Pharos Energy, an independent energy company, has announced its preliminary results for the year ended 31 December 2022.
Jann Brown, Chief Executive Officer, commented:
'2022 was a year of significant change for Pharos. Amidst the macroeconomic challenges and ongoing volatility specifically in Egypt, we delivered crucial milestones that have allowed us to rebuild resilience in the balance sheet, helping us to deliver on our strategy of creating long term, sustainable value for our shareholders via both regular cash returns and organic growth. Pharos is in a much stronger position with the 2023 work programme underway and a focus on sustainable cash generation with capital discipline to deliver returns to our stakeholders.
I would like to thank our global colleagues, investors, government and JV/JOC partners for their continued support and I look forward to updating stakeholders as Pharos works towards a new phase of growth in 2023.'
2022 Corporate Highlights
- Enhanced fiscal terms secured in Egypt through the signature of the Third Amendment to the El Fayum Concession 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 a carry of the Group's remaining 45% interest, expected to continue into Q3 2023
- Completion of $3m share buyback programme announced in July 2022, with a further $3m committed for 2023
- Announcement of policy for annual dividend, based on Operating Cash Flow
- Reshaping of Board structure and composition from 9 to 6 Directors with Jann Brown appointed as Chief Executive Officer in March 2022
- Commitment to achieve Net Zero GHG emissions from all our assets by no later than 2050 announced in September 2022
- 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 from 2023 to support emissions management projects
2022 Operational Highlights
- Total Group working interest 2022 production 7,166 boepd net (1) (2021: 8,878 boepd net, 7,533 boepd net on a comparative basis1), in line with production guidance;:
- Vietnam production 5,418 boepd net (2021: 5,560 boepd net)
- Egypt production 1,748 bopd 1 net (2021: 3,318 bopd; 1,973 bopd on a comparative basis(1))
- In Vietnam:
- Drilling programme for two TGT development wells completed in H2 2022, on time and under budget
- Drilling of one CNV well started in H2 2022 and completed in Q1 2023, on time and under budget
- Additional interpretation work on the 3D Seismic in Block 125 is continuing and showing promising results with a number of Prospects identified
- In Egypt:
- Commencement of the main El Fayum multi-year and multi-well development programme in Q2 2022 after farm-down
- Seven wells put on production in 2022, plus one additional well drilled in Q4 2022
- Rig on a long-term contract secured in July 2022, providing a stable platform for a continuous drilling campaign
- Request for a short extension on North Beni Suef (NBS) granted in Q4 2022
- Drilling commenced on the first of two NBS commitment exploration wells in parallel with acquisition of additional 3D seismic
2022 Financial Highlights
- Group revenue of $221.6m(2 3) (2021: $163.8m(2 3)
- Cash generated from operations $110.7m (2021: $51.5m)
- Operating cash flow $53.4m (6) (2021: $10.8m)
- Cash operating costs of $16.36/bbl(4) (2021: $16.05/bbl(4)
- Cash balances as at 31 December 2022 of $45.3m (2021: $27.1m)
- Net Debt as at 31 December 2022 of $28.9m(4,5) (2021: $57.5m(4,5)
- Profit for the year of $24.4m (2021: loss $4.7m)
- Net Debt to EBITDAX of 0.23x (4) (2021: 1.00x(4))
2023 Highlights and Outlook
- Continuation of share buyback programme announced in January, with a further $3m committed for 2023 so far
- Dividend payment of 1p per share to be proposed for approval at 2023 AGM
- Net Zero roadmap to be published in H2 2023
- Forecast cash capex for 2023 c.$38m (c.$23m after Egyptian carry by IPR)
- Group working interest 2023 production guidance 6,050 - 7,500 boepd net:
- Vietnam 2023 production guidance 4,700 - 5,700 boepd net
- Egypt 2023 production guidance 1,350 - 1,800 bopd net (equivalent to gross production of 3,000 - 4,000 bopd)
- In Vietnam
- Work on submitting Revised Field Development Plans (RFDPs) for two wells on TGT and one on CNV is progressing, with all wells remaining in contingent budget until approval
- Application for extensions to TGT & CNV licences submitted to partners for approval
- Application for extension to Blocks 125 & 126 licence submitted in December 2022, as no suitable rigs were available for drilling in 2023, and is now with the Prime Minister's office for approval
- Discussions ongoing with a number of interested parties to secure a farm-in partner before drilling the commitment well on Block 125
- In Egypt
- Multi-well development drilling in El Fayum continues in 2023, with nine wells planned for the year
- Two commitment exploration wells expected to be drilled in the El Fayum Concession
- Drilling of first commitment exploration well on NBS underway, with the additional commitment exploration well to follow later in the year. An additional extension of the exploration period until September 2023 was granted by EGPC in March 2023
- Acquisition of the c.110 km2 of additional 3D seismic at NBS has started
1 The farm-down transaction and transfer of operatorship of Pharos' Egyptian assets to IPR completed on 21 March 2022. Working interest production for Egypt in 2022 is therefore reported as 100% through to completion and 45% thereafter. The comparative basis for 2021 also assumes 100% working interest until 21 March 2021 and then 45% for the remainder of the year.
2 Egyptian revenues are stated post government take including corporate taxes
3 Stated prior to realised hedging loss of $22.5m (2021: loss of $29.7m)
4 See Non-IFRS measures on page 38
5 Includes RBL and National Bank of Egypt working capital drawdown
6 Operating cash flow = Net cash from operating activities, as set out in the Cash Flow Statement
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Source: Pharos Energy
