Interim results for the Half-year to 30 June 2022

Pharos Energy plc, an independent oil and gas exploration and production company, announces its interim results for the six months ended 30 June 2022. An analyst conference call will take place at 11.00 BST today.

Jann Brown, Chief Executive Officer, commented:

“Our results for this half year underscore the cash generation potential of our portfolio of assets, with operating cash flow of $27.6m achieved. In Vietnam, further development drilling on both TGT and CNV is due to commence imminently, with the rig on location and preparing to spud. In Egypt, a rig on long-term contract has been secured and is due to arrive in Q4 to continue the development drilling programme. These activities are set to add to production levels and cash flow in H2 and beyond.

We continue to focus our efforts on driving efficiencies, controlling costs and making judicious investments to maximise the value of our portfolio. The share buyback programme, which we announced in July, continues as part of the Company's broader strategy to deliver value to our shareholders and is expected to run for a further four to six months.

Pharos is now in a materially improved financial position, has an accelerating programme in Egypt and significant growth potential in Vietnam. Together, these put us in a strong position and I am pleased to be able to reward shareholder patience with the announcement of a return to a regular dividend, based on operating cash flow, with the first payment set for 2023. With our strengthened balance sheet, a portfolio of cash generative assets with substantial upside in both near term developments and exploration potential plus a commitment to capital discipline, we are well placed to create sustainable shareholder value.”

Corporate Highlights                                                                                                                                

• Signature of the Third Amendment to the El Fayum Concession Agreement in January 2022, increasing Contractor’s share of revenue from c.42% to c.50%
• Completion of farm-out transaction and transfer of operatorship of Egyptian assets to IPR in March 2022, delivering Pharos a 45% carry over its remaining interest
• Reshaping of Board structure and composition from 9 to 6 Board members
• Initiation of share buyback programme in July 2022, of which $1.6m has now been used
• Commitment to achieve Net Zero GHG emissions from all our assets by no later than 2050 announced today
• Establishment of an Emissions Management Fund, under which we will set aside $0.25 for each barrel sold at an oil price above $75/bbl to support emissions management projects

Operational Highlights

• Group working interest production 7,962 boepd net (1H 2021: 9,147 boepd) in line with full year guidance
• Vietnam
  • Production 5,861 boepd net (1H 2021: 5,429 boepd net)
  • Drilling of first of two TGT development wells due to commence
  • Work on submission of TGT & CNV licence extension requests progressing within the JOCs
  • Work ongoing to progress well planning and to secure a partner before drilling the commitment well on Block 125 in 2023
• Egypt
  • Production 2,101 bopd^* (1H 2021: 3,718 bopd)
  • Development activities continues in El Fayum, targeting recovery of c.17 Mbbl 2P
  • Four wells on production in the period
  • Drilling rig secured on long-term contract
  • North Beni Suef (NBS) first exploration commitment well planned for Q4 2022

Financial Highlights

• Group revenue $129.6m^** prior to hedging losses of $17.3m (1H 2021: $72.9m^** prior to hedging losses of $13.7m)
• Net profit of $54.3m (1H 2021: $6.4m profit), including non-cash impairment reversal after tax of $49.2m (1H 2021: impairment reversal after tax $19.4m)
• Cash generated from operations $57.0m¹ (1H 2021: $18.2m)¹
• Operating cash flow $27.6m⁴ (1H 2021: 0.1m)
• Cash operating costs $15.82/bbl² (1H 2021: $14.74/bbl)²
• Cash balances as at 30 June 2022 of $47.5m (30 June 2021: $28.4m)
• Forecast cash capex for the full year c.$29m of which $14.9m had been incurred by 30 June 2022
• Net debt as at 30 June 2022 of $37.9m^2,3 (30 June 2021: $32.9m)²
• Net debt to EBITDAX of 0.51x ² (1H 2021: 1.26x) ²

^{* The farm-out transaction and transfer of operatorship of Pharos’ Egyptian assets to IPR completed on 21 March 2022. Working interest production for Egypt is therefore reported as 100% through to completion and 45% thereafter}

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

^{1 Stated after realised hedging loss of $17.3m (1H 2021:  loss of $13.7m)}

^{2 See Non-IFRS measures at page 32}

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

^{4 Operating cash flow = Net cash from operating activities, as set out in the Cash Flow Statement}

Outlook

• 2022 full year Group working interest production guidance remains unchanged at 6,350 – 7,800 boepd net
• Vietnam
  • 2022 production guidance range unchanged at 5,000 – 6,000 boepd net
  • Three well drilling programme, including two development wells at TGT and one development well at CNV, is on track to commence with the rig on location at TGT
  • Work ongoing to progress well planning, with discussions ongoing to secure a partner ahead of drilling the commitment well on Block 125 in 2023
• Egypt
  • 2022 production guidance range unchanged at 1,350 – 1,800 bopd (equivalent to gross production of 3,000 – 4,000 bopd)
  • Rig secured on a long-term contract due to start in mid-October 2022, focusing on ramping up activities in El Fayum from developed resource base
  • Progressing work on conventional and unconventional exploration prospects to further enhance the value of our acreage
  • NBS commitment well due to be drilled in Q4 2022
  • Request for an extension to the NBS exploration period has been submitted to EGPC
• Net Zero commitment on all assets by 2050, detailed roadmap coming in 2023
• Recommending recommencement of regular dividend payments starting in 2023, subject to shareholder approval at AGM 2023, returning no less than 10% of Operating Cash Flow (OCF)

 

Enquiries

Pharos Energy plc Tel: 020 7747 2000

Jann Brown, Chief Executive Officer       

Sue Rivett, Chief Financial Officer

Tony Hunter, Company Secretary

Camarco Tel: 020 3757 4980

Billy Clegg | Georgia Edmonds | 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, Pharos holds a 45% working interest share in the El Fayum Concession in the Western Desert, with IPR Lake Qarun, part of the international integrated energy business IPR Energy Group, holding the remaining 55% working interest. The El Fayum Concession produces oil from 10 fields and is located 80 km southwest of Cairo. It is operated by Petrosilah, a 50/50 joint stock company between the contractor parties (being IPR Lake Qarun and Pharos) and the Egyptian General Petroleum Corporation (EGPC). Pharos also holds a 45% working interest share in the North Beni Suef (NBS) Concession in Egypt, which is located immediately south of the El Fayum Concession. IPR Lake Qarun operates and holds the remaining 55% working interest in the NBS 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 (CNV) 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 July 2022 Capricorn, Ratio and Pharos reached agreement to relinquish the Israeli licences, and Capricorn as operator has informed the Israeli Ministry of Energy of the parties’ intention.