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Tethys Petroleum on track to extend Kyzyloi gas contract

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Tethys Petroleum (LON:TPL) (TSE:TPL) told investors that it is on track for a 15 year extension for its Kyzyloi gas contract in Kazakhstan after the authorities approved a reserves report.

The approval is a precursor for the extension, Tethys said.

It explains that the Kyzyloi contract area spans 287 square kilometres, and is one of the areas that hosts Tethys’s shallow gas production. 

An extension will give the company significantly more time to produce natural gas from what it says is an attractive area.

Tethys also reported on operations in the surrounding Akkulka area, where it has started drilling the fourth new well of current program.

Testing on the first three wells of the program is expected to get underway early next month, and its scheduled to last for six to eight weeks. AKK20, the fourth well, will also be tested should initial findings indicate success.

After testing, the company will then obtain ‘state reserves’ and then the wells will be tied into production infrastructure. Tethys also said it has ordered equipment as part of its planned expansion of gas production, starting in early 2015.

"Obtaining updated state reserves for Kyzyloi places us on track to secure a long extension to the Kyzyloi gas field production period,” said Steve Elliot, Tethys vice president for project development.

“The program on Akkulka continues apace, with new wells being drilled, testing and tie-ins planned for this summer, and with important facilities such as the gas dehydration equipment now moving forward. 

“Our project team is focused on meeting the objective of tripling gas production by the beginning of next year and our commercial negotiators are working on achieving significant increases in gas prices, all of which should add significantly to cash flow from the project in 2015."

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