Total and CNODC Farm-in to Tethys' Tajikistan Assets

Tethys Petroleum Limited announced that its subsidiary, Kulob Petroleum Limited, has signed a farm-out agreement (FOA) for the Bokhtar Production Sharing Contract (PSC) in Tajikistan with subsidiaries of Total S.A. (Total) and the China National Oil and Gas Exploration and Development Corporation (CNODC).

Terms highlights:

• The interest in the PSC will be held equally by the three partners namely Kulob Petroleum Limited (KPL), Total E&P Tajikistan B.V. (a subsidiary of Total S.A.) and CNODC Coop UA (a subsidiary of CNODC).  
  
  
• Tethys owns an indirect 85% controlling interest in KPL. 
  
  
• KPL will receive 66.67% of back costs amounting to a payment of approximately USD60 million in cash upon completion. As funding for this project to date has been provided almost entirely by Tethys, monies received by KPL from this transaction will first be utilised to repay these loans to Tethys. The exact amount to be confirmed by the Tajikistan government.
  
  
• KPL will be partially carried on a USD80 million initial work programme such that it will pay 33.33% of its share of costs (therefore the funding obligation will be approximately USD8.9 million of the USD80 million work programme).
  
  
• The initial work programme is expected to comprise of further seismic data acquisition followed by a deep exploration well. Full details of the 2013-2014 work programme will be announced in Q1 2013.
  
  
• The PSC will be operated by a Joint Operating Company to be set up and owned by KPL, Total and CNODC, in proportion to their ownership in the PSC.

The farm-out is subject to final Tajik governmental approvals and State consents. Closing will take place once these approvals and all other conditions precedent under the FOA are satisfied and is expected to take place in the first quarter of 2013.

An Independent Resource Report of the Bokhtar PSC (dated June 30, 2012), prepared in accordance with Canadian National Instrument 51-101, estimates Gross unrisked mean recoverable prospective resources of 27.5 billion barrels of oil equivalent, consisting of 114 trillion cubic feet (3.22 trillion cubic metres) of gas and 8.5 billion barrels of oil.

Dr David Robson, Executive Chairman and President of Tethys, said:

"This is a tremendous deal for Tethys and extremely beneficial for the country of Tajikistan. It rewards us for taking the first steps into Tajikistan in 2006 and validates our extensive technical work to date. Total and CNPC are world class companies and we look forward to working with our new partners in Tajikistan which in our view has world class potential! Our partners each bring additional strengths to the project with extensive experience and skills in exploring and developing giant petroleum deposits and with the new pipelines carrying gas from Central Asia to China providing a potential export route for any sizeable gas discovery. This farm-out also provides significant additional funding for our Company to accelerate our other current projects."