Second quarter and half year report 2014 • New third

• New third party reserve report relating only to Lower Buah reservoir on Block 4,  Oman as at 30 June 2014 □ 1P reserves 2.3 mmbo (1.2 mmbo 31 Dec 2013) □ 2P reserves 5.0 mmbo (2.2 mmbo 31 Dec 2013) □ 3P reserves 7.4 mmbo (3.7 mmbo 31 Dec 2013) • Second quarter 2014 net sales of MSEK 245 compared to MSEK 195 in the first quarter 2014, an increase with 26 per cent. The strong net sales development is based on the production increase during the quarters as well as change in underlift position • Net result after tax during second quarter 2014 amounted to MSEK 107, and is up 86 per cent compared to MSEK 58 during first quarter 2014. Strong sales development and lower operating expenditures per barrel mainly explain the increase in net result and net margin • Second quarter 2014 earnings per share before and after dilution of SEK 3.02 compared to SEK 1.62 during first quarter 2014 • New production record achieved from Oman each month during first six months 2014 • New production record in July with 8,239 barrels per day from Oman • Second quarter production increased 8 per cent compared with first quarter 2014. Total production amounted to 658,123 barrels corresponding to 7,232 barrels per day. The increase is mainly due to continued successful appraisal in the Lower Buah (including B4EW4) area and continued implementation of the water injection programme in the Farha South area • Early redemption of MSEK 400 bond loan completed after MUSD 100 reserve based credit facility obtained • After the reporting period, Tethys increased its indirect interest in the Rietavas licence onshore Lithuania ┌──────────────────────────────┬──────────┬──────────┬──────────┬───────────┬─┐ │MSEK (unless specifically │Second │First │Second │% Q2 2014 │ │ │stated) │quarter │quarter │quarter │to Q1 2014 │ │ │ │2014 │2014 │2013 │ │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Production, before government │658,123 │608,582 │399,839 │8% │ │ │take (bbl) │ │ │ │ │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Average daily production, │7,232 │6,762 │4,394 │7% │ │ │before government take (bbl) │ │ │ │ │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Net sales, after government │350,059 │280,782 │156,816 │25% │ │ │take (bbl) │ │ │ │ │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Average selling price per │105.89 │106.56 │107.26 │-1% │ │ │barrel, USD │ │ │ │ │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Net sales of oil and gas │245 │195 │110 │26% │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Operating result │134 │83 │49 │61% │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │EBITDA │192 │130 │83 │48% │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Result for the period │107 │58 │39 │86% │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Earnings per share before and │3.02 │1.62 │1.10 │86% │ │ │after dilution, SEK │ │ │ │ │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Net debt │-3 │60 │182 │-105% │ │ ├──────────────────────────────┼──────────┼──────────┼──────────┼───────────┼─┤ │Investments │69 │45 │114 │53% │ │ └──────────────────────────────┴──────────┴──────────┴──────────┴───────────┴─┘   ┌──────────────────────────────────────┬───────────┬───────────┬──────────────┐ │MSEK (unless specifically stated) │First half │First half │% H1 2014 to │ │ │2014 │2013 │H1 2013 │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Production, before government take │1,266,705 │768,321 │65% │ │(bbl) │ │ │ │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Average daily production, before │6,998 │4,245 │65% │ │government take (bbl) │ │ │ │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Net sales, after government take (bbl)│630,841 │366,354 │72% │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Average selling price per barrel, USD │106.19 │107.68 │-1% │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Net sales of oil and gas │440 │256 │72% │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Operating result │216 │173 │25% │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │EBITDA │322 │235 │37% │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Result for the period │165 │144 │15% │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Earnings per share before and after │4.64 │4.04 │15% │ │dilution, SEK │ │ │ │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Net debt │-3 │182 │-102% │ ├──────────────────────────────────────┼───────────┼───────────┼──────────────┤ │Investments │114 │149 │-23% │ └──────────────────────────────────────┴───────────┴───────────┴──────────────┘   Dear Friends and Investors Once upon a time, actually not too long ago, Tethys was an event driven fringe-company. An exploration company offering lots of optimism and hope, but with a poor income statement and a weak balance sheet. Today, when we present this report filled with record numbers, that time seems a distant past. Gone are the zero sales lines and discussions on future capital needs. The revenues of MSEK 245 this quarter was a record high. EBITDA for the quarter was a healthy MSEK 192 and our net result for the quarter amounted to MSEK 107 (incidentally both also record numbers). In brief, we are now an oil company with substantial assets and strong finances. Future exploratory and appraisal work can now be funded from cash flow, or bank borrowing secured by reserves. Now, analysts can have opinions about our upcoming reports and investors can speculate in share buy backs or even future dividends. It is great, at least in some respects, to be part of ‘quarterly capitalism’. But this marvelous transition does not mean that we have lost our soul. We made it here, not through mergers or acquisitions, but through success with the drill bit. Through persistent and systematic efforts of appraisal and exploration along our strategic lines. The main driver behind our record high production of 7,232 barrels of oil per day in the second quarter (superseded in July by a new record production number of 8,239 barrels of oil per day) was the continued successful appraisal of the Lower Buah reservoir on Block 4. We have drilled four new appraisal/exploration wells in the Lower Buah reservoir and one in the Khufai reservoir on Block 4. All have been successful and put in production. As a consequence, we commissioned an interim reserve report from our reserve auditors, DeGolyer and MacNaughton, to estimate Lower Buah reserves as at 30 June 2014. But before we look at the numbers, let us just bear in mind that our appraisal strategy remains focused on production and cash flow, and only thereafter on reserve estimates. However, also with this conservative strategy, our reserve increase in Lower Buah for the first six months of 2014 has been quite satisfactory. When we compare the Lower Buah numbers to the reserve report as per 31 December 2013, our June 2P is larger than our December 3P number and the Lower Buah continues to show promise as one of our most important reservoirs. The 3P number for June stands at no less than 7.4 million barrels. But let us not forget that we have also made additional discoveries in the Khufai and that most of our production still comes from the Barik reservoir in the Farha South field. Exploration and appraisal work will continue throughout 2014 and we look forward to a new year-end reserve audit. Onshore Oman is not our only project area. Lithuania should offer exploration wells later this year, our assets in France are quiet but not dead and new areas and other projects may loom in the future. As our growth continues, we are staffing up with new senior colleagues. In Muscat, on 1 September Mr Hussain Al Lawati, a former Director General of Exploration of the Ministry of Oil and Gas, will join Tethys, most recently from a senior position with Oman Oil Company Exploration and Production.  And in Stockholm, former investment banker Mr. Jesper Alm, has recently joined us. So stay with us - the journey continues, albeit at a higher level!   Stockholm in August 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     Tethys Oil is a Swedish energy company focused on exploration and production of oil and natural gas. Tethys Oil’s core area is Oman, where the company is one of the largest onshore oil and gas concession holders. Tethys Oil also have exploration and production assets onshore Lithuania and France. The shares are listed on NASDAQ OMX Stockholm (TETY).