Tethys Oil AB (SSE: TETY): Increasing further the size of the prize
• The South Lahan area on Block 58 is estimated to hold 55-523 mmbl prospective resources (P90-P10 case) with a mean case of 251.8 mmbbl prospective resources across six prospects in the Ara Carbonate.• Combined with the previously disclosed prospective resources of the Fahd area in the north-eastern part of Block 58, Tethys Oil’s unrisked recoverable prospective resources on the block are estimated to be 435.9 mmbbl (Pmean).
• The geological chance of success ranges from 6% to 11% for the six new prospects.
• The reserves auditors considers that “considerable upside exists within the intra-Ara Formation plays”. The new prospect portfolio presented by Tethys largely summarises the potential of only one stringer level within each prospect, with the exception of the SL9 prospect. Additional intra-Ara seismic reflectors exist, and these may represent additional stringer reservoirs. Moreover, Tethys has not yet evaluated the ‘basal’ Ara carbonates (A1/A0) or the A4 Athel Silicylite plays, which have both proved to be highly prospective in the South Oman Salt Basin.
• Two exploration wells will be drilled at Block 58 in 2024 starting with the high impact Kunooz-1 well in Fahd (123.5 mmbbl unrisked prospective resources and unrisked NAV of ~SEK200 per share).
• The second exploration well will be either in Fahd or South Lahan depending on the results of Kunooz-1.
• We re-iterate our target price of SEK100/sh. The outcome of the ongoing strategic review process could be a catalyst to rerate the shares.
Valuation
Our ReNAV of SEK104/sh is based on the company’s 21.7 mmbbl 2P reserves, 15.5 mmbbl 2C resources and the upcoming activity programme. We assume a long term Brent price of US$70/bbl. The overall unrisked value of the prospective resources at Block 58 alone (453.9 mmboe) is >SEK700 per share.
Tethys Oil AB is a Sweden-based energy company. The Company is focused on oil and gas exploration and production onshore areas with known discoveries. Its core area of focus is the Sultanate of Oman, where the Company holds licence interests in three onshore blocks. Tethys Oil has licences in three countries altogether: Oman, Lithuania and France. Two of the licenses are in production, namely Blocks 3 & 4 in Oman and Gargzdai in Lithuania. During 2013 the Company also had licenses in Sweden, however, they have expired and were not renewed. As of December 31, 2013, the Company had 10 wholly owned subsidiaries active in Sweden, Gibraltar, Switzerland and the British Virgin Islands, such as Tethys Oil Denmark AB, Tethys Oil Spain AB and Tethys Oil Turkey AB, among others.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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