TIDMPHAR
RNS Number : 1433F
Pharos Energy PLC
14 July 2021
14 July 2021
Pharos Energy plc
("Pharos" or the "Company" or, together with its subsidiaries,
the "Group")
Trading and Operations Update
Pharos Energy plc, an independent oil and gas exploration and
production company, issues the following Trading and Operations
update in advance of the Company's half-year results on 15
September 2021. The information contained herein has not been
audited and may be subject to further review and amendment.
Ed Story, President and Chief Executive Officer, commented:
"I am pleased to be able to report a period of progress for the
Group. In Vietnam, we are about to embark on a major development
drilling campaign at TGT which will look to increase production by
up to 40% and also begin acquiring 3D seismic in Block 125, which
has the potential to show some game-changing prospectivity offshore
in the Phu Khanh Basin.
In Egypt, work on our farm-out, which will provide the
investment for future development, is progressing well with all
major drilling activity in the meantime having been put in abeyance
until the process has been concluded.
Battening down the hatches and restructuring the company during
the downturn has been a difficult but a necessary step in order to
reposition it for robust growth and careful capital allocation in
the best interest to all stakeholders. I look forward to updating
the market further as we progress our plans for the year in both
Egypt and Vietnam."
Summary
-- Group working interest H1 producti on 9,147 boepd net;
o Vietnam H1 production 5,429 boepd net
o Egypt H1 production 3,718 bopd
-- 2021 Full year Group working interest production guidance
remains unchanged at 9,200 - 10,600 boepd net;
o Vietnam - 5,200-6,200 boepd
o Egypt - 4,000-4,400 bopd, prior to any investment from a
farm-in partner
-- Group revenue for H1 2021 of c.$73m before hedging loss of c.$14m
-- Cash balances as at 30 June 2021 of $28m, net debt also $28m
-- Forecast cash capex for the full year updated to $41m
-- In Vietnam, four well TGT development drilling programme to start later this month
-- We remain committed to completing the farm-out process on
both the El Fayum and North Beni Suef assets in Egypt
o Advanced negotiations with preferred farm-out counterparty
o Ongoing interest from other parties
Operations Update
Vietnam
Vietnam Production
Production for the first half of 2021 from the TGT and CNV
fields net to t he Group's working interest averaged 5,429 boepd.
This is in line with the Vietnam 2021 production guidance of
5,200-6,200 boepd.
TGT H1 2021 production averaged 13,401 boepd gross and 3,976
boepd net to Pharos. CNV H1 2021 production averaged 5,813 boepd
gross and 1,453 boepd net to Pharos.
Vietnam Operations and Development
On Block 16-1 - TGT Field, operations are about to start on the
first of four development wells later this month. The final two
wells in the 6 well sequence are planned to be included in the
budget for 2022 and on completion of the full programme gross field
production is expected to increase by 5-6,000 bopd to 19- 20,000
bopd. On Block 9-2 - CNV Field, routine well intervention work,
comprising acidising of plugged perforations in two existing
producing wells, was performed as planned and we are evaluating the
results.
Blocks 125 & 126
A 3D seismic survey is to be acquired this summer over certain
high graded leads in the western part of Block 125. Processed
results will be available in 2022.
Egypt
El Fayum Production, Operations and Development
Production for the first half of 2021 from the El Fayum Conces
sion averaged 3,718 bopd. Production levels were impacted by well
maintenance issues in the first half and plans are in place to
accelerate production enhancement in the second half of the
year.
The cessation of drilling operations and maintenance, plus
reduced investment 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 has
frequently been re-assigned to work on well intervention work on
producing wells requiring maintenance (predominantly ESP and sucker
rod pump replacements). This has inevitably delayed some work on
the Phase 1B waterflood programme and has had an overall
detrimental effect on production. To resolve this issue, a second
workover rig is due to arrive on site early August, and will be
kept on for such time as is needed to return production to the
guidance levels.
It is anticipated that the recently drilled Batran exploration
discovery well will be tested in the next quarter.
Egypt Commercial Update
We are in advanced negotiations with our preferred farm-out
counterparty on both the El Fayum and North Beni Suef Concessions,
with other interested parties still engaged. The prolonged COVID-19
travel restrictions under which we are all still operating has made
this process more protracted than we had anticipated but we
continue to make good progress and an announcement of the details
will be made as soon as possible. All major operations are on hold
until the process has been completed.
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 President is likely to be
from September at the earliest.
The improved fiscal terms will lower the break-even and increase
the contractor share of revenue by around 20% while in full cost
recovery mode.
Financial Update
Cash / net debt
The Company entered the year with cash of $24.6m an d net debt
of $32.6m. Cash balances as at 30 June 2021 were c.$28m with net
debt also c.$28m.
Revenues and hedging
Group revenues for the six months to 30 June 2021 were c. $73m
before hedging loss of c.$14m. The average realised oil price per
barrel achieved for the same period from Vietnam was c.$67/bbl
representing a premium of nearly $2/bbl to Brent and for Egypt
approx. $60/bbl, representing a discount of approx. $5/bbl to
Brent.
Capital expenditure
Cash capital expenditure for 2021 is planned to be c.$41m which
now includes c.$9m on our 3D seismic programme in Block 125 in
Vietnam, plus $15m already allocated to the four well TGT drilling
campaign, and c.$11m on our programmes in Egypt, including Phase 1B
of the waterflood programme.
RBL
The June redetermination process under the RBL has now completed
with no repayment due. Good progress is being made in our
discussions with the banks in updating our RBL facility including
an extension of the tenor, in line with the licence extensions
granted last year over the assets in Vietnam. This process is being
co-ordinated by BNP Paribas and Crédit Agricole Corporate &
Investment Bank and we anticipate that it will be signed in the
coming weeks, at which point we will update the market.
Outlook
Our producing assets remain significantly geared to the recovery
in the oil price. In Vietnam, we already benefit from attractive
break-even oil prices; and in Egypt, the improvement in the fiscal
terms through the ratification of the Third Amendment will enhance
cash generation.
Our debt levels are forecast to remain low and committed
expenditure is limited.
The forthcoming development programme in Vietnam, the farm-out
of the Concessions in Egypt and the RBL extension all mean that the
Company will be well-positioned to return to growth within the next
12 months.
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.
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