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Tethys Petroleum Shares Pick Up As Doto Drilling Excites

Shares in Tethys Petroleum (LON:TPL) (TSE:TPL) gained over 9 per cent Friday after announcing the start of drilling at its AKD08 exploration well in Kazakhstan.

AKD08, also known as the Doto well, located in the south-west of the Doris field, is targeting several potential hydrocarbon zones, including some proven elsewhere in the field, but also deeper targets that have yielded significant 'shows' in nearby wells, including the Doris oil discovery.

The Doto prospect is estimated to contain 22mln barrels of gross recoverable oil resources; with the deeper targets not included in this figure. Shares of Tethy jumped 9.2 per cent to 71 Canadian cents on Friday afternoon, extending year-to-date gains to more than 36 per cent.

The Doto well has a targeted depth of 3,500 metres and Tethys expects the drill program will take around 70 days to complete.

"We are very pleased to have started drilling on the Doto well commencing our exciting drilling program in Kazakhstan," said chief executive Graham Wall.

"The Doto well is targeting several zones which have been either commercially proven or shown to be promising on adjacent structures. The timing of the Dexa Exploration well is being co-ordinated with the drilling of the Doto well in order to optimise resources, thereby reducing costs."

The work program in Kazakhstan also includes seismic work, with a 2D program over the Kul-Bas block and a 3D campaign on the Akkulka block. According to Tethys, the respective seismic programs will improve the group's understanding of the sub-surface and better focus the longer term work in the attractive area that has a proved commercial oil and gas system.

The Central Asia-focused oil and gas explorer and producer has assets in Kazakhstan, Tajikistan, Uzbekistan and Georgia, the latter of which it made a move into this summer.

Earlier this week, the company also received final presidential approvals for a production enhancement contract (PEC) for the Chegara oilfields in Uzbekistan. The contract will now be registered with the relevant state authorities and work is expected to begin within the next two months.

The work program in Kazakhstan is being funded through the farm-out agreement on its Bokhtar venture in Tajikistan signed earlier this year with French major Total and China National Petroleum Corp (CNPC). Under the terms of that farm-out deal, Total and CNPC each now own a one-third stake in the Bokhtar venture, in Tajikistan, while Tethys's 85% owned Kulob Petroleum subsidiary has the other third. The Tajik authorities also awarded the partners new acreage - a further 1,186 square kilometres - in the area, with the initial period under the production sharing contract extended until 2020.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.