Central Asia-focused Tethys Petroleum reported Wednesday that it has received an investment of $47.7 million from Kazakh firm AGR Energy. In return AGR will receive more than 318 million new shares in Tethys, effectively giving it control of the company as AGR will hold up to 51 percent of Tethys following the share placing.
Tethys has had to make the deal with AGR, which is controlled by Kazakhstan's Assaubayev family, in order to solve funding issues that it has had in recent months following the failure at the start of May of its plan to sell 50 percent of the company to SinoHan.
The funds will now be used to fund an increase in gas production by drilling a series of gas wells. It will also invest in infrastructure to reduce operating costs and improve operational efficiency. In addition, Tethys will use some of the funds to finance an exploration campaign in Kazakhstan and Tajikistan.
Commenting on the fund raising, Tethys Executive Chairman John Bell said:
"We are delighted to have secured this strategic collaboration with AGR Energy. Completion of the Placing will address the funding issues that Tethys has faced since before I became chairman in November of last year. It allows management to focus on maximising growth and value creation for all shareholders, working with its new partner AGR Energy.
"It also provides us with a platform to exploit the potential significant growth and earnings opportunities as we can invest to seek to accelerate production and potentially benefit from future higher gas prices achieved in China. We believe this represents a truly transformational deal for Tethys and we look forward to the future collaboration with AGR Energy."
AGR Managing Director Alastair Murray added:
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