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 December 29, 2015 - 9:10 AM EST
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Tethys Petroleum Limited Press Release: Kul-Bas Contract Extended 2 Years/Corporate Update

GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - Dec. 29, 2015) -

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Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL)(LSE:TPL) today announced it has been granted a 2-year extension to the Kul-Bas Exploration and Production Contract (the "Contract") in Kazakhstan and also provided an update on the previously announced US$15 million convertible facility and C$25.5 million private placement with Olisol Investments Limited ("Olisol").

Kul-Bas Exploration and Production Contract 2-year Extension

Tethys is pleased to announce that the Ministry of the Republic of Kazakhstan ("MOE") has agreed to extend the Appraisal Period for the Contract by a further two years until November 11, 2017.

The Kul-Bas contract area (which currently covers an area of 7,632 km2 (1.9 million acres)) surrounds the Akkulka contract area which contains the Company's producing oil and gas fields. This extension gives Tethys further time to explore and appraise this attractive area which has several prospects and leads and with a proved commercial oil and gas system in the Akkulka block. Within this contract area is the Klymene exploration prospect. This extension is subject to the approval of an appraisal extension project and work programme and subsequent registration of a suitable addition to the Contract.

Interim Facility

A US$15 million convertible facility ("Interim Facility") was entered into with Olisol on November 19, 2015. The Company submitted draw down notices for the entire loan amount on November 21, 2015 but to date has only received US$5,138,918. Olisol has provided confirmation that these funds are available and the reason for non-payment to date has been due to USD transfer restrictions imposed by the bank authorities of Kazakhstan ("Currency Controls").

Olisol has confirmed that it will now pay the balance of the loan to Tethys, using funds that will not be restricted by Currency Controls, in the near future.

Private Placement

On December 8, 2015 Tethys also announced it had entered into a binding investment agreement (the "Investment Agreement") with Olisol setting out the terms and conditions upon which Olisol Petroleum Limited, a wholly-owned subsidiary of Olisol ("OPL"), has agreed to purchase 150 million new ordinary shares at a price of C$0.17 per ordinary share for total proceeds of C$25.5 million by way of a private placement (the "Placing") and to commit to backstop a further equity fundraising of 50 million shares at C$0.17 per share (the "Further Financing") to ensure that a minimum of C$8.5 million is raised. The Interim Facility, Placing and Further Financing together form the "Transaction".

On closing of the Placing, the outstanding principal and accrued, but unpaid interest under the US$15 million Interim Facility will be automatically converted into ordinary shares at a conversion price of C$0.17 per share.

Prior to entering into the Investment Agreement, Olisol advised Tethys that it had access to a US$51 million credit facility from a leading Kazakh bank (all of which is undrawn) in support of the Transaction, and Olisol has since then again confirmed access to such credit facility. As stated in the press release of December 8th, 2015 certain supporting information has been provided by Olisol and further supporting information is a condition to the parties continuing with the Transaction. This additional information has not yet been provided despite assurances by Olisol that the Company would have this information by now. Olisol has said that this information will be provided in the near future. Furthermore, closing of the Transaction will require removal or waiver of the Currency Controls that have prevented draw-downs under the Interim Facility.

Assuming that funds are received under Interim Facility in short order, and that all other conditions to closing are satisfied, the Company expects that the Placing will close towards the end of February 2016.

Current Financial Position

The Company currently does not have sufficient funding to meet its requirements beyond the next few months and therefore, if the Transaction does not proceed for any reason, there is significant doubt about the Company's ability to continue as a going concern. If this Transaction does not proceed, there is significant doubt that management will be successful in securing alternative funding or that management will have sufficient time to implement any alternative transaction, which would be required to enable the Company to continue as a going concern.

Other Corporate Updates

Tethys has received a further notice from AGR Energy Limited No 1 ("AGR Energy") in relation to the unsecured convertible debenture issued by Tethys to AGR Energy on 15 May 2015 ("Convertible Debenture") demanding repayment of the principal amount of US$7,500,000 and accrued interest. Tethys is disputing that events of default have occurred but plans to repay AGR Energy as soon as the proceeds of the Interim Facility have been received.

Also as disclosed in the Third Quarter financial results in respect of the notice to withdraw from the Joint Operating Agreement and Shareholders Agreement dated June 18, 2013 relating to the Bokhtar PSC in Tajikistan (the "JOA") and the underlying PSC (the "Contract") from CNPC Central Asia B.V. ("CNPC") and Total E&P Tajikistan B.V. ("Total"). The notice of withdrawal was served on the basis that Tethys has not made the payment on October 9, 2015 for the September Cash Call (approximately US$1.28 Million) issued by the Bokhtar Operating Company. Tethys has also not made any further payments since then. Tethys continues to consider its position under the JOA, the Contract and under applicable laws and equity and, as stated in its announcement on October 9, 2015, Tethys will use all commercially reasonable efforts to protect its interest in the Bokhtar PSC in Tajikistan. Olisol and Tethys continue to discuss this issue.

About Tethys

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.

About Olisol

Olisol and its subsidiaries and affiliates have investments in energy and oil & gas operations in the Russian Federation and Kazakhstan. Olisol is incorporated under the laws of Cyprus and is headquartered in Almaty, Kazakhstan.

Disclaimer

Some of the statements in this document are forward-looking. Forward-looking statements include statements regarding the intent, belief and current expectations of the Company or its officers with respect to Olisol's access to funds, the Interim Financing, the Placing and the Further Financing, and the extension of the Kul-Bas Exploration and Production Contract. When used in this document, the words "expects," "believes," "anticipates," "plans," "may," "will," "should" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements including risks and uncertainties with respect to completion of the Placing and the Further Financing and receipt of proceeds, required shareholder approval and required regulatory approvals, use of proceeds, waiver of Currency Controls and receipt of funds pursuant to the Interim Facility. No assurance can be given that funds will be received under the Interim Facility and Placing by the dates noted in this release or at all.

The forward-looking statements are based on the following assumptions: that the Placing and Further Financing will be completed and all shareholder and other required approvals will be obtained and that conditions will be fulfilled and funds received under the Interim Facility and the Investment Agreement within anticipated timeframes.

No part of this announcement constitutes, or shall be taken to constitute, an invitation or inducement to invest in the Company or any other entity, and shareholders of the Company are cautioned not to place undue reliance on the forward-looking statements. Save as required by the Listing Rules and applicable law, the Company does not undertake to update or change any forward-looking statements to reflect events occurring after the date of this announcement.

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

info@tethyspetroleum.com
www.tethyspetroleum.com


Source: Marketwired (December 29, 2015 - 9:10 AM EST)

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