| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 2.00 | -97 |
| Graham Formula | 1.20 | -98 |
Tethys Oil AB (publ) is a Sweden-based exploration and production company focused on oil and natural gas assets, primarily in Oman. The company holds significant interests in multiple blocks in Oman, including Block 49 (50% interest), Blocks 3&4 (30% interest), Block 56 (65% interest), and Block 58 (100% interest). These assets provide Tethys Oil with exposure to proven and probable reserves, as well as contingent resources, positioning it as a key player in Oman's hydrocarbon sector. Incorporated in 2001 and headquartered in Stockholm, Tethys Oil operates in a high-potential but geopolitically stable region, mitigating some risks associated with oil exploration. The company's strategy revolves around maximizing production from existing assets while exploring new opportunities. With a market capitalization of approximately SEK 1.86 billion, Tethys Oil is a small-cap energy stock offering niche exposure to Middle Eastern oil reserves. Its operations are critical to Oman's energy sector, contributing to both local supply and export markets.
Tethys Oil presents a high-risk, high-reward investment opportunity due to its focus on oil exploration and production in Oman. The company reported a net loss of SEK -16.5 million in FY 2023, with negative diluted EPS of -0.51 SEK, reflecting operational challenges or lower oil prices. However, its operating cash flow of SEK 82.7 million suggests underlying cash generation capability. The near-zero dividend yield and minimal debt (SEK 100,000) indicate a reinvestment-focused strategy rather than income generation. Investors should weigh Oman's stable jurisdiction against the inherent volatility of oil prices and exploration risks. The stock's beta of 0.597 suggests lower volatility than the broader market, but sector-specific risks remain. Capital expenditures (SEK -82.2 million) indicate ongoing investment in production capacity, which could drive future growth if oil prices remain favorable.
Tethys Oil's competitive advantage lies in its strategic focus on Oman, a stable Middle Eastern oil producer with favorable fiscal terms for exploration companies. The company's 30% interest in Blocks 3&4 provides access to proven reserves, while its majority stakes in Blocks 56 and 58 offer exploration upside. However, Tethys operates in a highly competitive sector dominated by larger, diversified energy firms with stronger balance sheets. Its small size limits economies of scale in production and exploration, making it more vulnerable to oil price swings than integrated majors. The company's niche positioning allows agility in asset development but lacks the financial resilience of larger peers. Geopolitical stability in Oman is a key strength, but regional competition for licenses remains intense. Tethys must balance capital discipline with the need to prove up reserves in newer blocks to sustain long-term viability. Its ability to monetize contingent resources will be critical in establishing a sustainable production base beyond existing assets.