Tethys Petroleum Limited announced that it's wholly owned subsidiary, Tethys Europa B.V. signed a Memorandum of Understanding (MOU) with Halyk Finance on behalf of Closed Mutual Investment Fund Halyk Perspectiva concerning the Rostoshinskoe gas discovery in Kazakhstan.
The MOU outlines the willingness of Halyk Perspectiva to grant an option in favour of Tethys Europa for the acquisition of up to 50% of the interest in the rights to explore and produce hydrocarbons from the Rostoshinskoe field located in the Zelenovsky region of Western Kazakhstan, approximately 15 km from the City of Oral on the northern edge of the Pre-Caspian basin and to the west of the Karachaganak gas condensate field. The MOU gives Tethys Europa until July 1, 2008 to negotiate the terms of the Option.
The field was discovered in 1993 by well Rostoshinskoe #1 which tested gas from the Middle Carboniferous, Lower Permian and Upper Permian sequences. Chapman Petroleum Engineering Ltd. ("Chapman") has prepared a NI 51-101 compliant reserve report as at April 1, 2008, in respect of the Rostoshinskoe Property. This report indicates that there are Proven plus Probable reserves of approximately 553 Billion cubic feet of gas (net).
The MOU contemplates that Tethys Europa would commission McDaniel & Associates Consultants Ltd. ("McDaniel") to carry out a further assessment of and to prepare a report in respect of the reserves for the Rostoshinskoe Property. It is intended that the report will be finalised by June 15, 2008. Pursuant to the MOU, Halyk Perspectiva will provide all technical and economic data to McDaniel for use by McDaniel in their assessments of and report on the Rostoshinskoe Property. The terms of the agreement in respect of the Option will be finalised by the Company and Halyk Perspectiva upon reviewing this report.
Under the terms of the MOU, Tethys Europa has a right of first refusal to acquire up to a 50% interest in the event that Halyk Perspectiva wishes to transfer all or part of its participation interest excluding the Option Interest. Pursuant to the MOU, this right expires July 1, 2008 and the Company expects that it will determine, on or before this date, whether or not to enter into the Option Agreement.
Julian Hammond, Chief Commercial Officer of Tethys, commented: "We believe that the Rostoshinskoe field has significant potential and would be a good acquisition which fits with Tethys' focus on gas in Kazakhstan, particularly given that current prices for gas are increasing. This field is in a different region to our current gas production and exploration assets, but is located in an area of significant gas pipeline infrastructure close to the Russian border. We need the additional comfort of a reserve report from our current independent reserve auditors, McDaniel and Associates, and with this in hand we will hopefully be able to negotiate an acceptable deal to acquire an interest in this project."
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