Tethys: First Production Onshore Oman Set to Begin July 2009

Tethys Oil reported that preparations of the preliminary development plan for Block 15 onshore Oman continue. According to current plans, first production is set to begin in July 2009.

The preliminary field development plan for Jebel Aswad on Block 15 onshore Oman is progressing. Much work remains but first production is now estimated to start in July 2009 from three wells. The work programme up to this date calls for among others the drilling of two additional wells. Full production should be reached in October 2010 with 10 wells in production.

Tethys' share of first production in July 2009 is estimated at some 600 barrels per day of condensate and 6 million cubic feet per day of natural gas. Full production in October of 2010 should reach 20 million cubic feet per day and more than 1500 barrels per day of condensate. The gas production is estimated to remain at these levels for a five year plateau while condensate production is estimated to decline by 20 per cent per year and well from production start. These numbers correspond to more than 12,000 boe per day for the entire field with Tethys 40 per cent share amounting to more than 5,000 boe per day.

CAPEX investments consist primarily of additional wells and pipelines and facilities. Tethys share of CAPEX for phase one to reach first production is estimated at MUSD 12 and in phase -2 to reach full production an additional MUSD 31. An option whereby the production is transported directly to a third party before any treatment is also investigated.

Current financial plans look at funding Phase 1 from the proposed private placement, aimed to be placed primarily in the Middle East and Asia with Phase 2 being financed primarily from cash flow from early production and proceeds from exercise of the proposed warrant issue if these are approved placed and taken up in full.

The production targets and the current development plan is based on the mid case of 12 mmboe of resources net to Tethys before government take in The Natih A reservoir section as calculated by Tethys and Helix RDS in a report from August 2007. Additional reserve work carried out by Tethys based on information from seismic and the wells drilled so far indicate that two additional levels, Natih C and Shuaiba, are hydrocarbon bearing with a resource potential of about the same amount as in the Nathi A. These estimates are still preliminary and no reserve status can be attributed before additional drilling has been carried out.

"The Jebel Aswad development is taking shape. It is with great satisfaction we now see a possibility to be a producing oil company as early as next year, comments Magnus Nordin.

On testing of the Jebel Aswad re-entry well in June 2007 the well flowed 11.03 mmscfpd of natural gas and 793 bpd of 57API condensate (total of 2,626 boepd). Tethys Oil is the Operator of Block 15 with a 40 per cent interest with Danish company Odin Energi holding the rest.