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Tethys Petroleum (LSE:TPL); (TSX:TPL) is certainly not be the biggest oil and gas exploration company. It also is certainly not the only company engaged in exploration and production in central Asian republics that were formerly members of the Soviet Union. However, it is currently the only independent exploration and production company operating in more than one of those republics. Unfortunately for the FTSE, TPL’s 3.5% increase in share price to 32.22 today is not enough for the company with a market cap of some £95 million to give enough traction for the index to keep it from taking a dive at the end of the week.
Tethys operates in Tajikistan and Kazakhstan, of which, the latter is the source of what could become a well-spring of increasingly good news. This morning, TPL announced the first successful shallow gas exploration well of 2014. Well number AKK17, located in the Kyzoloi and Akkulka Gas Development is expected to match the quality and production volume of nearby AKK15, which generates seven million cubic feet of sweet, dry natural gas per day. That is the equivalent of 1,167 boe per day. That product gets to market through the company’s own 56-kilometer pipeline that ties into the Bukhara-Urals line.
The company’s strategic plan for the year includes the drilling of ten additional wells. The location of those wells, all within a short distance, has been based upon recent 3D seismic testing that indicates an abundance of shallow gas targets in the area. The success of AKK15 and AKK17 seem to substantiate the seismic data and indicate that TPL’s plan is fundamentally sound.
“The success of the AKK17 well once again shows that our geological model and geophysical interpretation of these sandstones is robust,” said CEO Graham Wall. “This well will contribute significantly to our planned increased gas production and we are pushing forward with the rest of the program.” According to this morning’s report, Tethys continues to believe that “this highly prolific oil and gas field” continues to have significant potential.
The company is wasting no time in putting its money where its mouth is. The rigging from AKK17 has already been relocated to the site for AKK18. Utilizing a management staff that has more than 20 years of experience, not just in petroleum production, but in the former Soviet Union, Tethys remains optimally positioned to leverage its strengths to achieve its strategy for both short-term cash flow and upside potential.
