Tethys Petroleum Claims Additional Gas Discoveries in Kazakhstan

Following yesterday's announcement of first gas sales from the Kyzyloi Field in Kazakhstan, Tethys Petroleum provided an update of current operations, which includes additional gas discoveries.

On the company's shallow gas exploration program in Kazakhstan, Tethys have already discovered significant additional gas in the Akkulka exploration area surrounding the now producing Kyzyloi gas Field, having flow tested over 40 MMcf (1,130 Mcm) of gas per day from seven successful shallow gas exploration wells drilled in the area to date, in addition to the gas tested from the Kyzyloi Field. Phase 2 of the Greater Kyzyloi development is designed to incorporate these discoveries into the development increasing commercial production to over 44 MMcf (1,200 Mcm) per day of gas in Q4 2008 by the installation of additional compression and tie-in of these wells to the Kyzyloi pipeline system.

Contract negotiations are almost complete for the supply of the additional compressors to be installed at the compressor station. Work is underway on the detailed engineering for this plan which will be finalized based on data from the Kyzyloi Field production history and the results of the AKK13 exploration well which is currently drilling ahead towards its target in the Central Akkulka area. Results from the AKK13 well should be available early in the New Year, and AKK13 is planned to be followed by a further exploration well in the Central Akkulka area (AKK14) on a separate prospect located east of AKK13 with shallow gas targets at two stratigraphic levels.

Any additional gas volumes from these Akkulka discoveries are not covered by the limited long-term gas sales contract relating to the Kyzyloi Field, and over the past two years regional gas prices have increased significantly since that contract was negotiated. In addition further price increases have been recently announced with Turkmenistan fixing a price of US$3.68 per Mcf (US$130 per Mcm) increasing to US$4.25($150 per Mcm) for gas exports during 2008, representing a 50% increase over the current price, most of which comes through Kazakhstan.