ENP Newswire -
Release date- 15082014 -
Reduced loss from continuing operations for Q2 2014 by 17% to
Revenue for Q2 2014 of
Production expenses for Q2 2014 of
Capital expenditure of
Administrative expenses were slightly down from the previous quarter with continuing actions being taken by the Company to reduce spend where practical
Administrative expenses during the six months ended
Testing of four successful shallow gas exploration wells: AKK17, AKK18, AKK19 and AKK20, which tested at an aggregate rate of approximately 650 Mcm/d (23MMcf/d - 3,833 boepd) from the Tasaran horizon
Extension of the Kyzyloi Production Contract for a further 15 years to
Renewal of Kazakh gas sale contracts through
Release, post period end, of the
The deposit has been released as a minimal interest bearing loan that will be deducted from consideration upon completion of the sale, demonstrating the confidence of both the Company and SinoHan in the pending completion of the sale which is now dependent upon Kazkhstan governmental approvals and waiver of the Kazakh State's pre-emptive right on the transaction under the same terms.
Some further cost reductions are expected, however, we are a public company, listed on the main boards of two major stock exchanges, with exploration and production activities spanning three countries and working in challenging operating and political environments. Although it may be possible to achieve further efficiencies and cost reductions, if the Company is to maintain and develop its high potential asset base then there is a cost associated with this.
Our active strategy to bring in partners to our projects has already borne fruit, with
Shallow Gas Programme Update
All key items related to the implementation of the shallow gas programme remain on track. Construction work on the gas dehydration project has commenced, and this equipment is scheduled to be operational before year end. Construction work for the shallow gas tie-ins has begun, with pipeline delivery expected in Q3, thus allowing sufficient time to tie-in the new gas wells prior to year end.
Following on from the successful testing programme of the new shallow gas wells, the State reserve reports are nearing completion, and will be submitted in due course for approval. When this next phase of the gas development programme is brought on stream it is anticipated that this will realise an approximately three-fold increase in gas production. Negotiations continue for a new gas sales contract which the Company expects to sign before year end, and with a significantly higher sales price than the current contract.
KBD01 - Kalypso
This well successfully encountered hydrocarbons in Jurassic sands and in carbonates of Permo/Carboniferous age in the north-western part of the Company's acreage in
This interval is approximately 4,100 metres below the surface and electric logs run over this section, together with drilling data, indicate more than 100 metres of gross potential hydrocarbon bearing section.
The initial hydraulic fracturing has now been carried out, with data indicating that this operation was successful, and with some permeability indicated. The next stage will be to acidize or frac with propant the interval, and following this procedure flow testing will be attempted to ascertain whether or not this zone can achieve commercial flow rates of what is interpreted to be gas condensate.
The option to sidetrack a new production section is also being considered (discussions are ongoing with
The Klymene prospect is planned to be drilled to a total depth of 2,750 metres targeting a large structure in the south-west of the Kul-Bas block, and will target three horizons in the Lower Cretaceous and Upper Jurassic. State approval for the Klymene exploration well project is expected by end-October, and commencement of drilling operations is planned upon receipt of funds from the SinoHan acquisition. The Klymene prospect has the potential to be an order of magnitude bigger than the Doris oil discovery and surrounding prospects (the geographical area of the prospect is up to ten times the areal extent of the Doris oil field).
It appears to have good four-way structural closure and positive hydrocarbon indications ('bright spots') on the recently acquired and interpreted seismic. Independent prospective resources assessment by
During this process no guidance is provided by the Kazakh State on timing or whether in fact it will take up this right, but, looking at historical precedence, the Company deems it unlikely that this right would be exercised. Once this transaction completes, Tethys will receive
The voluntary release of the
Once the SinoHan deal is completed it is intended to carry out further work to increase and maintain shallow gas production, carry out additional drilling on the Doris oilfield and on the Doto structure using horizontal wells aimed at increasing oil production, install equipment on the Doris oilfield to reduce operating costs and enable a production contract to be obtained (which would result in significantly higher net realised prices for oil) and complete and tie-in the Dione oil discovery which has been tested but is not yet on production.
These works would be in addition to the work on Kalypso and Klymene detailed above, and should further enhance revenue from the project.
KPL was selected by BOC and has concluded the Working State Requirement 0 (termed WSOR 0), the first key piece of engineering work for the first deep exploration well that is planned to be drilled in the Bokhtar PSC area. This work consisted of detailed analysis of the existing wells drilled in the region and the preparation of a preliminary geological prognosis for the deep exploration well.
The results of this work will enable more detailed engineering planning to be carried out on a well design to meet the unique challenges of the well, and to finalise long lead equipment specifications enabling key equipment orders to be placed in sufficient time to allow for manufacturing and delivery prior to the planned spud date in the latter part of 2015.
Tethys was very pleased to be selected by BOC for this groundbreaking piece of work and will be bidding for further related work on the deep drilling project. The Drilling Manager for the project is a Tethys secondee, agreed by the partnership.
BOC signed a contract on
This new wide line 2D survey is specially designed to image the deep targets described in the Independent Resource Report and consists of a first phase of 826 kms with an option for an additional 200 kms, all to be acquired within 2014 and the first three quarters of 2015. As well as 2D acquisition and processing, a concurrent low cost passive seismic survey is planned and a Magnetotellurics survey is also being acquired now along the dip lines.
Processing of all these data will be concurrent so interpretation and mapping will be underway from early 2015. This whole data set will enable the identification of the best possible location to spud the first deep well in the later part of 2015.
An Independent Resource Report on the Bokhtar PSC area (dated
Geochemical and rock mechanic studies are underway to further evaluate the unconventional play on the Company's acreage which Tethys believes has substantial upside potential. In addition, several conventional targets have been identified from seismic as well as potential drilling locations for unconventional wells. Capital expenditure on this work is minimal and it is currently not expected that significant investment will be required in
An Independent Resource Report on the Company's
The full Quarterly Results together with Management's Discussion and Analysis have been filed with the Canadian securities regulatory authorities. Copies of the filed documents may be obtained via SEDAR at www.sedar.com or on Tethys' website at www.tethyspetroleum.com.
The Company's Second Quarter 2014 financial statements are prepared under International Financial Reporting Standards ('IFRS').
Tethys is focused on oil and gas exploration and production activities in
The references in this press release to 'Prospective Recoverable Resources' means those quantities of petroleum estimated to be potentially recoverable from undiscovered accumulations by application of future exploration and development projects. Prospective resources have both an associated chance of discovery and a chance of development.
There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of these resources. The product types that may reasonably be expected from potential production consist of oil, condensate, natural gas and associated gas.
The resource estimates contained or referred to are estimates only and are not meant to provide a determination as to the volume or value of hydrocarbons attributable to any prospect. There are numerous uncertainties inherent in estimating quantities of resources and cash flows that may be derived, including many factors that are beyond the control of the Company.
The following is a non-exhaustive list of factors which may have a significant impact on the above estimates of prospective resources: despite the classification that they are as yet undiscovered but may be potentially recoverable the Company may be unable to carry out the development or their potential recovery; the activity may not be economically viable; the Company may not have sufficient capital or time to develop them; there may be no market or transportation routes for the potential production; legal, contractual, environmental and governmental concerns might not allow for the recovery being undertaken; reservoir characteristics might prevent recovery.
The recovery of the resources is subject to the following risks and uncertainties: market fluctuations, the proximity and capacity of oil and gas pipelines and processing equipment, government regulation, political issues, export issues, competing suppliers, operational issues (exploration, production, pricing, marketing and transportation), extensive controls and regulations imposed by various levels of government, lack of capital or income, the ability to drill productive wells at acceptable costs, the uncertainty of drilling operations, factors such as delays, accidents, adverse weather conditions, and the availability of drilling rigs and the delivery of equipment.
This press release contains 'forward-looking information' which may include, but is not limited to, prospective resource estimates, the potential for successful discoveries and their commercialisation, and our exploration targets.
Such forward-looking statements reflect our current views with respect to future events and are subject to certain assumptions, the fact that the Company will be successful in confirming the existence of the accumulations of petroleum in respect of its exploration targets, and subject to certain risks and uncertainties, the risk that limited discoveries will result from exploration wells and as a result the risk that any or all of the prospective resources will not become recoverable.
See our Annual Information Form for the year ended
Tel: +44 207 831 3113
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