Tethys Oil AB (SSE: TETY): Imminent first oil at Al-Jumd
• First oil al Al-Jumd on Block 56 is expected before the end of next week. The test will last 3-6 months with an initial gross flow rate of 400 bbl/d increasing rapidly to 800 bbl/d (Tethys WI: 65%).• With only ~US$0.35 mm associated opex per month, this will add cashflow and production that is not included in the FY23 guidance.
• The test is also expected to add contingent resources (we assume ~1.5 mmbbl) that would be converted into 2P reserves on declaration of commerciality.
• Drilling in the central area of the block is expected to start in 4Q23. The overall prospective resources are estimated at ~50 mmbbl, but the ongoing interpretation of 3D seismic recently acquired could lead to a higher figure.
• Tethys’ shares continue to provide investors with a combination of dividend yield, production and cash flow growth with very high impact exploration. A first well on Block 58 will be drilled in 3Q23, targeting 124 mmbbl prospective resources with an unrisked NAV of SEK205/sh (~4x the current share price). The total unrisked NAV of the company is >SEK560/sh. We re-iterate our target price of SEK120/sh.
More details on Al-Jumd well test
Al-Jumd oil will be transported approximately 15 km by truck from the production facility at Al Jumd to Simsim, where the oil will be unloaded and measured by the fiscal meter before being transferred into the national pipeline system. No historical cost will be recovered during the test.
Valuation
Our ReNAV of SEK125/sh is based on the company 23.9 mmbbl 2P reserves, 14.6 mmbbl 2C resources and the FY23 activity programme. We assume a long term Brent price of US$70/bbl.
Tethys Petroleum is an oil and gas exploration and production company focused on projects in Central Asia. Through its subsidiaries, Co. is engaged in the exploration for, and the acquisition, development and production of, oil and natural gas resources in Kazakhstan, Tajikistan and Uzbekistan.
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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