Earnings Release • Nov 12, 2013
Earnings Release
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| MSEK (unless specifically stated) |
1 Jan 2013 - 30 Sep 2013 9 months |
1 Jul 2013 - 30 Sep 2013 3 months |
1 Jan 2012 - 30 Sep 2012 9 months |
1 Jul 2012 - 30 Sep 2012 3 months |
1 Jan 2012 - 31 Dec 2012 12 months |
|---|---|---|---|---|---|
| Production, before government take (bbl) | 1,210,673 | 442,352 | 945,530 | 358,968 | 1,345,854 |
| Net sales, after government take (bbl) | 579,751 | 213,397 | 549,720 | 169,303 | 776,248 |
| Average selling price per barrel, USD | 105.64 | 102.13 | 109.99 | 101.09 | 110.35 |
| Net sales of oil and gas | 399 | 142 | 414 | 116 | 584 |
| Operating result | 233 | 60 | 184 | 62 | 336 |
| EBITDA | 331 | 96 | 332 | 77 | 530 |
| Result for the period | 196 | 52 | 169 | 46 | 314 |
| Earnings per share, SEK | 5.50 | 1.46 | 4.97 | 1.35 | 9.11 |
| Cash and cash equivalents | 246 | 246 | 323 | 323 | 248 |
| Shareholders' equity | 1,047 | 1,047 | 716 | 716 | 860 |
| Long term debt | 420 | 420 | 403 | 403 | 417 |
| Investments | 208 | 60 | 595 | 151 | 875 |
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 France, Lithuania and Sweden. The shares are listed on NASDAQ OMX Stockholm (TETY).
Let us start by concluding that the third quarter has also yielded good results. Both financials and operations continue to be strong. In the third quarter 2013, Tethys Oil produced 442,352 barrels of oil before government take, representing a new record production and an increase of 23 per cent compared with the third quarter 2012 (358,968 barrels). The international oil prices were almost flat compared to third quarter last year and we realized an average selling price of 102 USD/bbl (101). We report net sales of MSEK 142 (116). The result for the third quarter amounted to MSEK 52 (46). Like in the second quarter this year, timing issues in sales have resulted in higher production than sales volumes and we leave the quarter in an under lifted position.
Like previous quarter the average daily production from Block 3 and 4 increased quarter on quarter by 10 per cent from 4,261 bopd to 4,682 bopd. The production increase is partly the result of the successful implementation of the water injection programme on the Farha South oil field, with five new injection wells being drilled in the third quarter. We are however running a little behind schedule, and are now targeting the injection programme to be fully implemented on all fault blocks in production late in the first quarter 2014. Until then, the delay will from time to time affect the production.
The increase in production is also very much a result of the successful test production from the B4EW4 structure. Two wells are on long term test production from the Lower Buah, and a third will be added shortly following the recent highly encouraging result of more than 2,000 bopd tested from the B4EW4-5 well. And the appraisal of the structure continues. The 3D seismic suggests that the Lower Buah may be compartmentalized. Proper appraisal is therefore needed before a third party reserve audit should be carried out. The Lower Buah shows great promise. All three wells drilled into that reservoir section has encountered oil and the oil water oil contact has not yet been determined. This leads Tethys to conclude that somewhere between 2 to 4 million barrels of recoverable oil reserves could be added from this structure. Continued appraisal is of the essence and the currently drilling B4EW4-6 well, the fourth appraisal into the Lower Buah, will yield yet more important data to measure and understand this structure.
During the quarter, we drilled an exploration well in the B4EW5 structure. The well encountered oil and we made a new discovery, but the initial flows were a bit disappointing. We will therefore try to stimulate the well before it will be put in long term production test. However, the most important fact is that the B4EW5 discovered oil and proved the viability of the Buah play concept.
Next year's work programme is taking shape. The Farha water interjection programme will continue, but we also anticipate increased focus on exploratory drilling. In 2013, a large part of the work programme was devoted to seismic studies. With the processing of these studies nearing completion, and the interpretation so far suggesting a large amount of new prospects, we are confident that 2014's exploration programme will be much more focused on the drillbit.
In Lithuania production continues in Gargzdai and exploration activities are being carried out in both the other licenses. The data collection in the seismic study at the Raiseiniai licence is almost completed, and a new well is being drilled at the Rietavas licence. We are looking forward to the results.
In October 2013, my partner since many years, our chairman and co-founder of Tethys Vincent Hamilton left the company in order to work to support and fund a medical research foundation he recently founded. Vince and I have written some 50 management words over the years, but this time I wish Vince a very nice weekend without worrying about investor letters. We also wish him the very best of luck with his new venture. Needless to say, his great contribution to the company will continue to influence the way we operate as will his input as consulting geologist. But let me now welcome our new chairman Staffan Knafve. Staffan has been a board member since our AGM in 2012. With his background in the financial markets, he will bring valuable expertise of a new kind at this position.
So stay with us, our journey continues.
Stockholm in November 2013
Magnus Nordin Managing Director
| Licence name | Tethys Oil, % | Total area, km2 | Partners (operator in bold) |
|---|---|---|---|
| Block 15 | 40% | 1,389 | Odin Energy, Tethys Oil |
| Block 3 & 4 | 30% | 34,610 | CCED, Mitsui, Tethys Oil |
A total of eight wells were completed on the Blocks during the third quarter 2013. The drilling programme on Farha South on Block 3 continued in the third quarter 2013 to be focused on the water injection programme, with five water injector wells and one water source well completed in the quarter. On Block 4, one appraisal well was drilled on the B4EW4 discovery and one exploration well was drilled on the B4EW5 structure.
The results of the processing of the new 3D seismic survey, which was acquired in early April and includes the B4EW4 area, are almost completed and are now being interpreted. The result from the study will be used to guide the drilling programme in 2014.
Three rigs are employed in the drilling programme on Blocks 3 and 4. The partner group is actively sourcing a fourth rig to further speed drilling activity.
The B4EW4-4 well, the first appraisal well into the Lower Buah section of the B4EW4 structure on Block 4, was drilled and tested in the third quarter. The well confirmed the presence of oil and flowed more than 1,000 bopd from 32/64 inch choke. The B4EW4-4 well was drilled approximately 1 km from the discovery well B4EW4-1. The B4EW4-1 well has in the quarter continued to yield good flows under the long term production test from the Lower Buah. The B4EW4-4 well has also been hooked up to the testing equipment for a long term production test.
The B4EW4-5 well, the second appraisal well into the Lower Buah section of the B4EW4 structure, has just been drilled and tested. The well was drilled some 500 meters southeast from the B4EW4-1 well to a total depth of 2,113 metres. The presence of oil was again confirmed and the well flowed in excess of 2,000 bopd on test from 36/64 inch choke. The new well will also be hooked up to the testing equipment for a long term production test.
Appraisal drilling continues on the B4EW4 discovery. A new appraisal well is in progress to further some 1,100 meters northeast from the discovery well B4EW4-1.The new appraisal well, B4EW4-6 is planned to be drilled to a total depth of some 2,200 metres and is designed to further appraise the extension of the Lower Buah reservoir section.
Evaluation of the drilling results of the well B4EW4-3, that was drilled to evaluate the shallower Lower Al Bashir reservoir on the B4EW4 structure, is ongoing.
An exploration well was drilled on the B4EW5 on Block 4. The B4EW5 structure is a look-a-like structure to the producing B4EW4 structure, and was identified from recently completed 3D seismic. B4EW5 is located some 7 km south of B4EW4. The well drilled to a final total depth of around 3,000 metres and recorded oil shows in five separate formations (Lower Al Bashir, Upper Buah, Middle Buah, Lower Buah and Khufai). The well has been completed in the Lower Buah and produced by natural flow in excess of 200 bopd on 28/64 inch choke. Operations with a view to increase the production rate will be carried out and plans are to place the well on a long term production test.
1 The consolidated financial statements of the Tethys Oil Group (Hereafter referred to as "Tethys Oil" "Tethys" or the "Group"), where Tethys Oil AB (publ) (the "Company") with organisational number 556615-8266 is the parent company, are hereby presented for the nine months 2013 ended 30 September 2013. The amounts relating to the comparative period (equivalent period of last year) are shown in parenthesis after the amount for the current period. Segments of the Group are geographical markets. The numbers in the tables in this report may not add exactly due to rounding.
An Early Production System - "EPS" with facilities has been completed and commissioned on the Block. The JAS-1 well has since June been on intermittent production in a long term production test. The production rates are minor and continue to vary depending on test programme design.
In addition to the JAS-1 activities, a vertical sidetrack to the JAS-2 well has been drilled in order to evaluate deeper potential reservoirs. The sidetrack reached its final measured depth of 3,560 metres in the Shuaiba formation. The target formations for the sidetrack were Natih A and C and Shuaiba as oil bearing reservoirs. Natih B formation was evaluated as source rock and potential shale oil play, and more than 23 metres of core was acquired from this formation. Minor oil shows were encountered in Natih C and Shuaiba, but the Shuaiba reservoir was estimated as too tight to produce. Natih C has been perforated and will be hook up to the test facilities at JAS-1.
The assessment of Block 15 will continue for other opportunities, primarily in the Shuaiba and Natih formations.
| Licence name | Tethys Oil, % | Total area, km2 | Partners (operator in bold) |
|---|---|---|---|
| Gargzdai2 | 25% | 884 | Odin, GeoNafta, Tethys Oil |
| Rietavas2 | 14% | 1,594 | Chevron, Odin, Tethys Oil |
| Raiseiniai2 | 26% | 1,535 | Odin, Tethys Oil, private investors |
The production on the Gargzdai licence is declining according to expectations. The work programme aims at evaluate various production enhancing techniques.
The exploration and appraisal work on the Rietavas license has continued. On the Silale oil field, the old well Silale-1 was re-opened in January 2012. The well has undergone various tests and been in intermittent production with minor flow rates since then. An appraisal well Silale-5 (re-named, previously named Silale-2) has been drilled to further appraise the Silale field. Silale-5 is drilled 1.5 kilometres west of Silale-1 and reached its total depth in the Cambrian sandstones, which were found to be oil bearing. Production testing will be carried out shortly.
A further well, Rietavas-1, is being drilled in the North Eastern corner of the Rietavas license some 20 kilometres from Silale-5. The well will be drilled through all sedimentary layers and is planned to reach its target depth in the Cambrian sandstone.
The Lapgiriai-1 well on the Raiseiniai license was spudded in April and was drilled to a total depth of 1,129 metres. The well confirmed the presence of oil in the Silurian lime stone formation and during subsequent production testing small amounts of oil have been produced to surface. In order to define oil traps and to identify potentially oil bearing fracture systems, a partly EU funded 3D seismic study covering 80 square kilometres around the well area is ongoing. Collection of data is almost completed. Processing will start before year end and interpretation is expected to be carried out during first quarter 2014.
| Licence name | Tethys Oil, % | Total area, km2 | Partners (operator in bold) |
|---|---|---|---|
| Attila | 40% | 1,986 | Galli Coz, Tethys Oil |
| Alès | 37.5% | 215 | Tethys Oil, Mouvoil |
On the French licences, the work programmes have been delayed at the request of the government. It is unclear when the work programme could be resumed.
| Licence name | Tethys Oil, % | Total area, km2 | Partners (operator in bold) | |
|---|---|---|---|---|
| Gotland Större (incl. | 100% | 581 | Tethys Oil | |
| Gotland Mindre) |
On the Swedish licences, the work programme is being reviewed. At this stage, it is unclear when work could resume.
Tethys has production from two areas, Blocks 3 and 4 onshore Oman and the Gargzdai licence onshore Lithuania. Tethys Oil has 30 per cent interest in Block 3 and 4 Oman and an indirect interest of 25 per cent of Gargzdai Lithuania.
Production from Block 3 and 4 onshore Oman comes from two fields - the Farha South and Saiwan East oil fields, and from test production from the exploration well B4EW4 on Block 4. In addition to these fields, there has been test production from the discovery B4EW4. Production rates vary, mainly due to the on-going development and continued fine tuning of the infrastructure. Production from Oman accounts for 97 per cent of total production.
| Quarterly volumes Tethys' share of quarterly production before government take, (bbl) |
Q3 2013 | Q2 2013 | Q1 2013 | Q4 2012 | Q3 2012 |
|---|---|---|---|---|---|
| Oman, Block 3&4 | |||||
| Production | 430,763 | 387,734 | 356,050 | 400,324 | 358,968 |
| Average daily production | 4,682 | 4,261 | 3,956 | 4,351 | 3,902 |
| Lithuania, Gargzdai | |||||
| Production | 11,589 | 12,105 | 12,432 | 13,233 | 12,737 |
| Average daily production | 126 | 133 | 138 | 144 | 138 |
| Total production | 442,352 | 399,839 | 368,482 | 413,557 | 371,705 |
| Total average daily production | 4,808 | 4,394 | 4,094 | 4,495 | 4,040 |
The first nine months 2013 production in Oman amounted to 1,174,547 (945,530) barrels, a growth of 24 per cent compared to the same period last year. During the first nine months 2013, the Blocks 3&4 Joint Venture's share of production has continued to be 52 per cent of total production, which is the highest possible share of production according to the terms of the EPSA. Tethys Oil's share of the Joint Venture is 30 per cent. (For further information regarding Tethys Oil's share of production, please refer to the Annual Report 2012, page 16.) The high share of production will remain as long as there are remaining recoverable costs, which are created through further investments in the blocks. The estimated recoverable costs as per 30 September 2013, net to Tethys Oil, amounts to MUSD 87.
Production from the Gargzdai licence in western Lithuania has continued to decrease compared with the third quarter 2012, which is in line with the expected depletion of the fields. Tethys Oil's interest of 25 per cent in Gargzdai is held indirectly through Odin Energi A/S, an associated Danish company.
Tethys Oil's net working interest reserves in the Sultanate of Oman as per 31 December 2012, amounts to 14.3 million barrels of oil ("mmbo") of proven and probable reserves.
| Reserves | |||
|---|---|---|---|
| (Audited by DeGolyer and MacNaughton) | |||
| Mmbo | 1P | 2P | 3P |
| Farha South Field, Oman | 4.2 | 12.5 | 15.7 |
| Saiwan East Field, Oman | 0.9 | 1.4 | 2.5 |
| B4EW3 discovery, Oman | 0.2 | 0.4 | 0.5 |
| Total | 5.3 | 14.3 | 18.7 |
The reserves in the Farha South field are from the Barik reservoir section only. The reserves in the Saiwan East field and the B4EW3 area discovery are in the Khufai reservoir. The review of the reserves in Oman has been conducted by independent petroleum consultant DeGolyer and MacNaughton ("D&M").
Tethys Oil's indirect share of reserves in the Gargzdai license in Lithuania, according to the agreement with Odin Energi A/S, amounts as per 31 December 2012 to 0.8 mmbo of 1P reserves, 1.7 mmbo of 2P and 2.8 mmbo of 3P. The review of the reserves in Oman has been conducted by independent petroleum consultant Miller Lents Ltd.
During the first nine months 2013, Tethys Oil sold 579,751 (549,720) barrels of oil after government take from Block 3 and 4 in Oman and 213,397 (169,303) barrels of oil during the third quarter.
This resulted in net sales during the first nine months 2013 of MSEK 399 (414) and MSEK 142 (116) during the third quarter.
Despite the growth in production (24 per cent) compared to last year, net sales is lower mainly due to:
Furthermore, Tethys Oil has moved from an overlift position as per 31 December 2012 amounting to 609 barrels to an underlift position as per 30 September 2013 of 30,404 barrels.
Tethys average selling price per barrel amounted to USD 106 (110) per barrel during the first nine months period 2013 and USD 102 (101) for the third quarter.
The selling price received by Tethys Oil is determined for each calendar month based on the monthly average prices of the two month future price of Omani blend (see chart above). During the first nine months 2013, Omani blend prices have been trading between high levels of USD 113 per barrel and low levels of USD 97 per barrel. First nine months 2013 prices are lower compared to equivalent period last year.
Tethys Oil reports a net result after tax for the first nine months 2013 of MSEK 196 (169) and MSEK 52 (46) for the third quarter, representing earnings per share of SEK 5,50 (4,97) for the nine month period and SEK 1,46 (1,35) for the third quarter.
Earnings before interest, tax, depletion and amortisation (EBITDA) for the first nine months 2013 amounted to MSEK 331 (332) and MSEK 96 (78) for the third quarter.
The first quarter result 2012 was significantly impacted by an additional lifting giving a one-off additional sales amounting to MSEK 38. In line with the farmout agreement and presented as Other income, Tethys Oil received in the first quarter 2013 from Mitsui a bonus amounting to MSEK 65 (MUSD 10) as commercial production exceeded 10,000 bopd for 30 consecutive days and following the approval of the Field Development Plan ("FDP") in December 2012.
Tethys Oil holds indirect interest in the three Lithuanian licences, through the interests in associated companies Jylland Olie and Odin Energi. Total result from Tethys Oils shares in the associated companies amounted to MSEK 6 (17) for the first nine months period 2013 and MSEK 2 (-) for the third quarter. The comparative period's result for nine months and third quarter comes from received dividend for a whole financial year, which was accounted for in the income statement as the acquisition of the associated companies was still on-going during this period (for more information, please see note 7).
Depletion, depreciation and amortisation ("DD&A") for the first nine months 2013 amounted to MSEK 97 (35) and MSEK 36 (16) for the third quarter. Higher DD&A during the first nine months 2013 compared to equivalent period last year is referable to depletion of oil and gas properties which furthermore only relate to Blocks 3&4. The depletion development between the comparable periods is a result of the high level of
investments in Blocks 3&4 during the full year 2012 which has increased oil and gas properties and higher production rates during 2013 which also increase the depletion rate.
Operating expenses (OPEX) amounted during the first nine months 2013 to MSEK 115 (80) and MSEK 42 (31) for the third quarter. Operating expenses are related to oil and gas production on Block 3 and 4 in Oman, for example expenses for trucking, tariffs, supervision and administration etc. Over and underlift adjustments are made within the Operating expenses category. Due to an underlift position as per 30 September 2013 amounting to 30,404 barrels, the Operating expenses during the first nine months 2013 have been decreased by MSEK 3. The operating expenses have been significantly impacted by transfer of late incoming expenses from 2012 amounting to MSEK 13 and expenses related to well work overs amounting to MSEK 12.
The increase in operating expenses between the reporting period and the comparative period is mainly explained by late incoming invoices in 2012 and cost of workover wells. Direct production costs are lower in the current period despite higher production rates which is explained by the permanent production facilities which were commissioned during the fourth quarter 2012. A breakdown of Operating expenses is presented in note 5.
Administrative expenses amounted to MSEK 23 (19) for the first nine months 2013 and MSEK 6 (7) for the third quarter. Administrative expenses are mainly salaries, rents, listing costs and outside services. The administrative expenditures during the first nine months are higher compared with same period last year mainly due to the main market listing on NASDAQ OMX Stockholm, conducted during the second quarter.
The result for the first nine months 2013 has been impacted by net foreign exchange losses and interest on long term debt. The currency exchange effect of the group amounts to MSEK -6 and most of the effect relates to the weaker US dollar in relation to the Swedish krona. Currency translation differences between the parent company and subsidiaries are non cash related items. Interest on long term debt amounted to MSEK -29 for the first nine months and MSEK -10 for the third quarter. The currency exchange effect and interest on long term debt is part of net financial result amounting to MSEK -38 (-15) for the first nine months 2013 and MSEK -8 (-16) for the third quarter.
| Country | Licence name | Book value 30 Sep 2013 | Book value 31 Dec | Investments Jan-Sep 2013 |
|---|---|---|---|---|
| 2012 | ||||
| Oman | Block 15 | 44 | 27 | 18 |
| Oman | Block 3,4 | 976 | 890 | 197 |
| France | Attila | 0 | - | 1 |
| France | Alès | - | - | - |
| Sweden | Gotland Större | 3 | 2 | 0 |
| (incl. Gotland | ||||
| Mindre) | ||||
| Lithuania | Gargzdai3 | - | - | - |
| Lithuania | Rietavas3 | - | - | - |
| Lithuania | Raiseiniai3 | - | - | - |
| New ventures | 1 | 0 | 1 | |
| Total | 1,024 | 919 | 217 |
Oil and gas properties as per 30 September 2013 amounted to MSEK 1,024 (919). Investments in oil and gas properties of MSEK 217 (595) were incurred for the nine month period ended 30 September 2013
The book value of oil and gas properties includes currency exchange effects of MSEK -16 during the first nine months 2013, which are not cash related items and therefore not included in investments. For more information please see above under Result - Net financial result.
During the first nine months 2013, investments amounting to MSEK 197 were made on Blocks 3 & 4. Of the total investment amount, MSEK 182 consists of new investments in the blocks and the remaining MSEK 15 emanate from that part of investments previously made by Mitsui on Tethys Oil's behalf under the Carry agreement and was recovered by Mitsui during the first quarter from Tethys Oil's share of cost recovery oil entitlement.
Of the investments of MSEK 182 made by Tethys Oil during the first nine months 2013, most has been spent on appraisal drilling, seismic and water injection wells.
Other investments amounted during the period to MSEK 20, where Block 15 accounts for most of the investments. On Block 15, a long term production of JAS-1 was launched in June 2013.
Cash and bank as at 30 September 2013 amounted to MSEK 246 (248). A large part of cash and cash equivalents are kept in USD which has depreciated against SEK during the reporting period. The currency exchange effect on cash and cash equivalents amounted during first nine months 2013 to MSEK -3.
The high level of investments on Block 3 and 4 will continue, with a main focus on exploration, appraisal of the B4EW4 area and a water injection programme to enhance production. Tethys Oil's share of the total Joint Venture investment budget for 2013 on Blocks 3&4, including the extended work programme as described in the second quarter report 2013, amounts to MSEK 355. The investment budget is expected to be fully financed by cash flow from operations.
Tethys Oil's operations in Lithuania is expected to continue to be self-financed from oil production on the Gargzdai licence and financed by Chevron on the Rietavas licence.
In accordance with the 2010 farmout agreement, Mitsui commenced during first quarter 2012 recovering the MUSD 60 paid on behalf of Tethys Oil from the proceeds of Tethys Oil's share of cost recovery oil entitlement. Under the carry agreement, Tethys Oil has allocated its entire share of cost recovery entitlement to Mitsui until the full MUSD 60 was recovered by Mitsui. As per January 2013 the final balance cost recovery repayment was allocated to Mitsui.
Tethys Oil's interests in three Lithuanian licences are held through two private Danish companies. (For more information regarding the ownership structure, please refer to note 7.) As per 30 September 2013 the shareholding in the two associated Danish companies, Odin Energi and Jylland Olie, amounted to MSEK 185.
Tethys Oil's share of net profit during the first nine months 2013 from Odin Energi and Jylland Olie, which indirectly hold the Lithuanian licences, amounted to MSEK 6 (17) and MSEK 2 (-) for the third quarter. The result was mainly generated from selling 36,667 barrels of oil (Tethys Oil's indirect share) during the first nine months 2013 and 11,900 barrels of oil during the third quarter at an average price of USD 107 (-) per barrel for the nine months period and USD 109 (-) per barrel for the third quarter. During the second quarter a dividend from the Lithuanian investments was received amounting to MSEK 9 (17).
For the comparative period, nine months and third quarter 2012, the dividend received was accounted for in the income statement as the acquisition of the associated companies was still on-going during this period.
Tethys Oil receives cash flow from the Lithuanian investments only through dividends from the associated companies, which is normally received annually. For more information, please see note 7.
The Parent company reports a net result after tax for the first nine months 2013 amounting to MSEK -34 (-145) and MSEK -5 (-17) for the third quarter. Administrative expenses amounted to MSEK 16 (8) for the first nine months 2013 and MSEK 4 (3) for the third quarter. Net financial loss amounted to MSEK 27 (154) during the first nine months 2013 and MSEK 6 (15) for the third quarter. Interest paid on the bond loan and the weaker US dollar has had a negative impact on net financial result during the first nine months 2013. The exchange rate losses regard translation differences and are non cash related. Investments during the first nine months 2013 amounted to MSEK 45 (227). Financial investments are financial loans to subsidiaries for their oil and gas operations. The turnover in the Parent company relates to chargeouts of services to subsidiaries.
A statement of risk and uncertainties are presented in note 1, page 18.
| CONSOLIDATED STATEMENT OF COMPREHENSIVE | INCOME IN SUMMARY | |||||
|---|---|---|---|---|---|---|
| TSEK | Note | 1 Jan 2013 - | 1 Jul 2013 - | 1 Jan 2012 - | 1 Jul 2012 - | 1 Jan 2012 - |
| 30 Sep 2013 | 30 Sep 2013 | 30 Sep 2012 | 30 Sep 2012 | 31 Dec 2012 | ||
| 9 months | 3 months | 9 months | 3 months | 12 months | ||
| Net sales of oil and gas | 2,3 | 398,792 | 142,233 | 414,217 | 115,738 | 583,990 |
| Depletion, depreciation and amortisation | 4 | -96,865 | -36,172 | -35,166 | -15,518 | -54,508 |
| Exploration costs | 4 | -870 | - | -112,756 | 392 | -117,521 |
| Other income | 6 | 65,114 | 80 | 56 | 56 | 56 |
| Operating expenses | 5 | -115,031 | -41,850 | -79,607 | -31,214 | -95,518 |
| Net profit/loss from associates | 7 | 5,512 | 2,093 | 16,618 | - | 49,043 |
| Other losses/gains, net | -36 | -25 | -33 | 17 | -42 | |
| Administrative expenses | -23,176 | -6,109 | -19,229 | -7,366 | -29,200 | |
| Operating result | 233,441 | 60,249 | 184,101 | 62,106 | 336,300 | |
| Financial income and similar items | 3,678 | - | 8,172 | 1,757 | 14,673 | |
| Financial expenses and similar items | 9 | -41,496 | -8,429 | -22,823 | -17,874 | -36,798 |
| Net financial loss/profit | -37,818 | -8,429 | -14,651 | -16,117 | -22,125 | |
| Result before tax | 195,622 | 51,820 | 169,451 | 45,989 | 314,175 | |
| Income tax | -67 | -15 | -93 | -26 | -213 | |
| Result for the period | 195,555 | 51,805 | 169,358 | 45,963 | 313,962 | |
| Other comprehensive result | ||||||
| Items that may be subsequently | ||||||
| reclassified to profit or loss: | ||||||
| Currency translation differences | -8,769 | 5,357 | -23,770 | -29,052 | -23,630 | |
| Other comprehensive result for the period | -8,769 | 5,357 | -23,770 | -29,052 | -23,630 | |
| Total comprehensive result for the period | 186,787 | 57,162 | 145,588 | 16,910 | 290,332 | |
| Number of shares outstanding | 8 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 |
| Number of shares outstanding (after dilution) | 8 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 |
| Weighted number of shares | 8 | 35,543,750 | 35,543,750 | 34,102,144 | 34,102,144 | 34,464,515 |
| Earnings per share, SEK | 5.50 | 1.46 | 4.97 | 1.35 | 9.11 | |
| Earnings per share (after dilution), SEK | 5.50 | 1.46 | 4.97 | 1.35 | 9.11 |
| TSEK | Note | 30 Sep | 31 Dec |
|---|---|---|---|
| 2013 | 2012 | ||
| ASSETS | |||
| Non current assets | |||
| Oil and gas properties | 4 | 1,023,692 | 919,523 |
| Office equipment | 1,288 | 2,086 | |
| Investment in associates | 7 | 185,032 | 188,161 |
| 1,210,012 | 1,109,770 | ||
| Current assets | |||
| Other receivables | 51,400 | 14,618 | |
| Prepaid expenses | 1,789 | 1,812 | |
| Cash and cash equivalents | 245,550 | 248,038 | |
| 298,739 | 264,467 | ||
| TOTAL ASSETS | 1,508,751 | 1,374,237 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | |||
| Share capital | 5,924 | 5,924 | |
| Additional paid in capital | 552,060 | 552,060 | |
| Other reserves | -35,353 | -26,585 | |
| Retained earnings | 524,278 | 328,723 | |
| Total shareholders' equity | 8 | 1,046,908 | 860,122 |
| Non current liabilities | |||
| Bond issue | 9 | 391,972 | 388,862 |
| Other non current liabilities | 10 | 28,488 | 28,279 |
| 420,460 | 417,141 | ||
| Current liabilities | |||
| Accounts payable | 977 | 684 | |
| Other current liabilities | 34,889 | 12,762 | |
| Accrued expenses | 5,517 | 83,529 | |
| 41,383 | 96,975 | ||
| Total liabilities | 461,843 | 514,115 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 1,508,751 | 1,374,237 | |
| Pledged assets | 11 | 865,784 | 625,683 |
| Contingent liabilities | 12 | - | 15,648 |
| CONSOLIDATED STATEMENT OF CHANGES IN EQUITY IN SUMMARY |
||||||||
|---|---|---|---|---|---|---|---|---|
| TSEK | Share | Paid in | Other | Retained | Total | |||
| Capital | Capital | reserves | Earnings | Equity | ||||
| Opening balance 1 January 2012 | 5,424 | 438,329 | -2,955 | 14,761 | 455,559 | |||
| Comprehensive income | ||||||||
| Result for the first quarter 2012 | - | - | - | 108,190 | 108,190 | |||
| Result for the second quarter 2012 | - | - | - | 15,205 | 15,205 | |||
| Result for the third quarter 2012 | - | - | - | 45,963 | 45,963 | |||
| Result for the fourth quarter 2012 | - | - | - | 144,605 | 144,605 | |||
| Period result | - | - | - | 313,962 | 313,962 | |||
| Other Comprehensive income | ||||||||
| Currency translation differences first quarter 2012 | - | - | -4,451 | - | -4,451 | |||
| Currency translation differences second quarter 2012 | - | - | 9,734 | - | 9,734 | |||
| Currency translation differences third quarter 2012 | - | - | -29,052 | - | -29,052 | |||
| Currency translation differences fourth quarter 2012 | - | - | 140 | - | 140 | |||
| Total other comprehensive income | - | - | -23,630 | - | -23,630 | |||
| Total comprehensive income | - | - | -23,630 | 313,962 | 290,332 | |||
| Transactions with owners | ||||||||
| Share issue 2012 | 500 | 119,500 | - | 120,000 | ||||
| Issue costs Total transactions with owners |
- 500 |
-5,769 113,731 |
- - |
- | -5,769 114,231 |
|||
| Closing balance 31 December 2012 | 5,924 | 552,060 | -26,585 | 328,723 | 860,122 | |||
| Opening balance 1 January 2013 | 5,924 | 552,060 | -26,585 | 328,723 | 860,122 | |||
| Comprehensive income | ||||||||
| Result for the first quarter 2013 | - | - | - | 104,529 | 104,529 | |||
| Result for the second quarter 2013 | - | - | - | 39,222 | 39,222 | |||
| Result for the third quarter 2013 | - | - | - | 51,805 | 51,805 | |||
| Period result | - | - | - | 195,555 | 195,555 | |||
| Other Comprehensive income | ||||||||
| Currency translation differences first quarter 2013 | - | - | -15,872 | - | -15,872 | |||
| Currency translation differences second quarter 2013 | - | - | 1,746 | - | 1,746 | |||
| Currency translation differences third quarter 2013 | - | - | 5,357 | - | 5,357 | |||
| Total other comprehensive income | - | - | -8,769 | - | -8,769 | |||
| Total comprehensive income | - | - | -8,769 | 195,555 | 186,787 | |||
| Closing balance 30 September 2013 | 5,924 | 552,060 | -35,353 | 524,278 | 1,046,908 |
| Note | 1 Jan 2013 - | 1 Jul 2013 - | 1 Jan 2012 - | 1 Jul 2012 - | 1 Jan 2012 - | |
|---|---|---|---|---|---|---|
| TSEK | 30 Sep 2013 | 30 Sep 2013 | 30 Sep 2012 | 30 Sep 2012 | 31 Dec 2012 | |
| 9 months | 3 months | 9 months | 3 months | 12 months | ||
| Cash flow from operations | 233,441 | 60,249 | 184,101 | 62,106 | 336,300 | |
| Operating result | - | - | 135 | 135 | 550 | |
| Interest received | -38,000 | -19,000 | - | - | - | |
| Interest paid | 9 | -67 | -15 | -93 | -26 | -213 |
| Income tax | 870 | - | 112,756 | -392 | 117,521 | |
| Adjustment for exploration costs Adjustment for depletion, depreciation and other non cash related |
4 | 95,365 | 33,126 | 19,988 | -16,442 | 12,830 |
| items | 4 | |||||
| Total cash flow from operations before change in working capital |
291,609 | 74,360 | 316,887 | 45,380 | 466,988 | |
| Change in receivables | -36,485 | -12,546 | -19,419 | -463 | -13,850 | |
| Change in liabilities | -46,092 | 6,110 | 16,338 | -6,664 | 76,710 | |
| Cash flow from operations | 209,032 | 67,924 | 313,807 | 38,254 | 529,847 | |
| Investment activity | ||||||
| Investment in oil and gas properties | 4 | -201,683 | -59,461 | -339,617 | -75,723 | -493,364 |
| Oil and gas properties from cost oil repayment | 12 | -15,403 | - | -255,246 | -75,145 | -381,240 |
| Dividend from associated companies | 7 | 8,640 | - | - | - | - |
| Investment in other fixed assets | -29 | -86 | -359 | -283 | -697 | |
| Cash flow from investment activity | -208,475 | -59,547 | -595,222 | -151,151 | -875,301 | |
| Financing activity | ||||||
| Share issue, net after issue costs | - | - | 114,319 | -5,681 | 114,231 | |
| Bond issue, net after issue costs | 9 | - | - | 399,746 | 399,746 | 387,553 |
| Cash flow from financing activity | - | - | 514,065 | 394,065 | 501,784 | |
| Period cash flow | 557 | 8,377 | 232,650 | 281,168 | 156,330 | |
| Cash and cash equivalents at the beginning of the period | 248,038 | 236,960 | 93,105 | 43,688 | 93,105 | |
| Exchange gains/losses on cash and cash equivalents | -3,045 | 213 | -3,225 | -2,327 | -1,398 | |
| Cash and cash equivalents at the end of the period | 245,550 | 245,550 | 322 530 | 322,530 | 248,038 |
| TSEK | Note | 1 Jan 2013 - 30 Sep 2013 9 months |
1 Jul 2013 - 30 Sep 2013 3 months |
1 Jan 2012 - 30 Sep 2012 9 months |
1 Jul 2012 - 30 Sep 2012 3 months |
1 Jan 2012 - 31 Dec 2012 12 months |
|---|---|---|---|---|---|---|
| Net sales of oil and gas | - | - | - | - | - | |
| Depletion, depreciation and amortisation | -50 | -18 | - | - | - | |
| Other income | 3,781 | 1,980 | 1,467 | 485 | 2,781 | |
| Net profit/loss of associates | 7 | 5,512 | 2,093 | 16,618 | - | 49,043 |
| Other losses/gains, net | -36 | -25 | -33 | 17 | -42 | |
| Administrative expenses | -16,185 | -3,767 | -8,400 | -3,026 | -11,902 | |
| Operating result | -6,978 | 262 | 9,653 | -2,523 | 39,880 | |
| 14,869 | 4,060 | 12,043 | 3,004 | 70,362 | ||
| Financial income and similar items | -40,740 | -8,237 | -22,466 | -17,654 | -36,363 | |
| Financial expenses and similar items | 9 | -1,421 | -1,421 | -143,880 | - | -156,673 |
| Write down of shares in group company | ||||||
| Net financial loss | -27,291 | -5,598 | -154,303 | -14,650 | -122,673 | |
| Result before tax | -34,269 | -5,336 | -144,650 | -17,173 | -82,793 | |
| Income tax | - | - | - | - | - | |
| Loss for the period* | -34,269 | -5,336 | -144,650 | -17,173 | -82,793 | |
| Number of shares outstanding | 8 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 |
| Number of shares outstanding (after dilution) | 8 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 | 35,543,750 |
| Weighted number of shares | 8 | 35,543,750 | 35,543,750 | 34,102,144 | 34,102,144 | 34,464,515 |
* As there are no items in the parent company's other comprehensive income, no separate report on total comprehensive income is presented.
| TSEK | Note | 30 Sep | 31 Dec |
|---|---|---|---|
| 2013 | 2012 | ||
| ASSETS | |||
| Total non current assets | 597,429 | 562,763 | |
| Total current assets | 45,882 | 189,648 | |
| TOTAL ASSETS | 643,311 | 752,411 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity | 8 | 247,128 | 281,397 |
| Total non current liabilities | 9 | 391,972 | 388,862 |
| Total current liabilities | 4,212 | 82,152 | |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 643,311 | 752,411 | |
| Pledged assets | 11 | 865,784 | 625,683 |
| Contingent liabilities | 12 | - | - |
| TSEK | Restricted equity | Non restricted equity | ||||
|---|---|---|---|---|---|---|
| Share | Statutory | Share premium | Retained | Net | ||
| capital | Reserve | Reserve | Earnings | result | Total Equity | |
| Opening balance 1 January 2012 | 5,424 | 71,071 | 367,258 | -179,124 | -14,669 | 249,960 |
| Transfer of prior year net result | - | - | - | -14,669 | 14,669 | - |
| Comprehensive income | ||||||
| Loss for the first quarter 2012 | - | - | - | - | -1,438 | -1,438 |
| Loss for the second quarter 2012 | - | - | - | - | -126,039 | -126,039 |
| Loss for the third quarter 2012 | - | - | - | - | -17,173 | -17,173 |
| Profit for the fourth quarter 2012 | - | - | - | - | 61,856 | 61,856 |
| Period result | - | - | - | - | -82,793 | -82,793 |
| Total comprehensive income | - | - | - | - | -82,793 | -82,793 |
| Transactions with owners | ||||||
| Share issue 2012 | 500 | - | 119,500 | - | - | 120,000 |
| Issue costs | - | - | -5,769 | - | - | -5,769 |
| Total transactions with owners | 500 | - | 113,731 | - | - | 114,231 |
| Closing balance 31 December 2012 | 5,924 | 71,071 | 480,989 | -193,794 | -82,793 | 281,397 |
| 5,924 | 71,071 | 480,989 | -193,794 | -82,793 | 281,397 | |
| Opening balance 1 January 2013 | ||||||
| Transfer of prior year net result | - | - | - | -82,793 | 82,793 | - |
| Comprehensive income | ||||||
| Loss for the first quarter 2013 | - | - | - | - | -15,080 | -15,080 |
| Loss for the second quarter 2013 | - | - | - | - | -13,853 | -13,853 |
| Loss for the third quarter 2013 | - | - | - | - | -5,336 | -5,336 |
| Period result | - | - | - | - | -34,269 | -34,269 |
| Total comprehensive income | - | - | - | - | -34,269 | -34,269 |
| Closing balance 30 September 2013 | 5,924 | 71,071 | 480,989 | -276,587 | -34,269 | 247,128 |
Tethys Oil AB (publ) ("the Company"), organisation number 556615-8266, and its subsidiaries (together "the Group" or "Tethys Oil") are focused on exploration for and production of oil and natural gas. The Group has interests in exploration licences in Lithuania, France, Oman and Sweden.
The Company is a limited liability company incorporated and domiciled in Stockholm, Sweden. The Company is listed on NASDAQ OMX Stockholm.
The nine months report 2013 of the Tethys Oil Group has been prepared in accordance with IAS 34 and the Annual Accounts Act. The nine months report 2013 of the Parent company has been prepared in accordance with the Annual Accounts Act and the Recommendation RFR 2 –"Accounting for legal entities", issued by the Swedish Financial Accounting Standards Council. The same accounting principles were used in the Annual report 2012.
Tethys Oil has not used any derivative financial instruments during the period in order to hedge risks.
For the preparation of the financial statements for the reporting period, the following exchange rates have been used.
| 30 September 2013 | 30 September 2012 | 31 December 2012 | |||||
|---|---|---|---|---|---|---|---|
| Currency | 2013 Average | 2013 Period end | 2012 Average | 2012 Period end | 2012 Average | 2012 Period end | |
| SEK/CHF | 6.98 | 7.01 | 7.28 | 7.07 | 7.38 | 7.23 | |
| SEK/EUR | 8.59 | 8.68 | 8.80 | 8.58 | 8.78 | 8.75 | |
| SEK/LTL | 2.49 | 2.51 | - | - | - | - | |
| SEK/USD | 6.51 | 6.52 | 6.85 | 6.58 | 6.82 | 6.61 |
| Net sales of oil and gas | -20,781 |
|---|---|
| Depreciation, depletion and amortization | 5,041 |
| Exploration costs | - |
| Other income | -3,393 |
| Operating expenses | 5,995 |
| Net profit/loss from associate | - |
| Other losses/gains, net | - |
| Administrative expenses | 529 |
| Summary of currency exchange rate effect | -12,608 |
| on operating result |
The nominal value of accounts payables, cash and bank and accounts receivables is a fair approximation of those line items. The nominal amount of the bond loan was TSEK 400,000 and issued at a fixed annual interest rate of 9.50 per cent and it was trading at 6.80 per cent as per 30 September 2013 (7.97 per cent).
| 30 September 2013 | 31 December 2012 | ||||||
|---|---|---|---|---|---|---|---|
| TSEK | Financial assets and liabilities at fair value through profit or loss |
Receivables and other receivables |
Other liabilities | TSEK | Financial assets and liabilities at fair value through profit or loss |
Receivables and other receivables |
Other liabilities |
| Other receivables | - 51,400 |
- | Other receivables | - 14,618 |
|||
| Cash and bank | - 245,550 |
- | Cash and bank | - 248,038 |
|||
| Debt | - | - 391,972 |
Debt | - | - | ||
| Accounts | - | - 977 |
Accounts | - | - | ||
| payables | payables | ||||||
| Other current | - | - 34,889 |
Other current | - | - | ||
| liabilities | liabilities |
The Group's activities expose it to a number of risks and uncertainties which are continuously monitored and reviewed. The main risks and uncertainties are operational and financial risks described below.
At its current stage of development Tethys Oil is partly commercially producing oil and partly exploring for and appraising undeveloped known oil and/or natural gas accumulations. The operational risk is different in these different parts of Tethys Oil's operations. The main operational risk in exploration and appraisal activities is that the activities and investments made by Tethys Oil and its partners will not evolve into commercial reserves of oil and gas. The oil price is of significant importance to Tethys Oil in all parts of operations as income and profitability is and will be dependent on prices prevailing from time to time. Significantly lower oil prices will reduce current and expected profitability in projects and can make projects sub economic. Lower oil prices could also decrease the industry interest in Tethys Oil's projects regarding farmout or sale of assets. Another operational risk factor is access to equipment in Tethys Oil's project. Especially in the drilling/development phase of a project the group is dependent on advanced equipment such as rigs, casing, pipes etc. A shortage of theses supplies can present difficulties for Tethys Oil to fulfil projects. Through its operations Tethys Oil is furthermore subject to political risk, environmental risk and the risk of not being able to retain key personnel.
By operating in several countries, Tethys Oil is exposed to fluctuations in a number of currencies. Income is and will also most likely be denominated in foreign currencies, US dollars in particular. Furthermore, Tethys Oil has since inception been equity financed through share issues and financed by asset divestment. Additional capital may be needed to finance Tethys Oil's future operations and/or for acquisition of additional licences. The main risk is that this need may occur during less favourable market conditions.
A more detailed analysis of the Group's risks and uncertainties and how the Group addresses these risks, are given in the Annual report for 2012.
During the first nine months 2013, Tethys Oil sold 579,751 (549,720) barrels of oil after government take from Block 3 and 4 in Oman and 213,397 barrels (169,303 barrels) during the third quarter. This resulted in net sales during the first nine months 2013 of TSEK 398,792 (414,217) and TSEK 142,233 (115,738) during the third quarter. The average selling price per barrel amounted to USD 105.64 per barrel during the first nine months 2013 (109.99) and USD 102.13 (101.09) per barrel during the third quarter.
Tethys Oil is selling all of its oil through Mitsui Energy Trading Singapore, which is part of Mitsui & Co Ltd. All oil sales come from Blocks 3 & 4 Oman and are made on a monthly basis.
The Group´s accounting principle for segments describes that operating segments are based on geographic perspective. The operating result for each segment is presented below.
| Group income statement Jan-Sep 2012 | ||||||||
|---|---|---|---|---|---|---|---|---|
| TSEK | Dubai | France | Lithuania | Oman | Sweden | Switzerland | Other | Total |
| Net sales | - | - | - | 414,217 | - | - | - | 414,217 |
| Depreciation, depletion and | -65 | - | - | -35,166 | -79 | -418 | - | -35,728 |
| amortisation | ||||||||
| Exploration costs | - | -13,474 | - | -98,584 | - | -698 | -112,756 | |
| Other income | 56 | - | - | - | - | - | - | 56 |
| Operating expenses | - | - | - | -79,607 | - | - | - | -79,607 |
| Net profit/loss from | - | - | 16,618 | - | - | - | - | 16,618 |
| associates | ||||||||
| Other losses/gains, net | - | - | - | - | -33 | - | - | -33 |
| Administrative expenses | -3,344 | -1 | - | -4,595 | -5,647 | -4,538 | -543 | -18,668 |
| Operating result | -3,354 | -13,475 | 16,618 | 196,266 | -5,759 | -4,955 | -1,241 | 184,101 |
| Total financial items | -14,651 | |||||||
| Result before tax | 169,451 | |||||||
| Income tax | -93 | |||||||
| Result for the period | 169,358 |
| Group income statement Jan-Sep 2013 | ||||||||
|---|---|---|---|---|---|---|---|---|
| TSEK | Dubai | France | Lithuania | Oman | Sweden Switzerland | Other | Total | |
| Net sales | - | - | - | 398,792 | - | - | - | 398,792 |
| Depreciation, depletion and | -96,296 | -50 | -443 | - | -96,865 | |||
| amortisation | -75 | - | - | |||||
| Exploration costs | - | -829 | - | - | - | - | -41 | -870 |
| Other income | - | - | - | 65,114 | - | - | - | 65,114 |
| Operating expenses | - | - | - | -115,031 | - | - | - | -115,031 |
| Net profit/loss from | - | - | - | - | 5,512 | |||
| associates | - | - | 5,512 | |||||
| Other losses/gains, net | - | - | - | - | -36 | - | - | -36 |
| Administrative expenses | -3,504 | -11 | - | -1,781 | -16,185 | -1,547 | -146 | -23,176 |
| Operating result | -3,580 | -841 | 5,512 | 250,798 | -16,271 | -1,990 | -187 | 233,440 |
| Total financial items | -37,818 | |||||||
| Result before tax | 195,622 | |||||||
| Income tax | -67 | |||||||
| Result for the period | 195,555 |
| Country | Licence name | Phase | Expiration date | Remaining commitments |
Tethys Oil | Partners (operator in bold) |
|---|---|---|---|---|---|---|
| Oman | Block 15 | Exploration | Oct 2014 | None | 40% | Odin Energy, Tethys Oil |
| Oman | Block 3,4 | Production | Jul 2040 | None | 30% | CCED, Mitsui, Tethys Oil |
| France | Attila | Exploration | 20154 | None | 40% | Galli Coz, Tethys Oil |
| France | Alès | Exploration | 2015 | MUSD 1.55 | 37.5% | Tethys Oil, MouvOil |
| Sweden | Gotland Större, Mindre |
Exploration | Dec 2013 | None | 100% | Tethys Oil |
| Lithuania | Gargzdai6 | Production | No expiration date | None | 25% | Odin, GeoNafta, Tethys Oil |
| Lithuania | Rietavas6 | Exploration | Sep 2017 | MLTL 6.2 | 14% | Chevron, Odin, Tethys Oil, private investors |
| Lithuania | Raiseiniai6 | Exploration | Sep 2017 | MLTL 6.6 | 26% | Odin, Tethys Oil, private investors |
| TSEK | 30 Sep 2013 | 31 Dec 2012 |
|---|---|---|
| Producing cost pools | 975,518 | 889,970 |
| Non-producing cost pools | 48,175 | 29,553 |
| Total oil and gas properties | 1,023,692 | 919,523 |
| TSEK | Asset type | Book value 31 Dec 2012 |
Other non – cash adjustments 1 Jan -31 Dec 2012 |
Currency exchange diff 1 Jan -31 Dec |
DD&A7 1 Jan – 31 Dec 2012 |
Exploration costs 1 Jan -31 Dec 2012 |
Investments 1 Jan -31 Dec 2012 |
Book value 1 Jan 2012 |
|---|---|---|---|---|---|---|---|---|
| Country | ||||||||
| Oman Block 3&4 | Producing | 889,970 | 26,4288 | -17,062 | -54,508 | – | 860,646 | 74,466 |
| Oman Block 15 | Non-producing | 26,943 | – 930 |
– -98,223 |
10,565 | 113,671 | ||
| France Attila | Non-producing | – | – | – | – -10,118 |
401 | 9,717 | |
| France Alès | Non-producing | – | – | – | – -7,546 |
1,620 | 5,764 | |
| Sweden Gotland | Non-producing | 2,397 | – | – | – – |
197 | 2,200 | |
| New ventures | Non-producing | 214 | – | – | – -1,633 |
1,249 | 833 | |
| Total | 919,523 | 26,428 | -16,132 | -54,508 | -117,520 | 874,604 | 206,651 |
| TSEK | Asset type | Book value 30 Sep 2013 |
Other non – cash adjustments 1 Jan -30 Sep 2013 |
Currency exchange diff 1 Jan -30 Sep 2013 |
DD&A 1 Jan – 30 Sep 2013 |
Exploration costs 1 Jan -30 Sep 2013 |
Investments 1 Jan -30 Sep 2013 |
Book value 1 Jan 2013 |
|---|---|---|---|---|---|---|---|---|
| Country | ||||||||
| Oman Block 3&4 | Producing | 975,518 | - -15,095 |
-96,282 | – | 196,924 | 889,970 | |
| Oman Block 15 | Non-producing | 44,257 | – | -670 | – - |
17,984 | 26,943 | |
| France Attila | Non-producing | 12 | – | – | – -829 |
841 | – | |
| France Alès | Non-producing | – | – | – | – - |
- | – | |
| Sweden Gotland | Non-producing | 2,494 | – | – | – – |
97 | 2,397 | |
| New ventures | Non-producing | 1,411 | – | – | – -41 |
1,239 | 214 | |
| Total | 1,023,692 | - -15,765 |
-96,282 | -870 | 217,086 | 919,523 |
| TSEK | |||||
|---|---|---|---|---|---|
| Operating expenditures | 1 Jan 2013 - | 1 Jul 2013 - | 1 Jan 2012 - | 1 Jul 2012 - | 1 Jan 2012 - |
| 30 Sep 2013 | 30 Sep 2013 | 30 Sep 2012 | 30 Sep 2012 | 31 Dec 2012 | |
| 9 months | 3 months | 9 months | 3 months | 12 months | |
| General & Administrative | 14,466 | 7,402 | 9,622 | 6,031 | 14,641 |
| Production cost Early | |||||
| Production Facilities | - | - | 40,400 | 24,643 | 44,869 |
| Production cost | |||||
| Permanent Production | |||||
| Facilities | 36,583 | 21,857 | - | - | 11,409 |
| Well workovers | 11,926 | 4,061 | 1,275 | 1,275 | 1,690 |
| Over- / Underlift | -2,916 | -974 | -1,663 | -1,629 | 452 |
| Other | 6,897 | 3,760 | 8,238 | 4,482 | 10,165 |
| Accruals | 34,673 | 5,728 | 21,734 | -3,589 | 12,292 |
| Transferred costs from | |||||
| previous year | 13,403 | 16 | - | - | - |
| Total | 115,031 | 41,850 | 79,607 | 31,214 | 95,518 |
In accordance with the farmout agreement with Mitsui from 2010, Tethys Oil received from Mitsui a bonus amounting to MSEK 65 (MUSD 10) as commercial production exceeded 10,000 bopd for 30 consecutive days and following the approval of the Field Development Plan ("FDP") December 2012. The bonus was received during the first quarter 2013.
Parts of the administrative expenses in Tethys Oil are charged to oil and gas projects where the expenditures are capitalised. In case of Tethys Oil being the operator, these administrative expenditures are, through the above, also funded by the partners. The chargeout to the projects where Tethys Oil is operator is presented in the consolidated income statement as Other income. All other internal chargeouts are eliminated in the consolidated financial statements.
Tethys Oil holds an indirect interest of three Lithuanian companies holding three licences; Gargzdai, Rietavas and Raiseiniai licences. The interest is held through two Danish private companies part of the Odin Group of companies, Odin Energi and Jylland Olie. The table below presents the ownership and the result from associates for first nine months 2013. There was no result from associates for the equivalent period last year.
| Tethys Oil AB | Ownership | Ownership | Ownership | ||
|---|---|---|---|---|---|
| Odin Energi UAB Minijos Nafta Gargzdai licence |
50% 50% 100% |
Jylland Olie UAB TAN Oil Raiseiniai licence |
42%9 50% 100% |
Jylland Olie UAB TAN Oil UAB LL Investicos Rietavas licence |
42% 50% 50% 100% |
| Tethys Oil's indirect interest | 25% | 21%9 | 11%7 |
| UAB Minijos Nafta |
UAB TAN Oil |
UAB LL Investicos |
|
|---|---|---|---|
| Tethys Oil's share of profit loss from associates TSEK |
1 Jan – 30 Sep 2013 |
1 Jan – 30 Sep 2013 |
1 Jan – 30 Sep 2013 |
| Gross revenue | 28,398 | - | - |
| Royalty | -2,838 | - | - |
| Net revenue | 25,561 | - | - |
| Depreciation | -4,451 | - | - |
| Appraisal/development costs | -760 | - | - |
| Operating expenditures | -11,692 | - | - |
| Administrative expenditures in Lithuanian company | -2,086 | -310 | - |
| Operating result | 6,572 | -310 | - |
| Financial income | 32 | 1,491 | - |
| Financial expenditures | -145 | -1,157 | - |
| Profit before tax | 6,459 | 25 | - |
| Tax | -969 | -4 | - |
| Tethys share of net profit from associates | 5,490 | 22 | - |
Total share of net profit from associates 5,512
| TSEK | 30 Sep 2013 | 31 Dec 2012 |
|---|---|---|
| 1 January | 188,161 | - |
| Acquisitions | - | 188,161 |
| Tethys share of net profit from associates | 5,512 | - |
| Dividend from associates | -8,640 | - |
| Balance end of period | 185,032 | 188,161 |
For an overview of the ownership structure of Tethys Oil's interest in Lithuania, please see page 33 in the Annual Report 2012.
As per 30 September 2013, the number of outstanding shares in Tethys Oil amounts to 35,543,750 (35,543,750), with a quota value of SEK 0.17 (0.17). All shares represent one vote each. Tethys Oil does not have any incentive program for employees.
In September 2012, Tethys Oil issued a secured three-year bond loan of TSEK 400,000. The bonds were issued at 100 per cent of the nominal value and run with a fixed interest rate of 9.50 per cent per year. The maturity date of the bonds is 7 September 2015. The bonds are listed on NASDAQ OMX Stockholm. The transaction costs amounted to TSEK 12,447 and are depreciated during the maturity time of the bond. Non current liabilities amounted at 30 September 2013 to TSEK 391,972 (388,862).
Tethys Oil estimates that Tethys Oil's share of site restoration regarding Block 3&4 amounts to TSEK 28,488 (28,279). As a consequence of this provision, oil and gas properties have increased with an equal amount.
As per 30 September 2013, pledged assets amounted to TSEK 865,784 (625,683). Pledged assets are mainly a continuing security with regard to the bonds where Tethys Oil has entered into a pledge agreement. The pledge relates to all shares in the subsidiary Tethys Oil Block 3&4 Ltd for the benefit of the bond holders and the value of the pledge is equal to the shareholders' equity value in Tethys Oil Block 3&4 Ltd. Of pledged assets, TSEK 500 (500) relate to a pledge in relation to office rental.
There are no remaining outstanding contingent liabilities as per 30 September 2013. As per 31 December contingent liabilities amounted to TSEK 15,648. The background for the contingent liability as per 31 December 2012 was an agreement between Tethys Oil and Mitsui from 2010, whereby Mitsui undertook to fund Tethys Oil's share of non exploration related capital expenditure up to MUSD 60 on Blocks 3 and 4 effectively from 1 January 2010. As per 31 December 2011, Mitsui had fulfilled the undertaking and started during the first quarter 2012 to recover the MUSD 60 paid on behalf of Tethys Oil from the proceeds of Tethys Oil's share of cost recovery production entitlement. During the full year 2012, Mitsui received MUSD 58 from Tethys Oil's cost recovery. The remaining MUSD 2 was recovered by Mitsui during the first quarter 2013, which is why there are no outstanding contingent liabilities as per 30 September 2013.
During the first nine months 2013, Tethys Oil Suisse S.A., a wholly owned subsidiary of Tethys Oil AB, has paid rent to Mrs Mona Hamilton amounting to CHF 66,000. Mrs. Mona Hamilton is the wife of Vincent Hamilton, the Chairman of Tethys Oil. The rent of office space is a commercially based agreement between Tethys Oil Suisse S.A. and Mrs. Mona Hamilton. The office rental agreement was cancelled as per 31 December 2012 and after the nine month notice period, there will be no further rental payments after 30 September 2013.
| Group | |
|---|---|
| 1 Jan 2013 - | 1 Jul 2013 - | 1 Jan 2012 - | 1 Jul 2012 - | 1 Jan 2012 - | |
|---|---|---|---|---|---|
| 30 Sep 2013 | 30 Sep 2013 | 30 Sep 2012 | 30 Sep 2012 | 31 Dec 2012 | |
| 9 months | 3 months | 9 months | 3 months | 12 months | |
| Items regarding the income statement and balance sheet | |||||
| Operating result, TSEK | 233,441 | 60,249 | 184,101 | 62,106 | 336,300 |
| Operating margin, % | 58.54% | 42.36% | 44.45% | 53.66% | 57.59% |
| Result before tax, TSEK | 195,622 | 51,820 | 169,451 | 45,989 | 314,175 |
| Net result, TSEK | 195,555 | 51,805 | 169,358 | 45,963 | 313,962 |
| Net margin, % | 49.04% | 36.42% | 40.89% | 39.71% | 53.76% |
| Shareholders' equity, TSEK | 1,046,908 | 1,046,908 | 405,039 | 558,709 | 860,122 |
| Balance sheet total, TSEK | 1,508,751 | 1,508,751 | 408,068 | 644,498 | 1,374,237 |
| Capital structure | |||||
| Solvency, % | 69.39% | 69.39% | 99.26% | 86.69% | 62.59% |
| Leverage ratio, % | 13.99% | 13.99% | n.a. | n.a. | 16.37% |
| Adjusted equity ratio, % | 69.39% | 69.39% | 99.26% | 86.69% | 62.59% |
| Interest coverage ratio, % | 111.48% | 111.48% | n.a. | n.a. | 190.16% |
| Investments, TSEK | 208,475 | 59,547 | 595,222 | 151,151 | 875,301 |
| Profitability | |||||
| Return on shareholders' equity, % | 18.68% | 4.95% | 41.81% | 8.23% | 36.50% |
| Return on capital employed, % | 13.33% | 3.53% | 41.50% | 7.13% | 24.58% |
| Key figures per employee | |||||
| Average number of employees | 19 | 19 | 12 | 12 | 12 |
| Number of shares | |||||
| Dividend per share, SEK | n.a. | n.a. | n.a. | n.a. | n.a. |
| Cash flow used in operations per share, SEK | 5.88 | 1.91 | 9.20 | 1.12 | 15.37 |
| Number of shares on balance day, thousands | 35,544 | 35,544 | 35,544 | 35,544 | 35,544 |
| Shareholders' equity per share, SEK | 29.45 | 29.45 | 11.40 | 15.72 | 24.20 |
| Weighted number of shares on balance day, thousands | 35,544 | 35,544 | 34,102 | 34,102 | 34,465 |
| Earnings per share, SEK | 5.50 | 1.46 | 4.97 | 1.35 | 9.11 |
| Earnings per share after dilution, SEK | 5.50 | 1.46 | 4.97 | 1.35 | 9.11 |
For definitions of key ratios please refer to the 2012 Annual Report. The abbreviation n.a. means not applicable.
The Company plans to publish the following financial reports:
Year end report 2013 (January – December 2013) on 14 February 2014
Annual meeting 2014 is planned to be held in Stockholm on 14 May 2014
Three month report 2014 (January – March 2014) on 6 May 2014
Six month report 2014 (January – June 2014) on 19 August 2014
Nine month report 2014 (January – September 2014) on 4 November 2014
Magnus Nordin Managing Director
Stockholm, 12 November 2013 Tethys Oil AB (publ) Org. No. 556615-8266
For further information, please contact:
Magnus Nordin, Managing Director, phone: +46 8 505 947 02, e-mail:[email protected] or Morgan Sadarangani, CFO, phone +46 8 505 947 01, e-mail:[email protected]
Tethys Oil AB Hovslagargatan 5B SE-111 48 Stockholm Sweden Tel. +46 8 505 947 00 Fax +46 8 505 947 99 E-mail: [email protected] Website: www.tethysoil.com
We have reviewed this report for the period 1 January 2013 to 30 September 2013 for Tethys Oil AB (publ). The board of directors and Managing director are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Göteborg, 12 November 2013
PricewaterhouseCoopers AB
Klas Brand Johan Malmqvist Auditor in charge
Authorised Public Accountant Authorised Public Accountant
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