Annual Report 2023
23
Contents
The year in brief
Letter to shareholders
Business model
Market
Strategy and operations
– Development and production
– Blocks 3&4
– Exploration and appraisal
– Block 56
– Block 58
– Block 49
Sustainability at Tethys Oil
Key financial data and definitions
The Tethys Oil share
Sustainability statements
– Stakeholder engagement and materiality
assessment
– Key sustainability risks
– Environment
– Social and safety
– Governance
– Performance data
– TCFD index
– GRI index
Corporate governance report
Risk management
Board of Directors
Executive management
Payments to authorities
Administration report
Financial statements for the group
Financial statements for the parent company
Notes
Assurance
Auditor’s report
2
4
6
8
11
16
18
20
22
24
25
26
31
33
35
36
38
41
50
61
72
76
77
80
85
88
90
91
92
104
108
112
127
128
THE MUSCAT
OFFICE
The Muscat office is the base for Tethys Oil’s
Chief Technical Officer and consists of a team of
geologists, engineers and operations specialists
together with finanace and administrative staff.
STOCKHOLM
OFFICE
Tethys Oil’s head office is located in Stockholm,
Sweden. It is the base for the Managing Director,
the Chief Financial Officer and the Chief Legal
Officer, along with Tethys Oil’s finance, business
development, human resources, sustainability
and communications staff.
More information on Tethys Oil’s employees can
be found on pages 50 to 57.
Introduction
Tethys Oil is an oil exploration and production company with focus
on onshore areas with known oil discoveries. Founded in 2001,
with headquarters in Stockholm, the Company’s core area of
operations is the Sultanate of Oman, where it has been active
since 2006. Tethys Oil currently holds interests in the Exploration
and Production Sharing Agreements for blocks that cover an area
totalling 18 percent of Oman and as such is one of the largest
acreage holders in Oman with a production of 8,818 barrels of oil
per day. The Company’s shares are listed on Nasdaq Stockholm
(TETY) and are held by about 9,000 shareholders.
54,934
8,818
21.7
15.5
km2
area of operated and
non-operated blocks
Sultanate of Oman
barrels
average oil production
per day from Blocks 3&4
during 2023
mmbo
2P reserves
mmbo
2C contingent
resources
Block 56
Block 58
Block 49
Blocks 3&4
1
Tethys Oil Annual Report 2023 The year in brief
2023 in brief
2023 was a year of high activity across
Tethys Oil’s portfolio and another year of
historically high investments. At the same
time MUSD 17.5 was returned to share-
holders in the form of dividend, redemp-
tions and share repurchases.
Production from Blocks 3&4 in 2023 was
8,818 bopd with the newly drilled wells in
the year unable to offset natural declines
in combination with a number of legacy
wells performing below expectations.
During the year, four exploration wells
were drilled and 4,230 km2 of 3D seismic
was acquired. Other investments focused
on upgrading production facilities includ-
ing increased and improved water han-
dling capacity, well workovers and the
installation of new pumps. These initia-
tives, aimed at reducing unscheduled pro-
ductions stops and outages, resulted in
improved production stability towards the
end of the year.
The reserve replacement ratio on Blocks
3&4 was 32 percent for 2P reserves, with
additions from 2C contingent resources
and upgraded recovery factors on parts of
the fields more than offsetting the nega-
tive reserve impact of the underperform-
ing wells.
The first phase of Gas-to-Power-project on
Blocks 3&4 was commissioned in
December. The project will reduce routine
flaring by utilising the gas to power the
operations on the fields. As a result of
the gas utilisation the usage of diesel-
powered generators will be greatly cur-
tailed, reducing both total emissions and
operating expenses. A second phase will
be rolled out in 2024.
On Block 56, the Al Jumd discovery was
put on a six-month extended well test.
During the test the three wells produced
more than 60,000 barrels of oil and
yielded important data for the potential
development of the block. South-west of
Al Jumd, the Menna-1 exploration well
was drilled in December encountering oil
across three target zones. The well will be
tested in 2024 and is a key element in
Tethys Oil’s ambition to submit a declara-
tion of commerciality and enter into the
production phase in 2024.
On Block 58, the prospect inventory for
the Fahd area was completed in February
with an estimated 184 mmbo of unrisked
prospective resources (Pmean) across
three mapped prospects. The first explo-
ration well in the area, Kunooz-1, is target-
ing more than 100 mmbo of prospective
resources and is planned to spud in April
2024. In parallel, the processing and
interpretation of the 450 km2 3D seismic
data covering South Lahan was com-
pleted and a prospect inventory for the
area is in the final stages of completion.
On Block 49, Tethys Oil continued the
preparations for the re-entry and re-test-
ing of Thameen-1. A tendering process for
an integrated service contract was con-
ducted during 2023 but did not yield a
commercially viable outcome. As of
31 December 2023, Tethys Oil is in
dialogue with MEM on how to best move
forward on the block.
Operational and financial summary
MUSD (unless specifically stated)
Average daily production Blocks 3&4, before government take, bbl
Achieved oil price per barrel, USD
Revenue and other income
EBITDA
Cash and cash equivalents
Investments in oil and gas properties
Free cash flow
Dividend, SEK per share – 2023 proposed
Extraordinary distribution to shareholders, SEK per share 2023 proposed
Market capitalisation at the end of the year, MSEK
2P Reserves in Oman (million barrels of oil)
2C Contingent Resources in Oman (million barrels of oil)
2023
8,818
82.4
138.2
73.5
25.8
81.7
0.8
0.00
0.00
1,454
21.7
15.5
2022
9,940
94.2
156.5
99.1
41.5
89.1
-2.3
2.00
3.00
1,955
23.9
14.6
2021
11,136
62.8
112.7
61.4
68.6
35.2
29.7
2.00
5.00
2,059
26.2
15.6
2020
11,336
47.7
101.1
50.4
55.4
45.4
6.7
2.00
2.00
1,626
26.9
13.9
2019
12,832
64.2
150.8
92.2
75.6
65.2
31.4
2.00
3.00
3,063
26.1
13.5
2
Tethys Oil Annual Report 2023 The year in brief
Carbon emissions/
revenue (kg CO2e/USD)
1.70
(1.71 kg CO2e/USD)
Lost-time injury rate
(LTIR)
0.18
(0.23h per 1 mn hours
worked)
Flaring intensity (scf/bbl)
715
(727 scf/bbl)
Production per day, barrels
Total net reserves and resource,
million of barrels
12,000
9,000
6,000
3,000
0
13.5
13.9
15.6
14.6
15.5
26.1
26.9
26.2
23.9
21.7
44
33
22
11
0
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Bopd (bbl)
2P (mmboe)
2C (mmboe)
Financials
Investments oil & gas per block
MUSD
160
120
80
40
0
MUSD
88
66
44
22
0
2019
2020
2021
2022
2023
2019
2020
2021*
2022
2023
Revenue and other income
EBITDA
Blocks 3&4
Block 49
Block 56
Block 58
* 2021 investments for Block 49 are presented
adjusted for effects of the farmout to EOG
Netback & Netback (net of capex)
Dividend and distribution per share
MUSD
32
24
16
8
0
SEK
8
6
4
2
0
6
2
5
2
3
2
2
2
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023*
Netback
Netback (Net of Capex)
Ordinary dividend
Extraordinary distribution
* Proposed dividend and distribution
3
Tethys Oil Annual Report 2023 Letter to shareholders
Dear Friends
and Investors,
The document you hold in your hands, or
more likely, read on your screen is our
first integrated report including the
annual report, corporate governance
report and sustainability report. This
comprehensive report of 132 pages,
including copious detailed notes,
attempts to cover all aspects of our cor-
porate activities, operations, and invest-
ments. Financial reporting has been a
central part of corporate reporting since
the invention of the limited liability com-
pany in the 19th century. As reporting
standards have evolved over time so has
the general scope of reporting. Over the
last years hard facts on Sustainability
has become an increased focus area and
Tethys has published a separate Sustain-
ability Report since 2017. Just as IFRS is
applied to financial reporting, ESRS is
expected to become the international
standard for sustainability reporting, cov-
ering everything from emissions (Green-
house Gas Protocol) through Health and
Safety as well as Corporate Governance.
As a Company we sincerely welcome a
framework to enable standards of report-
ing to be set and comparability to between
corporations to be possible. Going for-
ward a corporation’s record will be clearly
measurable not only financially but also
sustainably through the Corporate
Sustainability Reporting and Disclosure
(CSRD) alignment as directed by the
European Union.
So how did Tethys score in 2023?
To date our operating activities have
been limited but if can we bring Block 56
into commercial production, that activity
will increase and our opportunities to set
meaningful Scope 1 goals will increase
as a result. Recognising these opportuni-
ties, the Board has formed a sustainabil-
ity Committee to complement the previ-
ous Technical Committee that was
tasked with overseeing our operational
activities.
Both sustainably and financially 2023
saw limited activities in our operated
Blocks. Investments amounted to just
over MUSD 6 most of that in Block 56
where we took a major step toward
Commercial Production by conducting a
4
six-month production test of the Al Jumd
discovery. More than 60,000 barrels of
oil were produced and sold generating
income and scope 1 emissions primarily
related to diesel used to power pumps to
facilitate the production. The continuing
work programme and appraisal of Block
56 calls for the testing of the Menna-1
well completed early this year and the
completion of a field development plan to
enable Block 56 to enter into commercial
production. Bringing Block 56 into com-
mercial production is one of the key
goals for 2024 and one to which we
devote considerable resources.
Commercial production from Block 56
would be a very welcome complement to
our current production and cash flow,
which comes entirely from our non-oper-
ated 30 percent interest in Blocks 3&4.
The blocks are operated by CCED in part-
nership with Mitsui E&P Middle East
which holds 20 percent, and Tethys.
Production continued to decline for the
second year in a row before stabilizing
towards the end of 2023. We have guided
for stable production in 2024 and the
year has started off well. In February
2024 we announced a strategic review to
evaluate our portfolio of assets and their
relative importance and prospects. Given
the discrepancy at the time of writing
between our book value and market capi-
talisation, the Board has requested such
a review to better understand how to real-
ise what we believe to be hidden values.
Blocks 3&4, being the core of our pro-
duction and financials, is a central part
of such a review. Production for 2023
amounted to 8,818 bopd compared to
9,940 bopd for 2022. Reserves at year-
end 2023 came in at 21.7 mmbo com-
pared to 23.9 mmbo at year-end 2022,
resulting in a reserve replacement
number of 32 percent, compared to 37
percent in 2022, the lowest in ten years.
During 2023, we invested MUSD 75.2,
up from MUSD 63.4 the year before.
When doing our impairment trigger test
we found that the fair value had not
increased compared to 2022 and thus a,
non-cash affecting, impairment charge of
MUSD 37 was incurred (the impairment
corresponds to about half of the invest-
ments made in 2023), bringing the recog-
nised value to MUSD 190. At the end of
2022 that value was MUSD 198.5. Of
the MUSD 75.2 invested in Blocks 3&4,
more than MUSD 15 were part of the flag
ship sustainability project being imple-
mented – to use associated gas to elec-
trical power. The first phase commenced
in December, and fully implemented the
project will enable diesel to be phased
out and natural gas to be used for power
generation, lowering both costs and
emissions.
So, we strongly believe that the MUSD
190 reflect a very reasonable value of
the asset in the current oil price environ-
ment. The impairment model used a real
long-term oil price corresponding to USD
Tethys Oil Annual Report 2023 Letter to shareholders
76 and a WACC of 14.5 percent. And the
resource base remains impressive with
2P reserves of 21.7 mmbo but 3P
reserves of 36.3 mmbo, which is actually
an increase year on year (the 2022
number was 36.2). Contingent resources
of 15.5 mmbo 2C further adds to the
remaining potential of the blocks. And
maybe more importantly: Cash flow from
operations for 2023 amounted to MUSD
82.7 only down by MUSD 5 from the
MUSD 87.5 achieved in 2022 despite the
drop in production. The cash flow from
operations multiple compared to our
market cap is a mere 1.4! so we certainly
believe there is still value to be had from
Blocks 3&4. Put in perspective the Blocks
have generated production of 43 million
barrels since production started, with half
as much remaining in reserves and
almost as much remaining in reserves
and contingent resources. And those 43
million barrels have resulted in distribu-
tion to shareholders of a very impressive
SEK 43 per share!
Looking forward Blocks 3&4 certainly
have value and can continue to deliver
both production and cash. How best to
realise that value for our shareholders
is part of the ongoing strategic review
process.
2024 should also be the year when
Block 56 enters commerciality and starts
contributing production and cash flow.
And our wildcard wildcat on Block 58, the
Kanooz-1 well is expected to be drilled in
the 2nd quarter. Targeting more than 100
mmbo of unrisked prospective resources
a success on Block 58 would of course
dwarf anything else we are currently doing.
So stay with us, there are a few things
we must prove, and we are working on
those as well as sharpening both our
financial and sustainability goals. 2023
had challenges. 2024 will hopefully see
them overcome. And Tethys will continue
on its journey to be an energy company
also for the future.
Stockholm, March 2024
Magnus Nordin
Managing Director
5
Tethys Oil Annual Report 2023
Business model
Business model: Tethys Oil’s
position in the value chain
The oil and gas industry is a vital part of the global economy, providing energy for
transportation, heating, electricity generation and various industrial processes.
The industry is divided into three sectors: upstream, midstream and downstream.
Upstream
Midstream
Downstream
Involves exploration activities such
as seismic surveys and exploration
and appraisal drilling. The upstream
activities also include onshore and
offshore development, production
and sales of oil and gas.
Includes storage, transportation and
distribution. Building and operating
of pipelines and other transport
methods such as oil tankers and
physical trading of oil and gas as
well as related products.
Refining, marketing and distribution of
petroleum products, including gasoline,
diesel jet fuel, lubricants and petrochemi-
cals to end consumers through various
channels. Including filling stations,
whole sale distribution and direct sales
to industrial customers.
6.
Production
5.
Development
1.
Licence
awarded
E&P life cycle
4.
Appraisal
2.
Geological &
geophysical
3.
Exploration
drilling
Tethys Oil’s exploration and production life cycle
The stages represent an overview of the process from
licence award to production, which is complex
and involves risks and opportunities at each step.
1.
A licence is awarded from
the government to explore for oil
in a specific area.
4.
Additional wells are drilled in the
appraisal stage to determine
extent of discoveries.
2.
Geological & geophysical
includes surface geology and
seismic surveys where geoscien-
tists try ito identify potential
hydrocarbon deposits.
3.
Exploration drilling based on
findings of G&G studies.
5.
Development starts,
including construction of
production infrastructure.
6.
Production begins and the
extracted oil is being trans-
ported to buyers.
6
Tethys Oil Annual Report 2023 Business model
Tethys Oil’s business model
Potential global oil
reserve deficits
Increase in energy
demand
Access to high-
potential, yet
underexplored
areas
i n a ble operation
s
a
t
s
S u
Exploration
and appraisal
Onshore areas
with known oil
discoveries
Development
and production
d
Flexible an d l o w
evelopmen t c o
n
c
c
o st
p t
e
Shareholder
value
Energy
security
Reserves and
production
growth
Tethys Oil’s position
Tethys Oil is active in the upstream oil and gas industry, working
across the whole lifecycle of exploration, appraisal, develop-
ment, and production. Tethys Oil seeks to build, maintain and
expand a well-balanced portfolio of oil assets, offering a meas-
ured exposure to onshore production, development, appraisal
and exploration potential. The focus is on geographies with
proven petroleum systems, existing infrastructure, established
institutional frameworks and low political risk. In all its activi-
ties, Tethys Oil seeks a balanced approach to risk, creating
shareholder value through responsible oil and gas exploration
and production.
Tethys Oil’s Board of Directors has authorised the executive
management to explore the possibility of investing in energy
transition businesses. The scope of the exploratory work should
focus on the company’s subsurface competence and/or its
geographic footprint in the Nordics and Baltics as well as Oman
and the Gulf region. Read more about Tethys Oil’s approach to
sustainability on pages 35 to 79.
7
Tethys Oil Annual Report 2023 Market
Energy market and transition
More stable oil price despite continued turbulence
The oil price development was more stable in 2023 when com-
pared to 2022, delivering an average price of around USD 83
per barrel for both Brent and DME Oman oil blends with a peak
of USD 96.5 per barrel in September. This was markedly lower
than in 2022 when the peak was reached in March after Rus-
sia’s invasion of Ukraine, with the volatility of the price being
very high throughout the year. The first half of 2023 was domi-
nated by demand factors, particularly by expectations of strong
recovery in oil demand in China, when the economy started
reopening, after strict COVID-19 policies. The opposing factor
was the extraordinary pace of monetary tightening in most of the
advanced and developing economies causing a slowdown in
economic growth. The second half of the year was dominated
by supply factors, with OPEC+ playing an important role in stabi-
lisation of oil markets when participating countries decided to
proceed with the cuts of oil production, which improved global
demand/supply balance and lead to recovery in oil price.
Oil demand will continue to grow…
Despite different scenarios for decarbonisation of business
activities and economic sectors, there is a shared view among
forecasters that there will be solid demand for petroleum prod-
ucts in the middle of the 21st century. Given strong population
and economic growth in the regions with a relatively low energy
consumption per capita, the world will need more energy pro-
duced in 2045 than today, with only part of that additional
demand covered by renewable energy sources according to
OPEC. Oil consumption in non-OECD countries is expected to
grow rapidly, by around 26.0 million barrels per day by 2045, or
by 48 per cent compared to 2022. Oil consumption in the OECD
countries on the other hand is expected to start to gradually
decline by the early 2030s. Despite the decline, by 2045 the
demand in OECD is estimated to be at approximately 80 percent
of the 2022 level of consumption. Furthermore, global oil
demand is expected to increase by 16.5 percent between
2022–2045, or by 16.4 million barrels oil per day in volumes.
Oil price development in 2023–2024,
Brent and DME Oman blends
Long-term oil demand by region, mb/d
120
100
80
60
40
20
Jan
23
Feb
23
Mar
23
Apr
23
May
23
Jun
23
Jul
23
Aug
23
Sep
23
Oct
23
Nov
23
Dec
23
Jan
24
Feb
24
2025
2030
2035
2040
2045
Brent
DME Oman
OECD
NON OECD
WORLD
Source: Bloomberg
Source: OPEC
Dollars/bbl
100
95
90
85
80
75
70
8
Tethys Oil Annual Report 2023
Market
In the short term, looking at 2024, there is consensus among
the main energy related organisations and agencies that the
demand for oil will continue growing.
…and investments are too low
In 2023, total oil inventories in the OECD countries reached the
lowest level since 2004, with depletion happening due to grow-
ing oil demand and limited supply in recent years. Improvements
in drilling technology and increased production efficiency, which
has allowed less capital invested in drilling, have been achieved
in the last decade. But the size of investments needed to meet
oil and gas demand is still very large. According to Wood Mac-
kenzie and OPEC, annual upstream investments of around USD
500 billion are required 2023–2045 to meet global demand. If
underinvestment continues, it could create a tangible risk for
the oil supply.
Emissions vs extraction costs: last man standing
According to the Energy Information Agency (EIA) oil will continue
to play an important role in the foreseeable future under many
policies and technologies scenarios, but the environmental
impact of oil production (predominantly GHG emissions), should
be improved. Ideally, oil should be produced where it has the
lowest carbon footprint, emission per barrel, and is cheap to
produce.
Also, a sizable portion of current global oil supply emanates
from countries with political instability, many of which have
experienced production decline and underinvestment in infra-
structure. It is therefore important to secure more oil supply
from other politically and economically stable regions, with
Oman being a good example. In addition, in Oman the infra-
structure for oil extraction is well developed and comprehensive
and the country is moving towards more sustainable oil extrac-
tion practices. By adapting to the important challenges facing
the oil sector, Oman has the potential to become one of the
“last men standing” of the oil producing nations.
Global oil demand growth, MMbbl/d
Emissions versus extraction costs for oil reserves
in selected countries
MMbbl/d
105
100
95
2022
2023e
2024e
OPEC
EIA
iEA
45
40
35
30
25
20
15
10
5
*
)
l
b
b
/
$
(
s
n
o
i
t
c
a
r
t
x
e
f
o
t
s
o
c
e
g
a
r
e
v
A
United Kingdom
Oman
Brazil
Nigeria
Venezuela
Norway
United States
Russia
Indonesia
Canada
Saudi Arabia
Iraq
Iran
10
20
Emissions (kg CO2 equiv. /bbl)
30
40
50
60
70
80
90
100
110
120
130
140
150
Size = 50 – remaining crude reserves (bn bbls)
NON-OPEC
OPEC
In Oman, the emission per barrels is around 21.77 kg CO2eq per barrel, while cost of
extraction (including capex) is between USD 30–40 per barrel.
* Average cost of extraction includes CAPEX, production, transportation and taxes
Sources: OPEC, EIA, and iEA
Sources: Accenture Analysis based on Rystad, EIA, OCI data, and National Ocean Industries Association (NOIA)
9
Tethys Oil Annual Report 2023
Market
Navigating energy transition
The impact of climate change on our
planet is undeniable and requires urgent
action from all parts of society. It is clear
that the challenge of reducing emissions
and decarbonising our industries, energy
and transportation systems requires a
collective response with the active partic-
ipation of all actors.
Transition of the oil and gas sector
According to the International Energy
Agency (IEA), Oil and gas operations
account for around 15 percent of global
energy-related emissions, while providing
roughly half of the world’s energy supply.
Serving not only as a primary energy
source, but also an essential raw mate-
rial required in several industrial pro-
cesses and everyday products.
Although the demand for fossil fuels
has been strong in recent years, there
are signs of a change in direction with
the deployment of low-emission alterna-
tives. However, the future demand for
fossil fuels is expected to vary across
economies at different stages of devel-
opment. In many emerging economies
energy demand will remain strong, driven
by factors such as urbanisation, low built
space per capita and vehicle ownership
relative to advanced economies. Further-
more, short term oil demand is expected
to increase as the result of a projected
population increase of 1.7 billion by 2050.
Oil, as a source of energy, has a role
to play also in a future scenario. However,
in that scenario, the type of fossil fuel
supply and its emission intensity will play
an important role in minimising emis-
sions while meeting the expected global
demand.
All oil is not equal
Oil is the world’s largest and most
diverse source of fossil fuel. Oil is found
in a wide range of regions and is depos-
ited in a wide variety of geological set-
tings. Different oils have varied chemical
makeups, and an array of technologies
are needed to extract and refine each oil
before it reaches consumers.
Onshore conventional light oil resources
are overall much less emissions-inten-
sive than other oils, and a relatively small
proportion of its emissions come from
extraction (upstream) and refining (down-
stream) processes.
There is no universal definition of
“unconventional” oil and gas resources,
however, they can broadly be considered
as those that are technically more chal-
lenging to extract.
Emissions intensity can vary greatly
among oil fields, with oil sands and heavy
oil being the most emissions-intensive
resource themes in general. If emissions
from final combustion are disregarded,
the emissions intensities differ consider-
ably across various production sources.
Even fields with similar characteristics
can exhibit substantial differences in
emissions intensities, influenced by fac-
tors such as well-maturity, viscosity, gas
to oil ratio (“GOR“), location and access
to external power grids.
Furthermore, studies have shown that,
all else being equal, similarly managed
unconventional assets display greater
fundamental environmental risks than
conventional assets due to either their
location of operation or their extraction
practices.
As an oil nation, Oman offers many
advantages and other factors that meet
the characteristics of onshore conven-
tional oil and gas production. Using the
existing infrastructure of Oman offers
efficient production and transportation.
The desert settings also offer a less sen-
sitive environment. These are important
factors in Tethys Oil’s ambition to provide
oil and gas in a responsible way by mini-
mising operational emissions and inter-
ference with local biodiversity.
% Energy out
100
90
80
70
60
50
40
30
20
10
Historic oil
and gas fields
New oil and gas
discoveries
Wind
Coal
EROI curve
The Net Energy Cliff
Fuels to the right require more energy
for production.
Energy available
for consumption
Energy used
in production
EROI Energy Return On Investment
Nuclear
Solar PV
Shale oil
Tar sands
Oil shale
50:1
40:1
30:1
20:1
10:1
1:1
1 IPCC, 2023: Climate Change 2023: Synthesis Report.
2 IPCC, 2023: Climate Change 2023: Synthesis Report.
3 Systemiq, 2023, Unconventional Oil & Gas Assets in the Net Zero Transition.
Source: EROI of Global Energy Resources, October 2013, The Net Energy Cliff,
https://assets.publishing.service.gov.uk/media/57a08a0340f0b652dd000508/
60999-EROI_of_Global_Energy_Resources.pdf
10
Tethys Oil Annual Report 2023 Strategy and operations
Strategy and operations
Tethys Oil’s strategy:
creating value from
exploration to production
Value is best created by spinning the drill bit on carefully selected
exploration prospects.
11
Tethys Oil Annual Report 2023 Strategy and operations
Oldest independent state in the Arab world
The Sultanate of Oman, located in the
south-eastern part of the Arabian Penin-
sula, overlooks the Arabian Sea, the Sea
of Oman and the Persian Gulf. It also
overlooks the strategic Strait of Hormuz
at the point of entry to the Persian Gulf
from where it has been part of the
world’s oldest trade routes. Oman’s
neighbours include the United Arab
Emirates, Saudi Arabia and Yemen. With
a population of around 5 million people
and area of approximately 309.500
square kilometers Oman is a sparsely
populated country, though it is one or
the larger countries in the region geo-
graphically.
Oman boasts a diverse landscape. It
is a country that combines white sand
beaches, rolling desert dunes and expan-
sive mountain ranges. It is an old sea
trading nation between Africa and Asia
and also the oldest independent state
in the Arab world with a long and rich
history over thousands of years. Modern
archaeological discoveries suggest that
humans settled in Oman during the Stone
Age, i.e. more than 10,000 years ago.
Oman as an oil nation
Most importantly for Tethys Oil, Oman is
also a major oil nation, the largest in the
Middle East that is not a member of
OPEC. Oman is part of OPEC+ and has
some 5.4 billion barrels of proven oil
reserves and ranks as the seventh larg-
est proven oil reserve holder in the
Middle East and the 21st largest in the
world. Oman’s crude oil and condensate
production amounted to 1,048,700 bar-
rels per day in 2023.
The largest producer in Oman is Petro-
leum Development Oman (“PDO”). PDO
produces around 60 percent of the total
production in Oman. PDO is owned by the
Omani government (60 percent), Shell
(34 percent), Total (4 percent), and
PTTEP (2 percent). Other major oil com-
panies active in Oman include Occidental
Petroleum, BP and ENI.
The total exports of oil and condensates
during 2023 amounted to 310 million bar-
rels. The People’s Republic of China
topped the list of the countries importing
crude oil from Oman with 92 percent.
Japan, South Korea and India combined
accounted for an additional six percent of
Oman’s oil exports, with the remaining
two percent being exported to other
countries.
History of good governance
Oman, a sultantate, is viewed as a model
of good governance and is defined as a
country with very high Human Develop-
ment Index (HDI). According to the World
Bank Political Stability and Absence of
Violence/Terrorism estimate, Oman is
one of the most stable countries in the
region. Oman is also viewed as a peace-
12
Tethys Oil Annual Report 2023
Strategy and operations
Strategy and operations
ful and diplomatically active actor within
the Gulf Cooperation Council (GCC) and
the broader Middle East. Recognising the
reliance on oil and gas revenues, the
work to diversify the economy of the
country is ongoing.
Advantages of operating in Oman
There are several advantages for an oil
and gas company to operate in Oman.
The above mentioned good governance
is one. A a transparent and tested regula-
tory framework, including streamlined
business registrations processes,
enforcement of anti-corruption measures
and protecting intellectual property rights
are other advantages. An existing infra-
structure for oil and gas production and
already established service companies
are also beneficial. A talent pool of local
professionals within oil and gas and the
strategic geographical position of Oman,
to meet the growing demand of countries
Tethys Oil has successfully
produced more than 42 million
barrels of oil.
in the east, such as India and China, are
also important benefits. Altogether,
Oman offers the opportunity for small
and medium sized. oil and gas compa-
nies to establish themselves. In addition,
the climate and environmental footprint
of conventional onshore oil production in
Oman is more favourable than in many
other places, and the quality of oil pro-
duced in Oman is relatively high (for more
information on this see the Sustainability
Report on pages 35–79).
The footprint of Tethys Oil in Oman
Tethys Oil began its journey in Oman in
2006. Since then the company has
successfully produced more than 42 mil-
lion barrels of oil. Starting in 2017,
Tethys Oil has built up a portfolio of oper-
ated exploration blocks focusing on the
underexplored flanks of the prolific cen-
tral Omani salt basins. An area that
offers a variety of exploration opportuni-
ties across a multitude of geological set-
tings. With a portfolio of high potential
blocks and a skilled exploration team in
Muscat, Tethys Oil is positioned for a con-
tinued exciting journey in the Sultanate of
Oman for many years to come.
Milestones for
Tethys Oil in Oman
2006
2007
2010
2015
2017
2019
2020
2021
2022
2023
Entry into Oman with Block 15 (since relinquished)
Acquisition of interests in Blocks 3&4
First oil production on Blocks 3&4
Production (net to Tethys Oil) exceeds 11,000 barrels oil per day
Awarded 100 percent of Block 49
Farmin 20 percent interest in Block 56
Production amounts to almost 13,000 barrels oil per day. Awarded Block 58
Drilled the Thameen-1 exploration well on Block 49.
Farmin of 45 percent interest in Block 56 and assumed operatorship
Drilled five wells on the Eastern Flank area of Block 56
Successful six-month well test in Al Jumd and drilling of Menna-1 on Block 56
Tethys Oil Annual Report 2023
13
Strategy and operations
Tethys Oil’s exploration strategy
Value is created by focusing on the high
potential, yet underexplored area, near
flanks of the basins that currently consti-
tute the majority of Oman’s production.
Tethys Oil’s main success story so far is
Blocks 3&4 with 42.7 mmbo produced
for Tethys Oil and with continued signifi-
cant exploration potential remaining.
Tethys Oil aims to explore, appraise and
develop its operated blocks to bring them
to commercial production. The focus is
on low-cost drilling, near infrastructure
driven exploration with short discovery
to production cycles. This means, the
roadmap to commerciality is maturing
and Tethys Oil is committed to pursue
the opportunities along the flanks of the
produing basins in Blocks 56 and 58.
Licences &
agreements
Area, km²
Tethys Oil
interest
Initial
exploration
phase
Second
exploration
phase
Production
phase
Expiry date
Partners
(operator in bold)
Blocks 3&4, Oman
29,130
30%
July 2040
CCED, Tethys Oil, Mitsui
Block 49, Oman
15,439
100%
December 2023
Tethys Oil
Block 56, Oman
5,808
65%
December 2024
Tethys Oil, Medco, Biyaq, Intaj
Block 58, Oman
4,557
100%
July 2024
Tethys Oil
14
Tethys Oil Annual Report 2023 Strategy and operations
What is an EPSA and a block?
A block is a specific defined area that can
be licensed by a state to companies for a
specific purpose, such as oil exploration
or production. The rights and obligations of
the licensee are governed by a license
agreement negotiated between the com-
pany and the responsible authority. In
Oman, this relationship is regulated through
a so-called Exploration and Production
Sharing Agreement (EPSA). EPSA is an
agreement between oil companies and the
Sultanate of Oman and regulates the terms
and conditions of the company’s oil explora-
tion and possible production. The conditions
include percentages for cost recovery, profit
sharing and tax.
3
CC Energy
3
4
CC Energy
49
Tethys Oil
58
Tethys Oil
56
Tethys Oil
100
50
0
100 kilometer
What is an operator?
Co-ownership of licenses is very
common in the oil and gas
industry. The terms and condi-
tions for co-ownership are often
partly regulated in the licensing
agreements, but in cases where
this is not sufficient, the co-own-
ing companies often enter a
so-called Joint Operations Agree-
ment (JOA). One of the main
issues regulated by licensing
agreements and JOA is the role
of the operator. The operator is
the partners who has opera-
tional responsibility for the oper-
ations, while non-operator part-
ners have a monitoring obliga-
tion. Tethys Oil is the operator in
Blocks 49, 56, and 58. CCED is
the operator of Blocks 3&4.
15
52ENI6PDO59Open42Shell41Open18Open38Open36EOG43BOpen4CC Energy31ARA12Total49Tethys Oil47ENI39Petrotel55Shell43AOpen50Masirah Oil LtdNLS66Open51Occidental54Lasso61BP56Tethys Oil58Tethys Oil40Open 74Open73Open7HCF77ENI3CC Energy75Open9Occidental62 OilOpen72Occidental15HCF44ARA30Occidental48OQ17Petrotel 57Petroleb67Petrotel62Occidental60OQ5Daleel76Open27Occidental70Maha65OccidentalVacantOpen53Occidental71Majan8MOGC8MOGCMadha10BOpen11BOpen10AOpen11AOpenMuscatSalalahMusandamTethys Oil Annual Report 2023 Strategy and operations
Development
and production
The development and production stage is when investments shift
to putting a field into production. Commercial production and the
revenues that follow are at the centre of the value creation cycle
for the upstream oil industry. Tethys Oil’s interest in Blocks 3&4
has produced over 42 mmbo since first oil in 2010.
Omani blend
The oil that Tethys Oil has the right to sell is called Omani Export Blend (or
simply Omani Blend for short). As the name suggests, it is a blend of all the
oil produced onshore Oman. The oil that Tethys Oil actually produces is thus
mixed with the oil of all other producers. Omani blend is considered medium
heavy with an API of 33.3 and slightly sour due to a relatively high sulfur
content. This can be compared to the well-known international standards
Brent or WTI (West Texas Intermediate) which have APIs of 37.9 and 42.0
respectively and just under half the sulphur content in comparison.
16
Tethys Oil Annual Report 2023
Strategy and operations
Oil exploration and production in Oman is
governed by EPSAs (for more information
on this see page 15). The EPSA allows
the companies to recover their costs
from a predetermined percentage of the
value of total oil production, referred to
as cost oil. After deducting any allowance
for cost oil, the remaining oil production
is split, also according to a predeter-
mined percentage individual per agree-
ment, between the government and the
partners. Cost can only be recovered
once a commercial discovery has been
made, production has started and the
production phase of the EPSA has been
entered. This means that until a commer-
cial oil discovery is made on an explora-
tion phased block, the exploring oil com-
pany bears all the risk.
All oil produced by Tethys Oil on Blocks
3&4 in Oman is transported through a
pipeline to the Qarn Alam metering sta-
tion. At the metering station, the oil vol-
umes are recorded, and the quality is
measured. The majority of oil produced in
Oman is onshore. From Qarn Alam, the
oil is transported through the national
pipeline system to the Mina Al Fahal
terminal in Muscat, on the Sea of Oman,
and it therefore never needs to pass
through the Strait of Hormuz. At the
terminal, the oil is lifted and loaded into
oil tankers and shipped to the final desti-
nations. The largest importers of oil from
Oman are China and India.
Tethys Oil sells all of its net entitled oil
on a monthly basis to Mitsui Energy Trad-
ing Singapore, which is part of Mitsui &
Co Ltd. Tethys Oil’s selling price is based
on the monthly average price of the front-
month future contract of Oman export
blend (with 2 months to delivery) as
traded on the Dubai Mercantile Exchange,
including trading and quality adjustments.
Reserves and contingent resources
Oman, Blocks 3&4
Tethys Oil’s net working interest Reserves in Blocks 3&4 in
Oman as per 31 December 2023 amount to 21,698 thousand
barrels of oil (“mbo”) of proven and probable Reserves (2P).
The 2P reserve replacement ratio amounts to 32 percent. In
addition, Tethys Oil’s net working interest resources oil base in
Oman amounts to 15,529 mbo of 2C Contingent Resources.
The Company’s 2023 and 2022 year-end Reserves were evalu-
ated by ERC Equipoise Limited (“ERCE”) as independent quali-
fied Reserves evaluator.
Additions and revisions include maturation of Contingent
Resources to Reserves from the Shahd fields. Revisions of
the Reserves also include the net of positive revisions on the
Farha South and Saiwan East fields and negative revisions on
the Ulfa fields.
Based on ERCE’s model and current oil price assumptions,
Tethys Oil’s net entitlement Reserves (Reserves after govern-
ment take) amount to 6,419 mbo of 1P, 10,392 mbo of 2P and
14,881 mbo of 3P.
In addition to Reserves, Tethys Oil also announces net work-
ing interest Contingent Resources. The bulk of the estimated
Contingent Resources are contained in the Ulfa, Samha and
Erfan fields. Development of the Contingent Resources in the
discoveries is contingent upon a committed work programme
as well as budget to access these resources.
Development of reserves (working interest), Blocks 3&4
Mbo
1P
2P
3P
Total 31 December 2022
14,040
23,901
36,211
Production 2023
Additions and revisions
Total 31 December 2023
-3,219
1,523
-3,219
1,016
-3,219
3,357
12,344
21,698
36,349
Reserve replacement ratio, %
47%
32%
104%
Contingent resources (working interest), Blocks 3&4
Mbo
1C
2C
3C
Total 31 December 2023
5,356
15,529
32,994
Management comments on reserves
The reserve replacement ratio (RRR) is a reflection of the robust
production and increasing recovery factors of the Farha South
field. These positive revisions more than offset the negative
revisions that stem from the underperforming fields that have
impacted production output during 2023. The disappointing
results of the exploration drilling and certain appraisal wells
during the year limited the 2P RRR to 32 percent.
Tethys Oil Annual Report 2023
17
Strategy and operations
Blocks 3&4
– extending the production plateau
Since Tethys Oil’s acquisition of its inter-
est in Blocks 3&4 onshore Oman in 2007
it has been at the core of the Group’s
operations. The two blocks, governed by a
single EPSA, cover a total area of
29,130km2 in the arid desert region
central Oman. Oil was discovered on the
Farha South field in 2009 and first oil
production was achieved the year after.
Since 2010 the fields on Blocks 3&4
have produced more than 140 million
barrels gross, almost 43 million net to
Tethys Oil. At the end of 2023 more than
21 million barrels of reserves and 15 mil-
lion barrels of contingent resources net
to Tethys Oil remains and with a track
record of consistently adding reserves
each year, the Company has plenty of run-
ning room for production and growth until
the expiry of the production term in 2040.
In 2023 production averaged 8,818
barrels per oil, a decline of 11 percent
compared to 2022 as the results of
newer production wells were unable to
offset the natural decline of the older
wells. Production on Blocks 3&4 comes
from over 300 active wells on seven
different fields including the original
Farha South and Saiwan East field as well
as the Shahd cluster discovered in 2012,
Ulfa, Erfan and Samha discovered in
2017 and the most recent discovery,
Anan from 2019.
For the most part of 2023 four drilling
rigs were active across the Blocks and a
total of 40 wells were drilled of which 29
were development/production wells,
seven appraisal wells and four explora-
tion wells. In addition to the drilling rigs,
two workover units were active to per-
form well workovers and interventions on
the existing well stock. A total of 79 work-
overs and 466 well interventions were
performed throughout the year.
Exploration and appraisal activity on
Blocks 3&4 in 2023 included four explo-
ration wells, seven appraisal wells and
the acquisition of 4,230 km2, as well as
processing and interpretation of 3D
seismic data. The four exploration wells
drilled targeted prospects which differed
both in play type and geographic loca-
18
tions. Three of the exploration wells were
drilled in the first quarter 2023, Elaf-1,
Rahbah-1 and Jari-1. Elaf-1, located
some eight kilometres northwest of Ulfa-
1, targeted the Khufai and Buah forma-
tions while Rahbah-1 is located about
seven kilometres southeast of the Ulfa
field, where it targeted the Khufai, Buah
and Barik formations. In the southern
part of Block 4, Jari-1 targeted a Cryo-
genian age formation near where the
Luja-1 well was drilled and confirmed the
presence of a working petroleum system
in 2019. The drilling of Jari-1 and
Rahbah-1 was completed during the
second quarter, and both flowed light
hydrocarbons to surface. Subsequent
analysis of Elaf-1 also resulted in hydro-
carbons flows during testing. In the case
of Elaf-1 and Rahbah-1 the flows con-
sisted of gas and condensates, and as
such are not considered viable for com-
mercial development. They are, however,
slated for inclusion in a later phase of
the Gas-to-Power project. Following a
comprehensive testing programme Jari-1
was deemed a technical discovery, but
the estimated recoverable volumes and
flow rates were considered insufficient
for a development on a stand-alone
basis. During the fourth quarter 2023,
the fourth and final exploration well of
the year, Raghad-1, was drilled as a dry
well as the well logs indicated no pres-
ence of hydrocarbons. Further work is
ongoing to integrate the results into the
overall geological model for Blocks 3&4.
The most notable development project
of 2023 was the installation and com-
missioning of the first phase of the Gas-
to-Power project. The project aims to use
the associated gas produced to replace
diesel as an energy source for opera-
Facts 2023
Production: 8,818 bopd
Wells drilled: 40
Exploration wells: 4
Appraisal wells: 7
Development wells: 29
Tethys Oil Annual Report 2023 tions on the blocks, reducing costs and
emissions. More information on the Gas-
to-Power project can be found on page 29.
Major development projects during the
year included expanding and upgrading
produced water reinjection (PWRI) facili-
ties in several areas of the field including
the installation of a new PWRI facility at
the Saiwan station. These upgrades
together with the installation of two new
permanent production separators and
replacement and rerouting of flowlines
and trunklines should significantly
improve production capacity and stability.
Block 3
Farha South Field
Ulfa
Samha
Shahd
field
Saiwan East Field
Anan
Erfan
Alam Station &
Pipeline System
Jari-1
Block 4
Fields in production
Fields in production
Leads and prospects
Leads and prospects
Strategy and operations
Block 3
19
Tethys Oil Annual Report 2023 Strategy and operations
Exploration and appraisal
– discovering new producing fields
Exploration and appraisal are critical phases that lay the foundation for future
production. Exploration drilling are drilling with the purpose of discovering new oil
fields, while appraisal includes further drilling and testing to assess the size and
commercial viability of these discoveries. Exploration and appraisal are important
activities for Tethys Oil to ensure continued good production and profitability.
Tethys Oil is engaged in exploration and/
or appraisal activities on all blocks in
which it has an interest share. These
activities are the key components in
building reserves and resources for
future production and is hence ongoing
throughout all phases of an EPSA. The
activities come in many forms, but the
primary elements include seismic data
acquisition and studies of that data with
the goal of finding the most promising
sites for drilling, then followed by the
actual exploration drilling.
In recent years Tethys Oil has increased
its exploration portfolio in blocks surround-
ing PDO’s Block 6 where most of Oman’s
oil production takes place. Tethys Oil
focuses on blocks that have both promis-
ing seismic data from previous operators
and well log data indicating the presence
of oil in the area, which it can then refine
or add to with additional seismic acquisi-
tion and studies.
Seismic studies
A key exploration activity is the use of
geophysical seismic. The principle
Vibrator truck
Geophones (receivers)
Water
20
Strategy and operations
behind seismic is that sound waves
travel at different speeds in different
materials and that the sound waves, at
the transition between different materi-
als, partly bend and reflect back to the
surface. As rocks have different composi-
tions, it is possible, based on variations
in the speed of the sound wave and
angle, to estimate the location of struc-
tures that could hold oil and/or natural
gas reserves in an exploration area.
Single linear lines of seismic provide
information about the subsurface rocks
directly beneath the seismic equipment.
This type of seismic data is referred to as
two-dimensional or 2D seismic, because
it provides data along two axes, length
and depth (see illustration below). If seis-
mic acquisition is done across multiple
lines simultaneously, the third dimension
of width is gained, hence referred to as
three-dimensional seismic, or 3D seismic.
3D seismic offers much greater density
of information about the subsurface but
is much more costly and covers usually a
smaller area. 2D is used to identify focus
areas where 3D can be acquired. As the
oil at Blocks 3&4 is trapped in fault
blocks or structures, 3D seismic has
been essential in the mapping of possi-
ble oil-bearing structures.
Formations
Geological formations are natural forma-
tions and structures in the subsurface
which have occurred as a result of usu-
ally very slow geological processes of
different kinds and ages. A formation is
a rock unit that is distinctive enough in
appearance that a geoscientist can tell
it apart from the surrounding rock layers.
The thickness of formations may range
from less than a metre to several thou-
sand metres. The term “formation” is
often used informally to refer to a specific
grouping of rocks, such as those encoun-
tered within a certain depth range in a
borehole.
On Blocks 3&4, reservoirs in formations
like Khufai, Barik, Lower Al Bashir, Buah
and Masirah Bay have been explored.
Receiver truck
Gas
Oil
Water
21
Strategy and operations
Block 56 – on track
for commerciality
Block 56 is a promising exploration and
appraisal block, where Tethys Oil has been
the operator since 2021. Block 56 covers
an area of 5,808 km2 in the south-east-
ern part of Oman, approximately 200 km
south of Blocks 3&4, adjacent to the
south-east of Block 6 where PDO and
Medco produces oil from the Karim Small
Fields cluster. Block 56 lies at the inter-
section of numerous geological prov-
inces including the prolific South Oman
Salt Basin with its extensive oil and gas
infrastructure. It offers appraisal and
exploration potential in multiple proven
play concepts, many of which are familiar
to Tethys Oil from its operations in Oman.
In total, there had been eleven wells
drilled on the block prior to Tethys Oil
assuming operatorship in 2021, ten of
which encountered oil or oil shows. Under
Tethys Oil’s operatorship the focus of the
appraisal and exploration activities has
been on the Eastern Flank of Block 56
around the area of Al Jumd discovery and
the Menna prospect.
Al Jumd is located in the northwestern
part of Block 56 and was the primary site
for appraisal activities on the Eastern
Flank, whereas the Menna prospect is
located approximately 20 kilometres
south-west of the Al Jumd discovery, with
which it shares similar characteristics.
Menna is one of several identified pros-
pects and leads that were interpreted uti-
lising Tethys’ 2022 3D seismic covering
2,000 km2 of the Eastern Flank trend, an
area stretching alongside the border of
Block 6’s productive Karim Small Fields.
Development in 2023 and outlook
Throughout 2023, Tethys Oil’s operations
in Block 56 in Oman were marked by
significant exploration and appraisal
activities, focusing on the Al Jumd discov-
ery and the Eastern Flank. Commencing
in early April, an extended well test (“EWT”)
at Al Jumd was performed. The aim was to
establish recoverable resource volumes
and optimal production rates from the Al
Jumd-2, Al Jumd-3, and Al Jumd-4 wells.
Production rates varied between 150 and
22
Tethys Oil Annual Report 2023
Strategy and operations
Leads and prospects
Karim Small Fields (KSF) – Operated by Medco
Al Jumd
Sarha-3
Eastern Flank
Block 6
Menna-1
Block 56
700 barrels per day and the Al Jumd wells
provided crucial data for field development
planning for the Eastern Flank. The quanti-
ties of oil that were produced and exported
from the Al Jumd EWT, contributed posi-
tively to Tethys Oil’s revenues and cash
flow. The exploration drilling of Menna-1
was conducted in December 2023 and
encountered oil in three formations. Test
results are expected to be disclosed in
the first half of 2024.
The overall focus for Tethys Oil in Block
56 in 2023 was to appraise the Al Jumd
discovery and preparing for further explo-
ration drilling in Block 56 along the East-
ern Flank with the drilling of Menna-1.
Consequently, the exploration phase for
Block 56 was extended until December
2024 by the Ministry of Energy and
Minerals to allow Tethys Oil more time
for drilling and evaluation. These efforts
are part of Tethys Oil’s broader strategy
to establish commercial viability and
expand its production portfolio in Oman.
The outlook for Block 56 is promising
and Tethys Oil’s work is focused on the
commercialisation of the Block in 2024.
23
Tethys Oil Annual Report 2023 Strategy and operations
Block 58 – exploration drilling
and potential farmout
Awarded in 2020 with a 100 percent
interest share, Block 58 is Tethys Oil’s
latest addition to the portfolio. The block
has several high-potential prospects in
the South Lahan and Fahd areas. Block
58 is located in the Dhofar Governorate
in the southern part of Oman and covers
an area of 4,557 km2. The block is adja-
cent to Block 6’s Harweel cluster with
producing fields and infrastructure some
four to ten kilometres to the east of the
block and straddles the western flank of
the South Oman Salt Basin and the West-
ern Deformation Front.
A total of 7,600 km of 2D seismic and
1,100 km2 of 3D seismic data acquired
by previous operators was made availa-
ble to Tethys Oil as it assumed operator-
Thameen-1
ship. Additional data such as well logs
and well reports from two wells drilled
on the block was also included in the
database. The block showed potential
as both previous wells had encountered
hydrocarbon shows and multiple play
concepts were believed to exist within
the block boundaries, including plays
proven in Block 3&4 but yet to be tested
in Block 58. Based on further analysis of
the legacy data, several prospects and
leads were identified, and Tethys Oil has
focused its exploration activities on two
areas of the block, Fahd and South Lahan.
Development in 2023 and outlook
In 2023, Tethys Oil’s work in Oman’s
Block 58 involved interpreting seismic
data to identify prospects in the South
Lahan area, where the prospects are part
of a play that is proven and producing light
oil in the nearby Harweel area on neigh-
bouring Block 6. In parallel, the drilling
preparation of the Fahd South prospect,
Kunooz (“Gift”), targeting +120 mmbo
was underway and is planned for Q2
2024. This meant that the initial explora-
tion phase of the block was also extended
to July 2024 and to manage risks and
resources effectively for the block Tethys
Oil is exploring the possibilities to acquire
a partner through a so called farm-out of a
share in the EPSA. Constructive discus-
sions are currently ongoing with a select
group of companies which could result in
a farmout.
Leads and prospects
Harweel and surrounding infrastructure
Fahd
Block 58
South
Lahan
Block 6
24
Tethys Oil Annual Report 2023 Strategy and operations
Block 49 – re-entry
and re-testing
In 2021, Thameen-1 on Block 49 became
Tethys Oil’s first operated exploration drill-
ing in Oman since 2007. The Block 49
license covers an area of 15,439 km2.
Nine wells have been drilled by previous
operators within the block boundaries,
several of which are reported to have
encountered oil shows. Among the legacy
wells, Dauka-1 was the first well ever
drilled in Oman in 1955.
Tethys Oil has, since it was awarded
the license in 2017, reprocessed around
1,500 km of 2D seismic data from previ-
ous operators and conducted seismic
campaigns of over 250 km2 of new 3D
and almost 300 km of new 2D. Based
on these seismic surveys, drilling opera-
tions commenced at Thameen-1 in the
north eastern part of the block on 31
December 2020 and reached its final
depth of over 4,000 metres in late Febru-
ary 2021. The drilling of Thameen-1 was
the first operated drilling of Tethys Oil in
over a decade and its operational success
included zero incidents and reaffirmed
Tethys Oil’s capabilities as an upstream
operator.
Development in 2023 and outlook
In 2023, Tethys Oil focused on re-enter-
ing and re-testing the Thameen-1 well in
Block 49 to determine its potential for oil
production. The company planned to use
hydraulic fracturing to stimulate the well
and assess if the oil-rich zone could flow
oil. Throughout the year, Tethys Oil worked
on planning and tendering for the neces-
sary services to conduct this re-testing.
However, challenges in finding commer-
cially attractive offers have led to ongo-
ing evaluations and delays. The outcome
of these activities will shape Tethys Oil’s
future plans for Block 49.
The initial exploration phase of the
EPSA for Block 49 expired on 31 Decem-
ber 2023 and Tethys Oil is in discussions
with the Ministry of Energy and Minerals
regarding entering next exploration phase.
Thameen-1
Block 49
25
Tethys Oil Annual Report 2023 Sustainability at Tethys Oil
Sustainability at Tethys Oil
Tethys Oil’s approach to sustainability
Tethys Oil recognises the critical interplay
between sustainable practices and its
role within the global energy landscape.
In the spirit of responsible resource man-
agement, Tethys Oil’s commitment to
sustainability spans across environmen-
tal, social, and governance dimensions.
By fostering a delicate balance between
profitability, societal well-being, and envi-
ronmental stewardship, Tethys Oil aspire
to pave the way toward a more sustaina-
ble energy future. Tethys Oil’s sustainabil-
ity strategy has evolved with its mission
to create lasting shareholder value
through responsible oil and gas explora-
tion and production. With a vision for
measured growth, Tethys Oil seek to culti-
vate a balanced portfolio of oil assets,
guided by a commitment to prudent risk
management. Tethys Oil’s corporate
culture is characterised by the values of
responsibility, fairness, and ethical conduct,
fostering a reputation as a forward-thinking
and conscientious corporate citizen across
all global operations. Tethys Oil’s strategy is
rooted in its commitment to serve stakehold-
ers, its long-term growth objectives, and the
ethical principles that define its culture, all
of which are encapsulated in the Company’s
mission, vision, and values. For more infor-
mation about Tethys Oils sustainability work,
please see the pages 35–79.
Mission
Vision
Values
Tethys Oil is an oil and gas exploration and production company with a primary objective
of creating shareholder value working across the whole upstream industry lifecycle of
exploration, appraisal, development, and production. A central belief in the business
model is to explore for and produce oil and gas in an economically, socially and environ-
mentally responsible way. The Group applies the same standards to its activities world-
wide to satisfy both its commercial and ethical requirements in accordance with the
Company’s Code of Conduct. Tethys Oil seeks to be a sustainable and profitable busi-
ness long-term. Sustainability means running a business that is not only profitable, but
is aligned with the requirements and expectations of stakeholders both within and out-
side the Group.
Tethys Oil’s vision is that growth continues through its exploration success. It seeks to
build, maintain and expand a well-balanced and self-financed portfolio of oil assets,
offering a measured exposure to onshore production, development, appraisal and
exploration potential. The focus of today and tomorrow is on geographies with proven
petroleum systems, existing infrastructure, established institutional frameworks and
low political risk. In all its activities, Tethys Oil seeks a balanced approach to risk.
Tethys Oil’s corporate culture emanates from the Group’s Scandinavian roots. It is the
responsibility of Tethys Oil’s management to foster a corporate culture that promotes
the values and principles outlined in the Group’s Code of Conduct. Tethys Oil aims to
act in a responsible, fair, accountable and ethical manner towards all aspects of the
environment and to all individuals and entities that the Group encounters in its course
of doing business. Tethys Oil aims to apply the same standards to all its activities wher-
ever they are carried out. It is of vital importance to Tethys Oil that the Group maintains
and further builds on its reputation as a responsible and forward-looking corporate citi-
zen in all countries where Tethys Oil has a presence and in relation to all stakeholders,
may they be shareholders, employees, contractors, partners or someone else.
26
Tethys Oil Annual Report 2023
Tethys Oil’s sustainability strategy
Sustainability at Tethys Oil
Within the three focus areas Environment, Social & Safety and Governance, Tethys Oil
has identified material topics with the potential to impact and affect people’s lives for the
better. The focus areas are followed-up with KPIs, action plans and long-term goals and
targets to ensure progress and performance management. The focus areas contribute to
a number of the UN Sustainable Development Goals.
Environment
Social and safety
Governance
Environment is about conducting opera-
tions while creating minimal disturbance
to the environment and to the people
living nearby. Potential disturbances
could for example be in connection to
local ecosystems, water, air and human
health.
Social and safety is Tethys Oil’s focus
area concerning its relationships with
internal and external stakeholders. As an
oil and gas company, Tethys Oil operates
in environments where the risk of acci-
dents is always present and where the
operations have a potential impact on
local communities. Furthermore, an
inclusive and diverse workplace is not
only necessary for Tethys Oil’s success,
but also vital components to support the
Company’s strategy on all levels.
Governance refers to corporate govern-
ance as an integral part of Tethys Oil,
guiding the Company in its decision-
making, corporate culture and business
objectives. Tethys Oil is committed to
conduct business honestly, safely, ethi-
cally, and with integrity in full compliance
with laws, rules, and regulations applica-
ble to the business in the countries in
which it operates.
Biodiversity & ecosystems
Affected communities
Business conduct
Goal: No Net Loss of biodiversity
and prevention of operations in
critical habitats
Goal: Make a positive impact
in the communities where the
Group operates
Goal: Strengthen and uphold a
high standard of integrity and
ethical business conduct
Emission management
Own workforce – health & safety
Business resilience
Goal: Integrate climate risk into the
Company business decisions and
organisational strategy
Goal: Zero harm
Goal: Resilience to a
low-carbon future
Equal treatment
and opportunity for all
Goal: Foster a diverse and
inclusive workplace
The material topics have individual goals, targets and KPI’s that Tethys Oil
follow-up continuously and communicate the development and progress on
an annual basis.
Please refer to section in the Sustainability statement, pages 35–79 for the
full disclosure of the material topics’ goals, targets and KPI:s.
27
Tethys Oil Annual Report 2023 Sustainability at Tethys Oil
Contributing through
community engagement in Oman
Tethys Oil strives to be a responsible corporate citizen and support the well-
being and prosperity of local communities. Meanwhile, the Group recognises
the delicate balance between energy exploration activities and its potential
impact on local communities. Mr. Hussain Ahmed Al Lawati, Executive Director
of External and Corporate Affairs, is at the forefront of Tethys Oil's commitment
to fostering shared prosperity and meaningful community engagement in Oman.
The success of Tethys Oil as an Oil and Gas exploration com-
pany is intricately tied to the well-being of the local communities
in which we operate. This is an interrelation that Mr. Al Lawati is
well familiar with, having over 40 years of experience in the oil &
gas industry and community relations. With a philosophy rooted
in the respect for the Omani population and its local communi-
ties, Mr. Al Lawati frequently and actively engages with stakehold-
ers to understand concerns and set mutually beneficial goals.
– Our success is intertwined with the prosperity of the com-
munities we operate in. Listening, learning, and considering
local perspectives are integral to our business conduct, Mr. Al
Lawati comments.
A key pillar of Tethys Oil's community engagement strategy is
addressing the potential challenges posed by its operations.
The Company places a premium on active dialogue, ensuring
that local stakeholders' needs and priorities are integrated into
decision-making processes. Tethys Oil strives to uphold tradi-
tional livelihoods, refraining from actions that might disrupt local
populations' traditions or negatively impact their quality of life.
Since acquiring the rights to Block 49 in 2018, Tethys Oil has
been actively involved in community engagement. This includes
initiatives like spreading awareness about seismic acquisition,
conducting on-site visits for operations – a concept previously
implemented in Block 56 before seismic acquisition and drilling
Al Jumd wells. Additionally, the company promotes dialogue
“Mr. Al Lawati’s network and local knowledge
is of great importance to Tethys Oil and to our
stakeholders. We want everyone affected by
our operations to feel included in the decision-
making and comfortable with how we conduct
our business. To maintain our position as a
respected and trusted actor in the area, we
need to cherish the local communities’ buy-in
and participation.”
Magnus Nordin, Managing Director
through events such as the Science and Tech Forum at Maqshin
School and contributes to the development of awareness and
entrepreneurial skills at Dhofar University. These efforts under-
line Tethys Oil's commitment to transparency and collaboration,
enabling students, teachers, and community leaders to actively
participate in discussions about the potential effects of explora-
tion and production activities.
Furthermore, Tethys Oil actively seeks opportunities to support
local communities during contract negotiations. Prioritising sup-
pliers, investing in local content, hiring locally, and committing to
social investment programs are integral to the company's
approach.
– Our engagement goes beyond profit; it's about contributing
to the development needs of the community and enhancing
education and work-skill development in the host country, Mr.
Al Lawati comments.
Tethys Oil's dedication to responsible corporate citizenship
extends beyond mere rhetoric. The company's Corporate Social
Responsibility (CSR) activities, headed by Mr. Al Lawati, are tai-
lored to create value in Oman continuously. Through meaningful
engagement with local communities, Tethys Oil is not only mini-
mising potential impacts but actively contributing to the well-
being of the regions it operates in.
28
Tethys Oil Annual Report 2023 Sustainability at Tethys Oil
Gas-to-Power
− decarbonisation and zero flaring progress
Tethys Oil remains committed to minimising the Company’s environmental footprint and
have undertaken significant strides in reducing emissions. The Gas-to-Power project is
Tethys Oil’s biggest emission saving project to date, and is an enabler to the ambition
to end routine flaring by 2030. During 2023, the project achieved several milestones,
and at the end of the year, the first power from the system was generated, taking the
Company one step closer to the elimination of flaring.
Gas flaring is the burning of natural gas that is associated with
oil extraction and has been a part of the oil production process
since its beginning. There are several motives for flaring the gas
instead of venting it, for example for safety and regulatory rea-
sons. Furthermore, venting gas instead of flaring it releases
methane which has a significant warming effect. At the same
time, flaring is also a waste of a potentially valuable resource
and a major source of greenhouse gas emissions. This is where
the Gas-to-Power project can make a major difference.
Transforming waste gas into valuable energy
Tethys Oil’s most substantial commitment to decarbonisation is
embodied in the Gas-to-Power project on Blocks 3&4. The total
investment for the project stands at USD 45 million, with Tethys
Oil contributing USD 15 million.
The technique used captures the gas that otherwise was
going to be flared or vented, and instead uses it as a source of
energy. By transferring the captured gas to a power generating
turbine to create electricity, one can supply electricity to remotely
located oil pumps, camps and process plants, thereby replacing
the diesel generators that supply much of the energy today. The
Gas-to-Power project is planned to be implemented in Tethys
Oil’s non-operated Blocks 3&4, starting with the Ulfa, Farha and
Shahd fields.
During 2023, a considerable part of the construction work
and the preparations to implement the system have been made,
and the first power tests were carried out late in December. The
first phase is expected to be finalised during the first quarter of
2024, and includes setting up main power lines to transfer
power from the power plants. After finalising the first phase of
the project, the capacity of the power system is expected to be
14,1 megawatt (”MW”), and is expected to increase to over
26 MW later in 2024.
Reduced environmental footprint and cost-saving
The Gas-to-Power project marks a significant milestone towards
Tethys Oil’s goal of aligning with the World Bank initiative “Zero
Routine Flaring by 2030”. Furthermore, it will lead to both signif-
icant cost savings and reduction of Tethys Oil’s overall carbon
footprint, both by eliminating unnecessary flaring and reducing
the dependency on diesel consumption with expectations to see
an incremental reduction of emissions from the beginning of
2024. Apart from the environmental impact, the project is
expected to deliver a positive economic effect, driven by the
reduction of diesel consumption.
Tethys Oil remains resolute in its commitment to sustainable
practices and will continue to explore innovative solutions to
reduce the environmental impact, emphasising the importance
of responsible energy production.
MW
26
The capacity of the power
system is expected to reach
26 MW in 2024.
29
Tethys Oil Annual Report 2023 Sustainability at Tethys Oil
ESG scorecard report
with target and approach
Material issue
Primary KPI
Performance
2023 (2022)
Target
Action plan
Annual
performance
against target
Aligned
with SDG
Environmental
Emission
management
Flaring intensity
(scf/bbl.)
Biodiversity &
ecosystems
Hydrocarbon spills
(oil spills per million
tones of production).
Social and safety
Affected
communities
# Community
engagement projects
locally, regionally and
nationally.
Own workforce-
health & safety
Lost time injury
frequency rate (LTIR).
Equal
treatment and
opportunity
for all
# reported cases of
discrimination.
Governance
Business
resilience
Carbon
emissions/ revenue
(Kg CO2 metric/USD).
Business
conduct
Employees who
completed the
Code of Conduct
course (%).
715 scf/bbl
(727 scf/bbl)
2% decrese in
2023.
Blocks 3&4 >>
0.0069
Block 56 >>
0.0037
Zero Tier 1 spill
Zero operational
routine flaring by
2030.
• Zero Tier 1
hydrocarbon
releases.
• No significant
environmental
incidents.
Endorse and support
operator emissions
and energy reduction
initiatives.
Initiate collaborative
efforts in biodiversity
research and conserva-
tion programs in adjacent
to licensed areas.
Blocks
49,56,58
Limited to
local projects
Blocks 3&4
fulfills goal
Tethys Oil &
contractors
Tethys Oil
LTIR = 0,
CCED
LTIR = 0.18
Ongoing long term
community engage-
ment projects in
local, regional and
national/interna-
tional level.
Better occupational
health and safety
records than
industry standards.
Employee satis-
faction rate
76% based on
annual survey
• Zero cases of
reported dis-
crimination.
• Human Rights and
anti-discrimination
training: 100%
employees trained
in policy
• Zero cases of
reported
discrimination.
Engaging with local
communities to ensure a
positive impact through
CSR projects and
beneficial initiatives for
impacting the resilience
and vitality of local
communities.
Continuous improvement
in lost-time injuries
frequency through
rigorous health & safety
related training and
pre-operational risk
assessments.
Fostering a diverse and
inclusive workplace
though awareness
campaigns and policy
declarations.
Resilience to a
low-carbon future.
100% Target
employees trained
on Code of Conduct
and relevant policies
and procedures.
Carbon
intensity of
revenues 1.70.
(1.71 in 2022.)
Total number
cases reported
to whistle-
blower 0.
100% employee
trained in rele-
vant policies.
Implement stress-testing
techniques and internal
carbon tax pricing to
ensure projects
resilience in different
energy transition
scenarios.
With zero-tolerance policy
on bribery and other
forms of corruption
continue to strengthen
and uphold high ethical
business ethics through
ethical business conduct
training.
30
Tethys Oil Annual Report 2023 Key financial data and definitions
Key financial data
Group
Operational items
2023
2022
2021
2020
2019
Production before government take, Oman Blocks 3&4, bbl
3,218,625
3,628,074
4,064,803
4,148,818
4,683,754
Production per day, Oman Blocks 3&4, bbl
8,818
9,940
11,136
11,336
12,832
Oil sales, bbl
Achieved oil price, USD/bbl
Income statement and balance sheet
Revenue and other income, MUSD
EBITDA, MUSD
EBITDA-margin
Operating result, MUSD
Operating margin
Net result, MUSD
Net margin
Cash and cash equivalents, MUSD
Shareholders' equity, MUSD
Balance sheet total, MUSD
Capital structure
Equity ratio
Leverage ratio
Investments in oil and gas properties, MUSD
Net cash, MUSD
Profitability
Return on shareholders' equity
Return on capital employed1
Other
Average number of full-time employees
Distribution per share, SEK
Cash flow from operations per share, USD
Number of shares at period end
1,735,025
1,585,534
1,808,857
2,317,875
2,259,849
82.4
94.2
62.8
47.7
64.2
138.2
73.5
'
53%
-11.6
-8%
-16.5
-12%
25.8
258.2
291.1
89%
neg.
81.7
25.7
-6.09%
-4.10%
31
5.00
2.47
156.5
112.7
99.1
63%
54.2
35%
58.3
37%
41.5
285.2
316.0
90%
neg.
89.1
41
21.53%
19.14%
29
7.00
2.63
61.4
54%
16.1
14%
16.7
15%
68.6
256.6
284.5
90%
neg.
35.2
67.8
6.46%
5.92%
26
4.00
1.96
101.1
50.3
50%
5.8
6%
3.3
3%
55.4
257.7
280.3
92%
neg.
45.4
55.1
1.23%
2.12%
22
5.00
1.59
150.8
92.2
61%
37.1
25%
38.3
25%
75.6
276.3
300.2
92%
neg.
65.2
75.1
14.10%
14.66%
23
8.00
2.64
33,458,828
33,056,608
33,056,608
33,056,608
36,294,960
Of which repurchased shares at period end
1,189,901
738,351
474,673
315,552
1,954,163
Number of shares at year end (excluding repurchased shares)
32,268,927
32,318,257
32,581,935
32,741,056
34,340,797
Shareholders' equity per share, USD
7.72
8.63
7.76
7.87
7.61
Weighted average number of shares (before dilution),
32,060,671
32,543,670
32,619,054
33,321,353
34,222,434
Weighted average number of shares (after dilution),
32,099,193
32,664,523
32,660,948
33,328,099
34,302,768
Earnings per share before dilution, USD
Earnings per share after dilution, USD
MUSD
Operating result
Add: Depreciation. depletion and amortisation
Add: Impairment
Add: Exploration costs
Less: Share of net result from associate
EBITDA
Cash and cash equivalents
Less: Interest bearing debt
Net cash
-0.51
-0.51
2023
-11.6
42.0
36.9
6.4
-0.2
73.5
25.8
-0.1
25.7
1.79
1.78
2022
54.2
40.5
–
4.5
-0.1
99.1
41.5
-0.5
41.0
0.51
0.51
2021
16.1
41.2
–
4.1
–
61.4
68.6
-0.8
67.8
0.1
0.1
2020
5.8
44.5
–
–
–
50.3
55.4
-0.3
55.1
1.12
1.12
2019
37.1
47.6
–
8.2
-0.7
92.2
75.6
-0.5
75.1
31
Tethys Oil Annual Report 2023 Key financial data and definitions
Alternative performance measures:
glossary and definitions
The Company applies the European
Securities and Markets Authority’s
(ESMA) guidelines on alternative perfor-
mance measures. The alternative key
financial performance indicators are
defined as financial measures of historical
or future earnings trends, financial posi-
tion, financial performance, or cash flows
that are not defined or specified in the
applicable regulations for financial
reporting, IFRS, and the Annual Accounts
Act. These measures should not be
regarded as a substitute for measures
defined in accordance with IFRS.
If an alternative performance measure
cannot be identified directly from the
financial statements, a reconciliation is
required.
EBITDA
EBITDA-margin
Equity ratio
Earnings before interest, taxes, depreciation, and amortisation.
EBITDA as a percentage of revenue and other income.
Shareholders’ equity as a percentage of total assets.
Return on shareholder’s equity,
rolling 12 months
Return on shareholder’s equity is calculated by dividing the net result for the past 12 months by the average of the ingoing
and outgoing shareholder’s equity for the same period.
Return on capital employed,
rolling 12 months
Return on capital employed is calculated dividing the operating result for the past 12 months by the average capital
employed (equity plus non-current liabilities) for the same period.
Net entitlement
Net entitlement share
Cost Oil
Profit Oil
Cost pool
Volumes and share of oil production from Joint operation, which the company is entitled to sell expressed in barrels.
Calculated monthly based on EPSA. Consist of 2 components: Cost oil and Profit Oil.
The oil production from Joint operation, which the company is entitled to sell expressed as a percentage of the company’s
total share of the oil produced. Calculated as Cost oil plus Profit Oil divided by Production.
The Cost Oil is the value of recoverable costs incurred in the period and any outstanding balance of unrecovered historical
cost from previous periods (“the Cost Pool”) The total amount of Cost Oil for a given period is capped to a fixed share of
total production, after conversion to barrels using the Official Selling Price (“OSP").
Profit Oil remains after the deduction of Cost Oil. The majority of the Profit Oil is the government’s take according to a fixed
percentage.
Any outstanding balance of unrecovered historical cost from previous periods.
Production before government take
Net share of total production.
Underlift/Overlift
Netback
Achieved Oil Price
Average OSP
Oman OSP
Net cash
Calculation of net from Net Entitlement barrels and lifted barrels. Lifting more barrels than entitlement barrels results in
an overlift and the opposite is an underlift.
Gross profit per barrel of oil. Average OSP reduced by royalties/government take and operating and transport expenses
per barrel.
Achieved Oil Price is calculated as revenue from oil sales within the period divided by sold barrels of oil.
The Average OSP is calculated as the production weighted average of the monthly Official Selling Price (OSP) for Omani
Export Blend in the quarter and does not take into consideration the timing of monthly liftings or any trading and quality
adjustments (as is the case with the Achieved oil price).
Oman’s Official Selling Price (OSP) is calculated using the monthly average price of the front month futures contract
of Oman blend (with 2 months to delivery) as traded on the Dubai Mercantile Exchange.
Cash and equivalents less interest-bearing debt.
Number of employees
Average number of fulltime employees during the period.
Shareholders’ equity per share
Shareholders’ equity divided by the number of outstanding shares.
Weighted average number of shares
(after dilution)
Number of shares at the beginning of the year with newly issued shares time weighted for the period on issue. Dilution
effects include potential shares that may be converted to shares under favourable conditions, primarily warrants with
subscription prices lower than the share price.
Treasury shares
Earnings per share
Own shares held by Tethys Oil following share repurchases.
Net result for the period divided by the weighted number of shares.
SEK
MSEK
USD
MUSD
Bbl
Bopd
Mbo
Mmbo
EPSA
Swedish krona.
Millions of Swedish kronor.
US dollar.
Millions of US dollars.
One barrel of oil = 159 litres, 0.159 cubic meters.
Oil production is often given in numbers of Barrels of Oil per Day.
Thousand Barrels.
Million Barrels.
Exploration and Production Sharing Agreement.
Prospective resources (2U)
Return on capital employed:
Like reserves and contingent resources, prospective resources volume estimates are defined probabilistically.
1U is the low estimate, 2U is the best estimate and 3U the high.
Net result plus net financial reesult as a persentage of average capital employed
(total assets less non interestes-bering liabilities).
32
Tethys Oil Annual Report 2023 The Tethys Oil Share
The Tethys Oil share
Shares outstanding
Tethys Oil’s shares are traded on Nasdaq
Stockholm and the Company’s registered
share capital at 31 December 2023
amounts to SEK 6,022,589 represented
by 33,458,828 shares with a quota
value of SEK 0.18. All shares in Tethys
Oil represent one vote each. All outstand-
ing shares are common shares and carry
equal rights to participation in Tethys
Oil’s assets and earnings. As per 31
December 2023, the Board of Directors
had remaining outstanding authorisation
from the Tethys Oil’s Annual General
Meeting (“AGM”) on 10 May 2023 to
resolve on the issue of up to 10 percent
of new shares up until the next AGM. In
addition the AGM 2023 resolved to grant
the Board of Directors the authorisation
to repurchase up to 10 percent of the
Company’s share capital. As of
31 December 2023, Tethys Oil held
1,189,901 of treasury shares, corre-
sponding to 3.6% of shares in issue
(2.2% in 2022). During 2023, 451,550
shares have been repurchased at the
average price of SEK 54.95 per share,
compared to 263,678 shares repur-
chased in 2022 at the average price of
SEK 60.12 per share.
Numbers of shares
Full year 2023
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Full year 2022
Shares in issue, end of the period
33, 458,828
33,458,828
33,056,608
33,056,608
33,056,608
33,056,608
Shares issued, during the period
Shares repurchased, during the period
Treasury shares, end of the period
402,220
451,550
402,220
–
–
–
–
25,000
58,795
367,755
1,189,901
1,189,901
1,189,901
1,164,901
1,106,106
–
263,678
738,351
Shares outstanding, end of the period
33,268,927
32,268,927
31,866,707
31,950,502
31,950,502
32,318,257
Weighted average outstanding before dilution,
during the period
Weighted average outstanding after dilution,
during the period
32,060,671
32,243,389
31,867,861
32,191,324
32,191,324
32,543,670
32,099,193
32,247,353
31,924,740
32,261,122
32,261,122
32,664,523
Shareholders per January 2024, or latest know update
Number of shares
Proportion capital/votes
Lansdowne Partners
Franklin Templeton
Magnus Nordin
Avanza Pension
Nordnet Pensionsförsäkring
Tethys Oil AB
Dimensional Fund Advisors
Bengt Karlsson
Janne Pakarinen
Jan Risberg
Anette Af Ekenstam
Grandeur Peak Global Advisors, LLC
Ensign Peak Advisors Inc.
Unisuper
Monega
Other shareholders, appr. 8,800
Total number of shares
3,633,699
1,746,717
1,555,427
1,523,617
1,297,815
1,189,901
982,100
695,000
670,362
615,000
464,498
434,441
383,927
319,275
300,000
17,647,049
33,458,828
10.9%
5.3%
4.6%
4.6%
3.9%
3.6%
2.9%
2.1%
2.0%
1.8%
1.4%
1.3%
1.2%
1.0%
0.9%
53.5%
100%
Source: Monitor by Modular Finance as per January 2024. Compiled and processed data from various sources, including Euroclear, Morningstar and the Swedish Financial Supervisory.
The verification date may vary for certain shareholders.
Tethys Oil has an incentive program as
part of the remuneration package to
employees. Warrants have been issued
annually since 2015, following a decision
by the respective AGM. Since 2021 war-
rants are only issued to the Executive
Management. In the fourth quarter 2023
338,000 new warrants were issued. In
October 2023 the exercise period for the
2020 incentive programme expired with
338,000 warrants being exercised, result-
ing in the addition of 402,200 new shares.
In 2022, Tethys Oil introduced the Tethys
Oil Long-Term Incentive Programme
2022–2024 (“LTIP 2022”) dedicated
to all employees, except for Executive
Management.
33
Tethys Oil Annual Report 2023 The Tethys Oil Share
Warrant incentive
programme
Exercise period
Subscription
price, SEK
Shares
per warrant
1 Jan 2023
Issued 2023 Exercised 2023
Expired 2023
31 Dec 2023
2020 programme
13 Jun – 6 Oct 2023
2021 programme
12 Jun – 4 Oct 2024
2022 programme
18 Aug – 6 Oct 2025
2023 programme
3 Jun – 28 Sep 2026
45.40
66.10
92.80
59.40
Total
1.19
1.15
1.07
1.01
350,000
200,000
160,000
–
710,000
–
–
–
250,000
250,000
338,000
12,000
–
–
–
–
–
–
338,000
12,000
–
200,000
160,000
250,000
610,000
Number of warrants
Dividend policy
Tethys Oil aims to provide a long-term
sustainable and growing ordinary divi-
dend funded by cash flow from its pro-
ducing assets. Distributions to the share-
holders must always be aligned with the
Company’s long term operational and
financial commitments, market condi-
tions and access to external funding. In
order to enable the Company to optimise
its capital structure, further shareholder
distribution may be carried out by various
methods such as redemption shares or
share repurchases.
Shareholder distribution proposal
For the financial year 2023, Tethys Oil’s
Board of Directors will propose to the
AGM 2024 that no dividend is to be paid.
The Board of Directors will revisit the
matter of shareholder distributions upon
the completion of the strategic review of
its portfolio, announced 5 February
2024. Tethys Oil’s dividend policy
remains unchanged.
Distribution of shareholdings
Distribution of shareholdings per 31 January 2024.
Owner distribution by holdings
Number of shares
Capital and votes
Number of owners
Part of owners
1 – 500
501 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 20,000
20,001 – 50,000
50,001 – 100,000
100,001 – 200,000
200,001 –
Shareholders with unknown amounts
Source: Monitor by Modular Finance
737,013
789,874
2,384,706
1,178,475
1,506,089
1,682,117
1,358,040
1,107,905
22,714,609
3,492,611
2.20%
2.36%
7.13%
3.52%
4.50%
5.03%
4.08%
3.33%
67.84%
11.21%
6,411
971
1,024
164
102
57
18
8
21
73.05%
11.06%
11.67%
1.87%
1.16%
0.65%
0.21%
0.09%
0.24%
Share statistics 2023
The final transaction price in 2023 was
SEK 43.46 corresponding to a total
market capitalisation of MSEK 1,454.
During the year the price of Tethys Oil’s
share decreased by 35.1 percent. Based
on data from NASDAQ Stockholm, the
highest transaction price in 2023 was
SEK 64.80 on 23 January and the lowest
was SEK 42.31 on 12 December. The
turnover velocity (annual turnover/
outstanding shares) was 89 percent on
Nasdaq Stockholm. Tethys Oil’s share
capital development is found on
tethysoil.com.
Share price development and turnover 2023
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Traded
volume,
shares
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Tethys Oil
OMX Stockholm PI
Turnover
120
100
80
60
40
20
0
SEK/
share
34
Tethys Oil Annual Report 2023
Sustainability statements
Sustainability statements
About this report
Pages 35–79 in Tethys Oil’s annual report constitute the Compa-
ny’s Sustainability Statements 2023 and complies with the Non-
Financial reporting requirements implemented in Swedish law,
The Annual Accounts Act 1995:1554 (Årsredovisningslagen),
implemented through the EU directive 2014/95/EU. This Sus-
tainability Report is produced in accordance with the Annual
Accounts Act (ÅRL Chapter 6, 10-14) and encompasses Tethys
Oil AB (publ) and its subsidiaries. The Board of Directors is
responsible for the preparation of the report.
In this report, Tethys Oil presents and describes its opera-
tions’ Environmental, Social and Governance (ESG) performance
along with sustainability impacts, risks and opportunities, and
aims to explain the organisation’s approach to managing the
material topics and their impacts. Based on the materiality anal-
ysis, the Sustainability Statements summarises activities and
reflects the issues most relevant to the business. The report
outlines why sustainability is pertinent to Tethys Oil, Tethys Oil’s
priorities and responsibilities, how progress is measured as well
as the processes of managing each material topic.
The scope of Tethys Oil’s Sustainability Statements 2023
Tethys Oil’s Sustainability Statements 2023 covers the opera-
tions as consolidated in the 2023 Annual Report. In Blocks 3&4
where Tethys Oil is not assigned the role of operator, the Group
is an equity interest partner. The Sustainability Statements
reflect impacts in both operated and non-operated EPSA:s.
However, the reporting of the measures taken to reduce sustain-
ability impacts is focused on the blocks where Tethys Oil is the
operator, hence having the control over the decision making of
the day-to-day operations.
Due to its limited exposure, the report does not include Tethys
Oil’s associated interest in the Lithuanian company Minijos Nafta.
All ESG related issues are consistent through all activities,
however the materiality of the impacts varies depending on the
nature of the activity, and if the activity takes place in a produc-
tion or exploration phase.
The report covers water usage on a Group level for operated
blocks, non-operated blocks and offices. However, due to the
small volumes needed during exploration phases, water usage
is not considered a material topic.
Reporting frameworks and principles
The report’s emission data accounts for Greenhouse Gas (GHG)
emissions according to GHG Protocol Corporate Accounting and
Reporting Standard. The approaches are the equity share
method and the operational control method in the performance
data, while the reporting on general material issues is based on
operational control approach if not stated otherwise. Tethys Oil
accounts for 100 percent of the GHG emissions on the blocks
where it has operational control. Blocks in which the Company
has a non-operator equity share will be accounted as Scope III
(Category 15: Investments) emissions. The GHG Protocol stand-
ards have been adopted for the report, as well as GHG reporting
frameworks and disclosure schemes.
Tethys Oil adopts the Task force on Climate-related Financial
Disclosures (TCFD) guidance to analyse and understand the
Group’s key climate-related risks and the reporting is aligned
with the recommendations. Tethys Oil’s TCFD index is provided
on page 76. Where relevant, the report also highlights the Com-
pany’s priorities regarding the UN Sustainable Development
Goals (SDG). Nine SDGs have been identified to illustrate where
the Company has material contributions.
Tethys Oil’s Sustainability Statements 2023 have been prepared
with reference to the GRI Sustainability Reporting Standards (GRI
Standards). The information provided in the GRI index on page 77
is reported for the period from January 1, 2023, to December 31,
2023. Applicable GRI Sector Standard – GRI 11: Oil and Gas
2021.
Reporting boundaries
Joint Operating Agreements (JOA) are particularly common in
the oil and gas industry. Within each JOA, one company is
assigned the operator status, and each partner has a percent-
age of owned equity. This distinction is important as the opera-
torship role manages the operations and has the day-to-day
control of the asset, while non-operator partners have a see-to
duty. Data for non-operated blocks will be presented in both
equity interest and operational control basis. For all the Group’s
material topics and metrics, the metrics are oriented on an oper-
ated basis.
35
Tethys Oil Annual Report 2023 Sustainability statements
Stakeholder engagement
During 2023,Tethys Oil conducted a thorough sustainability
stakeholder analysis utilising questionnaires, email exchanges,
and interviews. The gathered responses form the foundation
of the stakeholder analysis, and contributed to the Group’s new
stakeholder policy that was introduced.
Tethys Oil categorises its stakeholders in three groups: inter-
nal stakeholders, external stakeholders and connected stake-
holders. Stakeholders from a diverse set of categories responded
to the questionnaire, offering qualitative remarks and listing
priorities. Additionally, the Sustainability team engaged in more
in-depth discussions with certain stakeholders through email
and interviews.
The questionnaire, designed by the Sustainability team,
focused on Tethys Oil’s sustainability work, emphasising priori-
ties in environmental, social, and governance matters. Inter-
views, conducted through various means, supplemented the
data collection process.
Key findings from the stakeholder analysis are detailed in
the tables within the section on Tethys Oil’s double materiality
assessment.
Despite a diverse range of priorities among participants,
there were clear top-prioritised topics in each section: Emission
for Environment, “Own work force (Health and safety)” for
Social, and “Business Conduct” (Ethics & Transparency) for
Governance. These align with Tethys Oil’s internal prioritisations
on sustainability matters.
While stakeholder priorities largely align with Tethys Oil’s own
evaluations, qualitative feedback has provided valuable insights
for the Sustainability Team and the IR workgroup to enhance the
presentation of the Company’s sustainability efforts in reports
and presentations.
Stakeholder map
k e h o l ders
a
Intern al s t
Current shareholders
Employees
The Board of Directors
E xternal stak
e
h
o
l
d
e
r
s
Potential investors
Financial institutions
Host communities and
the surrounding environment
Governmental bodies
Regulatory entities
Non-governmental organisations
Industry associations
Media and opinion shapers
Rating agencies
Business partners
Contractors (incl. suppliers
and distributors)
Independent auditors
e rs
Double
materiality
assessment
C
o
nnected st a k e h o l d
Double materiality assessment
To identify the sustainability elements that are most relevant
to Tethys Oil’s business and stakeholders, a materiality assess-
ment was conducted in 2021. The materiality assessment
is validated bi-annually through analyses and stakeholder
dialogues.
In 2023, Tethys Oil performed a double materiality assess-
ment to gain insights into Tethys Oil’s impact on the external
environment and its ESG risks and opportunities and to prepare
for the upcoming Corporate Sustainability Reporting Directive
regulation in the European Union.
The following phases were performed:
Phase 1: Selection of relevant stakeholder groups and
15 material topics for consideration.
Phase 2: Interviews with internal, connected and external
stakeholders. Stakeholders were asked their views on
impacts, risks and opportunities for Tethys Oil regarding
the topics in their assigned categories.
Phase 3: Survey with selected members of Tethys Oil
management to estimate the financial impacts of each
topics associated with its risk exposure. After consolidating
the results from the survey, the following double materiality
map was obtained.
36
Tethys Oil Annual Report 2023 Sustainability statements
The results of this assessment will support the Groups prepara-
tions for the new European Corporate Sustainability Reporting
Directive (CSRD) and will help to inform the corporate ESG strat-
egy going forward.
The current and potential, direct and indirect impact of the
Group’s own operations is evaluated as well as the effect of
outside factors. The understanding of Tethys Oil’s impact on its
surroundings is based on a dialogue with key stakeholders as
well as current research into the social, environmental, and eco-
nomic challenges within the oil and gas industry. Based on the
Group’s knowledge of its operations, and where in the value
chain impact occurs, Tethys Oil sets priorities in both the short
and long term. Tethys Oil’s material topics are identified by
assessing issues that have the most significance to the Group’s
social, environmental and economic impact. The material topics
are reviewed and prioritised by internal experts and the Group
Management. For each topic, activities during the year that have
been implemented to avoid and mitigate actual and/or potential
impacts are further explained.
Tethys Oil’s material topics are divided into three ESG catego-
ries, closely linked to the Company’s sustainability strategy:
• Environment: Biodiversity & ecosystems,
Emission management
• Social and safety: Affected communities, Health &
safety, Equal treatment and opportunity for all
• Governance: Business conduct, Business resilience
Read more about Tethys Oil’s material topics and associated
goals, targets and KPIs on pages 41–67.
Double materiality
Business resilience
Data
Reserves valuation &
capital expenditures
t
c
a
p
m
i
l
i
a
c
n
a
n
i
F
Supply chain
management
Affected
communities
Climate change
Pollution
Business conduct
Business
continuation &
crisis management
Biodiversity
Own workforce
– health & safety
Air quality
People
Water
Labour
Stakeholder impact
Inside-out
Environmental & social materiality
Traditional Materiality Assessment
Business
Stakeholder
impact
Financial
impact
Environment & society
Outside-in
Business/financial materiality
Traditional risk management approach
37
Tethys Oil Annual Report 2023
Sustainability statements
Key sustainability risks
Tethys Oil focuses on the future to prepare for the changing busi-
ness landscape and mitigate potential risks. Understanding and
managing the non-financial risks and opportunities associated
with the business is an integral part of managing the business.
Several group functions are involved in identifying and managing
non-financial risks in their area of responsibility. Risks are con-
sidered at the corporate, asset and project levels, ensuring that
risks are identified and assessed from the bottom-up. These
risks are regularly conveyed to Group Management and fed into
the materiality process. During 2023, Tethys Oil undertook a
comprehensive review of the risks linked to its operations,
including an evaluation of non-financial risks and opportunities.
Materiality
Risk
Risk type
Risk description
Detection, preventive
and mitigating measures
(control, documents, action plan, etc.)
Environmental risks
Emission
Carbon pricing
Environmental
Biodiversity
and ecosystems
Oil spills and negative
biodiversity impacts
– material
Operational
Social and safety risks
Affected communities
Local community ten-
sions and grievances
Socio-political
Equal treatment for all
Risk for child labour,
forced labour or
human rights violation
by subcontractors
Regulatory
Own workforce –
health & safety
HSE
Operational
Carbon pricing of 120–140
USD per tonne of CO2eq within
TCFD exercise.
To develop an internal carbon pricing
model. Including financial alternative costs
scenarios.
Material oil spills leading to
environmental and/or reputa-
tional damage as well as
potential legal, operational
and financial ramifications.
Continuous QA of oil producing infrastruc-
ture including leak reduction programmes
and production assurance programmes.
The risk of a negative impact
from Tethys Oil's operations
on local communities, their
quality of life and damages to
heritages sites and other
important areas.
The risk that Tethys Oil's
sub-contractors violate the fair
treatment and human rights
of its employees affecting
amongst other Tethys Oil's
reputation and license to
operate.
Risk to the health and security
of people and impact on the
environment due to accidents.
Tethys Oil engages in an active relationship
with local stakeholders in order to under-
stand the concerns surrounding the
Group’s operations and to set mutually
beneficial goals. This is to ensure that
local stakeholders needs and priorities are
considered and avoid that the Group’s
operations disrupt the l ivelihood of the
local population and has a detrimental
effect on their quality of life.
Tethys Oil implemented several policies
such as a Supplier Code of Conduct and
Diversity and Non-discrimination Policy,
Human rights policy and is firmly commit-
ted to The UN Global Compact.
Policies and procedures in place, including
recurring training and certifications. Each
operational activity has its own risk
assessment which allows for a proactive
work to minimise risk realisation and
impact.
Governance risks
Business resilience
Oil price vulnerability
Market
Business conduct
Ethical misconduct in
operations or supply
chain, impacting
license to operate
Regulatory
Dependence on oil price levels
for revenues and income.
Diligent monitoring of market development.
Adapt expenditure strategies and building
business resilience.
The risk that Tethys Oil's
sub-contractors violate good
business conduct and ethics,
affecting amongst other Tethys
Oil's reputation and license to
operate.
Tethys Oil has adopted a “zero tolerance”
Anti-Corruption Policy in accordance with
Transparency International’s Business
Principles for Countering Bribery and clear
procedure for employees to report sus-
pected cases of corruption.
38
Tethys Oil Annual Report 2023 Sustainability statements
Safe and sustainable operations
In all Tethys Oil’s operations and activities there are environmen-
tal, social and governance issues. Impacts related to those
issues, whether presented as an opportunity or as a risk, will
vary substantially depending on the stage of the business cycle.
The likelihood of impact is considered small during exploration
and appraisal, as the activity levels are low. Nevertheless, all
potential impacts are prioritised and managed by the Group.
Impacts on economy, environment, and people are reported on
a quarterly basis to the highest governance body of the organi-
sation’s management. With each new exploration, seismic or
development project, Tethys Oil conducts a feasibility scoping
report together with an environmental services agency. If the
report’s conclusion is positive and other parameters fulfilled, a
comprehensive Environmental Impact Assessment (EIA) is con-
ducted. The purpose of an EIA is to ensure the protection and
conservation of the environment and natural resources including
human and health aspects, against uncontrolled development.
It enables the Company to define existing biodiversity, environ-
mental and other conditions near the activity sites, using various
analytical techniques ranging from sampling to photography.
Based on EIA recommendations, the Group strives towards a
more proactive sustainable practice by continuously improving
operational efficiency and environmental performance of its
operations. To date, all mitigation and management measures
recommended by the EIA have been adopted by Tethys Oil.
Tethys Oil’s view is that sustainable practices are the best way
to ensure its business resilience long-term.
Preliminary environmental studies are conducted before the
start of any project. As a result, all recommended prevention
measures are implemented beforehand to limit the impact and
risks related to Tethys Oil’s business activities throughout the
project life cycle.
Crisis management
The Crisis Management Plan (CMP) is a part of the Group’s com-
mitment to achieve continuous improvement toward no harm to
people, no accidents, and no spills. This Plan applies to all com-
panies in the Tethys Oil Group and any ventures that are controlled
or operated by Tethys Oil. This Plan should be followed by all
employees, consultants and contractors employed or retained by
the Group. The Crisis Management Team (CMT) is responsible
for the assembling and coordination of information, to coordi-
nate non-emergency related contacts with external stakeholders
and to provide accurate and timely information reviewed from
a legal point of view to all concerned stakeholders and media.
Exercises will be held on a regular basis, both ahead of major
new operations and during operation.
Emergency preparedness
Prior to commencing operations, the HSE department meticu-
lously formulates an Emergency Response Plan aligned with
Environmental Authority regulations, Tethys HSE Policy, and the
Incident Flow Chart. Operational activities undergo thorough
assessment with subcontractors, focusing on Waste Handling,
housekeeping, Oman Energy Association (OPAL) Road Safety,
and biodiversity impacts.
Tethys Oil – Emergency Response Programme (ERP)
The Group has developed a comprehensive and sys-
tematic approach to address potential emergencies
and ensure the safety of personnel, protection of the
environment, and preservation of assets. The goal is
to effectively respond to emergencies, minimize their
impact, and facilitate a swift recovery. Below is an out-
line of key components:
1. Risk Assessment and Hazard Identification
2. Emergency Planning
3. Training and Drills
4. Emergency Communication
5. Coordination with Authorities
6. Environmental Protection Mitigation Strategy
7. Documentation and Reporting
8. Continuous Improvement
9. Community Engagement
39
Tethys Oil Annual Report 2023 Sustainability statements
Exploration & appraisal
Tethys Oil’s environmental impacts stem to a large extent from
exploration and appraisal activities. The EIA has pinpointed
instances where Tethys Oil’s operations can affect air quality
and GHG emissions. During the year, Tethys Oil began screening
the group’s suppliers based on environmental criteria
Site preparation and construction: including building the
well site, grading the logistics base, constructing and
upgrading access roads, land preparation and earthworks
activities, transportation of staff, materials and waste,
energy use and power supply.
Drilling operations: transportation of staff, equipment, and
construction machinery. Other activities include rig relocation,
drilling and casing, energy consumption and power provision.
Testing/well abandonment activities: including flaring
and well-testing.
These activities take place over a short period of time, approxi-
mately 3–4 months, and air quality will return to existing condi-
tion after the site preparation and construction activities are
finalised. Overall, due to the relatively small amount, short dura-
tion and the large, distributed area over which air pollutants are
released, they are unlikely to cause a significant impact to air
quality and GHG levels.
Tethys Oil’s
principles for
responsible
exploration
Adopt responsible governance
and management
Apply ethical business practices
Respect human rights
Commit to project due diligence
and risk assessment
Engage host communities and other
affected and interested parties
Contribute to community development
and social well-being
Protect the environment
Safeguard the health and safety
of staff and the local population
40
Air pollution
and
emission control
Site restoration
Water
emission prevention
and control
Environmental
mitigation
procedures
Waste management
Land pollution
and
spill management
Camp sanitation
and hygiene
Potential project emissions could arise from the
following sources:
• Diesel fuel consumption by the generators at the drilling
and camp sites for power generation and by mobile sources
(e.g. construction equipment, trucks delivering equipment/
materials to the site, trucks collecting waste/sewage
wastewater from the site).
• Down-hole gas from the drilled formations coming to the
•
surface with returning drilling mud
Fugitive emissions from mud materials breakdown and
evaporation, which may lead to odours.
• Other fugitive emissions from cooling systems, handling
•
and storage of chemicals (e.g. paints, solvents), fuel load-
ing and storage systems (tanks, pipes)
Flaring – (if unavoidable) project controls are implemented
to avoid, reduce and restore potential negative impacts and
to ensure that positive impact materials are maximised
and inherent to the impact assessment
Tethys Oil Annual Report 2023 Sustainability statements
Tethys Oil CSR-project:
The Arabian Oryx reintroduction project in the Governorate of Al Wusta
The Arabian Oryx Reserve is the first natural reserve in Oman, surrounded by diverse wildlife.
The reserve’s area is about 2,824 square kilometres, making it one of the largest natural
reserves in terms of area. The number of Arabian oryx in the reserve is approximately 900.
The reserve also includes 1,140 sand gazelle and 140 Arabian gazelle, as well as Nubian ibex,
sand fox, striped hyena, wild rabbit, and honey badger, in addition to ostriches and llama. The
Arabian Oryx Reserve drives economic development by supporting ecotourism, promoting the
culture of conservation and preservation of natural habitats, education and field research to
enrich knowledge.
Environment
Pollution management
Biodiversity & ecosystems
Goal: Integrate climate risk into the
Company business decisions and
organisational strategy
Goal: No net loss of biodiversity
and prevention of operations in
critical habitats
41
Tethys Oil Annual Report 2023 Sustainability statements
Emissions management
Goal
Target
Target for non-operated blocks
Performance KPI
Integrate climate risk into the
Company business decisions and
organisational strategy
Zero routine flaring 2030
Endorse and support operator
emissions and energy reduction
initiatives
Flaring intensity: 715 scf/bbl*
Status
Status
Outcome
16% decrese in flaring (2023)
MUSD 15 invested in Gas-to-Power
715 scf/bbl (727 scf/bbl 2022)
*Standard cubic foot/barrel
Why is this important?
As a major contributor to global emissions, the oil and gas
industry must strengthen collaboration and act immediately to
ensure that future energy has less emissions. The industry’s
activities and the use of oil and gas products are responsible
for a large portion of two major GHGs: carbon dioxide (CO2) and
methane (CH4). Methane is a powerful and short-lived climate
pollutant which drives climate change as it is tens of times more
powerful than carbon dioxide at warming the atmosphere. As
methane has a short atmospheric lifetime, actions to minimize
these emissions can quickly reduce atmospheric concentrations.
To be able to meet future global energy demands, various
energy sources combined with energy efficiency are a prerequi-
site. The resilience in the industry will be determined by energy
efficiency and emission reduction.
Performance. Site visits are conducted monthly, including partici-
pation of an environmental specialist. All non-compliant or
environmental issues are reported and followed up.
Tethys Oil shall, in accordance with its Code of Conduct,
actively apply its health, safety and environmental (HSE) stand-
ards in all business operations including Joint Operating Agree-
ments. The policy commitments stipulate respecting of human
rights, as well as conducting due diligence. In practice, this
means to conduct active dialogue, maintain transparency, and
influence business partners to strive for the same goals. By
doing so, Tethys Oil aims to guide its partners to have active
dialogues with their affected stakeholders in a specific geo-
graphic area. This enables the identification of the ones nega-
tively affected, or potentially effected, by their operations and
also ensures respect for human rights.
Tethys Oil’s approach
Climate change is of increasing importance to the Group and all
its stakeholders. Tethys Oil has an ambition to explore for and
produce oil and gas with minimal environmental impact. The
current and potential, direct and indirect impact of the Group’s
own operations is evaluated, as well as the effect of outside
factors and if these impacts are long or short term. This ambi-
tion is intermeshed with the Company’s operations on explora-
tion licenses Blocks 49, 56 and 58. With respect to its non-oper-
ated licence for Blocks 3&4, Tethys Oil has supported the opera-
tors’ efforts in improving its environmental focus in operations
and proactive work to reduce the potential indirect environmen-
tal impact, not least the risks for spills and damage.
In 2023, most of the Group’s actual, indirect, material atmos-
pheric emissions were generated by its interest in the produc-
tion activities on Blocks 3&4. The blocks primary sources of
emissions arise from the flaring of associated gas produced in
conjunction with the recovery of oil and the use of diesel-run
power generators used to power production facilities, camps,
downhole pumps, and drilling rigs.
To reduce emissions, Tethys Oil proactively engages with the
operator of its production assets in Blocks 3&4. Although the
Group is not the operator of Blocks 3&4, monitoring of emis-
sions is performed with quarterly reporting from the operator
CCED and followed up by management regularly. The data is
recorded by GEO Resources consultancy which is a third party
Environmental Monitoring & Auditing Agency for Environmental
Activities and results 2023
To enhance the transparency on carbon accounting, Tethys Oil
discloses GHG emissions calculated with equity interest
method, as well as with the operational control methods. In
2023, total GHG emissions (according to operational control
method) declined by 3.9 percent year on year due to less flaring
and stationary combustion.
Scope 1 + Scope 2 emissions decreased by 75 percent year
on year in 2023, driven by less field activities than previous
year. Calculating the GHG emissions using the equity interest
method, the three largest contributors to the Group’s total emis-
sion (Scope 1+2+3) are “Flaring”, “Stationary and Mobile com-
bustion”, and “Use of sold products”, which account for 36.5
percent, 8.5 percent and 41.8 percent respectively. While emis-
sions from the “Use of sold products” are more challenging to
avoid, with the realisation of the Gas-to-Power Project on Blocks
3&4, Tethys Oil will be able to address almost 50 percent of its
total GHG emissions, substantially improving its carbon foot-
print profile.
During the year, the Gas-to-Power project has been a central
part of Tethys Oil’s plan to reduce and mitigate GHG emissions,
and the ambition with the project is to replace the energy pro-
ducing diesel generators used in the remote areas of Blocks
3&4. The project enables the re-usage of energy from the gas
generated when producing oil that was otherwise going to be
vented or flared. Read more about the Gas-to-Power project on
page 29.
42
Tethys Oil Annual Report 2023 Sustainability statements
Tethys Oil’s carbon accounting
A majority of Tethys Oil’s Scope 1 and 2 emissions originate in
the blocks in which the Company holds interest; Blocks 49, 56
and 58. Emissions from Blocks 3&4, operated by CCED, are
accounted for as Scope 3.
This report’s data primarily focuses on emission sources of
Scope 1 and 2 as these are the emissions that are under Tethys
Oil’s operational control. At the same time, to provide more
transparency on carbon accounting, Tethys Oil decided to addi-
tionally disclose GHG emissions also calculated with the equity
interest method.
Scope 1: Direct GHG emissions occur from sources that
are owned and controlled by the Company.
Scope 2: Indirect GHG emissions from the generation of
purchased electricity, steam, heating and cooling consumed
by the Company.
Scope 3: All other indirect emissions not covered in Scope
1 and 2. Including extraction and production of purchased
materials; transportation of purchased fuels; and use of
sold products and services.
Tethys Oil’s share of Global Warming Potential (GWP) emissions, based on the operational control method
Scope, GWP (t CO2e)
Scope 1
Scope 2
Scope 3
Total Emissions
2023
440
70
508,458
508,967
2022
1,977
67
527,362
529,405
2021
1,813
49
537,008
538,870
2020
32
40
465,148
465,220
2019
13
50
545,957
546,020
Most of Tethys Oil’s emissions originate from the 30 percent
interest share in Blocks 3&4, which are reported as indirect
Scope 3 emissions, classified according to the operational
control method. To further explain the emission distribution,
the table shows about half of the emissions generated by end
users fuel combustion. Other major contributors are emissions
from power generation from stationary electricity production in
the facilities and waste generated in upstream activities.
Air pollutants
During the monthly sampling period, sampling of
selected relevant ambient gases of (SO2, NO2, CO, O3,
H2S & NMHC) is conducted at single location within
each production facility using portable Ambient Air
Monitoring Station Type AQM-65 and Series 500
sensors.
Measured ambient gases at production plant area
are compared against relevant Omani Criteria, all the
monitoring results by third party environmental agency
were within legislative prescribed limits during 2023 in
the non-operated Blocks 3&4.
No major or significant release of emissions to
environment was observed at the sites.
The environmental strategy for the
producing Blocks of 3&4 is focused on:
Reduction of Greenhouse
Gas emissions.
Minimising impact from all
produced water.
Reducing waste generated
from operations and the
responsible disposal of all
unavoidable waste.
Improving efficiency to
enhance the reduction of
emissions, produced water
and waste.
To succeed with the environmental strategy, a substantial investment in associated gas utilisation project is necessary.
43
Tethys Oil Annual Report 2023 Sustainability statements
We are proud to endorse
The World Bank’s
Zero routine
Flaring Initiative 2030
Zero routine flaring by 2030
Tethys Oil endorses the World Bank initiative “Zero routine flar-
ing by 2030” to end the routine flaring of associated gas during
oil production as this contributes to climate change, impacting
the environment through the emission of CO2, black carbon and
other pollutants. Tethys Oil’s endorsement of the initiative is a
clear commitment to responsible resource management and
sustainable business practices linking environmental and eco-
nomic objectives. The initiative pertains to routine flaring and
not to flaring for safety reasons or non-routine flaring, which
nevertheless should be minimised. During 2023, Tethys Oil’s
Gas-to-Power project reached several milestones. The project’s
aim is to capture gas that was otherwise going to be vented or
flared, and use it as a source of valuable energy. According to
the project plan, the GHG emissions should decrease signifi-
cantly driven by both elimination of emission from routine flaring
and substantial reduction of diesel consumption for stationary
combustion.
Renewable Initiatives
CCED, the operator of Blocks 3&4, have continued to use solar
systems at some of their remote production wells during the
year, reducing GHG emissions by 9,000 tonnes. Currently there
are solar applications in the field for road lighting in camps and
remote transmission units with an average overall saving of 700
litres diesel per day. The operator assessed solar application
for certain pumps (ESP), a study was conducted in Nov-2022 to
check the viability of using solar to power ESP. The outcome is
not viable for now and decided to hold and search for alterna-
tive technology.
To further minimize GHG emission, CCED is also studying
additional applications such as:
• Solar power for contractor camps, workshops, wells and rigs
if solar is economical.
• Use solar panels to power chemical injection.
• Install electric powered heater treaters.
Waste management plan
The construction of waste management segregation yard and a
storage yard is scheduled for completion during first quarter of
2024. The operation will cover storage and separation of waste
for transportation to approved locations.
44
Tethys Oil Annual Report 2023 Sustainability statements
Energy
Energy used within organisation:
HQs and Operating Blocks (49, 56, 58)
Energy consumption*
Fuel consumption within the
organisation – non-renewable sources
Electricity consumption**
Energy Intensity
Unit
MJ
MJ
MWh
MWh/km driven
Energy Intensity (on exploration blocks)
MWh/man-hour worked
Man-hours worked (Blocks 49, 56, 58)
man-hour worked
Total km driven (Blocks 49, 56, 58)
km
Energy used outside the organisation
(Blocks 3&4)
Energy consumption*
Fuel consumption outside of the
organisation – non-renewable sources
Energy Intensity
Unit
MJ
MJ
MJ/bbl
* Refers to the total energy used for operations
** Electricity consumption includes electricity used for cooling and heating
2023
2022
2021
2020
GRI indicator
6,691,836
28,235,377
25,898,173
770,988
6,046,104
27,612,206
25,395,818
326,610
179
0.01
0.03
173
0.03
0.07
140
0.03
0.04
63,960
170,671
120,292
276,829
168,185
220,456
123
0.001
0.002
139,608
426,34
302-1
302-3
2023
2022
2021
2020
GRI indicator
601,545,613
548,450,569
437,043,761
392,541,455
601,545,613
548,450,569
437,043,761
392,541,455
187
151
108
95
302-2
302-3
Emissions
Emissions (Operational control method)
GHG (direct, scope 1)
of which Stationary combustion
of which Mobile combustion
GHG (indirect, scope 2)
of which Purchased Energy
GHG (indirect, scope 3)
of which Purchased goods and services
of which Fuel- and energy related emissions
(not included in Scope 1 and 2)
of which Waste generated in operations
of which Business travel
of which Employee commuting
of which Investments (Blocks 3&4, Minijos)
of which Flaring
of which Cold Venting
of which Gas Utilized
of which Power Generation
GHG (indirect, scope 3) excluding CO2
N2O
CH4
N2O
CH4
Total GHG emission (scope 1, 2, 3)
Direct CO2 emission
Units
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t
t
t CO2e
t CO2e
2020
GRI indicator
2023
440
430
9
70
70
2022
1,977
1,967
9
67
67
2021
1,813
1,804
10
49
49
32
28
4
40
40
508,458
527,362
537,008
465,148
4
94
25.4
59.9
22
508,253
185,714
3,517
3,062
43,020
16,624
92
16,532
0.31
661
508,967
440
4
354
24.8
63.1
19
526,897
220,496
3,871
3,481
39,223
19,931
84
19,848
0.28
794
529,405
1,977
4
148
43
45
18
536,750
201,522
4,280
3,914
31,150
16,748
76
16,673
0.25
667
538,870
1,813
3
13
0
23
18
465,091
123,220
3,662
0
28,105
3,893
143
3,750
0.48
150
465,220
32
305-1
305-2
305-3
305-1
45
Tethys Oil Annual Report 2023 Sustainability statements
Emissions (Equity share method)
GHG (direct, scope 1)
of which Stationary and Mobile combustion
of which Flaring
of which Cold Venting
of which Gas Utilized
GHG (indirect, scope 2)
of which Purchased Energy
GHG (indirect, scope 3)
of which Use of sold products
of which Processing of sold products
of which Transport and Distribution (downstream)
of which Purchased Goods and services
of which Capital Goods
of which Fuel- and energy related emissions
(not included in Scope 1 and 2)
of which Transport and Distribution (upstream)
of which Waste generated in operations
of which Investments
of which Business travel
of which Employee commuting
GHG (direct, scope 1) excluding CO2
N2O
CH4
N2O
CH4
Total GHG emission (scope 1, 2, 3)
Direct CO2 emission
GHG Intensity
Units
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t CO2e
t
t
t CO2e
t CO2e
2023
235,604
43,310
185,714
3,517
3,062
70
70
273,144
212,547
14,405
5,920
737
8,642
9,117
32
21,581
81
60
22
16,624
92
16,532
0.31
661
508,818
235,674
2022
268,360
40,512
220,496
3,871
3,481
67
67
260,291
211,363
13,499
5,630
699
6,786
8,581
32
13,538
81
63
19
19,931
84
19,848
0.28
794
528,718
268,427
2021
242,621
32,905
201,522
4,280
3,914
49
49
296,142
228,325
14,635
6,038
355
2,958
6,704
32
36,952
81
45
18
16,748
76
16,673
0.25
667
538,812
242,670
2020
GRI indicator
305-1
305-2
305-3
305-1
155,019
28,137
123,220
3,662
0
40
40
310,161
274,087
18,600
7,401
365
2,755
5,901
32
898
81
23
18
3,893
143
3,750
0.48
150
465,220
155,059
GHG Intensity, Operational control
Unit
GHG Intensity for the Operating blocks (S1+S2)*
t CO2e / km driven
2023
0.0030
2022
0.0074
2021
0.0084
2020
GRI indicator
0.0002
GHG Intensity for the Group (S1 + S2 + S3
(Cathegories 9, 10, 11 are excluded))**
GHG Intensity, Equity share
t CO2e / 000’bbl
85.8
82.4
71.3
39.8
GHG Intensity for the Operating blocks (S1+S2)*
t CO2e / km driven
GHG Intensity for the Group (S1 + S2 + S3
(Categories 9, 10, 11 are excluded))**
GHG Intensity for the Group (S1 + S2 )**
t CO2e / 000’bbl
t CO2e / 000’bbl
1.4
85.7
73.2
1.0
82.2
74.0
1.1
71.3
59.7
0.4
39.8
37.4
* GHG Intensity for Operating blocks is based on Scope 1&2
** Gases included in the calculation: CO2, CH4, N2O.
305-4
305-4
Flaring
Flaring and Venting on Blocks 3&4
Natural gas flared
Natural gas vented
Natural gas flared
Natural gas vented
Flaring intensity
46
Unit
t CO2e
t CO2e
MMscf
MMscf
scf / bbl
2023
2022
2021
2020
GRI indicator
185,714
220,496
201,522
123,220
3,517
2,302
63
715
3,871
2,639
67.8
727
4,280
2,392
72
588
3,662
2,261
45
545
305-1
Tethys Oil Annual Report 2023 Sustainability statements
Biodiversity and ecosystems
Goal
Target
Performance KPI
No Net Loss (NNL) of biodiversity
and prevention of operations in
critical habitats
Zero Tier 1 hydrocarbon releases
Hydrocarbon spill intensity
(Produced Liquids
Spilled (bbl)/Total Produced
Liquids (Mbbl))
Status
0 Tier 1 releases
Outcome
0.0069
Why is this important?
Biodiversity does not only have intrinsic value, but is also vital to
human health, food production, economic prosperity, and mitiga-
tion of climate change and adaptation to its impacts. It is during
the exploration phase that Tethys Oil’s operations may impact
and potentially disrupt biodiversity and the use of land. As most
operations constitute exploration, biodiversity and land use are
highly prioritised topics for Tethys Oil. Impacts on biodiversity
can result in limitations in the availability, accessibility, or quality
of natural resources, which in turn may impact the well-being
and livelihoods of local communities and their human rights.
Impacts can further be exacerbated if activities occur in pro-
tected areas or areas of high biodiversity value, and may extend
well beyond the closure and rehabilitation of operational sites or
geographic boundaries of activities.
Tethys Oil’s approach
Protecting species and habitats in the areas where Tethys Oil
operate is an important priority. By operating in the Sultanate of
Oman, arid areas where land use opportunities are limited and
biodiversity generally poor, possible impacts of the operations
can to some extent be mitigated thanks to the strategic geo-
graphical location.
Tethys Oil’s work is guided by precautionary principles and is
committed to avoidance or, if avoidance is not possible, to mini-
mise and restore any potential impact on natural habitats in the
surroundings above and below the surface, in line with the miti-
gation hierarchy.
Avoid
in pre-operations assessments, potential impacts are
evaluated together with plans for mitigative actions.
Minimise
when impacts cannot be avoided, activities are planned to
minimise the effects.
Restore
diligently work to remediate an area so that it is restored to
its original condition as reasonably as practical.
Tethys Oil is required to obtain a permit from the Environment
Authority after submitting an EIA Scoping Report to assess the
pollution aspect of the proposed project (air, dust, waste, noise
pollution, sewage discharge, etc). This Scoping Report will also
determine the method of the proposed control measures, as
well as the potential impact on existing critical areas, mitigation
measures to reduce the negative impact during operations,
and the participation of Tethys Oil contractors in adhering to the
Environment Management Plan.
In Blocks 49, 56 and 58 gazelles and lizards are the most
probable red list species that may be present within Tethys Oil’s
areas of interest. It is also likely that birds will be attending and
migrating through the project area. To identify and mitigate for
the presence of these, feasibility scoping reports are performed
before each new exploration, seismic or development project.
The report is conducted in conjunction with environmental ser-
vices agencies, which gives an external assurance of the envi-
ronmental assessments. Risks are assessed and mitigated
prior to any planned activity.
Tethys Oil is committed not to operate in protected areas des-
ignated under World Conservation Union and UNESCO Natural
World Heritage Sites.
Currently no project is located in protected areas.
Activities and results 2023
During the year, the Group implemented a Biodiversity Policy to
further strengthen its commitment. These commitments apply
to existing and future operations and to operations beyond
areas of high biodiversity value. The policy is based on the
knowledge from previous activities as well as industry standards
to ensure that the protection of biodiversity is included in the
planning and execution of all the Group’s projects. Tethys Oil
adopts the recommendations made from the scoping reports.
The Company holds meetings with local stakeholders to listen
to their opinions and knowledge. The subcontractors are also
educated on these issues and have representatives at the
meetings and participate in the investigations.
Tethys Oil’s policies are further explained on pages 62–63
in this report. More detailed information can be found in the
documents published on the Company’s website.
47
Tethys Oil Annual Report 2023 Sustainability statements
Spill prevention
In order to prevent any possible impact on the environment and
to ensure people's safety, Tethys Oil incorporate safety and
environmental protection criteria throughout the operations.
The Group’s HSE Policy ensures procedures where spills are
quickly detected, and timely action can be taken to mitigate the
impacts of the spill. In the event of a spill, the fluids are
removed by suction technique and the soil or sand is removed
and replaced if necessary.
recorded up to end of December 2023. A noteworthy milestone
that was achieved by the increased number of flow line replace-
ments, continued sand removal, start of chemical injection and
corrosion management plan post the metallurgy study conducted.
The following actions have been taken by the operator of Blocks
3&4 to eliminate hydrocarbon leaks:
• Constructed new Produced Water Treatment System (PWRI)
All oil spills are recorded, and regular site surveys are
in Saiwan station.
conducted by a third party environmental service agency that
provides recommendations on how these issues might be
mitigated. The number of Tier 1 hydrocarbon releases (more
than 7 barrels of oil spilled per hour) were 0 recorded incidents.
The number of limited releases increased due to repair of facili-
ties and maintainance activities which have been identified
concerning the facility plants in terms of leaks.
Blocks 3&4 liquid
hydrocarbon spills 2020–2023
2023
2022
2021
2020
Number of Tier 1 Spills
0
0
2
8
Spill Intensity*
(Produced Liquids Spilled (bbl)/
Total Produced Liquids (Mbbl))
0.0069
0.0023
0.02
0.02
* Calculation: Produced Liquid Spilled (bbls) / Total Produced Liquid (1,000 bbls)
Produced liquid spilled (bbls): All Crude Oil, condensate and/or
produced water spills which are not confined to impermeable
secondary containment.
Total produced liquid (1,000 bbls): crude oil, condensate and
produced water generated from exploration and production
activities (does not include gas).
Blocks 3&4 leak reduction programme
Managing spill risk is a critical element in reducing Tethys Oil’s
environmental impact. The 12-months rolling average for Tier-
1&2 leaks reached 0 since December 2022 and it’s continued
the same as there was no Tier-1&2 hydrocarbon release
• Upgraded Farha PWRI system, proactive replacement.
• Preventive/ corrective maintenance plan is in place.
• Started flange management activities from Saiwan station.
• Contract awarded for fugitive emission survey and repair.
• Proactively replaced the lines and corroded valves, flanges etc
The Environment Society of Oman (ESO)
In an effort to deepen the Groups engagement on biodiversity
topics with local communities and biodiversity experts, Tethys
Oil has a long history of collaborating with communities, indus-
try groups, regulators and conservation groups to identify and
protect biodiversity where it operates. Tethys Oil is a corporate
member of ESO, a non-governmental, not-for-profit organisation
which aims to help conserve Oman’s natural heritage and raise
awareness about environmental issues. ESO is a member of the
International Union for the Conservation of Nature (IUCN) and
represents environmental organisations of west Asia at the
United Nations Environment Programme (UNEP).
Site closure, decommissioning and reclamation.
• Assessment prior to operational activities to set baseline.
• Multi-stakeholder approach which requires participation and
transparent communication to local authorities and related
stakeholders on operational plans.
• Reclamation to it’s pre-operational ecosystem by soil
remeditation in case of drilling activities.
Completion of drilling well Menna-01
Initiate activities with team members who have valid
certifications, experience, and licenses according
to OPAL standards. The area has no obstructions,
no housekeeping issues, no spills, and has safely
demobilized all equipment from its location.
(Third party verification statement regarding site
reclamation) 08-12-2023 to 25-12-2023
48
Tethys Oil Annual Report 2023 Unit
number
number
number
number
litre
number
number
number
number
litre
Unit
number
number
number
number
litre
number
number
number
number
litre
Unit
number
number
number
number
Spills
Spills: Blocks 49/56/58 Operational control
Number of spills and leaks
of which minor (less than 0.7bbls/h)
of which medium (0.7bbls/h < spills < 7.0 bbl/h)
of which major (more than 7bbls/h)
Amount of spills and leaks
Number of oil spills and leaks
of which minor (less than 0.7bbls/h)
of which medium (0.7bbls/h < spills < 7.0 bbl/h)
of which major (more than 7bbls/h)
Amount of oil spills and leaks
Spills: Blocks 3&4 Non-operated
Number of spills and leaks
of which minor (less than 0.7bbls/h)
of which medium (0.7bbls/h < spills < 7.0 bbl/h)
of which major (more than 7bbls/h)
Amount of spills and leaks
Number of oil spills and leaks
of which minor (less than 0.7bbls/h)
of which medium (0.7bbls/h < spills < 7.0 bbl/h)
of which major (more than 7bbls/h)
Amount of oil spills and leaks
Biodiversity
IUCN Red List species with habitats
in operating areas (B49, B56, B58)
Critically endangered
Endangered
Vulnerable
Near threatened
IUCN Red List species with habitats
in operating areas, 2023
Critically endangered
Endangered
Vulnerable
Near threatened
Sustainability statements
2023
2022
2021
GRI indicator
1
1
0
0
35
1
1
0
0
35
2023
194
194
0
0
0
0
0
0
0
0
0
0
0
0
2022
129
129
0
0
0
0
0
0
0
0
0
0
0
0
2021
302
300
0
2
43,184
12,649
110,275
179
179
0
0
93
93
0
0
282
281
0
1
39,845
8,449
81,895
306-3
GRI indicator
306-3
2023
2022
2021
GRI indicator
2
4
5
7
2
4
5
7
2
4
5
7
304-4
Blocks 3&4
Block 49
Block 56
Block 58
0
0
1
1
1
4
5
7
0
0
4
1
2
4
5
7
49
Tethys Oil Annual Report 2023 Sustainability statements
Social and safety
Equal treatment
and opportunity for all
Goal: Foster a diverse and
inclusive workplace
Own workforce – health & safety
Affected communities
Goal: Zero harm
Goal: Make a positive impact
in the communities where the
Group operates
50
Tethys Oil Annual Report 2023 Equal treatment and opportunity for all
Sustainability statements
Goal
Target
Performance KPI:
Performance KPI:
Policy statement
Fostering a diverse and inclu-
sive workplace
Zero cases of
discrimination
Reported cases of
discrimination
Employee
satisfaction survey
Outcome
Outcome
Outcome
0
Satisfaction rate
76%
group-diversity-and-non-discrimina-
tion-policy. Group human rights policy
Why is this important?
A successful business is dependent upon its employees as indi-
viduals. A fair, respectful, and safe working environment based
on equal opportunities and treatment is vital to support a com-
pany’s strategy on all levels. No matter origin or ethnicity, every
person is entitled to the same human rights. Freedom from
discrimination is a human right and a fundamental right at work.
Respecting diversity and building an inclusive working culture is
deeply rooted in Tethys Oil’s Scandinavian values.
Tethys Oil’s approach
Tethys Oil’s primary asset is the employees. Ensuring a diverse
and equitable workplace where all employees feel welcome is
essential to the company’s continued success. High employee
satisfaction and high-performance standards are a high priority
for Tethys Oil, and a prerequisite to attract talent. Further, it shall
offer rewarding working conditions and realise each employee’s
individual potential through training and job promotion. Tethys
Oil has zero tolerance towards all forms of child and forced
labour in the value chain.
Tethys Oil’s position on diversity and discrimination
• Tethys Oil seeks to recruit and retain the best possible candi-
dates for all positions based on merit regardless of gender,
age, disability, nationality, race or religion.
• The cultural diversity of the Group’s employees is an asset
and shall be respected. Tethys Oil will not accept any form of
harassment or discrimination of its employees for any reason.
• Tethys Oil’s employees, partners and contractors should feel
free to voice concerns or report instances of discrimination
without fear of recrimination or harassment.
• Tethys Oil’s employees shall always act with the utmost integ-
rity and respect when dealing with colleagues, partners and
society.
Tethys Oil’s position on human rights
Tethys Oil expect all employees, suppliers and business part-
ners to meet strict social, ethical and environmental require-
ments and to respect human rights. The Group supports inter-
nationally recognised human rights wherever it operates. Tethys
Oil is committed to investigating, addressing, responding and
to take appropriate corrective action in response to any violation
of human rights. It means that the Group shall provide effective
remedies to victims, including reparation if a violation occurs.
Tethys Oil’s work is guided by international human rights
principles encompassed in the Universal Declaration of Human
Rights, the International Labour Organisation’s Declaration on
Fundamental Principles and Rights at Work (ILO) and the United
Nations Global Compact. Further, it’s based on the United
Nations Guiding Principles on Business and Human Rights,
endorsed by the UN Human Rights Council in 2011.
Tethys Oil recognises the importance of respecting the rights
of local communities, and thus before any new investment or
operational activity, the Company analyses potential impacts
on human rights. While the Group respects all human rights, it
focuses primarily on those human rights that have the highest
potential impact by its operations. Typically, those most
impacted are populations and communities in countries where
Tethys Oil is active or within its license areas where it operates.
The nature of Tethys Oil’s operations as a highly skilled
upstream oil and gas operator in Oman means that the risk for
child labour or bonded and forced labour is limited. There are
potential risks in the use of subcontractors in some cases, but
Tethys Oil’s stringent policies and the transparent process for
procurement, avoids and further mitigate any such risks.
Tethys Oil’s approach on sub-contractors and their respect of
human rights is further elaborated in the Group’s Supplier Code
of conduct, which is the code in regards to labour rights and
working condition. Supplier risk assessments ensure that sup-
pliers are meeting the conditions in the policy.
51
Tethys Oil Annual Report 2023
Sustainability statements
Local hiring
Tethys Oil prioritises hiring locally and developing local talents.
Local hiring allows the Group to make meaningful economic
contributions to the communities, especially in the areas where
professional labour may otherwise be scarce.
Tethys Oil’s offices
Tethys Oil’s Muscat office is the base for Tethys Oil’s Chief Tech-
nical Officer and consists of a team of engineers and subsur-
face specialists together with finance and administration staff.
In 2023 22 people were employed in Muscat.
Tethys Oil’s head office is located in Stockholm, Sweden. It is
the base for the Managing Director, the Chief Financial Officer
and the Chief Legal Officer, along with Tethys Oil’s finance, HR,
business development, sustainability and communications
staff. In 2023, Tethys Oil had an average of 10 employees
based in Stockholm.
In 2023 Tethys Oil had an average of 31 full-time employees
of several different nationalities, in a broad age range, of which
33 percent were female and 67 percent male. A majority of the
staff have graduated from universities and colleges, primarily
with geosciences, engineering or business administration.
Activities and results 2023
During 2023, Tethys Oil rolled out a Company-wide programme
to track employee satisfaction which is of high priority for Tethys
Oil. The tracking of employee satisfaction will allow Tethys Oil
to gain insights in the well-being of its employees and in manage-
ment performance. Furthermore, these insights will be meaningful
in making efforts to maintain and improve employee satisfaction.
To further strengthen its commitment on human rights, an
updated Human Rights Policy has been implemented during the
year. The policy is guided by international human rights princi-
ples, and it focuses on fostering open and inclusive workplaces
based on human rights.
• No human rights-related grievances were filed against the
Company in 2023.
• No recorded incidents of discrimination at Tethys Oil’s
operations during 2023.
Furthermore, Tethys Oil has adopted an updated Diversity
and Non-Discrimination Policy. The Policy applies to all staff and
contractors employed by Tethys Oil worldwide, and concerns
the process of recruiting, retaining, rewarding and promoting
employees and all other aspects of management of the Group’s
human resources.
Tethys Oil’s policies are further explained on pages 62–63
in this report. More detailed information can be found in the
documents published on the Company’s website.
52
Tethys Oil Annual Report 2023 Sustainability statements
Discrimination
Incidents of discrimination and corrective actions taken
Units
Total number of incidents of discrimination during the
reporting period
number
2023
0
2022
GRI indicator
0
406-1
Status of the incidents and actions taken
No incidents took place No incidents took place
Workforce data
Total number of employees
Total number of employees
out of which women
With employment contract,
undetermined period, full time
out of which women
With employment contract,
undetermined period, part time
out of which women
External consultants / contractors
out of which women
Sweden
Total number of employees
out of which women
External consultants / contractors
out of which women
Oman
Total number of employees
out of which women
External consultants / contractors
out of which women
UAE
Total number of employees
out of which women
Unit
number
number
number
number
number
number
number
number
number
number
number
number
number
number
number
number
number
number
2023
2022
GRI indicator
33
11
31
10
2
1
6
1
10
4
5
1
22
6
3
0
1
1
31
12
29
11
2
1
6
1
10
5
4
1
20
6
2
0
1
1
102-7
102-8
102-8
102-8
102-8
The percentage of women and men employees per employee category
(internal employees)
Unit
Top management
Middle management
Operative staff
GRI indicator
Percentage of women in the organisation %
Percentage of men in the organisation
Employees <30 years old
Employees between 30–50 years old
Employees >50 years old
%
%
%
%
2023
2022
2023
2022
2023
2022
9
14
0
8
20
8
16
0
10
20
18
23
0
8
60
8
16
0
5
60
73
64
100
85
20
83
68
100
86
20
405-1
The percentage is calculated by reference to the total number of women / men and not to the total number of employees.
53
Tethys Oil Annual Report 2023 2023
696
562
134
21
26
12
0.06
1,807
2022
673
540
133
21.7
30.0
11.1
0.03
Employee Category
GRI indicator
Economics, Finance & Legal
Economics, Finance & Legal
Economics, Finance & Legal
Economics, Finance & Legal
Economics, Finance & Legal
Economics, Finance & Legal
Economics, Finance & Legal
404-1
1,129
Economics, Finance & Legal
2023
2022
GRI indicator
75
25
0
75
25
2023
80
20
0
0
100
75
25
0
75
25
2022
80
20
0
0
100
405-1
GRI indicator
405-1
Sustainability statements
Average hours of training per year per employee
Group
Total training hours for all employees
thereof male
thereof female
Average hours of training per employee
thereof male
thereof female
Total training expenditures
for all employees
Average training expenditures
for all employees
Unit
hours
hours
hours
hours
hours
hours
MUSD
USD
Management
The percentage of individuals within
the Executive Management team
Percentage of men
Percentage of women
Percentage of individuals under 30 years old
Percentage of individuals between 30–50 years old
Percentage of individuals over 50 years old
Board of Directors
The percentage of individuals within
the Board of Directors
Percentage of men
Percentage of women
Percentage of individuals under 30 years old
Percentage of individuals between 30–50 years old
Percentage of individuals over 50 years old
Unit
%
%
%
%
%
Unit
%
%
%
%
%
54
Tethys Oil Annual Report 2023 Sustainability statements
Health and safety
Goal
Zero harm
Target
Performance KPI:
Policy statement
Better occupational health and
safety records than industry stand-
ards
Lost time injury rate (LTIR)
Why is this important?
Health and safety involves the prevention of physical and mental
harm to workers and promotion of workers health. Healthy and
safe working conditions are recognised as a human right, and a
high priority for Tethys Oil. As an oil and gas company, Tethys Oil
operates in an industry exposed to certain safety risks and
impacts, where accidents potentially can occur. It is thus the
Company’s responsibility to identify and mitigate potential risks,
and to provide the workforce with a safe and healthy working
environment.
Tethys Oil’s activities are subject to the Health, Safety and
Environmental (HSE) risks inherent in the oil industry. Prevention
of accidents and ill health is critical to efficient operations.
Prevention of illness and promoting of healthy lifestyles provide
lasting benefits for the workforce, their families, and the public.
Loss of control of safety issues at facilities can potentially result
in serious harm to people as well as the environment. The high-
est safety standards are critical to ensure the sound and effec-
tive functioning of Tethys Oil.
Outcome
0.0 (operated blocks)
0.18 (non-operated blocks)
Outcome
Group HSE Policy
Tethys Oil’s approach
The genuine care for HSE is a core value for Tethys Oil and is
transparent throughout all of the company's plans and actions.
The Group’s objective is to provide a healthy and safe working
environment for employees, contract personnel and members
of the general public who might be affected by its activities. The
Group is implementing a systematic approach to HSE manage-
ment to achieve continuous improvement toward no harm to
people, no accidents, no spills and to strive for minimum impact on
the environment, thereby contributing to sustainable development.
Tethys Oil has established an HSE Policy with accompanying
corporate procedures. The ultimate responsibility for HSE lies
with the Managing Director. However, it is the responsibility of all
Tethys Oil staff to ensure compliance with the Group’s standards
for safe operations.
Tethys Oil, as an operating company, will engage in technical
and operational activities that have inherent risks. The Group
has a commitment to achieve continuous improvement toward
the goal of no harm to people, no accidents, no spills and strive
for minimum impact on the environment and managing the com-
pany’s reputation and protecting its legal and social licenses to
operate. To meet this commitment, an assurance procedure for
key technical and operational activities has been implemented.
55
Tethys Oil Annual Report 2023
Sustainability statements
Operating Management System framework
The Operating Management System (OMS)
of the International Association of Oil & Gas
Producers (IOGP) provides a comprehensive
strategy to manage various risks, impacts, and
threats associated with occupational health and
safety, environmental and social responsibility,
as well as process safety, quality, and security.
The purpose of this procedure, is to ensure
key technical and operational activities are
conducted in a prudent and safe way according
to the OMS. Applicable to all types of upstream
projects, this framework consists of 10 elements
addressed by Tethys Oil’s operational manage-
ment when ensuring the effective handling of
risks and the achievement of high performance
standards in the oil and gas industry.
Elements
10.
Assurance,
review and
improvement
1.
Commitment
and accountability
9.
Monitoring,
reporting and
learning
Implementation
2.
Policies,
standards and
objectives
8.
Execution of
activities
Continuous
Improvement
Leadership
The
Fundamentals
3.
Organisation,
resources and
capability
7.
Plans and
procedures
Risk
Management
4.
Stakeholders
and customers
6.
Asset design
and integrity
5.
Risk assessment
and control
Activities and results 2023
In 2023, Tethys Oil continued to strengthen its HSE capabilities
and preparedness by executing risk assessments and mitiga-
tion plans for the ongoing activities in Blocks 49, 56 and 58.
Training expenditures for employees have doubled compared
to 2022. Average training expenditure per employee has
increased with 46% since 2022, and average hours of training
per employee has tripled since 2021.
HSE training and education:
Tethys Oil maintained its training programme focus for all
operational personnel. During the year, Tethys Oil focused on
the following activities to achieve zero harm in operations.
H2S training:
The training aims to ensure a thorough grasp of Hydrogen
sulfide (H2S) hazards and properties, along with appropriate
emergency response actions in case of an H2S incident. It is
designed for personnel in environments susceptible to H2S
gas contamination.
Defensive driving:
Oil and gas sector personnel must possess a Defensive Driving
Permit for work-related driving. Tethys Oil is committed to ongoing
training to improve drivers’ knowledge and skills for safe driving.
A Journey Management Plan training:
The training guides personnel in planning safe road journeys
in compliance with HSE requirements, emphasising the need for
a Journey Management Plan for trips over 4.5 hours.
Leadership for supervisors training:
The training emphasises industry success factors, equipping
managers and supervisors with tools to confidently handle risks
and uncertainties when making decisions.
First aid and adult CPR in the community:
All Tethys Oil’s personnel receives a First aid training based on
international guidelines from the European CPR Council.
56
Tethys Oil Annual Report 2023 Sustainability statements
Contractor engagement
Since contractors consistently make up most of the Group’s
operational work, Tethys Oil focus on two levels of contractor
engagement:
Executive level:
Tethys Oil management meets with key contractors to set clear
expectations of the Groups commitment to safety in the work-
place.
Working group:
Engagement sessions are held in the office and field locations
to provide the same message, while also creating an opportu-
nity to receive feedback and input on how Tethys Oil can colla-
borate and improve its safety performance.
Tethys Oil continue to build strong partnerships with its contrac-
tors to ensure an overall, unified HSE culture for everyone work-
ing with the company’s operations.
Contractors accident rate
Integration of contractors into the health and safety management
system:
1. On-site registration for procedure on safety plans.
2. Induction training on health and safety procedures and
emergency response.
3. Monitoring and evaluation: on-site performance.
Safety
Safety performance, non-operated,
employees & contractors, Blocks 3&4
Fatalities
Fatalities rate
Number of hours worked
Lost-Time Injury rate (LTIR )
High-consequence work-related injuries
High-consequence work-related injuries
Lost workday injuries
Lost work days (calendar days)
Total recordable injuries
Unit
number
per 100 mn hours worked
hours (thousand)
per 1 mn hours worked
number
per 1 mn hours worked
number
number
number
2023
2022
2021
GRI indicator
0
0
10,920
0.18
0
0
0
0
5
0
0
8,760
0.23
0
0
0
0
5
0
0
5,690
0.35
0
0
0
0
2
403-9
Total Recordable Injury Rate (TRIR)
per 1 mn hours worked
0.46
0.57
0.35
The main types of work-related injury for employees
Different
workrelated
Different
workrelated
Different
workrelated
Safety performance, operated,
employees & contractors, Blocks 49.56.58
Fatalities
Fatalities rate
Number of hours worked
Lost-Time Injury rate (LTIR )
High-consequence work-related injuries
High-consequence work-related injuries
Lost workday injuries
Lost work days (calendar days)
Total recordable injuries
Unit
number
per 100 mn hours worked
hours (thousand)
per 1 mn hours worked
number
per 1 mn hours worked
number
number
number
Total Recordable Injury Rate (TRIR)
per 1 mn hours worked
2023
0
0
64
0
0
0
0
0
0
0
2022
0
0
120
0
0
0
0
0
0
0
0
0
169
0
0
0
0
0
0
0
The main types of work-related injury for employees
Non occured in
the considered
period
Non occured in
the considered
period
Non occured in
the considered
period
2021
GRI indicator
403-9
57
Tethys Oil Annual Report 2023 Sustainability statements
Affected communities
Goal
Target
Performance KPI:
Policy statement
Make a positive impact in the communities
where Tethys Oil operates
Ongoing long term community engagement
projects at local, regional and national/
international level
Community engagement
projects
Outcome
Outcome
Global and National: 5
Regional: 4
Local: 5
Group CSR Policy and
Code of Conduct
Why is this important?
Access to reliable and affordable energy can improve quality
of life, create economic wealth and help people out of poverty.
However, extracting oil and gas can stress and impact communi-
ties and interfere with resources. This may result from, for exam-
ple, land use requirements for the industry activities, an influx
of people seeking employment and economic opportunities.
The support of communities in the host country is crucial for
operating a resilient business, therefore good relations with
host countries and local communities are prerequisites to
Tethys Oil’s business.
Tethys Oil’s approach
All Tethys Oil’s activities strive to create shared prosperity between
stakeholders to avoid and mitigate any potential negative impact.
The aim is to create economic opportunity and fostering goodwill
in the communities through locally relevant initiatives.
By engaging with the stakeholders in the communities in which
Tethys Oil operates, the Group ensures that they are listening
to, learning from and considering stakeholders’ views. To under-
stand the concerns surrounding Tethys Oil’s operations and to
set mutually beneficial goals, the Group engages in an active
dialogue and relationship with community stakeholders. This
is to ensure local stakeholders' needs and priorities are con-
sidered and to avoid that the operations might disrupt the
livelihood of the local population, their traditions and negatively
affecting their quality of life.
Tethys Oil is committed to engage in dialogue with stakehold-
ers on human rights issues related to the business and believes
that local issues are most appropriately addressed at the local
level. By encouraging local employment and, where appropriate,
work with local communities, Tethys Oil strives to improve the
health, skills and welfare in the local communities. Tethys Oil
endeavours, where applicable, to engage in capacity building
through the transfer of skills and technologies, and refrains from
any involvement in tribal, internal, or other armed conflicts or
acts of violence. Tethys Oil’s Corporate Social Responsibility
(CSR) activities are headed by the Director of Corporate Affairs
and are continuously followed up. In addition to non-profit part-
nerships, Tethys Oil has dedicated local team members focused
on listening and responding to community concerns in the oper-
ating areas.
Tethys Oil recognises that community engagement also
includes land and resource rights. See more details on page 28.
The Group is committed to act responsibly and minimising any
potential negative impact by addressing extensive and meaning-
ful engagement between Tethys Oil, local communities and
affected vulnerable groups.
58
Tethys Oil Annual Report 2023
Sustainability statements
Tethys Oil community engagement is focused on three segments integrated with the ESG strategy.
Build ESG strategy
around company goals
Global and
national
community
Regional
communities
Know what stakeholders
care about
Local
communities
Develop programs that
engages employees
Rethink the idea of ESG
Activities and results 2023
In 2023, Tethys Oil supported the communities associated with
the Groups operations, for example in issues regarding water
shortage and sanitation and providing necessary equipment to
support teaching in local schools. The Company had a continu-
ous dialogue on a national, regional and local level with all key
stakeholders relating to Blocks 49, 56, 58.
During the year Tethys Oil adopted a Groupwide CSR Policy.
The policy pertains to all activities undertaken by the Group
towards fulfilling its CSR objectives, and aims at ensuring that
all CSR expectations are handled according to good practice.
The policy is available on Tethys Oil’s website. Furthermore,
Tethys Oil, together with its Joint Venture partners has estab-
lished a CSR committee. The committee’s objective is to carry
through CSR projects and has an annual budget of MUSD 1.
The CSR function delivers the JV’s strategy to support local
communities in Oman through the provision of financial support
for education, community development, health & safety, environ-
mental causes and sponsorship of local events.
During the year the following initiatives have taken place in
Tethys Oil’s operated blocks:
Global and national community contributions
• Co-sponsor of Global forum Water and Humanity. The main
focus was to gather experts from all over the world in Muscat
to explore the challenges of energy transition and to examine
their ideas and visions on solutions for a more efficient sus-
tainable world.
Regional contributions
• Sponsorship of Shaleem hertiage, educational, and cultural
carnival 2024.
• Sponsored and participated in Scientific Symposium at
Dhofar Governorate. The symposium covered topics related
to water supply and situation, dams, treated wastewater,
artificial seeding and water associated with oil and water
desilination.
• Sponsored Water Security Seminar in the Governorate of
Dhofar, which raised awareness lectures on water usage and
water handling.
• Supporting hospitals and clinics is a primary focus, with pro-
jects ranging from supplying kidney laser stone machinery to
SQU Hospital, distal radius plates and 3-D printing to Khoula
Hospital, a dialysis unit to a health clinic in Adam, installing
an emergency room at a health center in Mahout, to construct-
ing a walkway for patient rehabilitation and outdoor mobility.
Local contributions
• Supported families under Social Security in Wilate Thumriate
with “Iftar Saeem”-initiative during the holy month of Ramadan
(481 families supported).
• Continued sponsoring establishing prepatory class in Wilate
Al Jazir. The objective of the contribution is for children who
enrol in school the upcoming year to have great confidence
in themselves and get them used to engaging in the school
environment.
• Muqshin School was provided with two drinking water filtration
system as well as printers for educational purposes.
59
Tethys Oil Annual Report 2023 Sustainability statements
The following initiatives are examples of additional community engagement projects collectively
undertaken with or by the partners in Blocks 3&4:
Project
Atta Ramadhan 2023
Omani Charitable Organisation
Health Walkway/Park (Mahout)
Aligned with SDG goal
10 – Reduce Inequalities
10 – Reduce Inequalities
3 – Good Health and Well Being
National Employment Programme
8 – Decent Work and Economic Growth
Nubian Ibex Conservation
Dialysis Unit in Adam
15 – Life on Land
3 – Good Health and Well-Being
Workshops for students with special needs
3 – Good Health and Well-Being
International Program of Grand Salam Explorer
4 – Quality Education
Outward Bound Oman “Musta’ad Program”
4 – Quality Education
National/Regional/Local
Local
National
Local
National
Regional
Regional
Regional
National
National
Tethys Oil has for several years invested in local talent
development by providing scholarships to students pur-
suing Geoscience at Sultan Qaboos University. In an
ongoing commitment, a Ph.D. and two MSc students
were supported, with the Ph.D. student joining Tethys
Oil’s team in Oman during the year. This aligns with the
company’s strategy to contribute to human capability
development and cultivate skills within the national
workforce. Notably, four former scholarship recipients
are now key members of Tethys Oil’s Geoscience team,
showcasing the success of the program.
Social investments in local communities
Social investments in local communities, Block 3&4, gross
cash
in kind
volunteering hours
Social investments in local communities, Blocks 49, 56, 58, gross
cash
in kind
volunteering hours
Unit
MUSD
MUSD
hours
Unit
MUSD
MUSD
hours
2023
1.0
0
0
2023
0.056
0
2022
1.0
0.0
0.0
2022
0.032
0.001
8 hrs distribution
coupons for Iftar
Saym for Ramadan
8 hrs distribution
coupons for Iftar
Saym for Ramadan
2021
1.0
0.0
0.0
2021
0.012
0.0
0.0
60
Tethys Oil Annual Report 2023 Sustainability statements
61
Governance
Business conduct
Business resilience
Goal: Strengthen and uphold a
high standard of integrity and
ethical business conduct
Goal: Resilience to a
low-carbon future
Tethys Oil Annual Report 2023 Sustainability statements
Business conduct
Goal
Target
KPI
A high standard of integrity and ethical business
conduct, based on Tethys Oil’s zero-tolerance
policy on bribery and corruption
100 percent employees trained on Code of
Conduct and relevant policies and procedures
Employees who completed the Code of Conduct
course
Outcome 2023
100 percent
Why is this important?
Failure to conduct a business in an ethical and transparent way
can threaten a company’s resilience or license to operate. Legal
violations, operational negligence or corruption can have severe
consequences for a company’s reputation or financial stability.
The consequences are material and have direct impact on the
business, its employees, shareholders, communities, families,
suppliers and customers.
Tethys Oil’s approach
Tethys Oil holds a high standard of ethical, moral, and legal busi-
ness conduct and expects its staff to act honestly, with integrity
and in accordance with the Group’s Code of Conduct. The Code
covers standards, laws and regulations that govern the busi-
ness, summarised in one common document below, that is
based on the following policies. These are the foundations for
the Company’s work with regards to ethics, anti-corruption, and
human rights.
The Code constitutes the commitment of the Group and its
Board of Directors and its employees to aspire to high stand-
ards of conduct. Employees are encouraged to report suspected
or known cases they believe may be illegal or a violation of the
Group’s Code of Conduct or any Group policies. To provide a
secure avenue for employees and third parties to disclose con-
cerns regarding improper, unethical or illegal conduct, Tethys Oil
has implemented a Whistleblowing Policy and a whistleblower
system, which are proactively communicated to employees.
Complaints covered by the whistleblower system and other
cases of suspected violation of the Code of Conduct, are man-
aged in accordance with Tethys Oil’s procedures. During 2023,
zero cases were reported to the whistleblowing channel.
Critical concerns include concerns about the organisation’s
potential and actual negative impacts on stakeholders raised
through grievance mechanisms stated in Tethys Oil’s Whistle-
blowing Policy. The Group’s grievance mechanism is a routinised
process through which grievances can be raised and remedy
can be sought. More detailed information can be found in the
documents published on the Company’s website.
Tethys Oil has zero tolerance for corruption. The Group has
adopted an Anti-Corruption Policy and transparent procedures
for employees, business partners and other external stakehold-
ers to report suspected corruption cases to prevent the abuse
of for example public office, company position, power for private
gain, or the misuse of private power in relation to business. The
policy and the procedures are based on Transparency Interna-
tional’s Business Principles framework.
Overview of Tethys Oil Group Code of conduct
Vision, Mission and Values
Code of Conduct
Anti-Corruption Policy
Anti-Fraud Policy
CSR Policy
HSE Policy
Human Rights Policy
Stakeholder
Relations Policy
Whistleblowing Policy
Biodiversity Policy
IT & Data Security
Policy & Procedure
AML, CTF and KYC Policy
Information and Insider Policies
Diversity and Non-Discrimination Policy
Data and External Privacy Policy
62
Tethys Oil Annual Report 2023
Sustainability statements
It is strictly prohibited for Tethys Oil’s staff or contractors to give,
authorise, offer, promise, request, agree or receive gifts, hospi-
tality and entertainment to improperly influence or reward acts
or decisions or as an actual or intended compensation for any
improper benefit.
Tethys Oil has strict anti-fraud policies aimed at safeguarding
the Group and its staff from fraud and dishonest behaviour. The
implementation of the policy aims to improve all Tethys Oil
staff’s knowledge and understanding of what constitutes fraud,
how to prevent, detect and report suspected fraud and where
the responsibility for investigation lies. The policy also aims to
assist in creating an atmosphere of openness and trust where
staff feels comfortable and able to raise concerns without the
risk of repercussions.
Tethys Oil recognises that accepting or offering gifts or hospi-
tality of moderate value is customary and in accordance with
local business practice in the region that it operates. Tethys Oil
has a gift policy in place that clarifies the requirements for staff
and contractors when receiving or offering gifts on behalf of the
Company.
Activities and results 2023
Tethys Oil is responsible to conduct regularly review of the Com-
pany’s policies. The policy Group consists of representatives
from legal, investor relations, and sustainability. The manager
for each business area is responsible to revise the relevant
policy when essential changes take place in the business that
affect content in the policy. The manager prepares the policy
updates in cooperation with concerned areas and functions
within the organisation, and given the comments received a final
version is prepared. The Board of Directors or the Managing
Director approves and adopt the Group’s Policies. The Managing
Director or another member of the Group Executive Manage-
ment is ultimately responsible for the implementation of the
Group’s Policies.
During the year the Human Rights Policy was updated with
adopting the Ten Principles of the UN Global Compact as guiding
principles. Furthermore, the Group Anti-Fraud, Group Anti-Corrup-
tion, Group AML-CFT and KYC, Group Diversity and Non-Discrimi-
nation and the Group’s Whistleblowing Policy were updated and
a new Supplier Code of Conduct and a Biodiversity Policy were
adopted. All new policies have been integrated in Tethys Oil’s
Code of Conduct.
The Board of Directors during a site visit in Oman.
63
Tethys Oil Annual Report 2023 Sustainability statements
Tethys Oil’s sustainability governance structure
Shareholders
External Auditor
General Meeting
Elects the Board and Auditor
Nomination Committee
Board of Directors
Appoints the Managing Director
Remuneration Committee
Managing Director
Technical Committee
Audit Committee
Group Executive Management
Sustainability Committee
Sustainability Working Group
The Sustainability Working Group is a cross-functional team of
subject matter experts that manages and coordinates the publi-
cation of the Group’s Sustainability Report as well as other ESG
related matters and efforts, as directed by the Executive Man-
agement. Tethys Oil’s Head of Sustainability is responsible for
overseeing ongoing activities as well as developing and imple-
menting strategies within the scope of the Sustainability Work-
ing Group.
The Board of Directors
The Board regularly reviews management reports and welcomes
external perspectives on a range of sustainability issues and
strategy development, including climate, environmental perfor-
mance, diversity and inclusion of our workforce, and community
engagement. The Board members routinely pursue opportuni-
ties to remain well informed on recent developments.
Audit Committee:
Supervises the Company's financial reporting including the
sustainability reports and is providing support to the Board
in the decision making process regarding such matters.
Remuneration Committee:
Supports the Board on decisions regarding remuneration to
the Managing Director including proposals and follow-up on the
KPI's for variable salary which includes ESG parameters.
Technical Committee:
Follows-up on technical evaluations and operational work and
reviews the operations management system including HSE
matters.
Sustainability Committee:
Responsible for reviewing and monitoring the continuity and
progress of the Groups sustainability goals, the management
of sustainability risks and the compliance with the Company
Policies and the Code of Conduct.
64
Tethys Oil Annual Report 2023 Sustainability statements
Payments to authorities
Production sharing
Income taxes
Licence costs
Total
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
GRI
indicator
Per project
Barrels (’000) Barrels (’000) USD (’000) USD (’000) USD (’000) USD (’000) USD (’000) USD (’000) USD (’000) USD (’000)
Oman
Blocks 3&4
Blocks 49
Blocks 56
Blocks 58
Total Oman
Gibraltar
Total Tethys Oil
Per Authority
Sultanate of Oman
– Ministry of Energy
and Minerals
Sultanate of Oman
– Ministry of Finance
Total Oman
Total Gibraltar
1,545
1,964
90,435
129,059
36,672
59,487
0
0
127,107
188,546
30
1,409
936
1,575
1,964
91,844
129,059
37,608
59,487
250
350
600
250
100
350
950
2,595
350
250
100
350
207-4
130,052
189,496
1,575
1,964
91,844
129,059
38,371
59,487
600
950
130,815
189,496
763
763
1,575
1,964
91,844
129,059
37,608
1,575
1,964
91,844
129,059
37,608
763
200
400
600
300
650
950
59,487
59,487
129,359
60,137
207-4
130,052
189,496
763
Total Tethys Oil
1,575
1,964
91,844
129,059
38,371
59,487
600
950
130,815
189,496
Social fines
Non-compliance with laws and regulations
in the social and economic area
Total number of significant fines
Total monetary value of significant fines
Total number of non-monetary sanctions
Cases brought through dispute resolution mechanisms
Units
number
MUSD
number
number
Corruption
2023
2022
GRI indicator
0
0
0
0
0
0
0
0
419-1
Confirmed incidents of corruption and actions taken
Units
2023
2022
GRI indicator
Total number and nature of confirmed incidents of corruption
number
Total number of confirmed incidents in which employees were
dismissed or disciplined for corruption
number
Total number of confirmed incidents when contracts with
business partners were terminated or not renewed due to
violations related to corruption.
Public legal cases regarding corruption brought against the
organization or its employees during the reporting period
Confirmed breaches to the Code of Conduct
Communication about anti-corruption policies and
procedures
Communication of Anti-Corruption Policy to the
Board of Directors
Communication of Anti-Corruption Policy to the employees
Group level
Executive Management
Operative staff
number
number
number
Units
number of members
%
number of employees
%
number of employees
%
0
0
0
0
0
2023
5
100
4
100
29
100
205-3
0
0
0
0
0
2022
GRI indicator
5
100
4
100
27
100
205-2
205-2
65
Tethys Oil Annual Report 2023 Sustainability statements
Business resilience
Goal
Target
KPI
Resilience to a low-carbon future
Conduct stress-testing analysis and internal
carbon pricing to ensure projects resilience in
different energy transition scenarios
Carbon Emissions/Revenue (kg CO2e/USD)
Outcome 2023
1.70 kg CO2e/USD (1.71 in 2022)
Why is this important?
The energy sector faces long-term challenges as energy
demands are shifting and, with it, so does the energy supply
landscape. The market for renewable energy is experiencing
rapid growth driven by the need for an energy source transition
away from the dependence of fossil fuels. While hydrocarbons
are expected to remain the dominant energy source in the
coming years, a decline from this position is expected to gradu-
ally occur over time. To remain competitive during this transition
period, the Company must be able to operate in an energy-
efficient and profitable way.
Tethys Oil’s approach
Tethys Oil’s definition of business resilience is the ability and
capacity to absorb stress and maintain continuous operations,
protect people and assets, and enabling them to thrive in
increasingly unfavourable conditions. Business resilience and
value creation are critical focus areas for the Group, operating in
the oil and gas industry, given its exposure to various challenges
such as market volatility, geopolitical risks, environmental con-
cerns, and technological advancements.
The Group can distinguish 5 important organizational pillars:
• Adaptability:
By fostering a culture of adaptability and innovation within the
organization. This includes staying agile in response to
market changes, technological advancements, and regulatory
developments.
• Technology and operational resilience:
Sustain core business functions and the availability of key
technology.
• Emergency preparedness:
Developing and regularly test emergency response and busi-
ness continuity plans to ensure the Group can effectively
respond to unforeseen incidents or crises.
A key metric that Tethys Oil uses measures the GHG intensity of
revenue generated (expressed in kg CO2 eq per USD or revenue).
The metric allows fair comparison of different projects and
assets, providing an opportunity for cross-sectoral comparison
of revenue streams.
All oil is not equal
In today’s evolving energy landscape, oil has come to encom-
pass a vast range of crudes that vary dramatically in colour, den-
sity, and use. The emission intensity from oil production varies
significantly depending on the type of oil assets, with oil sands
and heavy oil being the most emissions intensive resources
overall. Emission intensity from the same type of asset may also
be significantly different as factors like well-maturity, location
and other unique features of the individual wells affect the
energy required for production. Researchers are beginning to
quantify the varying environmental impacts of these different
oils, particularly as they relate to climate change. The results
could help companies and policymakers better decide when and
where to drill in a world increasingly concerned with the cost of
carbon – both financial and otherwise. For more information,
please read the Sustainable transition section on page 10.
The Group implements stress-testing techniques and internal
carbon pricing to ensure projects resilience in different energy
transition scenarios will deliver value to shareholders. The
Group continues to stress test its projects to different risks to
ensure that it can continue to deliver value to shareholders even
in a transitional environment.
• Financial resilience:
Retain liquidity and assets. Investments in upstream projects
is still needed even in rapid transitions.
• Risk management:
By implementing a comprehensive risk management strategy
that identifies, assesses, and mitigates various risks, includ-
ing market fluctuations, geopolitical events, and operational
challenges.
Activities and results 2023
As in 2022, a key exercise in 2023 was the Group’s continued
TCFD assessment for testing resilience against low-carbon sce-
narios, which is described in more detail on pages 68–71. In
2023, Tethys Oil’s commercial production essentially occurred
on the non-operated Blocks 3&4 where the partner group is
committed to reduce routine flaring to zero by 2030. A key step
to accomplish this is the investments made in a Gas-to-Power
facility that will use the associated gas to replace diesel as an
66
Tethys Oil Annual Report 2023
Sustainability statements
energy source for operations on the blocks. The investments
made corresponds to some MUSD 15 over the past years and
are expected to decrease emission intensity from production
by 30 percent over the next three years and will have a positive
payback during the project. The reduced emissions and costs
will increase the blocks’ competitiveness during the transition
era. For more information on the Gas-to-Power project, please
see page 29.
Block 56 – an example of Tethys Oil’s business model in the making
As the operated block with the most activity, Block 56 has over
the course of the past years moved through several of the steps
in the E&P life cycle – with the aim of field development and
commercial production in 2024. The extended well test suc-
cessfully performed in 2023 de-risked and strengthened the
belief that the Eastern Flank area is viable for further develop-
ment and commercialisation.
• Integrated decision-making:
Integrate environmental, social, and governance (ESG) consid-
erations into strategic decision-making processes to ensure
alignment with long-term sustainability goals.
• Risk management:
Conduct comprehensive risk assessments to identify and
mitigate risks associated with short-term profit-seeking act-
ivities, such as environmental pollution, community unrest,
regulatory non-compliance, and reputational damage.
• Stakeholder engagement:
Foster transparent and constructive dialogue with stakehold-
ers to build trust, address concerns, and co-create solutions
that balance short-term business objectives with long-term
societal and environmental needs.
In total Tethys Oil produced over 60,000 barrels of oil from
• Long-term investments:
two wells during the extended well test, and the contingent
resources of the Al Jumd, Menna and Sarha prospects are
expected to be evaluated and third party reviewed as the field
development plan is finalised. These three prospects are a part
of a chain of leads and prospects along the Eastern Flank area
of Block 56 that Tethys Oil over time aim to bring to commerciali-
sation.
The area is not only highly prospective but is also near estab-
lished infrastructure on neighbouring Block 6, allowing for easier
and more cost-efficient field development. As a part of the field
development planning, the Group is also exploring the possibil-
ity of electrifing the future production facilities by connecting
them to the grid on Block 6, this would provide additional cost
and emission reductions of the production per barrel. In Block
56 Tethys Oil sees the potential of bringing a second revenue
stream online, strengthening and diversifying the Group’s port-
folio, business resilience and competitiveness in the coming
years of energy transistion.
The strategic challenge of balancing short-term returns with its
long-term license to operate
By adopting a holistic approach that considers both short-term
financial performance and long-term sustainability, Tethys Oil
can navigate the strategic challenge of balancing immediate
returns with its license to operate effectively, ensuring resilience
and success in the face of evolving economic, social, and envi-
ronmental challenges.
Allocate resources towards long-term investments in sustain-
able practices, technology innovation, community develop-
ment, and stakeholder engagement initiatives that contribute
to both financial returns and social/environmental benefits.
• Metrics and reporting:
Establish key performance indicators (KPIs) and reporting
mechanisms to track progress towards both short-term finan-
cial goals and long-term sustainability objectives, providing
transparency and accountability to stakeholders.
• Leadership and culture:
Cultivate a corporate culture that values sustainability, ethical
conduct, and long-term thinking at all levels of the organiza-
tion, with leadership setting the tone and leading by example.
Tethys Oil’s Board of Directors has authorised the executive
management to explore the possibility of investing in energy
transition businesses. The scope of the exploratory work should
focus on the Company’s subsurface competence and/or its geo-
graphic footprint in the Nordics and Baltics as well as Oman and
the Gulf region.
67
Tethys Oil Annual Report 2023 Sustainability statements
Task force for Climate-related Financial Disclosures
Tethys Oil aims to produce oil and natural gas in the most effec-
tive and sustainable way to provide affordable and accessible
energy to the growing global population, and to improve the
quality-of-life standards for people around the globe. The Group
shares global concerns about multiple sustainability challenges
that the world is facing, including risks caused by climate
change.
In response to the emerging climate related risks, Tethys Oil
decided to start utilising the recommendations of the Task force
on Climate-related Financial Disclosures (TCFD).
TCFD framework
The Task force for Climate-related Financial Disclosures was
established in 2015 by the Financial Stability Board (FSB), and
was asked to develop voluntary, consistent climate related
financial disclosures that would be useful to investors, lenders,
and insurance underwriters in understanding material risks.
Under the TCFD Framework, companies are asked to demon-
strate how resilient their business would be, related to the
transition to a lower-carbon economy.
As a reference to this type of transition, scenarios of “below
2 degrees” are recommended to be used.
TCFD Framework is based on 4 pillars:
Governance
Disclose the Company’s governance around climate-related
risks and opportunities.
Strategy
Disclose the actual and potential impacts of climate-related
risks and opportunities on the Company’s businesses,
strategy, and financial planning where such information is
material.
Risk management
Disclose how the Company identifies, assesses,
and manages climate-related risks.
Metrics and targets
Disclose the metrics and targets used to assess and
manage relevant climate-related risks and opportunities
where such information is material.
68
Tethys Oil Annual Report 2023 Sustainability statements
Strategy and risk management
1. Climate-related risks and opportunities
ESG Board Committee has been established to address, among
other things, climate related risks and opportunities on the
Board level. Following TCFD Framework, Tethys Oil has identified
several potential climate related risks, emerging on physical risk
and transition risk dimensions. The risks are mostly long-term
in nature (i.e. with some probability of arising in the time horizon
of less than 10 years ahead) with some risks (specifically regu-
lations related) being medium-term nature (i.e. with some proba-
bility of arising in the time horizon of less than next 10 years).
The following risks have been identified, by the Group’s manage-
ment, related to the transition to a lower-carbon economy.
• Oil prices persistent decline due to lower demand in the
long-term.
• Carbon prices persistent increase, as the incentivisation
measure for emissions’ cut (long-term).
• Stricter regulation for new licenses permits granting, with
more conditionality added and longer process of applications
considerations and approvals (mid-term).
• Reputational concerns for the Oil & Gas industry with the
impact for social license to operate, talents attraction and
retention, and valuation of existing assets.
The following physical risks have been identified with their respective likelihood and magnitude:
Type of climate
related physical
risks
Frequency/degree
of vulnerability1
Climate change
Impacts due to identi-
fied vulnerability2
Risk
magnitude3
Comments
Cyclone
High Waves
Landslides
Dust Storms
High
Temperatures
Sea Level Rise
Heavy Rains
Flash Flooding
1
1
1
3
2
1
2
2
1
1
1
1
1
1
1
1
1
1
1
3
2
1
2
2
The location of the Blocks and nature of the surrounding landscape
would mean the project is not subject to cyclones.
The Blocks are located far away from the coast, and as a result,
are not subject to high waves.
The location of the project excludes the impacts of landslides,
as they are highly unlikely in the area.
The location of the site and nature of the surrounding landscape would
mean the project could be subject to high dust levels and dust storms
which can reduce visibility for vehicles and workers in the area.
High temperatures are typical in the area particularly in the summer
months when temperatures peak. Care should be taken to ensure
shelter and sufficient water is provided to hydrate workers on site; and
where possible, to provide breaks at time periods when temperatures
peak in the summer months.
The projects are located far away from the coast, and as a result, are not
subject to high sea level rise.
In the event of heavy rains, potential flooding is possible due to flat lying
land and lack of drainage in the area. This potentially can cause ground
contamination.
In the event of heavy rains, potential of flash flooding is possible due to
flat lying land and lack of drainage in the area.
1 1, 2 or 3 assigned for low, medium or high frequency of vulnerabilities
2 1, 2 or 3 assigned for low, medium or high impacts due to identified vulnerabilities
3 Risk magnitude should be calculated by multiplying frequency and climate impact
69
Tethys Oil Annual Report 2023 Sustainability statements
2. Scenario analysis and climate resilience
To stress-test the resilience of Tethys Oil’s business model,
the Group decided to conduct a scenario analysis exercise,
trying to understand the impact of different oil price scenarios
and carbon pricing scenarios on the valuation of the Group’s
assets and the recoverability of the Group’s reserves and
resources, assuming different transition paths to low-carbon
economy, that the world would undertake.
Three different scenarios from the IEA were considered.
Please see the description and key parameters of considered
scenarios below.
Definitions
Objectives
Net zero emissions by 2050 (NZE scenario)
Announced pledges scenario (APS)
Stated policies scenario (STEPS)
A scenario which sets out a narrow but
achievable pathway for the global energy
sector to achieve net zero CO2 emissions
by 2050. It doesn’t rely on emissions reduc-
tions from outside the energy sector to
achieve its goals.
A scenario which assumes that all climate
commitments made by governments and
industries around the world, including
Nationally Determined Contributions (NDCs)
and longer-term net zero targets, will be met
in full and on time.
A scenario which reflects current policy
settings based on a sector-by-sector and
country-by-country assessment of the
energy-related policies that were in place
by the end of August 2023, as well as those
that are under development.
To show what is needed across the main
sectors by various actors, and by when, for
the world to achieve net zero energy related
and industrial process CO2 emissions by
2050 while meeting other energy-related
sustainable development goals.
To show how close do current pledges get
the world towards the target of limiting
global warming to 1.5 °C, it highlights the
“ambition gap” that needs to be closed to
achieve the goals agreed at Paris in 2015.
To provide a benchmark to assess the
potential archivements of recent develop-
ments in energy and climate policy. The dif-
ferences between STEPS and the APS high-
lights “implementation gap” that needs to
be closed to archive the announced targets.
Source: https://www.iea.org/reports/global-energy-and-climate-model/understanding-gec-model-scenarios
Real terms (USD 2020)
IEA crude oil (USD/barrel)
2010
103
2022
98
2030
42
2050
25
2030
74
2050
60
2030
85
2050
83
Net Zero by 2050
APS
STEPS
USD (2022) per tonne of CO2
Announced pledges scenario (APS)
Advanced economies with net zero pledges
Emerging markets and developing economies with net zero pledges
Other emerging markets and developing economies
Stated policies scenario (STEPS)
European Union
China
Net zero emissions by 2050 scenario (NZE)
Advanced economies with net zero pledges
Emerging markets and developing economies with net zero pledges
Other emerging markets and developing economies
2030
2040
2050
130
40
-
120
28
140
90
15
175
110
17
129
43
205
160
35
200
160
47
135
53
250
200
55
70
Tethys Oil Annual Report 2023 Sustainability statements
Given the inputs from each scenario, Tethys Oil evaluated the
impact of:
a) Oil price scenarios
b) Oil price and carbon pricing scenarios together on Tethys Oil’s
year end 2023 2P+2C reserves and resources from the valua-
tion perspective as well as reserves and resources recovera-
bility perspective.
In terms of carbon pricing, the most severe option was used
within each scenario: i.e. carbon pricing assumed for advanced
economies.
GHG emission within scopes 1 and 2 was considered for Tethys
Oil, with 2 different GHG accounting approaches implemented
(operational control and equity share). Average GHG emission
for 2021 and 2022 is assumed for 2023–2040, adjusted for the
effect of Gas-to-Power plant. As can be seen in the tables below,
even the most severe assumptions and scenarios considered
would allow the Group to recover ca 80 percent of its reserves
and resources, with less than 35 percent of value affected.
Notably, those scenarios do not take into account emissions
reduction initiatives to be implemented in 2023–2024. (For
example, Gas-to-Power Project).
Operational control approach for GHG accounting
NPV at 10%
Oil price impact
How much of 2P+2C reserves will be recovered?
Oil price and Carbon pricing impact (S1+S2)
How much of 2P+2C reserves will be recovered?
Net Zero Emission by 2050
Announced Pledges
less than 20%
99%
less than 20%
100%
less than 5%
100%
less than 5%
100%
Equity share approach for GHG accounting
NPV at 10%
Oil price impact
How much of 2P+2C reserves will be recovered?
Oil price and Carbon pricing impact (S1+S2)
How much of 2P+2C reserves will be recovered?
Net zero emission by 2050
Announced pledges
less than 20%
99%
less than 35%
78%
less than 5%
100%
less than 20%
90%
Stated Policies
less than 5%
100%
less than 5%
100%
Stated policy
less than 5%
100%
less than 10%
98%
3. Risk management
The following mitigation measures are implemented for physical
risks:
• Dust suppression is typically used throughout the site in
events of high winds and dust generation. This measure is
important to increase visibility of passer-by vehicles and
reduce particulate matter to compliant levels. Dust is typically
monitored on a quarterly basis to ensure compliance with EA
standards.
• Drainage installed in the area to minimise impacts of poten-
tial floods in the events of heavy rains or cyclone events, in
each building, oil tanks and vessel boundaries.
• Measures implemented in the events of storms and lightning
to avoid potential lightning strikes to passer-by vehicles and
workers on site.
The following mitigation measures are implemented to transition
risks:
• Reduction of GHG emissions from operations through the
implementation of gas to power plant project, aiming to stop
routine flaring and eliminate diesel consumption for station-
ary combustion on Blocks 3&4.
• KPI of carbon intensity introduced (Management based KPI).
• Incorporation of carbon pricing assumptions in internal valua-
tion for all existing and potential future projects.
Tethys Oil continuously monitors existing and emerging regula-
tory requirements related to climate. Climate change regulation
at international, national and regional levels has the potential
to significantly affect the regulatory environment of the oil and
natural gas industry.
• In events of high temperatures, care is taken to ensure shel-
As countries around the world aim to fulfill their commitments
ter and sufficient water is provided to hydrate workers on site;
and when possible, to provide breaks at time periods when
temperatures peak in the summer months.
under the Paris Agreement, corresponding regulatory changes
could have a material impact on oil and gas operations.
71
Tethys Oil Annual Report 2023 Sustainability statements
Performance data
Introduction
Over the past couple of years, Tethys Oil’s operated activities
have increased noticeably as the Company has assumed the
operatorship for Block 56 and Block 58 and drilling operations
commenced on Block 49. In line with the increased activities, a
corresponding jump in the nominal figures for certain key met-
rics can also been seen from 2021 when compared to previous
years. Most noticeable for the operated blocks are the Scope 1
emissions and the increased energy consumption that followed
the seismic acquisition campaigns on Blocks 56 and 58 as well
as the wells drilled on Blocks 49 and 56. While these activities
are of key importance for the Company’s future growth they also
highlight the importance of a proactive approach in all aspects
of Tethys Oil’s sustainability work – from finding ways to keep
emissions on a competitive level, to safeguard the habitability
of the native species and supporting the local communities.
On the non-operated Blocks 3&4 the most noticeable increase is
the Scope 3 figures affected by flared gas. This increase is in
large part due to the new Flared Gas Emissions Estimation Meth-
odology, which is based on The American Petroleum Institute
(API) Compendium of Greenhouse Gas Emissions Methodologies
for Oil and Natural Gas Industry. Tethys Oil is, together with its
partner group on Blocks 3&4, currently engaging in a Gas-to-
Power project aimed at reducing flaring and instead using the
associated gas to replace diesel as the energy source of station-
ary combustion. The peak of flaring should have been in 2023, to
then start decreasing as the project’s facilities commence opera-
tions. The project is a first step towards Tethys Oil’s long-term
target of achieving zero routine flaring by 2030. On the following
pages Tethys Oil presents its non-financial performance data and
indices in reference to GRI and TCFD.
Performance data for Tethys Oil operated activities
Performance data for non-operated Blocks 3&4
Total Performance data for entire Group
Water used and discharged
Totally for the Group
In the areas with water stress
(B3&4, B49, B56, B58)
Water withdrawal
Water withdrawn, totally
thereof produced water
Unit
megaliters
megaliters
2023
1,951
1,346
2022
1,681
1,091
2021
1,603
913
2020
1,589
666
2023
1,951
1,346
2022
1,681
1,091
2021
1,603
913
2020
1,589
666
megaliters
0
0
0
megaliters
megaliters
1,346
32.0
1,091
36.4
megaliters
megaliters
megaliters
megaliters
32.0
31.9
0.1
36.4
36.3
0.1
913
42.0
42.0
42.0
0.1
0
666
2.3
2.3
2.2
0.1
0
0
0
1,346
32.0
1,091
36.3
32.0
31.9
0.0
36.3
36.3
0.0
913
42.0
42.0
42.0
0.0
0
666
2.2
2.2
2.2
0.0
572.5
553.4
648.2
921.2
572.5
553.4
648.2
921.2
megaliters
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
megaliters
megaliters
megaliters
572.5
1,664
1,059
553.4
1,404
813
648.2
1,459
769
921.2
1,485
559
572.5
1,664
1,059
553.4
1,404
813
648.2
1,459
769
921.2
1,485
559
%
%
78.7%
74.5%
84.2%
84.0%
78,7%
74.5%
84.2%
84.0%
54.3%
48.4%
47.9%
35.2%
54,3%
48.4%
48.0%
35.2%
thereof freshwater (≤1.000 mg/l
total dissolved solids)
thereof other water (>1.000 mg/l
total dissolved solids)
thereof third-party water
thereof freshwater (≤1.000 mg/l
total dissolved solids)
thereof groundwater
thereof surface water
thereof groundwater
thereof freshwater (≤1.000 mg/l
total dissolved solids)
thereof other water (>1.000 mg/l
total dissolved solids)
Water consumed
Water recycled and reused
Re-injected produced water vs.
produced water
Re-injected produced water vs.
total water withdrawn
72
GRI
indicator
303-3,
303-5
Tethys Oil Annual Report 2023 Sustainability statements
Water discharged
Water discharged by destination
thereof evaporated
thereof freshwater (≤1.000 mg/l
total dissolved solids)
thereof other water (>1.000 mg/l
total dissolved solids)
Totally for the Group
In the areas with water stress
(B3&4, B49, B56, B58)
Unit
megaliters
megaliters
megaliters
2023
2022
2021
2020
2023
2022
2021
2020
287
287
0
277
277
0
144
144
0
104
104
0
287
287
0
277
277
0
144
144
0
104
104
0
GRI
indicator
303-4
megaliters
287
277
144
104
287
277
144
104
Utility water: fresh water from third-party provider
No water withdrawal estimated for B49/56/58
Waste
Waste from Operating Blocks (49, 56, 58)
Unit
Total waste
thereof non-hazardous waste
thereof non-hazardous waste at landfill
thereof non-hazardous waste disposed to a designated locations
by the municipalities in Oman; offsite; general waste
Hazardous waste
thereof hazardous waste disposed to a designated locations
by the municipalities in Oman; landfill; offsite
Waste directed to disposal
t
t
t
t
t
t
Waste from Non-Operating Blocks (3&4) Excluding contractors in 2023
Unit
Total waste
thereof non-hazardous waste
thereof non-hazardous waste at landfill
thereof non-hazardous waste disposed to a designated locations
by the municipalities in Oman; offsite; general waste
Hazardous waste, liquids
thereof hazardous waste to landfill, onsite
thereof hazardous waste disposed to a designated locations by the
municipalities in Oman; landfill; offsite
Waste directed to disposal
t
t
t
t
t
t
t
2023
19.8
19.6
19.6
19.6
0.2
0.2
19.8
2023
414.3
414.3
414.3
414.3
19,674.0
10,698.1
8,976.0
414.3
GRI indicator
306-3, 306-5
GRI indicator
306-3, 306-5
2022
19.6
19.6
19.6
19.6
0.0
0.0
19.6
2022
676.9
676.9
676.9
676.9
24,132.5
7,659.7
16,472.8
676.9
Hirings
New employee hired by
age group and gender
Unit
Total Group level
<30 years old
30–50 years old
>50 years old
Sweden
<30 years old
30–50 years old
>50 years old
number
rate
number
rate
number
rate
number
rate
number
rate
number
rate
Number of employees
From which, women
GRI indicator
2023
2022
2023
2022
0
0%
3
13%
0
0%
0
0%
1
13%
0
0%
0
0%
3
13%
1
20%
0
0%
2
22%
1
50%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
2
22%
1
50%
0
0%
2
50%
1
100%
401-1
401-1
73
Tethys Oil Annual Report 2023 Sustainability statements
Hirings
Oman
<30 years old
30–50 years old
>50 years old
UAE
<30 years old
30–50 years old
>50 years old
Employee turnover by
age group and gender
Total Group level
<30 years old
30–50 years old
>50 years old
Sweden
<30 years old
30–50 years old
>50 years old
number
rate
number
rate
number
rate
number
rate
number
rate
number
rate
0
0%
2
11%
0
0%
0
0%
0
0%
0
0%
0
0%
1
7%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
401-1
401-1
Unit
Number of employees
From which, women
GRI indicator
2023
2022
2023
2022
number
rate
number
rate
number
rate
number
rate
number
rate
number
rate
0
0%
1
5%
0
0%
0
0%
1
13%
0
0%
0
0%
1
5%
1
20%
0
0%
1
11%
1
50%
0
0%
1
11%
0
0%
0
0%
1
25%
0
0%
0
0%
1
11%
1
50%
0
0%
1
25%
1
100%
401-1
401-1
Employee turnover
by age group and gender
Unit
Number of employees
From which, women
GRI indicator
2023
2022
2023
2022
Oman
<30 years old
30–50 years old
>50 years old
UAE
<30 years old
30–50 years old
>50 years old
number
rate
number
rate
number
rate
number
rate
number
rate
number
rate
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
0
0%
401-1
401-1
Number of employee departing the company ÷ Average number of employees = Employee turnover
74
Tethys Oil Annual Report 2023 Sustainability statements
2023
2022
Beneficiaries
Motivation
GRI indicator
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
yes
All employees
Health protection
All employees
Gender equality
All employees
All employees
All employees
All employees
All employees
Attraction
Attraction
Attraction
Attraction
Attraction
All employees
Health protection
Female employees
All employees
All employees
All employees
All employees
Attraction
Attraction
Attraction
Attraction
Attraction
All employees
Health protection
All employees
All employees
Attraction
Attraction
401-2
401-2
401-2
401-2
401-3
401-4
401-5
401-2
401-2
401-2
401-3
401-4
401-5
401-2
401-2
401-5
Standard benefits for full-time employees
Table 1. Benefits
Sweden
Health insurance care
Parental leave
Subsidies for holiday and treatment
Subsidies for lunches
Disability and invalidity coverage
Retirement provision
Stock ownership
Oman
Health insurance care
Parental leave
Subsidies for holiday and treatment
Disability and invalidity coverage
Retirement provision
Stock ownership
UAE
Health insurance care
Subsidies for holiday and treatment
Stock ownership
Performance review
The percentage of total employees, by gender and by employee category,
who received a regular performance and career development review
Unit
% of members of the organization who received performance review
% of women who received performance review
% of employees with ILC, undetermined period, full time,
who received performance review
% of women, with ILC, undetermined period,
full time, who received performance review
% of employees with ILC, undetermined period, part time,
who received performance review
% of women, with ILC, undetermined period, part time, who received
performance review
%
%
%
%
%
%
2023
100
100
100
100
100
100
2022
GRI indicator
100
100
100
100
100
100
404-3
Parental leave
Parental leave: Group
Unit
2023
2022
GRI indicator
Women
Men
Women
Men
Total number of employees that were
entitled to parental leave as per end of year
Total number of employees that took parental
leave during the year
Number of employees who returned to work
after parental leave ended
Number of employees who returned to work
after parental leave ended, who were still
employed twelve months after their return
to work
Return to work rate
Retention rate
number
number
number
number
%
%
3
1
1
1
100
100
6
0
0
0
100
100
3
2
1
1
50
100
2
2
2
2
100
100
401-3
75
Tethys Oil Annual Report 2023 Sustainability statements
TCFD index
Recommended TCFD Disclosure
Comment
Location of Disclosure
Governance
a) Board’s oversight of climate related risks
Process and frequency of information
Influence on business planning and goals
How the Board assesses progress against goals
b) Management’s role in assessing and managing climate-related risks
Responsibilities for climate-related risks
Description of organization structure
Process of communication
Process for monitoring
Strategy
a) Near, medium, and long-term climate-related risks
Description of time horizons
Specific risks that could be material
for each time horizon
Process to determine material risks
b) Impact on business, strategy and planning
Impact on business and strategy
Impact on financial planning, timing
and prioritization
How risks are integrated into
current decision-making and
strategy formulation
Business Conduct, p. 62
Business Conduct, p. 62
Business Conduct, p. 62
Business Conduct, p. 62
Business Conduct, p. 62
Business Conduct, p. 62
Business Conduct, p. 62
Long-term (mostly) and mid-term (selectively)
have been identified
Strategy and Risk Management, p. 69
Strategy and Risk Management, p. 69
Strategy and Risk Management, p. 69
Strategy and Risk Management, p. 69
Risk Management, p. 71
Risk Management, p. 71
Describe climate-related strategies
3 external scenarios considered
Scenario Analysis and Climate Resilience, p. 70
c) Resilience of strategy using 2-degree or lower scenarios
Impact on valuation of reserves and
resources under different transition
scenarios (oil price and carbon pricing)
Scenario Analysis and Climate Resilience, p. 71
Risk Management
a) Process to assess climate-related risks
Risk management process
Existing and emerging regulatory requirements
Process for assessing size and scope of risk
b) Process to manage climate-related risks
c) Integration of risk process into overall risk management
Metrics and Targets
a) Metrics used to assess climate-related risks
b) Scope 1 and Scope 2 emissions
Risk Management, p. 71
Emissions management, p. 42
Strategy and Risk Management, Scenario
Analysis and Climate Resilience, p. 42–44
Risk Management, p. 71
Business resilience, p. 66–67
GHG emissions, GHG intensity, Energy con-
sumption & intensity Water use & discharge
Scope 1, 2 and 3 calculated with Equity share
and Operational control methods
Performance data, p. 45–46
Performance data, p. 45–46
c) Describe targets used
No routine flaring by 2030
Emissions management, p. 42
76
Tethys Oil Annual Report 2023 Sustainability statements
GRI index
Statement of use
Tethys Oil AB (publ) has reported the information cited in this GRI content index for the period 1 January 2023 to 31 December
2023 with reference to the GRI Standards and with the use of GRI 1: Foundation 2021 and the applicable GRI Sector Standard
GRI 11: Oil and Gas 2021.
AR: Tethys Oil annual Report 2023, RR: Tethys Oil Renumeration Report 2023
GRI standard
Disclosure
Location
Comments
General disclosures
GRI 2: General
Disclosures 2021
2-1 Organizational details
AR Backcover
A-d) Applicable
Sector
standard
ref. no.
2-2 Entities included in the organization’s
sustainability reporting
2-3 Reporting period, frequency and contact point
2-4 Restatements of information
AR 35
AR 35
AR 35
2-5 External assurance
AR 128–131
2-6 Activities, value chain and other business
relationships
AR 6
2-7 Employees
AR 51–54
A-d) Applicable
A-d) Applicable
A) Applicable i. Applicable, ii,
Applicable, iii Applicable
A) Applicable b) i. Applicable, ii,
Applicable, iii Applicable
A) Applicable b) i. Applicable, ii,
Applicable, iii Applicable c)
Applicable d) Applicable
A) Applicable b) i. Applicable, ii,
Applicable, iii Not applicable iv.
Applicable v. Applicable c) i Applicable
ii Applicable d) Applicable e) Applicable
2-8 Workers who are not employees
AR 51–54, 80–84
Applicable
2-9 Governance structure and composition
AR 62–65, 80–84
Applicable
2-10 Nomination and selection of the highest
governance body
AR 62–64, 80–84
Applicable
2-11 Chair of the highest governance body
AR 62–64, 80–84
Applicable
2-12 Role of the highest governance body in
overseeing the management of impacts
2-13 Delegation of responsibility for managing
impacts
2-14 Role of the highest governance body in
sustainability reporting
2-15 Conflicts of interest
AR 62–64, 80–84
Applicable 2a, 2b i, ii, 2c
AR 62–64, 80–84
A-b) Applicable
AR 62–64, 80–84
A.b) Applicable
AR 51–52, 80–84
A-b) Applicable
2-16 Communication of critical concerns
AR 51–52, 62–64
A-b) Applicable (Whistleblower policy)
2-17 Collective knowledge of the highest
governance body
2-18 Evaluation of the performance of the highest
governance body
AR 62–64, 80–84
A-c) Applicable
RR, AR 80–84
A-c) Applicable
2-19 Remuneration policies
AR 98–102
2-20 Process to determine remuneration
RR, AR 80–84
A) i. Applicable ii. Applicable partially
iii. Applicable iv. Applicable partially
v. Applicable b) Applicable
A) i. Applicable ii. Applicable partially,
iii. Applicable b) Applicable partially
2-21 Annual total compensation ratio
RR, AR 80–84
A-c) Applicable
2-22 Statement on sustainable development
strategy
2-23 Policy commitments
2-24 Embedding policy commitments
AR 27,30
AR 62–63
AR 62–63
A-f) Applicable + corporate policies
A-f) Applicable
A) Applicable
2-25 Processes to remediate negative impacts
AR 38, 85–87
A-d) Applicable
2-26 Mechanisms for seeking advice and raising
concerns
AR 51–52, 62
A) Applicable
2-27 Compliance with laws and regulations
2-28 Membership associations
2-29 Approach to stakeholder engagement
AR 83–84 112–
118
AR 35
AR 36
A-e Applicable
A) Applicable
A) Applicable (Stakeholder Policy)
2-30 Collective bargaining agreements
AR 51, 98–102
A) Applicable
77
Tethys Oil Annual Report 2023 Sustainability statements
GRI standard
Material topics
Disclosure
Location
Comments
3-2 List of material topics
3-3 Management of material topics
AR 41–67
AR 41–67
A-b) Applicable
A-f) Applicable
GRI 201: Economic
Performance 2016
201-1 Direct economic value generated and
distributed
201-2 Financial implications and other risks and
opportunities due to climate change
202-2 Proportion of senior management hired from
the local community
AR 2–3, 66
A-b) Applicable
AR 68–71
A) Applicable
AR 51–54
A-d) Applicable
GRI 203: Indirect Eco-
nomic Impacts 2016
203-2 Significant indirect economic impacts
AR 58–60, 66–67
A-b) Applicable
Sector
standard
ref. no.
11.14.2
11.2.2
11.14.3
11.14.5
GRI 205: Anti-corruption
2016
205-1 Operations assessed for risks related to
corruption
AR 38–40, 62–64
A-b) Applicable (Anti-Corruption Policy) 11.20.2
AR 62–64
B) Applicable e) Applicable
11.20.3
205-2 Communication and training about anti-
corruption policies and procedures
205-3 Confirmed incidents of corruption and actions
taken
GRI 207: Tax 2019
207-1 Approach to tax
207-2 Tax governance, control, and risk manage-
ment
207-3 Stakeholder engagement and management
of concerns related to tax
207-4 Country-by-country reporting
GRI 302: Energy 2016
302-1 Energy consumption within the organisation
302-2 Energy consumption outside of the
organisation
302-3 Energy intensity
GRI 303: Water
and Effluents 2018
303-1 Interactions with water as a shared resource
GRI 304: Biodiversity
2016
GRI 305: Emissions
2016
303-3 Water withdrawal
303-4 Water discharge
303-5 Water consumption
304-1 Operational sites owned, leased, managed in,
or adjacent to, protected areas and areas of high
biodiversity value outside protected areas
304-2 Significant impacts of activities, products and
services on biodiversity
304-3 Habitats protected or restored
304-4 IUCN Red List species and national
conservation list species with habitats in areas
affected by operations
305-1 Direct (Scope 1) GHG emissions
305-2 Energy indirect (Scope 2) GHG emissions
305-3 Other indirect (Scope 3) GHG emissions
305-4 GHG emissions intensity
AR 62–64
AR 91
A-e) Applicable
A) Applicable
AR 91, 116
A-c) Applicable
AR 38. 85–87
A) Applicable
AR 120
AR 45
AR 45
AR 45
AR 72
AR 72
AR 72
AR 72
AR 47–49
AR 47–49
AR 47–49
AR 49
AR 42–46
AR 42–46
AR 42–46
AR 42–46
A-c Applicable
A-g) Applicable
A-c) Applicable
A-c) Applicable
A) Applicable
A-d) Applicable
A-e) Applicable
A) Applicable
A) Applicable i. Applicable, ii,
Applicable, iii Applicable v.
Applicable iv. Applicable
A) Applicable (Biodiversity Policy)
A-g Applicable (Biodiversity Policy)
A) Applicable i. Applicable, ii,
Applicable, iii Applicable v.
Applicable iv. Applicable
A-f) Applicable
A) Applicable
A) Applicable
A) Applicable c) Applicable,
d) Applicable
GRI 306: Waste 2020
306-3 Waste generated
AR 44, 73
A-b) Applicable
305-5 Reduction of GHG emissions
AR 28, 42–46
A-e) Applicable
306-4 Waste diverted from disposal
306-5 Waste directed to disposal
AR 44, 73
AR 44, 73
A) Applicable, b-c) Applicable
partially
A-e) Applicable
GRI 308: Supplier
Environmental
Assessment 2016
GRI 401: Employment
2016
308-1 New suppliers that were screened
using environmental criteria
AR 39–40, 52
A) Applicable
308-2 Negative environmental impacts in the supply
chain and actions taken
AR 40, 57
A-c Applicable
401-1 New employee hires and employee turnover
AR 51–54, 73–75
A-b) Applicable
401-2 Benefits provided to full-time employees
that are not provided to temporary or part-time
employees
401-3 Parental leave
AR 51–54, 73–75
A-b Applicable
AR 51–54, 73–75
A-d) Applicable
78
11.20.2
11.21.4
11.21.5
11.21.6
11.21.7
11.1.2
11.1.3
11.1.4
11.6.2
11.6.4
11.6.5
11.6.6
11.4.2
11.4.3
11.4.4
11.4.5
11.1.5
11.1.6
11.1.7
11.1.8
11.2.3
11.5.4
11.5.5
11.5.6
/
/
11.10.2
11.10.3
11.10.4
Tethys Oil Annual Report 2023 Sustainability statements
GRI standard
Disclosure
Location
Comments
GRI 403: Occupational
Health and Safety 2018
403-1 Occupational health and safety management
system
AR 39–40, 55–57
A-b) Applicable
403-2 Hazard identification, risk assessment, and
incident investigation
AR 38–40 35–37,
51
A-c) Applicable, (HSE Policy)
403-3 Occupational health services
AR 55–57
A) Applicable, (HSE Policy)
403-4 Worker participation, consultation, and
communication on occupational health and safety
403-5 Worker training on occupational health and
safety
403-6 Promotion of worker health
403-7 Prevention and mitigation of occupational
health and safety impacts directly linked by
business relationships
403-9 Work-related injuries
403-10 Work-related ill health
AR 55–57
A-b) Applicable
AR 55–57
AR 55–57
A) Applicable, (HSE Policy)
A-b) Applicable, (HSE Policy)
AR 38–40, 55–57
A) Applicable
AR 55–57
AR 55–57
A) Applicable e) Applicable
A-e) Applicable
GRI 404: Training
and Education 2016
404-1 Average hours of training per year per
employee
AR 54, 56
A) Applicable
404-3 Percentage of employees receiving regular
performance and career development reviews
AR 75
A) Applicable
GRI 405: Diversity
and Equal Opportunity
2016
405-1 Diversity of governance bodies and
employees
AR 51–54, 73–74
GRI 406: Non-
discrimination 2016
406-1 Incidents of discrimination and corrective
actions taken
AR 51–54
A) i Applicabw, ii Applicable,
b) i Applicable, ii. Applicable
A-b) Applicable, (Supplier Code
of Conduct)
GRI 408: Child Labor
2016
408-1 Operations and suppliers at significant risk
for incidents of child labor
GRI 410: Security
Practices 2016
410-1 Security personnel trained in human rights
policies or procedures
GRI 413: Local
Communities 2016
413-1 Operations with local community engage-
ment, impact assessments, and development
programs
AR 51–52
A-b) Applicable
AR 51–52, 62–63
A-b) Applicable (Human Risk Policy)
11.18.2
AR 39–40, 58–60
A) Applicable (Group CSR Policy)
11.15.2
Sector
standard
ref. no.
11.9.2
11.9.3
11.9.4
11.9.5
11.9.6
11.9.7
11.9.8
11.9.10
11.9.11
11.10.6
/
11.11.5
11.11.7
/
Auditor’s report on the
statutory sustainability report
To the general meeting of the shareholders in Tethys Oil AB (publ), corporate identity number 556615-8266.
Engagement and responsibility
It is the board of directors who is responsible for the statu-
tory sustainability report for the year 2023 on pages
35–79 and that it has been prepared in accordance with
the Annual Accounts Act.
is substantially different and less in scope than an audit
conducted in accordance with International Standards
on Auditing and generally accepted auditing standards
in Sweden. We believe that the examination has provided
us with sufficient basis for our opinion.
The scope of the audit
Our examination has been conducted in accordance with
FAR’s auditing standard RevR 12 The auditor’s opinion
regarding the statutory sustainability report. This means
that our examination of the statutory sustainability report
Opinion
A statutory sustainability report has been prepared.
Gothenburg, 27 March 2024
PricewaterhouseCoopers AB
Johan Malmqvist
Authorized Public Accountant
Lead Partner
Sophie Damborg
Authorized Public Accountant
79
Tethys Oil Annual Report 2023 Corporate Governance Report
Corporate Governance Report 2023
Corporate Governance refers to the framework of policies and
guidelines through which the Company is run accountably,
sustainably, transparently and efficiently on behalf of its share-
holders. Tethys Oil adheres to Swedish legislation, NASDAQ
Stockholm’s rule book for issuers and the Swedish Code of
Corporate Governance (“the Code”). In addition, Tethys Oil has
established governance rules and procedures decided by the
Board and which are available on the Company’s website.
This Corporate Governance Report 2023 is submitted in accord-
ance with the Swedish Annual Accounts Act and the Code (the
Code is published on www.bolagsstyrning.se). It explains how
Tethys Oil has conducted its corporate governance activities
during 2023. Tethys Oil does not report any deviations from the
Code. The report has been examined by the Company’s audi-
tors, please see page 84.
Shareholders
External Auditor
General Meeting
Elects the Board and Auditor
Nomination Committee
Board of Directors
Appoints the Managing Director
Remuneration Committee
Managing Director
Technical Committee
Audit Committee
Group Executive Management
Sustainability Committee
Shareholders
Tethys Oil’s shares are listed on Nasdaq Stockholm. Of the total
number of shares, foreign shareholders accounted for approxi-
mately 53 percent, Lansdowne Partners Austria is the only
shareholder with a holding in excess of 10 percent of shares
and votes, with a holding of 3,633,699 shares representing
10.9 percent of shares and votes as of 31 December 2023.
Tethys Oil’s holding of its own shares amounted to 1,189,901
shares as of 31 December 2023.
For further information on share, share capital development
and shareholders, see pages 33–34 and Tethys Oil’s website.
Annual General Meeting
The general meeting is the highest decision-making body. The
Annual General Meeting (“AGM”) must be held within six months
of the close of the fiscal year. All shareholders who are listed in
the share register on the record date and who have notified the
Company of their participation in due time are entitled to partici-
pate at the AGM. There are no restrictions on the number of
votes each shareholder may cast at the general meeting.
The AGM 2023 authorised the Board to, on one or several occa-
sions before the AGM 2024, resolve on issues of new shares
and/or convertibles against payment in cash, in kind or through
set-off or subject to other conditions and with the right to devi-
ate from the shareholders’ preferential rights. The purpose of
the authorisation and the reason for a possible deviation from
the shareholders’ preferential rights is to facilitate the raising
of capital for acquisitions and the Company’s operations.
The minutes recorded at the AGM can be found at Tethys Oil’s
website, www.tethysoil.com.
The Annual General Meeting 2024 is scheduled to be held
in Stockholm on 15 May 2024 at CEST 15:00. The meeting will
be held with the physical presence of shareholders, representa-
tives and authorised third parties.
Nomination process
In accordance with the Nomination Committee process
approved by the AGM 2023, the Nomination Committee for the
AGM 2024 consists of members appointed by three of the
largest shareholders of the Company based on shareholdings
80
Tethys Oil Annual Report 2023 Corporate Governance Report
Board of Directors elected at the AGM 2023
Member
Per Seime
Robert Anderson
Klas Brand
Alexandra Herger
Magnus Nordin
Elected
2017
2017
2020
2017
2001
Position
Chairman
Member
Member
Member
Member
Year
of birth
1946
1953
1956
1957
1956
Nationality
Norway
United Kingdom
Sweden
United States
Sweden
Independent in relation
to the Company
Independent in relation
to the Company’s
larger shareholders
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
as per 30 September 2023 and the chairman of the Board.
The names of the members of the Nomination Committee were
announced and posted on the Company’s website on 17 Novem-
ber 2023.
The Nomination Committee for the AGM 2024 consists of the
following members:
• Viktor Modigh, Chairman of the Nomination Committee,
representing Magnus Nordin;
• Mikael Petersson, representing
Lansdowne Partners Austria GmbH;
• Jan Risberg, representing himself; and
• Per Seime, Chairman of Tethys Oil
Shareholders who wish to present a motion to the Nomination
Committee can do so to the chairman of the nomination commit-
tee: nomcom@tethysoil.com or by letter to Tethys Oil AB, Nomi-
nation Committee, Hovslagargatan 5B, SE-111 48 Stockholm.
The Nomination Committee report, including the final propos-
als to the AGM 2024, will be published on the Company’s web-
site together with the notice of the AGM.
The Nomination Committee’s assignment is to prepare pro-
posals for Board of Directors and election of auditors, remunera-
tion to the Board of Directors and auditors as well as Chairman
for the Annual General Meeting.
The work of the Nomination Committee included evaluation of
the Board’s work, competence and composition, as well as the
independence of the members. The Nomination Committee also
considered other criteria such as the background and experi-
ence and has also taken part in the Board evaluation. Further,
the Nomination Committee applies rule 4.1 of the Swedish
Corporate Governance Code as well as the Company’s Board
diversity policy in its proposal for Board members. The Nomina-
tion Committee believes that the Board has an appropriate
composition with a diversity and a mix of nationalities with
diverse knowledge. The Board diversity policy is available on the
Company’s website.
Timing and main items for ordinary meetings following AGM
May
August
September
November
December
January–February
Constituting meeting
Second quarter report
Strategy review and discussion of investment plan
and budget
Third quarter report
Investment plan and budget, liquidity and forecast
Fourth quarter Year-end report, allocation of profit,
review auditors’ report
March–April
Annual report and AGM
The Board and its work
Board composition
The Articles of Association stipulate that the Board of Directors
of Tethys Oil shall consist of no less than three and no more
than ten Board members with no more than three deputy Board
members. Board members and chairman of the Board are
elected for a maximum of one year at a time. The Board of Direc-
tors of Tethys Oil elected at the AGM 2023 consists of five mem-
bers and no deputies. Per Seime was elected chair of the Board.
Four Board members are independent from the Company and
the Company’s management, and five Board members are inde-
pendent from larger shareholders. For further information on the
Board members, please see pages 88–89.
The work of the Board of Directors
The Board of Directors at Tethys Oil establishes the overall
goals and strategy of the Company and resolves on larger invest-
ments, acquisitions and disposals of business activities or
assets. The Board ensures that there is an appropriate system
for follow-up and control of the Company’s operations, including
evaluating the risks associated with its operations and that
there is a satisfactory process for monitoring the Company’s
compliance with applicable laws, regulations, internal rules and
procedures, and board resolutions. The Board further ensures
that the Company’s external communications are characterised
by openness, and that they are accurate, reliable, and relevant.
The Board of Directors’ work is governed by annually adopted
rules of procedure. The chairman of the Board of Directors
supervises the work and is responsible for it being well organ-
ised and efficient. This entails, among other things, continually
following the Company’s operations in contact with the Manag-
ing Director and being responsible for other Board members
receiving the information and documentation needed to ensure
high-quality discussions and well- founded decisions by the
Board of Directors. The chairman is responsible for the evalua-
tion of the Board of Directors’ and the Managing Director’s work
and represents the Board of Directors in ownership matters.
The Board has continued its work related to environmental
and sustainability issues and during the year the Board estab-
lished a Sustainability Committee and adopted new policies to
govern the Company’s conduct in society, with the aim of ensur-
ing its long-term value creation capability. Focus has also been
on following up and monitoring the Company’s risks. The Board
has also devoted substantial time to the Company’s develop-
ment of its operations.
81
Tethys Oil Annual Report 2023 Member
Audit
Committee
Member
Remuneration
Committee
Member of
Technical
Committee
Member of
Sustainability
Committee
Board
meetings
Audit
Committee
meetings
Remuneration
Committee
meetings
Technical
Committee
meetings
Sustainability
Committee
meetings
Board member
Per Seime
Klas Brand
Board
Chair
Member
Yes (Chair)
Robert Anderson
Member
Alexandra Herger
Member
Magnus Nordin
Member
–
–
–
Yes
Yes (Chair)
–
–
Yes (Chair)
Yes
Yes
Yes
Yes
Yes (Chair)
–
Yes
16/16
16/16
16/16
16/16
16/16
5/5
5/5
2/2
2/2
–
–
5/5
5/5
–
–
–
Yes
–
Corporate Governance Report
Board of Directors and committee attendance in 2023
Material issues discussed by the Board have been related to the
Company’s strategy, financing as well as other key matters.
Assessment of the Board’s work
The chairman of the Board is responsible for assessing the
Board’s work including the performance of individual Board
members. This is done on an annual basis through a question-
naire which is anonymous for the Board members. The assess-
ment focuses on such factors as the Board’s way of working,
number of meetings and effectiveness, time for preparation,
available competence and individual Board members influence
of the Board’s work. The Nomination Committee takes part in
assessing the results, and it is a component in the nomination
committee’s work to submit a proposal to the AGM concerning
Board members.
Board of Directors and committee attendance in 2023
During 2023, the Board held 16 meetings of which seven were
ordinary and nine extraordinary, in person, via telephone or digi-
tally and per capsulam meetings. Attendance at the meetings is
shown in the table above. Board secretary was the Company’s
Chief Legal Officer, Camilla Hansén. Prior to each meeting,
Board members were provided with an agenda and written infor-
mation on the matters to be covered. Each meeting has
included the possibility to discuss without management repre-
sentatives being present.
Remuneration to the Board 2023
Remuneration to be paid to the Board of Directors for the period
between the AGM:s of 2023 and 2024 amounts to a total of
TSEK 2,095, allocated among the Board members is shown in
note 11. Remuneration is not paid for service of the Boards or
directors of subsidiaries. Magnus Nordin, who is employed by
Tethys Oil, does not receive any remuneration for his service on
the Board of Directors. The AGM 2023 resolved on remunera-
tion to the Chairman of the Board of TSEK 720 and TSEK 350
for each member of the Board of Directors, excluding members
employed by the Company.
Annual fee for committee members is TSEK 35 per committee
assignment and annual fees for the chairman of the Remunera-
tion and Technical Committees are TSEK 65. The annual fee
for the chairman of the Audit Committee is TSEK 90 unless the
committee is chaired by the Chairman of the Board in which
case the annual fee is TSEK 65. No additional fees have been
paid for the members and Chairman of the Sustainability Com-
mittee as the Committe was established in the autumn of 2023.
82
1/1
1/1
1/1
1/1
1/1
TSEK
820
415
420
–
440
2,095
Remuneration to Board and Committee members
for the period between the AGM:s of 2023 and 2024
(in their capacity as Board members)
Per Seime
Robert Anderson
Alexandra Herger
Magnus Nordin
Klas Brand
Total
Board committees
In order to increase the efficiency of its work and enable a more
detailed analysis of certain matters, the Board has formed four
committees: The Audit, Remuneration, Technical and Sustaina-
bility committees. Committee members are appointed within the
Board for the period until the next AGM. The committees’ duties
and authorities are regulated in the annually approved rules of
procedure for each committee. The committees monitor and
evaluate relevant matters and make recommendations for deci-
sions by the Board of Directors.
Audit Committee
The Board has established an Audit Committee for the period
up to and including the AGM 2024, consisting of Klas Brand as
Chairman and Per Seime as member of the committee. The
work has mainly focused on supervising the Company’s financial
reporting and assessing the efficiency of the Company’s finan-
cial internal controls, the primary objective is to provide support
to the Board of Directors. The Audit Committee also regularly
liaises with the Group’s statutory auditors as part of the annual
audit process and reviews the audit fees and the auditors’ inde-
pendence and impartiality. The Audit Committee also assists
the Nomination Committee with proposals for resolutions on the
election and remuneration of the auditor. The Audit Committee
reports to the Board, normally in conjunction with the following
Board meeting.
Remuneration Committee
The Board has established a Remuneration Committee for
the period up to and including the AGM 2024, consisting of
Per Seime as Chairman and Alexandra Herger as member of
the Committee. The work has mainly focused on preparing the
Board’s decisions on principles for remuneration to the Manag-
Tethys Oil Annual Report 2023 Corporate Governance Report
ing Director and Group Executive Management, establishing
key performance indicators, monitoring and evaluating variable
remuneration and the application of the guidelines for remuner-
ation as well as to construct and propose the share-based
incentive programme to the AGM.
The guidelines for remuneration to senior executives were
approved by the Annual General Meeting 2023. In order to
simplify the variable remuneration components and the meas-
urements there will be a need for minor changes to the remuner-
ation guidelines to be proposed for the AGM in 2024. The remu-
neration guidelines applied in 2023 and proposed for 2024 is
presented in the Administration report on pages 92–103.
Remuneration to the auditors of Tethys Oil is paid in accordance
with approved current accounts. In 2023, remuneration to Price-
waterhouseCoopers AB amounted to MUSD 0.3 (0.2). For details
on remuneration to auditors, see note 9, Auditor’s fees.
Independent qualified reserves evaluator
Tethys Oil’s independent qualified reserves evaluator annually
evaluates Tethys Oil’s oil reserves and resources, although such
assets are not included in the Company’s balance sheet. The inde-
pendent qualified reserves auditor for the 2023 report was ERC
Equipoise Limited (“ERCE”), the same that also evaluated the
2022 report. For further information, see Reserves on page 94.
Technical Committee
The Board has established a Technical Committee for the period
up to and including the AGM 2024, consisting of Robert Anderson
as Chairman and Alexandra Herger as a member of the Commit-
tee. The work has mainly focused on following up on work pro-
grammes, budgets and investment proposals, evaluation of and
recommendation on appointment of independent qualified
reserve auditor, oversight of the reserves evaluation process,
review of operations management systems and technical review
of new ventures projects. The Technical Committee reports to
the Board, normally in conjunction with the following Board
meeting.
Sustainability Committee
In order to manage the increased focus on sustainability
matters, the Board has established a Sustainability Committee
for the period up to an including the AGM 2024, consisting of all
board members and Alexandra Herger as Chairman of the
committee. The work has been focused on external reporting,
governance, risk analysis and evaluation of the efficiency of the
internal controls regarding sustainability matters as well as
analysis of stakeholder’s expectations.
External auditors of the Company
Statutory auditors
Pursuant to its Articles of Association, Tethys Oil must have one
or two auditors, and no more than two deputies. A registered
firm of auditors may be appointed as the Company’s auditor.
Tethys Oil’s auditor is PricewaterhouseCoopers AB with Johan
Malmqvist as lead partner and Sophie Damborg as co-signing
auditor. PricewaterhouseCoopers AB was re-elected as the Com-
pany’s auditor at the AGM 2023. At least once a year, the Board
meets the Company’s auditor without the Managing Director or
any other member of the executive management present. Tethys
Oil’s auditors reviewed the Company’s third quarter and nine
months report 2023.
Tethys Oil’s auditor: PricewaterhouseCoopers AB
Johan Malmqvist
Sophie Damborg
Role partner
Lead
Company auditor since
2021
Co-signing Auditor
2020
Managing Director and executive management
The Managing Director is responsible for the day-to-day busi-
ness of the Company and shall take the decisions needed for
developing the business in accordance with the external and
internal framework. The Board evaluates the work of the Managing
Director formally at least once a year, and without any member
of the executive management present during this evaluation
process.
Per the end of 2023 the executive management in Tethys Oil
consisted of the Managing Director (Magnus Nordin), CFO
(Petter Hjertstedt), CTO (Fredrik Robelius) and CLO (Camilla
Hansén). The Board of Directors has adopted an instruction for
the Managing Director which clarifies the responsibilities and
authority of the Managing Director. According to the instruction,
the Managing Director shall provide the Board of Directors with
decision data in order to enable the Board to make well founded
decisions and with documents to enable it to continually moni-
tor the activities for the year.
Internal control
The Board of Directors has the overall responsibility for estab-
lishing an effective system of internal control and risk manage-
ment to ensure smooth business operations, clearly defined
reporting lines and performance measurement systems. This
includes maintaining an effective control environment and over-
seeing relevant policies and important accounting principles
applied by the Group in financial reporting as well as changes to
these principles. The main focus of the internal control function
is designing effective business processes and controls, docu-
mentation of the control procedures and implementation of
r outines with further assessment of the process’s effectiveness
and internal controls efficiency.
The Board of Directors identifies and monitors business and
financial risks ongoing. Risks identified are addressed to the
proper part of the organisation and internal control activities are
designed to execute and mitigate these risks. Activities status and
results are reported to the Board of Directors on an ongoing basis.
Financial reporting
The Group’s financial reporting procedures comply with the
requirements, laws and accounting and reporting regulations
effective in the countries of incorporation of the Group’s
subsidiaries, as well as with the International Financial Report-
ing Standards (‘IFRS’) for consolidated reporting.
83
Tethys Oil Annual Report 2023 Corporate Governance Report
Internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation and fair presentation of published
financial statements.
The Company’s finance team has a set of procedures allowing
the monitoring of business performance, performing of analyses
and following up on budgets, preparations of forecasts, follow
up on significant variations between periods etc. The control
activities also include following up on, and updating of, the
authorisation manual and accounting principles.
Tethys Oil’s main assets are primarily held jointly with part-
ners and the relationships are governed through Joint Operating
Agreement (JOA). The focus of internal control is, therefore, to
ensure reliability and accuracy of the operator’s financial infor-
mation, including where Tethys Oil is an operator. The control
is conducted by monthly and quarterly expenditure controls,
quarterly budget reviews and interviews with opera- tors to
understand and explain deviations from budget. As part of the
monitoring and control procedure of the Exploration and Produc-
tion Sharing Contract, Tethys Oil regularly reviews the results
of recoverability audits performed by Ministry of Energy and
Minerals of Sultanate Oman.
The Board of Directors further decides on specific control
activities and auditing of operators in joint operations.
With the Company’s current size, operations as well as finance
and internal control team, Tethys Oil currently does not consider
it necessary to have a dedicated internal audit function. The
issue is reviewed recurringly, and the need for a dedicated inter-
nal audit function will be reviewed prior to a possible commercial-
ization of Block 56.
Information and communication
The Board has adopted an information policy for the purpose of
ensuring that the external information is correct and complete.
There are also instructions regarding information security and
how to communicate financial information.
Monitoring and follow-up
Both the Board and the management follow up on the compli-
ance and effectiveness of the Company’s internal controls to
ensure the quality of internal processes. The Board receives
detailed monthly reports on the financial situation and develop-
ment of the business to this end. The Audit Committee ensures
and monitors that control activities are in place for important
areas of risk related to financial reporting.
Stockholm, 27 March 2024
Tethys Oil AB (publ)
The Board of Directors
Auditor’s report on the
Corporate Governance Statement
To the general meeting of the shareholders in Tethys Oil AB (publ), corporate identity number 556615-8266
Engagement and responsibility
It is the board of directors who is responsible for the
corporate governance statement for the year 2023 on
pages 80–84 and that it has been prepared in accordance
with the Annual Accounts Act.
The scope of the audit
Our examination has been conducted in accordance
with FAR’s auditing standard RevR 16 The auditor’s
examination of the corporate governance statement. This
means that our examination of the corporate governance
statement is different and substantially less in scope
than an audit conducted in accordance with International
Standards on Auditing and generally accepted auditing
standards in Sweden. We believe that the examination has
provided us with sufficient basis for our opinions.
Opinions
A corporate governance statement has been prepared.
Disclosures in accordance with chapter 6 section 6 the
second paragraph points 2–6 the Annual Accounts Act
and chapter 7 section 31 the second paragraph the same
law are consistent with the annual accounts and the con-
solidated accounts and are in accordance with the Annual
Accounts Act.
Gothenburg, 27 March 2024
PricewaterhouseCoopers AB
Johan Malmqvist
Authorized Public Accountant
Lead Partner
Sophie Damborg
Authorized Public Accountant
84
Tethys Oil Annual Report 2023 Risk management
Probability
8
4
3
5
6
9
12
1
10
72
t
c
a
p
m
I
1 Significant oil price drop
2 Political instability
3 Climate change related
operational risks
4 Third-party corruption
5 Dependence on key employees
6 Liquidity and refinancing risks
7 Loss of geological data
8 Sanctions on oil importing countries
9 Operational health and safety
10 Production and reserves decline
11 Short-term production disruptions
– Blocks 3&4
12 Natural disasters
Risk management
i
S
g
n
i
f
i
c
a
n
t
i
H
g
h
A
v
e
r
a
g
e
L
o
w
I
i
n
s
g
n
i
f
i
c
a
n
t
11
Improbable
Unlikely
Possible
Likely
Probable
Tethys Oil is engaged in the exploration, development and pro-
duction of oil with operations and subsidiaries across Europe
and the Middle East and as such, the Group is subject to various
risks and uncertainties. These risks and uncertainties stem
from Tethys Oil’s strategic direction and is an inherent part of
the Group’s ongoing operations, with each risk carefully weighed
against its potential strategic reward. As a part of Tethys Oil’s
risk management efforts, The Group conducts continuous risk
assessments throughout its operational, administrative, finan-
cial and sustainability work to identify the most relevant risks to
the achievement of its goals. The risks listed below are those
considered the most material on a Group-wide level in the 2023
risk assessment, based on their likelihood of realisation and
potential impact if realised.
Operational risks
Tethys Oil’s operational risks, if realised, directly affect the
Group’s ability to produce oil in both the short and long terms.
The majority of Tethys Oil’s oil production occurs on Blocks 3&4,
where Tethys Oil is not the operator and as such has less of a
direct impact on the day-to-day operations. Tethys Oil’s primary
role in the EPSA is to perform monthly reviews and follow-ups on
strategic choices made by the partner group to minimise the
realisation and impact of the risks.
Production and reserves decline
The primary financial value from Tethys Oil’s operations stems
from the short-term production of oil and the long-term reserves
to be used in future production. A decline in production has
immediate financial effect as less oil is sold and if the reserve
replacement ratio is below production, the longevity of opera-
tions is at risk. Oil is a finite resource and decline can occur
from normal maturation as well as through active decisions
beyond the Group’s control taken by the partner group, govern-
ments or OPEC+. To mitigate these scenarios Tethys Oil aims at
continued investments in a diversified portfolio of production,
appraisal and exploration assets. Exploration risks are related
to the geological chances of success in encountering hydro-
carbons, for the appraisal and development stage uncertainties
relating to the quality, quantity, productive capacity of a discov-
ery as well as the costs and technical challenges associated with
bringing it to commercial production are the main risks. The main
risks of the production phase are the ability to maintain long-term
profitable, safe and sustainable production. Tethys Oil has a
strategic portfolio of blocks in all phases of the exploration to
production cycle, which if successful will allow for increased
reserves, resources and future production.
Short-term production disruptions – Blocks 3&4
Short-term production disruption risks on Blocks 3&4 may be
realised either as the effect of strategic partner group deci-
sions, other external factors or natural causes. The blocks
produce oil from several different fields but with joint oil export
infrastructure and depending on where the disruption occurs,
the effect may be more or less severe.
85
Tethys Oil Annual Report 2023 Risk management
Loss of geological data
Tethys Oil’s operations is highly dependent on the geological
data the Group acquires, primarily through its seismic acquisi-
tion programmes. This data is needed for exploration, appraisal,
development and production as well as for the possibility to enter
farm-out agreements. As such, the secure safekeeping of the
geological data is paramount and highly prioritised. Tethys Oil
has a system in place which secures the data in both digital and
physical format protected against external attacks or incidents.
Operational health and safety
HSE-risks are those risk stemmed from the Group’s operations
related to the health and safety of people and the negative
impact due to accidents. The key aspect to minimise risk reali-
sation and impact is a culture of risk awareness. To foster such
a culture, Tethys Oil has implemented a comprehensive HSE-
policy framework to be adhered to by all its employees, partners,
contractors or other external visitors. For its own operations, the
Group is implementing an Operational Management System,
based on the industry’s best practise system and covering all
aspects of its field activities, as well as an Emergency Response
Plan and a Crisis Management Plan. The policy framework
includes risk assessments for each activity, repeated dry runs
and simulated training exercises, third-party-audits and whistle-
blower systems as well as the continuous review of policies and
practise to ensure that the processes are ever improving.
Dependence on key employees
Tethys Oil is active in advanced and complex industry which is
also facing various challenges from the transition to alternative
energy sources and as such, the Group is highly dependent on
key employees for its successful development. The Group aims
to strike an optimal balance between its dependence of key
employees and its methods for retaining these employees by
providing desirable working environment and remuneration
package while also focusing on the continued building of struc-
tural capital.
Financial risks
Additional information on Tethys Oil’s financial risks is pre-
sented in note 1 on page 117.
Significant oil price drop
Tethys Oil is highly dependent on the oil price levels for its reve-
nues, its ability to generate cash flow for operations, growth and
returns as well as the fair value of its assets. Over time, the oil
price is subject to large fluctuations with a variety of underlaying
factors, few of which Tethys Oil has any control over, such as the
economic conditions of key markets in the global economy and
the Group’s ability to access such markets. Should the oil price
drop significantly, there is a risk that oil production may no
longer be profitable.
Tethys Oil diligently monitors market development and has an
adaptable expenditure strategy and a strong financial resilience
that allows for flexibility and lower cash outflows. Tethys Oil’s
has a flexible approach towards oil price hedging, based on an
assessment of the benefits of the hedge contract in specific
86
circumstances. Based on analysis of the circumstances Tethys
Oil assess the benefits of forward hedging sales contracts for
the purpose of establishing a secured cash flow.
Net result in financial statements (MUSD)
Shift in oil price (USD/barrel)
Total effect on net result (MUSD)
-16.5
-16.5
+5
8.4
-5
-8.4
Liquidity and refinancing risks
The risk that the Group will not be able to meet its financial obli-
gations or secure short- and long-term funding of its current and
future operations. Tethys Oil is operating in several countries
and exposed to currency fluctuations. Income is and will also
most likely be denominated in foreign currencies, US dollars.
Furthermore, Tethys Oil has since inception been equity and
debt financed through share and bond issues, bank loans and
financed by asset divestment. Additional capital could be
needed to finance Tethys Oil’s future operations and/or for
acquisition of additional licences. The main risk is that this need
could occur during less favourable market conditions. Tethys Oil
continuously works to ensure that sufficient cash balances are
maintained in order to cover day to day operations, both through
the management of the Group’s cash flows as well as securing
external debt when needed. Management relies on forecasting
to assess Tethys Oil’s cash position based on expected future
cash flows. All financial liabilities of the Group as at end of
2023 and 2022 are fall due within 12 months.
External risks
The most material external risks Tethys Oil faces are those
whose realisation the Group has little control over. The Group,
alongside its partners, monitors environmental, market, political
and regulatory developments diligently to allow for early warn-
ings and to take adapted strategy actions accordingly.
Third-party corruption
In its operations, Tethys Oil is highly dependent on third-party
contractors and operators, which carries the risk of Tethys Oil
being held responsible for the corrupt actions of third-party actors.
Such corruption can come in various forms, such as bribery, and
could have a material effect on the Group’s operations, reputation
or financial stability. Tethys Oil has a zero-tolerance of corruption
and has implemented a stringent policy framework, including an
anonymous Whistleblowing system, as well as legal oversight
and know your customer process regarding major third-party
transactions and agreements. As Tethys Oil has a good standing
and knowledge of its core operational geographical areas, the
Group works primarily with well-known contractors and operators
with whom it has long-standing relations.
Sanctions on oil importing countries
The oil sold by Tethys Oil primarily has its end-customers in one
country, China, and as such the Group’s revenues are highly
dependent on that its oil can reach its markets. Should any oil
importing sanctions be put in place on China by international
or national regulators and impair Tethys Oil’s ability to sell its
Tethys Oil Annual Report 2023 Risk management
produced oil to the country, the Group must be ready to along-
side its partners shift is targeted market.
Political instability
Tethys Oil’s primary source of revenues is the Group’s oil sales
generated through its interests in EPSA:s in the Sultanate of
Oman. These agreements have negotiated expiry dates with
options for extension granted by the state and the operations
often requires local permits. As such the political stability is par-
amount and diligently monitored by the Group’s management
when considering possible and current project. Tethys Oil’s prin-
cipal approaches to deal with this risk are assets diversification,
emphasis on continuous close dialogue with host country
authorities and interest groups, nationally and locally. One of
the key strategic reasons that Tethys Oil is active in Oman is
that the country has a long history of proven political stability
even during tumultuous periods in neighbouring countries.
Climate change related operational risks
As an effect of increasing stakeholder awareness and concern
regarding climate change, Tethys Oil faces increased material
climate changes related risk to its operations. These risks
include increased regulation, decreased demand for oil and gas
as well as sector divestment from major financial investors. By
reporting its environmental impact in a transparent way, using
methods from GHG protocol and TCFD, and joining industry
initiatives to reduce its emissions, the Group mitigates the
risks. Currently, Tethys Oil primary GHG emission reduction
project is the implementation of the Gas-to-Power plant on
Blocks 3&4. The Group has also introduced a KPI of carbon
intensity for the Executive Management and incorporates
carbon pricing assumptions in internal valuation for all existing
and potential future projects.
Natural disasters
Natural disasters include extreme weather such as heavy
raining, flooding, lighting, dust storms and high temperatures
disrupting the operations, harming people, causing damage to
infrastructure and equipment and financial damage. The dam-
ages from severe weather conditions have often taken extended
periods of time to correct once occurred and as such, Tethys
Oil’s focus is on early warning systems, forecasting and damage
prevention. The Group, and its contractors and partners, has a
well-tested emergency response and crisis management plan
and keeps close contact with governmental bodies and agen-
cies to synchronise efforts when needed.
87
Tethys Oil Annual Report 2023 Board of Directors
Board of Directors
Per Seime
Rob Anderson
Klas Brand
Function
Elected
Year of birth
Nationality
Education/background
Experience
Chairman of the Board, Chairman
of the Remuneration Committee
and member of the Audit
Committee and Sustainability
Committee
2017
1946
Norway
Master of Law, University of Oslo.
Master of Comparative Law,
University of Chicago Law School.
Norwegian School of Economic
(NHH) Executive Board Programme.
Oil and gas lawyer with more than
30 years’ experience. Lawyer for
Mobil Oil (Norway, USA and
Indonesia). Previously chair of the
board of Premier Oil Norge and
Nexen Exploration Norge.
Other board duties
Shares in Tethys Oil
(per 31 December 2023)1
Warrants in Tethys Oil
(per 31 December 2023)1
Board and committe
remuneration (MSEK)2
Independent in relation
to the Company
Independent in relation to the
Company's larger shareholders
1 Privately or via company
2 Resolved upon at the AGM 2023
–
7,000
–
0.820
Yes
Yes
Board member, Chairman of the
Technical Committee and member
of the Sustainability Committee
Board member, Chairman of the
Audit Committee and member of
the Sustainability Committee
2017
1953
United Kingdom
2020
1956
Sweden
MA Engineering, Christ's College,
Cambridge University. Chartered
Engineer & Fellow of the Institution
of Mechanical Engineers.
Bachelor’s Degree in Business
Administration and Economics,
Gothenburg University
VP Projects & Engineering at
TNK-BP, Head of Projects at BP.
Engineer with deep experience in
oil installations and major oil and
gas field developments.
–
–
–
0.415
Yes
Yes
Former Authorised Public
Accountant and partner at PwC’s
Assurance practice in Gothenburg,
Sweden. Consultant to listed and
private companies within e.g.
internal controls and financial
reporting.
Board member of Göta Par Bricole,
Gothenburg, Board member of
1BC3 Brand AB.
10,000
–
0.440
Yes
Yes
88
Tethys Oil Annual Report 2023 Function
Elected
Year of birth
Nationality
Education/background
Experience
Other board duties
Alexandra Herger
Magnus Nordin
Board member, Chairwomen of the
Sustainability Committee and
member of the Remuneration and
Technical Committees
Board member, Managing Director
and member of the Sustainability
Committee
2017
1957
United States
BA Geology, Ohio Wesleyan
University and Master studies
Geology, University of Houston.
VP Global Exploration at Marathon
Oil, executive positions at Shell and
Enterprise Oil.
Board member: Panoro Energy ASA,
and Tortoise Capital Advisors
Member: Women's Leadership
Committee, Oil Council and
Leadership Texas, Foundation for
women's resources, member of the
PGS ASA’s Nomination Committee.
2001
1956
Sweden
Bachelor of Arts, University of Lund
and Master of Arts, University of
California, Los Angeles.
Several executive positions in
different oil companies.
Board member: Minotaurus AB,
including subsidiaries, and
Minotaurus Energi AS.
Shares in Tethys Oil
(per 31 December 2023)1
Warrants in Tethys Oil
(per 31 December 2023)1
Board and committe
remuneration (MSEK)2
Independent in relation
to the Company
Independent in relation to the
Company's larger shareholders
1 Privately or via company
2 Resolved upon at the AGM 2023
–
–
0.420
Yes
Yes
1,555,427
2021/24: 60,000
2022/25: 60,000
2023/26: 70,000
–
No
Yes
Board of Directors
89
Tethys Oil Annual Report 2023
Executive Management
Executive management
Function
Employed since
Education/background
Year of birth
Nationality
Experience
Shares in Tethys Oil
(per 31 December 2023)*
Warrants in Tethys Oil
(per 31 December 2023)
Magnus Nordin
Petter Hjertstedt
Board member and Managing Director
Chief Financial Officer
2004
2016
Bachelor of Arts, University of Lund and Master
of Arts, University of California, Los Angeles
Finance and accounting at Linköping University,
Sweden
1956
Sweden
1979
Sweden
Several executive positions in different oil
companies
Equity research analyst at SEB, Pareto Securities
and Carnegie Investment Bank. Finance and
Investor Relations at PA Resources
1,555,427
2021/24: 60,000
2022/25: 60,000
2023/26: 70,000
12,325
2021/24: 50,000
2022/25: 50,000
2023/26: 60,000
Function
Employed since
Education/background
Year of birth
Nationality
Experience
Camilla Hansén
Chief Legal Officer and
Head of Business Support
2022
Fredrik Robelius
Chief Technical Officer
2011
Master of Laws (LL.M.) and business
administration Stockholm University, Sweden
Education: PhD Engineering Physics, Uppsala
University; Postgraduate Diploma Petroleum
Engineering, Heriot-Watt University
1976
Sweden
1973
Sweden
Associate at Linklaters Advokatbyrå. Head of
M&A Legal at Nordea Bank Abp
Energy engineering positions in Fortum, petro-
leum engineering related positions in Tanganyika
Oil and Sinopec
Shares in Tethys Oil
(per 31 December 2023)*
Warrants in Tethys Oil
(per 31 December 2023)
* Privately, via company or insurance policy
–
2023/26: 60,000
90
15,742
2021/24: 50,000
2022/25: 50,000
2023/26: 60,000
Tethys Oil Annual Report 2023
Payments to authorities
Payments to authorities 2023
This report has been prepared in accordance with the law SFS
2015:812 (Lag 2015:812 om rapportering av betalningar till
myndigheter) regarding payments to authorities. The reported
amounts refer to direct payments in excess of the threshold
amount of SEK 860,000 as well as production sharing and
income taxes for the fiscal year 2023 for the group in which
Tethys Oil AB (publ) (“Tethys Oil”) is the parent company.
Per project
Project
Oman
Blocks 3&4
Block 49
Block 56
Block 58
Total Oman
Gibraltar
Total Gibraltar
Total Tethys Oil
Per Authority
Production sharing
Barrels (’000)
USD (’000)
Income taxes
USD ('000)
Licence costs
USD ('000)
Total
USD (’000)
1,545
–
30
–
1,575
–
–
90,435
–
1,409
–
91,844
–
–
1,575
91,844
36,672
–
936
–
37,608
763
763
38,371
–
–
250
350
600
–
–
600
127,107
0
2,595
350
130,052
763
763
130,815
Sultanate of Oman – Ministry
of Energy and Minerals
Sultanate of Oman – Ministry of Finance
Total Oman
Gibraltar – Income Tax Office
Total Gibraltar
Total Tethys Oil
Production sharing
Barrels (’000)
USD (’000)
Income taxes
USD ('000)
License costs
USD (’000)
Total
USD (’000)
1,575
–
1,575
–
–
91,844
–
91,844
–
–
1,575
91,844
–
37,608
37,608
763
763
38,371
200
400
600
–
–
600
92,044
38,008
130,052
763
763
130,815
Production sharing
The category includes non-cash taxes and compensation to
receiving state/authority in barrels of oil from Tethys Oil’s work-
ing interest share of production. The presented amounts are
based on net entitlement and have been valued using the
reported average price for the period.
Income Tax
Tethys Oil’s oil and gas operations in Oman are governed by an
Exploration and Production Sharing Agreement for each block
(“EPSA”) whereby Tethys Oil receives its share of oil after govern-
ment take. Under the terms of each EPSA, Tethys Oil is subject
to Omani income taxes, which are paid in full, on behalf of Tethys
Oil, from the government share of oil. As the final amount of
income tax is determined after the end of the calendar year,
Tethys Oil’s preliminary assessment of the amount of Omani
income tax paid on behalf of Tethys Oil in 2023 is MUSD 37.6
(MUSD 59.5) of which MUSD 36.7 (MUSD 59.5) is related to
Blocks 3&4 and MUSD 0.9 (MUSD -) to Block 56. For more infor-
mation, please see note 14.
Local income generated in Tethys Oil’s Gibraltar subsidiaries
are subject to Gibraltar taxes. Payments made in 2023 relate
to income tax and advance payment of income tax.
Licence costs
This pertains to costs for maintaining the exploration licences
for Block 56 and Block 58 in Oman where payments were made
to Oman’s Ministry of Energy and Minerals and Oman’s Ministry
of Finance.
91
Tethys Oil Annual Report 2023
Administration report
Administration report
The consolidated financial statements of the Tethys Oil Group (hereafter
referred to as “Tethys Oil” or the “Group”) as it is described in note 18,
where Tethys Oil AB (publ) (the “Company”) with company registration
number 556615-8266 is the parent company, are hereby presented for
the twelve-month period ended on 31 December 2023. The amounts
relating to the comparative period (equivalent period of last year) are
shown in parenthesis after the amount for the current period.
The Group’s operations
Tethys Oil is an oil and gas exploration and production company
with focus on onshore areas with known oil discoveries in the
Sultanate of Oman. The Group is headquartered in Sweden and
the Company’s shares are listed on Nasdaq Stockholm (TETY)
since 2012.
The Group is actively seeking to expand its operations in Oman,
and the surrounding region. Tethys Oil’s operational approach is
to explore, appraise and develop its assets con currently allow-
ing for continued operations to be funded from cash flow from
production. The business model has resulted in growth in both
production and reserves as well as shareholder value over time.
Licences & Agreements
Tethys Oil Interest %
Phase
Blocks 3&4, Oman
Block 49, Oman
Block 56, Oman
Block 58, Oman
30
100
65
100
Production phase
Expiry date
July 2040
Partners
(operator in bold)
CCED, Mitsui, Tethys Oil
Initial exploration phase
December 20231
Tethys Oil
Second exploration phase
December 20242
Tethys Oil, Medco, Biyaq, Intaj
Initial exploration phase
July 2024
Tethys Oil
1 The initial exploration phase of the EPSA for Block 49 expired on 31 December 2023 and Tethys Oil is in discussion
with the Ministry of Energy and Minerals regarding the possibility of an extension.
2 The one-year extension of the second exploration phase of Block 56 was approved on 17 August 2023.
Operational review
Production
The Group’s reported production comes from Blocks 3&4 in
Oman which averaged 8,818 barrels per day in 2023 compared
to 9,940 barrels per day in 2022. Reported production declined
by 11 percent in 2023 compared to the year before and amounted
to 3.2 million barrels (3.6 million barrels). The principal reasons
for the lower production were, in particular, weaker performance
from certain key wells, lower than expected output from certain
newly drilled development wells as well as constraints in the
performance of processing facilities, particularly the facilities
related to water handling, and flow lines. To counter these nega-
tive factors, the operator focused on production assurance initi-
atives and asset integrity projects, including workovers and the
installation of new pumps, in 2023. These initiatives, aimed at
reducing unscheduled productions stops and outages, resulted
in improved production stability. In parallel, the number of new
wells drilled on Blocks 3&4 in 2023 increased to 40 from 36 in
2022, of which 29 were development wells. As an effect of the
activities over the year, the production stabilised by the latter
parts of 2023. The focus on production integrity and stability will
continue as a part of the work programme 2024, including the
drilling of 40 wells of which 18 will be development wells.
92
Tethys Oil Annual Report 2023 Average daily production net to Tethys Oil, yearly
bopd
12,500
10,000
7,500
5,000
2,500
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Exploration and appraisal operations per Block
Blocks 3&4
Four exploration wells were drilled on Blocks 3&4 in 2023, Elaf- 1,
Jari-1, Rahbah-1, and Raghad-1, an increase from two wells in
2022.
Three of the exploration wells were drilled in the first quarter
2023, Elaf-1, Rahbah-1 and Jari-1. Elaf-1, located some eight
kilometres northwest of Ulfa-1, targeted the Khufai and Buah
formations while Rahbah-1 is located about seven kilometres
southeast of the Ulfa field, where it targeted the Khufai, Buah
and Barik formations. In the southern part of Block 4, Jari-1
targeted a Cryogenian age formation near where the Luja-1 well
was drilled and confirmed the presence of a working petroleum
system in 2019. The drilling of Jari-1 and Rahbah-1 was com-
pleted during the second quarter, and both flowed light hydro-
carbons to surface. Subsequent analysis of Elaf-1 also resulted
in hydrocarbons flows during testing. In the case of Elaf-1 and
Rahbah-1 the flows consisted of gas and condensates, and as
such are not considered viable for commercial development.
They are, however, slated for inclusion in a later phase of the
Gas-to-Power project. Following a comprehensive testing pro-
gramme Jari-1 was deemed a technical discovery, but the esti-
mated recoverable volumes and flow rates were considered
insufficient for a development on a stand-alone basis. During
the fourth quarter 2023, the fourth and final exploration well
of the year, Raghad-1, was drilled as a dry well as the well logs
indicated no presence of hydrocarbons. Further work is ongoing
to integrate the results into the overall geological model for
Blocks 3&4. Exploration costs of MUSD 6.3 was recognised in
the fourth quarter as the exploration wells upon completion
were deemed to be non-commercial.
In addition to the exploration wells, seven appraisal wells
were drilled during the year.
In 2019 the Blocks 3&4 partnership committed to a multi-
year programme to acquire high quality 3D seismic over the
Administration report
most potentially prospective areas of the Blocks. During 2023
seismic acquisition was focused on the southern part of Block 4
where an area comprising 6,200 km2 was surveyed. The pro-
gramme is expected to conclude in the middle of 2024.
Exploration and appraisal activities in 2024 will include the
completion of the seismic acquisition programme as well as the
drilling of three exploration wells in addition to 19 planned
appraisal wells.
Block 49
The focus of the work programme for Block 49 in 2023 was to
re-enter and re-test the Thameen-1 well that was drilled in 2021.
In the first quarter 2023, the focus lay on planning a tendering
for an integrated service contract to provide re-entry, frack and
test operations. The tendering continued during the following
quarters of the year, with no available alternatives being seen
as sufficiently commercially attractive. A more detailed timeline
on the block will be presented once the evaluation of the tender
is completed.
The logs from Thameen-1 indicated a more than 30-metre-
thick hydrocarbon bearing zone in the Hasirah sandstone forma-
tion. When tested, however, no flows of hydrocarbon to surface
were achieved. Subsequent analysis of, among others, samples
of the reservoir rock obtained from side wall cores suggest that
the Hasirah reservoir rock is tight and virtually impermeable
despite having good porosity. Further studies suggest that hydro-
carbons could flow if the reservoir rock is artificially fractured.
Successfully flowing hydrocarbons to surface through this opera-
tion would turn the inconclusive Thameen-1 well into a discovery
and thus determine the Company’s further course of action in
relation to a second exploration phase.
The initial exploration phase of the EPSA for Block 49 expired
on 31 December 2023 and Tethys Oil is in discussions with the
Ministry of Energy and minerals regarding the possibility of an
extension. The discussions mainly concern whether the contin-
ued work should be within the framework of the first or second
exploration phase.
Block 56
The focus on Block 56 for 2023 was primarily focused on the
evaluation of the Al Jumd discovery in the form of an extended
well test (“EWT”) in the second and third quarter as well as the
exploration drilling in the central part of the Eastern Flank area
along the border of Block 6.
The EWT commenced in April and continued until the end of
September 2023, with the aim of establishing the production
capability and the resource base of the Al Jumd discovery. The
fiscal meter necessary to be able to export oil through the pro-
duction facility Simsim on PDO’s Block 6 was approved and com-
missioned during the first quarter 2023, allowing for oil to be
exported at the end of March. The re-opening of Al Jumd-2 in
April marked the start of the EWT, with Al Jumd-3 and Al Jumd-4
following in May. All wells produced oil supported by a PCP pump
and tested at various pump speeds to establish pressure gradi-
ents and optimise flow rates with the resulting production rates
varying between 150 and 700 barrels of oil per day. Al Jumd-2
93
Tethys Oil Annual Report 2023 Administration report
and Al Jumd-3 produced continuously during the third and fourth
quarters of 2023 while Al Jumd-4 was shut in for workovers and
recompletion during the second quarter.
The EWT successfully concluded at the end of September
2023, in line with the agreement with the Ministry of Energy and
Minerals (“MEM”) and provided the Block 56 partnership with
vital production data, increased the understanding of the Al
Khlata formation and derisked the play concept in the Eastern
Flank area of Block 56. The data is being incorporated into the
ongoing field development planning.
In total, 60,369 barrels of oil were lifted as a part of the Al
Jumd EWT, including the governments share. The total proceeds
from the liftings amounted to MUSD 4.7 (gross from field, shared
with governments and partners). During the EWT, Tethys Oil has
handled the oil sales on behalf of the partners and government
splitting the proceeds in accordance with a provisional formula
of 75/25 to the government. Tethys Oil has received 65 percent
of the contractor share of the production and lifting proceeds.
During 2023, the processing of the 3D seismic data, which
was acquired in 2022, was completed and interpretation could
commence. In December the Menna-1 exploration well was
drilled on one of the prospects identified on the new seismic.
Menna-1 will, alongside Sarha-3, be tested in early 2024. A full
prospect and lead inventory for the Eastern Flank area is
expected to be finalised in the first quarter of 2024. With the
inventory in place and based on the results of the performed
well tests, Tethys Oil aims to finalise a field development plan
and bring the block to commercialisation in 2024.
In August 2023, Tethys Oil applied for an extension of the
current, second, exploration period. A one-year extension was
granted by the MEM to allow for continued drilling and evalua-
tion of the Block. The second exploration phase will expire on
28 December 2024.
Block 58
In early 2023, Tethys Oil finalised the prospect inventory for the
Fahd area in Block 58’s north-eastern corner. The area has a
total unrisked prospective resource potential of 184 mmbo split
between three identified prospects, of which the most promising
was the Fahd South prospect. In May 2023, the South Fahd
prospect was selected to be the first target for exploration drill-
ing on the block and the following well-pick meeting with the
MEM resulted in the approval of the prospect and the drilling
location. The South Fahd prospect was named Kunooz (“Gift”)
and as per the end of 2023 evaluation of tenders for drilling
services was ongoing. The drilling of Kunooz-1 is expected to
commence in the first half of 2024.
In the South Lahan area, in Block 58’s central-eastern part,
the work was focused on completing the processing and inter-
pretation of the 450 km2 3D seismic data collected in 2022.
During the fourth quarter, the processing and interpretation of
said data was completed and yielded the identification of sev-
eral drillable prospects. The complete prospect portfolio for
South Lahan will be peer reviewed in early 2024.
the potential of the block, Tethys Oil initiated a process to
explore the possibility of farming out a portion of the interest in
the EPSA for Block 58. In the latter parts of the year and during
early 2024, constructive discussions were ongoing with a select
group of companies which could result in a farmout of Tethys
Oil’s interest share in the EPSA.
Reserves and contingent resources
Oman, Blocks 3&4
Tethys Oil’s net working interest Reserves in Blocks 3&4 in
Oman as per 31 December 2023 amount to 21,698 thousand
barrels of oil (“mbo”) of proven and probable Reserves (2P).
The 2P reserve replacement ratio amounts to 32 percent. In
addition, Tethys Oil’s net working interest resources oil base in
Oman amounts to 15,529 mbo of 2C Contingent Resources.
The Company’s 2023 and 2022 year-end Reserves were evalu-
ated by ERC Equipoise Limited (“ERCE”) as independent qualified
Reserves evaluator.
Additions and revisions include maturation of Contingent
Resources to Reserves from the Shahd fields. Revisions of the
Reserves also include the net of positive revisions on the Farha
South and Saiwan East fields and negative revisions on the
Ulfa fields.
Based on ERCE’s model and current oil price assumptions,
Tethys Oil’s net entitlement Reserves (Reserves after government
take) amount to 6,419 mbo of 1P, 10,392 mbo of 2P and 14,881
mbo of 3P.
In addition to Reserves, Tethys Oil also announces net working
interest Contingent Resources. The bulk of the estimated Contin-
gent Resources are contained in the Ulfa, Samha and Erfan fields.
Development of the Contingent Resources in the discoveries is
contingent upon a committed work programme as well as budget
to access these resources.
The evaluation of the Reserves in Oman has been conducted
using 2018 Petroleum Resources Management System
(PRMS2018), sponsored by the Society of Petroleum Engineers
(SPE), World Petroleum Council (WPC), American Association of
Petroleum Geologists (AAPG), Society of Petroleum Evaluation
Engineers (SPEE), Society of Exploration Geophysicists (SEG),
Society of Petrophysicists and Well Log Analysts, (SPWLA), and
the European Association of Geoscientists & Engineers (EAGE).
Development of reserves, Blocks 3&4 (working interest)
mbo
1P
2P
3P
Total 31 December 2022
14,040
23,901
36,211
Production 2023
Additions and revisions
-3,219
1,523
-3,219
1,016
-3,219
3,357
Total 31 December 2023
12,344
21,698
36,349
Reserve replacement ratio, %
47%
32%
104%
Contingent resources Blocks 3&4 (working interest)
mbo
1C
2C
3C
5,356
15,529
32,994
In the interest of balancing portfolio commitments and risks,
Total 31 December 2023
as well as creating a technically strong partnership to realise
94
Tethys Oil Annual Report 2023 Full year 2024 production guidance
Tethys Oil expects the full year average production from Blocks
3&4 to be between 8,200 ± 400 barrels of oil per day. The pro-
duction of the first quarter 2024 will be affected by a planned
maintenance of the Saiwan East production facility for a period
of nine days.
Operating expenditure
Tethys Oil expects the average operating expenditure to be
approximately USD 17.5 per barrel for the full year 2024. Due
to increased costs related to the ramp up of the Gas-to-Power
project opex is expected to be above the full year average of
17.5 barrel during the first half of 2024 and to decline to a level
below the full year average in the second half of the year.
Administrative expenses
Tethys Oil expects the administrative expenses for the full year
2024 to be in the range of MUSD 6–8.
Strategic review
Tethys Oil’s Board of Directors has decided to initiate a strategic
review of the Group’s portfolio of Oil and Gas interests. The
review will explore the possibility of rebalancing the portfolio’s
mix of assets in different stages of the lifecycle and increasing
the visibility of the assets’ fair market value.
Financial review
Production Entitlement
The terms of the Exploration and Production Sharing Agreement
(“EPSA”) for Blocks 3&4 allows the joint operations partners to
recover their costs up to 40 percent of the value of total oil pro-
duction on an annual basis, this is referred to as ‘cost oil’. After
deducting any allowance for cost oil, the remaining production
is split 80/20 between the government (“government take”)
and the joint operations partners. If the costs incurred during
the period exceeds the maximum 40 percent of production, it is
carried forward to be recovered in future periods and is referred
to as the ‘Cost Pool’. If there are no costs to be recovered, the
joint operations partners receive 20 percent of the oil produced.
The terms of the EPSA this dictates that the joint operations
partners’ share of production after government take to be in the
range 20–52 percent, depending on available recoverable cost.
During 2023 not all recoverable cost incurred on Blocks 3&4
were recovered from production with the unrecovered cost being
carried forward in the Cost Pool for the Blocks. Net entitlement
share for 2023 was 52 percent (46 percent) of production. As
per 31 December 2023 Tethys Oil’s net share of the cost pool
balance was MUSD 22.2 (–).
Administration report
Revenue and sales
Mitsui Energy Trading (Singapore), a subsidiary of Mitsui & Co
Ltd, markets and sells all of Tethys Oil’s oil entitlement, the
majority of which originates from Blocks 3&4. Oil is lifted and
sold on a monthly basis in accordance with the official proce-
dure. The oil is priced based on the Official Selling Price (OSP)
as set by the Sultanate of Oman’s Ministry of Energy and Miner-
als, in addition to trading premiums and quality adjustments.
The OSP is calculated using the monthly average price of the
front month future contract of Oman Export blend (with 2 months
to delivery) as traded on the Dubai Mercantile Exchange (DME).
Volumes for oil sales are nominated two to three months in
advance and are not based upon the actual production in a
month; as a result, sales volumes can deviate from actual pro-
duction volumes in the period. Where the sales volume exceeds
the quantity of barrels produced, an overlift position occurs and
where it is less, an underlift position occurs. During the year, the
Group’s underlift position of 66,961 barrels at the end of 2022
decreased to 5,620 barrels at the 31 December 2023. The
valuation of both over and underlift is based on market price at
the balance sheet date.
During 2023 Tethys Oil performed an extended well test (EWT)
on Block 56. The production terms were not commercial and
thus ordinary production sharing terms are not applied resulting
in a lower entitlement to contractors. Tethys Oil’s net entitlement
from the extended well test was 9,879 barrels with a remaining
underlift position at the end of the extended well test of 68
barrels. These barrels can be sold should production resume.
Revenue and other income
2023
2022
2021
2020
2019
Oil sold, bbl 1,735,025 1,585,534 1,808,857 2,317,875 2,259,849
Underlift
(overlift)
movement,
bbl
Net barrels
produced,
after
government
take, bbl1
Achieved
oil price,
USD/bbl
Revenue,
MUSD
Underlift
(overlift)
adjust-
ments,
MUSD
EWT
Revenue
and other
income,
MUSD
-61,340
78,829
-8,717
-160,490
123,238
1,673,685 1,664,363 1,800,140 2,157,385 2,383,086
82.4
94,2
62.8
47.7
64.2
143.0
149.4
113.5
110.7
145.0
-5.6
0.8
7.1
–
-0.8
–
-9.6
–
5.8
–
138.2
156.5
112.7
101.1
150.8
1 Does not include the oil sold or the Underlift (overlift) movement from the EWT.
95
Tethys Oil Annual Report 2023 Administration report
During 2023, Tethys Oil sold 1,735,025 barrels of oil from
Blocks 3&4, representing a 9 percent increase compared to
2022 when 1,585,534 barrels of oil were sold. The increase
in oil sale volume has reduced the underlift position from the
end of 2022.
Revenue from oil sales in 2023 was MUSD 143.0 (149.4),
a 4 percent decrease compared to 2022. The decrease in reve-
nue was driven by a 13 percent decrease in Achieved oil price,
offsetting the higher sales volumes. Achieved oil price was USD
82.4 per barrel (94.2).
The decrease of the underlift position to 5,620 barrels at the
end of 2023 from 66,961 barrels at the end of 2022, and a
decrease in the oil price resulted in an overlift adjustment of
MUSD -5.6 (7.1).
From the extended well test 9,812 barrels were sold at an
Achieved oil price of USD 78.3 per barrel amounting to MUSD 0.8.
The Revenue and the Underlift (overlift) adjustment, together
with the EWT, add up to Revenue and other income of MUSD
138.2, a 12 percent decrease in 2023 compared to MUSD
156.5 in 2022.
Operating expenses
Production costs,
MUSD
Well workovers,
MUSD
Operator G&A and
overhead expenses
Total operating
expenses producing
assets, MUSD
Operating expenses
extended well test
Block 56, MUSD
Total operating
expenses, MUSD
Operating expenses
per barrel, USD
2023
2022
2021
2020
2019
37.4
33.5
31.0
29.6
37.1
6.3
5.0
11.5
11.6
2.9
9.9
3.1
4.1
10.7
10.4
55.1
50.1
43.8
43.4
51.6
1.3
–
–
–
–
56.4
50.1
43.8
43.4
51.6
17.1
13.8
10.8
10.5
11.0
Production costs relate to oil production on Blocks 3&4, and
comprise of expenses for throughput fees, energy, consuma-
bles, field staff, and maintenance. Well workovers and interven-
tions relate to downhole work including replacing of electric
submersible pumps. Operator G&A and overhead expenses
relate to administration as well as operator overhead.
Production costs, well workovers and operator G&A together
comprise operating expenses producing assets, amounting to
MUSD 55.1 in 2023 (50.1), an increase of 10 percent com-
pared to 2022. The increase is mainly due to higher fuel con-
sumption and costs in addition to more expensive well work-
overs driven by limited availability of suitable workover rigs.
Operating expenses for the extended well test include prim-
arily the cost of leased production facilities, staff costs, trans-
portation and processing fees as well as tariffs, amounting to
MUSD 1.3 in 2023 (–).
96
Depletion, depreciation and amortisation
DD&A, MUSD
DD&A per barrel,
USD
2023
42.0
2022
40.5
2021
41.2
2020
44.5
2019
47.6
13.1
11.2
10.1
10.7
10.2
Depletion, depreciation and amortisation (“DD&A”) comprised
of two components: a straight-line depreciation component and
a unit of production component. DD&A in 2023 amounted to
MUSD 42.0 (40.5). The higher DD&A is a result of the unit of
production component increasing following the lower reserves
at the end of 2022. The DD&A charge relates to Blocks 3&4 and
a depreciation relating to right-of-use assets of MUSD 0.3.
Impairment
An impairment test was performed of the carrying value of
Tethys Oil’s interest in Blocks 3&4 as of 31 December 2023.
The impairment test resulted in a net present value of MUSD
190.0 compared to a carrying value of MUSD 226.9 and thus
resulted in a MUSD 36.9 (–) impairment charge in the income
statement. The impairment charge had no cash or tax impact.
Exploration Costs
Exploration costs recorded in 2023 were MUSD 6.4 (4.5) and
are related to the write down of four uneconomic exploration
wells on Blocks 3&4, Jari-1, Elaf-1, Ragbah-1, and Raghad-1.
Exploration and appraisal expenditures are capitalised as they
incur and subject to regular review. Dry or uneconomic wells are
expensed when the recoverability of the costs is deemed unlikely.
Administrative expenses
Administrative expenses amounted to MUSD 8.3 for 2023
compared to MUSD 7.3 during 2022. Administrative expenses
are mainly salaries, rents, listing costs and external services.
Net financial result
The net financial result for 2023 of MUSD -4.4 (4.7) has been
impacted by net gain due to changes in foreign exchange rates
resulting from the strengthening of SEK against USD. Transla-
tion differences on loans between the parent company and sub-
sidiaries have no effect on cash flows.
Tax
Tethys Oil’s oil and gas operations in Oman are governed by an
Exploration and Production Sharing Agreement for each licence
(“EPSA”) whereby Tethys Oil receives its share of oil after govern-
ment take. Under the terms of each EPSA, Tethys Oil is subject
to Omani income taxes, which are paid in full, on behalf of Tethys
Oil from the government share of oil. The effect of these taxes is
netted against revenue and other income in the income statement.
Currently Blocks 3&4 is the only Omani EPSA in a tax paying
position. As the final amount of income tax is determined after
the end of the calendar year, Tethys Oil’s preliminary assess-
ment of the amount of Omani income tax paid on behalf of
Tethys Oil in 2023 is MUSD 36.7 (59.5). Income tax of MUSD
0.5 (0.6) related to Tethys Oil’s income in Gibraltar was recorded
Tethys Oil Annual Report 2023 Administration report
in the income statement. Note 14 presents more information
on the treatment of Tethys Oil’s income tax.
Result
Tethys Oil reports a net result after tax for 2023 of MUSD -16.5
(58.3), representing earnings per share before dilution of USD
-0.51 (1.79). The result for 2023 decreased compared to 2022
due to the aforementioned combination of lower production and
achieved oil price and the impairment of Blocks 3&4.
Investments
Blocks 3&4,
MUSD
Drilling
G&G
Facilities
Total
investments
Blocks 3&4
2023
35.8
17.1
22.3
2022
30.1
13.4
19.9
2021
17.6
4.1
8.7
2020
19.4
9.2
10.2
2019
25.0
10.1
18.9
75.2
63.4
30.4
38.8
54.0
Liquidity and financing
Cash and cash equivalents as per 31 December 2023
amounted to MUSD 25.8 compared to MUSD 41.5 as per 31
December 2022.
In November 2023, a dividend of SEK 2.00 per share was
paid to shareholders, which in total amounted to MUSD 6.1.
Additionally SEK 3.00 was distributed to shareholders through
a mandatory share redemption programme, which in total
amounted to MUSD 9.0. Total distribution to shareholders
amounted to MUSD 15.1 (22.8).
For the twelve months ended 31 December 2023, the cash
flow from operations amounted to MUSD 82.7 (87.0). Cash
flows from investments in oil and gas amounted to MUSD -81.7
(-89.1). For the twelve months of 2023, free cash flow (cash
flow from operations less investments) amounted to MUSD 0.8
(-2.3).
Tethys Oil’s ongoing operations and work programmes on
Blocks 3&4, Block 49, Block 56, and Block 58 in Oman are
expected to be funded by cash, cash flow from operations and
external borrowing.
Investments and work programme
During 2023, total investments in oil and gas properties
amounted to MUSD 81.7 compared to MUSD 89.1 in 2022. In
2023, investments of MUSD 75.2 related to Blocks 3&4, MUSD
0.5 to Block 49, MUSD 3.7 to Block 56 and MUSD 2.2 to Block
58. The total decreased investment is mainly a result of fewer
wells being drilled on Block 56. The investments in Blocks 3&4
increased due to a more extensive drilling programme for Explo-
ration and Appraisal wells. In addition, there was a larger seismic
programme and new investments in the Gas-to-Power project.
Country/Asset, MUSD
Book value
31 Dec
2023
Investments
Jan–Dec
2023
Book value
31 Dec
2022
Investments
Jan–Dec
2022
Oman Blocks 3&4
190.0
75.2
198.5
Oman Block 49
Oman Block 56
Oman Block 58
New ventures
Total
1.2
43.4
10.2
0.0
0.5
3.7
2.2
0.0
0.6
38.9
8.0
0.1
244.8
81.7
246.1
63.4
0.4
23.9
1.4
–
89.1
Investments and work programme 2024
Tethys Oil’s investments in oil and gas properties for 2024 is
expected to amount to MUSD 90–94 compared to MUSD 81.7
in 2023. The increase in oil and gas investments is a result of
more extensive work programmes on Blocks 56 and 58 includ-
ing the drilling of three exploration wells.
Investments on Blocks 3&4 are expected to be MUSD 63–67
(2023: MUSD 75.2). The decrease in investment is due to lower
spending on the drilling and seismic programmes. The 2024
drilling programme contains the same number of wells as were
drilled in 2023, but with the emphasis on appraisal wells, which
are less costly to drill compared to exploration wells. In 2024
the final areas to be covered in the five-year seismic programme
will be completed.
2024 investments on Block 49 is expected to be MUSD 0.5
(2023: MUSD 0.5).
On Block 56, Tethys Oil’s 2024 investments, is expected to
amount to a total of MUSD 7.5 (2023: MUSD 3.7). The expendi-
ture includes one exploration well in the Central area.
On Block 58 Tethys Oil’s 2024 investments are expected to
amount to MUSD 18.5 (2023: MUSD 2.2) which relates to the
drilling of two exploration wells.
Netback
USD/bbl
2023
2022
2021
2020
2019
Netback Blocks 3&4
Value of oil produced
(Average OSP)
Government take
Entitlement value
(after government
take)
Operating expenses
Netback
Capex
Netback
(Net of Capex)
82.3
-39.5
95.3
-51.6
64.1
-35.7
47.2
-22.7
63.6
-31.3
42.8
-17.1
25.6
-23.4
43.7
-13.8
29.9
-17.5
28.4
-10.8
17.6
-7.5
24.6
-10.5
14.1
-9.4
32.4
-11.0
21.4
-11.5
2.3
12.4
10.1
4.7
9.8
The decrease in Netback is a result of the decreased oil price.
The Netback (net of Capex) decreased further as a result of
increased capital expenditure.
97
Tethys Oil Annual Report 2023 Administration report
Parent company
The parent company reports a net result after tax for 2023
amounting to MSEK 592.9 compared to MSEK 294.2 for 2022.
Administrative expenses amounted to MSEK 64.4 for 2023 com-
pared to MSEK 49.7 for 2022. Net financial result amounted to
MSEK 638.6 during 2023 compared to MSEK 327.9 for 2022.
Dividends from subsidiaries amounting to MSEK 584.5 and
currency exchange differences related to intercompany loans
were the components of the net financial result.
During 2023 Tethys Oil restructured its holding of certain
group companies and transferred the holding of intercompany
loans from the parent company to a wholly owned subsidiary
that became an internal treasury company. As such, the parent
company’s long-term receivables from the subsidiaries have
been converted into shares in subsidiaries.
Other information
Significant agreements and commitments
In Tethys Oil’s oil and gas operations, there are two main catego-
ries of agreements: one that governs the relationship with the
host country, and one that governs the relationship with partners.
The agreements that govern the relationship with host coun-
tries can take different forms depending on the licensing and
fiscal regime of the country. In the case of Tethys Oil and Oman
the relationship is governed by Exploration and Production
Sharing Agreements (EPSA or PSA). Tethys Oil holds its interests
directly through aforementioned agreements in Oman. The
agreements with host countries have a time limit and are
normally divided into clearly defined time periods. Financial
commitments and/or work commitments normally relate to the
different periods. Tethys Oil has fulfilled its commitments on
Blocks 3&4 and Block 49. On Block 58, the initial work commit-
ments during the first period includes geological studies,
seismic acquisition and processing and exploratory drilling.
On Block 56, the extended second exploration period includes
drilling of one well, workover and test of two wells.
The agreements that govern the relationship with partners are
referred to as Joint Operating Agreements (JOA). In all areas of
operation where Tethys Oil has partners, JOAs are in effect. Other
than the aforementioned agreements, there are no individual agree-
ments or similar circumstances relating to the business which are
of crucial significance for the group’s operations or profitability.
Board of Directors
At the AGM of shareholders on 10 May 2023 Robert Anderson,
Alexandra Herger, Magnus Nordin, Per Seime and Klas Brand
were re-elected. No deputy directors were appointed. At the
same meeting, Per Seime was appointed Chairman of the
Board. The work of the Board is subject to an established work
procedure that defines the distribution of work between the
board and the Managing Director. The work procedure is evalu-
ated each year and revised if deemed appropriate. The Board
held 16 meetings during 2023. The five members of the Board
have consisted of four non-executive directors and the Manag-
ing Director. The Board has four committees – the Audit Commit-
tee, the Remuneration Committee, the Technical Committee and
the Sustainability Committee. Klas Brand is Chairman of the
Audit Committee, Per Seime is Chairman of the Remuneration
Committee, Rob Anderson is Chairman of the Technical Commit-
tee and Alexandra Herger is the Chairman of the Sustainability
Committee.
Organisation
At the end of the year, Tethys Oil had the equivalent of 31 full
time employees (29). Of these, 11 (11) were women. In addi-
tion, Tethys Oil has a number of contractors and consultants
engaged in the Group’s operations.
Remuneration policy 2023
The previous guidelines were approved by the Annual General
Meeting 2023. The changes made are primarily linguistic and
related to the variable remuneration and the performance criteria.
The Company has not received any comments on the guidelines
from shareholders.
Background
These guidelines do not apply to any remuneration resolved
upon or approved by the General Meeting and are only applica-
ble to remuneration agreed, and amendments to remuneration
already agreed, after the adoption of these guidelines by the
Annual General Meeting 2023.
Application of guidelines
These guidelines apply to remuneration to the Group Executive
Management and to members of the Board of Directors if remu-
neration is paid for work performed outside the scope of the
ordinary board work (e.g. pursuant to an employment or con-
sultancy agreement). As of the date of these guidelines, the
Company’s Group Executive Management are the Managing
Director, the CFO, the CTO and the Head of Legal.
These guidelines constitute a framework within which remu-
neration to the Group Executive Management may be decided
on by the Board of Directors.
General remuneration principles
In short, the group’s business strategy is to create shareholder
value working across the whole upstream oil and gas industry
lifecycle of exploration, appraisal, development and production.
A central objective in the group’s business model is to explore
for and produce oil and gas in an economically, socially, and
environ mentally responsible way. For more information regarding
the group’s strategic priorities, please refer to the group’s annual
reports and the Company’s website: (www.tethysoil.com).
The Company’s remuneration principles are to ensure respon-
sible and sustainable remuneration decisions that support the
Company’s strategy, long-term interests and sustainable busi-
ness practices and further enhance the group’s market position
as well as increase the shareholder value. To this end, salaries
and other employment terms shall enable the group to retain
and recruit skilled group executives at a reasonable cost. The
remuneration shall be on market terms and based on the princi-
ples of performance, competitiveness and fairness.
98
Tethys Oil Annual Report 2023 Administration report
When evaluating whether these guidelines and the limitations
set out herein are reasonable, the Board of Directors (including
the Remuneration Committee) has considered the total income
of all employees of the Company, including the various compo-
nents of their remuneration as well as the increase and growth
rate over time.
In order to comply with mandatory rules or established local
practice, remuneration which is subject to rules outside Sweden
may be adjusted to comply with such local rules, taking into
account, to the extent possible, the overall purpose of these
guidelines.
Elements of remuneration
The remuneration covered by these guidelines may consist of
basic salary, variable cash salary, pension, non-financial bene-
fits and severance pay. In addition hereto, the General Meeting
may decide on, inter alia, long-term incentive programs in which
the Group Executive Management can participate.
Principles for fixed salary
The fixed salary shall be in line with market conditions, be com-
petitive, and shall take into account the scope and responsibility
associated with the position, as well as the skills, experience and
performance of each member of the Group Executive Management.
On the assumption of payment of full variable salary, pension
benefits and other benefits, the fixed salary is expected to amount
to no more than 45 per cent of the total remuneration. If there is
no variable salary, pension benefits or other benefits, the fixed
salary will constitute the entire remuneration.
Principles for variable salary
Variable salary, i.e. cash bonuses, shall be based on a set of
pre-determined and measurable performance criteria that reflect
the key drivers for pursuing the Company’s strategy, long-term
interests and sustainable business practices. Such performance
criteria include (but are not limited to) HSE, ESG, reserves &
resources and financial return as well as individual performance.
To which extent the criteria for awarding variable cash salary
have been satisfied shall be determined annually in connection
with the publication of the year-end report for the respective
financial year based on an evaluation of the executive’s achieve-
ment of the performance indicators as described in the agreed
individual performance targets.
Payment of variable salary shall be conditional upon the
Group Executive Management member remaining employed for
the duration of the qualification period.
Variable cash remuneration shall qualify for pension benefits
only to the extent it is required pursuant to mandatory provisions
of applicable collective bargaining agreements.
The annual variable cash salary may not amount to more than
twelve months’ fixed salary and is therefore expected to amount
to no more than 50 per cent of the total remuneration.
Principles for pension benefits
Pension benefits shall comprise a defined contribution scheme
with premiums calculated on the full basic salary and be set on
an individual basis, however, provided that mandatory provisions
of applicable collective bargaining agreements do not require
otherwise.
Pension benefits may not amount to more than 30 per cent of
the basic salary and is therefore expected to amount to no more
than 25 per cent of total remuneration.
Principles for non-financial benefits
Non-financial benefits shall be based on market terms and shall
facilitate the duties of the Group Executive Management. Non-
financial benefits may include, inter alia, life insurance, medical
insurance etc.
Premiums and other costs relating to non-financial benefits
may not amount to more than five per cent of the basic salary
and is therefore expected to amount to no more than five per
cent of the total remuneration.
Remuneration during notice period and severance pay
The notice period for termination of the Managing Director shall
not exceed twelve months and the notice period for termination
of other members of the Group Executive Management shall not
exceed nine months.
A mutual termination period of twelve months applies
between the Company and the Managing Director and of up to
nine months between the Company and other members of the
Group Executive Management.
Severance pay to the Managing Director and other members
of the Group Executive Management shall not exceed twelve
months’ gross basic salary, provided that the employment is
terminated by the Company. In the event a member of the Group
Executive Management terminates his or her employment, no
severance shall be payable.
Notwithstanding the above, in the event of a change of control
of the Company, the Managing Director or other members of
the Group Executive Management may receive severance pay
in excess of twelve months’ basic salary and may receive sever-
ance pay even if notice is given by the executive, provided that
the sum of salary paid during the notice period and the sever-
ance pay may not exceed the equivalent of 24 months’ gross
basic salary.
For the purposes of these guidelines, a change of control
shall mean any event whereby a single party (or a group of par-
ties acting in concert), directly or indirectly, controls in excess of
51 per cent of the shares or votes in the Company (e.g., due to a
public tender offer).
Principles for certain remuneration to members of the
Board of Directors
To the extent members of the Board of Directors perform work
for the Company outside the scope of the ordinary board work,
consultancy fees on market terms may be paid in addition to any
board fees resolved upon by the General Meeting. The Nomina-
tion Committee is tasked with proposing a framework, if any,
for such remuneration, to be approved by the Annual General
Meeting.
99
Tethys Oil Annual Report 2023 Administration report
Long-term incentive programs
Any remuneration resolved upon by the General Meeting is
not covered by these guidelines. Accordingly, these guidelines
do not apply to the Company’s long-term incentive programs
resolved upon by the General Meeting.
The Company’s existing long-term incentive programs are
directed to certain key employees of the group and designed
to create conditions for retaining and recruiting competent and
committed personnel to the group. More information on the
Company’s existing and proposed incentive programs from time to
time is available on the Company’s website: (www.tethysoil.com).
In connection with incentive programs resolved on by the
General Meeting, the Company may make such cash payments
to the participants which are compatible with the decisions to
implement or settle such incentive programs (e.g., by making
cash payments to participants who, pursuant to the terms of the
programs, are to receive incentive instruments (e.g., warrants)
free of charge or be compensated for tax effects). Such pay-
ments shall not be considered part of the basic or variable cash
salary as they are an integral part of the incentive programs.
Preparation and review of the compliance of these guidelines
The Board of Directors has established a Remuneration Com-
mittee to deal with matters of executive compensation and
wider group remuneration. These guidelines have been prepared
by the Remuneration Committee of the Board of Directors and
the Board of Directors. The Remuneration Committee is respon-
sible for preparation of updated proposals in respect of guide-
lines for executive remuneration. A proposal for amended guide-
lines is to be prepared by the Remuneration Committee and
the Board of Directors when the need for material amendments
arises, but at least every four years.
Within the scope and on the basis of these guidelines, the
Board of Directors shall, based on the Remuneration Commit-
tee’s preparation and recommendations, annually decide on the
specific revised remuneration terms for each member of the
Group Executive Management and make such other decisions
in respect of remuneration for member of the Group Executive
Management that may be required.
The members of the Remuneration Committee are independ-
ent in relation to the Company and the Group Executive Manage-
ment. The Managing Director and the other members of the
Group Executive Management do not participate in the Board
of Directors’ handling of, or resolutions regarding, remuneration-
related matters if they are affected by such matters.
Derogations from these guidelines
The Board of Directors is entitled to adjust the compensation in
the case of, for example, extraordinary increases or decreases
in the group’s earnings. The Board of Directors may also tempo-
rarily resolve to derogate from these guidelines, in whole or in
part, if in a specific case there is special cause for such deroga-
tion and a derogation is necessary to serve the Company’s
long-term interests, including its sustainability, or to ensure the
Company’s financial viability.
100
Remuneration policy – proposal 2024
The Board of Directors of Tethys Oil AB (publ) (the “Company”)
proposes that the Company shall apply the following guidelines
for executive remuneration agreed after the Annual General
Meeting 2024.
Background
The previous guidelines were approved by the Annual General
Meeting 2023. The changes made are primarily linguistic. in
addition, there is a change made to the non-financial benefits.
The Company has not received any comments on the guidelines
from shareholders. These guidelines do not apply to any remu-
neration resolved upon or approved by the General Meeting and
are only applicable to remuneration agreed, and amendments
to remuneration already agreed, after the adoption of these
guidelines by the Annual General Meeting 2024.
Application of guidelines
These guidelines apply to remuneration to the Group Executive
Management and to members of the Board of Directors if remu-
neration is paid for work performed outside the scope of the ordi-
nary board work (e.g. pursuant to an employment or con sultancy
agreement). As of the date of these guidelines, the Company’s
Group Executive Management are the Managing Director, the
CFO, the CTO and the CLO. These guidelines constitute a frame-
work within which remuneration to the Group Executive Manage-
ment may be decided on by the Board of Directors.
General remuneration principles
In short, the Group’s business strategy is to create shareholder
value working across the whole upstream oil and gas industry
lifecycle of exploration, appraisal, development and production.
A central objective in the group’s business model is to explore
for and produce oil and gas in an economically, socially, and
environmentally responsible way. For more information regarding
the Group’s strategic priorities, please refer to the Group’s
annual reports and the Company’s website (www.tethysoil.com).
The Company’s remuneration principles are to ensure respon-
sible and sustainable remuneration decisions that support the
Company’s strategy, long-term interests and sustainable busi-
ness practices and further enhance the group’s market position
as well as increase the shareholder value. To this end, salaries
and other employment terms shall enable the group to retain
and recruit skilled group executives at a reasonable cost. The
remuneration shall be on market terms and based on the princi-
ples of performance, competitiveness and fairness.
When evaluating whether these guidelines and the limitations
set out herein are reasonable, the Board of Directors (including
the Remuneration Committee) has considered the total income
of all employees of the Company, including the various compo-
nents of their remuneration as well as the increase and growth
rate over time.
In order to comply with mandatory rules or established local
practice, remuneration which is subject to rules outside Sweden
may be adjusted to comply with such local rules, taking into
account, to the extent possible, the overall purpose of these
guidelines.
Tethys Oil Annual Report 2023 Administration report
Elements of remuneration
The remuneration covered by these guidelines may consist of
fixed salary, variable salary, pension, non-financial benefits and
severance pay. In addition hereto, the General Meeting may
decide on, inter alia, long-term incentive programmes in which
the Group Executive Management can participate.
Principles for fixed salary
The fixed salary shall be in line with market terms, be competi-
tive, and shall take into account the scope and responsibility
associated with the position, as well as the skills, experience
and performance of each member of the Group Executive Man-
agement. The fixed salary constitutes the basis for the variable
salary. If there is no variable salary, pension benefits or other
benefits, the fixed salary will constitute the entire remuneration.
Principles for variable salary
Variable salary, i.e. cash bonuses, shall be based on a set of
predetermined and measurable performance criteria that reflect
the key drivers for pursuing the Company’s strategy, long-term
interests and sustainable business practices. Such performance
criteria include (but are not limited to) health, safety & environ-
ment (HSE), sustainability, reserves & resources and financial
return.
To which extent the criteria for awarding variable salary have
been satisfied shall be determined annually in connection with
the publication of the year-end report for the respective financial
year based on an evaluation of the executive’s achievement of
the performance indicators as described in the agreed individual
performance targets.
Payment of variable salary shall be conditional upon the
Group Executive Management member remaining employed for
the duration of the qualification period.
Variable salary shall qualify for pension benefits only to the
extent it is required pursuant to mandatory provisions of appli-
cable collective bargaining agreements.
The variable salary may not amount to more than twelve
months’ fixed salary and is therefore expected to amount to
no more than 100 per cent of the fixed remuneration.
Principles for pension benefits
Pension benefits shall comprise a defined contribution scheme
with premiums calculated on the full fixed salary and be set on
an individual basis, however, provided that mandatory provisions
of applicable collective bargaining agreements do not require
otherwise.
Pension benefits may not amount to more than 30 per cent
of the fixed salary.
Principles for non-financial benefits
Non-financial benefits shall be based on market terms and
shall facilitate the duties of the Group Executive Management.
Non-financial benefits may include, inter alia, life insurance,
medical insurance etc.
Premiums and other costs relating to non-financial benefits may
not amount to more than ten percent of the fixed salary.
Remuneration during notice period and severance pay
The notice period for termination of the Managing Director shall
not exceed twelve months and the notice period for termination
of other members of the Group Executive Management shall not
exceed nine months.
A mutual termination period of twelve months applies
between the Company and the Managing Director and of up to
nine months between the Company and other members of the
Group Executive Management.
Severance pay to the Managing Director and other members
of the Group Executive Management shall not exceed twelve
months’ gross fixed salary, provided that the employment is
terminated by the Company. In the event a member of the Group
Executive Management terminates his or her employment, no
severance shall be payable.
Notwithstanding the above, in the event of a change of control
of the Company, the Managing Director or other members of the
Group Executive Management may receive severance pay in
excess of twelve months’ fixed salary and may receive sever-
ance pay even if notice is given by the executive, provided that
the sum of salary paid during the notice period and the sever-
ance pay may not exceed the equivalent of 24 months’ gross
fixed salary.
For the purposes of these guidelines, a change of control
shall mean any event whereby a single party (or a group of par-
ties acting in concert), directly or indirectly, controls in excess
of 51 per cent of the shares or votes in the Company (e.g., due
to a public tender offer).
Principles for certain remuneration to members of the
Board of Directors
To the extent members of the Board of Directors perform work
for the Company outside the scope of the ordinary board work,
consultancy fees on market terms may be paid in addition to
any board fees resolved upon by the General Meeting. The Nomi-
nation Committee is tasked with proposing a framework, if any,
for such remuneration, to be approved by the Annual General
Meeting.
Long-term incentive programmes
Any remuneration resolved upon by the General Meeting is not
covered by these guidelines. Accordingly, these guidelines do
not apply to the Company’s long-term incentive programmes
resolved upon by the General Meeting.
The Company’s existing long-term incentive programmes are
directed to certain key employees of the Group and designed to
create conditions for retaining and recruiting competent and com-
mitted personnel to the Group. More information on the Compa-
ny’s existing and proposed incentive programmes from time to
time is available on the Company’s website (www.tethysoil.com).
In connection with incentive programmes resolved on by the
General Meeting, the Company may make such cash payments
to the participants which are compatible with the decisions to
implement or settle such incentive programmes (e.g., by making
cash payments to participants who, pursuant to the terms of
the programmes, are to receive incentive instruments (e.g.,
101
Tethys Oil Annual Report 2023 Administration report
warrants) free of charge or be compensated for tax effects).
Such payments shall not be considered part of the fixed or varia-
ble salary as they are an integral part of the incentive pro-
grammes.
in Tethys Oil France AB by MSEK 938.9 and indirect sharehold-
ing in Tethys Oil Invest AB accordingly. More information is pre-
sented in note 18.
Preparation and review of the compliance of these guidelines
The Board of Directors has established a Remuneration Com-
mittee to deal with matters of executive compensation and
wider group remuneration. These guidelines have been prepared
by the Remuneration Committee of the Board of Directors and
the Board of Directors. The Remuneration Committee is respon-
sible for preparation of updated proposals in respect of guide-
lines for executive remuneration. A proposal for amended guide-
lines is to be prepared by the Remuneration Committee and the
Board of Directors when the need for material amendments
arises, but at least every four years.
Within the scope and on the basis of these guidelines, the
Board of Directors shall, based on the Remuneration Commit-
tee’s preparation and recommendations, annually decide on the
specific revised remuneration terms for each member of the
Group Executive Management and make such other decisions in
respect of remuneration for member of the Group Executive
Management that may be required.
The members of the Remuneration Committee are independ-
ent in relation to the Company and the Group Executive Manage-
ment. The Managing Director and the other members of the
Group Executive Management do not participate in the Board of
Directors’ handling of, or resolutions regarding, remuneration-
related matters if they are affected by such matters.
Derogations from these guidelines
The Board of Directors is entitled to adjust the compensation in
the case of, for example, extraordinary increases or decreases
in the Group’s earnings. The Board of Directors may also tempo-
rarily resolve to derogate from these guidelines, in whole or in
part, if in a specific case there is special cause for such deroga-
tion and a derogation is necessary to serve the Company’s long-
term interests, including its sustainability, or to ensure the Com-
pany’s financial viability.
Group structure
Tethys Oil AB (publ), with organizational number 556615-8266,
is the parent company in the Tethys Oil Group. Material subsidi-
aries include Tethys Oil Block 3&4 Limited, Tethys Oil Montasar
Limited, Tethys Oil Qatbeet Limited, Tethys Oil Oman Onshore
Limited and Tethys Oil France AB. The Tethys Oil Group was
established on 1 October 2003. The Group has offices in
Muscat, Oman and Dubai, the United Arab Emirates.
During 2023, the Group decided to optimise the treasury
function to ensure efficiency of its intercompany financing.
Tethys Oil restructured its holding of certain group companies
and transferred the holding of intercompany loans from the
parent company to the indirectly wholly owned subsidiary Tethys
Oil Invest AB that is acting as an internal treasury company. This
resulted in the revaluation of Tethys Oil AB’s direct shareholding
Associated companies
Tethys Oil holding 25% in Odin Energy A/S, Danish limited lia-
bility company, which holds 100% shares in the Lithuanian
operating company having the oil production licence Gargzdai.
Consequently, Tethys Oil has an effective 25% interest in the
Gargzdai licence. As of 31 December 2023, the value of the
shareholding in the associated Danish company Odin Energy
A/S amounted to MUSD 0.0 (0.0). During 2023 Tethys Oil
received dividend of MUSD 0.2 (0.1) from the Odin Energy A/S.
Share Data
As of 31 December 2023, the number of issued shares in Tethys
Oil amounted to 33,458,828 (33,056,608), with a nominal value
of SEK 0.18 (0.18). All shares represent one vote each. Tethys Oil
has a warrant-based incentive programme for Key Management.
When the share price is above the exercise price of the warrants
a potential dilution effect arises. During 2023, the 2020 warrants
programme was exercised, which resulted in new share issue of
402,200 shares. During 2023 the share price was below the
exercise price of the two tranches of the warrant programme,
thus the weighted average number of shares outstanding after
dilution was 32,099,193 (32,664,523). For further information
please see note 18. A weekly updated list of Tethys Oil’s repur-
chases is available on the Company’s website.
Tethys Oil has a warrant-based incentive programme for
employees which may increase the number of shares depending
on the share price during the exercise periods, for further infor-
mation please see note 19.
Seasonal effects
Tethys Oil has no significant seasonal variations.
Transactions with related parties
See note 20.
Risk and uncertainties
A statement of risks and uncertainties are presented on page
85 to 87 and in note 1 on page 117.
Sustainability report
In accordance with the Swedish Annual Accounts Act (ÅRL chap-
ter 6, §11) Tethys Oil has opted to issue the sustainability report
separate from the administration report. Pages 35 to 79 in the
annual report 2023 constitute the statutory sustainability report
in accordance with the Annual Accounts Act. The auditor’s report
on the statutory sustainability report is found on page 79.
Appropriation of profit
For the financial year 2023, Tethys Oil’s Board of Directors will
propose to the AGM 2024 that no dividend is to be paid. The
Board of Directors will revisit the matter of shareholder distribu-
102
Tethys Oil Annual Report 2023 Administration report
Tethys Oil has generated significant cash flows in recent years
and the Group has a solid financial position with net cash and
no financial debt. In addition, the Company has an undrawn
MUSD 60 credit commitment from a bank in the UAE which is
being finalized.
Despite the parent company’s and Group’s solid financial
position there remain uncertainty regarding both the near- and
long-term capital requirements relating to the development of
the Company’s portfolio of oil and gas assets, and until such
time that these are fully understood the Board of Directors
cannot confidently assess the Company’s ability to pay a divi-
dend for the year 2023. In parallel, the Group is conducting a
strategic review of its portfolio of oil and gas assets with the aim
of rebalancing the asset mix and increasing the visibility of the
assets fair market value. Upon conclusion of the assessment of
capital requirements and the strategic review the Board aims to
revisit the matter of shareholder distributions.
Financial statements
The result of the Group’s and parent company’s operations and
the financial position at the end of the financial year is shown
in the following income statements, balance sheets, cash flow
statements, statements of changes in equity and related notes.
Balance sheets and income statements will be resolved at the
AGM, 15 May 2024.
tions upon the completion of the strategic review of its portfolio,
announced 5 February 2024. Tethys Oil’s dividend policy
remains unchanged.
For the financial year 2022, the Board of Directors proposed a
dividend of SEK 2.00 per share equal to MSEK 64.6. The Board
of Directors also proposed an extraordinary distribution of SEK
3.00 per share by way of a mandatory share redemption pro-
gramme following the AGM 2023 equal to MSEK 97.0.
It is also proposed that the balance of retained earnings are
retained in the business as described below.
MSEK
Share premium reserve
Retained earnings
Profit for the year
2023
548.6
-272.4
592.9
869.0
The Board of Directors proposes that these earnings be appropriated
as follows:
To the shareholders, a distribution of SEK 0.00
per share (AGM 2023: SEK 2.00)
To the shareholders, an extraordinary
distribution of SEK 0.00 per share
(AGM 2023: SEK 3.00)
To be retained in the business
–
–
869.0
869.0
2022
530.3
-382.1
294.2
442.4
64.6
97.0
280.8
442,4
Dividend and Distribution
The Board of Directors has proposed that no dividend for the
financial year 2023 is to be paid. The Company is in the process
of assessing the capital requirements across its asset portfolio
and is also conducting a strategic review of the composition of
the Group’s portfolio of oil and gas assets. The dividend and dis-
tribution proposal is subject to approval at the AGM 2024.
The parent company has distributable earnings (unrestricted
equity) of MSEK 869.0 on 31 December 2023. As per 31
December 2023, the Group’s and the parent company’s equity
ratio amounted to 88.7 percent and 98.0 percent, respectively.
103
Tethys Oil Annual Report 2023 Financial statements for the group
Consolidated statement of comprehensive income
Note
2023
2022
3,4,5
3,8
3,7
7
7
9–11
12
13
14
16
16
16
16
16
138.2
156.5
-56.4
81.7
-42.0
-36.9
-6.4
-8.3
0.2
-11.6
15.2
-19.6
-4.4
-16.0
-0.5
-16.5
5.9
5.9
-10.6
-10.6
–
-50.1
106.4
-40.5
–
-4.5
-7.3
0.1
54.2
23.5
-18.8
4.7
58.9
-0.6
58.3
-5.9
-5.9
52.4
52.4
–
33,458,828
33,056,608
32,060,671
32,543,670
33,099,193
32,664,523
-0.51
-0.51
1.79
1.78
1 January – 31 December, MUSD
Revenue and other income
Operating expenses
Gross profit
Depletion, depreciation and amortisation
Impairment
Exploration costs
Administrative expenses
Share of net result from associates
Operating result
Financial income and similar items
Financial expenses and similar items
Net financial result
Result before tax
Income tax
Net Result
Other comprehensive result
Items that may be subsequently reclassified to profit or loss:
Exchange differences
Other comprehensive result
Total comprehensive result
Attributable to:
Shareholders in the parent company
Non-controlling interest
Total number of shares at the end of the period
Weighted average number of shares (before dilution)
Weighted average number of shares (after dilution)
Earnings per share (before dilution), USD
Earnings per share (after dilution), USD
104
Tethys Oil Annual Report 2023 Consolidated balance sheet
31 December, MUSD
ASSETS
Non-current assets
Oil and gas properties
Other fixed assets
Current assets
Trade and other receivables
Prepaid expenses
Cash and cash equivalents
TOTAL ASSETS
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Share capital
Additional paid in capital
Reserves
Retained earnings
Total shareholders' equity
Non-current liabilities
Non-current provisions
Other non-current liabilities
Current liabilities
Accounts payable and other current liabilities
Total liabilities
Financial statements for the group
Note
2023
2022
7
15
16
6
17
244.8
0.4
245.2
19.9
0.2
25.8
45.9
246.1
0.8
246.9
26.9
0.7
41.5
69.1
291.1
316.0
0.8
78.0
0.3
179.2
258.2
13.5
0.1
13.6
19.2
19.2
32.9
0.8
76.3
-5.6
213.7
285.2
10.8
0.4
11.2
19.6
19.6
30.8
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
291.1
316.0
105
Tethys Oil Annual Report 2023 Financial statements for the group
Consolidated statement of changes in equity
MUSD
Share capital
Paid in capital
Reserves
Retained earnings
Total equity
Attributable to shareholders of the parent company
Opening balance 1 January 2022
Net result 2022
Other comprehensive income 2022
Total comprehensive income
Transactions with owners
Repurchase of shares
Dividend
Share redemption
Incentive programme
Total transactions with owners
Closing balance 31 December 2022
Opening balance 1 January 2023
Net result 2023
Other comprehensive income 2023
Total comprehensive income
Transactions with owners
Share issue
Repurchase of shares
Dividend
Share redemption
Incentive programme
Total transactions with owners
Closing balance 31 December 2023
0.8
–
–
0.0
–
–
–
–
0.0
0.8
0.8
–
–
0.0
0.0
–
–
–
–
0.0
0.8
76.3
–
–
0.0
–
–
–
–
0.0
76.3
76.3
–
–
0.0
1.7
–
–
–
–
1.7
78.0
0.3
–
-5.9
-5.9
–
–
–
–
0.0
-5.6
-5.6
–
5.9
5.9
–
–
–
–
–
0.0
0.3
179.2
58.3
–
58.3
-1.6
-6.6
-16.2
0.6
-23.8
213.7
213.7
-16.5
–
-16.5
–
-2.3
-6.3
-9.4
0.0
-18.0
179.2
256.6
58.3
-5.9
52.4
-1.6
-6.6
-16.2
0.6
-23.8
285.2
285.2
-16.5
5.9
-10.6
1.7
-2.3
-6.3
-9.4
0.0
-16.4
258.2
106
Tethys Oil Annual Report 2023 Consolidated cash flow statement
1 January – 31 December, MUSD
Cash flow from operations
Result before tax
Adjustments for non cash items:
Depletion, depreciation
Impairment
Exploration costs
Other non-cash items
Interest received
Income tax paid
Total cash flow from operations before change in working capital
Change in receivables
Change in liabilities
Cash flow from operations
Investment activity
Investment in oil and gas properties
Investment in other fixed assets
Dividend from associates
Cash flow from investment activity
Financing activity
Share issue
Repurchase of shares
Dividend
Share redemption
Incentive programme
Cash flow from financing activity
Period cash flow
Cash and cash equivalents at the beginning of the period
Exchange gains/losses on cash and cash equivalents
Cash and cash equivalents at the end of the period
Financial statements for the group
Note
2023
2022
3
3
3
7
16
-16.0
42.0
36.9
6.4
5.2
1.1
-0.8
74.9
7.5
0.3
82.7
-81.7
-0.5
0.2
-82.0
1.7
-2.4
-6.1
-9.0
-0.7
-16.5
-15.7
41.5
0.0
25.8
58.9
40.5
–
4.5
-4.4
–
–
99.5
-17.7
5.2
87.0
-89.1
-0.3
0.1
-89.3
–
-1.6
-6.6
-16.2
-0.2
-24.6
-26.9
68.6
-0.2
41.5
107
Tethys Oil Annual Report 2023
Financial statements for the parent company
Parent company income statement
1 January – 31 December, MSEK
Other income
Administrative expenses
Share of net result from associates
Exploration costs
Operating result
Financial income and similar items
Financial expenses and similar items
Net financial result
Result before tax
Income tax
Net result 1
Note
3,5
9–11
12
13
14
2023
16.5
-64.4
2.2
–
-45.7
784.3
-145.7
638.6
2022
14.8
-49.7
1.6
-0.4
-33.7
552.4
-224.5
327.9
592.9
294.2
–
–
592.9
294.2
1 As there are no items in the parent company´s other comprehensive income, no separate report on total comprehensive income is presented.
108
Tethys Oil Annual Report 2023 Financial statements for the parent company
Parent company balance sheet
31 December, MSEK
ASSETS
Non-current assets
Oil and gas properties
Shares in subsidiaries
Long term receivables from subsidiaries
Current assets
Short term receivables from subsidiaries
Other receivables
Prepaid expenses
Cash and cash equivalents
TOTAL ASSETS
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Restricted equity:
Share capital
Statutory reserve
Unrestricted equity:
Share premium reserve
Retained earnings
Net result
Total shareholders' equity
Current liabilities
Accounts payable and other current liabilities
Other current liabilities to group companies
Total liabilities
Note
2023
2022
7
18
20
20
15
16
17
20
0,4
939,8
–
940,3
5,4
1,7
1,2
16,7
25,0
–
1,0
903,2
904,2
–
3,2
5,1
47,6
55,9
965,2
960,1
6,0
71,1
548,6
-272,4
592,9
946,2
8,1
11,0
19,1
6,0
71,1
530,3
-382,1
294,2
519,5
10,9
429,7
440,6
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES
965,2
960,1
109
Tethys Oil Annual Report 2023 Financial statements for the parent company
Parent company statement of changes in equity
MSEK
Opening balance 1 January 2022
Transfer of prior year net result
Net result 2022
Total comprehensive income
Transactions with owners
Repurchase of shares
Dividend
Share redemption
Incentive programme
Total transactions with owners
Closing balance 31 December 2022
Opening balance 1 January 2023
Transfer of prior year net result
Net result 2023
Total comprehensive income
Transactions with owners
Share issue
Repurchase of shares
Dividend
Share redemption
Incentive programme
Total transactions with owners
Closing balance 31 December 2023
Restricted equity
Unrestricted equity
Share
capital
Statutory
reserve
Share
premium
reserve
Retained
earnings
6.0
–
–
0.0
–
–
–
–
0.0
6.0
6.0
–
–
0.0
0.0
–
–
–
–
0.0
6.0
71.1
–
–
0.0
–
–
–
–
0.0
71.1
71.1
–
-
0.0
–
–
–
–
–
530.3
–
–
0.0
–
–
–
–
0.0
530.3
530.3
–
–
0.0
18.3
–
–
–
–
0.0
71.1
18.3
548.6
-505.0
360.9
–
0.0
-15.9
-65.2
-162.9
6.0
-238.0
-382.1
-382.1
294.2
–
0.0
–
-24.8
-64.5
-95.9
0.7
-184.5
-272.4
Net
result
360.9
-360.9
294.2
294.2
–
–
–
–
0.0
294.2
294.2
-294.2
592.9
592.9
–
–
–
–
–
0.0
592.9
Total equity
463.3
0.0
294.2
294.2
-15.9
-65.2
-162.9
6.0
-238.0
519.5
519.5
-
592.9
592.9
18.3
-24.8
-64.5
-95.9
0.7
-166.2
946.2
110
Tethys Oil Annual Report 2023 Financial statements for the parent company
Parent company cash flow statement
1 January – 31 December, MSEK
Cash flow from operations
Profit before tax
Adjustments for:
Dividend from Group company
Net exchange differences
Finance items − net
Other non-cash items
Interest received
Total cash flow from operations before change in working capital
Change in receivables
Change in liabilities
Cash flow from operations
Investment activity
Dividend from associates
Cash flow from investment activity
Financing activity
Share issue
Financing from long term receivables
Repurchased shares
Dividend payment
Share redemption
Incentive programme
Cash flow from financing activity
Period cash flow
Cash and cash equivalents at the beginning of the period
Exchange gains/losses on cash and cash equivalents
Cash and cash equivalents at the end of the period
Note
2023
2022
12
12, 13
12, 13
20
16
592.9
294.2
-540.0
-250.5
-17.4
-39.2
-8.9
1.1
-11.5
-4.2
1.1
-14.6
2.2
2.2
18.3
156.8
-24.8
-64.5
-95.9
-6.9
-17.1
-29.4
47.6
-1.5
16.7
-52.1
-25.1
-11.4
–
-44.9
-5.2
3.0
-47.1
1.6
1.6
–
254.5
-15.9
-65.2
-162.9
-1.6
8.9
-36.6
76.8
7.4
47.6
111
Tethys Oil Annual Report 2023 Notes
Notes
General information
Tethys Oil AB (publ) (“the Company”), corporate identity number 556615-8266,
and its subsidiaries (together “the Group” or “Tethys Oil”) are focused on
exploration for and production of oil and natural gas. The Group has interests
in exploration licences in Oman and Lithuania. The Company is a limited liabil-
ity company incorporated and domiciled in Stockholm, Sweden. The Company
is listed on Nasdaq Stockholm.
The consolidated financial statements of Tethys Oil AB and its subsidiaries
(collectively referred to as the Group) for the year ended 31 December 2023
have been approved by the Board of Directors on 27 March 2024.
Basis of preparation
The consolidated financial statements of the Tethys Oil AB group have been
prepared in accordance with prevailing International Financial Reporting Stand-
ards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations adopted
by the EU Commission and the Swedish Annual Accounts Act (1995:1554). In
addition, RFR 1 “Supplementary Rules for Groups” has been applied as issued
by the Swedish Financial Reporting Board.
The Parent Company financial statements have been prepared in accord-
ance with the Annual Accounts Act and Swedish Financial Accounting Stand-
ards Council’s RFR 2 “Accounting for legal entities”. RFR 2 means that the
Parent Company in the annual report for the legal entity shall apply IFRS’ rules
and statements as adopted by the EU, so far this is possible within the frame-
work of the Annual Accounts Act and with regard to the connection between
accounting and taxation. The recommendation states which exceptions and
additions that shall be or are allowed to be made from IFRS. The accounting prin-
ciples of the Parent Company are the same as for the Group, except in the cases
specified below in the section entitled “Parent Company accounting principles”.
The consolidated financial statements have been prepared on a going con-
cern basis and in accordance with the framework described above and effec-
tive for the year ended 31 December 2023. The accounting policies that follow
have been consistently applied to all years presented, except where otherwise
indicated.
The consolidated financial statements have been prepared under the histor-
ical cost basis unless disclosed in the accounting policies below.
includes the fair value of any asset or liability resulting from a contingent con-
sideration arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their fair values at the
acquisition date.
On an acquisition-by-acquisition basis, the Group recognizes any non-con-
trolling interest in the acquired asset either at fair value or at the non-control-
ling interest’s proportionate share of the acquired net assets.
Intra-group balances and transactions, including unrealized profits arising from
intra-group transactions, are eliminated. Unrealized losses are eliminated unless
the transaction provides evidence of an impairment of the asset transferred.
Non-controlling interests represent the equity in subsidiaries that is not
attributable, directly or indirectly, to the Group shareholders.
Non-controlling interests in the results and equity of subsidiaries are shown
separately in the consolidated statement of profit or loss, statement of compre-
hensive income, statement of changes in equity and balance sheet respectively.
(ii) Associates
Associates are entities over which the group has significant influence but not con-
trol or joint control. This is generally the case where the group holds between
20 percent and 50 percent of the voting rights. Investments in associates are
accounted for using the equity method of accounting after initially being recognised
at cost. Share of net profit or loss from an associate is accounted for as increase/
decrease of the initial investment. Dividends received or receivable from asso-
ciates are recognised as a reduction in the carrying amount of the investment.
Accounting policies of associates are changed where necessary to ensure
consistency with the policies adopted by the Group.
Under the equity method of accounting, the investments are initially recog-
nised at cost and adjusted thereafter to recognise the group’s share of the
post-acquisition profits or losses of the investee in profit or loss, and the
group’s share of movements in other comprehensive income of the investee
in other comprehensive income. Dividends received or receivable from associ-
ates and joint ventures are recognised as a reduction in the carrying amount
of the investment.
The preparation of financial statements in conformity with IFRS requires the
Where the group’s share of losses in an equity-accounted investment equals
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting poli-
cies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial
statements are disclosed in note 2.
IASB issued several amended accounting standards that were endorsed by
EU, effective date 1 January 2023. None of these had a material effect on the
Group financial statements 2023.
Certain new accounting standards, amendments to accounting standards
and interpretations have been published that are not mandatory for 31 Dec-
ember 2023 reporting periods and have not been early adopted by the group.
These standards, amendments or interpretations are not expected to have a
material impact on the entity in the current or future reporting periods and on
foreseeable future transactions.
or exceeds its interest in the entity, including any other unsecured long-term
receivables, the group does not recognise further losses, unless it has incurred
obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its associates
and joint ventures are eliminated to the extent of the group’s interest in these
entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred.
Financial statements of equity-accounted entities are prepared for the same
reporting year as the group. Where material differences arise in the accounting
policies used by the equity-accounted entity and those used by Tethys Oil,
adjustments are made to those financial statements to bring the accounting
policies used into line with those of the group.
The carrying amount of equity-accounted investments is tested for impair-
ment in accordance with the policy described below.
Basis of consolidation
The consolidated group financial statements consolidate the financial state-
ments of Tethys Oil AB and its subsidiaries drawn up to 31 December each year.
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group
has control. The Group controls an entity where the group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the abil-
ity to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that control ceases.
The financial statements of subsidiaries are prepared for the same report-
ing year as the Parent Company, using consistent accounting policies.
Subsidiaries are consolidated from the date of their acquisition, being the
date on which the Group obtains control, including when control is obtained
via potential voting rights, and continue to be consolidated until the date that
control ceases.
The Group uses the acquisition method of accounting to account for busi-
ness combinations. The consideration transferred for the acquisition of a sub-
sidiary is the fair values of the assets transferred, the liabilities incurred, and
the equity interests issued by the Group. The consideration transferred
(iii) Joint arrangements
Under IFRS 11 Joint Arrangements investments in joint arrangements are
classified as either joint operations or joint ventures. The classification
depends on the contractual rights and obligations of each investor, rather than
the legal structure of the joint arrangement. Tethys Oil has joint operations.
Joint operations
Tethys Oil recognizes its direct right to the assets, liabilities, revenues and
expenses of joint operations and its share of any jointly held or incurred
assets, liabilities, revenues and expenses. These have been incorporated
in the financial statements under the appropriate headings.
The Group conducts oil and gas operations as a joint operation that does
not have a separate legal entity status through licences which are held jointly
with other companies. The Groups financial statements reflect the Group’s share
of production, capital costs, operational costs, current assets and liabilities in
the joint operations.
Joint ventures
Interests in joint ventures are accounted for using the equity method (see
below), after initially being recognised at cost in the consolidated balance
sheet. Tethys Oil group has no joint ventures.
112
Tethys Oil Annual Report 2023 Notes
Changes in ownership interests
The group treats transactions with non-controlling interests that do not result
in a loss of control as transactions with equity owners of the group. A change
in ownership interest results in an adjustment between the carrying amounts
of the controlling and non-controlling interests to reflect their relative interests
in the subsidiary. Any difference between the amount of the adjustment to non-
controlling interests and any consideration paid or received is recognised in
a separate reserve within equity attributable to owners of Tethys Oil AB group.
When the group ceases to consolidate or equity account for an investment
because of a loss of control, joint control or significant influence, any retained
interest in the entity is remeasured to its fair value, with the change in carrying
amount recognised in profit or loss. This fair value becomes the initial carrying
amount for the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any amounts
previously recognised in other comprehensive income in respect of that entity
are accounted for as if the group had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognised in other compre-
hensive income are reclassified to profit or loss.
If the ownership interest in a joint venture or an associate is reduced but
joint control or significant influence is retained, only a proportionate share of
the amounts previously recognised in other comprehensive income are reclas-
sified to profit or loss where appropriate.
Foreign currency translation
i) Functional and presentation currency
The US dollar is the presentation currency of the Group. In management’s view
this provides the most meaningful information about the company’s performance
and results to the Group’s management and shareholders.
Segment reporting
Primary operating segments are split between producing and non-producing
oil and gas properties and geographic perspective is reported as secondary
segment information. Both segments are reported in a manner consistent with
the internal reporting provided to the Executive Management.
Classification of assets and liabilities
Non-current assets, long-term liabilities and provisions consist for the most
part solely of amounts that are expected to be recovered or paid more than
twelve months after the balance sheet date. Current assets and current liabili-
ties consist solely of amounts that are expected to be recovered or paid within
twelve months after the balance sheet date.
Oil and gas properties
Oil and gas properties are initially recorded at historical cost, where it is proba-
ble that they will generate future economic benefits.
Oil and gas properties are all costs for acquiring concessions, licences or
interests in production sharing contracts and for the survey, drilling and devel-
opment of such interests and are capitalised on a field area cost centre basis.
This includes capitalisation of decommissioning and restoration costs associ-
ated with provisions for asset retirement (see “Provisions”). Oil and gas proper-
ties are subsequently carried at cost less accumulated depreciation, depletion,
and amortization (including any impairment).
Gains and losses on disposals of oil and gas properties are determined by
comparing the proceeds with the carrying amounts of assets sold and are
recognised in the income statement.
Routine maintenance and repair costs for producing assets are expensed
to the income statement when they are incurred.
The functional currency of each of the Group’s consolidated entities is the
Oil and gas properties are categorised as either producing or non-producing.
currency of the primary economic environment in which the entity operates.
The Group’s most significant subsidiaries’ functional currency is USD, as being
most common for oil and gas industry.
Tethys Oil AB’s (the Parent Company) functional currency is Swedish Krona
(‘SEK’) as the company is domicile in Sweden and run most of its business
primarily in SEK. Accordingly, Tethys Oil AB’s (Parent Company) presentation
currency is SEK.
(ii) Transactions and balances
Parent Company
Monetary assets and liabilities denominated in foreign currencies are trans-
lated into the functional currency at the National Bank of Sweden (Riksbanken
Sverige) rates of exchange prevailing at the balance sheet date and foreign
exchange currency differences are recognized in the income statement.
Transactions in foreign currencies are translated into the functional currency
at exchange rates prevailing at the transaction date. Exchange differences are
included in financial income/expenses in the income statement.
Foreign exchange gains and losses that relate to borrowings are presented
in the statement of profit or loss, within finance costs. All other foreign exchange
gains and losses are presented in the statement of profit or loss on a net basis
within other gains/(losses).
Group companies
The results and financial position of foreign operations or entity that have a
functional currency different from the presentation currency are translated into
the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the
closing exchange rate at the date of that balance sheet
• income and expenses for each statement of profit or loss and statement of
comprehensive income are translated at the average exchange rate, except
for transactions where it is more relevant to use the rate of the day of the
transaction, and
• the translation differences which arise are recorded directly in the foreign
currency translation reserve within other comprehensive income. Upon
disposal of a foreign operation, the translation differences relating to that
operation will be transferred from equity to the income statement and
included in the result on sale.
For the preparation of the financial statements for the reporting period, the
following exchange rates have been used.
31 December 2023
31 December 2022
Currency
SEK/USD
Average
Period end
Average
Period end
10.61
10.04
10.12
10.44
Depreciation, depletion and amortization
No depreciation or amortisation is charged during the exploration and evalua-
tion phase.
Producing oil and gas properties are depleted on a unit of production basis
over the proved and probable reserves of the field concerned, except in the case
of assets whose useful lives differ from the lifetime of the field, in which case the
straight-line method is applied. In accordance with the unit of production method,
net capitalised costs to reporting date, together with anticipated future capital
costs for the development of the proved and probable reserves determined at
the balance sheet date price levels, are depleted based on the year’s production
in relation to estimated total proved and probable reserves of oil and gas. Deple-
tion of a field area is charged to the income statement once commercial produc-
tion commences, under category Depreciation, depletion and amortisation.
Commercial reserves
Proved reserves are those quantities of petroleum which, by analysis of geolo-
gical and engineering data, can be estimated with reasonable certainty to be
commercially recoverable, from a given date forward, from known reservoirs
and under current economic conditions, operating methods and governmental
regulations. Proved reserves can be categorised as developed or undeveloped.
If deterministic methods are used, the term reasonable certainty is intended to
express a high degree of confidence that the quantities will be recovered. If
probabilistic methods are used, there should be at least a 90 percent probabil-
ity that the quantities actually recovered will equal or exceed the estimates.
Probable reserves are those unproved reserves which analysis of geological
and engineering data suggests are more likely than not to be recoverable. In
this context, when probabilistic methods are used, there should be at least a
50 percent probability that the quantities actually recovered will equal or exceed
the sum of estimated proved plus probable reserves.
Exploration costs
The Group adopts the successful efforts method of accounting for exploration
and evaluation costs. Exploration costs related to non-producing oil and gas
properties are charged to the income statement when a decision is made not to
proceed with an oil and gas project, or when the expected future economic bene-
fits of an oil and gas project are less than the capitalised costs. No depletion is
charged to non-producing oil and gas properties. Costs related to non-producing
oil and gas properties and directly associated with an exploration well are capi-
talised until the determination of commercial reserves is evaluated. If it is deter-
mined that a commercial discovery has not been achieved, these exploration
costs are charged to the income statement as exploration costs. Once the com-
mercial reserves are found, and the commercial production commences, explo-
ration assets are tested for impairment and transferred to producing assets.
113
Tethys Oil Annual Report 2023 Notes
Impairment of Oil and Gas Properties
Tethys Oil continuously assesses its producing oil and gas properties for any
need for impairment. This is performed in conjunction with each balance sheet
date or if there are trigger events or changes in circumstances that indicate
that the carrying values of assets may not be recoverable. Such indicators
include changes in the Group’s business plans, relinquished licences, changes
in raw materials prices leading to lower revenues and, for oil and gas properties,
downward revisions of estimated reserve quantities.
Testing for impairment losses is performed for each cash generating unit,
which corresponds to a licence right, production sharing agreement or equiva-
lent owned by Tethys Oil. A cash generating unit usually corresponds to each
acquired asset in which Tethys Oil carries on oil and gas operations. Impair-
ment testing means that the balance sheet item amount for each cash gener-
ating unit is compared to the recoverable amount for the assets, which is the
higher of the fair value of the assets less sales expenses and the value in use.
The value in use of the assets is based on the present value of future cash
flows discounted by a discount rate; see also note 2 under the section Impair-
ment testing. An impairment loss is recorded when the book value of an asset
or a cash generating unit exceeds the recoverable amount. Impairment losses
are charged to the income statement.
Tangible assets other than oil and gas
Other tangible assets are stated at cost less accumulated depreciation. Depre-
ciation is based on cost and is calculated on a straight-line basis over the esti-
mated economic life of 3 to 5 years for office equipment and other assets.
Additional costs to existing assets are included in the assets’ net book
value or recognised as a separate asset, as appropriate, only when it is proba-
ble that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably.
The net book value of any replaced parts is written off. Other additional
expenses are deemed to be repair and maintenance costs and are charged to
the income statement when they are incurred. The net book value is written
down immediately to its recoverable amount when the net book value is higher.
The recoverable amount is the higher of an asset’s fair value less cost to sell
and value in use.
Gains and losses on disposals are determined by comparing proceeds with
carrying amounts. These are included in profit or loss. When revalued assets
are sold any amounts included in other reserves in respect of those assets
transferred to retained earnings.
Cash and cash equivalents
For presentation in the statement of cash flows, cash and cash equivalents
includes cash on hand, deposits held at call with financial institutions, other
short-term, highly liquid investments with original maturities of three months or
less that are readily convertible to known amounts of cash and which are sub-
ject to an insignificant risk of changes in value, and bank overdrafts. Bank over-
drafts are shown within borrowings in current liabilities in the balance sheet.
Borrowing costs
Borrowing costs attributable to the acquisition, construction or production of
qualifying assets are added to the cost of those assets. Qualifying assets are
assets that take a substantial period of time to complete for their intended use
or sale. Investment income earned on the temporary investment of specific
borrowings pending to be used for the qualifying asset, is deducted from the
borrowing costs eligible for capitalisation. This applies to the interest on bor-
rowings to finance fields under development which is capitalised within oil and
gas properties until production commences. All other borrowing costs are rec-
ognised in the income statement in the period in which they occur. Interest on
borrowings to finance the acquisition of producing oil and gas properties is
charged to the income statement as incurred.
Provisions
General provision
Provisions for legal claims and other obligations are recognised when the
group has a present legal or constructive obligation as a result of past events,
and it is probable that an outflow of resources will be required to settle the
obligation, and the amount can be reliably estimated. Provisions are not recog-
nised for future operating losses.
Where there are a number of similar obligations, the likelihood that an out-
flow will be required in settlement is determined by considering the class of
obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations
may be small.
114
Provisions are measured at the present value of management’s best estimate
of the expenditure required to settle the present obligation at the end of the
reporting period. The discount rate used to determine the present value is a
pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the liability. The increase in the provision due
to the passage of time is recognised as interest expense.
Site restoration provision
Site restoration work is the work anticipated at the end of the useful life of a
production unit or when other installation may be required by law, by the terms
of operating licences or by an entity’s stated policy and past practice.
Amounts used in recording a provision for site restoration are estimated
based on current legal and constructive requirements and current technology
and price levels for the removal of facilities and plugging and abandoning of
wells. Due to changes in relation to these items, the future actual cash out-
flows in relation to the site decommissioning and restoration can be different.
To reflect the effects due to changes in legislation, requirements and technol-
ogy and price levels, the carrying amounts of site restoration provisions are
reviewed on annual basis. The effects of changes in estimates do not give rise
to prior year adjustments and are treated prospectively over the estimated
remaining commercial reserves of each field. While the Group uses its best
estimates and judgement, actual results could differ from these estimates.
Financial Instruments
Financial assets and financial liabilities are recognised when a group entity
becomes a party to the contractual provisions of the instruments.
Financial assets and financial liabilities are initially measured at fair value.
Transaction costs that are directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than financial assets and finan-
cial liabilities at fair value through profit or loss) are added to or deducted from
the fair value of the financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
Financial assets
Financial assets are classified into financial assets measured at fair value
through profit or loss or fair value through other comprehensive income or at
amortised cost. The Group determines the classification at initial recognition.
Financial assets are classified as financial assets measured at amortised
cost if both of the following conditions are met:
• The asset is held within a business model whose objective is to hold assets
in order to collect contractual cash flows;
• The contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
Otherwise, they are classified as financial assets measured at fair value.
The Group does not have any financial assets measured at fair value
through other comprehensive income (hereinafter referred to as FVTOCI.
After initial recognition, financial assets are measured based on the follow-
ing classification:
• Financial assets measured at amortised cost are measured at amortised
cost using the effective interest method.
• Financial assets other than those measured at amortised cost are meas-
ured at fair value through profit and loss.
The Group’s financial assets include cash and cash equivalents, trade and
other receivables and loans issued.
All regular way purchases or sales of financial assets are recognised and
de-recognised on a trade date basis. Regular way purchases or sales are pur-
chases or sales of financial assets that require delivery of assets within the
time frame established by regulation or convention in the marketplace. Loans
and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Loans and receivables
(including trade and other receivables, bank balances and cash) are measured
at amortised cost using the effective interest method, less any impairment.
Interest income is recognised by applying the effective interest rate, except for
short-term receivables when the effect of discounting is immaterial.
Impairment and de-recognition of financial assets
In accordance with IFRS 9, the Group assesses expected credit losses on
financial assets measured at amortised cost. The Group recognises a reserve
Tethys Oil Annual Report 2023 for such expected credit losses at each reporting date. The Group always rec-
ognises lifetime expected credit losses (“ECL”) for its trade and other receiva-
bles (the “simplified approach” under IFRS 9) and updates this expectation at
each reporting date to reflect changes in credit risk since initial recognition of
the respective financial instrument. The expected credit losses on these finan-
cial assets are estimated using a provision matrix based on the Group’s histori-
cal credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current as well as
the forecast direction of conditions at the reporting date, including time value
of money where appropriate.
For all other financial instruments, the Group recognises lifetime ECL when
there has been a significant increase in credit risk since initial recognition. If,
on the other hand, the credit risk on the financial instrument has not increased
significantly since initial recognition, the Group measures the loss allowance
for that financial instrument at an amount equal to 12-month ECL. The assess-
ment of whether lifetime ECL should be recognised is based on significant
increases in the likelihood or risk of a default occurring since initial recognition
instead of on evidence of a financial asset being credit-impaired at the report-
ing date or an actual default occurring. Lifetime ECL represents the expected
credit losses that will result from all possible default events over the expected
life of a financial instrument.
In contrast, 12-month ECL represents the portion of lifetime ECL that is
expected to result from default events on a financial instrument that are possi-
ble within 12 months after the reporting date. Expected credit losses are rec-
ognized in the consolidated statement of profit and loss within the financial
costs. The Group de-recognises a financial asset when the contractual rights to
the cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another party.
On de-recognition of a financial asset in its entirety, the difference between the
asset’s carrying amount and the sum of the consideration received and receiva-
ble and the cumulative gain or loss that had been recognised in other compre-
hensive income and accumulated in equity is recognised in profit or loss.
Financial liabilities
All financial liabilities are measured at fair value at initial recognition. However,
financial liabilities measured at amortised cost are measured at cost after
deducting transaction costs that are directly attributable to the financial liabili-
ties. Financial liabilities are subsequently measured at amortised cost using the
effective interest method, except for derivatives measured at fair value through
profit or loss. The Group determines the classification at initial recognition.
After initial recognition, financial liabilities are measured based on the
following classification:
• Financial liabilities measured at amortised cost are measured at amortised
cost using the effective interest method. Amortisation under the effective
interest method and gains or losses on de-recognition are recognised as
profit or loss in the consolidated statement of income.
• Financial liabilities measured at fair value through profit or loss include
financial liabilities held for trading and financial liabilities designated as
measured at fair value through profit or loss at initial recognition. The net
gain or loss recognised in the consolidated statement of profit or loss
incorporates any interest paid on the financial liability and is included in the
gain/(loss) on derivative financial instruments and investments, net.
The Group’s financial liabilities may include loans and borrowings and trade
and other payables.
Financial liabilities are recognised initially at fair value plus in the case of
loans and borrowings, directly attributable transaction costs. Any difference
between the proceeds (net of transaction costs) and the redemption amount is
recognised in profit or loss over the period of the borrowings using the effective
interest method.
Loans and borrowing are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
Loans and borrowings and trade and other payables are subsequently
measured at amortised cost using the effective interest rate method.
Trade and other payables represent liabilities for goods and services pro-
vided to the Group prior to the end of the financial year which are unpaid.
Accounts and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period.
The Group de-recognises financial liabilities when, and only when, the
Group’s obligations are discharged, cancelled or have expired. The difference
between the carrying amount of the financial liability de-recognised and the
consideration paid, including any non-cash assets transferred or liabilities
Notes
assumed, and payable is recognised in profit and loss as other income or
finance costs.
For investments in equity instruments that are not held for trading, this will
depend on whether the group has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair value through
other comprehensive income (FVOCI).
Equity instruments
The group subsequently measures all equity investments at fair value. Where
the group’s management has elected to present fair value gains and losses on
equity investments in OCI, there is no subsequent reclassification of fair value
gains and losses to profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised in profit or loss
as other income when the group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognised in other
gains/(losses) in the statement of profit or loss as applicable.
Impairment losses (and reversal of impairment losses) on equity invest-
ments measured at FVOCI are not reported separately from other changes in
fair value.
Impairment of equity instruments
The group assesses on a forward-looking basis the expected credit losses
associated with its debt instruments carried at amortised cost and FVOCI.
The impairment methodology applied depends on whether there has been a
significant increase in credit risk. For trade receivables, the group applies the
simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.
Leases
Tethys Oil recognizes right of use assets and lease liabilities arising from all
leases in the balance sheet, with some exceptions. This model reflects that,
at the start of a lease, the lessee always obtains the right to use an asset for
a period of time and has an obligation to pay for that right.
Assets and liabilities arising from a lease are initially measured on a pre-
sent value basis. Lease liabilities include the net present value of the following
lease payments:
• fixed payments (including in-substance fixed payments), less any lease
incentives receivable
• variable lease payments that are based on an index or a rate, initially
measured using the index or rate as at the commencement date
• amounts expected to be payable by the group under residual value guaran-
tees
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any
lease incentives received
• any initial direct costs, and
• restoration costs.
Under IFRS 16 Tethys Oil applies the exceptions for short-term leases and
leases for which the underlying asset is of low value e.g. office leases and IT
servers/programmes and other leases of shorter duration or lesser value.
IFRS 16 Leases does not apply to joint operations unless operated by Tethys
Oil. In the case of joint operations operated by Tethys Oil, the group recognises
its interest share of the value of the underlying assets and corresponding lia-
bilities of the leases in its consolidated group accounts.
At present Tethys Oil does not have any leases under IFRS 16 from joint
operations in its group accounts.
Equity
Share capital consists of the registered share capital for the Parent Company.
Share issue costs associated with the issuance of new equity are treated as
a direct reduction of proceeds. Excess contribution in relation to the issuance
of shares is accounted for in the item additional paid-in-capital.
If any Group company purchase Parent Company shares (repurchase of own
shares) the proceeds including any directly attributable transaction costs
(net after tax) will reduce equity attributable to the shareholders of the Parent
Company until the shares are annulled or realized.
115
Tethys Oil Annual Report 2023 Notes
If the shares are realized, proceeds net after directly attributable issue costs
and tax effects are shown in equity attributable to the shareholders of the
parent company.
The currency translation reserve contains unrealised translation differences
due to the conversion of the functional currencies into the presentation currency.
Retained earnings contain the accumulated results attributable to the
share holders of the Parent Company.
Dividends
Provision is made for the amount of any dividend declared, being appropriately
authorised and no longer at the discretion of the entity, on or before the end
of the reporting period but not distributed at the end of the reporting period.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit attributable to owners of the company, excluding any costs of
servicing equity other than ordinary shares
• by the weighted average number of ordinary shares outstanding during the
financial year, adjusted for bonus elements in ordinary shares issued during
the year and excluding treasury shares.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account:
• the after-income tax effect of interest and other financing costs associated
with dilutive potential ordinary shares, and
• the weighted average number of additional ordinary shares that would have
been outstanding assuming the conversion of all dilutive potential ordinary
shares.
Revenue and Other income
Revenue from sale of crude oil
Revenue from sale of crude oil is recognised at the fair value of the consideration
received or receivable when the significant risks and rewards of ownership have
been transferred, which is when title passes from Tethys Oil to the customer.
The title transfer is the moment when crude oil is loaded onto a tanker on
behalf of the customer. Revenue is only recognised to the extent that it is
highly probable that a significant reversal will not occur.
QBA (Quality Bank Adjustment) is an additional income received by Tethys Oil
from Operator. In substance, this is premium paid for the quality of the extracted
oil being above the average quality of the oil in Omani. QBA is recognized as
part of Revenue from sales of crude oil.
Underlift and overlift adjustment
Lifting arrangements for oil and gas produced in the Companys jointly owned
operations are such that each participant may not receive and sell its precise
share of the overall production in each period. The resulting imbalance between
cumulative entitlement and cumulative production is underlift or overlift.
Underlift and overlift are valued at market value and included within Trade
and other receivables and Accounts payables and other current liabilities
respectively. Movements during an accounting period are adjusted through
cost of sales such that gross profit is recognized on an entitlement basis.
Underlift or overlift positions are taken into account for future oil sales nomi-
nations, aiming at balancing the position. Underlift and overlifts are adjusting
Revenue income over the periods and recorded on a separate line.
Other Income
Incidental revenues from the test production of oil and gas are recognised as
Other Income until quantities of proven and probable reserves are determined
or commercial production has commenced.
Income from the sale or farm-out of oil and gas concessions in the explora-
tion stage and the related production costs are reported in the Income State-
ment net of capital expenditure.
Profit oil and cost recovery in Joint Operation
Tethys Oil’s producing oil and gas property in Oman (Blocks 3&4) is governed
by an Exploration and Production Sharing Contract (EPSA). Under the EPSA,
revenues are derived from cost recovery oil and profit oil . Cost recovery oil
allows Tethys Oil to recover a majority of investments and operating expenses
(CAPEX and OPEX) incurred. Profit oil is split between the host government and
joint operations parties in accordance with a fixed percentage. The joint opera-
tions partners split the cost recovery oil and profit oil in accordance with their
respective equity interests. Joint operations definition and accounting policy
are described in this note above.
116
Employee benefits
Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave that are expected to be settled wholly within
12 months after the end of the period in which the employees render the
related service are recognised in respect of employees’ services up to the end
of the reporting period and are measured at the amounts expected to be paid
when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the balance sheet.
Post-employment obligations /Pension obligations
The group operates various post-employment schemes mostly defined contri-
bution pension plans. For defined contribution plans, the group pays contribu-
tions to publicly or privately administered pension insurance plans on a man-
datory, contractual or voluntary basis. The group has no further payment obliga-
tions once the contributions have been paid. The contributions are recognised
as employee benefit expense when they are due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the
future payments is available.
Share-based payments
Share-based compensation benefits are provided to employees. Equity settled
share-based payments are recognized in the income statement as administra-
tive expenses and as equity in the balance sheet. The share-based option is
recognised at fair value at the date of grant using the Black & Scholes options
pricing model and is charged to the income statement.
Termination benefits
Termination benefits are payable when employment is terminated by the group
before the normal retirement date, or when an employee accepts voluntary
redundancy in exchange for these benefits. The group recognises termination
benefits at the earlier of the following dates: (a) when the group can no longer
withdraw the offer of those benefits; and (b) when the entity recognises costs
for a restructuring that is within the scope of IAS 37 and involves the payment
of terminations benefits. In the case of an offer made to encourage voluntary
redundancy, the termination benefits are measured based on the number of
employees expected to accept the offer. Benefits falling due more than 12
months after the end of the reporting period are discounted to present value.
Income taxes
Presented income taxes include tax payable or tax receivable for the reporting
period, adjustments in regard to previous year’s taxes and changes in deferred
tax. Valuations of all tax liabilities/claims are in nominal amounts and are
prepared in accordance with tax legislation and tax rates decided or announced
and at which they are likely to be resolved. The tax expense for the period com-
prises current and deferred tax. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In such case, the tax is also recognised in other
comprehensive income or directly in equity, respectively. Deferred income tax is
recognised, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consoli-
dated financial statements. Deferred income tax assets are recognised only to
the extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Related party transactions
Related parties include shareholders and other related parties (e.g. jointly
controlled entities, associated companies) representing entities that have
significant influence on the Group, and members of key management person-
nel or other parties that are partly, directly or indirectly, controlled by key man-
agement personnel or of its family or of any individual that controls, or has joint
control or significant influence over Tethys Oil.
Information on the Board of Directors and senior executives, as well as
remuneration for these, is disclosed in Note 11 Employees.
For disclosures of the Parent Company’s transactions with related parties,
refer to Note 21, Related-party transactions under the Parent Company.
Cash Flow Statement
The statement of cash flows is prepared in accordance with the indirect
method. The reported cash flow only covers transactions that have resulted
in payments or disbursements.
Rounding of amounts
All amounts disclosed in the financial statements and notes have been
rounded off to the nearest thousand currency units unless otherwise stated.
Tethys Oil Annual Report 2023 Notes
Parent Company accounting principles
The Parent Company has prepared its annual report in compliance with the
Swedish Annual Accounts Act and the recommendation RFR 2, Accounting for
Legal Entities of the Swedish Financial Reporting Board. The Annual Report
was prepared on a historical cost basis.
The preparation of financial statements in conformity with RFR 2 requires
the use of certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Parent Company’s
accounting policies.
The accounting principles of the Parent Company deviate from the account-
ing principles of the group in respect of the following:
Leasing
The Parent Company has chosen not to apply IFRS 16 Leases but has instead
chosen to apply RFR 2 and IFRS 16 Leases p. 2-12. This policy choice means
that no right of-use assets or lease liabilities are recognised in the balance
sheet. Instead, leasing fees are expensed on a straight-line basis over the lease
period. The Parent Company only has office leases and IT-servers/-programs
and other leases concerning items of lesser value.
Financial instruments:
Assets and liabilities are recognised initially at fair value plus transaction costs
and subsequently measured at amortised cost unless stated otherwise. Finan-
cial assets are derecognised when the rights to receive cash flows from the
investments have expired or have been transferred and the Group has trans-
ferred substantially all risks and rewards of ownership.
All financial assets and liabilities are current and the fair value of these seems
to be the carrying amount as the discounting effects are not significant.
Subsidiaries:
The Parent Company’s investments in subsidiaries and associates are recog-
nised using the cost method. The values of subsidiaries are tested for impair-
ment when there is an indication of a decline in the value.
Shareholders contributions and Group contributions.
The Parent Company uses the alternative method in accounting for group con-
tributions and records paid as well as received contributions as appropriations
in the income statement. Shareholder contributions paid by the Parent Company
are recognised as an increase in the holding’s carrying amount.
Income Taxes
A tax liability is recognised when a future payment, in application of a tax regu-
lation, is considered probable and can be reasonably estimated. The exercise
of judgment is required to assess the impact of new events on the amount of
the liability. Deferred tax assets are recognised for unused tax losses to the
extent that it is probable that future taxable profits will be available against
which the losses can be utilised. Estimation and judgement are required to
determine the value of the deferred tax asset, based upon the timing and level
of future taxable profits.
The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the consolidated financial
statements are disclosed in Note 2.
Note 1, Financial risk management
The Group’s activities expose it to a variety of financial risks such as foreign
currency exchange rate risk, liquidity risk, credit risk and risk of management
estimates and assumptions. The Group’s risks are continuously monitored and
analysed by the Board of Directors and management with the aim to minimise
potential adverse effects on the Group’s financial performance and position.
Foreign currency risk
The Group is exposed to fluctuations in the foreign exchange markets as fluctu-
ations in exchange rates as expenses in foreign subsidiaries, oil and gas
expenditures, or financial instruments may fluctuate due to changes in rates,
which can negatively affect the result, cash flow and equity.
The major proportion of the Group’s assets relate to international oil and
gas discoveries valued in USD and which generate revenues in USD. During the
reporting period all of Tethys Oil’s oil sales and operative expenditures were
denominated in USD with a share of general and administrative expenses
being denominated in SEK. The exchange risk affects the Group by transaction
risk and translation risk.
Transaction risk
Transaction exposure arises in the cash flow when invoicing or the costs of
invoiced goods and services are not in the local currency. The Group only has
limited costs in currencies other than USD, primarily relating to the SEK costs
in the parent company. Presented below is the exposure to currencies with
reference to items in the financial statements:
Revenues
Investments in Oil & Gas
External financing at year end
2023
2022
100% in USD 100% in USD
99.9% in USD 100% in USD
No
No
Tethys Oil does not use derivative contracts to hedge exchange rates. The
Group policy is that cash held in bank should be in USD, except for a brief
period when sufficient amounts of SEK required in the Parent company to pay
dividend and share redemption. Furthermore, there are relatively minor
amounts in SEK held in the Parent company, in order to cover running costs.
Translation risk
Exchange rate changes affect the Group’s operating profit in conjunction
with the translation of the income statements of subsidiaries into USD. When
net assets are translated into USD the translation can negatively affect the
Group’s statement of financial position. The parent company has issued loans
to its subsidiaries denominated in USD and exchange rate changes impact the
income statement of the parent company. The Group does not hedge its trans-
lation exposure and fluctuating currency rates might negatively affect the oper-
ating profit and financial position of the Group.
Liquidity risk and Refinancing risk
Liquidity risk is the risk that the Company will not be able to meet its financial
obligations as they fall due.
Tethys Oil is operating in several countries and exposed to currency fluctua-
tions. Income is and will also most likely be denominated in foreign currencies,
US dollars. Furthermore, Tethys Oil has since inception been equity and debt
financed through share and bond issues, bank loans and financed by asset
divestment. Additional capital could be needed to finance Tethys Oil’s future
operations and/or for acquisition of additional licences. The main risk is that
this need could occur during less favourable market conditions. Tethys Oil con-
tinuously works to ensure that sufficient cash balances are maintained in order
to cover day to day operations, both through the management of the Group’s
cash flows as well as securing external debt when needed. Management relies
on forecasting to assess Tethys Oil’s cash position based on expected future
cash flows. All financial liabilities of the Group as at end of 2023 and 2022 are
fall due within 12 months.
Credit risk
Tethys Oil’s policy is to limit credit risk by limiting the counterparties to major
banks and oil trading companies. Tethys Oil is selling all of its oil through
Mitsui Energy Trading Singapore which is part of Mitsui & Co. Ltd., with 30 days
payment from bill of lading. As at end of each period the account receivable
basically represents the amounts due within the next month. This is the maxi-
mum exposure on accounts receivable. There is no history of default, and the
Group does not anticipate future credit losses. Cash and cash equivalents are
maintained with banks having strong long-term credit ratings. Maximal expo-
sure regarding other financial assets is those presented in the balance sheet.
The Board of Directors responsibility is to overview the Group’s capital struc-
ture and financial management, approve certain business regarding acquisi-
tion, investments, possible lending as well as on-going monitoring exposure to
financial risks.
117
Tethys Oil Annual Report 2023
Notes
Note 2, Critical accounting estimates
and judgements
In preparing consolidated financial statements in conformity with IFRS, esti-
mates and assumptions are used by Tethys Oil management in determining the
reported amounts of assets and liabilities, revenues and expenses recognized
during the periods presented and disclosures of contingent assets and liabili-
ties known to exist as of the date of the financial statements. These estimates
and assumptions must be made because certain information that is used in
the preparation of such financial statements is dependent on future events,
cannot be calculated with a high degree of precision from data available, or are
not capable of being readily calculated based on generally accepted methodol-
ogies. In some cases, these estimates are particularly difficult to determine,
and the Company must exercise significant operations judgment. Actual
results for all estimates could differ materially from the estimates and assump-
tions used by the Company, which could have a material adverse effect on the
Group’s business, financial condition, results of, cash flows and future pros-
pects. More detailed information about significant estimates is presented below.
Estimates and judgements are continuously evaluated and are based on
historical experience and other factors, including expectations of future events
which are believed to be reasonable under the circumstances. The Group
makes estimates and assumptions concerning the future. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets within the next financial year are discussed below.
Estimates in oil and gas reserves and resources
The business of the Group is the exploration for, development of and produc-
tion of oil and gas reserves. Estimates of oil and gas reserves and resources
are used in the calculations for impairment tests, in-house modelling and
accounting for depletion and site restoration. Changes in estimates in oil and
gas reserves and resources, resulting in different future production profiles,
will affect the discounted cash flows used in impairment testing, the anticipated
date of site decommissioning and restoration and the depletion charges in
accordance with the unit of production method. Estimates in oil and gas
reserves and resources may change following for instance new wells, long term
production data and changes in macroeconomic data.
Impairment of oil and gas properties
Tethys Oil continuously assesses its producing oil and gas properties for
any need for impairment testing. This is performed in conjunction with each
balance sheet date or if there are events or changes in circumstances that
indicate that carrying values of assets may not be recoverable. Such indicators
include changes in the Group’s business plans, relinquished licences, changes
in oil prices leading to lower revenues and, for oil and gas properties, down-
ward revisions of estimated reserve quantities.
Testing for impairment losses is performed when necessary for each cash
generating unit, which corresponds to licence right, production sharing agree-
ment or equivalent owned by Tethys Oil. A cash generating unit thus usually
corresponds to each acquired asset in each country in which Tethys Oil carries
on oil and gas operations. Impairment testing means that the balance sheet
item amount for each cash generating unit is compared to the recoverable
amount for the assets, which is the higher of the fair value of the assets less
sales expenses and the value in use. The value in use of the assets is based
on the present value of future cash flows discounted by a discount rate.
An impairment loss is recorded when an asset’s or a cash generating unit’s
recorded value exceeds the recoverable amount. Impairment losses are
charged to the income statement. Recent results are disclosed in the note 7
under the section Impairment testing.
Oil and natural gas price assumptions
Assumptions and forecasts of oil prices are used in the recurring evaluations
of impairment tests. The prices used are a combination of actual prices, for-
ward prices for the next six months, as well as the long-term forecasts provided
by Tethys Oil’s reserves evaluator ERCE.
Discount rate assumptions
The discount rates used for impairment testing and provisions continuously
updated during the year in light of changing economic and geopolitical outlooks.
Site restoration provision
Amounts used in recording a provision for site restoration are estimates based
on current legal and constructive requirements and current technology and
price levels for the removal of facilities and plugging and abandoning of wells.
Due to changes in relation to these items, the future actual cash outflows in
relation to the site decommissioning and restoration can be different. To reflect
the effects due to changes in legislation, requirements and technology and
price levels, the carrying amounts of site restoration provisions are reviewed
on a regular basis. The effects of changes in estimates do not give rise to prior
year adjustments and are treated prospectively over the estimated remaining
commercial reserves of each field. While the Group uses its best estimates
and judgement, actual results could differ from these estimates.
Income taxes
Tethys Oil has not recorded a deferred tax in relation to the tax losses carried.
Management does not consider the measurement of deferred tax assets to be
a significant accounting estimate.
Note 3, Segment information
The Group accounting principles for segment describes that the operating seg-
ment are reported based in Producing assets, Non-producing assets, Other
and Eliminations, as well as geographic perspective, where Producing and Non-
producing assets are represented by Oman and Other by Sweden, and reported
in a manner consistent with the internal reporting which is primarily based on
income statement ratios and provided to the executive management, which is
considered to be the chief operating decision maker. Producing assets include
the Company’s non-operated interest in Blocks 3&4. Non-producing assets
include the operated exploration interests in Block 49, Block 56 and Block 58.
The segment Other includes the head office and other central functions across
the Group as well as the Company’s indirect 25 percent holding in its Lithua-
nian associated company Minijos Nafta UAB. The operating result for each
segment is presented below. Revenue and other income relates to external
(non-intra group) transactions and customers. Oman is Tethys Oil´s only oil
producing area from which revenue is generated as at 31 December 2023
(and comparative period). Revenue, depletion and operating expenses, which
is presented in notes 4, 7 and 8, therefore only related to Oman, Block 3&4
and Block 56. More information regarding Oil and gas properties is provided
in note 7.
Group income statement Jan-Dec 2023, MUSD
Total
Revenue and other income
Operating expenses
Depreciation, depletion and amortisation
Impairment
Exploration costs
Administrative expenses
Share of net profit from associate
Operating result
118
Producing assets
Non-producing assets
Other
Eliminations
137.4
-55.2
-41.7
-36.9
-6.3
-2.7
–
-5.3
0.8
-1.3
–
–
–
-1.0
–
-1.5
1.6
–
-0.3
–
-0.1
-6.4
0.2
-5.0
-1.6
–
–
–
–
1.8
–
0.2
Total
138.2
-56.4
-42.0
-36.9
-6.4
-8.3
0.2
-11.6
Tethys Oil Annual Report 2023
Group income statement Jan-Dec 2023, MUSD
Total
Producing assets
Non-producing assets
Other
Eliminations
Revenue by country
Revenue and other income
Oman
Other
Producing assets
Non-producing assets
Other
137.4
–
0.8
–
Oil and Gas properties as of 31 Dec 2023
Producing assets
Non-producing assets
Oil and Gas properties
190.0
55.2
–
1.6
Other
0.0
–
-1.6
-0.5
Group income statement Jan-Dec 2022, MUSD
Total
Revenue and other income
Operating expenses
Depreciation, depletion and amortisation
Exploration costs
Administrative expenses
Share of net profit from associate
Operating result
Revenue by country
Revenue and other income
Oman
Other
Producing assets
Non-producing assets
Other
Eliminations
156.5
-50.1
-40.3
-2.6
-3.2
–
60.3
0.2
–
–
-1.7
-0.5
–
-2.0
1.5
–
-0.3
-0.2
-5.1
0.2
-4.0
Producing assets
Non-producing assets
Other
156.5
–
0.2
–
–
1.5
Other
0.1
-1.7
–
–
–
1.6
-0.0
-0.1
-0.2
-1.5
-0.2
Oil and Gas properties as of 31 Dec 2022
Producing assets
Non-producing assets
Oil and Gas properties
198.5
47.7
Notes
Total
Total
138.2
–
Total
244.8
Total
156.5
-50.1
-40.5
-4.5
-7.3
0.1
54.2
Total
156.5
–
Total
246.1
Note 4, Revenue and other income
Note 5, Other income
MUSD
Revenue
Underlift (+) / overlift (-), adjustment
Other income EWT
Revenue and other income
Group MUSD
2023
143.0
-5.6
0.8
2022
149.4
7.1
–
138.2
156.5
Parts of the administrative expenses in Tethys Oil, such as management fees
and overhead costs in the parent company, have been charged out to oil and
gas projects within the group. Other income in the parent company during
2023 amounted to MSEK 16.5 (14.8). In case of Tethys Oil being the operator
in joint operations, these administrative expenditures are, through the above,
also funded by the partner if such partners exist. All internal charge outs
are eliminated in the consolidated financial statements. Tethys Oil is as at
31 December 2023 operator in block 49, 56 and 58 in Oman and hold 100
percent of the licenses interest in Block 49, 58 and 65 percent in Block 56.
Tethys Oil sells all oil from Block 3&4, including oil from other income EWT
(extended well test) related to Block 56, to Mitsui Energy Trading Singapore,
wich is part of Mitsui & Co Ltd. Oil sales come from Block 3&4 Oman and are
made on a monthly basis. Tethys Oil´s average selling price is based on the
monthly average price of the two-month future contract of oman blend as traded
on the Dubai Mercantile Exchange, including trading and quality adjustments.
Note 6, Site restoration provision
The provisions at year end 2023 for Block 49 and 56 respectively are MUSD
0.2 (MUSD 0.2), MUSD 0.8 (0.0).
Tethys Oil estimates that its share of site restoration costs for Blocks 3&4 at
year end 2023 amounts to MUSD 12.5 (MUSD 10.6). Because of the revised
value of the site restoration provision, the value of Oil and Gas properties
for Block 3&4 have been increased by the corresponding amount. The change
in provision follows an annual review of the site restoration calculation which
estimates the cost of restoring all wells and removing surface facilities.
The value is inflated using an annual inflation factor of 2.0 percent (2.0 )
and the long-term provisions are discounted using a risk-free interest rate of
4.2 percent (4.1 ) and a credit spread of 4.0 percent (4.0 ) for Blocks 3&4.
MUSD
Provisions as of beginning of period
Accretion expense
Impact of changes to discount rate
Change in estimates and provisions relating
to new drilling and installations
Total provision for abandonment liabilities
31 December
2023
31 December
2022
10.8
0.9
-2.1
3.9
13.5
13.0
0.8
-5.8
2.8
10.8
119
Tethys Oil Annual Report 2023 Notes
Note 7, Oil and gas properties
The agreements that govern the relationship with host countries are referred
to as licenses or Exploration and Production Sharing Agreements (EPSA or PSA).
Tethys Oil holds its interest directly through aforementioned agreements in
Oman. The agreements with host countries have a time limit and are normally
divided into periods. Financial commitments and or work commitments nor-
mally relates to the different periods. Tethys Oil has fulfilled its commitments
on Blocks 3&4. In Block 49, 56 and 58 the initial work commitments during the
first period include geological studies, seismic acquisition and processing
and exploratory drilling. In the other areas of operations, the commitments are
either fulfilled or there are no commitments of which Tethys Oil can be held
liable for. In some of Tethys Oil’s areas of interest there are requirements of
work to be done or minimum expenditures in order to retain the license, but no
commitments of which Tethys Oil can be held liable for. The Parent company oil
and gas properties are part of the new venture category.
Country
Licence
Phase
Expiration date
Tethys Oil, %
Partners (operator in bold)
Oman
Oman
Oman
Oman
Lithuania
Blocks 3&4
Block 491
Block 562
Block 583
Gargzdai4
Production
Exploration
Exploration
Exploration
Production
July 2040
Dec 2023
Dec 2024
July 2024
No expiration date
30%
100%
65%
100%
25%
CCED, Mitsui, Tethys Oil
Tethys Oil
Tethys Oil, Medco Arabia Ltd, Intaj LLC,
and Biyaq Oil Field Services
Tethys Oil
Minijos Nafta, Odin, GeoNafta
1 The contingent final formal goverment approval for the exploration and production sharing
agreement (EPSA) for Block 49 expired in December 2023, a extended licence application has
been submitted to the Ministry of Energy and Minerals December 2023. At expiration of the ini-
tial period Tethys Oil has the right to enter into a second three year exploration period. In case
of a commercial oil or gas discovery, the EPSA will be transformed in to a 15 year production
licence with the option of a further five year extension. In case of a commercial discovery Oman
Government Company, has a right to acquire up to a 30 percent interest in Block 49 against
refunding of past expenditure. The initial work commitments during the first period include geo-
logical studies, seismic acquisition and processing and exploratory drilling.
2 The initial exploration period for the EPSA for Block 56 expired in December 2020,
whereby the partners elected to enter into the second exploration period, which expires in
December 2024. In case of a commercial oil or gas discovery, the EPSA will be trans-
formed in to a 20 year production licence with the option of a further five year extension. In
case of a commercial discovery Oman Government Company, has a right to acquire up to a
25 percent interest in Block 56 against refunding of past expenditure. The work commit-
ments during the second period include geological studies, seismic acquisition and pro-
cessing and exploratory drilling.
3 Tethys Oil entered into an one year extention of the initial exploration phase of the EPSA
for Block 58, approved on 6 of January 2023. Tethys Oil has the right to enter into a
second three year exploration period. In case of a commercial oil or gas discovery, the
EPSA will be transformed in to a 15 year production licence with the option of a further five
year extension. In case of a commercial discovery Oman Government Company, has a
right to acquire up to a 30 percent interest in Block 58 against refunding of past expendi-
ture. The initial work commitments during the first period include geological studies, seis-
mic acquisition and processing and exploratory drilling.
4 The interest in the Lithuanian Gargzdai licence is held indirectly through a 50 percent
shareholding in a Danish private company Odin Energi A/S , which in its turn holds 50 per-
cent of the shares in the Lithuanian company which holds 100 percent of the licence inter-
est. The Danish company Odin Energi A/S is not consolidated in Tethys Oils financial
statements due to the ownership structure, which is why there is no oil and gas property
related to the licence.
MUSD
Producing cost pools
Non-producing cost pools
Total oil and gas properties
MUSD
Licence
Phase
Blocks 3&4
Production
Exploration
Exploration
Exploration
Block 49
Block 56
Block 58
New ventures
Total
MUSD
Licence
Phase
Blocks 3&4
Production
Exploration
Exploration
Exploration
Block 49
Block 56
Block 58
New ventures
Total
120
Tethys
Oil’s
share
30%
100%
65%
100%
Tethys
Oil’s
share
30%
100%
65%
100%
31 December
2023
Investments
190.0
1.2
43.4
10.2
0.0
244.8
75.2
0.5
3.7
2.2
0.0
81.7
31 December
2022
Investments
198.5
0.6
38.9
8.0
0.1
246.1
63.4
0.4
23.9
1.4
–
89.1
31 December 2023
31 December 2022
190.0
54.7
244.8
Impairment
Exploration
costs
Site restoration
and other
adjustments
-36.9
-6.3
198.5
47.5
246.1
1 January
2023
198.5
0.6
38.9
8.0
0.1
1.0
–
0.8
–
–
–
–
–
–
–
–
–
-0.1
-6.4
-41.5
-36.9
1.8
246.1
DD&A
-41.5
–
–
–
–
Impairment
Exploration
costs
Site restoration
and other
adjustments
–
–
–
–
–
–
-2.6
–
-1.7
–
-0.2
-4.5
-3.0
-0.2
–
–
0.0
-3.2
1 January
2022
180.9
0.4
16.7
6.6
0.3
204.8
DD&A
-40.2
–
–
–
–
-40.2
Tethys Oil Annual Report 2023 MUSD
Producing cost pools
Cost 1 Jan 2023
Investments
Impairment
Exploration cost
Change in estimates
Cost 31 Dec 2023
Accumulated depreciation 1 Jan 2023
Depletion charge for the year
Accumulated depreciation 31 Dec 2023
Net book value 31 Dec 2023
Block 3&4
595.5
75.2
-36.9
-6.3
1.0
628.5
-397.0
-41.5
-438.5
190.0
Total
595.5
75.2
-36.9
-6.3
1.0
628.5
-397.0
-41.5
-438.5
190.0
MUSD
Producing cost pools
Cost 1 Jan 2022
Investments
Exploration cost
Change in estimates
Cost 31 Dec 2022
Accumulated depreciation 1 Jan 2022
Depletion charge for the year
Accumulated depreciation 31 Dec 2022
Net book value 31 Dec 2022
Block 3&4
537.7
63.4
-2.6
-3.0
595.5
-356.8
-40.2
-397.0
198.5
Notes
Total
537.7
63.4
-2.6
-3.0
595.5
-356.8
-40.2
-397.0
198.5
Impairment testing
In response to the 2023 exploration and development investments on Blocks
3&4 not yielding the expected production output and reserve additions, Tethys
Oil conducted an impairment test of the Group’s interest in Blocks 3&4 based
on the reserves and resources evaluation effective as of 31 December 2023.
As a result of the test, an impairment charge of MUSD 36.9 was recognised in
2023. To estimate the value of the Blocks’ oil and gas properties, a base case
oil price per barrel forecast provided by Blocks 3&4’s reserves and resources
evaluator ERCE as well as a discount rate of 14.5 percent (after tax) and an
average inflation rate of 2.5 percent are applied to production and cost profiles
based on proven and probable reserves (2P) and contingent resources (2C).
The ERCE base case price forecast estimates Brent oil prices in nominal
terms of USD 78 to 90 per barrel for the years 2024–2033 respectively, and
a long-term price growth of 2 percent per annum thereafter.
Valuation sensitivity
to discount rate
ERCE Brent oil price expectations, real and nominal
95
90
85
80
75
70
65
60
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
ERCE January 2024, nominal
ERCE January 2024, real
Discount rate
10.0% 12.0% 14.0% 14.5% 15.0% 16.0%
Blocks 3&4
valuation, MUSD
240.1
217.2
197.2
190.0
188.1
179.6
Exploration cost
Exploration cost in 2023 amounted to MUSD 6.3 related to write down
of exploration wells on Block 3&4 and new venture projects.
Note 8, Operating expenditure
Note 9, Remuneration to company auditor
MUSD
Production costs
Well Workovers
Operator G&A and overhead expenses
EWT production cost
Total
2023
-37.4
-6.3
-11.5
-1.3
-56.4
2022
-33.5
-5.0
-11.6
–
-50.1
PwC:
Audit fee
Audit-related fees
Other
Audit fees to other
audit company
Other
Total
Group MUSD
Parent MSEK
2023
2022
2023
2022
-0.3
0.0
–
-0.1
-
-0.4
-0.2
0.0
0.0
0.0
-0.1
-0.3
-3.0
-0.1
–
0.0
-
-3.2
-2.2
-0.2
0.0
0.0
–
-2.4
Of the Group total during 2023, MUSD 0.3 (MUSD 0.2) has been in relation to
PwC Sweden.
Note 10, Administrative expenses
Group MUSD
Parent MSEK
Personnel costs and benefits
Utilities and office supply
Legal and consulting
Audit
Marketing expenses
Travel expenses
Listing costs
Other costs
Total
Note
2023
2022
9
-4.2
-0.6
-1.3
-0.4
-0.4
-0.4
-0.2
-0.9
-8.3
-3.3
-1.4
-0.8
-0.3
-0.4
-0.3
-0.2
-0.6
-7.3
2023
-30.1
-4.0
-11.3
-3.2
-3.8
-5.4
-1.1
-5.6
-64.5
2022
-23.7
-5.0
-5.5
-2.4
-3.9
-1.7
-1.8
-5.8
-49.7
121
Tethys Oil Annual Report 2023 Notes
Note 11, Employees
Average number of full time employees per country
Total
Total men
Total
Total men
2023
2022
Parent company
Sweden
Total parent company
Subsidiary companies in Sweden
Subsidiary companies foreign
Oman
United Arab Emirates
Total subsidiary companies foreign
Total group
9
9
–
21
1
22
31
5
5
–
15
–
15
20
8
8
–
20
1
21
29
5
5
–
13
–
13
18
MUSD
Salaries, other remuneration and social costs
Salaries,
other remuneration
Social costs
Salaries,
other remuneration
Social costs
2023
2022
Parent company
Sweden
Total parent company
Subsidiary companies in Sweden
Subsidiary companies foreign
Oman
United Arab Emirates
Total subsidiary companies foreign
Total group
-2.3
-2.3
–
-3.7
-0.2
-3.9
-6.2
-0.5
-0.5
–
–
–
–
-0.5
-1.9
-1.9
–
-3.3
-0.1
-3.4
-5.3
-0.4
-0.4
–
–
–
–
-0.4
MUSD
Salaries and other remuneration distributed
between The Board and other employees
2023
2022
Board and
managing director
Other employees
Board and
managing director
Other employees
Parent company
Sweden
Total parent company
Subsidiary companies in Sweden
Subsidiary companies foreign
Oman
United Arab Emirates
Total subsidiary companies foreign
Total group
-0.7
-0.7
–
–
–
–
-0.7
-1.6
-1.6
–
-3.7
-0.2
-3.9
-5.5
-0.7
-0.7
–
–
–
–
-0.7
-1.2
-1.2
–
-3.3
-0.1
-3.4
-4.6
During 2023 one woman and four men have been members of the Board of
Directors, unchanged from 2022. One woman and three men have been mem-
bers of the executive management, unchanged since 2022. At the AGM of
shareholders on 10 May 2023, Klas Brand, Robert Anderson, Alexandra
Herger, Magnus Nordin and Per Seime were re-elected members of the Board.
No deputy directors were appointed. At the same meeting, Per Seime was
re-appointed to Chairman of the Board. There have not been any agreements
on pensions for any of the directors of the Board. For the executive manage-
ment, the pension costs follow a defined contribution plan.
Salaries and other remuneration to executive
management during 2023, MSEK
Basic salary
Pension
arrangements
Variable salary
Share based long
term incentive1
Other benefits
Total 2023
Managing director
Other executive management
Total
5.156
7.030
12.186
–
0.992
0.992
0.786
1.154
1.940
1.658
3.346
5.004
0.035
0.068
0.103
7.635
12.590
20.225
Salaries and other remuneration to executive
management during 2022, MSEK
Basic salary
Pension
arrangements
Variable salary
Share based long
term incentive1
Other benefits
Total 2022
Managing director
Other executive management
Total
5.078
5.588
10.666
-
0.653
0.653
0.581
0.951
1.533
1.399
1.565
2.964
0.055
0.040
0.095
7.113
8.797
15.910
1 The Managing director received 70,000 (60,000) and Other executive management received 180,000 (100,000) warrants in the 2023 incentive programme,
totalling 250,000 (160,000) warrants.
122
Tethys Oil Annual Report 2023 Notes
Total remuneration to executive management increased in 2023 compared
to 2022 and is mainly due to one full year additional member of the executive
management group. During 2023, the variable salary and the incentive pro-
gram for the managing director increased. Remuneration to the other members
of the executive management increased as a result of the addition of one
member to the executive management group in 2022 serving for the full year
in 2023. According to the employment contract, the Managing Director has a
notice period of twelve months mutual between the Managing Director and
the company. If the employment is terminated by the Company, the Managing
Director is entitled to severance pay corresponding to twelve months’ salary,
less from the date at new employment begins at another company.
Remuneration to board member, MSEK
AGM 2023 to
AGM 2024
AGM 2022 to
AGM 2023
Per Seime
Robert Anderson
Alexandra Herger
Magnus Nordin
Klas Brand
Total
0.820
0.415
0.420
–
0.440
2.095
0.800
0.395
0.400
–
0.420
2.015
Note 12, Financial income and similar items
Note 13, Financial expenses and similar items
Interest income
Currency exchange gains
Dividend from group companies
Other financial income
Total
Group MUSD
Parent MSEK
2023
1.1
13.7
–
0.5
15.2
2022
0.3
23.2
–
–
2023
79.7
120.1
584.5
–
2022
67.4
234.5
250.5
–
23.5
784.3
552.4
Interest expenses
Currency exchange loss
Other financial expenses
Total
Group MUSD
Parent MSEK
2023
0.0
-18.6
-1.0
-19.6
2022
–
2023
-42.7
2022
-42.0
-18.0
-102.8
-182.4
-0.8
-0.3
–
-18.8
-145.7
-224.5
Tethys Oil’s oil and gas operations in Oman are governed by separate Explora-
tion and Production Sharing Agreements (“EPSA”) for each contract area.
Under the terms of each EPSA, Tethys Oil is subject to Omani income taxes,
which are paid in full, on behalf of Tethys Oil from the government share of oil.
The effect of these taxes is netted against revenue and other income in the
income statement. Currently Blocks 3&4 and Block 56 are the Omani EPSAs
in a tax paying position.
As the final amount of income tax is determined after the end of the calen-
dar year, Tethys Oil’s preliminary assessment of the amount of Omani income
tax paid on behalf of Tethys Oil in 2023 is MUSD 37.6 (MUSD 59.5) of which
MUSD 36.7 (MUSD 59.5) is related to Blocks 3&4 and MUSD 0.9 (MUSD -) to
Block 56.
Local income generated in Tethys Oil’s Gibraltar subsidiaries are subject to
Gibraltar taxes. Tethys Oil recorded MUSD 0.5 (MUSD 0.6) in tax in Gibraltar in
the period.
Note 14, Tax
The Group’s income tax charge amounts to MUSD 0.5 (MUSD 0.6) and is
related to Tethys Oil’s income in Gibraltar. Tethys Oil has not recorded a
deferred tax asset in relation to the tax losses carried forward since there is
uncertainty as to if the tax losses may be utilised. The tax losses are in
another jurisdiction than where main profits are generated. Tax losses carried
forward amounted to MSEK 272.7 (MSEK 219.3). There are no time limits for
the utilization of tax losses.
The tax losses on the parent company’s result before tax differs from the
theoretical amount that would arise using the Swedish tax rate as follows:
Parent MSEK
Result before tax
Tax at applicable tax rate 20.6% (2022: 20.6%)
Non-deductible expenses
Non-taxable income
Utilized (+) / Built up (-) tax loss carry forwards
previously not recorded as deferred tax assets
Tax expense
2023
592.9
-122.1
-0.3
120.9
1.6
0.0
2022
294.2
-60.6
-0.2
51.9
8.8
0.0
Note 15, Trade and other receivables
Group MUSD
Parent MSEK
Trade receivables oil sales
Underlift position
Non-trade receivables
Joint operation receivables
Other receivables
Total
2023
9.8
0.5
5.0
0.1
4.5
2022
12.5
6.1
4.9
0.1
3.3
19.9
26.9
2023
2022
–
–
–
–
1.7
1.7
–
–
–
–
3.2
3.2
123
Tethys Oil Annual Report 2023
Notes
Note 16, Shareholders’ equity
As at 31 December 2023, the number of issued shares in Tethys Oil amounted
to 33,458,828 (33,056,608), with a nominal value of SEK 0.18 (SEK 0.18).
All shares represent one vote each. Tethys Oil has a warrant-based incentive
programme for Key Management. When the share price is above the exercise
price of the warrants a potential dilution effect arises. During 2023, the 2020
warrants programme was exercised, which resulted in new share issue of
402,200 shares. During 2023 the share price was below the exercise price of
the two tranches of the warrant programme, thus the weighted average number
of shares outstanding after dilution was 32,099,193 (32,664,523). For further
information please see note 19.
Tethys Oil’s Annual General Meeting on 10 May 2023 (“AGM”) has resolved
to grant the Board of Directors the authorisation to repurchase up to 10 percent
of the company’s share capital.
During 2023 Tethys Oil repurchased 451,550 shares. As of 31 December
2023, Tethys Oil held 1,189,901 shares in treasury – the equivalent of 3.6
percent of issued shares. In 2024 there were no shares repurchased as per
the publication of this year-end report.
For the complete repurchase authorisation, please refer to Tethys Oil’s web-
site www.tethysoil.com.
Earnings per share
Earnings per share before dilution is calculated by dividing profit for the year
attributable to ordinary shareholders of the parent company by the weighted
average number of ordinary shares outstanding during the year.
Earnings per share after dilution is calculated by dividing the profit for the
year attributable to ordinary shareholders of the parent company by weighted
average number of ordinary shares outstanding during the year while also
including the dilution effect of warrants where the subscription price is below
the share price.
Appropriation of profit
For the financial year 2023, Tethys Oil’s Board of Directors will propose to the
AGM 2024 that no dividend is to be paid. The Board of Directors will revisit the
matter of shareholder distributions upon the completion of the strategic review
of its portfolio, announced 5 February 2024. Tethys Oil’s dividend policy remains
unchanged. Further details to follow in the proposal to the 2024 AGM.
Note 17, Accounts payable and other current liabilities
Accounts payable
Joint operations payable
Tax liability
Other current liabilities
Total
Group MUSD
Parent MSEK
31 December
2023
31 December
2022
31 December
2023
31 December
2022
0.2
17.2
0.3
1.5
19.2
0.6
16.9
0.6
1.5
19.6
2.3
–
–
5.8
8.1
1.7
–
–
9.2
10.9
Note 18, Shares in subsidiaries
Company
Tethys Oil France AB
Tethys Oil Invest AB *
Tethys Oil Exploration AB*
Reg. number
556658-1491
556658-1442
556658-1483
Reg. office
Sweden
Sweden
Sweden
Tethys Oil Middle East North Africa B.V.
27306813
Netherlands
95212
101981
115710
118203
119982
Gibraltar
Gibraltar
Gibraltar
Gibraltar
Gibraltar
Tethys Oil Oman Ltd
Tethys Oil Block 3&4 Ltd
Tethys Oil Montasar Ltd
Tethys Oil Oman Onshore Ltd
Tethys Oil Oman Qatbeet Ltd
* Wholly owned by Tethys Oil France AB
Shares in subsidiaries, MSEK
1 January
Acquisitions/Relinquishments
31 December
Number of shares
(thousands)
Percentage
Nominal value
per share
1.0
1.0
1.0
18.0
0.1
1.0
1.0
1.0
1.0
100%
100%
100%
100%
100%
100%
100%
100%
100%
SEK 100
SEK 100
SEK 100
EUR 1
GBP 1
USD 1
USD 1
USD 1
USD 1
Parent 2023
Parent 2022
1.0
938.9
939.9
1.0
0.0
1.0
During 2023, The Group has decided to optimise the treasury function to
ensure efficiency of its intercompany financing. Tethys Oil restructured its
holding of certain group companies and transferred the holding of intercom-
pany loans from the parent company to the indirectly wholly owned subsidiary
Tethys Oil Invest AB that is acting as an internal treasury company. This resulted
in the revalution of Tethys Oil AB’s direct shareholding in Tethys Oil France with
MSEK 938,9 and indirect shareholding in Tethys Oil Invest accordingly.
124
Tethys Oil Annual Report 2023 Notes
Note 19, Incentive programmes
Warrants based programme
Tethys Oil has an incentive programme as part of the remuneration package to
employees. The allocation is not guaranteed and the Board of Directors of the
Company shall resolve on and implement the allocation. The warrants have no
vesting period or other restrictions and have been trans ferred free of charge to
the participants and the Group accounts for any income tax for the participants
to the extent such tax is attributable to the programme. The market value of
the warrants has been calculated in accordance with the Black & Scholes for-
mula by an independent valuation institution. The subscription price is based
on the volume-weighted average of the purchase price for the Company’s share
on Nasdaq Stockholm during approximately a two-week period prior to the date
of allocation.
Warrants have been issued annually since 2015, following a decision by
the respective AGM. Since 2021 warrants are only issued to the Executive
Management. During 2023 250,000 new warrants were issued. and 338,000
warrants from the 2020 Programme were exercised, resulting in the issue of
402,220 shares.
During 2023 due to the share price level only one warrant program (2020–
2023) was contributing to the potentiall dilution, but the actual dilution has
been compensated by ongoing share buy-back program. As a result, the
weighted average number of outstanding shares (after dilution) for 2023
decreased to 32,099,193 vs. 32,664,523 for 2022. The cost is calculated
in accordance with the Black & Scholes formula where the main inputs are the
factors in the above table, expected volatility, share price at valuation and an
equity discount rate. The cost for the incentive programme is included as
part of administrative expenses and includes tax and social charges where
applicable.
Warrant incentive
programme
Exercise period
Subscription
price, SEK
Shares
per warrant
1 Jan
2023
Issued
2023
2020 incentive programme
13 Jun–6 Oct 2023
2021 incentive programme
12 Jun–4 Oct 2024
2022 incentive programme
18 Aug–6 Oct 2025
2023 incentive programme
3 Jun–28 Sep 2026
45.40
66.10
92.80
59.40
Total
1.19
1.15
1.07
1.01
350,000
200,000
160,000
–
710,000
–
–
–
250,000
250,000
Number of warrants
Exercised
2023
338,000
Expired
2023
12,000
–
–
–
–
–
–
338,000
12,000
Number of warrants
Warrant incentive
programme
Exercise period
Subscription
price, SEK
Shares
per warrant
1 Jan
2022
Issued
2022
Exercised
2022
2019 incentive programme
1 Jun–7 Oct, 2022
2020 incentive programme
13 Jun–6 Oct, 2023
2021 incentive programme
12 Jun–4 Oct, 2024
2022 incentive programme
18 Aug–6 Oct 2025
64.90
48.20
70.80
99.50
Total
1.21
1.12
1.07
1.00
350,000
350,000
200,000
–
900,000
–
–
160,000
160,000
–
–
–
–
–
Expired
2022
350,000
–
–
–
350,000
31 Dec
2023
–
200,000
160,000
250,000
610,000
31 Dec
2022
–
350,000
200,000
160,000
710,000
Warrant incentive programme
Incentive programme cost
Total
Group MUSD
Parent MSEK
2023
0.6
0.6
2022
0.3
0.3
2023
6.0
6.0
2022
3.5
3.5
Long-term incentive program 2022–2024
In 2022 the Board of Directors of Tethys Oil AB approved the launch of a new
Long-Term Incentive Programme (LTIP). The Programme is established to form
a part of the incentive and retention programme directed to the employees of
the Group, except for Executive Management. The aim is to align the objectives
of the Company´s shareholders and the employees for increasing the value of
the Company in the long-term, to retain the employees at the Company and to
offer them a competitive incentive programme that gives them an opportunity to
receive Shares acquired with the reward. The programme is denominated in SEK.
LTIP 2022–2024 (“LTIP 2022”) was launched in October 2022. The Pro-
gramme comprises one three-year Vesting Period, covering the financial years
of 2022–2024. The payment of each instalment is conditional on continued
employment, and continued ownership of the Reward Shares purchased within
the programme.
During the financial year 2022, a total amount of MSEK 6,0 was granted to
the participants of the program to be earned during the vesting period. In 2023
the second instalment of reward in amout of MSEK 1.7 was exercised and a
total of MSEK 2.3 remains outstanding for the final instalment due in 2024.
LTIP 2023–2025 (“LTIP 2023”) was launched in April 2023 following the
approval of the Board of Directors. The programme is identical to LTIP 2022.
The maximum limit for the programme is MSEK 5.3. During 2023 the first
instalment of MSEK 1.6 was granted to participants and MSEK 3.4 remains
outstanding for the future instalments.
125
Tethys Oil Annual Report 2023 Notes
Note 20, Related party transactions
Note 21, Pledged assets
In the Tethys Oil Group, Tethys Oil AB (publ) with organizational number
556615-8266 is the parent company. Material subsidiaries include Tethys Oil
Block 3&4 Limited, Tethys Oil Montasar Limited, Tethys Oil Oman Qatbeet
Limited and Tethys Oil Oman Onshore Limited.
During the year, the Company entered into the following significant trans-
actions with related parties.
The parent company had no pledged assets as per 31 December 2023 and
31 December 2022.
Note 22, Contingent liabilities
As part of the October 2020 farmin transaction with Medco for Block 56
there is further potential contingent consideration upon a declaration of
commerciality.
Note 23, Subsequent events
Tethys Oil has received a credit commitment for a MUSD 60 amortising term loan
facility from one of the leading banks of the United Arab Emirates (UAE). The loan
agreement is expected to be finalised by the end of the first quarter 2024.
Tethys Oil’s Board of Directors has decided to initiate a strategic review of
the Group’s portfolio of Oil and Gas interests. The review will explore the possi-
bility of rebalancing the portfolio’s mix of assets in different stages of the life-
cycle and increasing the visibility of the assets’ fair market value.
Tethys Oil has signed a drilling rig contract with Gulf Oilfield Services
(“GOS“) for the exploration well Kunooz-1 in the Fahd area on Block 58.
Tethys Oil’s Board of Directors has authorised the executive management to
explore the possibility of investing in energy transition businesses. The scope
of the exploratory work should focus on the Company’s subsurface compe-
tence and/or its geographic footprint in the Nordics and Baltics as well as
Oman and the Gulf region.
Transactions with group companies,
MSEK
Interest income
Other income
Dividend income
Interest expense
Total
Balance with related parties,
MSEK
Short-term receivable from group compa-
nies
Long-term receivable from group compa-
nies
Total
Balance with related parties,
MSEK
Other current liabilities to group compa-
nies
Total
2023
78.5
16.5
584.5
-42.7
636.8
2022
67.1
14.8
250.5
-42.0
290.4
2023
2022
5.4
–
5.4
2023
11.0
11.0
–
903.2
903.2
2022
429.7
429.7
The receivables or payables from related parties arise from the net of purchased
services and upstreamed or downstreamed funds between parent and subsidi-
aries. The interest rates on receivables are in the range of SOFR +4–6 percent
per annum. Receivables are long term in duration and unsecured in nature.
Payables are short term in duration, unsecured in nature and bear no interest.
During 2023 Tethys Oil received dividend of MSEK 2.2 (1.6) from the associ-
ated company Odin Energy A/S.
Information on the Board of Directors and senior executives, as well as
remuneration for these, is disclosed in Note 11 Employees.
126
Tethys Oil Annual Report 2023 Assurance
Assurance
The Board of Directors and the managing director declare that
the consolidated financial statements have been prepared in
accordance with IFRS as adopted by the EU and give a true and
fair view of the Group’s financial position and results of opera-
tions. The financial statements of the parent company have
been prepared in accordance with generally accepted account-
ing principles in Sweden and give a true and fair view of the
parent company’s financial position and results of operations.
The statutory Administration Report of the Group and the parent
company provides a fair review of the development of the Group’s
and the parent company’s operations, financial position and
results of operations and describes material risks and uncertain-
ties facing the parent company and the companies included in
the Group.
Stockholm, 27 March 2024
Per Seime
Chairman of the board
Rob Anderson
Director
Klas Brand
Director
Alexandra Herger
Director
Magnus Nordin
Managing Director
Auditor’s endorsement
Our audit report was submitted on 27 March 2024.
PricewaterhouseCoopers AB
Johan Malmqvist
Authorized Public Accountant
Lead Partner
Sophie Damborg
Authorized Public Accountant
127
Tethys Oil Annual Report 2023 Auditor’s report
Auditor’s report
To the general meeting of the shareholders of Tethys Oil AB (publ), corporate identity number 556615-8266
Report on the annual accounts
and consolidated accounts
Opinions
We have audited the annual accounts and consolidated accounts
of Tethys Oil AB (publ) for the year 2023.
The annual accounts and consolidated accounts of the com-
pany are included on pages 92–127 in this document.
In our opinion, the annual accounts have been prepared in
accordance with the Annual Accounts Act and present fairly, in
all material respects, the financial position of parent company
and the group as of 31 December 2023 and its financial perfor-
mance and cash flow for the year then ended in accordance with
the Annual Accounts Act. The consolidated accounts have been
prepared in accordance with the Annual Accounts Act and pre-
sent fairly, in all material respects, the financial position of the
group as of 31 December 2023 and their financial performance
and cash flow for the year then ended in accordance with Inter-
national Financial Reporting Standards (IFRS), as adopted by the
EU, and the Annual Accounts Act. The statutory administration
report is consistent with the other parts of the annual accounts
and consolidated accounts.
We therefore recommend that the general meeting of share-
holders adopts the income statement and balance sheet for the
parent company and the group.
Our opinions in this report on the annual accounts and con-
solidated accounts are consistent with the content of the addi-
tional report that has been submitted to the parent company’s
audit committee in accordance with the Audit Regulation
(537/2014) Article 11.
Basis for Opinions
We conducted our audit in accordance with International Stand-
ards on Auditing (ISA) and generally accepted auditing standards
in Sweden. Our responsibilities under those standards are further
described in the Auditor’s Responsibilities section. We are inde-
pendent of the parent company and the group in accordance with
professional ethics for accountants in Sweden and have other-
wise fulfilled our ethical responsibilities in accordance with
these requirements. This includes that, based on the best of
our knowledge and belief, no prohibited services referred to in
the Audit Regulation (537/2014) Article 5.1 have been provided
to the audited company or, where applicable, its parent company
or its controlled companies within the EU.
We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our opinions.
Our audit approach
Audit scope
We designed our audit by determining materiality and assessing
the risks of material misstatement in the consolidated financial
statements. In particular, we considered where the management
and the Managing Director made subjective judgements; for
example, in respect of significant accounting estimates that
involved making assumptions and considering future events
that are inherently uncertain. As in all of our audits, we also
addressed the risk of management override of internal controls,
including among other matters consideration of whether there
was evidence of bias that represented a risk of material mis-
statement due to fraud.
We tailored the scope of our audit in order to perform suffi-
cient work to enable us to provide an opinion on the consoli-
dated financial statements as a whole, taking into account the
structure of the Group, the accounting processes and controls,
and the industry in which the Group operates.
Materiality
The scope of our audit was influenced by our application of
materiality. An audit is designed to obtain reasonable assurance
whether the financial statements are free from material misstate-
ment. Misstatements may arise due to fraud or error. They are
considered material if individually or in aggregate, they could rea-
sonably be expected to influence the economic decisions of users
taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain
quantitative thresholds for materiality, including the overall
group materiality for the consolidated financial statements as a
whole. These, together with qualitative considerations, helped
us to determine the scope of our audit and the nature, timing
and extent of our audit procedures and to evaluate the effect
of misstatements, both individually and in aggregate on the
financial statements as a whole.
Key audit matters
Key audit matters of the audit are those matters that, in our
professional judgment, were of most significance in our audit of
the annual accounts and consolidated accounts of the current
period. These matters were addressed in the context of our audit
of, and in forming our opinion thereon, the annual accounts and
consolidated accounts as a whole, but we do not provide a sepa-
rate opinion on these matters.
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Tethys Oil Annual Report 2023 Key audit matter
Recoverability of the carrying value of oil and gas
properties
The carrying value of oil and gas properties amounted
to MUSD 244.8 as per 31 December 2023 and the
major part represented by the producing assets in
Block 3&4 in Oman. The oil and gas properties relating
to Block 3&4 in Oman amounted to MUSD 190.0 by
31 December 2023.
During the year management follows a process to
identify potential indicators of impairment and to the
extent that indicators are identified impairment tests
are prepared.
The carrying value of oil and gas properties is sup-
ported by the higher of either value in use calculations
or fair value less cost of disposal (recoverable amount).
The assessment to identify potential impairment
indicators and to perform impairment tests requires
management to exercise significant judgement where
there is a risk that the valuation of oil and gas proper-
ties and any potential impairment charge or reversal
of impairment may be incorrect.
Management’s test requires consideration of a
number of factors, including but not limited to, the
Group’s intention to proceed with a future work pro-
gramme, the probability of success of future drilling,
the size of proved, probable reserves as well as pro-
spective resources, short and long term oil prices,
future costs as well as the discount and inflation rates.
Following the analysis of potential impairment indi-
cators for Block 3&4 in Oman during the year and as
per 31 December 2023 it was concluded that an
impairment was needed and an impairment of MUSD
36.9 was recorded.
Refer to pages 93–97 in the Directors’ report, page
113–114 in the Accounting Policies and note 2 and 7
in the financial statements for more information.
Auditor’s report
How our audit addressed the Key audit matter
We have audited management’s assessment for deter-
mining the impairment indicators and concluded that
there are no impairment indicators identified.
The assumptions that underpin management’s
assessment are inherently judgmental. Our audit work
therefore assessed the reasonableness of manage-
ment’s key judgements of the recoverable amount of
Block 3&4. Specifically our work included, but was not
limited to, the following procedures:
• comparison of management´s short-term oil price
assumptions against external oil price forward curves;
• comparison of long-term oil price assumptions
against views published by brokers, economists,
consultancies and respected industry bodies, which
provided a range of relevant third-party data points;
• reconciliation of hydrocarbon production profiles to
the combination of proved and probable reserves
and contingent resources from reserve reports from
ERC Equipoise Limited;
• verification of estimated future costs by agreement
to budgets and where applicable, third party data;
• benchmarking of inflation and discount rates applied;
• testing of the mathematical accuracy of the model
• Test the accounting treatment of the impairment
We have obtained the estimation of proven and proba-
ble reserves and contingent resources certified by the
group’s external reserves auditor. Our work included
but was not limited to:
• determining that the group’s process for collecting
relevant reports were sufficiently robust;
• assessing competence and objectivity of reserves
auditor ERC Equipoise Limited, to satisfy ourselves
they were appropriately qualified to carry out the
volumes estimation;
• validation of that the updated reserves and resources
estimates were included appropriately in manage-
ment’s consideration of impairment and in account-
ing for depletion charges.
Other Information than the annual accounts
and consolidated accounts
This document also contains other information than the annual
accounts and consolidated accounts and is found on pages 1–79
and 85–91. Other information those not include the Financial
statements, consolidated accounts and our audit report related
to the Financial statements. The Board of Directors and the
Managing Director are responsible for this other information.
The information in the “Remuneration report 2023”, which will
be published on Tethys Oils webpage at the same time as this
report is also considered other information.
Our opinion on the annual accounts and consolidated accounts
does not cover this other information and we do not express any
form of assurance conclusion regarding this other information.
In connection with our audit of the annual accounts and con-
solidated accounts, our responsibility is to read the information
identified above and consider whether the information is materi-
ally inconsistent with the annual accounts and consolidated
accounts. In this procedure we also take into account our
knowledge otherwise obtained in the audit and assess whether
the information otherwise appears to be materially misstated.
If we, based on the work performed concerning this informa-
tion, conclude that there is a material misstatement of this
other information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Board of Director’s
and the Managing Director
The Board of Directors and the Managing Director are responsi-
ble for the preparation of the annual accounts and consolidated
accounts and that they give a fair presentation in accordance
with the Annual Accounts Act and, concerning the consolidated
accounts, in accordance with IFRS as adopted by the EU. The
Board of Directors and the Managing Director are also responsible
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Tethys Oil Annual Report 2023 Auditor’s report
for such internal control as they determine is necessary to enable
the preparation of annual accounts and consolidated accounts
that are free from material misstatement, whether due to fraud
or error.
In preparing the annual accounts and consolidated accounts,
The Board of Directors and the Managing Director are responsi-
ble for the assessment of the company’s and the group’s ability
to continue as a going concern. They disclose, as applicable,
matters related to going concern and using the going concern
basis of accounting. The going concern basis of accounting is
however not applied if the Board of Directors and the Managing
Director intend to liquidate the company, to cease operations,
or has no realistic alternative but to do so.
The Audit Committee shall, without prejudice to the Board of
Director’s responsibilities and tasks in general, among other
things oversee the company’s financial reporting process.
Auditor’s responsibility
Our objectives are to obtain reasonable assurance about
whether the annual accounts and consolidated accounts as
a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our
opinions. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance
with ISAs and generally accepted auditing standards in Sweden
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken
on the basis of these annual accounts and consolidated
accounts.
A further description of our responsibility for the audit of
the annual accounts and consolidated accounts is available
on Revisorsinspektionen’s website:
www.revisorsinspektionen.se/revisornsansvar.
This description is part of the auditor´s report.
Report on other legal and regulatory requirements
Opinions
In addition to our audit of the annual accounts and consolidated
accounts, we have also audited the administration of the Board
of Director’s and the Managing Director of Tethys Oil AB (publ)
for the year 2023 and the proposed appropriations of the com-
pany’s profit or loss.
We recommend to the general meeting of shareholders that
the profit be appropriated in accordance with the proposal in the
statutory administration report and that the members of the
Board of Director’s and the Managing Director be discharged
from liability for the financial year.
Basis for Opinions
We conducted the audit in accordance with generally accepted
auditing standards in Sweden. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities
section. We are independent of the parent company and the
group in accordance with professional ethics for accountants in
Sweden and have otherwise fulfilled our ethical responsibilities
in accordance with these requirements.
Responsibilities of the Board of Director’s
and the Managing Director
The Board of Directors is responsible for the proposal for appro-
priations of the company’s profit or loss. At the proposal of a
dividend, this includes an assessment of whether the dividend
is justifiable considering the requirements which the company’s
and the group’s type of operations, size and risks place on the
size of the parent company’s and the group’ equity, consolida-
tion requirements, liquidity and position in general.
The Board of Directors is responsible for the company’s
organization and the administration of the company’s affairs.
This includes among other things continuous assessment of
the company’s and the group’s financial situation and ensuring
that the company´s organization is designed so that the
accounting, management of assets and the company’s financial
affairs otherwise are controlled in a reassuring manner. The
Managing Director shall manage the ongoing administration
according to the Board of Directors’ guidelines and instructions
and among other matters take measures that are necessary to
fulfill the company’s accounting in accordance with law and
handle the management of assets in a reassuring manner.
Auditor’s responsibility
Our objective concerning the audit of the administration, and
thereby our opinion about discharge from liability, is to obtain
audit evidence to assess with a reasonable degree of assur-
ance whether any member of the Board of Directors or the
Managing Director in any material respect:
• has undertaken any action or been guilty of any omission
which can give rise to liability to the company, or
• in any other way has acted in contravention of the Companies
Act, the Annual Accounts Act or the Articles of Association.
Our objective concerning the audit of the proposed appropria-
tions of the company’s profit or loss, and thereby our opinion
about this, is to assess with reasonable degree of assurance
whether the proposal is in accordance with the Companies Act.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with generally
accepted auditing standards in Sweden will always detect actions
or omissions that can give rise to liability to the company, or that
the proposed appropriations of the company’s profit or loss are
not in accordance with the Companies Act.
A further description of our responsibility for the audit of the
administration is available on Revisorsinspektionen’s website:
www.revisorsinspektionen.se/revisornsansvar. This description
is part of the auditor’s report.
The auditor’s examination of the ESEF report
Opinion
In addition to our audit of the annual accounts and consolidated
accounts, we have also examined that the Board of Directors
and the Managing Director have prepared the annual accounts
and consolidated accounts in a format that enables uniform
electronic reporting (the Esef report) pursuant to Chapter 16,
Section 4(a) of the Swedish Securities Market Act (2007:528)
for ABC AB (publ) for the financial year 2023.
Our examination and our opinion relate only to the statutory
We believe that the audit evidence we have obtained is suffi-
requirements.
cient and appropriate to provide a basis for our opinions.
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Tethys Oil Annual Report 2023 Auditor’s report
In our opinion, the Esef report has been prepared in a format that,
in all material respects, enables uniform electronic reporting.
expected to influence the economic decisions of users taken
on the basis of the ESEF report.
Basis for Opinions
We have performed the examination in accordance with FAR’s
recommendation RevR 18 Examination of the Esef report. Our
responsibility under this recommendation is described in more
detail in the Auditors’ responsibility section. We are indepen-
dent of Tethys Oil AB (publ) in accordance with professional
ethics for accountants in Sweden and have otherwise fulfilled
my (our) ethical responsibilities in accordance with these
requirements.
We believe that the evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Responsibilities of the Board of Director’s
and the Managing Director
The Board of Directors and the Managing Director are responsible
for ensuring that the Esef report has been prepared in accord-
ance with the Chapter 16, Section 4(a) of the Swedish Securi-
ties Market Act (2007:528), and for such internal control that
the Board of Directors and the Managing Director determine is
necessary to prepare the Esef report without material misstate-
ments, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to form an opinion with reasonable assurance
whether the Esef report is in all material respects prepared in a
format that meets the requirements of Chapter 16, Section 4(a)
of the Swedish Securities Market Act (2007:528), based on the
procedures performed.
RevR 18 requires us to plan and execute procedures to achieve
reasonable assurance that the Esef report is prepared in a format
that meets these requirements.
Reasonable assurance is a high level of assurance, but it is
not a guarantee that an engagement carried out according to
RevR 18 and generally accepted auditing standards in Sweden
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be
The audit firm applies ISQC 1 Quality Control for Firms that
Perform Audits and Reviews of Financial Statements, and other
Assurance and Related Services Engagements and accordingly
maintains a comprehensive system of quality control, including
documented policies and procedures regarding compliance with
professional ethical requirements, professional standards and
legal and regulatory requirements.
The reasonable assurance engagement involves obtaining
evidence, through various procedures, that the Esef report has
been prepared in a format that enables uniform electronic
reporting of the annual accounts. The procedures selected
depend on the auditor’s judgment, including the assessment of
the risks of material misstatement in the report, whether due to
fraud or error. In carrying out this risk assessment, and in order
to design procedures that are appropriate in the circumstances,
the auditor considers those elements of internal control that are
relevant to the preparation of the Esef report by the Board of
Directors and the Managing Director, but not for the purpose of
expressing an opinion on the effectiveness of those internal
controls. The reasonable assurance engagement also includes
an evaluation of the appropriateness and reasonableness of
assumptions made by the Board of Directors and the Managing
Director.
The procedures mainly include a validation that the Esef
report has been prepared in a valid XHTML format and a recon-
ciliation of the Esef report with the audited annual accounts and
consolidated accounts.
Furthermore, the procedures also include an assessment of
whether the consolidated statement of financial performance,
financial position, changes in equity, cash flow and disclosures
in the Esef report has been marked with iXBRL in accordance
with what follows from the Esef regulation.
PricewaterhouseCoopers AB, 405 32 Göteborg, was appointed
auditor of Tethys Oil AB (publ) by the general meeting of the
shareholders on the 10 May 2023 and has been the company’s
auditor since the 2001. The company has been listed at
NasdaqOMX since the 2 May 2013.
Gothenburg, 27 March 2024
PricewaterhouseCoopers AB
Johan Malmqvist
Authorized Public Accountant
Lead Partner
Sophie Damborg
Authorized Public Accountant
131
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Franz Aberham/Getty Images, Getty Images, Fredy Thuerig/Shutterstock, joachimbelaieff.com and Tethys Oil.
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Tethys Oil Annual Report 2023
Corporate Head Office
Tethys Oil AB (publ)
Hovslagargatan 5B
SE-111 48 Stockholm
Sverige
Telephone: +46 8 505 947 00
Fax: +46 8 505 947 99
E-mail: info@tethysoil.com
www.tethysoil.com