Tethys Oil Acquires Stake in Block 15 in Oman

Tethys has signed a sales and purchase agreement to acquire a 40% interest in Block 15 onshore Oman. Block 15 is an appraisal project and covers an area of 1,389 square kilometers in the North Central area of Oman. It contains two discovery wells and estimated oil in-place of more than 50 million barrels, with an expected recovery ratio of between 5 and 20%. Under the sales and purchase agreement Tethys will pay MUSD 0.6 and issue a total of 400,000 new Tethys shares for the 40% interest. The acquisition is subject to approval by relevant authorities.

Tethys will participate in a work program of MUSD 5 of which Tethys' share amounts to MUSD 2. The objective of the work program is to test the production capacity of the reservoir. The work program will involve the re-entry of the two previously drilled wells and drilling horizontal sidetracks using under-balanced drilling technology to fully evaluate the reservoir intervals already identified by flow tests and well logs.

The two previously drilled exploration wells, Jebel Aswad and Wadi Saylah were drilled by Conquest Exploration in 1994 and 1997 respectively. Jebel Aswad -1 has tested 204 bbls of 40 degree API oil from a thirty foot perforated interval in the Nati A/B limestone reservoir. Jebel Aswad identified a gross hydrocarbon bearing limestone section of 210 feet. Wadi Saylah identified a 132 feet gross hydrocarbon bearing column but was never tested. Conquest relinquished the block in 1998 deeming the discoveries sub-commercial at that time. The block was then held by Novus Petroleum. Novus relinquished the block in 2003 after completing some seismic reprocessing.

Block 15 is well situated within the northern petroleum province of Oman. In total more than 2,600 km of seismic has been shot over the block. In addition to the two discoveries the block contains a number of mapped leads and prospects some of them on trend with Occidental Petroleum's recent oil discoveries in adjacent Block 9.

"The acquisition of Block 15 in Oman is entirely in line with Tethys acquisition strategy of appraisal/ development projects. The block contains oil in place as well as exploration upside and requires additional work to establish production potential. We look forward to carry out significant work in Block 15 over the next couple of years", says Magnus Nordin, Managing Director of Tethys Oil.