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Tethys Petroleum Gets Four Year Extension For Akkulka Project

|Includes: Tethys Petroleum, Ltd. (TETHF)

Tethys Petroleum (LON:TPL) (TSE:TPL) has been granted a four year extension to the Akkulka exploration contract in Kazakhstan.

The extension, which is two years longer than previous awards, will allow Tethys to fully assess the Akkulka acreage.

It also effectively extends the contract for production from the Doris field, which was found within the permit area.

"I am pleased that through this extension we have secured appraisal and production rights on this very important contract area for another four years," said chairman John Bell.

"It demonstrates the very good working relationship we have with the Ministry of Energy and other state bodies, and bodes well for our future operations in Kazakhstan."

In Kazakhstan, Tethys is currently producing oil and gas comprising approximately 2,400 barrels of oil per day (bopd) and 260 thousand cubic metres per day (mcm/day) of gas.

SinoHan's offer to purchase 50% plus one share of the company's Kazakhstan assets is expected to complete in the first quarter of 2015. On completion, Tethys will receive approximately US$71mln in cash, with SinoHan also obligated to fund the first US$9mln (of the forward work program).

"The SinoHan transaction alone values the Kazakhstan assets at US$150 mln (plus upside potential bonuses); this equates to 27p a share (CDN$0.48) as compared to the current share price of 14p (CDN$0.26)," said the company in a statement spelling out its new plans to close the significant value gap between its share price and the assets of its business in early December.

Tethys shares are currently trading at 23 Canadian cents in Toronto. The news today comes about a month after Tethys decided to overhaul its board following the requisition of an EGM by shareholder Pope Asset Management that called for the removal of most of the company's previous directors.

The company recently said it is expecting a "step change" in revenue when it brings additional gas production in Kazakhstan on stream this quarter. Last week it signed a one-year gas supply contract for 2015 at a price of $75/mcm ($2.12 per 1,000 cubic feet), which represents a 42 percent increase over the current realized gas price.

Tethys also has assets in Georgia and Tajikistan, where the Central Asia-focused oil and gas company in is partnership with Total and CNPC on the huge Boktar development. In Georgia, it is in discussions with partner Georgian Oil and Gas to offset its current funding obligations of approximately US$5 million through reducing its interest.