Friday, June 13, 2008 – Dushanbe, Tajikistan – Tethys Petroleum Limited (“Tethys” or the “Company”) (TSX: TPL) today announced that:
• The Company had created history in Dushanbe today when Tethys’ CEO Dr David Robson and Gul Sherali, the Minister of Energy and Industry of the Republic of Tajikistan (the State Authorised Body of the Tajik Government), signed the first ever Production Sharing Contract (PSC) awarded in Tajikistan.
• The awarding of the PSC was the culmination of many months of close collaboration between Tethys personnel and the Tajikistan government.
• The final area awarded to Tethys’ subsidiary Kulob Petroleum Limited (“KPL”) under the PSC is almost four times the size that was originally under discussion. The total net area covered under the PSC is approximately 34,785 km2 (8.6 million acres). The area under the PSC (The “PSC Area”) is in the south-western part of Tajikistan and surrounds and includes the original Kulob Area, a large highly prospective region which has existing oil and gas discoveries but which has seen limited exploration to date. The PSC Area includes the Khatlon Region and the area around the capital city, Dushanbe and includes more than 50 different prospective structures which have already been identified in the area by Tajik Geology.
• Tethys believes that the PSC Area has considerable potential for oil and gas condensate. The area includes almost the entire Tajik portion of the Afghan-Tajik basin, an extension of the prolific Amu Darya basin which contains giant and supergiant gas and gas condensate fields in nearby Turkmenistan and Uzbekistan.
• A proven hydrocarbon system exists in the PSC Area but only limited exploration has taken place in the past. Several reservoir horizons are present and both sweet light oil and gas condensate has been produced. Salt tectonics dominate the southern part of the area where numerous salt domes provide the potential for substantial hydrocarbon traps. Figures produced by the US Geological Survey in 2006 estimate the mean unrisked resources for the Afghan portion of the Afghan-Tajik basin (which lies to the south of the PSC Area), to be some 1.5 billion barrels of oil, 8.1 trillion cubic feet (230 billion cubic metres) of gas and 370 million barrels of Natural Gas Liquids.
• The PSC Area includes several oil and gas condensate discoveries and KPL will carry out both appraisal and rehabilitation of these deposits as well as exploration for new targets. The rehabilitation activities are aimed at establishing early cash flow whilst exploring for high potential deeper prospects.
• Under the Production Sharing Contract KPL will recover 100% of its costs from up to 70% of total production (the maximum allowed under the newly approved production sharing legislation of Tajikistan) and the remaining production (termed “Profit Oil and Gas”) will be shared 70% to KPL and 30% to the Government whose share includes all taxes, levies and duties.
• The terms are fixed over the life of the PSC which is twenty-five years, and the Government has certain obligations to fulfil during the next month to bring it into effect. Amendments to certain legislation have now been passed by both houses of the Tajik Parliament and are expected to be brought into law imminently.
• KPL is currently 100% owned by Tethys Tajikistan Limited (“TTL”), a wholly owned subsidiary of Tethys.
• Tethys previously announced it is taking a 49% partner in its Tajik projects and signed a Shareholder Agreement at the end of 2007. Under the Agreement TTL and the investment company Sangam Limited (“Sangam”) have formed a joint company named “Seven Stars Energy Corporation” (“SSEC”) owned and funded 51% by TTL and 49% by Sangam. This process is nearly complete and the ownership of KPL will then be transferred to SSEC.
Gul Sherali, The Minister of Energy of Tajikistan, said, “On behalf of the Ministry of Energy I am very pleased to sign the first ever Production Sharing Contract in Tajikistan with Kulob Petroleum Limited. The area covered by the contract is extremely prospective with much potential for both early oil and gas production and exploration for larger deposits. We look forward to working with our new partners in the development of the oil and gas industry in Tajikistan.”
Dr. David Robson, Chief Executive Officer of Tethys “We are delighted to become the first oil and gas company to sign a Production Sharing Contract in Tajikistan. This contract, with fixed terms for twenty-five years, allows us to now move forward with an increased capital program in this prospective area of south-western Tajikistan. We believe this area to have excellent potential for both early production in the shallower levels as well as large exploration potential deeper down. The same basin is a prolific producer in the adjacent areas in Uzbekistan and Turkmenistan, but has been relatively under-explored in this area in the past. Our patience, and close work with the Government of Tajikistan, has resulted in obtaining the rights to a much larger area than was first discussed. We would like to thank the Government of Tajikistan for awarding us the first ever PSC in their country. We now intend to commence a seismic program this summer and drilling works later on in the year with the aim of both commencing early cash flow from existing deposits and exploring for potentially large oil and gas deposits.”
Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republic of Kazakhstan and in 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.
For more information please contact:
Vice President Investor Relations
Tethys Petroleum Limited
TD Canada Trust Tower
161 Bay Street, 27th Floor
Toronto N5J 2S1
Almaty, Samal 2 Business Center Satty
Office phone/fax: 2 72 88 67, 2 72 82 37, 2 72 77 45