THIRD QUARTER AND NINE MONTHS REPORT ENDING 30 SEPTEMBER 2016
Third quarter 2016
* Production amounted to 12,297 barrels per day, up 1 per cent compared to second quarter 2016 * Revenue amounted to MUSD 26, up 26 per cent compared to second quarter 2016 * EBITDA amounted to MUSD 16, up 86 per cent compared to second quarter 2016 * Net result amounted to MUSD 6, compared with MUSD -3 in the second quarter 2016 * Earnings per share amounted to USD 0.19 during third quarter 2016 * EGM held 25 October 2016 resolved to distribute SEK 3.00 per share through a redemption programme. The share redemption will be completed by the end of November and total distributed amount will be approximately MUSD 12 | MUSD (unless specifically stated) | Third quarter 2016 | Second quarter 2016 | Third quarter 2015 | | | | | | | Net daily production before government take (bbl) | 12,297 | 12,164 | 10,087 | | Net barrels sold, after government take (bbl) | 501,167 | 740,844 | 584,399 | | | | | | | Average selling price per barrel, USD | 45.8 | 35.9 | 61.8 | | | | | | | Revenue | 26 | 21 | 30 | | EBITDA | 16 | 8 | 18 | | Operating result | 4 | -3 | 8 | | Result for the period | 6 | -3 | 8 | | Net cash | 48 | 41 | 59 | | Investments in oil and gas properties | 9 | 9 | 13 | | | | | | | Earnings per share, USD | 0.19 | -0.09 | 0.23 | | | MUSD (unless specifically stated) | Nine months 2016 | Nine months 2015 | | | | | | | | Net daily production before government take (bbl) | 12,224 | 9,417 | | | Net barrels sold, after government take (bbl) | 1,773,929 | 1,438,310 | | | | | | | | Average selling price per barrel, USD | 38.6 | 60.7 | | | | | | | | Revenue | 66 | 81 | | | EBITDA | 34 | 45 | | | Operating result | 1 | 19 | | | Result for the period | 1 | 20 | | | Net cash | 48 | 59 | | | Investments in oil and gas properties | 34 | 35 | | | | | | | | Earnings per share, USD | 0.03 | 0.58 | Letter to shareholders Dear friends and investors, One of the most important parameters for our business - the oil price - stabilised further during the third quarter as demand continued to increase and more importantly producers sent clear signals that ’ever lower prices’ is not a viable long term option. This strengthened our view that long term prices below USD 40-45 per barrel are highly unlikely. Sustainable prices above USD 55 per barrel are also unlikely for the near term. Until more clarity is reached in understanding what the real marginal cost for US shale oil producers actually is, and how easy access to new capital such producers have, forecasts for price increases will remain speculative. Oil production Another vital parameter is the production, and in 2016 Tethys Oil is pumping more oil than ever before. The average daily production amounted to 12,297 barrels of oil per day, the highest in the company’s history. Our production has grown over 20 per cent per compared with the third quarter 2015. Opex A third important parameter is the operating expenses, and Tethys Oil’s operating expenses per barrel are substantially lower in 2016 than in last year as a result of general cost reductions and higher production. From the range USD 10.3 to 14.4 per barrel in 2015, the operating expenses per barrel have in 2016 been reduced to the range USD 7.3 to 9.3. Solid financial results Following higher achieved oil prices, higher production and lower operating expenses per barrel, Tethys Oil returned to profitability during the third quarter and we report a net result of MUSD 6. Our revenue increased 26 per cent quarter on quarter to MUSD 26 and our EBITDA increased 86 per cent to MUSD 16. Our investments in oil and gas assets continued at unchanged level and amounted to MUSD 9. Our cash flow, which has remained positive throughout the year, strengthened further and the operating cash flow after investments in oil and gas assets amounted to MUSD 6. Tethys Oil’s cash position increased further during the quarter and amounted to MUSD 48 at the end of September. Distribution to shareholders Since our project in Oman has proven to be as robust as we believed it would be, and based on our strong financial position and on our continued ability to generate free cash even at prices below USD 40 per barrel, we got the confidence to revisit the issue of cash distribution to shareholders. As a result, an EGM in late October resolved on an additional distribution to shareholders of 3.00 SEK per share in a redemption procedure. After completing the redemption procedure in November and also including the share repurchase programme during the year, we will in total have distributed around MUSD 18 (MSEK 151) to shareholders during 2016, undisputedly a sign of significant financial strength. Outlook Although we are happy over our numbers for the third quarter, we aim higher. We are hopeful that the drilling program for the fourth quarter will increase our production and result in another volume record by year end. The fourth quarter will also see some interesting exploration activity particularly in the area between the Shahd and Farha South oil fields. Depending on the outcome of this exploration activity, we may be able to establish an overlap between the fields in the three main producing reservoirs - Buah, Khufai and Barik. And in addition to our organic growth, our new venture screening activity remains high. So stay with us, exciting times continue! Stockholm in November 2016 Magnus Nordin Managing director Conference call Date: 2016-11-01 Time: 10.00 CET To participate in the conference call you may choose one of the following options: 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: Link to webcast: http://edge.media-server.com/m/p/6yptaty6 For further information, please contact: Magnus Nordin, managing director, phone: +46 8 505 947 00 Morgan Sadarangani, CFO, phone: +46 8 505 947 00 This information is information that Tethys Oil AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 07.30 CET on 1 November 2016. (For full report, please see attached file)