2013 Annual Results
GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - March 31, 2014) - Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL)(LSE:TPL) today announced its Annual Results for the year ended December 31, 2013.
-- Completion of a farm-out of 66.66% of the Tajik Bokhtar Production Sharing Contract agreement to subsidiaries of Total Exploration and Production SA and China National Petroleum Corporation for USD63.4 million -- Conditional sale of 50% (plus one share) of the Kazakh oil and gas assets to SinoHan Oil and Gas Investment BV for USD75 million plus potential future bonuses -- Acquisition (completed early January 2014) of a 56% interest of Blocks XIA, XIM and XIN in Georgia for USD 9.6 million -- Decision to discontinue operations in Uzbekistan -- Drilling of AKD08 and AKD09 in Kazakhstan
-- Oil and gas revenue from continuing operations of USD36.95 million - an increase of 10% on 2012 (USD33.63 million) -- Loss for the year from continuing operations of USD10.54 million - a decrease of 50% on 2012 (USD20.96 million). In addition there was a loss of USD7.10 million from the discontinued Uzbekh operation which was primarily a write-down of assets -- Basic & diluted loss per share of USD0.03 cents from continuing operations (2012: USD0.07 cents) -- Capital Expenditure of USD23.81 million - an increase of 36% on 2012 (USD17.50 million) -- Cash and cash equivalents of USD25.10 million - an increase of USD23.35 million on 2012 (USD1.75 million)
Annual audited net reserve results of: 1P (Proved) - 13.03 million barrels oil equivalent ("boe"), 2P - (Proved plus Probable) - 23.29 million boe and 3P - (Proved plus Probable plus Possible) - 36.70 million boe. With the addition of 2013 production, these figures represent an increase on the 2012 year end volumes.
The above reserve data does not reflect the conditional sale of 50% of the Kazakh operations announced on Nov 1, 2013.
Dr. David Robson, Executive Chairman and President said, "2013 was a landmark year for Tethys as it developed our strategic partnerships in all its areas of operations. These partnerships have strengthened our projects in our focus areas financially, operationally and strategically.
"In Tajikistan, we completed the farm-out of a 66.66% interest of the Tajik Bokhtar Production Sharing Contract to subsidiaries of Total Exploration and Production SA and China National Petroleum Corporation for USD63.4 million. The endorsement of our belief in the super-giant potential of this section of the Amu-Darya basin by a super-major and the Chinese state oil and gas company is a great accomplishment for Tethys and puts us in a strong position to now capitalise on this potential through a partnership with financial and technical strength. We look forward to acquiring the necessary additional seismic later this year in order to locate a deep well, and then drilling in 2015, which will be an exciting time for the Company. We also welcome the news that the Chinese will commence construction of a gas pipeline from Tajikistan to China, which border each other, and which could carry any gas from a discovery, accelerating monetization. In addition, this farm-out released valuable funds which were invested in other areas of the business.
"Turning to Kazakhstan, in 2013 we signed a conditional sale of 50% (plus one share) of the Kazakh oil and gas assets to SinoHan Oil and Gas Investment BV for USD75 million plus potential future bonuses. SinoHan are a subsidiary of Beijing-based, Hanhong Private Equity Management Company, a well-known Chinese private equity firm. Globally, Hanhong is working on managing several international resources funds valued at more than USD1 billion. This is an excellent transaction for Tethys in terms of the valuation it received for its assets and also in bringing in a strong financial partner with a shared vision of the potential which these assets have, both in terms of the underlying oil production that provides valuable cash flow to support the business, and the exciting growth story in the gas market which has now opened up after the completion of the gas pipeline to China from Kazakhstan which is in close proximity to the field. We also maintain operational control and run day-to-day operations. Once this transaction completes after the necessary government consents expected mid-year 2014, the exploration and developments programmes will both move into full swing. We expect to approximately triple gas production from now until 2015 when we also expect to realize a significantly higher gas price due to selling into the Chinese market for the first time. These are shallow, cheap wells to drill and our first two wells drilled in 2014 have been successful which bodes well for the forward programme. In addition we will continue to explore and our shareholders are looking forward to drilling the Klymene exploration prospect later in the year targeting over 400 million barrels of unrisked mean prospective recoverable resources of oil. Our reserves have remained steady which provides a valuable underpinning revenue stream whilst we push forward in other areas. It is planned to increase current oil production from these reserves through the drilling of a horizontal well later this year, targeting the fractures in the Jurassic Limestone which has not been extensively produced to date, but contain significant reserves.
"We entered a new country with the acquisition (completed early January 2014) of a 56% interest of Blocks XIA, XIM and XIN in Georgia with Tethys being the Operator of all these PSC's. We believe that with the application of more modern technologies than have previously been applied these PSC's hold world class potential for conventional and non-conventional oil and gas production. The opportunity to enter Georgia, a country with a very good business climate, as Operator with a substantial acreage position and existing strong local partners is a very attractive opportunity. The independent evaluation carried out suggests potential of several billion barrels of oil in acreage with direct access to world markets and good commercial terms. We believe that these transactions will add significantly to Tethys' current portfolio in Central Asia and will complement these projects adding to future shareholder value. The new seismic acquired to date has already allowed us to identify some good prospects and we plan to drill a well later in the year.
"Turning to recent events in Ukraine, where we do not operate, we would like to stress that, whilst this is disturbing for that particular country, we do not see this affecting the countries in which we operate. Kazakhstan and Tajikistan have experienced a long period of stability now and all the signs are that this will continue going forward. Georgia has a democratically-elected government that has strong popular support and indeed is very pro-business with a stable relationship with Russia. Countries in the former Soviet Union tend to be unfairly grouped together when in fact they are all uniquely independent and different.
"We are now in three countries and have, what we believe to be, the right partnerships for each of those countries. We believe it is a diversified portfolio that provides good oil and gas production to support the business with very exciting exploration upside that we will capitalise on in order to bring shareholder value in 2014 and beyond."
The full Annual Results together with Management's Discussion and Analysis and Annual Information Form have been filed with the Canadian securities regulatory authorities. Copies of the filed documents may be obtained via SEDAR at www.sedar.com or on Tethys' website at www.tethyspetroleum.com. The summary financial statements are attached to this press release.
The Company's 2013 financial statements are prepared under International Financial Reporting Standards ("IFRS").
The above highlights along with other financial details will be further discussed in a scheduled conference call. Details of the conference call can be found below:
A conference call will be held at 8:00AM EDT (1:00PM BST) on Tuesday, April 1, 2014. The North American conference call number is 866-700-6293 and the outside North America conference call number is +1-617-213-8835. The conference call code to use is 73537454. Please call in about 10 minutes before the starting time in order to be patched into the call.
The call is being webcast and can be accessed at http://edge.media-server.com/m/p/45b4kzfw/lan/en.
Tethys is focused on oil and gas exploration and production activities in Central Asia and the Caspian Region. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.
This press release contains "forward-looking information" which may include, but is not limited to, statements with respect to our operations, completion of the sale of an interest to SinoHan Oil and Gas Investment BV; tripling of gas production from the Company's Kazakhstan projects, realizing significantly higher gas prices due to selling in the Chinese market; adding to shareholder value and drilling targets. Such forward-looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including the risk that approvals for the sale to SinoHan Oil and Gas Investments BV will be delayed; risk that gas production will not increase as anticipated, the risk that gas prices will not increase and the risk of changes in our drilling programmes. See our Annual Information Form for the year ended December 31, 2013 for a description of risks and uncertainties relevant to our business, including our exploration activities.
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
A barrel of oil equivalent ("boe") conversion ratio of 6,000 cubic feet (169.9 cubic metres) of natural gas = 1 barrel of oil has been used and is based on the standard energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
The references in this press release to "Prospective Recoverable Resources" means those quantities of petroleum estimated, as of 15th January 2014, to be potentially recoverable from undiscovered accumulations by application of future exploration and development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of these resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of these resources. The product types that may reasonably be expected from potential production consist of oil, condensate, natural gas and associated gas.
The resource estimate contained or referred to are estimates only and are not meant to provide a determination as to the volume or value of hydrocarbons attributable to the Klymene prospect. There are numerous uncertainties inherent in estimating quantities of resources and cash flows that may be derived, including many factors that are beyond the control of the Company. The following is a non-exhaustive list of factors which may have a significant impact on the above estimates of prospective resources: despite the classification that they are as yet undiscovered but may be potentially recoverable the Company may be unable to carry out the development or their potential recovery; the activity may not be economically viable; the Company may not have sufficient capital or time to develop them; there may be no market or transportation routes for the potential production; legal, contractual, environmental and governmental concerns might not allow for the recovery being undertaken; reservoir characteristics might prevent recovery. The recovery of the resources is subject to the following risks and uncertainties: market fluctuations, the proximity and capacity of oil and gas pipelines and processing equipment, government regulation, political issues, export issues, competing suppliers, operational issues (exploration, production, pricing, marketing and transportation), extensive controls and regulations imposed by various levels of government, lack of capital or income, the ability to drill productive wells at acceptable costs, the uncertainty of drilling operations, factors such as delays, accidents, adverse weather conditions, and the availability of drilling rigs and the delivery of equipment. See the Company's Annual Information Form for the year ended December 31, 2013 for further information with respect to factors and contingencies relevant to this estimate.
Tethys Petroleum Limited Consolidated Statement of Financial Position (in thousands of US dollars) As at December 31 --------------------------- 2013 2012 Non-current assets Deferred tax 322 - Intangible assets 31,074 107,374 Property, plant and equipment 15,291 121,097 Restricted cash 660 1,543 Prepayments and other receivables - 6,444 Investment in joint arrangements 4 1,116 47,351 237,574 Current assets Inventories - 2,046 Trade and other receivables 1,358 7,703 Advances 4,000 - Loan receivable from jointly venture - 2,403 Cash and cash equivalents 25,109 1,750 Restricted cash 475 477 Assets of a disposal group classified as held for sale 156,325 - 187,267 14,379 Total assets 234,618 251,953 Equity Share capital 28,756 28,671 Share premium 307,295 306,725 Other reserves 42,621 41,705 Accumulated deficit (182,533) (165,385) Non-controlling interest 6,454 8,437 Total equity 202,593 220,153 Non-current liabilities Financial liabilities - borrowings - 3,688 Deferred taxation - 2,912 Trade and other payables - 351 Asset retirement obligations - 524 - 7,475 Current liabilities Financial liabilities - borrowings 4,965 13,625 Derivative financial instruments - warrants 17 523 Current taxation 144 233 Deferred revenue - 1,713 Trade and other payables 4,946 8,231 Provisions 520 - Liabilities of a disposal group classified as held for sale 21,433 - 32,025 24,325 Total liabilities 32,025 31,800 Total equity and liabilities 234,618 251,953 Tethys Petroleum Limited Consolidated Statement of Comprehensive Income (in thousands of US dollars) Year ended December 31, --------------------------- 2012 2013 Restated Sales and other revenues 36,945 33,629 Sales expenses (3,036) - Production expenses (13,640) (11,363) Depreciation, depletion and amortization (12,619) (17,313) Unsuccessful exploration and evaluation expenditures - (1,093) Business development expenses (2,695) (858) Administrative expenses (18,703) (18,942) Transaction costs of assets held for sale (611) - Share based payments (862) (2,932) Gain on Tajik farm-out 8,214 - Foreign exchange loss - net (113) (451) Fair value gain on derivative financial instrument - net 830 53 Profit from jointly controlled entity 298 191 Finance costs - net (1,460) (1,083) Loss before taxation from continuing operations (7,452) (20,162) Taxation (3,083) (798) Loss for the year from continuing operations (10,535) (20,960) (Loss)/profit for the year from discontinued operations net of tax (7,096) 56 Loss and total comprehensive income for the year (17,631) (20,904) Loss and total comprehensive income attributable to: Shareholders (17,148) (20,423) Non-controlling interest (483) (481) Loss and total comprehensive income for the year (17,631) (20,904) Loss per share attributable to shareholders: Basic and diluted - from continuing operations (0.03) (0.07) Basic and diluted - from discontinued operations (0.02) - Year ended December 31, --------------------------- 2012 2013 Restated Cash flow from operating activities Loss before taxation from continuing operations (7,452) (20,162) (Loss)/profit before tax from discontinued operations (8,150) 292 (15,602) (19,870) Adjustments for Impairment charge in loss from discontinued operations 7,010 - Share based payments 862 2,932 Net finance cost 1,460 1,083 Unsuccessful exploration and evaluation expenditures - 955 Depreciation, depletion and amortization 13,534 18,424 Fair value gain on derivative financial instruments (830) (53) Net unrealised foreign exchange (gain)/loss (43) 46 Gain on Tajik farm-out (8,214) - Profit from jointly controlled entity (298) (191) Movement in deferred revenue (1,191) (126) Net change in working capital 2,807 (1,842) Cash (used in)/generated from operating activities (505) 1,358 Corporation tax paid (276) - Net cash (used in)/generated from operating activities (781) 1,358 Cash flow from investing activities Interest received 216 6 Expenditure on exploration and evaluation assets (4,529) (7,764) Expenditures on property, plant and equipment (19,280) (9,737) Movement in restricted cash (778) 272 Investment in jointly controlled entity (4) (3) Repayment of loan receivable from jointly controlled entity 200 - Proceeds of Tajik farm-out (net of costs) 62,959 - Movement in advances to construction contractors (1,081) 778 Other advances (4,000) - Movement in value added tax receivable (3,113) 2,995 Net change in working capital 170 (2,279) Movement in asset retirement obligation (253) - Net cash used in investing activities 30,507 (15,732) Cash flow from financing activities Proceeds from issuance of borrowings, net of issue costs 4,714 15,670 Repayment of borrowings (8,389) (8,563) Interest paid on borrowings (2,360) (1,433) Proceeds from issuance of equity, net of issue costs 523 - Movement in other non-current liabilities (283) (283) Net cash (used in)/generated from financing activities (5,795) 5,391 Effects of exchange rate changes on cash and cash equivalents 50 (13) Net decrease in cash and cash equivalents 23,981 (8,996) Cash and cash equivalents at beginning of the year 1,750 10,746 Cash and cash equivalents at end of the year 25,731 1,750 Cash and cash equivalents at end of the year comprises: Cash reclassified as assets of a disposal group held for sale 622 - Cash and cash equivalents 25,109 1,750 25,731 1,750
FOR FURTHER INFORMATION PLEASE CONTACT:
Tethys Investor Relations
Tethys Petroleum Limited
Vice President Investor Relations
Media / IR Enquiries - London
+44 207 831 3113
+852 2217 2999
Source: Tethys Petroleum Limited