Tethys Oil - Working towards exploration in Q4 (ABG Sundal Collier)

2021-08-02 09:14
Production down ~5% sequentially
We expect steady progress towards Q4 exploration
Discounts a Brent oil price of ~USD 50/bbl
Q2e EBITDA of USD 16m
Based on the monthly production updates, we estimate Tethys’ Q2 working interest production at 10,949boe/d. This is a 5.5% sequential decline from the Q1 level of 11,585boe/d. We estimate revenue of USD 38m in Q2, but expect a negative effect on other income of UDS 9.4m, reversing the position from Q1. Our Q2e EBITDA of USD 16.0m is up from USD 12.3m in Q1, but we are below consensus at USD 21.6m. Our ’22 revisions relate to our incorporating our current oil price estimate of USD 65/bbl (USD 65/bbl) into the numbers.

We expect steady progress towards Q4 exploration drilling
We expect Tethys Oil to announce steady progress on its new growth initiatives, with drilling on Block 56 starting in Q4’21. Blocks 3&4 remain the main focus for the company, and production is hovering around expected levels.

Discounts oil around USD 50/bbl
We estimate that Tethys Oil discounts a Brent oil price around USD 50/bbl (P/NAV of 1.0x at 12% WACC), with a strong balance sheet of SEK 17/sh at YE’21e. Our SOTP reflects reserves and resources identified, although in this context it is important to keep in mind that Tethys has been successful in growing 2P reserves every year since 2011.


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