Interim report first quarter 1 January – 31 March 2024

First quarter 2024 (Fourth quarter 2023)

  • The Field Development Plan for Block 56 is being finalised and is expected to be presented to the Ministry of Energy and Minerals before the end of May.
  • Site preparation for the exploration well Kunooz-1 in Fahd, Block 58, completed. The drilling rig is being mobilised and drilling will begin in mid-June.
  • Six prospects identified in South Lahan on Block 58, estimated to hold 251.5 mmbo of unrisked recoverable prospective resources. The identified prospects have been audited by Merlin Energy Resources Ltd.
  • Tethys Oil has entered the second exploration phase on Block 49, extending the EPSA until December 2026.
  • The strategic review initiated by the Tethys Oil’s Board of Directors is ongoing with Jefferies Financial Group Inc. as advisors.
  • Tethys Oil has signed a Heads of Agreement with Algerian national oil company, Sonatrach, to negotiate a potential production sharing agreement for two areas in Algeria.
  • Production from Blocks 3&4 in the quarter amounted to 8,032 barrels of oil per day (8,397), with a Net entitlement of 52% (52%) and an achieved oil price of USD 79.5 per barrel (90.4).
  • Revenue and other income was MUSD 30.1 (36.4) and EBITDA was MUSD 13.0 (21.5).
  • Cash flow from operations was MUSD 6.2 (21.9) and Free cash flow MUSD -10.8 (2.5).
  • The loan agreement for a MUSD 60 amortising term loan facility is about to be completed and is expected to become available before the end of the second quarter.
MUSD, unless specifically stated First quarter 2024 Fourth
quarter 2023
First quarter 2023 Full year
Net daily production, before government take, barrels per day 8,032 8,397 9,411 8,818
Production before government take, bbl 730,878 772,515 847,002 3,218,625
Net entitlement barrels, bbl 380,053 401,708 440,441 1,673,685
Net entitlement as share of production, percent 52% 52% 52% 52%
Achieved Oil Price, USD/bbl 79.5 90.4 81.7 82.4
Revenue and other income 30.1 36.4 35.3 138.2
EBITDA 13.0 21.5 18.7 73.5
Operating result 2.1 -31.9 7.7 -11.6
Net result 7.3 -38.7 8.0 -16.5
Earnings per share, after dilution, USD 0.23 -1.20 0.25 -0.51
Cash flow from operations 6.2 21.9 20.4 82.7
Investments in oil and gas properties 17.0 19.2 20.0 81.7
Free cash flow -10.8 2.5 0.4 0.8
Cash and cash equivalents 14.9 25.8 39.9 25.8

Letter to shareholders

Dear Friends and Investors,

What is going on? Well, a whole lot. Let us start with our operated blocks. We’re approaching several important milestones in our portfolio. Block 56 has taken large steps towards commerciality with the successful results from the Menna-1 well drilled earlier this year and the ongoing re-testing of the Sarha-3 well. The Field Development Plan for the block is nearing completion, and we expect to present it to the Omani Ministry of Energy and Minerals later this month. It will propose the development of the Al Jumd, Menna and Sarha discoveries and outline substantial future appraisal and exploration upside within Block 56. We are hopeful that the plan will be rapidly approved by the MEM, with a Declaration of Commerciality for Block 56 as a result. This will enable production to resume on the block, giving Tethys a second Omani commercial production stream as a complement to the production from Blocks 3&4. It will also enable us to book the reserves and resources attributable to Block 56, increasing our overall reserves. A Declaration of Commerciality for Block 56 will be a major milestone for Tethys, one that could very well be reached within the coming quarters.

Block 58 is in an earlier stage of the exploration cycle, and by mid-June we expect to begin drilling the Kunooz-1 well, targeting more than 120 million barrels of prospective resources. The well carries a chance of success of above 20 percent, which when compared to the resource potential has an excellent risk/reward ratio. In the case of success, Kunooz-1 will be transformative for Tethys, and we believe the well to be one of the highest profile ones to be drilled this year in Oman.

On Block 49 we are also moving forward. We elected to enter the second exploration phase to allow for the proper evaluation of the Thameen-1 well, as well as to increase the understanding of the true potential of the block and the well’s surrounding areas.

So, what hides on the other side of the coin? Well, while the operated portfolio is doing very well indeed, Blocks 3&4 have had a couple of challenging past years. On the positive side baseline production appears to stabilise and the operator CCED is increasing the exploration, appraisal and Gas-to-Power activities, strengthening the blocks for the future. However, costs and investments have gone up in recent years. Our guidance for 2024 included lower production and, unless oil prices rise, less free cash flow, than previous years from Blocks 3&4. So, for the first time in many years, Tethys is in a position to high-grade the now multiple opportunities available to us and put greater emphasis on how we allocate our resources. In February we announced that the Board instigated a strategic review to address this situation and ensure that Tethys is in a strong position to capitalise on these opportunities going forward. The review is still ongoing, but a few important decisions have been made.

The Board has proposed no dividend for the financial year 2023. The dividend policy remains firm, but with strong demand for capital we need to reposition ourselves for future growth.

To enable growth, a loan facility is being finalised with a bank in the United Arab Emirates to allow for further flexibility in pursuing our various projects. To assist the Board in evaluating the best way forward under this strategic review, the Board has mandated a financial advisor, the investment Bank Jefferies, to advise the Board on possible strategic alternatives to optimise Tethys’ portfolio and future strategy.

Since 2015, we have distributed SEK 43 per share to our shareholders and we remain committed to offer superior returns to shareholders and stakeholders alike. We have a wide palette of opportunities with Block 56 being the most mature to offer future growth, not without similarities to where Blocks 3&4 was ten years ago.

Our immediate target is to set a growth strategy and resume cash dividends as soon as possible. We pursue the imminent commercialisation of Block 56, the drilling of Kunooz-1 and eagerly await the evaluation of strategic alternatives for our portfolio of assets.

So stay with us, we have had a large period of harvest, we now enter a phase of growth and investments which should lead to harvest again.

Stockholm, May 2024
Magnus Nordin
Managing Director


Date: 7 May 2024
Time: 10.00 CEST

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