TIDMTPL
Tethys Petroleum Limited Press Release: 2016 Q3 Results
FOR: TETHYS PETROLEUM LIMITED
TSX, LSE SYMBOL: TPL
November 15, 2016
Tethys Petroleum Limited Press Release: 2016 Q3 Results
GRAND CAYMAN, CAYMAN ISLANDS--(Marketwired - Nov. 15, 2016) - Tethys Petroleum Limited (TSX:TPL)(LSE:TPL) today
announced its Results for the quarter ended September 30, 2016.
Q3 Financial Highlights (all figures reported in USD unless stated otherwise. 2015 amounts are for the quarter ended
September 30, 2015).
=- Revenues decreased by 46% to USD3.1m from USD5.7m due to a natural
decline in production volumes and price reductions in USD terms as a
result of the devaluation of the Kazakh currency, the Tenge, in August
2015;
=- The loss of USD4.0m was higher than loss of USD3.7m in 2015 due to the
significantly lower revenue in the current quarter and provision of
USD0.8m made for non-fulfilment of Kazakh work programmes penalties. The
Company is working to have these withdrawn or reduced;
=- EBITDA - adjusted for share based payments increased from negative
USD0.6m to negative USD0.8m as a result of significantly lower revenue
in the current quarter. This was offset by lower costs;
=- Capital expenditure at USD0.3m (Q3 2015: USD1.9m) was lower due to lack
of funds to develop the Company's assets with expenditure in the prior
period relating to Kazakhstan exploration and development and Tajikistan
exploration.
Q3 Operational Highlights
Oil
=- Average oil production for the quarter decreased to 742 bopd (Q3 2015:
1,702 bopd) reflecting a natural decline in overall production;
=- Oil production cost per barrel in Q3 2016 increased to USD8.84 compared
with USD6.26 in Q3 2015. This was mainly due to the decrease in oil
production and non-variable costs of production. There was a decrease in
cost per barrel to USD8.27 in YTD Q3 2016 compared with USD8.73 in YTD
Q3 2015 as a result of cost reduction initiatives and the Tenge
devalution;
=- Oil prices averaged USD7.81 in the quarter compared with USD12.24 bbl in
Q3 2015, a reduction of 36%, reflecting the fall in World oil price
which impacted the domestic Kazakh price and the devaluation of the
Tenge.
Gas
=- Current quarter gas production averaged 2,106 boe/d compared with 3,121
boe/d in Q3 2015 reflecting a natural decline in overall production;
=- Gas production cost per Mcm in the current quarter reduced to USD14.76
compared with USD15.70 in Q3 2015 despite lower production volume as a
result of cost reduction initiatives as well as the Tenge devaluation;
=- An increase in gas price in local currency of over 50 percent was
obtained from January 1, 2016, however, this was negatively affected in
USD terms due to the Tenge devaluation.
Note: 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.
Q3 Significant Events
=- Kenneth J. May was appointed as interim Chief Executive Officer and his
permanent appointment has since been confirmed;
=- The Grand Court in the Cayman Islands approved a reduction in the par
value of the Company's ordinary shares from USD0.10 per share to USD0.01
which was done to facilitate the Investment Agreement between Tethys and
Olisol;
=- A new cost optimisation programme, that once fully implemented, should
save the company an estimated USD2.5 million a year commenced. The
programme followed an extensive review into costs and operations
following the Company's AGM;
=- Claims brought against the Company in Kazakhstan in relation to the USD
7.5 million debenture due June 30, 2017 originally issued to AGR and
which resulted in a seizure order over the Company's assets and freezing
of the Company's bank accounts were successfully defended and dismissed
by the Courts;
=- The Company worked to complete the private placement with Olisol,
however Olisol failed to meet its funding commitments and breached the
terms of the Investment Agreement. The Company announced it would
continue to work with Olisol to complete the private placement;
Significant Events Subsequent to September 30, 2016
=- The private placement with Olisol did not close by the outside date
under the Investment Agreement. Tethys took all steps required to close
the private placement and was ready, willing and able to do so, however,
Olisol failed to provide Tethys with any of the CAD9.8 million purchase
price. Olisol claims that it is entitled to terminate the Investment
Agreement and has also demanded immediate repayment of its working
capital loan. Tethys disagrees with Olisol that it has the right to
terminate the Investment Agreement and disagrees that the loan is
repayable.
=- Eurasia Gas Group LLP ("EGG") the sole customer for oil produced by the
Company's subsidiary Tethys Aral Gas LLP ("TAG"), and a related party of
Olisol, lodged a court claim seeking an award equivalent to USD2.6
million for the alleged failure by TAG to deliver certain minimum
volumes of crude oil to EGG. The Company's view is that the claim is
without merit or substance. As a consequence of EGG's Court claim the
bank accounts of TAG have been blocked.
=- Alexander Abramov, a principal of Olisol, was removed from the Board of
Directors of the Company by a majority vote of the Board and in
accordance with the Company's Articles of Association. Alexander Abramov
was replaced as Chairman of the Board by William P. Wells.
=- Allegations of improper conduct were made against certain employees of
TAG in an action initiated by Mr. Abramov and searches and seizures at
TAG's offices in Kazakhstan took place by law enforcement agencies.
These claims have since been dismissed. Tethys wishes to acknowledge the
assistance of the Office of the Almaty City Prosecutor in quickly
reviewing the claims and dismissing the case. Property taken during the
investigation has been returned to the Company and we work to have the
Court imposed freezing order over TAG's bank accounts lifted and restore
normal business operations as soon as possible.
=- Proposals from two private investors have been received which would
result in each investor acquiring approximately 9.9% (when measured
individually against the current number of shares outstanding) of the
enlarged share capital of the Company. The price for the ordinary shares
would be USD0.01593 per share and the total proceeds would amount to
approximately USD1.4m. The investors would also be granted warrants
giving them the right to acquire additional ordinary shares of Tethys
with an exercise price of USD0.031 per share. Each of the investors
would be appointed to the Board of the Company on closing of the
placings which the parties are working to complete as soon as possible.
If completed, the placements will bring much needed funding to the
Company as well as provide it with strong in-country partners in
Kazakhstan and internationally.
=- The full Q3 Results together with Management's Discussion & 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.
Cautionary Statements
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.
These forward-looking statements are subject to certain risks and uncertainties. See our Annual Information Form for
the year ended December 31, 2015 for a description of risks and uncertainties relevant to our business, including our
exploration activities.
About Tethys Petroleum
Tethys Petroleum's aim is to become the leading independent E&P Company in Central Asia, by exercising capital
discipline, by generating cash flow from existing discoveries and by maturing large exploration prospects within our
highly attractive frontier acreage.
Tethys Petroleum Limited
Consolidated Statement of Financial Position
(in thousands of US dollars)
As at
September 30, 2016 December 31, 2015
=---------------------------------------------------------------------------
Non-current assets
Intangible assets 67,227 64,202
Property, plant and equipment 105,699 113,397
Restricted cash 2,237 2,233
Investment in joint arrangements 4 4
Trade and other receivables 1,910 2,457
Deferred tax 211 226
=---------------------------------------------------------------------------
177,288 182,519
Current assets
Cash and cash equivalents 1,800 3,272
Trade and other receivables 7,349 3,710
Inventories 821 879
Restricted cash 65 215
=---------------------------------------------------------------------------
10,035 8,076
=---------------------------------------------------------------------------
Total assets 187,323 190,595
=---------------------------------------------------------------------------
Non-current liabilities
Trade and other payables 70 133
Financial liabilities - borrowings 1,811 22,873
Deferred tax 10,133 10,792
Provisions 894 846
=---------------------------------------------------------------------------
12,908 34,644
Current liabilities
Financial liabilities - borrowings 32,356 9,159
Derivative financial instruments - 275
Current taxation 491 398
Trade and other payables 18,133 14,189
Provisions 25 360
=---------------------------------------------------------------------------
51,005 24,381
=---------------------------------------------------------------------------
Total liabilities 63,913 59,025
Equity
Share capital 4,000 33,696
Share premium 357,803 321,803
Other reserves 43,349 43,166
Accumulated deficit (287,838) (273,189)
Non-controlling interest 6,096 6,094
=---------------------------------------------------------------------------
Total equity 123,410 131,570
=---------------------------------------------------------------------------
Total equity and liabilities 187,323 190,595
=---------------------------------------------------------------------------
Tethys Petroleum Limited
Consolidated Statements of Comprehensive Income (Loss)
(in thousands of US dollars except per share information)
Three months ended Nine months ended
September 30 September 30
=---------------------------------------------------------------------------
2016 2015 2016 2015
Sales and other revenues 3,119 5,736 10,103 18,528
Sales expenses (665) (1,182) (2,132) (3,563)
Production expenses (1,979) (1,811) (4,503) (8,578)
Depreciation, depletion and
amortisation (2,473) (3,716) (8,256) (25,004)
Administrative expenses (1,354) (2,073) (4,379) (7,608)
Restructuring costs 23 (586) (1,400) (2,907)
Transaction costs of assets held
for sale - - - (1,065)
Share based payments (20) (93) (183) (358)
Profit on sale of fixed assets - 10 10 53
Foreign exchange gain/(loss) 18 (716) 141 (931)
Fair value gain/(loss) on
derivative financial instrument 6 236 275 (233)
Loss from jointly controlled
entity - (15) - (250)
Finance costs (893) (321) (4,835) (2,848)
=---------------------------------------------------------------------------
(7,337) (10,267) (25,262) (53,292)
=---------------------------------------------------------------------------
Loss before tax from continuing
operations (4,218) (4,531) (15,159) (34,764)
Taxation 182 833 512 3,754
=---------------------------------------------------------------------------
Loss from continuing operations (4,036) (3,698) (14,647) (31,010)
Loss from discontinued
operations net of tax - (11) - (88)
=---------------------------------------------------------------------------
Loss and total comprehensive
income (4,036) (3,709) (14,647) (31,098)
Loss and total comprehensive
income attributable to:
Shareholders (4,196) (3,711) (14,649) (31,097)
Non-controlling interest 160 2 2 (1)
=---------------------------------------------------------------------------
Loss and total comprehensive
income (4,036) (3,709) (14,647) (31,098)
=---------------------------------------------------------------------------
Loss per share attributable to
shareholders:
Basic and diluted - from
continuing operations (USD) (0.01) (0.01) (0.04) (0.09)
Basic and diluted - from
discontinued operations (USD) - - - -
=---------------------------------------------------------------------------
Tethys Petroleum Limited
Consolidated Statements of Cash Flows
(in thousands of US dollars)
Three months ended Nine months ended
September 30 September 30
=---------------------------------------------------------------------------
Cash flow from operating
activities
Loss before tax from continuing
operations (4,218) (4,531) (15,159) (34,764)
Loss before tax from
discontinued operations - (11) - (88)
=---------------------------------------------------------------------------
Adjustments for:
Share based payments 20 93 183 358
Net finance cost 893 321 4,835 2,848
Depreciation, depletion and
amortisation 2,473 3,716 8,256 25,004
Profit on sale of fixed assets - (10) (10) (53)
Fair value gain on derivative
financial instruments (4) (236) (274) 233
Net unrealised foreign exchange
loss/(gain) 109 (87) (246) (61)
Loss from jointly controlled
entity - 15 - 250
Movement in provisions (100) (1,308) (1,736) (3,298)
Net change in working capital (883) (3,085) (1,099) (970)
=---------------------------------------------------------------------------
Cash used in operating
activities (1,710) (5,123) (5,250) (10,541)
Corporation tax paid (7) - (28) (134)
=---------------------------------------------------------------------------
Net cash used in operating
activities (1,717) (5,123) (5,278) (10,675)
Cash flow from investing
activities:
Interest received - 46 - 137
Expenditure on exploration and
evaluation assets (90) (1,588) (545) (5,530)
Expenditure on property, plant
and equipment (228) (350) (509) (2,389)
Proceeds from sale of fixed
assets - 8 33 121
Movement in restricted cash (2) (87) 146 (238)
Movement in advances to
construction contractors 193 (11) (6) 179
Movement in value added tax
receivable 131 339 559 1,058
Net change in working capital 200 598 239 (924)
=---------------------------------------------------------------------------
Net cash generated/(used) in
investing activities 204 (1,045) (83) (7,586)
Cash flow from financing
activities:
Proceeds from issuance of
borrowings, net of issue costs 4,430 5,000 7,930 23,235
Repayment of borrowings (715) (288) (1,289) (4,953)
Interest paid on borrowings (903) (311) (2,616) (1,219)
Movement in other non-current
liabilities (22) (27) (90) (83)
=---------------------------------------------------------------------------
Net cash generated from
financing activities 2,790 4,374 3,935 16,980
Effects of exchange rate changes
on cash and cash equivalents (177) 1,138 (46) 1,699
=---------------------------------------------------------------------------
Net increase/(decrease) in cash
and cash equivalents 1,100 (656) (1,472) 418
Cash and cash equivalents at
beginning of the period 700 4,942 3,272 3,868
=---------------------------------------------------------------------------
Cash and cash equivalents at end
of the period 1,800 4,286 1,800 4,286
=---------------------------------------------------------------------------
FOR FURTHER INFORMATION PLEASE CONTACT:
Tethys Petroleum
info@tethyspetroleum.com
Web: http://www.tethyspetroleum.com
Tethys Petroleum Limited
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