GRAND CAYMAN, CAYMAN ISLANDS — (Marketwire) — 11/14/12 — Tethys Petroleum today announced its third quarter 2012 financial results. The results are highlighted by a 46% increase in production revenues over the third quarter of last year.
RECENT FINANCIAL HIGHLIGHTS
Q3 2012 vs Q3 2011
9 months 2012 vs 9 months 2011
The 9 months period in 2012 has seen a substantial increase in oil production and revenue from the Doris oil field in Kazakhstan with a small drop in corporate administrative costs over the same period. It is forecast that both these trends will continue into 4Q 2012. On the revenue side both October–s and November–s average oil production figures have so far contributed toward the best quarter of oil production in Kazakhstan to date. October oil production averaged approximately 3,700 bopd and it is forecast that Novembers– production figures will exceed this number. These figures demonstrate the optimisation of the trucking operation in Kazakhstan is coming to fruition which has been the main restriction on maximum production to date, not the production capability of the wells.
On the costs side in Q3 the Company has initiated a review of all costs with a particular focus on administrative expenses. The objective of this exercise is first and foremost to review all areas with a view to reducing costs but particularly administrative costs, and secondly to review the categorization of costs to ensure that the Company is reporting consistently with other similar oil and gas companies, which will facilitate appropriate comparison within its peer group.
Some of these measures can be seen in a 22% reduction in the Q3 2012 costs over the Q2 2012 costs and in the 8% reduction against Q3 2011, but it is expected most of the effect will be realised in the quarters to come as this assessment and resulting action takes some time to implement. This cost reduction exercise does not in anyway reflect the growth prospects of the Company which, as can be seen from the higher production and revenue growth in Kazakhstan and the recent signing of the MOU for a Tajikistan farm-in partner, are very good.
The Company reports financial results in accordance with International Financial Reporting Standards (“IFRS”).
These highlights along with other operational and financial details will be further discussed in a scheduled conference call. Details of the conference call can be found below:
Conference Call:
A conference call will be held at 10:30 AM EST US and Canada and 15:30 PM GMT European time on Thursday, November 15, 2012. The North American conference call number is ((866) 202-3048) and the outside North America conference call number is (+1 (617) 213-8843). The conference call code to use is (32537707). Please call in about 10 minutes before the starting time in order to be patched into the call.
Webcast:
The call is being webcast and can be accessed at:
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The following disclosure is provided to comply with regulatory requirements:
During the fourth quarter of 2011 and the first quarter of 2012, the Company borrowed from various lenders an aggregate principal amount of USD10 million for the purpose of re-financing the purchase price of drilling rigs. The loans are evidenced by loan notes having a maturity of one year or two years. The lenders also received warrants to purchase ordinary shares of the Company having a term of one year or two years, corresponding to the term of the loan notes. In October 2012, the Company received approval from a number of lenders to a one-year extension of the maturity date of loans notes in the principal amount of USD2,165,240 maturing in December 2012. In connection with the approval of the extension of the maturity date, the Company agreed, subject to definitive lender approval, to extend by six months the expiry date of 1,575,000 warrants issued in December 2011 (having an exercise price of CAD0.58 to CAD0.65) and 3,017,380 warrants issued in February, March and April 2012 (having an exercise price of CAD0.84 to CAD1.18), excluding warrants issued to insiders of the Company. The number of ordinary shares into which these warrants may be exercised represents, in aggregate, 1.6% of the number of ordinary shares outstanding on the date hereof. The exercise prices of these warrants represent a premium of 14% to 27% in the case of the warrants issued in December 2011 and 64% to 131% in the case of the warrants issued in February, March and April 2012 of the volume weighted average trading price of the ordinary shares of the Company on the TSX for the five days to October 19, 2012, being the date of the agreement with the lenders. The change to the expiry dates of these warrants will be effective on November 29, 2012. The Company will also issue, subject to definitive lender approval, 1,082,620 warrants having an exercise price of $0.64 to lenders who agreed to extend the maturity date of their one year loan notes by 12 months. These warrants will expire on certain dates in December 2013 or, in the case of 307,620 warrants issued to two officers of the Company, June 2014. The number of ordinary shares into which these new warrants may be exercised represents, in aggregate, 0.4% of the number of ordinary shares outstanding on the date hereof (0.1% in respect of the warrants to be issued to the two officers of the Company). The exercise price of the new warrants represents a premium of 25% of the volume weighted average trading price of the ordinary shares of the Company for the five days to October 19, 2012.
Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan, Tajikistan and Uzbekistan. 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. See our Annual Information Form for the year ended December 31, 2011 for a description of risks and uncertainties relevant to our business, including our exploration activities. A barrel of oil equivalent (“boe”) conversion ratio of 6,000 cubic feet (169.9 cubic metres) of natural gas = 1 barrel of oil has been used and is based on the standard energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Contacts:
North America
Tethys Petroleum Limited
Sabin Rossi, Vice President Investor Relations
Office: +1 416-941-1257
+1 416-947-0167 (FAX)
Europe
Tethys Petroleum Limited
Veronica Zhuvaghena, Vice President Corporate Communications
Office: +44 1481 725911
+44 1481 725922 (FAX)
Corporate Brokers:
FirstEnergy
Hugh Sanderson/David Van Erp
Office: + 44 207 448 0200
Seymour Pierce
Richard Redmayne/Jonathan Wright/Stewart Dickson
Office: +44 207 107 8000
Asia Pacific:
Quam IR
Anita Wan
Office phone/fax: +852 2217 2999
FTI Consulting
Ben Brewerton/Edward Westropp
Office: +44 207 831 3113
Tethys Petroleum Limited