2012 Annual Results and Operations Update
GRAND CAYMAN, CAYMAN ISLANDS -- (MARKETWIRE) -- 04/01/13 -- Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL)(LSE:TPL) today announced its Annual Results for the period ended December 31, 2012. The financials are highlighted by a 66% increase in annual oil and gas revenue and the first year in which the Company has generated a cash profit.(1)
Oil and gas sales of USD38.11 million, an increase of 66% on 2011 A cash profit1 for the year of USD3.42 million compared to a cash loss1 of USD3.93 million in 2011 Increase in oil and gas revenues from USD6.49 million (Q1) to USD11.43 million (Q4) and from a cash loss1 of USD1.65 million (Q1) to a cash profit1 of USD2.34 million (Q4) USD1.36 million net cash generated from operating activities compared to USD12.56 million used in operating activities in 2011 Net cash used in investing activities of USD15.73 million compared to USD52.20 million in 2011 Accounting Loss for the year of USD20.90 million, a decrease of 23% on 2011
Production and Reserves Highlights
Oil production (before the deduction of local governments' share or taxation) increased from 2,148 bopd (2011) to 3,371 bopd (2012), an increase of 57% and has increased over the year to reach a rate of 4,381 bopd in Q4. Similarly boe production has increased to 6,313 boepd in 2012 compared to 5,656 boepd in 2011 In the reserve audit report produced by Gustavson Associates, and effective date December 31, 2012, the following gross figures are(2): 1P - 14.8 MMboe 2P - 26.1 MMboe 3P - 41.0 MMboe With 1P oil reserves more than replaced due to strong Doris field performance (Reserve Replacement Ratio of 126%) NPV10 of the Company's 2P Kazakh reserves (from Gustavson) is USD310 million
Updated Kazakh independent Resource Report estimates the gross unrisked recoverable mean prospective oil resources to be 1.23 billion barrels of oil plus 634 Bcf of natural gas Aral Oil Terminal commenced operations, Phase 2 completed and awaiting final State approval Two new gas supply contracts signed effectively doubling the price for 2013 to USD65 (USD72.8 including VAT) per 1,000 cubic metres (previously USD32.5 including VAT for the Kyzyloi and Akkulka Fields) Akkulka Exploration Contract term extended to March 2015 Kul-Bas Exploration and Production Contract term extended to November 2015 (subject to usual contract amendments)
Signed Farm Out Agreement ("FOA") for the Bokhtar Production Sharing Contract ("PSC") with subsidiaries of Total S.A. ("Total") and the China National Oil and Gas Exploration and Development Corporation ("CNODC") Updated Tajik independent Resource Report estimates gross unrisked mean recoverable resources to be 27.5 billion boe Completed acquisition of 501 km of new seismic data
Signed Production Enhancement Contract for a new oil field, the Chegara Group of Fields, in Uzbekistan Signed MOU to provide the framework for a Joint Study and the negotiation process for an Exploration Agreement relating to certain exploration blocks in the North Ustyurt Basin of Uzbekistan - the same basin which contains the Doris oil discovery
It is expected that the FOA for the Company's Tajik assets will be completed in Q2 2013. The Tajik Government has approved the participation of subsidiaries of Total and CNPC in the Bokhtar Production Sharing Contract and remaining points are now being finalized. All three parties are working hard jointly to achieve closing as soon as possible.
As part of the transaction, the new Joint Operating Company will present a comprehensive work programme upon completion of the FOA for the remainder of 2013.
In Kazakhstan in 2013, the Company plans to drill up to three wells targeting oil on the Akkulka Exploration Contract area.
The first well is firm and is expected to commence drilling in June 2013 and will target the Doto prospect nearby to the Doris oil discovery. This well has a relatively low risk in the exploration portfolio and is targeting mean unrisked prospective recoverable resources of 21.6 MMbbls (Gustavson Associates) in the Cretaceous and Upper Jurassic.
Following the increase in gas price in early 2013, further work will be carried out to increase production including workovers on the AKK05 and AKK14 wells in Q2 which will be tied in to the gas pipeline thereafter. A further programme will follow to include tie-in of additional wells and the drilling of further shallow gas exploration prospects in the area which are clearly defined on the seismic data as strong amplitude anomalies.
It is planned to test (including acidisation) the previously drilled KBD01 ("Kalypso") well, which contains a 100 metre (328 feet) gross section in Permo-Carboniferous limestones which is interpreted to contain moveable hydrocarbons based on wireline logs and mud log data. It is also planned to acquire additional seismic this year on the Kul-Bas and Akkulka Contract Areas.
The activities planned in Kazakhstan as described above are contingent on availability of funding, and the Company will provide a more detailed capital programme breakdown on closing of the Tajikistan farm-out, which is expected in Q2.
The full Annual Results together with a Management Discussion & 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 atwww.tethyspetroleum.com. The summary financial statements are attached to this press release.
The Company's 2012 financial statements are prepared under International Financial Reporting Standards ("IFRS").
The above highlights along with other operational and 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 10:00 Eastern Daylight Savings Time (15:00 British Summer Time) on Tuesday, April 2, 2013. The North American conference call number is 866-515-2912 and the outside North America conference call number is +1 617-399-5126. The conference call code to use is 50738618. 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://www.media-server.com/m/acs/891167705996eb72a5ec5a2fedc7c218
Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan, Tajikistan and Uzbekistan. 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 FAO and drilling, testing and well workover programmes for 2013. 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 completion of the FOA will be delayed beyond Q2 and the risk of changes in our drilling, testing and well workover programmes. See our Annual Information Form for the year ended December 31, 2012 for a description of risks and uncertainties relevant to our business, including our exploration activities. 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 resources" means those quantities of petroleum estimated, as of June 30, 2012, to be potentially recoverable from undiscovered accumulations by application of future 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 resources estimates 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 Company's properties. 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 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.
Non GAAP Measures:
This press release includes references to Non GAAP measures, including " cash profit" and "cash loss." These terms do not have any standardized meaning under IFRS. Cash profit (cash loss) is also referred to as profit (loss) before non-cash items in the Management Discussion & Analysis for the year ended December 31, 2012 and is defined as revenue less production costs, administrative costs, listing expenses, business development expenses and foreign exchange. See page 11 to the Management Discussion & Analysis for the year ended December 31, 2012 for a reconciliation of these amounts to IFRS measures.
(1) These terms are Non-GAAP measures. See "Non-GAAP Measures" above.
(2) "1P" means Proved Reserves; "2P" means Proved plus Probable Reserves and "3P" means Proved plus Probable plus Possible Reserves.
Tethys Petroleum Limited
Consolidated Statement of Financial Position
(in US dollars)
As at December 31
2012 $'000 2011 $'000
Intangible assets 107,374 99,959
Property, plant and equipment 121,097 128,918 Restricted cash 1,543 1,407
Prepayments and other receivables 6,444 10,217
Investment in jointly controlled entities 1,116 1,113
237,574 241,614 Current assets
Inventories 2,046 2,025
Trade and other receivables 7,703 5,478
Loan receivable from jointly controlled entity 2,403 2,013
Cash and cash equivalents 1,750 10,746
Restricted cash 477 885 Derivative financial instruments - interest rate swap - 630 14,379 21,777
Total assets 251,953 263,391 Equity attributable to shareholders
Share capital 28,671 28,669
Share premium 306,725 306,725 Other reserves 41,705 38,530
Accumulated deficit (165,385 ) (144,962 ) Non-controlling interest 8,437 8,918
Total equity 220,153 237,880 Non-current liabilities
Financial liabilities - borrowings 3,688 1,632
Deferred taxation 2,912 2,111
Trade and other payables 351 547 Asset retirement obligations 524 386 7,475 4,676
Financial liabilities - borrowings 13,625 8,396
Derivative financial instruments - warrants 523 264 Derivative financial instruments - foreign currency hedge - 157 Current taxation 233 -
Deferred revenue 1,713 1,839
Trade and other payables 8,231 10,179
Total liabilities 31,800 25,511
Total shareholders' equity and liabilities 251,953 263,391 Tethys Petroleum Limited Consolidated Statement of Comprehensive Income (in US dollars) Year ended December 31, 2012 $'000 2011 $'000 (re- presented)
Sales and other operating revenues 38,107 22,922
Other operating income - 7,375
Total revenue and other income 38,107 30,297
Production expenditures (12,970 ) (10,785 ) Depreciation, depletion and amortization (18,424 ) (13,111 ) Impairment charge - (8,983 ) Unsuccessful exploration and evaluation expenditures (1,093 ) (1,807 ) Listing expenses - (606 ) Business development expenses (1,591 ) (3,149 ) Administrative expenses (19,673 ) (19,763 ) Share based payments (2,932 ) (3,814 ) Foreign exchange (loss) / gain - net (455 ) 74
Fair value gain / (loss) - net on derivative financial instrument 53 (625 ) Gain on previously held interest in jointly controlled entity - 27,381
Loss on settlement of pre-existing loan relationship - (24,423 ) Profit / (loss) from jointly controlled entity 191 (722 ) Finance (costs) / income - net (1,083 ) 1,100
Loss before taxation (19,870 ) (28,936 ) Taxation (1,034 ) 1,947
Loss for the year (20,904 ) (26,989 ) Loss attributable to:
Shareholders (20,423 ) (26,939 ) Non-controlling interest (481 ) (50 ) Loss for the year (20,904 ) (26,989 ) Loss per share attributable to shareholders
Basic and diluted (0.07 ) (0.10 ) No dividends were paid or are declared for the year (2011 - $Nil).
Tethys Petroleum Limited Consolidated Statement of Cash Flows (in US dollars) Year ended December 31,
Cash flow from operating activities
Loss before taxation (19,870 ) (28,936 ) Adjustments for
Share based payments 2,932 3,814
Net finance cost / (income) 1,083 (1,100 ) Unsuccessful exploration and evaluation expenditures 955 1,807
Depreciation, depletion and amortization 18,424 13,111
Impairment charge - 8,983
Loss on disposal of assets - 96
Fair value (gain) / loss on derivative financial instrument (53 ) 625 Gain on previously held interest in SSEC - (27,381 ) Loss on settlement of pre-existing loan relationship - 24,423
Net unrealised foreign exchange loss / (gain) 46 (72 ) (Profit) / loss from jointly controlled entity (191 ) 722 Deferred revenue (126 ) (611 ) Other operating income - (7,375 ) Net change in non-cash working capital (1,842 ) (664 ) Net cash used in operating activities 1,358 (12,558 ) Cash flow from investing activities
Interest received 6 138 Expenditure on exploration and evaluation assets (7,764 ) (11,633 ) Expenditures on property, plant and equipment (9,737 ) (30,269 ) Movement in restricted cash 272 (1,277 ) Acquisition of subsidiary, net of cash received - (6,785 ) Payments made on behalf of jointly controlled entity - (18,292 ) Movement in advances to construction contractors 778 2,490
Movement in value added tax receivable 2,995 (2,982 ) Net change in non-cash working capital (2,279 ) 682 Net cash used in investing activities (15,729 ) (67,928 ) Cash flow from financing activities
Investment in jointly controlled entity (3 ) (1,113 ) Proceeds from issuance of borrowings - net of issue costs 15,670 2,393
Repayment of borrowings (8,563 ) (642 ) Interest paid on borrowings (1,433 ) (356 ) Non-current other payables (283 ) (284 ) Proceeds from issuance of equity, net of issue costs - 12,109
Net cash generated from financing activities 5,388 12,107
Effects of exchange rate changes on cash and cash equivalents (13 ) (10 ) Net decrease in cash and cash equivalents (8,996 ) (68,389 ) Cash and cash equivalents at beginning of the year 10,746 79,135
Cash and cash equivalents at end of the year 1,750 10,746
Tethys Petroleum Limited
Sabin Rossi - All Investor Queries
Vice President Investor Relations
+1 416-947-0167 (FAX)
Tethys Petroleum Limited
Veronica Seymour - All Media Queries
Vice President Corporate Communications
+44 1481 725911
+44 1481 725922 (FAX)
Hugh Sanderson / David Van Erp
+ 44 207 448 0200
Richard Redmayne / Stewart Dickson
+44 207 107 8000
Asia Pacific: Quam IR
Office phone/fax: +852 2217 2999
Ben Brewerton / Natalia Erikssen
+44 207 831 3113
Tethys Petroleum Limited
Mobile site: m.tethyspetroleum.com