Eurasia Capital is initiating coverage of Tethys Petroleum with a BUY rating, 12-month target price C$2.00 per share.

Tethys Petroleum Limited (TPL), a Toronto listed company, offers unique exposure to large-scale oil and gas resources in Central Asia. TPL has five exploration and production projects in the vast hydrocarbon basins of Kazakhstan, Tajikistan and Uzbekistan where several global major oil and gas companies are currently operating. TPL has recently discovered oil in its Akkulka property, Kazakhstan and the company may materially upgrade its oil reserves. We estimate potential recoverable oil in place in its Akkulka property at 149mn bbls. We believe the likelihood for further increase in oil reserves is substantial from Kulbas exploration property, Kazakhstan. Our 12-month target price is based on a combined DCF and resource-based valuation approach. We apply DCF valuation to TPL’s producing and near production assets and use resource-based valuation EV/Resources for valuing undeveloped oil & gas resources in Kazakhstan and Tajikistan.

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