Tethys Oil - Q4 set to be a good quarter
Estimates up on strong Q4 production, ’21e oil price Exploration well currently drilling Discounts oil price of USD 50/bbl Strong Q4 production and oil price We raise our estimate on another quarter of production being permitted to exceed the Omani government’s indicated cap of 9,300 boe/d (WI). Based on monthly production reports, Tethys’ working interest production was 11,072boe/d, representing a ~19% hike in production, and the quarter saw the oil price come close to ABGSCe (USD 44/bbl vs. ABGSCe USD 45/bbl). These are the key factors driving our Q4 revisions.
For 2021, we raise our estimates due to higher oil price assumptions of USD 58/bbl (USD 50/bbl). Exploration well currently underway The Thameen-1 exploration well was spudded on 4 January. Drilling operations are expected to take 45 days, meaning that results should be available around/shortly after the Q4 report on 9 February.
Tethys is the operator on the well, and could potentially be a play opener on Block 49, in our view. US-based company EOG, a large player within US shale operations, is a 50% partner to Tethys Oil. Share up 50% since November The share is up 50% since November on the back of the recovery in oil prices.
According to our estimates, the share now trades at a P/E ‘21e of ~6x, while an oil price of USD 50/bbl is discounted in our SOTP; we also note that Tethys’ balance sheet is robust, with a net cash position of SEK 13/sh at Q4’20e.
