Tethys Petroleum to shut Dubai office as part of shakeup
Tethys Petroleum, a struggling oil exploration company focused on prospects in Central Asia and the Caspian Sea, is closing its Dubai office as part of a wider restructuring under new management.
The company, whose London and Toronto-listed shares have fallen by about 75 per cent since summer 2013, has faced a series of difficulties. This includes legal problems that precipitated a hasty exit from Uzbekistan at the end of last year, and which culminated in a shareholder revolt last month and a new executive chairman, John Bell, being installed.
Tethys said yesterday that it would begin to cut costs immediately, which will include the closure of offices in Dubai, Washington DC and Toronto. In total, the new boss said, Tethys aims to cut US$38 million in corporate costs this year and next.
The company’s assets are mainly in Kazakhstan, Tajikistan and Georgia. To improve its cash position, Tethys also has agreed to sell a controlling share in its Kazakhstan business to HanHong, a Chinese investment fund, for $71m in cash plus a commitment to fund the first $9m of its work programme there.
Tethys said that it expects to double gas production in Kazakhstan by the first quarter of next year and estimates that even before factoring in upside potential, the HanHong deal — which is subject to Kazakhstan government approval — values the company’s Kazakhstan assets alone at 27 pence a share, compared to a closing price last week of 14 pence.
The statement yesterday said: “The board believes there is a significant value gap between the current share price and the net asset value of the business,” and added that its plan aims to close that gap in the coming months.
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Published: December 1, 2014 04:00 AM