Pharos Energy announces Agreement Amendment for El Fayum Concession
Pharos Energy receives provisional approval to an amendment of the fiscal terms of its El Fayum Concession in Egypt’s Western Desert.
Pharos Energy has received provisional approval from the Egyptian General Petroleum Corporation’s (EGPC) Main Board to an amendment of the fiscal terms of its El Fayum Concession, which is now subject to the approval of the Egyptian Government.
Under the new terms, the Cost Recovery Petroleum percentage (i.e. the share of gross revenues that is available for the Contractor to recover its costs) will be increased from 30% to 40%, allowing Pharos a significantly faster recovery of all its past and future investments. In return, Pharos has agreed to (i) waive its rights to recover a portion of the past costs pool ($115 million) and (ii) reduce its share of Excess Cost Recovery Petroleum from 15% to 7.5%.
El Fayum phased water flood programme
Work for phase 1b water flood programme in El Fayum has commenced, utilising the funds raised in the equity placing earlier this year.
El Fayum Farm-out
The Company has been encouraged by the level of interest and is currently reviewing a number of attractive bids. An update will be provided to the market in due course.
Ed Story, President and Chief Executive Officer, commented:
‘I am very pleased with the outcome following our constructive negotiations with EGPC/ MOP concerning potential improvements in the Concession Agreement terms in order to support a return to operational investment. We have arrived at an agreement that mutually benefits both Pharos and EGPC. The improved cost recovery terms mean past and future investments in El Fayum can be recovered thanks to a significant increase in Pharos’ total share of gross revenues. Together these new fiscal terms mean an improvement of up to $5.7/bbl in the breakeven price. We appreciate the cooperation and commitment of the leadership team at EGPC and the support that we have received from the Egyptian Ministry of Petroleum and Mineral Resources, we look forward to working withthem to realise the significant mutual benefits of these new arrangements’.