Doris Phase 2 Oil Production Advances

February 17, 2011


Tethys Petroleum Limited (“Tethys” or the “Company”) (TSX: TPL) today announced that TethysMunaiGaz, its 100% owned Kazakh subsidiary, has signed a joint venture agreement to construct and operate a rail oil loading terminal (“Terminal”) in Kazakhstan. It will be owned 50/50 with a new local partner, Eurasia Gas LLP, who has strong experience in the oil distribution business in Kazakhstan.

Under phase one oil production Tethys is currently selling unprocessed oil at the field from the AKD01 oil discovery well at the well site under an early oil production scheme. The oil is then trucked 430 kilometres to a location near Emba, where it is processed and then transported to local refineries. This early oil scheme was introduced to realise some immediate cash flow, but also to gain experience of trucking logistics in the region with trucking of up to 750 bopd.

For phase two oil production infrastructure is currently being installed at the field to process the oil to meet refinery specifications and also to increase production from AKD01 from 750 bopd to 3,000 – 4,000 bopd. The construction of the Terminal will significantly reduce the trucking distance and will result in lower operating costs and improved margins, as well as reducing the number of trucks required to transport this volume of oil. Both the second stage oil production infrastructure and the Terminal are planned to be operational by June 2010 whereupon production is planned to be increased to 3,000 – 4,000 bopd. The higher oil quality after processing and additional pricing power from larger cargos should translate into higher realised prices for Tethys.

A site has already been identified for the Terminal and detailed preliminary planning has already been carried out by Eurasia Gas LLP. It is planned to initially install a simple technical scheme to ensure operations can commence as soon as possible, with further storage and infrastructure upgrades planned for later in the year which will provide for greater efficiency and reduced transport costs in the long run.

Julian Hammond, Deputy Chief Executive and Chief Commercial Officer, commented, ” We are delighted to sign this agreement to progress the second phase of production which will generate valuable cash flow that can be reinvested in the Company whilst we appraise the Doris oil discovery and explore for further oil in the immediate area, where the recently acquired and interpreted 3D seismic program has identified exploration targets in addition to the highly prospective targets we already had. Eurasia Gas have strong experience in the oil distribution business and this relationship will strengthen our position in the region. This is an important step for Tethys in building an efficient transportation network to facilitate oil sales to market in the quickest and most efficient manner.”

Initial testing of the AKD03 (Dione) well is expected to commence shortly, and the company is progressing activities on the AKD04 Doris appraisal well and the KBD01 high potential exploration well. The company will update on these activities in due course.

The Doris Oil Discovery: Background

The Doris discovery well (AKD-01) flowed at a rate in excess of 6,800 barrels of oil per day (“bopd”).

Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Tajikistan, Kazakhstan and Uzbekistan. 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, 2009 for a description of risks and uncertainties relevant to our business, including our exploration activities.

Contacts: Tethys Petroleum Limited Sabin Rossi Vice President Investor Relations +1 416 572 2065 +1 416 572 2201 (FAX) Tethys Petroleum Limited TD Canada Trust Tower 161 Bay Street, 27th Floor Toronto N5J 2S1, Canada Mobile site: In Asia-Pacific Quam IR Anita Wan, Associate Director + (852) 2217-2999 + (852) 2217-2999 (FAX) Quam IR 3/F Fung House 19-20 Connaught Road Central Hong Kong SAR, PRC
SOURCE: Tethys Petroleum Limited