2015 Q1 Results

May 15, 2015

GRAND CAYMAN, CAYMAN ISLANDS–(Marketwired – May 15, 2015) – Tethys Petroleum Limited (TSX:TPL)(LSE:TPL) today announced its Results for the quarter ended March 31, 2015.

Q1 Financial Highlights (all figures reported in USD millions)

--  Oil and gas revenue of USD5.95m (2014: USD6.78m)

--  Gas revenue increased 97% to USD4.71m (2014: USD2.39m)

--  Production expenses down 31% to USD2.61m (2014: USD3.79m)

--  G&A expenses down 45% to USD2.82m (2014: USD5.13m)

--  Loss for the period from continuing operations - USD2.03m (2014:
    USD4.41m), (including restructuring and transaction expenses of

--  Basic & diluted loss per share from continuing operations - USD0.01
    (2014: USD0.01)

--  Capital Expenditure of USD1.95m (2014: USD7.27m)

--  Cash and cash equivalents of USD6.99m (2014: USD15.33m)

Q1 Operational Highlights

--  Gas production up 57% to 3,173 barrels of oil equivalent ("BOE")/day
    (2014: 2,016 BOE/day)

--  Highest quarterly gas production in 3 years

--  Total Production up 9% to 4,368 BOE/day (2014: 4,025 BOE/day)

Q1 Corporate Highlights

--  4-year extension of the Akkulka Exploration Contract (subject to certain
    routine amendments to the Contract)

--  15-year extension of the Kyzyloi Gas Production Contract

--  Increase in Reserves in all boe categories as at December 31, 2014

--  New Gustavson Resource(i) Economics issued

    --  Klymene (Kazakhstan - prospect) EMV $347 million

    --  Karatau (Tajikistan - lead) EMV $368 million

--  USD9.5 million loan financings

--  Seismic survey in Tajikistan progressing positively

--  Reduction in funding obligations in Georgia and renegotiated a more
    efficient new work programme with the State

(i) unrisked mean gross recoverable prospective resources

Post Q1 Highlights

--  A strategic review of the business which encompasses options including
    asset sales, farm-outs, financing, investments at the corporate level,
    or the sale of the Company is being conducted

--  Discussions have been ongoing with a number of interested parties on all
    of these potential avenues

--  USD7.5m convertible loan facility secured on May 15, 2015 with AGR
    Energy Limited No. 1("AGR Energy") as we advance the strategic review

--  As an option being considered as part of the ongoing strategic review,
    Tethys has entered into a limited period of exclusivity with AGR Energy
    to negotiate a potential larger financing. The exclusivity period runs
    through to June 12th, 2015 and is subject to certain customary

--  Current average Q2 production to date is 4,807 BOE/day comprising 1,719
    bopd of oil and 525 Mcm/d (18.5 MMcf/d) of sales gas.

--  Current average production to date in May is 5,379 BOE/day

John Bell, Executive Chairman, commented:

“During the quarter we have significantly reduced our cost base with G&A costs down 45% and production costs down by 31% from the same period last year whilst increasing gas production by 57% and gas revenues by 97%. The fall in oil prices has obviously affected the bottom line like all our peers but the focus on increasing gas production has proven to be beneficial and has mitigated this to some extent.”

“In addition to this, we are pleased to have secured the funding from AGR to help provide greater security for, and the opportunity to grow, the company going forward. We continue the strategic review process, where we have entered into an exclusivity period for four weeks, to discuss a potential larger financing with AGR. I will update shareholders when we have further news in this important area.”

The full Quarterly Results together with Management’s Discussion and Analysis have been filed with the Canadian securities regulatory authorities. Copies of the filed documents may be obtained via SEDAR at www.sedar.com or on the Tethys website at www.tethyspetroleum.com. The summary financial statements are attached to this press release.

The Company’s First Quarter 2015 financial statements are prepared under International Financial Reporting Standards (“IFRS”).

Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.

Cautionary Statements

This press release contains “forward-looking information” which may include, but is not limited to, statements with respect to our operations a strategic review process, the negotiation of a potential larger financing with AGR Energy and funding from AGR Energy providing greater security and the opportunity to grow the Company going forward. 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, 2014 for a description of risks and uncertainties relevant to our business, including our exploration activities. The “forward looking statements” contained herein speak only as of the date of this press release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise.

The references in this press release to resources are to “Prospective Recoverable Resources” which means those quantities of petroleum estimated, to be potentially recoverable from undiscovered accumulations by application of future exploration and development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of these resources. The product types that may reasonably be expected from potential production consist of oil, condensate, natural gas and associated gas.

The resource estimates contained or referred to are estimates only and are not meant to provide a determination as to the volume or value of hydrocarbons attributable to Klymene Prospect and Karatau Lead. For both Klymene and Karatau the basis of the Expected Monetary Value (EMV) is the net Tethys working interest of the summated value of the Net Present Values 10% of all outcomes (including a failure case) multiplied by its Chance of Success, of that Prospect or Lead.

For Klymene Prospect the fiscal terms and oil pricing are as the NI 51-101 reserve report completed by Gustavson on Kazakhstan dated February 25th, 2015 and detailed in the AIF effective December 31, 2014.

For Karatau Lead fiscal terms are as per those published in the AIF and detailed in the Gustavson reserve report dated March 27, 2013. Product pricing was taken by Gustavson from 3rd party published information with an assumed discount for transport on the gas.

There are numerous uncertainties inherent in estimating quantities of resources and cash flows that may be derived, including many factors that are beyond the control of the Company. The following is a non-exhaustive list of factors which may have a significant impact on the above estimates of prospective resources: despite the classification that they are as yet undiscovered but may be potentially recoverable the Company may be unable to carry out the development or their potential recovery; the activity may not be economically viable; the Company may not have sufficient capital or time to develop them; there may be no market or transportation routes for the potential production; legal, contractual, environmental and governmental concerns might not allow for the recovery being undertaken; reservoir characteristics might prevent recovery. The recovery of the resources is subject to the following risks and uncertainties: market fluctuations, the proximity and capacity of oil and gas pipelines and processing equipment, government regulation, political issues, export issues, competing suppliers, operational issues (exploration, production, pricing, marketing and transportation), extensive controls and regulations imposed by various levels of government, lack of capital or income, the ability to drill productive wells at acceptable costs, the uncertainty of drilling operations, factors such as delays, accidents, adverse weather conditions, and the availability of drilling rigs and the delivery of equipment.

About Tethys Petroleum

Tethys Petroleum’s aim is to become the leading independent E&P Company in Central Asia, by exercising capital discipline, by generating cash flow from existing discoveries and by maturing large exploration prospects within our highly attractive frontier acreage.

Tethys Petroleum Limited Condensed Consolidated Statement of Financial Position (unaudited) (in thousands of US dollars)

                                                          As at
                                                 March 31,    December 31,
                                                      2015            2014
Non-current assets
Intangible assets                                   48,771          47,630
Property, plant and equipment                       13,116          13,804
Restricted cash                                          -             623
Investment in joint arrangements                         4               4
Deferred tax                                           255             258
                                                    62,146          62,319
Current assets
Cash and cash equivalents                            5,280           3,112
Trade and other receivables                            756             634
Restricted cash                                        659             116
Assets of a disposal group classified as held
 for sale                                          174,719         172,514
                                                   181,414         176,376

Total assets                                       243,560         238,695

Share capital                                       33,659          33,645
Share premium                                      321,746         321,724
Other reserves                                      42,956          42,845
Accumulated deficit                               (200,633)       (198,560)
Non-controlling interest                             6,094           6,096
Total equity                                       203,822         205,750

Non-current liabilities
Financial liabilities - borrowings                  11,468           5,489
                                                    11,468           5,489
Current liabilities
Financial liabilities - borrowings                   5,169           5,139
Derivative financial instruments - warrants          1,870               -
Current taxation                                       274             364
Trade and other payables                             3,171           4,102
Provisions                                             966           1,759
Liabilities of a disposal group classified as
 held for sale                                      16,820          16,092
                                                    28,270          27,456

Total liabilities                                   39,738          32,945

Total equity and liabilities                       243,560         238,695

Tethys Petroleum Limited
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands of US dollars except per share information)

                                                   Three months ended
                                                        March 31,
                                                      2015            2014

Sales and other revenues                             5,954           6,781

Sales expenses                                      (1,102)           (744)
Production expenses                                 (2,608)         (3,798)
Depreciation, depletion and amortization              (674)           (151)
Business development expenses                            -            (740)
Administrative expenses                             (2,821)         (5,126)
Restructuring costs                                   (319)              -
Transaction costs of assets held for sale             (120)            (15)
Share based payments                                  (147)           (119)
Profit on sale of assets                                14               -
Foreign exchange (loss)/gain - net                      (6)              7
Fair value gain/(loss) on derivative
 financial instrument - net                          1,078             (19)
Loss from jointly controlled entity                   (250)         (1,203)
Finance costs - net                                   (579)           (603)

Loss before taxation from continuing
 operations                                         (1,580)         (5,730)

Taxation                                              (454)          1,321

Loss for the period from continuing
 operations                                         (2,034)         (4,409)

Loss for the period from discontinued
 operations net of tax                                 (41)           (492)
Loss and total comprehensive income for the
 period                                             (2,075)         (4,901)
Loss and total comprehensive income
 attributable to:
Shareholders                                        (2,069)         (4,849)
Non-controlling interest                                (2)            (52)
Loss and total comprehensive income for the
 year                                               (2,075)         (4,901)
Loss per share attributable to shareholders:
Basic and diluted - from continuing
 operations                                          (0.01)          (0.01)
Basic and diluted - from discontinued
 operations                                              -               -

Tethys Petroleum Limited
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands of US dollars)

                                                   Three months ended
                                                        March 31,
                                                      2015            2014
Cash flow from operating activities
Loss before taxation from continuing
 operations                                         (1,580)         (5,730)
Loss before tax from discontinued operations           (41)           (492)

Adjustments for
  Share based payments                                 146             119
  Net finance cost                                     579             603
  Depreciation, depletion and amortization             674             151
  Fair value (gain)/loss on derivative
   financial instruments                            (1,078)             19
  Net unrealised foreign exchange (gain)/loss         (121)             11
  Loss from jointly controlled entity                  250           1,203
  Profit on disposal                                   (15)              -
  Movement in provisions                              (793)           (142)
  Net change in working capital                        641              91
Cash used in operating activities                   (1,338)         (4,167)
  Corporation tax paid                                (130)           (138)
Net cash used in operating activities               (1,468)         (4,305)
Cash flow from investing activities
Interest received                                       45              50
Expenditure on exploration and evaluation
 assets                                             (1,205)         (3,217)
Expenditures on property, plant and equipment         (742)         (4,049)
Proceeds from disposal of property, plant and
 equipment                                              16               -
Movement in restricted cash                             (4)              -
Movement in advances to construction
 contractors                                            91             953
Movement in value added tax receivable                 352            (269)
Net change in working capital                       (2,128)            258
Net cash used in investing activities               (3,575)         (6,274)

Cash flow from financing activities
Proceeds from issuance of borrowings, net of
 issue costs                                         9,135           6,707
Repayment of borrowings                               (467)         (6,030)
Interest paid on borrowings                           (354)           (484)
Share issue costs                                        -             (48)
Movement in other non-current liabilities              (28)            (71)
Net cash generated from financing activities         8,286              74
Effects of exchange rate changes on cash and
 cash equivalents                                     (124)             99
Net increase/(decrease) in cash and cash
 equivalents                                         3,119         (10,406)
Cash and cash equivalents at beginning of the
 period                                              3,868          25,731
Cash and cash equivalents at end of the
 period                                              6,987          15,325
Cash and cash equivalents at end of the
 period comprises:
Cash in assets of a disposal group held for
 sale                                                1,707           1,627
Cash and cash equivalents                            5,280          13,698
                                                     6,987          15,325

Tethys Petroleum
John Bell, Executive Chairman c/o Camarco
Twitter: www.twitter.com/tethyspetroleum

CAMARCO (Financial PR)
Billy Clegg / Georgia Mann
+44(0)203 757 4983

Source: Tethys Petroleum Limited