Production guidance cut, growth potential from other blocksIn the Q2 report, Tethys lowered its FY'23 production guidance by ~5% to 9.0kboe/d (9.0-10.0kboe/d) due to the soft performance on Block 3&4. It is becoming increasingly apparent that the operator is struggling to reverse the production decline experienced over the last quarters. Due to lower production, opex guidance was revised up to USD 17/bbl from USD 14/bbl. Therefore, we adjust our estimates accordingly and now forecast FY'23 production of 9.1kboe/d (9.4kboe/d). Moreover, Tethys highlighted the potential for future growth from other Blocks in the portfolio. The closest to commercial production is Block 56, where the Al Jumbd area is undergoing an extended well test. Following additional testing, exploration and appraisal work, Block 56 could potentially become an important contributor to production in the future.P/NAV of 0.57x and discounts USD 56/bbl
Tethys is trading at a P/NAV multiple of ~0.57x our estimated YE'23 NAV of SEK 86/sh and discounts an oil price of ~USD 56/bbl. Due to the downward revisions to our estimates and net asset value following the Q2 report, we revise our fair value range to SEK 40-80/sh (50-90/sh.). This is equivalent to a P/NAV range of ~0.5x-0.9x, in line with the trading range of other Nordic-listed E&P companies.
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