Tethys Petroleum Limited
TSX : TPL
LSE : TPL

Tethys Petroleum Limited

November 14, 2014 17:54 ET

Tethys Petroleum Limited: Third Quarter 2014 Financial Results and Activity Update

GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - Nov. 14, 2014) - Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL)(LSE:TPL) today announced its Third Quarter 2014 Financial Results and activity update.

Financial Highlights

  • Loss for the period from continuing operations USD2.4 million (Q3: 2013 USD4.9 million), a decrease of 51%
  • Basic & diluted loss per share of USD0.01 cent from continuing operations (Q3: 2013 USD0.02 cents)
  • Oil & gas revenue from continuing operations of USD7.3 million (Q3 2013: USD9.1 million)
  • Production expenses reduced by 3% to USD3.0 million (Q3 2013: USD3.1 million)
  • Administrative expenses reduced by 12% to USD4.2 million (Q3 2013: USD4.8 million)
  • Business development expenses reduced by 16% to USD0.5 million (Q3 2013: USD0.6 million)
  • Capital expenditure of USD6.2 million (Q3 2013: USD4.9 million)
  • Cash & cash equivalents at the end of Q3 2014 of USD 10.1 million including cash held in a disposal group (Q3: 2013 USD51.2 million)

Denise Lay, Director and Chief Financial Officer of Tethys, commented; "Q3 has seen consistency of production over Q2 and reductions in operating, business development and G&A costs. Cost reduction is a key focus for the Company and a comprehensive plan of cost reductions, which will be phased, has already commenced, the results of which will be realised over the coming months. This, combined with an anticipated step change in revenue when we bring on stream additional gas production in Q1 2015, should be reflected in the bottom line results in Q1 and Q2 of 2015."

Operations Highlights

Kazakhstan

Shallow Gas Program Update

All the key items within the next phase of the gas development program are on track and it is expected that the additional production will be ready to be brought on stream in January 2015. This includes the installation of a gas dehydration unit and construction of shallow gas tie-ins for the new gas wells to hook up the previously drilled gas wells.

When this next phase of the gas development programme is brought on stream it is anticipated that this will realise an approximately three-fold increase in gas production. Negotiations continue for a new gas sales contract which the Company expects to sign before year end, and with a significantly higher sales price than the current contract.

SinoHan Transaction Update

In October 2015 Tethys announced that it had agreed with SinoHan Oil and Gas Investment 6 B.V. ("SinoHan"), part of HanHong, a Beijing, PRC based private equity fund, to extend the one-year longstop date for completing the sale by a period of six months, until 1 May 2015. This extension keeps the current agreement in place while discussions continue with the Kazakh State.

This deal is based upon USD75 million for the 50% (+ 1 share) interest.

Once this transaction has completed the new partnership can then move forward quickly to further develop the shallow gas resource where the Company has identified a number of new attractive prospects, drill a horizontal well on the Doris field to increase production, and also move ahead with drilling the exciting deeper Klymene exploration prospect.

Tajikistan

The seismic acquisition programme planned to identify the location of the first deep well to be drilled commenced in the third quarter. This new wide line 2D survey is specially designed to image the deep targets described in the Independent Resource Report and consists of a first phase of 826 kms with an option for an additional 200 kms, all to be acquired within 2014 and the first three quarters of 2015. As well as 2D acquisition and processing, a concurrent low cost passive seismic survey is planned and a Magnetotellurics survey is also being acquired now along the dip lines.

Processing of data from the survey will be concurrent so interpretation and mapping will be underway before the end of this year. This data set will assist in the identification of the best possible location to spud the first deep well by the end of 2015.

The partnership of Tethys, Total and CNPC, together as Bokhtar Operating Company, are looking forward to the results of this survey with all partners keen to move forward with the drilling of the first deep well on this very prospective acreage.

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 Tethys' website at www.tethyspetroleum.com. The summary financial statements are attached to this press release. Investors are advised to review the Third Quarterly 2014 financial statements and the notes to those financial statements in detail as they contain important information.

The Company's Third Quarter 2014 financial statements are prepared under International Financial Reporting Standards ("IFRS").

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." Such forward-looking statements reflect our current views with respect to future events and are subject to certain assumptions. 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. 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.

Tethys Petroleum Limited
Condensed Consolidated Statement of Financial Position (unaudited)
(in thousands of US dollars)
As at
September 30, 2014December 31, 2013
Non-current assets
Deferred tax301322
Intangible assets45,11931,074
Property, plant and equipment14,68715,291
Restricted cash651660
Investment in jointly controlled entity44
60,76247,351
Current assets
Trade and other receivables6601,358
Advances-4,000
Cash and cash equivalents7,91425,109
Restricted cash583475
Assets of a disposal group classified as held for sale171,140156,325
180,297187,267
Total assets241,059234,618
Equity
Share capital33,64528,756
Share premium321,724307,295
Other reserves42,83742,621
Accumulated deficit(193,378)(182,533)
Non-controlling interest6,1586,454
Total equity210,986202,593
Non-current liabilities
Financial liabilities - borrowings5,923-
5,923-
Current liabilities
Financial liabilities - borrowings5,1094,965
Derivative financial instruments - warrants-17
Current taxation172144
Trade and other payables2,6424,946
Provisions-520
Liabilities of a disposal group classified as held for sale16,22721,433
24,15032,025
Total liabilities30,07332,025
Total equity and liabilities241,059234,618
Tethys Petroleum Limited
Condensed Consolidated Statement of Comprehensive Income (unaudited)
(in thousands of US dollars)
Three months ended Nine months ended
September 30, 2014 September 30, 2013
Restated
September 30, 2014 September 30, 2013
Restated
Sales and other revenues7,261 9,082 21,165 28,418
Sales expenses(534)(831)(1,776)(2,356)
Production expenses(2,963)(3,137)(9,975)(9,380)
Depreciation, depletion and amortization(281)(3,581)(580)(11,350)
Business development expenses(461)(628)(1,781)(1,605)
Administrative expenses(4,181)(4,848)(14,388)(14,046)
Transaction costs of assets held for sale(114)- (245)-
Share based payments(20)(205)(216)(751)
(Loss)/gain on Tajik farm-out- (206)- 8,453
Foreign exchange loss - net(98)(140)(168)(67)
Fair value gain on derivative financial instrument - net- 516 17 548
(Loss)/profit from jointly controlled entity(44)201 (1,312)589
Finance costs - net(215)(732)(1,200)(2,249)
Loss before tax from continuing operations(1,650)(4,509)(10,459)(3,796)
Taxation(712)(378)20 (2,532)
Loss for the period from continuing operations(2,362)(4,887)(10,439)(6,328)
Loss for the period from discontinued operations net of tax(57)(501)(702)(689)
Loss and total comprehensive income for the period(2,419)(5,388)(11,141)(7,017)
Loss and total comprehensive income attributable to: Shareholders(2,321)(5,177)(10,845)(6,578)
Non-controlling interest(98)(211)(296)(439)
Loss and total comprehensive income for the period(2,419)(5,388)(11,141)(7,017)
Loss per share attributable to shareholders:
Basic and diluted - from continuing operations(0.01)(0.02)(0.03)(0.02)
Basic and diluted - from discontinued operations- - - -
Tethys Petroleum Limited
Condensed Consolidated Statement of Cash Flows (unaudited)
(in thousands of US dollars)
Three months ended Nine months ended
September 30, 2014 September 30, 2013 September 30, 2014 September 30, 2013
Cash flow from operating activities
Loss before tax from continuing operations(1,650)(4,509)(10,459)(3,796)
Loss before tax from discontinued operations(57)(551)(704)(681)
Adjustments for
Share based payments20 205 216 751
Net finance cost215 734 1,200 2,249
Depreciation, depletion and amortization281 3,721 580 12,234
Fair value gain on derivative financial instruments- (516)(17)(548)
Net unrealised foreign exchange (gain)/loss(147)113 (64)(2)
Loss/(gain) on Tajik farm-out- 206 - (8,453)
Loss/(profit) from jointly controlled entity44 (201)1,312 (589)
Movement in deferred revenue- (491)- (1,049)
Movement in provisions(200)- (520)-
Net change in working capital(613)(4,200)(1,161)(2,943)
Cash used in operating activities(2,107)(5,489)(9,617)(2,827)
Corporation tax paid- (50)(148)(276)
Net cash used in operating activities(2,107)(5,539)(9,765)(3,103)
Cash flow from investing activities
Interest received50 60 148 152
Expenditure on exploration and evaluation assets(1,633)(945)(6,199)(1,458)
Expenditure on property, plant and equipment(4,583)(4,040)(12,118)(5,841)
Movement in restricted cash(14)(10)(474)(635)
Investment in jointly controlled entity- - - (4)
Repayment of loan receivable from jointly controlled entity- - - 400
(Costs)/proceeds of Tajik farm-out- (206)- 63,199
Movement in advances to construction contractors(304)(1,409)(2,032)(2,321)
Movement in value added tax receivable72 189 (21)1,734
Net change in working capital(1,063)704 (251)(1,387)
Net cash (used in)/generated from investing activities(7,475)(5,657)(20,947)53,839
Cash flow from financing activities
Proceeds from issuance of borrowings, net of issue costs3,884 - 11,604 4,714
Repayment of borrowings(1,113)(1,216)(8,204)(4,203)
Interest paid on borrowings(434)(631)(1,357)(1,814)
Proceeds from issuance of equity- - 14,947 523
Share issue costs(133)- (1,379)-
Movement in asset retirement obligation- (253)- (253)
Payment of other liabilities(27)(70)(126)(212)
Net cash generated from/(used in) financing activities2,177 (2,170)15,485 (1,245)
Effects of exchange rate changes on cash and cash equivalents(206)38 (437)(34)
Net (decrease)/increase in cash and cash equivalents(7,611)(13,328)(15,664)49,457
Cash and cash equivalents at beginning of the period17,678 64,535 25,731 1,750
Cash and cash equivalents at end of the period10,067 51,207 10,067 51,207
Cash and cash equivalents at end of the period comprises:
Cash in assets of a disposal group held for sale2,153 - 2,153 -
Cash and cash equivalents7,914 51,207 7,914 51,207
10,067 51,207 10,067 51,207

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