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Tethys Oil: Fourth quarter report 2015

* Production amounted to 10,956 barrels per day, up 9 per cent compared to
the third quarter 2015
* Revenue amounted to MSEK 222, down 13 per cent compared to third quarter
* Net result amounted to MSEK 27, down 65 per cent compared to the third
quarter 2015
* Earnings per share amounted to SEK 0.78 during fourth quarter 2015
* The board of directors propose to the annual meeting a dividend of SEK 1.00
per share
* As per 31 December 2015 audited reserves Block 3&4 Oman net to Tethys:

- 1P reserves 12,905 thousand barrels (11,794)

- 2P reserves 18,244 thousand barrels (17,779)

- 3P reserves 27,863 thousand barrels (25,080)

* The increase in 2P reserves represents an internal reserve replacement
ratio of 113 per cent
* Seven new wells completed during the quarter on Blocks 3 and 4
* New reservoir, the Lower Khufai in the Shahd field, boosts production

| MSEK (unless specifically stated) Fourth quarter 2015 Fourth quarter 2014 Third quarter 2015 |
| |
| Net daily production before government take (bbl) 10,956 8,350 10,087 |
| Net barrels sold, after government take (bbl) 366,746 434,035 584,399 |
| |
| Average selling price per barrel, USD 47.90 97.09 61.77 |
| |
| Revenue 222 281 255 |
| EBITDA 113 181 153 |
| Operating result 30 -5 76 |
| Result for the period 27 -1 78 |
| Net cash 436 372 485 |
| Investments in oil and gas properties 79 101 85 |
| |
| Earnings per share, SEK 0.78 -0.02 2.23 |

[1] Tethys Oil has made changes to its accounting principles with regard to
valuation of underlift and allocation and presentation of over- and underlift
compared to previous reports, which has had an effect on current as well as
historic financial data. Historical financial data has been restated in
accordance with the new accounting principles. Please see page 17 and section
“Accounting principles” for more information.

| MSEK (unless specifically stated) Full year 2015 Full year 2014 |
| |
| Net daily production before government take (bbl) 9,804 7,692 |
| Net barrels sold, after government take (bbl) 1,805,056 1,464,228 |
| |
| Average selling price per barrel, USD 58.09 103.87 |
| |
| Revenue 905 1,027 |
| EBITDA 496 743 |
| Operating result 194 393 |
| Result for the period 198 340 |
| Net cash 436 372 |
| Investments in oil and gas properties 324 259 |
| |
| Earnings per share, SEK 5.66 9.56 |

Letter to shareholders

Dear Friends and Investors

Also in this fourth quarter report, events outside of our control - movements
in the oil price - have had a large impact on our results. The oil price has
fallen for 18 months and as we entered January 2016, the fall accelerated
before bouncing in mid January. At the time of writing, there are signs that
the week of January 15 saw the bottom of the downturn. Irrespective of
whether we have seen the low of the cycle or not, I strongly believe we are
close in time to the end of the down turn. Prices will bottom out and
stabilize. At what level prices will stabilize and how quickly they rise
again is a different matter. In any case, Tethys will be able to continue to
generate a positive gross profit also at prices below 30 dollars per barrel!

Strong production growth

Now, turning to more pleasant subject, namely events that are under our
control. A year ago, we believed that we had every reason to expect our
production to continue to increase also in 2015. And in fact, in 2015 we
produced more oil than ever before. Our oil production increased at an
average pace of over seven per cent each quarter, and by the end of the year,
we had produced 31 per cent more oil in the fourth quarter 2015 than we did
in the last quarter 2014. And, just like the oil price but in the opposite
direction, the rate of increase accelerated in January and average daily
production for the year’s first month surpassed 12,000 barrels!

The recent surge is primarily related to the successful bringing on stream of
a new reservoir within the Shahd field, the Lower Khufai Carbonates. This new
reservoir has responded very well to horizontal drilling, and is dramatically
complementing the other primary producer in Shahd field, the Buah layer.

Reserves continue to increase

A year ago we were also optimistic that our reserve numbers would continue to
increase also in 2015. And indeed our 2P reserve replacement ratio stands at
113 per cent. The 1P number is even better showing an increase in absolute
numbers of more than one million barrels underscoring the robustness of our
producing reserves. So having moved reserves from 3P into 2P and 1P we are
happy to note a 3P number of 27.9 million barrels as we enter 2016, showing
an increase of almost 3 million barrels for the year after taking account of
the 3.5 million barrels produced in 2015.

Continued positive financial results

Our average selling price fell 22 per cent quarter on quarter down to USD 47.9
per barrel. In the fourth quarter, we report revenues of MSEK 222. Our EBITDA
for the quarter amounted to MSEK 113. Our cash flow from operations amounted
to MSEK 23, and our net result amounted to MSEK 27. Our net cash stood at
MSEK 436 as per 31 December 2015.


Our two Blocks onshore the desert of the Sultanate of Oman have turned into a
world class asset. A few years ago we described the Blocks as a smorgasbord
of opportunity – and what a buffet they have turned into. With the addition
of production from the Lower Khufai, we have shown that the Blocks hold
massive potential for growth. The Buah overlays the Khufai and both
reservoirs are present in large parts at least of the eastern area of the

As exploration and appraisal continues in 2016 within and close to the
producing areas in all three fields, we have every reason to believe that
much more oil can be found. With the successful bringing on stream of the new
reservoir within the Shahd field, a water injection programme in the Buah
layer showing signs of working combined with a steady production on Farha
South field, we also believe that production will continue to increase during
2016. As the production from the new reservoirs is optimized, the production
for individual months will fluctuate, and possibly show more volatility than
during 2015. And commencing in April, planned maintenance work at first in
Farha South and then in Shahd will lead to temporary production disruption.
Our focus on cash flow will continue, and the work programme will be
continually monitored to stay optimized in relation to oil prices.

Our balance sheet remains one of the strongest of our peer group and as the
oil price has fallen further, our relative strength has increased. There is a
lot of opportunity out there. We are well positioned and are continuously
evaluating new projects. We continue to be a cash dividend company, and
propose a dividend of SEK 1 per share. Depending on how oil prices,
production levels investments and other events unfold we will continually
evaluate the sense in distributing more cash to shareholders in accordance
with our long term financial goals.

So stay with us, we expect that Tethys will produce a fair amount of oil, at
least in relativity terms, but most likely not enough to influence the
international oil price.

Stockholm in February 2016

Magnus Nordin

Managing director

Conference call

Date: Tuesday, 9 February 2016

Time: 10.00 CET

To participate in the conference call you may choose one of the following

To participate via phone, please call:

Sweden: +46 8 505 564 74

Switzerland: +41 225 675 541

UK: +44 203 364 5374

North America: +1 855 753 2230

To participate via web:

Länk till webbsändningen:

For further information, please contact:

Magnus Nordin, managing director, phone: +46 8 505 947 00

Morgan Sadarangani, CFO, phone: +46 8 505 947 00

Författare NGN

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