Interim Results 2021 Pharos Energy - 15 September 2021
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Interim Results 2021 Pharos Energy 15 September 2021
Pharos Energy – 2021 Interim Results 15 September 2021 / 2
Disclaimer
Nothing in this presentation or in any accompanying management discussion of this presentation The Group undertakes no obligation to revise any such forward-looking statements to reflect any
constitutes, nor is it intended to constitute: (i) an invitation or inducement to engage in any changes in the Group’s expectations or any change in circumstances, events, financial or market
investment activity, whether in the United Kingdom or in any other jurisdiction; (ii) any conditions or the Group’s plans and strategy. Accordingly, no reliance may be placed on the figures
recommendation or advice in respect of the ordinary shares (the Shares) in Pharos Energy plc or contained in such forward-looking statements. Forward-looking statements are not guarantees or
the group of companies of which it is the ultimate holding company (together the Group); (iii) any representations of future performance. Similarly, past share performance cannot be relied on as a
offer for the sale, purchase or subscription of any Shares; or (iv) a profit forecast. guide to future performance. Even if the Group’s performance, results of operations, financial and
market conditions, and the development of the industry in which the Group operates, are consistent
This presentation contains certain forward-looking statements that are subject to significant risks with the forward-looking statements contained in the presentation, such performance, results,
and uncertainties associated with the oil and gas exploration and production business generally conditions or developments may not be indicative of performance, results, conditions or
and specifically with the business, operations and financial position of the Group. These forward- developments in subsequent periods.
looking statements can be identified by the use of forward-looking terminology, including the terms
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"should“, “could” or, in each case, their negative or other variations or comparable terminology, or completeness of the information in this presentation or any accompanying management discussion
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we urge you to look at the Principal Risks and Mitigations section in our most recent Annual Report
and Accounts.
Introduction Ed Story President & CEO
Pharos Energy – 2021 Interim Results 15 September 2021 / 4
Highlights
• Farm-out of 55% interest in El Fayum and North Beni Suef to IPR (Improved Petroleum Recovery), a Dallas-
based private company founded by Dr. Mahmoud Dabbous 40 years ago to enhance oil production in Egypt
• Transaction transfers the operatorship and provides a development & exploration carry
• TGT Field Infill Development Programme to boost production underway
• Two TGT wells drilled - first well flowed at an initial rate of 1,600 bopd, second well soon to complete
• Block 125 3D seismic survey acquired, processing contract awarded
• Approval of 2-year extension of Block 125 & 126 Exploration Period received from Government
• Total group working interest 1H 2021 production 9,147 boepd
• $11.7m equity placing in January 2021; proceeds currently funding Phase 1B of Egypt waterflood programme
• RBL refinanced in July 2021, extending the maturity to 2025
• New working capital facility with the National Bank of Egypt in April 2021
• Head office reorganisation with 50% reduction in headcount to be completed by end of 2021
• Reduction in salary of 50% from 1 April 2021 volunteered by all three executive directors in office on that date
• Appointment of Sue Rivett as CFO effective 1 July 2021
Farm-out Jann Brown Managing Director
Pharos Energy – 2021 Interim Results 15 September 2021 / 6
Farmout of El Fayum and North Beni Suef
• Sale of a 55% working interest and operatorship in each of El Fayum and North Beni Suef Concessions to IPR
Lake Qarun Petroleum Co, a wholly owned subsidiary of IPR Energy AG (“IPR”)
• IPR has 40 years of experience in Egypt as a technically proficient and effective operator. IPR is active in all four
key producing regions of Egypt, including the Western Desert
• The Transaction implies a gross value of up to $115m for the Assets (1), consideration includes:
o $5m cash at completion; plus
o an additional contingent consideration of up to $20m dependent on oil prices in the years 2022 to 2025; plus
o IPR funding the group’s retained 45% interest share of future activities (opex and capex) for $38.425m.
• Pharos share of revenues during the period of the carry will provide free cash flow after modest corporate costs
(1) Dependent on the Brent contingent consideration
Pharos Energy – 2021 Interim Results 15 September 2021 / 7
Key Conditions Precedent of the Transaction
• Waiver of EGPC of its pre-emption rights in relation to the Transaction
• Receipt of EGPC’s approval of the draft Deeds of Assignment (“DoA”)
• Approval of the initialed El Fayum Concession Agreement Third Amendment
• Approval by Pharos Shareholders as a Class 1 Transaction
Note: Completion of the El Fayum and North Beni Suef Farm-out Agreements (“FoAs”) are interconditional
Pharos Energy – 2021 Interim Results 15 September 2021 / 8
Farmout Forward Indicative Timeline
Timing of EGPC approvals will run in parallel with the Pharos shareholder approval process.
2021 2022
September October November December January February March
Farm Out Agreements Signed
El Fayum Concession Agreement
Third Amendment
Awaiting ratification CP
EGPC Pre-Emption Period 90 days
CP
Pharos Shareholder Meeting Circular AGM
CP
Conditions Precedent Notice &
Pre-Completion Date
Deed of
Deed of Assignment EGPC draft approval Assignment
CP
to EGPC
IPR becomes operator
Completion Commencement of the infill development drilling programme
A sustainable business Jann Brown Managing Director
Pharos Energy – 2021 Interim Results 15 September 2021 / 10
Operating a sustainable business
Responsibility Framework
Environment Society Business Ethics People
• 34 kg CO2e /bbl of oil • $261,000 community and • 100% • Zero Lost Time Injury
equivalent of • 100% • 100%
charitable investments El Fayum Oil employees and in Vietnam & Egypt in
hydrocarbon produced TGT/ CNV Oil
supporting 12 projects in relevant 1H 2021 (3)
by equity share 1H 2021 Vietnam in 1H 2021(1) Oil sold and used domestically in 1H contractors
2021, contributing to host country undertaken anti-
• Working from
• 259 tonnes CO2e/1000 development goals and access to energy home continued in
tonnes of hydrocarbon bribery and
and replacing coal corruption (ABC) 2021 to allow flexibility
produced by equity
training(2) & reduce infection risks
share at 1H 2021
• 4/9 Board members
are female
Carbon Disclosure Project Task Force on Climate-related Financial Disclosures Governance changes
Continue to report transparently in Preparation work on Phase 2 of the TCFD’s recommendations on Appointment of Sue Rivett as CFO
the CDP’s Climate Change and Financial Disclosure
Water Security Questionnaire 2021
(1) via HLHVJOC | (2) By 02 February 2021 | (3) Pharos’ Vietnam assets have maintained a zero Lost Time Injury record since inceptionFinancial review Sue Rivett Chief Financial Officer
Pharos Energy – 2021 Interim Results 15 September 2021 / 12
1H 2021 Financial summary(1)
Revenue before hedging
Production Hedging loss Net Debt
gain/loss
9,147 boepd $73m $14m $33m
24% 9%
24%
1H 2020: 12,093 boepd 1H 2020: $59m 1H 2020: gain $21m 1H 2020: $36m
Cash Opex Cash from Operations Cash Capex Balance Sheet
$24.4m $18m
Vietnam $333m
$14.7/ bbl
$10m Egypt $110m
67% 70% Net Liabilities ($137m)
Total BS $306m
1H 2020: $24.5m 1H 2020 : $56m 1H 2020: $32m 1H 2020 Total BS $249m
$11.1/bbl
(1) All numbers are to 0 decimal place
(2) Including the loss of our 1H hedges of $13.7m (1H 2020: gain of $21.1m)Pharos Energy – 2021 Interim Results 15 September 2021 / 13
Capex and liquidity management
Capital discipline
Protecting Group liquidity
Capex Flexibility • Onshore low cost wells in Egypt compliment offshore
higher costs wells in Vietnam • Provide continuity to underpin revenues and profitability
• Protect RBL covenants
Overheads • Group admin expense reduced by 34% period on
period, with continued cost savings efforts for • Preserve upside exposure where possible
remainder of the year • Range of products used
• Exec salaries reduced by 35% up to 1Q 2021 and 50%
from 2Q 2021 onwards
• Voluntary staff salary reductions continued at 20%
Percentage of Production Hedged
from 2020 to 1Q 2021. 70%
64%
• A 50% redundancy programme announced at head
office in 1Q 2021 60%
54%
Equity Placing • $11.7m gross raised to support Phase 1B waterflood 50%
programme in El Fayum
40%
Farm-out • De-risking and introduction of capital via Egypt farm-
out
$45.8/bbl
30% $54.4/bbl
Egyptian terms • EGPC approval to change in licence terms secured,
20%
waiting for ratification 15%
• Improvement in revenues by c.20% backdated to
November 2020 10% $63.9/bbl
RBL • RBL refinanced in July 2021, extending the maturity to 0%
2025 1H 2021 2H 2021 1H 2022
• $100m; additional uncommitted US$50m available on
“accordion” basisPharos Energy – 2021 Interim Results 15 September 2021 / 14
Cash sources and uses
Cash Flow as at 30 June 2021 1H 2021 Capex
$m
40
TGT
$1.6m
CNV
30
Capex $0.3m
Spend 125 & 126
$0.1 $10.9 EGYPT $0.8m
20 $9.5 $8.3
$4.2 $1.8 $5.3m $9.5m
Israel
$28.4 $1.5m
$24.6
10
0 El Fayum TGT
Cash Balance at Operating CF Investing Proceeds from Repayment of Interest on Net proceeds Cash Balance at • Batran exploration well • Preparation for 3Q drilling
31 Dec 2020 Activites - borrowings borrowings (RBL borrowings from Equity 30 June 2021
Capex (NBE) & NBE) Placing • Allocated G&A • Abandonment funding
(incl. CNV Blocks 125 & 126
abandonment) • No drilling activity • Operational Office / G&G
• Abandonment funding Israel
• Reprocessing dataPharos Energy – 2021 Interim Results 15 September 2021 / 15
Full year Capex Full year 2021 Capex forecast
Capex underway including discretionary spend
Vietnam
• TGT FFDP programme fully funded from cash flow
• Post-capex free cash flow by 1H 2022
• Blocks 125 & 126 3D seismic commitment CNV
TGT - No planned activity
Egypt $13.6m - Abandonment funding
Capex TGT
$16.7m
Spend - 4 wells to be drilled in 3Q
- Abandonment funding
Egypt $44.9m
Blocks 125 & 126
– 909km² 3D seismic
programme
• Phase 1B waterflood in progress El Fayum
- Waterflood
• 3 well interim drilling programme - 3 new wells
• Farm-out to fund the future development programme
125 & 126 Israel
$11.5m - Reprocessing data
CNV
$0.8m
Israel & NBS
$2.3mAsset overview Mike Watts Managing Director
Pharos Energy – 2021 Interim Results 15 September 2021 / 17
Pharos assets
Production from TGT and CNV fields offshore Vietnam and the El Fayum fields onshore Egypt Vietnam
Egypt & Israel
Offshore Israel
Blocks
125 &
126
TGT &
CNV
Fields
El Fayum & North Beni Suef onshore
TGT & CNVVietnam
Pharos Energy – 2021 Interim Results 15 September 2021 / 19
Vietnam
TGT & CNV Production Cuu Long Basin - TGT and CNV Fields Phu Khanh Basin - Blocks 125 &126
1H 2021 Production net 5,429 boepd
• 70% W.I. and
TGT field Operator of
1H 2021 Production net 3,976 boepd Exploration
Blocks 125 &
CNV field 126
1H 2021 Production net 1,453 boepd
Commencement of TGT Infill Development Drilling
Programme TGT Field
Vietnam Full year 2021 net production guidance
5,500-6,000 boepd
Blocks 125 & 126 CNV Field
• Completion of 909 km2 3D seismic acquisition
programme on the western part of Bock 125 in Phu
Khanh Basin
• Final seismic processed results are expected in 1H TGT and Blocks
2022 CNV 125 &
Fields 126
• Approval of 2-year extension to Phase 1 of Block
125 & 126 Exploration PeriodPharos Energy – 2021 Interim Results 15 September 2021 / 20
TGT Infill Development & Well Intervention Programme
• Implementation of the full TGT infill development well programme, is expected to increase gross field
production by 5-6,000 boepd to around 20,000 boepd
3rd well
• The programme is using a jack-up drilling rig (PVD-II) from Petro Vietnam Drilling (H1-33P)
• The first well in the sequence, TGT-H4-34P:
Full Field 4th well
Development Plan (H1-4P-
- Spud on 20 July 2021 and reached planned TD on 3 August 2021. The well completed on 15 August, 6 firm producers ST1)
ahead of both schedule and budget and came on stream on 23 August at an initial rate of 1,600 bopd
• The second well in the sequence, TGT- H5-12XPST: 9 contingent
wells
- Spud on 24 August and reached planned TD on 7 September 2021. The well is currently being completed
before being put on production (anticipate 1,200 bopd from the main reservoirs) after a short test of the deep
& tight Oligocene D potential") ~ 20 September
• FPSO gas lift compressor upgrade completed in April ahead of schedule and within budget
• TGT operations focussed on a well intervention programme to manage production improvements proactively
First well
Summary of 2021 Well Intervention Programme as of 30 June 2021 H4 -34P
Second well
H5 -12XPharos Energy – 2021 Interim Results 15 September 2021 / 21
TGT-H4-34P Development Well Results
Seismic Line along TGT-H4-34P well bore H4-34P well result
H5-12XPST
Perforation strategy
Phase 1A:
• Perforate and carry out flow test Oligocene D
• Flow test duration ~ 3 weeks
Phase 1B:
• Perforate sands in Oligocene C, 5.2L and 5.2U
• Produce reservoirs, including Oilgocene D, in
comingled flowPharos Energy – 2021 Interim Results 15 September 2021 / 22
Block 125 3D Seismic
Screenshot from Vessel – 27 June 2021 Completion of 3D seismic acquisition July 2021
• 3D covers multiple prospects & leads
identified on 2D seismic
• Data acquired by Shearwater MV Vespucci
• 8 streamer configuration
• The survey was acquired on time and on
budget
Processing timetable – Key targets
• Fast-Track 3D PSTM Volume: ~ December 2021
• Full 3D PSTM Volume: ~ February 2022
• Full 3D PSDM Volume: ~ June 2022
• 70% W.I. and
Operator of
Exploration Blocks
125 & 126Pharos Energy – 2021 Interim Results 15 September 2021 / 23
Value Catalysts
Vietnam 1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22
TGT Development wells First 4 infill wells 2 wells *
TGT Well Intervention Programme Routine reservoir management
CNV Development Well TBD *
Block 125 3D seismic Acquisition Processing
* Precise timing of the 5th and 6th wells in the TGT firm 6 well programme and CNV Programme to be decided by the Joint Ventures in 4Q 2021
The TGT FFDP includes:
• 6 firm infill producer wells; targeted
to increase gross production from
the present ~15,000 boepd to
around 20,000 boepd in 2022.
• A further 9 contingent wellsEgypt
Pharos Energy – 2021 Interim Results 15 September 2021 / 25
Egypt – El Fayum and North Beni Suef
2021 Production 2021 Activity
1H 2021 Production net • Significant improvement in concession agreement terms agreed with EGPC to accelerate
3,718 bopd cost recovery for near-term cash – c.$6/bbl improvement. Parliamentary approval for
these fiscal changes in a “Third Amendment” to the contract is awaited, thereafter
ratification by the President of Egypt is expected 2H 2021
Full year 2021 net production guidance • Phase 1B of the Waterflood programme (well conversions to injectors, reperforations in
some wells, additional of perforations in others and completions) using one workover rig,
3,200 - 3,500 bopd started 1Q 2021. The programme got off to an intermittent start due to the one workover
rig having to perform maintenance on existing wells
• Plans in place to accelerate production enhancement in the second half of the year
Production guidance revised from 4,000 – include:
4,400 bopd to 3,200 – 3,500 bopd due to o A second work over rig operating since end-August
operational delays and the drive mechanism o Recommencement of development drilling operations via a 3-well interim
being primary depletion only (steep declines) programme approved by the Board in mid-August. One drilling rig is being
contracted and the first well is expected to spud in October 2021
until the main waterflood secondary recovery
programme is operational • Batran-1X exploration commitment well drilled 2Q 2021 – discovery in the Abu Roash
Lower “G” (LARG) and the Upper Bahariya (UB) reservoirs
• Farm-out announcedPharos Energy – 2021 Interim Results 15 September 2021 / 26
2021 Operations
Phase 1B waterflood programme Batran oil discovery 2Q 2021 Interim Development Drilling
Key to 9 month programme
Wells to be completed as water injectors • 3 well programme to commence October
• The Batran-1X commitment exploration well in the NE
Wells to be recompleted as water injectors
Tersa Development Lease, was drilled on a prospect
• Intended to support planned investment
Wells to be recompleted to add located 4km west of the Main Tersa-1X well
waterflooded zones to production programme ahead of farm-out completion
Injection wells Completed Wells
• The Batran well reached Total Depth on 4 June 2021
Production wells
• Batran to be tested 4Q 2021
Silah Field: Top UB Depth Map
Planned
well
Batran
Silah 1X
Silah 13-1
Planned
wellPharos Energy – 2021 Interim Results 15 September 2021 / 27
El Fayum & NBS Growth Potential
El Fayum 2P Reserves & Discovered Resource
• 23 mmbls produced as of 30 June 2020
• 41 mmbls remaining (45mmbbls with term extension)
• 48 mmbls contingent resource
El Fayum Potential
• AR “F” + More of the same exploration + new plays e.g., deep play
NBS Potential
• Possible unitisations + more of the same exploration + frontier east of Nile El Fayum Technical Case
El Fayum Investment Case - 57 wells to recover 18% of resource
90 wells to
recover 30 %
of resource
(shown with
50% risking)Pharos Energy – 2021 Interim Results 15 September 2021 / 28
Value Catalysts
Egypt 2021 2022
1Q 21 2Q 21 3Q 21 4Q 21 1Q 22 2Q 22 3Q 22
Farm-out process and execution
Pressure support / H2O injection Phase 1B Phase 2 dependent on farm-out
Licence extension Parliamentary Approval &
EGPC approval
Presidential Ratification
Anticipated 2H 2021
Re-negotiation of licence terms
Interim wells + Full Development programme 3 well interim programme Subject to investment from farminee
Batran exploration well + single zone test 57 to 90 well development programme
dependent on farm-out doneOutlook Ed Story President & CEO
Pharos Energy – 2021 Interim Results 15 September 2021 / 30
Outlook
Operational Strategic
Vietnam Corporate
TGT & CNV
• Eyes on optimising the development prize • The end of the TGT development spend
and the carry on El Fayum set to allow
Blocks 125 & 126 Pharos to return to free cash in 2022
• Process and evaluate the 3D seismic. • Careful handling of blocks 125 & 126
• Initiate third party conversations around will be required to maximise the
potential farm-out “company making” potential
Egypt • Pharos will refocus on Vietnam and the
Far East, where it has long established
relationships
El Fayum & North Beni Suef exploration
• Complete the farm-out, transition of
operations
• Support the full field developmentPharos Energy – 2021 Interim Results 15 September 2021 / 31
Conclusion
Restructuring of the A smaller but more
company will continue financially resilient
post the Egypt farm-out business post the
downturn
Far East focus
Focus on cash flow
Optimise 125 & 126
& shareholder returns
potentialQ&A
Investor Relations Pharos Energy Tel: 020 7747 2000 27/28 Eastcastle Street London W1W 8DH United Kingdom Company No: 3300821 www.pharos.energy
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