It’s all go go go at Tethys as they finally get the green light on the Total/ CNPC Farm out deal.
The deal was officially signed in yesterday and came with some additional upside news in the forma of an extra $3mln in cash and an increased acreage which could prove very lucrative in the future.
The deal confirms Tethys as 33.3% interest holders with a part carry on the first $80mln spend (with just $9mln spend on working programme to contribute from TPL).
What is astonishing is that the other partners involved are super Majors ‘TOTAL’ and China’s National oil Corporation (CNOC). Each has an even 33.3% share. It’s unusual for the minnows to mix it with huge leaders in Oil&Gas like this, but it perhaps demonstrates how well connected TPL’s management are with the local regional leaders. Politics and relationships mean everything in these frontier regions. But when you look at the mouth watering potential of the Bokhtar PSC then you soon realise that the Majors are not here to make up the numbers – they are here to see some of the 27.5 billion barrels oil equivalent of gross unrisked mean recoverable prospective resources (according to independent figures) brought to market.
And little old Tethys is firmly in the mix. Terrific to see for a small company.
But that’s not all that TPL has to offer. There’s bags more. For starter there is the Kaza licences. These are by far the best near term cash flow generators. At present TPL is exporting around 4,500boepd. They intend to move this to 6,500 in the mid term and 12,500boepd longer term.
The current cash flow combined with the recent $63mln banked from the Total/CNOC deal ensures they have more than enough cash to see them through all ops planned for 2013 and keep plenty in reserve for 2014.
The Tajikistan deal is likely to proceed with some speed imho. The RNS stated that the work programme will be announced soon which could included some developments in 2013 such as Seimsics etc.
Today’s RNS covers off the Kaza plans which look jam packed over the next 6 months.
And if that’s not enough – there’s also the prospect of Uzbekistan. Yep – there’s more. The company is in the process of finalising plans on exploration with work set to begin on the Bayterek block in the North Ustyurt Basin of Northern Uzbekistan.
It’s go go go. And at 56p, the stock looks a long way from pricing the current Kaza production and Total/CNOC deal nevermind the recently acquired $63mln wedge of cash. Mr market has some waking up to do.
Tethys is part of the share hub’s 2013 Hotlist.
June 19, 2013
Tethys Petroleum Limited: Kazakhstan Forward Work Programme
ALMATY, KAZAKHSTAN–(Marketwired – June 19, 2013) – Tethys Petroleum Limited (“Tethys”) (TSX:TPL)(LSE:TPL), the oil and gas exploration and production company focused on Central Asia, today announced its work programme in Kazakhstan for the second half of 2013.
Forward Work Programme:
=- AKD08 (“Doto”) Exploration well to spud in early August
=- Further oil exploration wells planned after Doto results
=- Testing programme on suspended oil wells
=- Two gas well workovers planned
=- Up to five new shallow gas wells to be drilled near the Akkulka Block
=- Kalypso well to be stimulated and tested in Q3
=- 2D Seismic planned and crew mobilising for the Kul-Bas Block
=- 3D Seismic planned for the near future in the Akkulka Block
=- Further seismic will help improve subsurface understanding in both Kul-
Bas and Akkulka to better focus the longer-term programme.
=- Aral Oil Terminal (“AOT”) expansion adds 12,500 barrels of storage
=- Total CAPEX for the programme estimated at approximately USD20.4 million
Dr. David Robson, Executive Chairman and President of Tethys, commented:
“The second half of the year will see us implement a busy and active programme in Kazakhstan. The combination of new exploration, testing of existing wells and workovers will move Tethys closer to exploiting the high potential of its gas and liquids portfolio, at a modest cost for shareholders. Further seismic will help us improve subsurface understanding in Kul-Bas and Akkulka to focus our longer-term programme as we continue to be excited by the upside and prospectivity of the area.”
A location for The AKD08 (“Doto”) Exploration well has been finalized to the south-west of the producing Doris field and is designed to target both the Upper Jurassic Carbonate and Lower Cretaceous sandstone sequences as proven in Doris. The Doto prospect has 22 million barrels gross mean unrisked recoverable prospective oil resources attributed to it (Gustavson & Associates).
The well will be spudded in early August and is forecast to take approximately 45 days to drill to a planned total depth of 2,420 metres using Tethys’ own ZJ70 “Telesto” rig.
Following on from AKD08 the Company has plans to drill additional exploration targets in the Akkulka and Kul-Bas licences, further information on these targets will be provided in due course.
A number of progressive cavity pumps are being purchased to carry out a testing programme on several suspended oil wells. These pumps should enable definition of the ultimate potential of these wells which was not possible during the initial testing due to the lack of available lifting capacity at that time. These wells include AKD02, 03 and 07 and if successful these wells could be brought on production quickly.
Tethys has re-focused some of its investment into gas development after the effective doubling of the realised gas price in January of this year to US$65 from US$32.5 per 1,000 cubic metres. The new Kazakhstan-China gas trunkline under construction (planned to pass through Tethys’ contract areas) will provide an additional commercialization route and a further upside to the price.
It is planned to conduct workovers on the AKK05 and AKK14 wells in Q3 in order to boost gas production and short-term cash flow. These wells have successfully tested gas in the past but were not brought on stream due to the relatively low gas price at that time.
Commencing in Q4 up to five further shallow gas exploration wells are expected to be drilled on a number of additional prospects and leads which have been identified based on seismic data. These are relatively low risk targets and of the 13 shallow exploration wells previously drilled by Tethys in the Akkulka Block, 11 tested commercial gas.
The planned gas exploration wells are typically 600-800 meters measured depth and will take up to three weeks each to drill. Currently these are located mainly in the central and south-eastern part of the Akkulka Exploration Contract and relatively close to existing gas infrastructure.
The KBD01 (Kalypso) comprehensive testing programme initially on the Permo-Carboniferous interval will commence in Q3. The programme will involve initial perforation and potentially acidisation followed by fracture stimulation of the carbonate interval approximately 4,100 meters below the surface and will take up to one month to complete. Electric logs run over this section indicated more than 100 metres of gross potential hydrocarbon bearing zones in what is interpreted to be shelf limestones with hydrocarbon shows also being noted whilst drilling. The Kalypso Permo-Carboniferous is likely to be gas condensate bearing with 122 billion cubic feet (3.5 billion cubic metres) gross mean unrisked recoverable prospective resources attributed to it by Gustavson & Associates. Further potential lies in the Jurassic sands which showed indications of oil when drilling and on electric logs.
The two-year extension to the Kul-Bas Exploration and Production Contract area has now been successfully obtained by Tethys at the Ministry of Oil and Gas in Astana and as such the exploration phase of this contract will now run until November 11, 2015 assuming no further extensions are given.
200 kilometres of 2D seismic is planned in Q3 over identified prospects in the south-west part of the Kul-Bas block, separate from Kalypso.
An additional seismic programme of 100 square kilometres of 3D data is planned over further prospects identified north west of the producing Doris wells and with similar Cretaceous reservoirs predicted. Furthermore an additional 35 kilometres of 2D data is planned for acquisition within the Akkulka block, but targeting additional areas of interest around the shallow producing Kyzyloi gas field. This activity is likely to follow the Kul-Bas seismic acquisition programme.
The total CAPEX for this program, with the drilling of two oil exploration wells, seismic, testing of KBD01, drilling of five shallow gas wells and workovers totals approximately USD20.4 million and is expected to take the rest of this year and into H1 2014.
Aral Oil Terminal
On June 6, 2013 Phase 2b of the Aral Oil Terminal (“AOT”) expansion was inspected by the State Commission of the Republic of Kazakhstan. The Phase 2b expansion consists primarily of an additional 12,500 barrels of crude oil storage capacity. This additional storage capability will greatly enhance the efficiency of oil transhipment through the terminal which has been suffering of late due to lack of storage associated with offtake issues from the terminal. These issues, although now solved, did affect the volumes of oil which were able to transit through the terminal. Furthermore, Phase 3 expansion of AOT, which will see the installation of an electrical dehydrator to significantly improve the quality of oil, will be undertaken when Phase 2b has been formally signed off. Phase 3 expansion is expected to be commissioned and operational in Q3 of this year.