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Tethys Oil AB: Second quarter and half year report - 30 June 2018

2018-08-14T07:30:00 CET

 

Second quarter 2018 (first quarter 2018)

·         Production from Oman, Blocks 3&4 amounted to 11,733 bopd (11,574 bopd)

·         Revenue and other income of MUSD 36.4 (MUSD 34.2)

·         EBITDA of MUSD 24.3 (MUSD 21.5)

·         Net result of MUSD 15.0 (MUSD 9.0)

·         Earnings per share amounted to USD 0.44 (USD 0.27)

·         Three successful appraisal wells drilled on the discoveries made in 2017, coming in as, or slightly better than, expected

·         750 km2 increase of 3D seismic programme now totalling 2,750 km2

 

 

MUSD (unless specifically stated) Second quarter 2018 First quarter 2018 Second quarter 2017
Net daily production from Oman, Blocks 3&4 before government take (bbl) 11,733 11,574 12,373
Net barrels produced, after government take (bbl) 555,201 541,686 585,506
Net barrels sold, after government take (bbl) 529,194 511,998 565,331
       
Average selling price per barrel, USD 65.6 63.7 53.7
       
Revenue and other income 36.4 34.2 31.4
EBITDA 24.3 21.5 21.0
Operating result 12.9 10.3 11.0
Result for the period 15.0 9.0 10.6
Earnings per share (after dilution), USD 0.44 0.27 0.31
       
Net cash 35.8 52.4 32.3
Investments in oil and gas properties 13.2 13.8 15.1

 

MUSD (unless specifically stated) First
half
2018
First
half
2017
Full
year
2017
Net daily production from Oman, Blocks 3&4 before government take (bbl) 11,654 12,379 12,162
Net barrels produced, after government take (bbl) 1,096,887 1,165,148 2,308,342
Net barrels sold, after government take (bbl) 1,041,192 1,130,031 2,316,404
       
Average selling price per barrel, USD 64.6 52.2 51.8
       
Revenue and other income 70.6 60.7 119.3
EBITDA 45.7 40.3 78.2
Operating result 23.1 20.3 38.4
Result for the period 24.0 17.3 33.1
Earnings per share (after dilution), USD 0.71 0.51 0.97
       
Net cash 35.8 32.3 42.0
Investments in oil and gas properties 26.9 28.1 40.4

Letter to shareholders

Dear Friends and Investors,

  • Appraisal drilling results on last year's discoveries in line with or slightly better than expected
  • Several thousand square kilometres of new 3D seismic around the producing fields being acquired and interpreted
  • Production in line with expectations and sold at a healthy price

Quite a good quarter for our core asset, Blocks 3&4 onshore Oman!

The appraisal programme is important to progress contingent resources into reserves and increase production. The 3D seismic is important to define new potential oilfields to guide the exploration programme on Blocks 3&4. Production and sale of oil is of course of utmost importance to generate the cash required for the continued expansion of Tethys Oil and to enable us to maintain the distributions of cash to our shareholders.

Work at the Ulfa early production facility ("EPF") is ongoing with a few items having taken longer than expected, and we would now expect the EPF to be up and running during the fourth quarter of 2018, some four to six weeks later than originally planned. Once up and running, the EPF will enable several more appraisal wells on the Ulfa and Samah discoveries to be put on stream. It will also allow capacity in the Farha production facility, currently being used to handle some long-term production testing from Ulfa, to be returned to the Farha producers.

Oil production
Our oil production in Oman increased slightly in the second quarter 2018 and amounted to 11,733 bopd, compared to 11,574 bopd in the first quarter 2018. It is at the lower end of our guidance of a monthly average production of between 11,000-13,000 bopd. As the year progresses, however, we are anticipating the monthly average production to increase towards the higher end of our production guidance. This anticipated increase will follow once the Ulfa EPF is up and running.

Second quarter 2018 in focus
Following the increase in oil price and production, we are happy to report revenue and other income of MUSD 36.4, an increase of 6 percent compared with the first quarter 2018. Our EBITDA was up 13 percent and amounted to MUSD 24.3. Our investments in oil and gas operations amounted to MUSD 13.2, in line with MUSD 13.8 in the first quarter 2018. During the second quarter 2018 a total of SEK 5.00 per share, in total MUSD 19, was distributed to shareholders while still leaving us with a net cash balance of MUSD 35.8 at the end of June.

We have experienced higher operating expenses per barrel this quarter than we originally expected. This is partly associated with remedial work being carried out on our older fields. As we can judge today we would expect operating expenses per barrel to come down once the Ulfa EPF is commissioned and the full effect of the remedial work areas is reflected in the production numbers. However, as previously guided, we would expect operating expenses per barrel in 2018 to be somewhat higher than the previous year.

Block 49
While Blocks 3&4 remain our core asset, work is gearing up on our operated exploration block, Block 49, in the southern part of Oman next to the border with Saudi Arabia. We have a 100 percent interest in this large (15,439 km2) block and it is a pleasure to again be operator in Oman. We are well underway to establishing Tethys Oil's presence with the local communities and organisational bodies. 

The first part of the work programme, the reprocessing and reinterpreting of existing seismic data, is ongoing. In the first phase, we are processing some 40 lines of 2D seismic amounting to over 1,000 km of various vintages. This is giving us seismic images of a better resolution which will enable us to search the block for targets not visible to previous operators. It is still early days but so far we have not been disappointed with what we have seen. Once the reprocessing has been completed the next step will be to assess if and where new seismic is needed to further enhance our understanding of where in the block the highest chances of finding commercial oil exist.

So please stay with us - as the older fields in Blocks 3&4 mature, new fields are brought on stream and new seismic opens up for further discoveries in coming months and years. And with exploration work on Block 49 picking up with Tethys Oil as operator, Tethys Oil is firmly on its way to increasing its footprint in the Sultanate of Oman.

Stockholm in August 2018

Magnus Nordin
Managing Director

This report has not been subject to review by the auditors of the Company.

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

This information is information that Tethys Oil AB (publ) is required to make public pursuant to the Securities Markets Act. The information was submitted for publication, through the contact persons set out above, at 07.30 CEST on 14 August 2018 

CONFERENCE CALL
Date: 14 August 2018
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/sfgja37m

To participate via phone, please call:
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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).