2019 Preliminary Results
Pharos Energy plc, an independent oil and gas exploration and production company, focused on sustainable growth and returns to stakeholders, announces its preliminary results for the year ended 31 December 2019. A conference call will take place at 0930 GMT today.
Ed Story, President and Chief Executive Officer, commented:
“In these turbulent times of global market uncertainties we remain focused on financial discipline and are now taking appropriate measures to preserve shareholder value. We are confident that through a combination of our low gearing, low commitments, low oil price break-evens for Vietnam and the flexibility offered by deferring some of our largely discretionary investments in Egypt, the business is well placed to weather the challenging macroeconomic conditions whilst retaining the growth opportunities. Operating a sustainable business remains a key priority for Pharos and environmental, social and governance (ESG) issues are at the heart of how we run the business. We continue to make ESG enhancements including new Independent Board appointments, social investments and reductions in greenhouse gas (GHG) emissions in our operations. We believe these prompt actions ensure the business is in the best possible position to weather the current uncertainties”.
2019 Strategic Highlights
- Completion of the acquisition of the El Fayum Concession in Egypt
- Building a regional portfolio through the acquisition of further prospective acreage, via the North Beni Suef onshore Concession in Egypt, and eight offshore licences in Israel
- ESG enhancements across the business including the establishment of the Environmental, Social and Governance (ESG) Board Committee, new independent Board appointments, initiatives to reduce GHG emissions and maintaining our exceptional safety record in Vietnam
- Rebranded to Pharos Energy plc to reflect a refreshed business with new focus on growth opportunities
2019 Financial Highlights
- Group revenue of $189.7m (2018: $175.1m)¹, ²
- Loss for the year of $24.5m (2018: profit of $27.7m, including a post-tax impairment reversal of $23.9m)
- Cash operating costs $10.45/bbl (2018: $13.63/bbl)1, 3
- Cash generated from operations $113.0m (2018: $101.4m)1
- Group Net Debt $41.5m as at 31 December 2019 (2018: Net Cash $140.1m)3
- Cash balances as at 31 December 2019 of $58.5m
- 2019 full year dividend of $27.4m (2018: $23.3m) paid 31 May 2019
- Net Debt to EBITDAX of 0.37 3
* Egyptian revenues are given post government take including corporate taxes.
1 Vietnam – full 12 months | Egypt – from 02/04/2019
2 Stated after realised hedging loss of $0.2m
3 See Non-IFRS measures at page 39
2019 Operational Highlights
- Total Group working interest production 12,136 boepd net (2018: 7,274 boepd)
- Vietnam production 7,081 boepd (2018: 7,274 boepd)
- Egypt production 5,055 bopd (2 April to 31 December 2019)
- In Egypt, expanded El Fayum operations and ESG enhancements;
- Increased drilling activity and commencement of waterflood implementation in the Greater Silah Area
- Reduced GHG emissions through the elimination of 730,000 litres of diesel use per year and associated emissions
- Achieved a 30% reduction in flared gas at the North Silah Deep site.
- In Vietnam two firm wells approved in the 2019 work programme;
- First well TGT-H5-31I has been completed as a producer / future water injector
- Second TGT-H1-15X appraisal/future development well is currently operating. This well will test the commercial potential of a new deeper play, discovered in early 2019, with estimated STOIIP potential of 225 million barrels across the TGT structure, discovered in early 2019.
Outlook for 2020
- Cash capital expenditure in 2020 is now expected to be up to c. $45m, with an additional c. $10m of discretionary spend in Egypt under review.
- In light of the new global macroeconomic circumstances, Egypt production guidance issued on 8 January 2020 for the full year 2020 (Egypt: 6,500 to 7,500 bopd) is suspended whilst the scale of our discretionary work programme for the rest of the year is under review. The production guidance for Vietnam remains unchanged for the 2020 full year (5,500 to 6,500 boepd net)
- In Egypt
- Appropriate pacing of low cost multi-well producer and water-injector programme, to proceed with waterflood implementation to increase production and recovery
- Phase Two programme of associated gas powered electrical generators is planned to reduce CO2 emissions further and the use of solar power sources for electrical generation at satellite wellsite(s) is under investigation
- The low-cost evaluation of the oil development potential of the recently awarded North Beni Suef Concession which straddles the Nile across both the Western and Eastern Deserts
- In Israel low-cost activities during the first phase of the licences comprise reprocessing of existing 3D seismic data and evaluation of the acreage’s potential
- In Vietnam
- The appraisal and production performance of the deep Oligocene reservoir in the TGT-H1-15X well offshore Vietnam (Target depth reached 28 February 2020)
- Evaluation of the undrilled Phu Khanh Basin Blocks 125 & 126 offshore Vietnam will continue, but the planned 3D seismic may be deferred until 2021
- We maintain our commitment to paying the dividend of 2.75 pence per share during 2020, as previously announced. However, given the current uncertainties in the global economy, the Board has decided to postpone these dividend payments until the macro environment becomes clearer.
- Careful deployment of capital to maintain a strong balance sheet throughout the period of market uncertainty, with a view to early resumption of our approach to maximising shareholder returns through organic investments or acquisitions that can support cash flow generation and value accretion to underpin a longer-term dividend stream.
Pharos Energy plc Tel: 020 7747 2000
Ed Story, President and Chief Executive Officer
Jann Brown, Managing Director and Chief Financial Officer
Mike Watts, Managing Director
Sharan Dhami, Group Head of Investor Relations
Camarco Tel: 020 3757 4980
Billy Clegg | Owen Roberts | Monique Perks
Notes to editors
Pharos Energy is an independent oil and gas exploration and production company with a focus on sustainable growth and returns to stakeholders, headquartered in London and listed on the London Stock Exchange. Pharos has production, development and exploration interests in Egypt, Israel and Vietnam. In Egypt, Pharos holds a 100% working interest in the El Fayum oil concession in the low-cost and highly prolific Western Desert, one of Egypt's most established and prolific hydrocarbon basins. The concession produces from 10 fields and is located 80 km south west of Cairo and close to local energy infrastructure. It is operated by Petrosilah a 50/50 JV between Pharos and Egyptian General Petroleum Corporation (EGPC). Pharos is also an operator with 100% working interest in the North Beni Suef (NBS) Concession which is located immediately south of the El Fayum concession. In Israel, Pharos together with Cairn Energy plc and Israel's Ratio Oil Exploration, were successful in their bid for eight blocks in the second offshore bid round in Israel. Each party has an equal working interest and Cairn is the operator. In Vietnam, Pharos holds a 30.5% working interest in the Te Giac Trang (TGT) Field in Block 16-1, which is operated by the Hoang Long Joint Operating Company. Block 16-1 is located in the shallow water Cuu Long Basin, offshore southern Vietnam and a 25% working interest in the Ca Ngu Vang (CVN) Field in Block 9-2, which is operated by the Hoan Vu Joint Operating Company. Block 9-2 is 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.