Tethys Oil

• The extended well test on the Al Jumd discovery on Block 56 was active throughout the quarter with positive results. A total of 34,699 barrels gross was produced during the quarter.
• Tethys has applied for an extension to the license to allow for preparations of a provisional field development plan and to conduct additional appraisal and exploration activities with the aim of establishing commercial viability of the block.
• Exploration drilling on the first South Fahd prospect on Block 58 has been pushed to early 2024 following a retendering of the drilling rig. The South Lahan prospect maturation is completed and is expected to be third-party validated in the third quarter.
• Tethys Oil is exploring a potential farmout of an interest share in Block 58.
• Production from Blocks 3&4 in the quarter amounted to 8,994 barrels of oil per day (9,411), with a Net entitlement of 52% (52) and an achieved oil price of USD 81.6 per barrel (81.7).
• Revenue and other income was MUSD 34.7 (35.3) and EBITDA MUSD 16.9 (18.7).
• Cash flow from operations amounted to MUSD 25.7 (20.4) while the investments in oil and gas properties amounted to MUSD 21.4 (20.0) and the Free cash flow was MUSD 4.0 (0.4).

Revised full year 2023 production and financial guidance

• Production for the full year 2023 is expected to be 9,000 (+/- 200) barrels of oil per day, compared to previous full year guidance of 9,000-10,000 barrels of oil per day.
• Following the revised production guidance, operating expenditures are expected to be USD 17.0 (+/- 0.5) per barrel of oil, compared to USD 14.5 (+/- 1.0) per barrel of oil.
• 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,

The second quarter 2023 could very well be the quarter when Block 56 onshore Oman in earnest started its rise towards becoming a second core interest area for Tethys in Oman. The results of the extended well test on the Al Jumd discovery and very encouraging interpretations from the new 3D seismic study covering the wider Al Jumd trend suggests that this area of Block 56 holds promising commercial potential. The next steps in evaluating and eventually realising this potential includes requesting an extension of the second exploration phase to allow for additional appraisal and exploration drilling to be carried out and a provisional field development plan to be prepared. Work will also be prepared to enable Block 56 to be included in the yearly reserves and resource report.

I have several times already compared Block 56 with Blocks 3&4 of a dozen years ago and what we have seen so far this year further underscores that assessment. With Tethys share of Blocks 3&4’s production now below 10,000 barrels of oil per day, bringing Block 56 to commercial production is of course a high priority.

The Al Jumd trend consists of the Al Jumd discovery, which produced some 35,000 barrels of oil gross during the quarter as part of the ongoing extended well test, the Sarha discovery and the newly identified prospect as well as several other leads trending northeast-southwest along the border with Block 6 to the west.

Further east in Block 56 there is a separate potential fairway of leads straddling the intersection between the South Oman Salt Basin and the Eastern Tertiary Basin. Older 2D seismic suggests several leads along this trend and the newly acquired 3D seismic is currently being interpreted.

The excitement over Block 56 should however not make us lose sight of Block 58. During the quarter work has been centred on firming up the prospectivity of the South Lahan prospects, which are currently being peer reviewed. The three Fahd prospect, with close to 200 mmbo of unrisked prospective resources remains the main target in the Block but South Lahan has proven to be quite interesting as well. Tendering for a drilling rig is in progress and we are also investigating the appetite for potential partners to join the exploration effort on Block 58. With both Fahd and South Lahan now showing good prospectivity, a suitable partner would certainly strengthen the effort. With Tethys holding 100 percent of the block, and with a strong balance sheet, we are in a good position to invite a partner should interest exist.

The second quarter for Block 49 has seen some delays in sourcing all the necessary services for the re-testing of the Thameen-1 well and we will keep you updated on the progress as the third quarter proceeds.

On our non-operated Blocks 3&4 we are hopeful that production will stabilise around 9,000 barrels per day net to Tethys, before Government take, based on the most recent production forecast available from the operator. That said we are of course disappointed that Blocks 3&4 production has continued to perform below expectations. We are in close contact with the operator CCED and are actively engaging to understand and improve the production performance. Blocks 3&4 exploration has been more positive so far this year as all three exploration wells drilled have encountered hydrocarbon and established flows. The wells are currently being evaluated and we hope to know more in the coming months.

Financially the quarter was adequate with cash flow from operations amounting to MUSD 25.7 after revenues of MUSD 34.7 and an achieved oil price of USD 81.6 per barrel.

So stay with us. After a few quarters of declining production from Blocks 3&4 we may be on the cusp of a turnaround for Tethys’ overall production and now led by our operated Block 56.

Stockholm, August 2023
Magnus Nordin
Managing Director

CONFERENCE CALL
Date: 8 August 2023
Time: 10.00 CEST

To participate in the conference call, you may choose one of the following options:

Link to webcast: https://edge.media-server.com/mmc/p/podr9kj2

To participate via phone, please register here to receive dial-in information.

FOR FURTHER INFORMATION, PLEASE CONTACT:
Magnus Nordin, Managing Director, phone: +46 8 505 947 00
Petter Hjertstedt, CFO, phone: +46 8 505 947 10

For investor relations inquiries: ir@tethysoil.com