TIDMPHAR

RNS Number : 6964X

Pharos Energy PLC

27 April 2023

27 April 2023

Pharos Energy plc

("Pharos" or the "Company" or, together with its subsidiaries, the "Group")

Annual Report & Accounts and Notice of Annual General Meeting ("AGM")

The Annual Report & Accounts of the Company for the year ended 31 December 2022 (in pdf and ESEF compliant format), a Shareholder Circular, which includes Notice of the 2023 AGM are now available on the Company's website and can be accessed via www.pharos.energy .

Hard copies of the above two documents, together with a Form of Proxy, have been mailed to those shareholders having elected to receive paper copies.

In accordance with LR 9.6.1, copies of the above documents have also been submitted to the FCA's National Storage Mechanism and will shortly be available for inspection on the National Storage Mechanism's website, https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

This dissemination announcement is based upon the Company's announcement of Preliminary Results for the Year Ended 31 December 2022 made on 22 March 2023 with the addition of information required by Disclosure and Transparency Rule (DTR) 6.3.5R set out below in the Appendix.

Annual General Meeting

The 2023 AGM will be held at Storey Club, 100 Liverpool Street, London, EC2M 2AT on 25 May 2023 at 2.00 p.m.

After the disruption to our normal meeting format over the last three years, the Company is pleased to invite shareholders to attend the Company's 2023 AGM in person.

For reasons of cost and logistics we are not offering the option of virtual participation in this year's AGM, but the Board recognises that some shareholders may still have reservations about attending the meeting in person. We also recognise that the AGM is an important event for shareholders in the corporate calendar, and we are committed to ensuring that shareholders can exercise their right to vote and ask questions in connection with this meeting. Accordingly, for those shareholders that do not wish to attend, or those that wish to attend and are unable to do so, questions in connection with the business of the AGM can be submitted on reasonable notice in advance of the meeting by email to info@pharos.energy. In so far as relevant to the business of the meeting questions will be responded to by email and taken into account as appropriate at the meeting itself.

Shareholders wishing to vote on any of the matters of business at the AGM are encouraged to submit their votes as soon as possible, and in any event no later than the relevant deadline, 2.00 p.m. on 23 May 2023, through the proxy and electronic voting facilities. Voting at the AGM will be carried out by way of a poll so that the votes cast in advance by all shareholders appointing the Chair of the Meeting as their proxy can be taken into account. As is usual, the results of the AGM will be announced as soon as practical after it has taken place.

Enquiries

Pharos Energy plc Tel: 0207 603 1515

Tony Hunter, Company Secretary

Camarco Tel: 020 3757 4980

Billy Clegg | Georgia Edmonds | Rebecca Waterworth | Kirsty Duff

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 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.

Appendix

Following the release of the Company's Preliminary Results for the Year Ended 31 December 2022 made on 22 March 2023, additional information is set out below in accordance with DTR 6.3.5R.

1) The following is extracted from page 160 of the Company's Annual Report and Accounts 2022 at www.pharos.energy.

D i r ecto r s' R e sp o nsib i l i ty S t a t e m ent

(a) the Financial Statements set out on pages 171 to 202, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and in accordance with International Financial Reporting Standards as issued by the IASB, give a true and fair view of the assets, liabilities, financial position and loss of the Company and the Group taken as a whole;

(b) this Directors' Report along with the Strategic Report, including each of the management reports forming part of these reports, includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that they face and how these are being managed and mitigated as set out in the Risk Management and Risk Report on pages 47 to 60; and

(c) the annual report and the Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for the shareholders to assess the Group's position, performance, business model and strategy.

Approved by the Board and signed on its behalf.

Sue Rivett

Chief Financial Officer

21 March 2023

2) The following description of the principal risks and uncertainties is extracted from the Risk Management Report (pages 47 to 60) of the Annual Report and Accounts 2022 at www.pharos.energy .

Principal Risks and Uncertainties

A summary of the key risks affecting Pharos and how these risks are mitigated to enable the Company to achieve its strategic objectives is as follows.

Key to change in likelihood: á Increase ß à No Change â Decrease N New Risk

 
 STRATEGIC 
                          Principal risks                               Change                                   Causes                                                           Risk Mitigation 
                                                                          in 
                                                                      likelihood 
                                                                     -----------  -------------------------------------------------------------------  -------------------------------------------------------------------- 
 
        1. Further lockdowns                                                          *    Emergence of new variants or other viruses                            *    Continue to maintain and promote precautionary 
        dampening oil demand                                             â                                                                                       measures to minimise disruption to business 
 
         *    Sub-optimal pricing on commodity sales                                  *    Waving efficacy of vaccinations and boosters 
                                                                                                                                                                 *    Procure long lead items as early as possible from 
                                                                                                                                                                      reliable suppliers / contractors 
         *    Reduced revenue to finance operations                                   *    COVID-19 infections continue to go up 
 
                                                                                                                                                                 *    Tight cash management and forecasting 
                                                                                      *    The virus maintains its pandemic status throughout 
                                                                                           2023 
                                                                                                                                                                 *    Hold back on discretionary spend 
 
                                                                                      *    Social disorder as poorer nations / populations fall 
                                                                                           behind on vaccination programmes                                      *    Oil price hedging 
 
 
                                                                                                                                                                 *    The bulk of our output sold on the local markets 
                                                                                                                                                                      where demand remains strong 
 
 
                                                                                                                                                                 *    Closely follow and comply with all applicable law, 
                                                                                                                                                                      regulation and public health guidance relating to the 
                                                                                                                                                                      COVID-19 pandemic 
                                                                     -----------  -------------------------------------------------------------------  -------------------------------------------------------------------- 
 
             2. Insufficient                                             â             *    Reallocation of capital away from oil and gas             *    Regular review of funding options 
             funds to meet commitments 
 
              *    Inability to invest in line with growth strategy                         *    Huge swings in oil and other commodity prices             *    Stress testing forecast 
 
 
                                                                                            *    Assets bubble bursts                                      *    Proactive dialogue with banks and other providers of 
                                                                                                                                                                capital 
 
                                                                                            *    Global debt crises emerging 
                                                                                                                                                           *    Opportunity screening 
 
                                                                                            *    Inadequate cost control 
                                                                                                                                                           *    Effective project management and resourcing 
 
                                                                                            *    Poor technical data to support allocations 
                                                                                                                                                           *    Cost carry by farm-in partner(s) 
 
                                                                                            *    High inflation 
                                                                                                                                                           *    Thorough capital allocation process 
                                                                     -----------  -------------------------------------------------------------------  -------------------------------------------------------------------- 
 
              3. Production levels                                       ß             *    Inadequate waterflood responses                                 *    Develop a clear wells strategy, focusing on 
              below expectation                                          à                                                                                       performance improvement, regulatory compliance and 
                                                                                                                                                                      increased activity 
               *    Sub-Optimal well performance                                            *    Incorrect well placements 
 
                                                                                                                                                                 *    Increase drilling activity / plan-drill additional 
               *    Reduced drilling                                                        *    Development wells uncommercial                                       injection wells / frac injection zone 
 
 
                                                                                            *    Poor reservoir models                                           *    Reduce cost of well construction 
 
 
                                                                                            *    Lack of financing for drilling programme                        *    Increase surveillance and intervention rates 
 
 
                                                                                                                                                                 *    Perform Target workovers on Producer /injection wells 
 
 
                                                                                                                                                                 *    De-risk best prospects / drill best prospects 
 
 
                                                                                                                                                                 *    Improve Reservoir models 
 
 
                                                                                                                                                                 *    Implement planned drilling programmes 
 
 
                                                                                                                                                                 *    Active participation in dialogue with JVs/JOCs 
                                                                     -----------  -------------------------------------------------------------------  -------------------------------------------------------------------- 
 
              4. Health, Safety,                                                           *    Business disruption due to workforce affected by           *    Improve structural and Asset Integrity through strong 
              Environmental and                                          ß                 COVID-19                                                        operational and maintenance processes which are 
              Social Risk                                                à                                                                                 critical to preserving a safer environment 
 
               *    Reputational                                                           *    Health and safety and environmental risks of major 
                                                                                                explosions, leaks or spills                                *    Comply with all legislative / regulatory frameworks 
                                                                                                                                                                and transition to a goal based approach focused on 
               *    Operational outages leading to lower production                                                                                             improving safety 
                                                                                           *    High risk operating conditions and HSES risks 
 
                                                                                                                                                           *    Promote a positive health and safety culture where 
                                                                                           *    Climate change impacts on the sector, such as extreme           workers are given proper training and incentives to 
                                                                                                weather, sea level rise and water availability                  work safe with a zero tolerance for non- compliance 
                                                                                                affecting production 
 
                                                                                                                                                           *    Environmental and Social Impact Assessments relating 
                                                                                           *    Gas venting and flaring hazards and risks - well blow           to, for example: 
                                                                                                outs, land/water contamination 
 
                                                                                                                                                          o climate impacts and 
                                                                                           *    Non-alignment of new acquisitions' HSES practices         need to adapt to changing 
                                                                                                with Pharos Corporate standards                           climate conditions over 
                                                                                                                                                          the life of the asset 
                                                                                                                                                          o regulatory developments 
                                                                                           *    Increased disparities and societal risks in health,        *    Enhance emergency preparedness and spill prevention 
                                                                                                technology or workforce opportunities                           plan 
 
 
                                                                                                                                                          o Controlled venting 
                                                                                                                                                          o Control and management 
                                                                                                                                                          of pressurised oil and 
                                                                                                                                                          gas from boreholes 
                                                                                                                                                          o Use of low impact 
                                                                                                                                                          extraction chemicals 
                                                                                                                                                          where alternatives exist 
                                                                                                                                                          o Water management - 
                                                                                                                                                          securing of a sustainable 
                                                                                                                                                          water supply, recycling 
                                                                                                                                                          and reuse wastewater 
                                                                                                                                                          o Marine management 
                                                                                                                                                          plan - especially for 
                                                                                                                                                          offshore drilling 
                                                                                                                                                          o Carry out scenario 
                                                                                                                                                          exercises to improve 
                                                                                                                                                          preparedness 
                                                                                                                                                          o Active participation 
                                                                                                                                                          in dialogue with JOC 
                                                                                                                                                          to influence them on 
                                                                                                                                                          best work practices 
                                                                                                                                                           *    Maintaining adequate energy insurance for our assets 
                                                                                                                                                                and operations 
                                                                     -----------  -------------------------------------------------------------------  -------------------------------------------------------------------- 
 
              5. Climate Change                                          á            *    Pressure on investors to divest / avoid fossil fuel              *    Transparent reporting and participation in Carbon 
              - transition and                                                                  companies / projects                                                  Disclosure Project (CDP)and Water questionnaire 
              physical risks 
 
               *    Lack of Capital                                                        *    Inability to find economically viable CO(2) reduction            *    Continue alignment with TCFD recommendations 
                                                                                                solutions 
 
               *    Reputational                                                                                                                                 *    Net Zero commitment on all assets by 2050, detailed 
                                                                                           *    Lack of alignment between our key stakeholders'                       roadmap coming in 2023 
                                                                                                priorities and climate change concerns 
               *    Increased capex and operating costs 
                                                                                                                                                                 *    Establishment of an Emission Management Fund, under 
                                                                                           *    Global transition to a lower carbon intensity economy                 which we will set aside $0.25 for each barrel sold at 
               *    Physical Damage to                                                                                                                                an oil price above $75/bbl to support emissions 
                                                                                                                                                                      management projects 
                                                                                           *    Increased climate regulation and disclosure 
              assets 
               *    Lower oil prices                                                                                                                             *    Transparent reporting and participation in Carbon 
                                                                                           *    Increase in carbon taxes / decarbonisation charges                    Disclosure Project (CDP) Climate Change and Water 
                                                                                                                                                                      Security questionnaires 
               *    Stranded assets 
                                                                                           *    transformational shifts leading to reduced demand for 
                                                                                                fossil fuels                                                     *    Continue alignment with TCFD recommendations 
               *    Regulatory changes - 
 
                                                                                           *    Climate activists pressing prominent institutions and            *    Further integrate climate risk management within 
              potential taxes                                                                   investors to abandon fossil investments - "greening"                  Pharos Risk Management Framework 
                                                                                                the financial system 
 
                                                                                                                                                                 *    Stress test our going concerns under a Net Zero 
                                                                                           *    Increased frequency of extreme weather events                         Emissions price scenario and carbon tax 
 
 
                                                                                           *    Supply chain disruptions causing delay/ shutdowns to             *    Embed Climate change scenarios and evaluate decisions 
                                                                                                operations                                                            on key business operations / directions 
 
 
                                                                                           *    Lack of partner alignment on decarbonisation                     *    Continuous improvement of GHG emissions management 
                                                                                                initiatives                                                           and get JOCs to support CO(2) emissions reduction 
                                                                                                                                                                      initiatives 
 
 
                                                                                                                                                                 *    Update our Climate Change Policy and keep it fit for 
                                                                                                                                                                      purpose and in line with evolving decarbonisation 
                                                                                                                                                                      developments 
 
 
                                                                                                                                                                 *    Comprehensive insurance cover for Physical Damage 
 
 
                                                                                                                                                                 *    Regional close monitoring of extreme weather 
                                                                                                                                                                      developments so that evacuation or shut-down are 
                                                                                                                                                                      activated in good time 
 
 
                                                                                                                                                                 *    Regular and timely control of inventories to ensure 
                                                                                                                                                                      essential spares are sourced in advance 
 
 
                                                                                                                                                                 *    Prepare business case or back study to support 
                                                                                                                                                                      decarbonisation initiatives 
                                                                     -----------  -------------------------------------------------------------------  -------------------------------------------------------------------- 
 
 
 FINANCIAL* 
                        Principal risks                            Change                                 Causes                                                        Risk Mitigation 
                                                                     in 
                                                                 likelihood 
                                                                -----------  ---------------------------------------------------------------  ------------------------------------------------------------------ 
 
             6. Commodity Price                                     ß        *    On-going market volatility and uncertainties from          *    Oil commodity Hedging 
             risk                                                   à             COVID-19 
 
              *    Uncertainty on planning                                                                                                       o Comply with RBL requirements 
                                                                                  *    Geo-political factors and international conflicts         o Maintain robust processes 
                                                                                                                                                 around treasury, governance, 
              *    Inability to fund work programme / dividend                                                                                   forecasting, credit 
                                                                                  *    Pressure on investors to divest / avoid fossil fuel       and risk 
                                                                                       companies / projects                                       *    Close monitoring of business activities, financial 
                                                                                                                                                       position cash flows 
 
                                                                                  *    Lower long-term prices tighten the margin of error 
                                                                                       for investments                                            *    Control over procurement costs / effective management 
                                                                                                                                                       of supply chains derived from third parties - 
                                                                                                                                                       suppliers, joint venture partners, investors, and 
                                                                                  *    Forecasting volatility swings are more complex as it            contractors 
                                                                                       is challenging to gauge what that means for the 
                                                                                       industry as market dynamics are influenced by the 
                                                                                       speed of recovery from COVID-19 and growing ESG            *    Stress test scenarios and sensitivities via principal 
                                                                                       pressures                                                       compound risk analysis to ensure a level of 
                                                                                                                                                       robustness to downside price scenarios 
 
                                                                                  *    Negative cash flows & earnings degradation 
                                                                                                                                                  *    Capital discipline with focus on controlling and 
                                                                                                                                                       managing costs 
                                                                                  *    Market speculation and trading in oil futures 
 
                                                                                                                                                  *    Discretionary spend actively managed 
                                                                                  *    Resurgence of new COVID-19 variants 
 
                                                                                                                                                  *    Maintain and cultivate good relationships with 
                                                                                  *    Repercussions of the Russian invasion of Ukraine                lenders 
                                                                -----------  ---------------------------------------------------------------  ------------------------------------------------------------------ 
 
        7. Rising Operational                                       ß            *    Global inflation                                            *    Regular updates to yearly budgets and forecasts 
        Costs                                                       à 
 
         *    Reduced profits                                                         *    Turmoil in the energy markets causing sharp price           *    Focus in discretionary spend 
                                                                                           hikes 
 
         *    Strain on cash flows                                                                                                                     *    Secure long-term contracts where appropriate without 
                                                                                      *    Sudden unplanned rate increases for oil and gas                  lock-ins 
                                                                                           services 
         *    Shortages in skilled labour 
                                                                                                                                                       *    Explore applying new technological advances, focus o 
                                                                                                                                                      n 
                                                                                                                                                            prevention and early detection 
                                                                -----------  ---------------------------------------------------------------  ------------------------------------------------------------------ 
 
             8. Egyptian economy                                      N                *    Inability to repatriate cash earned from Egypt         *    Pharos have opted not to accept the payment of our 
                                                                                                                                                        receivables balance in EGP unless required for 
              *    The impact of the war on Egypt's economy is                                                                                          operations 
                   especially significant                                              *    Further devaluation of the Egyptian pound 
 
                                                                                                                                                   *    Revolving credit facility with the National Bank of 
                                                                                                                                                        Egypt (NBE), which allows us to draw down 60% of the 
                                                                                                                                                        value of each invoice in USD (extended the current 
                                                                                                                                                        $18m facility on the same terms to 31 March 2024) 
                                                                -----------  ---------------------------------------------------------------  ------------------------------------------------------------------ 
 
 
 OPERATIONAL 
            Principal risks                                            Change                                   Causes                                                          Risk Mitigation 
                                                                         in 
                                                                     likelihood 
                                                                    -----------  -------------------------------------------------------------------  ------------------------------------------------------------------- 
 
        9. Reserves Risk                                                ß             *    Inaccurate reserves estimates                                  *    Monitor and maintain standards of reserves reporting 
                                                                        à                                                                                      by adhering to three key considerations: of 
         *    Future cash flows and value depend on producing our                                                                                                   consistency, transparency and utility, including 
              reserves                                                                     *    Subcontracting certain reserves estimation work to                  disclosure of movements in reserves on a 
                                                                                                independent reserve engineers outside the direct                    country-by-country basis, disclosure of material 
                                                                                                control of the Group                                                projects and moderation of subjective judgements 
 
 
                                                                                           *    Earlier impairment triggers due to low commodity               *    On-going evaluation of projects in existing and 
                                                                                                price                                                               potential new areas of interest and pursue 
                                                                                                                                                                    development opportunities 
 
                                                                                           *    Capital constraints jeopardise planned exploration / 
                                                                                                development initiatives                                        *    Regular reviews of reserves estimates by independent 
                                                                                                                                                                    consultants 
 
                                                                                           *    Inherent uncertainties in the evaluation techniques 
                                                                                                to estimate the 2P reserves                                    *    Ensure continuing adherence to industry best practice 
                                                                                                                                                                    regarding technical estimates and judgements 
 
                                                                                           *    Increased DD&A costs 
                                                                                                                                                               *    Ensuring peer and independent verification of future 
                                                                                                                                                                    production profiles and reserve recovery 
                                                                                           *    Lower than expected well performances and drilling 
                                                                                                results 
                                                                                                                                                               *    RBL facility compliance - Vietnam Reserves are 
                                                                                                                                                                    audited independently by reserves consultants 
                                                                                           *    Slower drilling programmes                                          approved by lenders 
                                                                    -----------  -------------------------------------------------------------------  ------------------------------------------------------------------- 
 
        10. Partner Alignment                                           á       *    FPSO Tie-in Agreement from other Operator                            *    Active Participation in JOC management 
        Risk 
 
        Vietnam                                                                      *    Delay in the Field Development Plans                                 *    Direct secondment 
         *    Misalignment at JV/JOC level can delay investment 
 
                                                                                     *    Technical disagreement caused by quality of JV staff,                *    Build Senior Management level relationship with local 
         *    Adverse impact on Production and Cash flow                                                                                                            Partners 
 
                                                                                    work ethic, low productivity, 
                                                                                    competency issues                                                          *    Continue good relationship with other Foreign Partner 
                                                                                     *    Geological Modelling differences resulting in 
                                                                                          sub-optimal well locations 
        Egypt                                                                                                                                                  *    Close collaboration with JOCs partners 
         *    Technical Misalignment of JV/JOC level can delay 
              investment                                                             *    JOC partner (IPR and EGPC) divergent views on 
                                                                                          investments, and difference in value-drivers.                        *    Support JV training initiatives 
 
         *    Adverse impact on Production and Cash flow 
                                                                                                                                                               *    Engage with JV Exploration Manager. Achieve technical 
                                                                                                                                                                    buy-in to ERCE model 
 
 
                                                                                                                                                               *    Waterflood analogue success education 
                                                                    -----------  -------------------------------------------------------------------  ------------------------------------------------------------------- 
 
       11. Cyber risk                                                   á            *    Sophistication and frequency of cyber-attacks                    *    Update Service level agreement with IT providers 
                                                                                               increasing 
        *    Major cyber security breach may result in loss of key 
             confidential data                                                                                                                                  *    Offsite Installation of back-up system and Business 
                                                                                          *    Heavy reliance on and disruption to critical business                 Recovery / continuity Plan in place 
                                                                                               systems 
        *    Unavailability of key systems 
                                                                                                                                                                *    Enhance our Cloud back-up data and solutions 
                                                                                          *    Infiltration of spam emails corrupting our systems 
 
                                                                                                                                                                *    Prevention & detection of cyber threats via a 
                                                                                          *    Critical reliance on remote working in light of                       programme of effective continuous monitoring 
                                                                                               COVID-19 pandemic and expectation of longer-term 
                                                                                               hybrid working practices 
                                                                                                                                                                *    Plan for staged integration (new acquisition) and 
                                                                                                                                                                     upgrade of IT systems 
                                                                                          *    The war in Ukraine has raised acute concerns about 
                                                                                               cyber operations 
                                                                                                                                                                *    Cyber Security and Phishing training for all our 
                                                                                                                                                                     workforce globally in 2022 
                                                                    -----------  -------------------------------------------------------------------  ------------------------------------------------------------------- 
 
        12. Human Resource                                              ß             *    Failure to recruit and retain high calibre personnel      *    Remuneration Committee retains independent advisors 
        Risk                                                            à                  to deliver on and implement growth strategy                    to test the competitiveness of compensation packages 
                                                                                                                                                               for key employees 
         *    Good skilled people are essential to ensure success 
                                                                                           *    Challenges in the recruitment & integration of 
                                                                                                additional technical expertise for any new 
                                                                                                acquisition                                               *    On-going succession planning 
 
 
                                                                                           *    Negative view of the oil and gas industry amongst 
                                                                                                younger professionals, particularly in light of           *    Maintain a competitive remuneration mix re bonus, 
                                                                                                climate change impacts                                         long-term incentive and share option plans 
 
 
                                                                                           *    High costs of recruiting experienced workforce            *    Build and use people networks in each country and 
                                                                                                                                                               advertise vacancies in these networks 
 
                                                                                           *    Weakened corporate culture and collegiate 
                                                                                                responsibility due to remote working                      *    Maintain a programme for staff wellbeing 
 
 
                                                                                           *    Restructuring workforce                                   *    Facilitate and encourage workforce communication via 
                                                                                                                                                               employee surveys and shared feedback 
 
                                                                                           *    Board re-composition and retirements 
                                                                                                                                                          *    The Board was reduced from 9 to 6 (two Executive 
                                                                                                                                                               Directors and four Non-Executive Directors) 
 
 
                                                                                                                                                         -- 
                                                                    -----------  -------------------------------------------------------------------  ------------------------------------------------------------------- 
 
 
 REPUTATION 
                         Principal risks                              Change                                  Causes                                                          Risk Mitigation 
                                                                        in 
                                                                    likelihood 
                                                                   -----------  ------------------------------------------------------------------  ------------------------------------------------------------------- 
 
       13. Sub-optimal                                                 ß            *    Scarcity of capital for investment projects                    *    Carry out robust economic analyses based on 
       capital allocation                                              à                                                                                     opportunities high-grading to support capital 
                                                                                                                                                                  allocation 
        *    Adverse reaction from current / future stakeholders                         *    A volatile macroeconomic environment resulting in 
                                                                                              significant differences to key assumptions 
                                                                                              underpinning investment decisions                              *    Key KPIs such as NPV, IRR and payback used to compare 
        *    Investment decisions based on realistic / achievable                                                                                                 across many project scenarios 
             economic assumptions 
                                                                                         *    Pressure to invest and produce growth and returns in 
                                                                                              the short term to maintain dividend payments                   *    Rig count investment scenarios are stress-tested 
                                                                                                                                                                  against a range of Brent oil price 
 
                                                                                         *    Shareholder focus on increasing returns in conflict 
                                                                                              with wider strategic considerations                            *    Seeking to maximise influence to promote best 
                                                                                                                                                                  practice in non-operated ventures - 
 
                                                                                         *    Inability to "switch-off" drilling / investment 
                                                                                              commitments if economic assumptions change rapidly             *    Seek the views of stakeholders through direct and 
                                                                                                                                                                  indirect engagement 
 
                                                                                         *    Lack of partner/stakeholder alignment on 
                                                                                              decarbonisation initiatives                                    *    Maintain a balanced investment portfolio which allows 
                                                                                                                                                                  a degree of resilience in adjusting short-term 
                                                                                                                                                                  investment commitments 
 
 
                                                                                                                                                             *    Prepare business case or back pay study to support 
                                                                                                                                                                  decarbonisation initiatives 
                                                                   -----------  ------------------------------------------------------------------  ------------------------------------------------------------------- 
 
       14. Political and                                               á           *    Operations in challenging regulatory and political               *    Canvass support in risk management by using both 
       Regional risk                                                                         environments                                                          international and in-country professional advisors 
 
        *    Energy sector exposed to a wide range of political 
             developments which may impact adversely on operating                       *    Changes to fiscal regimes without robust                         *    Engage directly with the relevant authorities on a 
             costs, compliance and taxation                                                  stabilisation protections                                             regular basis 
 
 
                                                                                        *    Protracted approval processes causing delays                     *    Assess country risk profiles, trend analyses and 
                                                                                                                                                                   on-the-ground reports by journalists / academics 
 
                                                                                        *    Government reform, political instability and/ or 
                                                                                             civil unrest                                                     *    Thoroughly evaluate the risks of operating in 
                                                                                                                                                                   specific areas and assess commercial acceptability 
 
                                                                                        *    Impact of of financial sanctions, export controls and 
                                                                                             other trading restrictions on industry counterparties            *    Maintain political risk insurance at appropriate 
                                                                                             and sectors (in particular, Russian state-controlled                  levels of cover 
                                                                                             entities, or certain other connected entities or 
                                                                                             Individuals, arising from the continuing conflict in 
                                                                                             Ukraine)                                                         *    All operations are located outside of the EU and USD 
                                                                                                                                                                   is the main currency of our business 
 
 
                                                                                                                                                              *    Active working group monitoring sanctions arising 
                                                                                                                                                                   from conflict in Ukraine and assessing/managing 
                                                                                                                                                                   associated risk to Group 
 
 
                                                                                                                                                              *    Adoption in May 2022 of new standalone Group 
                                                                                                                                                                   Sanctions Policy, to supplement existing Group Code 
                                                                                                                                                                   of Business Conduct and Ethics 
 
 
                                                                                                                                                              *    Develop and maintain mitigation planning in relation 
                                                                                                                                                                   to certain counterparties with potential to come 
                                                                                                                                                                   within the future scope of sanctions 
                                                                   -----------  ------------------------------------------------------------------  ------------------------------------------------------------------- 
 
       15. Business Conduct                                            ß       *    Present in countries with below average score on the                *    Ensure adequate due diligence prior to on-boarding 
       and Bribery                                                     à            Transparency International Corruption Index                              with a risk-based approach,including independent "Red 
                                                                                                                                                                  flags" checks 
        *    Reputational damage and exposure to criminal charges 
                                                                                    *    Lack of transparent procurement and investment 
                                                                                         policies                                                            *    Annual training, testing and compliance 
                                                                                                                                                                  certifications by all associated persons 
 
                                                                                    *    Non-compliance with Criminal Crime Offences (CCO) 
                                                                                         and/or UK Bribery Act                                               *    Increase awareness of the Group's Code of Business 
                                                                                                                                                                  Conduct and Ethics and related policies for all 
                                                                                                                                                                  employees and associated persons 
                                                                                    *    Corruption and human rights issues 
 
                                                                                                                                                             *    Mandatory Gifts and Hospitality declaration and 
                                                                                                                                                                  register 
 
 
                                                                                                                                                             *    Group Whistleblowing Policy and confidential ethics 
                                                                                                                                                                  24-hour hotline supported by EthicsPoint with numbers 
                                                                                                                                                                  displayed in all offices 
 
 
                                                                                                                                                             *    CCO risk assessment and on-going implementation of 
                                                                                                                                                                  adequate procedures to prevent facilitation of tax 
                                                                                                                                                                  evasion across all operations 
 
 
                                                                                                                                                             *    Comply with the principles of the Extractive 
                                                                                                                                                                  Industries Transparency Initiative 
                                                                   -----------  ------------------------------------------------------------------  ------------------------------------------------------------------- 
 

3) The following is extracted from Note 35 to the Financial Statements (page 199) of the Annual Report and Accounts 2022 at www.pharos.energy .

RELATED PARTY TRANSACTIONS

During the year, the Company recorded a net cost of $0.01m (2021: net cost of $0.01m) in respect of services rendered between Group companies.

Remuneration of key management personnel

The remuneration of the Directors of the Company, who are considered to be its key management personnel, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. Further information about the remuneration of individual Directors is provided in the audited part of the Directors' Remuneration Report on pages 136 to 142.

 
                                      2022           2021 
                                 $ million      $ million 
=============================  ===========  ============= 
Short-term employee benefits           3.0            4.5 
=============================  ===========  ============= 
Post-employment benefits               0.1            0.2 
=============================  ===========  ============= 
Share-based payments                   1.0            3.1 
=============================  ===========  ============= 
                                       4.1            7.8 
=============================  ===========  ============= 
 

Directors' transactions

Pursuant to a lease dated 20 April 1997, Comfort Storyville (a company wholly owned by Mr Ed Story) has leased to the Group, office and storage space in Comfort, Texas, USA. The lease, which was negotiated on an arm's length basis, has a fixed monthly rent of $1,000.

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April 27, 2023 11:27 ET (15:27 GMT)

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