Dear Friends and Investors,

2021 was a good year to be an oil company. As Covid-19 released its grip on society and the economy during the course of the year demand for our product returned, resulting in steadily increasing oil prices. For the full year, Tethys Oil’s achieved selling price increased by more than 30 percent to average 62.80 USD per barrel compared to the year before. Fueled by the oil price increase our key financials have skyrocketed! Our net result is up by more than 400 percent, our operating result increased by close to 180 percent and our year-end cash position is up 22 percent compared to last year, leaving us with MUSD 68.6 of cash as we enter 2022. This record cash balance was reached whilst both investing in our assets but also returning more than MUSD 16 to our shareholders by way of dividends, redemptions, and share buybacks in the year.

In fact, since 2015 Tethys has distributed more than MUSD 135 million dollars to its shareholders while contributing over one billion dollars to the Sultanate of Oman’s economy. The Board of Director’s dividend and distribution proposal for 2022 will add a further MUSD 25 to that already impressive shareholder return tally.

The source of this cash distribution and the force behind our strong results in 2021 is our stake in our ‘star’ asset onshore Oman – Blocks 3&4. Over the last three years our share of production from the Blocks has amounted to close to 13 million barrels of oil whilst maintaining 2P reserves of more than 26 million barrels. In other words, we have consistently replaced our production with new reserves. 2021 is the first year in which we have replaced less than 100 percent of our production and we also saw a small drop in production compared to the year before ( -1.7 percent).

At first look these numbers could be seen as a sign of weakness. But put in perspective they are actually numbers of great strength! Investments in Blocks 3&4 almost halved during 2020 and 2021 compared to previous years. Precipitously dropping oil prices and production limitations in 2020 led to massive cost savings and shutting in of producing wells. The 2021 outlook was cautions and the work programme limited. As conditions started to normalise by mid-2021, bottlenecks appeared, and back logs increased. In short it was not easy to get back to where we had been before.

As we enter 2022, we clearly see signs of under-investment. This will be remedied by a major increase in capital spending during 2022. Don’t forget, these investments are subject to cost recovery. The majority of these investments on Blocks 3&4 will be repaid to us almost immediately in the form of increased Net Entitlement with only a small “haircut”. Considered the drop in investments our production and reserves development in 2021 is indeed a sign of the tremendous resilience and robustness inherent in Blocks 3&4. And just to make this point even stronger. The overall asset base of 2P reserves and 2C contingent resources increased during 2021.

So, we have every reason to remain confident that Blocks 3&4 will continue to be the backbone of our financial strength for several years to come.

But Tethys Oil is more than Blocks 3&4. Since a few years back we have used our experience, and a portion of our cash flow from Blocks 3&4 to add other onshore Blocks to our portfolio in Oman. One of them, in particular, is looking very promising.

As we started to understand the potential of Blocks 3&4, now more than a decade ago, we described the Blocks as ‘a smorgasbord of opportunities. Block 56 today offers a similar smorgasbord of opportunities of various shapes, sizes and value potential.

At the time of writing, we have started to evaluate the first of these opportunities on Block 56, the Al Jumd trend of leads and prospects in the North-western part of the Block. The initial work programme calls for establishing commercial viability through the drilling of a horizontal well Al Jumd-2 and putting this on a long-term production test while drilling two more wells to establish the reserve base in the area.

In the central part of the Block, we are halfway through a 2,000 km2 seismic survey which should give us state-ofthe-art 3D seismic data over three different petroleum plays and more than a dozen potential leads. We believe the central part of the Block holds the tastiest dishes of the Smorgasbord, but we must, alas, await the results later in 2022 before we can set our teeth in them.

A likely desert table, to push the metaphor, is Block 58 where we are working to mature some very interesting leads. Depending on the results here, including the result of a recently completed seismic study, Block 58 could come to complement Block 56 maybe also as a main dish.

To conclude our exploration portfolio, we expect to finalise a reservoir study of the sandstones in the Thameen well where we encountered an almost 40-metre gross hydrocarbon column last year that refused to flow to surface, however. The study will address several ways of stimulating the tight reservoir to release the hydrocarbons trapped within it. The results of the study will form the basis for our continued work in Block 49. The current license extension expires in June of this year so by that time we must have made up our mind as how to proceed.

As our partners EOG have advised that they wish to leave the Block, we are formalising the paperwork to go back to 100% ownership. We thank EOG for excellent partnering during 2021 and hope to have the opportunity to work with them again in the future.

We will have an active year and I expect to have many opportunities to write about all our Omani activities in upcoming letters throughout the year.

We will also have opportunity to address the more global questions of great importance for us and our industry and, for that matter our planet, such as Energy Transition, oil’s place in the future world, as well as other ESG matters, more fully later in the year. First out will be our Sustainability Report and our Annual Report to be published in April.

So, stay with us. Many more letters to shareholders await to be written and read.

Stockholm, February 2022

Magnus Nordin,

Managing Director