Tethys Petroleum Limited provides the following corporate update to its shareholders.
Highlights
- Resolution reached with SinoHan.
- Following the greater than 50% reduction of our corporate and regional overheads, further restructuring and costs reductions are on going.
- As part of the ongoing strategic review, Tethys remains in an exclusivity period with AGR Energy Limited No. 1 ("AGR Energy") to negotiate a potential larger financing. The exclusivity period runs through to June 12, 2015.
- Kazakhstan May production averaged 5,408 boepd, highest since June 2013.
- 2015 average production to date 4,585 boepd.
- Shallow gas well AKK14 successfully brought onto production and work has commenced on the AKK05 gas well.
- 2D seismic programme in Tajikistan with partners CNPC and Total is progressing well with Phase One on track to complete in Q3.
John Bell, Chairman of Tethys Petroleum said: "We continue to focus on managing our cost base to further reduce our overheads while at the same time steadily increasing our production rates. We are delighted to report that our Kazakhstan production for May 2015 was up 19% on April, and a record rate since June 2013.
Discussions continue with AGR Energy regarding a potential larger financing as part of the strategic review and we look forward to updating shareholders in due course."
Resolution with SinoHan
The Company is pleased to announce that an amicable resolution on mutually acceptable terms has been reached with SinoHan Oil & Gas Investment 6 B.V ("SinoHan") regarding the termination of the SPA, pursuant to which the Company will repay the escrow loan and agreed costs. Both parties wish each other well in their future business endeavours
Restructuring
Further optimisation and restructuring continues with the Company to close the Guernsey office and relocate the finance team to London. The Company has entered into the two-week consultation with all Guernsey staff regarding their ongoing employment with Tethys. Over the last 7 months the Company has closed Washington, Toronto, Beijing and the Dubai offices as well as relocated and downsized offices in Georgia and Tajikistan. It is expected that the process of closing the Guernsey office will take 3 - 6 months. The Company believes that this will ensure a more streamlined organization with the key departments in one location and will ultimately save costs and enable greater efficiency. In addition to this, further staff reductions in the finance department have been made corporately.
Strategic Review
The Strategic Review process, being undertaken with the assistance of Macquarie Capital, is progressing well. As part of the ongoing strategic review, Tethys remains in an exclusivity period with AGR Energy to negotiate a potential larger financing. The exclusivity period runs through to June 12, 2015 and is subject to certain customary exceptions. A further update will be provided in due course. At this stage, there can be no certainty that further funding will be secured or that any strategic transaction or alternative will be undertaken.
Operations
Kazakhstan production for May 2015 averaged 5,408 boepd and is at the highest rate since June 2013. Current production comprises 563 Mcm/d (19.9 MMcf/d) of net sales of gas and 2,185 bopd of oil. Production for the year to date has averaged 4,585 boepd.
Highlights during the past month included the successful production start-up of the AKK14 shallow gas well post workover and the commencement of the workover of the AKK05 gas well. In addition, at the start of the month the overhaul of compressor #5 was completed successfully, and the Company is planning to overhaul more compressors later in the year.
In Tajikistan the Joint Venture is working towards the exploration mapping of the northern half of the PSC area with a view to being able to site a well there in 2016 if agreed. The thorough geological and geophysical investigation includes a Phase One 826 kms 2D seismic and associated magneto-tellurics acquisition programme which is progressing well through contractor BGP with partners Total and CNPC under the Joint Operating Company BOC. Phase One of the seismic acquisition programme is currently on track to complete in the latter part of Q3. The processing contract has been awarded to Schlumberger Beijing (SCSA) and they will start batch processing from June. The exploration programme is currently on budget and on time to allow for the mapping of the northern part of the PSC by year-end.
In Georgia, contractor Prospectuini, under operator NOC, continues with the ground gravity survey in Block XIN. The final full State approval process to ratify the new streamlined exploration work programmes for all 3 joint venture blocks XIA, XIM and XIN is now expected to finish in late June or early July. The 2015 work obligation of gravity acquisition in all 3 blocks is expected to be completed in August. This gravity survey will lay a solid foundation for a further programme of limited detailed 2D seismic acquisition and mapping prior to deciding if and where to drill any exploration wells.
