Tethys Petroleum : Interim results MD&A Q1 2024

Tethys Petroleum Limited

Management's Discussion and Analysis for the period ended March 31, 2024

The following Management's Discussion and Analysis ("MD&A") is dated May 17, 2024 and should be read in conjunction with the Group's unaudited condensed consolidated interim financial statements and related notes for the period ended March 31, 2024 as well as the audited consolidated financial statements and the MD&A for the year ended December 31, 2023. The accompanying unaudited condensed consolidated interim financial statements of the Group have been prepared by management and approved by the Company's Audit Committee and Board of Directors. The 2023 annual audited consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"). The unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting". Additional information relating to the Group can be found on the SEDAR website at www.sedar.com and the Group's website at www.tethys-group.com.

Readers should also read the "Forward-Looking Statements" legal advisory wording contained at the end of this MD&A.

Nature of Business

Tethys Petroleum Limited is an oil and gas company operating within the Republic of Kazakhstan. Tethys' principal activity is the exploration and development of crude oil and natural gas fields. The address of the Company's registered office is Grand Pavilion Hibiscus Way, 802 West Bay Road, Grand Cayman KY1-1205, Cayman Islands. The domicile of Tethys is the Cayman Islands where it is incorporated.

The Company has its primary listing on TSX Venture Exchange ("TSXV"). The Company is also listed on the Kazakhstan Stock Exchange ("KASE").

1

Financial highlights

(All references to $ are United States dollars unless otherwise noted and tabular amounts are in thousands, unless otherwise stated)

Note 1 Adjusted EBITDA and net debt are non-GAAP Measures, refer to page 18 for details.

First quarter 2024 versus first quarter 2023

• Oil and gas sales revenues decreased by 80% to $1.9 million from $9.9 million. There were no oil sales in the period (2023: $9.9 million) as the wells were closed at the end of the exploration contract and pilot production project in October 2023. Some oil production from appraisal wells restarted in Q2 2024 and production from the remaining wells will restart when the Group receives a commercial production license which it hopes to receive shortly. Gas sales were $1.9 million compared with $30 thousand in the prior period. The gas price has been recorded on an estimated basis as the price has not been finalised, refer page 10 for further details;
• The loss for the quarter was $1.0 million compared with a profit of $2.5 million in Q1 2023. The reduction in profit is mainly due to the lack of any oil sales during the quarter;
• Adjusted EBITDA was negative $0.8 million compared with positive $6.1 million in Q1 2023 due to the lower oil revenues;
• Total assets increased by 2% to $83.1 million due mainly to a $5.7 million increase in property, plant and equipment offset by a reduction in cash & cash equivalents of $5.4 million;
• The Group had no borrowings at March 31, 2024 compared with $2.7 million a year earlier;
• Total non-current liabilities increased by $4.0 million to $36.4 million due to an increase in the deferred tax liabilities and the historical cost liabilities due to the government under the Kul-Bas exploration contract;
• The Group had net cash of $1.1 million compared with $4.5 million at Q1 2023 mainly reflecting cash expenditures on property, plant & equipment;
• The number of ordinary shares outstanding decreased slightly due to the cancellation of shares repurchased by the Company.

2

Operational Highlights

Oil

• There was no oil production in the quarter compared with 2,939 bopd in Q1 2023 as the wells were closed at the end of the exploration contract and pilot production project in October 2023. Some oil production from appraisal wells restarted in Q2 2024 and production from the remaining wells will restart when the Group receives a commercial production license which it hopes to receive shortly;
• Consequently, oil revenue for the quarter was $nil compared with $9.9 million or $36.97/bbl in Q1 2023;
• Some unavoidable operating costs continued to be incurred for the oil operations, albeit at a lower level than the prior period, due to the lack of production in the quarter. Total oil costs amounted to $1.7 million compared with $3.0 million or $11.51/bbl in Q1 2023, resulting in a contribution before tax in Q1 2023 of $25.46/bbl.

3

Operational Highlights - continued

Gas

• Gas production averaged 1,441 boe/d compared with 16 boe/d in Q1 2023. The low level of production in the prior period was a result of the closure of the gas fields from January 5, 2023 due to the gas price dispute with the Group's customer QazaqGaz, a state-owned company with production restarting in the current quarter following progress made in negotiations with QazaqGaz;
• Gas revenue for the quarter of $1.9 million compared with $30 thousand in Q1 2023. Payment was received from QazaqGaz for gas delivered in January-April 2022 although payment for the remaining eight months of 2022 and the current quarter remains outstanding. The expected price for the current quarter is $90.02/Mcm;
• Gas production costs for the quarter were $1.4 million or $62.95/Mcm (2023: $0.9 million) and
  the contribution before tax from gas operations was $0.4 million (2023: negative $0.9 million) or $20.07/Mcm.

Outlook

The information provided under this heading is considered as forward looking information; as such please refer to page 21 - "Forward Looking Statements" of this MD&A.

The Group's objective is to become one of the leading oil and gas exploration and production company in Central Asia. The goal is to exercise capital discipline and generate cash flow from new and existing discoveries within our acreage under license. The Group seeks to provide good employment opportunities, support for the local communities and seeks to be a leading company in the economically and ecologically sensitive Aral Sea area.

The Group's long-term ambition is to achieve a significant role in the production and delivery of hydrocarbons from the Central Asian region. The specific focus of management in the short term is to:

• Continue our development of the Group's oil & gas fields and licenses to increase production levels and revenues. The particular focus is the Kul-bas oil field where we are working towards a full commercial production license;
• Continue to improve the marketing of oil and gas to achieve best prices;
• Continue to improve the logistics where the Group can increase its ability to ship oil volumes at reduced costs; and
• Continue to fund the Group's development plans from operations while exploring potential financing and partnership alternatives.

4

Operational Review

Significant events and transactions for the three months ended March 31, 2024

• McDaniel & Associates estimates of oil & gas reserves and economic evaluation
  The Group's "Proved" 1P reserves at December 31, 2023 were 49.5 million BOE (2022: 45.8
  million BOE) and "Proved + Probable" 2P reserves were 85.7 million BOE (2022: 82.2 million BOE). The net present value after tax of the Group's 2P reserves as at December 31, 2023 was $628.7 million (2022: $610.5 million), based on a 10% discount rate. Refer to the section below headed Reserves for further details and basis of preparation.
• Oil & gas operations
  For details of oil operations during the year, refer to sections below headed Results of Operations and Operational Review.
• Deferred payment obligation adjustment
  The Group announced on February 14, 2024 that it had previously recognized in its interim financial statements a deferred payment obligation for historical costs incurred by the government on geological investigation of the Kul-Bas exploration area. The total amount of approximately $28.3 million was to be paid quarterly over a period of up to 10 years from April 2023. The equivalent amount recognized in the Group's interim financial statements was $18.1 million on a net present value basis.
  After a further examination of the nature of acquired geological information, involving communication with the State Geology Committee, the Group determined that certain costs amounting to $25.1 million do not qualify as historical costs and, therefore, are not due for reimbursement to the government and that the amount owing was in fact approximately $3.2 million payable quarterly over a period of 10 years.
  Subsequently, the Group communicated its findings to the Aktobe Tax Department and requested confirmation for the exclusion of these costs from its obligations. On February 12, 2024 the Aktobe Tax Department responded and affirmed the Group's position. As a result, the Group made an adjustment to the amounts previously recognized in its balance resulting in a reduction of the previously reported liabilities of approximately $16.1 million on a present value basis, from the abovementioned $18.1 million to $2.0 million.

Significant events and transactions subsequent to the period end

• Regulatory matters
  On April 5, 2024 the Group announced that it had received the permit from the Ministry of Ecology which allows for test oil production from the KBD-10 and KBD-11 wells and regarding the commercial license, the Ministry of Energy has not yet issued the official minutes of the Working Group, and the Company is trying to determine the reason for the delay.

5

Operational Review - continued

• Gas dispute
  Also on April 5, 2024 the Group announced that it has been continuing to work on a resolution with QazaqGaz over the dispute on the payment of gas produced by the Group. We have been unable to come to an agreement and gas production has been shut down. Due to the shutdown of gas production, a significant number of employees may be forced to take a temporary furlough and are at risk of permanent dismissal. Sixteen employees have been put on furlough. In an effort to reduce the number of staff laid off, seventeen employees have been transferred from TethysAralGas to Kul-Bas in order to assist with the oil production on KBD-10 and KBD-11.
• Functional currency change
  Items included in the financial statements of all of the Company's subsidiaries have historically been measured in United States dollars ($) which was considered the currency of the primary economic environment in which they operate ("the functional currency"). Subsequent to the end of the reporting period the Group reassessed the relevant factors and determined that it was appropriate to change the functional currency of its Kazakhstan subsidiaries from United States dollars to Kazakhstan tenge. In accordance with IFRS Accounting Standards, this change will be made prospectively from the date the change was made. The Group will continue to present its consolidated financial statements in United States dollars.

Reserves

Following the completion of the December 31, 2023 annual evaluation of the Group's reserves in Kazakhstan by the independent qualified reserves evaluator, McDaniel & Associates, of Calgary, Canada, in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators ("NI 51-101"), the Group's Total Gross (i.e. before the application of Kazakh Mineral Extraction Tax) Oil and Gas Reserves consisting of "Proved" 1P reserves were 49.5 million BOE (2022: 45.8 million BOE) and "Proved + Probable" 2P reserves were

85.7 million BOE (2022: 82.2 million BOE). The net present value after tax of the Group's 2P reserves as at December 31, 2023 was $628.7 million (2022: $610.5 million) based on a 10% discount rate.

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. Both oil and gas reserves are based on availability of sufficient funding to allow development of the known accumulations.

6

Operational Review - continued

Results of Operations and Operational Review - Kazakhstan

Oil production

Oil production from pilot production project and appraisal wells

There was no oil production in the quarter compared with 2,939 bopd in Q1 2023 as the wells were closed at the end of the exploration contract and pilot production project in October 2023. Some oil production from the KBD-10 and KBD-11 appraisal wells restarted in Q2 2024 and production from the remaining wells will restart when the Group receives a commercial production license which it hopes to receive shortly.

The Group produced from six wells in 2023 as shown in the table on page 9.

The KBD-02,KBD-06 and KBD-07 wells were in the approved pilot production project (PPP) which initially ran until the end of 2022 but was extended until October 16, 2023. Production from these wells from January 1, 2023 until the October 16, 2023 was 836,475 barrels compared with the Group's quota under the PPP for 2023 of 1,056,257 barrels (132,729 tons). From the commencement of production until October 16, 2023 production from the PPP wells was 2,510,183 barrels.

In addition to the PPP wells, the Group has drilled five successful appraisal wells outside of the PPP area and is allowed to produce from these wells for a maximum of 90 days from each zone before the wells are closed for the required reporting and approval process.

The KBD-03 and KBD-08 appraisal wells completed their testing in 2022 and produced a total of 253,184 barrels and 226,090 barrels respectively. Test production from the KBD-04,KBD-10 and KBD- 11 appraisal wells produced a total of 324,293 barrels from January 1, 2023 until October 16, 2023.

All wells were closed from the end of the exploration contract on October 16, 2023. The PPP wells are required to remain closed until the Group obtains a commercial production license although the Group received the necessary permissions to restart testing of the appraisal wells from April 2024.

Progress towards a commercial production license

The Group completed the reserve estimation for Kul-Bas and a mining allotment of 67.72 km2 was approved at the end of June 2023. The contract for a preparatory period of three years with the assigned mining allotment for the Kul-Bas exploration and production contract was signed by the MoE on July 28, 2023 and the Group has prepared a Field Development Project (FDP). In order to meet the ecological requirements, the Group needs to install gas turbines to convert the gas produced from the wells to electricity. These have been purchased and are in the process of being installed.

On January 25, 2024 the Company successfully presented the FDP to the Central Committee on Exploration and Development (CCED) The next steps were to get approval for the gas utilization program, secure ecology and gas flaring permits and successfully install the necessary equipment for the gas utilization and oil handling.

7

Operational Review - continued

On March 20, 2024 the Group announced, regarding the commercial license, that while the Working Group for the Gas Processing Program of the MoE provided a positive review on March 1, the Ministry had still not yet issued the official minutes of the Working Group, causing a delay beyond the March 15 deadline. Consequently, Tethys had initiated the process of reapplying for the ecology permit necessary for commercial production. On April 5, 2024 the Group announced that it had received the permit from the Ministry of Ecology for test oil production from the KBD-10 and KBD-11 wells and regarding the commercial license, the Ministry of Energy has not yet issued the official minutes of the Working Group as of the date of this analysis, and the Company is trying to determine the reason for the delay.

Main facilities

Construction contractors are working on the oil handling facilities and gas turbine site. Work has been carried out to prepare the booster compressor station equipment for startup and this equipment is ready for production. The oil handling and gas utilization facilities are not yet complete, but the Group expects to have them in place and operational when the commercial license is received.

Oil prices and marketing

On November 21, 2023, the Group announced that in early 2023, the MoE issued an order restricting the export of certain refined oil products beyond the Eurasian Economic Union's territory. This regulation, in combination with effects from the war in Ukraine, has negatively impacted the price of domestic oil in Kazakhstan. The Group's oil price at the field dropped from approximately 50% of Brent at the beginning of the year to approximately 30% of Brent in October. The average price of the Group's oil sales dropped to $242 per metric ton as compared to $312 per metric ton for the same period in 2022. This decline resulted in an estimated loss in revenue in 2023 exceeding $10 million.

Given the reduction in oil prices in the Republic of Kazakhstan, Tethys is reducing its exploration and operating plans to incorporate lower oil price estimates. The priority has been to address the costs necessary for the gas utilization required for the commercial license. The Tethys board wishes to assure shareholders that Tethys will continue to work to maintain a good return on shareholders' equity on any new investment.

8