More exploration wells planned in Blocks 3&4 in 2017

Swedish based international oil and gas firm Tethys Oil says its partners in Blocks 3 & 4 onshore Oman plan to drill a number of exploration wells targeting prospective hydrocarbon resources as part of a new work programme agreed for 2017.

A top executive of the Stockholmbased firm, which has a 30 per cent interest in the adjoining blocks, said it also plans to acquire new acreage as part of its growth strategy in the Sultanate.

“The partner group for Blocks 3&4, Oman, have now agreed upon the work programme for 2017,” said Magnus Nordin, Managing Director. “The budget will be in line with 2016, but more attention will be given exploration activities. We are targeting to drill a number of explorations wells.”

In a letter to shareholders, Nordin also added: “We are also actively pursuing new acreage and acquisition opportunities and remain cautiously optimistic about our prospects. A number of new projects have been and continue to be evaluated.”

CC Energy Development SAL (Oman Branch) is the operator of the two blocks with a 50 per cent interest, while Mitsui E&P Middle East BV is a 20 per cent partner.

Tethys Oil’s share of production in 2016 reached 4.4 million barrels of oil, up 25 per cent versus figures for 2015 – the highest so far for any year, said Nordin. While eager in principle to increase production in 2017, the company is mindful of the pledge made by the Sultanate to cut output as part of an Opec-led global deal, he noted.

“We should of course bear in mind that Oman has signed up to the OPEC initiated production limitations, which gives us a monthly target production of 12,300 BOPD for the first six months. Actual production is however likely to continue to fluctuate depending both on our production capacity but now also on how the maximum monthly production allowed by Oman is filled,” Nordin said.

The Managing Director also revealed that the correction of an “export reporting error” uncovered recently has negatively impacted Tethys Oil’s 2016 Q4 earnings. The company said it was informed by the operator that due to an “inadvertent fiscal metering calibration problem, an over-reporting of exported oil from Blocks 3 and 4 during the period August 2010 until February 2016 occurred”.

“Tethys Oil estimates that its share of the overestimated volume of oil amounts to 157,000 barrels (before government take). To rectify the overreported quantity of delivered oil, the Blocks 3 and 4 partners have agreed with the pipeline operator and the Ministry of Oil and Gas to repay the over-lifted amount in cash.

Tethys Oil estimates, that Tethys Oil’s share of the cash repayment, will amount to approximately $5.9 million, which consequently will reduce Tethys Oil’s fourth quarter 2016 revenue and result with that amount. The mechanism for the settlement details are being discussed, but Tethys Oil expects that the final settlement will reflect the relevant agreements,” Nordin stated.