Tethys Oil net result up by more than 400%
Published: 03:02 PM,Feb 08,2022 | EDITED : 05:02 PM,Feb 15,2022
Tethys Oil, a Swedish oil company, which holds interests in Oman’s Blocks 3&4, Block 49, Block 56 and Block 58, announces that its net result is up by more than 400 per cent. This was revealed by the company’s Managing Director, Magnus Nordin. Fueled by the oil price increase, its key financials soared, its operating result increased by close to 180 per cent and year-end cash position is up 22 per cent compared to last year, leaving the company with $68.6 million of cash as it enters 2022.
This record cash balance was reached whilst both investing in the company’s assets but also returning more than $16 million to its shareholders by way of dividends, redemptions, and share buybacks in the year.
In fact, since 2015 Tethys has distributed more than $135 million to its shareholders while contributing over $ 1 billion to the Sultanate of Oman’s economy. The Board of Director’s dividend and distribution proposal for 2022 will add a further $25 million to that already impressive shareholder return tally.
The source of this cash distribution and the force behind the company’s strong results in 2021 is its stake in ‘star’ asset onshore Oman – Blocks 3&4.
Over the last three years the share of production from the Blocks has amounted to close to 13 million barrels of oil whilst maintaining 2P reserves of more than 26 million barrels.
In other words, it consistently replaced its production with new reserves. 2021 is the first year in which the company have replaced less than 100 per cent of it production and also saw a small drop in production compared to the year before ( -1.7 per cent).
For 2022, the company sees signs of under-investment. “This will be remedied by a major increase in capital spending during 2022. Don’t forget, these investments are subject to cost recovery. The majority of these investments on Blocks 3&4 will be repaid to us almost immediately in the form of increased Net Entitlement with only a small 'haircut'. Considered the drop in investments our production and reserves development in 2021 is indeed a sign of the tremendous resilience and robustness inherent in Blocks 3&4. And just to make this point even stronger. The overall asset base of 2P reserves and 2C contingent resources increased during 2021,” Nordin added.
The Managing Director is confident that Blocks 3&4 will continue to be the backbone of the company’s financial strength for several years to come.
Block 56 a smorgasbord of opportunities
A few years back, Tethys Oil added other onshore Blocks to its portfolio in the Sultanate of Oman. One of them, in particular, is looking very promising. More than a decade ago, the company describes Blocks 3&4 as ‘a smorgasbord of opportunities.’ Block 56 today offers a similar smorgasbord of opportunities of various shapes, sizes and value potential.
The company have started to evaluate the first of these opportunities on Block 56, the Al Jumd trend of leads and prospects in the North-western part of the Block. The initial work programme calls for establishing commercial viability through the drilling of a horizontal well Al Jumd-2 and putting this on a long-term production test while drilling two more wells to establish the reserve base in the area.
In the central part of the Block, the company is halfway through a 2,000 km2 seismic survey which should give a state-of-the-art 3D seismic data over three different petroleum plays and more than a dozen potential leads. Nordin believes the central part of the Block holds the tastiest dishes of the smorgasbord, but said to await the results later in 2022.
Investments for 2022
For 2022, the company's investments in oil and gas properties is expected to amount to $91 million. The majority of oil and gas investments relating to the Blocks operated by Tethys Oil are expected to be incurred in the first half of 2022 with resulting cash flow impact. The 2022 investments in oil and gas properties are expected to be funded by the Group’s cash flows as well as cash on hand.
Investments on Blocks 3&4 are expected to be $62 million. The expenditures are due to the full year operation of three drilling rigs, upgrade and expansion of production facilities, field infrastructure improvements and 3D seismic acquisition.
For Block 49, investments are expected to be $ 0.5 million with expenditure focusing on a feasibility study of the application of unconventional completion and production techniques on the Thameen-1 well.
For Block 56, Tethys Oil’s 2022 investments, including carry arrangements, is expected to amount to a total of $20 million. The expenditure includes the drilling of the three wells in the Al Jumd area, subsequent well testing and the 3D seismic survey on the central area of the Block.
For Block 58, Tethys Oil’s 2022 investments are expected to amount to $8.5 million to cover the expense related to seismic processing and the drilling of one exploration well.
This record cash balance was reached whilst both investing in the company’s assets but also returning more than $16 million to its shareholders by way of dividends, redemptions, and share buybacks in the year.
In fact, since 2015 Tethys has distributed more than $135 million to its shareholders while contributing over $ 1 billion to the Sultanate of Oman’s economy. The Board of Director’s dividend and distribution proposal for 2022 will add a further $25 million to that already impressive shareholder return tally.
The source of this cash distribution and the force behind the company’s strong results in 2021 is its stake in ‘star’ asset onshore Oman – Blocks 3&4.
Over the last three years the share of production from the Blocks has amounted to close to 13 million barrels of oil whilst maintaining 2P reserves of more than 26 million barrels.
In other words, it consistently replaced its production with new reserves. 2021 is the first year in which the company have replaced less than 100 per cent of it production and also saw a small drop in production compared to the year before ( -1.7 per cent).
For 2022, the company sees signs of under-investment. “This will be remedied by a major increase in capital spending during 2022. Don’t forget, these investments are subject to cost recovery. The majority of these investments on Blocks 3&4 will be repaid to us almost immediately in the form of increased Net Entitlement with only a small 'haircut'. Considered the drop in investments our production and reserves development in 2021 is indeed a sign of the tremendous resilience and robustness inherent in Blocks 3&4. And just to make this point even stronger. The overall asset base of 2P reserves and 2C contingent resources increased during 2021,” Nordin added.
The Managing Director is confident that Blocks 3&4 will continue to be the backbone of the company’s financial strength for several years to come.
Block 56 a smorgasbord of opportunities
A few years back, Tethys Oil added other onshore Blocks to its portfolio in the Sultanate of Oman. One of them, in particular, is looking very promising. More than a decade ago, the company describes Blocks 3&4 as ‘a smorgasbord of opportunities.’ Block 56 today offers a similar smorgasbord of opportunities of various shapes, sizes and value potential.
The company have started to evaluate the first of these opportunities on Block 56, the Al Jumd trend of leads and prospects in the North-western part of the Block. The initial work programme calls for establishing commercial viability through the drilling of a horizontal well Al Jumd-2 and putting this on a long-term production test while drilling two more wells to establish the reserve base in the area.
In the central part of the Block, the company is halfway through a 2,000 km2 seismic survey which should give a state-of-the-art 3D seismic data over three different petroleum plays and more than a dozen potential leads. Nordin believes the central part of the Block holds the tastiest dishes of the smorgasbord, but said to await the results later in 2022.
Investments for 2022
For 2022, the company's investments in oil and gas properties is expected to amount to $91 million. The majority of oil and gas investments relating to the Blocks operated by Tethys Oil are expected to be incurred in the first half of 2022 with resulting cash flow impact. The 2022 investments in oil and gas properties are expected to be funded by the Group’s cash flows as well as cash on hand.
Investments on Blocks 3&4 are expected to be $62 million. The expenditures are due to the full year operation of three drilling rigs, upgrade and expansion of production facilities, field infrastructure improvements and 3D seismic acquisition.
For Block 49, investments are expected to be $ 0.5 million with expenditure focusing on a feasibility study of the application of unconventional completion and production techniques on the Thameen-1 well.
For Block 56, Tethys Oil’s 2022 investments, including carry arrangements, is expected to amount to a total of $20 million. The expenditure includes the drilling of the three wells in the Al Jumd area, subsequent well testing and the 3D seismic survey on the central area of the Block.
For Block 58, Tethys Oil’s 2022 investments are expected to amount to $8.5 million to cover the expense related to seismic processing and the drilling of one exploration well.