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Tethys Oil

Oil and natural gas

Tethys Oil is an independent E&P company with its core operation in Oman. Tethys is the partner on Blocks 3&4, which produces ~12,000 boe/d net to Tethys before government take. It also has some onshore production in Lithuania.

Continued production increase from blocks 3&4 in Oman is the main opportunity for Tethys Oil, where positive reserve revisions will be an important factor for sustainability. Further, Tethys Oil has balance sheet flexibility to engage in M&A activity or distribute to shareholders.

The main risks to the Tethys Oil investment case is oil price, USDSEK, continued production growth and reserve replacement. Tethys has a very strong production track record from Blocks 3&4 in Oman, a halt in production growth will be negative for the company. Also, being a “one asset play” is not favourable.

Financials

USDm 2018 2019e 2020e
Sales 157 148 135
Sales growth (%) 31,9 -5,9 -9,1
EBITDA 107 94 87
EBITDA margin (%) 67,8 63,4 64,6
EBIT adj 61 46 42
EBIT adj margin (%) 38,6 31 31,6
Pretax profit 62 48 45
EPS rep 1,73 1,33 1,25
EPS growth (%) 78,4 -22,8 -6,6
EPS adj 1,73 1,33 1,25
DPS 0,63 0,89 0,36
EV/EBITDA (x) 1,6 1,8 1,6
EV/EBIT adj (x) 2,9 3,8 3,2
P/E (x) 4,2 5,8 6,2
P/E adj (x) 4,2 5,8 6,2
EV/sales (x) 1,1 1,2 1
FCF yield (%) 16 17,6 17,7
Dividend yield (%) 8,8 11,5 4,6
Net IB debt/EBITDA -0,7 -1 -1,5
USDm 2018 2019e 2020e
Sales 157 148 135
COGS -52 -54 -48
Gross profit 106 94 87
Other operating items 1 0 0
EBITDA 107 94 87
Depreciation on tangibles -46 -48 -44
Depreciation on intangibles 0 0 0
EBITA 61 46 42
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 61 46 42
Other financial items 0 0 0
Net financial items 1 2 2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 62 48 45
Tax 0 0 0
Net profit 62 48 45
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 62 48 45
EPS 1,73 1,33 1,25
EPS Adj 1,73 1,33 1,25
Total extraordinary items after tax 0 0 0
Tax rate (%) 0 0 0
Gross margin (%) 67,2 63,4 64,6
EBITDA margin (%) 67,8 63,4 64,6
EBITA margin (%) 38,6 31 31,6
EBIT margin (%) 38,6 31 31,6
Pretax margin (%) 39,4 32,4 33,3
Net margin (%) 39,4 32,4 33,3
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 31,9 -5,9 -9,1
EBITDA growth (%) 36,8 -11,9 -7,4
EBIT growth (%) 58,1 -24,3 -7,6
Net profit growth (%) 87,3 -22,8 -6,6
EPS growth (%) 78,4 -22,8 -6,6
Profitability 2018 2019 2020
ROE (%) 25 17,4 15
ROE Adj (%) 25 17,4 15
ROCE (%) 26,4 17,4 15
ROCE Adj(%) 26,4 17,4 15
ROIC (%) 29 21,2 19,9
ROIC Adj (%) 29 21,2 19,9
Adj earnings numbers 2018 2019 2020
EBITDA Adj 107 94 87
EBITDA Adj margin (%) 67,8 63,4 64,6
EBITA Adj 61 46 42
EBITA Adj margin (%) 38,6 31 31,6
EBIT Adj 61 46 42
EBIT Adj margin (%) 38,6 31 31,6
Pretax profit Adj 62 48 45
Net profit Adj 62 48 45
Net profit to shareholders Adj 62 48 45
Net Adj margin (%) 39,4 32,4 33,3
USDm 2018 2019e 2020e
EBITDA 107 94 87
Net financial items 1 2 2
Paid tax 0 0 0
Non-cash items 1 0 0
Cash flow before change in WC 109 96 89
Change in WC -5 3 0
Operating cash flow 96 98 89
CAPEX tangible fixed assets -56 -49 -40
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 1 0 0
Free cash flow 41 49 49
Dividend paid -23 -32 -13
Share issues and buybacks 3 0 0
Other non cash items 10 2 0
Decrease in net IB debt 31 19 36
Balance Sheet (USDm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 0 0 0
Tangible fixed assets 200 202 197
Other fixed assets 0 0 0
Fixed assets 200 202 197
Inventories 18 14 14
Receivables 0 0 0
Other current assets 0 0 0
Cash and liquid assets 73 92 128
Total assets 291 308 340
Shareholders equity 268 283 315
Minority 0 0 0
Total equity 268 283 315
Long-term debt 0 0 0
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 9 9 9
Short-term debt 0 0 0
Accounts payable 1 0 0
Other current liabilities 14 16 16
Total liabilities and equity 239 245 291
Net IB debt -73 -92 -128
Net IB debt excl. pension debt -73 -92 -128
Capital invested 217 216 211
Working capital 17 14 14
EV breakdown 2018 2019 2020
Market cap. diluted (m) 246 265 265
Net IB debt Adj -73 -92 -128
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 173 173 137
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 58,7 49,4 41,6
Capital invested turnover (%) 75,1 68,3 63
Capital employed turnover (%) 63,4 53,8 45
Inventories / sales (%) 9,9 10,8 10,3
Customer advances / sales (%) 0 0 0
Payables / sales (%) 0,6 0,3 0
Working capital / sales (%) 9,3 10,5 10,3
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -27,3 -32,5 -40,7
Net debt / market cap (%) -22,2 -34,7 -48,4
Equity ratio (%) 91,8 91,9 92,7
Net IB debt adj. / equity (%) -27,3 -32,5 -40,7
Current ratio (%) 612,8 682 917,2
EBITDA / net interest (%) -8200 -4781,2 -3812,6
Net IB debt / EBITDA (%) -68,6 -97,8 -147,5
Interest cover (%) 1871,4 47988,5 N/A
USDm 2018 2019e 2020e
Shares outstanding adj. 34 34 34
Fully diluted shares Adj 34 34 34
EPS 1,73 1,33 1,25
Dividend per share Adj 0,6 0,9 0,4
EPS Adj 1,73 1,33 1,25
BVPS 7,84 8,26 9,19
BVPS Adj 7,84 8,26 9,19
Net IB debt / share -2,1 -2,7 -3,7
Share price 9,65 7,73 7,73
Market cap. (m) 330 265 265
Valuation 2018 2019 2020
P/E 4,2 5,8 6,2
EV/sales 1,1 1,17 1,02
EV/EBITDA 1,6 1,8 1,6
EV/EBITA 2,9 3,8 3,2
EV/EBIT 2,9 3,8 3,2
Dividend yield (%) 8,8 11,5 4,6
FCF yield (%) 16 17,6 17,7
P/BVPS 0,92 0,94 0,84
P/BVPS Adj 0,92 0,94 0,84
P/E Adj 4,2 5,8 6,2
EV/EBITDA Adj 1,6 1,8 1,6
EV/EBITA Adj 2,9 3,8 3,2
EV/EBIT Adj 2,9 3,8 3,2
EV/cap. employed 0,6 0,6 0,4
Investment ratios 2018 2019 2020
Capex / sales 35,5 33,2 29,7
Capex / depreciation 121,8 102,4 89,9
Capex tangibles / tangible fixed assets 27,9 24,3 20,3
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 22,9 23,7 22,5

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Main shareholders

Tethys Oil

Main shareholders Share capital % Voting shares % Verified
Lansdowne Partners 10.1 % 10.1 %
Franklin Templeton 5.0 % 5.0 %
Magnus Nordin 4.1 % 4.1 %
Grandeur Peak Global Advisors, LLC 4.0 % 4.0 %
SEB Fonder 3.7 % 3.7 %
Tethys Oil AB 3.5 % 3.5 %
Liontrust 2.8 % 2.8 %
WEALINS S.A. 1.7 % 1.7 %
Russell Investments 1.7 % 1.7 %
Carl Erik Norman 1.6 % 1.6 %