Grand Cayman, Cayman Islands - Tethys Petroleum Limited (TPL.H) ("Tethys" or the "Company") today provides a corporate update.
Completion of DSFK Agreement
On February 8, 2020 Tethys announced that it had reached a legally binding settlement agreement with Olisol Petroleum Limited and certain of its affiliated companies and their principals (together Olisol) and DSFK Special Finance Company LLP (DSFK), (hereinafter the Settlement Agreement).
The Kazahkstan Supreme court has ratified the agreement effective May 26, 2020. The Company has made the required financial payment of 1,434,692,762 tenge and has issued the 18 million shares necessary to complete and finalize the agreement. The Company is moving forward with its application to reactivate from the NEX board to a Tier 2 Oil & Gas Issuer on the TSX Venture exchange.
Cash Flow outlook
The Company is pleased to report that gas production volumes and revenue have been fairly steady. The cash flows from the gas sales are allowing Tethys to make progress on fulfilling its debt and contractual obligations. Management believes that at current production levels the prepayment obligation of the 70% of monthly gas sales will be completed in September. On January 17, 2020 Tethys announced that the loan originally made by AGR Energy Limited had been amended to reduce the outstanding balance from $12.1 million to $9 million and extending the maturity to June 30, 2021. As part of the workout agreement regarding the AGR notes, Tethys will be obligated to make a $3mm USD payment by the end of the year. This payment will be followed by two more payment obligations of $3mm each at six month intervals. The Company is currently seeking to obtain funding to prepay the note by the end of August for a price of $7mm. The loan would not only allow Tethys to refinance on more favorable terms but would hopefully allow the Company more operating flexibility (vs. trying to meet a challenging goal of raising $3mm USD from operations by year end while also fulfilling the prepayment obligation).
Testing of Klymene Exploration Well
Management is pleased to announce that the testing of the KBD-02 well has provided indications of commercial amounts of oil. The Company is being careful to not only comply with all the necessary measures regarding well integrity but also in regards to Covid-19 protocols. The well test has produced approximately 20,000 barrels of oil to date and has averaged over 400 barrels/day for the last week (using a 9 mm choke). The oil quality is good and there currently are no water cut issues. Until the well goes into steady production, it is difficult to know whether to expect that this production rate can be increased. The test to date has focused on the Jurassic zone as the widest zone of three potential zones. The current plan is to test this zone until July 7 and then to test the next zone. At present, the service provider is under quarantine but it is expected that by next month they will be able to travel.
Testing of Additional Gas Wells
The current plan is for Tethys to drill 3 more gas wells later this year (again assuming a relaxation of the quarantine restrictions).