Tethys Petroleum Press Release: Corporate Update

Tethys Petroleum Limited (TSXV: TPL) (" Tethys " or the " Company ") is pleased to provide an update on the Company's operations in the Republic of Kazakhstan. On September 11, 2026, the Government of Kazakhstan adopted Resolution No. 816, increasing from 50% to 95% the coefficient used in the price-linked excise tax calculation applicable to gasoline and diesel fuel. The amendment applies retroactively to transactions arising from September 1, 2026. Under the excise framework established by Government Resolution No. 1049, the excise tax payable on gasoline and diesel is linked to an official weighted-average wholesale reference price. The formula uses statutory price thresholds of KZT 214,584 per tonne for gasoline and KZT 284,350 per tonne for diesel . Prior to the September amendment, the coefficient applied to the excess over the relevant threshold was 50%. This has now been increased to 95%. The official reference price used in the calculation is based on specified wholesale sales at Kazakhstan's major refineries and may therefore differ from the selling price actually realized by an individual producer. As a result, the revised mechanism may increase the excise burden even where a producer is unable to achieve a corresponding increase in its own realized selling prices. Based on the Company's current estimates, the gasoline threshold provides relatively limited headroom over normalized operating cash costs, while the diesel threshold provides greater headroom. The change comes at a time when access to sell to alternative petroleum-product markets remains restricted. Current measures include restrictions through the second half of 2026 on exports of light distillates, jet fuel, diesel fuel, gasoil and certain other petroleum products outside the Eurasian Economic Union, as well as restrictions on certain petroleum-product exports by road and rail, subject to specified exceptions. Industry participants, including PetroMining , have raised concerns regarding the impact of the revised excise mechanism on the economics of domestic petroleum-product sales and the potential implications for future investment and production growth. Tethys is currently required to refine and deliver its Kul-Bas crude production into refined petroleum products for sale in the Kazakhstan domestic market. The Company expects the increase in the excise coefficient to reduce downstream margins and cash generation (where realized selling prices will not increase sufficiently enough to offset the higher tax burden). The Company is currently updating its internal operating and cash flow forecasts to reflect the revised excise tax regime and current domestic market conditions. Bill Wells, Executive Chairman of Tethys, commented: "The increase in the excise coefficient from 50% to 95%, combined with restrictions on petroleum-product exports, materially reduces the economic upside available for Tethys and other oil producers supplying the domestic market. We share PetroMining's concern that this will reduce the incentive to increase production and commit additional capital. While Tethys's cash costs are expected to be below the statutory price thresholds (where excess cash can still be generated), it appears more challenging for Tethys to recover the substantial investment previously made in exploration and overhead expenses. The Tethys board does not anticipate that the current tax and pricing mechanisms allows for sufficient profit to justify the risks and costs of new exploration projects beyond those currently anticipated (ex. Kronos). As a result, Tethys is unlikely to participate in the forthcoming auctions for new licenses offered by the Republic of Kazakhstan. The Tethys board has also decided to seek farmout partners for its Nurzhau, Diyar and Zhanasu licenses. Tethys remains focused on growing production in Kazakhstan.