Monday, 1 April 2013

Tethys Petroleum sees 66% rise in 2012 revenue for first year of cash profit, Tajik deal expected to wrap up in Q2

Tethys Petroleum (TSE:TPL)(LON:TPL) has revealed a 66 percent year-over-year increase in its 2012 oil and gas revenue, with the company generating a cash profit for its first year. 
In a statement released Sunday, the Central Asia-focused oil and gas company reported a 2012 cash profit, an adjusted metric, of US$3.42 million, compared to a cash loss of US$3.93 million in 2011. 
Net loss on a per share basis was narrowed to 7 cents, from a loss of 10 cents in the prior year. It noted that it posted an accounting loss for the year of US$20.9 million, 23 percent lower than in 2011.               
Oil and gas revenues rose to $38.11 million, a 66 percent increase from the prior year. 
The company said in its release that it generated US$1.36 million in net cash from operating activities, compared to US$12.56 million used in operating activities in 2011. 
Oil production, before the deduction of local governments' share or taxes, increased to 3,371 barrels of oil per day (bopd) in 2012, up from 2,148 bopd the prior year. In the fourth quarter, the rate reached 4,381 bopd, the company said Sunday.
Similarly, oil equivalent production rose to 6,313 boepd last year, versus 5,656 boepd in 2011. As of year-end, the company's proven and probable reserves were estimated at 26.1 million barrels of oil equivalent (MMboe). 
As the only independent oil and gas company operating in three Central Asian republics, Tethys Petroleum has a strong foothold on its assets with enormous potential for future growth. It operates in Tajikstan, Kazakhstan and relatively recently entered Uzbekistan.
In Kazakhstan last year, the company updated its gross unrisked recoverable mean prospective oil resources to 1.23 billion barrels of oil, plus 634 Bcf of natural gas. 
The oil and gas company also earlier this year announced the signing of a new deal with Kazakh authorities, which effectively doubles the price it receives for gas from the Kyzyloi and Akkulka fields. The company will supply up to 150 million cubic metres at a price of US$65 per thousand cubic metres.
In 2013, Tethys says it plans to drill up to three wells targeting oil on the Akkulka exploration contract in Kazakhstan. The first well is expected to start drilling in June, and will target the Doto prospect nearby the company's Doris oil disovery. 
Following the increase in gas prices, the company said further work will be carried out to increase production in the second quarter, with wells to be tied into the gas pipeline afterwards. 
The company also stepped its game up further recently, announcing in January that it had completed a farm-out agreement for the Bokhtar Production Sharing Contract (PSC) in Tajikistan with subsidiaries of the French super-major Total S.A. (NYSE:TOT) and the China National Oil and Gas Exploration and Development Corporation (CNODC) - part of the Chinese State company CNPC.
French giant Total and China’s CNODC will each both take a third of a share in the project, while Tethys’ participation in the program will be largely carried - with over $70 million being spent on the Canadian firm’s behalf. 
As such, it is only required to pay 33 per cent of its share of the costs of the upcoming program, and this is expected to amount to around $9 million. Tethys’ Tajik subsidiary, Kulob Petroleum, will also receive $60 million for back costs.
The farm-out deal is expected to wrap up in the second quarter, the company said Sunday, with the local government already approving the participation of Total and CNPC in the production-sharing contract. 
A new "comprehensive work program" for the remainder of this year will be presented to investors by the joint operating company once the deal is closed.  
Tethys has an estimated 27.5 billion barrels of oil equivalent of gross unrisked mean recoverable resources in Tajikistan, and has completed the acquisition of 501 kilometres of new seismic data. 
In Uzbekistan, Tethys is the only Western company currently operating in the oil and gas sector. It signed a preliminary agreement to provide the framework for a joint study relating to certain exploration blocks in the North Ustyurt Basin - the same basin that contains the Doris oil discovery. Recently, it also inked a production enhancement contract for a new field named Chegara.

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