World's Energy

March 01, 2009 - Oil Voice - Tethys Petroleum Limited announces that its 100% subsidiary, Tethyda Limited, has signed an agreement, which is subject to certain regulatory requirements, corporate approvals and additional conditions, to acquire from the British company, Rosehill Energy plc ("Rosehill"), its wholly-owned subsidiary ("the Contractor") which holds Rosehill's entire interest in the Production Enhancement Contract ("PEC") for the North Urtabulak Oil Field in Uzbekistan. The consideration for the purchase of this project is 15,000,000 (fifteen million) ordinary shares of Tethys. These shares will be restricted for resale for a period of up to one year. The value of the transaction (based on a Tethys share price of US$0.42 calculated as the 5 day volume weighted average ending on February 25, 2009) is approximately US$6.5 million. The revenue realised under the PEC for 2008 attributable to the Contractor was US$13.67 Million in 2008. Average daily production attributed to the Contractor from the North Urtabulak Oil Field for January 2009 was 913 barrels of oil per day. Tethys believes there is considerable scope to increase this production through relatively modest capital investment by working over existing wells and introducing a dedicated gas lift system with modern equipment that has not as yet been utilised at the field. The PEC also gives certain rights over various other fields in the area around North Urtabulak. Dr. David Robson, CEO of Tethys Petroleum Limited, commented, "We believe this acquisition adds significant shareholder value to the company at an attractive purchase price and brings immediate revenue through existing oil production. We also believe there is significant scope to increase this production through relatively low cost techniques using our own drilling and workover equipment and also by purchasing or leasing some new equipment to introduce gas lift. This also gives us a country entry into Uzbekistan through the purchase of a project that has an existing experienced in-country operations team with a good working knowledge of the field and surrounding area. We will build on this position to evaluate other projects in Uzbekistan, which is internationally known as having substantial oil and gas potential. Furthermore this oil project provides an excellent complement to our existing gas assets and offers shareholders leverage for any increase in the oil price from current levels." North Urtabulak Oil Field: The North Urtabulak Oil Field is located in southern Uzbekistan in the northern portion of the Amu-Darya basin. The nearest city is Bukhara which is about 120 kms north-west of the Field. Under the PEC the Contractor receives a share of incremental production from individual wells it works on. The North Urtabulak Field produces from a Jurassic age reef structure at a depth of about 2,500 metres (8,125 feet). Surface elevation is approximately 320 metres (1,040 feet). Under the PEC, the Contractor partners with the Uzbek State Oil Company and a local refinery (collective "the Uzbek Partners"). The Contractor under the PEC receives 50% of all incremental production of each individual well it works on for the first three years of production, and the Uzbek Partners receive 50%. After three years of production from the well, the Contractor receives 20%, and the Uzbek Partners 80%. If at any time certain defined work is carried out on the well then the three year initial period starts again. Under the PEC the Contractor is responsible for all capital investment and carrying out all operations on the North Urtabulak Field. The work program and budget under the PEC is approved by an Operating Committee which is jointly run by the Contractor and the Uzbek State Oil Company. The oil produced under the PEC is refined at a local refinery and the Contractor uses its own marketing agents to sell its share of the refined products at market prices. As a guide to pricing the Contactor received a net oil price (at the field) of approximately US$20.50 per barrel of oil in January 2009. The PEC terminates eight years after the date of the first incremental production from the final Contractor Well. It is expected to begin work on additional wells in 2009 which resets this period each time a well is completed and production obtained.