Dear Friends and Investors,

As the autumn leaves are falling, the weather remains mostly mild in Northern Europe as an uncertain winter approaches. At Tethys we continue to bring our contribution to the global energy supply, and hope to be able to contribute much more in coming years. And while we can report on yet another very strong quarter financially our production is once again not quite where we would have preferred for it to be.

Cash flow from operations stood at a healthy MUSD 23 while production from Blocks 3&4 came in at 9,788 barrels of oil per day, 3 percent lower than in the second quarter. Blocks 3&4 production has underperformed expectations throughout the year and while we have seen more stability in the second half of 2022 some challenges remain, primarily on the surface with bottlenecks in the production system and a shortage of workover rig time to carry out necessary well maintenance. The Operator is working hard to rectify these shortcomings but post covid effects and remaining supply chain bottlenecks primarily from China will continue to take its toll, at least for the remaining part of 2022.

During the quarter we invested MUSD 20 in our oil and gas assets, the bulk going into Blocks 3&4. On Block 56 investment remained steady as the additional wells on Al Jumd were completed. And after investments we note a free cash flow of some MUSD 3 which has strengthened our cash position to MUSD 42.

Our business model continues to deliver – investments are funded by cash flow from operations and the capital structure allows for both share buy-backs and distribution of cash to shareholders.

A significant part of the investment is aimed at future growth. In Blocks 3&4 we increase drilling while seismic acquisition continues and in our operated Blocks activity has centred on Block 56. Three wells have been completed on the Al Jumd structure all recording initial flows of oil of up to 700 barrels per day. Preparations for the extended well test are well underway, the tanks are filled with oil and infrastructure such as flowlines and pumps are in place. At the time of writing what remains before extended production testing can commence is the finalisation and approval of the oil metering station and its installation at the Sim Sim facility where oil from Block 56 will be metered before entering the national Omani pipeline system on its way to the export facilities in Muscat. We are hopeful that the meter will be up and running within the next four to six weeks and that we early next year will be in a position to further evaluate the Al Jumd oil discovery from the perspective of potential commerciality. At the same time, we will also get some cash contribution from the oil sold from the production testing.

In parallel, interpretation of the 2,000 km2 state of the art 3D seismic study in the Central Area of Block 56 is ongoing with results expected early next year and on Block 58 seismic interpretation and geological modelling are in the final stages before prospect ranking for well picking will commence. On Block 49 planning and procurement for re-testing of the Thameen well is ongoing.

Over the next couple of months, the extended well testing of Al Jumd stands out as the most significant milestone of our operated Blocks but the desktop work in the other areas are of pivotal importance for our future growth. And despite the somewhat disappointing production numbers from Block 3&4 so far this year, those Blocks will remain the main engine for cash flow generation for several years to come. They have the potential to increase production as well as reserves as we expect exploration drilling to pick up starting in the fourth quarter and continuing throughout 2023.

So stay with us, the future may not be ours to see but we are doing our best to ensure it will be a bright one for Tethys.

Stockholm, November 2022

Magnus Nordin,
Managing Director