2015-05-01

Strategic Review and Sinohan Transaction Update

GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - May 1, 2015) - Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL)(LSE:TPL) today provides further details of the previously-announced strategic review, and a SinoHan Oil and Gas Investment Number 6 B.V. ("SinoHan") transaction update, to shareholders.

Highlights

--  A strategic review of the business which encompasses options including
    asset sales, farm-outs, financing, investments at the corporate level,
    or the sale of the Company is being conducted
--  Discussions are ongoing with a number of interested parties on all of
    these potential avenues
--  The sale of 50% of the Company's Kazakh oil and gas assets to SinoHan is
    not proceeding
--  Discussions with SinoHan have commenced on matters relating to the
    termination of the sale and purchase agreement
--  Corporate and regional overheads, and operational expenses, continue to
    be scrutinized and reduced during this period
--  Current production stands at 5,380 boe/d

Strategic Review

The Company has adopted a twin strategy in recent months: to diligently seek timely approval from the Ministry of Energy ("MoE") to allow completion of the condition precedents ("CPs") for the SinoHan transaction while simultaneously exploring alternative paths to value realization should the deal not complete.

During this period, the exclusivity term in the SinoHan farm out agreement has prevented the Company from actively marketing its attractive Kazakhstan assets to other potential partners, or seeking other solutions for these specific assets, even though unsolicited informal expressions of interest have been received. The focus of the strategic review to date, as announced on April 10th, 2015, has therefore been restricted to date to a further scale down of the business, sale or farm downs of non-Kazakhstan assets, equity financing at the corporate level and a debt refinancing.

As the exclusivity restriction no longer applies, a potential farm-out of the Kazakhstan assets will be included with the other strategic options being pursued.

Macquarie Capital has been appointed to work with the Company to advise on the review process, and to host the data room for farm-out discussions.

Discussions are already ongoing with a number of interested parties at the corporate level and a further update will be made when appropriate. There is no certainty that any transaction will take place.

In parallel to the strategic review, the Company continues its focus on delivery of production and reduction of non-essential expenses both corporately and in Kazakhstan, beyond the extensive cuts that have already been delivered since the Board changes at the end of November 2014.

Current Financial Position

Although the Company has significantly reduced its cost base and secured additional loan financing, the Company will need to secure additional funding in order to meet its full contractual obligations and maintain a positive cash position throughout the next twelve months. There can be no assurances that such additional funding will be secured or that management will be able to implement one or more of the strategic initiatives being explored by the Company.

These circumstances indicate the existence of a material uncertainty related to events or conditions that may cast significant doubt about the Company's ability to continue as a going concern.

SinoHan Transaction

On November 1st, 2013 Tethys entered into a legally-binding exclusive agreement for the sale of 50% of its Kazakh oil and gas assets to SinoHan, part of HanHong, a Beijing, PRC, based private equity fund, for US$75 million. The longstop date for fulfilment or waiver of the CPs was extended for an additional six months starting November 1st, 2014 by mutual consent of both parties.

The Company has been working hard to fulfil the CPs required under the agreement with SinoHan prior to concluding the deal in good faith, however, the main approval required from the Kazakhstan Ministry of Energy ("MoE") has not been received by the longstop date of May 1st, 2015. Tethys has explored with SinoHan the possibility of a further short extension of the longstop date to provide additional time to obtain approval from the MoE, however SinoHan has confirmed that it does not wish to enter into a further extension on the transaction. As a result, the sale of 50% of the Tethys' Kazakhstan assets to SinoHan will not proceed and the Company will therefore retain its 100% interest.

The Company is currently in discussions with SinoHan on matters relating to the termination of the sale and purchase agreement, including:

--  the US$3.88 million deposit advanced by SinoHan in the form of a minimal
    interest-bearing loan, which becomes repayable within 10 Business Days
    of receiving written demand for repayment except in circumstances where
    the failure to complete is solely as a result of SinoHan's breach of its
    obligations under the sale and purchase agreement; and

--  the amount of up to US$0.70 million that would also be payable to
    SinoHan in the event of the CPs not being met or waived by the extended
    longstop date in circumstances where SinoHan has complied with all its
    obligations.

The Company expects to update the market in the near future on progress with these discussions.

John Bell, Executive Chairman, commented:

"Since I became Chairman at the end of November last year we have short term re-financed the Company and significantly reduced the cost base in order to continue operations, which were at the time unfunded, until we were able to get certainty of an outcome on the SinoHan transaction. We have reduced overheads by half and achieved the highest quarterly gas production in the last three years, whilst increasing reserves in all categories."

"The next step in Tethys' turnaround should have been the recapitalization of the Company through the SinoHan investment in Kazakhstan. Every effort has been made by me and my staff to complete this transaction. We are disappointed that the Ministry of Energy of Kazakhstan did not provide the approval required by the longstop date which was a condition precedent to the transaction."

"We are now focused on exploring further a number of interesting options that have already arisen to date from the strategic review, with the aim of maximizing the shareholders' return. I look forward to apprising shareholders of progress over the coming weeks."

"What has not changed since I joined Tethys as Chairman is the undoubted quality of the Company's assets. We retain 100% of our highly attractive assets in Kazakhstan that have generated significant industry interest at the asset and corporate level."

Website www.tethyspetroleum.com

About Tethys Petroleum:

Tethys Petroleum's aim is to become the leading Independent E&P Company in Central Asia, by exercising capital discipline, by generating cash flow from existing discoveries and by maturing large exploration prospects within our highly-attractive frontier acreage.

This press release contains "forward-looking information" which may include, but is not limited to, statements with respect to discussions with SinoHan on matters relating to the termination of the SinoHan transaction including with regard to the US$3.88 million loan and a US$0.70 million amount payable in circumstances where the CPs are not met or waived by the longstop date and the buyer has complied with its obligations, the reduction of corporate and regional overheads and operational expenses the securing of additional funding, as well as a strategic review and the mention of alternatives. Such forward-looking statements reflect our current views with respect to future events, including discussions of matters relating to the termination of the SinoHan transaction, achieving further reductions of corporate and regional overheads and operational expenses, securing additional funding or achieving strategic alternatives, and the significant potential of exploration and discovered deposits. The forward looking statements are based on the following assumptions; that discussions of matters relating to the termination of the SinoHan transaction conclude with a resolution of matters acceptable to both parties, that the Company will be able to successfully further reduce its corporate and regional overheads and operational expenses, that further funding will be secured and that a strategic initiative or transaction will be achieved. These forward looking statements are subject to a number of risks and uncertainties, including that discussions of matters relating to the termination of the SinoHan transaction will not conclude with a resolution of matters acceptable to both parties, that the cost cutting program will be delayed or that it will not result in the reductions to our corporate and regionals overheads and operational expenses, that further funding will not be secured and that the strategic alternatives are not achieved. These circumstances indicate the existence of a material uncertainty related to events or conditions that may cast significant doubt about the Company's ability to continue as a going concern and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. See our Annual Information Form for the year ended December 31, 2014 for a description of risks and uncertainties relevant to our business, including our exploration activities. The "forward looking statements" contained herein speak only as of the date of this press release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise.

FOR FURTHER INFORMATION PLEASE CONTACT:
Tethys Petroleum Limited John Bell, Executive Chairman c/o Camarco
info@tethyspetroleum.com
www.tethyspetroleum.com

CAMARCO (Financial PR)
Billy Clegg / Georgia Mann
+44(0)203 757 4983

Source: Tethys Petroleum Limited