Transmeridian Exploration Incorporated (TMY:AMEX)
Transmeridian Exploration is an independent energy company established to acquire and develop identified and underdeveloped oil reserves in the region around the Caspian Sea.
Transmeridian targets medium sized fields with low initial entry costs, identified reserves, significant upside reserve potential and a quick payback period of two to three years and which offer the likelihood of lower than average international finding costs.
Transmeridian’s primary oil and gas property is the South Alibek Field, in which the company holds a 100% interest through its subsidiary CaspiNeftTME in Kazakhstan. At January 1, 2007, the estimated total proved reserves were 67.2 million barrels.
Kazakhstan is located in Central Asia and is the ninth largest country in the world by land area. It is bordered by Russia to the north, China to the east and the Caspian Sea to the west. It ihas a population of 15 million. The country has a democratic political system and a market economy founded on a stable currency, the Tenge. It is widely recognized as being the most stable country in the CIS from an economic and political perspective. Kazakhstan’s sovereign debt rating is investment grade, Baa3 by Moody’s and BBB- by S&P, with a stable outlook, remaining the highest of any of the CIS countries, including Russia. Of the CIS countries, Kazakhstan is second only to Russia in production and reserves. Its current production is approaching 1.3 million barrels of oil per day, with over 85% of that
oil exported. Its goal is to increase production to over three million barrels of oil per day during the next decade. Reaching this goal is supported by the continued development of the oil and gas treatment and transportation infrastructure in the core oil producing regions of western Kazakhstan. This would move Kazakhstan into the ranks of the top 10 oil producing countries in the world. Since 2000, its GDP growth has averaged over 10% per year. Kazakhstan has enacted western-style legislation on banking, securities regulation, taxes, land, accounting and natural resources.
Transmeridian Exploration Incorporated and United Energy Group Limited announced lrecently that they have entered into an Investment Agreement in connection with which UEG will acquire at least 90% of the outstanding shares of (i) 15% senior redeemable convertible preferred stock and (ii) 20% junior redeemable convertible preferred stock of Transmeridian (the ''Preferred Stock``) and pursuant to which UEG will make a cash infusion to fund Transmeridian's ongoing capital expenditure program and working capital requirements. UEG will receive shares of new preferred stock and warrants to purchase common stock, representing approximately 60% of the capital stock of Transmeridian on an as-converted, fully diluted basis in exchange for the Preferred Stock it acquires and the cash infusion. The transaction is subject to the approval of UEG's and Transmeridian's shareholders, regulatory approval and other terms and conditions contained in the Investment Agreement.
United Energy's Chairman and Executive Director, Hongwei Zhang stated, ``We are very pleased to invest in a company with such attractive assets as Transmeridian. This transaction will further strengthen United Energy's portfolio and demonstrate our commitment to establishing a global footprint of E&P assets.''
Transmeridian's CEO, Lorrie T. Olivier, stated, ``We are delighted to have United Energy as a new investor, and we are looking forward to the new opportunities Transmeridian will be able to pursue with this strengthened financial position.''
Transmeridian currently has projects in Kazakhstan and southern Russia; its main asset is a 100% interest in the South Alibek field in western Kazakhstan.
There are 250 discovered oil and gas fields within the borders of Kazakhstan. These oil and gas fields contain an estimated 40 billion barrels of recoverable oil based on recent discoveries. Developing these assets and getting the product to market requires unique knowledge about the region, local laws and customs. The management team at Transmeridian has developed the knowledge and skill to operate successfully in the country. With United Energy's backing Transmeridian should be able to forge ahead now with its projects.
About United Energy Group Limited
United Energy is an investment holding company principally investing in the oil and gas business and primarily targets investments in oil and gas fields globally with proved or probable reserves and significant upside reserve potential.
United Energy holds certain participating interests in an oilfield project in Bohai Bay Basin in the People's Republic of China and it is focused on expanding its portfolio to include E&P opportunities in Asia Pacific, Africa, Latin America and other parts of the world.
Transmeridian"s stock price has dropped from nearly $6 to $0.63 in the last 2 years.
With new funding from United Energy Group, the stock could certainly stage a big turnaround.
In fact, this company’s shares are so underpriced that if you took its market valuation (the price of all outstanding shares), and divided it by all those barrels of oil, it comes out to less than $5 a barrel. With oil hovering around $140 a barrel, this has got to be a bargain!
Even though the oil is still in the ground at this stage, it is hugely undervalued.
Buy Transmeridian Exploration (TMY:AMEX) up to $1