Tethys Petroleum rockets higher as big guns sign up at Bokhtar - UPDATE

Fri 9:40 am by Philip Whiterow

***updated with management comments from conference call***

Tethys Petroleum (LON:TPL) (TSE:TPL) shares rocketed higher as it brought in two of the world’s largest oil firms to develop its huge, 35,000 square kilometre Bokhtar field in Tajikistan.

French giant Total and China’s CNODC will both take a third share in the project, while Tethys’ Tajik subsidiary Kulob Petroleum (KPL) will also receive US$60 mln for back costs.

David Robson, Tethys executive chairman and president of Tethys, described it as “tremendous deal” for the company and would be extremely beneficial for Tajikistan.

“It rewards us for taking the first steps into Tajikistan in 2006 and validates our extensive technical work to date.

“Total and CNPC are world class companies and we look forward to working with our new partners in Tajikistan which in our view has world class potential.”

He added that Total and CNODC have the experience to explore and develop giant petroleum deposits, while the new pipelines carrying gas from Central Asia to China provide a potential export route for any sizeable gas discovery.

“This farm-out also provides significant additional funding for our company to accelerate our other current projects," he said.

Indeed, on a conference call this morning, Robson said that there is still a lot of exploration and development work to be done at its operations in Kazakhstan, where it has a "fantastic oil discovery" and has identified several prospects nearby. The company is planning to drilling 2 to 3 new wells in the area, with detailed plans to be laid out early in the new year.

Kulob, which is 85% owned by Tethys, will be partially carried on a US$80 million initial work programme of further seismic data acquisition in Tajikstan, followed by a deep exploration well. The farm-out is subject to final Tajik governmental approvals and State consents.

The PSC (production sharing contract) will be operated by a joint operating company to be set up and owned by KPL, Total and CNODC, in proportion to their ownership in the PSC.

Robson said that the final work program will be decided by the partners sometime in the first quarter of next year, with regards to choosing the "best initial target".

Indepedent assessors have put the size of the Bokhtar PSC resource at a gross unrisked mean recoverable prospective 27.5bn barrels of oil equivalent, consisting of 114 trillion cubic feet (3.22 trillion cubic metres) of gas and 8.5 billion barrels of oil.

On the call this morning, Robson also took note of Tethys' new field in Uzbekistan, where it is waiting for government approvals, after which it hopes to start an initial work program. The company's CEO said management believes first production at this field can be achieved "quite early".

Shares in Tethys jumped by more than 40% to 37p in London morning trade, and were lately up over 30%.