First quarter 2017
· Production amounted to 12,495 bopd, compared to 12,268 bopd in the fourth quarter 2016
· Revenue of MUSD 29.3, compared to MUSD 20.7 in the fourth quarter 2016
· EBITDA of MUSD 19.3, compared to MUSD 9.6 in the fourth quarter 2016
· Net result of MUSD 6.7, compared to MUSD 1.5 in the fourth quarter 2016
· Earnings per share amounted to USD 0.19 during first quarter 2017
· 14 new wells completed on Blocks 3&4 during the first quarter 2017
· Two previously undrilled fault blocks on Farha South and one previously undrilled structure on Shahd were successfully drilled and found to be oil bearing
· Exploration well Erfan-1 flows oil to surface
· Drilling success increases production capacity
| MUSD (unless specifically stated) | First quarter 2017 | Fourth quarter 2016 | First quarter 2016 | Full year 2016 | |
| Net daily production before government take (bbl) | 12,495 | 12,268 | 12,212 | 12,235 | |
| Net barrels sold, after government take (bbl) | 564,700 | 583,772 | 531,918 | 2,357,701 | |
| Average selling price per barrel, USD | 50.7 | 46.0 | 35.7 | 40.5 | |
| Revenue | 29.3 | 20.7 | 19.7 | 87.1 | |
| EBITDA | 19.3 | 9.6 | 10.3 | 44.0 | |
| Operating result | 9.3 | -1.7 | -1.4 | -0.5 | |
| Result for the period | 6.7 | 1.5 | -2.3 | 2.7 | |
| Net cash | 40.1 | 39.0 | 45.4 | 39.0 | |
| Investments in oil and gas properties | 13.0 | 15.0 | 15.0 | 48.5 | |
| Earnings per share (after dilution), USD | 0.19 | 0.04 | -0.07 | 0.08 |
Letter to shareholders
Dear Friends and Investors, Tethys Oil has had a strong and constructive quarter, with basically all numbers as well as the drill bit going our way. Oil prices and production are increasing, resulting in higher revenues. At the same time, costs are coming down, resulting in improved bottom line result.
New oil discoveries Drilling activity has been high, particularly on the exploration side, and we are happy to note that the drilling success rate on Blocks 3&4 remains very high. The two new, previously undrilled, fault blocks on the Farha South field drilled during the quarter came in successfully. Likewise did the new, also previously undrilled, structure on the Shahd field. And maybe even more significantly, so did the exploration well Erfan-1. Erfan-1 was drilled on a previously undrilled structure south west of the producing Saiwan East field and flowed oil to surface from the Khufai carbonate formation. The result is encouraging and we believe Erfan will contribute positively to our future production capacity.
Oil production increases We reached a new record production of 12,495 bopd, of which 12,386 bopd from our Omani blocks, representing a two percent increase compared to the fourth quarter 2016. Since Oman has agreed to support the OPEC initiated production limitations Tethys has been given a monthly production target corresponding to 12,300 bopd for the first six months of 2017. First quarter production was slightly above this target and we are confident that we shall be able to at least meet the target also for the second quarter. Following our recent drilling success, we are also confident that we will able to increase our production as soon as the production limitations are removed.
Oil price increase After the limitations were announced late last year, international oil prices strengthened substantially. Our achieved oil prices increased from USD 46.0 per barrel in the fourth quarter 2016 to USD 50.7 per barrel in the first quarter 2017. So far it seems the OPEC limitations have had a positive effect in stabilizing the oil price. We will follow OPEC's decisions for the future with great interest.
Lower costs Our operating expenses per barrel are down more than 7 percent quarter on quarter. And backed by our reserve increase by year end 2016, our depletion costs were lowered from USD 10.0 per barrel down to USD 8.9 per barrel
Further financial strengthening For the first quarter 2017 we are happy to report revenues of MUSD 29.3, an EBITDA for the quarter of MUSD 19.3, and a net result of MUSD 6.7. Our net cash increased to MUSD 40.1 as per 31 March 2017.
Outlook Even though we are producing at record levels, we have been able to work on further production optimization and reservoir management, particularly on the Shahd fields where some wells have been shut it. We are using the time during the production limitations to gain further knowledge about the reservoirs, to optimize and fine tune production and structure ongoing appraisal and other activities, to be fully prepared once the current limitations are lifted. Following the success of the drilling program so far this year, we are confident that the production capacity on Blocks 3&4 will increase and that we will be capable of a daily production rate above the average achieved so far this year, once the current production limitations are lifted.
Our drilling program continues. In the second quarter 2017, the exploration well Ulfa-1 reached its total depth and is now being evaluated. With more than a dozen additional leads and prospects mapped, and with the success achieved so far, we remain convinced that there is still a lot of growth potential for Blocks 3&4.
So stay with us, we stand strong and continue to grow!
Stockholm in May 2017
Magnus Nordin Managing director
CONFERENCE CALL
Date: 2 May 2017
Time: 10.00 CET
To participate in the conference call you may choose one of the following options:
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/mvere4g9
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 is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CET on 2 May 2017.
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