SHARE SALE AND PURCHASE AGREEMENT

(1)

SEERIA ALLIANCE LTD. , a company incorporated under the International Business Companies Act of the British Virgin Islands (CAP.291) (IBC registration number 507352 ), whose registered office is at c/o Mossack Fonseca & Co. (BVI) Ltd., Akara Building, 24 DeCastro Street, Wickhams Cay I, P.O. Box 3136, Road Town, Tortola, British Virgin Islands (the “ Seller ”) ; and

(2)

TRANSMERIDIAN EXPLORATION, INC. , a company incorporated under the International Business Companies Act of the British Virgin Islands (CAP.291) (IBC registration number 205858), whose registered office is at c/o Nerine Trust Company (BVI) Limited, Quastisky Building, 3 ^rd Floor, P.O. 905, Road Town, Tortola, British Virgin Islands (the “ Buyer ”).

(A)

The Seller is the legal and beneficial owner of 50,000 shares of the Company, with a par value of US $1.00 each, constituting 100% of all authorized and issued shares in the Company (such shares being the “ Shares ”).

(B)

The Company owns 50% of all authorized and issued shares in JSC CaspiNeft TME, a Kazakhstani joint stock company (“ CaspiNeft ”), which is a party to the Contract for the Right to Explore Hydrocarbons signed with the Agency of the Republic of Kazakhstan on Investments on 7 March 2000 (the “ Contract ”), which gives CaspiNeft the exclusive right to explore South Alibek Field located in the Aktobe Oblast of the Republic of Kazakhstan.

(C)

The Parties wish to enter into this Agreement for the sale and purchase of the Shares, free of any Encumbrances, on the terms and conditions set forth below.

1.

DEFINITIONS AND INTERPRETATION

1.1

In this Agreement where the context so admits the following words and expressions shall have the following meanings:

“Banking Day”

a day (other than a Saturday or Sunday) on which banks in New York are open for normal business operations;

“BTA” JSC

Bank TuranAlem;

“BTA Debt”

the total amount owing (whether or not then due and

payable) to BTA (or any affiliate of BTA) by CaspiNeft pursuant to the BTA Loan Agreements (and any other agreements or understandings relating to the granting of loans under the BTA Loan Agreements) as of close of business on the date of the Closing (including without limitation principal, interest, exchange rate adjustments, fees, charges, expenses and other sums of any nature whatsoever owing (whether or not then due and payable) under the BTA Loan Agreements and any related agreements and understandings as aforesaid);

“BTA Loan Agreements”

two loan agreements pursuant to which BTA has extended certain loans to CaspiNeft, namely: (i) Main Loan Agreement No. 02-0402-2 dated 4 February 2002 among BTA, CaspiNeft, the Buyer and Kazstroyproekt LLP, for the total amount of US $20,000,000, as amended, and (ii) General Loan Agreement No. 2000/03/40 dated 2 June 2003 among BTA, CaspiNeft, the Buyer and the Company, for the total amount of US $30,000,000, as amended or supplemented;

“Buyer’s Group”

means the group of companies comprising the Buyer, any holding company from time to time of the Buyer and any subsidiary of the Buyer (including, following Closing, the Company and CaspiNeft) or of any such holding company and “ member of the Buyer’s Group ” shall be construed accordingly;

“CaspiNeft”

has the meaning set forth in Recital (B);

“Claim”

any claim by the Buyer under Article 6.6 or under the Warranties referred to in Article 6.1, Article 6.2 and set out in Schedule 1;

“Closing”

means completion of the sale and purchase of the Shares in exchange for the consideration payable by the Buyer pursuant to Article 3;

“Company”

Bramex Management, Inc. a company incorporated under the International Business Companies Act of the British Virgin Islands (CAP.291) (IBC registration number 492384), whose registered office is at Sea Meadow House, Blackburn Highway, Road Town, Tortola, British Virgin Islands;

“Consideration”

has the meaning set forth in Article 3;

“Contract”

has the meaning set forth in Recital (B);

“Debt”

means, as at the close of business on the date of Closing the aggregate of all debts owed by the Company to members of the Seller’s Group;

“Disclosure Letter”

a letter in the agreed form (together with any documents annexed to it) dated the date of this Agreement from the Seller to the Buyer;

“Due Diligence Review Questionnaire”

means the written list of enquiries delivered to the Seller by the Buyer prior to the date hereof which is annexed to and incorporated in the Disclosure Letter;

“Encumbrance”

means any mortgage, charge, pledge, hypothecation, lien, assignment by way of security, right of set-off, title retention arrangement, option or other rights of third parties (other than by virtue of this Agreement);

“Estimated Consideration”

has the meaning set forth in Article 3.2;

“Estimated Debt”

has the meaning set forth in Article 3.2;

“Joint Operating Agreement”

means the joint operating agreement regarding the operation of CaspiNeft between the Buyer and the Company (as successor to Kazstroyproect LLP) dated 14 February 2002, as amended or supplemented;

“Independent Accountants”

a firm of independent chartered accountants jointly agreed upon between the Buyer and the Seller or (failing such agreement) appointed, at the request of either the Buyer or the Seller at any time, by the President from time to time of the Institute of Chartered Accountants in England and Wales;

“Information”

means any existing written information and data connected with the past, present and future activities of CaspiNeft under or in connection with the Contract, which is in the possession of any member of the Seller’s Group or the Company (as the case

may be) at Closing, including, without limitation, any geological, geochemical, geophysical and geotechnical information, data, maps, reports, samples, core logs, analysis, results of tests and other materials in connection with any activities undertaken in connection with the Contract;

“Kazakhstan Counsel”

means a law firm of international standing with offices in Almaty, Kazakhstan reasonably acceptable to the Buyer and the Seller;

“Losses”

means, with respect to any Party, all and any obligations, proceedings, losses, damages, liabilities, claims, costs and expenses incurred by such Party;

“Outstanding Documents”

means the Release Documents and the opinions of Harney Westwood & Riegels (British Virgin Islands office) to be delivered pursuant to Articles 4.1.7.1 and 5.2.4.1 and Kazakhstan Counsel to be delivered pursuant to Articles 4.1.7.2 and 5.2.4.2;

“Parties”

the Seller and the Buyer and their respective successors and permitted assigns;

“Purchase Price”

has the meaning set forth in Article 3;

“Release Documents”

means (i) a release in form and substance reasonably satisfactory to the Buyer providing a full release and discharge of the Encumbrances securing the BTA Debt, and (ii) all documentation necessary to be provided by BTA and filed with or produced before the Kazakhstani registration authorities to de-register the Encumbrances securing the BTA Debt from their records (including, without limitation, a letter confirming that the BTA Debt has been repaid and that the Encumbrances securing the BTA Debt are to be released, a letter to the Ministry of Energy and Mineral Resources requesting it to release subsoil rights from the Encumbrances securing the BTA Debt, applications to various registration authorities to deregister the Encumbrances securing the BTA Debt over immovable and movable assets of CaspiNeft, and an order to CaspiNeft’s registrar requesting the release of the CaspiNeft shares from any Encumbrances securing the BTA Debt);

“Seller’s Group”

means the group of companies comprising the Seller, any holding company from time to time of the Seller (which for the avoidance of doubt shall be deemed to include BTA) and any subsidiary of the Seller (excluding the Company) or of any such holding company and “member of the Seller’s Group” shall be construed accordingly;

“Shares”

has the meaning set forth in Recital A;

“Supplemental Disclosure Letter”

a letter (together with any documents annexed thereto) dated on the date of Closing from the Seller to the Buyer;

“Tax” or “Taxation”

all forms of taxation, withholdings, duties, imposts, levies, social security contributions and rates imposed by any local, municipal, governmental, state, federal, or other body in the British Virgin Islands, the Republic of Kazakhstan or elsewhere and any interest, penalty, surcharge or fine in connection therewith; and

“Warranties”

the warranties referred to in Article 6.1, Article 6.2 and set out in Schedule 1.

1.2

Any references, express or implied, to statutes or statutory provisions shall be construed as references to those statutes or provisions as respectively amended or re-enacted or as their application is modified from time to time by other provisions (whether before or after the date hereof) and shall include any statutes or provisions of which they are re-enactments (whether with or without modification) and any orders, regulations, instruments or other subordinate legislation under the relevant statute or statutory provision.

1.3

References in this Agreement to Articles and Schedules are to articles in and schedules to this Agreement (unless the context otherwise requires). The recitals and schedules to this Agreement shall be deemed to form part of this Agreement.

1.4

Headings are inserted for convenience only and shall not affect the construction of this Agreement.

1.5

The expressions “ Seller ,” “ Company ” and “ Buyer ” include each party’s successors and permitted assigns.

1.6

References to “ persons ” shall include bodies corporate, unincorporated associations and partnerships (whether or not having separate legal personality).

1.7

A company or other entity shall be a “ holding company ” for the purposes of this Agreement if it falls within either the meaning attributed to that term in ss736 and 736A Companies Act 1985 (“CA85”) or the meaning attributed to the term “ parent undertaking ” in s258 CA85, and a company or other entity shall be a “ subsidiary ” for the purposes of this Agreement if it falls within either the meaning attributed to that term in ss736 and 736A of the CA85 or the meaning attributed to the term “ subsidiary undertaking ” in s258 of the CA85, and the term “ subsidiaries ” is to be construed accordingly.

1.8

Any reference to a document in the “ agreed form ” is to the form of the relevant document in the terms agreed between the Seller and the Buyer prior to the execution of this Agreement and signed or initialled for identification purposes only by or on behalf of the Seller and the Buyer (in each case with such amendments as may be agreed in writing by or on behalf of the Seller and the Buyer).

2.

SALE OF SHARES

2.1

Subject to the terms and conditions of this Agreement, at the Closing the Seller shall sell to the Buyer, with full title guarantee (as such term is defined in the Law of Property (Miscellaneous Provisions) Act 1994), and the Buyer shall purchase from the Seller, the Shares in registered form, free of any Encumbrances and together with all rights thereafter attached to them.

2.2

The Seller hereby irrevocably waives and agrees to procure the waiver of any restrictions on transfer (including rights of pre-emption) which may exist in relation to the Shares, whether under the articles of association of the Company or otherwise.

3.

CONSIDERATION AND PAYMENT

3.1

Subject to the terms of this Agreement, the total consideration payable by the Buyer for the Shares shall consist of US$ 168,000,000 less the BTA Debt (the “ Purchase Price ”) less an amount equal to the Debt (the “ Consideration ”).

3.2

Not later than five (5) Banking Days prior to the date fixed for Closing, the Seller shall notify the Buyer in writing of its estimate (acting reasonably, and attaching such evidence as it may have in support of its calculation) of the Debt (the “ Estimated Debt ”), and the Purchase Price less an amount equal to the Estimated Debt shall be the “ Estimated Consideration ” for the purposes of this agreement.

3.3

At the Closing the Buyer shall pay the Estimated Consideration to the Seller in accordance with Article 5.3.2.

3.4

The Buyer and the Seller shall procure that the Independent Accountants shall, by no later than ten (10) Banking Days after the Closing, deliver to the Buyer and the Seller a certificate stating the amount of the Debt, which certificate, in the absence of manifest error, shall be conclusive and binding upon the parties.

3.5

In the event that the Consideration:

3.5.1

is less than the Estimated Consideration then the Seller shall pay to the Buyer an amount equal to such shortfall;

3.5.2

exceeds the Estimated Consideration then the Buyer shall pay to the Seller an amount equal to such excess.

3.6

Any and all sums payable pursuant to Article 3.5 shall be paid by the Buyer or the Seller (by wire transfer to the bank account notified by the Buyer or the Seller (as the case may be) to the other in writing) within five (5) Banking Days after delivery of the certificate of the Independent Accountants in accordance with Article 3.4 and shall be treated as:

3.6.1

reducing the consideration for the Shares in the case of payments by the Seller to the Buyer pursuant to Article 3.5.1; and

3.6.2

increasing the consideration for the Shares in the case of payments by the Buyer to the Seller pursuant to Article 3.5.2.

3.7

The Estimated Consideration and the Consideration shall be paid without any deductions or withholdings except as may be required by applicable law; and if the Estimated Consideration or the Consideration shall be subject to any deductions or withholdings such payment shall be increased by such an amount as shall ensure that after deduction or withholding of such Tax the Seller shall have received a net amount equal to the Estimated Consideration or the Consideration; provided, however, that for the avoidance of doubt, this provision shall not be construed to extend to any tax payable by the Seller on any gain, profit, income or otherwise as a result of its receipt of the Estimated Consideration or the Consideration.

3.8

At the Closing, the Buyer shall procure that the BTA Debt is repaid in full in accordance with the following provisions:

3.8.1

Within five (5) Banking Days prior to the date of the Closing, BTA shall provide CaspiNeft with a calculation showing the funds necessary to repay the BTA Debt on the date of the Closing;

3.8.2

On or prior to the date of the Closing, the Buyer and the Company shall cause CaspiNeft to issue a Cash Call for the amount set forth in the calculation provided by BTA pursuant to Article 3.8.1 above. The Buyer, on or prior to the date of the Closing, shall lend the entire amount of such Cash Call to

3.8.3

At the Closing, subject to the provisions of this Agreement, the Buyer and the Company (to the extent that it is able to do so, but without any obligation of the Company to lend or otherwise provide any monies to CaspiNeft) shall procure that CaspiNeft fully repays the BTA Debt to BTA.

3.9

The Seller agrees to procure the performance by the Company or BTA, as the case may be, of their respective obligations under this Article 3.

3.10

In this Article 3, capitalised terms defined in the Joint Operating Agreement and not otherwise defined in this Agreement shall have the meanings set out in the Joint Operating Agreement.

3.11

On the date hereof, the Buyer and BTA have agreed that repayments, whether of principal or interest (or otherwise), of the BTA Debt shall be deferred until Closing (the “ BTA Debt Deferral ”).

4.

CONDITIONS PRECEDENT

4.1

Closing is conditional upon:

4.1.1

each of the Warranties being true and accurate in all material respects on the date hereof and remaining true and accurate in all material respects at the Closing by reference to the facts and circumstances then existing (subject to the Disclosure Letter, the Supplemental Disclosure Letter and the provisions of Article 6);

4.1.2

there having been no disclosure set out in the Supplemental Disclosure Letter which indicates a material adverse change in the business or financial position of the Company after the date of this Agreement which is not a direct consequence of a matter previously disclosed in the Disclosure Letter except for any change which results from action taken with the prior written approval of the Buyer;

4.1.3

there having been no response to any further enquiries made by the Buyer to the Seller after the date of this Agreement in connection with the Due Diligence Review Questionnaire which would constitute a disclosure against any of the Warranties and which indicates a material adverse change in the business or financial position of the Company after the date of this Agreement;

4.1.4

the Seller having delivered to the Buyer no earlier than five (5) Banking Days prior to the date of Closing, a certified copy of the register of shares maintained by the Company’s registered agent in the British Virgin Islands evidencing that all of the Shares are duly registered in the name of the Seller,

4.1.5

prior to the date of Closing, the Company being the owner of twenty-five thousand (25,000) ordinary shares of CaspiNeft, such shareholding representing 50% of all authorized and issued shares of CaspiNeft, fully paid and free of Encumbrances (other than security relating to the BTA Debt), and the Buyer having received an extract from the share register of CaspiNeft confirming such shareholding;

4.1.6

the Seller having delivered to the Buyer

4.1.6.1

a draft opinion of Harney Westwood & Riegels by no later than ten (10) Banking Days after the date of this Agreement, in form and substance reasonably satisfactory to the Buyer, stating that (i) the Seller is the registered owner of, and has legal and beneficial title to, 50,000 ordinary shares of the Company, which shares comprise 100% of all authorized and issued shares of the Company, free of any Encumbrances, (ii) no legal proceedings are pending against the Company in the British Virgin Islands, (iii) no legal proceedings are pending against the Seller in the British Virgin Islands in relation to the subject matter of this Agreement or challenging the ownership of the Shares, (iv) the Company and the Seller are duly incorporated, validly existing and in good standing under the laws of the British Virgin Islands, (v) that the Agreement will be treated by the courts of the British Virgin Islands as a legally binding, valid and enforceable obligations of the Seller;

4.1.6.2

a draft opinion of Kazakhstan Counsel, by no later than ten (10) Banking Days after the date of this Agreement, in form and substance reasonably satisfactory to the Buyer, covering certain matters agreed upon between the Buyer and the Seller;

4.1.7

since the date of this Agreement the Company having not revoked any approval it has given pursuant to the Joint Operating Agreement prior to the date of this Agreement in relation to the agreed budget of CaspiNeft (pursuant to the Joint Operating Agreement) which would have a material adverse effect on the business or operations of the Company or CaspiNeft (save if such revocation is approved in writing by the Buyer);

4.1.8

each of the Outstanding Documents having been negotiated and settled by the Parties in accordance with Article 8.6; and

4.1.9

since the date of this Agreement BTA not having required or purported to require CaspiNeft to repay any or all of the BTA Debt prior to the date of Closing or otherwise been in breach of its obligations under the BTA Debt Deferral.

4.2

The Buyer may waive all or any of the above-listed conditions at any time by notice in writing given to the Seller.

4.3

The Parties shall use all reasonable endeavors to procure the fulfillment of the conditions listed in Article 4.1 above on or before 30 November 2005 and in any event by 23 December 2005.

4.4

The Buyer shall notify the Seller in writing within five (5) Banking Days after all the conditions listed in Articles 4.1.3, 4.1.4, 4.1.5, 4.1.6, 4.1.8 have been fulfilled to the satisfaction of the Buyer or waived.

4.5

In the event that any of the conditions set forth in Article 4.1 shall not have been fulfilled (unless such conditions were waived pursuant to Article 4.2) on or before 23 December 2005, then the neither the Buyer nor the Seller shall be bound to proceed with the sale and acquisition of the Shares and either of them may rescind this Agreement without liability on any party (other than in relation to prior breaches of Articles 4.3 and 8.4).

5.

CLOSING

5.1

Subject to the satisfaction of the conditions precedent set out in Article 4.1, the Closing shall occur on 30 November 2005, or, if later, five (5) Banking Days following written notification by the Buyer to the Seller of the fulfillment to the satisfaction of the Buyer (or waiver) of the conditions listed in Articles 4.1.3, 4.1.4, 4.1.5, 4.1.6 and 4.1.8, provided that at the date of the Closing the remaining conditions shall have been fulfilled to the satisfaction of the Buyer (or waived by the Buyer) (but in any event no later than 30 December 2005), at the offices of Baker & McKenzie—CIS, Limited, Central Asia in Almaty, Kazakhstan, with, to the extent necessary, certain Closing actions occurring at the offices of the Buyer’s British Virgin Islands counsel in the British Virgin Islands when all (but not some only) of the events described in Article 5.2 and Article 5.3 shall occur.

5.2

Subject to satisfaction of the Buyer’s obligations under Article 5.3, at Closing, the Seller shall do the following:

5.2.1

deliver to the Buyer duly executed transfers of all of the Shares into the name of the Buyer together with the relevant share certificates representing the Shares registered in the name of the Buyer free of any Encumbrances;

5.2.2

to the extent required, cause the board of directors of the Company to hold a meeting (or provide written resolutions) at which the board shall pass resolutions to approve (i) the registration of the Buyer as the sole shareholder of the Company, (ii) the entering of the Buyer’s name on the share register of the Company, (iii) the issue to the Buyer of a share certificate of the Company representing the Shares, (iv) the appointment of such persons as the Buyer may nominate as directors of the Company prior to Closing;

5.2.3

deliver to the Buyer the Information

5.2.4

deliver opinions of:

5.2.4.1

Harney Westwood & Riegels (British Virgin Islands office), dated the date of the Closing, in form and substance reasonably satisfactory to the Buyer stating that (i) immediately prior to Closing, the Seller, and upon Closing, the Buyer is the registered owner of, and has legal and beneficial title to, 50,000 ordinary shares of the Company, which shares comprise 100% of all authorized and issued shares of the Company, free of any Encumbrances, (ii) no legal proceedings are pending against the Company in the British Virgin Islands, (iii) no legal proceedings are pending against the Seller in the British Virgin Islands in relation to the subject matter of this Agreement or challenging the ownership of the Shares, (iv) the Company and the Seller are duly incorporated, validly existing and in good standing under the laws of the British Virgin Islands, (v) that the Agreement will be treated by the courts of the British Virgin Islands as a legally binding, valid and enforceable obligations of the Seller;

5.2.4.2

Kazakhstan Counsel dated the date of the Closing, in form and substance reasonably satisfactory to the Buyer covering certain matters agreed upon between the Buyer and the Seller;

5.2.5

deliver to the Buyer the resignations (in a form reasonably satisfactory to the parties) of the officers, directors and secretary of the Company and CaspiNeft (to the extent such persons are controlled by the Seller), such resignations containing waivers of all claims against the Company and CaspiNeft for compensation or otherwise;

5.2.6

deliver to the Buyer all existing statutory and other books (if any) (duly written and up to date) of the Company and its Articles and Memorandum of Association, foundation documents and corporate seal (if any);

5.2.7

deliver to the Buyer a certificate or other instrument in form and substance reasonably satisfactory to the Buyer, executed by the Seller, relinquishing any and all authority over the business or affairs of the Company and discharging

5.2.8

procure that BTA delivers to the Buyer the duly executed Release Documents.

5.3

Subject to satisfaction of the Seller’s obligations under Article 5.2, at the Closing the Buyer shall:

5.3.1

procure that CaspiNeft repays the BTA Debt; and

5.3.2

pay the Estimated Consideration to the Seller by wire transfer to such bank account as the Seller shall notify the Buyer in writing at least five (5) Banking Days prior to the date of Closing.

5.4

The Parties hereby agree that if the obligations under this Article 5 are not complied with in any respect on the Closing by either the Buyer or the Seller (“ Defaulting Party ”) the other Party (“ Relevant Party ”) shall not be obliged to complete the sale and purchase of the Shares and the Relevant Party may, at its own discretion, elect to do any of the following:

5.4.1

defer Closing by a period of not more than 30 days (and the provisions of Article 5 shall apply to the Closing as so deferred), which date shall be set forth in a notice from the Relevant Party to the Defaulting Party and shall be no earlier than five (5) Banking Days from the date such notice is given; or

5.4.2

proceed to Closing so far as practicable (without prejudice to its rights under this Agreement); or

5.4.3

rescind this Agreement without any further liability on any party (save for any prior breaches and other than as set out in Articles 8.4 and 8.5).

6.

WARRANTIES

6.1

Except as otherwise provided in the Disclosure Letter or the Supplemental Disclosure Letter, the Seller hereby warrants to the Buyer that each of the statements set out in Schedule 1 (the “ Warranties ”) is now true and accurate.

6.2

Each of the Warranties shall be deemed to be repeated at Closing by reference to the facts and circumstances then existing and on the basis that all references (whether express or implied) in such Warranties to the “date of this Agreement” or in any of the definitions used in such Warranties (except in the definition of the “Disclosure Letter”) shall be deemed to be substituted with references to the “date on which these Warranties are given”.

6.3

The Seller may deliver to the Buyer immediately prior to the Closing the Supplemental Disclosure Letter confirming that the Warranties (as given at Closing under Article 6.2) remain true and accurate immediately prior to the Closing, except as regards any matter or event which is fairly disclosed in the Supplemental Disclosure Letter and the Disclosure Letter.

6.4

T