Rig Financing Secured
March 19, 2008 – St. Peter Port, Guernsey – Tethys Petroleum Limited (“Tethys” or the “Company”) (TSX: TPL) today announced that its wholly owned subsidiary, Tethys Petroleum Inc. (“TPI”) has secured loan financing from a group of accredited investors in the amount of USD$5,300,000 toward the purchase of a new drilling rig from China.
• The ZJ 70 diesel mechanical drilling rig is capable of drilling 23,000 feet (7,000 metres). • Manufactured by the Sichuan Honghua Petroleum Equipment Co. ,Ltd in Chengdu, China. • Will be one of the largest rigs in Kazakhstan. • Creates significant flexibility and lower costs over hiring a third party drilling company. • The rig would also be available for third party contracts to create an additional revenue stream during periods of inactivity. • Capable to drill the deeper prospects in Tajikistan. • Delivery expected Q2 2008. • 3-year loan with monthly payments of interest and capital and a final balloon payment. The average annual interest payable expressed as a percentage of the total borrowed funds is 9.3%. 795,000 warrants to purchase Tethys shares were also issued to the lenders with a term of 3 years and an exercise price of CAD$3.25. • Lenders have security over the shares of TPI which has no other assets except the drilling rig. No corporate guarantees or security are being provided by Tethys.
Dr. David Robson, CEO and President of Tethys, said of the acquisition, “This financing helps secure a rig for the deeper drilling program and beyond and provides for significant cost saving on individual wells. It has been manufactured by a high quality firm that last year made over 100 deep drilling rigs, many of which were exported all over the world. “
Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republic of Kazakhstan and more recently the Republic of Tajikistan. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.
This press release contains “forward-looking information” which may include, but is not limited to, statements with respect to our operations. Such forward looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions.
For more information please contact:
Vice President Investor Relations
Tethys Petroleum Limited
TD Canada Trust Tower
161 Bay Street, 27th Floor
Toronto N5J 2S1