10-12,000 boepd production by year end, massive increase in resources on a key acreage & we are drilling with our own rig = £118m market cap? I don't think so.

Tethys Petroleum Stocks Jump on News of 27.5 Billion Barrels of Oil Find

UPDATED: Central Asia-focussed oil and gas exploration and production company Tethys Petroleum Limited (LSE:TPL) (TSX:TPL) now holds an estimated 27.5 billion barrels of oil equivalent (boe) from its Tajikistan, the company announced today.

The latest estimate is a sharp increase in the previously estimated prospective resource of about 1.14 billion boe buried within the same basin as the super-giant gas fields in nearby Turkmenistan and Uzbekistan.

The independent report stated Tethys’ 35,000-square kilometre asset in the Central Asia country has gross unrisked mean recoverable prospective resource of 114 trillion cubic feet of gas and 8.5 billion barrels of oil condensate.

Shares of Tethys jumped 36.6% on the London Stock Exchange, gaining 15 pence to 56 pence by 12:00 PM GMT, in a positive response to the development.

Enormous and Untapped Potential

“Tethys is operating in a world class basin with enormous and untapped potential,” stated Tethys’ Chairman, President, and Chief Executive Officer, Dr. David Robson.

“I believe that these unrisked mean prospective resources are significantly greater than the estimated remaining reserves and unrisked resources in the UK North Sea.”

 

http://www.advfn.com/newspaper/kenneth-mondero/6864/tethys-petroleum-stocks-jump-on-news-of-27-5-billion-barrels-of-oil-find

In reply to Isaac, post #19

Tethys Petroleum Stocks Jump on News of 27.5 Billion Barrels of Oil Find
Misleading headline of the year?

Tethys use

http://www.gustavson.com/about/

Their team seems to be a small one :

http://www.gustavson.com/about/our-team/

to produce the eye catching numbers released today , can anyone comment as to their reputation , FWIW I've never seen the name before on any Reserves report for an E & P

Thx for any responses

Tethys Petroleum Stocks Jump on News of 27.5 Billion Barrels of Oil Find
Misleading headline of the year?

Indeed. I'm sure some here don't know the difference between prospective resources and reserves.

Cairn's Rajesthan assets were subject to the same misleading publicity, but they never quite had them described as a find.

Maybe that's why the spike was a little higher than I was expecting.

Buffy

In reply to thebuffoon, post #22

I thought I'd dig around for any quoted company reserve reports produced by Gustavson that have had time to move towards fruition , very few are readily available but this one ;

http://www.manaspetroleum.com/s/NewsReleases.asp?ReportID=32......

So dating from 2008 with some impressive numbers , well how has it panned out so far for shareholders?

http://www.manaspetroleum.com/s/StockInfo.asp

http://www.google.co.uk/finance?q=OTC%3AMNAP

Can anyone unearth a more promising example of Gustavon Resource Reports turning into success for shareholders?

Genuinely curious as a potential investor?

Cheers

PS also posted on TMF

JTCod's posts on TPL - Definetly worth reading to get a good understanding of the Investment case - I think the posts are better then ee's Soco fess up post all those years back.

http://uk.advfn.com/cmn/fbb/thread.php3?id=13974731&from=56587#firstpost

http://uk.advfn.com/cmn/fbb/thread.php3?id=13974731&from=56588#firstpost

http://uk.advfn.com/cmn/fbb/thread.php3?id=27040151&from=1914#firstpost

Hi Isaac,

Dontcha think it'd be a good idea to ask your new hero JTCod to comment on rhomboid1's info re Gustavson just unearthed (post 23 above) ? Rather than just gratuitously/offensively side-swipe ee ?

Manas' shareprice performance since Gustavson's P50 appraisal (2.5BN TCF in Albania) 4 years ago doesn't seem to have translated into the sort of result you're hoping for from TPL !

USD 5.00+ (then) to USD 0.15 (now) is not  the sort of shareprice progress that I'm normally targeting........

I'm now a (modest) holder of TPL, myself btw, but this is definitely one for  the SOB (Sh*t or Bust - trademark applied for) portfolio.

ATB

extrader

If you think it is a SOB holding then you clearly have'nt done your research.

I did a lot of research prior to buying and sat on the side waiting for the right price.

TPL is my 2 nd largest holding behind Soco, If Soco sold up I would be putting more money towards TPL.

Hi Isaac,

To each his own...

I would simply point out that Gustavson's work re Manas/Petromanas Energy that spoke v positively of Albania in 2008 was 'reworked' in 2009-10 by GLJ Consultants and resulted in much lower numbers.

Shell recently JV'd into the Albanian op (which I suppose is some kind of endorsement), but they were only interested in the concession areas (nos. 2 and 3) that include the existing Bankers Petroleum operated Patos Marinza, which has been producing for nearly 100 years.....so hardly 'frontier' stuff.

Having said which, I'd probably also put some more into TPL post a Soco sale, but unlikely to be more than 1 or 2 % of the proceeds....

Oh,btw, apart from working for Manas on Albania, Gustavson also appear to have worked for them on THEIR Tajikistan prospects.....and on THEIR Mongolian prospects (coincidentally adjacent to Soco's relinquished concession - and PetroMatad's unsuccessful one).

It's surely a small world !

Worth a listen

Tethys Petroleum production and super giant potential

Thursday, July 19, 2012

David Robson, President & CEO of Tethys Petroleum, talks about 1.17 Bbo & 606 Bcf gas - with 127 Mbo near term potential + other prospects & 7,000 bbls a day production in Kazakhstan, operations & acquisitions in Uzbekistan, potential for super giant fields in Tajikistan, & increasing cash flow (July 2012).

http://www.proactiveinvestors.co.uk/companies/stocktube/1247/tethys-petroleum-production-and-super-giant-potential-1247.html

In reply to Isaac, post #28

Isaac

They seem evasive over the cash position , they are running on empty with even their drilling equipment charged as security for a loan,

When do they turn cash positive?

How much headroom will they have in their 14% per annum ring fenced loan facility in Kazakh at that point?

Because if they run out of cash all Equity holders face substantial/massive dilution.

Any view welcome

In reply to rhomboid1, post #29

Mmm..according to the interview with Robson in Isaac's post (number 28), they are currently cash flow positive..if you believe that!

One would certainly expect them to be cash generative once the Doris field gets up to 8-10,000 bopd, though it still leaves the question of how they will fund a deep well in Tajikistan; only options seem to be either raising funds or farming out. Farming out, obviously, would be by far the preferable of the two options.

On the probity or otherwise of the Gustavson report, I was interested to read in their prospectus that the TRACS resource report for Tajikistan listed P10 prospective resources of 20+ billion bbls..so (given the further information acquired since then) it is perhaps not such a surprise that the Gustavson report came up with such a huge figure.

Hi LBR

Yes he said they were cash generative , no numbers mind, and in the next breath started to talk about the Kazakh loan facility!

Perfect non-sequitur...

rhomboid1

-TPL is generating more cash now with a higher netback due to the upgrade of the Aral Oil terminal, I think the netback was previously $30/bbl but is now roughly $35-40/bbl according to the conference call : http://edge.media-server.com/m/p/6jttdztq/lan/en

-They are also producing significantly more Oil then they did in Q1. According to the Q1 results presentation (http://www.tethyspetroleum.com/tethys/irwebcasting.action) it read

Q1 2012 average oil production from the Doris field in Kazakhstan was
1,038 barrels of oil per day (Q1 2011; 337 barrels of oil per day)

But if you read the May 2012 Corp presentation you will note current production of Oil as of May was 4,830 bopd slide 3.

So why was the Oil production so low in Q1 which in turn generated a loss for the company? Well because they had a very bad winter which prevented large quantities of Oil being trucked 450km to the ember terminal - there were periods of time when they could not truck the Oil, however with the upgrade of the AOL Terminal they are never going to have this problem again - they are now trucking 230km away and no longer need to take the northern part of the trucking route that was impacted by the adverse weather.

They are also expecting to take Oil production in excess of 5,000 bopd in phase 2 - Julian Hammond talks about TPL accumulating cash in 2H and they are not interested in raising any cash via equity placing.

A deep drill in Tajikstan is expected in Q1 2013, TPL are currently in discussions with various farm in partners to fund the drill - we should have news of farm in before the end of the year.

The new Kazakh-China gas pipeline is expected to be open in 2013 - this is likely to result in a 5-7x increase in the gas price TPL are currently recieving.

TPL are due to upgrade AOL by the end of 2012 so phase 3 capacity can produce 12,000 bopd & store 125,800 bbl of Crude 12,580 of refined product storage compared to the current production capacity of 6,3000 bopd and 12,580  bbl crude storage - I think this is going to be quite transformational for the company.

I am getting the impression that a lot people have simply read the recent results, seen the cash burn and have become a tad concerned about the cashflow without looking further at the detail & understanding why the Oil production was so low.

Therefore when the results are published for Q2 next month - the markets could be in for a surprise.

Also when TPL get their export licence next year the cashflow will improve further.

George Soro's fund holds quite a few of these.....I am very excited about the coming months and the next 24 months. There are'nt many opportunities like this that offer HUGE upside with little downside and can self fund the upside.

In reply to extrader, post #27

extrader,

I would simply point out that Gustavson's work re Manas/Petromanas Energy that spoke v positively of Albania in 2008 was 'reworked' in 2009-10 by GLJ Consultants and resulted in much lower numbers.

Hmm. The original Gustavson report stated "unrisked" P50 2.987 bn bbl and 3.014 TCF:

http://www.manaspete.com/s/NewsReleases.asp?ReportID=280518&_Type=News-Releases&_Title=Independent-Resource-Evaluation-Confirms-Existence-of-Giant-Oil-and-Gas-Pro...

GLJ's report comes up with total P50 of 214mmbbl and 350mmboe (2.1 TCF):

http://www.petromanas.com/s/News_Releases.asp?ReportID=473705

But this report considers only 6 prospects and is risked for discovery! Taking that into consideration the original numbers don't seem too bad to me (particularly the gas) considering they had limited seismic?

In reply to swanvesta, post #33

Edit: Apologies for missing your earlier comment extrader. I am not clued up on these Albanian assets, so can't comment on your assessment of Shell's involvement,

In reply to rhomboid1, post #31

rhomboid,

As far as I remember Robson was being asked to explain capital structure. So it is pretty obvious he has to mention the loan facility which, as I've explained elsewhere, was being put in place end of March and is (I imagine) going to be put to good use testing the prospects already drilled in Kaz.

I've also done a simple cashflow assessment elsewhere and come to the conclusion that at current production they will be breaking even, or slightly positive, before significant capex. So capex plans are indeed dependent on the loan and the extra 2000 bopd planned by end of year. But there are other plans in the pipeline to bump up revenue, which have also been discussed, but which you have not yet seen fit to comment on. I look forward to that, if it should ever happen :o)

Tom

In reply to swanvesta, post #35

Hi Tom

Isaac did an excellent upside case a few posts ago which made me stop and think, in summary my nervousness is ;

1) Cash is tight and loan facilities hard too come by , hence the encumbered drilling equipment, if they were to hit a bump in the route to sustained cash generation then they are pretty much out of options other than a deeply discounted equity raise. The current price action and volume traded suggests at least one major holder is unsupportive and dumping stock and this further undermines the price at which any fresh equity could be raised.

2) they appear to have high overheads which doesnt sit comfortably with the above! Are there some hidden costs to doing business in the "stans"?

3) Mr Robson made the claim of being cash generating in an interview (not an RNS) but then didn't expand on it at all, bizarrely moving straight on to the new loan facility , given how key the cash neutral or better issue is to the investment case , why so shy?

Overall that makes me twitchy ...but still interested , I'd be more interested still if relying on any Gustavson reserves report has demonstrably made investors money!

The cash crunch is now so all the "sunlit uplands"stuff is largely irrelevant unless these plans to generate cash do so before they run out of headroom.

They may romp away in future but if I were holding I'd be seeking more short term cash vs debt headroom info .

Cheers

3

In reply to rhomboid1, post #36

Hi rhomboid,

Agree it's not a totally comfortable situation. But the real crunch was 3 months ago, near the end of the interminable wait for the AOT to open. This company actually built a rail terminal, with associated facilities, in some dodgy backwater in the 'stans'! Those of us who were around back then are probably wondering what all the fuss is about, and the fact the management managed to steer through that without a cashcall actually makes me more comfortable now. Though I do get nervous from time to time at the apparently high cost of doing 'business' here (they operate in several 'stans' of course), and the fact that people like you question the status of the competent persons they are engaging.

On the subject of Gustavson, as already posted I tracked down the Petromanas revised resource report, and didn't feel it was a massive reduction, all things considered. Doesn't exclude GLJ being less than trustworthy too of course!

To repeat what I said elsewhere about cash, at current level of AOT sales I genuinely think they are just about breaking even, before capex. Hence the absence of any desire to qualify from Robson. Any significant capex requires them to dip into their loan facility - they are due to appraise a couple of wells in H2 and I imagine they are already incurring expenses for long-lead items. Hence the loan facility is very material to their capital situation and THAT was the question Robson was answering. It's a hand to mouth existence for sure, and they do need to spend a bit now on these appraisals to increase revenue so that the future is more comfortable. But it's controllable (barring upsets) in the sense they can take the foot off the pedal when they want to.

I could be deluded of course.

Cheers,

Tom