Tethys Petroleum Ltd V.TPL

Another analyst on board

[Intravires69]

Maulen Burashev, Visor Capital (02/04/11)

"Tethys Petroleum owns a diversified asset portfolio in Central Asia, with interests in oil and gas over Kazakhstan, Uzbekistan and Tajikistan at different stages of development. . .Despite the diversified portfolio, we attach 97% of our valuation to Kazakh assets, with the remainder covering Uzbek rehabilitation and Tajik exploration. Whilst this reflects assets success in Kazakhstan, it does highlight the critical importance of development at and around the Doris discovery. With an unrisked prospective resource of 663 Mboe still to be explored, positive news flow is likely to mean this dominance only grows.

We anticipate H111 will be a year of active and largely positive news flow for Tethys, with the critical results of Kazakh oil exploration and appraisal likely to dominate. Tethys intends to complete an independent reserve audit by February 2011 and complete the appraisal of Doris by year-end 2011. Based upon historic reserve reports and the derisking proved up by Doris, we expect these will be positive and indicate greater reserve base to explore.

We value Tethys Petroleum based upon an additive DCF model, based upon a 30 Mbbl. discovery at Doris, a further 30 Mbbl. discovery in H111 and exploration program in Kazakhstan—discounted by 20% for funding and license risks. We assume other operations (Kazakhstan gas, Uzbekistan and Tajikistan) proceed in line with guidance and remain relatively minor in our valuation. We initiate coverage on Tethys Petroleum with a BUY rating and a 12-month target price of CAD$2/sh."