Interim results for the Half-year to 30 June 2021

Pharos Energy plc, an independent oil and gas exploration and production company, announces its interim results for the six months ended 30 June 2021. An analyst conference call will take place at 1430 BST today.

A separate announcement on the farm-out of the Group's interests in the El Fayum and North Beni Suef Concessions in Egypt (the “Farm-Out Announcement”) was published earlier today at www.pharos.energy.

Ed Story, President and Chief Executive Officer, commented:

“We are delighted to announce the farm-out of our onshore Egypt position today. The proposed transaction will result in IPR taking over 55% working interest and operatorship in the El Fayum and North Beni Suef Concessions. IPR is a well-regarded and experienced operator in Egypt and is perfectly positioned to effect the full field development and exploration programmes. We look forward to working with them to realise the full potential of these fields.

The Infill Development Drilling Programme in TGT Field in Vietnam is well underway; the first well drilled is already on production with initial flow rate at 1,600 bopd, the second well is currently being completed, and the third well in the sequence is due to spud shortly.

The signing of the Egyptian farm-out and the infill development programme in Vietnam means that the medium term outlook for the Company is a return to free cash flow and ultimately to distributions to shareholders.”

1H 2021 Operational Highlights

• Group working interest 1H 2021 production 9,147 boepd net (1H 2020: 12,093 boepd)
• Vietnam
  • Vietnam 1H 2021 production 5,429 boepd net (1H 2020: 6,114 boepd net)
  • TGT 6-well Infill Development Programme commenced in July 2021; first well drilled and completed successfully ahead of both schedule and budget, second well near completion and the third well due to spud shortly
  • 3D seismic survey acquired in June/July 2021 on Block 125 fulfils the geophysical commitment on both Blocks 125 & 126. Processing results are expected 1H 2022
  • Government approval received in September 2021 for a 2-year extension on Blocks 125 & 126 Exploration Period
• Egypt
  • Egypt 1H 2021 production 3,718 bopd (1H 2020: 5,979 bopd)
  • El Fayum Phase 1B waterflood programme commenced with one workover rig; second workover rig contracted in August to be dedicated to the maintenance programme
  • Batran-1X oil discovery
  • Signing of Egyptian farm-out

1H 2021 Financial Highlights

• Group revenue $72.9m^* prior to hedging losses of $13.7m (1H 2020: $59.0m^* prior to hedging gain of $21.1m)
• Cash generated from operations $18.2m¹ (1H 2020: $55.9m)¹
• Cash operating costs $14.74/bbl² (1H 2020: $11.13/bbl)²
• Cash balances as at 30 June 2021 of $28.4m (30 June 2020: $37.8m)
• Net debt as at 30 June 2021 of $32.9m^2,3 (30 June 2020: $36.1m)²
• Net profit of $6.4m (1H 2020: $268.3m loss), including non-cash impairment reversal after tax of $19.4m (1H 2020: impairment charge after tax $265.5m)
• Forecast cash capex for the full year c.$45m of which $9.5m had been incurred by 30 June 2021 (1H 2020: $31.9m)
• Net debt to EBITDAX of 1.26x ² (1H 2020: 0.88x) ²

_{* Egyptian revenues are given post government take including corporate taxes.}

_{1 Stated after realised hedging loss of $13.7m (1H 2020:  gain of $21.1m)}

_{2 See Non-IFRS measures at page 27}

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

1H 2021 Corporate Highlights                       

• Completion of equity placing, subscription and retail offering in January 2021 which raised gross proceeds of approximately $11.7m; proceeds are being used to fund Phase 1B of the waterflood programme in Egypt
• Reduction in salary of 50% from 1 April 2021 volunteered by all three executive directors in office on that date
• Appointment of Sue Rivett to the Board as Chief Financial Officer (“CFO”) effective 1 July 2021
• Head office reorganisation and reduction in headcount to be completed by end of 2021

Outlook

• 2021 Full year Group working interest production guidance updated to 8,700 – 9,500 boepd net
• Vietnam
  • 2021 production guidance range narrowed to 5,500 – 6,000 boepd net
  • TGT Infill Development Well Programme ongoing. The initial four-well programme to be completed 2021, with two additional wells in 2022
  • Proactive management of the existing producing TGT reservoirs continues through an active well intervention programme
  • Submission of the revised CNV Revised Full Field Development Plan at the end of 2021, subject to partners’ approval
  • Final processed 3D seismic results over Block 125 are expected in 1H 2022
• Egypt
  • 2021 production guidance updated to 3,200 – 3,500 bopd
  • Return to drilling with an interim 3-well programme commencing in October to accelerate production enhancement ahead of farm-out partner resuming operatorship
  • The investment funds required to develop the fields in the initial 57 well producer and injector programme will become available following completion of the farm-out to IPR Lake Qarun Petroleum Co., a wholly owned subsidiary of IPR Energy AG
  • Testing of the recently drilled Batran-1X exploration discovery well in 4Q 2021
  • Parliamentary approval on the Third Amendment to the El Fayum Concession Agreement awaited. The Amendment is expected to be backdated to November 2020 and will increase contractor revenue take by c.20%

• Israel
  • Seismic reprocessing in order to mature prospectivity ahead of a drilling decision in 3Q 2022 concluded in 3Q 2021

 

Enquiries

Pharos Energy plc Tel: 020 7747 2000

Ed Story, President and Chief Executive Officer
Sue Rivett, Chief Financial Officer

Camarco Tel: 020 3757 4980

Billy Clegg | Owen Roberts | Monique Perks

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, 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).  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 Cairn Energy plc and Israel's Ratio Oil Exploration, have eight licences offshore Israel. Each party has an equal working interest and Cairn is the operator.