Tethys Petroleum Limited: Second Quarter 2012 Financial Results

Another Significant Period of Growth for the Business With Revenues Increased by 93%

GRAND CAYMAN, CAYMAN ISLANDS–(Marketwire -08/14/12)-Tethys Petroleum Limited (Cayman Islands) (“Tethys” or “the Company”) today announced its second quarter 2012 financial results. The results are underlined by a 93% increase in revenues over the second quarter of last year.

The Company reports financial results in accordance with International Financial Reporting Standards (“IFRS”).

RECENT FINANCIAL HIGHLIGHTS

—  USD16 million loan facility secured

—  Q2 2012 Total Revenue was USD10.2 million (Q2 2011 USD4.2 million)         —  Q2 2012 average oil and gas production was 6,683 barrels of oil             equivalent per day (q2 2011:5)(q2 2011:681 barrels of oil equivalent per day)

—  Q2 2012 average oil production from the Doris field in Kazakhstan was 2,927 barrels of oil per day (q2 2011:815 barrels of oil per day)

RECENT OPERATIONAL HIGHLIGHTS AND UPDATE

—  First shipment of commercial oil production through Aral Oil Terminal(the “AOT”) in Kazakhstan

—  Updated Kazakh independent Resource Report estimates the gross unrisked recoverable mean prospective oil resources to be 1.23 billion barrels of oil

—  AKD07 well to spud early September 2012

—  Akkulka Exploration Contract extended in Kazakhstan

—  Updated Tajik independent Resource Report estimates gross unrisked mean recoverable resources are 27.5 billion barrels of oil equivalent (boe)

—  Awarded seismic contract in Tajikistan, work about to commence

—  Signed Production Enhancement Contract (“PEC”) for a new oil field, the Chegara Group of Fields (“Chegara”), in Uzbekistan

 

Kazakhstan

Production / development

In the second quarter commercial oil sales commenced through the Aral Oil Terminal (the “AOT”), owned by Tethys and a 50% partner, which effectively halved the oil trucking distance and provides better control over the oil sales. Production was steadily increased over a period as each part of the sales chain was optimised. Moving into the third quarter production was temporarily disrupted in July due to an internal refinery issue that restricted rail cars availability within all of Kazakhstan. This issue has now been resolved and production has again reached approximately 4,000 bopd.

AOT Phase 2 construction that will allow a throughput capacity of up to 6,000 bopd is progressing on schedule with 2 x 1000 m3 tanks (approximately 12,500 bbls) having already been installed and with work currently focussing on the installation of associated dehydration and pumping equipment. Phase 2 of the AOT is expected to be fully operational by October 2012. With the current well stock it is forecast that a production rate of between 4,500 and 5,000 bopd can be achieved on a continual basis. Higher rates can be achieved but it is believed that these rates are most optimal for this reservoir with the current wells.

Appraisal / exploration

The AKD07 appraisal/exploration well is located to the south-east of the original AKD01 (Doris) discovery well and will target 3P reserves at the Cretaceous Aptian sand level in what is believed to be a channel sand system, whilst simultaneously targeting an exciting exploration prospect (named “Dyna”), which has been identified on the recently acquired seismic data from a bright amplitude anomaly at a slightly shallower level, and is interpreted to be part of a different, larger sand fan system. This Dyna prospect has 128 million barrels gross mean unrisked recoverable prospective resources attributed to it (Gustavson Associates). It is also targeting a third horizon, a Jurassic sandstone. The well is expected to spud in the second week of September 2012 and is forecast to take approximately 55 days to drill to a depth of 2,540 meters using Tethys’ own ZJ70 “Telesto” rig. It is then expected to take approximately one month to run logs, complete the well (assuming the logs are positive), receive State permissions and then test the well. The recently updated prospective resource report for Kazakhstan (Gustavson Associates) estimates gross unrisked recoverable mean prospective oil resources of 1.23 billion barrels of oil and this is the first well since that report to target this exciting exploration upside.

Final signatures on the approval for the extension of the Akkulka Exploration Contract until March 10th 2015 have now been received from the Ministry of Oil and Gas (MOG) and this will allow the Company to further appraise Doris and Dione Discoveries as well as explore wider within the block in targets highlighted by the recent Kazakh Resource Report.

Tajikistan

The Tajik Resource Report, independently produced by Gustavson Associates, calculated a total gross mean unrisked recoverable prospective resource of 27.5 billion boe across the Bokhtar PSC.

The Tajik seismic programme will commence in late August as most equipment is now in country and the contracted company “Prospectiuni” has completed the preliminary set-up and testing work. The programme, up to 870 km of 2D seismic acquisition, is designed to identify a drilling location for the first deep well expected to commence in 2013.

The initial analysis of the data from the aerial graviometry survey completed at the end of 2011 revealed several attractive prospective areas with the potential presence of very large deep sub-salt and sub-thrust prospects within the Bokhtar Production Sharing Contract (“PSC”) Area. The additional seismic about to be acquired will target these areas and provide the final data in a comprehensive programme to optimally locate a deep well.

This final stage of the seismic programme will involve the acquisition of new seismic in two areas; the Vaksh Valley and the Dushanbe Step. The programme has been designed to target these areas as the graviometry survey and other data have identified them to be the most likely to contain large deep prospects including potential Jurassic reefs located on the edge of likely Permian basement high features. Jurassic reefs form some of the most prolific fields in the Amu Darya basin (of which the Bokhtar PSC area forms part) and no wells have ever been drilled through the overlying salt layer into that horizon in this region of Tajikistan to date. This basin is extremely prolific containing oil, gas and condensate fields and indeed some of the world’s largest gas fields are located in this basin. These data also reveal significant potential in other parts of the PSC Area, including the Kulob area, however it has been decided to focus on the Vaksh Valley and the Dushanbe Step initially.

It is expected that this new seismic programme will further confirm the high potential in the Tethys PSC acreage. Tethys now owns an 85% interest in the Bokhtar PSC following the recent acquisition of an additional 34% interest from its partner in the project. Tethys continues to hold discussions with numerous potential farminees with the aim of concluding an agreement by year-end.

Further evaluation of the Beshtentak Field has been carried out in light of the initial success of the BST20 well. Three to four other candidates have been identified for workovers in different horizons and well preparation work is expected to commence at the end of August with initial results expected in late September.

Uzbekistan

Progress continues in Uzbekistan where Tethys recently announced Chegara Production Limited (“CPL”), its 100% owned subsidiary, signed a Production Enhancement Contract (“PEC”) for a new oil field, the Chegara Group of Fields (“Chegara”). In addition Tethys signed a Memorandum of Understanding (“MOU”), which agrees a timetable for the potential signing of an Exploration Agreement a highly prospective Exploration block in the North Ustyurt Basin.

The Chegara Group is an underdeveloped group of fields located 14 kilometers south-west of the existing Tethys asset of North Urtabulak, and contiguous to the prolific Urtabulak gas condensate Field, within the world-class Amu Darya Basin. The reservoirs comprise Upper Jurassic age carbonates at an approximate depth of 2,650 meters, trapped below a regionally prevalent salt and anhydrite seal. The oil is of moderate gravity and at present there are 3 producing wells all flowing naturally under reservoir pressure. This currently has limited existing oil production, and will form the baseline production under the new Chegara PEC with Uzbekneftegaz. Tethys believes there is substantial additional production potential in the field.

Tethys has collected and interpreted a significant volume of historic seismic, drilling, geological and production data relating to the Chegara Group of fields, and plans to initially work over the existing well stock using technologies and techniques that have been successfully implemented to increase production on the North Urtabulak Field over the previous 12 years under a very similar contractual arrangement. Furthermore, it is intended that additional geophysical data will be acquired on the field to identify undrilled areas that provide high potential upside. Currently there are only State reserves assigned to the field and no figures yet under NI 51-101 reporting procedures.

The contract will become effective following standard regulatory approvals, which include the issuance of a Presidential Decree and the completion of a Feasibility Study. The PEC has a term of twenty-five (25) years and under the new PEC CPL is allocated refined products for the crude oil it produces and sells these outside Uzbekistan. Furthermore Tethys has been granted exclusive rights to carry out operations with liquid hydrocarbons on Chegara.

The MOU signed with NHC Uzbekneftegaz sets out a fixed timetable to potentially sign an Exploration Agreement for a large Exploration block in the North Usyturt basin in Uzbekistan. TPL submitted a proposal for an exploration program for the block in June 2012. Once approved by NHC Uzbekneftegaz and the Government of the Republic of Uzbekistan an Exploration Agreement will be negotiated.

Gross production under the existing North Urtabulak PEC remains fairly constant at approximately 675 bopd.

The full Q2 Results together with a Management Discussion & Analysis have been filed with the Canadian securities regulatory authorities. Copies of the filed documents may be obtained via SEDAR at www.sedar.com or on Tethys’ website at www.tethyspetroleum.com . The summary financial statements are attached to this press release.

The above highlights along with other operational and financial details will be further discussed in a scheduled conference call. Details of the conference call can be found below:

Conference Call:

A conference call will be held at 8:00 AM Eastern Standard Time 1:00 PM British Summer Time on Wednesday, August 15, 2012. The North American conference call number is 866.383.8008 and the outside North America conference call number is +1-617.597.5341. The conference call code to use is 72526728. Please call in about 10 minutes before the starting time in order to be patched into the call.

Webcast:

The call is being webcast and can be accessed at:

http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=213714&eventID=4822812

Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan, Tajikistan and Uzbekistan. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.

This press release contains “forward-looking information” which may include, but is not limited to, statements with respect to our operations. Such forward-looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. See our Annual Information Form for the year ended December 31, 2011 for a description of risks and uncertainties relevant to our business, including our exploration activities. A barrel of oil equivalent (“boe”) conversion ratio of 6,000 cubic feet (169.9 cubic metres) of natural gas = 1 barrel of oil has been used and is based on the standard energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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