Tethys Petroleum: Provides AGR Energy Update and Pope Asset Management Share Subscription

Tethys Petroleum Limited is pleased to announce that, further to its announcement on July 1, 2015 in relation to the strategic collaboration with AGR Energy Holdings Limited (“AGR Energy”) and US$47.7 million financing (the “AGR Placing”), it has agreed with Pope Asset Management, LLC (“Pope”), the Company’s largest shareholder, that Pope will subscribe for 100,000,000 new ordinary shares on substantially the same terms as the AGR Placing. The number of shares for which AGR Energy will subscribe under the AGR Placing will be reduced correspondingly to 218,003,951 new ordinary shares.

John Bell, Executive Chairman said:

“We are delighted to have the full support of our largest shareholder, Pope Asset Management and to have secured a substantial commitment from them to participate in the proposed placing alongside AGR Energy. Today’s news is a further endorsement from our shareholders of their confidence in the Company’s strategy, team and strategic partnership with AGR Energy.”

Shareholder Subscription Key Terms

Under the terms of the subscription agreement relating to the AGR Placing, the Company has invited certain substantial shareholders to subscribe for ordinary shares on similar terms to AGR Energy. Following such invitations, Pope has entered into a subscription agreement with the Company (the “Pope Subscription Agreement”) pursuant to which it will subscribe for 100,000,000 ordinary shares in the Company on terms substantially similar to the AGR Placing (the “Shareholder Subscription”).

As with the AGR Placing, the subscription price under the Shareholder Subscription will be at a price of C$0.19 per ordinary share.

The Shareholder Subscription will reduce by a corresponding number the number of shares for which AGR Energy will subscribe under the AGR Placing. Consequently, following closing of the AGR Placing and the Shareholder Subscription:

— AGR Energy is expected to acquire 218,003,951 ordinary shares under the
AGR Placing;
— AGR Energy, together with its affiliates, will hold approximately 36.0%
of the enlarged issued share capital of Tethys, assuming conversion of
the pre-existing convertible loans held by AGR Energy Limited Number I
and Annuity and Life Reassurance Ltd (“ALR”, an investor controlled by
Pope), not including any issue of shares to satisfy interest payments,
and the exercise of 23,333,333 warrants held by ALR and disregarding all
other outstanding options and warrants; and
— Pope, together with its affiliates and entities controlled by it
(including ALR), will hold approximately 26.6% of the enlarged issued
share capital of Tethys, on the same assumptions as set out in the
preceding paragraph.

Conditions to Closing of the Shareholder Subscription: Completion of the Shareholder Subscription and receipt of funds is conditional, inter alia, upon each of the following conditions being satisfied on or before November 1, 2015, or such later date as may be agreed:

— approval by the Company’s shareholders of the Shareholder Subscription;
— the Shareholder Subscription shares being approved for issue and
admitted to trading by the TSX; and
— closing of the AGR Placing having occurred.

A consequence of the Shareholder Subscription being conditional upon closing of the AGR Placing, is that it will also be conditional on the receipt of the Kazakh regulatory approvals and consents that are a condition of the AGR Placing. Further information on these regulatory approvals and consents is set out in the announcement of the Company on July 1, 2015 relating to the AGR Placing.

Further details of the Pope Subscription Agreement will be set out in the circular to be issued in connection with the extraordinary general meeting to seek shareholder approval of the AGR Placing and the Shareholder Subscription, in addition to certain related matters. A copy of the Pope Subscription Agreement will be filed on SEDAR in a timely manner.

Recommendation

The Board considers the Shareholder Subscription to be in the best interests of the Company and its shareholders as a whole. Accordingly, the proposed transaction has the unanimous support of the Board and each Tethys Director intends to vote in favour of all those resolutions required to implement the Shareholder Subscription in relation to shares held or controlled by them.

Extraordinary General Meeting

As noted in the Company’s announcement on July 1, 2015, the Company will prepare a circular that will be sent to all shareholders, including details of those resolutions relating to the AGR Placing, the associated convertible loan and the Shareholder Subscription to be voted on at an Extraordinary General Meeting (“EGM”). It is currently anticipated that the EGM will be held at InterContinental Paris – Le Grand 2 Rue Scribe, Paris, 75009, France on August 28, 2015 at 11:30 a.m. (CEST – local time in Paris, France), and that the circular will be sent to shareholders on or before July 28, 2015.