Higher oil price estimates for ’20-‘21

Room for more OPEC+ production in ’21?

USD 42/bbl appears to be discounted oil price for Tethys

Positive estimate revisions on higher oil price assumptions
We have increased our Brent oil price estimates to an average of USD 43(31)/bbl in ‘20e and USD 50(43)/bbl in ‘21e. We consequently make positive revisions to our ’20-’21 revenue estimates, with sales up 20% and 25%, respectively. For 2022 and beyond, we reiterate our view that USD 60/bbl Brent should allow sufficient economics for the market to clear, with US production as the swing producer.

Room for more OPEC+ production in ’21?
On our oil market estimates, we find that there is already room for OPEC+ to produce above its current production quotas in 2021. With Tethys Oil’s production restricted by Oman’s participation in the production curtailments, we find that this could mean that there is upside potential to our ’21 volumes estimates if these curtailments are relaxed.

USD 42/bbl appears discounted in current share price
On our estimates, an oil price of USD 42/bbl appears discounted in Tethys. With a USD 60/bbl long-term oil price, we estimate a current P/NAV of 0.66. Tethys is supported by a robust balance sheet with SEK 16/ in gross cash at YE’20e and zero long-term debt. The Q2 results are due out on 11 August.

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