Estimates down on lower oil price assumptions

Strong cash generation all the same

NAV of SEK 82/share at USD 65/bbl Brent

Q4: Likely another solid quarter
For Q4 we forecast Tethys Oil will report production of 11.9m boe/d, revenues of ~USD 42m and EBITDAX of ~USD 31m. We estimate Tethys Oil will report net cash of SEK 19/share. The Q4 results are due on 12 February.

Negative estimate revisions on lower oil price
Based on our lowered Brent oil price assumption of USD 65/bbl long term (USD 75/bbl), we revise our revenue and EBITDAX by -13% and +6% and -18% and +9% for ’19e and ’20e, respectively. An offsetting factor for our estimates is the somewhat slower depletion of the cost of oil (yielding TETY a relatively higher net entitlement on the produced barrels), causing the positive revisions to our estimates in ’20.

NAV of SEK 82/share at USD 65/bbl Brent
We estimate TETY will generate SEK 33/share in FCF in ’19-’20, exiting ’20e with SEK 52/share in net cash if we assume no dividends. The near-term estimates appear attractive with a P/E ’19e of 4.9x. However, investors should keep in mind that the cost of oil balance is about to be depleted following the strong revenue generation. At USD 60/bbl our NAV stands at SEK 69/share, at USD 65/bbl SEK 82/share and at USD 70/bbl SEK 86/share.

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