Nine months and third quarter report 2013

(For full report, please see attached file)
• Production from Oman and Lithuania of 442,352 barrels corresponding to
4,808 barrels per day
• First appraisal well in the Lower Buah layer on the B4EW4 structure flows
in excess of 1,000 bopd       
• Exploration well in new structure B4EW5 encounters oil and flows in excess
of 200 bopd
• Net sales of MSEK 142 (116)
• Net result after tax MSEK 52 (46)
• Earnings per share before and after dilution of SEK 1.46 (1.35)
• Net sales of MSEK 399 (414)
• Net result after tax MSEK 196 (169)
• Earnings per share before and after dilution of SEK 5.50 (4.97)  
• Vincent Hamilton resigned as Chairman of Tethys Oil AB and the board of
directors appointed Staffan Knafve as new Chairman
• Second appraisal well completed in November in the Lower Buah layer on the
B4EW4 structure flows in excess of  2,000 bopd
• Tethys estimates B4EW4 structure to hold recoverable reserves of some 2 to
4 million barrels of oil net to Tethys Oil
• Tethys Oil’s share of production from Oman during October amounted to
143,388 barrels corresponding to 4,625 barrels per day
(For table, see attached file)
Dear Friends and Investors
Let us start by concluding that the third quarter has also yielded good
results. Both financials and operations continue to be strong. In the third
quarter 2013, Tethys Oil produced 442,352 barrels of oil before government
take, representing a new record production and an increase of 23 per cent
compared with the third quarter 2012 (358,968 barrels). The international oil
prices were almost flat compared to third quarter last year and we realized an
average selling price of 102 USD/bbl (101). We report net sales of MSEK 142
(116). The result for the third quarter amounted to MSEK 52 (46). Like in the
second quarter this year, timing issues in sales have resulted in higher
production than sales volumes and we leave the quarter in an under lifted
Like previous quarter the average daily production from Block 3 and 4 increased
quarter on quarter by 10 per cent from 4,261 bopd to 4,682 bopd. The production
increase is partly the result of the successful implementation of the water
injection programme on the Farha South oil field, with five new injection wells
being drilled in the third quarter. We are however running a little behind
schedule, and are now targeting the injection programme to be fully implemented
on all fault blocks in production late in the first quarter 2014. Until then,
the delay will from time to time affect the production.
The increase in production is also very much a result of the successful test
production from the B4EW4 structure. Two wells are on long term test production
from the Lower Buah, and a third will be added shortly following the recent
highly encouraging result of more than 2,000 bopd tested from the B4EW4-5 well.
And the appraisal of the structure continues. The 3D seismic suggests that the
Lower Buah may be compartmentalized. Proper appraisal is therefore needed
before a third party reserve audit should be carried out. The Lower Buah shows
great promise. All three wells drilled into that reservoir section has
encountered oil and the oil water oil contact has not yet been determined. This
leads Tethys to conclude that somewhere between 2 to 4 million barrels of
recoverable oil reserves could be added from this structure.  Continued
appraisal is of the essence and the currently drilling B4EW4-6 well, the fourth
appraisal into the Lower Buah, will yield yet more important data to measure
and understand this structure.
During the quarter, we drilled an exploration well in the B4EW5 structure. The
well encountered oil and we made a new discovery, but the initial flows were a
bit disappointing. We will therefore try to stimulate the well before it will
be put in long term production test. However, the most important fact is that
the B4EW5 discovered oil and proved the viability of the Buah play concept.
Next year’s work programme is taking shape. The Farha water interjection
programme will continue, but we also anticipate increased focus on exploratory
drilling. In 2013, a large part of the work programme was devoted to seismic
studies. With the processing of these studies nearing completion, and the
interpretation so far suggesting a large amount of new prospects, we are
confident that 2014’s exploration programme will be much more focused on the
In Lithuania production continues in Gargzdai and exploration activities are
being carried out in both the other licenses. The data collection in the
seismic study at the Raiseiniai licence is almost completed, and a new well is
being drilled at the Rietavas licence. We are looking forward to the results.
In October 2013, my partner since many years, our chairman and co-founder of
Tethys Vincent Hamilton left the company in order to work to support and fund a
medical research foundation he recently founded. Vince and I have written some
50 management words over the years, but this time I wish Vince a very nice
weekend without worrying about investor letters. We also wish him the very best
of luck with his new venture. Needless to say, his great contribution to the
company will continue to influence the way we operate as will his input as
consulting geologist. But let me now welcome our new chairman Staffan Knafve.
Staffan has been a board member since our AGM in 2012. With his background in
the financial markets, he will bring valuable expertise of a new kind at this
So stay with us, our journey continues.
Stockholm in November 2013
Magnus Nordin
Managing Director
For further information, please contact:
Magnus Nordin, Managing Director, phone: +46 8 505 947 02,
Morgan Sadarangani, CFO, phone +46 8 505 947 01,