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Tethys Petroleum Limited: Third Quarter 2012 Financial Results

Date : 11/15/2012 @ 3:30AM
Source : Marketwired
Stock : Tethys Petroleum Limited (TPL)
Quote : 0.21  0.01 (5.00%) @ 2:26AM
Tethys Petroleum Limited share price Chart

Tethys Petroleum Limited: Third Quarter 2012 Financial Results

Tethys Petroleum Limited (TSX:TPL)
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3 Years : From Dec 2011 to Dec 2014

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Tethys Petroleum today announced its third quarter 2012 financial results. The results are highlighted by a 46% increase in production revenues over the third quarter of last year.

RECENT FINANCIAL HIGHLIGHTS

Q3 2012 vs Q3 2011


--  Total Oil and Gas Revenue up 46% at USD10.0 million 
--  Average oil production from the Doris field, Kazakhstan up 74% at 2,732
    bopd 
--  Administrative costs down 8% at USD4.5 million 
--  Total Assets USD252.1 million 

9 months 2012 vs 9 months 2011


--  Total Oil and Gas Revenue up 72% at USD26.7 million 
--  Average oil production from the Doris field, Kazakhstan up 145% at 2,234
    bopd 
--  Administrative costs down 2% at USD15.5 million 

The 9 months period in 2012 has seen a substantial increase in oil production and revenue from the Doris oil field in Kazakhstan with a small drop in corporate administrative costs over the same period. It is forecast that both these trends will continue into 4Q 2012. On the revenue side both October's and November's average oil production figures have so far contributed toward the best quarter of oil production in Kazakhstan to date. October oil production averaged approximately 3,700 bopd and it is forecast that Novembers' production figures will exceed this number. These figures demonstrate the optimisation of the trucking operation in Kazakhstan is coming to fruition which has been the main restriction on maximum production to date, not the production capability of the wells.

On the costs side in Q3 the Company has initiated a review of all costs with a particular focus on administrative expenses. The objective of this exercise is first and foremost to review all areas with a view to reducing costs but particularly administrative costs, and secondly to review the categorization of costs to ensure that the Company is reporting consistently with other similar oil and gas companies, which will facilitate appropriate comparison within its peer group.

Some of these measures can be seen in a 22% reduction in the Q3 2012 costs over the Q2 2012 costs and in the 8% reduction against Q3 2011, but it is expected most of the effect will be realised in the quarters to come as this assessment and resulting action takes some time to implement. This cost reduction exercise does not in anyway reflect the growth prospects of the Company which, as can be seen from the higher production and revenue growth in Kazakhstan and the recent signing of the MOU for a Tajikistan farm-in partner, are very good.

The Company reports financial results in accordance with International Financial Reporting Standards ("IFRS").

These highlights along with other operational and financial details will be further discussed in a scheduled conference call. Details of the conference call can be found below:

Conference Call:

A conference call will be held at 10:30 AM EST US and Canada and 15:30 PM GMT European time on Thursday, November 15, 2012. The North American conference call number is ((866) 202-3048) and the outside North America conference call number is (+1 (617) 213-8843). The conference call code to use is (32537707). Please call in about 10 minutes before the starting time in order to be patched into the call.

Webcast:

The call is being webcast and can be accessed at:

http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=213714&eventID=4869022.

The following disclosure is provided to comply with regulatory requirements:

During the fourth quarter of 2011 and the first quarter of 2012, the Company borrowed from various lenders an aggregate principal amount of USD10 million for the purpose of re-financing the purchase price of drilling rigs. The loans are evidenced by loan notes having a maturity of one year or two years. The lenders also received warrants to purchase ordinary shares of the Company having a term of one year or two years, corresponding to the term of the loan notes. In October 2012, the Company received approval from a number of lenders to a one-year extension of the maturity date of loans notes in the principal amount of USD2,165,240 maturing in December 2012. In connection with the approval of the extension of the maturity date, the Company agreed, subject to definitive lender approval, to extend by six months the expiry date of 1,575,000 warrants issued in December 2011 (having an exercise price of CAD0.58 to CAD0.65) and 3,017,380 warrants issued in February, March and April 2012 (having an exercise price of CAD0.84 to CAD1.18), excluding warrants issued to insiders of the Company. The number of ordinary shares into which these warrants may be exercised represents, in aggregate, 1.6% of the number of ordinary shares outstanding on the date hereof. The exercise prices of these warrants represent a premium of 14% to 27% in the case of the warrants issued in December 2011 and 64% to 131% in the case of the warrants issued in February, March and April 2012 of the volume weighted average trading price of the ordinary shares of the Company on the TSX for the five days to October 19, 2012, being the date of the agreement with the lenders. The change to the expiry dates of these warrants will be effective on November 29, 2012. The Company will also issue, subject to definitive lender approval, 1,082,620 warrants having an exercise price of $0.64 to lenders who agreed to extend the maturity date of their one year loan notes by 12 months. These warrants will expire on certain dates in December 2013 or, in the case of 307,620 warrants issued to two officers of the Company, June 2014. The number of ordinary shares into which these new warrants may be exercised represents, in aggregate, 0.4% of the number of ordinary shares outstanding on the date hereof (0.1% in respect of the warrants to be issued to the two officers of the Company). The exercise price of the new warrants represents a premium of 25% of the volume weighted average trading price of the ordinary shares of the Company for the five days to October 19, 2012.

Tethys is focused on oil and gas exploration and production activities in Central Asia with activities currently in the Republics of Kazakhstan, Tajikistan and Uzbekistan. This highly prolific oil and gas area is rapidly developing and Tethys believes that significant potential exists in both exploration and in discovered deposits.

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 and are subject to certain risks, uncertainties and assumptions. See our Annual Information Form for the year ended December 31, 2011 for a description of risks and uncertainties relevant to our business, including our exploration activities. A barrel of oil equivalent ("boe") conversion ratio of 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.


Tethys Petroleum Limited                                                    
Condensed Consolidated Statement of Financial Position                      
(Unaudited)                                                                 
(in US Dollars)                                                             
                                                                            
                                                          As at             
                                               September 30,   December 31, 
                                                        2012           2011 
                                                       $'000          $'000 
Non-current assets                                                          
Property, plant and equipment                        121,894        128,918 
Intangible assets                                    104,165         99,959 
Restricted cash                                        1,406          1,407 
Prepayments and other receivables                     10,629         10,217 
Investment in jointly controlled entity                1,118          1,113 
                                              ------------------------------
                                                     239,212        241,614 
                                              ------------------------------
                                                                            
Current assets                                                              
Inventories                                            1,934          2,025 
Trade and other receivables                            7,449          5,478 
Loan receivable from jointly controlled entity         1,868          2,013 
Cash and cash equivalents                              1,146         10,746 
Restricted cash                                          474            885 
Derivative financial instruments - interest                                 
 rate swap                                                 -            630 
                                              ------------------------------
                                                      12,871         21,777 
                                              ------------------------------
                                                                            
Total assets                                         252,083        263,391 
                                              ------------------------------
                                              ------------------------------
                                                                            
Equity attributable to shareholders                                         
Share capital                                         28,671         28,669 
Share premium                                        306,725        306,725 
Other reserves                                        41,200         38,530 
Accumulated deficit                                 (161,527)      (144,962)
Non-controlling interest                               8,648          8,918 
                                              ------------------------------
Total equity                                         223,717        237,880 
                                              ------------------------------
                                                                            
Non-current liabilities                                                     
Financial liabilities - borrowings                     5,874          1,632 
Deferred taxation                                      2,913          2,111 
Trade and other payables                                 402            547 
Asset retirement obligations                             248            386 
                                              ------------------------------
                                                       9,437          4,676 
                                              ------------------------------
Current liabilities                                                         
Financial liabilities - borrowings                     7,411          8,396 
Derivative financial instruments - warrants              688            264 
Derivative financial instruments - foreign                                  
 currency hedge                                            -            157 
Deferred revenue                                       1,238          1,839 
Trade and other payables                               9,294         10,179 
Current tax                                              298              - 
                                              ------------------------------
                                                      18,929         20,835 
                                              ------------------------------
Total liabilities                                                           
                                              ------------------------------
                                                      28,366         25,511 
                                              ------------------------------
Total shareholders' equity and liabilities                                  
                                                     252,083        263,391 
                                              ------------------------------
                                              ------------------------------
                                                                            
                                                                            
Tethys Petroleum Limited                                                    
Condensed Consolidated Statement of Comprehensive Income                    
(Unaudited)                                                                 
For the three and nine months ended September 30, 2012                      
(in US Dollars)                                                             
                                                                            
                                       For the 3 months    For the 9 months 
                                                  ended               ended 
                                          September 30,       September 30, 
                                         2012      2011      2012      2011 
                                        $'000     $'000     $'000     $'000 
                                                                            
Sales and other revenues                9,990     6,849    26,681    15,506 
Other operating income                      -       922         -     6,628 
                                    ----------------------------------------
Total revenue and other income          9,990     7,771    26,681    22,134 
                                                                            
Production expenses                    (3,562)   (3,393)   (9,401)   (6,918)
Depreciation, depletion and                                                 
 amortisation                          (4,766)   (3,857)  (12,557)   (9,684)
Exploration and evaluation                                                  
 expenditure written off                 (138)   (1,807)     (138)   (1,807)
Listing expenses                            -      (273)        -      (606)
Business development expenses             (42)     (697)     (621)   (1,926)
Administrative expenses                (4,490)   (4,859)  (15,248)  (15,520)
Share based payments                     (582)   (1,054)   (2,459)   (3,111)
Foreign exchange (loss) / gain - net     (158)     (183)     (334)       33 
Fair value loss on derivative                                               
 financial instrument                    (149)     (231)     (216)     (554)
Loss from jointly controlled entity      (395)     (291)     (294)     (802)
Net finance (costs) / income             (296)      194    (1,148)      912 
                                                                            
                                    ----------------------------------------
Loss before taxation                   (4,588)   (8,680)  (15,735)  (17,849)
                                                                            
Taxation                                 (529)      105    (1,100)      283 
                                                                            
                                    ----------------------------------------
Loss for the period                    (5,117)   (8,575)  (16,835)  (17,566)
                                    ----------------------------------------
                                    ----------------------------------------
                                                                            
Loss attributable to:                                                       
Shareholders                           (4,906)   (8,575)  (16,565)  (17,566)
Non-controlling interest                 (211)        -      (270)        - 
                                    ----------------------------------------
Loss for the period                    (5,117)   (8,575)  (16,835)  (17,566)
                                    ----------------------------------------
                                    ----------------------------------------
                                                                            
Loss per share attributable to                                              
 shareholders                                                               
                                                                            
Basic and diluted                       (0.02)    (0.03)    (0.06)    (0.07)
                                                                            
                                                                            
Tethys Petroleum Limited                                                    
Condensed Consolidated Statement of Cash Flows                              
(Unaudited)                                                                 
For the three and nine months ended September 30, 2012                      
(in US dollars)                                                             
                                                                            
                                       For the 3 months    For the 9 months 
                                                  ended               ended 
                                          September 30,       September 30, 
                                         2012      2011      2012      2011 
                                        $'000     $'000     $'000     $'000 
Cash flow from operating activities                                         
Loss before taxation for the period    (4,588)   (8,680)  (15,735)  (17,849)
Adjustments for                                                             
  Share based payments                    582     1,054     2,459     3,111 
  Net finance cost / (income)             296      (194)    1,148      (910)
  Unsuccessful exploration and                                              
   evaluation expenditure written                                           
   off                                      -     1,807         -     1,807 
  Depreciation, depletion and                                               
   amortization                         4,766     3,857    12,557     9,684 
  (Gain)/loss on disposal of assets         -       (16)        -       120 
  Fair value loss on derivative                                             
   financial instrument                   149       231       216       554 
  Net unrealised foreign exchange                                           
   (gain) / loss                          228       (70)      216       (22)
  Loss from jointly controlled                                              
   entity                                 395       291       294       802 
  Deferred revenue                       (157)    1,721      (601)      (55)
  Other operating income                    -      (922)        -    (6,628)
  Net change in non-cash working                                            
   capital                                 84    (1,252)   (1,903)     (483)
                                    ----------------------------------------
Net cash generated / (used) in                                              
 operating activities                   1,755    (2,173)   (1,349)   (9,869)
                                    ----------------------------------------
Cash flow from investing activities                                         
Interest received                           -        36         5       112 
Expenditure on exploration and                                              
 evaluation assets                     (2,412)   (3,335)   (4,014)   (9,624)
Expenditures on property, plant and                                         
 equipment                             (3,609)   (7,813)   (5,317)  (27,210)
Movement in restricted cash                 1     2,100       412    (1,451)
Investment in jointly controlled                                            
 entity                                     -         -        (5)        - 
Payments made on behalf of jointly                                          
 controlled entity                          -    (5,071)            (12,435)
Movement in advances to construction                                        
 contractors                             (643)    1,304    (1,677)    1,187 
Movement in value added tax                                                 
 receivable                               251      (980)    1,098    (3,133)
Net change in non-cash working                                              
 capital                                1,476       726      (924)    1,080 
                                    ----------------------------------------
Net cash used in investing                                                  
 activities                            (4,936)  (13,033)  (10,422)  (51,474)
                                    ----------------------------------------
Cash flow from financing activities                                         
Proceeds from issuance of                                                   
 borrowings, net of issue costs           999         -    10,334         - 
Repayment of borrowings                  (246)      (93)   (7,112)     (269)
Interest paid on borrowings              (283)      (69)     (804)     (266)
Movement in other non-current                                               
 liabilities                              (71)      (76)     (213)     (227)
                                    ----------------------------------------
Net cash generated / (used) in                                              
 financing activities                     399      (238)    2,205      (762)
                                    ----------------------------------------
Effects of exchange rate changes on                                         
 cash and cash equivalents                (44)      114       (34)      (14)
Net decrease in cash and cash                                               
 equivalents                           (2,826)  (15,330)   (9,600)  (62,119)
Cash and cash equivalents at                                                
 beginning of the period                3,972    32,346    10,746    79,135 
                                    ----------------------------------------
Cash and cash equivalents at end of                                         
 the period                             1,146    17,016     1,146    17,016 
                                    ----------------------------------------

Contacts: North America Tethys Petroleum Limited Sabin Rossi, Vice President Investor Relations Office: +1 416-941-1257 +1 416-947-0167 (FAX) Europe Tethys Petroleum Limited Veronica Zhuvaghena, Vice President Corporate Communications Office: +44 1481 725911 +44 1481 725922 (FAX) Corporate Brokers: FirstEnergy Hugh Sanderson/David Van Erp Office: + 44 207 448 0200 Seymour Pierce Richard Redmayne/Jonathan Wright/Stewart Dickson Office: +44 207 107 8000 Asia Pacific: Quam IR Anita Wan Office phone/fax: +852 2217 2999 FTI Consulting Ben Brewerton/Edward Westropp Office: +44 207 831 3113 Tethys Petroleum Limitedinfo@tethyspetroleum.com www.tethyspetroleum.comhttp://m.tethyspetroleum.com



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