Tethys Announces USD 15 Million Equity Financing

Tethys Announces USD 15 Million Equity Financing

Tethys Petroleum Limited (“Tethys” or “the Company”) (TSX:TPL)(LSE:TPL) announces today that it has conditionally raised USD 15 million through the issue of 36,894,923 new ordinary shares to new and existing investors at GBP 0.24 per share (the “Placing Price”). Several of the Company’s large existing shareholders have participated in the financing.
The Company has entered into a placing agreement with FirstEnergy Capital LLP and Cantor Fitzgerald Europe as placing agents (“Placing Agents”) to raise USD 13,000,000 with new and existing investors (the “Placing”) and agreed to raise USD 2,000,000 with new and existing investors by way of direct subscription (the “Direct Subscription”). The Direct Subscription and the Placing are together referred to as the “Offering”. When completed, the Offering will raise gross proceeds of USD 15 million.
The Offering will be completed in two tranches. 17,105,764 ordinary shares will be issued in the “First Tranche” (the “First Tranche Shares”), raising gross proceeds of USD 6.95 million. 19,789,159 ordinary shares will be issued in the “Second Tranche” (the “Second Tranche Shares”), raising gross proceeds of USD 8.05 million.
Application has been made to the Financial Conduct Authority (“FCA”) for the First Tranche Shares to be admitted to listing on the Official List and to the London Stock Exchange for such First Tranche Shares to be admitted to trading on the London Stock Exchange’s main market for listed securities (“First Tranche Admission”). It is expected that First Tranche Admission will become effective on or around 19 May 2014.
Subject to the approval of a prospectus by the FCA, application will be made to the FCA for all the Second Tranche Shares to be admitted to listing on the Official List and to the London Stock Exchange for such Second Tranche Shares to be admitted to trading on the London Stock Exchange’s main market for listed securities (“Second Tranche Admission”). It is expected that Second Tranche Admission will become effective on or before end June 2014.
The net proceeds of the Offering will be used by Tethys for continued development of its Kazakh shallow gas programme including installation of a gas dehydrator, drilling of new shallow gas wells, and the purchase and installation of tie-in pipelines and associated infrastructure (seven previously drilled successful gas wells are ready to be tied in now). Completion of this work should result in an increase in current gas production by the beginning of 2015 at which time Tethys plans to begin sales into the Chinese market and potentially realise higher prices than current levels. This programme must be implemented now in order to meet the target of producing the additional gas by year-end.
As further background in November 2013, Tethys announced that it has entered into a definitive agreement for the sale of 50% (plus one share) of its Kazakh oil & gas assets to SinoHan Oil and Gas Investment B.V.(“SinoHan”), part of HanHong, a Beijing, PRC based private equity fund for an initial payment of USD 75 million plus potential bonuses. The sale is subject to Kazakh State approvals, including the waiver on pre-emption (Article 36). The Company is confident that these approvals will be given at some point this year, but does not know the precise date. As such it was necessary to carry out this equity placing to provide the funds to ensure that the increased gas production rates can be achieved as planned. It should be noted that if the Kazakh State elects to pre-empt, an event that the Company considers extremely unlikely, then the State should fulfill the terms of the definitive agreement with SinoHan including paying the initial USD 75 million to Tethys to become a 50% shareholder in the project.
Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region.
This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.
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