`Delaware                         1311                  76-0644935
(State or Other Jurisdiction      (Primary Standard        (I.R.S. Employer
          of                         Industrial          Identification Number)
     Incorporation or            Classification Code)
      Organization)

                                                Jim Tucker, V.P. Finance
                                               397 N. Sam Houston Parkway E.
397 N. Sam Houston Parkway E.                         Suite 300
Suite 300,                                      Houston, Texas  77060
Houston, Texas, 77060                              (281) 999-9091
(281) 999-9091
(Address, Including Zip Code,               (Name, Address, Including Zip Code,
and Telephone Number, Including Area        and Telephone Number, Including Area
Code of Registrant's Executive Offices)     Code, of Agent for Service)`

Indicate by check mark whether the registrant (1) has filed all reports required to be
 filed by Section 13 or
 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.

YES |X| NO |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. |_|

As of December 31, 2001, the aggregate market value of registrant's voting common
stock, par value $.0006 per share, held by non-affiliates was $16,767.  As of December
31, 2001, registrant had 56,747,029shares of its common stock, par value $.0006 per
share, issued and outstanding.

This Annual Report on Form 10-KSB
ontains forward-looking statements within the meaning
of Section 27A of the
Securities Act of 1993 and
Section 21E of the Securities Exchange Act of 1934. The words anticipate,
believe, estimate, expect, project and similar expressions are intended to
identify forward-looking statements. Without limiting the foregoing, all
statements under the caption Item 6--Management’s Discussion and
Analysis of Financial Condition and Results of Operations relating to the
Company’s anticipated capital expenditures, future cash flows and
borrowings, pursuit of potential future acquisition opportunities and sources of
funding for exploration and development are forward-looking statements. These
statements are subject to certain risks and uncertainties, such as the
volatility of natural gas and oil prices, potential write downs or impairments,
inability to meet capital requirements, uncertainty of reserve information and
future net revenue estimates, reserve replacement risks, drilling risks,
operating risks of natural gas and oil operations, acquisition risks, hedging
risks, government regulation, environmental matters, competition and potential
conflicts of interests with our majority shareholder. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, believed,
estimated, expected or projected. For additional discussion of such risks,
uncertainties and assumptions, see Risk Factors Affecting Our Business in Items
1 and 2. Business and Properties and Item 6. Management’s Discussion
and Analysis of Financial Condition and Results of Operations included in this
Annual Report filed under the Securities Exchange Act of 1934, as
amended.

Unless otherwise indicated, references to Transmeridian Exploration or the Company refers
      to Transmeridian Exploration Incorporated and its subsidiaries on a consolidated basis.

PART I

`ITEM 1.  BUSINESS.....................................................   4

ITEM 2.  PROPERTIES...................................................   5

ITEM 3.  LEGAL PROCEEDINGS...........................................   13

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........   13

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.........................................   15

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF OPERATION................................................   16

ITEM 7.  FINANCIAL STATEMENTS
(See below)..........................................................   20

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE....................................   21

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT............   21

ITEM 10. EXECUTIVE COMPENSATION......................................   23

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT..............................................   24

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............   24

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K............................   24

SIGNATURES...........................................................   25

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS..............................27`

ITEM 1. BUSINESS

Our Business

Transmeridian  Exploration,  Inc. is an independent  energy company  established to
acquire and develop  identified and  underdeveloped hydrocarbon  reserves  in the
region of the former  Soviet  Union  known as the  Confederation  of  Independent
States  (CIS) and more particularly  the Caspian Sea region.  Our philosophy is to
take  advantage of these  opportunities  based in part on our  management's
experience  and business  relationships  in the area. Our key  management  team has
a total of about 50 years of experience  working in the CIS Region . We target
opportunities with proved and potential oil and natural gas reserves at below the
industry's  international finding cost rates.

The first  opportunity which the  company  purchased  is the South  Alibek  Field.
The South  Alibek  Field is located in the Caspian Region of western Kazakhstan,
and is situated near pipelines,  railroads,  power transmission lines, regional
roads, and other related oil field  infrastructure  needs. The proximity to existing
infrastructure  for exportation of oil and gas,  reduces  associated costs
and the time needed to place new fields on production.

As of December 31, 2001 we had  estimated  net proved  reserves to our interest of
17,645,418  barrels of oil and 3.475 MMCF (million cubic feet) with a net present
value at 10%(before taxes) of $128,917,482 and a standardized measure of $90,242,000
(after tax) as measured on  December  31,  2001.  Of these  reserves,  5,808,683
barrels of oil and 1,144 MMCF were  classified  as proved  developed
non-producing.

Acquisition of Emba Oil Terminal

On August 27th of 2001 Transmeridian  was granted   a  right to  purchase up to
a 50%  interest in Emba  Trans Ltd a rail terminal at the city of Emba to facilitate
the storage, sales and export of oil from the production of South Alibek Field.
The Company elected not to exercise this  option.  On April 26, 2002, Transmeridian
purchased   a  25% equity interest in the Emba Terminal for 4,000,000 shares of  common
stock of the company, and has up to 180 calendar days to purchase another 25% equity
interest in the facility at a price to be further negotiated. The terminal has
sufficient handling capacity for the production from South Alibek.

Employees

As of December 31, 2001, our staff consists of an experienced management team
with five professionals in the Houston office plus the support of expert engineering
and geoscience consultants as needed and an operations management team and staff in
Almaty and Aktobe comprised of nine in Almaty, eleven in Aktobe and six field personnel,
as well as contract employees supervised by our expatriate engineers.

Corporate Information

Transmeridian was incorporated under the laws of the State of Delaware on April
18, 2000.

Our corporate headquarters' offices comprising 6,725 square feet of rented executive
offices in Houston, at 397 N. Sam Houston Parkway, Suite 300, Houston, Texas 77060, at a
monthly rental of $9,527 on a five-year lease. The corporate office of Caspi Neft TME is in
Almaty, Kazakhstan, 130 A Furmanova Street, comprising 4500 square feet rented monthly
for $5,460 and their branch office in Aktobe, Kazakhstan, is at Gaziza Zhubanova Street, 50 A
comprising 1,162 square feet, rented monthly at $540. Our Houston telephone number
is (281) 999-9091.

ITEM 2.PROPERTIES

Properties

All exploration and production activities are conducted through wholly owned operating
subsidiaries.  Transmeridian Exploration Inc.(BVI) is responsible for the management of
the South Alibek Field, with Open Joint Stock Company (OJSC) Caspi Neft TME (Caspi
Neft TME).  This Kazakhstan company was established specifically to hold the title to
the License 1557 and to manage all the joint venture operations of that project.  The
Exploration License 1557 for South Alibek and the related Exploration Contract for the
exploration work are registered in the name of the operating company OJSC Caspi Neft
TME.  The  company holds 100% of the equity interest of Caspi Neft TME, and provides
a net carried interest of 10% to Kornerstone Investment Group Ltd (Kornerstone),
The  principals of Kornerstone received this 10% carry as a finder's fee for the
acquisition of the License 1557 OIL.

On December  28th, 2001 the company signed a contract to purchase a Land Drilling Rig
named Rig 232 - type National 1320UE, from Seaboard Equipment Company, Inc., for a total
consideration of $5,300,000 to be paid in cash and the Company's common stock.  The
Company will use this rig to support a continuous delineation and development drilling
program beginning in the third quarter of 2002.

`No.  Company Holding Title                   Name          Description          Size          Costs
 1   Caspi Neft TME                       South Alibek     License 1557       14,111 acres  $4,000,000
                                                           Oil and Gas Lease

 2   TMEI                                                  Drilling Rig                      $5,300,000`

RESERVES

As of December 31, 2001,
our estimated net proved
reserves in the South Alibek field is 17.645 million barrels of oil based on our
90% interest in the property and net of government royalty. These reserves only
include the reserves estimated to be recoverable within 240 acres from well No.
29 and two 80 acre offset units (wells). Proved reserves increased in 2001
because of increasing the net interest in the property from 84.5% to 90% with
the acquisition on January 1, 2001 of the 4.5% interest held by Tracer
Petroleum. Proved reserves are the estimated quantities which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. The reserve disclosure is based upon a reserve study of the South
Alibek Field conducted by Ryder Scott Company, (Ryder Scott) a US independent
engineering company utilizing data available prior to December 31, 2001.
Extensive geologic and engineering information was obtained over the South
Alibek Field and license area, and the adjacent Alibekmola, currently under
development and the nearby developed Zhanazhol Field, both analogous to South
Alibek. This data serves as the basis of the technical evaluation and
conclusions made by Ryder Scott.

These proved reserves
estimates do not include reserves which may be found by extension of proved
areas through the drilling of new wells. When a commercial reservoir is
discovered, proved reserves are initially determined based on only limited data
from the first well or wells. Further drilling will better define the extent of
the reservoir and additional production performance. Well tests and engineering
studies will likely improve the reliability of the estimate.

Ryder Scott completed a
 geological study of the
South Alibek Field in 2000 and estimated that only half of the potential field
size was within the original license area of 13.745 square kilometers (3400
acres). Reserves potential of 121 million barrels was identified within this
smaller license area. The license area was extended to a larger 57.1 square

kilometers (14,111 acres) on November, 2001 in order to secure control over the
entire potential area of the field and the total potential reserves. The plan
for 2002 is to drill two wells, the first well half a mile (900 meters) north of
well 29, and the second well nearly 2 miles (3 kilometers) north of well 29.
Each well will each have the potential of increasing reserves by the same amount
already estimated for the 240 acres around well 29, or to prove up as much as 35
million barrels of additional reserves net to us. Actual results may be
significantly different as the potential reserves have greater inherent risks
than do proved reserve estimates.

These potential reserve
 estimates conform to
definitions of probable and possible reserves approved by the SPE/SPEE using the
deterministic methodology and have the same risks n ormally associated with
potential reserves categories as defined by the SPE/SPEE. Conversion of these
potential reserves to proved reserves will be only following the extensive and
successful drilling of new wells outside of the 240 acres already identified
with estimated proved reserves, including reasonable confirmation of the
presence of reservoirs and oil, and the productivity of these reservoirs from
testing of the new wells and thorough analysis of the new data obtained from the
drilling and other geological efforts such as mapping of the existing 2D and 3D
seismic data. Results from future drilling may cause these potential reserves
estimates to be reduced as they are only estimates and are dependent on many
geologic and engineering assumptions that may not be supported by the new
information to be obtained.

Summary of the Work
Performed by Ryder Scott

The Securities and Exchange
Commission (SEC) and
financial accounting standards require a presentation of the company’s
commercially recoverable reserves on an annual basis utilizing the year end
pricing for the valuation of these reserves over the future of the respective
field. Ryder Scott provided its estimate of the reserves, future production, and
income attributable to the existing Well No 29 and 2 offset wells.

Crude oil prices in effect
at December 31, 2001 were used in the preparation of this report as required by
SEC rules; however, actual future prices may vary significantly from December
31, 2001 prices. Therefore, amounts of income actually received may differ
significantly from the estimated quantities presented in this report. The
results of this study are summarized below.

The estimates of reserves
 presented herein were based
upon a detailed study of the properties in which Transmeridian owns an interest;
however, Ryder Scott has not made any field examination of the properties. No
consideration was given in this report to potential environmental liabilities
that may exist nor were any costs included for potential liability to restore
and clean up damages, if any, caused by past operating practices. Transmeridian
has furnished all of the accounts, records, geological and engineering data, and
reports and other data required for the Ryder Scott investigation. The ownership
interests, prices, and other factual data was also furnished by Transmeridian
and were accepted without independent verification. The estimates presented in
this report were based on data available through December 31, 2001.

The following table
 presents Ryder
Scott’s estimated net proved oil and natural gas r eserves and the
present value of our reserves at December 31, 2001, based on, and qualified by
reference to, the reserve report prepared by them. The present values,
discounted at 10% per annum, of estimated future net cash flows before income
taxes shown in the table are not intended to represent the current market value
of the estimated oil and natural gas reserves that we own.

The present value of future
 net cash flows before
income tax as of December 31, 2001 was determined by using the stated sales
price offered for field deliveries using the market crude price of Dated Brent
as of December 31, 2001 of U.S. $20.50 per barrel less a 25% discount for
quality and transportation and handling for a net price of U.S. $15.37 per
barrel. Ryder Scott utilized an estimate of 10% for government royalty in the
calculations of present value. Royalty rates currently being applied are similar
to new production contracts in the Kazakhstan range between 6-10%. No value was
assigned to gas reserves as currently there is no delivery contract for gas
sales.

`Future Net Revenue

Category                    Oil        Gas          Total            Present Worth
                                              (Undiscounted Future  (Discounted Future
Proved:                     Bbls       Mmcf       Net Revenue)       Net Revenue (10%))
   Developed Non Poducing  5,808,683   1,144      $89,308,496          $32,953,417
     Underdeveloped       11,836,735   2,331     $181,989,793          $95,964,065
     Total Proved         17,645,418   3,475     $271,298,289         $128,917,482


                                 Summary of Productive Area
                               South Alibek Field (License 1557)

                             Gross
 Total Area                 14,111 acres
                                                1 well plus 2 offsets at 80
Proved                         240 acres                     acre spacing
Remaining                   13,871 acres                   (1)
Interest                          90.00%                   (2)
Wells                                  1                   (3)

(1) We are in the second year of a 6-year exploration period of the license for this
    property and there are no prior year properties.  Commercial production from the field
    has not commenced as of this filing.
(2) Subsequent to year-end we acquired the 4.5% interest previously owned by TRACER
(3) Well No. 29 is now on test production since February 26, 2001.`

Oil and Gas Producing
Activities: (Unaudited)

Total costs incurred in the
acquisition of the License 1557 and the formation and development of our wholly
owned subsidiary Caspi Neft TME, the owner of the oil and gas exploration
activities, all incurred within Kazakhstan, were as follows (in thousands except
per barrel information):

`For the year ended    For the year ended
                                              December 31, 2001     December 31, 2000
                                                   (000)                (000)

Property Acquition Costs
        Unproved                                $    -               $    -
        Proved                                  $5,598               $3,944

Exploration Costs                                                    $    -

Development Costs                               $2,168               $  501

Depreciation, depreciation and amortization
 per equilvalent barrel of production           $    -               $    -

The aggregate capital costs relative to oil
 and gas producing activities are as follows
        Unproved oil and gas properties         $    -               $    -
        Proved oil and gas properties        $7,766               $4,445 

Accumulated depreciation, depletion and
 amoritzation                                $    -               $    -

                Net Capitalized Cost            $7,766               $4,445`

The following information regarding estimates of the Company's proved oil and gas reserves,
all located in Kazakhstan, is based on reports prepared on behalf of the Company by
independent petroleum engineers, Ryder Scott Company.  Because oil and gas reserve
estimates are inherently imprecise and require extensive judgments of reservoir engineering
data, they are generally less precise than estimates made in conjunction with financial
disclosures.  The revisions of previous estimates as reflected in the table below result
from more precise engineering calculations based upon additional production histories.

`Year ended                 Year ended
                                              December 31, 2001         December 31, 2000

                                             Natural Gas   Oil          Natural Gas    Oil
                                              (Mmcf's)   (Bbls)         (Mmcf's)     (Bbls)
Proved developed and undeveloped reserves

Beginning of period                           3,391     17,213,772           -               -
Revisions of previous year estimates             84        431,646           -               -
Extensions, discoveries and new additions         -              -           -               -
Improved recovery                                 -              -           -               -
Purchase of minerals in place                     -              -       3,391      17,213,772
Sales of minerals in place                        -              -           -               -
Production                                        -              -           -               -
End of period                                 3,475     17,645,418       3,391      17,213,772`

Standardized
Measure of Discounted Future Net Cash Flows from Oil and Gas Operations
and Changes Therein.

The standardized measure of discounted future net cash flows was determined based on
 the economic conditions in
 effect at the end of the
period presented, except in those instances where fixed and determinable gas
price escalations are included in contracts. The disclosures below do not
purport to present the fair market value of our oil and gas reserves. An
estimate of the fair market value would also take into account, among other
things, the recovery of reserves of an independent engineering evaluation of the
known producible reserves in the field, anticipated future changes in prices and
costs, a discount factor more representative of the time value of money and risk
inherent in reserve estimates.

The reserve estimates provided at December 31, 2001 are based on oil prices of approximately
 $15.37, which approximates
 75% of the Dated North Sea
Brent Crude price per barrel which related to a commercial offer at that time to
purchase crude from the field. No value was assigned to gas reserves, as
currently there is no delivery contact for gas sales.

`For the year ended              For the year ended
                                        December 31, 2001               December 31, 2000
                                             (000)                           (000)
Future net revenue                          $271,298                       $309,830

Future costs
    Lease operating expense                ($27,228)                      ($26,202)
    Development costs                      ($10,661)                      ($10,407)

Future net cash flows before income
   taxes                                    $233,409                      $273,221
Discounted at 10% per annum                ($104,492)                    ($123,765)

Discounted future net cash flows
   before income taxes                      $128,917                      $149,456
Future income taxes, net of
   discount at 10% annum                    ($38,675)                     ($44,107)

Standardized measure of discounted
   future net cash flows                    $90,242                        $105,349`

The following are the principal sources of changes in the standardized measure
of discounted future net cash flows:

`Year ended              Year ended
                                             December 31, 2001       December 31, 2000
                                              (in thousands)          (in thousands)

Beginning of year                               $105,349                 $      -

Accretion of discount                             14,946                        -

Revisions to previous quantity estimates           3,298                        -

Net changes in prices, net of production cost    (25,100)                       -

Purchase of reserves in place                          -                 $105,349

Other                                          (8,251)                          -

End of year                                     $ 90,242                 $105,349`

Commencement of Operations
and Initial Production Activities

An Early Start-up Program
(ESP) has been established to evaluate reservoir and productive characteristics
that will be critical in determining the final design of the field development
program. Permits and operational plans were filed with the authorities to begin
production testing of Well No. 29 in January 2001. The various permits and
authorizations required were granted in February 2001. This testing program has
been authorized for 18 months, which will allow us to flow and recover
production from Well No. 29 during this period.

The initial work program on
 Well No. 29 included
remedial work to repair mechanical deficiencies and evaluation of new zones
identified but not tested in the original drilling and testing of the well. This
ongoing work began in February 2001 with an extended flow test of the existing
well No.29. Test production from well No.29 was 180 barrels of oil per day, off
and on, for a total of 30 days of production from the 13 feet (4 meters) of open
interval in the well intervals that was in condition to flow without any
treatment or improvement in well production mechanics. Test oil produced during
the term of testing operations totaled in excess of 5,000 barrels of oil as of
April 30, 2001. The oil recovered in the test was a high gravity of 39(Degree)
API type crude and with a low sulfur content of about 0.8%.

A program to repair well
 damage and to open
additional intervals for production evaluation was completed in June 2001.
During this workover, it was discovered that only 13 feet (4 meters) of oil pay
had been previously opened to production from the well. After repair of well
damage, an additional 60 net feet of oil pay intervals were opened by
perforations in the lower KT-I and upper KTII intervals. The well was being
placed on a long-term continued testing program when a mechanical failure
resulted in part of the production string being lost in the hole. Adequate sized
equipment was not available to immediately remove the lost equipment and the
testing program has been suspended pending the availability of equipment and
material to properly remove the damaged equipment in the well.

Marketing of Test Production

The Mugodzhar region of the
Aktubinsk Oblast, in which South Alibek is located, is one of the most highly
developed areas for oil field development and production in the Republic of
Kazakhstan, with existing roads, railroads, rail oil terminals and oil
pipelines. Our first test production was initially trucked to the Shubarkuduk
Oil Terminal and sold to Kaspi Neft Chim, a local crude oil purchaser.

License Extension

An area extension
application was made to the
government authorities and an extension was granted and authorized by government
resolution on November 7, 2001. The new license area for the Company’s
South Alibek Field (“Field”) was increased 400% to incorporate
all of the currently identified potentially oil bearing reservoirs associated
with the Field. With this increase, the Company now estimates that the entire
structural closure of the Field is completely within the expanded 14,111 acre
(57.106 sq. km) License area. TMEI now can pursue the development of the
complete Field structure area, as well as pursuing exploration of upside
prospective targets within the larger license area. This significantly larger
area could potentially provide additional proved reserves and higher daily
production rates to us in the future than we have currently forecasted.

Application for Commercial Reserves

The company filed with
government authorities a
declaration of commercial reserves for the well No. 29 and the area within a
radius of one kilometer of the well. This commercial area is small and does not
reflect the company’s estimation of the entire South Alibek field, but
these reserves generally conform with the amount of reserves included in the
proved reserves defined in the current Ryder Scott Reserve Report included in
this document. Once the government approves these reserves, the company can
proceed with the conversion of the existing Exploration Contract to an
Exploration and Production Contract. The first level of review has been
completed by the local authorities and the study now goes to the National
Committee on Reserves for certification and inclusion of the reserves on the
national balance of recoverable hydrocarbon reserves. This certification will
allow for the next contractual phase of commercial production as described by
the petroleum code of Kazakhstan. In this regard, the company will be soliciting
that the government revise the existing Exploration Contract to an Exploration
and Production Contract. In this way the company may continue to expand the
limits of the existing field as well as initiate investments for the commercial
exploitation of the commercial reserves identified within the field and License
Area.

Present Activities

The following discussion of
our plan of operation should be read in conjunction with the consolidated
financial statements and the attached notes included elsewhere in this report.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
but not limited to, those set forth under Risk Factors and elsewhere in this
report.

The company has executed a
Share Purchase Agreement
with Kazstroiproyekt Ltd (KSP), an affiliate of Astana Holdings Ltd., which, at
KSP’s option within two years, provides for the possible sale and
transfer of 50% interest of OJSC Caspi Neft TME, the company which holds the
license to the South Alibek Field. In exchange for this interest, KSP must make
available initially a three year $20 million dollar financing for the
development of the field.

KSP arranged the $20 million loan through Turan Alem
Bank of Kazakhstan. Within twenty-four months of this initial loan, KSP must
determine if it wants to continue with the project. If KSP determines that it
will continue, KSP will be responsible for the payment of $15 million of the
initial loan and make available up to $30 million in additional development
financing at commercial rates. The portion of the loan not cancelled by the
contribution of KSP will be treated as a corporate cost of OJSC Caspi Neft TME
to be retired from proceeds of operations or further financing. If KSP
determines after 24 months, that it will not continue in the project it will
relinquish all claims and rights to the 50% interest in Caspi Neft TME and Caspi
Neft TME will be solely responsible for the entire loan, having an additional 12
months to cancel the debt. The partnership is governed by a joint shareholders
agreement which was based on a typical international joint operating agreement.
TMEI will provide for all the engineering and general directorship of the
company for at least the first 3 years. An interim bridge loan for $1.5 million
was issued through Turan Alem Bank in December 2001, and the Company paid off
the $1 million Alpha note on December 1. A final credit agreement with Turan
Alem Bank for the principal loan of $20 million was signed on February 26, 2002.
The company believes that this financing should be sufficient to bring the field
into production and allow the completion of the initial phase of delineation
drilling and installation of testing and production facilities to handle
production rates of up to 30,000 barrels of oil per day. All production will be
treated to allow for the sale of crude by truck transport to local railroad
transport terminals.

Financial Plan and Plan of Operation for 2002

Our focus in 2002 will be to:

`o     Strengthen the company’s balance sheet by raising additional working capital of $5-10
      million through equity or equity based instruments
o     Crude oil forward purchase contracts
o     Bank Financing for the development of South Alibek field
o     Commence initial 3 well delineation drilling activities
o     Installation of testing facilities for rates of up to 5,000 bopd and  Production
      Facilities up to 30,000 bopd.
o     Staffing to accommodate the expansion of drilling and production operations`

Financing
through the Sale of Stock

The Company plans to file a
registration statement with the SEC in the near future for the sale of its
common stock or other equity/debt instruments to raise $5-10 million in working
capital. These funds will allow the company to strengthen its balance sheet
considering the debt being incurred, and to allow the company to be in a
position to act on acquisition opportunities as they arise.

Crude oil forward purchase contracts

On August 27 of 2001, Caspi
 Neft TME executed a Crude
oil forward purchase contract with So Cal Energy Incorporated for the delivery
and sale of a minimum 3,000 tons (approximately 21,000 barrels) of crude oil per
month at a price tied to Dated North Sea Brent Crude. Due to mechanical problems
making production from the Alibek Well No.29 impracticable at this time, the
company and So Cal suspended the previous sales agreement to handle production
from this well.  The company maintains contacts with this and other
marketing companies in the region in anticipation of beginning test production
in the third quarter after the initiation of the current 3-well drilling
program.

Bank Financing

The financing contemplated
 by the Share Purchase
Agreement with Kazstroiproekt Ltd (KSP), has been activated and funds have been
drawn down to cancel all of the company’s previous debt to Al Alpha as
well as allow OJSC Caspi Neft TME to repay some of the loans made by its parent
company, Transmeridian. Transmeridian has pledged all the shares of
Caspi Neft TME, as well as the sub-surface rights related to the License 1557
OIL which includes the South Alibek field. In addition, Transmeridian has
provided a corporate guarantee letter for up

to $7,000,000 of liability should
Caspi Neft TME default on its loan commitments.

The initial $20 million
credit line can be drawn down within the first 9 months of the loan period with
simple interest accruing at 15% per annum. There is an interest and principal
holiday for the first 18 months of the loan. Thereafter interest and principal
payments will begin on a quarterly basis.

Commencement
of Initial Drilling Activities

The investment program for
 the next three years, will
include the drilling and completion of 10 wells and the installation of
production facilities and pipeline at a cost of approximately $40,000,000. The
development of these wells should prove up additional reserves according to the
independent petroleum engineering report from the Ryder Scott. The successful
delineation of the existing field could prove up total reserves up to 350-450
million barrels. The first three-well program will be initiated with the
drilling of the first well in the 3rd Quarter 2002. Two additional wells will
immediately follow with the second completed in the 4th quarter and the third
well completed in the 1st quarter of 2003. The total cost of drilling and
testing is estimated at $9,600,000 and the construction of a sales trunk-line to
the railroad terminal, construction planned for 2002 at an estimated cost of
about $2,000,000. We estimate that each well should cost about $3 million
dollars to drill and complete and about $400,000 to test and evaluate. Each well
should produce test crude which should generate about $0.4 million per month in
gross revenue under the existing railroad sales program which would provide
about $10-$11 per barrel net-back to the wellhead to cover operating and testing
costs. This program will be initiated by the funds from the bank financing but
the majority of the development capital will come from the excess internally
generated cash flow from our drilling program and or advance crude sales based
on these production levels. Each commercial well drilled will add to this
revenue base. We currently estimate that 44 completed wells will be required in
the first phase of the field development program.

Most sales from our area of
operation are based on the European marker North Sea Brent Crude. Initial
transportation costs are higher due to the limited amounts of production and the
need to truck the produced crude about 35 miles to the nearest railroad sales
terminal. Economies of scale will be realized when production increases and
transportation costs can be reduced with installation of pipelines to export or
sales points.

To facilitate a continuous
low cost drilling program, on December 28th, 2001 the company purchased a Land
Drilling Rig named Rig 232 - type National 1320UE, from Seaboard Equipment
Company, Inc., for a total consideration of $5,300,000 to be paid in cash and
the Companys common stock. The Company will use this rig to start its 2002
drilling program. The rig was constructed in the middle 80s by Western
Companies and was refurbished in 1998. The equipment will be operated by Dingo
Drilling International Ltd..

Improvement of Production Facilities

Production facilities for
 test production of up to
5,000 barrels of oil per day, and field production of up to 30,000 barrels per
day have been conceptually designed and construction will be ordered in the
second quarter of 2002.. All tankage, piping and construction should be provided
by local construction firms which specialize in installing petroleum processing
facilities. We estimate that approximately $4.0 million will be required for the
installation of permanent production facilities to process production of 30,000
BOPD.

The gas produced in
association with the oil production will be separated, treated and utilized in
providing fuel for operations with the balance initially being flared during the
testing phase then later re-injected until sales to local markets can be
arranged.

Staffing

At the present time, we
 have a start-up staff of
about 25 professionals between the Houston and Kazakhstan field offices. The
drilling program will require a team of at least six engineers to be employed
from the Houston office. Two drilling engineers will supervise the drilling work
in Kazakhstan for 30 days and then be relieved by two other engineers from the
Houston office for 30 days. Two expatriate production engineers will also rotate
on a 30 days on and off basis to supervise the crude oil production. Each of
these professionals will require approximately four Kazakhstan field assistances
for fieldwork and language translation, or 12 in country employees. This
increase in activity and payroll will require administrative support, geologist,
engineers, accountants, interpreters and drivers both at the Almaty office as
well as at the Aktobe office. With the addition of the pipeline and terminal
construction and expanded development field operations we expect to increase the
number of employees in about 4 years to approximately 100 employees in
Kazakhstan and 15 in the Houston office.

Future Operation

Our focus is to rapidly
develop our property in Kazakhstan and, once a stable production and sales
stream is achieved, our attention will be directed to the acquisition and
development of additional properties that have:

`o        low entry cost as measured on a dollar per barrel for proved and potential reserves;
o        ready access to infrastructure allowing for production within a short time period
         without significant capital commitments;
o        ready access to local and export markets without the need for immediate investment
         in pipeline construction projects; and
o        projects where we can control operations and ownership.`

Operationally, we expect to finish the year 2002 in the South Alibek Field with a substantial
increase in daily  production from test production  in the field.  Two wells on test
production  could have the  capability  of providing  4,000 to 6,000 barrels per day. The
company plans to continue its  delineation  drilling  program  adding a well on the average
every 90 days. A pipeline is planned by the government  which will transport  about 300,000
barrels per day from the region to the Aktau refinery and sales pipeline  network.  The
combination of the Emba Terminal and the proposed new pipeline  provide  adequate
insurance that there will be a ready transport route to deliver the field's production
in the local and export markets.

We plan to continue with our reserve-purchasing program that will include at least one
additional field acquisition in the region, which can all be managed from one core
administration and operational team, in each of the next two years.

ITEM 3. LEGAL PROCEEDINGS

We are not party to any pending or threatened legal proceeding nor are any of our
properties subject to a pending or threatened legal
proceeding.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our Annual Shareholders' Meeting was held on October 11, 2001.

Re-election
of the Board

All of our Directors were re-elected at the Annual Shareholders' Meeting.
The following is our Board of Directors as of December 31, 2001:

`Name                       Age            Postion

Lorrie T. Olivier (1)      51       President & CEO, Secretary, Treasurer, (acting)
                                    Chairman
Peter L. Holstein (1)      59       Director
Philip J. McCauley (2)     39       Director
Angus G.P.M. Simpson (2)   38       Director
Rober W. Brittain (2)      64       Director

        (1)  These Directors were elected and have served since the formation of
                Transmeridian in 2000.
        (2)  These Directors were elected by the sitting Board on Octer 23, 2000.`

They have all acted as directors since October 23, 2000. All directors hold office
until the next annual meeting of stockholder and
until their successors have been duly elected and qualified. There are no agreements
with respect to the election of directors.

Appointment of Corporate Auditors

At the Annual Shareholders' Meeting held October 11, 2001, the Board unanimously
appointed Grant Thornton LLP as the company's auditors.

Adoption
of Company Incentive Stock Option Plan

At the Annual Shareholders' Meeting held October 11, 2001, the Board unanimously
approved the Company Incentive Stock Option Plan. As of December 31, 2001 no
options had been issued.

Other Matter Voted On

There were no other matters voted on at the Annual Shareholders' Meeting.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The trading market for our common stock is on the OTC bulletin board, under our symbol TMXN.  The trading range for April 2002 was
from a low of $0.35 to a high of $2.20.

The following description of our securities and various provisions of our Restated Certificate of Incorporation and our bylaws are
summaries. The Restated Certificate of Incorporation and bylaws, copies of which have been filed with the Securities and Exchange
Commission as exhibits to our registration statement of which this prospectus constitutes a part, and provisions of applicable law.
Our authorized capital stock consists of 200,000,000 shares of common stock, $.0006 par value, of which 56,747,029 shares were issued
and outstanding as of December 31, 2001, and 5,000,000 shares of preferred stock, $.0006 par value, of which 3,000 shares of
Non-Voting Series A Convertible Preferred Stock and 100,000 shares of Non-Voting Series B Convertible Preferred Stock were issued and
outstanding as of December 31, 2001. As of December 31, 2001, there were approximately 62 holders of record of our common stock.

Common Stock

Each share of common stock is entitled to share pro rata in dividends and distributions with respect to the common stock when, as and
if declared by the board of directors from legally available funds. No holder of any shares of common stock has any pre-emptive right
to subscribe for any of our securities. Upon our dissolution, liquidation or winding up of our corporate affairs, the assets will be
divided pro rata on a share-for-share basis among holders of the shares of common stock after any required distribution to the
holders of preferred stock, if any. All shares of common stock outstanding are fully paid and non-assessable.

Each shareholder of common stock is entitled to one vote per share with respect to all matters that are required by law to be
submitted to shareholders. The shareholders are not entitled to cumulative voting in the election of directors. Accordingly, the
holders of more than 50% of the shares voting in the election of directors will be able to elect all the directors if they choose to
do so. Currently, our bylaws provide that shareholder action may be taken at a meeting of shareholders and may be affected by a
consent in writing if such consent is signed by the holders of the majority of outstanding shares, unless Delaware law requires a
greater percentage. Our Restated Certificate of Incorporation provides that they may be amended by the affirmative vote of a majority
of the shares entitled to vote on such an amendment. These are the only provisions of our bylaws or Restated Certificate of
Incorporation that specifies the vote required by security holders to take action. Written notice of the annual, and each special
meeting of stockholders, stating the time, place, and purpose or purposes thereof, shall be given to each stockholder entitled to
vote thereat, not less than 10 nor more than 60 days before the meeting. The holders of a majority of the shares of the corporation's
capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a
quorum at any meeting of stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate
of Incorporation.

Preferred Stock

The board of directors is authorized, without further shareholder approval, to issue from time to time up to an aggregate of
5,000,000 shares of preferred stock. The preferred stock may be issued in one or more series and the board of directors may fix the
rights, preferences and designations thereof. There are two series of Preferred shares outstanding, a Series A and B both with a par
value of $.0006. Series A of 3,000 shares with a stated value of $100 per share issued to Ratcliff International Ltd. which are
convertible at any time by Transmeridian, after the stock is publicly tradable, at the rate of 85% of the average bid price for our
common stock, five days prior to conversion. The total series accrues dividends at 12.5% per annum of the stated value of $300,158
until conversion. An aggregate of 100,000 Series B Preferred Shares with a stated value of $15 per share are convertible by the
holder at any time prior to their 5 year term on the basis of 15 shares for our common stock for each Series B Preferred Share. These
Series B shares accrue no interest and are convertible to Transmeridian's common share at the rate of $1.00 per share. Both the
Series A and Series B are non voting.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Going Concern

The Company financial statements have been presented on the basis that it is a going concern, which
contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
The Company has incurred losses totalling $2,923,438 and has a significant amount of debt
in the start-up phase of the Company.  Additionally, to
fully develop the area covered by the License, the Company needs substantial additional funding.
Finally, the Company must also obtain a commercial production contract with the government of Kazakhstan.
The Company is legally entitled to receive this commercial production contract and has an exclusive right
to negotiate this contract and the government of Kazakhstan is obligated to conduct these negotiations
under the Law of Petroleum.  If no terms can be negotiated, the Company has a right to produce and
sell oil, including export oil, under the Law of Petroleum for the term of its existing contract to the end of 2005.

In view of the matters described in the preceding paragraph,  recoverability of a major portion of the
recorded asset amounts shown in the accompanying  consolidated balance sheet is dependent upon continued
operations of the Company,  which in turn is dependent upon the Company's ability to meet its financing
requirements on a continuing  basis, primarily by the Company's ability to raise
additional  funds in equity markets, to maintain present financing, and to succeed in its future operations.
The consolidated financial  statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of liabilities that might be
necessary should the Company be unable to continue in existence.

Management has taken the following  steps to revise its operating and financial requirements,
which it believes are sufficient to provide the Company with the ability to continue in existence.

`o        The Company plans to continue to raise additional capital in the equity markets as significant source of
         funding the development of the License.
o        As described in Note F, in the companies financial statements subsequent to year end, the Company obtained $20,000,000 in
         financing from a bank in Kazakhstan.  The funds obtained through this financing will be used for the  development of several
         wells.
o        The Company is currently negotiating a new Exploration and Production Operating Contract in Kazakhstan.  The contract will
         contain all commercial and operating aspects of exploration and production, including terms for full commercial production.
         This will replace the existing contract that only covers the Exploration phase of License 1557.
o        Development of South Alibek's proven reserves - South Alibek has approximately 11.5 and 5.7 million barrels of net estimated
         proven undeveloped and developed nonproducing oil reserves, respectively.  Based on its expected production capabilities
         from the expenditures that will be made as a result of equity and debt financing, the Company believes that it could
         generate adequate cash flow.  Additional funding requirements may also be necessary before the Company is able to rely
         solely on the production from the South Alibek Field for the cash flow of the Company.`

Results from Operations

Oil and gas revenues for the
twelve months ended December 31, 2001 were $51,289, compared to  $-0- reported  as the oil and gas
 revenues for the twelve
 months ended December 31,
2000. There has been no production since the second quarter, which is primarily
attributed to the shut down of Well No. 29 due to the work over in progress.
Lease operating expense increased from $-0- for the twelve months ended December
31, 2000 to $489,373, for the twelve months ended December 31, 2001, an increase
of $489,373. The increase is primarily due to the start up of test production
activity. General and administrative costs increased from $187,140 for the
twelve months ended December 31, 2000 to $1,486,161 for the twelve months ended
December 31, 2001. The increase of $1,299,021 primarily consists of an increase
in payroll and office overhead expenses.

We are an independent energy company established to acquire and develop identified and underdeveloped
 hydrocarbon reserves in the
 region of the former Soviet
Union known as the Confederation of Independent States (CIS) and more
particularly the Caspian Sea region, based in part on our management’s
experience and business relationships in the area. Our management team has more
than 50 years of experience working in Kazakhstan and

the CIS region. We target
opportunities with proved and potential oil and natural gas reserves at below
international finding cost rates. We currently have one project under
development. The project (which is referred to at times as the Kazakhstan
Property or the South Alibek Field) is located in the Caspian Region of western
Kazakhstan, and is situated near pipelines, railroads and oil field
infrastructure. The proximity to existing infrastructure for exportation of oil
and gas, which reduces associated costs as well as reduces the time needed to
place wells on production, will be an important factor in our acquisition of any
additional properties.

We currently have a ninety percent (90.0%) equity interest in the Kazakhstan property with Kornerstone Investment Group Ltd. holding
 a ten percent (10%) carried
 interest. Contractually,
therefore, we are responsible for 100% of development costs. We pay the 10%
interest holder’s portion of expenses until the project reaches a
positive cash flow basis. Then we are reimbursed from production for the
payments made on behalf of the 10% interest holder, Kornerstone Investment Group
Ltd., plus 10% interest.

An Early Start-up Program (ESP) has been established to evaluate reservoir and productive characteristics that will be critical in
determining the final design of the field
development program. Permits and operational plans were filed with the
authorities to begin production testing of Well No. 29 in January 2001. The
various permits and authorizations required were granted in February 2001. This
testing program has been authorized for 18 months, which will allow us to flow
and recover production from Well No. 29 during this period.

The initial work program on Well No. 29 included remedial work to repair mechanical deficiencies and evaluation of new zones
 identified but not tested
 in the original drilling
and testing of the well. This ongoing work began in February 2001 with an
extended flow test of the existing well No.29. Test production from well No.29
was 180 barrels of oil per day, off and on, for a total of 30 days of production
from the 13 feet (4 meters) of open interval in the well intervals that was in
condition to flow without any treatment or improvement in well production
mechanics. Test oil produced during the term of testing operations totaled in
excess of 5,000 barrels of oil as of April 30, 2001. The oil recovered in the
test was a high gravity of 39 (Degree) API type crude and with a low sulfur
content of about 0.8%.

A program to repair well damage and to open additional intervals for production evaluation was completed in June 2001. During this
 workover, it was discovered
 that only 13 feet (4
meters) of oil pay had been previously opened to production from the well. After
repair of well damage, an additional 60 net feet of oil pay intervals were
opened by perforations in the lower KT-I and upper KTII intervals. The well was
being placed on a long-term continued testing program when a mechanical failure
resulted in part of the production string being lost in the hole. Adequate sized
equipment was not available to immediately remove the lost equipment and the
testing program has been suspended pending the availability of equipment and
material to properly remove the damage equipment in the well.

Liquidity and Capital Resources

Bank Financing

The company has executed a Share Purchase Agreement with Kazstroiproyekt Ltd (KSP), an affiliate of Astana Holdings Ltd., which, at
 KSPs option within
 two years, provides for the
possible sale and transfer of 50% interest of OJSC Caspi Neft TME, the company
which holds the license to the South Alibek Field. In exchange for this
interest, KSP must make available initially a three year $20 million dollar
financing for the development of the field. Within twenty-four months of this
initial loan, KSP must determine if it wants to continue with the project. If
KSP determines that it will continue KSP will be responsible for the payment of
$15 million of the initial loan plus accrued interest and make available up to
$30 million in additional development financing at commercial rates. If KSP
determines that it will not continue in the project it will surrender all rights
to its 50% interest in Caspi Neft TME and Caspi Neft will be solely responsible
for the existing loan. The partnership is governed by a joint shareholders
agreement with provisions similar to an international joint operating agreement.
The parties agreed to have Transmeridian personnel as the general director of
the company for at least the first 3 years.

An interim bridge loan for $1.5 million was issued in December 2001, and the Company paid off the $1 million Alpha note on December
 1, 2001. A final credit
 agreement for the principal
loan of $20 million was completed on February 26, 2002, and the bridge loan was
cancelled with the funds from the first draw under the general loan
agreement.

CASH FLOW INFORMATION

The company raised $3,224,982 from the sale of stock, $324,261 from accounts payable increases and used  $404,839  of its beginning
 cash to fund an increase in
 its investment in oil and
gas properties and equipment of $1,813,713 and to cover our operating cost of
$1,930,266 leaving cash on hand at the end of the year of
$107,276.

Development Financing

See Kazstroiproekt Ltd (KSP) under bank financing above.

Operation Plan

The following discussion of our plan of operation should be read in conjunction with the consolidated financial statements and the
 attached notes included
 elsewhere in this filing.
This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of various
factors.</P> </FONT></P>

Commencement of Initial Drilling Activities

The investment program for the next three-years, will include the drilling and completion of 10 wells and the installation of
 production facilities and
 pipeline at a cost of
approximately $40,000,000. The development of these wells should prove up
additional reserves according to the independent petroleum engineering report
from the Ryder Scott. The successful delineation of the existing field could
prove up total reserves up to 350-450 million barrels. The first three-well
program will be initiated with the drilling of the first well in the 3rd Quarter
2002. Two additional wells will immediately follow with the second completed in
the 4th quarter and the third well completed in the 1st quarter of 2003. The
total cost of drilling and testing is estimated at $9,600,000 and the
construction of a sales trunk-line to the railroad terminal, construction
planned for 2002 at an estimated cost of about $2,000,000. We estimate that each
well should cost about $3 million dollars to drill and complete and about
$400,000 to test andevaluate. Each well should produce test crude which should
generate about $0.4 million per month in gross revenue under the existing
railroad sales program which would provide about $10-$11 per barrel net-back to
the wellhead to cover operating and testing costs. This program will be
initiated by the funds from the bank financing but the majority of the
development capital will come from the excess internally generated cash flow
from our drilling program and or advance crude sales based on these production
levels. Each commercial well drilled will add to this revenue base. We currently
estimate that 44 completed wells will be required in the first phase of the
field development program.

Most sales from our area of operation are based on the European marker North Sea Brent crude. Initial transportation costs are higher
 due to the limited amounts
 of production and the need
to truck the produced crude about 35 miles to the nearest railroad sales
terminal. Economies of scale will be realized when production increases and
transportation costs can be reduced with installation of pipelines to export or
sales points.

To facilitate a continuous low cost drilling program, on December 28th, 2001 the company purchased a Land Drilling Rig named Rig 232
- type National 1320UE, from Seaboard Equipment Company, Inc., for a total consideration of $5,300,000 to be paid in cash and the
Company's common stock. The Company will use this rig to start its 2002 drilling program. The rig was constructed in the middle 80's
by Western Companies and was refurbished in 1998.  The equipment will be operated by Dingo Drilling International Ltd..

Improvement of Production Facilities

Production facilities for test production of up to 5,000 barrels of oil per day, and field production of up to 30,000 barrels per day
 have been conceptually
 designed and construction
will be ordered in the second quarter of 2002. All tankage, piping and
construction should be provided by local construction firms which specialize in
installing petroleum processing facilities. We estimate that approximately $4.0
million will be required for the installation of permanent production facilities
to process production of 30,000 BOPD.

The gas produced in association with the oil production will be separated, treated and utilized in providing fuel for operations with
 the balance initially being
flared during the testing phase then later re-injected until sales to local
markets can be arranged.

Growth Strategy

Our Growth Strategy is dependent on the success of the South Alibek field.  The company expects to utilize the cash from these
 operations to generate the
 capital to continue with
its business plan of low cost green-field acquisitions in the region. The bank
financing provided by the credit facility with the Turan Alem Bank alleviates
any need to raise funds for the further drilling and development program for the
South Alibek field. Additional equity funding could facilitate the purchase of
new fields to add to our assets in the region of South Alibek.

There is no question that there is opportunity in Kazakhstan. The Russians discovered several major fields with proved reserves and
 left these fields for the
 Kazakhstan Government to
develop. The Government has turned to independent companies for exploration and
development capital. TMEI expects to continue to participate in this program and
will dedicate excess cash reserves to the acquisitions of fields within our
region of interest.

Commodity Prices for Oil

Our revenues, profitability, growth and value are highly dependent upon the price of oil. Market conditions make it difficult to
 estimate prices of oil or
 the impact of inflation on
such prices. Oil prices have been volatile, and it is likely they will continue
to fluctuate in the future. Various factors beyond our control affect prices for
oil, including supplies of oil available worldwide and in Kazakhstan, the
ability of OPEC to agree to maintain oil prices and production controls,
political instability or armed conflict in Kazakhstan or other oil producing
regions, the price of foreign imports, the level of consumer demand, the price
and availability of alternative fuels, the availability of transportation routes
and pipeline capacity, and changes in applicable laws and
regulations.

Exploration Contract and Conversion to Exploration and Production Contract

Exploration Contract

Currently we have an Exploration Contract for South Alibek. As long as we operate under the Exploration Contract we can produce the
wells under a test program and pay a 2% royalty. The exploration period consists of six (6) successive years from the effective date
of the License dated April 29, 1999.

The License may be extended twice as mutually agreed by the parties to the License with each extension period having a term of two
 years. Therefore the total
 possible exploration period
utilizing the maximum of extension periods allowed by the contract is a term of
ten (10) years. For each extension requested of the competent government body,
the parties shall determine the part of the Contractual Area for further
exploration work and make the appropriate changes in the applicable working
program. The exploration contract can be converted to terms under a Production
Contract at any time that we wish with the requirement that we file an approved
reserves report based on the current test production of Well No. 29. In
accordance with the Exploration Contract and the provision of the Kazakhstan
Petroleum Code, we will be expected to inform the government within 30 days of
the existence of any commercial reserves at which time we will be expected to
convert our operations to a Production Contract, which will also cover the
entire license area. We believe the present Exploration Contract provides us
with a preferential right to receive such a commercial production contract. We
have sought and received a letter from the Ministry of Natural Resources as to
their preferred treatment of transitioning our existing operating contract to

include commercial production. Section 10.4. of the present Exploration Contract
grants us the exclusive right to a production contract. It states Commercial
Discovery entitles the Contractor with the exclusive right for conclusion of a
Production Contract provided that provisions of the License and the Contract are
met and the letter we received from the Ministry of Energy, Industry and Trade,
clearly states that we have an exclusive right to be granted the right for
hydrocarbon production.. and we have a right to a Production Contract.... When
we establish commercial production we expect that we will convert from an
Exploration Contract to an Exploration Production Contract, as we will still
have an unexpired Exploration term and additional exploration works would be
warranted.

ITEM 7. FINANCIAL STATEMENTS

See Item 14(a) for a list of the Financial Statements and the supplementary financial information included in this report,  following
the signature page.

CRITICAL ACCOUNTING POLICIES

INTRODUCTION. The following describes the critical accounting policies used by the Company in reporting its financial condition and
 results of operations. In
 some cases, accounting
standards allow more than one alternative accounting method for reporting, such
is the case with accounting for oil and gas activities described below. In those
cases, the Company’s reported results of operations would be different
should it employ an alternative accounting method.

SUCCESSFUL EFFORTS METHOD OF ACCOUNTING FOR OIL AND GAS ACTIVITIES. The Securities and Exchange Commission ("SEC") prescribes in
 Regulation SX the financial
 accounting and reporting
standards for companies engaged in oil and gas producing activities. Two methods
are prescribed: the successful efforts method and the full cost method. Like
many other oil and gas companies, the Company has chosen to follow the
successful efforts method. Management believes that this method is preferable,
as the Company has focused on exploration activities wherein there are risks
associated with future success, and as such earnings are best represented by
attachment to the drilling operations of the company.

Costs of successful wells, development dry holes and leases containing productive reserves are capitalized and amortized on a
 unit-of-production basis
 over the life of the
related reserves. Estimated future abandonment and site restoration costs, net
of anticipated salvage values, are amortized on a unit of production basis over
the life of the related reserves. Other exploration costs, including geological
and geophysical expenses applicable to undeveloped leasehold, 3-D seismic data,
leasehold expiration costs and delay rentals are expensed as
incurred.

In accordance with accounting under successful efforts, the Company reviews proved oil and gas properties for indications of
 impairment whenever events
 or circumstances indicate
that the carrying value of its oil and gas properties may not be recoverable.
When it is determined that an oil and gas property’s estimated future
net cash flows will not be sufficient to recover its carrying amount, an
impairment charge must be recorded to reduce the carrying amount of the asset to
its estimated fair value.

Reserves - Estimates of our proved oil and gas reserves are prepared by Ryder Scott, an independent petroleum engineering firm, in
 accordance with guidelines
 established by the SEC.
Those guidelines require that reserve estimates be prepared under existing
economic and operating conditions with no provisions for increases in commodity
prices, except by contractual arrangement. Estimation of oil and gas reserve
quantities is inherently difficult and is subject to numerous uncertainties.
Such uncertainties include the projection of future rates of production and the
timing of development expenditures. The accuracy of the estimates depends on the
quality of available geological and geophysical data and requires interpretation
and judgment. Estimates may be revised either upward or downward by results of
future drilling, testing or production. In addition, estimates of volumes
considered to be commercially recoverable fluctuate with changes in commodity
prices and operating costs. Our estimates of reserves are expected to change as
additional information becomes available.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS. On June 29, 2001, SFAS No. 141, "Business Combinations" was approved by the Financial
Accounting Standards Board. SFAS No. 141 requires that the purchase method of accounting be used or all business combinations
initiated after June 30, 2001. The Company was required to implement SFAS No. 141 on January 1, 2002. Management expects that the
adoption of this statement will have no effect on the Company's consolidated financial position, cash flows or results of operations.

On June 29, 2001, SFAS No. 142, "Goodwill and Other Intangible Assets", was approved by the Financial Accounting Standards Board
("FASB"). SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Amortization
of goodwill, including goodwill recorded in past business combinations, will cease upon adoption of this statement. The Company was
required to implement SFAS No. 142 on January 1, 2002. Management has reviewed SFAS No. 142 and determined that this statement will
not have a material effect on its consolidated financial position, cash flows or results of operation.

In June 2001 the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 provides the accounting
 requirements for retirement
obligations associated with tangible long-lived assets. SFAS No. 143 is
effective for fiscal years beginning after June 15, 2002, and early adoption is
permitted. Management has reviewed SFAS No. 143 and determined that this
statement will not have a material effect on its consolidated financial
position, cash flows or results of operation.

In August 2001 the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The new rules
 supersede SFAS No. 121,“Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of.” The new rules retain many of the fundamental recognition and
measurement provisions, but significantly change the criteria for classifying an
asset as held-for-sale. SFAS No. 144 is effective for fiscal years beginning
after December 15, 2001. Management has reviewed SFAS No. 144 and determined
that this statement will not have a material effect on its consolidated
financial position, cash flows or results of operation.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not Applicable.

`Name                            Age             Position

Lorrie T. Olivier (1)           51         President & CEO, and Secretary
                                           Acting Chairman
Bruce A. Falkenstein            44         Vice President Exploration and Geology
Jim W. Tucker                   59         Vice President Finance, Controller
Peter L. Holstein (1)           59         Director
Philip J, McCauley (2)          39         Director
Angus G.P.M. Simpson (2)        38         Director
Roger W. Brittain (2)           64         Director, Chairman of the Audit Committee`

`(1)  These Directors were elected and have served since the formation of
             Transmeridian in 2000
        (2)  These Directors were elected by the sitting Board on October 23, 2000.`

They have all acted as directors since October 23, 2000. All directors hold office
until the next annual meeting of stockholder and until their successors have been
duly elected and qualified. There are no agreements with respect to the election of directors.

The following represents a summary of the business history of each of the named individuals
for the last five years:

Lorrie T. Olivier

Mr. Olivier is President, Chief Executive Officer and current acting Chairman of the Board. From February 1, 1991 to March 30, 2000,
Mr. Olivier was employed by American International petroleum Corporation as a Vice President of Operation and President of American
International Petroleum Kazakhstan (AIPK), American Eurasia Petroleum, and American International Petroleum Holdings. He was the lead
manager in developing the company's interest in the Caspian Sea region with the acquisition of a several large properties, the last
three years focused on Kazakhstan as well as developing experience and business contacts in Russia and other CIS countries.  In 1988
Mr. Olivier established his own international business consulting firm specializing in South American petroleum ventures, after 15
years working in domestic and international petroleum operations with initially Shell Oil USA and Pecten, then with Occidental
Petroleum Corporation.

Bruce A. Falkenstein

Mr. Falkenstein is Vice President of Exploration and Geology. He served for 20 years with Amoco, and later with BP from February 3,
1994 to August 5, 2000, as Chief Geophysicist and a manager of the Kazakhstan Exploration team. Since 1992 he has been working and
managing the identification, technical evaluation and capture of oil fields and operations of licenses in the CIS, with particular
focus on the Caspian Sea region, 6 years of that time concentrating on Kazakhstan, developing experience and industry contacts in the
region during this time.

Jim W. Tucker

Mr. Tucker is Vice President of Finance. From 1966 to 1972 he served Texaco
Inc., his last position as Vice President of Texaco
Nigeria Ltd. From 1976 to 1988 he served with Texas Oil and Gas Corp., holding positions as Assistant Controller, Vice President and
assistant to the President. From January 1, 1990 until January 20, 2001 he served as the Vice President of Finance of Crossroads
Environmental Corp. and Chairman of the Board.

Peter L. Holstein

Mr. Holstein is a Director. From April 1, 1994 to December 1, 1999 he served as
a Director and Chairman of the Board for Tracer
Petroleum International Director Atlantic Caspian Resources Plc. (January- February 1999), Chairman and Director of Odyssey Petroleum
Corporation (1997), and President Arakis Energy International (1996). He has been actively engaged in seeking out and reviewing oil
industry opportunities in the Former Soviet Union since 1995. These have included those in Russia, the Ukraine, Kyrgestan, Romania,
Azerbijan and participating in a joint venture in Turkmenistan, as well as the company's current project in Kazakhstan.

Philip J. McCauley

Mr. McCauley is a Director. He is currently the Chairman and Chief Executive Officer of Audio Navigation Ltd. From November 1, 1983
to December 1, 1999, Mr. McCauley was the chief executive officer of TTL Group Ltd.

Angus G.M.P Simpson

Mr. Simpson is a Director. He has been a Director of Glenrand Ltd. since October 1, 1998 and also a Director and Executive Chairman
of Glenrand Simpson Ltd. since October 1, 1999, prior to this Mr. Simpson served as a Director of Crawley Warren & Co. Ltd.

Roger W. Brittain

Mr. Brittain is Chairman of the Audit Committee of the Board and a Director. Until his retirement on March 31, 2001 he was a Director
of Investec Henderson Crosthwaite Corporate Finance from January 10, 1998. Mr. Brittain is also the non-executive Chairman of the
Board of Directors of Canargo Energy Corporation, and a former Director of Snyder Oil Company (January 1, 1986-December 31, 1998),
Sen Hong Resources from August 30, 1997 to August 30, 2000 and Glenrand Simpson from November 1, 1998 to November 1, 2000.

We have not compensated directors for service on the Board of Directors or any committee thereof. As of the date hereof, no director
has accrued any expenses or compensation. Officers are appointed annually by the Board of Directors and each executive officer serves
at the discretion of the Board of Directors. We do not have any standing committees at this time.

There are no family relationships between any of our directors, executive officers and other key personnel.

During the past five years none or our directors, executive officers, promoters or control persons were:

(1) the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that time;

(2) convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor
offenses);

(3) subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or

(4) found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law.

ITEM 10.  EXECUTIVE COMPENSATION

There was no executive compensation program as of December 31, 2001. This is the first year of operation and there are no historical
compensation amounts prior to 2001 to report. The following table sets forth information concerning the compensation of the named
executive officers through December 31, 2000.

`Annual Compensation                                 Long-Term Compensation
                                                                               Awards                Payouts
                                                                      Restricted  Securities
 Name of Principal                                   Other Annual        Stock    Underlying     LTIP     All other
    Position         Year       Salary     Bonuses   Compensation       Award(s)  Options/SARs  Payouts  Compensation
                      (b)       ($)(c)      ($)(d)     ($)(e)            ($)(f)       ($)(g)     ($)(h)      ($)(i)
P.I. Holstein        2001       105,000       0          0                 0            0           0           0
 Chairman
L.T. Olivier         2001       200,000       0          0                 0            0           0           0
President CEO
Bruce Falkenstein    2001       110,000       0          0                 0            0           0           0
    VP
Jim W. Tucker        2001        94,444       0          0                 0            0           0           0
    VP`

An incentive employee stock option
plan was approved at the Annual Shareholders meeting held on October 11, 2001 and Lorrie Olivier
and Peter Holstein each gave 2,500,.000 shares of Company stock to the Company,
which the Company redeemed, for this plan.   There
were no outstanding options as of the date of this prospectus.

There are no arrangements pursuant to which any director has been
or is currently compensated for any service provided as a director.
Directors and/or officers will receive expense reimbursement for expenses
reasonably incurred on our behalf.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, to the best knowledge of Transmeridian as of December 31, 2001, with respect to each
 person known by us to own
 beneficially more than 5%
of Tran meridian’s outstanding common stock, each director of
Transmeridian and all directors and officers of Transmeridian as a
group.

`NAME OF BENEFICIAL             NUMBER OF                  PERCENTAGE OF
        OWNERS                   SHARES OWNED                 CURRENT ISSUED
                                                             AND OUTSTANDING
Lorrie T. Olivier                 7,800,000                     14%
JM JC Investmetns, Inc. (1)       8,300,000                     15%
Colamar Ltd. (2)                    800,000                      1%
Peter L. Holstein                 1,110,000                      2%
Sovereign Trust                  10,000,000                     18%
Roger W. Brittain                   150,000                      0%
Angus Simpson                        50,000                      0%
Philip J. McCauley                   50,000                      0%
Zen Trust (4)                       500,000                      1%
Remaining Officers                2,667,500                      5%
All Officers and Directors as a
group  (7 persons)               31,427,500                     56%`

`(1)      Beneficial owner of JMJC Investments Inc. are the children of Mr. Lorrie T. Olivier, who is the President of the Company.
(2)      Beneficial owner of Colamer Ltd. is Lorrie T. Olivier
(3)      Beneficial owner of the Sovereign Trust is the Holstein family,  Mr. Peter Holstein is the settler of the Trust.
(4)      Beneficial owner of Zen Trust are the children of Mr. Philip McCauley. Mr. McCauley is the settler of the Trust`

ITEM 12. Certain Relationships and Related Transactions

On April 19, 2000 we issued 18,900,000 shares to each Mr. Peter Holstein and Mr. Lorrie Olivier
in exchange for their stock in Transmeridian Exploration, Inc. (BVI) and $.0006 per share.

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

All schedules for which a provision is made in the applicable accounting regulations of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and, therefore, have been omitted.

(b) Current Reports on Form 8-K.

We filed a Current Report on Form 8-K, dated January 11, 2002 to report the purchase of a $5,300,000 drilling rig, the extension of
our acreage in Kazakhstan  from 13 sq km to 57 sq km and a bank financing for our drilling program from
$20,000,000 to $50,000,000.

We filed a Current Report on Form 8-K, dated April 26, 2002 to report the purchase of a 25% interest in Emba Oil Terminal in exchange
for 4,000,000 shares of restricted common stock.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.,



By: /s/ Lorrie T. Olivier

Lorrie T. Olivier, President, Chief Executive Officer and Chairman

by:      /s/ Jim Tucker, Vice President Finance

Jim Tucker

by:      /s/ Jeff Tucker, Assistant Secretary

Jeff Tucker

Dated: May 13, 2002

`Report of Independent Certified Public Accountants.........................F-1

Consolidated Balance Sheets at December 31, 2001 and December 31, 2000.....F-3

Consolidated Statements of Operations for the periods ended
December 31, 2001, December 31, 2000 and from inception
to date to December 31, 2001.............................................. F-4

Consolidated Statement of Stockholders' Equity.............................F-5

Consolidated Statements of Cash Flows for the periods ended
December 31, 2001, December 31, 2000 and from inception to date............F-6

Notes to Consolidated Financial Statements.................................F-7`

Board of Directors

Transmeridian Exploration Incorporated and Subsidiaries

We have audited the accompanying consolidated balance sheet of Transmeridian Exploration Incorporated and Subsidiaries (a
development stage company) as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years then ended and for the period from inception to December 31, 2001.  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 auditing standards generally accepted in the 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 Incorporated and Subsidiaries at December 31, 2001 and 2000 and the consolidated
results of their operations and cash flows for the years then ended and for the period from inception to December 31, 2001, in
conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going
concern.  As shown in the financial statements, the Company incurred a net loss of $2,112,890 and $810,548 during the years ended
December 31, 2001 and 2000, and, as of that date, the Company's current liabilities exceeded its current assets by $2,098,281 and
$1,052,234.  These factors, among others, including the Company's ability to develop the proven reserves, as discussed in Note B to
the financial statements, raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans in
regard to these matters are also described in Note B.  The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/ Grant Thornton LLP

Houston, Texas
May 7, 2002

`(A Development Stage Company)
                                            CONSOLIDATED BALANCE SHEETS
                                                   December 31,



                                      ASSETS                                            2001           2000
Cash                                                                           $     107,276       $   512,115
Receivables                                                                          270,112               -
Prepaid expenses                                                                         -              49,560
          Current assets                                                             377,388           561,675
Office equipment, net of accumulated
    depreciation of $10,431 and $950                                                   40,294            6,616
Oil and gas properties (successful efforts method of
    accounting for oil and gas properties)                                           7,765,565        4,445,451
Drilling Rig                                                                         5,300,000              -
Debt financing costs                                                                400,000                 -
          Total assets                                                             $13,883,247        $5,013,742

                       LIABILITIES AND STOCKHOLDERS' DEFICIT
Current maturities of long-term debt                                            $  1,431,204      $        -
Unpaid amounts to a third party                                                     -                 1,385,842
Accounts payable and accrued liabilities                                           1,044,465            231,439
          Total current liabilities                                                 2,475,669         1,617,281
Long-term debt, net of current maturities                                           3,368,796         -
Redeemable common stock $.0006 par, 1,000,000 and -0- shares
    issued and outstanding                                                          2,000,000         -
STOCKHOLDERS' EQUITY
    Preferred stock $.0006 par, authorized 5,000,000 shares;
       103,000 and 3,000 shares issued and outstanding                              62                2
    Common stock $.0006 par; authorized 200,000,000 shares;
       55,747,029 and  57,797,000 shares issued and outstanding                     33,448            34,678
    Additional paid-in capital                                                      9,051,981         4,172,329
    Deficit accumulated during development stage                                  (3,046,709)        (810,548)
          Total stockholders' equity                                                  6,038,782       3,396,461
          Total liabilities and STOCKHOLDERS' EQUITY                                $13,883,247       $5,013,742`

`Cumulative
                                                                                                              total from
                                                                                                             inception to
                                                                            Year ended December 31,          December 31,
                                                                          2001                  2000                2001
Oil sales                                                           $      51,289            $      -        $      51,289
Cost and expenses
    Operating expenses                                                    489,373                    -             489,373
    General and administrative expenses                                 1,486,161              187,140           1,673,301

   Total operating expenses                                         1,975,534              187,140           2,162,674

      Operating loss                                           (1,924,245)            (187,140)         (2,111,385)

Other income (expense)
    Gain on sale of working interest                                            -              414,146             414,146
    Start-up costs                                                              -             (246,484)           (246,484)
    Lease financing cost and interest expense                            (188,645)            (791,070)           (979,715)
         Total other income (expense)                                      (188,645)            (623,408)           (812,053)
          NET (LOSS) INCOME                                            (2,112,890)            (810,548)         (2,923,438)
Preferred dividends                                                       123,271                -                 123,271
          NET (LOSS) INCOME AVAILABLE TO
              COMMON SHAREHOLDERS                                     $(2,236,161)           $(810,548)        $(3,046,709)

Basic loss per share                                                      $  (0.04)         $     (0.06)      $       (0.08)

Weighted average shares outstanding                                    59,621,255           14,453,691          37,037,473`

The accompanying notes are an integral part of these statements.

`Additional
                                                           Preferred     Preferred        Common           Common          paid-in         Retained        Treasury
                                                             shares        stock           shares           stock          capital          deficit          stock            Total

Balance at January 1, 2000                                        -       $      -               -        $      -      $          -    $                  $      -     $           -
                                                                                                                                                   -
Issuance of founders shares                                       -              -      41,300,000          24,780                 -               -              -           24,780
Issuance of stock to third parties for services                   -              -       5,152,000           3,091           543,309               -              -          546,400
Conversion of debt to common stock                                -              -         800,000             480           199,520               -              -          200,000
Conversion of debt to preferred stock                         3,000              2               -               -           300,156               -              -          300,158
Stock issued in private placements                                -              -      10,545,000           6,327         3,626,173               -              -        3,632,500
Expenses of private placements                                    -              -               -               -          (496,829)              -              -         (496,829)
Net loss                                                          -          -                    -          -                   -          (810,548)         -             (810,548)
Balance at December 31, 2000                                  3,000              2      57,797,000          34,678         4,172,329        (810,548)             -        3,396,461
Stock issued in private placements                                -              -       1,720,000           1,032         1,052,968               -              -        1,054,000
Preferred stock issued for working interest                 100,000             60               -               -         1,499,940               -              -        1,500,000
Costs of private placements                                       -              -               -               -          (105,400)              -              -         (105,400)
Issuance of stock to third parties for services                   -              -         126,429              76           153,424               -              -          153,500
Issuance of common stock                                          -              -       1,103,600             662           775,218               -              -          775,880
Stock offering costs                                              -              -               -               -           (89,467)              -              -          (89,467)
Purchase of treasury stock                                        -              -               -               -                 -               -         (1,320)          (1,320)
Sale of treasury stock                                            -              -               -               -         1,540,000               -          1,320        1,541,320
Beneficial conversion preferred stock dividend                    -              -               -               -            52,969         (52,969)             -                -
Dividends accrued on convertible preferred stock                  -              -               -               -                 -         (70,302)             -          (70,302)
Retirement of common stock                                        -              -      (5,000,000)         (3,000)                -               -              -           (3,000)
Net loss                                                         -           -                    -          -                   -        (2,112,890)         -           (2,112,890)
Balance at December 31, 2001                                103,000    $        62      55,747,029         $33,448        $9,051,981     $(3,046,709)   $     -          $ 6,038,782`

The accompanying notes are an integral part of this statement.

`Cumulative
                                                                                                                   total from
                                                                                                                  inception to
                                                                                    Year ended December 31,       December 31,
                                                                                   2001              2000               2001
Cash flows from operating activities
    Net loss                                                                    $(2,112,890)    $   (810,548)      $(2,923,438)
    Adjustments to reconcile net loss
       to net cash used in operating activities
       Gain on sale of working interest                                                   -         (414,146)         (414,146)
       Stock issued for services                                                    153,500          546,400           699,900
       Depreciation and amortization                                                  9,481              950            10,431
       Increase in receivables                                                     (270,112)               -          (270,112)
       Increase in prepaid expenses                                                       -          (49,560)          (49,560)
       Increase in accounts payable and accrued liabilities                         289,755          231,439           521,194

          Net cash used in operating activities                                  (1,930,266)        (495,465)       (2,425,731)

Cash flows from investing activities
    Proceeds from sale of working interest                                                -          614,146           614,146
    Purchase of office property and equipment                                       (43,159)          (7,566)          (50,725)
    Purchase of oil and gas properties                                           (1,770,554)      (3,645,451)       (2,416,005)

          Net cash used in investing activities                                  (1,813,713)      (3,038,871)       (1,852,584)

Cash flows from financing activities
    Proceeds from long-term debt and notes payable                                1,710,103          386,000         1,096,103
    Payments on notes payable                                                      (210,103)               -          (210,103)
    Purchase of treasury stock                                                       (1,320)               -            (1,320)
    Proceeds from sale of treasury stock                                          1,541,320                -         1,541,320
    Retirement of common stock                                                       (3,000)               -            (3,000)
    Proceeds from sale of stock, net of offering expenses                         1,687,982        3,160,451         4,848,433
    Payments of amounts due to third parties                                     (1,385,842)      (2,500,000)       (2,885,842)

          Net cash provided by financing activities                               3,339,140        1,046,451         4,385,591

(Decrease) increase in cash and cash equivalents                                   (404,839)         512,115           107,276

Cash and cash equivalents at beginning of period                                    512,115              -                -

Cash and cash equivalents at end of period                                     $    107,276     $    512,115      $    107,276`

The accompanying notes are an integral part of these statements.

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Transmeridian Exploration Incorporated (the Company) acquired 100% of the
shares of Open Joint Stock Company
Caspi Neft TME, which has as its primary asset the license and related contract
for the exploration and development of an oil and gas lease known as Yuzhny
(South) Alibek Field (the License). During 2000, Open Joint Stock Company Caspi
Neft TME was formed solely the for purpose of the acquisition of the License.
This transaction is hereafter referred to as “the Share Purchase
Agreement”. The Company plans to begin development of the property
shortly after the completion of future private-placement or public
offerings.

Transmeridian Exploration Incorporated was incorporated in Delaware in April 2000. Previously, all activity
     was conducted by Transmeridian Exploration Inc. (British Virgin Islands). There was no significant activity
     prior to January 1, 2000.

The Company has been in the development stage since its formation. It is primarily engaged in the
     exploration, development and production of oil and gas properties.

1.  Principles of Consolidation

The consolidated financial statements include the accounts of Transmeridian Exploration Incorporated and its
     subsidiaries, Transmeridian Exploration Inc. (British Virgin Islands), Transmeridian (Kazakhstan)
     Incorporated (British Virgin Islands), and Open Joint Stock Company Caspi Neft TME ("Caspi Neft TME")
     (Kazakhstan), all wholly-owned. In consolidation, all significant intercompany transactions have been
     eliminated.

2. Use of Estimates

In preparing the financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those
estimates.

3.Cash and Cash Equivalents

The
Company considers all highly liquid instruments purchased with a maturity of
three months or less to be cash equivalents.

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

4.Allowance for Doubtful Accounts

The Company considers all receivables to be fully collectible; accordingly, no
allowance for doubtful accounts is required. If amounts become uncollectible,
they will be charged to operations when that determination is
made.

5.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.
Intangible drilling and development costs related to development wells and
successful exploratory wells are capitalized, whereas the costs of exploratory
wells which do not find proved reserves are expensed. All geological and
geophysical costs not reimbursed are expensed as incurred. Costs of acquiring
unproved leases are evaluated for impairment until such time as the leases are
proved or abandoned. In addition, unamortized costs at a field level are reduced
to fair value if the sum of expected undiscounted future cash flows are less
than net book value.

Depreciation and amortization of producing properties is computed using the
unit-of-production method based upon estimated proved recoverable reserves.
Depreciation of office equipment is calculated using the straight-line method
based upon estimated useful lives ranging from three to five years. Maintenance
and repairs are charged to expense as incurred. Renewals and betterments 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.

6.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 consequences of temporary differences
between tax bases and financial reporting bases of other assets and liabilities.
The Company deducts intangible development costs as incurred and deducts
statutory depletion when it exceeds cost depletion for federal income tax
purposes.

7.Start-up Costs

Start-up
costs, including organizational expenses, are expensed as incurred.

8.Debt Financing Costs

Financing
costs are amortized over the life of the related obligation.

9.Loss Per Share

Basic loss per common share is calculated by dividing net loss after deducting
preferred stock dividends and discount on Preferred Stock that is accreted
directly to the accumulated deficit, by the aggregate weighted average shares
outstanding during the period. Diluted loss per common share considers the
dilutive effect of the average number of common stock equivalents that are
outstanding during the period. Included in weighted average shares outstanding
are the 1,000,000 shares of redeemable common stock.

Diluted loss per share is not presented because the exercise of warrants and the
effect of the conversion of the Company’s Preferred Stock into shares
of the Company’s common stock are antidilutive.

10.Risks and Uncertainties

The ability of the Company to realize the carrying value of its assets is
dependent on being able to develop, transport and market hydrocarbons.
Currently, exports from the Republic of Kazakhstan are primarily dependent on
transport routes, either via rail, barge or pipeline, through Russian territory.
Pipeline capacity has significantly improved in 2001 with the opening of the CPC
Pipeline, raising current capacity of 250,000 bopd to 800,000 bopd at year end.
Domestic markets in the Republic of Kazakhstan might not permit world market
prices to be obtained. Management believes, however, that over the life of the
project transportation options will be improved by further increases in the
capacity of the CPC and other existing pipelines and the building of new
pipelines within the region and prices will remain achievable for hydrocarbons
extracted to allow full recovery of the carrying value of its
assets.

11.Revenue Recognition

Revenues from the sale of oil and gas are recorded using the sales method. As of
December 31, 2001, the Company has had only minimal test
production.

12.Foreign Exchange Transactions

The Company's functional currency is the U.S. dollar, thus the financial statements of the Company's foreign
    subsidiaries are measured using the U.S. dollar. Accordingly, transaction gains and losses for foreign
    subsidiaries are recognized in consolidated operations in the year of occurrence.

NOTE B - GOING CONCERN

The
Companys financial statements have been presented on the basis that it is
a going concern, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. The Company has incurred losses
totalling $2,923,438 and has incurred a significant
amount of debt in the start-up phase of the Company. Additionally, to fully
develop the area covered by the License, the Company needs substantial
additional funding. Finally, the Company must also obtain a commercial
production contract with the government of Kazakhstan. The Company is legally
entitled to receive this commercial production contract and has an exclusive
right to negotiate this contract and the government of Kazakhstan is obligated
to conduct these negotiations under the Law of Petroleum. If no terms can be
negotiated, the Company has a right to produce and sell oil, including export
oil, under the Law of Petroleum for the term of its existing contract to the end
of 2005.

In
view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded asset amounts shown in the accompanying
consolidated balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Companys ability to meet its
financing requirements on a continuing basis, primarily by the Companys
ability to raise additional funds in equity markets, to maintain present
financing, and to succeed in its future operations. The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of
liabilities that might be necessary should the Company be unable to continue in
existence.

Management
has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue in existence.

o
The Company plans to continue to raise additional capital in the equity markets
as significant source of funding the development of the License.

o
As described in Note F, subsequent to year end, the Company obtained $20,000,000
in financing from a bank in Kazakhstan. The funds obtained through this
financing will be used to develop several wells.

o
The Company is currently negotiating a new Exploration and Production Operating
Contract in Kazakhstan. The contract will contain all commercial and operating
aspects of exploration and production, including terms for full commercial
production. This will replace the existing contract that only covers the
Exploration phase of License 1557.

o
Development of South
Alibeks proven reserves & #150; South Alibek has approximately 11.5
and 5.7 million barrels of net estimated proven undeveloped and developed
nonproducing oil reserves, respectively. Based on its expected production
capabilities from the expenditures that will be made as a result of equity and
debt financing, the Company believes that it could generate adequate cash flow.
Additional funding requirements may also be necessary before the Company is able
to rely solely on the production from the South Alibek Field for the cash flow
of the Company.

NOTE C - OIL AND GAS PROPERTIES

The Companys oil and gas properties primarily include the value of the
License and other capitalizable costs under the successful efforts method of
accounting.

Oil
and gas properties are made up of the following at December 31:

`2001                                                                     2000
       Leasehold costs                                                          $  5,597,850      $3,944,827
       Intangible development costs                                                1,600,596         396,727
       Production facilities                                                         499,619         103,898
       Wellhead equipment                                                             67,500           -
                                                                                 $ 7,765,565      $4,445,452`

During 2001, the Company advanced a joint venture approximately $254,000 for the
completion of a terminal station. As part of the advance, the Company acquired
an option to acquire up to 50% of the joint venture. In 2002, the Company chose
not to exercise this option, and expects to receive repayment of the advance in
2002. On April 26, 2002, Transmeridian purchased a 25% equity interest in the
Emba Terminal for 4,000,000 shares of common stock of the company, and has up to
180 calendar days to purchase another 25% equity interest in the facility at a
price to be further negotiated.

NOTE D - DRILLING RIG

In December 2001, the Company purchased a drilling rig for $5,300,000. In
exchange for the rig, the Company signed a $3,300,000 note payable due in 24
months at 10% interest, and issued 1,000,000 shares of common stock to the
seller. The Company agreed to redeem 500,000 shares at $2.00 per share after a
nine month holding period and to redeem the other 500,000 shares at $2.00 per
share after a holding period of twelve months. The seller’s right to
redeem each group of shares expires 10 days after the end of each holding
period.

NOTE E - UNPAID AMOUNTS TO THIRD PARTIES

The Company owed a third party the final installment of the Share Purchase
Agreement in the amount of $1,385,842, which was paid in
2001.

NOTE F - LONG-TERM DEBT

`Long-term debt consists of the following amounts at December 31, 2001:



          Note payable to a Company due in 24 monthly installments of

          $152,278 of principal and interest at 10%, secured by a drilling rig                                      $3,300,000

          Note payable to a Kazakhstan bank with all principal and interest due

          August 2003, with an interest rate of 15%; secured by all of the stock of

          Caspi Neft TME                                                                                             1,500,000

                                                                                                                     4,800,000

          Less: current portion                                                                                      1,431,204

                                                                                                                    $3,368,796



     Maturities of long-term debt as of December 31, 2001, are as follows:



          2002                                                                                                       $1,431,204

          2003                                                                                                        3,217,776

          2004                                                                                                          151,020

                                                                                                                     $4,800,000`

The loan agreement signed with the bank in 2001, served as bridge financing for
a $20,000,000 loan agreement signed in February 2002. Under the terms of this
agreement, the Company is required to repay all accrued interest and principal
on the first $2,233,000 of borrowings in August 2003. The remaining accrued
interest and principal is due on February 2005. The loan is subject to an annual
credit facility fee equal to .5% of the unused portion of the credit
facility.

A Kazakhstan corporation (Corporation), which is controlled by major
shareholders of the bank, has an option to purchase 50% of the stock of Caspi
Neft TME. The exercise of the option would require the Corporation to repay
$15,000,000 of this loan by February 2004, and to provide an additional
$30,000,000 in financing at market rates by March 2004. In consideration for
this option, the Corporation paid the Company approximately $65,000 in 2001,
which is refundable should they not exercise the option. The bank holds all of
the stock of Caspi Neft TME as collateral on the loan.

In 2001, the Company entered into an agreement to pay a consultant $400,000 to
locate financing for the development of the License area. This fee, which is
recorded in accrued liabilities and will be paid in 2002, will be amortized over
the life of the related long-term debt as a yield
adjustment.

In 2000, the Company borrowed $300,158 from a third party, which accrued
interest at 12.5%. The Company entered into a credit conversion agreement on
August 23, 2000, whereby the $300,158 in notes payable would be converted to
convertible or redeemable preferred stock. During December 2000, the debt was
converted. The preferred stock accrues dividends at 12.5% until converted or
redeemed. Accrued dividends at December 31, 2000 were not significant. At
December 31, 2001, the Company has accrued $70,302 in
dividends.

These
shares are either convertible to common stock or redeemable at the
Companys option. The conversion rate is 85% of the average bid price for
the five previous consecutive trading days prior to the conversion date.

The conversion feature of the preferred stock represents a beneficial
conversion feature; as addressed in EITF 98-5, Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios. Under EITF 98-5, a portion of the proceeds
received from the preferred stock is allocable to the conversion feature
contained herein. The value assigned to the conversion feature is determined as
the difference between the market price of the Company’s common stock
and the conversion price multiplied times the number of shares to be received
upon conversion. The discount assigned to the conversion feature is recorded as
additional paid-in capital and to accumulated deficit when the stock becomes
publicly tradable. In the fourth quarter of 2001, the Company recorded a
discount of $52,969.

As additional consideration for entering into this credit conversion agreement,
the Company issued 1,200,000 shares of common stock to the third
party.

The
Company incurred debt totaling $200,000 from a related party. The Company
entered into an agreement with the related party that converted the debt into
800,000 shares of common stock in December 2000.

Management
believes the fair value of debt at December 31, 2001 and 2000 is not
significantly different than its book value.

NOTE G - STOCK FOR SERVICES RENDERED

The
 Company entered into
several agreements to exchange common stock for services.
The stock has been valued based on the fair value of the stock at the time of
the agreements. During the year ended December 31, 2001 and 2000, the Company
issued a total of 126,429 and 5,152,000 shares under these type of agreements.
This stock was issued to unrelated third party vendors for software, engineering
and geological services.

NOTE H - CONVEYANCE OF WORKING INTERESTS

As consideration for work done in conjunction with the Share Purchase Agreement,
the Company assigned a 10% carried working interest to a third party. In
addition, the Company issued 1,000,000 shares of common stock to this party for
the negotiation of an extension of the payment terms with the previous owners of
the License. The value of these additional shares has been recorded as lease
financing cost in the statement of operations.

During the year ended December 31, 2000, the Company sold a 4.5% working
interest share of the License to another third party.

In April 2001, the Company re-acquired the 4.5% working interest from the third
party. The Company issued 100,000 shares of convertible preferred stock, with no
mandatory dividends (convertible to 1,500,000 shares of the Company’s
common stock), 1,000,000 warrants for the purchase of common stock at $1.00 per
share and forgave approximately $50,000 of joint interest billings as
consideration for the working interest.



At
December 31, 2001 and 2000 the components of the Companys deferred tax
assets and liabilities are as follows:

`2001             2000
       Deferred tax assets:

       Net operating loss carryforwards                                          $ 990,000        $ 274,000
       Valuation allowance                                                        (990,000)        (274,000)

       Deferred tax assets                                                  $        -        $       -`

As
of December 31, 2001, the Company has estimated loss carryforwards of
approximately $2,905,000 of which $807,000 and $2,098,000 expire in 2020 and
2021.

The Company has not recorded any deferred tax assets or income tax benefits from the
net operating losses for the years ended December 31, 2001 and 2000. The Company
has placed a 100% valuation allowance against the deferred tax asset because
future realization of the net operating losses has not been determined to be
more likely than not.

NOTE J - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash
paid for interest in 2001 and 2000 was $174,534 and $791,069. No taxes were paid
in 2001 or 2000.

During
the year ended December 31, 2001, the Company acquired a drilling rig for a
$3,300,000 note payable and $2,000,000 of redeemable common stock.

During the year ended December 31, 2001, the Company re-acquired a 4.5% interest
in the License for $1,500,000 of convertible preferred
stock.

At
December 31, 2001, the Company has accrued a $400,000 payment to a consultant
for assistance in obtaining financing. This fee is treated as a financing cost.
Additionally, the Company has accrued $70,302 in dividends payable on its
convertible preferred stock.

During
the year ended December 31, 2000, the Company converted $200,000 of debt to
800,000 shares of common stock.

During
the year ended December 31, 2000, the Company converted $300,158 of debt to
3,000 shares of preferred stock.

During the year ended December 31, 2000, the Company acquired oil and gas
properties from a third party in exchange for amounts owed totaling
$3,885,842.

NOTE K- NEW ACCOUNTING PRONOUNCEMENTS

On June 29, 2001, SFAS No. 141,  Business Combinations was approved by the Financial Accounting Standards
    Board. ("FASB") SFAS No. 141 requires that the purchase method of accounting be used or all business
    combinations initiated after June 30, 2001. The Company was required to implement SFAS No. 141 on January 1,
    2002. Management has reviewed SFAS No. 141 and determined that the adoption of this statement will have no
    effect on the Company's consolidated financial position, cash flows or results of operations.

On June 29, 2001, SFAS No. 142, Goodwill and Other Intangible Assets, was
approved by the FASB. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. The Company was required to implement SFAS No. 142
on January 1, 2002. Management has reviewed SFAS No. 142 and determined that
this statement will not have a material effect on its consolidated financial
position, cash flows or results of operation.

In June 2001 the FASB issued SFAS No. 143,  Accounting for Asset Retirement Obligations. SFAS No. 143
    provides the accounting requirements for retirement obligations associated with tangible long-lived assets.
    SFAS No. 143 is effective for fiscal years beginning after June 15, 2002, and early adoption is permitted.
    Management has reviewed SFAS No. 143 and determined that this statement will not have a material effect on
    its consolidated financial position, cash flows or results of operation.

In August 2001 the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. The new rules supersede SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of. The new rules retain many of the fundamental recognition and measurement
provisions, but significantly change the criteria for classifying an asset as
held-for-sale. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001. Management has reviewed SFAS No. 144 and determined that this
statement will not have a material effect on its consolidated financial
position, cash flows or results of operation.

February 1, 2002

Transmeridian Exploration, Inc.
11811 North Freeway
Houston, Texas  77060

Gentlemen:

The estimated reserves and future income amounts presented in this report are related to hydrocarbon
prices.  Hydrocarbon prices in effect at December 31, 2001 were used in the preparation of this report as
required by SEC rules; however, actual future prices may vary significantly from December 31, 2001 prices.
Therefore, volumes of reserves actually recovered and amounts of income actually received may differ
significantly from the estimated quantities presented in this report.  The results of this study are summarized
below.

`Proved
                                        -----------------------------------------------------------------
                                            Developed                                         Total
                                          Non-Producing             Undeveloped              Proved
                                        -------------------       ----------------       ----------------
Net Remaining Reserves
  Oil/Condensate - Barrels                       5,808,683             11,836,735             17,645,418
  Gas - MMCF                                         1,144                  2,331                  3,475

Income Data
  Future Gross Revenue                         $89,308,496           $181,989,793           $271,298,289
  Deductions                                    13,726,691             24,161,877             37,888,568
  Future Net Income (FNI)                      $75,581,805           $157,827,916           $233,409,721

  Discounted FNI @ 10%                         $32,953,417            $95,964,065           $128,917,482`

Liquid hydrocarbons are expressed in standard 42 gallon barrels. All gas volumes
are sales gas expressed in millions of cubic feet (MMCF) at the official
temperature and pressure base of the area in which the gas reserves are
located.

The future gross revenue is after the deduction of the normal direct costs of operating the wells,
recompletion costs, and development costs.  The future net income is before the deduction of Kazakhstan income
tax and excess profit tax.  No gas pipeline is in place nor is there a contract in place for sale of gas,
therefore no income is included for the gas that will be produced.  Liquid hydrocarbon reserves account for all
of the total future gross revenue from proved reserves.

The discounted future net income shown above was calculated using a discount rate of 10 percent per
annum compounded monthly.  Future net income was discounted at four other discount rates which were also
compounded monthly.  These results are shown on each estimated projection of future production and income
presented in a later section of this report and in summary form below.

`Discounted Future Net Income
                                                                      As of December 31, 2001
                                                          ------------------------------------------------
                       Discount Rate                                          Total
                          Percent                                             Proved
                    --------------------                                 -----------------

                             8                                            $142,374,028
                            12                                             $117,607,233
                            15                                             $103,712,251
                            20                                             $ 86,301,191`

The results shown above are presented for your information and should not be construed as our estimate
of fair market value.

Reserves Included in This Report

The proved reserves included herein conform to the definition as set forth in the Securities and
Exchange Commission's Regulation S-X Part 210.4-10 (a) as clarified by subsequent Commission Staff Accounting
Bulletins.  The definition of proved reserves are included under the tab "Reserve Definitions" in this report.

Because of the direct relationship between volumes of proved undeveloped reserves and development plans,
we include in the proved undeveloped category only reserves assigned to undeveloped locations that we have been
assured will definitely be drilled.

Transmeridian has additional interests in this concession that may contain substantial hydrocarbon
potential not included herein.  Transmeridian has stated that they have an active exploratory and development
drilling program that may result in the discovery or reclassification of significant additional volumes.

The various reserve status categories are defined under the tab "Reserve Definitions" in this report.
The developed non-producing reserves included herein are comprised of the shut in category.

Estimates of Reserves

All reserves included in this report were estimated using volumetric methods.

The reserves included in this report are estimates only and should not be construed as being exact
quantities.  They may or may not be actually recovered, and if recovered, the revenues there from and the actual
costs related thereto could be more or less than the estimated amounts.  Moreover, estimates of reserves may
increase or decrease as a result of future operations.

Future Production Rates

Test data and other related information were used to estimate the anticipated initial production rates
for those wells or locations that are not currently producing.  Future production rates were held constant, or
adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was
anticipated.  An estimated rate of decline was then applied to depletion of the reserves.  For reserves not yet
on production, sales were estimated to commence at an anticipated date furnished by Transmeridian.

Wells or locations that are not currently producing may start producing earlier or later than
anticipated in our estimates of their future production rates.

Hydrocarbon Prices

Transmeridian furnished us with hydrocarbon prices in effect at December 31, 2001 and with its forecasts
of future prices which take into account SEC and Financial Accounting Standards Board (FASB) rules, current
market prices, contract prices, and fixed and determinable price escalations where applicable.

In accordance with FASB Statement No. 69, December 31, 2001 market prices were

determined using the daily oil price or daily gas sales price

(spot price) adjusted for oilfield or gas gathering hub and

lhead price differences (e.g. grade, transportation, gravity, sulfur

and BS&W) as appropriate. Also in accordance with SEC and FASB

specifications, changes in market prices subsequent to December 31, 2001

were not considered in this report.

For  hydrocarbon  products  sold under  contract,  the contract  price  including  fixed and  determinable
escalations,  exclusive  of  inflation  adjustments,  was used until  expiration  of the  contract.  Upon  contract
expiration,  the price was  adjusted to the current  market price for the area and held at this  adjusted  price to
depletion of the reserves.

The effects of derivative instruments designated as price hedges of oil and gas quantities are generally
not reflected in our individual property evaluations.

Costs

Operating costs for the leases and wells in this report were supplied by Transmeridian and include only
those costs directly applicable to the leases or wells.  When applicable, the operating costs include a portion
of general and administrative costs allocated directly to the leases and wells under terms of operating
agreements.  No deduction was made for indirect costs such as general administration and overhead expenses, loan
repayments, interest expenses, and exploration and development prepayments that are not charged directly to the
leases or wells.

Development costs were furnished to us by Transmeridian and are based on authorizations for expenditure
for the proposed work or actual costs for similar projects.  At the request of Transmeridian, their estimate of
zero abandonment costs after salvage value for onshore properties was used in this report.  We have not performed
a detailed study of the abandonment costs or the salvage value and makes no warranty for Transmeridian's estimate.

Current costs were held constant throughout the life of the properties.

General

Table A presents a one line summary of proved reserve and income data for each of the subject properties
which are ranked according to their future net income discounted at 10 percent per year.  Table B presents a one
line summary of gross and net reserves and income data for each of the subject properties.  Table C presents a
one line summary of initial basic data for each of the subject properties.  Tables 1 through 12 present our
estimated projection of production and income by years beginning January 1, 2002, by lease or well.

While it may reasonably be anticipated that the future prices received for the sale of production and
the operating costs and other costs relating to such production may also increase or decrease from existing
levels, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this
evaluation.

The estimates of reserves presented herein were based upon a detailed study of the properties in which
Transmeridian owns an interest; however, we have not made any field examination of the properties.  No
consideration was given in this report to potential environmental liabilities that may exist nor were any costs
included for potential liability to restore and clean up damages, if any, caused by past operating practices.
Transmeridian has informed us that they have furnished us all of the accounts, records, geological and
engineering data, and reports and other data required for this investigation.  The ownership interests, prices,
and other factual data furnished by Transmeridian were accepted without independent verification.  The estimates
presented in this report are based on data available through December 2001.

Transmeridian has assured us of their intent and ability to proceed with the development activities
included in this report, and that they are not aware of any legal, regulatory or political obstacles that would
significantly alter their plans.

Neither we nor any of our employees have any interest in the subject properties and neither the
employment to make this study nor the compensation is contingent on our estimates of reserves and future income
for the subject properties.

This report was prepared for the exclusive use and sole benefit of

Transmeridian Exploration, Inc. The data, work papers, and maps used

in this report are available for examination by authorized parties

in our offices. Please contact us if we can be of further service.

Very truly yours,

RYDER SCOTT COMPANY, L.P.

L. B. Branum, P.E.

Vice President

LBB/plk