- Om Tethys Oil
(For full report, please see attached file)
THIRD QUARTER 2013
NINE MONTHS 2013
(For table, see attached file)
Dear Friends and Investors
Let us start by concluding that the third quarter has also yielded good results. Both financials and operations continue to be strong. In the third quarter 2013, Tethys Oil produced 442,352 barrels of oil before government take, representing a new record production and an increase of 23 per cent compared with the third quarter 2012 (358,968 barrels). The international oil prices were almost flat compared to third quarter last year and we realized an average selling price of 102 USD/bbl (101). We report net sales of MSEK 142 (116). The result for the third quarter amounted to MSEK 52 (46). Like in the second quarter this year, timing issues in sales have resulted in higher production than sales volumes and we leave the quarter in an under lifted position.
Like previous quarter the average daily production from Block 3 and 4 increased quarter on quarter by 10 per cent from 4,261 bopd to 4,682 bopd. The production increase is partly the result of the successful implementation of the water injection programme on the Farha South oil field, with five new injection wells being drilled in the third quarter. We are however running a little behind schedule, and are now targeting the injection programme to be fully implemented on all fault blocks in production late in the first quarter 2014. Until then, the delay will from time to time affect the production.
The increase in production is also very much a result of the successful test production from the B4EW4 structure. Two wells are on long term test production from the Lower Buah, and a third will be added shortly following the recent highly encouraging result of more than 2,000 bopd tested from the B4EW4-5 well. And the appraisal of the structure continues. The 3D seismic suggests that the Lower Buah may be compartmentalized. Proper appraisal is therefore needed before a third party reserve audit should be carried out. The Lower Buah shows great promise. All three wells drilled into that reservoir section has encountered oil and the oil water oil contact has not yet been determined. This leads Tethys to conclude that somewhere between 2 to 4 million barrels of recoverable oil reserves could be added from this structure. Continued appraisal is of the essence and the currently drilling B4EW4-6 well, the fourth appraisal into the Lower Buah, will yield yet more important data to measure and understand this structure.
During the quarter, we drilled an exploration well in the B4EW5 structure. The well encountered oil and we made a new discovery, but the initial flows were a bit disappointing. We will therefore try to stimulate the well before it will be put in long term production test. However, the most important fact is that the B4EW5 discovered oil and proved the viability of the Buah play concept.
Next year's work programme is taking shape. The Farha water interjection programme will continue, but we also anticipate increased focus on exploratory drilling. In 2013, a large part of the work programme was devoted to seismic studies. With the processing of these studies nearing completion, and the interpretation so far suggesting a large amount of new prospects, we are confident that 2014's exploration programme will be much more focused on the drillbit.
In Lithuania production continues in Gargzdai and exploration activities are being carried out in both the other licenses. The data collection in the seismic study at the Raiseiniai licence is almost completed, and a new well is being drilled at the Rietavas licence. We are looking forward to the results.
In October 2013, my partner since many years, our chairman and co-founder of Tethys Vincent Hamilton left the company in order to work to support and fund a medical research foundation he recently founded. Vince and I have written some 50 management words over the years, but this time I wish Vince a very nice weekend without worrying about investor letters. We also wish him the very best of luck with his new venture. Needless to say, his great contribution to the company will continue to influence the way we operate as will his input as consulting geologist. But let me now welcome our new chairman Staffan Knafve. Staffan has been a board member since our AGM in 2012. With his background in the financial markets, he will bring valuable expertise of a new kind at this position.
So stay with us, our journey continues.
Stockholm in November 2013
For further information, please contact:
Magnus Nordin, Managing Director, phone: +46 8 505 947 02, e-mail:firstname.lastname@example.org
Morgan Sadarangani, CFO, phone +46 8 505 947 01, e-mail:email@example.com