We estimate that Tethys Oil will report Q4’21 EBITDA of USD 21.4m, based on monthly production reports indicating a working interest production of 10,659 boe/d for the quarter. Our EBITDA is close to consensus of USD 21.3m. We anticipate strong CFO of USD 23.7m, with capacity to take on USD 19.5m of capex, and estimate Tethys to exit the quarter with a net cash position of USD 63.4m.
Likely to see activity pick up in ‘22
Given the strong commodity prices, we expect that Tethys will guide for a meaningful increase in investments from USD 47m in 2021 to USD 66m in 2022. We expect this to support production for ‘22e-‘23e.
Discounts Brent at USD 54/bbl
On our estimates, Tethys Oil discounts an oil price of USD 54/bbl over the long term. Given the cash-rich balance sheet and a strong FCF yield of ~16% in ‘22e, we anticipate that Tethys Oil will declare DPS of SEK 6/share, which implies a dividend yield of ~9%.
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