Tethys Petroleum Limited
TSX : TPL

Tethys Petroleum Limited

November 12, 2010 09:19 ET

Tethys Petroleum Third Quarter 2010 Financial Results

GRAND CAYMAN, CAYMAN ISLANDS--(Marketwire - Nov. 12, 2010) - Tethys Petroleum Limited ("Tethys" or the "Company") (TSX:TPL) today announced its third quarter 2010 financial results. The results are highlighted by a 30% increase in revenues over the third quarter of last year.

The Company reports financial results in accordance with International Financial Reporting Standards ("IFRS").

RECENT HIGHLIGHTS

  • Tethys recently completed a public offering for gross proceeds of US$100 million in October 2010. 
  • Tethys commenced sales of oil from Kazakhstan early oil production scheme that commenced on September 10, 2010, which is the first step in monetising the Doris oil discovery and providing essential logistical data to plan for the step up in production planned for Q2 2011. (Note: According to IFRS the income generated from sales during the test production stage is not included in the Company's production revenue but is offset against expenditure.) 
  • Memorandum of Understanding ("MOU") with the Uzbek State oil and gas company, National Holding Company "Uzbekneftegaz" ("UNG") signed in September 2010 to work towards assigning Tethys new fields to work on. 
  • The Akkulka (Phase 2)gas contract was signed in September 2010 with Asia Gas NG LLP at a price of US$38 per Mcm (including VAT) for sale on the domestic market. The contract runs for a period of two years with an average daily contract quantity for Phase 2 of approximately 500 Mcm. Sales of Phase 2 gas did not commence until October, 2010 and is not included in third quarter figures. 
  • Production revenues in Q3 2010 from Kazakhstan and Uzbekistan sales totalled some US$3.17 million compared to US$2.43 million in the same period in 2009, a 30% increase. Year to date figures were now US$11.32 million in 2010 against US$5.75 million in 2009. 
  • In Q3 2010 the Company recorded a net loss before taxation of US$5.89 million in the three months ended September 30, 2010 compared to a net loss of US$3.94 million in the three months ended September 30, 2009. 
  • Capital expenditure in Q3 2010, excluding the joint venture in Tajikistan, incurred in the quarter at US$11.95 million represented a 43% increase on the US$8.33 million incurred in the same period in 2009. This expenditure was mainly focused on the exploration and appraisal programme to ascertain the size, potential and commerciality of the oil discovery in Kazakhstan. 

These 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:

Conference Call:

A conference call will be held at 11:30 AM Eastern Time on Monday, November 15, 2010. The North American conference call number is (800) 320-2978 and the outside North America conference call number is (617) 614-4923. The conference call code to use is 86864947. Please call in about 10 minutes before the starting time in order to be patched into the call.

Webcast:

The call is being webcast and can be accessed at:

http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=213714&eventID=3511259

Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Tajikistan, Kazakhstan 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. Such forward looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. See our Annual Information Form for the year ended December 31, 2009 for a description of risks and uncertainties relevant to our business, including our exploration activities.

Tethys Petroleum Limited  
Consolidated Statement of Financial Position  
(Unaudited)  
    As at  
       
    September 30, 2010     December 31, 2009  
             
    $'000     $'000  
Non-current assets            
Property, plant and equipment   74,542     73,171  
Intangible assets   44,835     24,378  
Investments   770     659  
Prepaids and other receivables   9,203     5,171  
Loan receivable from jointly controlled entity   31,593     21,727  
    160,943     125,106  
             
Current assets            
Inventories   3,327     2,368  
Trade and other receivables   3,558     2,311  
Cash and cash equivalents   12,917     7,297  
Derivative financial instruments – interest rate swap   1,336     -  
    21,138     11,976  
             
Total assets   182,081     137,082  
             
Equity attributable to shareholders            
Share capital   18,797     13,455  
Share premium   207,231     153,748  
Other reserves   31,811     27,775  
Accumulated deficit   (106,813 )   (88,374 )
Total equity   151,026     106,604  
             
Non-current liabilities            
Deferred gain on sale of assets to jointly controlled entity   3,699     3,659  
Financial liabilities - borrowings   8,003     9,324  
Shares to be issued   -     3,750  
Deferred taxation   3,320     598  
Trade and other payables   762     808  
Asset retirement obligations   179     206  
    15,963     18,345  
Current liabilities            
Financial liabilities - borrowings   3,515     1,086  
Derivative financial instruments - warrants   2,399     1,053  
Derivative financial instruments – interest rate swap   -     95  
Current taxation   31     -  
Deferred revenue   2,439     3,113  
Trade and other payables   6,708     6,786  
    15,092     12,133  
             
Total liabilities   31,055     30,478  
             
Total shareholders' equity and liabilities   182,081     137,082  
         
         
         
Tethys Petroleum Limited  
Consolidated Statement of Comprehensive Loss  
(Unaudited)   
For the three and the nine months ended September 30, 2010   
         
  For the 3 months ended   For the 9 months ended  
  September 30,   September 30,   September 30,   September 30,  
  2010   2009   2010   2009  
  $'000   $'000   $'000   $'000  
                 
Sales and other operating revenues 3,173   2,426   11,319   5,752  
Finance income 20   -   45   49  
Total revenue and other income 3,193   2,426   11,364   5,801  
                 
Production expenses (1,236 ) (748 ) (4,111 ) (1,989 )
Depreciation, depletion and amortisation (1,635 ) (1,120 ) (3,685 ) (3,035 )
Exploration and evaluation expenditure written off (5 ) (14 ) (94 ) (140 )
Listing expenses (31 ) -   (1,230 ) -  
Administrative expenses (5,365 ) (4,191 ) (16,771 ) (12,342 )
Foreign exchange gain (loss) - net (184 ) 147   (337 ) (2,275 )
Fair value loss on derivative financial instruments - net (738 ) (160 ) (266 ) (221 )
Loss from jointly controlled entity (178 ) -   (422 ) -  
Finance costs 288   (284 ) (134 ) (1,353 )
                 
Loss before taxation (5,891 ) (3,944 ) (15,686 ) (15,554 )
                 
Taxation (1,227 ) -   (2,753 ) -  
                 
Net loss and comprehensive loss for the year attributable to shareholders (7,118 ) (3,944 ) (18,439 ) (15,554 )
                 
                 
Loss per share attributable to shareholders                
Basic and diluted (0.04 ) (0.03 ) (0.10 ) (0.16 )
                 
No dividends were paid or are declared for the period (2009– $Nil).  
           
           
                         
Tethys Petroleum Limited  
Consolidated Statement of Cash Flows  
(Unaudited)  
For the three and the nine months ended September 30, 2010  
   
  For the 3 months ended September 30,   For the 9 months ended September 30,  
  2010   2009   2010   2009  
  $'000   $'000   $'000   $'000  
Cash flow from operating activities                
Loss before taxation for the period (5,891 ) (3,944 ) (15,686 ) (15,554 )
Adjustments for                
  Share based payments 836   768   4,096   2,388  
  Net finance cost (303 ) 284   80   1,305  
  Unsuccessful exploration and evaluation expenditures -   14   -   140  
  Depreciation, depletion and amortization 1,635   1,120   3,685   3,035  
  Payment of royalties -   -   (78 ) -  
  Fair value loss on derivative financial instruments - net 738   160   266   221  
  Listing expenses -   -   351      
  Net unrealised foreign exchange loss (13 ) 65   (12 ) 1,200  
  Loss from jointly controlled entity 178   -   422   -  
  Deferred revenue 689   -   (674 ) -  
  Net change in non-cash working capital 3,233   (10 ) (411 ) (17 )
Net cash used in operating activities 1,102   (1,543 ) (7,961 ) (7,282 )
                 
   
Cash flow from investing activities  
  Interest received 20   -   45   49  
  Expenditure on exploration and evaluation assets (11,532 ) (4,530 ) (19,015 ) (13,537 )
  Expenditures on property, plant and equipment (418 ) (3,807 ) (4,694 ) (9,816 )
  Investment in restricted cash (84 ) (7 ) (111 ) (27 )
  Acquisition of subsidiary, net of cash received -   -   -   532  
  Payments made on behalf of jointly controlled entity (3,079 ) -   (10,248 ) -  
  Movement in advances to construction contractors 1,452   126   (1,748 ) 1,280  
  Value added tax receivable (1,600 ) (350 ) (2,924 ) (395 )
  Net change in non-cash working capital (2,659 ) (1,189 ) (1,927 ) (1,011 )
Net cash used in investing activities (17,900 ) (9,757 ) (40,622 ) (22,925 )
                 
Cash flow from financing activities          
Proceeds from issuance of short-term borrowings -   -   -   2,500  
Repayment of short-term borrowings -   -   -   (2,500 )
Proceeds from issuance of long-term borrowings -   -   1,840   -  
Repayment of long-term borrowings (371 ) (230 ) (1,076 ) (594 )
Interest paid on long-term borrowings and other non-current payables (364 ) (182 ) (739 ) (574 )
Other non-current liabilities (75 ) (22 ) (220 ) (65 )
Proceeds from issuance of equity, net of issue costs 306   (68 ) 54,440   17,951  
Net cash generated from financing activities (504 ) (502 ) 54,245   16,718  
Effects of exchange rate changes on cash and cash equivalents (13 ) (36 ) (42 ) -  
                 
Net increase / (decrease) in cash and cash equivalents (17,315 ) (11,838 ) 5,620   (13,489 )
Cash and cash equivalents at beginning of the period 30,232   20,549   7,297   22,200  
Cash and cash equivalents at end of the period 12,917   8,711   12,917   8,711  
                   

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