TIDMPHAR
RNS Number : 7873L
Pharos Energy PLC
15 September 2021
15 September 2021
Pharos Energy plc
("Pharos" or the "Company" or, together with its subsidiaries,
the "Group")
Interim results for the Half-year to 30 June 2021
Pharos Energy plc, an independent oil and gas exploration and
production company, announces its interim results for the six
months ended 30 June 2021. An analyst conference call will take
place at 1430 BST today.
A separate announcement on the farm-out of the Group's interests
in the El Fayum and North Beni Suef Concessions in Egypt (the
"Farm-Out Announcement") was published earlier today at
www.pharos.energy.
Ed Story, President and Chief Executive Officer, commented:
" We are delighted to announce the farm-out of our onshore Egypt
position today. The proposed transaction will result in IPR taking
over 55% working interest and operatorship in the El Fayum and
North Beni Suef Concessions. IPR is a well-regarded and experienced
operator in Egypt and is perfectly positioned to effect the full
field development and exploration programmes. We look forward to
working with them to realise the full potential of these
fields.
The Infill Development Drilling Programme in TGT Field in
Vietnam is well underway; the first well drilled is already on
production with initial flow rate at 1,600 bopd, the second well is
currently being completed, and the third well in the sequence is
due to spud shortly.
The signing of the Egyptian farm-out and the infill development
programme in Vietnam means that the medium term outlook for the
Company is a return to free cash flow and ultimately to
distributions to shareholders."
1H 2021 Operational Highlights
-- Group working interest 1H 2021 production 9,147 boepd net (1H 2020: 12,093 boepd)
-- Vietnam
- Vietnam 1H 2021 production 5,429 boepd net (1H 2020: 6,114 boepd net)
- TGT 6-well Infill Development Programme commenced in July
2021; first well drilled and completed successfully ahead of both
schedule and budget, second well near completion and the third well
due to spud shortly
- 3D seismic survey acquired in June/July 2021 on Block 125
fulfils the geophysical commitment on both Blocks 125 & 126.
Processing results are expected 1H 2022
- Government approval received in September 2021 for a 2-year
extension on Blocks 125 & 126 Exploration Period
-- Egypt
- Egypt 1H 2021 production 3,718 bopd (1H 2020: 5,979 bopd)
- El Fayum Phase 1B waterflood programme commenced with one
workover rig; second workover rig contracted in August to be
dedicated to the maintenance programme
- Batran-1X oil discovery
- Signing of Egyptian farm-out
1H 2021 Financial Highlights
-- Group revenue $72.9m(*) prior to hedging losses of $13.7m (1H
2020: $59.0m(*) prior to hedging gain of $21.1m)
-- Cash generated from operations $18.2m(1) (1H 2020: $55.9m)(1)
-- Cash operating costs $14.74/bbl(2) (1H 2020: $11.13/bbl)(2)
-- Cash balances as at 30 June 2021 of $28.4m (30 June 2020: $37.8m)
-- Net debt as at 30 June 2021 of $32.9m(2,3) (30 June 2020: $36.1m)(2)
-- Net profit of $6.4m (1H 2020: $268.3m loss), including
non-cash impairment reversal after tax of $19.4m (1H 2020:
impairment charge after tax $265.5m)
-- Forecast cash capex for the full year c.$45m of which $9.5m
had been incurred by 30 June 2021 (1H 2020: $31.9m)
-- Net debt to EBITDAX of 1.26x (2) (1H 2020: 0.88x) (2)
(*) Egyptian revenues are given post government take including corporate taxes.
(1) Stated after realised hedging loss of $13.7m (1H 2020: gain
of $21.1m)
(2) See Non-IFRS measures at page 27
(3) Includes RBL and National Bank of Egypt working capital
drawdown
1H 2021 Corporate Highlights
-- Completion of equity placing, subscription and retail
offering in January 2021 which raised gross proceeds of
approximately $11.7m; proceeds are being used to fund Phase 1B of
the waterflood programme in Egypt
-- Reduction in salary of 50% from 1 April 2021 volunteered by
all three executive directors in office on that date
-- Appointment of Sue Rivett to the Board as Chief Financial
Officer ("CFO") effective 1 July 2021
-- Head office reorganisation and reduction in headcount to be completed by end of 2021
Outlook
-- 2021 Full year Group working interest production guidance
updated to 8,700 - 9,500 boep d net
-- Vietnam
- 2021 production guidance range narrowed to 5,500 - 6,000 boepd net
- TGT Infill Development Well Programme ongoing. The initial
four-well programme to be completed 2021, with two additional wells
in 2022
- Proactive management of the existing producing TGT reservoirs
continues through an active well intervention programme
- Sub mission of the revised CNV Revised Full Field Development
Plan at the e nd of 2021, subject to partners' approval
- Final processed 3D seismic results over Block 125 are expected in 1H 2022
-- Egypt
- 2021 production guidance updated to 3,200 - 3,500 bopd
- Return to drilling with an interim 3-well programme commencing
in October to accelerate production enhancement ahead of farm-out
partner resuming operatorship
- The investment funds required to develop the fields in the
initial 57 well producer and injector programme will become
available following completion of the farm-out to IPR Lake Qarun
Petroleum Co., a wholly owned subsidiary of IPR Energy AG
- Testing of the recently drilled Batran-1X exploration discovery well in 4Q 2021
- Parliamentary approva l on the Third Amendment to the El Fayum
Concession Agreement awaited. The Amendment is expected to be
backdated to November 2020 and will increase contractor revenue
take by c.20%
-- Israel
- Seismic reprocessing in order to mature prospectivity ahead of
a drilling decision in 3Q 2022 concluded in 3Q 2021
Enquiries
Pharos Energy plc Tel: 020 7747 2000
Ed Story, President and Chief Executive Officer
Sue Rivett, Chief Financial Officer
Camarco Tel: 020 3757 4980
Billy Clegg | Owen Roberts | Monique Perks
Notes to editors
Pharos Energy plc is an independent oil and gas exploration and
production company with a focus on sustainable growth and returns
to stakeholders, which is listed on the London Stock Exchange.
Pharos has production, development and/or exploration interests in
Egypt, Vietnam and Israel. In Egypt, Pharos holds a 100% working
interest in the El Fayum oil Concession in the Western Desert. The
Concession produces from 10 fields and is located 80 km southwest
of Cairo. It is operated by Petrosilah, a 50/50 JV between Pharos
and the Egyptian General Petroleum Corporation (EGPC). Pharos is
also an operator with a 100% working interest in the North Beni
Suef (NBS) Concession, which is located immediately south of the El
Fayum 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 (CVN) field located in Block
9-2, which is operated by the Hoan Vu Joint Operating Company.
Blocks 16-1 and 9-2 are located in the shallow water Cuu Long
Basin, offshore southern Vietnam. Pharos also holds a 70% interest
in and is designated operator of Blocks 125 & 126, located in
the moderate to deep water Phu Khanh Basin, north east of the Cuu
Long Basin, offshore central Vietnam. In Israel, Pharos, together
with Cairn Energy plc and Israel's Ratio Oil Exploration, have
eight licences offshore Israel. Each party has an equal working
interest and Cairn is the operator.
Review of Operations
Vietnam
Vietnam Production
Production for the first half of 2021 from the TGT and CNV
fields net to the Group's working interest averaged 5,429 boepd (1H
2020: 6,114 boepd). This is in line with the Vietnam 2021
production guidance of 5,200-6,200 boepd.
TGT 1H 2021 production averaged 13,401 boepd gross and 3,976
boepd net to Pharos (1H 2020: 14,878 boepd gross and 4,431 boepd
net). CNV 1H 2021 production averaged 5,813 boepd gross and 1,453
boepd net to Pharos (1H 2020: 6,731 boepd gross and 1,683 boepd
net).
Vietnam Development and Operations .
Block 16-1 - TGT Field
The producing TGT Field is located in 47m of water depth in the
Cuu Long Basin offshore southern Vietnam.
In July 2021, the TGT-H4-34P well, the first of four infill
development wells, was spudded from the H4 wellhead platform at the
southern end of the TGT field using the jack-up drilling rig PVDII.
Planned Total Depth ("TD") was reached in early August, the well
was completed and brought into production on 23 August through the
existing TGT processing facilities. The 34P well initial flow rate
of approximately 1,600 bopd was in line with expectations, further
behind pipe potential will be accessed in a second phase of
perforations.
The drilling rig is now currently operating at the H5 platform
on the second well in the sequence, TGT-H5-12XPST which spudded on
24 August 2021 and reached TD on 7 Septe mber 2021.
The initial four-well programme will be expected to be finished
in 4Q this year with an additional two wells to be drilled in 2022
pending budgetary approval later this year.
The full infill programme is expected to increase gross TGT
production by 5-6,000 boepd to around 20,000 boepd.
The capital spend for the initial four-well programme is c.$13m
net to Pharos.
Block 9-2 - CNV Field
On Block 9-2 - CNV Field, routine well intervention work,
comprising of acidising plugged perforations in two existing
producing wells, was performed as planned. The gross production
gain was approximately 150 bopd.
Vietnam Exploration
Blocks 125 & 126
In July 2021, the Company announced the completion of its 3D
seismic acquisition programme on the western part of Block 125 in
the Phu Khanh Basin, offshore Vietnam. The 909 km(2) 3D seismic
programme was acquired on behalf of Pharos by Shearwater
GeoServices Singapore Pte Ltd, using the SW Vespucci seismic
vessel, across water depths of between 100m to 2,300m.
The cash capital spend for the acquisition of the 3D survey was
$8.5m. The seismic processing contract has been awarded and the
final seismic processed results are expected in 1H 2022.
On 8 September 2021, Pharos received approval for a 2-year
extension to the terms of Phase 1 of Block 125 & 126
Exploration Period from the Ministry of Industry and Trade.
Vietnam operational focus for remainder of 2021
-- Vietnam
- Full year 2021 production guidance range narrowed from 5,200 -
6,200 boepd to 5,500 - 6,000 boped net
- Continuation of the Infill Development Well Programme in the
TGT Field. The initial four-well programme is expected to extend
until the end of this year, and the timing of the drilling of the
final two additional wells in 2022 awaits budgetary approval later
this year
- Proactive management of the existing producing TGT reservoirs
continues through an active well intervention programme
- Submission of the revised CNV Revised Full Field Development
Plan at the end of 2021; subject to partners' approval
- The final processed 3D seismic results over Block 125 are expected in 1H 2022
Egypt
El Fayum Production, Operations and Development
Production for the first half of 2021 from the El Fayum Conces
sion av eraged 3,718 bopd (1H 2020: 5,979 bopd). Production levels
were impacted by well maintenance issues in the first half and the
inability of the one workover rig to cover both the Phase 1B
waterflood programme and remedial activity. Plans in place to
accelerate production enhancement in the second half of the year
include the arrival of a second workover rig in August and the
recommencement o f drilling in 4Q 2021 with a first drilling rig to
be operational since March 2020.
The reduced levels of activity in the El Fayum fields since the
beginning of the pandemic in March 2020 has resulted in a number of
remedial well maintenance interventions being required. The
workover rig assigned to the planned 9-month Phase 1B waterflood
programme supported the well intervention work on producing wells
requiring maintenance (predominantly ESP and sucker rod pump
replacements) until the second workover rig arrived on site in
mid-August. Both the waterflood and the well intervention work are
now back on track. The first drilling rig is expected to arrive in
October and will be operational in 4Q 2021. During this interim
period, production is via primary depletion until the initial 57
well development programme and Phase 2 waterflood programme
commences in 2022.
The main drive mechanism of primary depletion combined with
various operational delays has meant that guidance for Egypt for
the year has now been revised down to 3,200 - 3,500 bopd.
El Fayum Exploration
The Batran-1X commitment exploration well, drilled on a fault
bounded and three-way-closed dip prospect located 4km west of the
Main Tersa-1X well, reached Total Depth on 4 June 2021. The well
encountered 52 ft (15.85m) of net oil pay in the LARG and UB sands.
Additional thin pay zones may also be present in the Abu Roash "A",
"D" and "E" sands where oil shows were also encountered whilst
drilling. Pressure readings confirm that the oil-bearing reservoirs
are at initial pressure.
The Batran-1X well will be tested as a potential future producer
in the LARG and UB reservoir sections using a workover rig in 4Q
2021.
The preliminary post-well in-place volume and resource estimates
for the LARG and UB discoveries are 4.3 mmbbls and 430,000 bbls
respectively.
All other exploration drilling activity is on hold.
North Beni Suef (NBS)
Interpretation of the large pre-existing 3D seismic survey on
the NBS Concession continues with several drillable prospects
having been identified.
Egypt Farm-out
As announced separately by the Company this morning (the
"Farm-Out Announcement"), the Group has entered into conditional
agreements for the farm-out and sale of a 55% working interest and
operatorship in each of the El Fayum and North Beni Suef
Concessions to IPR Lake Qarun Petroleum Co., a wholly owned
subsidiary of IPR Energy AG. Further details of the farm-out,
including the background to and reasons for the transaction and the
key terms of the transaction documents, are set out in the Farm-Out
Announcement. The farm-out is a Class 1 transaction under the
Listing Rules and is conditional, amongst other things, on
shareholder approval. Pharos will publish a circular to
shareholders in due course, setting out further details of the
farm-out and convening the general meeting at which shareholder
approval will be sought.
Egypt commercial update
The El Fayum Third Amendment agreement (which includes the
fiscal cost recovery change and the licence term extension)
approved by EGPC has been submitted to the Parliamentary energy
committee. Parliament is in summer recess so approval of the Third
Amendment and its ratification by the Parliament is likely to be in
2H 2021.
The improved fiscal terms are expected to be backdated to
November 2020 and will increase the contractor share of revenue by
around 20% and lower the break-even while in full cost recovery
mode.
Egypt operational focus for remainder of 2021
-- Egypt
- 2021 production guidance of 4,000-4,400 bopd net will now not
be met because of the decline rates due to primary depletion and
various operational delays and is now revised to 3,200 - 3,500
bopd
- Plans in place to accelerate production enhancement in the
second half of the year include the arrival of a second workover
rig in August and the recommencement of drilling in 4Q 2021 with an
interim 3-well programme
- The investment funds required to develop the fields in a 57 or
90 well producer and injector programme are expected to become
available following successful completion of the farm-out. Th is
will have the effect of increasing the rig count and allow the
commencement of the main Phase 2 of the waterflood programme which
will lead to a steady increase in production
- Testing of the recently drilled Batran-1X exploration discovery well in 4Q 2021
- Parliamentary approva l on the Third Amendment to the El Fayum
Concession Agreement awaited. The Amendment is expected to be
backdated to November 2020 and will increase contractor revenue
take by c.20%
Israel
Pharos, together with Cairn Energy plc and Israel's Ratio Oil
Exploration, have eight licences offshore Israel. Each party has an
equal working interest and Cairn is the operator. Seismic
processing in order to mature prospectivity ahead of a drilling
decision in 3Q 2022 concluded in 3Q 2021.
HSES
Health and Safety
Safety continues to be high priority for our business, and we
are committed to operating safely and responsibly at all times and
to providing a safe and healthy working environment for staff and
contractors. We are pleased to report that in Egypt and Vietnam we
have worked with our partners to maintain our record of zero Lost
Time Injury (LTI) frequency rate through the first half of
2021.
At the outset of the COVID-19 pandemic, we took swift and robust
action to help our employees, contractors and other stakeholders to
stay safe and well. Our production operations in Egypt and Vietnam
have not been majorly disrupted by COVID-19 but there have been
some delays in projects execution and, in line with the government
directives in Egypt, Vietnam and the UK, measures are in place to
minimise the risk of any outbreak occurring.
In Vietnam, in addition to following government guidelines, the
HLHVJOC have implemented a policy of testing all staff for COVID-19
before transfer to offshore operations. In Egypt, at the El Fayum
base camp, Petrosilah has implemented robust health and safety and
social distancing measures to mitigate the risk of any cases of
COVID-19 arising. In the UK office, staff have been working from
home since March 2020 in line with UK governmental guidelines with
negligible disruption to the business.
Social Engagement
In Vietnam, Pharos continues to invest in long-term social
projects through the HLHVJOC Charitable Donation programme. In the
first half of 2021, 12 projects have been approved, ranging from
providing healthcare support for underprivileged children to
supporting local communities in areas hit hardest by COVID-19. In
1Q 2021, the Group provided financial support for autistic children
at Anh Dao Specialised Educational Centre in Ha Tinh province, with
additional donations towards providing therapy for children with
disabilities at An Tue Social Assistance Centre, Thua Thien Hue
province. In 2Q 2021, the Donation Programme helped fund the
construction of a community culture house in Hop Hung commune, Vu
Ban district, Nam Dinh province. The most recent assistance
provided by the Group was financial support for the COVID-19
pandemic prevention fund through the HLHVJOC's Labour Union and the
Government's COVID-19 Vaccine Fund through PVEP, and funding to
support families in underprivileged areas hit hardest by
COVID-19.
Principal and Emerging risks and Uncertainties for the second
half of 2021
The Board continues to fulfil its role in risk oversight by
developing policies and procedures around risks that are consistent
with the organization's strategy and risk appetite, taking steps to
foster risk awareness and encouraging a company culture of risk
adjusting awareness throughout the Group.
Pharos carried out an assessment of its Principal and Emerging
risks at half year 2021 and continues to monitor closely the
internal and external evolving risk landscape under the COVID-19
pandemic and the socio macro-economic environment worldwide. The
key principal and emerging risks are:
-- Further COVID-19 lockdowns dampening oil demand
-- Insufficient funds to meet commitments
-- Commodity price volatility
-- Volatility in production levels
-- Climate change and speed of energy transition
-- Non-completion of farm-out of Egypt assets
-- Partner alignment
-- Reserves downgrades
-- Cyber security
-- Sub-optimal capital allocation
-- Political risk and Regional risk
-- HSE
Financial Review
Finance strategy
Our finance strategy continues to underpin the Group's business
model and goes hand in hand with our commitment to building
shareholder value through capital growth and sustainable dividends.
Since the downturn in oil price in 1Q 2020 the group has tactically
prioritised preserving capital and liquidity over investing in our
portfolio for growth. In 2021, we have recommenced investment and
with the additional liquidity offered by our farm-in partner, we
are on the path back to focusing on investing for cash flow
generation.
Highlights
1H 2021 1H 2020
Production Volumes (boepd) 9,147 12,093
Oil Price Realised ($/bbl) 64.76 40.47
Oil & Gas Price Realised ($/boe) 57.47 37.06
Oil & Gas Sales ($m) 72.9 59.0
Total Revenue ($m)(1) 59.2 80.1
Gross Profit ($m) 7.7 9.1
Operating profit/(loss) ($m) 30.0 (315.4)
Operating profit excluding impairment
(reversal)/charge ($m)(2) 2.2 1.6
Cash operating cost per ($/boe)(2) 14.74 11.13
---------------------------------------
Net debt ($/m)(2) 32.9 36.1
EBITDAX ($/m)(2) 26.1 41.0
Gearing(2) 0.20 0.30
======================================= ======== ========
(1) Stated after realised hedging loss of $13.7m (1H 2020: gain
of $21.1m)
(2) See Non-IFRS measures at page 27
Operating Performance
Revenue
Oil & gas sales for the period were up 24% to $72.9m (1H
2020: $59.0m). The total Group revenues in the period were impacted
by hedging losses of $13.7m (1H 2020: gain $21.1m).
Revenue for Vietnam increased 30% to $56.3m (1H 2020: $43.2m).
The average realised crude oil price was $66.47/bbl (1H 2020:
$43.43/bbl), a 53% increase. The premium to Brent decreased,
representing nearly $2/bbl (1H 2020: $5/bbl). Production declined
from 6,114 boepd to 5,429 boepd.
The revenue for Egypt of $16.6m (1H 2020: $15.8m) increased
slightly as a result of increased average realised crude oil price,
up 74% to $59.70/bbl (1H 2020: $34.31/bbl), offset by lower average
production levels, from 5,979 bopd to 3,718 bopd. There are two
discounts applied to the El Fayum crude production - a general
Western Desert Discount and one related specifically to El Fayum.
Both are set by EGPC (the in country regulator) and combined stayed
consistent at nearly $5/bbl period over the period.
Group operating costs, DD&A and expenses
Cash operating costs at group level, defined in the Non-IFRS
measures section on page 27, amounted to $24.4m (1H 2020: $24.5m) a
small reduction in same period last year. On a barrel of oil
equivalent basis this was $14.74/boe (1H 2020: $11.13/boe), this
reflects the small overall cost reduction impacted by the decrease
in production volumes period on period. Cash operating costs in
Vietnam increased to $15.3m (1H 2020: $12.5m) in the period which
equate to $15.57/bbl (1H 2020: $11.23/bbl). The increase is due to
higher costs relating to the FPSO as a result of (i) lower TLJOC
production throughput which increased Pharos' share of the costs
and (ii) higher foreign contractor's withholding tax, of which the
CIT element impacts the FPSO included in operating costs, from 2%
to 5% retroactive from 27 August 2018 till date, which was also
spread over fewer produced barrels. Cash operating costs in Egypt
were $9.1m (1H 2020: $12.0m) in the period, which equate to
$13.52/bbl (1H 2020: $11.03/bbl). The decrease in cash operating
costs relates largely to reduction in variable cost as a result of
decreased production and a decrease in the number of workovers in
comparison to 1H 2020.
DD&A charges on production and development assets decreased
to $23.6m (1H 2020: $38.7m) due to lower depreciating cost base
following 2020 impairments taken on both Vietnam and Egypt.
DD&A per bbl is currently $14.25/boe (1H 2020: $17.58/boe).
Administrative expenses of $5.5m (1H 2020: $7.5m) are
considerably lower than the comparative period, this is due to
continuous efforts throughout 2020 and 1H 2021 to reduce the head
office costs. The non-cash elements included in administration
costs (share based payments and depreciation) totalled $1.5m (1H
2020: $1.4m), resulting in a 34% reduction in cash administration
costs over the comparative period. Voluntary staff salary
reductions at 20% continued from 2020 through to 1Q 2021. The
Executives who were on a 35% reduction in base salary brought over
from 2020, agreed to a further reduction from 1 April 2021 to 50%
of base salary. The Non-Executive reduced their fees throughout
most of 2020 and continued those reductions through 1H 2021. A
programme of redundancies was announced at head office in 1Q
2021.
Impairment Reversals
As a result of ongoing oil price volatility and movements in 2P
reserves, we have tested each of our oil and gas producing
properties for impairment and impairment reversals. The results of
these impairment tests are summarised below. For Vietnam producing
properties, the recoverable amount has been determined using the
fair value less costs of disposal method which constitutes a level
3 valuation within the fair value hierarchy. The recoverable amount
is based on the fair value derived from a discounted cash flow
valuation of the 2P production profile for each producing property.
For Egypt producing property, the recoverable amount has been
determined using the value-in-use method.
For CNV, a pre-tax impairment reversal of $2.2m (1H 2020:
impairment charge $15.5m) has been reflected in the income
statement with an associated deferred tax charge of $0.8m (1H 2020:
deferred tax credit $5.8m). As at 30 June 2021, the carrying amount
of the CNV oil and gas producing property, after additions of
$0.2m, changes in decommissioning asset due to discount rate
($0.9m), DD&A ($5.0m) and the impairment reversal ($2.2m), is
$87.7m (1H 2020: the carrying amount of the CNV oil and gas
producing property, after additions ($2.2m), DD&A ($6.4m) and
the impairment charge ($15.5m) was $104.4m).
For TGT, a pre-tax impairment reversal of $21.9m (1H 2020:
impairment charge $132.0m) has been reflected in the income
statement with an associated deferred tax charge of $7.6m (1H 2020:
deferred tax credit $45.7m). As at 30 June 2021, the carrying
amount of the TGT oil and gas producing property, after additions
of $0.7m, changes in decommissioning asset due to discount rate
($2.7m), DD&A ($14.4m) and the impairment reversal ($21.9m), is
$244.8m (1H 2020: the carrying amount of the TGT oil and gas
producing property, after additions ($15.0m), DD&A ($20.1m) and
the impairment charge ($132.0m) was $205.5m).
For Egypt, an impairment reversal (pre- and post-tax) in the
amount of $3.7m (1H 2020: impairment charge $146.6m) has been
reflected in the income statement. As at 30 June 2021, the carrying
amount of the Egypt oil and gas producing property, after additions
($3.3m), DD&A ($4.2m) and the impairment reversal ($3.7m), is
$106.9m (1H 2020: the carrying amount of the Egypt oil and gas
producing property, after additions ($17.7m), DD&A ($12.0m) and
the impairment charge ($146.6m) was $60.5m).
The total non-cash, post tax impairment reversal amounts to
$19.4m and the balance sheet carrying values of the oil and gas
producing properties stands at $439.4m (1H 2020: the total
non-cash, post tax impairment charge amounts to $242.6m and the
balance sheet carrying values of the oil and gas producing
properties stood at $370.4m). Testing for the Paris compliant oil
price scenario would result in an additional post-tax impairment of
$10.7m. Further details of these impairment charges, including key
assumptions in relation to oil price and discount rate are provided
in Note 10 of the interim financial statements.
Hedging
Our hedging positions for the period resulted in a realised loss
of $13.7m (1H 2020: gain of $21.1m) as the Brent price improved
from $40 to $73. Additionally, the fair value as at 30 June was an
unrealised loss of $12.4m for the remaining hedges in place (1H
2020: unrealised gain of $3.0m) . The Group is required to hedge
30% of Vietnam production as part of the RBL agreemen t.
Approximately 27% of the Group's forecast production representing
37% of Vietnam's production until June 2022, is hedged at an
average price of $55.6/bbl (1H 2020: cover was 35% of the Group's
forecast production and 50% of Vietnam's production from July 2020
to September 2021 securing a minimum price for this hedged volume
of $44.8/bbl).
Financing costs
Finance costs for the period were $2.9m (1H 2020: $2.7m) mainly
related to amortisation of capitalised borrowing costs of $1.0m (1H
2020: $1.0m gain due to changes in future cash flows), interest
expense payable and similar fees of $1.8m (1H 2020: $2.7m) and
unwinding of discount of provisions $0.3m (1H 2020: $0.6m).
Taxation
The overall net tax charge of $20.3m (1H 2020: $49.6m credit)
relates to tax charges in Vietnam of $11.9m plus the deferred tax
charge on impairment reversal of $8.4m (1H 2020: Vietnam tax
charges of $1.9m offset by the deferred tax credit of $51.5m).
The Egypt concessions are subject to corporate income tax at the
standard rate of 40.55%, however responsibility for payment of
corporate income taxes falls upon EGPC on behalf of our local
subsidiary Pharos El Fayum (PEF). The Group records a tax charge,
with a corresponding increase in revenue, for the tax paid by EGPC
on its behalf. Due to accumulated tax-deductible balances, there is
no tax due on PEF this period.
Net profit
A net profit was recorded for the period from continuing
operations of $6.4m which is after $19.4m post-tax impairment
reversal on PPE (1H 2020: loss $268.3m includes $265.5m post-tax
impairments on both PPE and Intangibles).
Balance Sheet
Net cash/debt
As at the balance sheet date, $61.3m was drawn under the group's
borrowing facilities and there was cash of $28.4m, giving a net
debt figure of $32.9m (1H 2020: cash $37.8m and net debt of
$36.1m). Gearing has been calculated as total debt to equity of
0.20x (1H 2020: 0.30x).
As at 14 September 2021, the cash balance stood at $44.1m with
net debt of $42.3m, following RBL refinancing and the uncommitted
revolving credit facility mentioned below.
Borrowings
Reserve Based Lending (RBL)
The RBL is secured over the Vietnam assets only and as at 30
June 2021 had a five-year term maturing in September 2023. A
payment of $0.9m was made in January 2021 (1H 2020: $26.1m) and the
borrowing base as at 30 June 2021 was $56.3m (1H 2020: $64.5m).
See Non-IFRS measures at page 27.
Uncommitted Revolving Credit Facility (URCF)
In April, the Group drew down on a new facility with the
National Bank of Egypt. The carrying amount of our trade
receivables balance includes receivables in Egypt which are subject
to an Uncommitted Revolving Credit Facility for Discounting (with
Recourse) arrangement. This facility has been put in place to
mitigate the risk of late payment of our debtors. Under this
arrangement, Pharos is able to access cash from the facility using
the El Fayum oil sales invoices as evidence to support its ability
to repay the facility. The oil sales invoices remain due to Pharos
and it retains the credit risk. The group therefore continue to
recognise the receivables in their entirety in its balance sheet.
The amount repayable under the agreement at 30 June 2021 was $5.0m
(30 June 2020: N/A) and it is presented as unsecured borrowing.
Cash flow
Cash generated from operations was $18.2m (1H 2020: $55.9m) and
prior to working capital movements was $27.1m (1H 2020: $42.5m).
Stripping out the impact of the hedging positions to the underlying
operations numbers gives a total of $40.8m (1H 2020: $21.4m), which
is in line with the improvement that we see in commodity prices
offset by the production decrease period on period.
The increase in receivables was $5.4m for the period (1H 2020:
decrease of $18.5m). The movement is mainly commodity price driven,
from YE20 the average oil price realised has increased from
$44.70/bbl to $64.76/bbl therefore increasing the receivables
balance held at half-year. (1H 2020: the average oil price realised
from YE19 decreased from $68.48/bbl to $40.47/bbl therefore
decreasing the receivables balance held at half-year).
Placing
In January 2021, the Company announced the successful completion
of the Placing of 44,661,490 new Ordinary Shares, as well as the
concurrent Subscription and Retail Offer.
Through this equity placing, Pharos raised additional capital of
$10.9m (net of direct issue costs of $0.8m - Placing Price
GBP0.1925 converted at the exchange rate as of 21/01/21 of 1.3628).
These funds allowed the company to restart its investment in the
waterflood programme in the El Fayum oil fields in Egypt as we
progress our farm-out process.
Capital allocation
Given the Group's cash resources and the continued uncertainty
in the macro environment no dividends are currently
recommended.
The Group had a modest capital programme in 1H 2021 of $9.5m (1H
2020: $31.9m), mainly spent in Egypt. $5.3m related to the
Batran-1X exploration well and allocated G&A, $1.6m related to
preparation of 3Q drilling in TGT and $1.5m was expended in Israel
for 2D and 3D seismic reprocessing. In July 2021 we commenced
operations on our 4 well drilling campaign in Vietnam on our TGT
field and additionally satisfied the 3D seismic exploration
commitment on Blocks 125 & 126 also in Vietnam. In 2H 2021 we
also expect to spend additional funds in Egypt on the phase 1B
waterflood and minor drilling programme to help arrest the
production decline ahead of bringing in a new funding partner and
embarking on a full field development plan in 2022.
Forecast group cash capital expenditure for the year has
increased from $37m to $45m and includes $15m for TGT 4 well
drilling programme, $11m for Blocks 125 & 126 3D seismic and
$11m for Egypt Phase 1B waterflood programme and 3 well drilling
programme.
Liquidity risk management and going concern
The Group closely monitors its liquidity risk. Cash forecasts
are regularly produced, and stress tested for a number of scenarios
including a downturn in the oil price, changes in production rates,
operating costs and capital expenditure. In the current environment
of volatile, although strengthen oil prices and continued economic
uncertainties created by the COVID-19 pandemic, scenario planning
continues to be extensive. Accordingly, stress tests have been run
for oil prices down to $45/bbl in 4Q 2021, rising by $5/bbl every 2
months to our base oil price curve, concurrent with reductions in
Vietnam and Egypt production compared to our base case of 5%. As at
30 June 2021, the Group had a cash balance of $28.4m and the
forecasts show that the Group will have sufficient financial
headroom for the period of 12 months from the date of approval of
these half year results. The Directors therefore have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Thus, they
continue to adopt the going concern basis of accounting in
preparing these half year results.
Post balance sheet events
RBL
In July, the Group completed the refinancing of its Reserve
Based Lending Facility secured against the Group's producing assets
in Vietnam. The new RBL will provide access to up to a committed
US$100m with a further US$50m available on an uncommitted
"accordion" basis and has a four-year term that matures in July
2025.
In connection with the refinancing, Pharos welcome Société
Générale to the banking group alongside BNP Paribas, Crédit
Agricole Corporate and Investment Bank and DBS. Société Générale
replaces Standard Chartered Bank in the lender group.
The new RBL extends the tenor of the facility by 22 months,
allowing for a rephasing of the repayment schedule and the
provision of additional near term liquidity within the Group.
Farm-out
The Group has entered into conditional agreements for the
farm-out and sale of a 55% working interest and operatorship in
each of the El Fayum and North Beni Suef Concessions to IPR Lake
Qarun Petroleum Co., a wholly owned subsidiary of IPR Energy AG.
Further details of the farm-out, including the background to and
reasons for the transaction and the key terms of the transaction
documents, are set out in the Farm-Out Announcement. The farm-out
is a Class 1 transaction under the Listing Rules and is
conditional, amongst other things, on shareholder approval. Pharos
will publish a circular to shareholders in due course, setting out
further details of the farm-out and convening the general meeting
at which shareholder approval will be sought.
Blocks 125 & 126 extension
On 8 September 2021, Pharos received approval for a 2-year
extension to the terms of Phase 1 of Block 125 & 126
Exploration Period from the Ministry of Industry and Trade.
Sue Rivett
Chief Financial Officer
Responsibility Statement
The Directors confirm that to the best of their knowledge:
1. The interim condensed consolidated set of financial
statements immediately following this report has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as issued by
the IASB and adopted by the EU; and
2. The interim report includes a fair review of the information required by:
-- DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed consolidated set of financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
-- DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
INDEPENT REVIEW REPORT TO PHAROS ENERGY PLC
We have been engaged by the company to review the condensed
consolidated set of financial statements in the half-yearly
financial report for the six months ended 30 June 2021 which
comprises the condensed consolidated income statement, the
condensed consolidated balance sheet, the condensed consolidated
statement of changes in equity, the condensed consolidated cash
flow statement and related notes 1 to 16. We have read the other
information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed
consolidated set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group will be prepared in accordance with United Kingdom adopted
International Financial Reporting Standards and/or as issued by the
International Accounting Standards Board. The condensed
consolidated set of financial statements included in this
half-yearly financial report has been prepared in accordance with
United Kingdom adopted International Accounting Standard 34
"Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed consolidated set of financial statements in the
half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2021 is not prepared, in all material
respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
14 September 2021
Condensed consolidated income statement
(unaudited) (unaudited)
Six months Six months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
Notes $ million $ million $ million
------------ ------------ ----------
Continuing operations
Revenue 3, 13 59.2 80.1 142.0
Cost of sales 4 (51.5) (71.0) (123.8)
------------ ------------ ----------
Gross profit 7.7 9.1 18.2
Administrative expenses (5.5) (7.5) (14.7)
Impairment charge
- Intangibles 3, 9 - (22.9) (24.3)
Impairment
reversal/(charge)
- PP&E 3, 10 27.8 (294.1) (210.5)
------------ ------------ ----------
Operating profit/(loss) 30.0 (315.4) (231.3)
Other/exceptional
(expense)/gain 5 (0.4) 0.1 (5.8)
Investment revenue - 0.1 0.1
Finance costs 6 (2.9) (2.7) (4.2)
------------ ------------ ----------
Profit/(Loss) for the period before
tax 3 26.7 (317.9) (241.2)
Tax 7 (20.3) 49.6 25.6
------------ ------------ ----------
Profit/(Loss) for the period from continuing
operations 6.4 (268.3) (215.6)
------------ ------------ ----------
Discontinued
operations
Operating loss from discontinued operations - - (0.2)
Loss post-tax for the period from
discontinued
operations - - (0.2)
------------ ------------ ----------
Profit/(Loss) for the period 6.4 (268.3) (215.8)
------------ ------------ ----------
Earnings/(Loss) per share from continuing
operations (cents) 8
Basic 1.5 (70.9) (54.6)
Diluted 1.4 (70.9) (54.6)
Earnings/(Loss) per share from continuing
and discontinued operations (cents)
Basic 1.5 (70.9) (54.6)
Diluted 1.4 (70.9) (54.6)
Condensed consolidated statements of comprehensive income
(unaudited) (unaudited)
Six months Six months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
Notes $ million $ million $ million
------------ ------------ ----------
Profit/(Loss) for
the period 6.4 (268.3) (215.8)
Items that may be subsequently reclassified
to profit or loss:
Fair value (loss)/gain arising on hedging
instruments during the period (19.8) 26.7 20.0
Less: Cumulative loss/(gain)
arising on hedging
instruments
reclassified to profit or
loss 13 13.7 (21.1) (23.7)
Unrealised currency
translation
differences 0.1 0.3 -
------------ ------------ ----------
Total comprehensive income/(loss)
for the period 0.4 (262.4) (219.5)
------------ ------------ ----------
The above condensed consolidated income statement and condensed
consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes.
CONDENSED CONSOLIDATED Balance sheets
(unaudited) (unaudited)
30 Jun 30 Jun
21 20 31 Dec 20
Notes $ million $ million $ million
------------ ------------ ----------
Non-current
assets
Intangible
assets 9 4.6 0.3 1.5
Property, plant
and equipment 10 440.3 372.3 435.7
Right-of-use assets - 6.7 0.1
Other assets 47.1 44.9 45.9
------------
492.0 424.2 483.2
------------ ------------ ----------
Current assets
Inventories 19.2 16.2 17.7
Trade and other
receivables 29.5 20.0 22.9
Derivative financial
instruments 13 - 6.7 -
Tax receivables 0.4 0.5 0.6
Cash and cash equivalents 28.4 37.8 24.6
------------ ------------
77.5 81.2 65.8
------------ ------------ ----------
Total assets 569.5 505.4 549.0
Current liabilities
Trade and other
payables (25.6) (29.7) (28.8)
Derivative financial
instruments 13 (14.9) - (6.8)
Borrowings (13.7) (15.0) (12.7)
Lease liabilities - (1.0) (0.4)
Tax payable (4.2) (3.0) (6.7)
------------ ------------ ----------
(58.4) (48.7) (55.4)
------------ ------------ ----------
Net current assets 19.1 32.5 10.4
Non-current
liabilities
Deferred tax
liabilities (89.9) (76.1) (85.5)
Borrowings (45.0) (56.0) (41.0)
Lease liabilities - (5.9) -
Long term provisions (70.1) (69.7) (73.4)
------------ ------------ ----------
(205.0) (207.7) (199.9)
Total liabilities (263.4) (256.4) (255.3)
------------ ------------ ----------
Net assets 306.1 249.0 293.7
------------ ------------ ----------
Equity
Share capital 15 34.9 31.9 31.9
Share premium 15 58.0 55.4 55.4
Merger reserve 15 5.3 - -
Other reserves 235.9 251.5 243.0
Retained deficit (28.0) (89.8) (36.6)
------------ ------------ ----------
Total equity 306.1 249.0 293.7
------------ ------------ ----------
The above condensed consolidated balance sheets should be read
in conjunction with the accompanying notes.
CONDENSED consolidated STATEMENTs OF CHANGES IN EQUITY
Called Retained
up share Share Merger Other (deficit)/
capital Premium Reserve reserves earnings Total
$ million $ million $ million $ million $ million $ million
---------- ---------- ---------- ---------- ------------ ----------
As at 1 January 2020 31.9 55.4 - 246.6 176.2 510.1
Loss for the period - - - - (268.3) (268.3)
Other comprehensive
income - - - 5.9 - 5.9
Currency exchange - -
translation
differences - - - -
Share-based payments - - - 1.3 - 1.3
Transfer relating to
share-based payments - - - (2.3) 2.3 -
As at 30 June 2020
(unaudited) 31.9 55.4 - 251.5 (89.8) 249.0
Profit for the period - - - - 52.5 52.5
Other comprehensive loss - - - (9.6) - (9.6)
Currency exchange
translation
differences - - - 0.8 - 0.8
Share-based payments - - - 1.0 - 1.0
Transfer relating to
share-based
payments - - - (0.7) 0.7 -
As at 1 January 2021 31.9 55.4 - 243.0 (36.6) 293.7
Profit for the period - - - - 6.4 6.4
Other Comprehensive loss - - - (6.0) - (6.0)
Shares Issued 15 3.0 2.6 5.3 - - 10.9
Share-based payments - - - 1.1 - 1.1
Transfer relating to
share-based
payments - - - (2.2) 2.2 -
As at 30 June 2021
(unaudited) 34.9 58.0 5.3 235.9 (28.0) 306.1
---------- ---------- ---------- ---------- ------------ ----------
The above condensed consolidated statements of changes in equity
should be read in conjunction with the accompanying notes.
condensed consolidated cash flow statements
(unaudited) (unaudited)
Six months Six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
Notes $ million $ million $ million
------------ ------------ -----------
Net cash from operating activities 12 0.1 41.0 56.4
Investing activities
Purchase of intangible
assets (4.2) (1.4) (3.5)
Purchase of property, plant and
equipment (4.1) (29.2) (35.5)
Payment to abandonment fund (1.2) (1.3) (2.3)
------------ ------------ -----------
Net cash used in investing activities (9.5) (31.9) (41.3)
Financing activities
Proceeds from borrowings 14 8.3 - -
Interest paid on borrowings (1.8) (2.9) (4.6)
Repayment of borrowings (4.2) (26.1) (42.8)
Lease payments (0.1) (0.4) (1.1)
Net proceeds from issue
of share capital 15 10.9 - -
------------ ------------
Net cash from/(used in) financing
activities 13.1 (29.4) (48.5)
Net increase/(decrease) in cash
and cash equivalents 3.7 (20.3) (33.4)
Cash and cash equivalents at
beginning of period 24.6 58.5 58.5
Effect of foreign exchange rate
changes 0.1 (0.4) (0.5)
Cash and cash equivalents at
end of period 28.4 37.8 24.6
------------ ------------ -----------
The above condensed consolidated cash flow statements should be
read in conjunction with the accompanying notes.
Notes to the condensed consolidated financial statements
1. General information
The information for the year ended 31 December 2020 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for that year
has been delivered to the Registrar of Companies. The auditor's
report on those accounts was not qualified, did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying the report and did not contain
statements under section 498(2) or (3) of the Companies Act
2006.
The half year financial report is presented in US dollars
because that is the currency of the primary economic environment in
which the Group operates.
The half year financial report for the six months ended 30 June
2021 was approved by the Directors on 14 September 2021.
2. Significant accounting policies
The half year financial report, which is unaudited, has been
prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards ('IFRS')
and International Accounting Standards Board ('IASB') 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 United Kingdom and the disclosure
requirements of the Listing Rules and using the same accounting
policies and methods of computation as applied by the Company in
its 2020 Annual Report and Accounts for the year ended 31 December
2020.
The condensed set of financial statements included in this half
year financial report has been prepared on a going concern basis of
accounting for the reasons set out in the Financial Results section
of this report and in accordance with International Accounting
Standard IAS 34 'Interim Financial Reporting', and the requirements
of the UK Disclosure and Transparency Rules of the Financial
Services Authority in the United Kingdom as applicable to interim
financial reporting. A number of judgements were taken in
concluding that this basis of preparation was appropriate and that
there were no material uncertainties in this regard. These included
applying appropriate estimates of future production and oil price
together with ensuring that the forecasts included all expenditure
that was either committed or expected to be incurred in relation to
estimated production volumes. Consideration was also given to the
potential ongoing impact of the COVID-19 pandemic. During 2021, the
pandemic did not cause any interruptions to the group's producing
assets in Vietnam and Egypt.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
year ended 31 December 2020 and any public announcements made by
Pharos during the interim reporting period.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the
current reporting period. The group did not have to change its
accounting policies or make retrospective adjustments as a result
of adopting these standards.
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9,
IAS 39, IFRS 7, IFRS 4 and IFRS 16
The amendments provide temporary reliefs which address the
financial reporting effects when an interbank offered rate (IBOR)
is replaced with an alternative nearly risk-free interest rate
(RFR).
The amendments include the following practical expedients:
-- A practical expedient to require contractual changes, or
changes to cash flows that are directly required by the reform, to
be treated as changes to a floating interest rate, equivalent to a
movement in a market rate of interest
-- Permit changes required by IBOR reform to be made to hedge
designations and hedge documentation without the hedging
relationship being discontinued
-- Provide temporary relief to entities from having to meet the
separately identifiable requirement when an RFR instrument is
designated as a hedge of a risk component
These amendments had no impact on the interim condensed
consolidated financial statements of the Group.
The RBL refinancing announced in July 2021 remains benchmarked
on USD LIBOR. Following discussions with the RBL banking group, it
is anticipated that this will change to the Secured Overnight
Financing Rate (SOFR) in 2022. The carrying amount of the total RBL
loan as at June 2021 is $56.3m.
The Group intends to use the practical expedients in future
periods if they become applicable.
Covid-19-Related Rent Concessions and Covid-19-Related Rent
Concessions beyond 30 June 2021 - Amendments to IFRS 16.
These amendments had no impact on the interim condensed
consolidated financial statements of the Group.
Critical judgements and accounting estimates
The preparation of condensed consolidated financial statements
requires management to make judgements, estimates and assumptions
which affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expense. Actual
results may differ from these estimates.
In preparing the condensed consolidated financial statements,
the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were consistent with those applied to the consolidated
financial statements for the year ended 31 December 2020. These
relate to the judgements required in assessing the extent of
impairment triggers for intangible exploration and evaluation
assets and key sources of estimation uncertainty in relation to:
(a) oil & gas reserves and DD&A; (b) impairment of
producing oil & gas assets; and (c) climate change and the
energy transition.
3. Segment information
The Group has one principal business activity being oil and gas
exploration and production. The Group's continuing operations are
located in South East Asia and Egypt (the Group's operating
segments). Africa has been classified as a discontinued operation
for all periods shown, as the Group disposed of all of its
interests in that geographical area in previous years. There are no
inter-segment sales. South East Asia and Egypt form the basis on
which the Group reports its segment information.
Africa
Six months ended 30 June 2021 SE Asia Egypt (2) Unallocated Group
$ million $ million $ million $ million $ million
---------- ---------- ---------- ------------ ----------
Oil and gas revenue 56.3 16.6 - - 72.9
Commodity Hedge (see Note 13) - - - (13.7) (13.7)
Total Revenue 56.3 16.6 - (13.7) 59.2
Depreciation, depletion and
amortisation - oil and gas (19.4) (4.2) - - (23.6)
Depreciation, depletion and
amortisation - other - (0.3) - - (0.3)
Impairment charge - Intangibles - - - - -
Impairment reversal - PP&E 24.1 3.7 - - 27.8
Profit/(Loss) before tax from
continuing operations(1) 42.4 6.0 - (21.7) 26.7
Tax charge on operations (see
Note 7) (11.9) - - - (11.9)
Tax charge on impairment reversal
(see Note 7) (8.4) - - - (8.4)
Non-current assets (3) 333.3 109.7 - 1.9 444.9
---------- ---------- ---------- ------------ ----------
Africa
Six months ended 30 June 2020 SE Asia Egypt (2) Unallocated Group
$ million $ million $ million $ million $ million
---------- ---------- ---------- ------------ ----------
Oil and gas revenue 43.2 15.8 - - 59.0
Commodity Hedge (see Note 13) - - - 21.1 21.1
Total Revenue 43.2 15.8 - 21.1 80.1
Depreciation, depletion and
amortisation - oil and gas (26.5) (12.2) - - (38.7)
Depreciation, depletion and
amortisation - other - (0.3) - (0.4) (0.7)
Impairment charge - Intangibles (18.1) (4.8) - - (22.9)
Impairment charge - PP&E (147.5) (146.6) - - (294.1)
(Loss)/Profit before tax from
continuing operations(1) (169.0) (160.8) - 11.9 (317.9)
Tax charge on operations (see
Note 7) (1.9) - - - (1.9)
Tax credit on impairment charge
(see Note 7) 51.5 - - - 51.5
Non-current assets (3) 309.9 62.4 - 7.0 379.3
---------- ---------- ---------- ------------ ----------
Africa
Year end 31 December 2020 SE Asia Egypt (2) Unallocated Group
$ million $ million $ million $ million $ million
---------- ---------- ---------- ------------ ----------
Oil and gas revenue 87.7 30.6 - - 118.3
Commodity Hedge - - - 23.7 23.7
Total Revenue 87.7 30.6 - 23.7 142.0
Depreciation, depletion and
amortisation - oil and gas (47.8) (15.5) - - (63.3)
Depreciation, depletion and
amortisation - other - (0.5) - (0.7) (1.2)
Impairment charge - Intangibles (19.0) (5.3) - - (24.3)
Impairment charge - PP&E (105.1) (105.4) - - (210.5)
(Loss) Profit before tax from
continuing operations(1) (121.8) (124.6) - 5.2 (241.2)
Loss post-tax from discontinued
operations - - (0.2) - (0.2)
Tax charge on operations (see
Note 7) (11.1) - - - (11.1)
Tax credit on impairment charge
(see Note 7) 36.7 - - - 36.7
Non-current assets (3) 330.5 105.3 - 1.5 437.3
---------- ---------- ---------- ------------ ----------
(1) Unallocated amounts included in profit/(loss) before tax
comprise corporate costs not attributable to an operating segment,
investment and hedging revenue, other gains and losses and finance
costs.
(2) As of December 2018, Africa operations had been
disposed.
(3) Excludes other assets.
4. Cost of sales
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
------------ ------------ -----------
Depreciation, depletion and amortisation 23.6 38.7 63.3
Production based
taxes 4.4 2.4 7.0
Production operating
costs 25.2 26.1 51.2
Inventories (1.7) 3.8 2.3
51.5 71.0 123.8
------------ ------------ -----------
5. Other/exceptional expense/(gain)
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
------------ ------------ -----------
Redundancy charge/(release) 0.4 (0.1) (0.1)
Egypt acquisition cost - royalty - - 4.9
Premium - lease
transfer - - 1.0
0.4 (0.1) 5.8
------------ ------------ -----------
6. Finance Costs
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
------------ ------------ -----------
Unwinding of discount on provisions 0.3 0.6 0.8
Interest expense payable and similar fees 1.8 2.7 4.5
Interest on lease liabilities - 0.2 0.3
Amortisation of capitalised borrowing costs 1.0 (1.0) (1.5)
Net foreign exchange (gains)/losses (0.2) 0.2 0.1
2.9 2.7 4.2
------------ ------------ -------------
As at 30 June 2021, $0.3m relates to the unwinding of discount
on the provisions for decommissioning (1H 2020: $0.6m). The
provisions are based on the net present value of the Group's share
of the expenditure which may be incurred at the end of the life of
TGT and CNV (currently estimated to be 9-10 years) in the removal
and decommissioning of the facilities currently in place.
Following the June and December 2020 redeterminations and the
accelerated repayment of principal in relation to the group's
reserve based lending facility, there was a change in estimated
future cash flows. As a result, in June 2020 and December 2020, a
one off gain of $1.0m and $1.5m, respectively, have been recognised
in profit or loss.
7. Tax
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
------------ ------------ -----------
Current tax 16.0 12.2 26.7
Deferred tax on operations (4.1) (10.3) (15.6)
Deferred tax on impairment
reversal/(charge) 8.4 (51.5) (36.7)
Total tax charge/(credit) 20.3 (49.6) (25.6)
------------ ------------ -------------
The Group's corporation tax is calculated at 50% (1H 2020: 50%)
of the estimated assessable profit for the year in Vietnam. In
Egypt, under the terms of the concession any local taxes arising
are settled by EGPC. During each period, both current and deferred
taxation have arisen in overseas jurisdictions only.
The prevailing tax rate in Vietnam, where the Group produces oil
and gas, is 50% (1H 2020: 50%). The tax charge in future periods
may also be affected by the factors in the reconciliation
above.
The Egypt concessions are subject to corporate income tax at the
standard rate of 40.55%, however responsibility for payment of
corporate income taxes falls upon EGPC on behalf of our local
subsidiary Pharos El Fayum (PEF). The Group records a tax charge,
with a corresponding increase in revenue, for the tax paid by EGPC
on its behalf. However, this is only valid if PEF is in a profit
making position and no such tax has been recorded this period.
For CNV, a pre-tax impairment reversal in the amount of $2.2m
has been reflected in the income statement with an associated
deferred tax charge of $0.8m (1H 2020: pre-tax impairment charge
$15.5m, deferred tax credit of $5.8m). For TGT, a pre-tax
impairment reversal in the amount of $21.9m has been reflected in
the income statement with an associated deferred tax charge of
$7.6m (1H 2020: pre-tax impairment charge $132.0m, deferred tax
credit of $45.7m).
8. Earnings/(loss) per share
The calculation of the basic and diluted earnings/(loss) per
share is based on the following data:
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
------------ ------------ -----------
Profit/(Loss) from continuing and discontinued
operations for the purposes of basic profit/(loss)
per share 6.4 (268.3) (215.8)
Effect of dilutive potential ordinary shares
- Cash settled share awards and options (0.3) - -
Profit/(Loss) from continuing and discontinued
operations for the purposes of diluted profit/(loss)
per share 6.1 (268.3) (215.8)
------------ ------------ -----------
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
------------ ------------ -----------
Profit/(Loss) from continuing operations
for the purposes of basic profit/(loss) per
share 6.4 (268.3) (215.6)
Effect of dilutive potential ordinary shares
- Cash settled share awards and options (0.3) - -
Profit/(Loss) from continuing operations
for the purpose of diluted profit/(loss)
per share 6.1 (268.3) (215.6)
------------ ------------ -----------
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
-------------- -------------- -------------
Weighted average number of ordinary shares 434.6 378.3 395.1
Effect of dilutive potential ordinary shares
- Share awards and options 0.7 - -
Weighted average number of ordinary shares
for the purpose of diluted profit/(loss)
per share 435.3 378.3 395.1
-------------- -------------- ---------------
In accordance with IAS 33 "Earnings per Share", the effect of
antidilutive potential shares have not been included when
calculating dilutive earning per share as the Group was loss
making. This would have had an impact of $0.3m for the six month
period ended 30 June 2020 and $1.3m for the year ended 31 December
2020.
9. Intangible assets
Intangible assets comprise the Group's exploration and
evaluation projects which are pending determination.
In June 2021, having reviewed the triggers for impairment,
Management are of the view that none of the impairment indicators
under IFRS 6 have been triggered and therefore no impairment
testing is required for Vietnam, Egypt or Israel (Dec 2020: Vietnam
impairment charge $19.0m and Egypt impairment charge $5.3m).
10. Property, plant and equipment
As a result of ongoing oil price volatility and movements in 2P
reserves, the Group have tested each of our oil and gas producing
properties for impairment. The results of these impairment tests
are summarised below. For Vietnam producing properties, the
recoverable amount has been determined using the fair value less
costs of disposal method which constitutes a level 3 valuation
within the fair value hierarchy. The recoverable amount is based on
the fair value derived from a discounted cash flow valuation of the
2P production profile for each producing property. For Egypt
producing property, the recoverable amount has been determined
using the value-in-use method.
Vietnam
The key assumptions to which the fair value measurement is most
sensitive are oil price, discount rate, capital spend and 2P
reserves (2020: oil price, discount rate, capital spend and 2P
reserves). As at 30 June 2021, the fair value of the assets are
estimated based on a post-tax nominal discount rate of 11% (1H
2020: 11%) and a Brent oil price of $64.7/bbl in 2H 2021 up to
$65.0/bbl in 2025 plus inflation of 2% thereafter (1H 2020: an oil
price of $52.9/bbl in 2H 2021 up to $67.6/bbl in 2025, plus
inflation of 2% thereafter).
For CNV, a pre-tax impairment reversal in the amount of $2.2m
has been reflected in the income statement with an associated
deferred tax charge of $0.8m. As at 30 June 2021, the carrying
amount of the CNV oil and gas producing property, after additions
($0.9m decrease in decommissioning asset offset by $0.2m in
additions), DD&A ($5.0m) and impairment reversal ($2.2m), is
$87.7m.
For TGT, a pre-tax impairment reversal in the amount of $21.9m
has been reflected in the income statement with an associated
deferred tax charge of $7.6m. As at 30 June 2021, the carrying
amount of the TGT oil and gas producing property, after additions
($2.7m decrease in decommissioning asset offset by $0.7m in
additions), DD&A ($14.4m) and after impairment reversal
($21.9m), is $244.8m.
Testing of sensitivity cases indicated that a $5/bbl reduction
in long-term oil price used when determining the fair value less
costs of disposal method would result in post-tax impairments
charge (compare to new NBV) of $26.7m on TGT and a $4.9m on CNV. A
1% increase in discount rate would result in post-tax impairments
of $4.8m on TGT and $1.5m on CNV. We have also run sensitivities
utilising the average of a number of third party forecasts
described as being consistent with achieving the 2019 COP 21 Paris
agreement goal to limit temperature rises to well below 2 degrees
Celsius (the "Paris oil price scenario"). The nominal Brent prices
used in this scenario were as follows; 2021: $64.7/bbl,
2022:$64.2/bbl, 2023:$63.6/bbl,2024:$63.7/bbl, 2025:$63.6/bbl,
2026: $64.6/bbl, 2027:$65.6/bbl, 2028:$66.6/bbl, 2029:$67.6/bbl.
2030:$68.6/bbl. Using these prices and an 11% discount rate would
result in additional post-tax impairments of $2.3m on TGT and $0.6m
on CNV.
Egypt
The key assumptions to which the fair value measurement is most
sensitive are oil price, discount rate, capital spend and 2P
reserves (2019: oil price, discount rate, capital spend and 2P
reserves). As at 30 June 2021, the fair value of the asset is
estimated based on a post-tax nominal discount rate of 14% (1H
2020: 13%) and a Brent oil price of $64.7/bbl in 2H 2021 up to
$65.0/bbl in 2025 plus inflation of 2% thereafter (1H 2020: an oil
price of $52.9/bbl in 2H 2021 up to $67.6/bbl in 2025, plus
inflation of 2% thereafter).
For Egypt, an impairment reversal (pre and post tax) in the
amount of $3.7m has been reflected in the income statement. As at
30 June 2021, the carrying amount of the Egypt oil and gas
producing property, after additions ($3.3m), DD&A ($4.2m) and
after the impairment reversal ($3.7m), is $106.9m.
Testing of sensitivity cases indicated that a $5/bbl reduction
in long term oil price used would result in an impairment of $42.6m
(compare to new NBV) . A 1% increase in discount rate would result
in an impairment charge of $7.5m. We have also run a sensitivity
using a 14% discount rate and the Paris oil price scenario which
would result in an additional impairment of $7.8m.
It is not considered possible to provide meaningful
sensitivities in relation to 2P reserves for any of the group's oil
and gas producing properties, as the impact of any changes in 2P
reserves on recoverable amount would depend on a variety of
factors, including the timing of changes in production profile and
the consequential effect on the expenditure required to both
develop and extract the reserves.
Other fixed assets comprise office fixtures and fittings and
computer equipment.
11. Distribution to Shareholders
The Company is focused on preserving balance sheet strength and
do not recommend a dividend for 2021 (2020: the dividend was
withdrawn), given the continued uncertainty in the macro
environment. The decision to re-instate the dividend will be kept
under review and the Board will continue to use the well documented
capital allocation criteria to assess where and how to spend any
free cash flow generated.
12. Reconciliation of operating profit to operating cash
flows
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
2021 2020 2020
$ million $ million $ million
------------ ------------ -----------
Operating profit/(loss) 30.0 (315.4) (231.3)
Share-based payments 1.0 1.5 2.8
Depreciation, depletion and
amortisation 23.9 39.4 64.5
Impairment (reversal)/charge (27.8) 317.0 234.8
------------ ------------ -----------
Operating cash flows before movements
in working capital 27.1 42.5 70.8
Increase in inventories (1.5) - (1.5)
(Increase)/Decrease in receivables(1) (5.4) 18.5 19.6
Decrease in payables(1) (2.0) (5.1) (3.4)
------------ ------------ -----------
Cash generated by operations 18.2 55.9 85.5
Interest (paid)/received (0.1) 0.1 0.1
Other/exceptional expense
outflow (0.1) - (2.7)
Income taxes paid (17.9) (15.0) (26.5)
------------ ------------ -----------
Net cash from operating activities 0.1 41.0 56.4
------------ ------------ -----------
(1) During the six months ended 30 June 2021 a total of $2.6m
(1H 2020: $7.9m) of trade receivables due from EGPC in Egypt were
settled by way of non-cash offset against trade payables.
13. Hedge transactions
During 1H 2021, Pharos entered into different commodity (swap)
hedges to protect the Brent component of forecast oil sales and to
ensure future compliance with its obligations under the RBL over
the producing assets in Vietnam. The commodity hedges run until
June 2022 and are settled monthly. The hedging positions in place
at the balance sheet date cover 27% of the Group's forecast
production until June 2022, securing an average price for this
hedged volume of $55.6/bbl (1H 2020: cover was 35% of the Group's
forecast production until September 2021, securing an average price
for this hedged volume of $44.8/bbl).
Pharos has designated the swaps as cash flow hedges. This means
that the effective portion of unrealised gains or losses on open
positions will be reflected in other comprehensive income. Every
month, the realised gain or loss will be reflected in the revenue
line of the income statement. For the period ended 30 June 2021 a
loss of $13.7m was realised (1H 2020: gain of $21.1m). The
outstanding unrealised loss on open position as at 30 June 2021
amounts to $12.4m (1H 2020: gain of $3.0m).
The carrying amount of the swaps is based on the fair value
determined by a financial institution. As all material inputs are
observable, they are categorised within Level 2 in the fair value
hierarchy. It is presented in " Derivative financial instruments "
in the consolidated statement of financial position. The liability
position as at June 2021 was $14.9m of which $2.5m has been
realised and due for payment early July (1H 2020: asset position
$6.7m of which $3.7m was realised).
14. Uncommitted Revolving Credit Facility - Egypt
In April 2021, the Group drew down on a new facility with the
National Bank of Egypt. The carrying amount of the trade
receivables include receivables in Egypt which are subject to an
Uncommitted Revolving Credit Facility for Discounting (with
Recourse) arrangement. This facility has been put in place to
mitigate the risk of late payment. Under this arrangement, Pharos
is able to access cash from the facility using the El Fayum oil
sales invoices as evidence to support its ability to repay the
facility. The oil sales invoices remain due to Pharos and it
retains the credit risk. The group therefore continue to recognise
the receivables in their entirety in its balance sheet. The amount
repayable under the agreement is presented as unsecured
borrowing.
The relevant carrying amounts are as follows:
$ million
Receivables subject to the facility 8.3
Associated secured borrowing 5.0
15. Placing
In January 2021, the Company announced the successful completion
of an equity Placing, Subscription and Retail Offering ('Placing')
to fund Phase 1B of the waterflood programme in Egypt.
Pursuant to the Placing, which was significantly oversubscribed,
a total of 30,733,682 Placing Shares have been placed with new and
existing investors at the Placing Price raising gross proceeds of
approximately $8.1m (GBP5.9m). Concurrently with the Placing,
certain directors and existing shareholders have entered into
subscription agreements with the Company to subscribe for 9,017,886
Subscription Shares at the Placing Price raising gross proceeds of
approximately $2.4m (GBP1.7m). In addition, retail investors have
subscribed in the Retail Offer via PrimaryBid for 4,909,922 Retail
Shares at the Placing Price raising gross proceeds of approximately
$1.3m (GBP0.9m).
Equity instruments issued by the Company are recorded at the
proceeds received $11.7m, net of direct issue costs ($0.8m).
The Placing shares were issued for non-cash consideration by way
of a 'cash box' structure involving a newly incorporated Jersey
subsidiary of the Company (Pharos Energy (Jersey) Limited -
'JerseyCo').
This structure involved the issue of ordinary and preference
shares by JerseyCo to one of the investment banks advising the
Company in respect of the Placing. The Company subscribed for 89%
of the ordinary shares and the Settlement Bank subscribed for 11%
of the ordinary shares in JerseyCo.
These preference and ordinary shares were subsequently acquired
by the Company and the preference shares were redeemed by JerseyCo.
The acquisition by the Company of the ordinary shares in JerseyCo
held by the investment bank resulted in the Company securing over
90% of the equity share capital of JerseyCo. The Company was
therefore able to rely on Section 612 of the Companies Act 2006,
which provides relief from the requirements under Section 610 of
the Companies Act 2006 to create a share premium account.
Therefore, no share premium was recorded in relation to the Placing
shares. The premium over the nominal value of the Placing shares
was credited to a merger reserve ($5.3m).
Pharos Energy (Jersey) Limited was dissolved on 5 February
2021.
16. Subsequent events
RBL
In July 2021, the Group completed the refinancing of its Reserve
Based Lending Facility (RBL) secured against the Group's producing
assets in Vietnam. The new RBL will provide access to up to a
committed US$100m with a further US$50m available on an uncommitted
"accordion" basis and has a four-year term that matures in July
2025. This refinancing provided the Group with additional
liquidity.
At the time of the refinancing, Société Générale joined the RBL
banking group alongside BNP Paribas, Crédit Agricole Corporate and
Investment Bank and DBS. Société Générale replaces Standard
Chartered Bank in the lender group.
The original RBL was signed in September 2018 and was due to
mature in September 2023. The new RBL extends the tenor of the
facility by 22 months, allowing for a rephasing of the repayment
schedule and the provision of additional funds available for
general corporate purposes.
Farm-out
The Group has entered into conditional agreements for the
farm-out and sale of a 55% working interest and operatorship in
each of the El Fayum and North Beni Suef Concessions to IPR Lake
Qarun Petroleum Co., a wholly owned subsidiary of IPR Energy AG.
The farm-out is a Class 1 transaction under the Listing Rules and
is conditional, amongst other things, on shareholder approval.
Pharos will publish a circular to shareholders in due course,
setting out further details of the farm-out and convening the
general meeting at which shareholder approval will be sought.
125/126 extension
On 8 September 2021, Pharos received approval for a 2-year
extension to the terms of Phase 1 of Block 125 & 126
Exploration Period from the Ministry of Industry and Trade, from
9th November 2021 to 8th November 2023.
Glossary
Non-IFRS measures
The Group uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles. These non-IFRS measures include cash
operating costs per barrel, DD&A per barrel, gearing and
operating cash per share. For the RBL covenant compliance, three
Non-IFRS measures are included: Net debt, EBITDAX and Net
debt/EBITDAX.
Cash operating costs per barrel
Cash operating costs are defined as cost of sales less DD&A,
production based taxes, movement in inventories and certain other
immaterial cost of sales.
Cash operating costs for the period is then divided by barrels
of oil equivalent produced. This is a useful indicator of cash
operating costs incurred to produce oil and gas from the Group's
producing assets.
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
21 20 20
$ million $ million $ million
------------ ------------ -----------
Cost of sales 51.5 71.0 123.8
Less:
Depreciation, depletion and amortisation (23.6) (38.7) (63.3)
Production based taxes (4.4) (2.4) (7.0)
Inventories 1.7 (3.8) (2.3)
Other cost of sales (0.8) (1.6) (2.9)
Cash operating costs 24.4 24.5 48.3
------------ ------------ -----------
Production (BOEPD) 9,147 12,093 11,373
------------ ------------ -----------
Cash operating cost
per BOE ($) 14.74 11.13 11.60
------------ ------------ -----------
Cash operating costs per barrel by segment (1H 2021)
Vietnam Egypt Total
$ million $ million $ million
---------- ---------- ----------
Cost of sales 37.7 13.8 51.5
Less:
Depreciation, depletion and
amortisation (19.4) (4.2) (23.6)
Production based taxes (4.3) (0.1) (4.4)
Inventories 1.7 - 1.7
Other cost of sales (0.4) (0.4) (0.8)
Cash operating cost 15.3 9.1 24.4
---------- ---------- ----------
Production (BOEPD) 5,429 3,718 9,147
---------- ---------- ----------
Cash operating cost
per BOE ($) 15.57 13.52 14.74
---------- ---------- ----------
DD&A per barrel
DD&A per barrel is calculated as net book value of oil and
gas assets in production, together with estimated future
development costs over the remaining 2P reserves. This is a useful
indicator of ongoing rates of depreciation and amortisation of the
Group's producing assets.
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
21 20 20
$ million $ million $ million
------------ ------------ -----------
Depreciation, depletion and amortisation (23.6) (38.7) (63.3)
------------ ------------ -----------
Production (BOEPD) 9,147 12,093 11,373
------------ ------------ -----------
DD&A per BOE ($) 14.25 17.58 15.21
------------ ------------ -----------
DD&A per barrel by segment (2021)
Vietnam Egypt Total
$ million $ million $ million
---------- ---------- ------------
Depreciation, depletion and
amortisation (19.4) (4.2) (23.6)
---------- ---------- ----------
Production (BOEPD) 5,429 3,718 9,147
---------- ---------- ------------
DD&A per BOE ($) 19.74 6.24 14.25
---------- ---------- ------------
Net Debt
Net debt comprises interest-bearing bank loans, less cash and
cash equivalents.
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
21 20 20
$ million $ million $ million
------------ ------------ -----------
Cash and cash equivalents 28.4 37.8 24.6
Borrowings* (61.3) (73.9) (57.2)
------------ ------------ -----------
Net Debt (32.9) (36.1) (32.6)
------------ ------------ -----------
*Exclude unamortised capitalised set up costs
EBITDAX
EBITDAX is earnings from continuing activities before interest,
tax, DD&A, impairment (reversal)/charge of PP&E and
intangibles and exploration expenditure.
(unaudited) (unaudited)
six months six months Year
ended ended ended
30 Jun 30 Jun 31 Dec
21 20 20
$ million $ million $ million
------------ ------------ ----------
Operating profit/(loss) 30.0 (315.4) (231.3)
Depreciation, depletion and amortisation 23.9 39.4 64.5
Impairment (reversal)/charge (27.8) 317.0 234.8
------------ ------------ ----------
EBITDAX 26.1 41.0 68.0
------------ ------------ ----------
Net Debt/EBITDAX
Net Debt/EBITDAX ratio expresses how many years it would take to
repay the debt, if net debt and EBITDAX stay constant.
(unaudited) (unaudited)
six months six months Year
ended ended ended
30 Jun 30 Jun 31 Dec
21 20 20
$ million $ million $ million
------------ ------------ ----------
Net Debt (32.9) (36.1) (32.6)
EBITDAX 26.1 41.0 68.0
------------ ------------ ----------
Net Debt/EBITDAX 1.26 0.88 0.48
------------ ------------ ----------
Gearing
Debt to equity ratio is calculated by dividing interest-bearing
bank loans by stockholder's equity. The debt to equity ratio
expresses the relationship between external equity (liabilities)
and internal equity (stockholder's equity).
(unaudited) (unaudited)
six months six months Year
ended ended ended
30 Jun 30 Jun 31 Dec
21 20 20
$ million $ million $ million
------------ ------------ ----------
Total Debt 61.3 73.9 57.2
Total Equity 306.1 249.0 293.7
------------ ------------ ----------
Debt to Equity 0.20 0.30 0.20
------------ ------------ ----------
Operating cash per share
Operating cash per share is calculated by dividing net cash from
continuing operations by number of shares.
(unaudited) (unaudited)
six months six months
ended ended Year ended
30 Jun 30 Jun 31 Dec
21 20 20
$ million $ million $ million
------------ ------------ ------------
Net cash from continuing operating activities 0.1 41.0 56.4
Weighted number of
shares in the year 436,995,454 378,335,889 397,515,684
------------ ------------ ------------
Operating cash per
share - 0.11 0.14
------------ ------------ ------------
Operating profit/(loss) excluding impairment
(reversal)/charge
Operating profit/(loss) excluding impairment (reversal)/charge
is calculated by adding back the impairment (reversal)/charge to
the operating profit/(loss).
(unaudited)
(unaudited) six months
six months ended Year ended
ended 30 Jun 31 Dec
30 Jun 21 20 20
$ million $ million $ million
------------ ------------ -----------
Operating profit/(loss) 30.0 (315.4) (231.3)
Impairment (reversal)/charge (27.8) 317.0 234.8
------------ ------------ -----------
Operating profit excluding impairment
(reversal)/charge 2.2 1.6 3.5
------------ ------------ -----------
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