Thursday, September 06, 2007 – Bozoi, Kazakhstan – Tethys Petroleum Limited (“Tethys”) (TSX:TPL) today announced it has completed its initial 5-well shallow exploration program in its Akkulka Exploration Contract Area in Kazakhstan.
Of the five wells drilled three have tested gas at commercial rates for an aggregate rate of approximately 10 MMcf/d (283 thousand cubic metres per day (Mcm/d)) and one well (AKK07) remains to be tested. The last well to be tested, AKK10, tested dry gas at a rate of 0.6 million cubic feet per day (MMcf/d) (16.2 thousand cubic metres per day (Mcm/d)), on a 100/64 inch (40 mm) choke with a flowing tubing head pressure of 6.6 psig (0.45 atmospheres). A further interval at the top of the sands will be perforated prior to the well being brought on production. This flow rate was as expected due to the thinner sands which are present in the North Kyzyloi area, to the north-west of the Kyzyloi field, as indicated by the AKK08 well, which is located to the north of the AKK10 well across a fault. Following the results of the AKK08 and AKK10 wells, and newly acquired seismic data, plans are being drawn up for the near-term development of the North Kyzyloi accumulation and tie-in to the Kyzyloi Field export system.
The Akkulka AKK09 exploration well tested dry gas at a rate of 6.7 million cubic feet per day (MMcf/d) (190 thousand cubic metres per day (Mcm/d and the AKK08 well tested at a rate of 2.6 Mmscf/d (74 Mcm/d). Due to the higher sand quality on the wells drilled in central Akkulka and west-central Akkulka, and results of the recently shot seismic in the area, Tethys have now commenced drilling an additional well (AKK11) in this vicinity where additional structures have been identified.
As a result of earlier drilling operations, re–completions on certain existing wells and the success of the exploration wells to date, Tethys has already tested aggregate gas production in excess of 50 MMcf/d (1,416 Mcm/d). Tethys has identified more than 27 additional drilling locations on its Akkulka and Kul–Bas Exploration Contract Areas, which have the potential to significantly increase production. The AKK11 well is the first well in a 10-well program targeting the much larger Kul-Bas Area and any additional prospects, to be completed by June 2008.
The Akkulka discoveries will be tied into Tethys’ Kyzyloi gas development which is one of the first dry gas developments to be undertaken in Kazakhstan and is commercially underpinned by a long term take-or-pay gas offtake agreement. Regional gas prices have increased significantly recently, and Tethys expects to benefit from these rising prices as additional gas is brought on production. Tethys recently completed a 56km (35 mile) pipeline and is awaiting a tie-in to the major Bukhara-Urals trunk line by the trunk line’s owners, as well as a governmental commission to officially open the line. It is expected first gas sales will be realized early in the fourth quarter 2007, with an initial sales rate of 22 MMscf/d (623 Mcm/d).
Dr David Robson, Chairman, President and Chief Executive Officer of Tethys, commented, “The results of our initial 5-well program means that we are well on our way to achieving our mid-year 2008 production target of 38 MMcf/day (1,076 Mcm/day). Success on our planned 10-well program that has already commenced, and with the installation of additional compression, should ensure we also achieve our year-end 2008 production target of 54 MMcf/day (1,529 Mcm/day). The design capacity of our initial export pipeline system is 72 MMcf/day (2,039 Mcm/day).”
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.
For more information please contact:
Investor Relations Manager
Tethys Petroleum Limited
TD Canada Trust Tower
161 Bay Street, 27th Floor
Toronto N5J 2S1