the following two Regulations.

18. Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered as a member upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a member for all purposes shall be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such.

19. Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as a transference of such share or shares and such request shall likewise be treated as if it were a transfer.

ACQUISITION OF OWN SHARES

20. Subject to the provisions of the Act in this regard, the directors may, on behalf of the Company, purchase, redeem or otherwise acquire any of the Company’s own shares but only out of surplus or in exchange for newly issued shares of equal value, or for such consideration as they consider fit, and either cancel or hold such shares as treasury shares. The directors may dispose of any shares held as treasury shares on such terms and conditions as they may from time to time determine. Shares may be purchased or otherwise acquired in exchange for newly issued shares in the Company.

21. Subject to the terms of any resolution passed by the directors for the purpose of increasing the authorised capital of the Company, such increased capital may be divided

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into shares of such respective amounts, and with such rights or privileges (if any) as the directors think expedient.

22. Any capital raised by the creation of new shares shall be considered as part of the original capital, and shall be subject to the same provisions as if it had been part of the original capital.

23. The directors may by resolution:

(a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(b) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its authorised share capital by the amount of the shares so cancelled;

(c) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association and so that subject to the provisions of Regulation 10 the resolution whereby any share is sub-divided may determine that as between the holders of the shares resulting from such sub-division one or more of the shares may have such preferred or other special rights over or may have such qualified or deferred rights or be subject to any such restrictions as compared with the other or others as the Company has power to attach to unissued or new shares;

(d) subject to any confirmation or consent required by law, reduce its authorised and issued share capital or any capital redemption reserve fund or any share premium account in any manner.

24. Where any difficulty arises in regard to any consolidation and division under this Regulation, the directors may settle the same as they think expedient.

MEETINGS OF MEMBERS

25. The directors may convene meetings of the members of the Company at such times and in such manner and places as the directors consider necessary or desirable, and they shall convene such a meeting upon the written request of members holding more than 50 percent of the votes of the outstanding voting shares in the Company.

26. Seven days’ notice at the least specifying the place, the day and the hour of the meeting and the general nature of the business to be conducted shall be given in the manner hereinafter mentioned to such persons whose names on the date the notice is given appear as members in the share register of the Company and to the agent or attorney of record of the holders of bearer shares having the right to vote at such meeting.

27. A meeting of the members shall be deemed to have been validly held, notwithstanding that it is held in contravention of the requirement to give notice in Regulation 26, if

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notice of the meeting is waived by ninety percent of the holders of bearer shares having a right to attend and vote at the meeting.

28. The inadvertent failure of the directors to give notice of a meeting to a member or to the agent or attorney as the case may be, or the fact that a member or such agent or attorney has not received the notice, does not invalidate the meeting.

PROCEEDINGS AT MEETINGS OF MEMBERS

29. No business shall be transacted at any meeting unless a quorum of members is present at the time when the meeting proceeds to business. A quorum shall consist of the holder or holders present in person or by proxy of not less than one third of the shares of each class or series of shares entitled to vote as a class or series thereon and the same proportion of the votes of the remaining shares entitled to vote thereon.

30. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved.

31. At every meeting the members present shall choose someone of their number to be the Chairman. If the members are unable to choose a Chairman for any reason, then the person representing the greatest number of voting shares present at the meeting shall preside as Chairman, failing which the oldest individual person shall take the chair.

32. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

33. At any meeting a resolution put to the vote of the meeting shall be decided on a show of hands by simple majority unless a poll is (before or on the declaration of the result of the show of hands) demanded:

(a) by the Chairman; or

(b) by any member or members present in person or by proxy and representing not less than one tenth of the total voting rights of all the members having the right to vote at the meeting.

34. Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution.

35. If a poll is duly demanded, it shall be taken in such manner as the Chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn.

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36. In the case of an equality of votes, whether on a show of hands, or on a poll, the Chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote.

VOTES OF MEMBERS

37. At any meeting of members, whether on a show of hands or on a poll, every holder of a voting share present in person or by proxy shall have one vote for every voting share of which he is the holder.

38. A resolution which has been notified to all members for the time being entitled to vote and which has been approved by a majority of the votes of those members in the form of one or more documents in writing or by telex, telegram, cable or other written electronic communication shall forthwith, without the need for any notice, become effectual as a resolution of the members.

39. If a committee be appointed for any member who is of unsound mind he may vote by the committee.

40. If two or more persons are jointly entitled to a registered share or shares and if more than one of such persons shall vote in person or by proxy at any meeting of members or in accordance with the terms of Regulation 37, the vote of that person whose name appears first among such voting joint holders in the share register shall alone be counted.

41. Votes may be given either personally or by proxy.

42. The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote.

43. An instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy.

44. The instrument appointing a proxy shall be in writing under the hand of the appointer, unless the appointer is a corporation or other form of legal entity other than one or more individuals holding as joint owners, in which case the instrument appointing a proxy shall be in writing under the hand of an individual duly authorised by such corporation or legal entity to execute the same. The Chairman of any meeting at which a vote is cast by proxy so authorised may call for a notarially certified copy of such authority which shall be produced within 7 days of being so requested or the vote or votes cast by such proxy shall be disregarded. In case of a proxy being given by the holder of a share issued to bearer, it shall be sufficient for the appointer to identify himself by writing the identifying number of the certificate evidencing the shares issued to bearer.

CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS

45. Any corporation or other form of corporate legal entity which is a member of the Company may by resolution of its directors or other governing body authorise such

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person as it thinks fit to act as its representative at any meeting of the members or of any class of members of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual member of the Company.

DIRECTORS

46. Subject to any subsequent amendment to change the number of directors, the number of the directors shall be not less than one nor more than seven.

47. The first director or directors shall be elected by the subscribers to the Memorandum. Thereafter, the director(s) shall be elected by the members or the director (if there is only one) or directors for such term as the members or the director (if there is only one) or directors may determine.

48. The director(s) shall hold office until his(their) successor(s) shall take office or until his(their) earlier death, resignation or removal.

49. Every vacancy in the board of directors may be filled by a resolution of the members or of the director (if there is only one) or of a majority of the remaining directors if applicable.

50. Until the director(s) is(are) appointed, the subscribers to the Memorandum of Association shall have the power to act as directors.

51. A director shall not require a share qualification, but nevertheless shall be entitle to attend and speak at any meeting of the members and at any separate meeting of the holders of any class of shares in the Company.

52. A director by writing under his hand deposited at the Registered Office of the Company may from time to time appoint another director or any other person to be his alternate. Every such alternate shall be entitled to be given notice of meetings of the directors and to attend and vote as a director at any such meeting at which the director appointing him is not personally present and generally at such meeting to have and exercise all the powers, rights, duties and authorities of the director appointing him. Every such alternate shall be deemed to be an officer of the Company and shall not be deemed to be an agent of the director appointing him. If undue delay or difficulty would be occasioned by giving notice to a director of a resolution of which his approval is sought in accordance with Regulation 77, his alternate (if any) shall be entitled to signify approval of the same on behalf of that director. The remuneration of an alternate shall be payable out of the remuneration payable to the director appointing him, and shall consist of such portion of the last mentioned remuneration as shall be agreed between such alternate and the director appointing him. A director by writing under his hand deposited at the Registered Office of the Company may at any time revoke the appointment of an alternate appointed by him. If a director shall die or cease to hold the office or director, the appointment of his alternate shall thereupon cease and terminate.

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53. The directors may, by resolution, fix the emoluments of directors in respect of services rendered or to be rendered in any capacity to the Company. The director may also be paid such traveling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors, or any committee of the directors or meetings of the members, or in connection with the business of the Company as shall be approved by resolution of the directors.

54. Any director who, by request, goes or resides abroad for any purposes of the Company or who performs services which in the opinion of the directors go beyond the ordinary duties of a director, may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as shall be approved by resolution of the directors.

55. The Company may pay to a director who at the request of the Company holds any office (including a directorship) in, or renders services to any company in which the Company may be interested, such remuneration (whether by way of salary, commission, participation in profits or otherwise) in respect of such office or services as shall be approved by resolution of the directors.

56. The office of director shall be vacated if the director:

(a) is removed from office by a resolution or members or by a resolution of directors, or

(b) becomes bankrupt or makes any arrangement or composition with his creditors generally, or

(c) becomes of unsound mind, or of such infirm health as to be incapable or managing his affairs, or

(d) resigns his office by notice in writing to the Company.

57. (a) A director may hold any other office or position of profit under the Company (except that of auditor) in conjunction with his office of director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the directors shall arrange.

(b) A director may be or become a director or other officer of, or otherwise interested in any company promoted by the Company, or in which the Company may be interested, as a member or otherwise, and no such director shall be accountable for any remuneration or other benefits received by him as director or officer or from his interest in such other company. The directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favour of any resolutions appointing them, or any of their number, directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A director may vote in favour of the exercise of such voting rights in the manner

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aforesaid, notwithstanding that he may be, or be about to become, a director or officer of such other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in the manner aforesaid.

(c) No director shall be disqualified by his office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any director shall be in any way interested be voided, nor shall any director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement, by reason of such director holding that office or of the fiduciary relationship thereby established. The nature of a director’s interest must be declared by him at the meeting of the directors at which the question of entering into the contract or arrangement is first taken into consideration, and if the director was not at the date of that meeting interested in the proposed contract or arrangement, or shall become interested in a contract or arrangement after it is made, he shall forthwith after becoming so interested advise the Company in writing of the fact and nature of his interest. A general notice to be regarded as interested in any contract or transaction which may, after the date of notice, be made with such firm or company shall (if such director shall give the same at a meeting of the directors, or shall take reasonable steps to secure that the same is brought up and read at the next meeting of directors after it is given) be a sufficient declaration of interest in relation to such contract or transaction with such firm or company. A director may be counted as one of a quorum upon a motion in respect of any contract or arrangement which he shall make with the Company, or in which he is so interested as aforesaid, and may vote upon such motion.

OFFICERS

58. The directors of the Company may, by a resolution of directors, appoint officers of the Company at such times as shall be considered necessary or expedient, and such officers may consist of a President, one or more Vice-Presidents, a Secretary and a Treasurer and such other officers as may from time to time be deemed desirable. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modification in such duties as may be prescribed by the directors thereafter, but in the absence of any specific allocation of duties it shall be the responsibility of the President to manage the day to day affairs of the Company, the Vice-Presidents to act in order of seniority in the absence of the President but otherwise to perform such duties as may be delegated to them by the President, the Secretary to maintain the registers, minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the Company by applicable law, and the Treasurer to be responsible for the financial affairs of the Company.

59. Any person may hold more than one office and no officer need be a director or member of the Company. The officers shall remain in office until removed from office by the directors whether or not a successor is appointed.

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60. Any officer who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it and of transacting any of the business of the officers.

POWERS OF DIRECTORS

61. The business of the Company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company, and may exercise all such powers of the Company as are not by the Act or by these Regulations required to be exercised by the members subject to any delegation of such powers as may be authorised by these Regulations and to such requirements as may be prescribed by resolution of the members; but no requirement made by resolution of the members shall prevail if it be inconsistent with these Regulations nor shall such requirements invalidate any prior act of the directors which would have been valid if such requirement had not been made.

62. The directors may entrust to and confer upon any director or officer any of the powers exercisable by them upon such terms and conditions and with such restrictions as they think fit, and either collaterally with, or to the exclusion of, their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in the exercise of the powers so delegated conform to any regulations that may be imposed on it by the directors.

63. The directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Regulations) and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the directors may think fit and may also authorise any such attorney to delegate all or any of the powers, authorities and discretions vested in him.

64. Any director who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it at Directors Meetings and of transacting any of the business of the directors.

65. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as the directors shall from time to time by resolution determine.

66. The directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings, property and uncalled capital or any part thereof, to

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issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.

67. The continuing directors may act notwithstanding any vacancy in their body, save that if the number of directors shall have been fixed at two or more persons and by reason of vacancies having occurred among the directors there shall be only one continuing director, he shall be authorised to act alone only for the purpose of appointing another director.

PROCEEDINGS OF DIRECTORS

68. The meetings of the directors and any committee thereof shall be held at such place or places as the directors shall decide.

69. The directors may elect a chairman of their meetings and determine the period for which he is to hold office; but if no such chairman is elected, or if at any meeting the chairman is not present at the time appointed for holding the same, the directors present may choose one of their number to be Chairman of the meeting.

70. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a majority of votes; in case of an equality of votes the chairman shall have a second or casting vote. A director may at any time summon a meeting of the directors. If the Company shall have only one director, the provisions hereinafter contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters and in lieu of minutes of a meeting shall record in writing and sign a note or memorandum of all matters requiring a resolution of the directors. Such note or memorandum shall constitute sufficient evidence of such resolution for all purpose.

71. A director shall be given not less than seven days notice of a meeting of the directors.

72. Notwithstanding Regulation 71 above, a meeting of directors held in contravention of that regulation shall be valid if a majority of the directors entitled to vote at the meeting have waived the notice of the meeting.

73. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, does not invalidate the meeting.

74. A meeting of directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one third of the total number of directors with a minimum of two.

75. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved.

76. Any one or more of the directors or any committee thereof may participate in a meeting of directors or of a committee of directors by means of a conference telephone or similar

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communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

77. A resolution approved by a majority of the directors for the time being entitled to receive notice of a meeting of the directors or of a committee of the directors and taking the form of one or more documents in writing or by telex, telegram, cable or other written electronic communication shall be as valid and effectual as if it had been passed at a meeting of the directors or of such committee duly convened and held, without the need for any notice.

INDEMNITY

78. Subject to the provisions of the Act and of any other statute for the time being in force, every director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no director or other officer shall be liable for any loss, damage or misfortune which may happen to, or be incurred by the Company in the execution of the duties of his office, or in relation thereto.

SEAL

79. The directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument, shall be witnessed by a director or any other person so authorised from time to time by the directors. The directors may provide for a facsimile of the common seal and approve the signature of any director or authorised person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the seal had been affixed to such instrument and the same had been signed as hereinbefore described.

DIVIDENDS AND RESERVES

80. The directors may, by resolution, declare a dividend, but no dividend shall be declared and paid except out of surplus and unless the directors determine that immediately after the payment of the dividend:

(a) the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and

(b) the realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital.

81. Dividends may be declared and paid in money, shares or other property.

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82. In computing the surplus for the purpose of resolving to declare and pay a dividend, the directors may include in their computation the net unrealised appreciation of the assets of the Company.

83. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the surplus of the Company.

84. Subject to the rights of the holders of shares entitled to special rights as to dividends, all dividends shall be declared and paid according to the par value of the shares in issue, excluding those shares which are held by the Company as treasury shares at the date of declaration of the dividend.

85. The directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies, or for any other purpose to which the profits of the Company may be properly applied, and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments as the directors may from time to time think fit.

86. If several persons are registered as joint holders of any share, any of them may give effectual receipt for any dividend or other monies payable on or in respect of the share.

87. In the case of shares issued to bearer, the directors may provide for the payment of dividend by reference to counterfoil or warrant issued with the certificate for such shares, and the production of such counterfoil or warrant shall evidence entitlement to receipt of such dividend in the same way and to the same extent as production of the certificate itself. At the time of presentation of the counterfoil or warrant, the directors may issue such further counterfoils or warrants as may be required to permit receipt by the holder thereof of subsequent dividends.

88. Notice of any dividend that may have been declared shall be given to each member in the manner hereinafter mentioned and all dividends unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the Company.

89. No dividend shall bear interest against the Company.

BOOKS AND RECORDS

90. The Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the Company.

91. The Company shall keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members, and copies of all resolutions consented to by directors, members, committees of directors, committees of officers and committees of members.

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92. The books, records and minutes required by Regulations 90 and 91 shall be kept at the Registered Office of the Company or at such other place as the directors may determine, and shall be open to the inspection of the directors at all times.

93. The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the books, records and minutes of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any book, record, minute or document of the Company except as conferred by Law or authorised by resolution of the directors.

AUDIT

94. The directors may by resolution call for the accounts of the Company to be examined by an auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed.

95. The auditor may be a member of the Company, but no director or officer shall be eligible during his continuance in office.

96. Every auditor of the Company shall have a right of access at all times to the books of accounts and vouchers of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties.

97. The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company’s audited Profit and Loss Account and Balance Sheet is to be presented.

NOTICES

98. Any notice, information or written statement required to be given to members shall be served:

(a) in the case of members holding registered shares, by mail (air mail service if available) addressed to each member at the address shown in the share register; and

(b) in the case of members holding shares issued to bearer

(i) by mail (air mail service if available) addressed to the agent or attorney whose name and address has been given for service of notice by the bearer of the shares (identified for this purpose by the number of the share certificate), or

(ii) in the absence of an address for service being given, or if the notice, information or written statement cannot be served for any other reason, by publishing the notice, information or written statement in the Gazette and

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in one or more newspapers published and circulated in the British Virgin Islands and in a Newspaper where the Company has its principal office.

99. All notices directed to be given to the members shall, with respect to any registered share to which persons are jointly entitled, be given to whichever of such persons is named first in the share register, and notice so given shall be sufficient notice to all the holders of such share.

100. Any notice, if served by post, shall be deemed to have been served within ten days of posting, and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the Post Office.

PENSIONS AND SUPERANNUATION FUNDS

101. The directors may establish and maintain or procure the establishment and maintenance of any non-contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions, allowances or emoluments to any persons who are or were at any time in the employment or service of the Company or any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary, or who are or were at any time directors or officers of the Company or of any such other company as aforesaid or who hold or held any salaried employment or office in the Company or such other company or any persons in whose welfare the Company or any such other company as aforesaid is or has been at any time interested, and to the wives, widows, families and dependents of any such person, and may make payments for or towards the insurance of any such persons as aforesaid, and may do any of the matters• aforesaid either alone or in conjunction with any such other company as aforesaid. A director holding any such employment or office shall be entitled to participate in and retain for his own benefit any such donation, gratuity, pension, allowance or emolument.

WINDING UP

102. If the Company shall be wound up, the Liquidator may, in accordance with a resolution of members, divide among the members in specie or in kind the whole or any part of the assets ‘of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributories as the Liquidator shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

ARBITRATION

103. Whenever any difference arises between the Company on the one hand and any of the members, their executors, administrators or assigns on the other hand touching the true intent and construction or the incidence or consequences of these presents or of the Act touching anything done or executed omitted or suffered in pursuance of the Act or

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touching any breach or alleged breach or otherwise relating to the premises or to these presents or to any Act affecting the Company or to any of the affairs of the Company, such difference shall, unless the parties agree to refer the same to a single arbitrator, be referred to two arbitrators one to be chosen by each of the parties to the difference and the arbitrators shall before entering in the reference appoint an umpire.

104. If either party to the reference makes default in appointing an arbitrator either originally or by way of substitution (in the event that an appointed arbitrator shall die, be incapable of acting or refuse to act) for ten days after the other party has given him notice to appoint the same, such other party may appoint an arbitrator to act in the place of the arbitrator of the defaulting party.

AMENDMENT TO ARTICLES

105. The Company may alter or modify the conditions contained in these Regulations, as originally drafted or as amended from time to time, by a resolution of either the Company member(s) or the director(s).

CONTINUATION

106. The Company may by resolution of members or by a resolution passed unanimously by all directors of the Company continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws.

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We Nerine Trust Company (BVI) Limited, Nerine Chambers, Road Town, Tortola, British Virgin Islands for the purpose of incorporating an International Business Company under the laws of the British Virgin Islands hereby subscribe our name to these Articles of Association.

NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER

NERINE TRUST COMPANY (BVI) LIMITED Nerine Chambers Road Town, Tortola British Virgin Islands
	/s/ M.C. Unwin
	M.C. Unwin
DATED this 16th March, 2000
WITNESS to the above signature:	/s/ Rita Kirketerp
	Rita Kirketerp
	Nerine Chambers Road Town, Tortola British Virgin Islands

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EX-3.8

Exhibit 3.8

[Logo]

I.B.C. No. 492384

Territory of the British Virgin Islands

The International Business Companies Act

(Cap. 291)

MEMORANDUM AND ARTICLES OF ASSOCIATION

of

BRAMEX MANAGEMENT, INC.

Incorporated this 18th Day of April, 2002

[Logo]

AMS FINANCIAL SERVICES LIMITED

Sea Meadow House, Blackburne Highway

(P.O. Box 116) Road Town, Tortola

British Virgin Islands Tel: (284) 494-3399; Fax: (284) 494-3041

email: ams@amsbvi.com

website: www.amsbvi.com

[Seal]

TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT (CAP.291)

MEMORANDUM OF ASSOCIATION

OF

BRAMEX MANAGEMENT, INC.

1. NAME

The name of the Company is BRAMEX MANAGEMENT, INC.

2. REGISTERED OFFICE

The registered office of the Company will be situated at Sea Meadow House, Blackburne Highway, (P.O. Box 116), Road Town, Tortola, British Virgin Islands or at such other place within the British Virgin Islands as the directors may from time to time determine.

3. REGISTERED AGENT

The registered agent of the Company will be AMS Trustees Limited, Sea Meadow House, Blackburne Highway, (P.O. Box 116), Road Town, Tortola, British Virgin Islands or such other person or company being a person or company entitled to act as a registered agent, as the directors may from time to time determine.

4. GENERAL OBJECTS AND POWERS

(a) To buy, sell, underwrite, invest in, exchange or otherwise acquire and to hold, manage, develop, deal with and turn to account any bonds, debentures, shares, (whether fully paid or not) stocks, options, commodities, futures, forward contracts, notes or securities of Governments, States, municipalities, public authorities or public or private limited or unlimited companies in any part of the world, precious metals, gems, works of art and other articles of value and whether on a cash or margin basis and including short sales, and to lend money against the security of any of the aforementioned property.

(b) To buy, own, hold, subdivide, lease, sell, rent, prepare building sites, construct reconstruct, alter, improve, decorate, furnish, operate, maintain, reclaim or otherwise deal with and/or develop land and buildings and otherwise deal in real estate in all its branches, to make advances upon the security of land or houses or other property or any interest therein, and whether erected or in course of erection and whether on first mortgage or charge or subject to prior mortgage or mortgages or charge or charges, and to develop land and buildings as may seem expedient but without prejudice to the generality of the foregoing.

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(c) To borrow or raise money by the issue of debentures, debenture stock (perpetual or terminable), bonds, mortgages, or any other securities founded or based upon all or any of the assets or property of the Company or without any such security and upon such term as to priority or otherwise as the Company shall think fit.

(d) To mortgage, pledge or charge its assets and other property (or any part thereof) as collateral security for the Company’s debts, liabilities or obligations or in connection with the Company’s guarantee or grant of other security for any third party, such mortgage, pledge or charge being on such terms as the Company’s members or directors deem fit.

(e) To engage in any other business or businesses whatsoever, or in any acts or activities which are not prohibited under any law for the time being in force in the British Virgin Islands.

(f) To do all such other things as are incidental to, or the Company may think conducive to, the attainment of all the above objects. And it is hereby declared that the intention is that each of the objects specified in each paragraph of this clause shall, except where otherwise expressed in such paragraph, be an independent main object and be in nowise limited or restricted by reference to or inference from the terms of any other paragraph or the name of the Company.

5. EXCLUSIONS

The company shall not be treated as carrying on business with persons resident in the British Virgin Islands by reason only that:

(a) it makes or maintains deposits with a person carrying on banking business within the British Virgin Islands;

(b) it makes or maintains professional contact with solicitors, barristers, accountants, bookkeepers, trust companies, administration companies, investment advisers or other similar persons carrying on business within the British Virgin Islands;

(c) it prepares or maintains books and records within the British Virgin Islands;

(d) it holds, within the British Virgin Islands, meetings of its directors or members;

(e) it holds a lease of property for use as an office from which to communicate with members or where books and records of the Company are prepared or maintained;

(f) it holds shares, debt obligations or other securities in a company incorporated under the International Business Companies Act (CAP.291) or under the Companies Act;

(g) its shares, debt obligations or other securities in the Company are owned by any person resident in the British Virgin Islands or by any company incorporated under the International Business Companies Act (CAP.291) or under the Companies Act.

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6. The Company has no power to:

(a) carry on business with persons resident in the British Virgin Islands;

(b) own an interest in real property situate in the British Virgin Islands, other than a lease referred to in paragraph (e) of subsection (2) of the International Business Companies Act (CAP.291);

(c) carry on banking or trust business, unless it is licensed under the Banks and Trust Companies Act, 1990;

(d) carry on business as an insurance or as a reinsurance company, insurance agent or insurance broker, unless it is licensed under an enactment authorizing it to carry on that business;

(e) carry on the business of company management unless it is licensed under the Companies Management Act, 1990; or

(f) carry on the business of providing the registered office or the registered agent for companies incorporated in the British Virgin Islands.

7. SHARE CAPITAL

The shares in the Company shall be issued in the currency of the United States of America.

8. AUTHORISED CAPITAL

The authorised capital of the Company is US$50,000.00 comprising 50,000 shares with par value of US$1.00 each. Shares may be issued by the Directors at their discretion and may either be bearer or registered shares.

9. CLASSES OF SHARES

The shares shall be divided into such number of classes and series as the directors shall by resolution from time to time determine and until so divided shall comprise one class and series.

10. RIGHTS, QUALIFICATIONS OF SHARES

The directors shall by resolution have the power to issue any class or series of shares that the Company is authorised to issue in its capital, original or increased, with or subject to any designations, powers, preferences, rights, qualifications, limitations and restrictions.

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11. REGISTERED OR BEARER SHARES

Shares issued as registered shares may be exchanged for shares issued to bearer, and shares issued to bearer may be exchanged for registered shares.

12. Where shares are issued to bearer, the bearer, identified for this purpose by the number of the share certificate, shall be requested to give to the Company the name and address of an agent or attorney for service of any notice, information or written statement required to be given to members, and service upon such agent or attorney shall constitute service upon the bearer of such shares. In the absence of such name and address being given, it shall be sufficient for purpose of service for the Company to publish the notice, information or written statement in the Gazette, in one or more newspapers published or circulated in the British Virgin Islands and in a newspaper in the place where the Company has its principal office.

13. AMENDMENTS

The Company shall by resolution of the directors or by resolution of the members have the power to amend or modify any of the conditions contained in this Memorandum of Association and to increase or reduce the authorised capital of the Company in anyway which may be permitted by law.

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We, the undersigned Subscriber, are desirous of being formed into a Company in pursuance of this Memorandum of Association.

NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER

/s/ Marcus Diprose

Marcus Diprose

AMS Trustees Limited

Sea Meadow House

Blackburne Highway

P.O. Box 116

Road Town, Tortola

British Virgin Islands

Dated this 18th day of April, 2002

WITNESS to the above signature:

/s/ Sherrie Archer

Sherrie Archer

Sea Meadow House

Blackburne Highway

P.O. Box 116

Road Town, Tortola

British Virgin Islands

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TERRITORY OF THE BRITISH VIRGIN ISLANDS

THE INTERNATIONAL BUSINESS COMPANIES ACT (CAP.291)

ARTICLES OF ASSOCIATION

OF

BRAMEX MANAGEMENT, INC.

INTERPRETATION

1. References in these regulations to the Act shall mean The International Business Companies Act (CAP.291). The following Regulations shall constitute the regulations of the Company. In these Articles, words and expressions defined in the Act shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice versa, the masculine shall include the feminine and the neuter and references to persons shall include corporations and all legal entities capable of having a legal existence.

SHARES

2. The authorised capital of the Company is US$50,000.00 comprising 50,000 shares with a par value of US$1.00 each. Shares may be issued by the directors at their discretion and may either be bearer or registered shares.

3. Every person whose name is entered as a member in the share register, being the holder of registered shares, and every person who subscribes for shares issued to bearer, shall, without payment, be entitled to a certificate signed by two directors or two officers or by one director and one officer of the Company or under the common Seal of the Company with or without the signature of any director or officer of the Company specifying the share or shares held and the par value thereof, provided that in respect of a registered share, or shares, held jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all.

4. In the case of bearer shares, each certificate for shares issued to bearer shall carry an identifying number, and the Company shall maintain a register of the name and address of an agent or attorney which may be given to the Company by the bearer, identified for this purpose by such identifying number, for service of any notice, information or written statement required to be given to members.

5. If a certificate is worn out or lost it may be renewed on production of the worn out certificate, or on satisfactory proof of its loss together with such indemnity as the directors may reasonably require. Any member receiving a share certificate shall indemnify and hold the Company and its officers harmless from any loss or liability which it or they may incur by reason of wrongful or fraudulent use or representation made by any person by virtue of the possession of such a certificate.

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SHARE CAPITAL AND VARIATION OF RIGHTS

6. Subject to the provisions of these Articles, the unissued shares of the Company (whether forming part of the original or any increased capital) shall be at the disposal of the Directors who may offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration, being not less than the par value of the shares being disposed of, and upon such terms and conditions as the directors may determine.

7. Without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares, any share in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise as the directors may from time to time determine.

8. Subject to the provisions of the Act in this regard, shares may be issued on the terms that they are redeemable, or at the option of the Company be liable to be redeemed on such terms and in such manner as the directors before or at any time of the issue of the shares may determine.

9. The directors may redeem any such share at a premium.

10. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound up, be varied with the consent in writing to the holders of not less than three-fourths of the issued shares of that class and the holders of not less than three-fourths of the issued shares of any other class of shares which may be affected by such variation.

11. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

12. Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except as by these Regulations or by law otherwise provided) any other rights in respect of any share except any absolute right to the entirety thereof by the registered holder.

TRANSFER OF SHARES

13. Registered shares in the Company may be transferred by a written instrument signed by the transferor and containing the name and address of the transferee or such other manner or form and subject to such evidence as the directors shall consider appropriate. Shares issued to bearer shall be transferred by delivery of the certificate evidencing same.

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14. The holder of registered shares may request that such shares be exchanged for shares issued to bearer and the directors shall cancel the certificates evidencing registered shares and the entry in the share register and instead issue a certificate evidencing shares issued to bearer with and subject to such evidence of intent as the directors may consider appropriate.

15. The holder of a certificate evidencing shares issued to bearer may request that such shares be exchanged for registered shares and the directors shall cancel the certificate evidencing shares issued to bearer and instead issue a certificate evidencing registered shares and enter the name and address of the holder thereof in the share register with and subject to such evidence of intent as the directors may consider appropriate.

16. Upon receipt of notification of any change of name and address of any agent or attorney given to the Company for the purpose of service of any notice, information or written statement required to given to members, identified by reference to the number of the certificate to bearer the directors shall forthwith amend the register maintained for this purpose.

TRANSMISSION OF SHARES

17. The executor or administrator of a deceased member, the guardian of an incompetent member or the trustee of a bankrupt member shall be the only person recognized by the Company as having any title to his share but they shall not be entitled to exercise any rights as a member of the Company until they have proceeded as set forth in the next following three Articles, save that and only in the event of death, incompetency or bankruptcy of any member or members of the Company as a consequence of which the Company no longer has any directors or members, then upon the production of any documentation which is reasonable evidence of the applicant being entitled to:

(a) a grant of probate of the will, or grant of letters of administration of the estate, or confirmation of the appointment as executor, of a deceased member; or

(b) the appointment of a guardian of an incompetent member; or

(c) the trustee of a bankrupt member; or

(d) any other documentation providing reasonable evidence of the applicants beneficial ownership of the shares -

to the company’s Registered Agent in the British Virgin Islands together with (if so requested by the Registered Agent) a notarized copy of the share certificate(s) of the deceased incompetent or bankrupt member, an indemnity in favour of the Registered Agent and appropriate legal advice in respect of any document issued by a foreign court, then the administrator, executor, guardian or trustee in bankruptcy (as the case may be) notwithstanding that their name has not been entered in the share register of the Company, may by written resolution of the applicant, endorsed with written approval by the Registered Agent, be appointed a director of the Company or recognised as beneficial owner of the shares.

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18. The production to the Company of any document which is evidence of:

(a) a grant of probate of the will, or grant of letters of administration of the estate, or confirmation of the appointment as executor, of a deceased member; or

(b) the appointment of a guardian of an incompetent member; or

(c) the trustee of a bankrupt member; or

(d) any other documentation providing reasonable evidence of the applicants beneficial ownership of the shares –

shall be accepted by the Company even if the deceased, incompetent member or bankrupt member is domiciled outside the British Virgin Islands if the document is issued by a foreign court which had competent jurisdiction in the matter. For the purposes of establishing whether or not a foreign court had competent jurisdiction in such a matter the directors may obtain appropriate legal advice. The directors may also require an indemnity to be given by the executor, administrator, guardian or trustee in bankruptcy.

19. Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered as a member upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a member shall for all purposes be deemed to be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such.

20. Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as the transferee of such share or shares and such request shall likewise be treated as if it were a transfer.

21. What amounts to incompetence on the part of a person is a matter to be determined by the court having regard to all the relevant evidence and the circumstances of the case.

ACQUISITION OF OWN SHARES

22. Subject to the provisions of the Act in this regard, the directors may, on behalf of the Company purchase, redeem or otherwise acquire any of the Company’s own shares for such consideration as they consider fit, and either cancel or hold such shares as Treasury shares. The directors may dispose of any shares held as Treasury shares on such terms and conditions as they may from time to time determine. Shares may be purchased or otherwise acquired in exchange for newly issued shares in the Company.

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ALTERATION IN CAPITAL

23. Subject to the terms of any resolution passed by the directors for the purpose of increasing the authorised capital of the Company, such increased capital may be divided into shares of such respective amounts, and with such rights or privileges (if any) as the directors think expedient.

24. Any capital raised by the creation of new shares shall be considered as part of the original capital and shall be subject to the same provisions as if it had been part of the original capital.

25. The directors may by resolution:

(a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(b) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its authorised share capital by the amount of the shares so canceled.

(c) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association and so that subject to the provisions of Regulation 10, the resolution whereby any share is sub-divided may determine that as between the holders of the shares resulting from such sub-division one or more of the shares may have such preferred or other special rights over or may have such qualified or deferred rights or be subject to any such restrictions as compared with the other or others as the Company has power to attach to unused or new shares;

(d) subject to any confirmation or consent required by law, reduce its authorised and issued share capital or any capital redemption reserve fund of any share premium account in any manner.

26. Where any difficulty arises in regard to any consolidation and division under this Regulation the directors may settle same as they think expedient.

MEETINGS OF MEMBERS

27. The directors may convene meetings of the members of the Company at such times and in such manner and places as the directors consider necessary or desirable, and they shall convene such a meeting upon the written request of members holding more than 50 percent of the votes of the outstanding voting shares in the Company.

28. Seven days notice at the least specifying the place, the day and the hour of the meeting and general nature of the business to be conducted shall be given in the manner hereinafter mentioned to such persons whose names on the date the notice is given appear as members in the share register of the Company and to the agent or attorney of record of the holders of bearer shares.

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29. A meeting of the members shall be deemed to have been validly held, notwithstanding that it is held in contravention of the requirement to give notice in Regulation 28 if notice of the meeting is waived by an absolute majority in number of the members or holders of bearer shares having a right to attend and vote at the meeting.

30. The inadvertent failure of the directors to give notice of a meeting to a member or to the agent or attorney as the case may be, or the fact that a member or such agent or attorney has not received the notice, does not invalidate the meeting.

PROCEEDINGS AT MEETINGS OF MEMBERS

31. No business shall be transacted at any meeting unless a quorum of members is present at the time when the meeting proceeds to business. A quorum shall consist of the holder or holders present in person or by proxy of not less than one-third of the shares of each class or series of shares entitled to vote as a class or series thereon and the same proportion of the votes of the remaining shares entitled to vote thereon.

32. If, within half an hour from the time appointed for the meeting, a quorum is not present, the meeting shall be dissolved.

33. At every meeting the members present shall choose someone of their number to be the Chairman. If the members are unable to choose a Chairman for any reason, then the person representing the greatest number of voting shares present at the meeting shall preside as Chairman failing which the oldest individual person shall take the chair.

34. The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

35. At any meeting a resolution put to the vote of the meeting shall be decided on a show of hands by simple majority unless a poll is (before or on the declaration of the result of the show of hands) demanded:

(a) by the Chairman; or

(b) by any members present in person or by proxy and representing not less than one tenth of the total voting rights of all the members having the right to vote at the meeting;

36. Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a show of hands, been carried, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution.

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37. If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn.

38. In the case of an equality of votes, whether on a show of hands, or on a poll, the Chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall be entitled to a second or casting vote.

VOTES OF MEMBERS

39. At any meeting of members whether on a show of hands or on a poll every holder of a voting share present in person or by proxy shall have one vote for every voting share of which he is the holder.

40. A resolution which has been notified to all members for the time being entitled to vote and which has been approved by a majority of the votes of those members in the form of one or more documents in writing or by telex, telegram, cable or other written electronic communication shall forthwith, without the need for any notice, become effectual as a resolution of the members.

41. If a committee be appointed for any member who is of unsound mind he may vote by his committee.

42. If two or more persons are jointly entitled to a registered share or shares and if more than one of such persons shall vote in person or by proxy at any meeting of members or in accordance with the terms of Regulation 39, the vote of that person whose name appears first among such voting joint holders in the share register shall alone be counted.

43. Votes may be given either personally or by proxy.

44. The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote.

45. An instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy.

46. The instrument appointing a proxy shall be in writing under the hand of the appointer unless the appointer is a corporation or other form of legal entity other than one or more individuals holding as joint owner in which case the instrument appointing a proxy shall be in writing under the hand of an individual duly authorised by such corporation or legal entity to execute the same. The Chairman of any meeting at which a vote is cast by proxy so authorised may call for a notarially certified copy of such authority which shall be produced within seven days of being so requested or the vote or votes cast by such proxy shall be disregarded. In the case of a proxy being given by the holder of a share issued to bearer, it shall be sufficient for the appointer to identify himself by writing the identifying number of the certificate evidencing the shares issued to bearer.

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CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS

47. Any corporation or other form of corporate legal entity which is member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the members or any class of members of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual member of the Company.

DIRECTORS

48. Subject to any subsequent amendment to change the number of directors, the number of the directors shall be not less than one nor more than fifteen.

49. The first director or directors shall be elected by the subscriber to the Memorandum of Association. Thereafter, the directors shall be elected by the members or the directors for such terms as the members or directors may determine and may be removed by them.

50. Each director holds office until his successor takes office or until his earlier death resignation or removal.

51. A vacancy in the board of directors may be filled by a resolution of members or a majority of the remaining directors.

52. A director shall not require a share qualification, but nevertheless shall be entitled to attend and speak at any meeting of the members and at any separate meeting of the holders of any class of shares in the Company.

53. A director by writing under his hand deposited at the Registered Office of the Company may from time to time appoint another director or an other person to be his alternate. Every such alternate shall be entitled to be given notice of meetings of the directors and to attend and vote as a director at any such meeting at which the director appointing him is not personally present and generally at such meeting to have and exercise all the powers, rights, duties and authorities of the director appointing him. Every such alternate shall be deemed to be an officer of the Company and shall not be deemed to be an agent of the director appointing him. If undue delay or difficulty would be occasioned by giving notice to a director of a resolution of which his approval is sought in accordance with Regulation 78 his alternate (if any) shall be entitled to signify approval of the same on behalf of that director. The remuneration of an alternate shall be payable out of the remuneration payable to the director appointing him, and shall consist of such portion of the last mentioned remuneration as shall be agreed between such alternate and the director appointing him. A director by writing under his hand deposited at the Registered Office of the Company may at any time revoke the appointment of an alternate appointed by him. If a director shall die or cease to hold the office of director, the appointment of his alternate shall thereupon cease and terminate.

54. The directors may, by resolution, fix the emolument of directors in respect of services rendered or to be rendered in any capacity to the Company. The directors may also be

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paid such traveling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors, or any committee of the directors or meetings of the members, or in connection with the business of the Company as shall be approved by resolution of the directors.

55. Any director who, by request, goes or resides abroad for any purposes of the Company, or who performs services which in the opinion of the Board go beyond the ordinary duties of a director, may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as shall be approved by resolution of the directors.

56. The Company may pay to a director who at the request of the Company holds any office (including a directorship) in, or renders services to, any company in which the Company may be interested, such remuneration (whether by way of salary, commission, participation in profits or otherwise) in respect of such office or services as shall be approved by resolution of the directors.

57. The office of director shall be vacated if the director:

(a) is removed from office by a resolution of members or by a resolution of directors, or

(b) becomes bankrupt or makes any arrangement or composition with his creditors generally, or

(c) becomes of unsound mind, or of such infirm health as to be incapable of managing his affairs, or

(d) resigns his office by a notice in writing to the Company.

58.    (a) A Director may hold any other office or position of profit under the Company (except that of auditor) in conjunction with his office of director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the directors shall arrange.

(b) A director may be or become a director or officer of, or otherwise be interested in any company promoted by the Company, or in which the Company may be interested, as a member or otherwise and no such director shall be accountable for any remuneration or other benefits received by him as director or officer or from his interest in such other company. The directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favour of any resolutions appointing them, or of their number, directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A director may vote in favour of the exercise of such voting rights in the manner aforesaid notwithstanding that he may be, or be about to become ,a director or officer of such other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in the manner aforesaid.

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(c) No director shall be disqualified by his office from contracting with the Company either as a vendor, purchaser or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any director shall be in any way interested be voided, or shall any director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement, by reason of such director holding that office or of the fiduciary relationship thereby established. The nature of a director’s interest must be declared by him at the meeting of the directors at which the question of entering into the contract or arrangement is first taken into consideration, and if the director was not at the date of the meeting interested in the proposed contract or arrangement, or shall become interested in a contract or arrangement after it is made, he shall forthwith after becoming so interested, advise the Company in writing of the fact and nature of his interest. A general notice to the directors by a director that he is a member of a specified firm or company, and is to be regarded as interested in any contract or transaction which may, after the date of notice, be made with such firm or company shall (if such director shall give the same at a meeting of the directors, or shall take reasonable steps to secure that the same is brought up and read at the next meeting of the directors after it is given) be a sufficient declaration of interest in relation to such contract or transaction with such firm or company. A director may be counted as one of a quorum upon a motion in respect of any contract or arrangement which he shall make with the Company, or in which he is so interested as aforesaid, and may vote upon such motion.

OFFICERS

59. The directors of the Company may, by resolution of directors, appoint officers of the Company at such times as shall be considered necessary or expedient, and such officers may consist of a President, one or more Vice Presidents, a Secretary, and a Treasurer and such other officers as may from time to time be deemed desirable. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modifications in such duties as may be prescribed by the directors thereafter, but in the absence of any specific allocation of duties it shall be the responsibility of the President to manage the day to day affairs of the Company, the Vice Presidents to act in order of seniority in the absence of the President, but otherwise to perform such duties as may be delegated to them by the President, the Secretary to maintain the registers, minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the Company by applicable law, and the Treasurer to be responsible for the financial affairs of the Company.

60. Any person may hold more than one office and no officer need be a director or member of the Company. The officers shall remain in the office until removed from office by the directors whether or not a successor is appointed.

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61. Any officer who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it and of transacting any of the business of the officers.

POWERS OF DIRECTORS

62. The business of the Company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company, and may exercise all such powers of the Company as are not by the Act or by these Regulations required to be exercised by the members subject to any delegation of such powers as may be authorised by these Regulations and to such requirements as may be prescribed by resolution of the members, but no requirement made by resolution of the members shall prevail if it be inconsistent with these Regulations nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made.

63. The Board may entrust to and confer upon any director or officer any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. The directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit. Any committees so formed shall in the exercise of powers so delegated conform to any regulations that may be imposed on it by the directors.

64. The directors may from time to time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Regulations) and for such period and subject to such conditions as they think fit, and any such powers of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney to delegate all or any of the powers authorities and discretions vested in him.

65. Any director who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it at Board Meetings and of transacting any of the business of the directors.

66. All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be, in such manner as the directors shall from time to time by resolution determine.

67. The directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertakings, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.

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68. The continuing directors may act notwithstanding any vacancy in their body, save that if the number of directors shall have been fixed at two or more persons and by reason of vacancies having occurred in the Board there shall be only one continuing director, he shall be authorised to act alone only for the purpose of appointing another director.

PROCEEDINGS OF DIRECTORS

69. The meetings of the Board of Directors and any committee thereof shall be held at such place or places as the directors shall decide.

70. The directors may elect a chairman of their meeting and determine the period for which he is to hold office; but if no such chairman is elected, or if at any meeting the Chairman is not present at the time appointed for holding the same, the directors present may choose one of their number to be chairman for the meeting.

71. The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. Questions arising at any meeting shall be decided by a majority of votes; in case of an equality in votes the Chairman shall have a second or casting vote. A director may at any time summon a meeting of the directors. If the Company shall have only one director, the provisions hereinafter contained for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters and in lieu of minutes of a meeting shall record in writing and sign a note of memorandum of all matters requiring a resolution of the directors. Such note or memorandum shall constitute sufficient evidence of such resolution for all purposes.

72. A director shall be given not less than seven days notice of a meeting of the directors.

73. Notwithstanding Regulation 72 above, a meeting of the directors held in contravention of that Regulation shall be valid if a majority of the directors entitled to vote at the meeting have waived the notice of the meeting.

74. The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice does not invalidate the meeting.

75. A meeting of the directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one-third of the total number of directors with a minimum of two, or in the case of only one director a minimum of one.

76. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved.

77. Any one or more members of the Board of Directors or any committee thereof may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participating by such means shall constitute presence in person at a meeting.

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78. A resolution approved by a majority of the directors for the time being entitled to receive notice of a meeting of the directors or of a committee of the directors and taking the form of one or more documents in writing or by telex, telegram, cable or other written or electronic communication shall be as valid and effectual as if it had been passed at a meeting of the directors or of such committee duly convened and held, without the need for any notice.

INDEMNITY

79. Subject to the provisions of the Act and of any other statute for the time being in force every director or other officer of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, and no director or other officer shall be liable for any loss, damage or misfortune which may happen to, or be incurred by the Company in the execution of the duties of his office, or in relation thereto.

SEAL

80. The directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument except as provided in Regulation 3, shall be witnessed by a director or any other person so authorised from time to time by the directors. The directors may provide for a facsimile of the common seal and approve the signature of any director or authorised person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the seal has been affixed to such instrument and the same had been signed as hereinbefore described.

DIVIDENDS AND RESERVES

81. The directors may, by resolution, declare a dividend but no dividend shall be declared and paid except out of surplus and unless the directors determine that immediately after the payment of the dividend

(a) the Company will be able to satisfy its liabilities as they become due in the ordinary course of its business; and

(b) the realisable value of the assets of the Company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital.

82. Dividends may be declared and paid in money, shares or other property.

83. In computing the surplus for the purpose of resolving to declare and pay a dividend, the directors may include in their computation the net unrealised appreciation of the assets of the Company.

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84. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the surplus of the Company.

85. Subject to the rights of the holders of shares entitled to special rights as to dividends, all dividends shall be declared and paid according to the par value of the shares in issue, excluding those shares which are held by the Company as Treasury shares at the date of declaration of the dividend.

86. The directors may, before recommending any dividend, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at their discretion, either be employed in the business of the Company or be invested in such investments as the directors may from time to time think fit.

87. If several persons are registered as joint holders of any share, any of them may give effectual receipt for any dividend or other monies payable on or in respect of the share.

88. In the case of shares issued to bearer, the directors may provide for the payment of dividend by reference to counterfoils or warrants issued with the certificate for such shares, and the production of such dividend counterfoil or warrant shall evidence entitlement to receipt of such dividend in the same way and to the same extent as production of the certificate itself. At the time of presentation of the counterfoil or warrant, the directors may issue such further counterfoils or warrants as may be required to permit receipt by the holder thereof of subsequent dividends.

89. Notice of any dividend that may have been declared shall be given to each member in manner hereinafter mentioned and all dividends unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the Company.

90. No dividend shall bear interest against the Company.

BOOKS AND RECORDS

91. The Company shall keep such accounts and records as the directors consider necessary or desirable in order to reflect the financial position of the Company.

92. The Company shall keep minutes of all meetings of directors, members, committees of directors, committees of officers and committees of members, and copies of all resolutions consented to by the directors, members, committees of directors, committees of officers and committees of members.

93. The books, records and minutes required by Regulation 91 and 92 shall be kept at the registered office of the Company or at such other place as the directors may determine, and shall be open to the inspection of the directors at all times.

94. The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the books, records and minutes of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right of inspecting any book, record, minute or document of the Company except as conferred by Law or authorised by resolution of the directors.

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95. The directors may by resolution call for the accounts of the Company to be examined by an auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed.

96. The auditor may be a member of the company but no director or officer shall be eligible during his continuance in office.

97. Every auditor of the Company shall have a right of access at all times to the books of accounts and vouchers of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties.

98. The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company’s audited Profit and Loss Account and Balance Sheet is to be presented.

NOTICES

99. Any notice, information or written statement required to be given to members shall be served:

(a) in the case of members holding registered shares, by mail (air-mail service if available) addressed to each member at the address shown in the share register; and

(b) in the case of members holding shares issued to bearer (i) by mail (airmail service if available) addressed to the agent or attorney whose name and address has been given for service of notice by the bearer of the share (identified for this purpose by the number of the share certificate), or (ii) in the absence of an address for service being given, or if the notice, information or written statement cannot be served for any other reason, by publishing the notice, information or written statement in the Gazette and in one or more newspapers published or circulated in the British Virgin Islands and in a newspaper where the Company has its principal office.

100. All notices directed to be given to the members shall, with respect to any registered shares to which persons are jointly entitled, be given to whichever of such persons is named first in the share register, and notice so given shall be sufficient notice to all the holders of such shares.

101. Any notice, if served by post, shall be deemed to have been served within ten days of posting, and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and put into the Post Office.

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PENSION AND SUPERANNUATION FUND

102. The directors may establish and maintain or procure the establishment and maintenance of any non-contributory or contributory pension or superannuation funds for the benefit of, and give or procure the giving of donations, gratuities, pensions, allowances or emoluments to any persons who are or were at any time in the employment or service of the Company or any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary, or who are or were at any time directors or officers of the Company or of any such other company as aforesaid or who hold or held any salaried employment or office in the Company or such other company, or any persons in whose welfare the Company or any such other company as aforesaid is, or has been at any time, interested, and to the wives, widows, families and dependents of any such persons, and make payments for or towards the insurance of such persons as aforesaid, and may do any of the matters aforesaid either alone or in conjunction with any such other company as aforesaid. A director holding any such employment or office shall be entitled to participate in and retain for his own benefit any such donation, gratuity, pension, allowance or emolument.

WINDING UP

103. If the Company shall be wound up, the Liquidator may, in accordance with a resolution of members, divide amongst the members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any such property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributors as the Liquidator shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

ARBITRATION

104. Whenever any difference arises between the Company on the one hand and any of the members, their executors, administrators or assigns on the other hand touching the true intent and construction or the incidence or consequences of these presents or of the Act touching anything done or executed omitted or suffered in pursuance of the Act touching any breach or alleged breach or otherwise relating to the premises or to these presents or to any Act affecting the Company or to any of the affairs of the Company such difference shall unless the parties agree to refer the same to a single arbitrator be referred to two arbitrators, one to be chosen by each of the parties to the difference and the arbitrators shall before entering on the reference appoint an umpire.

105. If either party to the reference makes default in appointing an arbitrator either originally or by way of substitution (in the event that an appointed arbitrator shall die, be incapable of acting or refuse to act) for ten days after the other party has given him notice to appoint the same, such other party may appoint an arbitrator to act in the place of the arbitrator of the defaulting party.

AMENDMENT TO ARTICLES

106. The Company may alter or modify the conditions contained in these Regulations as originally drafted or as amended from time to time by a resolution of the directors.

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We, the undersigned Subscriber, are desirous of being formed into a Company in pursuance of these Articles of Association.

NAME, ADDRESS AND DESCRIPTION OF SUBSCRIBER

/s/ Marcus Diprose

Marcus Diprose

AMS Trustees Limited

Sea Meadow House

Blackburne Highway

P.O. Box 116

Road Town, Tortola

British Virgin Islands

Dated this 18th day of April, 2002

WITNESS to the above signature:

/s/ Sherrie Archer

Sherrie Archer

Sea Meadow House

Blackburne Highway

P.O. Box 116

Road Town, Tortola

British Virgin Islands

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EX-3.9

Exhibit 3.9

“APPROVED”

by the General Meeting of Shareholders

dated April 4, 2005

CHARTER

OF

SUBSIDIARY

JOINT-STOCK

COMPANY

“CASPI NEFT TME”

CHARTER OF SUBSIDIARY JOINT-STOCK COMPANY “CASPI NEFT TME”

ARTICLE 1. GENERAL PROVISIONS

1.1. Subsidiary Joint-Stock Company “Caspi Neft TME”, hereinafter referred to as the “Company”, acts on the basis of the Civil Code of the Republic of Kazakhstan (the General Part) dated December 27, 1994, the Law of the Republic of Kazakhstan “On Joint-Stock Companies” dated May 13, 2003 (hereinafter referred to as the “Law”), and other legislative acts of the Republic of Kazakhstan (hereinafter referred to as the “Legislation”), and this Charter.

ARTICLE 2. NAME, LOCATION AND THE TERM FOR BUSINESS ACTIVITY OF THE COMPANY

2.1. Full official name of the Company:

• in the Kazakh language: ;

• in the Russian language: ;

• in the English language: Subsidiary Joint-Stock Company “Caspi Neft TME”.

2.2. Short official name of the Company:

• in the Kazakh language: ;

• in the Russian language: ;

• in the English language: SJSC “Caspi Neft TME”.

The above-given names shall be used in all documents to be sent by the Company in its name or on its behalf and if the Company acts as a party in any legal relationship.

2.3. Location of the executive body of the Company (Legal Address):

50 A Gazizy Zhubanovoi Street, Aktobe, 463000, Republic of Kazakhstan.

2.4. Term of Business Activity of the Company is not limited.

ARTICLE 3. LEGAL STATUS OF THE COMPANY

3.1. The Company is a legal entity and acquires all relevant rights from the moment of its state registration in the Ministry of Justice of the Republic of Kazakhstan in the procedure provided by the acting Legislation.

3.2. The Company is a commercial organization, has an independent balance sheet and performs its activity in accordance with the acting Legislation. The Company bears full responsibility for observance of the rights and lawful interests of the citizens, legal entities and the state, as well as for fulfillment of its obligations assumed.

3.3. The Company has a seal bearing its name, stamps, company’s letterhead, trademarks, logotype and other attributes.

3.4. The Company has movable and real property, separated from the property of its Shareholders and bears no responsibility for their obligations. The Company is responsible for its obligations within the limits of its property. The Company’s Shareholders are not responsible for its obligations and bear losses related to the Company’s activity only within the limits of the value of its owned shares, except for cases provided by the legislative acts of the Republic of Kazakhstan.

3.5. Form of ownership of the Company is private.

3.6. Financial and economic activities of the Company are performed on the basis of proprietary, economic and financial independence.

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3.7. Labor relations between the Company and its employees (work regime, working hours and free time, guarantees and compensations, etc.) are regulated by the acting Legislation.

3.8. The Company has the right to obtain all necessary licenses and other permits and approvals of the state bodies in order to perform its business activity.

3.9. The Company has the right to establish and close down its branches and representations by the decision of the Board of Directors in the procedure provided for by the Legislation.

ARTICLE 4. PURPOSES AND DIRECTIONS OF COMPANY’S ACTIVITY

4.1. The Company is formed for profit-seeking activity for the purpose of profit earning. To attain this goal, the Company makes any civil and legal transactions and deals, which are not prohibited by the Legislation, performs operations with property and securities, as well as performs any other legally significant actions.

4.2. Primary activities of the Company are:

4.2.1. investments into the enterprises specializing in exploration and production of oil and gas; development of oil and gas exploration and production projects;

4.2.2. prospecting and exploration of oil, gas, hydrocarbons and water reserves with the purpose to strengthen the mineral and raw material basis of the Republic of Kazakhstan on a competitive extraterritorial basis, development of oil and gas fields at the expense of both owned assets and attracted funds (investments);

4.2.3. exploration and production of oil, gas and hydrocarbons;

4.2.4. marketing, storage and sale of oil and oil products both in domestic and international market, transportation of hydrocarbons and their processed products, using any type of transport, including marine transport;

4.2.5. creating conditions ensuring stable incomes of the Shareholders;

4.2.6. securities transactions in accordance with the Legislation;

4.2.7. commercial and external economic activity in accordance with the acting Legislation.

4.3. With the availability of the License, the Company has the right to perform any other licensed activities.

4.4. The Company has the right to perform any other activities permitted by the Legislation.

ARTICLE 5. RIGHTS AND OBLIGATIONS OF THE SHAREHOLDERS OF THE COMPANY

5.1. A Shareholder of the Company has the right:

5.1.1. to participate in managerial control of the Company in the procedure provided for by the Law and by this Charter;

5.1.2. to receive dividends;

5.1.3. to receive information on activity of the Company, including financial reporting of the Company, according to the procedure established by the General Meeting of Shareholders or by the Charter;

5.1.4. to receive extracts from the registrar or nominee holder confirming its ownership to securities;

5.1.5. to offer to the General Meeting of Shareholders the candidates for election to the Board of Directors of the Company;

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5.1.6. to dispute in a judicial procedure the decisions made by the bodies of the Company;

5.1.7. to address written inquiries to the Company on activities of the Company and receive motivated answers within thirty days of the date of receipt of the inquiry by the Company;

5.1.8. to a part of the property in case of liquidation of the Company;

5.1.9. of privileged right to buy Shares or other securities of the Company, which may be converted into the shares in the procedure established by the Law.

5.2. A Shareholder or several Shareholders, acting on the basis of the agreement concluded between them, who (who in the aggregate) owns 10 and more percent of the voting shares of the Company (hereinafter referred to as the “Principal Shareholder”) also has the right:

5.2.1. to demand convening of an extraordinary General Meeting of Shareholders or to apply to court with a claim for its convening in case of refusal of the Board of Directors to convene the General Meeting of Shareholders;

5.2.2. to offer to the Board of Directors to include extra items into the agenda of the General Meeting of Shareholders in accordance with the Law;

5.2.3. to demand convening of the meeting of the Board of Directors;

5.2.4. to demand an audit of the Company to be performed by an auditing company at the expense of the Shareholder.

5.3. The provisions of the Charter of the Company and other documents and decisions of the Company’s bodies restricting the above-mentioned rights of the Shareholders are invalid.

5.4. The Shareholders may have other rights provided by the acting Legislation and the Charter of the Company.

5.5. A shareholder of the Company is obliged:

5.5.1. to pay for shares;

5.5.2. to notify the registrar or nominee holder of shares owned by this Shareholder within 10 (ten) days about change of the data required for conduct of the register of Shareholders of the Company;

5.5.3. to not disclose information about the Company and its business activity, which is considered to be an official, commercial or any other secret protected by law;

5.5.4. to perform other obligations in accordance with the Legislation.

5.6. The Company and the registrar shall not bear responsibility for consequences of non-fulfillment by the Shareholder of the requirement stipulated by subitem 5.5.2 of item 5.5 contained in this Article.

5.7. The Company may not impose any other duties on its Shareholder.

ARTICLE 6. CHARTER CAPITAL OF THE COMPANY

6.1. The amount of the Charter Capital of the Company is 50,000,000 (fifty million) tenge and consists of 50,000 (fifty thousand) of common shares; the nominal value of one share is 1,000 (one thousand) tenge.

6.2. The Company may place its shares after state registration of their issue.

6.3. Decision on placing of shares of the Company and the price of their placing within the number of authorized shares specified by the General Meeting of Shareholders shall be determined by the decision of the Board of Directors of the Company.

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6.4. Reduction of the declared Charter Capital lower than the minimum size established by the Law is not permitted.

6.5. Widening of the Charter Capital of the Company is permitted by the decision of the General Meeting of Shareholders by means of issue and placing of shares in the procedure stipulated by the Legislation.

ARTICLE 7. SHARES

7.1. The Company issues common shares or uncertificated common and preferred shares.

7.2. A share is indivisible. If a share is acquired by several persons, they all in relation to the Company shall be considered as one Shareholder and they exercise their rights through their mutual representative.

7.3. The common share gives every shareholder, who owns it, equal measure of right comparing with the other holders of ordinary shares. An ordinary share entitles a Shareholder to participate in the General Meeting of Shareholders with the right to vote on all matters submitted for voting; the right to receive dividends, if the Company has net income, the right to receive a part of the property of the Company in case of its liquidation in the procedure established by the acting Legislation.

7.4. The Shareholders who own the preferred shares take precedence over the shareholders who are the owners of ordinary shares to receive the dividends in the previously provided guaranteed amount, and have the priority right to receive a part of the Company’s property in case of its liquidation in the procedure established by the Legislation and the Charter of the Company.

7.5. The amount of the preferred shares of the Company shall not exceed 25 percent of the total amount of its authorized shares.

7.6. The preferred share shall not entitle the Shareholder of the Company to participate in managerial control of the Company in cases other than listed below:

7.6.1. The General Meeting of Shareholders shall consider the question the decision of which may restrict the rights of the Shareholder who owns the preferred shares. The decision on this question shall be deemed to be taken provided that not less than two thirds of the total amount of the preferred shares voted for limitation of the rights;

7.6.2. The General Meeting of Shareholders shall consider the question on reorganization or liquidation of the Company;

7.6.3. Dividend on preferred share shall not be paid out in full amount within the set period of payment.

7.7. The shares shall be placed by the Company in accordance with the Legislation and the Charter. The Company shall be entitled to issue other securities, the terms and procedure of issue, placement, circulation and repayment of which are established by the Legislation on the securities market.

7.8. If the Company declares the intention to place the declared shares or other securities convertible in common shares of the Company and to place the earlier redeemed specified securities, the Company is obliged by written notice or publications in the printed edition 30 days prior to sale to propose the Shareholders to get securities on equal terms proportionally shares they own at the price established by the body of the Company, which have made a decision on placement of securities. At that the Shareholder possessing common shares of the Company has the right of primary purchasing of common shares or other securities convertible in common shares of the

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Company, and the Shareholder possessing preferred shares of the Company has the right of primary purchasing of preferred shares of the Company.

ARTICLE 8. PROCEDURE FOR PAYMENT OF THE COMPANY’S DIVIDENDS

8.1. Dividends for the Shares of the Company are paid in the monetary form or in securities of the Company, provided that a decision on payment of the dividends has been taken at the General Meeting of Shareholders by simple majority of voting Shares of the Company, excluding the dividends for preferred shares which procedure of payment has been determined in Article 9 of the present Charter. Payment of the dividends for the Company’s shares in the securities of the Company is permitted only in case when payment is executed by the declared Shares of the Company and issued bond securities with a written consent of Shareholder.

8.2. The Company shall pay dividends based on the results of the respective year.

8.3. A decision to pay dividends on common shares of the Company on the results of the respective year shall be made by the annual General Meeting of Shareholders. The General Meeting of Shareholders has the right to make decision not pay the dividends for the common shares of the Company, but should obligatory publish this decision in press within 10 (ten) days from the day of taking the decision.

8.4. Within 5 (five) working days after taking the decision on payment of the dividends for the common shares of the Company, this decision has to be published in press.

8.5. The decision on payment of the dividends for the common shares of the Company shall contain the following data:

8.5.1. the name, location, banking details and other requisites of the Company;

8.5.2. the period, during which the dividends are paid;

8.5.3. the dividend amount per one common share;

8.5.4. the start date of payment of dividends;

8.5.5. procedure and form of payment of dividends.

8.6. A Shareholder has the right to claim for payment of non-received dividends irrespective of the time of the debts formation of the Company.

8.7. Dividends shall not be accrued and paid for the shares, which were not placed or bought out by the Company itself.

ARTICLE 9. DIVIDENDS FOR THE PREFERRED SHARES

9.1. For payment of the dividends for the preferred Shares of the Company the decision of the Company’s body is not required except the cases specified in Article 11.

9.2. Dividends on the preferred Shares shall be issued based on the results of the respective year.

9.3. The amount of the dividends accrued for the preferred Shares can not be lower than the amount of dividends accrued for the common shares over the same period.

9.4. Before full dividend payment on the preferred shares of the Company the dividend payments on the ordinary Shares shall not be made.

9.5. The guaranteed size of the dividend on the preferred Shares is settled by the General Meeting of Shareholders at decision making on issuance of preferred shares.

9.6. Within five working days prior the date of dividend payment on the preferred shares, the Company shall publish the information on dividend payment with the data listed in sub-items 8.5.1., 8.5.2., 8.5.3., 8.5.4. and 8.5.5. of Article 8 of herein in press, as well as the dividend size per a preferred share of the Company.

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ARTICLE 10. RESTRICTIONS ON PAYMENT OF DIVIDENDS

10.1. Dividends shall not be paid for the common and preferred shares of the Company:

10.1.1. if the dimension of the owned capital is negative, or if the dimension of the owned capital of the Company becomes negative as a result of dividend payment on its shares;

10.1.2. if the Company fits all the criteria for insolvency or bankruptcy in accordance with Bankruptcy Laws, or if the said criteria appear after payment of dividends on its shares;

10.1.3. if the court or the General Meeting of Shareholders takes decision about its liquidation.

ARTICLE 11. SETTLEMENT OF TRANSACTIONS WITH THE COMPANY’S SHARES

11.1. The procedure of transfer and carve-out of Shares of the Company by the Shareholders is determined by the Legislation of the Republic of Kazakhstan and the Charter of the Company as well as by the direct agreements between the Shareholders of the Company.

ARTICLE 12. OTHER SECURITIES OF THE COMPANY

12.1. BONDS

12.1.1. The Company shall be entitled to issue bonds for the purpose of attraction of financial resources for further business activity of the Company. The terms of bond issue shall be determined by the decision taken by the Board of Directors. The owners of the bonds shall not be vested with rights to participate in managerial control of the Company.

12.1.2. The Joint Stock Company shall be entitled to issue bonds secured by pledge of property, secured by warrants of third persons, junk bonds. The Joint Stock Company has the right to issue bearer and discount bonds. The terms and procedure of bond issue shall be determined by the securities market legislation.

12.1.3. The amount and periodicity of payment of remuneration (interest) on the bonds issued by the Company shall be set by way of non-recurrent or terminal payment effected in accordance with the terms of bond issue.

12.1.4. Bond issue is liable to the state registration in the procedure provided for by the Legislation and admitted only subject to the terms of Securities Law.

12.1.5. The Company has the right to issue the convertible securities. Converting of the bonds to the shares of the Company shall be carried out in accordance with the terms and procedure of converting of bonds to shares of the issuer established by the prospectus of bond issue.

12.2. CONVERTIBLE SECURITIES

12.2.1. The Company has the right to issue convertible securities.

12.2.2. The converting terms and right to converting shall be approved by the prospectus of securities issue.

12.2.3. Issue of the securities of the Company convertible to the shares shall be permitted within the limits of the authorized and distributed shares of the Company.

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12.3. OPTIONS

12.3.1. The Company is entitled to conclude with the investors the options for acquisition of its issued shares, as well as bonds convertible to the shares of this Joint Stock Company by the decision of the Board of Directors subject to:

1) the amount of shares of the Company being the objects of such options shall not exceed variation between the number of the authorized and placed shares of the Company;

2) it’s forbidden to the Company to conclude the options by means of which the Company may buy out its placed shares except for the cases established by the Legislation of the Republic of Kazakhstan;

3) Option shall cover a type and amount of securities which the investor is entitled to buy, the securities purchase price, period and procedure of securities acquisition and other option terms and conditions;

4) The terms and conditions of acquisition of options for shares and bonds convertible to shares shall be established by the interoffice documents of the Joint Stock Company;

5) The Shareholder of Joint Stock Company shall have the right of first refusal for options. The Shareholder is not entitled to transfer a right of first refusal to other persons.

12.3.2. The procedure and terms and conditions of conclusion of options and their circulation shall be regulated by the Stock Market Legislation.

ARTICLE 13. MANAGEMENT BODIES OF THE COMPANY

13.1. The management bodies of the Company are:

13.1.1. the highest body — the General Meeting of Shareholders;

13.1.2. the management body — the Board of Directors;

13.1.3. the executive body — the Company Management (collegial body);

13.1.4. the supervisory body — Internal Audit Department (collegial body).

ARTICLE 14. GENERAL MEETING OF THE SHAREHOLDERS OF THE COMPANY

14.1. The Company is obligated to hold yearly an annual General Meeting of Shareholders. An annual General Meeting of Shareholders must be held within 5 months after the end of a fiscal year. The given period is deemed to be extended for three months if the audit of the Company activities for the reported period cannot be completed.

14.2. At the annual General Meeting of Shareholders the annual financial reporting is approved, the procedure of distribution of net income of the Company for the last fiscal year and the dividend size per ordinary share of the Company are determined. The annual General Meeting of Shareholders shall be entitled to review other issues, taking decisions on which is referred to the competence of the General Meeting of Shareholders.

14.3. The annual General Meeting of Shareholders is convened by the Board of Directors.

14.4. Apart from annual general meetings, there may be extraordinary General Meetings of Shareholders.

14.5. Every shareholder as he votes at the General Meeting has the number of votes equal to the number of his voting shares except if another procedure of votes’ determination is provided for in the Legislation.

14.6. Any persons can attend the General Meeting of Shareholders, unless otherwise specified by the General Meeting of Shareholders. The right of persons to speak at the General

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Meeting of Shareholders is established by the decision of the General Meeting of Shareholders.

14.7. The annual General Meeting of Shareholders may be convened and held on the ground of the court decision taken for the claim of any interested person, in case the bodies of the Company violate the procedure of convening of the annual General Meeting of Shareholders established by the Law.

ARTICLE 15. EXCLUSIVE COMPETENCE OF THE GENERAL MEETING OF SHAREHOLDERS

15.1. Exclusive competence of the General Meeting of Shareholders includes the following:

15.1.1. introduction of amendments and addenda into the Charter of the Company or its approval in a new version;

15.1.2. voluntary reorganization or liquidation of the Company;

15.1.3. taking decision on changing of the number of the authorized shares of the Company;

15.1.4. determination of the number of members and term of powers of the counting commission, election of its members and early termination of their authority;

15.1.5. determination of the number of members and term of powers of the Board of Directors, election of its members and early termination of their authority; determination of the amount and terms of payment of remuneration to the members of the Board of Directors;

15.1.6. determination of the audit company, which makes the audit of the Company;

15.1.7. approval of the annual financial reporting;

15.1.8. approval of the procedure of distribution of the net income of the Company for the reporting fiscal year, taking decision about payment of dividends on ordinary shares and approval of the dividend size per ordinary share of the Company according to the results of the year;

15.1.9. taking decision about non-payment of dividends on ordinary shares of the Company in cases specified in item 10.1. of the article 10 of the present Charter;

15.1.10.  taking decision on participation of the Company in formation or in operations of other legal entities by transfer of a part or several parts of the assets totaling to 25% or more of all the assets owned by the Company;

15.1.11.  approval of decisions on conclusion by the Company of large transactions and those transactions, in execution of which the Company is interested;

15.1.12.  taking decision about increase of the liabilities of the Company by the amount constituting 25% and more of the owned capital of the Company;

15.1.13.  determination of the form to notify the Shareholders by the Company of convocation of the General Meeting of Shareholders and taking decision about publishing such notice in press;

15.1.14.  approval of the methodology of determining the value of shares when the shares are bought out by the Company in accordance with the Legislation of the Republic of Kazakhstan on the securities market;

15.1.15.  approval of the agenda of the General Meeting of Shareholders;

15.1.16.  determination of the procedure of providing information to the Shareholders regarding business activity of the Company;

15.1.17.  introduction and cancellation of the golden share;

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15.1.18.  determination and approval of external auditor of the Company;

15.1.19.  other issues, decisions on which are referred by the Law and this Charter of the Company to the exclusive competence of the General Meeting of Shareholders.

ARTICLE 16. DECISION MAKING BY THE GENERAL MEETING OF SHAREHOLDERS

16.1. Decisions on the issues listed in subitems 15.1.1. – 15.1.3. of item 15.1. of Article 15 of this Charter shall be made by a qualified majority of the total number of the voting shares of the Company.

16.2. Decisions on other issues referred to the exclusive competence of the General Meeting of Shareholders shall be made by a simple majority of votes of the total number of the voting shares of the Company, which take part in voting, unless otherwise specified by the Law and the Charter.

16.3. The issues referred to the exclusive competence of the General Meeting of Shareholders may not be delegated for competence of the other bodies, officials and employees of the Company in cases other than stipulated by the Law.

16.4. The General Meeting of Shareholders shall be entitled to cancel any decision of other bodies of the Company on the issues relating to the internal activity of the Company.

ARTICLE 17. EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS

17.1. An extraordinary General Meeting of Shareholders shall be convened on the initiative of the Board of Directors, liquidation committee, Principal Shareholder.

17.2. The expenses related to convocation, preparation and holding of the General Meeting of Shareholders shall be incurred by the Company, in cases other than stipulated by the Law and this Charter.

17.3. An extraordinary General Meeting of Shareholders may be convened and held on the ground of the court decision taken for the claim of the Principal Shareholder, if the bodies of the Company have not fulfilled the demand of the Principal Shareholder to hold an extraordinary General Meeting of Shareholders.

ARTICLE 18. INFORMATION ON CONDUCTING THE GENERAL MEETING OF SHAREHOLDERS

18.1. A list of the shareholders entitled to participate in the General Meeting of Shareholders is made by the registrar of the Company on the basis of the data of the register of the holders of shares of the Company. The date of making this list shall not be determined prior to the date of the decision-making on holding the General Meeting of Shareholders.

18.2. The Shareholders shall be informed about conduct of the General Meeting not later than 30 calendar days, and in case of absentee voting or combined voting – not later than 45 calendar days prior to the date of holding the meeting by sending a written notice to the Shareholders and (or) publishing such notice in press specified in item 18.8 of this Charter.

18.3. The Company shall be entitled to inform additionally the Shareholders about holding the General Meeting through other mass media (TV, radio).

18.4. Notice of the General Meeting of Shareholders shall include:

18.4.1.  full name and location of the executive body of the Company;

18.4.2.  information about initiator of convocation of the meeting;

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18.4.3. date, time and place of conduct of the General Meeting of Shareholders of the Company, registration time of the members of the meeting; the date and time of conduct of the adjourned General Meeting of Shareholders of the Company, which is to be held in case the first meeting does not take place;

18.4.4. date of drawing up a list of the shareholders entitled to participate in the General Meeting of Shareholders of the Company;

18.4.5. the agenda of the General Meeting of Shareholders;

18.4.6. procedure of familiarization of the Shareholders of the Company with the materials on the agenda items of the General Meeting of Shareholders of the Company.

18.5. The materials on the agenda items of the General Meeting of Shareholders shall contain information in the content required to make reasonable decisions on these items.

18.6. The agenda of the General Meeting of Shareholders shall be made by the Board of Directors of the Company and shall contain comprehensive list of concretely formulated items submitted for discussion.

18.7. The agenda for the adjourned General Meeting of Shareholders shall not differ from the agenda of the General Meeting of Shareholders, which did not take place. The agenda of the General Meeting of Shareholders may be supplemented by the Principal Shareholder or the Board of Directors, provided that the shareholders of the Company are notified of such addenda not later than 15 days prior to the date of holding the General Meeting.

18.8. The information, publication of which is provided for in accordance with the Legislation and this Charter, shall be published in the newspapers “Kazakhstanskaya Pravda” or “Yegemen Kazakhstan”.

ARTICLE 19. QUORUM OF THE GENERAL MEETING OF SHAREHOLDERS

19.1. The General Meeting of Shareholders shall be entitled to review and take decisions on the agenda items, if the Shareholders or their representatives included into the list of Shareholders, and also the persons specified in item 2 of Article 39 of the Law, owning, in the aggregate, 50 percent and more of the voting Shares of the Company, are registered for participation in the meeting at the time of completion of registration of members of the meeting.

19.2. If absentee voting bulletins are sent to the Shareholders, the votes represented by the said voting bulletins and received by the Company by the time of registration of the participants of the General Meeting shall be taken into account when determining the quorum and summarizing the results of voting.

ARTICLE 20. THE ADJOURNED GENERAL MEETING OF SHAREHOLDERS OF THE COMPANY

20.1. An adjourned General Meeting of Shareholders of the Company shall be convened in the procedure provided for by the Law for convocation of the General Meeting of Shareholders.

20.2. An adjourned General Meeting of Shareholders that is held instead of the meeting, which did not take place, shall be entitled to review the agenda items and take decisions on them, if:

20.2.1. the procedure of convocation of the General Meeting of Shareholders, which did not take place due to absence of quorum, was observed;

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20.2.2. the Shareholders (or their representatives) possessing, in the aggregate, 40 and more percent of the voting Shares of the Company, including the Shareholders voting by correspondence, are registered at the time of completion of the registration.

ARTICLE 21. PROCEDURE FOR HOLDING OF THE GENERAL MEETING OF SHAREHOLDERS

21.1. The procedure of the General Meeting of Shareholders shall be determined in accordance with the Law, this Charter, regulations and other documents of the Company that regulate its internal activity, or directly by the decision of the General Meeting.

21.2. Before the General Meeting of Shareholders opens, the arrived shareholders (their representatives) are registered. A representative of a Shareholder shall submit his power of attorney confirming his authority to participate and vote and executed in accordance with the Legislation.

21.3. A Shareholder (his representative), who is not registered, shall not be accounted for in quorum determination and has no right to participate in the voting.

21.4. The General Meeting of Shareholders shall be open at the declared time, if the quorum is available. The General Meeting of Shareholders shall not be open before the declared time, except for the case when all shareholders or their representatives have already been registered, notified and do not object to the change in the time of opening the meeting.

21.5. The General Meeting of Shareholders shall elect the chairman (of the presidium) and the secretary of the General Meeting. The Meeting of Shareholders shall choose a form of voting: open or secret (using voting slips) voting. In voting for or against the persons listed in this paragraph, each shareholder shall have one vote, and decision is taken by simple majority of votes of those who are present.

21.6. The members of the Company Management shall not preside at the General Meeting of Shareholders, except for the cases when all the shareholders present at the meeting are the members of the Company Management.

21.7. The Secretary of the General Meeting of Shareholders shall be responsible for completeness and credibility of the information contained in the minutes of the General Meeting of Shareholders of the Company.

ARTICLE 22. REPRESENTATION

22.1. A Shareholder of the Company shall be entitled to participate in the General Meeting of Shareholders and vote on the items under consideration either personally or through his representative.

22.2. The officials of the Company shall not be entitled to act as representatives of Shareholders at the General Meeting.

22.3. A Shareholder’s representative shall act on the basis of the power of attorney executed in accordance with the Legislation.

22.4. If a trust management agreement on managing of a shareholder’s shares is concluded, a trust manager shall be entitled to act as a shareholder’s representative at the General Meeting, unless otherwise specified by the agreement between the Shareholder and the trust manager.

22.5. Voting on pledged Shares is held in accordance with the terms of the pledge agreement.

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ARTICLE 23. SHAREHOLDERS’ DECISION MADE BY ABSENTEE VOTING

23.1. Decisions on all the issues referred to the competence of the General Meeting of Shareholders of the Company may be made by voting by correspondence. Voting by correspondence may be used along with personal voting of the shareholders present at the General Meeting (mixed voting) or without holding of the General Meeting.

23.2. When voting by correspondence, voting slips are sent (handed over) to the persons included in the list of shareholders drawn up in accordance with the Legislation and provisions of this Charter.

23.3. A voting slip shall be sent to its recipient within not later than 45 calendar days before the date of the General Meeting of Shareholders or the date of counting of votes for absentee voting without holding the General Meeting of Shareholders. The Company shall not be entitled to forward voting slips selectively to some shareholders in order to exert influence upon the results of voting at the General Meeting.

23.4. Votes on the issues where the voter chooses only one of the possible voting options shall be counted in the voting.

23.5. A voting slip shall be invalid if not signed by the voter or a head of the voting legal entity or his substitute and not bearing the imprint of the stamp of a shareholder-legal entity.

23.6. Those voting slips shall take part in voting, which have been received by the Company by the moment of registration of the participants of the General Meeting, or by the date on which the votes are to be counted, when decisions are made without holding the General Meeting.

23.7. The decisions made by absentee voting shall be valid when the quorum required for the General Meeting of Shareholders is observed.

ARTICLE 24. VOTING AT THE GENERAL MEETING OF SHAREHOLDERS

24.1. Voting at the General Meeting of Shareholders is carried out on the principle “one share of the Company – one vote”, except for the following cases:

24.1.1. limitation of the maximum number of votes on shares provided to one shareholder in cases provided for by the Legislation;

24.1.2. cumulative voting when electing the members of the Board of Directors;

24.1.3. provision of one vote on procedural questions of conduct of the General Meeting of Shareholders to every person entitled to vote at the General Meeting of Shareholders.

24.2. Voting at the General Meeting may be either open or secret using voting slips.

ARTICLE 25. PROTOCOL ON THE RESULTS OF VOTING

25.1. Based on the results of voting, the vote counting commission or the person authorized to count votes at the General Meeting of Shareholders shall execute and sign a protocol on the results of voting.

25.2. After the protocol on the results of voting has been executed and the minutes of the General Meeting of Shareholders have been signed, the voting slips shall be sealed and placed in the Company’s archive for storage. The protocol on the results of voting shall be attached to the minutes of the General Meeting of Shareholders.

25.3. The results of voting shall be announced at the General Meeting of Shareholders, during which the voting took place. The results of voting of the General Meeting of Shareholders or the results of absentee voting shall be brought to the shareholders’ notice within 10 days after the General Meeting of Shareholders has been closed by means of

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publishing the results of voting in press or by sending a written notice to each Shareholder.

ARTICLE 26. MINUTES OF THE GENERAL MEETING OF SHAREHOLDERS

26.1. The Minutes of the General Meeting of Shareholders shall be executed within not later than three working days after the General Meeting of Shareholders is closed.

26.2. The Minutes of the General Meeting of Shareholders shall specify the following:

26.2.1. full name and location of the Executive Body of the Company;

26.2.2. date, time and place of the General Meeting of Shareholders;

26.2.3. data concerning the amount of voting shares of the Company, presented at the General Meeting of Shareholders;

26.2.4. quorum of the General Meeting of Shareholders;

26.2.5. agenda of the General Meeting of Shareholders;

26.2.6. voting procedure at the General Meeting of Shareholders

26.2.7. the chairman (presidium) and the secretary of the General Meeting of Shareholders;

26.2.8. statements of the participants of the General Meeting of Shareholders;

26.2.9. total number of votes of shareholders on each item of the agenda submitted for voting at the General Meeting of Shareholders;

26.2.10.  items to be voted and the results of voting;

26.2.11.  decisions made by the General Meeting of Shareholders;

26.3. The Minutes of the General Meeting of Shareholders shall be signed by:

26.3.1. the Chairman (members of presidium) and the secretary of the General Meeting of Shareholders;

26.3.2. members of the counting commission;

26.3.3. Shareholders possessing 10 and more percent of the Company voting stock and participated in the General Meeting of Shareholders.

26.4. If the person duly authorized to sign the Minutes is unable to do so, then the Minutes shall be signed by his representative on the basis of the power of attorney;

26.5. The Minutes of the General Meeting of Shareholders is stapled together with the minutes of voting results, powers of attorney to participate and vote at the General Meeting, as well as written explanations of reasons not to sign the Minutes. The mentioned documents shall be kept by the Company Management and submitted to shareholders for review at any time. A copy of the Minutes of the General Meeting of Shareholders shall be given to a shareholder by his request.

26.6. The Company shall notify the Shareholders of the results of voting at the General Meeting of Shareholders by sending them a copy of the Minutes of the General Meeting of Shareholders by mail, facsimile, courier or in person.

ARTICLE 27. BOARD OF DIRECTORS OF THE COMPANY

27.1. The Board of Directors is a body of the Company, which exercises general management of the Company except for the issues to be settled within the exclusive competence of the General Meeting.

27.2. The Board of Directors shall consist of not less then four persons, provided that the number of representatives from every Shareholder shall be equal.

27.3. By the decision of the General Meeting of Shareholders, during the period of performance of their duties, the members of the Board of Directors may be paid fees or

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compensation of the expenses pertaining to their performing functions of the members of the Board of Directors. The amount of these fees and compensations shall be determined by the General Meeting of Shareholders.

ARTICLE 28. COMPETENCE OF THE BOARD OF DIRECTORS

28.1. Within the exclusive competence of the Board of Directors shall be:

28.1.1. determination of the priority guidelines of the Company activity;

28.1.2. decision-making on convening annual and extraordinary General Meetings of Shareholders of the Company;

28.1.3. approval of the agenda of the General Meeting of Shareholders;

28.1.4. specifying the date for drawing up the list of Shareholders entitled to take part in the General Meeting of Shareholders and other issues related to the preparation and conducting of the General Meeting of Shareholders;

28.1.5. making decision on placing of Company shares and the cost of their placing within the number of authorized shares;

28.1.6. decision-making on Company buy-out of placed shares or other securities as provided for in the Legislation;

28.1.7. preliminary approval of annual financial accounting of the Company;

28.1.8. determination of terms for bonds issue and derivative securities of the Company;

28.1.9. determination of quantitative composition, term of powers of the Management, election of its Chief Executive and members, as well as early termination of their powers;

28.1.10.  determination of the amount of salaries and terms of labor and bonus payment of the chief executive and members of the Management;

28.1.11.  determination of procedure of internal auditing service, amount and terms of labor ad bonus payment of internal auditing employees;

28.1.12.  determination of payment of auditor and auditing company services;

28.1.13.  determination of the procedure to use reserve capital and other funds of the Company;

28.1.14.  approval of the documents regulating Company internal activity (except for the documents adopted by the Management to organize the Company’s activity);

28.1.15.  making decision on formation and closure of branch and representative offices of the Company and approval of appropriate regulations;

28.1.16.  making decision on Company participation in formation and operation of other organizations;

28.1.17.  making decision on conclusion of major transactions and transactions that the Company is interested in;

28.1.18.  making decision on conclusion of transaction by the Company for the amount over $200 000 (two hundred thousand) US dollars;

28.1.19.  determination of information regarding the Company or its activity representing official, commercial or other secret protected by the Law;

28.1.20.  election of Company registrar in case of cancellation of the contract with previous registrar;

28.1.21.  determination of the size, shape of any area required to be surrendered in accordance with the terms of the License and the Hydrocarbons Exploration Contract at the South Alibek field located in Mugalzhar region, Aktobe Oblast,

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Republic of Kazakhstan; if no proposal attains the support of such voting, then the proposal supported by a simple majority of votes shall be deemed approved by the Board of Directors;

28.1.22.  a surrender of all or any part of the area included in the License and the Hydrocarbons Exploration Contract in South Alibek field located in Mugalzhar region, Aktobe Oblast, Republic of Kazakhstan, where such surrender is not required as one of the provisions of the License and Exploration Contract;

28.1.23.  consideration of the proposal to extend the term of any stage of the License and the Exploration Contract in South Alibek field, located in Mugalzhar region, Aktobe Oblast, Republic of Kazakhstan, consideration of a proposal to enter into any new stage of the stated License and Exploration Contract;

28.1.24.  approval of the tender committee of the Company;

28.1.25.  establishment of Committees, assignment of their authorities, objectives, members and payment of their services;

28.1.26.  consideration and approval of Work Program, Program of Works, Budget and Development Plan;

28.1.27.  other issues not referring to the exclusive competence of the General Meeting of Shareholders as provided for in the Law and Charter of the Company.

28.2. The issues referred to the exclusive competence of the Board of Directors of the Company may not be delegated for decision of the Company Management.

ARTICLE 29. ELECTION OF THE BOARD OF DIRECTORS OF THE COMPANY

29.1. The members of the Board of Directors of the Company shall be elected by the annual General Meeting of Shareholders for a term of 5 years and shall be re-elected by the General Meeting of Shareholders in the case of early termination of authority of the previously elected members of the Board of Directors in the procedure as provided for in the Law and this Charter. The members of the Board of Directors can be re-elected for an unlimited number of times.

29.2. Only an individual person can be a member of the Board of Directors. The members of the Board of Directors shall be elected from among:

• Shareholders – physical persons;

• Persons proposed (recommended) to be elected to the Board of Directors as the representatives of the Shareholders.

29.3. The members of the Company Management, except for its Chief Executive Officer, shall not be members of the Board of Directors. The Chief Executive Officer shall not concurrently be the Chairman of the Board of Directors of the Company.

29.4. Election of the members of the Board of Directors shall be exercised by cumulative voting. A shareholder shall be entitled to give the votes on the shares owned by him for one candidate or distribute them to several candidates for membership in the Board of Directors of the Company. The candidates who receive the greatest number of votes are considered as elected to the Board of Directors of the Company.

ARTICLE 30. TERM OF POWERS OF THE MEMBERS OF THE BOARD OF DIRECTORS

30.1. The persons elected to the Board of Directors of the Company may be re-elected for an unlimited number of times, unless otherwise provided by the Legislation.

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30.2. The term of powers of the Board of Directors shall expire at the moment of conducting the General Meeting of Shareholders where a new Board of Directors of the Company is being elected.

30.3. The General Meeting of Shareholders shall be entitled to early terminate the powers of all or separate members of the Board of Directors.

ARTICLE 31. TERMINATION OF POWERS OF THE MEMBERS OF THE BOARD OF DIRECTORS

31.1. Early termination of the powers of any member of the Board of Directors on his own initiative shall be effected based on a written notice of the Board of Directors. The powers of such member of the Board of Directors shall be terminated from the moment he receives the stated notice from the Board of Directors.

31.2. In case of early termination of the powers of any member of the Board of Directors the election of a new member of the Board of Directors shall be performed by simple majority of votes of the total number of voting shares presented at the General Meeting of Shareholders, therewith the powers of these members of the Board of Directors shall expire simultaneously with expiry of term of the powers for the Board of Directors in general.

ARTICLE 32. CHAIRMAN OF THE BOARD OF DIRECTORS OF THE COMPANY

32.1. The Chairman of the Board of Directors shall be elected from among its members by majority vote of the total number of the members of the Board of Directors of the Company by secret voting.

32.2. The Board of Directors of the Company shall be entitled to re-elect its Chairman at any time by majority of votes of the total number of the members of the Board of Directors.

32.3. The Chairman shall organize the work of the Board of Directors of the Company, convene and preside at Board meetings, and organize taking of the minutes at the meetings in the procedure established by the Legislation and this Charter of the Company, therewith his vote shall not be a casting one when making decisions, as well as exercise other functions specified by the Charter.

32.4. In case of absence of the Chairman of the Board of Directors of the Company his functions shall be performed by one of the members of the Board of Directors as decided by the Board of Directors.

ARTICLE 33. CONVENING OF THE MEETING OF THE BOARD OF DIRECTORS

33.1. A meeting of the Board of Directors of the Company may be convened on the initiative of the Chairman of the Board of Directors or the Management or upon request of:

33.1.1. any member of the Board of Directors;

33.1.2. internal auditing services of the Company;

33.1.3. auditing organization performing audit of the Company;

33.1.4. principal Shareholder.

33.2. The requirement on convocation of the Meeting of the Board of Directors shall be forwarded to Chairman of the Board of Directors by direction of the corresponding written notice containing the proposed agenda of the Meeting of the Board of Directors. In the event of a refusal by the Chairman of the Board of Directors in convocation of the Meeting the initiator has the right to address with the specified requirement to executive body, which is obliged to call the Meeting of the Board of Directors. The Meeting of the

16

Board of Directors shall be convening by the Chairman of the Board of Directors or the Board not later than ten days from the date of receipt of the requirement on convocation.

33.3. Written notices of the Meeting of the Board of Directors with attached information regarding the agenda items of the Meeting shall be forwarded to the members of the Board of Directors within not later than three days before Meeting date. Notice of the Meeting of the Board of Directors shall contain information concerning date, time and place of the Meeting, as well as the agenda.

33.4. The member of the Board of Directors shall notify the Company Management beforehand of his impossibility to participate in the Meeting of the Board of Directors.

33.5. Items not included into the agenda of the Meeting shall not be settled, except when, at least, one director attending the Meeting of the Board of Directors and elected by any Shareholder, agrees to consider the issue, not contained in the agenda.

33.6. In case the notice is required as provided in item of the present article of herein, with available written waiver of that notice, signed by the Person entitled to sign the notice (whether before or after the time stated in the notice) shall be deemed equivalent to having received timely notice. Attendance at the Meeting shall also be deemed as waiver of notice of that matter, unless the express purpose of such attendance is to object, at the beginning of the Meeting, to the transaction of any business because the meeting is not properly convened or held.

ARTICLE 34. MEETING OF THE BOARD OF DIRECTORS

34.1. The quorum for the meetings of the Board of Directors of the Company shall be at least half of the number of elected members of the Board of Directors, provided that equal number of members of the Board of Directors from each Shareholder of the Company must attend. The meetings of the Board of Directors can be held in the mixed form when an absent member of the Board of Directors must send his decision on the agenda items by fax, the original must be obligatorily sent by mail. If the number of the members of the Board of Directors is insufficient for the quorum, the Board of Directors shall convene an extraordinary General Meeting of Shareholders to elect new members to the Board of Directors of the Company. The remaining members of the Board of Directors of the Company shall be entitled to make decision only on convening of such extraordinary General Meeting of Shareholders.

34.2. Within the period indicated, the Board of Directors of the Company shall be entitled to make decisions on emergency issues of the Company activity specified in the Charter of the Company, with further approval thereof at the General Meeting of Shareholders. In case the General Meeting of Shareholders disagrees with the decision on emergency issues made by the Board of Directors, such decision of the Board of Directors shall be deemed invalid.

34.3. Decisions at the Meeting of the Board of Directors of the Company shall be taken by the majority vote of the members of the Board of Directors, present at the Meeting unless otherwise specified by the Law. When making decisions at the Meeting of the Board of Directors of the Company, each member of the Board of Directors of the Company shall have one vote.

34.4. At all the meetings of the Board of Directors the presiding chairman shall prepare the written minutes of the Meeting and shall coordinate all the issues related to the Meeting.

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34.5. The Minutes of the Meeting of the Board of Directors shall be executed within not later than three working days after its holding and shall be signed by the presiding chairman and the secretary.

34.6. The Minutes of the Meeting shall indicate the following:

34.6.1. full name and location of the executive body of the Company;

34.6.2. date, place and time of the Meeting;

34.6.3. data about the persons attending the Meeting;

34.6.4. agenda of the meeting;

34.6.5. issues that are put to vote and the results of voting thereon;

34.6.6. resolutions adopted;

34.6.7. other information by the decision of the Board of Directors.

ARTICLE 35. DECISION-MAKING WITHOUT A MEETING OF THE BOARD OF DIRECTORS

35.1. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if every Director consents thereto in writing, setting forth the action taken, and the document or documents are filed with the minutes of the meetings of the Board of Directors (absentee voting).

35.2. Such consent can be sent to the Company by fax or by mail.

ARTICLE 36. EXECUTIVE BODY OF THE COMPANY

36.1. The collegial executive body of the Company – Company Management, performs management of current activity of the Company.

36.2. The Company Management (Chief Executive Officer and members of the Management) shall be elected by the Board of Directors for a term of three calendar years consisting of at least three persons, therewith the equal number of the representatives of the Shareholders shall be presented.

36.3. The Company Management shall execute decisions of the General Meeting of Shareholders and the Board of Directors of the Company.

36.4. The formation of the Company Management, its authorities and early termination of the powers, shall be effected pursuant to a decision of the Board of Directors of the Company in accordance with the Law and the Charter of the Company.

36.5. Members of the Company Management may be Shareholders and the Company employees who are not its Shareholders.

36.6. The rights and obligations of the members of the Company Management shall be defined by the Legislation, this Charter and the individual labor contract entered into by each of them with the Company.

36.7. The individual labor contract with the Chief Executive Officer on behalf of the Company shall be signed by the Chairman of the Board of Directors of the Company or a person authorized by the General Meeting or the Board of Directors of the Company.

36.8. The labor legislation shall apply to the relations between the Company and the members of the Company Management in the part not regulated by the provisions of the Law.

36.9. A member of the Company Management can take position in other organizations or bodies of other organizations only with the consent of the Board of Directors of the Company.

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ARTICLE 37. COMPETENCE OF COMPANY MANAGEMENT

37.1. All issues ensuring Company activity, which do not refer to the exclusive competence of the General Meeting and the Board of Directors, which are defined by the Law, this Charter or regulations and other documents adopted by the General Meeting and the Board of Directors of the Company, shall be within the competence of the Company Management.

ARTICLE 38. COMPOSITION OF THE MANAGEMENT OF THE COMPANY

38.1. The Company Management (Chief Executive Officer and members of the Management) shall be elected by the Board of Directors for a term of three calendar years consisting of not less than four persons; therewith the equal number of the representatives of the Shareholders shall be presented.

ARTICLE 39. AUTHORITIES OF THE CHIEF EXECUTIVE OFFICER OF THE COMPANY

39.1. The Chief Executive Officer of the Company shall:

39.1.1. arrange execution of decisions of the General Meeting of Shareholders and the Board of Directors;

39.1.2. act on behalf of the Company in relations with third parties without power of attorney;

39.1.3. issue powers of attorney entitling their holder to represent the Company to the third parties;

39.1.4. as regards the Company employees, shall issue orders on their appointment, transfer and dismissal (except for employees being members of the executive body), determine labor compensation, establishes the rates of salaries and personal incentives and take disciplinary measures, determine amount of bonuses of Company employees, except for the employees incorporated in the Executive body and internal audit service of the Company;

39.1.5. have the right for the first signature in bank, financial and other documents of the Company;

39.1.6. If absent, shall devolve responsibility on any member of the Management;

39.1.7. distribute obligations and jurisdiction and responsibility between the members of the Management;

39.1.8. exercise other functions specified in the Charter and by the decisions of the General Meeting of Shareholders and the Board of Directors.

ARTICLE 40. AUTHORITIES OF THE DEPUTY CHIEF OFFICER ON ECONOMICS AND FINANCE

40.1. Deputy Chief Executive Officer on Economics and Finance shall:

40.1.1. have the right for the second signature in bank and financial documents of the Company;

40.1.2. exercise control over the financial and economic activity of the Company, fulfillment of finance plans, budgets;

40.1.3. exercise other powers contained in his labor contract and job description.

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ARTICLE 41. MEETINGS OF THE COMPANY MANAGEMENT

41.1. The quorum for the meetings of the Company Management shall be at least half of the number of elected members of the Company Management, provided that equal number of members of the Management from each Shareholder of the Company shall attend. The meetings of the Management can be conducted in the mixed form when an absent member of the Management must send his decision of the items of the agenda by fax, the original must be obligatorily sent by mail.

41.2. Decisions at the Meeting of the Company Management shall be taken by the majority vote of its members. At the meetings of the Company Management each of its members shall have one vote.

41.3. Transfer of votes from one member of the Company Management to another member shall be prohibited.

41.4. At all the meetings of the Company Management the Chief Executive Officer shall prepare written minutes of the Meeting and shall coordinate all the issues related to the conduct of the Meeting.

ARTICLE 42. SIGNING OF FINANCIAL DOCUMENTS

42.1. Effecting of any payment, conclusion of any transaction, issue of guarantee, bills, acquisition or sale of the Company assets shall be with the availability of at least two signatures – signature of the Chief Executive Officer and the Deputy Chief Executive Officer on Economics and Finance, or the Chairman of the Board of Directors, or the persons legally substituting them, therewith the indicated persons who sign these documents shall be the representatives of different Shareholders.

42.2. Violation of the terms specified in paragraph 42.1. of herein shall signify the invalidity of the concluded bargain or transaction. The responsibility for the official’s actions who has violated the procedure of the actions established by this paragraph shall be borne by that Party of which he is a representative or the Party that proposed to appoint this person to the position of Chief Executive Officer or Deputy Chief Executive Officer on Economics and Finance, and the Company is entitled to demand compensation for the losses caused by such actions of the Chief Executive Officer or Deputy Chief Executive Officer on Economics and Finance.

ARTICLE 43. AUDITING COMMISSION OF THE COMPANY

(INTERNAL AUDIT SERVICE OF THE COMPANY)

43.1. In order to exercise control over financial and economic activity of the Company, the Auditing Commission may be formed in amount of minimum three members.

43.2. Employees of Auditing Commission shall not be elected to the Board of Directors and the Management.

43.3. The Auditing Commission is directly subordinate to the Board of Directors and accountable before the latter in regard to auditing activity.

ARTICLE 44. RESPONSIBILITY OF COMPANY OFFICERS

44.1. The Chief Executive and members of the Company Management shall be responsible before the Company for the damages caused by their actions (inactivity) in accordance with the Legislation.

44.2. Upon the decision of the General Meeting of Shareholders the Company is entitled to submit a lawsuit against its officer for compensation of Company losses.

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ARTICLE 45. ANNUAL FINANCIAL REPORTING OF THE COMPANY

45.1. The Company shall hold audit of annual financial reports. The Company Management shall submit Annual Financial Reports for the preceding year to the General Meeting of Shareholders for discussion and approval.

45.2. Annual Financial Reports includes a report on business activity of the Company and annual balance sheet and a profit- and- loss report of the Company, and are prepared according to the Legislation on accounting and financial reporting.

45.3. The Annual Financial Reports of the Company are subject to preliminary approval by the Board of Directors not later than 30 days before the date of the annual General Meeting of Shareholders.

45.4. Final approval of the Annual Financial Reports shall be made by the annual General Meeting of Shareholders.

45.5. The Company shall annually publish the annual financial reports in the press that meets the requirements of the Legislation of the Republic of Kazakhstan within the terms specified by an authorized body.

ARTICLE 46. AUDIT OF THE COMPANY

46.1. The Company carries out financial audits in order to check and confirm reliability of the annual financial reports of the Company and its current state. An independent auditor of the Company shall be approved by the General Meeting of Shareholders of the Company.

46.2. A Company audit may be carried out at any time on the initiative of the Board of Directors, the Management at the expense of the Company or by demand of the shareholder or several shareholders acting on the basis of the agreement made between them, who own (in the aggregate) 10 and more percent of voting shares of the Company at their expense.

46.3. If the Company Management evades auditing inspection of the Company, audit may be ordered by a court decision made following the respective claim of any concerned person.

ARTICLE 47. DISCLOSURE OF INFORMATION BY THE COMPANY,

DOCUMENTATION OF THE COMPANY

47.1. The Company shall make known to its shareholders the information regarding Company activity, touching the interests of Company shareholders. The information touching the interests of company shareholders is deemed to be:

47.1.1. decisions taken by the General Meeting of Shareholders and the Board of Directors and the information on the execution of taken decisions;

47.1.2. issue by the Company of shares and other securities, and approval by authorized body of reports on the results of placing and paying off the Company securities, annulment by authorized body of the Company securities;

47.1.3. big transactions by the Company and transactions that the Company is interested in;

47.1.4. receiving a loan by the Company in the amount of twenty five and more percent of own Company capital;

47.1.5. obtaining licenses by the Company for any kinds of activity, suspension or termination of licenses earlier obtained by the Company for any kinds of activity;

47.1.6. the Company participation in the foundation of legal entity;

47.1.7. seizure of the Company property;

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47.1.8. extraordinary circumstances, in the result of which the Company property was terminated, balance cost of which was ten and more percent of total amount of the Company assets;

47.1.9. bringing to administrative responsibility of the Company and its officials;

47.1.10.  decisions on forced re-organization of the Company;

47.1.11.  other information touching the interests of Company Shareholders pursuant to this Charter.

47.2. Information on Company activity touching shareholders interests shall be provided within thirty calendar days from the date of occurrence of circumstances touching the interests of Company shareholders. Documents containing the above mentioned information shall be forwarded to a shareholder either by mail to the address that the registrar has or to another address indicated in shareholder’s written application or by fax or to be given in person.

47.3. On demand of any Shareholder, the Company is obligated to submit the copies of the documents to him as provided for in the Law, within the period of not more than thirty calendar days from the date of shareholder’s written application to the Company Management. Copies of demanded documents shall be forwarded to a shareholder either by mail to the address that the registrar has or to another address indicated in shareholder’s written application or by fax or to be given in person. Amount of fee for provision of such document copies shall be established by the Company and shall not exceed the amount of expenses incurred when making copies of such documents and expenses related to the delivery of the documents to the Shareholder.

ARTICLE 48. REORGANIZATION OF THE COMPANY

48.1. Reorganization of the Company (merger, consolidation, split, spin-off, re-structuring) shall be performed in accordance with the Civil Code of the Republic of Kazakhstan, taking into account certain specific provisions provided for in the Legislation.

ARTICLE 49. LIQUIDATION OF THE COMPANY

49.1. The decision on voluntary liquidation of the Company is made by the General Meeting of Shareholders, which determines the liquidation procedure as agreed with the lenders under their control in accordance with the relevant Legislation. The compulsory liquidation of the Company shall be performed by the court in the cases specified in the Legislation. The concerned persons may submit to the court the demand of Company liquidation.

49.2. By the decision of the court or the General Meeting on Company liquidation, a liquidation commission is appointed. The liquidation commission has powers for Company management during its liquidation and actions the list of which is specified in the Legislation.

49.3. The liquidation commission shall include the representatives of Company lenders, representatives of shareholders owning in aggregate 10 or more percent of Company voting shares, as well as other persons pursuant to the decision of the General Meeting of Shareholders.

49.4. In case of Company liquidation its declared shares including placed ones are subject to be canceled in the procedure established by the Legislation.

49.5. The procedure of Company liquidation and the order of satisfying its lenders claims are regulated by the Legislation.

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ARTICLE 50. DISTRIBUTION OF PROPERTY OF THE LIQUIDATED COMPANY AMONG SHAREHOLDERS

50.1. The property of the liquidated Company remaining after final settlement with lenders shall be distributed among the Shareholders by the liquidation commission in the following order of priority:

50.1.1. payments for the shares to be bought out according to the Law are of first priority;

50.1.2. payments for accrued and unpaid dividends on preferred shares are of second priority;

50.1.3. payments for accrued and unpaid dividends on common shares are of third property;

50.1.4. repayment of the cost of preferred shares is of forth priority.

50.1.5. repayment of the cost of ordinary shares is of fifth priority.

50.2. The remaining property shall be distributed among all shareholders in proportion to the nominal value of the stock they own.

50.3. Distribution of the property at each priority level is made after full distribution of the property at the preceding priority level.

50.4. If the property of the liquidated Company is insufficient for payment of the accrued but unpaid dividends, the said property shall be fully distributed among this category of the shareholders in proportion to the number of the shares they own.

FOR “TRANSMERIDIAN EXPLORATION, INC.” (BVI)
/ Lorrie Olivier	L.S.
FOR “BRAMEX MANAGEMENT INC.”
/ Kairat Sadykov	L.S.

23

EX-5.1

Exhibit 5.1

[AKIN GUMP STRAUSS HAUER & FELD LLP LETTERHEAD]

March 17, 2006

Transmeridian Exploration Inc.

397 N. Sam Houston Pkwy E., Suite 300

Houston, TX 77060

Ladies and Gentlemen:

We have acted as counsel to Transmeridian Exploration Inc., a company organized under the laws of the British Virgin Islands (the “Company”), in connection with the registration, pursuant to a registration statement on Form S-4 (the “Registration Statement”) filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”), of (i) the proposed offer by the Company to exchange (the “Exchange Offer”) all outstanding unregistered Senior Secured Notes due 2010 of the Company (the “Outstanding Notes”) for Senior Secured Notes due 2010 of the Company (the “Registered Notes”) which have been registered under the Act, and (ii) the guarantees (the “Guarantees”) of the entities listed in the Registration Statement (the “Guarantors”). The Outstanding Notes have been, and the Registered Notes will be, issued pursuant to an Indenture, dated as of December 12, 2005 (as supplemented by that certain First Supplemental Indenture, dated as of December 22, 2005, the “Indenture”), by and among the Company, the Guarantors and The Bank of New York, as trustee (the “Trustee”).

We have examined originals or certified copies of such corporate records of the Company and the Guarantors and other certificates and documents of officials of the Company and the Guarantors, public officials and others as we have deemed appropriate for purposes of this letter. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all copies submitted to us as conformed and certified or reproduced copies. We have also assumed the legal capacity of natural persons, the corporate or other power of all persons signing on behalf of the parties to all documents other than the Company and the Guarantors, the due authorization, execution and delivery of all documents by the parties thereto other than the Company and the Guarantors, that the Registered Notes will conform to the specimens examined by us and that the Trustee’s certificate of authentication of Registered Notes will be manually signed by one of the Trustee’s authorized officers.

Based upon the foregoing and subject to the assumptions, exceptions, qualifications and limitations set forth hereinafter, we are of the opinion that, when (a) the Registration Statement has become effective under the Act, (b) the Outstanding Notes have been exchanged in the manner described in the prospectus forming a part of the Registration Statement, (c) the Registered Notes have been duly executed, authenticated, issued and delivered in accordance

Transmeridian Exploration Inc.

March 17, 2006

Page 2

with the terms of the Indenture against receipt of the Outstanding Notes surrendered in exchange therefor, (d) the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended, and (e) applicable provisions of “blue sky” laws have been complied with,

1. the Registered Notes proposed to be issued pursuant to the Exchange Offer, when duly executed, authenticated and delivered by or on behalf of the Company, will be binding obligations of the Company; and

2. the Guarantees proposed to be issued pursuant to the Exchange Offer will be binding obligations of each Guarantor.

The opinions and other matters in this letter are qualified in their entirety and subject to the following:

A. We express no opinion as to any constitutions, treaties, laws, rules or regulations or judicial or administrative decisions of any jurisdiction (“Laws”) other than (i) the federal Laws of the United States, (ii) the General Corporation Law of the State of Delaware, (iii) the Laws of the State of New York and (iv) the Laws of the State of Texas.

B. The matters expressed in this letter are subject to and qualified and limited by (i) applicable bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally; (ii) general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity); (iii) commercial reasonableness and unconscionability and an implied covenant of good faith and fair dealing; (iv) the power of the courts to award damages in lieu of equitable remedies; (v) securities Laws and public policy underlying such Laws with respect to rights to indemnification and contribution; and (vi) limitations on the waiver of rights under usury Laws.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name in the prospectus forming a part of the Registration Statement under the caption “Legal Matters.” In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act and the rules and regulations thereunder.

Very truly yours,

/S/ AKIN, GUMP, STRAUSS, HAUER & FELD LLP

EX-12.1

Exhibit 12.1

Transmeridian Exploration Incorporated

Ratio of Earnings to Fixed Charges

(in thousands except ratio of earnings to fixed charges)

	Years Ended December 31,
	2005			2004			2003			2002			2001
Earnings (Loss)
Loss before minority interest and provision for income taxes	$	(19,829	)	$	(4,671	)	$	(5,687	)	$	(3,271	)	$	(2,113	)
Fixed charges		18,780			6,295			5,431			1,876			248
Amortization of capitalized interest		511			370			196			88			62
Capitalized interest		(2,498	)		(4,520	)		(4,165	)		(1,286	)		—
Earnings (loss) as adjusted	$	(3,036	)	$	(2,526	)	$	(4,225	)	$	(2,593	)	$	(1,803	)
Fixed Charges
Interest expense	$	10,344		$	1,400		$	772		$	338		$	189
Capitalized interest		2,498			4,520			4,165			1,286			—
Amortization of debt financing costs		1,115			193			184			126			—
Amortization of debt discount		4,633			—			—			—			—
Portion of rental expense representative of the interest factor		190			182			310			126			59
Total fixed charges	$	18,780		$	6,295		$	5,431		$	1,876		$	248
Ratio of earnings to fixed charges and preferred stock dividends (a)		—			—			—			—			—

(a) For the years ended December 31, 2005, 2004, 2003, 2002 and 2001, earnings were inadequate to cover fixed charges by $21.8 million, $8.8 million, $9.7 million, $4.5 million and $2.2 million, respectively.

EX-21.1

Exhibit 21.1

Transmeridian Exploration Inc.

List of Subsidiaries

As of March 1, 2006

Name	Jurisdiction of Organization
Bramex Management, Inc.	British Virgin Islands
JSC Caspi Neft TME	Republic of Kazakhstan
Transmeridian Caspian Petroleum LLP	Republic of Kazakhstan
Transmeridian (Kazakhstan) Incorporated	British Virgin Islands
Emba-Trans LLP	Republic of Kazakhstan

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the inclusion in the Registration Statement on Form S-4 of Transmeridian Exploration Inc. of our reports dated March 16, 2006 relating to the consolidated financial statements of Transmeridian Exploration Incorporated, Transmeridian Exploration Incorporated’s management assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Transmeridian Exploration Incorporated which appears in the Annual Report on Form 10-K for the year ended December 31, 2005. We also consent to the reference to us under the heading “Independent Auditors” in such Registration Statement.

/s/ UHY MANN FRANKFORT STEIN & LIPP CPAs, LLP

Houston, Texas

March 17, 2006

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the caption “Independent Auditors” in the Registration Statement on Form S-4 of Transmeridian Exploration Inc. and the related prospectuses and to the use in such Registration Statement of our report dated March 14, 2005 with respect to the consolidated financial statements of Transmeridian Exploration Incorporated as of December 31, 2004 and for each of the years ended December 31, 2004 and December 31, 2003.

/s/ John A. Braden & Company, P.C.

Houston, Texas

March 17, 2006

EX-23.4

Exhibit 23.4

CONSENT OF INDEPENDENT RESERVE ENGINEERS

We hereby consent to the use of our name in this Registration Statement on Form S-4 of Transmeridian Exploration Inc. and the related prospectuses and to the references to our estimates of proved reserves and estimates of future net revenues from proved reserves as of December 31, 2005 included herein.

/s/ Ryder Scott Company, L.P.

RYDER SCOTT COMPANY, L.P.

Houston, Texas

March 14, 2006

EX-25.1

Exhibit 25.1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY

UNDER THE TRUST INDENTURE ACT OF 1939 OF A

CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE

ELIGIBILITY OF A TURSTEE PURSUANT TO

SECTION 305 (b)(2)

The BANK OF NEW YORK

(Exact name of trustee as specified in its charter)

New York	13-5160382
(State of incorporation if not a U.S. national bank)	(I.R.S. employer identification no.)
One Wall Street, New York, N.Y.	10286
(Address of principal executive offices)	(Zip code)

Transmeridian Exploration Incorporated

(Exact name of obligor as specified in its charter)

DELAWARE	76-0644935
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)
397 N. Sam Houston Pkwy. E., Suite 300
Houston, TX	77060
(Address of principal executive offices)	(Zip code)

Senior Secured Notes due 2010

(Title of the indenture securities)

General information. Furnish the following information as to the Trustee:

(a) Name and address of each examining or supervising authority to which it is subject.

Name	Address
Superintendent of Banks of the State of New York	2 Rector Street, New York, N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York	33 Liberty Plaza, New York, N.Y.10045
Federal Deposit Insurance Corporation	Washington, D.C. 20429
New York Clearing House Association	New York, New York 10005

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

1. Affiliations with Obligor.

Of the obligor is an affiliate of the trustee, describe each such affiliation.

None.

16. List of Exhibits.

Exhibits identified in parentheses below, on file with the Commission, are incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29 Under the Trust Indenture Act of 1939 (the “Act”) and 17 C.F.R. 229.10(d).

1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibit 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to From T-1 filed with Registration Statement No. 33-29637.)

4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.)

6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)

7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority.

SIGNATURE

Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York, and State of New York, on the 28^th day of February, 2006.

THE BANK OF NEW YORK
By:	/s/ Luis Perez
Name:	Luis Perez
Title:	Assistant Vice President

EX-99.1

Exhibit 99.1

THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,

ON                     , 2006, UNLESS EXTENDED (THE “EXPIRATION TIME”).

TRANSMERIDIAN EXPLORATION INC.

LETTER OF TRANSMITTAL

FOR

OFFER TO EXCHANGE

UP TO $250,000,000 REGISTERED SENIOR SECURED NOTES DUE 2010

FOR

ANY AND ALL OUTSTANDING UNREGISTERED SENIOR SECURED NOTES DUE 2010

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:

THE BANK OF NEW YORK

For Delivery by Mail/Hand Delivery/Overnight Delivery:

THE BANK OF NEW YORK

101 Barclay Street

Floor 21 West

New York, New York 10286

Attn: Corporate Trust Trustee Administration

By Facsimile Transmission (for eligible institutions only):

To Confirm Receipt:

For Information Call:

(Originals of all documents sent by facsimile should be sent promptly by

registered or certified mail, by hand or by overnight delivery service.)

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN AND THE RELATED PROSPECTUS SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. DO NOT DELIVER THIS LETTER OF TRANSMITTAL TO TRANSMERIDIAN EXPLORATION INC. OR THE DEPOSITORY TRUST COMPANY.

By completing this letter of transmittal (“Letter of Transmittal”), you acknowledge that you have received and reviewed the prospectus dated                     , 2006 (the “Prospectus”) of Transmeridian Exploration Inc. (“Transmeridian”) and this Letter of Transmittal, which together constitute the “Exchange Offer.” This Letter of Transmittal and the Prospectus have been delivered to you in connection with Transmeridian’s offer to exchange up to $250,000,000 in aggregate principal amount of its Senior Secured Notes due 2010 (the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for the same amount of its outstanding unregistered Senior Secured Notes due 2010 (the “Outstanding Notes”).

Transmeridian reserves the right, at any time and from time to time, to extend the Exchange Offer at its discretion, in which event the term “Expiration Time” shall mean the latest date and time to which the Exchange Offer is extended. Transmeridian shall timely notify the Exchange Agent of any extension by written notice.

This Letter of Transmittal is to be completed by a Holder (as defined below) of Outstanding Notes if (1) the Holder is delivering certificates for Outstanding Notes with this document; or (2) the tender of certificates for Outstanding Notes will be made by book-entry transfer to the account maintained by The Bank of New York, the exchange agent (the “Exchange Agent”) for the Exchange Offer, at The Depository Trust Company (“DTC”) according to the procedures described in the section of the Prospectus entitled “The Exchange Offer—Procedures for Tendering.” Please note that delivery of documents required by this Letter of Transmittal to DTC or Transmeridian does not constitute delivery to the Exchange Agent.

You must tender your Outstanding Notes according to the guaranteed delivery procedures described in this document if (1) the certificates for your Outstanding Notes are not immediately available; (2) the certificates for your Outstanding Notes, this Letter of Transmittal and all other required documents cannot be delivered to the Exchange Agent prior to the Expiration Time; or (3) you are unable to complete the procedures for delivery of your Outstanding Notes by book-entry transfer prior to the Expiration Time.

More complete information about the guaranteed delivery procedures is contained in the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures.”

As used in this Letter of Transmittal, the term “Holder” means (1) any person in whose name Outstanding Notes are registered on the books of Transmeridian, (2) any other person who has obtained a properly executed bond power from the registered Holder or (3) any person whose Outstanding Notes are held of record by DTC who desires to deliver such notes by book-entry transfer at DTC. You should use this Letter of Transmittal to indicate whether you would like to participate in the Exchange Offer. If you decide to tender your Outstanding Notes, you must complete this entire Letter of Transmittal.

PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS LETTER OF TRANSMITTAL. IF YOU HAVE QUESTIONS OR NEED HELP, OR IF YOU WOULD LIKE ADDITIONAL COPIES OF THE PROSPECTUS OR THIS LETTER OF TRANSMITTAL, YOU SHOULD CONTACT THE EXCHANGE AGENT AT THE PHONE NUMBER OR ADDRESS SET FORTH ON THE COVER PAGE OF THIS LETTER OF TRANSMITTAL.

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List below the Outstanding Notes to which this Letter of Transmittal relates.

DESCRIPTION OF OUTSTANDING NOTES TENDERED

Name(s) and Address(es) of Registered Owner(s) as (it/they) appear(s) on the Outstanding Notes	Certificate Numbers of Outstanding Notes*	Aggregate Principal Amount Represented by Outstanding Notes	Principal Amount Tendered**
____________________________________	__________	________________	_________
____________________________________	__________	________________	_________
____________________________________	__________	________________	_________
____________________________________	__________	________________	_________
		Total Principal Amount of Outstanding Notes Tendered**

(If additional space is required, attach a sheet in substantially

the above form.)

* Need not be completed by book-entry holders.

** Unless otherwise indicated, any tendering holder of Outstanding Notes will be deemed to have tendered the entire aggregate principal amount represented by its Outstanding Notes. All tenders must be in integral multiples of $1,000.

METHOD OF DELIVERY

¨ Check here if tendered Outstanding Notes are enclosed herewith.

¨ Check here if tendered Outstanding Notes are being delivered by book-entry transfer to an account maintained by the Exchange Agent at DTC and complete the following:

Name of Tendering Institution:                                                      

Account Number:                                                                           

Transaction Code Number:                                                            

¨ Check here if tendered Outstanding Notes are being delivered pursuant to a Notice of Guaranteed Delivery and complete the following:

Name(s) of Registered Holder(s):                                                                                  

Date of Execution of Notice of Guaranteed Delivery:                                                   

Window Ticket Number (if available):                                                                          

Name of Eligible Institution that guaranteed delivery:                                                  

Account Number (if delivered by book-entry transfer):                                                

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SIGNATURES MUST BE PROVIDED BELOW

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

According to the terms and conditions of the Exchange Offer, I hereby tender to Transmeridian the principal amount of Outstanding Notes indicated above. At the time these notes are accepted by Transmeridian, and exchanged for the same principal amount of Exchange Notes, I will sell, assign, and transfer to Transmeridian all right, title and interest in and to the Outstanding Notes I have tendered. I am aware that the Exchange Agent also acts as the agent of Transmeridian. By executing this document, I irrevocably appoint the Exchange Agent as my agent and attorney-in-fact for the tendered Outstanding Notes with full power of substitution to:

• deliver certificates for the Outstanding Notes, or transfer ownership of the Outstanding Notes on the account books maintained by DTC, to Transmeridian and deliver all accompanying evidences of transfer and authenticity to Transmeridian; and

• present the Outstanding Notes for transfer on the books of Transmeridian, receive all benefits and exercise all rights of beneficial ownership of these Outstanding Notes, according to the terms of the Exchange Offer. The power of attorney granted in this paragraph is irrevocable and coupled with an interest.

I represent and warrant that I have full power and authority to tender, sell, assign, and transfer the Outstanding Notes that I am tendering. I represent and warrant that Transmeridian will acquire good and unencumbered title to the Outstanding Notes, free and clear of all liens, restrictions, charges and encumbrances and that the Outstanding Notes will not be subject to any adverse claim at the time Transmeridian acquires them. I further represent that:

• the Exchange Notes I will acquire in exchange for the Outstanding Notes I have tendered pursuant to the Exchange Offer will be acquired in the ordinary course of my business;

• I have no arrangements or understanding with any person to participate in a distribution of Outstanding Notes or any Exchange Notes issued to me within the meaning of the Securities Act; and

• I am not an “affiliate” (within the meaning of Rule 405 under the Securities Act) of Transmeridian or, if I am an affiliate of Transmeridian, I will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable.

I understand that the Exchange Offer is being made in reliance on interpretations contained in letters issued to third parties by the staff of the Securities and Exchange Commission (“Commission”). These letters provide that the Exchange Notes issued in exchange for the Outstanding Notes in the Exchange Offer may be offered for resale, resold and otherwise transferred by a Holder of Exchange Notes, unless that person is an “affiliate” of Transmeridian (within the meaning of Rule 405 under the Securities Act), without compliance with the registration and prospectus delivery requirements of the Securities Act. Moreover, the Exchange Notes must be acquired in the ordinary course of the Holder’s business and the Holder must not be engaging in, must not intend to engage in, and must not have any arrangement or understanding with any person to participate in, a distribution of the Exchange Notes within the meaning of the Securities Act.

I understand that if any of these conditions are not satisfied and I transfer Exchange Notes issued to me in the exchange offer without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from the registration and prospectus delivery requirements, I may incur liability under the Securities Act and that Transmeridian will not assume, nor will Transmeridian indemnify me against, any such liability.

If I am not a broker-dealer, I represent that I am not engaged in, and do not intend to engage in, a distribution of the Exchange Notes within the meaning of the Securities Act. If I am a broker-dealer that will receive Exchange Notes for my own account in exchange for Outstanding Notes that were acquired as a result of

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market-making activities or other trading activities (an “Exchanging Dealer”), I acknowledge that I will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, I will not be deemed to admit that I am an “underwriter” within the meaning of the Securities Act.

Transmeridian has agreed that, subject to the provisions of the registration rights agreement, dated as of December 12, 2005, by and among Transmeridian, the guarantors of the Outstanding Notes party thereto and the initial purchasers of the Outstanding Notes, the Prospectus, as it may be amended or supplemented from time to time, may be used by an Exchanging Dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes, where such Outstanding Notes were acquired by such Exchanging Dealer for its own account as a result of market-making activities or other trading activities, for a period ending 180 days after the consummation of the exchange offer.

In that regard, if I am an Exchanging Dealer, by tendering such Outstanding Notes and executing this Letter of Transmittal, I agree that, upon receipt of notice from Transmeridian of the occurrence of any event or the discovery of any fact which makes any statement contained or incorporated by reference in the Prospectus untrue in any material respect or which causes the Prospectus to omit to state a material fact necessary in order to make the statements contained or incorporated by reference therein, in light of the circumstances under which they were made, not misleading or of the occurrence of certain other events specified in the registration rights agreement, I will suspend the sale of Exchange Notes pursuant to the Prospectus until Transmeridian has amended or supplemented the Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented Prospectus to the Exchanging Dealer or Transmeridian has given notice that the sale of the Exchange Notes may be resumed, as the case may be.

If Transmeridian gives such notice to suspend the sale of the Exchange Notes, it shall extend the 180-day period referred to above during which Exchanging Dealers are entitled to use the Prospectus in connection with the resale of Exchange Notes by the number of days during the period from and including the date of the giving of such notice to and including the date when Exchanging Dealers shall have received copies of the supplemented or amended Prospectus necessary to permit resales of the Exchange Notes or to and including the date on which Transmeridian has given notice that the sale of Exchange Notes may be resumed, as the case may be.

Upon request, I will execute and deliver any additional documents deemed by the Exchange Agent or Transmeridian to be necessary or desirable to complete the sale, assignment and transfer of the Outstanding Notes I have tendered.

I understand that Transmeridian will be deemed to have accepted validly tendered Outstanding Notes when Transmeridian gives oral or written notice of acceptance to the Exchange Agent.

If, for any reason, any tendered Outstanding Notes are not accepted for exchange in the Exchange Offer, certificates for those unaccepted Outstanding Notes will be returned to me without charge at the address shown below or at a different address if one is listed below under “Special Delivery Instructions.” Any unaccepted Outstanding Notes which had been tendered by book-entry transfer will be credited to an account at DTC, promptly after the Expiration Time.

All authority granted or agreed to be granted by this Letter of Transmittal will survive my death, incapacity or, if I am a corporation or institution, my dissolution, and every obligation under this Letter of Transmittal is binding upon my heirs, personal representatives, successors and assigns.

I understand that tenders of Outstanding Notes according to the procedures described in the section of the Prospectus entitled “The Exchange Offer—Procedures for Tendering” and in the instructions included in this Letter of Transmittal constitute a binding agreement between myself and Transmeridian, subject to the terms and conditions of the Exchange Offer.

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Unless I have provided other instructions in this Letter of Transmittal below under “Special Issuance Instructions,” please issue the certificates representing Exchange Notes issued in exchange for my tendered and accepted Outstanding Notes in my name, and issue any replacement certificates for Outstanding Notes not tendered or not exchanged in my name. Similarly, unless I have instructed otherwise below under “Special Delivery Instructions,” please send the certificates representing the Exchange Notes issued in exchange for tendered and accepted Outstanding Notes and any certificates for Outstanding Notes that were not tendered or not exchanged, as well as any accompanying documents, to me at the address shown below my signature. If both “Special Issuance Instructions” and “Special Delivery Instructions” are completed, please issue the certificates representing the Exchange Notes issued in exchange for my tendered and accepted Outstanding Notes in the name(s) of, and return any certificates representing Outstanding Notes that were not tendered or exchanged to, the person(s) so indicated. I understand that if Transmeridian does not accept any of the tendered Outstanding Notes for exchange, Transmeridian has no obligation to transfer any Outstanding Notes from the name of the registered Holder(s) according to my instructions below under “Special Issuance Instructions” and “Special Delivery Instructions.”

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SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 4, 5 AND 6)	SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 4, 5 AND 6)
To be completed only (i) if Outstanding Notes in a principal amount not tendered, or Exchange Notes issued in exchange for Outstanding Notes accepted for exchange, are to be issued in the name of someone other than you, or (ii) if Outstanding Notes tendered by book-entry transfer which are not exchanged are to be returned by credit to an account maintained at the Book-Entry Transfer Facility. Issue Exchange Notes and/or Outstanding Notes to:	To be completed ONLY if Exchange Notes are to be issued or sent to someone other than you or to you at an address other than as indicated above. ¨  Mail    ¨  Issue (check appropriate boxes) certificates to:
Name	Name
(Type or Print)	(Type or Print)
Address	Address
(Zip Code)	(Zip Code)
(Tax Identification or Social Security Number)	(Tax Identification or Social Security Number)
(Complete Substitute Form W-9)
Credit unexchanged Outstanding Notes delivered by book-entry transfer to the Book-Entry Transfer Facility set forth below:
Book-Entry Transfer Facility Account Number:

SPECIAL BROKER-DEALER INSTRUCTIONS

¨ Check here if you are a broker-dealer and wish to receive 10 additional copies of the Prospectus and 10 copies of any amendments or supplements thereto.

Name
Address
	(Zip Code)

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IMPORTANT

PLEASE SIGN HERE WHETHER OR NOT

OUTSTANDING NOTES ARE BEING PHYSICALLY TENDERED HEREBY

(Complete Accompanying Substitute Form W-9)

(Signature(s) of Registered Holders of Outstanding Notes)

Dated                     , 2006

(The above lines must be signed by the registered holder(s) of Outstanding Notes as its/their name(s) appear(s) on the Outstanding Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by a properly completed bond power from the registered holder(s), a copy of which must be transmitted with this Letter of Transmittal. If Outstanding Notes to which this Letter of Transmittal relate are held of record by two or more joint holders, then all such holders must sign this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, then such person must (i) set forth his or her full title below and (ii) unless waived by Transmeridian, submit evidence satisfactory to Transmeridian of such person’s authority so to act. See Instructions 1 and 5 below regarding completion of this Letter of Transmittal.)

Name(s)                                                                                                                                                                                                              

(Please Type or Print)

Capacity:                                                                                                                                                                                                            

Address:                                                                                                                                                                                                             

(Include Zip Code)

Area Code and Telephone Number:                                                                                                                                                        

MEDALLION SIGNATURE GUARANTEE

(If Required by Instructions 1 and 4)

Certain signatures must be Guaranteed by an Eligible Institution.

Signature(s) Guaranteed by an Eligible Institution:                                                                                                                           

               (Authorized Signature)

(Title)

(Name of Firm)

(Address, Include Zip Code)

(Area Code and Telephone Number)

Dated:                     , 2006

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INSTRUCTIONS

PART OF THE TERMS AND CONDITIONS OF THE

EXCHANGE OFFER

1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OUTSTANDING NOTES. The tendered Outstanding Notes or a confirmation of book-entry delivery, as well as a properly completed and executed copy or facsimile of this Letter of Transmittal and all other required documents, must be received by the Exchange Agent at its address listed on the cover page of this Letter of Transmittal prior to the Expiration Time. YOU ARE RESPONSIBLE FOR THE DELIVERY OF THE OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT. EXCEPT UNDER THE LIMITED CIRCUMSTANCES DESCRIBED BELOW, THE DELIVERY OF THESE DOCUMENTS WILL BE CONSIDERED TO HAVE BEEN MADE ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. WHILE THE METHOD OF DELIVERY IS AT YOUR RISK AND CHOICE, TRANSMERIDIAN RECOMMENDS THAT YOU USE AN OVERNIGHT OR HAND DELIVERY SERVICE RATHER THAN REGULAR MAIL. YOU SHOULD SEND YOUR DOCUMENTS WELL BEFORE THE EXPIRATION TIME TO ENSURE RECEIPT BY THE EXCHANGE AGENT. YOU MAY REQUEST THAT YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR NOMINEE DELIVER YOUR OUTSTANDING NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT. DO NOT SEND THIS LETTER OF TRANSMITTAL OR YOUR OUTSTANDING NOTES TO TRANSMERIDIAN OR DTC.

If you wish to tender your Outstanding Notes, but:

• the certificates for your Outstanding Notes are not immediately available;

• the certificates for your Outstanding Notes, this Letter of Transmittal and all other required documents cannot be delivered to the Exchange Agent prior to the Expiration Time; or

• you are unable to complete the procedures for delivery of your Outstanding Notes by book-entry transfer prior to the Expiration Time;

you must tender your Outstanding Notes according to the guaranteed delivery procedures. A summary of the procedures follow, but you should read the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures” for more complete information. As used in this Letter of Transmittal, an “Eligible Institution” is any participant in a recognized Medallion Signature Guarantee program within the meaning of Rule 17Ad-15 under the Exchange Act.

For a tender made through the guaranteed delivery procedures to be valid, the Exchange Agent must receive a properly completed and executed Notice of Guaranteed Delivery or a facsimile thereof prior to the Expiration Time. The Notice of Guaranteed Delivery must be delivered by an Eligible Institution and must:

• state your name and address;

• list the certificate numbers of your Outstanding Notes or account number at the book-entry transfer facility (as the case may be), and principal amounts of the Outstanding Notes being tendered;

• state that the tender of your Outstanding Notes is being made through the Notice of Guaranteed Delivery; and

• guarantee that this Letter of Transmittal, or a facsimile of it, the certificates representing the Outstanding Notes or a confirmation of DTC book-entry transfer (as the case may be), and all other required documents will be deposited with the Exchange Agent by the Eligible Institution within three American Stock Exchange trading days after the Expiration Time.

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The Exchange Agent must receive the certificates representing your Outstanding Notes, or a confirmation of DTC book-entry transfer, in proper form for transfer, this Letter of Transmittal and all other required documents within three American Stock Exchange trading days after the Expiration Time or your tender will be invalid and may not be accepted for exchange.

Transmeridian has the sole right to decide any questions about the validity, form, eligibility, time of receipt, acceptance or withdrawal of tendered Outstanding Notes, and its decision will be final and binding. Transmeridian’s interpretation of the terms and conditions of the Exchange Offer, including the instructions contained in this Letter of Transmittal and in the section of the Prospectus entitled “The Exchange Offer—Conditions,” will be final and binding on all parties.

Transmeridian has the absolute right to reject any or all of the tendered Outstanding Notes if (1) the Outstanding Notes are not properly tendered or (2) in the opinion of Transmeridian or its counsel, the acceptance of those Outstanding Notes would be unlawful.

Transmeridian may also decide to waive any conditions, defects, or invalidity of any tender of Outstanding Notes and accept such Outstanding Notes for exchange. Any defect or invalidity in any tender of Outstanding Notes that is not waived by Transmeridian must be cured within the period of time set by Transmeridian.

It is your responsibility to identify and cure any defect or irregularity in the tender of your Outstanding Notes. A tender of your Outstanding Notes will not be considered to have been made until any defect or irregularity is cured or waived. While Transmeridian intends to notify you of defects or irregularities with respect to a tender of your Outstanding Notes, neither Transmeridian, the Exchange Agent nor any other person is required to notify you that your tender was invalid or defective, and no one will be liable for any failure to notify you of such a defect or irregularity in your tender of Outstanding Notes. Promptly after the Expiration Time, the Exchange Agent will return to the Holder any Outstanding Notes that were invalidly tendered if the defect or irregularity has not been cured or waived.

2. TENDER BY HOLDER. You must be a Holder of Outstanding Notes in order to participate in the Exchange Offer. If you are a beneficial holder of Outstanding Notes who wishes to tender, but you are not the registered Holder, you must arrange with the registered Holder to execute and deliver this Letter of Transmittal on your behalf. Before completing and executing this Letter of Transmittal and delivering the registered Holder’s Outstanding Notes, you must either make appropriate arrangements to register ownership of the Outstanding Notes in your name, or obtain a properly executed bond power from the registered Holder. The transfer of registered ownership of Outstanding Notes may take a significant period of time.

3. PARTIAL TENDERS. If you are tendering less than the entire principal amount of Outstanding Notes represented by a certificate, you should fill in the principal amount you are tendering in the last column of the box entitled “Description of Outstanding Notes Tendered.” The entire principal amount of Outstanding Notes listed on the certificates delivered to the Exchange Agent will be deemed to have been tendered unless you fill in the appropriate box. If the entire principal amount of all Outstanding Notes is not tendered, a certificate will be issued for the principal amount of the Outstanding Notes not tendered.

Unless a different address is provided in the appropriate box on this Letter of Transmittal, certificate(s) representing Exchange Notes issued in exchange for any tendered and accepted Outstanding Notes will be sent to the registered Holder at his, her or its registered address promptly after the Outstanding Notes are accepted for exchange. In the case of Outstanding Notes tendered by book-entry transfer, any untendered Outstanding Notes and any Exchange Notes issued in exchange for tendered and accepted Outstanding Notes will be credited to the appropriate account at DTC.

4. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If you are the registered Holder of the Outstanding Notes tendered with this

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Letter of Transmittal and are signing this Letter of Transmittal, your signature must match exactly with the name(s) written on the face of the Outstanding Notes. There can be no alteration, enlargement, or change in your signature in any manner. If certificates representing the Exchange Notes or certificates issued to replace any Outstanding Notes you have not tendered are to be issued to you as the registered Holder, do not endorse any tendered Outstanding Notes and do not provide a separate bond power.

If Exchange Notes or any replacement Outstanding Notes certificates will be issued to someone other than you, you must either properly endorse the Outstanding Notes you have tendered or deliver with this Letter of Transmittal a properly completed bond power. Please note that the signatures on any endorsement or bond power must be guaranteed by an Eligible Institution.

If you are signing this Letter of Transmittal but are not the registered Holder(s) of any Outstanding Notes listed in this Letter of Transmittal under “Description of Outstanding Notes Tendered,” the Outstanding Notes tendered must be endorsed or accompanied by appropriate bond powers, in each case signed in the name of the registered Holder(s) exactly as it appears on the Outstanding Notes. Please note that the signatures on any endorsement or bond power must be guaranteed by an Eligible Institution.

If this Letter of Transmittal, any Outstanding Notes tendered or any bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, that person must indicate their title or capacity when signing. Unless waived by Transmeridian, evidence satisfactory to Transmeridian of that person’s authority to act must be submitted with this Letter of Transmittal. Please note that the signatures on any endorsement or bond power must be guaranteed by an Eligible Institution.

ALL SIGNATURES ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION UNLESS ONE OF THE FOLLOWING SITUATIONS APPLY: (1) If this Letter of Transmittal is signed by the registered Holder(s) of the Outstanding Notes tendered with this Letter of Transmittal and such Holder(s) has not completed the box entitled “Special Issuance Instructions” or the box entitled “Special Delivery Instructions;” or (2) If the Outstanding Notes are tendered for the account of an Eligible Institution.

5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If different from the name and address of the person signing this Letter of Transmittal, you should indicate, in the applicable box or boxes, the name and address where Outstanding Notes issued in replacement for any untendered or tendered but unaccepted Outstanding Notes should be issued or sent. If replacement Outstanding Notes are to be issued in a different name, you must indicate the taxpayer identification or social security number of the person named.

6. TRANSFER TAXES. Transmeridian will pay all transfer taxes, if any, applicable to the exchange of Outstanding Notes in the Exchange Offer. However, transfer taxes will be payable by you (or by the tendering Holder if you are signing this Letter of Transmittal on behalf of a tendering Holder) if:

• certificates representing Exchange Notes or notes issued to replace any Outstanding Notes not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, a person other than the registered Holder; or

• a transfer tax is imposed for any reason other than the exchange of Outstanding Notes pursuant to the Exchange Offer. If satisfactory evidence of the payment of those taxes or an exemption from payment is not submitted with this Letter of Transmittal, the amount of those transfer taxes will be billed directly to the tendering Holder. Until those transfer taxes are paid, Transmeridian will not be required to deliver any Exchange Notes required to be delivered to, or at the direction of, such tendering Holder.

Except as provided in this Instruction 6, it is not necessary for transfer tax stamps to be attached to the Outstanding Notes listed in this Letter of Transmittal.

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7. SUBSTITUTE FORM W-9. You must provide the Exchange Agent with a correct Taxpayer Identification Number (“TIN”) for the Holder on the enclosed Substitute Form W-9. If the Holder is an individual, the TIN is his or her social security number. If you do not provide the required information on the Substitute Form W-9, you may be subject to 28% federal income tax withholding on certain payments made to the Holders of Exchange Notes. Certain Holders, such as corporations and certain foreign individuals, are not subject to these backup withholding requirements. For additional information, please read the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. To prove to the Exchange Agent that a foreign individual qualifies as an exempt Holder, the foreign individual must submit a Form W-8, Form W-8 BEN or other similar statement, signed under penalties of perjury, certifying as to that individual’s exempt status. You can obtain the appropriate form from the Exchange Agent.

8. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility (including time of receipt), acceptance or withdrawal of Outstanding Notes tendered for exchange will be determined by Transmeridian, in its sole discretion, which determination shall be final and binding. Transmeridian reserves the absolute right to reject any or all tenders not properly tendered or to not accept any particular Outstanding Notes which acceptance might, in the judgment of Transmeridian or its counsel, be unlawful. Transmeridian also reserves the absolute right to waive any defects or irregularities or conditions of the Exchange Offer as to any particular Outstanding Notes either before or after the Expiration Time (including the right to waive the ineligibility of any holder who seeks to tender Outstanding Notes in the Exchange Offer). Transmeridian’s interpretation of the terms and conditions of the Exchange Offer as to any particular Outstanding Notes either before or after the Expiration Time (including this Letter of Transmittal and the instructions thereto) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Outstanding Notes for exchange must be cured within such period of time as Transmeridian shall determine. While Transmeridian intends to notify you of defects or irregularities with respect to a tender of your Outstanding Notes, neither Transmeridian, the Exchange Agent nor any other person shall be under any duty to give you notification of any defect or irregularity with respect to any tender of Outstanding Notes for exchange, nor shall any of them incur any liability for failure to give such notification. Tenders of Outstanding Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Outstanding Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holders, unless otherwise provided in this Letter of Transmittal, promptly following the Expiration Time.

9. WAIVER OF CONDITIONS. Transmeridian may choose, at any time and for any reason, to amend, waive or modify certain of the conditions to the Exchange Offer. The conditions applicable to tenders of Outstanding Notes in the Exchange Offer are described in the section of the Prospectus entitled “The Exchange Offer—Conditions.”

10. NO CONDITIONAL TENDER. No alternative, conditional or contingent tender of Outstanding Notes will be accepted.

11. MUTILATED, LOST, STOLEN OR DESTROYED OUTSTANDING NOTES. If the certificates representing your Outstanding Notes have been mutilated, lost, stolen or destroyed, you should contact the Exchange Agent at the address listed on the cover page of this Letter of Transmittal for further instructions.

12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. If you have questions, need assistance, or would like to receive additional copies of the Prospectus or this Letter of Transmittal, you should contact the Exchange Agent at the address listed on the cover page of this Letter of Transmittal. You may also contact your broker, dealer, commercial bank, trust company, or other nominee for assistance concerning the Exchange Offer.

13. WITHDRAWAL. Tenders may be withdrawn only pursuant to the withdrawal rights described in the section of the Prospectus entitled “The Exchange Offer—Withdrawal of Tenders.”

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TO BE COMPLETED BY ALL TENDERING HOLDERS

(SEE INSTRUCTION 7)

SUBSTITUTE FORM W-9	PART 1—PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW	Social Security Number OR Employer Identification Number
DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE	PART 2—Certification—Underpenalties of perjury, I certify that:	PART 3—
	(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and	Awaiting TIN
PAYEE’S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)	(2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (“IRS”) that I am subject to backup withholding as a result of failure to report interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding, and	Please complete the Certificate of Awaiting Taxpayer Identification Number below.
	(3) I am a U.S. person (including a U.S. resident alien).

Certificate Instructions—You must cross out item (2) in Part 2 above if you have been notified by the IRS that you are subject to backup withholding because of unreported interest or dividends. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out item (2).

SIGNATURE:                                                                                                                                                                                                

DATE:                         , 2006

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 28% OF CERTAIN PAYMENTS MADE TO YOU WITH RESPECT TO THE EXCHANGE NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

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YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED

THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number to the payor within 60 days, 28% of all reportable payments made to me thereafter will be withheld until I provide a number.

SIGNATURE:                                                                                                                                                                                                

DATE:                     , 2006

CERTIFICATE FOR FOREIGN RECORD HOLDERS

Under penalties of perjury, I certify that I am not a United States citizen or resident (or I am signing for a foreign corporation, partnership, estate or trust).

SIGNATURE:                                                                                                                                                                                                

DATE:                     , 2006

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EX-99.2

Exhibit 99.2

NOTICE OF GUARANTEED DELIVERY

FOR TENDER OF

OUTSTANDING UNREGISTERED SENIOR SECURED NOTES DUE 2010

OF

TRANSMERIDIAN EXPLORATION INC.

This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be used to accept the Exchange Offer (as defined below) if (i) the certificates for the Company’s (as defined below) Senior Secured Notes due 2010 (the “Outstanding Notes”) are not immediately available, (ii) the certificates for the Outstanding Notes, the Letter of Transmittal and all other required documents cannot be delivered to The Bank of New York (the “Exchange Agent”) prior to the Expiration Time (as defined in the Prospectus referred to below) or (iii) the procedures for delivery of Outstanding Notes by book-entry transfer cannot be completed prior to the Expiration Time. This Notice of Guaranteed Delivery may be delivered by hand, overnight courier or mail, or transmitted by facsimile transmission, to the Exchange Agent. See the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures.” In addition, in order to utilize the guaranteed delivery procedures to tender Outstanding Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or facsimile thereof) must also be received by the Exchange Agent prior to the Expiration Time. Capitalized terms not defined herein have the meanings assigned to them in the Prospectus.

THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:

THE BANK OF NEW YORK

For Delivery by Mail/Hand Delivery/Overnight Delivery:

THE BANK OF NEW YORK

101 Barclay Street

Floor 21 West

New York, New York 10286

Attn: Corporate Trust Trustee Administration

By Facsimile Transmission (for eligible institutions only):

To Confirm Receipt:

For Information Call:

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN “ELIGIBLE INSTITUTION” UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.

Ladies and Gentlemen:

The undersigned hereby tenders to Transmeridian Exploration Inc. (the “Company”), upon the terms and subject to the conditions set forth in the prospectus dated                     , 2006 (as the same may be amended or supplemented from time to time, the “Prospectus”) and the related Letter of Transmittal (which together constitute the “Exchange Offer”), receipt of which is hereby acknowledged, the aggregate principal amount of Outstanding Notes set forth below pursuant to the guaranteed delivery procedures described in the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures.”

The undersigned understands and acknowledges that the Exchange Offer will expire at 5:00 p.m., New York City time, on                     , 2006, unless extended by the Company. With respect to the Exchange Offer, “Expiration Time” means such time and date or, if the Exchange Offer is extended, the latest time and date to which the Exchange Offer is so extended by the Company.

All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned (in the case of an individual), or the dissolution of the undersigned (in the case of a corporation or other entity), and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned.

DESCRIPTION OF OUTSTANDING NOTES TENDERED

CERTIFICATE NUMBER(S) (IF KNOWN) OF OUTSTANDING NOTES OR ACCOUNT NUMBER AT THE BOOK-ENTRY TRANSFER FACILITY	AGGREGATE PRINCIPAL AMOUNT REPRESENTED BY OUTSTANDING NOTES	PRINCIPAL AMOUNT TENDERED*
__________________________________________	_____________________________	____________
__________________________________________	_____________________________	____________
__________________________________________	_____________________________	____________
	TOTAL:

* Unless otherwise indicated, any tendering holder of Outstanding Notes will be deemed to have tendered the entire aggregate principal amount represented by its Outstanding Notes. All tenders must be in integral multiples of $1,000.

PLEASE SIGN AND COMPLETE

Signature:	Name:
Address:	Capacity (full title), if signing in a representative
	capacity:
(Zip Code)
Area Code and Telephone Number:	Taxpayer Identification or Social Security Number:
Dated:

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GUARANTEE

(NOT TO BE USED FOR SIGNATURE GUARANTEE)

The undersigned, a firm or other entity identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, as an “eligible guarantor institution,” including (as such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities broker, municipal securities dealer, government securities broker or government securities dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or learning agency; or (v) a savings association that is a participant in a Securities Transfer Association recognized program (each of the foregoing being referred to as an “Eligible Institution”), hereby guarantees to deliver to the Exchange Agent either the Outstanding Notes tendered hereby in proper form for transfer, or confirmation of the book-entry transfer of such Outstanding Notes to the Exchange Agent’s account at The Depository Trust Company, pursuant to the procedures for book-entry transfer described in the Prospectus, in either case together with one or more properly completed and duly executed Letter(s) of Transmittal (or facsimile thereof) and all other required documents within three American Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery.

The undersigned acknowledges that it must deliver the Letter(s) of Transmittal, the Outstanding Notes tendered hereby and all other required documents to the Exchange Agent within the time period set forth above and that failure to do so could result in a financial loss to the undersigned.

	(Name of Firm)
	Sign here:
	(Authorized Signature)
	Name:
	(Please type or print)
	Title:
	(Area Code and Telephone Number)
Dated:                     , 2006
	Address and Zip Code

NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING NOTES WITH THIS FORM. CERTIFICATES FOR OUTSTANDING NOTES SHOULD ONLY BE SENT WITH A LETTER OF TRANSMITTAL.

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EX-99.3

Exhibit 99.3

TRANSMERIDIAN EXPLORATION INC.

OFFER TO EXCHANGE

UP TO $250,000,000 REGISTERED SENIOR SECURED NOTES DUE 2010

FOR

ANY AND ALL OUTSTANDING UNREGISTERED SENIOR SECURED NOTES DUE 2010

To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:

Transmeridian Exploration Inc. (the “Company”) is offering, subject to the terms and conditions set forth in the prospectus, dated                     , 2006 (the “Prospectus”), relating to the offer (the “Exchange Offer”) of the Company to exchange up to $250,000,000 in aggregate principal amount of its Senior Secured Notes due 2010 (the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for the same amount of its outstanding unregistered Senior Secured Notes due 2010 (the “Outstanding Notes”). The Outstanding Notes were issued in a private placement in December 2005 pursuant to Regulation D under the Securities Act. The Exchange Offer is being extended to all holders of the Outstanding Notes in order to satisfy certain obligations of the Company set forth in the Registration Rights Agreement, dated as of December 12, 2005, by and among the Company, the guarantors of the Outstanding Notes party thereto and the initial purchasers of the Outstanding Notes. The Exchange Notes are substantially identical to the Outstanding Notes, except that the transfer restrictions and registration rights relating to the Outstanding Notes will not apply to the Exchange Notes.

Please contact your clients for whom you hold Outstanding Notes regarding the Exchange Offer. For your information and for forwarding to your clients for whom you hold Outstanding Notes registered in your name or in the name of your nominee, or who hold Outstanding Notes registered in their own names, we are enclosing the following documents:

1. A Prospectus dated                     , 2006;

2. A Letter of Transmittal for your use and for the information of your clients;

3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offer if: (a) the certificates for the Outstanding Notes are not immediately available, (b) the certificates for the Outstanding Notes, the Letter of Transmittal and all other required documents cannot be delivered to the Exchange Agent prior to the expiration of the Exchange Offer or (c) the procedures for book-entry transfer of the Outstanding Notes cannot be completed prior to the expiration of the Exchange Offer;

4. A form of letter which may be sent to your clients for whose accounts you hold Outstanding Notes registered in your name or in the name of your nominee, with space provided for obtaining such clients’ instructions with regard to the Exchange Offer;

5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and

6. Return envelopes addressed to The Bank of New York, the Exchange Agent for the Exchange Offer (the “Exchange Agent”).

Your prompt action is requested. The Exchange Offer will expire at 5:00 P.M., New York City time, on                     , 2006, unless the Exchange Offer is extended by the Company (as it may be extended, the “Expiration Time”). Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Time.

Pursuant to the Letter of Transmittal, each holder of Outstanding Notes will represent to the Company that:

• the Exchange Notes acquired in exchange for Outstanding Notes pursuant to the Exchange Offer are being acquired in the ordinary course of business of the holder;

• the holder has no arrangements or understanding with any person to participate in a distribution of Outstanding Notes or Exchange Notes issued to such holder within the meaning of the Securities Act;

• the holder is not an “affiliate” (within the meaning of Rule 405 under the Securities Act) of the Company or, if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and

• if the holder is not a broker-dealer, that the holder is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes within the meaning of the Securities Act.

If the holder is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes.

The enclosed form of letter to clients contains an authorization by the beneficial owners of the Outstanding Notes for you to make the foregoing representations.

Unless a holder of Outstanding Notes complies with the procedures described in the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures,” the holder must do one of the following prior to the Expiration Time to participate in the Exchange Offer:

• tender the Outstanding Notes by sending the certificates for the Outstanding Notes, in proper form for transfer, a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, and all other documents required by the Letter of Transmittal, to the Exchange Agent at the address listed on the cover page of the Letter of Transmittal;

• tender the Outstanding Notes by using the book-entry procedures described in the section of the Prospectus entitled “The Exchange Offer—Procedures for Tendering” and transmitting a properly completed and duly executed Letter of Transmittal, with any required signature guarantees, or an Agent’s Message in lieu of the Letter of Transmittal, to the Exchange Agent.

In order for a book-entry transfer to constitute a valid tender of Outstanding Notes in the Exchange Offer, the Exchange Agent must receive a confirmation of book-entry transfer (a “Book-Entry Confirmation”) of the Outstanding Notes into the Exchange Agent’s account at The Depository Trust Company prior to the Expiration Time. The term “Agent’s Message” means a message, transmitted by The Depository Trust Company and received by the Exchange Agent and forming a part of a Book-Entry Confirmation, which states that The Depository Trust Company has received an express acknowledgment from the tendering holder of Outstanding Notes that the holder has received and has agreed to be bound by the Letter of Transmittal.

If a registered holder of Outstanding Notes wishes to tender its Outstanding Notes in the Exchange Offer, but (a) the certificates for the Outstanding Notes are not immediately available, (b) the certificates for the Outstanding Notes, the Letter of Transmittal and all other required documents cannot be delivered to the Exchange Agent prior to the Expiration Time or (c) the procedures for delivery of the Outstanding Notes by book-entry transfer cannot be completed prior to the Expiration Time, a tender of Outstanding Notes may be effected by following the guaranteed delivery procedures described in the section of the Prospectus entitled “The Exchange Offer—Guaranteed Delivery Procedures.”

The Company will, upon request, reimburse brokers, dealers, commercial banks, trust companies and other nominees for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and the

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related documents to the beneficial owners of Outstanding Notes held by them as nominee or in a fiduciary capacity. The Company will pay or cause to be paid all transfer taxes applicable to the exchange of Outstanding Notes in the Exchange Offer, except as set forth in Instruction 6 of the Letter of Transmittal.

Any inquiries you may have with respect to the Exchange Offer, or requests for additional copies of the enclosed materials, should be directed to the Exchange Agent at its address and telephone number set forth on the cover page of the Letter of Transmittal.

Very truly yours,

TRANSMERIDIAN EXPLORATION INC.

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF TRANSMERIDIAN EXPLORATION INC. OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF EITHER OF THEM IN CONNECTION WITH THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.

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EX-99.4

Exhibit 99.4

TRANSMERIDIAN EXPLORATION INC.

OFFER TO EXCHANGE

UP TO $250,000,000 REGISTERED SENIOR SECURED NOTES DUE 2010

FOR

ANY AND ALL OUTSTANDING UNREGISTERED SENIOR SECURED NOTES DUE 2010

To Our Clients:

Enclosed for your consideration is a prospectus, dated                     , 2006 (the “Prospectus”), and the related Letter of Transmittal (the “Letter of Transmittal”) relating to the offer (the “Exchange Offer”) of Transmeridian Exploration Inc. (the “Company”) to exchange up to $250,000,000 in aggregate principal amount of its Senior Secured Notes due 2010 (the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for the same amount of its outstanding unregistered Senior Secured Notes due 2010 (the “Outstanding Notes”). The Outstanding Notes were issued in a private placement in December 2005 pursuant to Regulation D under the Securities Act. The Exchange Offer is being extended to all holders of the Outstanding Notes in order to satisfy certain obligations of the Company set forth in the Registration Rights Agreement, dated as of December 12, 2005, by and among the Company, the guarantors of the Outstanding Notes party thereto and the initial purchasers of the Outstanding Notes. The Exchange Notes are substantially identical to the Outstanding Notes, except that the transfer restrictions and registration rights relating to the Outstanding Notes will not apply to the Exchange Notes.

These materials are being forwarded to you as the beneficial owner of the Outstanding Notes held by us for your account but not registered in your name. A tender of such Outstanding Notes may only be made by us as the holder of record and pursuant to your instructions.

Accordingly, we request instructions as to whether you wish us to tender on your behalf the Outstanding Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and Letter of Transmittal. We also request that you confirm that we may, on your behalf, make the representations contained in the Letter of Transmittal.

Your instructions should be forwarded to us as promptly as possible in order to permit us to tender the Outstanding Notes on your behalf in accordance with the provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 P.M., New York City time, on                     , 2006, unless the Exchange Offer is extended by the Company. Any Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn at any time before the expiration of the Exchange Offer.

Your attention is directed to the following:

1. The Exchange Offer is for any and all Outstanding Notes.

2. The Exchange Offer is subject to certain conditions set forth in the section of the Prospectus entitled “The Exchange Offer—Conditions.”

3. Any transfer taxes incident to the transfer of Outstanding Notes from the holder to the Company will be paid by the Company, except as otherwise provided in Instruction 6 of the Letter of Transmittal.

4. The Exchange Offer expires at 5:00 P.M., New York City time, on                     , 2006, unless the Exchange Offer is extended by the Company.

If you wish to have us tender your Outstanding Notes, please so instruct us by completing, executing and returning to us the instruction form accompanying this letter. The Letter of Transmittal is furnished to you for your information only and may not be used by you to tender your Outstanding Notes.

INSTRUCTIONS WITH RESPECT TO

THE EXCHANGE OFFER

The undersigned acknowledges receipt of your letter and the enclosed materials referred to therein relating to the Exchange Offer made by Transmeridian Exploration Inc. with respect to its Outstanding Notes.

This will instruct you as to the action to be taken by you relating to the Exchange Offer with respect to the Outstanding Notes held by you for the account of the undersigned.

The aggregate face amount of the Outstanding Notes held by you for the account of the undersigned is (fill in amount):

$                     of Senior Secured Notes due 2010

With respect to the Exchange Offer, the undersigned hereby instructs you (check appropriate box):

¨ to tender the following Outstanding Notes, subject to the terms and conditions set forth in the Prospectus and the Letter of Transmittal, held by you for the account of the undersigned (insert principal amount of Outstanding Notes to be tendered) (if any): $                    

¨ not to tender any Outstanding Notes held by you for the account of the undersigned.

If the undersigned instructs you to tender the Outstanding Notes held by you for the account of the undersigned, it is understood that you are authorized to make, on behalf of the undersigned (and the undersigned by its signature below, hereby makes to you), the representations contained in the Letter of Transmittal that are to be made with respect to the undersigned as a beneficial owner, including but not limited to the representations that:

• the Exchange Notes acquired in exchange for Outstanding Notes pursuant to the Exchange Offer are being acquired in the ordinary course of business of the undersigned;

• the undersigned has no arrangements or understanding with any person to participate in a distribution of Outstanding Notes or Exchange Notes issued to the undersigned within the meaning of the Securities Act;

• the undersigned is not an “affiliate” (within the meaning of Rule 405 under the Securities Act) of the Company or, if the undersigned is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and

• if the undersigned is not a broker-dealer, that the undersigned is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes within the meaning of the Securities Act.

If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Outstanding Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes.

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Signature:                                                                                                                                                                                                         

Print Name here:                                                                                                                                                                                            

(Print Address):                                                                                                                                                                                              

(Area Code and Telephone Number):                                                                                                                                                     

(Tax Identification or Social Security Number):                                                                                                                                 

Dated:                                                                                                                                                                                                                 

None of the Outstanding Notes held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature hereon shall constitute an instruction to us to tender all of the Outstanding Notes held by us for your account.

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EX-99.5

Exhibit 99.5

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9

PURPOSE OF FORM—A person who is required to file an information return with the IRS must obtain your correct Taxpayer Identification Number (“TIN”) to report income paid to you, real estate transactions, mortgage interest you paid, the acquisition or abandonment of secured property, or contributions you made to an IRA. For most individuals, your taxpayer identification number will be your Social Security Number (“SSN”). Use the form provided to furnish your correct TIN and, when applicable, to (1) certify that the TIN you are furnishing is correct (or that you are waiting for a number to be issued), (2) certify that you are not subject to backup withholding or (3) claim exemption from backup withholding if you are an exempt payee. Furnishing your correct TIN and making the appropriate certifications will prevent certain payments from being subject to backup withholding.

If you are an individual, you must generally provide the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name, the last name shown on your social security card, and your new last name.

If you are a sole proprietor, you must furnish your INDIVIDUAL name and either your SSN or Employer Identification Number (“EIN”). You may also enter your business name or “doing business as” name on the business name line. Enter your name as shown on your social security card and/or as it was used to apply for your EIN on Form SS-4.

You must sign the certification or backup withholding will apply.

HOW TO OBTAIN A TIN—If you do not have a TIN, apply for one immediately. To apply, get FORM SS-5, Application for a Social Security Card (for individuals), from your local office of the Social Security Administration, or FORM SS-4, Application for Employer Identification Number (for businesses and all other entities), from your local IRS office.

Once you receive your TIN, complete the enclosed form and return it to us. Please note that you will be subject to backup withholding at a 28% rate until we receive your TIN.

FOR THIS TYPE OF ACCOUNT:	GIVE NAME AND SSN OF:
1.    Individual	The individual
2.    Two or more individuals (joint account)	The actual owner of the account or, if combined funds, the first individual on the account (1)
3.    Custodian account of a minor (Uniform Gift to Minors Act)	The minor (2)
4.    a.   The usual revocable savings trust (grantor is also trustee)	The grantor-trustee (1)
b.    So-called trust account that is not a legal or valid trust under state law	The actual owner (1)
5.    Sole proprietorship	The owner (3)
6.    A valid trust, estate, or pension trust	Legal entity (4)
7.    Corporate	The corporation

FOR THIS TYPE OF ACCOUNT:	GIVE NAME AND SSN OF:
8.    Association, club, religious, charitable, education, or other tax-exempt organization	The organization
9.    Partnership	The partnership
10. A broker or registered nominee	The broker or nominee
11. Account with the Department of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments	The public entity

(1) List first and circle the name of the person whose number you furnish.

(2) Circle the minor’s name and furnish the minor’s SSN.

(3) Show your individual name. You may also enter your business name. You may use your SSN or EIN.

(4) List first and circle the name of the legal trust, estate, or pension trust. (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.)

NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

WHAT IS BACKUP WITHHOLDING?—Persons making certain payments to you after 1992 are required to withhold and pay to the IRS 28% of such payments under certain conditions. This is called “backup withholding.”

If you give the requester your correct TIN, make the appropriate certifications, and report all your taxable interest and dividends on your tax return, your payments will not be subject to backup withholding. Payments you receive will be subject to backup withholding if:

1. you do not furnish your TIN to the requester;

2. the IRS notifies the requester that you furnished an incorrect TIN;

3. you are notified by the IRS that you are subject to backup withholding because you failed to report taxable interest and dividends on your tax return;

4. you do not certify to the requester that you are not subject to backup withholding under item 3 above; or

5. you do not certify as to your TIN.

PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. The following is a list of payees exempt from backup withholding and for which no information reporting is required.

(1) A corporation.

(2) An organization exempt from tax under Section 501(a) of the Internal Revenue Code, or an IRA, or a custodial account under Section 403(b)(7) of the Internal Revenue Code.

(3) The United States or any of its agencies or instrumentalities.

(4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities.

(5) A foreign government or any of its political subdivisions, agencies, or instrumentalities.

(6) An international organization or any of its agencies or instrumentalities.

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(7) A foreign central bank of issue.

(8) A dealer in securities or commodities required to register in the United States or a possession of the United States.

(9) A real estate reinvestment trust.

(10) An entity registered at all times during the tax year under the Investment Company Act of 1940.

(11) A common trust fund operated by a bank under Section 584(a) of the Internal Revenue Code.

(12) A financial institution.

(13) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc. Nominee List.

(14) A trust exempt from tax under Section 664 of the Internal Revenue Code or described in Section 4947 of the Internal Revenue Code.

Payments generally not subject to backup withholding include the following:

• Payments to nonresident aliens subject to withholding under Section 1441 of the Internal Revenue Code.

• Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident partner.

• Payments of patronage dividends not paid in money.

• Payments made by certain foreign organizations.

PENALTIES

FAILURE TO FURNISH TIN—If you fail to furnish your correct TIN, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING—If you make a false statement with no reasonable basis that results in no backup withholding, you are subject to a $500 penalty.

CRIMINAL PENALTY FOR FALSIFYING INFORMATION—Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment.

MISUSE OF TINS—If the requester discloses or uses TINs in violation of Federal law, the requester may be subject to civil and criminal penalties.

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