Tethys Petroleum announced that Chegara Production Limited (“CPL”), its 100% owned subsidiary, has signed a Production Enhancement Contract (“PEC”) for a new oil field, the Chegara Group of Fields (“Chegara”), in Uzbekistan. In addition Tethys announced it had signed a Memorandum of Understanding (“MOU”), which agrees a timetable for the potential signing of an Exploration Agreement for a highly prospective Exploration block.
— New 25-year Production Enhancement Contract on oil field
— Existing producing oil wells
— Significant upside in undrilled areas – additional geophysical data to be acquired
— MOU for potential Exploration Agreement on an exploration block in North Ustyurt Basin
Dr David Robson, Chairman, President and Chief Executive Officer of Tethys, added: “We are delighted that we have been awarded this new oil field in Uzbekistan. I would like to thank our partners, Uzbekneftegaz, Uzneftegazdobycha and Uznefteproduct, for their support and hard work in negotiating this new contract. We believe the Chegara Group of Fields has good potential through increasing production in existing wells and also large upside in undrilled areas. It has only had minimal, initial drilling work carried out on it and we believe with additional geophysical data we will be able to develop this field more efficiently and increase production substantially. In addition the newly signed MOU now sets out a clear timetable to potentially signing an exploration agreement for a block in the Ustyurt basin which we believe has very similar geological characteristics to the Akkulka block where we have our Doris oil discovery.”
The Chegara Group is an underdeveloped group of fields located 14 kilometers south-west of the existing Tethys asset of North Urtabulak, and contiguous to the prolific Urtabulak gas condensate Field, within the world-class Amu Darya Basin. The reservoirs comprise Upper Jurassic age carbonates at an approximate depth of 2,650 meters, trapped below a regionally prevalent salt and anhydrite seal. The oil is of moderate gravity and at present there are 3 producing wells all flowing naturally under reservoir pressure. This currently has limited existing oil production, and will form the baseline production under the new Chegara PEC with Uzbekneftegaz. Tethys believes there is substantial additional production potential in the field.
Tethys has collected and interpreted a significant volume of historic seismic, drilling, geological and production data relating to the Chegara Group of fields, and plans to initially work over the existing well stock using technologies and techniques that have been successfully implemented to increase production on the North Urtabulak Field over the previous 12 years under a very similar contractual arrangement. Furthermore, it is intended that additional geophysical data will be acquired on the field to identify undrilled areas that provide high potential upside. Currently there are only State reserves assigned to the field and no figures yet under NI 51-101 reporting procedures.
The contract will become effective following standard regulatory approvals, which include the issuance of a Presidential Decree and the completion of a Feasibility Study. The PEC has a term of twenty-five (25) years and under the new PEC CPL is allocated refined products for the crude oil it produces and sells these outside Uzbekistan. Furthermore Tethys has been granted exclusive rights to carry out operations with liquid hydrocarbons on Chegara.
The MOU signed with NHC Uzbekneftegaz sets out a fixed timetable to potentially sign an Exploration Agreement for a large Exploration block in the North Usyturt basin in Uzbekistan. TPL will submit a proposal for an exploration program for the block by the end of June 2012. After approval by NHC Uzbekneftegaz and the Government of the Republic of Uzbekistan an Exploration Agreement will be negotiated.