BOZOI, KAZAKHSTAN, Sep 10, 2010 (MARKETWIRE via COMTEX) —
Tethys Petroleum Limited (“Tethys” or the “Company”)(TSX: TPL) today is pleased to announce that it has commenced oil sales under a test production scheme from the Doris oil discovery in Kazakhstan. This is ahead of the scheduled start date of the end of 2010.
Today trucks began transporting first commercial oil from the AKD01 well on the Doris oil discovery on the Akkulka Exploration Contract in Kazakhstan. Initially untreated oil will be sold at the well site to an oil trading company who will transport the oil to the oil processing facility at Emba, located some 450 km to the north-east where it will be treated before being transported to a local refinery. Initial daily production under this early production scheme is planned to be 750 bopd and will be sold at the wellhead at an initial price of $22/barrel for the untreated oil. This test production scheme is being implemented to realise early cash flow and also to prepare for the higher production and associated logistics for the next stage.
The second stage of the oil production scheme is anticipated to commence in the second quarter of 2011 whereby production is planned to increase to 3-4,000 bopd. The increased production should see Tethys source further trucks and begin a bigger trucking operation whereby higher margins will be realised due to processing of the oil at the field and also from more effective transportation.
Julian Hammond, Chief Commercial Officer of Tethys, commented, ” We are very pleased to have implemented the test oil production scheme ahead of schedule and now to be commercialising our Doris oil discovery. This is only an interim stage to realise early cash flow and optimise transportation logistics prior to bringing on stream the higher production rates intended for Q2 2011 and we expect margins to strengthen considerably over the next year as we take further control of the sales marketing chain.”
In accordance with the Akkulka Exploration Contract Tethys has the right to produce and sell oil for 90 days under Test Production. Tethys is also at an advanced stage in the process of obtaining approved Kazakh State reserves on the Akkulka oil discovery. It is expected that this process will be completed before the Test Production period expires, at which point oil can be produced for a period of 2 years while still operating under the Exploration Contract. Both the first stage of 750 bopd and the second stage of 3-4,000 bopd planned for Q2 2011 will be produced under the Exploration Contract. Kazakh oil and gas legislation dictates that oil produced under an exploration contract can only be sold on the domestic market.
Once sufficient data has been gathered on the Akkulka Block, Tethys will apply for a Production Contract to cover the discovery area and any other discoveries made in the meantime. This application is expected to be submitted in 2011 and when approved Tethys will be in a position to sell on the export market, where it is expected higher oil sales prices can be achieved. In the long term Tethys anticipates that oil will be exported from Akkulka through a pipeline system, the size and location of which will depend on the results of the ongoing exploration and appraisal programme.
Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan, Tajikistan 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, including the risks relating to regulatory approvals and of sufficiency of the proceeds for the purposes contemplated.
See the description of risks and uncertainties and underlying factors and assumptions relevant to the offering and “forward looking information” contained herein and to the Company’s business, including its exploration and development activities, contained in the Annual Information Form dated March 31, 2010 and other corporate filings (which are incorporated herein by reference). 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.
Contacts: Tethys Petroleum Limited Sabin Rossi Vice President Investor Relations Office: +1 416 572 2065 +1 416 572 2201 (FAX) firstname.lastname@example.org www.tethyspetroleum.com In Asia-Pacific Quam IR Anita Wan, Associate Director Office phone/fax: + (852) 2217-2999 email@example.com
SOURCE: Tethys Petroleum Limited