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Tethys Oil AB: Second quarter and half year report - 30 June 2017

2017-08-15T07:30:00 CET

Second quarter 2017 (first quarter 2017)

·         Production amounted to 12,477 bopd (12,495 bopd)

·         Revenue of MUSD 31.4 (MUSD 29.3)

·         EBITDA of MUSD 21.0 (MUSD 19.3)

·         Net result of MUSD 10.6 (MUSD 6.7)

·         Earnings per share amounted to USD 0.31 (USD 0.19)

·         12 new wells completed on Blocks 3&4

·         Exploration well Ulfa-1 flows oil to surface

·         One previously undrilled fault block on Farha South successfully drilled and found to be oil bearing

·         Daily production on Blocks 3&4 expected to be in line with the first half of 2017 until end of Q1 2018, following the extension of OPEC/Non-OPEC production limitations

 

MUSD (unless specifically stated) Second quarter 2017 First quarter 2017 Second quarter 2016  
Net daily production before government take (bbl) 12,477 12,495 12,164  
Net barrels sold, after government take (bbl) 565,331 564,700 740,844  
         
Average selling price per barrel, USD 53.7 50.7 35.9  
         
Revenue 31.4 29.3 20.6  
EBITDA 21.0 19.3 8.4  
Operating result 11.0 9.3 -2.5  
Result for the period 10.6 6.7 -2.9  
Net cash 32.3 40.1 41.2  
Investments in oil and gas properties 15.1 13.0 9.0  
         
Earnings per share (after dilution), USD 0.31 0.19 -0.09  

 

MUSD (unless specifically stated) First half 2017 First
half
2016
Full
year
2016
Net daily production before government take (bbl) 12,486 12,188 12,235
Net barrels sold, after government take (bbl) 1,130,031 1,272,762 2,357,701
       
Average selling price per barrel, USD 52.2 35.8 40.5
       
Revenue 60.7 40.3 87.1
EBITDA 40.3 18.8 44.0
Operating result 20.3 -3.2 -0.5
Result for the period 17.3 -5.2 2.7
Net cash 32.3 41.2 39.0
Investments in oil and gas properties 28.1 24.0 48.5
       
Earnings per share (after dilution), USD 0.50 -0.15 0.08

Letter to shareholders

Dear Friends and Investors,
A lot happened during the second quarter, although it may not seem obvious. Tethys Oil continues to be profitable and paid another dividend to our shareholders. Operationally, we are particularly pleased that exploration activity continued to deliver solid results for growth. Most significantly, the exploration well Ulfa-1 was successfully completed and tested during the second quarter. Together with the exploration well Erfan-1, drilled in the first quarter and appraised in the second, we now have two new discoveries. Depending on the ongoing appraisal and evaluation process, these discoveries have the potential to turn into new oil fields on Blocks 3&4. If so, we are looking at the first new fields since 2013.

And the Farha South field has continued to grow. In addition to the two new, previously undrilled, fault blocks that were drilled and found to be oil bearing in the first quarter, we successfully drilled another previously undrilled fault block in the second quarter.

A total of 12 wells were drilled on Blocks 3&4 in the second quarter, including one exploration well, appraisal and production wells and wells for water injection.

So, all in all, the drill bit has certainly been with us this quarter and we actually continue to have a 100% success rate when it comes to drilling oil bearing wells!

Production
We produced 1,135,370 barrels of oil in the quarter, which was in line with the first quarter 2017. In May it was announced that OPEC had agreed to extend certain production quotas until the end of the first quarter 2018 with the support of Oman. Consequently we expect that Tethys Oil's average daily production during that period will be in line with the average daily production achieved for the first half of 2017 albeit with some month to month fluctuations. With the recent exploration success and the ongoing optimization in the existing fields we remain confident that once the production limitations are lifted, we will be able to increase our production on very short notice.

Strengthened oil price environment
The oil price environment strengthened in the second quarter, and our average selling price increased 6% from USD 50.7 in the first quarter to USD 53.7 per barrel. The oil price however continued to be volatile and we saw a substantial drop in the end of the second quarter. In the beginning of the third quarter, the prices have again increased. We seem to be locked in a price range of say 45-52 USD per barrel with the end points defined by US shale rig activity. As oil consumption increases and old fields worldwide decline coupled with massive underinvestment in new exploration/production, we would expect oil prices to rise eventually, possibly even dramatically. But we would not expect to break out of the current range in the near term.

Second quarter in focus
In the second quarter, we report revenues of MUSD 31.4, up 7% compared with the first quarter. Our EBITDA amounted to MUSD 21.0, up 9% compared with the first quarter. Following investments in oil and gas of MUSD 15.1 and a total dividend to shareholders in May of MUSD 3.8, combined with a cash flow from operations of MUSD 11.1, our net cash position decreased from MUSD 40.1 to MUSD 32.3. Our operating expenses continued to decrease, and amounted to USD 7.3 per barrel, down 4% compared to the first quarter. At the bottom line, our net result amounted to MUSD 10.6, up 58% compared to the first quarter.

Outlook
Tethys Oil stands strong. We are producing at record levels, and even though we cannot raise our production and use our full production potential at the moment, we continue to grow. Our new discoveries and potentially new oil fields, Erfan and Ulfa, combined with continued appraisal and production drilling on all producing fields as well as our large inventory of undrilled prospects provides us with a solid platform for continued growth. We remain confident, that the production capacity on Blocks 3&4 have increased and that we will be capable of a daily production rate above the average achieved so far this year, once the current production limitations are lifted.

So, stay with us, Tethys Oil remains a strong growth case, profitable at today's oil prices and with great potential for the future!

Stockholm in August 2017

Magnus Nordin
Managing director

For further information, please contact:
Magnus Nordin, managing director, phone: +46 8 505 947 00
Jesper Alm, CFO, phone: +46 8 505 947 00

 

Tethys Oil AB - Hovslagargatan 5B, SE-111 48 Stockholm, Sweden - Tel. +46 8 505 947 00 -
Fax +46 8 505 947 99 - E-mail: info@tethysoil.com - Website: www.tethysoil.com

 

CONFERENCE CALL

Date: 15 August 2017

Time: 10.00 CET

 

To participate in the conference call you may choose one of the following options:

 

Link to webcast: https://edge.media-server.com/m6/p/d7bpgi88

To participate via phone, please call:
Sweden: +46 8 505 564 74
Switzerland: +41 225 675 541
UK: +44 203 364 5374
North America: +1 855 753 2230

This information is information that Tethys Oil AB is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted for publication, through the agency of the persons set out above, at 07:30 CET on 15 August 2017.

 

Bilagor

Om Tethys Oil

Tethys Oil är ett svenskt oljebolag med fokus på onshoreområden med kända oljefynd. Tethys kärnområde är Oman, där bolaget har 22 miljoner fat i bevisade och sannolika oljereserver och 17 miljoner fat i betingade resurser 2C. Under 2017 hade Tethys Oil en genomsnittlig oljeproduktion om 12 162 fat om dagen från Block 3&4. Tethys Oil har också prospekteringstillgångar onshore Frankrike och Litauen och viss produktion i Litauen. Aktierna är noterade på Nasdaq Stockholm (TETY).