Second quarter 2018 (first quarter 2018)
· Production from Oman, Blocks 3&4 amounted to 11,733 bopd (11,574 bopd)
· Revenue and other income of MUSD 36.4 (MUSD 34.2)
· EBITDA of MUSD 24.3 (MUSD 21.5)
· Net result of MUSD 15.0 (MUSD 9.0)
· Earnings per share amounted to USD 0.44 (USD 0.27)
· Three successful appraisal wells drilled on the discoveries made in 2017, coming in as, or slightly better than, expected
· 750 km2 increase of 3D seismic programme now totalling 2,750 km2
|MUSD (unless specifically stated)||Second quarter 2018||First quarter 2018||Second quarter 2017|
|Net daily production from Oman, Blocks 3&4 before government take (bbl)||11,733||11,574||12,373|
|Net barrels produced, after government take (bbl)||555,201||541,686||585,506|
|Net barrels sold, after government take (bbl)||529,194||511,998||565,331|
|Average selling price per barrel, USD||65.6||63.7||53.7|
|Revenue and other income||36.4||34.2||31.4|
|Result for the period||15.0||9.0||10.6|
|Earnings per share (after dilution), USD||0.44||0.27||0.31|
|Investments in oil and gas properties||13.2||13.8||15.1|
|MUSD (unless specifically stated)|| First
|Net daily production from Oman, Blocks 3&4 before government take (bbl)||11,654||12,379||12,162|
|Net barrels produced, after government take (bbl)||1,096,887||1,165,148||2,308,342|
|Net barrels sold, after government take (bbl)||1,041,192||1,130,031||2,316,404|
|Average selling price per barrel, USD||64.6||52.2||51.8|
|Revenue and other income||70.6||60.7||119.3|
|Result for the period||24.0||17.3||33.1|
|Earnings per share (after dilution), USD||0.71||0.51||0.97|
|Investments in oil and gas properties||26.9||28.1||40.4|
Letter to shareholders
Dear Friends and Investors,
- Appraisal drilling results on last year’s discoveries in line with or slightly better than expected
- Several thousand square kilometres of new 3D seismic around the producing fields being acquired and interpreted
- Production in line with expectations and sold at a healthy price
Quite a good quarter for our core asset, Blocks 3&4 onshore Oman!
The appraisal programme is important to progress contingent resources into reserves and increase production. The 3D seismic is important to define new potential oilfields to guide the exploration programme on Blocks 3&4. Production and sale of oil is of course of utmost importance to generate the cash required for the continued expansion of Tethys Oil and to enable us to maintain the distributions of cash to our shareholders.
Work at the Ulfa early production facility (“EPF”) is ongoing with a few items having taken longer than expected, and we would now expect the EPF to be up and running during the fourth quarter of 2018, some four to six weeks later than originally planned. Once up and running, the EPF will enable several more appraisal wells on the Ulfa and Samah discoveries to be put on stream. It will also allow capacity in the Farha production facility, currently being used to handle some long-term production testing from Ulfa, to be returned to the Farha producers.
Our oil production in Oman increased slightly in the second quarter 2018 and amounted to 11,733 bopd, compared to 11,574 bopd in the first quarter 2018. It is at the lower end of our guidance of a monthly average production of between 11,000-13,000 bopd. As the year progresses, however, we are anticipating the monthly average production to increase towards the higher end of our production guidance. This anticipated increase will follow once the Ulfa EPF is up and running.
Second quarter 2018 in focus
Following the increase in oil price and production, we are happy to report revenue and other income of MUSD 36.4, an increase of 6 percent compared with the first quarter 2018. Our EBITDA was up 13 percent and amounted to MUSD 24.3. Our investments in oil and gas operations amounted to MUSD 13.2, in line with MUSD 13.8 in the first quarter 2018. During the second quarter 2018 a total of SEK 5.00 per share, in total MUSD 19, was distributed to shareholders while still leaving us with a net cash balance of MUSD 35.8 at the end of June.
We have experienced higher operating expenses per barrel this quarter than we originally expected. This is partly associated with remedial work being carried out on our older fields. As we can judge today we would expect operating expenses per barrel to come down once the Ulfa EPF is commissioned and the full effect of the remedial work areas is reflected in the production numbers. However, as previously guided, we would expect operating expenses per barrel in 2018 to be somewhat higher than the previous year.
While Blocks 3&4 remain our core asset, work is gearing up on our operated exploration block, Block 49, in the southern part of Oman next to the border with Saudi Arabia. We have a 100 percent interest in this large (15,439 km2) block and it is a pleasure to again be operator in Oman. We are well underway to establishing Tethys Oil’s presence with the local communities and organisational bodies.
The first part of the work programme, the reprocessing and reinterpreting of existing seismic data, is ongoing. In the first phase, we are processing some 40 lines of 2D seismic amounting to over 1,000 km of various vintages. This is giving us seismic images of a better resolution which will enable us to search the block for targets not visible to previous operators. It is still early days but so far we have not been disappointed with what we have seen. Once the reprocessing has been completed the next step will be to assess if and where new seismic is needed to further enhance our understanding of where in the block the highest chances of finding commercial oil exist.
So please stay with us – as the older fields in Blocks 3&4 mature, new fields are brought on stream and new seismic opens up for further discoveries in coming months and years. And with exploration work on Block 49 picking up with Tethys Oil as operator, Tethys Oil is firmly on its way to increasing its footprint in the Sultanate of Oman.
Stockholm in August 2018
This report has not been subject to review by the auditors of the Company.
For further information, please contact:
Magnus Nordin, managing director, phone: +46 8 505 947 00
Jesper Alm, CFO, phone: +46 8 505 947 00
This information is information that Tethys Oil AB (publ) is required to make public pursuant to the Securities Markets Act. The information was submitted for publication, through the contact persons set out above, at 07.30 CEST on 14 August 2018
Date: 14 August 2018
Time: 10.00 CET
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