2021 Preliminary Results

Pharos Energy plc, an independent oil and gas exploration and production company, announces its preliminary results for the year ended 31 December 2021. A conference call will take place at 0900 GMT today.

Jann Brown, Managing Director and Chief Executive Officer Designate, commented:

“It is truly an exciting time to take over the reins at Pharos. The completion of the deal with IPR, expected imminently, is a key step in reshaping the portfolio and 2022 will see investments made in both Vietnam and Egypt to deliver growth, value and cash flow. The key focus for 2022 is cash generation, through careful cost control, a rapid payback programme of drilling in Vietnam and in Egypt through our carry, which covers all but our own moderate corporate costs.”

“For the first time in some years, we have capital to allocate to an exciting work programmes in 2022, forming a clear roadmap to cash generation and value creation in the year ahead.”

2021 Operational Highlights

• Total Group working interest 2021 production 8,878 boepd net (2020: 11,373 boepd), in line with production guidance:
  • Egypt production 3,318 bopd (2020: 5,270 bopd)
  • Vietnam production 5,560 boepd net (2020: 6,103 boepd)
• In Egypt:
  • Return to drilling with Batran-1X exploration commitment well and three-well development drilling programme
  • El Fayum Phase 1B waterflood programme commenced with one workover rig, with a second workover rig dedicated to the maintenance programme
  • Conditional agreements for the farm-down and sale of a 55% working interest and operatorship in each of the Egyptian El Fayum and North Beni Suef Concessions to IPR Lake Qarun Petroleum Co. ("IPR")
• In Vietnam:
  • Successful completion of Phase 1 of TGT four-well development drilling campaign, ahead of schedule and below budget
  • HLJOC management committee approval of two additional TGT wells and 13 well interventions in November 2021
  • Completion of 3D seismic acquisition programme on Block 125, with seismic processing underway and final results expected mid-2022
  • Government approval for a 2-year extension of the initial exploration phase under the Block 125 & 126 Production Sharing Contract (“PSC”)

2021 Financial Highlights

• Group revenue of $163.8m*¹ (2020: $118.3m*¹)
• Cash generated from operations $51.5m (2020: $85.5m)
• Cash operating costs of $16.05/bbl² (2020: $11.60/bbl²)
• Cash balances as at 31 December 2021 of $27.1m (2020: $24.6m)
• Net Debt as at 31 December 2021 of $57.5m^2,3 (2020: Net Debt $32.6m²)
• Loss for the year of $4.7m (2020: loss $215.8m), including non-cash net impairment reversal after tax of $23.5m (2020: impairment charge after tax of $198.1m)
• Net Debt to EBITDAX of 1.00x (2020: 0.48x)²

^{* Egyptian revenues are stated post government take including corporate taxes.}

^{1 Stated prior to realised hedging loss of $29.7m (2020: gain of $23.7m)}

^{2 See Non-IFRS measures on page 35}

^{3 Includes RBL and National Bank of Egypt working capital drawdown}

2021 Corporate Highlights

• Completion of equity placing, subscription and retail offering in January 2021 which raised gross proceeds of approximately $11.7m
• Refinancing of the Group’s RBL facility in July 2021, providing additional liquidity through access to a committed $100m with a further $50m available on an uncommitted “accordion” basis and extending the tenor of the facility by 22 months
• Signature of agreements in September 2021 for the farm-down and sale of a 55% working interest and operatorship in the El Fayum and North Beni Suef Concessions in Egypt to IPR, with Pharos shareholder approval secured in December 2021
• Reduction in salary of 50% from 1 April 2021 volunteered by all three Executive Directors in office on that date
• The Executive Directors also voluntarily reduce their bonus entitlement for 2021 by 20% from 72.5% to 58%
• Appointment of Sue Rivett to the Board as Chief Financial Officer (“CFO”) effective 1 July 2021
• London office reorganisation and c.50% reduction in headcount completed

2022 Highlights and Outlook

• Signature of the Third Amendment to the El Fayum Concession Agreement, with retroactive application of the improved fiscal terms from November 2020 and a three and a half year extension to the exploration period
• Modest hedging programme to capture the higher oil price environment
• Phase Two of Task Force on Climate-related Disclosure (“TCFD”) project completed in Q1 2022, with ongoing work on future TCFD alignment
• Appointment of Jann Brown as Chief Executive Officer (“CEO”) on completion of the transaction with IPR
• Additional directorate changes upon completion of the transaction with IPR and at the 2022 AGM, resulting in a reduction in the size of the Board from nine Directors to six, with a much lower cost base
• In Egypt
• Pharos and EGPC have finalised all necessary documents to be presented to the Minister of Petroleum and Natural Resources to approve the transaction with IPR and this approval is expected shortly
• The three-well drilling programme, which commenced in November 2021, is ongoing
• Commencement of the main El Fayum multi-year and multi-well development programme in Q2 2022
• Production forecast for 2022 will be evaluated following completion of the farm-down to IPR and transfer of operatorship. Guidance will be given at the AGM
• In Vietnam
• Vietnam 2022 production guidance : 5,000 – 6,000 boepd
• Drilling of two development wells in TGT and one in CNV to commence Q3 2022
• Processing of 3D seismic data on Block 125 ongoing

 

Enquiries

Pharos Energy plc Tel: 020 7747 2000

Jann Brown, Chief Executive Officer Designate

Sue Rivett, Chief Financial Officer

Camarco Tel: 020 3757 4980

Billy Clegg | Owen Roberts | Monique Perks | Rebecca Waterworth

Notes to editors

Pharos Energy plc is an independent oil and gas exploration and production company with a focus on sustainable growth and returns to stakeholders, which is listed on the London Stock Exchange. Pharos has production, development and/or exploration interests in Egypt, Vietnam and Israel. In Egypt, until completion of the farm-out to IPR Energy announced on 15 September 2021 (the “Farm-out Transaction”), Pharos holds a 100% working interest in the El Fayum oil Concession in the Western Desert. The Concession produces from 10 fields and is located 80 km southwest of Cairo. It is operated by Petrosilah, a 50/50 JV between Pharos and the Egyptian General Petroleum Corporation (EGPC). Similarly, until completion of the Farm-Out Transaction occurs, Pharos is also an operator with a 100% working interest in the North Beni Suef (NBS) Concession, which is located immediately south of the El Fayum Concession. In Vietnam, Pharos has a 30.5% working interest in Block 16-1 which contains 97% of the Te Giac Trang (TGT) field and is operated by the Hoang Long Joint Operating Company. Pharos’ unitised interest in the TGT field is 29.7%. Pharos also has a 25% working interest in the Ca Ngu Vang (CVN) field located in Block 9-2, which is operated by the Hoan Vu Joint Operating Company. Blocks 16-1 and 9-2 are located in the shallow water Cuu Long Basin, offshore southern Vietnam. Pharos also holds a 70% interest in and is designated operator of Blocks 125 & 126, located in the moderate to deep water Phu Khanh Basin, north east of the Cuu Long Basin, offshore central Vietnam. In Israel, Pharos together with Capricorn Energy PLC (formerly known as Cairn Energy PLC) and Israel's Ratio Oil Exploration, have eight licences offshore Israel. Each party has an equal working interest and Capricorn Energy is the operator.