11/5/2024

speaker
Magnus Norden
Chief Executive Officer (CEO)

Good morning, everyone, and welcome to yet another quarterly earnings call with Tethys, one that could possibly be our last in the public environment. We've had quite an exciting quarter, possibly one of the most exciting quarters since the company turned public in 2004. We've drilled an exploration well that we have been waiting for for a long time to get off the ground. We are hopefully very close to getting an FTP for our Operated Block 56. And we have received a public offer from Rock Oil of Australia for all the outstanding shares of Tethys. Not bad for a third quarter, I'd say. So this could very well, if the ROC offer is accepted by shareholders, and I believe the first date for the acceptance period to end has been advised to be in the second of December, this could very well mean that this is our final quarterly report as a public company. But of course, we don't know what our shareholders are going to do. And while we continue to be a public company, we of course strive to create value for all our stakeholders including all our current investors. So let's get down to the details of what we've actually achieved during Q3. Well, Block 58, the Canoes I Exploration Well, started in August, drilling completed in early November, I think, no, sorry, in October. A little bit after the quarter left, we will get into the details, but testing operations are ongoing of that well. Block 56, FTP for Block 56 and commerciality declaration. We've filed a FTP with the Ministry of Energy and Minerals in Oman in June, and we have been talking back and forth about the best way of optimizing that. before we actually get off to start developing the block. 49, we still have the block. We're in the second period, and we are looking at various ways of getting some sensible data out of the Thamine I well. On the non-operated side, the production from 3 and 4 actually increased during the third quarter compared to the second quarter. A very good sign, I must say. I think it's the first time we've actually, in years, we've actually seen an increase quarter by quarter rather than a decrease. So we are quite optimistic that Operator CCD has now managed to stabilize things and possibly turn them around a bit on the production side. That gave us a revenue and other income of $30.8 million, suspiciously close to what we had in the second quarter, which was also $30.8 million. EBITDA a little bit down from the previous quarter. PETA, our CFO, will give you all the details behind these numbers. Cash flow from operations, 15.4, down from 19.9, and cash down a little bit from 18.1 for the last quarter to 16.4. Again, back to PETA on that one. Then, of course, on September the 13th, Rock Oil announced their intention to acquire all the shares of Tethys for a cash price of $58.70 per share. At the time, an almost 90% premium to the share price close on the stocking exchange on the 12th of September. And as I said, the acceptance period is up and running. But let's turn on. So, production, Blocks 3 and 4. We saw a slight increase compared to second quarter. Of course, as you may remember, second quarter was impacted by some weather events. Had a lot of rain in the early parts of the second quarter, which brought some operational shut-ins. It took a while to sort that out, but we are now seeing both that new wells drilled deliver nicely on oil, and also that some of the wells shut in because of the rain have actually come back on. So we are seeing a general stabilization at round levels, and we expect production to continue to increase for the fourth quarter. And we stand by our guidance of 2024 year production to be somewhere in the range of 7,800 to 8,000 barrels of oil per day, narrowing our range a little bit now as we are actually well into the fourth quarter. 3.4 continues to deliver good production, and now hopefully in a more stable manner than we've seen over the last couple of years. Appraisal wells of the near field areas in the Farha and Sahad continue. And whereas we've seen the new Farha wells produce well, there's been a little bit more uncertainty around Sahad wells. But all in all, we are seeing a stabilization of the production also from new production wells and appraisal wells drilled. Picking up on certain of the exploration prospects, both near-field ones, but in particular maybe the Barrick, which is a known reservoir of a tight sandstone formation, where various fracking designs have been tried, and we are hopeful we are going to see some continuation of that as we move into about the fourth quarter and on to next year. We'll also do some work on the heavy oils that are also well known in the area. A lot of heavy oil is known to exist in particular in Block 4. However, the possibility of producing that has been uncertain to say the least, but there is now some work from the operator CCD to ascertain if there are any good ways of actually bringing that oil also to surface. And then we are at the very end of the seismic acquisition program, where we now are about to have a complete coverage of all the interesting areas of block three and four, which will be subject to ongoing interpretation probably for the next couple of years to see what can be unearthed of additional prospectivity in those blocks. Leaving the non-operated producing 3 and 4 and move to 56 where we are eager to get the field development plan approved so we can get on with getting commercial production from this field, or these fields I should say. The development plan for the block was submitted in June. We are primarily focusing on the Aljun discovery where we had a long-term production test last year. The SAFHA and the MENA discoveries, the MENA one was made earlier this year. And then there is a very good exploration upside with a number of prospects and leads identified and a lot of seismic here to be interpreted. We've had a good dialogue with the Ministry of Energy and Minerals. I hope we are in the concluding phases of that dialogue. We have been focusing a bit on the exploration strategy going forward as part of the FTP for the, not only for the known discoveries, but also for the prospects and leads and the potential of the block. And we would expect the FTP to be approved in the fourth quarter, so within the next weeks, we are hopeful. 58 is more of an immediate event. The Canoes Well was started, as I said, in August. We had three targets, the Birba and Bua Carbonates and the Hufai slightly deeper carbonate. We drilled the well to a total depth of 3,923 meters, true vertical depth. We drilled through all the reservoirs. And here we had some interesting events occurring. One of the main uncertainties on the well was reservoir quality of the carbonates, both the Arabirba and the Hufai. We produce, as you may recall, from the Buha and Hufai in Block 4, and we know from experience there that reservoir qualities can be quite fickle. You can have a good well with good productivity, and you can have a well just a slight distance away from there that is much worse. The reservoir in these carbonates is quite important. What we also learned from Block 4 is that fractures, not only the matrix porosity of the carbonates, but also that fractures have been created as secondary porosity, can be quite important for productivity. And what we found when we drilled canoes was fractures galore. We had so many much fractures in the Ara Birba section that we had to resort to drilling blind. No drilling fluid back to surface, no cuttings. We have absolutely no idea what we drilled through, but there is carbonates. We believe, and logs have confirmed, that we also got into the, if you look at the map here, And I should say this is not to scale. This is just an illustration of where we are. So we got into the Arabirba, lost circulation immediately, continued a little bit, were not able to cure the flows, so switched over to water-based mud and drilled blind through the Arabirba, the Buha, into the Shuram Shale, and into the Hufa, and TD'd in what we believe to be the Masirah Bay as we come out of the Hufa. Logs confirm the tops of the various horizons and confirms the presence of the Shuram and the Hufai below. However, the whole quality of the Hufai and also with massive fractures and the difficulties of drilling water-based through the Shuram shale made it unclear what we actually would be able to get out of the Hufai. So we decided to plug above the and not do any further testings of that at this stage. But in the Bir Babuwa, we have more than 500 meters of fractured covenants that we have now completed for testing. And since we really have no idea what's in the reservoir, we decided not to case the hole, but to do an open hole test, just like you did in the old days. and see what comes up. So within the next couple of weeks, we will open up the well. And we will flow the well and see what comes to the surface. We should bear in mind that while drilling, a lot of drilling fluid, water-based, was lost into the fracture system. So we may first have the well clean up and get part or all of that water back. And then we'll see if we also get some oil. And obviously, we are hopeful that the multiple fractures will be filled not with saltwater but with oil. But the only way to find out is to flow the well and see what comes to surface. So do stay tuned. We should have an idea of what's in this reservoir over the next two to three weeks.

speaker
Paul
Investor Relations Representative

So yeah.

speaker
Magnus Norden
Chief Executive Officer (CEO)

I think we can move straight on to financial highlights, actually. And there I believe Petter is much better placed to explain the intricate details about financials than I am. So, Petter, please.

speaker
Petter
Chief Financial Officer (CFO)

Thank you, Magnus. And good morning, everyone. The third quarter in general was largely in terms of revenues and earnings unchanged versus the second quarter. And as you can see in the graph to the right, this year to date have been relatively stable on those headline numbers of revenue and EBITDA, with only a small dip in the first quarter. In the second quarter, we saw stable oil prices and stable net entitlement and very, very small changes in overall cost, leading to an EBITDA of 15.2 million, only half a million lower than the second quarter. If you look a bit closer at the cash flow, however, we did see a bit of movement as there was a lower contribution from working capital and some increased capex ticking up in the third quarter as activity picked up out in the field. We ended the quarter with $16 million in cash and a net cash position of $9 million. Looking closer at the revenues and entitlement and oil sales, we see that revenues, as I said before, relatively flat over most of the quarters of this year. However, we do see slightly lower oil sales volumes, particularly in the third quarter. And as a result, we have an underlift position of almost 30,000 barrels at the end of the quarter. And that is a shift from an overlift position at the end of Q2. So essentially, we have almost 30,000 barrels that we are entitled to sell but have yet to sell by the end of the quarter. And that we expect to even out in the coming courses as that position balances out. But that did have some impact on the oil sales revenues in the quarter and certainly will impact the cash flow profile both at the end of the quarter and moving into Q4. The cost pool, which is the unrecovered cost, has risen to $40 million from almost $33 million at the end of the second quarter. As we are operating at full entitlement, but have costs exceeding that, we have $40 million of, let's call it, pent-up cash flow that we hope to recover in the coming years. Moving to expenses. We saw relatively flat development both in OPEX and in admin costs. In OPEX, cost savings in production costs and DNA at the operator were offset by slightly higher workovers as some of that activity picked up during the third quarter, and that has been crucial in also stabilizing the production that we've seen. Switching out pumps on some key producers has had a positive effect, but of course we also see the commensurate costs with that. OPEX per barrel is unchanged for the second quarter in a row at $18 per barrel, and we expect that to be the full year average number as well, as it averages out with continued improved small cost savings in OPEX in the fourth quarter. We saw a smaller uptick as well in admin expenses, but that is mainly related to the activity of our strategic review and the lending activities that concluded in the third quarter. When it comes to cash flow and operations and CapEx, we saw operating cash flow about a million dollars lower than the previous quarter, but then of course we didn't have the full benefits of the working capital swings that at times can be quite significant. So after that, it was about $5 million lower than the previous quarter. And of course, we had an uptick in CapEx, as I mentioned before, both on 3 and 4, as activity and some exploration drilling has picked up. But in particular, it is related to the drilling of the Canoes 1 well, which Magnus has told you about. We do expect more expenditure on canoes in the fourth quarter. as it did conclude drilling operations in October, and we're looking forward to some testing in the coming months. I just mentioned that the working capital shift is mainly an effect of the switch to an underlift position. That is the main contributing factor to that shift from quarter to quarter. as I'm sure you're all accustomed to now, that does tend to fluctuate from quarter to quarter, but even out over time. The result of this is that a negative free cash flow of almost $9 million, but in the quarter we did also conclude financing and drew down $7 million on that loan, so we ended the quarter with $16 million in cash on hand and have more than $50 million available to draw on that facility. And here is a quick reminder on that. We have a five-year, $60 million amortizing term loan that was concluded in August. We made one drawdown in the quarter and have that available for a further nine months with some very good interest rates and, however, some hedging requirements that have yet to be put in place and have not been seen in the third quarter. But that certainly gives us ample support to manage the volatility that we do see in some of those cash flows as we explore and also as the oil price continues to fluctuate. And that takes me to our forward-looking guidance for the year. We are expecting production for the full year to be in the range of 7,800 to 8,000 barrels of oil per day. That's a narrowing of that guidance plan that we provided earlier, so now at a smaller range, but certainly in line with what we have seen in the year-to-date production and as you will see in the monthly production updates. Operating expenditure is expected to be around $18 per barrel for the full year, and that's in line with what we've seen in the past two quarters and certainly is something we expect along those lines in the fourth quarter. Investment in oil and gas is largely unchanged with just some small addition with the effect of the testing on Canoes 1. We expect to be able to finance all these investments with the cash we have on hand, the cash being generated and the debt facility that we have available. With that, I would like to conclude my financial update and hand over to Magnus.

speaker
Conference Call Host
Host

Thank you, Peter, and thank you, Paul, for that. We are approaching the end of the Q&A. A summary of the public offer received from Rock Oil.

speaker
Paul
Investor Relations Representative

So, 58 crowns and 70 euros per catch.

speaker
Magnus Norden
Chief Executive Officer (CEO)

Actually, sorry, which 58.70 in cash per share, which actually corresponds to a company valuation of 1,894,000,000 Swedish crowns, a premium of 89.5% compared to the close on the 12th of September. The independent bid committee of the Board of Directors of Tethys has unanimously commended Shireless to accept ROC's public offer. ROC has also received revocables for about, I think, some 16% of the outstanding shares of Tethys. The acceptance period commenced after ROC filed the formal Offering memorandum with the NASDAQ Stock Exchange commenced on the 28th of October and will expire on the 2nd of December. And the offer is, among others, conditional on receiving 90% acceptance of the shareholders' tethys. So with that on the cards, I do think it's fair to say that the third quarter 2024 offered quite a lot of excitement for Tethys and for Ashahelos. As we move into the fourth quarter, the final fourth quarter of 2024, that excitement continues with three major cliffhangers. Will Block 58 test oil, the canoes on Block 58 test oil and water? When will we finally get the Block 56 Field Development Plan? And will ROC's offer be accepted on December 2nd or not? So stay tuned. There will be a lot happening in TEFIS over the next couple of weeks. We may meet again for a Q4 report. early February in 2025 in that case. However, if the ROC offer is accepted, it's quite possible also that Ethis will no longer be a public company in February of 2025. But that's to be determined. And for the time being, do stay with us. And now let's move over to questions.

speaker
Petter
Chief Financial Officer (CFO)

Shall we start with the questions on the audio lines?

speaker
Conference Call Operator
Moderator

Yes, thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 1-1 again. We will now take our first question. Please stand by. And the first question comes from the line of Theodore V. Nielsen from SB1 Markets. Please go ahead. Your line is now open.

speaker
Theodore V. Nielsen
Analyst, SB1 Markets

Good morning, Magnus, and good morning, Petra. Thank you for the update. A few questions. First of all, it's on the Q&A as well. Could you say anything about the resource estimate there? And the second question, which is maybe the most important, as you said, Magnus, is most likely the last quarterly presentation you do as a publicly listed company. So just what do you remember the best? from your peers as the CEO, what's your best memories from TET Disorder? And maybe also the same question to Petter, of course you haven't been there for that many years, but what's your best memory from TET Disorder? Thank you.

speaker
Magnus Norden
Chief Executive Officer (CEO)

Okay, well, thank you, Theodore. What was your first question, sorry?

speaker
Theodore V. Nielsen
Analyst, SB1 Markets

That was a resource estimate for the... Oh, okay.

speaker
Magnus Norden
Chief Executive Officer (CEO)

Right, right, right, right. I think pre-drill, we were somewhere at a... 120 million barrels at a, was it 18% chance of success or something like that?

speaker
Petter
Chief Financial Officer (CFO)

Across all the... Across all the... At about 45 million barrels in Pimin, yeah. Those are all published numbers, and I don't think we have any new view on it.

speaker
Magnus Norden
Chief Executive Officer (CEO)

No, no, no, nothing new. I mean, depending on what the test itself shows, then, of course, we would maybe be able to come up with a... revised resource base based, of course, but dependent on what will show. And as we say, I mean, testing preparations are ongoing, and we would expect to have some idea of the test before the end of the month. Then, Odia, best memories. There have been a few portal reports, and you have been a very diligent participant here, and we thank you very much for that. I would almost like to turn the question around to you. But first, let's see. Obviously, the major discoveries in 3 and 4 and the resilience and longevity of the 3 and 4 discoveries, I mean, 150 million barrels has actually been extracted from blocks 3 and 4. I think that's a lot more than we expected when we first entered the block and also when we had the first discoveries there. That's, of course, a major success. The ability to build the Tethys portfolio of a number of other exploration opportunities in Oman has also been quite exciting, and every time we have been able to announce a new EPSA, that's been a major milestone, both of potential but also of confidence in Tethys' ability to do something sensible with this acreage. Then, of course, there have been ups and downs connection with the quarterly reports. We have had the occasional 10-15% up day and we have had several more 10-15% down days with strong volatility associated with reports, which also, of course, has created a bit of excitement and almost betting as to how will the report be received today. And I think all in all, it's been a most interesting journey and some very, very entertaining years with the a lot of good things to look back to. And it isn't quite over yet. I mean, we'll know more in about a month's time. Petro, any thoughts from your side?

speaker
Petter
Chief Financial Officer (CFO)

Oh, it's a difficult question. I think it's very difficult to pinpoint any single moment. There are lots of times that are imprinted on memory. But I would say that what actually... I think one of the lasting things with the past few years is certainly seeing the strategy come to fruition, looking back at negotiating licenses and looking at the plans that were laid at that time and now seeing, for instance, the canoes well being drilled and seeing how that is being realized and a testament of kind of keeping the long-term view and trying to keep the momentum despite sometimes very challenging conditions, while trying to please the shareholders' need for constant sort of action and updates. I think it's a difficult balance in a long-cycle business, but certainly the ups and downs, I would say, are the enjoyable bits.

speaker
Magnus Norden
Chief Executive Officer (CEO)

Indeed, Peter, if you don't like ups and downs, you should not be in your business.

speaker
Theodore V. Nielsen
Analyst, SB1 Markets

Okay, thank you. That's great. I have a third question, if I may. As far as I remember, the companies reformed after acquisition of Nureco's licenses in Oman. That was a great deal, paying only $1 million. Where can we find that kind of deal now going forward? Where do you look for those kind of deals?

speaker
Magnus Norden
Chief Executive Officer (CEO)

Oh.

speaker
Theodore V. Nielsen
Analyst, SB1 Markets

globally?

speaker
Magnus Norden
Chief Executive Officer (CEO)

Interesting question, Theodore, and it's obviously something that deserves some thought. I think actually Oman may still offer some such opportunities. As we have concluded over the years we've been there, there is underexplored areas. The received wisdom of where oil has been generated and where oil has been reservoired in Oman still prevails a lot of the outlooks. And in particular, the flanks of the salt basin are by no means fully explored. And I think that could still be opportunity.

speaker
Petter
Chief Financial Officer (CFO)

Otherwise, the... We are looking at Algeria now without being, you know, Every deal is unique, and while the numbers will not always translate, I think we do see overlooked potential in Algeria, and that is what we are pursuing there, hopefully on being able to secure it on terms that are equally favorable from a risk-reward perspective without going to the specific numbers. Indeed, indeed.

speaker
Magnus Norden
Chief Executive Officer (CEO)

So there are still overlooked opportunities, and... If you want to get a good risk-reward, look in areas where oil is known and has been discovered, and look around there and see what may have been overlooked by past companies.

speaker
Theodore V. Nielsen
Analyst, SB1 Markets

Okay, that's it for now. Yeah, absolutely. So thank you, and I wish all the best with the acceptance period with Rook Oil and also news from Block 58 and 56. Thank you. Thank you.

speaker
Conference Call Operator
Moderator

Thank you. We will now take our next question. Please stand by. And the next question comes from a line of Martin Carlson from Commandeer Capital AS. Please go ahead. Your line is now open.

speaker
Martin Carlson
Analyst, Commandeer Capital AS

Good morning. And I just want to first start by thanking you for being great stewards of our shareholders' capital and doing rational decisions which may not always be popular. I would like to start on block 56. During the second quarter conference call it was mentioned that the declaration of commerciality was within weeks not months and yet here we stand without a declaration of commerciality and you touched on that there were some dialogue with regards to the exploration part of the license that had delayed the declaration. Could you perhaps go a bit more into detail on that?

speaker
Magnus Norden
Chief Executive Officer (CEO)

Shall we say it's, I mean, a field development plan is by its nature a plan for developing known discoveries. In the case of 56, there's also strong exploration upside. And we've had a discussion on how to, shall we say, best optimize resources between both the getting production up and running as quickly as possible and ramping that up as quickly as possible, while also maintaining a strong focus on the exploration potential of the block, which sort of goes hand in hand, because, I mean, if you – If you stop exploring, as we have seen in various other situations, you will eventually have difficulties in boosting and maintaining production. So I think it's fair to say that we are in good agreement with the Ministry that we certainly want to do this, and we are just ironing out the details of how we can optimize the combination of development production and future exploration. So certainly there has been a delay in getting the FTP and getting the commerciality, but I think for the long-term project it's been a good dialogue and it's probably going to benefit the project going forward. In a way, maybe it's better to have it now rather than later.

speaker
Martin Carlson
Analyst, Commandeer Capital AS

Moving on to the bid from the Fusang Group of China. Given the importance of the pre-drill estimates for Block 56, which were quite large and, in your own word, would transform the company, If pre-drill comes in, which would indicate a significant increase in valuation, would this affect the term of the bid? And specifically, while term 5 allows the bidder to withdraw in case of adverse changes, would there be a provision for TELIS or its shareholders to reconsider acceptance if significant positive developments do occur?

speaker
Magnus Norden
Chief Executive Officer (CEO)

Let's put it this way. I mean, the offer is made to shareholders. and the shareholders may very well elect not to tender their shares. And if enough shareholders feel that a value-creative event has occurred, they may then not tender their shares and thus force maybe an adjustment in price. But at this stage, it's very much up to the shareholders and, of course, to the company to provide the shareholders with as good information as possible for the shareholders to make as good a decision as possible. But it is entirely up to the shareholders, and if they elect not to tender the shares by, in this case, December 2nd, then they would have elected not to do that. And it would then be up to the buyer to address that situation. And that's beyond what we can speculate in how the buyer would – what the buyer would do in that case if they do not reach 90 percent by December 2nd. Then, of course, there are other terms and conditions also, including various government and other approvals, et cetera, et cetera. So, I mean, it's not a done deal, and nothing is done until it's done. As we have pointed out here, there is some interesting developments going on in the company, and we will see how that will affect the shareholders' view on the offer. And if the offer is not accepted, reach the 90% by December 2nd, we'll see what happens then. But to answer your question directly, it's in the hands of the shareholders. based on whatever information the company is able to give.

speaker
Martin Carlson
Analyst, Commandeer Capital AS

Yes, and going a bit further on that, and I was curious if you could reflect a bit on the decision of landing the acceptance period for December 2nd, given the current ongoing testing on Block 58 and the delayed announcement of the production plans for Block 56, which will probably be announced quite up until that deadline. It's quite a tight time period there to get all the information needed to make a qualified decision with regards to the value of the offer.

speaker
Magnus Norden
Chief Executive Officer (CEO)

The acceptance period is entirely in the hands of the buyer. It's nothing where the seller has any information. All we can do now is continue running the company as business as usual. The offer is known to shareholders, but it's up to the buyer how the buyer wants to handle the offer made and any acceptance period or any other conditions. Tethys is not involved in that.

speaker
Martin Carlson
Analyst, Commandeer Capital AS

It's entirely up to the buyer. Okay. And perhaps another question with regards to the bid. So you, yourself, Mr. Nordin, Lancelot Partners, and one other shareholder has made an irrevocable acceptance of their shares to Rockoil. And it was a bit interesting. You mentioned that you were going sort of old school with the Canoe One Well to see if anything was flowing to the surface. And when we first discussed the Canoe One Well in a conference call some years ago, we were sort of making a bit perhaps a humorous analogy to the spindle top. But is it to be understood that if it's 150 feet gusher with 100,000 barrels, you would still have irrevocable acceptance of the shares? Or is there a mechanism there too?

speaker
Magnus Norden
Chief Executive Officer (CEO)

The... There are certain situations where the irrevocables would be released, and I believe one of them is that unless acceptance by other shareholders is less than 80%, for example, the revocable would be released. So, again, it's very much up to the shareholders to decide based on whatever information they have and what we know if they want to accept the offer as it stands or not. The other side, I should say, in starting.

speaker
Martin Carlson
Analyst, Commandeer Capital AS

Okay, that's great. That clarifies things. Yeah, I think that's...

speaker
Magnus Norden
Chief Executive Officer (CEO)

all for me perhaps i'm just going to end by saying that the lucas well on the spindle top took nine days to take and get under control so that could perhaps be something to think about with with the planning and all of that hopefully we've learned something from that and and we expect to have a control flow whatever it is that comes that comes out of the well but but thanks for reminding us of this optimistic outcome

speaker
Martin Carlson
Analyst, Commandeer Capital AS

You're welcome. Okay, that's all for me.

speaker
Magnus Norden
Chief Executive Officer (CEO)

Thank you. Okay, thank you very much.

speaker
Conference Call Operator
Moderator

Thank you. We will now take our next question. And the next question comes from the line of Simon Asikainen-Wickberg from Xperia. Please go ahead. Your line is now open.

speaker
Simon Asikainen-Wickberg
Analyst, Xperia

Can you speak Swedish or can you speak English?

speaker
Magnus Norden
Chief Executive Officer (CEO)

Vi förstår ju vad du säger om du pratar svenska men vi kan ju finnas lyssnare som inte gör det så jag tror det är bättre om vi kan tala på engelska.

speaker
Unnamed Participant
Investor

You mentioned that it's going to take two to three weeks to get results in the block 58 and that is cutting it very close to the acceptance period as recently mentioned and there can be complications but will TETIS So regardless if you have finished what you want to finish in the different blocks, go out with as much information as possible, like before December 2nd, so our shareholders can make as good decision as possible. Because if you're not finished and you're like, oh, well, we're going to finish the 4th, well, then we don't have any information.

speaker
Magnus Norden
Chief Executive Officer (CEO)

It is an interesting question and clearly it's... And as you said, I mean, this is a live operation and there could be surprises and anything will... It's difficult to have a fixed timetable. But clearly everyone is aware of the situation and it's our intention to keep the shareholders as well briefed as possible with the events from the testing of the well.

speaker
Unnamed Participant
Investor

Yes, because if I can complain a little bit, you had complications in 58, as you mentioned, now drilling. I mean, some companies would have published that ongoing when you drilled, oh, we have multiple fractures, this we had to change, we have to drill in blind. Like, I mean, some companies would have issued at the PM when that happened. So that's just why I'm thinking, but you decided to wait until now to release it. So that's just, I mean, it's very important for us if we should accept or not. So that, yeah. But then I have another question, like, is there any realistic scenario of the information that you will gather during these last weeks in 58 and 56 that the board would rescinder its recommendation of accepting this offer?

speaker
Magnus Norden
Chief Executive Officer (CEO)

Again, that would be a question to the board and I think it's something the board would have to address when and if there is information that would suggest that the board would have to address such a situation. It's nothing that I can either really comment on or speculate on at this stage. Primarily, it's up to the shareholders, and the authorities will provide as much and as good information as possible from the ongoing operations.

speaker
Petter
Chief Financial Officer (CFO)

I can add that both management and board take this question quite seriously, or very seriously even, in terms of, being acutely aware of that situation as you describe. And that means that until this company is owned by anyone else than the current shareholders, it is our duty to keep you informed and take decisions that are in the interest of shareholders. But that has to be done on the basis of sound information. And that's why it's very difficult to speculate ahead of time what information will be available at what point and with what certainty. It's certainly something everyone is acutely aware of. And ultimately, as you say, if shareholders are not satisfied with the situation, they will have to act in accordance to their own best interests. And the bidder will, of course, have to adapt accordingly. So there are several parties in this, and I think everyone is fully aware of the situation. and will aim to do the best under those circumstances. But it's very difficult to beforehand say exactly what that will be before you know the information. And that's the same with the information provided to date. It is on the basis of giving as complete a picture as possible at the time when it makes meaningful sense to communicate it. Sometimes communicating things beforehand be rather misleading than informative. So that's always a balance that has to be struck.

speaker
Unnamed Participant
Investor

Yes, well then I will thank you. I will hope you will release as much information as you are holding as close to this acceptance period so we can make as good of a choice as possible. Thank you. Thank you.

speaker
Conference Call Operator
Moderator

Thank you. As there are no further questions on the phone line, I would now like to hand back to the floor for any questions that have been written in.

speaker
Petter
Chief Financial Officer (CFO)

Yes, that's right. Thank you. We do have an email, a set of email questions from Stefan Fokko at AUCTUS Advisors. And I believe most of these questions will actually be put to Magnus. I will ask them on his behalf. Thank you. The first question was, has already been addressed, but let's ask it again. Why has the FTP for Block 56 not been approved yet? As mentioned by another participant, we were expecting that to be in a matter of weeks after the Q2 report. Now months have passed. Do you want to address that again, Magnus?

speaker
Magnus Norden
Chief Executive Officer (CEO)

No, indeed. So we've had a more detailed dialogue than we anticipated with the MEM, and it's lately been directed primarily towards the exploration part of the block going forward. And we expect it now to have it in, well, certainly within the next month or so.

speaker
Petter
Chief Financial Officer (CFO)

Excellent. On block 58, the question on flow tests, I think several participants have touched on this. Would you expect to announce the flow test results as they come through, or would you wait to enter the test to announce the results?

speaker
Magnus Norden
Chief Executive Officer (CEO)

And again here, I mean, and I think as Petter touched on just a couple of minutes ago, we would certainly keep shareholders updated in what's happening and release any meaningful information as soon as we have it.

speaker
Petter
Chief Financial Officer (CFO)

I think we can add to that. I mean, any information that is of interest great importance to the share price. I think we are obliged to announce as soon as we are aware of those.

speaker
Magnus Norden
Chief Executive Officer (CEO)

Any material change to the company's position will have to be immediately.

speaker
Petter
Chief Financial Officer (CFO)

Exactly, and that is something that's always the case. There is one final question, slightly more technical. Why were the logs, this is on block 58, why were the logs inconclusive on the fractured reservoirs? What did the resistivity logs say? Well,

speaker
Magnus Norden
Chief Executive Officer (CEO)

The logs, given that we have nothing really to compare the logs with since we're blind, there is uncertainty as to what the resistivity is actually showed. So what we have more certainty on is the presence of fractures and where they are, the various formation tops, and the permeability from the fractures and the porosity within the matrix. But we have incomplete information to actually conclude if the resistivity logs, what they actually show. And that's why an open-hole flow test is essential to get a better handle on what's actually in the reservoir. And I hope that answered the question, Petter.

speaker
Petter
Chief Financial Officer (CFO)

I believe so. I think Stefan will have to follow up if he's not satisfied with the questions offline. But I believe that's all we have on email. And otherwise, I don't know if there's any new questions coming in from the participants.

speaker
Conference Call Operator
Moderator

Hello. We have no further questions on the audio line. I would now like to hand back to Magnus Norden for any closing remarks.

speaker
Magnus Norden
Chief Executive Officer (CEO)

So in that case, thank you so much for listening. Stay tuned for 56, stay tuned for 58, and stay tuned for the offer from Rock. We should have some very interesting couple of weeks ahead of us. And until we meet again, best of luck and take care. Thank you, everyone.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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