DUSHANBE, TAJIKISTAN, Dec 22, 2008 (MARKET WIRE via COMTEX News Network) — Tethys Petroleum Limited (“Tethys” or the “Company”) (TSX: TPL) today announced that its wholly owned subsidiary Kulob Petroleum (“KPL”) had signed a Memorandum of Understanding (“MOU”) with the Ministry of Energy and Industry of the Republic of Tajikistan (“MEI”) to takeover drilling operations on the East Olimtoi exploration well EOL09 that lies within KPL’s Bokhtar Production Sharing Contract (“PSC”) area.
The State Unitary Enterprise “Naftugaz va Angisht” (“NTG”) owned by the MEI has been drilling the EOL09 exploration well with a target depth of 3,800 metres (12,467 feet) in the Olimtoi area located in the south east of the Contract Area as defined in the PSC using the funding allocated from the state budget of the Republic of Tajikistan.
Under the terms of the PSC, from the date of the PSC all Petroleum Operations within the Contract Area are to be carried out solely by the Operator or the Contractor under the terms of the PSC and in accordance with the commercial conditions of the PSC. KPL is the Contractor under the PSC and Tethys’ subsidiary in Tajikistan, Tethys Services Tajikistan Ltd (“TSTL”) is the Operator under the PSC.
KPL and the MEI have now agreed to continue drilling operations on the EOL09 well through TSTL, utilising NTG as a Sub-Contractor. KPL will now fund and carry out further drilling operations on the well including upgrading of the drilling equipment. KPL has also agreed with the MEI to negotiate a legally binding contract between TSTL and NTG as soon as possible setting out the obligations of the Parties and the detailed terms and conditions relating to the well services. The time to completion of this well will depend on the rig upgrades carried out.
The East Olimtoi EOL09 well is testing a structure mapped on the edge of a salt dome in the Kulob mega-synclinorium in the south eastern part of the PSC area just to the north of the Panj River which marks the Tajik border with Afghanistan. The well is targeting potential oil and gas deposits in the lower Paleogene Bukhara and Alay formations which are productive in other parts of the area.
Julian Hammond, Chief Commercial Officer and Head of the Tajikistan Business Unit of Tethys commented, “This MOU gives us a significant head start on our exploration program in Tajikistan by taking over a well that has already been drilled to a depth of 2,013 metres (6,605 feet) which is already half way to target depth. Using a local subcontractor will significantly reduce costs and going forward we will upgrade the drilling equipment to further improve drilling efficiency and hence drilling time. We believe this is a good prospect providing the opportunity to test a structure in an area we believe has good exploration potential in the target horizons.”
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.
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SOURCE: Tethys Petroleum Limited