GUERNSEY, CHANNEL ISLANDS–(Marketwire – Nov. 14, 2008) – Tethys Petroleum Limited (“Tethys” or the “Company”) (TSX:TPL – News) today announced its third quarter 2008 financial results, and also gave a brief operational update.
FINANCIAL SUMMARY
Three months ended March June 30 Sept 30 Dec 31 March June 30 Sept 30 31 2007 2007 2007 2007 31 2008 2008 2008 Financials (US$000’s) Revenue – – – 194 1,431 1,566 1,485 Net loss (2,321) (20,117) (2,969) (16,372) (4,701) (5,280) (6,551) Basic and diluted loss (US$) per share (0.14) (0.95) (0.07) (0.36) (0.10) (0.11) (0.10) Capital Expenditure 2,285 20,249 3,845 11,622 3,541 9,565 14,152 Total Assets 33,751 89,648 85,749 71,656 73,546 115,957 109,422 Cash and working capital surplus 11,901 43,205 37,161 25,773 23,762 57,558 36,921 HIGHLIGHTS
- Revenue generated in the three months to September 30, 2008 was US$1,485,000 compared to nil in the same period of 2007.
- Average field production achieved in the three months to September 30, 2008 was 18.4 million cubic feet per day (MMcf/d) (522 thousand cubic metres per day (Mm3/d)) and gas sales totalled 1.68 billion cubic feet (Bcf) or 47.52 million cubic metres (MMcm). Although there were 92 days in Q3 2008 gross production was actually achieved on only 87 days as a result of the temporary shut-down of compressors for maintenance, the shut-down of wells for testing as per the State requirements and line pigging. If these shut-downs had not been necessary, average field production would have been 19.5 MMcf/d (552 Mcm/d) for the quarter. Delays with the delivery of separators from Ukrainian manufacturers for two additional Kyzyloi wells G12 and G16 resulted in these wells not being able to commence production as planned in August. These separators are expected on site in November and the wells will be brought on stream following installation and State consents, this likely to be in December at which point field gas production is expected to increase significantly.
- A net loss of US$6,551,000 was recorded in the three months to September 30, 2008 compared to a loss of US$2,969,000 for the same period in 2007. The net loss in the three months to September 30, 2008 included a depreciation charge of US$2,298,000 compared to US$20,000 in 2007 and foreign exchange loss of US$1,254,000 in 2008 compared to a gain of US$51,000 in the same period in 2007.
- Capital expenditure of $14,152,000 was incurred as the Company pursued its objectives of initiating Phase 2 gas production from the Akkulka field in Kazakhstan, drilling two exploration wells on the Kul-Bas contract area, preparing to drilling the AKD01 deep well in Kazakhstan, the acquisition of drilling, production and related equipment and commencing operations in Tajikistan following the signing of the PSC in June 2008.
- Operating costs for the three months to September 30, 2008 were $274,000 compared to nil for the same period in 2007. The figures in this latest period also showed an increase on previous quarters in 2008 in part as a result of higher labour costs and insurance premiums but also as a result of work done to optimize the Kyzyloi wells and compression regimes.
- Depletion on proved properties in Q3 2008 was US$2,240,000 compared to nil in the same period of 2007 as production did not commence until Q4 2007.
- General & Administration costs incurred in Q3 2008 were US$3,347,000 compared to US$2,743,000 in the same period in 2007 due to increased levels of activity, cost inflation in Kazakhstan and extraordinary office related expenditures.
- Exchange rates moved significantly in the three months to September 30, 2008 resulting in an exchange rate loss of $1,254,000 relating primarily to Euros which are held for equipment purchases and UK Pounds Sterling Sterling which is held for employment and travel costs.
- As at September 30, 2008 17.55% of the contract volume under the long-term gas supply contract relating to the Kyzyloi field had been delivered to the buyer. This contract is for a volume of up to 850 MMcm (30 Bcf) from the Kyzyloi field at an agreed price of US$1.02 per Mcf (US$36.16 per Mcm) before royalties and including Value Added Tax (VAT) which can be offset against VAT costs on the Kyzyloi project.
BRIEF OPERATIONS UPDATE
Kazakhstan
Exploration well KUL03 has now commenced drilling on the potentially large “Kokbulak” gas prospect in the north-west of the Kul-Bas block some 80 km (50 miles) north west of the recent AKK16 well. The well is anticipated to reach total depth within the next three weeks following which, if successful, the well will be tested. Tethys’ 80 tonne rig which is drilling the well will then be mobilised to Tajikistan.
The deep exploration well AKD01 is almost ready to commence drilling with the rig now being erected on site and being prepared. However certain small but critical items of ancillary equipment have not yet arrived at the site from China and these are now on their way, with a planned spud date for the well before the end of this month.
Tethys has also commenced initial negotiations with several potential buyers for Phase 2 (Akkulka) gas, with these negotiations now progressing. Meanwhile work on Phase 2 is proceeding apace with the additional compressors now being transported from the Kazakh border to the field and with other work on schedule. The timing of first Phase 2 production is dependent on both completion of the compressor and control system installation and on approval from a Kazakh State Commission. Although this is still possible before the end of this year, it currently seems likely that the Commission will not be ready to visit the field until the New Year resulting in the commencement of Phase 2 gas production at the end of January 2009.
Tajikistan
Workover operations are underway on the Komsomolsk gas field north of Dushanbe with the intention of producing gas in the short term. Workover operations are also commencing on the Beshtentak oil field in the Baljuvon region and are planned to commence shortly on the Khoja Sartez gas condensate field near Kulob, both with the intention of achieving early production. Meanwhile Tethys is building up the capabilities of its new operating company Tethys Services Tajikistan, and carrying out extensive fieldwork and data collection on the large Bokhtar area with a view to planning further appraisal and exploration activities.
Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan and 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. See our Annual Information Form for the year ended December 31, 2007 for a description of risks and uncertainties relevant to our business, including our exploration activities.
Tethys Petroleum Limited is listed on the Toronto Stock Exchange (TSX) with the symbol “TPL” and on the RFCA in Almaty, Kazakhstan.
Consolidated Balance Sheet (unaudited) As at --------------------------- September 30, December 31, Note 2008 2007 ------------- ------------ (Expressed in 000's United States dollars) ASSETS Current Assets Cash and cash equivalents 36,989 26,692 Prepayments 3 1,044 351 Accounts Receivable 552 219 Value added tax recoverable 39 - Inventory 178 - Other current assets 575 790 ------------- ------------ Total current assets 39,377 28,052 Non Current Assets Prepayments 3 6,754 3,062 Restricted Cash 4 469 318 Value added tax recoverable 5 3,749 2,752 Capital assets 6 59,073 37,472 ------------- ------------ Total non-current assets 70,045 43,604 ------------- ------------ Total Assets 109,422 71,656 ------------- ------------ ------------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable 553 1,388 Current portion of long term debt 7 828 - Accrued & other liabilities 1,075 891 ------------- ------------ Total current liabilities 2,456 2,279 Non Current Liabilities Long term debt 7 4,093 - Other non-current liabilities 8 548 776 Asset retirement obligation 9 772 661 ------------- ------------ Total non current liabilities 5,413 1,437 ------------- ------------ Total Liabilities 7,869 3,716 ------------- ------------ Stockholders' equity 11 Share capital 145,555 99,483 Contributed Surplus 6,619 3,527 Warrants 17,535 16,555 Accumulated deficit (68,156) (51,625) ------------- ------------ Total stockholders' equity 101,553 67,940 ------------- ------------ Total Liabilities and Stockholders' Equity 109,422 71,656 ------------- ------------ ------------- ------------ Commitments and contingencies 10 Consolidated Statement of Operations and Comprehensive Loss (unaudited) For three months to Year to Date Sept 30, Sept 30, Sept 30, Sept 30, 2008 2007 2008 2007 -------------------- -------------------- (Expressed in 000's (Expressed in 000's United States United States dollars except dollars except Note share data) share data) Revenues Net of Royalties Oil and gas sales 1,485 - 4,482 - -------------------- -------------------- 1,485 - 4,482 - -------------------- -------------------- Expenses Operating 274 - 537 - Selling, general and administrative 3,347 2,743 9,515 6,164 Stock based compensation 12 812 679 3,092 17,018 Depreciation, depletion and amortization 2,298 20 5,716 48 -------------------- -------------------- 6,731 3,442 18,860 23,230 -------------------- -------------------- Operating Loss (5,246) (3,442) (14,378) (23,230) -------------------- -------------------- Other Income/(Expense): Interest, net 283 451 574 (1,817) Foreign exchange gains/(losses) (1,254) 51 (1,392) (92) Finance charges 12 (250) - (1,230) (238) Other (84) (29) (106) (30) -------------------- -------------------- Total Other Income/(Expense) (1,305) 473 (2,154) (2,177) -------------------- -------------------- Loss Before Income Taxes (6,551) (2,969) (16,532) (25,407) Income taxes - - - - -------------------- -------------------- Net Loss and Comprehensive Loss for the period (6,551) (2,969) (16,532) (25,407) -------------------- -------------------- -------------------- -------------------- Weighted average number of common shares outstanding 13 66,393,292 45,116,696 52,598,576 29,283,608 Basic and diluted loss per share (0.10) (0.07) (0.31) (0.87) -------------------- -------------------- See accompanying notes to these financial statements Consolidated Statement of Cash Flows (unaudited) For three months to Year to Date Sept 30, Sept 30, Sept 30, Sept 30, 2008 2007 2008 2007 -------------------- -------------------- (Expressed in 000's (Expressed in 000's United States United States Note dollars) dollars) Operating activities: Net loss for the period (6,551) (2,969) (16,532) (25,407) Items not affecting cash Stock based compensation 812 679 3,092 17,018 Accretion 19 - 52 - Finance costs - - 980 238 Non-cash interest expense - - - 1,917 Depreciation, depletion and amortization 2,298 20 5,716 48 Net change in non-cash working capital items Accounts Receivable 34 - (333) - Other current assets (521) (100) (2) (1,022) Prepayments (369) (328) (693) (80) Accounts payable (438) 126 (835) 209 Accrued and other liabilities (7) (1,912) 184 (257) -------------------- -------------------- Net cash used in operating activities (4,723) (4,484) (8,371) (7,336) -------------------- -------------------- Investing activities: Capital expenditures (14,152) (3,845) (27,257) (11,360) Restricted cash (26) (2) (151) (14) Value added tax recoverable (994) (242) (998) (676) Change in oil & gas suppliers prepayments (1,625) 326 (3,692) (2,393) -------------------- -------------------- Net cash used in investing activities (16,797) (3,763) (32,098) (14,443) -------------------- -------------------- Financing activities: Proceeds from sale of common stock - 50,000 67,337 Share issue costs (178) (12) (3,928) (5,068) Proceeds (Repayment) from long term debt (192) - 4,922 (5,000) Other non-current liabilities (24) - (228) (32) -------------------- -------------------- Net cash provided by/(used in) financing activities (394) (12) 50,766 57,237 -------------------- -------------------- Net increase/(decrease) in cash and cash equivalents (21,914) (8,258) 10,297 35,458 Cash and cash equivalents, beginning of period 58,903 45,479 26,692 1,763 -------------------- -------------------- Cash and cash equivalents, end of period 36,989 37,221 36,989 37,221 -------------------- -------------------- -------------------- -------------------- Interest paid 152 - 309 375
See accompanying notes to these financial statements
Contact: Sabin Rossi Tethys Petroleum Limited Vice President Investor Relations (416) 572-2065 (416) 572-2201 (FAX) Email: info@tethyspetroleum.com Website: www.tethyspetroleum.com Ardak Akanov, Managing Director In Kazakhstan, PG Communications Office phone/fax: +7 (727) 272 8867, +7 (727) 272 8237, +7 (727) 272 7745 Cell: +7 701 711 5604 Email: development@pressclub.kz
Source: Tethys Petroleum Limited