On September 20, 2004, prior to completion of the merger, CEL completed a private placement of 7,142,000 common shares at a price of $1.90 per share.  On September 21, 2004, concurrently with the closing of the merger, the common shares of the Company were admitted to trading on the Alterative Investment Market (AIM) of the London Stock Exchange (and continue to be listed on the Toronto Stock Exchange) and the Company completed a private placement of 20,218,000 common shares at a price of 0.82 Pounds Sterling per share.

Collectively, the net proceeds raised by the Company and CEL in September of 2004 permit CEL to fund the obligations of Aral relating to a minimum work program pursuant to an exploration contract dated December 29, 2002 that Aral entered into with the Ministry of Energy and Mineral Resources (Republic of Kazakhstan – “ROK”).  Under the terms of the work program, Aral has agreed to spend a minimum of US$20.8 million during the initial three year term of the exploration contract. The expenditures include such things as processing and reinterpretation of geological and geophysical data of prior years, two dimensional and three dimensional seismic shoots and surveys, drilling exploration wells, well reactivations and well surveys and testing. 

The Company intends to focus on the exploration and development of the North Block using the latest western techniques to prove up the maximum amount of reserves from the minimum number of wells. The Company intends to crystallise shareholder value either through selected developments or through a targeted program of disposals, at the appropriate stage of development of its assets, in the North Block.

Overview of the Kazakh oil industry

The extraction, production and transportation of oil and gas is a significant part of the Kazakhstan economy. The Caspian Basin is one of the world's largest untapped hydrocarbon reservoirs. Kazakhstan has projected reserves of 28 billion barrels of oil and condensate and 106 trillion cubic feet of gas. Kazakhstan is not a member of OPEC and is not subject to the OPEC system of production quotas.

The largest deposits of explored oil reserves are located in the Tengiz, Zhetybai, Kalamkas and Uzen fields in the Caspian region, the Karachaganak and Zhanazhol fields in North-Western Kazakhstan, the Kumkol filed in central Kazakhstan and the Kashagan fields in the Kazakh sector of the Caspian Sea.

The Government of Kazakhstan encourages foreign direct investment in the oil and gas sector. In Kazakhstan, major international oil companies and smaller independent companies, such as Caspian, compete for the acquisition of additional exploration and production rights as well as for access to export routes.

North Block

Located on the Eastern margin of the Pre-Caspian basin in the Aktobe Oblast in Western Kazakhstan, the North Block covers an area of 3,458 square kilometres and the Northern boundary of the block is located approximately 150 kilometres south of the city of Aktobe.

There are several producing and non-producing oil fields located within the boundary of the block that are operated by international and Kazakh oil companies including Chinese National Petroleum Corporation, Nelson Resources and Transmeridian Exploration Inc.

The exploration contract held by Aral permits exploration for hydrocarbons on the Severniy deposit within a number of portions of blocks.

Within the North Block, Caspian considers the Zhagabulak field as its primary target due to the extent of the Soviet age 2D seismic survey and the existence of significant neighbouring producing oil fields.

Aral re-entered one of the older exploration wells in the East Zhagabulak field and re-perforated and tested the well. The well was put on production in early February 2004 and daily production has remained fairly constant at approximately 500 barrels of light crude oil per day.

The North Block area is serviced by excellent infrastructure, including electrical power lines, a good network of all weather roads and an experienced oil industry work force. The area is crossed by the regional rail oil transportation system and is connected by a new pipeline from Kenkiyak to Atyrau and on to Western European and Russian export markets.

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Board of Directors

Charles Summers – President and Chief Operating Officer, Director

Prior to his appointment at Caspian, Mr. Summers served for eight years as general manager for Kerr-McGee Oil & Gas Corporation in Kazakhstan where he ran Kerr-McGee's offices in Almaty and Aktau and was responsible for Kerr-McGee's interests in the Caspian Pipeline Consortium and for the development of the Arman field, and the development of the Mertvyi Kultuk exploration block.

Mr. Summers was President of the Kazakhstan Petroleum Association for two years from 1993 to 1995. He was operations manager for Kerr-McGee in the United Kingdom and has worked in the oil and gas industry for 34 years. He joined Sun Oil Co. in 1974 and held various positions of increasing responsibility with Sun Oil and Oryx Energy in the US and internationally.

William Ramsay – Chief Executive Officer, Director

Mr. Ramsay has been engaged in private equity investments primarily in Kazakhstan since 1997. As a founder of Golden Eagle, he was actively engaged in advising companies on inward investment in the energy sector. Following the acquisition of Golden Eagle by Central Asian Industrial Holdings, he worked closely with Kazkommertsbank CJSC during which time a group of investors from Kazakhstan acquired a majority stake in Nelson Resources Inc. He became the chairman designate, and subsequently interim chairman of Nelson Resources Inc. on completion of the acquisition.

Mr. Ramsay has over 20 years experience in the Asian capital markets. From 1984 to 1990 he served as a director of Baring International Investment Management, during which years he resided in Korea and Japan, with principal responsibility for managing funds investing in the Asian equity markets. From 1991 to 1997, Mr. Ramsay was based in Hong Kong and worked for Jardine Fleming Securities as a director. His geographical areas of responsibility included Korea, Taiwan, India, Pakistan and Sri Lanka.

Brian D. Korney – Vice-President, Finance, Secretary & Chief Financial Officer, Director  

Mr. Korney graduated from the University of Alberta in 1976 with a Bachelor of Commerce Degree, majoring in Finance and Accounting and becoming a Chartered Accountant in 1978. In 1976, he joined the firm of Arthur Andersen & Co. In 1981, Mr. Korney joined the Robert W. Lamond Group as Controller/Treasurer with a wide range of responsibilities, including banking, insurance management, financing, administration of the accounting department and reporting to various regulatory authorities. From 1983 to 1988, Mr. Korney held the position of Controller with Sea Hawk Resources Ltd. and Mission Resources Limited. Mr. Korney joined Grad & Walker Resources ltd. in 1988 becoming Vice-President, Finance and Corporate Secretary, playing a significant role in its initial public offering.

In September, 1994, Mr. Korney joined Electra Energy Corporation as Treasurer and Chief Financial Officer where he remained until the inception of BriAlto Energy Corporation in 1996. BriAlto executed a reverse takeover on Highland Energy Ltd., which became Highland Energy Inc. and was merged into Ketch Energy Ltd., in May, 2000. During November 2000, he co-founded Innova Exploration Ltd. and remained there until August 2004. Brian was appointed CFO of Caspian Energy Inc. on November 1, 2004. In aggregate, Mr. Korney has 28 years' experience in many facets of the energy industry.

Gordon Harris

Gordon Harris has over 25 years experience in the oil industry, having held various senior management positions. He is currently President and Chief Executive Officer of Choice Resources Corp., a TSX-V listed company.

From 1999 to 2003, Mr. Harris was President of Roseland Resources Ltd. and from 1997 to 1999, he held the positions of Chief Operating Officer and Vice President, Engineering and Production, of Vermilion Resources Ltd. From 1988 to 1997, he was Regional Manager for Europe, Africa and the Commonwealth of Independent States (formerly the Soviet Union) at Canadian Occidental Petroleum Ltd, where he established technical teams to develop and explore for oil in Kazakhstan, Nigeria, Egypt, Libya, Tunisia and the United Kingdom.

Mr. Harris also established and managed a subsidiary of LiflockResources Ltd. which produced over 5,000 barrels of oil per day.

Michael B.A. Nobbs 

Michael Nobbs is a professional 'Independent Company Director' and investment Banking consultant.

He advises in the area of Corporate Finance, business planning, and M and A, and acts as Remuneration Investment, Audit, Governance and "Special Committee" Chairs. Recent activities include IPO's, Company reorganization, the structure of Joint Ventures, and work on both the "AIM" and the "TV/SX". Advisor to UK and US Private Equity groups on specific acquisitions and investments. Worked with consultants to design comprehensive Compensation Plans. General sector focus is Oil, Gas and alternative energy. Direct recent experience with the dynamic of Board activity and responsibility in some seven publicly traded Companies. Areas of investment activity span the regions of the USA, the UK, Canada, Africa and Asia.

Adil Mukhamedzhanov

Mr. Adil Mukhamedzhanov has served as Deputy General Director for Aral Petroleum Capital LLP ("Aral") in Kazakhstan since March 2004. Caspian has a 50% stake in Aral. Mr. Mukhamedzhanov worked in the project management department of JSC KazTransOil and the consulting and corporate finance department of Deloitte & Touche Central Asia. Mr. Mukhamedzhanov has a B.A. in Finance and Accounting from the University of Nottingham in the United Kingdom, and an economics degree specializing in International Finance from the Kazakhstan Economic University.

Maurizio Barnaba

Mr. Barnaba is currently Managing Director of EFAME Export Ltd., an entity which focuses on trading and providing financial, commercial, marketing and technical consultation in Europe, North Africa and Middle East for Defence and Oil and Gas products. His educational credentials include a Bachelor’s degree in Electronic engineering and a further degree in Economics, Finance and Marketing.

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