First quarter report 2014

FIRST QUARTER 2014  
  • New production record each month during first quarter 2014  
  • First quarter production increase 25 per cent compared with fourth quarter
    2013. Total production amounted to 608,582 barrels corresponding to 6,762
    barrels per day. The increase is mainly due to continued successful
    appraisal in the B4EW4 area  
  • New oil discovery onshore Oman – Exploration well B4EW6 flows in excess of
    2,200 barrels per day
  • Appraisal well on area 4 (B4EW4-7) encounters oil and confirms reservoir
    extension to the south east  
  • First quarter 2014 net sales of MSEK 195 compared to MSEK 193 in fourth
    quarter 2013. Net sales has not kept up with production increase which has
    created an increased underlift position at 31 March 2014 compared to 31
    December 2013  
  • Net result after tax first quarter 2014 of MSEK 58 compared to MSEK 45
    during fourth quarter 2013. OPEX and the depletion rate is higher during
    first quarter 2014, but the exploration costs during the fourth quarter
    2013 still result in an increase in result on a quarter to quarter basis  
  • First quarter 2014 earnings per share before and after dilution of SEK 1.62
    compared to SEK 1.26 during fourth quarter 2013  
  • Tethys Oil signed a four year, up to MUSD 100, senior revolving reserve
    based lending facility with BNP Paribas. The lending facility will reduce
    and optimize the financing costs as well as increasing operational and
    financial flexibility                              

 

SUBSEQUENT EVENTS

  • In April 2014, Tethys Oil completed the early redemption of the MSEK 400
    bond loan. To redeem the bond loan, Tethys Oil paid 104.50 per cent of the
    nominal amount and accrued interest to all bond holders. The payment was
    made 7 April 2014

 


┌───────────────────────────────┬──────────┬───────────┬──────────┬──────────┐
│                               │First     │Fourth     │First     │Change, % │
│MSEK (unless specifically      │quarter   │quarter    │quarter   │          │
│stated)                        │2014      │2013       │2013      │Q1 2014 to│
│                               │          │           │          │Q4 2013   │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Production, before government  │608,582   │499,028    │368,481   │22%       │
│take (bbl)                     │          │           │          │          │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Average daily production,      │6,762     │5,424      │4,094     │25%       │
│before government take (bbl)   │          │           │          │          │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Net sales, after government    │280,782   │271,175    │209,538   │4%        │
│take (bbl)                     │          │           │          │          │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Average selling price per      │106.56    │108.47     │107.63    │-2%       │
│barrel, USD                    │          │           │          │          │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Net sales of oil and gas       │195       │193        │146       │1%        │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Operating result               │83        │52         │124       │60%       │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│EBITDA                         │130       │148        │152       │-12%      │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Result for the period          │58        │45         │105       │29%       │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Earnings per share before and  │1.62      │1.26       │2.94      │29%       │
│after dilution, SEK            │          │           │          │          │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Cash and cash equivalents      │363       │295        │270       │23%       │
├───────────────────────────────┼──────────┼───────────┼──────────┼──────────┤
│Investments                    │45        │80         │35        │-44%      │
└───────────────────────────────┴──────────┴───────────┴──────────┴──────────┘

   

Dear Friends and Investors

25%. That is our production increase compared to the final quarter last year.
The comprehensive drilling programme is paying off and lead times from
discovery to production remain excellent. The appraisal well B4EW4-7 on area 4
encountered oil and confirmed reservoir extension to the south east. Another
appraisal well is currently on-going so sooner or later we will find out where
the B4EW4 reservoir structure ends. Let us hope it is later rather than sooner.
We are appraising the area 6 (B4EW6) discovery and we are drilling another
Lower Buah exploration well. And we expect to start drilling our first Masirah
Graben exploration well later in the second quarter. But amid all this
activity, let us stop to scrutinize the first quarter in a little more detail.

Average daily production for the quarter of 6,762 bopd was the highest
quarterly production number in the company’s history.  Oil prices were almost
flat compared to the previous quarter and we report an average selling price of
USD 107 per barrel. Our net sales of MSEK 195 are also record high, but the
sales could have been higher. Timing issues in sales have again resulted in
higher production than sales volumes and we leave the quarter in an underlifted
position of over 43,000 barrels. As for the bottom line, we are happy to report
a result for the first quarter of MSEK 58.

All in all, a total of 15 wells were completed on Blocks 3 and 4 during the
first quarter 2014. The development of the water injection system in the Barik
layer on the Farha South oil field has also continued and further strengthened
and stabilized the production from the field.

In Lithuania, the 3D seismic on Raiseiniai license show promise. More than a
dozen potentially oil bearing reefal structures have been identified. Drilling
is expected to start after the summer, and if luck stays with us, Lithuanian
reserves and production could also increase.

Financially, we have strengthened our balance sheet and signed a four year, up
to MUSD 100, senior revolving reserve based lending facility. The lending
facility will reduce and optimize the financing costs as well as increase our
operational and financial flexibility. The MSEK 400 bond loan has been
redeemed.

The numbers underscores that we are in a better position than ever before. Our
financial numbers are at record levels. Our production is at record levels.
Drilling activity is at record levels. And the number of shareholders are at
record levels. So welcome on-board and stay with us.

 

Stockholm in May 2014

Magnus Nordin                                                              

Managing Director

 

For further information, please contact:

Magnus Nordin. Managing Director. phone: +46 8 505 947 02.
e-mail:magnus@tethysoil.com

or

Morgan Sadarangani. CFO. phone +46 8 505 947 01. e-mail:morgan@tethysoil.com

About Tethys Oil

Tethys Oil is a Swedish oil company with focus on onshore areas with known oil discoveries. Tethys Oil's core area is Oman, where the company holds 2P Reserves of 25 mmbo and 2C Contingent Resources of 13 mmbo and had an average oil production of 11,767 barrels per day from Blocks 3&4 during 2018. Tethys Oil also has onshore exploration licences in Lithuania and France and some production in Lithuania. The shares are listed on Nasdaq Stockholm (TETY).