Mr. Billy Clegg reports

TETHYS PETROLEUM LIMITED: OLISOL TRANSACTION UPDATE

Tethys Petroleum Ltd. is providing an update on the previously announced $15-million (U.S.) convertible debt facility with Olisol Petroleum Ltd. (OPL), a wholly owned subsidiary of Olisol Investments Ltd.

Following the company's announcement on Jan. 22, 2016, Tethys received a further $1-million (U.S.) on Jan. 28, 2016. Olisol has now indicated that it believes that it can transfer an additional $1-million (U.S.) by Feb. 12, 2016. Olisol has stated on many occasions that funds would be forthcoming imminently, only for each of their own targets to pass without any transfer being made. There can be no guarantee that the further payment will be made by Feb. 12, 2016, or that further financing will be received. Olisol has continued to inform the company that the funds are subject to U.S.-dollar transfer restrictions imposed by the bank authorities in Kazakhstan, which have prevented further transfers within the contractually obligated time frames.

Olisol has also indicated that in the near future it will be able to draw down on the facility with Bank RBK that was agreed to be the source of financing for investments in Tethys under the letter of intent signed with Olisol and announced by Tethys on Nov. 9, 2015.

In a new development, Olisol has also stated that due to difficult business and banking environment in Kazakhstan it would like to renegotiate some of the key terms of the transactions envisaged in the LOI. This would include changes to the facility agreement for the interim facility and the investment agreement which the company announced entering into on Dec. 8, 2015. A further update will be provided to shareholders once the proposal has been fully clarified in its entirety.

Whilst the company considers that Olisol is in breach of all the legally binding agreements made between Olisol and Tethys, as reported to the market on Nov. 19, 2015, the board of directors of Tethys continues to believe that the transactions with Olisol are in the best interests of Tethys stakeholders and that Olisol is a strong in-country strategic partner.

Background to the interim facility

The interim facility was entered into with OPL on Nov. 19, 2015, as the first transaction of those contemplated in the LOI. Under the terms of the interim facility, Tethys was entitled to draw down the corresponding funds within two business days of entering into the facility and, as announced on Dec. 29, 2015, the company submitted drawdown notices for the entire loan amount of $15-million (U.S.) on Nov. 21, 2015. As previously announced, Tethys received $5,138,918 (U.S.) in late November, 2015, which was used to repay the $5-million (U.S.) term loan from Nostrum Oil & Gas PLC as required under the conditions of the advance.

Current financial position

The company currently does not have sufficient financing to meet its requirements over the next few months and therefore, if the transactions with Olisol do not proceed for any reason, the company's ability to continue as a going concern will be dependent on the company being successful in securing alternative financing. There is no guarantee that the Olisol transactions can be completed or that Tethys will be able to secure any alternative financing.

We seek Safe Harbor.