Tethys Petroleum Ltd Tethys Petroleum Press Release: Update on Claims Made Against the Company and its Employees in Kazakhstan

TIDMTPL

Tethys Petroleum Press Release: Update on Claims Made Against the Company and its Employees in Kazakhstan
FOR: TETHYS PETROLEUM LIMITED

TSX, LSE SYMBOL: TPL

November 7, 2016

Tethys Petroleum Press Release: Update on Claims Made Against the Company and its Employees in Kazakhstan

GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - Nov. 7, 2016) - Tethys Petroleum Limited (TSX:TPL)(LSE:TPL)
("Tethys" or the "Company") today provides an update to the previously announced failure by Olisol Petroleum
Limited and Olisol Investments Limited (together "Olisol") to fulfill their obligations under the Investment
Agreement, claims made against Tethys subsidiaries in Kazakhstan by Eurasia Gas Group LLP ("EGG") and other
claims made against Tethys subsidiaries and employees.

Mr. Alexander Skripka is a principal of both Olisol and EGG and the Company's former Chief Commercial Officer
and Deputy General Director in Kazakhstan. Mr. Alexander Abramov is also a principal of Olisol and former
Chairman of the Company. As previously announced, Mr. Abramov was removed as a director of the Company on
November 3, 2016 by a majority vote of the Board and in accordance with its Articles of Association.

Investment Agreement with Olisol

On April 28, 2016 Tethys and Olisol signed an investment agreement under which Olisol, a company controlled by
three Kazakhstan citizens including Mr. Skripka and Mr. Abramov, undertook by October 27, 2016 to provide
equity investments to Tethys in the amount of CDN$9.8 million and also extended a working capital loan in the
amount of US$5.7 million which Olisol could convert into additional shares ("Investment Agreement"). It was
expected that Olisol would acquire at least 42% of the ordinary shares of Tethys and become a good in-country
partner for Tethys in Kazakhstan.

Olisol did not perform its financing obligations under the Investment Agreement.

Prior to the anticipated closing date of the Investment Agreement Intergas Central Asia ("ICA"), the only buyer
of the Company's gas in Kazakhstan, unexpectedly notified the Company's subsidiary Tethys Aral Gas LLP ("TAG")
that it would no longer take gas produced by TAG and was cancelling its gas sales contract with TAG.

Although the termination of the contract by ICA is questionable, as no grounds for termination were given and
the Company disagrees with ICA's right to terminate the contract, Olisol alleges that there has been a material
adverse change in the Company's business which gives it the right to terminate the Investment Agreement and to
demand immediate repayment of its loan.

As announced on November 1, 2016 the Company continues to be in discussions with ICA and Governmental
officials, and believes that there remains a reasonable prospect that ICA will reinstate the gas contract.

Further, the Company does not believe that the loss of the gas sales to date have been material to the Company
or that Olisol has the right to terminate the Investment Agreement or that the loan is repayable, as the
conditions for repayment under the contract have not been met. Olisol is obliged under the legally binding
terms of the Investment Agreement to continue to provide Tethys with amounts reasonably requested by Tethys, to
fund working capital requirements during the period ending on the latest of (i) the completion of the TAG Loan
and (ii) the occurrence of the Closing Date. Olisol undertook to work with Tethys and a Kazakh bank to obtain a
bank loan of not less than US$10 million for TAG ("TAG Loan") and to date Olisol has not been able to complete
the TAG Loan.

Disputes with Eurasia Gas Group

EGG is the sole buyer of oil produced by TAG. In 2012, EGG secured loan funding for TAG through a loan in its
own name through RBK Bank JSC with Tethys assets securing this EGG loan and Tethys responsible to EGG for the
loan. This was provided to TAG as a prepayment for crude oil to be delivered in future and with a commitment by
Tethys that all oil would be sold to EGG as long as the loan was outstanding. To all intents and purposes this
is a secured, interest bearing loan for TAG, with a fixed interest rate and repayment schedule.

EGG has not paid in full for oil purchases from TAG for more than 10 months. More than US$1.4 million is now
owed by EGG and, after exhausting other efforts to secure payment, TAG wrote to EGG on October 13, 2016
demanding repayment within 10 days or that it would be forced to take court action to recover the amounts owed
by EGG.

On October 26, 2016 the Company was notified of a claim lodged by EGG in the Almaty City Court against TAG. EGG
is seeking an award equivalent to US$2.6 million for the alleged failure by TAG to deliver certain minimum
volumes of crude oil to EGG. The Company's view is that the claim is without merit or substance as TAG has no
contractual obligation to deliver minimum volumes of crude oil to EGG, nor is there any penalty clause in
contracts entered into between TAG and EGG for failure to deliver minimum volumes of crude oil.

Despite the Company only being notified of the claim on October 26, 2016 the Statement of Claim was filed on
October 21, 2016 and on October 24, 2016 the Judge issued a freezing order on the bank accounts, production
assets, shares and subsoil use contracts of TAG.

We have serious concerns about these actions as the lawsuit was accepted by the Court in breach of the
statutory pre-trial dispute resolution procedure which requires a 30 day negotiation period prior to filing a
lawsuit.

The Judge's ruling also prohibited general meetings of the shareholders of TAG and the management of the
company was prohibited from issuing certain resolutions and orders. In other words, the management of TAG is
restricted from performing some of its functions according to its Charter. The freezing order was imposed on
all bank accounts, and the company is unable to pay salaries to employees, suppliers or taxes due to Government
authorities until the accounts are unblocked. It is also unable to receive payment of the more than US$3
million owed by ICA for gas sales and the US$1.4 million owed by EGG for oil sales.

A Court hearing date was set for November 1, 2016, however, EGG's legal representatives failed to appear and
the hearing was delayed for a week.

Criminal case against Tethys Aral Gas LLP and allegations against its employees. Searches and seizures at the
office of Tethys Aral Gas LLP, Tethys Services Kazakhstan LLP and Kul-Bas LLP

On November 1, 2016 a judge of a regional court of Almaty issued a resolution to execute searches at the office
of TAG as a result of a criminal case against TAG and its employees alleging theft. We understand that the case
was initiated by Mr. Abramov. On November 2, 2016 the investigation division of the Internal Affairs Department
of Almaty conducted searches of the Company's offices.

We are informed by legal counsel in Kazakhstan that a freezing order of the sort described above imposed by a
special inter-district economic court of Almaty in a simple civil case is quite unusual and that the
involvement of armed law enforcement authorities to quickly conduct investigations in a case of this nature is
highly unusual.

As a result of the searches and seizures, accounting documents, contracts, computers and servers of TAG were
seized. Moreover, documents, computers and servers of Tethys Services Kazakhstan LLP and Kul-Bas LLP, companies
affiliated with TAG, were also seized.

Furthermore, members of TAG management were required to attend interrogation on November 4, 2016 and this
process is ongoing. The Company is concerned that if the management of TAG is arrested, TAG risks being
deprived of its management.

We are concerned that the actions described above may deprive the Company of control over TAG, Tethys Services
Kazakhstan LLP and Kul-Bas LLP.

Tethys, as the sole shareholder of TAG, Tethys Services Kazakhstan LLP and Kul-Bas LLP, will seek to protect
its rights and legitimate interests through all legal means and will incur all commercially reasonable legal
fees and expenses necessary to protect its investment, its management and employees from what it believes to be
improper allegations.

Tethys will also take all reasonable steps at its disposal to return to normal business operations at the
earliest time.

Tethys in Kazakhstan employs 280 personnel and the Company has invested circa. US$250 million in the Kazakhstan
economy since it began its operations in Kazakhstan. The company has also paid over KZT7.4 billion in taxes.

Over recent years the President and the Government of Kazakhstan, the Chairman of the Supreme Court, the
General Prosecutor and ministers have declared the country's desire to improve the investment attractiveness of
Kazakhstan and guarantee the supremacy of law and protection of proprietary rights. Based on these
declarations, Tethys invested in the economy of Kazakhstan and is extremely concerned about the ongoing events
described above.

The Company is preparing to appeal to the Head of the Executive Office of the President of the Republic of
Kazakhstan, the General Prosecutor and other Kazakh Governmental agencies, foreign embassies and trade
associations requesting their assistance and intervention to help resolve these issues.

About Tethys

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.

Disclaimer

Some of the statements in this document are forward-looking. Forward-looking statements include statements
regarding the intent, belief and current expectations of the Company or its officers with respect to the
potential that exists in both exploration and in discovered deposits in Central Asia and the Caspian Region,
reinstatement of the gas sales contract and resolution of the claims against the Company and its employees in

Kazakhstan. When used in this document, the words "expects," "believes," "anticipates," "plans," "may," "will," 
"should" and similar expressions, and the negatives thereof, are intended to identify forward-looking 
statements. Such statements are not promises or guarantees, and are subject to risks and uncertainties that 
could cause actual outcomes to differ materially from those suggested by any such statements including risks 
and uncertainties with respect to the potential that exists in both exploration and in discovered deposits in 
Central Asia, reinstatement of the gas sales contract and resolution of the claims against the Company and its 
employees in Kazakhstan, and the risk that the Company's Kazakhstan subsidiaries may not be able to satisfy 
their obligations as they become due until such time as the freeze order has been lifted and payment for past 
gas sales has been received. 
 
No part of this announcement constitutes, or shall be taken to constitute, an invitation or inducement to 
invest in the Company or any other entity, and shareholders of the Company are cautioned not to place undue 
reliance on the forward-looking statements. Save as required by the Listing Rules and applicable law, the 
Company does not undertake to update or change any forward-looking statements to reflect events occurring after 
the date of this announcement. 
 
 
-30- 
 
FOR FURTHER INFORMATION PLEASE CONTACT: 
 
Tethys Petroleum 
info@tethyspetroleum.com 
www.tethyspetroleum.com 
 
 
Tethys Petroleum Limited

(END) Dow Jones Newswires

November 07, 2016 02:05 ET (07:05 GMT)

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