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Third party research

Tethys Oil: First year of RRR below 100% - ABG

Tethys Oil

This is a third party research report and does not necessarily reflect our views or values

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EBITDA below ABGSCe, on lower net entitlement
Soft RRR, investing for growth in ‘22
DPS of SEK 7/sh ~9.7% dividend yield

EBITDA below ABGSCe, on lower net entitlement
Tethys Oil reported Q4 EBITDAX of USD 18m, below ABGSCe at USD 21.3m, a notch above cons at USD 17m. Mind that the deviation vs. our numbers is explained by less capex for the quarter (USD 17.2m vs. ABGSCe at USD 19.5m), resulting in a net entitlement share that was lower than our estimate (consequently affective the P&L recognized revenues). There was also a USD 4.1m non-cash exploration charge for the quarter, negatively affecting EBITDA and below line items. Free cash flow of USD 9.3m and net cash at USD 68.6m was however above ABGSCe at USD 4.1 and USD 63.3m.

Soft RRR, investing for growth in ‘22
The 2P reserve replacement ratio for ’21 came in at 82%, the first year that Tethys have not been able to more than replace its production from reserve additions. For ’22 guides for production of 11-11.5kboe/d (ABGSCe in high end of guidance at 11.6kboe/d), with capex at Blocks 3&4 of USD 62m (ABGSCe 66m) and a further USD 29m to be spent for exploration activities at Blocks 49, 56 and 58. On a negative note, EOG has notified that it will withdraw from Block 49. We found EOG to be a solid partner, and as such it creates some concern on the potential in the Block.

DPS of SEK 7/sh ~9.7% dividend yield
Tethys declare a total DPS of SEK 7, this implies ~9.7% and is a above our assumption of DPS of SEK 6. Tethys will host a conference call today at 10:00CET.
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