Wednesday, July 18, 2007 – Toronto, Canada – Tethys Petroleum Limited (“TPL”) (TSX:TPL) today provided an update on its current exploration and development activities in Kazakhstan.
TPL is currently involved in the development of its Kyzyloi shallow gas field, exploration drilling in the surrounding Akkulka area, and seismic acquisition in the large Kul-Bas exploration block, all of these being situated in south-western Kazakhstan, to the west of the Aral Sea.
At Kyzyloi the commissioning of the initial development wells on the field is now almost complete, as is construction of the 51 km (32 mile) pipeline which will connect the field to the major Bukhara-Urals gas export trunkline. Pressure testing of the line is about to commence, with first gas through the system planned within the next month. Tie-in to the main trunkline is then planned, in conjunction with the certification of the system by a high level Kazakh government commission. Once this is completed first gas sales can commence. The initial gas production rate from the Kyzyloi field is planned to be 22 Mmscf/d (623 Mcm/d), with over 25 Mmscf/d (708 Mcm/d) having been tested to date.
On the Akkulka exploration program, the AKK08 and AKK09 wells have recently been completed and testing of these wells is underway. The AKK09 well, drilled on a separate structure to the south west of the AKK04 Central Akkulka discovery encountered the target sand on prognosis, and wireline logs indicate the presence of gas in this sand. Production casing has been run, the well perforated, with gas flowed to surface, and the well is currently shut-in awaiting further testing following completion of testing on the AKK08 well.
The AKK08 well, drilled on a down-faulted prospect some 3.5 km (2.1 miles) to the north of the G-17 well drilled in Soviet times which tested gas in a structure named North Kyzyloi, is currently being tested. In AKK08 wireline logs indicate a gas bearing sand interval of some 25 feet (8 metres) at a depth of 1,542 – 1,574 feet (470 – 480 metres) BKB. The sand thickness and quality appears consistent with expectations in the northern part of the Akkulka block where the sands are thinner than over the Kyzyloi field itself. Initial production testing on the well has now been carried out with a gas production rate of 2.6 Mmscf/d (74 Mcm/d) having been recorded on a 40/64 inch (16 mm) choke with a flowing tubing head pressure of 296 psig (20 atm). The well is currently shut-in for initial pressure build-up tests and further testing will be carried out on the well to establish reservoir characteristics and an optimum production rate for future development. To date TPL has tested gas at over 19 Mmscf/d (538 Mcm/d) from the Akkulka shallow gas exploration program, this not including the AKK09 well which will be tested shortly.
Following the results of AKK08, the next exploration well, AKK10 is to be located based on the new seismic data recently acquired by TPL on the up-thrown fault block to the south of AKK08. The rig is now on location and the well will commence drilling imminently. This Akkulka exploration program to date has been funded from existing company funds prior to the recent US$50 MM IPO.
The seismic acquisition program being carried out by TPL is well underway with over 160 km (100 miles) of new dynamite data having been already acquired. Initial processing shows this data to be of good quality giving better definition to both the shallow gas and deeper potential oil targets. Based on this TPL have decided to extend this survey up to approximately 400 km (250 miles) over both the shallow prospects, a further ten of which are planned to be drilled over the next year, and the deeper prospects, to better locate the first deep exploration well planned to commence in Q4 of this year. This well will target what TPL believes is substantial oil potential, with independently assessed unrisked mean prospective resources at this level totalling approximately 690 MMboe.
TPL 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, including, the risks and uncertainties outlined under the section titles “Risk Factors and Uncertainties” in our prospectus (available at www.sedar.com). Should one or more of these risks materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Additional information in respect of the Kyzyloi shallow gas filed and Akkulka area (also referred to as the Akkulka Block), including location, area, geologic age and lithology, depth, estimated costs and gas marketing information, appears in TPL’s prospectus dated June 18, 2007. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
For more information please contact:
Investor Relations Manager
Tethys Petroleum Limited
TD Canada Trust Tower
161 Bay Street, 27th Floor
Toronto N5J 2S1