Tethys Explores the Possibility of Farming Down its Interest in The Bokhtar PSC
Tuesday 13 October 2015
DUSHANBE (Tethys press service) — In a statement released on October 12, Tethys Petroleum Limited announces that it has not made the payment for the September cash call issued by the Bokhtar Operating Company in connection with Tethys’ interest in the Bokhtar PSC in Tajikistan (the Tajik Asset). As a result, Tethys remains in default of its obligations under the Joint Operating Agreement and Shareholders Agreement dated June 18, 2013 relating to the Tajik Asset (the JOA).
On September 23, 2015 the Company announced that it had not paid the September Cash Call.The Company also noted that a payment would need to be made by October 9, 2015 in order to remedy this non-payment and avoid the Tethys’ contractor party being subject to various, potentially very onerous remedies that other contracting parties may seek to enforce under the JOA, which may result in a significant impairment of the value of Tethys’ interest in the Tajik Asset.
Furthermore, the Company announced at that time, that if binding documentation had not been entered into in connection with the interim financing proposed by Nostrum Oil & Gas PLC (Nostrum) by the end of the exclusivity period with Nostrum, which expired at 11.59 p.m. on October 6, 2015, it was very likely that the Company would not be able to make the payment within the prescribed timeframe that would prevent the aforementioned scenario arising.
Due to the fact that Nostrum withdrew its proposed offer having not obtained support from Tethys’ largest shareholder, Pope Asset Management, the interim financing was not provided. While the Company is currently exploring alternative potential financing proposals, which may result in funds shortly becoming available to remedy the non-payment of the aforementioned cash calls and provide funding to meet future cash calls issued by the Bokhtar Operating Company, at this time there can be no certainty that any such alternative financing will be secured. In the event that additional funding is secured there can be no assurance that it will be sufficient to remedy the outstanding cash calls and fund future cash calls. Accordingly, the Company has decided at this time not to make this payment for the September Cash Call (approximately $1.28 mln) or the October 2015 cash call (approximately $0.78 mln).Due to its current financial situation, the Company concluded it was not prudent to make these payments without sufficient funding certainty for further payments going forward.
As part of its strategic review, Tethys explored extensively the possibility of farming down its interest in the Tajik Asset. Although Tethys received interest from a number of leading global oil and gas companies in what has been a difficult market, at this time no agreement has been reached with any party in connection with a farm down of the Company’s interest in its Tajik Asset. As the Tethys contracting company is currently in default of its obligations under the JOA, it is subject to various restrictions, which, among other things, prevent the Tethys contractor party from receiving data from the Bokhtar Operating Company on the project and prevent Tethys from assigning all or part of its participating interest in the project to any third party, in each case until all defaults have been remedied.
Tethys has initiated discussions with CNPC Central Asia B.V. (CNPC) and Total E&P Tajikistan B.V. (Total) in regards to finding a mutually acceptable solution, including proposing a reduction in Tethys’ participation in the Tajik Asset, however at this stage no agreement has been reached and no assurance can be given that any such agreement will be reached. If no such agreement is reached, CNPC and Total (each being a non-defaulting party) could seek to enforce one of the onerous remedies set out under the terms of the JOA on or after October 11, 2015. Such remedies include:
- any non-defaulting party having the option, exercisable in its discretion at any time to require that the defaulting party offer to completely withdraw from the JOA and assign all of its participating interest in the Tajik Asset to the non-defaulting party or parties; or
- any non-defaulting party having the option, exercisable in its discretion at any time to require that the defaulting party offer to sell and assign all of its participating interest to any non-defaulting contracting companies wishing to purchase such participating interest, in each case, in accordance with the provisions of the JOA.
In the event of a non-defaulting party seeking to enforce one of the aforementioned onerous remedies under the JOA, Tethys would use all commercially reasonable efforts to protect its interest in the Tajik Asset.