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Tethys Oil

Tethys Oil

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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 2019 2020e 2021e
Sales 155 151 80
Sales growth (%) -1,8 -2,4 -46,8
EBITDA 98 101 42
EBITDA margin (%) 63,2 66,6 52,8
EBIT adj 50 56 29
EBIT adj margin (%) 32,5 37,3 36,3
Pretax profit 52 58 30
EPS rep 1,46 1,63 0,88
EPS growth (%) -15,5 11,4 -46,1
EPS adj 1,46 1,63 0,88
DPS 0,8 0,75 0,8
EV/EBITDA (x) 2,1 1,6 3,8
EV/EBIT adj (x) 4,1 2,9 5,5
P/E (x) 5,9 5,3 9,8
P/E adj (x) 5,9 5,3 9,8
EV/sales (x) 1,3 1,1 2
FCF yield (%) 13,5 20,3 10,6
Dividend yield (%) 9,3 8,8 9,3
Net IB debt/EBITDA -0,9 -1,3 -3,1
USDm 2019 2020e 2021e
Sales 155 151 80
COGS -57 -50 -38
Gross profit 97 101 42
Other operating items 1 0 0
EBITDA 98 101 42
Depreciation on tangibles -47 -44 -13
Depreciation on intangibles 0 0 0
EBITA 50 56 29
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 50 56 29
Other financial items 0 0 0
Net financial items 2 2 1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 52 58 30
Tax 0 0 0
Net profit 52 58 30
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 52 58 30
EPS 1,46 1,63 0,88
EPS Adj 1,46 1,63 0,88
Total extraordinary items after tax 0 0 0
Tax rate (%) 0 0 0
Gross margin (%) 62,9 66,6 52,9
EBITDA margin (%) 63,2 66,6 52,8
EBITA margin (%) 32,5 37,3 36,3
EBIT margin (%) 32,5 37,3 36,3
Pretax margin (%) 33,9 38,7 37,1
Net margin (%) 33,9 38,7 37,1
Growth rates Y/Y 2019 2020 2021
Sales growth (%) -1,8 -2,4 -46,8
EBITDA growth (%) -8,4 2,9 -57,9
EBIT growth (%) -17,3 12 -48,2
Net profit growth (%) -15,5 11,4 -49
EPS growth (%) -15,5 11,4 -46,1
Profitability 2019 2020 2021
ROE (%) 19 19,3 9,2
ROE Adj (%) 19 19,3 9,2
ROCE (%) 19,2 19,3 9,2
ROCE Adj(%) 19,2 19,3 9,2
ROIC (%) 22,9 25,6 13,4
ROIC Adj (%) 22,9 25,6 13,4
Adj earnings numbers 2019 2020 2021
EBITDA Adj 98 101 42
EBITDA Adj margin (%) 63,2 66,6 52,8
EBITA Adj 50 56 29
EBITA Adj margin (%) 32,5 37,3 36,3
EBIT Adj 50 56 29
EBIT Adj margin (%) 32,5 37,3 36,3
Pretax profit Adj 52 58 30
Net profit Adj 52 58 30
Net profit to shareholders Adj 52 58 30
Net Adj margin (%) 33,9 38,7 37,1
USDm 2019 2020e 2021e
EBITDA 98 101 42
Net financial items 2 2 1
Paid tax 0 0 0
Non-cash items 1 0 0
Cash flow before change in WC 101 103 43
Change in WC -1 0 0
Operating cash flow 96 103 43
CAPEX tangible fixed assets -51 -40 -12
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals -3 0 0
Free cash flow 42 63 31
Dividend paid -29 -27 -27
Share issues and buybacks -2 0 0
Other non cash items 0 7 0
Decrease in net IB debt 11 42 4
Balance Sheet (USDm) 2019 2020 2021
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 0 0 0
Tangible fixed assets 204 199 198
Other fixed assets 1 1 1
Fixed assets 204 200 199
Inventories 19 19 19
Receivables 0 0 0
Other current assets 0 0 0
Cash and liquid assets 83 125 130
Total assets 307 345 348
Shareholders equity 283 322 324
Minority 0 0 0
Total equity 283 322 324
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 1 1
Other current liabilities 13 13 13
Total liabilities and equity 245 291 307
Net IB debt -84 -126 -130
Net IB debt excl. pension debt -84 -126 -130
Capital invested 222 218 216
Working capital 18 18 18
EV breakdown 2019 2020 2021
Market cap. diluted (m) 291 291 291
Net IB debt Adj -84 -126 -130
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 208 165 161
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 51,7 46,3 23,2
Capital invested turnover (%) 70,4 68,6 37
Capital employed turnover (%) 56,1 49,9 24,9
Inventories / sales (%) 12,2 12,9 24,2
Customer advances / sales (%) 0 0 0
Payables / sales (%) 0,6 0,7 1,2
Working capital / sales (%) 11,5 12,2 22,9
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) -29,5 -39,2 -40,1
Net debt / market cap (%) -30,8 -43,3 -44,7
Equity ratio (%) 92,4 93,2 93,3
Net IB debt adj. / equity (%) -29,5 -39,2 -40,1
Current ratio (%) 716 1012,6 1041,3
EBITDA / net interest (%) -4518,7 -4781,1 -6756,3
Net IB debt / EBITDA (%) -85,7 -125,4 -307,4
Interest cover (%) 13196 N/A N/A
USDm 2019 2020e 2021e
Shares outstanding adj. 34 34 34
Fully diluted shares Adj 34 34 34
EPS 1,46 1,63 0,88
Dividend per share Adj 0,8 0,8 0,8
EPS Adj 1,46 1,63 0,88
BVPS 8,35 9,47 9,55
BVPS Adj 8,35 9,47 9,55
Net IB debt / share -2,5 -3,7 -3,8
Share price 8 8,58 8,58
Market cap. (m) 272 291 291
Valuation 2019 2020 2021
P/E 5,9 5,3 9,8
EV/sales 1,34 1,1 2,01
EV/EBITDA 2,1 1,6 3,8
EV/EBITA 4,1 2,9 5,5
EV/EBIT 4,1 2,9 5,5
Dividend yield (%) 9,3 8,8 9,3
FCF yield (%) 13,5 20,3 10,6
P/BVPS 1,03 0,91 0,9
P/BVPS Adj 1,03 0,91 0,9
P/E Adj 5,9 5,3 9,8
EV/EBITDA Adj 2,1 1,6 3,8
EV/EBITA Adj 4,1 2,9 5,5
EV/EBIT Adj 4,1 2,9 5,5
EV/cap. employed 0,7 0,5 0,5
Investment ratios 2019 2020 2021
Capex / sales 32,9 26,5 14,9
Capex / depreciation 107,2 90,3 90,8
Capex tangibles / tangible fixed assets 25 20,1 6,1
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 23,3 22,2 6,7

Equity research

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Media

Tethys Oil - Interview with CEO Magnus Nordin
Tethys Oil - Company presentation with CEO Magnus Nordin

Main shareholders - Tethys Oil

Main shareholders Share capital % Voting shares % Verified
Lansdowne Partners 10.0 % 10.0 % 6 Nov 2019
Tethys Oil AB 5.4 % 5.4 % 31 Dec 2019
Magnus Nordin 4.3 % 4.3 % 31 Dec 2019
JP Morgan Asset Management 3.2 % 3.2 % 31 Oct 2019
Liontrust 2.7 % 2.7 % 30 Nov 2019
Franklin Templeton 2.2 % 2.2 % 31 Oct 2019
Grandeur Peak Global Advisors, LLC 2.1 % 2.1 % 31 Jul 2019
Jan Risberg 2.0 % 2.0 % 9 May 2019
Avanza Pension 1.9 % 1.9 % 31 Dec 2019
Carl Erik Norman 1.7 % 1.7 % 31 Dec 2019
Source: Holdings by Modular Finance AB

Insider list - Tethys Oil

Name Quantity Code Date
William Holland + 1 514 BUY 6 Nov 2019
Magnus Nordin - 70 000 Redemp 4 Oct 2019
Magnus Nordin + 83 300 Redemp 4 Oct 2019
Fredrik Robelius - 20 000 SELL 23 Aug 2019
Fredrik Robelius - 25 000 SELL 22 Aug 2019
William Holland + 50 000 BUY 15 Aug 2019
Fredrik Robelius + 50 000 BUY 15 Aug 2019
William Holland + 1 000 BUY 15 Aug 2019
Magnus Nordin + 60 000 BUY 15 Aug 2019
Geoffrey Turbott + 2 152 BUY 17 Jun 2019

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