Caspian Energy Inc. Calgary, AB, TSX and AIM: CEK is engaged in the exploration for and development and production of oil and gas in the Republic of Kazakhstan. Its primary operating activities are carried out through its wholly-owned subsidiary, Caspian Energy Ltd. (“Caspian Ltd.”).

It has a number of targets in the highly prospective Aktobe Oblast of Western Kazakhstan.

Joint ventures

Caspian Energy Inc. is a Canadian registered oil company whose primary asset is in Kazakhstan. Through its 50% ownership of Aral Petroleum Capital, a Kazakhstan registered company, it has the exclusive exploration contract for the North Block, 3,458 km2, in the Pre-Caspian Basin. The Company's licence area lies immediately adjacent to various producing fields, including the Alibekmola, Zhanazhol and Kenkiyak fields.

Operational highlights

• Increase in average price per barrel from $36.53 in the same period last year to $85.02 due to the impact of international oil markets. The Company sold an average 285 Bopd during the three month period (Q3 2007 – 617 Bopd).
• The East Zhagabulak field was shut-in on August 31, 2008 upon expiration of the term of the gas flaring permit.
• The field was subsequently brought back into production on October 24, 2008 following the approval by the Gas Working Committee at the Ministry of Energy of the permit to enable continuation of flaring by the Company until 31 December 2009
• Following resumption of production on East Zhagabulak, 24 hour tests were completed on both EZ#302 and EZ#213 with flow rates of 560 bopd and 779 Mcfd and 196 bopd and 274 Mcfd respectively.

Outlook

The Company has completed the official State Reserves Report for East Zhagabulak,a key element in the plan of development approval process and this was approved by the government on October 16, 2008.

The preparation of the Technology Scheme, which outlines the detailed plan of development of the field, is now underway with completion expected by the end of this month. Consequently, the Company anticipates a development contract for the field to be issued by the end of 2008.

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.