Tethys announces farm-out on Kazakhstan assets
Azerbaijan, Baku, Oct. 4 / Trend E. Kosolapova/
Tethys Petroleum Limited entered into a definitive agreement for the sale of 50 percent of its Kazakh oil and gas assets to SinoHan Oil and Gas Investment B.V., the company reported.
SinoHan Oil and Gas Investment B.V is a part of HanHong, a Beijing, PRC based private equity fund.
"SinoHan will acquire a 50 percent + 1 share in Tethys Kazakhstan SPRL (TK SPRL), the wholly owned subsidiary of Tethys which holds the Kazakh assets.
Tethys will remain as the operator of the Kazakh assets with both partners having equal board representation in TK SPRL.
Tethys will receive an initial payment of $75 million for this sale. Additional performance bonus payments will be made to Tethys for the incremental discovery of proven and probable reserves achieved from the 2013 and 2014 drilling program, and also in profit sharing of excess profit at any exit by SinoHan from the project.
The initial cash payment to Tethys includes a base consideration of $55 million and $20 million towards the cost of an agreed work programme that commenced on July 1st 2013. This work programme includes the currently drilling AKD08 and 09 wells and testing of the KBD01 well.
Two further payments (the first and second bonus payouts) of up to $30 million will be made to Tethys for any increase in proven and probable oil and gas reserves in calendar years 2013 and 2014 (adjusted for any production in 2013 and 2014).
In addition to the base consideration and the first and second bonus payments, Tethys will be eligible to profit sharing of excess profit at any exit by SinoHan from the project.
HanHong is placing a $3.88 million deposit into escrow for the transaction. Tethys has no obligation to make any payments, bonus or otherwise, to SinoHan in the event of a sale or other realisation of the value of its investment.
The sale is subject to Kazakh State approvals, including the waiver on pre - emption. Closing will take place once these approvals are received.
Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region with activities currently in the Republics of Kazakhstan, Tajikistan, Uzbekistan and potential interests in the Republic of Georgia.