(MENAFN- Investor Ideas) Two wells in an area in Oman have been producing, and others are slated for testing in the near term, noted an Auctus Advisors report.
Tethys Oil AB's (TETY:SSE;TETY:STO) Q2/23 financial results showed lower-than-expected production from Blocks 3&4 in Oman, and as a result, Auctus Advisors lowered its target price on the company, reported analyst Stephane Foucaud in an August 8 research note. However, "positive appraisal results" on a different block, 56, "could trigger the development of a new field."
Return Still Attractive
Auctus' new target price on the oil explorer-developer is SEK110, down from SEK120, noted Foucaud. In comparison, Tethys is currently trading at about SEK48 per share.
The difference between these prices implies a significant return for investors of 139%.
Revised Production Estimates
Foucaud reported that the Swedish energy company lowered its full-year 2023 (FY23) production guidance to 9 Mbbl/d from 9-10 Mbbl/d. This came on the heels of lower Q2/23 production from Blocks 3&4 of 8,994 bbl/d net to Tethys, given its working interest in the asset. Flow stabilized at about 9,000 barrels per day (9 Mbbl/d) net to Tethys.
Auctus reduced its estimate of Tethys' share of FY23 production to 9 Mbbl/d, too.
However, production and reserves from Blocks 3 and 4 could be supplemented by any of the Elaf-1, Rahbah-1, or Jari-1 exploration wells should they yield positive results, purported Foucaud.
Looking To Advance Discovery
The highlight of Q2/23, Foucaud pointed out, was the positive results of the extended well tests on Al Jumd in the northwestern corner of Block 56.
Two of the three wells tested produced 34,699 barrels during the quarter, equivalent to about 385 barrels per day (385 bbl/d). However, actual production varied from 150-700 bbl/d.
"Following these results, the company has started looking at commercialization options for the Al Jumd trend," wrote Foucaud. "We currently carry only 1,500,000 barrels for Al Jumd, but the development could be much more material."
Al Jumd could encompass resources from two additional wells, Foucaud indicated. One is an exploration well slated for drilling in H2/23. The second is the Sarha-3 well, testing of which is scheduled to restart "in the coming
months."
Ultimately, the Al Jumd area could be greenlighted and start adding production next year.
Other Possible Growth Areas
Tethys is considering at least three other areas for exploration, reported Foucaud.
As for the central area of Block 56, the company will announce further details on the prospective resources there in Q1/24.
This quarter, Q3/23, Tethys will announce prospective resources at Block 58 that were identified via interpretation of the three-dimensional seismic data on South Lahan.
The drilling of the South Fahd prospect, originally slated for Q3/23, has been postponed until Q1/24. This change decreases FY23 capex to US$81-86 million (US$81-86M) from US$85-95M.