2014-11-14

Third Quarter 2014 Financial Results and Activity Update

GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - Nov. 14, 2014) - Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL)(LSE:TPL) today announced its Third Quarter 2014 Financial Results and activity update.

Financial Highlights

--  Loss for the period from continuing operations USD2.4 million (Q3: 2013
    USD4.9 million), a decrease of 51%
--  Basic & diluted loss per share of USD0.01 cent from continuing
    operations (Q3: 2013 USD0.02 cents)
--  Oil & gas revenue from continuing operations of USD7.3 million (Q3 2013:
    USD9.1 million)
--  Production expenses reduced by 3% to USD3.0 million (Q3 2013: USD3.1
    million)
--  Administrative expenses reduced by 12% to USD4.2 million (Q3 2013:
    USD4.8 million)
--  Business development expenses reduced by 16% to USD0.5 million (Q3 2013:
    USD0.6 million)
--  Capital expenditure of USD6.2 million (Q3 2013: USD4.9 million)
--  Cash & cash equivalents at the end of Q3 2014 of USD 10.1 million
    including cash held in a disposal group (Q3: 2013 USD51.2 million)

Denise Lay, Director and Chief Financial Officer of Tethys, commented; "Q3 has seen consistency of production over Q2 and reductions in operating, business development and G&A costs. Cost reduction is a key focus for the Company and a comprehensive plan of cost reductions, which will be phased, has already commenced, the results of which will be realised over the coming months. This, combined with an anticipated step change in revenue when we bring on stream additional gas production in Q1 2015, should be reflected in the bottom line results in Q1 and Q2 of 2015."

Operations Highlights

Kazakhstan

Shallow Gas Program Update All the key items within the next phase of the gas development program are on track and it is expected that the additional production will be ready to be brought on stream in January 2015. This includes the installation of a gas dehydration unit and construction of shallow gas tie-ins for the new gas wells to hook up the previously drilled gas wells.

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.

SinoHan Transaction Update

In October 2015 Tethys announced that it had agreed with SinoHan Oil and Gas Investment 6 B.V. ("SinoHan"), part of HanHong, a Beijing, PRC based private equity fund, to extend the one-year longstop date for completing the sale by a period of six months, until 1 May 2015. This extension keeps the current agreement in place while discussions continue with the Kazakh State.

This deal is based upon USD75 million for the 50% (+ 1 share) interest.

Once this transaction has completed the new partnership can then move forward quickly to further develop the shallow gas resource where the Company has identified a number of new attractive prospects, drill a horizontal well on the Doris field to increase production, and also move ahead with drilling the exciting deeper Klymene exploration prospect.

Tajikistan

The seismic acquisition programme planned to identify the location of the first deep well to be drilled commenced in the third quarter. 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 data from the survey will be concurrent so interpretation and mapping will be underway before the end of this year. This data set will assist in the identification of the best possible location to spud the first deep well by the end of 2015.

The partnership of Tethys, Total and CNPC, together as Bokhtar Operating Company, are looking forward to the results of this survey with all partners keen to move forward with the drilling of the first deep well on this very prospective acreage.

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 summary financial statements are attached to this press release. Investors are advised to review the Third Quarterly 2014 financial statements and the notes to those financial statements in detail as they contain important information.

The Company's Third Quarter 2014 financial statements are prepared under International Financial Reporting Standards ("IFRS").

Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.

This press release contains "forward-looking information." Such forward-looking statements reflect our current views with respect to future events and are subject to certain assumptions. See our Annual Information Form for the year ended December 31, 2013 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.

Tethys Petroleum Limited
Condensed Consolidated Statement of Financial Position (unaudited)
(in thousands of US dollars)
                                                      As at
                                    ----------------------------------------
                                      September 30, 2014   December 31, 2013
Non-current assets
Deferred tax                                         301                 322
Intangible assets                                 45,119              31,074
Property, plant and equipment                     14,687              15,291
Restricted cash                                      651                 660
Investment in jointly controlled
 entity                                                4                   4
                                                  60,762              47,351
Current assets
Trade and other receivables                          660               1,358
Advances                                               -               4,000
Cash and cash equivalents                          7,914              25,109
Restricted cash                                      583                 475
Assets of a disposal group
 classified as held for sale                     171,140             156,325
                                                 180,297             187,267

Total assets                                     241,059             234,618

Equity
Share capital                                     33,645              28,756
Share premium                                    321,724             307,295
Other reserves                                    42,837              42,621
Accumulated deficit                            (193,378)           (182,533)
Non-controlling interest                           6,158               6,454
Total equity                                     210,986             202,593

Non-current liabilities
Financial liabilities - borrowings                 5,923                   -
                                                   5,923                   -
Current liabilities
Financial liabilities - borrowings                 5,109               4,965
Derivative financial instruments -
 warrants                                              -                  17
Current taxation                                     172                 144
Trade and other payables                           2,642               4,946
Provisions                                             -                 520
Liabilities of a disposal group
 classified as held for sale                      16,227              21,433
                                                  24,150              32,025

Total liabilities                                 30,073              32,025

Total equity and liabilities                     241,059             234,618


Tethys Petroleum Limited
Condensed Consolidated Statement of Comprehensive Income (unaudited)
(in thousands of US dollars)

                               Three months ended      Nine months ended
                            ------------------------------------------------
                                          September               September
                              September    30, 2013   September    30, 2013
                               30, 2014    Restated    30, 2014    Restated

Sales and other revenues          7,261       9,082      21,165      28,418

Sales expenses                     (534)       (831)     (1,776)     (2,356)
Production expenses              (2,963)     (3,137)     (9,975)     (9,380)
Depreciation, depletion and
 amortization                      (281)     (3,581)       (580)    (11,350)
Business development
 expenses                          (461)       (628)     (1,781)     (1,605)
Administrative expenses          (4,181)     (4,848)    (14,388)    (14,046)
Transaction costs of assets
 held for sale                     (114)          -        (245)          -
Share based payments                (20)       (205)       (216)       (751)
(Loss)/gain on Tajik farm-
 out                                  -        (206)          -       8,453
Foreign exchange loss - net         (98)       (140)       (168)        (67)
Fair value gain on
 derivative financial
 instrument - net                     -         516          17         548
(Loss)/profit from jointly
 controlled entity                  (44)        201      (1,312)        589
Finance costs - net                (215)       (732)     (1,200)     (2,249)

Loss before tax from
 continuing operations           (1,650)     (4,509)    (10,459)     (3,796)

Taxation                           (712)       (378)         20      (2,532)

Loss for the period from
 continuing operations           (2,362)     (4,887)    (10,439)     (6,328)

Loss for the period from
 discontinued operations net
 of tax                             (57)       (501)       (702)       (689)

Loss and total comprehensive
 income for the period           (2,419)     (5,388)    (11,141)     (7,017)


Loss and total comprehensive
 income attributable to:
 Shareholders                    (2,321)     (5,177)    (10,845)     (6,578)
Non-controlling interest            (98)       (211)       (296)       (439)

Loss and total comprehensive
 income for the period           (2,419)     (5,388)    (11,141)     (7,017)


Loss per share attributable
 to shareholders:
Basic and diluted - from
 continuing operations            (0.01)      (0.02)      (0.03)      (0.02)
Basic and diluted - from
 discontinued operations              -           -           -           -


Tethys Petroleum Limited
Condensed Consolidated Statement of Cash Flows (unaudited)
(in thousands of US dollars)

                             Three months ended           Nine months ended
                    --------------------------------------------------------
                    September 30, September 30, September 30, September 30,
                             2014          2013          2014          2013
Cash flow from
 operating
 activities
Loss before tax from
 continuing
 operations                (1,650)       (4,509)      (10,459)       (3,796)
Loss before tax from
 discontinued
 operations                   (57)         (551)         (704)         (681)

Adjustments for
 Share based
  payments                     20           205           216           751
 Net finance cost             215           734         1,200         2,249
 Depreciation,
  depletion and
  amortization                281         3,721           580        12,234
 Fair value gain on
  derivative
  financial
  instruments                   -          (516)          (17)         (548)
 Net unrealised
  foreign exchange
  (gain)/loss                (147)          113           (64)           (2)
 Loss/(gain) on
  Tajik farm-out                -           206             -        (8,453)
 Loss/(profit) from
  jointly controlled
  entity                       44          (201)        1,312          (589)
 Movement in
  deferred revenue              -          (491)            -        (1,049)
 Movement in
  provisions                 (200)            -          (520)            -
 Net change in
  working capital            (613)       (4,200)       (1,161)       (2,943)
Cash used in
 operating
 activities                (2,107)       (5,489)       (9,617)       (2,827)
 Corporation tax
  paid                          -           (50)         (148)         (276)
Net cash used in
 operating
 activities                (2,107)       (5,539)       (9,765)       (3,103)
Cash flow from
 investing
 activities
Interest received              50            60           148           152
Expenditure on
 exploration and
 evaluation assets         (1,633)         (945)       (6,199)       (1,458)
Expenditure on
 property, plant and
 equipment                 (4,583)       (4,040)      (12,118)       (5,841)
Movement in
 restricted cash              (14)          (10)         (474)         (635)
Investment in
 jointly controlled
 entity                         -             -             -            (4)
Repayment of loan
 receivable from
 jointly controlled
 entity                         -             -             -           400
(Costs)/proceeds of
 Tajik farm-out                 -          (206)            -        63,199
Movement in advances
 to construction
 contractors                 (304)       (1,409)       (2,032)       (2,321)
Movement in value
 added tax
 receivable                    72           189           (21)        1,734
Net change in
 working capital           (1,063)          704          (251)       (1,387)
Net cash (used
 in)/generated from
 investing
 activities                (7,475)       (5,657)      (20,947)       53,839

Cash flow from
 financing
 activities
Proceeds from
 issuance of
 borrowings, net of
 issue costs                3,884             -        11,604         4,714
Repayment of
 borrowings                (1,113)       (1,216)       (8,204)       (4,203)
Interest paid on
 borrowings                  (434)         (631)       (1,357)       (1,814)
Proceeds from
 issuance of equity             -             -        14,947           523
Share issue costs            (133)            -        (1,379)            -
Movement in asset
 retirement
 obligation                     -          (253)            -          (253)
Payment of other
 liabilities                  (27)          (70)         (126)         (212)
Net cash generated
 from/(used in)
 financing
 activities                 2,177        (2,170)       15,485        (1,245)
Effects of exchange
 rate changes on
 cash and cash
 equivalents                 (206)           38          (437)          (34)
Net
 (decrease)/increase
 in cash and cash
 equivalents               (7,611)      (13,328)      (15,664)       49,457

Cash and cash
 equivalents at
 beginning of the
 period                    17,678        64,535        25,731         1,750
Cash and cash
 equivalents at end
 of the period             10,067        51,207        10,067        51,207
Cash and cash
 equivalents at end
 of the period
 comprises:
Cash in assets of a
 disposal group held
 for sale                   2,153             -         2,153             -
Cash and cash
 equivalents                7,914        51,207         7,914        51,207
                           10,067        51,207        10,067        51,207

FOR FURTHER INFORMATION PLEASE CONTACT:
Tethys Investor Relations: Tethys Petroleum Limited
Sabin Rossi
Vice President Investor Relations
srossi@tethyspetroleum.com

Media / IR Enquiries
Asia Pacific
Quam IR:
Anita Wan
+852 2217 2999

info@tethyspetroleum.com
Web: www.tethyspetroleum.com
Twitter: www.twitter.com/tethyspetroleum

Source: Tethys Petroleum Limited