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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 157 155 151
Sales growth (%) 31,9 -1,3 -2,8
EBITDA 107 99 101
EBITDA margin (%) 67,8 63,7 66,8
EBIT adj 61 51 57
EBIT adj margin (%) 38,6 33,1 37,5
Pretax profit 62 54 59
EPS rep 1,73 1,5 1,64
EPS growth (%) 78,4 -13 9,1
EPS adj 1,73 1,5 1,64
DPS 0,63 0,8 0,87
EV/EBITDA (x) 1,6 1,7 1,2
EV/EBIT adj (x) 2,9 3,3 2,1
P/E (x) 4,2 5,1 4,7
P/E adj (x) 4,2 5,1 4,7
EV/sales (x) 1,1 1,1 0,8
FCF yield (%) 16 16,7 22,9
Dividend yield (%) 8,8 10,5 11,3
Net IB debt/EBITDA -0,7 -0,9 -1,4
USDm 2018 2019e 2020e
Sales 157 155 151
COGS -52 -57 -50
Gross profit 106 98 101
Other operating items 1 1 0
EBITDA 107 99 101
Depreciation on tangibles -46 -47 -44
Depreciation on intangibles 0 0 0
EBITA 61 51 57
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 61 51 57
Other financial items 0 0 0
Net financial items 1 3 2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 62 54 59
Tax 0 0 0
Net profit 62 54 59
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 62 54 59
EPS 1,73 1,5 1,64
EPS Adj 1,73 1,5 1,64
Total extraordinary items after tax 0 0 0
Tax rate (%) 0 0 0
Gross margin (%) 67,2 63,4 66,8
EBITDA margin (%) 67,8 63,7 66,8
EBITA margin (%) 38,6 33,1 37,5
EBIT margin (%) 38,6 33,1 37,5
Pretax margin (%) 39,4 34,8 39
Net margin (%) 39,4 34,8 39
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 31,9 -1,3 -2,8
EBITDA growth (%) 36,8 -7,3 2
EBIT growth (%) 58,1 -15,3 9,9
Net profit growth (%) 87,3 -13 9,1
EPS growth (%) 78,4 -13 9,1
Profitability 2018 2019 2020
ROE (%) 25 19,5 19,1
ROE Adj (%) 25 19,5 19,1
ROCE (%) 26,4 19,6 19,1
ROCE Adj(%) 26,4 19,6 19,1
ROIC (%) 29 23,6 26,1
ROIC Adj (%) 29 23,6 26,1
Adj earnings numbers 2018 2019 2020
EBITDA Adj 107 99 101
EBITDA Adj margin (%) 67,8 63,7 66,8
EBITA Adj 61 51 57
EBITA Adj margin (%) 38,6 33,1 37,5
EBIT Adj 61 51 57
EBIT Adj margin (%) 38,6 33,1 37,5
Pretax profit Adj 62 54 59
Net profit Adj 62 54 59
Net profit to shareholders Adj 62 54 59
Net Adj margin (%) 39,4 34,8 39
USDm 2018 2019e 2020e
EBITDA 107 99 101
Net financial items 1 3 2
Paid tax 0 0 0
Non-cash items 1 1 0
Cash flow before change in WC 109 102 103
Change in WC -5 1 0
Operating cash flow 96 95 103
CAPEX tangible fixed assets -56 -49 -40
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 1 1 0
Free cash flow 41 46 63
Dividend paid -23 -29 -31
Share issues and buybacks 3 -2 0
Other non cash items 2 1 19
Decrease in net IB debt 31 16 51
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 200 202 198
Other fixed assets 0 1 1
Fixed assets 200 203 199
Inventories 18 16 16
Receivables 0 0 0
Other current assets 0 0 0
Cash and liquid assets 73 88 140
Total assets 291 307 354
Shareholders equity 268 285 332
Minority 0 0 0
Total equity 268 285 332
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 14 14
Total liabilities and equity 239 245 291
Net IB debt -73 -89 -140
Net IB debt excl. pension debt -73 -89 -140
Capital invested 217 218 214
Working capital 17 16 16
EV breakdown 2018 2019 2020
Market cap. diluted (m) 246 260 260
Net IB debt Adj -73 -89 -140
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 173 171 120
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 58,7 51,8 45,6
Capital invested turnover (%) 75,1 71,2 69,8
Capital employed turnover (%) 63,4 56,2 49
Inventories / sales (%) 9,9 11,1 10,7
Customer advances / sales (%) 0 0 0
Payables / sales (%) 0,6 0,3 0
Working capital / sales (%) 9,3 10,8 10,7
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -27,3 -31,3 -42,3
Net debt / market cap (%) -22,2 -34,2 -53,9
Equity ratio (%) 91,8 92,6 93,6
Net IB debt adj. / equity (%) -27,3 -31,3 -42,3
Current ratio (%) 612,8 762,5 1137,3
EBITDA / net interest (%) -8200 -3948,3 -4396,1
Net IB debt / EBITDA (%) -68,6 -90 -139,2
Interest cover (%) 1871,4 27070,1 N/A
USDm 2018 2019e 2020e
Shares outstanding adj. 34 34 34
Fully diluted shares Adj 34 34 34
EPS 1,73 1,5 1,64
Dividend per share Adj 0,6 0,8 0,9
EPS Adj 1,73 1,5 1,64
BVPS 7,84 8,38 9,77
BVPS Adj 7,84 8,38 9,77
Net IB debt / share -2,1 -2,6 -4,1
Share price 9,65 7,66 7,66
Market cap. (m) 330 260 260
Valuation 2018 2019 2020
P/E 4,2 5,1 4,7
EV/sales 1,1 1,1 0,79
EV/EBITDA 1,6 1,7 1,2
EV/EBITA 2,9 3,3 2,1
EV/EBIT 2,9 3,3 2,1
Dividend yield (%) 8,8 10,5 11,3
FCF yield (%) 16 16,7 22,9
P/BVPS 0,92 0,91 0,78
P/BVPS Adj 0,92 0,91 0,78
P/E Adj 4,2 5,1 4,7
EV/EBITDA Adj 1,6 1,7 1,2
EV/EBITA Adj 2,9 3,3 2,1
EV/EBIT Adj 2,9 3,3 2,1
EV/cap. employed 0,6 0,6 0,4
Investment ratios 2018 2019 2020
Capex / sales 35,5 31,8 26,5
Capex / depreciation 121,8 104,2 90,3
Capex tangibles / tangible fixed assets 27,9 24,4 20,2
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 23,4 22,4

Equity research

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Media

Tethys Oil - Interview with CEO Magnus Nordin
Tethys Oil - Company presentation with CEO Magnus Nordin (in Swedish)

Main shareholders - Tethys Oil

Main shareholders Share capital % Voting shares % Verified
Lansdowne Partners 10.0 % 10.0 % 9 May 2019
Tethys Oil AB 5.4 % 5.4 % 17 Oct 2019
Magnus Nordin 4.3 % 4.3 % 4 Oct 2019
JP Morgan Asset Management 3.3 % 3.3 % 30 Sep 2019
Liontrust 2.6 % 2.6 % 30 Sep 2019
SEB Fonder 2.6 % 2.6 % 30 Sep 2019
Franklin Templeton 2.3 % 2.3 % 31 Aug 2019
Grandeur Peak Global Advisors, LLC 2.1 % 2.1 % 31 Jul 2019
Carl Erik Norman 1.7 % 1.7 % 30 Sep 2019
Avanza Pension 1.7 % 1.7 % 30 Sep 2019
Source: Holdings by Modular Finance AB