Tethys Petroleum inks deal for $16.5 mln loan facility

Tethys Petroleum (TSE:TPL) (LON:TPL) said Friday that its Kazakh subsidiary has reached an agreement on a USD$16.5 million loan facility, to be used for future funding requirements.
The oil and gas exploration and production company said the facility will be provided by an undisclosed Kazakh bank to the company’s wholly owned subsidiary, Tethys Aral Gas, and is available to fund capital expenditures in Kazakhstan.
The facility, which can be drawn down at any time, has a term of up to four years depending on the company’s requirements and bears a 14 per cent interest rate per year on sums drawn down.
It will be secured against field facilities in Kazakhstan, the company said. So far, USD$3.5 million of this facility has been drawn down.
"This facility provides flexibility to meet the company's possible funding requirements should the company wish to make use of it and I believe it is prudent financial management at this time," said the company’s CFO, Bernard Murphy.
Tethys is focused in Central Asia in areas with substantial oil and gas potential, and is currently operating projects in Kazakhstan, Tajikistan and Uzbekistan.
In May, the company was awarded a new oil field in Uzbekistan, from which it says there is good potential to increase production.
The Chegara field currently has limited production from three wells and lies 14 kilometres south-west of the firm's existing North Urtabulak asset.
It has been the subject of minimal drilling and Tethys believes with more work, the firm can increase production "substantially".
The deal for Chegara is for a 25 year production enhancement contract.
Tethys also announced in May it had signed a memorandum of understanding with NHC Uzbekneftegaz concerning a potential exploration agreement for a block in the North Usyturt basin in Uzbekistan.
With regards to its Kazakhstan assets, the company recently revealed it had increased the resource estimate for these assets to 1.17 billion barrels of oil.
The upgrade was a result of additional 2D and 3D seismic acquisition and interpretation as well as drilling data, which also increased the chance of success in the area.
Tethys reported in May that its revenues jumped 45 per cent to US$6.49 million in the first quarter compared with the same period of 2011, as production increased to 5,117 barrels of oil equivalent per day (boepd) from 4,531 boepd.
Average output from the company’s Doris field in Kazakhstan was 1,038 bopd - up from 337 bopd a year earlier.
Shares of Tethys closed Thursday at 56 cents in Toronto.