2015-08-14

2015 Q2 Results

GRAND CAYMAN, CAYMAN ISLANDS, Aug 14, 2015 (Marketwired via COMTEX) -- Tethys Petroleum Limited (TPL)(TPL) today announced its Results for the quarter ended June 30, 2015.

Q2 Financial Highlights (all figures reported in USD millions)

  • Oil and gas revenue of USD6.8m (2014: USD7.1m)
  • Gas revenue increased 137% to USD4.8m (2014: USD2.0m)
  • Production expenses USD4.2m (2014: USD3.2m)
  • G&A expenses down 39% to USD3.1m (2014: USD5.0m)
  • EBITDA adjusted for share based payments(i) of negative USD4.4m (2014 USD2.5m)
  • Loss for the period from continuing operations - USD25.3m - including: depletion of properties re-classified from Assets Held For Sale of USD19.4m (non-cash) and restructuring and transaction expenses of USD2.6m (2014: USD0.1m)
  • Basic & diluted loss per share from continuing operations - USD0.08 (2014: USD0.01)
  • Capital expenditure of USD4.0m (2014: USD2.5m)
  • Cash and cash equivalents of USD4.9m (2014: USD11.6m)

(i) Non GAAP measure

Q2 Operational Highlights

  • Total gas production up 77% to 3,250 barrels of oil equivalent ("BOE")/day (2014: 1,839 BOE/day)
  • Highest quarterly gas production in 3 years (since Q1 2012)
  • Total Production up 21% to 5,204 BOE/day (2014: 4,312 BOE/day)

Q2 Corporate Highlights

  • Non-completion of the SinoHan transaction resulting in the re-classification of Kazakh assets and liabilities from Assets Held For Sale
  • USD9.3m convertible loan financings
  • Announcement of intention to close Guernsey office

Post Q2 Highlights

  • A strategic review of the business which encompasses options including asset sales, farm-outs, financing, investments at the corporate level, or the sale of the Company is continuing to be conducted
  • Discussions have been ongoing with a number of interested parties on these potential avenues, subject to any agreed exclusivity or non-solicitation provisions
  • USD5.0m convertible loan facility secured on August 10, 2015 with Nostrum Oil & Gas PLC ("Nostrum")
  • Tethys has entered into a limited period of exclusivity with Nostrum with respect to a possible offer received from Nostrum for the entire issued and to be issued share capital of the Company. The exclusivity period runs through to August 24, 2015 and is subject to certain customary exceptions
  • Akkulka Production Contract (gas) Mining Allotment was expanded by 363% to 396.2 km2 (97,901 acres) from surface to the base of the Paleogene interval, effective July 10, 2015
  • Current average Q3 production to date is 4,972 BOE/day comprising 1,795 bopd of oil and 539 Mcm/d (19.06 MMcf/d) of sales gas.
  • Current average production to date in August is 4,494 BOE/day

John Bell, Executive Chairman, commented:

"The turnaround is now well underway, some of which is reflected in these financial results. I am encouraged by the performance of the gas division and the cost reductions achieved at Group level. The strategic review is ongoing, and the team is working hard to both conclude the strategic review process and continue to improve the operations."

The full Quarterly Results together with Management's Discussion and Analysis 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 the Tethys website at www.tethyspetroleum.com. The summary financial statements are attached to this press release.

The Company's Second Quarter 2015 financial statements are prepared under International Financial Reporting Standards ("IFRS").

About Tethys

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.

Cautionary Statements

This press release contains "forward-looking information". Such forward-looking statements reflect our current views with respect to future events, including with respect to a strategic review process and any related discussions with parties, a possible offer from Nostrum and the existence of significant potential in both exploration and in discovered deposits in Central Asia and the Caspian Region and the rapid development of this oil and gas area. The forward-looking statements are based on the assumption that significant potential exists in both exploration and in discovered deposits in Central Asia and the Caspian Region and that this oil and gas area continues to rapidly develop. These forward-looking statements are subject to a number of risks and uncertainties, including the risk that the strategic review process is unsuccessful, the possible offer from Nostrum not proceeding and that significant potential in both exploration and in discovered deposits do not exist in Central Asia and the Caspian Region and that this oil and gas area does not continue to rapidly develop. See our Annual Information Form for the year ended December 31, 2014 for a description of risks and uncertainties relevant to our business, including our exploration activities. The "forward looking statements" contained herein speak only as of the date of this press release and, unless required by applicable law, the Company undertakes no obligation to publicly update or revise such information, whether as a result of new information, future events or otherwise.

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.

Ends

Tethys Petroleum Limited
Consolidated Statement of Financial Position (unaudited)
(in thousands of US dollars)
                                                            As at
                                                    June 30,   December 31,
                                                        2015           2014
Non-current assets
Intangible assets                                     80,793         47,630
Property, plant and equipment                        119,724         13,804
Restricted cash                                        2,116            623
Investments in joint arrangements                         19              4
Trade and other receivables                            5,033              -
Deferred tax                                               -            258
                                                     207,685         62,319
Current assets
Cash and cash equivalents                              4,942          3,112
Trade and other receivables                            9,189            634
Loans to joint arrangements                            2,456              -
Inventories                                            1,055              -
Restricted cash                                          697            116
Assets of a disposal group classified as held for
 sale                                                      -        172,514
                                                      18,339        176,376
Total assets                                         226,024        238,695
Equity
Share capital                                         33,671         33,645
Share premium                                        321,764        321,724
Other reserves                                        43,043         42,845
Accumulated deficit                                 (225,946)      (198,560)
Non-controlling interest                               6,093          6,096
Total equity                                         178,625        205,750
Non-current liabilities
Trade and other payables                                 176              -
Financial liabilities - borrowings                    20,735          5,489
Provisions                                               984              -
Deferred tax                                           1,302              -
                                                      23,197          5,489
Current liabilities
Financial liabilities - borrowings                     5,984          5,139
Derivative financial instruments                       3,668              -
Current taxation                                         311            364
Trade and other payables                              12,539          4,102
Provisions                                             1,700          1,759
Liabilities of a disposal group classified as held
 for sale                                                  -         16,092
                                                      24,202         27,456
Total liabilities                                     47,399         32,945
Total equity and liabilities                         226,024        238,695

Tethys Petroleum Limited
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(in thousands of US dollars except per share information)

                                     Three months ended    Six months ended
                                     June 30,  June 30,  June 30,  June 30,
                                         2015      2014      2015      2014
Sales and other revenues                6,838     7,123    12,792    13,904
Sales expenses                         (1,279)     (498)   (2,381)   (1,242)
Production expenses                    (4,159)   (3,214)   (6,767)   (7,012)
Depreciation, depletion and
 amortisation                         (20,614)     (148)  (21,288)     (299)
Business development expenses               -      (580)        -    (1,320)
Administrative expenses                (3,103)   (5,082)   (5,924)  (10,207)
Restructuring costs                    (1,613)        -    (1,932)        -
Transaction costs of assets held for
 sale                                    (945)     (116)   (1,065)     (131)
Share based payments                     (118)      (77)     (265)     (196)
Profit on sale of fixed assets             29         -        43         -
Foreign exchange loss                    (208)      (77)     (215)      (70)
Fair value (loss)/gain on derivative
 financial instrument                  (1,547)       36      (469)       17
Profit/(loss) from jointly
 controlled entity                         15       (65)     (235)   (1,268)
Finance costs                          (1,949)     (382)   (2,527)     (985)
Loss before taxation from continuing
 operations                           (28,653)   (3,080)  (30,233)   (8,809)
Taxation                                3,375      (588)    2,921       732
Loss for the period from continuing
 operations                           (25,278)   (3,668)  (27,312)   (8,077)
Loss for the period from
 discontinued operations net of tax       (36)     (153)      (77)     (645)
Loss and total comprehensive income
 for the period                       (25,314)   (3,821)  (27,389)   (8,722)
Loss and total comprehensive income
 attributable to:
Shareholders                          (25,313)   (3,675)  (27,386)   (8,524)
Non-controlling interest                   (1)     (146)       (3)     (198)
Loss and total comprehensive income
 for the period                       (25,314)   (3,821)  (27,389)   (8,722)
Loss per share attributable to
 shareholders:
Basic and diluted - from continuing
 operations (USD)                       (0.08)    (0.01)    (0.08)    (0.03)
Basic and diluted - from
 discontinued operations (USD)              -         -         -         -
Tethys Petroleum Limited
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands of US dollars)

                                     Three months ended    Six months ended
                                     June 30,  June 30,  June 30,  June 30,
                                         2015      2014      2015      2014
Cash flow from operating activities
Loss before taxation from continuing
 operations                           (28,653)   (3,080)  (30,233)   (8,809)
Loss before tax from discontinued
 operations                               (36)     (155)      (77)     (647)
Adjustments for
  Share based payments                    118        77       265       196
  Net finance cost                      1,949       386     2,527       985
  Depreciation, depletion and
   amortization                        20,614       148    21,288       299
  Profit on sale of fixed assets          (29)        -       (43)        -
  Fair value gain on derivative
   financial instruments                1,547       (36)      469       (17)
  Net unrealised foreign exchange
   loss                                   147        72        26        83
  (Profit)/loss from jointly
   controlled entity                      (15)       65       235     1,268
  Movement in provisions               (1,197)     (178)   (1,990)     (320)
  Net change in working capital         1,474      (639)    2,115      (548)
Cash used in operating activities      (4,081)   (3,340)   (5,418)   (7,510)
  Corporation tax paid                     (4)      (10)     (134)     (148)
Net cash used in operating
 activities                            (4,085)   (3,350)   (5,552)   (7,658)
Cash flow from investing activities
Interest received                          46        48        91        98
Expenditure on exploration and
 evaluation assets                     (2,737)   (1,349)   (3,942)   (4,566)
Expenditures on property, plant and
 equipment                             (1,297)   (3,486)   (2,039)   (7,535)
Proceeds from sale of fixed assets        113         -       113         -
Transfer to restricted cash              (147)     (460)     (151)     (460)
Movement in advances to construction
 contractors                               99    (2,681)      190    (1,728)
Movement in value added tax
 receivable                               368       177       719       (93)
Net change in working capital             605       554    (1,522)      812
Net cash used in investing
 activities                            (2,950)   (7,197)   (6,541)  (13,472)
Cash flow from financing activities
Proceeds from issuance of
 borrowings, net of issue costs         9,100     1,013    18,235     7,720
Repayment of borrowings                (4,198)   (1,062)   (4,665)   (7,091)
Interest paid on borrowings              (554)     (440)     (908)     (923)
Proceeds from issuance of equity            -    14,947         -    14,947
Share issue costs                           -    (1,198)        -    (1,246)
Payment of other liabilities              (27)      (27)      (56)      (99)
Net cash generated from financing
 activities                             4,321    13,233    12,606    13,308
Effects of exchange rate changes on
 cash and cash equivalents                669      (333)      561      (231)
Net (decrease)/increase in cash and
 cash equivalents                      (2,045)    2,353     1,074    (8,053)
Cash and cash equivalents at
 beginning of the period                6,987    15,325     3,868    25,731
Cash and cash equivalents at end of
 the period                             4,942    17,678     4,942    17,678
Cash and cash equivalents at end of
 the period comprises:
Cash in assets of a disposal group
 held for sale                              -     6,036         -     6,036
Cash and cash equivalents               4,942    11,642     4,942    11,642
                                        4,942    17,678     4,942    17,678

Contacts:
Tethys Petroleum
John Bell, Executive Chairman c/o Camarco
info@tethyspetroleum.com
Web: www.tethyspetroleum.com
Twitter: www.twitter.com/tethyspetroleum

CAMARCO (Financial PR)
Billy Clegg / Georgia Mann
+44(0)203 757 4983