First quarter report – 31 March 2019

First quarter 2019 (fourth quarter 2018)

  • Production from Blocks 3&4, Oman, amounted to 11,901 bopd (11,898 bopd)
  • Revenue and other income of MUSD 32.7 (MUSD 44.4)
  • EBITDA of MUSD 17.2 (MUSD 30.8)
  • Net result of MUSD 6.4 (MUSD 19.9)
  • Earnings per share amounted to USD 0.19 (USD 0.58)
  • Exploration well Masarrah-1 on Blocks 3&4 resulted in a new oil discovery
  • Additional capacity for gas separation installed at Ulfa EPF after initial start-up issues
MUSD (unless specifically stated) First quarter 2019 Fourth quarter 2018 First quarter 2018 Full
Net daily production from Oman, Blocks 3&4 before government take (bbl) 11,901 11,898 11,664 11,767
Net barrels produced, after government take (bbl) 556,967 569,177 541,686 2,233,323
Net barrels sold, after government take (bbl) 613,752 542,596 511,998 2,163,148
Average selling price per barrel, USD 61.6 77.9 63.7 70.5
Revenue and other income 32.7 44.4 34.2 157.3
EBITDA 17.2 30.8 21.5 106.6
Operating result 5.6 19.1 10.3 60.7
Result for the period 6.4 19.9 9.0 62.2
Earnings per share (after dilution), USD 0.19 0.58 0.26  1.82
Net cash 82.7 73.1 52.4 73.1
Investments in oil and gas properties 11.6  16.2 13.8  55.8

Letter to shareholders

Dear Friends and Investors,

It has been a bit of a mixed quarter for Tethys Oil.

Oil prices increased steadily during 2018 but fell in the last few months. Whilst prices have started to increase again in 2019, there is a two month delay in the oil price achieved by Tethys Oil and as such, we will not benefit from the recovery in prices until the second quarter of 2019. But in spite of the drop in oil price achieved, free cash generation has remained strong and we added close to MUSD 10 to our already solid cash position and ended the quarter with more than MUSD 80 in cash after paying our share of investments on the blocks, which included drilling more than ten wells. A fact that truly underscores the robustness of our core Omani asset! A fact that is further emphasized by our record distribution proposal: we propose to the annual general meeting a dividend and share redemption of MSEK 274 (approximately MUSD 28.9), of which MSEK 240 (approximately MUSD 25.3) is payable in the second quarter 2019.


Production was at the lower end of our expectations in the first quarter 2018 primarily due to capacity issues at the new Ulfa field production facility, which were not resolved until late in the quarter. Despite these constraints, production amounted to 11,901 bopd and is up compared to the daily average production for 2018!

Operating expenses

At the end of 2018 we saw an increase in operating expenses due to higher costs in the older parts of the Farha, Saiwan and Shahd fields and from the commencement of production operations from new fields. Following these higher costs, we expect operating expenses per barrel in 2019 to be higher than the USD 10.7 recorded for 2018. However, the operating expenses for the first quarter of 2019 were impacted by certain one-off costs and carry-overs from 2018, and this, along with the constraints to production, resulted in operating expenses per barrel of USD 13.3. With higher production expected in the coming quarters, and operating expenses returning to their forecasted levels, we anticipate that the operating expenses per barrel will decrease towards the levels seen in 2018.

First quarter financials in focus

Following the lower oil price combined with an unchanged production, our financial results decreased during the quarter. We report revenues and other income of MUSD 32.7, down 26 percent compared with the fourth quarter 2018. Our EBITDA amounted to MUSD 17.2, down 44 percent compared with the fourth quarter 2018. During the quarter, cash flow from operations amounted to MUSD 21.7 and investments in oil and gas amounted to MUSD 11.6. Our net cash position increased from MUSD 73.1 to MUSD 82.7. The result for the period amounted to MUSD 6.4, down from MUSD 19.9 in the fourth quarter 2018.

Oil price environment

As Tethys Oil’s oil sales price is calculated with an effective two-month lag to spot prices, we experienced, as expected, the lower prices from end of 2018 during the first quarter 2019. Our sales price dropped from USD 77.9 per barrel in the fourth quarter 2018 to USD 61.6 per barrel in the first quarter 2019. In January 2019, the prices rebounded, and oil prices we see in the second quarter are almost 10 percent higher than in the first quarter 2019.

Exploration drilling on Block 3&4

To top the mixed quarter off we even had mixed exploration results. One near field Ulfa/Samah analogue drilled as the Masarrah-1 well resulted in a discovery which now will undergo a long-term production test and has every sign of turning into a new midsized Blocks 3&4 field. A far field prospect targeting a non-proven play, the Mahamid-1 well, yielded mixed results. Oil was not encountered in the target formation, but as frequently is the case on Blocks 3&4 onshore Oman, oil was encountered at shallower levels on the way down. The significance of the oil shows in Mahamid-1 are not yet clear, but given the location of the well, just finding oil in this area could turn out to be very interesting indeed.

Exploration remains an important part of the year’s work programme with significant seismic acquisitions planned and the drilling of at least three new exploration wells.

Block 49

In our 100 percent owned and operated Block 49, onshore western Oman we have just received parts of the processed data from the seismic acquisition conducted in the fourth quarter 2018. Our Block 49 exploration activity for the next couple of months will focus on interpreting that data with a view to finding drillable prospects. We will know much more by the time of the report for the second quarter 2019.

So stay with us, we are confident that the coming quarters will have a better mix.

Stockholm in May 2019

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

Conference call

Date: 7 May 2019
Time: 10.00 CET

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

Link to webcast:

To participate via phone, please call:
Sweden: +46 8 566 426 51 / PIN: 69756366#
Switzerland: +41 225 809 034 / PIN: 69756366#
UK: +44 333 300 0804 PIN: 69756366#
United States (Toll-Free): +1 855 857 0686 PIN: 69756366#

This information is information that Tethys Oil AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 7:30 CET on 7 May 2019.