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withdrawn or reduced;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
September 30 |
|
Nine months ended
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
September 30 |
|
Nine months ended
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 |
|