Tethys Petroleum: 2014 Results – Gas Production Doubled

Tethys Petroleum Limited today announced its Annual Results for the year ended December 31, 2014.

Corporate Highlights – 2014

• Updated Oil Resource Report for the ‘Klymene’ prospect in Kazakhstan with total Unrisked Mean Recoverable Oil Resources being estimated independently at over 400 million barrels;
• Drilling of a further 4 successful shallow gas exploration wells;
• Renewal of the 2013 gas sale contracts for 2014 volumes up to 150 million cubic metres;
• USD15 million financing completed;
• Release of the USD3.88m deposit placed into Escrow with respect to the conditional sale of a 50% (plus one share) interest in the Company’s Kazakhstan business;
• Extension of the Longstop Date to the Sale and Purchase Agreement with SinoHan Oil and Gas Investment Number 6 B.V. through to May 1, 2015;
• New Executive Chairman and Board changes
• A new contract was signed with respect to 2015 gas production for a minimum 100 million cubic metres at a net price of $75/Mcm (at a fixed Tenge price)

Corporate Highlights – Q1 2015

• Extension of the Akkulka Exploration Contract for another four years, from March 10, 2015 to March 10, 2019 (subject to certain routine amendments to the Contract);
• Completion of two loan financings amounting to gross proceeds of USD9.5 million;
• Reduction in interests and current funding obligations in Georgia of approximately US$4 million;
• Extension of the Kyzyloi Gas Production Contract for another 15 years, from June 14, 2014 to December 31, 2029.
• Financial Highlights – 2014
• Oil and gas revenue from continuing operations of USD27.39 million (2013: USD36.95 million);
• Loss for the year from continuing operations of USD15.47 million (2013: USD10.54 million(1));
• Basic & diluted loss per share of USD0.05 from continuing operations (2013: USD0.03)
• Capital Expenditure of USD26.07 million (2013: USD23.81 million)
• Cash and cash equivalents of USD3.11 (2013: USD25.11 million)

(1) The 2013 reported loss of USD10.54 million includes a gain of USD8.2 million realized on the Tajik farm-out

Reserve Highlights

• Total Gross (i.e. before the application of Kazakh Mineral Extraction Tax) Oil and Gas Reserves consisting of ‘Proved’ 1P reserves of 16.62 million BOE (2013: 14.14 million BOE) and ‘Proved and Probable’ 2P reserves of 27.08 million BOE (2013: 25.37 million BOE). With the addition of 2014 production these figures represent an increase on the 2013 year end volumes in both categories;
• The NPV10 value after tax of the Company’s Kazakh reserves (proven and probable) as at December 31, 2014 was USD185.86 million (2013: USD257.2 million);
• The reserves in this press release are estimated with an effective date of December 31, 2014 and do not reflect the pending sale of 50% of the Kazakhstan assets, which remains subject to Kazakh State waiver.

The reserve report was prepared by Gustavson Associates in full accordance with the requirements of National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators. The Company’s 2014 Annual Information Form dated March 31, 2015 includes more detailed disclosure and reports relating to petroleum and natural gas activities for 2014. Both oil and gas reserves are based on availability of sufficient funding to allow development of the known accumulations. The estimated value (NPV10) of the reserves does not represent fair market value.

Executive Chairman’s Message

John Bell, Executive Chairman said: ‘Since I became Executive Chairman at the end of November last year, we have made significant progress across all aspects of the business, to better manage the business in the challenging oil price environment. We have outlined a new strategy focused on delivering cash flows and value from our existing discovered reserves and material upside from within our portfolio, whilst exercising capital discipline. We have announced a halving of the Company’s G&A, cost cuttings which are on track, and we have doubled gas production and increased prices for the quarter. Based on this we believe Tethys is well placed to respond and adapt to the changing market environment.’