Dear Friends and Investors,

Finally, as the first quarter was drawing to a close, the fiscal meter for the extended well test (“EWT”) on Block 56 was commissioned allowing for the test to begin in earnest in early April. The three horizontal wells drilled on the Al Jumd discovery last year will now be evaluated, and the structure appraised for commercial viability. An important, if not decisive, milestone has been reached in the continuing exploration of onshore Block 56!

The other major Block 56 event in the first quarter was the finalisation of the processing of the Central Area seismic. Interpretation is ongoing and by the end of the second quarter we hope to have identified several drillable prospects to be tested by the drill bit in the second half of 2023.

On Block 58 seismic interpretation is further along with work on the Fahd area completed, drillable prospects identified, and prospective resources estimated and risked. Interpretation of the Lahan area is nearing completion and these carbonate stringers imbedded in salt hold interesting potential but the year’s exploration drilling in Block 58 will most likely target the large Fahd prospects.

Exploration drilling on Block 58 and Block 56 will be the main focus areas for the second half of the year and with prospective resources well close to 200 million barrels of oil, success could be transformative.

We expect to revisit our old friend on Block 49, the Thameen-1 well, later this year, most likely in the third quarter. The well will undergo a re-test and preparations and tendering for the services needed to re-enter the well and conduct hydraulic fracturing operations in the tight sandstone are ongoing.

With so much activity on our operated blocks it is almost easy to forget our non-operated 30 percent in Blocks 3&4. However, there were some encouraging exploration activities on these blocks as well. Three exploration wells were drilled, all of which encountered oil. The two near field ones, Elaf-1 and Rahbah-1 are undergoing production testing and evaluation, the results of which are eagerly awaited.

The far field Jari-1 well, drilled to test a large, so far unproven play, in the southern part of Block 4, encountered oil while drilling in tight sandstone of pre-Cambrian age. This Cryogenian sandstone, known locally as the Abu Mahara, is prolific in the area and, if the play works, substantial resources could be unlocked. As expected, the reservoir was too tight to allow flows to surface and the next step is to further evaluate the well by doing what Tethys is doing in Thameen in Block 49, test after creating fractures. We would not expect any results until the end of the second quarter, but those results will also be eagerly awaited.

But of course, exploration is not primarily what Blocks 3&4 are about. These blocks are the source of our production and cash flow. The operator CCED managed to stabilise production during the quarter at more than 31,000 barrels of oil per day, corresponding to almost 9,500 barrels of oil per day for Tethys 30 percent stake. Infrastructure improvements continued and water handling stabilised and with four rigs in operation we would expect to see further contribution to production as the exploration focus of the first quarter changes back to production and appraisal drilling in and around the producing fields.

Oil prices above USD 80 contributed to a strong operating cash flow of MUSD 20 which funded our continued strong investments during the quarter and also a comparatively high opex of about USD 17 per barrel. First quarter opex has historically been comparatively high and we would expect opex per barrel to come down as the year evolves. Net entitlement returned to 52 percent, reflecting the high level of capex and opex, resulting in a cash flow contribution from Blocks 3&4 of MUSD 2.4 which covered investments in our other blocks.

With continued strong potential in Blocks 3&4 and with fast moving exploration and appraisal activities in our operated Blocks 49, 56 and 58, I can but reiterate:

Stay with us, the year has just begun.

Stockholm, May 2023
Magnus Nordin
Managing Director