Interim results for the Half-year to 30 June 2023

Pharos Energy plc, an independent oil and gas exploration and production company, announces its interim results for the six months ended 30 June 2023. An analyst conference call will take place at 11.00 BST today.

Jann Brown, Chief Executive Officer, commented:

 “The first half of the year has been marked by strong operational performance. In Vietnam, the lateral well drilled on CNV came on production significantly above expectation and this success is now being factored into future development plans. In Egypt, The first exploration well drilled on the NBS concession was successful and efforts are underway to secure approval for production to commence in 4Q this year. An exploration well in a new zone of the main producing asset in Egypt, El Fayum, has also been successful. 

“Vietnam continues to deliver robust revenues and cash flows to support the business and our returns to shareholders. We are progressing the licence extensions through the system enabling us to prolong the lives of these fields. In Egypt, capital is being allocated carefully to reflect the economic situation. In the short term, we continue to be supported by the terms of the deal struck with IPR, with full carry plus the oil price based contingent consideration, the first payment for which we received in June.  Looking to the future, the potential of our Egyptian assets has been enhanced with exploration successes delivered this year. 

“Finally, we were delighted to secure a two-year extension to the term of our exciting frontier exploration position, Blocks 125/126 in Vietnam.  This extension gives us time to bring in the right farm in partner and to complete the necessary work to drill this basin opening play. The size of the prize has company making potential and the risk reward dynamic for investors from drilling is asymmetric. We will pursue drilling on Block 125 as soon as we have secured a partner and a rig.

“The company continues to focus on delivering returns to shareholders through our commitment to a regular dividend, our ongoing share buybacks, and by driving value throughout the portfolio to grow the business.”

 

Corporate Highlights                                                                

  • Final dividend for the 2022 financial year of 1p per share, totalling $5.3m, approved by shareholders at the AGM and paid out on 12 July 2023
  • Continuation of $3m share buyback programme announced back in January, with a total of $0.7m spent as at 30 June 2023
  • First contingent payment of $5m from the deal with IPR received

Operational Highlights

  • Group working interest 1H production was 6,915 boepd net (1H 2022: 7,962 boepd) in line with full year guidance
  • Vietnam
    • Production 5,566 boepd net (1H 2022: 5,861 boepd net)
    • Recently drilled well CNV-2PST1 has been strongly contributing to CNV field production
    • TGT Revised Field Development Plan (RFDP) approved by MOIT, drilling rig tender is in progress for 2024 drilling campaign
    • Applications for five-year extensions to the TGT & CNV licences, including terms and work programme commitments for the extension period, have been agreed by the partners and are currently with PVN for approval
    • Approval received from the Vietnamese Government for the two-year extension to Phase One of the Exploration Period under the Blocks 125 & 126 PSC to 8 November 2025
    • CPR for Block 125 confirms a range of gross unrisked prospective oil resources of between 1,178 MMstb (1U) and 29,785 MMstb (3U) with a Mean value of 13,328 MMstb
  • Egypt
    • Production 1,349 bopd (1H 2022: 2,101 bopd, working interest 100% up to 21 March 2022 )
    • Egypt production has been stable in the first half of the year underpinned by a small development drilling campaign plus a focus on workovers, recompletions, and water injection to bring low-cost barrels to production and build reservoir energy for future drilling
    • Four development wells and one exploration commitment well were drilled in the El Fayum concession in 1H 2023
    • The first exploration commitment well in the El Fayum Concession encountered oil-bearing reservoirs in the Abu Roash G and Upper Bahariya formations. The well will be tested to confirm deliverability using one of the workover rigs
    • The first exploration commitment well in the North Beni Suef Concession (NBS-SW1X) was declared a commercial discovery after encountering multiple pay zones in the Abu Roash G formation. The stabilised production test rate pre-frac is 470 bopd (gross). The operator has requested approval from the regulator for the grant of the NBS Development Lease with a view to starting commercial production in 4Q 2023
    • Acquisition of c.130 km2 of additional 3D seismic at NBS is completed and a second well will be drilled this year

Financial Highlights

  • Group revenue $86.2m (1H 2022: $129.6m) with no realised hedging gains or losses (1H 2022: prior to realised hedging losses of $17.3m)
  • Net loss of $14.3m (1H 2022: $54.3m profit), including non-cash impairment charge after tax of $9.8m (1H 2022: impairment reversal after tax $49.2m)
  • Cash generated from operations $43.4m1 (1H 2022: $57.0m)1
  • Operating cash flow $21.3m4 (1H 2022: $27.6m)4
  • Cash operating costs $14.14/bbl2 (1H 2022: $15.82/bbl)2
  • Cash balances as at 30 June 2023 of $35.9m (30 June 2022: $47.5m)
  • Forecast cash capex for the full year pre-carry is $27.4m (post carry $13.2m), of which $15.4m (post carry $8.3m) had been incurred by 30 June 2023
  • Net debt as at 30 June 2023 of $16.4m2,3 (30 June 2022: $37.9m)2,3
  • Net debt to EBITDAX of 0.31x 2 (1H 2022: 0.51x) 2

1 Stated after realised hedging gain/loss of $nil (1H 2022: loss of $17.3m)

2 See Non-IFRS measures on page 30

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

  • 2023 full year Group working interest production guidance updated to 6,350 – 6,750 boepd net from 6,050 – 7,500 boepd net
  • Vietnam
    • 2023 production guidance narrowed to 5,000 – 5,300 boepd net from 4,700 – 5,700 boepd net
    • TGT RFDP currently with the Government for approval; drilling programme, which includes two wells, expected to commence following approval of the RFDP
    • CNV RFDP to be submitted to partners for approval in 4Q 2023
    • Work ongoing to progress well planning, with discussions ongoing to secure a partner ahead of drilling the commitment well on Block 125
    • Additional independent work is being undertaken by ERCE to extend the review to identify leads and mature these into Prospects
  • Egypt
    • 2023 production guidance narrowed to 1,350 – 1,450 bopd net from 1,350 – 1,800 bopd net
    • Additional workover and waterflood projects to be completed in 2H 2023
    • NBS first commitment well targeted to be on production in 4Q 2023
    • Second exploration commitment well on NBS is expected to be drilled this year
  • Net Zero roadmap to be published in 4Q 2023

Enquiries

Pharos Energy plc Tel: 020 7747 2000

Jann Brown, Chief Executive Officer       

Sue Rivett, Chief Financial Officer

Camarco Tel: 020 3757 4980

Billy Clegg | Andrew Turner | Rebecca Waterworth | Kirsty Duff

Notes to editors

Pharos Energy plc is an independent energy 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 and Vietnam. 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.

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