Tethys Petroleum (LON:TPL) has been asked to withdraw from the Bokhtar exploration venture in Tajikistan.
Joint venture partners Total and Chinese group CNPC have made the formal request because Tethys has missed payments for its share of costs.
The company’s core assets are a group of gas producing fields in Kazakhstan, though a tie-up with Total and CNPC in 2013 highlighted the blue-sky potential in Tajikistan which has since been a key attraction for investors.
Tethys capex budget for Tajikistan in 2015 amounted to about US$15mln.
For September, a US$1.28mln was due with a deadline of October 9, but went unpaid. The October cash call is for US$0.78mln. As a result the company is in default under the 2013 joint operating agreement (JOA), which saw Total and CNPC join the project (taking 33% each).
Tethys, in a statement, said: “Tethys is considering its position under the JOA, the contract and under applicable laws and equity.”
The company added that it will use “all commercially reasonable efforts” to protect its interest in the Bokhtar venture.
It comes during a period of uncertainty over Tethys’ future.
In recent months it has had a number of proposals to sell the company or to substantially recapitalise via strategic share sales. However, none have yet proceeded.
Proposals have come with the offer of interim finance, though these deals have not been done soon enough to meet the payments for the Tajikistan venture.
Pope Asset Management, Tethys largest shareholder, last week rejected a proposal to buy the company from Nostrum Oil & Gas (LON:NOG) and as a result a proposed US$20mln interim financing could not proceed.
Tethys explained that it is currently exploring alternative potential financing proposals, which may result in funds shortly becoming available.
Last week, the company receive two separate recapitalisation proposals – one from Olisol Investment Group, and one from AGR Energy.
Tethys cautioned, however, that there can be no certainty that arrangements can be made.
The company added: “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 to propose 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.”
Bokhtar spanned some 36,000 square kilometres (before it was extended further) and in 2012 the area was estimated to contain prospective resources amounting to 27.5bn barrels of oil equivalent.
As a result of the joint venture agreement Tethys received US$63mln for past costs, and the new major partners agreed to ‘carry’ Tethys for US$80mln of work in the first programme. The junior oil and gas firm was required to contribute US$9mln to the programme.