Tethys Petroleum: Company Update

TPL is making significant progress on its exploration properties in Kazakhstan. The company tested the AKD01 exploration well on Doris prospect, which flowed oil in excess of  6800 bbls/d. In March 2010 the company announced 29mn bbls in the lower Cretaceous and 3.8mn bbls in Jurassic in the AKD01 well. Going  forward, the company has aggressive appraisal program and exploration plans in Kazakstan, focused on Doris and four other prospects. We have revisited our appraisal success rate and increased it to 30% from previous 20% (please see “TPL initiation report” 07.02.2010) based on proven hydrocarbon system in the area and that well AKD01 alone can access over 30mn bbls. Therefore we estimate oil reserves in Doris at 44.6mn bbls. We have raised our 12-month target price to CAD2.5/share. Our 2010 valuation results in equity valuation of US$470.5mn or US$2.45/share (CAD2.56/share) and we set our target price at CAD2.5/share. This represents 59% upside to current TPL’s share price of CAD1.61 (11.08.2010)

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