Pharos Energy announces trading and operations update for July 2021
Pharos Energy has issued a 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.’
- Group working interest H1 production 9,147 boepd net;
- Vietnam H1 production 5,429 boepd net
- Egypt H1 production 3,718 bopd
- 2021 Full year Group working interest production guidance remains unchanged at 9,200 – 10,600 boepd net;
- Vietnam – 5,200-6,200 boepd
- 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
- Advanced negotiations with preferred farm-out counterparty
- Ongoing interest from other parties
Egypt Operations Update
El Fayum Production, Operations and Development
Production for the first half of 2021 from the El Fayum Concession 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.
(Source: Pharos Energy)