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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.

USDm 2018 2019e 2020e
Sales 157 155 139
Sales growth (%) 31,9 -1,6 -10,3
EBITDA 107 113 100
EBITDA margin (%) 67,2 73,4 72,2
EBIT adj 61 65 54
EBIT adj margin (%) 38 41,9 39,5
Pretax profit 62 66 57
EPS rep 1,73 1,84 1,59
EPS growth (%) 78,4 6,8 -13,7
EPS adj 1,73 1,84 1,59
DPS 0,63 0,89 0,53
EV/EBITDA (x) 1,6 1,6 1,4
EV/EBIT adj (x) 2,9 2,8 2,5
P/E (x) 4,2 4,6 5,3
P/E adj (x) 4,2 4,6 5,3
EV/sales (x) 1,1 1,2 1
FCF yield (%) 16 21,6 20,8
Dividend yield (%) 8,8 10,5 6,3
Net IB debt/EBITDA -0,7 -0,9 -1,5
USDm 2018 2019e 2020e
Sales 157 155 139
COGS -52 -41 -39
Gross profit 106 114 100
Other operating items 1 0 0
EBITDA 107 113 100
Depreciation on tangibles -46 -49 -45
Depreciation on intangibles 0 0 0
EBITA 61 65 54
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 61 65 54
Other financial items 0 0 0
Net financial items 1 2 3
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 62 66 57
Tax 0 0 0
Net profit 62 66 57
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 62 66 57
EPS 1,73 1,84 1,59
EPS Adj 1,73 1,84 1,59
Total extraordinary items after tax 0 0 0
Tax rate (%) 0 0 0
Gross margin (%) 67,2 73,4 72,2
EBITDA margin (%) 67,2 73,4 72,2
EBITA margin (%) 38 41,9 39,5
EBIT margin (%) 38 41,9 39,5
Pretax margin (%) 38,8 42,9 41,4
Net margin (%) 38,8 42,9 41,4
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 31,9 -1,6 -10,3
EBITDA growth (%) 36,8 6,4 -11,9
EBIT growth (%) 58,1 6,3 -15,5
Net profit growth (%) 87,3 6,8 -13,7
EPS growth (%) 78,4 6,8 -13,7
Profitability 2018 2019 2020
ROE (%) 25 23,2 17,8
ROE Adj (%) 25 23,2 17,8
ROCE (%) 34,4 33,9 29,6
ROCE Adj(%) 34,4 33,9 29,6
ROIC (%) 29 29,6 25,3
ROIC Adj (%) 29 29,6 25,3
Adj earnings numbers 2018 2019 2020
EBITDA Adj 107 113 100
EBITDA Adj margin (%) 67,2 73,4 72,2
EBITA Adj 61 65 54
EBITA Adj margin (%) 38 41,9 39,5
EBIT Adj 61 65 54
EBIT Adj margin (%) 38 41,9 39,5
Pretax profit Adj 62 66 57
Net profit Adj 62 66 57
Net profit to shareholders Adj 62 66 57
Net Adj margin (%) 38,8 42,9 41,4
USDm 2018 2019e 2020e
EBITDA 107 113 100
Net financial items 1 2 3
Paid tax 0 0 0
Non-cash items 1 0 0
Cash flow before change in WC 109 115 102
Change in WC -5 0 0
Operating cash flow 96 115 103
CAPEX tangible fixed assets -56 -50 -40
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 1 0 0
Free cash flow 41 65 63
Dividend paid -23 -32 -19
Share issues and buybacks 3 0 0
Other non cash items 10 0 0
Decrease in net IB debt 31 33 43
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 200 201 196
Other fixed assets 0 0 -1
Fixed assets 200 201 195
Inventories 18 18 18
Receivables 0 0 0
Other current assets 0 0 0
Cash and liquid assets 73 107 150
Total assets 291 326 364
Shareholders equity 268 302 340
Minority 0 0 0
Total equity 268 302 340
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 14 14 14
Total liabilities and equity 239 245 291
Net IB debt -73 -106 -150
Net IB debt excl. pension debt -73 -106 -150
Capital invested 217 218 213
Working capital 17 17 17
EV breakdown 2018 2019 2020
Market cap. diluted (m) 246 288 288
Net IB debt Adj -73 -106 -150
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 173 182 138
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 58,7 50,2 40,3
Capital invested turnover (%) 75,1 71,1 64,3
Capital employed turnover (%) 82,6 79,4 71,9
Inventories / sales (%) 9,9 11,8 13,1
Customer advances / sales (%) 0 0 0
Payables / sales (%) 0,6 0,6 0,7
Working capital / sales (%) 9,3 11,1 12,4
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) -27,3 -35,2 -44
Net debt / market cap (%) -22,2 -36,9 -52
Equity ratio (%) 91,8 92,7 93,5
Net IB debt adj. / equity (%) -27,3 -35,2 -44
Current ratio (%) 612,8 837 1130,2
EBITDA / net interest (%) -8200 -6818,2 -3764,7
Net IB debt / EBITDA (%) -68,6 -93,7 -149,8
Interest cover (%) 1871,4 N/A N/A
USDm 2018 2019e 2020e
Shares outstanding adj. 34 34 34
Fully diluted shares Adj 34 34 34
EPS 1,73 1,84 1,59
Dividend per share Adj 0,6 0,9 0,5
EPS Adj 1,73 1,84 1,59
BVPS 7,84 8,84 9,95
BVPS Adj 7,84 8,84 9,95
Net IB debt / share -2,1 -3,1 -4,4
Share price 9,65 8,43 8,43
Market cap. (m) 330 288 288
Valuation 2018 2019 2020
P/E 4,2 4,6 5,3
EV/sales 1,1 1,17 1
EV/EBITDA 1,6 1,6 1,4
EV/EBITA 2,9 2,8 2,5
EV/EBIT 2,9 2,8 2,5
Dividend yield (%) 8,8 10,5 6,3
FCF yield (%) 16 21,6 20,8
P/BVPS 0,92 0,95 0,85
P/BVPS Adj 0,92 0,95 0,85
P/E Adj 4,2 4,6 5,3
EV/EBITDA Adj 1,6 1,6 1,4
EV/EBITA Adj 2,9 2,8 2,5
EV/EBIT Adj 2,9 2,8 2,5
EV/cap. employed 0,9 0,9 0,7
Investment ratios 2018 2019 2020
Capex / sales 35,5 32,3 28,8
Capex / depreciation 121,8 102,4 88,2
Capex tangibles / tangible fixed assets 27,9 24,8 20,4
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 24,3 23,2

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Main shareholders

Tethys Oil

Main shareholders Share capital % Voting shares % Verified
Lansdowne Partners 10.1 % 10.1 % 31 Aug 2018
Franklin Templeton 4.9 % 4.9 % 9 Oct 2018
Tethys Oil AB 4.6 % 4.6 % 28 Feb 2019
SEB Fonder 4.2 % 4.2 % 28 Feb 2019
Magnus Nordin 4.1 % 4.1 % 28 Feb 2019
JP Morgan Asset Management 3.3 % 3.3 % 28 Feb 2019
Grandeur Peak Global Advisors, LLC 3.2 % 3.2 % 31 Oct 2018
Liontrust 2.9 % 2.9 % 28 Feb 2019
Carl Erik Norman 1.6 % 1.6 % 28 Feb 2019
Avanza Pension 1.5 % 1.5 % 28 Feb 2019
Source: Holdings by Modular Finance AB

Insider list

Tethys Oil

Name Quantity Code Date
Fredrik Robelius - 12 238 SELL 20 Sep 2018
Magnus Nordin - 34 614 SELL 20 Sep 2018
Magnus Nordin + 3 000 BUY 20 Sep 2018
Magnus Nordin - 35 388 SELL 19 Sep 2018
Magnus Nordin - 7 998 SELL 18 Sep 2018
Fredrik Robelius + 1 500 BUY 5 Sep 2018
Fredrik Robelius - 9 762 SELL 27 Aug 2018
Jesper Alm - 19 000 SELL 23 Aug 2018
Jesper Alm + 1 250 BUY 15 Aug 2018
Jesper Alm - 20 000 SELL 5 Jul 2018

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