Dear Friends and Investors,

I trust you are safe and sound despite continued effects of the coronavirus pandemic that persists throughout the world. In the field the testing protocols continue to be in force and occasional cases have occurred, but thankfully all cases have been contained and led to recoveries. Delays have occurred and there is no doubt that we would very much wish for the coronavirus to go away completely!

That said, we can look back at yet another solid quarter. Oil prices are well managed by OPEC+, with production limitations still in place, and the new incarnation of fiscally disciplined shale producers in the United States. Brent above USD 70 per barrel may be a bit overextended for the long run but the lows of last year seem very far away and are not likely to return for the foreseeable future.

As oil consumption returns to levels not seen since before the pandemic-induced shutdowns, with prices much higher than before the virus set in it will be very interesting to see how the demand for oil evolves over the next couple of years. Tethys Oil will continue to be active in the upstream oil market as long as we see a need for our product, bearing in mind that we will maintain a strong focus on environmental and other ESG related areas. And with consumption rapidly returning we will position ourselves accordingly.

Production from Blocks 3&4 for the quarter amounted to 11,030 BOPD and above the original quotas set in April of last year. Various work has been carried out on the fields aiming at improving and upgrading transportation systems and certain facilities. The work programme for the remainder of 2021 will continue to be focused on long term improvements and we are hopeful that average daily production for the second half of the year will be higher than the 11,306 BOPD we had during the first half of 2021. With three rigs now back in operation we also expect an increase in the number of exploration wells to be drilled during the year.

The achieved oil price amounted to USD 59.7 per barrel, up 28 percent compared with first quarter 2021. The higher oil price, combined with operating expenses per barrel decreasing to USD 9.9, down 13 percent from USD 11,4 per barrel in first quarter, resulted in a significantly higher netback per barrel. Netback per barrel for the second quarter amounted to USD 15.2, compared to USD 11.8 in the first quarter, an increase by 29 percent. The higher achieved oil price offset the lower net entitlement to give a higher net revenue in the second quarter. EBITDA and operating result increased to MUSD 14.5 and 4.3 respectively, an increase compared with the first quarter 2021 of 18 and 153 percent. Even after a distribution of over MUSD 15.5 to our shareholders during the quarter, our balance sheet remains strong with a net cash position of MUSD 45.5.

Work on our operated Block 58 is moving ahead slightly faster than expected in that the design and tender for seismic acquisition is nearing completion and collection expected to start in the third quarter. The planning of a 2021 drilling campaign consisting of up to three wells to further evaluate the Al Jumd area in Block 56 continues with first well planned to be drilled in the fourth quarter 2021. This appraisal could lead to long term production test on the Al Jumd complex before the end of the year. In addition, the planning of a seismic campaign in the central area on Block 56 is also ongoing.

And last but not least we are about to get our head around the results of the Thameen-1 exploration well on Block 49 that we successfully drilled during the first quarter. With logs having indicated a gross hydrocarbon column of close to 40 metres, we were naturally disappointed when no flows were recorded. As analysis nears completion data suggests a reservoir section with very good porosity but very limited permeability. How to take the project forward in the best way will be the focus on Block 49 for the third quarter.

So please stay with us – as usual no lack of interesting activities in all our ongoing projects.

Stockholm, August 2021

Magnus Nordin,
Managing Director