Interim report third quarter 1 January – 30 September 2023

Third quarter 2023 (Second quarter 2023)

• The extended well test on the Al Jumd discovery on Block 56 was concluded during the quarter and has provided Tethys Oil with vital production data that is being incorporated into the ongoing field development planning.
• The extension of the current exploration phase on Block 56 has been approved by the Ministry of Energy and Minerals (“MEM”). The licence will expire at the end of December 2024.
• The Menna prospect on Block 56, 20 km southwest of Al Jumd, has been approved for drilling by partners and the MEM and exploration drilling is planned to commence in December.
• Production from Blocks 3&4 in the quarter amounted to 8,486 barrels of oil per day (8,994), with a Net entitlement of 52% (52%) and an achieved oil price of USD 76.9 per barrel (81.6).
• Revenue and other income was MUSD 31.8 (34.7) and EBITDA MUSD 16.4 (16.9).
• Cash flow from operations amounted to MUSD 14.8 (25.7) while the investments in oil and gas properties amounted to MUSD 21.1 (21.4) and the Free cash flow was MUSD -6.1 (4.0).

Dividend

• Dividend of SEK 2,00 per share is to be paid in November 2023. The record date for the dividend is 13 November 2023, with the last days of trading in the share including the right to receive dividends is 9 November 2023.

Revised full year 2023 production and financial guidance

• Production guidance for the full year 2023 is now expected to be 8,800-9,000 barrels of oil per day, compared to 9,000 (+/- 200) barrels of oil per day previously.
• Operating expenditures are expected to be
  USD 17.5 (+/- 0.5) per barrel of oil, compared to USD 17.0 (+/- 0.5) per barrel of oil previously.
• Investments in oil and gas properties are expected to be in the range of MUSD 81-86, compared to MUSD 85-95.

Letter to shareholders

Dear Friends and Investors,

To strike the right note when addressing the third quarter can be a bit of a challenge. The year is three quarters done so a lot of what will happen in the year has happened. But not enough to allow for a complete review and closing and the upcoming year is still too far off to warrant a full outlook. But there are always highlights and on those I will try to focus.

First, Blocks 3&4. Our non-operated 30% interest continues to offer the bulk of revenue and production. During the quarter we have seen Tethys’ share of production stabilizing above 8,000 bbl per day and opex per barrel come down compared to the second quarter. It is of course too early to say that the trend of lower production and rising costs have been broken, but it is certainly a step in that direction. The operator is indicating an increased focus on near-field appraisal and exploration opportunities for the upcoming months and the new appraisal program of the Lower Al Bashair reservoir, that once produced in the Farha field, is a promising activity in the fourth quarter. There are more details on the production stabilizing activities in the operations section but let us leave Blocks 3&4 on a slightly positive note.

However, dare I say, more important for the future are the activities in Block 56. The extended well test on the Al Jumd discovery was successfully concluded and close to 40,000 barrels sold during the quarter. Al Jumd has production potential and is a founding steppingstone towards the commercialization of Block 56.

The 3D seismic that we acquired last year has yielded unexpectedly good results in the so-called Eastern Flank area to the southwest of Al Jumd and a string of Al Jumd look-alikes are emerging. One of the largest of these, the Menna prospect, will be tested by the Menna-1 well in December. Shortly thereafter the Sarha-3 well that we drilled last year will be worked over and retested.

These activities will build on the Al Jumd foundation and combined with the overall prospectivity of the Eastern Flank will form the backbone of the field development plan that is in preparation. There is certainly still geological risk in Block 56 but there are so many opportunities that any early setback should be overcome by additional work.

Focus for the fourth quarter and for the field development plan will be on further evaluation and incorporating the Al Jumd production data into the plan, recalculate the Al Jumd resource base, test the Sarha-3 well and drill and test Menna. If these activities prove sufficiently successful, then a field development plan should take firmer shape during the first quarter.

We now have a further year to develop our plans after the license extension was granted and let me take this opportunity to extend our gratitude to the Ministry of Energy and Minerals for their support and encouragement.

Leaving the highlight scene let us not forget the ongoing preparation for retesting Thameen on Block 49 and the ever-growing prospective resource base on Block 58.

So stay with us, we are in for more growth activity than we have been for a long time and in mid-November a dividend of SEK 2.00 per share will be transferred to you, our shareholders

Stockholm, November 2023
Magnus Nordin
Managing Director

CONFERENCE CALL

Date: 7 November 2023
Time: 10.00 CET

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