- Om Tethys Oil
|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|
|Result for the period||10.6||6.7||-2.9|
|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 |
| Full |
|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|
|Result for the period||17.3||-5.2||2.7|
|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!
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.
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
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: firstname.lastname@example.org - Website: www.tethysoil.com
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.