We make two main changes to our estimates ahead of Tethys Oil's Q3 report: 1) We update our model with the trading update for Q3, which came in slightly below our previous estimates. Net production was 7.7kboe/d vs. ABGSCe at 8.0kboe/d. The net entitlement in Q3 was 4.0kboe/d, which compares to our estimate of 4.2kboe/d. However, both production numbers were fairly expected ahead of the trading update given the monthly production updates provided by Tethys. 2) We update our model with our latest oil market view, in which we lower our oil price estimate for Q4'24e-Q4'25e to USD 75/bbl (90) and FY'26e-'29e to USD 85/bbl ('26e-'28e: 90, FY'29e: 75), as described in our report: Crude Quarterly Q3'24: Lower oil price. In sum, our EBIT estimate for '24e is down by 31%. For Q3, we now forecast revenues and EBITDA of USD 28.2m and USD 15.3m, respectively.
All share offer likely to be accepted
On 3 September 2024, Roc Oil Company Pty Limited announced a public cash offer to the shareholders of Tethys Oil AB to tender all their shares in Tethys to the offeror at a price of SEK 58.70/sh in cash, valuing the company at SEK 1.894b. As the offer is much in line with our current valuation, represents a substantial premium to day prior to the bid (89%), and is the largest that the shareholder, together with the current CEO, has committed to the offer, we believe it is likely that the bid will be accepted. Read more about the offer here: All share offer at SEK 58.7/sh.
P/NAV of 1.00x on ABGSCe
At the current share price, Tethys is trading at a P/NAV multiple of ~1.00x our YE'24e NAV of SEK 56/sh, and discounts an oil price of ~USD 82/bbl (P/NAV = 1). Our NAV valuation remains fairly unchanged since our last report. Consequently, Tethys is trading very to close to the offer price at SEK 58.70/sh.
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