Fourth quarter and year-end report 1 January – 31 December 2023

Fourth quarter 2023 (Third quarter 2023)

  • The exploration well Menna-1 on Block 56 was drilled in December with well logs indicating hydrocarbons in three formations. Testing to commence in the first quarter.
  • The first phase of the Gas-to-Power project, which aims to reduce emissions and operating cost on Blocks 3&4, was commissioned at the end of the year.
  • Production from Blocks 3&4 in the quarter amounted to 8,397 barrels of oil per day (8,486), with a Net entitlement of 52% (52%) and an achieved oil price of USD 90.4 per barrel (76.9).
  • Revenue and other income was MUSD 36.4 (31.8) and EBITDA MUSD 21.5 (16.4).
  • Cash flow from operations was MUSD 21.9 (14.8) and Free cash flow MUSD 2.5 (-6.1).
  • An impairment charge of MUSD 36.9 (-) was recognised in the fourth quarter following an impairment test of the value of Oil and gas properties related to Blocks 3&4.
  • Exploration costs of MUSD 6.3 was recognised in the fourth quarter relating to four exploration wells drilled in Blocks 3&4 in 2023.

Events after the period end

  • Tethys Oil has received a credit commitment for a MUSD 60 amortising term loan facility from one of the leading banks of the United Arab Emirates (UAE). The loan agreement is expected to be finalised by the end of the first quarter.
  • Tethys Oil’s Board of Directors has decided to initiate a strategic review of the Group’s portfolio of Oil and Gas interests. The review will explore the possibility of rebalancing the portfolio’s mix of assets in different stages of the lifecycle and increasing the visibility of the assets’ fair market value.

Reserves and Resources

  • 2P reserve replacement ratio of 32 percent. (2022: 37 percent).
  • Year-end 2023 2P Reserves of 21,698 mbo (2022: 23,901) and 2C Contingent Resources of 15,529 mbo (2022: 14,623).

Dividend and Distributions

  • The board of directors has elected to defer its dividend proposal until the assessment of capital requirements and the strategic portfolio review have been completed.

2024 Outlook and Guidance

  • Production guidance for the full year 2024 is expected to be 8,200 ± 400 barrels of oil per day.
  • Operating expenditures for the full year 2024 are expected to be about USD 17.5 per barrel of oil.
  • Administrative expenses are expected to be in the range of MUSD 6-8 for the full year 2024
  • Investments in oil and gas properties are expected to be in the range of MUSD 90-94.


MUSD, unless specifically stated Fourth quarter 2023 Third
quarter 2023
quarter 2022
Full year 2023 Full year
Net daily production, before government take, barrels per day 8,397 8,486 9 441 8,818 9,940
Production before government take, bbl 772,515 780,676 868 589 3,218,625 3,628,074
Net entitlement barrels, bbl 401,708 405,952 467 564 1,673,685 1,664,363
Net entitlement as share of production, percent 52% 52% 54% 52% 46%
Achieved Oil Price, USD/bbl 90.4 76.9 93.3 82.4 94.2
Revenue and other income 36.4 31.8 43.2 138.2 156.5
EBITDA 21.5 16.4 27.8 73.5 99.1
Operating result -31.9 6.5 14.8 -11.6 54.2
Net result -38.7 6.2 13.0 -16.5 58.3
Earnings per share, after dilution, USD -1.20 0.19 0.40 -0.51 1.78
Cash flow from operations 21.9 14.8 25.2 82.7 87.0
Investments in oil and gas properties 19.2 21.1 24.6 81.7 89.1
Free cash flow 2.5 -6.1 0.4 0.8 -2.3
Cash and cash equivalents 25.8 27.7 41.5 25.8 41.5

Letter to shareholders

Dear Friends and Investors,

The year and the quarter ended on a stabilizing and promising note; however, the overall outcome of 2023 could have been better.

Production from Blocks 3&4 stabilised during the 4th quarter at nearly 8,400 bopd giving an overall average of close to 8,800 bopd for the year. We have invested significantly in the Blocks in 2023, not only to make up for the lost time and lower investment during the pandemic years 2020-2021 but also as an affirmation of our long-term belief in the potential in the Blocks. Two such notable long-term investments are the 3D seismic acquisition and Gas-to-Power project.

The Gas-to-Power project aims to reduce routine flaring of the associated gas produced on Blocks 3&4. Instead, the gas will be used as a power source to generate electricity for the production facilities and downhole pumps in the field. This will remove the need for the use of diesel generators which today make up a substantial part of the field’s emissions. The project is a major milestone in improving Tethys Oil’s environmental footprint and a significant investment. To date the company has invested more than MUSD 15 and expects to invest a further MUSD 10 before the end of 2024. A substantial part of these investments is expected to be recouped through lower operating expenses – which we expect to realise towards the second half of 2024.

The major seismic campaign to cover the entire central part of Blocks 3&4 that has been ongoing for several years will be completed in 2024. A significant investment of MUSD 6 in 2024 (MUSD 11.6 in 2023) that we expect will bear fruit in the coming year’s exploration activities. With these major projects completed the operator projects both lower operating and capital expenditures in the years beyond 2024.

We have yet to see the effects of the investments on the reserves and production on Blocks 3&4, but we feel confident that this will soon be the case. In the near term, however, the book value of Oil and gas properties has grown to a level which is not yet reflected in its current performance, and we have thus made an impairment test resulting in an impairment. After the impairment the carrying value of the asset is still an impressive MUSD 190, in line with its historical level and significantly above our current market capitalisation. This value is no less impressive given that the value does not reflect the many upsides which we expect the coming year’s exploration and appraisal activities will unlock, not least with the latest state-of-the-art 3D seismic in our possession. Let’s not forget that Blocks 3&4 is an asset that has confounded sceptics many times in the past with its hidden treasures.

On Block 58 we are fast approaching the moment of truth with the drilling of the first exploration well in the Fahd area, Kunooz-1, expected to commence before the end of the first quarter.

Our operations on Block 56 have seen continuous activity in the past year with the Extended Well Test proving the productive capacity of the Al Jumd discovery, producing over 60,000 barrels gross, 332 bopd from only two wells. The quest to turn the Eastern Flank trend into our next producing field continued at the end of the fourth quarter with a return to Sarha-3 for a workover and the drilling of the Menna-1 exploration well further south in the trend. Both wells have encountered hydrocarbons across multiple zones and we are looking forward to testing which will commence imminently.

The upcoming test results from Menna-1 and Saraha-3 will be important data points for the field development plan for Block 56 which is currently in progress. A number of important key metrics are being established such as production potential, the reserve and resource base, as well as an assessment of the overall prospectivity of the Block.

Our asset portfolio remains highly promising and with many moving parts. The level of activity is such that our board of directors has elected to defer the decision on shareholder distribution for now and decided to review our asset portfolio composition to make sure we are optimised to deliver on our best opportunities. These are exciting times if also somewhat trying.

So, bear with us, and stay with us. 2024 promises to either be flat or the vigorous start of a new growth phase, led by the commercialisation of Block 56 and of course if the Fahd exploration well on Block 58 is a success…

Stockholm, January 2023
Magnus Nordin
Managing Director


Date: 6 February 2024
Time: 10.00 CET

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