MUSD (unless specifically stated) Second First Second
quarter quarter quarter
2020 2020 2019
Net daily production from Oman, Blocks 10,597 13,032 12,881
3&4 before government take (barrels per
day)
Net entitlement barrels (bbl) 532,325 585,801 609,523
Net entitlement as share of production 55 49 52
(percent)
 
Average selling price per barrel, USD 34.3 63.1 67.8
 
Revenue and other income 21.1 37.3 41.3
EBITDA 8.7 21.9 27.9
Operating result -1.7 9.2 16.4
Net result for the period -3.9 12.1 17.3
Earnings per share (after dilution), USD -0.12 0.35 0.51
 
Net cash 59.8 78.0 62.0
Free cash flow 0.6 9.2 6.2
Investments in oil and gas properties 10.4 15.4 12.8
 
MUSD (unless specifically stated) First Firsthalf Full
half 2020 2019 year 2019
Net daily production from Oman, Blocks 11,815 12,394 12,832
3&4 before government take (barrels per
day)
Net entitlement barrels (bbl) 1,118,127 1,166,490 2,383,086
Net entitlement as share of production 52 52 51
(percent)

Average selling price per barrel, USD 51.5 64.5 64.2

Revenue and other income 58.4 74.0 150.8
EBITDA 30.6 44.8 92.9
Operating result 7.5 22.0 37.1
Net result for the period 8.2 23.7 38.3
Earnings per share (after dilution), USD 0.24 0.69 1.12
 
Net cash 59.8 62.0 75.1
Free cash flow 9.8 16.4 31.4
Investments in oil and gas properties 25.8 24.4 65.2

Letter to shareholders

Dear Friends and Investors,

The second quarter 2020 will stand out as an extraordinary quarter in many ways and for a long time to come. For Tethys the principal focus has been to ensure the safety and wellbeing of all our co-workers and partners and maintain an operational momentum as close to normal as possible.

I am extremely pleased and grateful to be able to report that both goals were successfully achieved! And despite the difficult environment caused by the pandemic, we also managed to stay cash flow neutral during the quarter. However, we are fully aware that the situation has not returned to normal, and we maintain a high readiness to be able to continue safe and efficient operations in this surreal world.

At the onset of the quarter it was by no means obvious that either of the aforementioned goals would be achieved. But thanks to the strong dedication from all Tethys people we managed to stay safe and continue operating almost as usual, but under quite unusual circumstances. The operator of Blocks 3&4 managed to deliver functioning operations meeting all safety and production goals while implementing a rigorous anti-covid-19 regime in the field. Our host country, the Sultanate of Oman, implemented strict health measures while managing to assure that the oil sector could continue to function. I would here like to express our thanks and gratitude to both for these outstanding achievements.

Turning to the financial situation, we note with satisfaction that the impact of the fall in oil price was mitigated by cost reductions and deferral of investments. Towards the end of the quarter, oil prices rebounded somewhat following the gradual restoration of demand and responding to the large production cuts effected by the OPEC+ group of oil producers. The OPEC+ agreement has also affected Tethys and in April, after being informed by the operator that our production would be subject to limitations, we subsequently elected to suspend our financial and production guidance for the year. Average production for the second quarter 2020 came in lower than the previous quarter, but we still reached a healthy 10,600 barrels per day. And while the limitations remain, our production is likely to fluctuate on a monthly basis.

Thanks to the rapidly implemented investment deferrals by the operator for Blocks 3&4, we expect our capital expenditures to significantly come down for the remainder of the year, which coupled with the recovering oil price should leave us in a rather comfortable financial situation going forward. Even after a distribution of over MUSD 17 to our shareholders during the quarter, our balance sheet remains strong with MUSD 60 of cash.

Some of that cash will be put to use in our exploration efforts and not the least in our new Block 58. This Block borders our other operated Block 49 and holds some very interesting geological features that hopefully will translate into oil fields in the not too distant future. But we will do the work by the book. We will start by reprocessing, integrating and further interpreting existing seismic. This will increase our understanding of the block in general, but also aim to firm up the promising leads already identified. When the initial work is completed, we will address the further work programme, which includes the drilling of at least two exploration wells.

Other parts of our cash will go to drill an exploration well on Block 49. We are in final negotiations with several rig contractors and are confident we will drill before the end of the year.

On Block 56, where we hold a non-operated 20 percent interest, we have started the initial planning of a possible new seismic campaign.

While we expect to increase our exploration investments going forward, we will of course continue to look for opportunities to distribute cash to our shareholders.

So stay with us, we offer the opportunity of substantial growth from our promising portfolio of Omani exploration assets Blocks 49, 56 and 58 on top of the solid base provided by Blocks 3&4.

Stockholm, August 2020

Magnus Nordin,
Managing Director

For further information, please contact:
Magnus Nordin, Managing Director, phone: +46 8 505 947 00
Petter Hjertstedt, acting CFO, phone: +46 8 505 947 00

Conference call

Date: 11 August 2020
Time: 10.00 CET

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

Link to webcast: https://edge.media-server.com/mmc/p/dk3xznsg

To participate via phone, please call:
Sweden: +46 8 566 426 51
Switzerland: +41 225 809 034
UK: +44 333 300 0804
United States (Toll-Free): +1 855 857 0686

PIN: 52163194#

This information is information that Tethys Oil AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, at 7:30 CET on 11 August 2020.