- Om Tethys Oil
Second quarter 2016
MUSD (unless specifically stated)
|Second quarter 2016||First quarter 2016||Second quarter 2015|
|Net daily production before government take (bbl)||12,164||12,212||9,434|
|Net barrels sold, after government take (bbl)||740,844||531,918||545,019|
|Average selling price per barrel, USD||35.88||35.70||57.77|
|Result for the period||-3||-2||4|
|Investments in oil and gas properties||9||15||6|
|Earnings per share, USD||-0.08||-0.07||0.13|
MUSD (unless specifically stated)
| First |
|First half 2015|
|Net daily production before government take (bbl)||12,188||9,075|
|Net barrels sold, after government take (bbl)||1,272,762||853,911|
|Average selling price per barrel, USD||35.80||59.95|
|Result for the period||-5||12|
|Investments in oil and gas properties||24||22|
|Earnings per share, USD||-0.15||0.34|
Starting 1 January 2016, the Tethys Oil group presents the financial reports in USD. Please note that all comparative financials have been restated. For further information, please see Accounting principles on page 14.
Letter to shareholders
Dear friends and investors,
it is a pleasure to report a continued solid operational and financial performance for Tethys Oil. We produced over 12,000 barrels of oil per day, which was in line with our production in the first quarter, even though our producing fields on Blocks 3 and 4 in Oman were partially shut down for planned maintenance.
Robust balance sheet
In the second quarter, we report revenue of MUSD 21, up 5 per cent quarter on quarter. Our EBITDA for the quarter amounted to MUSD 8, a decrease quarter on quarter after slightly higher operating costs. We invested MUSD 9 in oil and gas assets during the second quarter 2016, and again we report positive cash flow after investments of MUSD 2. Our net result this quarter was negative amounting to MUSD -3. Our net cash stood at MUSD 41 as per 30 June 2016.
Stronger macro environment
An element of stability and possibly predictability returned to the industry in the course of the second quarter as oil prices increased and volatility dropped. A price range for Brent oil of between USD 40-50 per barrel emerged, a price at which our producing assets in Oman generate strong profitability and cash flow. As we have a two months lag in our selling price, our average selling price in the second quarter was in line with the first quarter. We will see the benefit of the price increase in the third quarter.
Infrastructure on Blocks 3 and 4 upgraded
Planned maintenance work was carried out on all three fields on Blocks 3 and 4 during the first half of 2016. The maintenance work caused some temporary shut downs of the fields, which had a limited impact on production. The main objectives of the maintenance work were to verify asset integrity of the systems and to add and change components. The assets are now fully served to handle present and future volumes.
The new oil price environment favours consolidation and forward looking. For Tethys Oil, this is an excellent opportunity to strengthen the organisation, recruit new colleagues and expand the data base, to broaden the long term outlook and implement a more systematic approach to surveying opportunities within the industry. We would expect more corporate transactions in general in the oil industry in the second half of 2016, as the expectations of price recovery for underfunded projects are not fulfilled and the lack of available capital firmly establishes a buyer's market. We are calmly, collectedly and systematically evaluating possibilities to expand our portfolio of value creating projects.
Blocks 3 and 4 in Oman are maturing as we gain an increasing understanding of our producing plays, resulting in even better predictability and enhanced ability to map out further opportunities. A number of far field exploration and appraisal opportunities remain, and we gain a better and better understanding of where they may be located. We have ample seismic coverage, and from a staff point of view, Tethys Oil has never been stronger. We take advantage of the overall lower cost environment to cleverly and systematically mature prospects and develop play concepts.
So stay with us, time is on our side and we intend to continue to share our strong balance sheet with our investors as we let our other strengths play out within our chosen industry!
Stockholm in August 2016
Time: 10.00 CET
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